Opinion
No. 00-2043-CM.
November 26, 2001
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiff's Motion to Compel Responses to its First and Fifth Sets of Document Production Requests (doc. 151). Upon review of the arguments presented, Plaintiff's Motion is granted in part and denied in part as specifically set forth below.
I. Factual Background
Plaintiff Western Resources ("Plaintiff") generates, distributes and sells retail electric power in Kansas and is co-owner and designated operator of the Jeffrey Energy Center ("JEC"), a coal-fired electric generating facility located in Pottawatomie County, Kansas. Defendants Union Pacific Railroad Company ("UP") and Burlington Northern and Santa Fe Railway Company ("BNSF") are both interstate railroads that, among other things, provide transportation of coal by rail.
Plaintiff asserts it entered into two Rail Transportation Agreements effective in January 1993, both of which govern transportation services for the movement of coal by one or both Defendants from the Powder River Basin in Wyoming ("PRB") to Plaintiff at its JEC facility in Kansas. Plaintiff alleges in its First Amended Complaint that Defendants breached both the express terms of the contracts and the implied duty of good faith and fair dealing in performing these contracts.
Relevant to the Motion currently pending, Plaintiff served its First Set of Document Production Requests upon Defendant UP on July 15, 2000 and, on January 19, 2001, served its Fifth Set of Requests. The parties apparently met and conferred in an attempt to resolve the plethora of discovery disputes arising from Defendant UP's responses to the First and Fifth sets of Requests, but, based on the Motion currently pending, it appears they were unable to resolve a large number of the disputes. Accordingly, the Court now considers Plaintiff's Motion to Compel Defendant UP to provide responsive documents to First Requests 22, 23, 26, 43, 45, 46, 47, 48, 49, 51, 55, 59, 68, 78, 86, 96, 101, 106, 107, 108, 121, 137, 138, 139 and to Fifth Request 1.
II. Discussion
The Court will address the above-listed disputed Requests by category as argued by the parties in their briefing:
• Litigation documents from the Entergy v. Union Pacific lawsuits filed in the United States District Courts for the Middle District of Louisiana and the District of Nebraska (First Request 121 and Fifth Request 1);
• Computerized car and train movement records from 1990-1992 (First Request 43);
• Documents relating to UP's relationships with third-party PRB coal shippers (First Requests 22, 23, 26, 68, 86);
• Depository index materials from the UP/SP merger (First Request 101); and
• Dilatory production of documents to which UP agreed to produce on a rolling basis (First Requests 45, 46, 47, 48, 49, 51, 55, 59, 78, 96, 106, 107, 108, 137, 138 and 139).
• Litigation documents from the Entergy v. Union Pacific lawsuits filed in the United States District Courts for the Middle District of Louisiana and the District of Nebraska (First Request 121 and Fifth Request 1]
Plaintiff's First Request 121 seeks production of
(1) all discovery requests served on UP in (a) Docket No. CV No. 97-967-B-M3, Entergy Services, Inc. and Entergy Arkansas, Inc. v. Union Pacific Railroad Company, filed in the United States District Court for the Middle District of Louisiana, and (b) Docket No. 8:97CV00345, Entergy Service, Inc. and Entergy Arkansas, Inc. v. Union Pacific Railroad Company, currently pending in the United States District Court for the District of Nebraska; and (2) all written responses and documents produced by UP in response to such requests and/or any court order.
In connection with discussions concerning the scope of UP's response to Request 121, Plaintiff states it inquired whether UP planned to produce transcripts and exhibits relating to the deposition of UP's fact witnesses in Phase II of the referenced Entergy litigation. Plaintiff states that because UP maintained such deposition transcripts and exhibits were outside the scope of Request 121, it subsequently served its Fifth Set of Document Requests seeking
The Entergy litigation was bifurcated into two phases. Phase I dealt with the question of whether a breach of contract had occurred. Phase II dealt with the questions of materiality and good faith.
the depositions and deposition exhibits of all UP employees and personnel, former UP employees and personnel, and agents of UP deposed as fact witnesses in Phase II discovery of the case styled Entergy Services, Inc. and Entergy Arkansas, Inc. v. Union Pacific Railroad Company, Case No. 8:98CV345 in the United States District Court for the District of Nebraska.
