MEMORANDUM AND ORDER
GERALD L. RUSHFELT, Magistrate Judge.
Before the Court is a Motion to Compel Discovery (ECF No. 38), filed by Defendant on March 4, 2013. For the reasons set out below, the Court grants the motion.
I. Nature of the Matter Before the Court
This action arises from a contract between Plaintiffs, landlord and management company for a state-owned gaming facility located in Dodge City, Kansas (Boot Hill Casino & Resort), and Defendant, a provider of computer software for collecting and disseminating gambling information of the operation. Plaintiffs sue for breach of contract, negligent misrepresentation, fraud, breach of express warranty, and breach of implied warranty of merchantability based on their purchase of Defendant's software for slot accounting and for casino marketing and player tracking. They allege generally that the software failed to operate in conformity with promises and representations made by Defendant prior to the purchase. Defendant has filed counterclaims alleging that Plaintiffs failed to make payments due under the purchase agreement and continued to use the software after their license expired.
Defendant has requested Plaintiffs to produce various documents. An inability to resolve a relevancy objection to Request 10 prompted the instant motion to compel. The motion is fully briefed and ready for ruling.
Through Request 10, served pursuant to Fed.R.Civ.P. 34, Defendant requested Plaintiffs to produce "All documents concerning the selection and installation of plaintiffs' new software." In its motion Defendant states it does not seek documents protected by attorney-client privilege or as work product. Its reply brief clarifies that Request 10 is limited to the search conducted by Plaintiffs for the selection of replacement software. Plaintiffs have withheld production. A party seeking discovery under Fed.R.Civ.P. 34 may move to compel production or inspection when the other party "fails to respond that inspection will be permitted - or fails to permit inspection - as requested under Rule 34."
Plaintiffs objected to Request 10 on grounds of irrelevancy, work product, and attorney-client privilege. Given the statement that Defendant does not seek work product or documents protected by attorney-client privilege, the Court need only consider the objection of irrelevancy.
Rule 26(b)(1) of the Federal Rules of Civil Procedure defines the general scope of discovery. Since amendments in 2000, the rule provides "a two-tiered discovery process; the first tier being attorney-managed discovery of information relevant to any claim or defense of a party, and the second being court-managed discovery that can include information relevant to the subject matter of the action." Under this two-tiered process, objections on grounds of relevancy require the courts to first "determine whether the discovery is relevant to the claims or defenses and, if not, whether good cause exists for authorizing it so long as it is relevant to the subject matter of the action."
At the discovery stage of litigation, relevancy is broadly construed and courts should consider requests for discovery relevant "if there is any possibility' that the information sought may be relevant to the claim or defense of any party" or "to the subject matter of the action." When the relevancy of requested discovery is not apparent, the party seeking the discovery has the burden to show its relevance. On the other hand, when requested discovery appears relevant, the party objecting to the discovery has the burden to show that the discovery does not fall within the broad scope of relevance set out in Rule 26(b)(1) or "is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure."
In this case, Defendant contends that documents responsive to Request 10 are relevant to Plaintiffs' claim that it provided faulty software and its position that the software worked as intended and that Plaintiffs are thus wrongfully refusing to pay. It also contends that responsive documents may show Plaintiffs' complaints regarding its software and what problems are corrected by the new software.
Request 10 appears to seek documents relevant to claims and defenses asserted in this action. Plaintiffs have asserted that Defendant provided faulty software. Documents revealing the search conducted by Plaintiffs for the selection of replacement software may show their stated reasons for seeking replacement software, including their complaints about Defendant's software. Responsive documents may also show differences between Defendant's software and potential replacement software. Although Plaintiffs contend that the software it purchased to replace Defendant's software is simply not at issue in this case, the new software and the reasons for obtaining it directly goes to claims and defenses in this action. Defendant affirmatively disputes that its software was unable to perform as promised. It has asserted a counterclaim for damages for unlawful termination of the contract by Plaintiffs. It alleges that its software met all contractual specifications and that Plaintiffs terminated the contract for other reasons. Given the facial relevancy of Request 10, Plaintiffs have the burden to show that it is irrelevant. They have not carried that burden.
Plaintiffs also urge the Court to find any marginal relevance of documents relating to the installation of its new software outweighed by the proprietary and confidential nature of the responsive communications with direct competitors of Defendant. Plaintiffs assert that an existing confidentiality agreement with third-party vendor Konami Gaming, Inc. does not adequately protect the vendor's confidentiality interests if they produce documents involving the vendor. Defendant states that it does not seek confidential or privileged information from Konami - it wants Plaintiffs' communications to Konami and other potential replacement vendors to discover Plaintiffs' thoughts about its software. The Court does not find documents responsive to Request 10 to be of such marginal relevance that the potential harm occasioned by their production outweighs the ordinary presumption in favor of broad disclosure.
The parties and Konami, furthermore, have worked together in obtaining a stay of briefing on a related motion by Konami to intervene. And in an effort to avoid wasting time and to alleviate the confidentiality concerns of Konami, the parties and Konami have agreed that, if the Court grants this motion to compel, Plaintiffs will initially "produce only BHC-authored documents relating to the Konami purchase created prior to July 17, 2012, " which have been redacted to protect "any Konami responses to BHC-authored communications that ...