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Pipeline Productions, Inc. v. The Madison Companies, LLC

United States District Court, D. Kansas

March 22, 2019




         This matter comes before the court upon Plaintiffs' Motion to Compel Defendants to Respond to Their Fourth Request for Production of Documents (ECF No. 384). Plaintiffs argue that defendants have improperly objected to document production requests seeking information about defendants' financial history and seeking communications between email addresses associated with defendants and individuals associated with a non-party entity. Defendants assert that this court has already ruled that plaintiffs are not entitled to either category of information. For the reasons stated below, plaintiffs motion is granted in part and denied in part.

         I. Factual Background

         This action arises from a failed country music concert in Arkansas, the Thunder on the Mountain (“Thunder”) music festival. Plaintiffs allege that they entered into a joint venture with the defendants to own and produce the music festival. Plaintiffs contend that defendants reneged on the agreement, which forced plaintiffs to cancel the festival. Defendants assert counterclaims against plaintiffs, seeking declaratory judgments establishing the rights of the parties and recovery from the plaintiffs under the theories of breach of contract, promissory estoppel, and unjust enrichment.[1]

         Plaintiffs served their fourth request for production of documents on November 2, 2018.[2]On December 21, 2018, defendants served their initial responses and objections to plaintiffs document production requests.[3] Following the defendants' response, the parties met and conferred to resolve their discovery disputes.[4] During the meet and confer process, the parties agreed to narrow the scope of plaintiffs' Requests 6, and 19 through 21 to only “emails discussing a potential job and/or consulting work.”[5] On January 21, 2019, plaintiffs filed this motion.

         II. Discussion

         a. General Objections

          The court first turns to defendants' general objections to plaintiffs' document production requests. In the District of Kansas, “general objections are considered ‘overly broad and worthless unless the objections are substantiated with detailed explanations.'”[6] This court has consistently held that “a general objection that objects to a discovery request ‘to the extent' that it asks the responding party to provide documents or information protected by the attorney-client privilege or work product immunity is tantamount to asserting no objection at all.”[7] Furthermore, this court has held that boilerplate objections, without explanation or specific analysis, are insufficient to substantiate an objection, even when applied to individual discovery requests.[8] In response to plaintiffs' document production requests, defendants listed twenty generic objections.[9] Following prior caselaw in this jurisdiction and in this case, the court overrules these generic objections to the extent that these objections are not raised and supported in response to specific document production requests.

         b. Requests for Production Nos. 1 through 5

         In Requests Nos. 1 through 5, plaintiffs seek from defendants a variety of financial documents from 2014 to 2018.[10] In full, Request No. 1 reads:

All monthly, quarterly, annual and year-end financial statements of Madison and Horsepower for the years 2014, 2015, 2016, 2017, and 2018 to date, including but not limited to, balance sheets, statements of profit and loss, statement of cash flows, statement of changes in equity, general ledgers, accounts receivable and accounts payable.

         Request No. 2 reads:

All monthly, quarterly, or annual statements or reports from financial institutions pertaining to Madison and Horsepower's financial assets of any type whatsoever (including bank accounts, savings accounts, checking accounts, investment accounts) for the years 2014, 2015, 2016, 2017, and 2018 to date.

         Request No. 3 reads:

All federal and state tax returns including all schedules, attachments, and worksheets filed by Madison and Horsepower in years 2014, 2015, 2016, 2017, and 2018 to date.

         Request No. 4 reads:

All documents relating to any debts of Madison or Horsepower for the past four years, including but not limited to all notes, loan agreements, deeds of trust, mortgages, loan guarantees, bond agreements and trust indentures.

         Request No. 5 reads:

All documents prepared or submitted by Madison or Horsepower to obtain a loan, lease, deed of trust, or mortgage in the years 2014, 2015, 2016, 2017, and 2018 to date.

         In response, defendant argued that that the requests were “overbroad, compound, unduly burdensome, ” sought irrelevant and disproportional information, and sought confidential financial information.[11] In response to Requests Nos. 2 and 4, defendants also argued the requests were vague and ambiguous.[12] These document production requests are nearly identical to those found in Accountable Health Solutions, LLC v. Wellness Corp. Solutions, LLC.[13] As such, the court will adopt the legal analysis framework from Accountable Health.

         i. Legal Principles

         As a general matter, “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 . . . .”[14]When evaluating whether a discovery request is within the scope, this court must consider, among other things, “the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.”[15] Furthermore, this court must limit discovery when the frequency or extent of that discovery is “unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive . . . .”[16] A party may request copies or access to inspect documents in the responding party's possession, custody, or control, provided that request is within the scope of discovery.[17] A responding party may object to any document production request, but such objections must be made with particularity.[18]