UP objected to producing the documents requested in First Request 121 and Fifth Request 1 on grounds that the requests are overly broad, unduly burdensome and seek information that is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. Referring generally to protective orders in the Entergy case and the case here, UP also expressed confidentiality concerns in producing the requested documents. Subject to and without waiving these objections, UP states it will review all discovery requests, written responses and documents produced in the Entergy litigation as part of its general review of documents for possible production in response to Plaintiff's other document requests.
The Court first will turn to Defendant UP's objections that First Request 121 and Fifth Request 1 are overly broad in scope and seek information that is not relevant to the claims asserted by Plaintiff. Amended Rule 26(b)(1) provides that "[p]arties may obtain discovery regarding any matter . . . that is relevant to the claim or defense of any party." Fed.R.Civ.P. 26(b)(1). Further, "[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id.
Discovery of information "relevant to the subject matter involved in the action," previously allowed as a matter of right under the prior version of Rule 26(b)(1), now can be undertaken only with leave of court or for good cause shown. The recent amendments to Rule 26(b)(1) were intended to focus the attention of both the parties and the Court on the actual claims and defenses involved in a suit. See Adv. Comm. Notes to the 2000 Amendments to Fed.R.Civ.P. 26(b)(1) ("The rule change signals to the court that it has the authority to confine discovery to the claims and defenses asserted in the pleadings . . . ."). Since December 1, 2000, amended Rule 26(b)(1) has applied to federal court proceedings insofar as "just and practicable." It is unnecessary to decide whether the former or current version of Rule 26 is applicable here, because the Court finds the documents requested relevant under the current, more narrow version of the Rule.
When the discovery sought appears relevant, the party resisting the discovery has the burden to establish the lack of relevance by demonstrating that the requested discovery (1) does not come within the scope of relevance as defined under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure. Scott v. Leavenworth Unified School Dist. No. 453, 190 F.R.D. 583, 585 (D.Kan. 1999). Similarly, a party resisting discovery on the grounds that a request is overly broad has the burden to support its objection, unless the request is overly broad on its face. Etienne v. Wolverine Tube, Inc., 185 F.R.D. 653, 656 (D.Kan. 1999); Hilt v. SFC Inc., 170 F.R.D. 182, 186 (D.Kan. 1997). Id. When the relevancy of propounded discovery is not apparent, however, its proponent has the burden to show the discovery relevant. Pulsecard, Inc. v. Discover Card Serv., Inc., 168 F.R.D. 295, 309 (D.Kan. 1996).
Pursuant to amended Rule 26(b)(1), the Court finds that First Request 121 and Fifth Request 1 appear on their face to be relevant to the claims set forth by Plaintiff. In the Amended Complaint, Plaintiff claims Defendant UP breached an implied duty of good faith and fair dealing in performing the contracts at issue. In claiming the Entergy litigation documents are relevant to its claim of breach of an implied duty of good faith and fair dealing in performing the contracts at issue, Plaintiff maintains the claims set forth and the relief requested in its Amended Complaint are analogous to the claims asserted and relief requested in the Entergy litigation. Plaintiff asserts that both suits are brought by utility shippers claiming that their rail transportation contracts were materially breached as a result of UP's failure to deliver PRB coal as required and that UP breached its duty to act in good faith and to provide maximum equipment utilization and transportation efficiencies. Plaintiff further asserts that both suits seek a declaration that the contracts between the parties are terminated as a result of the breach and that both suits request actual damages and restitution.
Kansas courts have followed the trend of implying the covenant of good faith and fair dealing to almost every contract. Bonanza, Inc. v. McLean, 242 Kan. 209, 747 P.2d 792 (1987); but see, Morriss v. Coleman Co., 241 Kan. 501, 738 P.2d 841 (1987) (implied covenant of good faith and fair dealing as applicable to all contracts is "overly broad and should not be applicable to employment-at-will contracts"). In Pizza Management, Inc. v. Pizza Hut, Inc., 737 F. Supp. 1154, 1178-79 (D.Kan. 1990), this Court set forth some basic principles applicable to the implied covenant of good faith and fair dealing:
By employing [the implied covenant of good faith and fair dealing], a court forces the parties to perform consistent with their intentions and expectations which are embodied, expressly and impliedly, in the terms of their agreement.
