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Panel Specialists, Inc. v. Tenawa Haven Processing, LLC

United States District Court, D. Kansas

August 16, 2017

PANEL SPECIALISTS, INC., Plaintiff,
v.
TENAWA HAVEN PROCESSING, LLC, Defendant.

          ORDER

          K. Gary Sebelius, U.S. Magistrate Judge.

         This case comes before the court upon defendant Tenawa Haven Processing, LLC's (“Tenawa's”) Motion to Compel plaintiff Panel Specialists, Inc. (“PSI”) to answer Interrogatory No. 5. For the following reasons, this motion is denied.

         I.

         PSI sued Tenawa for more than $600, 000 in unpaid invoices for work that PSI performed in connection with the construction of Tenawa's gas processing plant in Haven, Kansas. Tenawa asserted counterclaims against PSI for damages due to defective and delayed work on the project by PSI. Tenawa also believes that it can show that PSI excessively marked up the cost of materials and equipment that PSI purchased for the construction of the plant in the invoices PSI submitted to Tenawa. Tenawa issued discovery to PSI regarding these mark-ups, including Interrogatory No. 5 which requested information about mark-ups PSI applied to other customers on other projects.

INTERROGATORY NO. 5: Identify and describe each instance from January 1, 2007 to the present where PSI charged a mark-up or commission to a customer on labor, equipment, materials, or services provided to PSI by a third party which was then used by PSI on a project for the customer. For each instance, identify (i) the name and contact information of the third party that provided the labor, equipment, materials, or services to PSI; (2) the name and contact information for the customer; (3) a description of the labor, equipment, materials, or services provided by the third party; (4) the date the labor, equipment, materials, or services were provided to PSI by the third party; (5) the amount PSI paid the third party for the labor, equipment, materials, or services; (6) the amount PSI billed the customer for the labor, equipment, materials, or services provided by the third party; and (7) a description of the project for the customer.

         In its initial response, PSI objected to Interrogatory No. 5 as overly broad, and invasive of confidential information between PSI and its other customers:.

ANSWER TO INTERROGATORY NO. 5: PSI objects to this Interrogatory as overly broad, vague, ambiguous and invasive of confidential, protected information between PSI and its other customers. The discovery request is overly broad in that it is well-known and common in the industry that contractors mark-up labor, equipment and materials, that this request asks PSI to list out, with specifics, all of its work for the prices ten years plus. Thus, the discovery request does not pertain to a non-privileged matter that is relevant to any party's claim or defense, and even if relevant is not proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issue, and that the burden or expense of the proposed discovery request outweighs its likely benefit.

         After some further discussions between the parties to confer concerning the discovery dispute, PSI agreed to identify by name customers for whom it charged a mark-up or commission for labor, equipment, or materials provided to PSI by a third-party for the years 2012 through 2016. Counsel for Tenawa objected to this supplemental answer, requesting detailed information concerning a specific “mark-up” for each customer. Counsel for the parties then conferred again via email and over the phone in an effort to find some middle ground regarding Interrogatory No. 5, but were unable to reach an agreement. Tenawa now seeks to compel PSI to answer this interrogatory. Tenawa alleges:

PSI admits that the standard markup in the industry for purchases of equipment and materials is 10% to 15%, but argues that the 25% that it now claims to have marked up Tenawa's invoices is reasonable because it allegedly took more effort and time by PSI than normal to select and order the equipment and material for this project. However, at the same time, PSI refuses to produce any other information (other than customer names) about other instances where it has marked up invoices on other projects… Tenawa is entitled to the information it requested in Interrogatory No. 5 so PSI [sic] can make that determination for itself and so that it can conduct follow-up discovery on any of those third parties, if necessary.

         In response, PSI has suggested that it would be a “next to impossible task to provide the information” sought by Tenawa, and the information sought is not proportional to needs of this case.

         II.

         Rule 26(b)(1) of the Federal Rules of Civil Procedure outlines the scope of discovery as follows:

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.

         Considerations of both relevance and proportionality now govern the scope of discovery.[1] Relevance is still to be “construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on” any party's claim or defense.[2] Information still “need not be admissible in evidence to be discoverable.”[3] The amendment deleted the “reasonably calculated to lead to the discovery of admissible evidence” phrase, however, ...


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