         In a motion to compel, the moving party need only file the motion and draw the court's attention to the relief sought.[19] However, discovery requests must, at a minimum, seek facially relevant discovery before a court will order compliance.[20] If a request seeks documents or information that is not facially relevant, the party seeking discovery has the burden to show the relevancy of the requested discovery.[21] If a request seeks facially relevant discovery, the burden then shifts to the defendant to reassert and support any objections initially asserted in response to the plaintiff's discovery request.[22]

         ii. Plaintiffs' Punitive Damages Claims

         The court first must address whether plaintiffs are allowed to seek financial documents in this case. As the court has noted previously, discovery about a litigant's ability to pay a judgment is generally not permissible until a judgment is entered.[23] However, information about a party's net worth or financial condition is relevant to the issue of punitive damages.[24] “When a punitive damages claim has been asserted by the plaintiff, a majority of federal courts permit pretrial discovery of financial information of the defendant without requiring plaintiff to establish a prima facie case on the issue of punitive damages.”[25] But a plaintiff seeking discovery of the defendant's financial condition in support of a claim for punitive damages must show the claim is not spurious.[26] To prove a claim is not spurious, a party must provide specific factual allegations to support its claim for punitive damages.[27]

         In determining whether plaintiffs' punitive damages claim is spurious, the Court looks to whether plaintiffs have made sufficient allegations-short of those needed to establish a prima facie case-to support a claim for punitive damages under the applicable law. In this case, plaintiffs' are seeking punitive damages based upon their state law claims for breach of fiduciary duty (Count II), fraud based on a promise of future events (Count III), and tortious interference (Count IV). Under Kansas law, a plaintiff making a claim for punitive damages has the “burden of proving, by clear and convincing evidence in the initial phase of the trial, that the defendant acted toward the plaintiff with willful conduct, wanton conduct, fraud or malice.”[28]

         Here, plaintiffs' punitive damages claims are not spurious. In their amended complaint, plaintiffs alleged that defendants repeatedly offered financial assistance to plaintiffs to produce Thunder, offered assurances of the existence of this financing even if the initial agreements fell apart, and encouraged plaintiffs to promote Thunder and book artists while negotiations for the financial agreement continued.[29] Plaintiffs further assert that after Thunder failed, defendants began targeting plaintiffs partners and employees in an effort to “further destroy Plaintiffs' business . . . ” that led to plaintiffs tortious interference claim.[30] In support of their breach of fiduciary duty claim, plaintiffs' asserted that defendants pressured plaintiffs into a new agreement with the threat of a lawsuit.[31] To support their fraud claim, plaintiffs further assert that defendants intentionally deceived plaintiffs with their offer to support Thunder in an effort to force plaintiffs into a lopsided deal.

         As plaintiffs note, the court has already ruled on defendants' motion to dismiss, and plaintiffs' claims for punitive damages have survived. To survive a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), a complaint must contain factual allegations that, assumed to be true, “raise a right to relief above the speculative level”[32] and must include “enough facts to state a claim for relief that is plausible on its face.”[33] Defendants appear to wish to relitigate the motion to dismiss with regards to punitive damages; however, this court need not disturb the prior order here. Plaintiffs' factual allegations are sufficient to establish more than spurious claims for punitive damages. As defendants note, the punitive damages claims shall likely be addressed in a subsequent motion for summary judgment; however, such arguments likewise need not be addressed now.

         iii. Scope of Requests

          While plaintiffs' claims for punitive damages opens the door to financial discovery, plaintiffs are not entitled to violate the Fed.R.Civ.P. 26(b) scope of discovery limits to reach their desired information. Typically, discovery of financial information for punitive damages purposes is limited to the defendant's most recent annual reports and current financial statements.[34] Plaintiffs cite N. Ala. Fabricating Co., Inc., v. Bedeschi Mid-West Conveyor Co., LLC, [35] to suggest they should be entitled to more than one year of records relevant to their fraud claim. In that case, the court determined that seeking deposition testimony about a defendant's financial ability at the time the defendant made promises to pay plaintiff a debt was relevant to plaintiff's fraud claims.[36] Specifically, the court allowed questioning about a defendant's financial state from September 2015 to July 2016.[37] Here, however, plaintiffs are not alleging defendants were factually unable to fund Thunder, but instead, plaintiffs allege that defendants had no interest in funding Thunder.[38] Thus, plaintiffs reliance on N. Ala. Fabricating is misplaced.

         Plaintiffs' discovery requests must be modified to come within the scope of discovery. Following other decisions in this district, the court finds that only records of defendants' present financial state are relevant within the scope of discovery, and all other records are facially overbroad. As plaintiffs' requests are nearly identical to those found in Accountable Health, the court will further adopt and incorporate the Accountable Health analysis with regards to relevance.[39] Specifically, plaintiffs' Requests No. 2, 3, and 4, which seek statements from financial institutions about defendants' assets, defendants' tax returns, and documents relating to any debts incurred by defendants for the past four years, all seek ...

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