* * * * * * * * * *
Because the goal of this implied duty is to effectuate the parties' express promises, breach of this duty is actionable when it relates "to some aspect of performance under the terms of the contract." Adolph Coors Co. [v. Rodriguez], 780 S.W.2d [477,] at 482 [(Tex.Ct.App. 1989)]. A breach occurs when a party's actions are commercially unreasonable. Larese v. Creamland Dairies, Inc., 767 F.2d 716, 717-18 (10th Cir. 1985); Burgess Const. Co. v. M. Morrin Son Co., Inc., 526 F.2d 108, 115 (10th Cir. 1975), cert. denied, 429 U.S. 866 (1976).
Based on Plaintiffs' assertions, it appears to the Court that the Entergy litigation documents may lead to the discovery of admissible evidence regarding Plaintiff's claim that UP breached the implied duty of good faith and fair dealing in performing the contracts at issue and, more specifically, whether UP knew or should have known in performing the contracts that their rail systems were currently over-committed or were going to be over-committed in years to come. Because the Court finds the discovery sought appears relevant on its face, Defendant UP now has the burden to establish lack of relevance by demonstrating that the requested discovery (1) does not come within the scope of relevance as defined under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure. See Scott v. Leavenworth Unified School Dist. No. 453, 190 F.R.D. at 585.
To that end, UP asserts the Entergy litigation documents are overly broad and not relevant to the claims asserted in Plaintiff's First Amended Complaint because this case and the Entergy case are different in the following respects:
• Timeframe — the Entergy lawsuit was premised on breach of three interrelated contracts, two of which were executed in 1983 and the third in 1991;
• Parties: UP is the only party common to the Entergy litigation and this case. BNSF had no role in providing the transportation services at issue in Entergy and was not a party to that case and three other railroads that subsequently were merged into UP were parties to contracts in Entergy but were never involved in transporting coal to Plaintiff;
• Different Routes: Entergy's trains travel a different route and a greater distance than Plaintiff's coal trains; and
• Different Contracts: Unlike the Entergy contract, Plaintiff's contract did not require binding declarations regarding the amount of coal Plaintiff would ship, Plaintiff's contract required Plaintiff to provide all railcars to carry coal and Plaintiff's contract did not promise a fixed cycle time by the railroads and Plaintiffs' contract does not expressly require the railroads to "make a good faith effort to avoid creating Deficit Tonnages."
Although UP goes to great lengths to establish that this lawsuit and the Entergy lawsuit are not completely identical, UP does not dispute that both lawsuits generally deal with breaches of contract in connection with UP's 1997 rail-service crisis, which allegedly was caused by UP overselling its capacity to transport coal while under-investing in rail infrastructure to keep up with its growing traffic. UP's identification of various differences in the factual circumstances forming the legal basis for the two lawsuits fails to rule out the possibility that documents from the Entergy litigation are relevant because they support Plaintiff's claim that UP materially breached its contract and its implied duty of good faith and fair dealing in performing the contracts at issue or, in the alternative, that such documents may lead to the discovery of admissible evidence on those claims.
Citing Fusion, Inc. v. Nebraska Aluminum Castings, 962 F. Supp. 1392, 1395 (D.Kan. 1997), Plaintiff claims good faith performance is an element of the test for considering materiality of an alleged breach of contract.
Moreover, UP fails to demonstrate that the potential harm occasioned by production of the Entergy litigation documents would outweigh the relevance of such documents to Plaintiff's breach of implied duty of good faith and fair dealing claim. Although UP makes a blanket claim that production of the Entergy litigation documents would be unduly burdensome, UP fails to support its claim of undue burden with any specific facts; thus, the Court cannot, and does not, deem this speculative burden to outweigh the potential relevance of the Entergy litigation documents. And, although UP also asserts harm in the form of prospective confidentiality violations, UP states it already has produced "thousands" of the documents at issue pursuant to the June 26, 2001 Stipulated Protective Order (doc. 27) in this matter. Accordingly, the Court finds any potential harm based on confidentiality concerns is outweighed by the potential relevance of such contracts to Plaintiff's breach of implied duty of good faith and fair dealing claim.
Plaintiff states in its brief, and UP does not dispute, that the Entergy litigation documents already are assembled at the offices of UP's legal counsel in Washington, D.C. and, given production in the prior litigation, already have been reviewed for privilege and confidentiality concerns. Plaintiff further states that it has offered to review such documents at the offices of UP's legal counsel in Washington, D.C. and, in doing so, will identify documents not yet produced of which it would like to have copies.
Based on this discussion, Plaintiff's Motion to Compel will be granted with respect to First Request 121 and Fifth Request 1.
• Computerized car and train movement records from 1990-1992 (First Request 43]
UP asserts it should not be required to produce computerized car and train movement records from 1990-1992 because they "are beyond the temporal scope of this case and do not seek any information relevant to any claim or defense." As the party resisting the discovery, Defendant has the burden to show facts justifying their objections. See Snowden v. Connaught Lab., Inc., 137 F.R.D. 325, 332 (D.Kan. 1991).
Pursuant to amended Rule 26(b)(1), the Court finds that Request 43 appears on its face to be relevant to the claims set forth by Plaintiff in its Amended Complaint. As noted above, Plaintiff claims Defendant breached an implied duty of good faith and fair dealing in performing the contracts at issue. In maintaining the 1990-1992 computerized car and train movement records are relevant to its claim of breach of an implied duty of good faith and fair dealing, Plaintiff asserts that Defendant was aware of significant infrastructure and capacity shortfalls within their organization in the period leading up to execution of its contract with Plaintiff (including the 1990-1994 negotiation period) and that Defendant never advised Plaintiff of such constraints or the related impact of these constraints on service capabilities. Given these assertions, the Court cannot rule out the possibility that the information contained in the 1990-1992 computerized car and train movement records may lead to the discovery of admissible evidence regarding Plaintiff's claim that Defendant breached their implied duty of good faith and fair dealing in performing the contracts at issue.
As corrected in a letter from William E. Hanna dated August 18, 2000.
Because the Court finds the discovery sought appears relevant on its face, Defendant again has the burden to establish lack of relevance or such marginal relevance that potential harm outweighs the ordinary presumption in favor of broad disclosure. See Scott v. Leavenworth Unified School Dist. No. 453, 190 F.R.D. at 585. Defendant argues computerized car and train movement records from 1990-1992 are irrelevant and overly broad because they pre-date by seven years the time period when Plaintiff claims Defendant was in material breach of the contract at issue.
The Court disagrees with UP's argument. It is entirely possible that the information contained in the 1990-1992 computerized car and train movement records is relevant because it could very well support Plaintiff's claim that Defendant breached its implied duty of good faith and fair dealing with regard to performance of the contracts. Although, as UP notes, Plaintiff alleges a material breach of contract beginning in 1997, UP fails to acknowledge that Plaintiff also alleges a breach of implied duty of good faith and fair dealing related to performance of the contracts at issue. Performance of the contracts began on their effective date, at least one of which was January 1, 1993, thus the liability period for the implied breach claim starts in 1993. Although in a different context, the Tenth Circuit has authorized the scope of discovery to be extended to a reasonable number of years prior to the liability period. See, e.g., James v. Newspaper Agency Corp., 591 F.2d 579 (10th Cir. 1979) (four years prior to liability period reasonable).
Given the discussion above, and the fact that UP fails to demonstrate that the potential harm occasioned by production of the documents at issue would outweigh the relevance of such documents, Plaintiff's Motion is granted as to First Request 43.
• Documents relating to UP's relationships with third-party PRB coal shippers (First Requests 22, 23, 26, 68, 86]
A number of Plaintiff's requests seek information relating to UP's relationships with third-party PRB coal shippers during the 1997 Service Crisis and beyond. Although UP has produced many documents responsive to these requests, UP claims it should not be compelled to produce additional third-party shipper information because it would impose an undue burden upon UP. In support of its claim of undue burden, UP submits the affidavit of Associate General Counsel Louise A. Rinn, who states under oath that responding to the interrogatories in question would entail, at a minimum, the review of approximately 400 boxes of documents plus extensive electronic correspondence and records. Ms. Rinn further avers that such material is not easily retrievably because, as a general rule, it is not centrally located.
Plaintiff asserts UP's objection based on undue burden is without merit, because it repeatedly has agreed to limit production of responsive documents by UP to those documents produced pursuant to a similar request in the Entergy litigation; thus, UP simply can re-produce materials it already has assembled and reviewed. To that end, Plaintiff submits in its Reply brief that if UP is ordered to produce the Entergy litigation documents at issue in Section A, supra, the dispute regarding third-party PRB coal shipper documents is moot. Based on Plaintiff's representation, and the fact that the Court herein grants Plaintiff's Motion to Compel with respect to the Entergy litigation documents, the Court accordingly will deny Plaintiff's Motion to Compel with regard to third-party PRB coal shipper documents as moot.
• Depository index materials from the UP/SP merger (First Request 101]
Plaintiff's Request 101 seeks production of "all forecasts, estimates and other documents concerning the potential impact of the SP merger upon service to PRB coal shippers."
UP states that in order to resolve disputes between the parties with regard to Request 101, UP produced an index of material in the merger depository. UP further states Plaintiff subsequently identified documents listed on the index that it believed might be responsive and UP then produced almost all documents requested, excluding the following documents it did not believe were relevant to Plaintiff's claims: (1) customer service surveys conducted by UP from 1989 to 1993; (2) a 1995 UP traffic diversion study (and its underlying data); and (3) hypothetical market share data for 1994. Plaintiff now seeks production of the documents withheld.
The merger depository is a massive collection of materials produced during discovery in administrative proceedings concerning the UP/SP merger.
Plaintiff states it is not seeking the ICC Waybill Sample data.
Pursuant to amended Rule 26(b)(1), the Court finds that Request 101 appears on its face to be relevant to the claims set forth by Plaintiff in its Amended Complaint. As noted above, Plaintiff claims Defendant breached an implied duty of good faith and fair dealing in performing the contracts at issue. In maintaining the customer service surveys, the traffic diversion studies and the hypothetical market share data documents are relevant to its claim of breach of an implied duty of good faith and fair dealing, Plaintiff asserts that Defendant was aware of significant infrastructure and capacity shortfalls within their organization but that Defendant never advised Plaintiff of such constraints or the related impact of these constraints on service capabilities.
Thus, it appears to the Court that the documents at issue could support Plaintiff's claim that Defendant breached their implied duty of good faith and fair dealing in performing the contracts at issue in that the documents may lead to the discovery of admissible evidence regarding whether Defendant knew or should have known that their rail systems currently were over-committed or were going to be over-committed in years to come.
Because the Court finds the discovery sought appears relevant on its face, Defendant once again has the burden to establish lack of relevance or such marginal relevance that potential harm outweighs the ordinary presumption in favor of broad disclosure. See Scott v. Leavenworth Unified School Dist. No. 453, 190 F.R.D. at 585. Defendant argues the surveys and studies at issue are irrelevant and overly broad in that they were created prior to the time period when Plaintiff claims Defendant was in material breach of contract. The Court is not persuaded by UP's argument and finds it entirely possible that the information contained in the surveys and studies is relevant and/or may lead to the discovery of admissible evidence with regard to Plaintiff's claim that Defendant breached its implied duty of good faith and fair dealing in performing the contracts at issue.
• Dilatory production of documents to which UP agreed to produce on a rolling basis (First Requests 45, 46, 47, 48, 49, 51, 55, 59, 78, 96, 106, 107, 108, 137, 138 and 139]
In the final section of its Motion to Compel, Plaintiff seeks an order compelling UP to complete production, or to confirm that production is complete, as to sixteen other requests. In its responsive pleading, UP does not dispute Plaintiff is entitled to discover the documents at issue, but instead maintains that it has completed production of all documents responsive to the referenced sixteen requests. Accordingly, the Court uses its discretion to summarily grant this portion of Plaintiff's Motion as unopposed under D. Kan. Rule 7.4 and UP shall file a supplemental pleading confirming under oath that production is complete as to the referenced sixteen requests.
Conclusion
Based on the discussion above, Plaintiff's Motion to Compel
• is granted with respect to First Request 121, Fifth Request 1, First Request 43, First Request 101 and First Requests 45, 46, 47, 48, 49, 51, 55, 59, 78, 96, 106, 107, 108, 137, 138 and 139; and
• is denied as moot with respect to First Requests 22, 23, 26, 68, 86.
IT IS SO ORDERED.