Opinion
CASE NO. 3:18-CV-100 (CDL)
2020-05-28
David P. ECHOLS, et al., Plaintiffs, v. PILGRIM'S PRIDE CORPORATION, Defendant.
Andrew K. Hazen, Joel L. McKie, Atlanta, GA, for Plaintiffs. Benjamin L. Stewart, Pro Hac Vice, Clayton E. Bailey, Pro Hac Vice, Dallas, TX, Burke B. Johnson, Athens, GA, for Defendant.
Andrew K. Hazen, Joel L. McKie, Atlanta, GA, for Plaintiffs.
Benjamin L. Stewart, Pro Hac Vice, Clayton E. Bailey, Pro Hac Vice, Dallas, TX, Burke B. Johnson, Athens, GA, for Defendant.
ORDER
CLAY D. LAND, CHIEF U.S. DISTRICT COURT JUDGE
Plaintiffs, who are local poultry growers in the Athens, Georgia area, move the Court to compel Defendant, a national poultry processor, to respond to a variety of interrogatories and requests for production. Plaintiffs contend that the discovery requests seek evidence that is relevant to their claims arising from Defendant's termination of their poultry grower contracts, which are called Broiler Production Agreements ("BPAs"). Defendant maintains that it properly terminated the BPAs when Plaintiffs failed to upgrade their facilities to produce "No Antibiotic Ever" ("NAE") chicken as demanded by Defendant's customers and opposes the motion, responding that the information Plaintiffs seek is neither relevant nor proportional to the needs of this case.
The discovery that Plaintiffs seek can be categorized as follows: (1) evidence related to Defendant's practices with regard to poultry growers other than Plaintiffs; (2) cell phone data including text messages involving Defendant's employees; (3) sales reports and contracts with Defendant's customers; and (4) USDA notices of violations and citations directed to Defendant. For the reasons explained in the remainder of this order, Plaintiffs' motion (ECF No. 53) is denied as to the evidence sought in categories 1 and 2 but granted in part as to the evidence sought in categories 3 and 4.
MOTION TO COMPEL STANDARD
"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. Information within this scope of discovery need not be admissible in evidence to be discoverable." Fed. R. Civ. P. 26(b).
I. Discovery Requests Related to Other Facilities
Plaintiffs first seek evidence that Defendant did not require other growers at non-Athens facilities to upgrade their buildings in order to produce NAE chickens and other evidence related to non-Athens facilities. They argue that this evidence is relevant (1) to determine whether Defendant employed good faith when it terminated the BPAs; (2) to support their Packers and Stockyards Act ("PSA") claims; and (3) to assess Defendant's affirmative defense of competitive justification. Plaintiffs' arguments that this evidence is relevant rests largely upon their misinterpretation of the BPAs.
Although the Court previously interpreted the applicable language in the BPAs in ruling on Defendant's motion to dismiss, Plaintiffs nevertheless rely upon their contradictory interpretation to support their motion to compel. As a refresher, the Court reminds the parties of its previous ruling that addressed paragraph H(1) of the BPAs. That paragraph is titled "Basic Housing" and states that "[t]he Independent Grower shall provide and maintain proper housing ... in accordance with the Company's specifications and applicable regulations." Pilgrim's Pride Corporation Broiler Production Agreement with David Echols, ¶ H(1), ECF No. 49-4 at 3 (hereinafter "Echols BPA"). The Court found that this language unequivocally required Plaintiffs to meet Defendant's new, AAA housing specifications, and, when they did not, Defendant had sufficient cause to terminate the BPAs. The Court explained that Plaintiffs' breach of contract claims only survived the motion to dismiss because they also alleged that Defendant prevented them from complying with the new housing specifications. Order 12-13 (Apr. 5, 2019), ECF No. 40. The effect of the Court's ruling was that Defendant did not breach the BPAs by requiring Plaintiffs to upgrade their facilities because the contract unambiguously gave Defendant the right to do so. But, because Plaintiffs also alleged that Defendant prevented them from making those upgrades, the Court found that Plaintiffs had alleged a claim that Defendant failed to perform the contract in good faith. Dissatisfied with the Court's interpretation of the BPAs, Plaintiffs want the Court to reconsider it. Perhaps understanding the difficulty of having a judge change his mind with no change in circumstances, Plaintiffs desperately attempt to create new circumstances. They now, for the first time in this litigation, point to other language in the BPAs to rescue their breach of contract claims. Relying on paragraphs 8 and 9 of "Exhibit A, Broiler Production Payment Schedule" of the BPAs, Plaintiffs argue that Defendant had no right to force them to make the improvements. Paragraph 8 states that "[a]n Improved House is defined as a house meeting the following minimum standards" and provides a list of specific, technical requirements about fans, wind speeds, and other items. Echols BPA, Exhibit A ¶ 8, ECF No. 49-4 at 8. They contend that this language defines the general phrase "proper housing ... in accordance with the Company's specification" from paragraph H(1). Thus, they argue that paragraph 8 limited Defendant's discretion to require new housing specifications and that Defendant had no right to impose the new, AAA housing obligations that it did. Pointing to paragraph 9, Plaintiffs note that it says "[h]ouses on Improved ... contracts as of June 1, 2009 that do not meet the current minimum standards (outlined above in Paragraph 8) will remain on Improved contract but will not be eligible for future pay increases until all minimum standards are met or Unimproved House contract pay per pound exceeds current contract." Echols BPA, Exhibit A ¶ 9. They interpret this language to mean that Defendant did not have cause to terminate the BPAs when they failed to upgrade their poultry houses because it states that improved houses "will remain on Improved contracts." Plaintiffs essentially read paragraph 9 as a guarantee that Defendant would maintain a contractual relationship with them as long as they met the minimum standards outlined in paragraph 8.
The parties agree that the Echols BPA is representative of the material language in all of the Plaintiffs' BPAs with Defendant.
Plaintiffs' reliance on paragraphs 8 and 9 of Exhibit A is misplaced. First, paragraph H(1), the "Basic Housing" section of the BPA, makes no reference to Exhibit A. Paragraph B, titled "Fee," and paragraph G(1), titled "Payment," do reference Exhibit A though. The parties could have referenced Exhibit A in paragraph H(1) too, but they chose not to, indicating that neither paragraph 8 nor paragraph 9 of Exhibit A related to or restricted Defendant's right to require housing upgrades.
Moreover, Exhibit A's title declares that it is a "Payment Schedule." And, in a preamble to paragraphs 8 and 9, Exhibit A explicitly articulates its purpose: "[t]he following procedure will determine the payment to the Independent Grower in consideration for raising Broilers." Echols BPA, Exhibit A (emphasis added). It does not refer to paragraph H(1) or mention housing specifications. Paragraph 9 does state in part that houses currently on improved contracts that do not meet the minimum standards outlined in paragraph 8 "will remain on Improved contracts," but it continues that such houses "will not be eligible for future pay increases until all minimum standards are met or Unimproved House contract pay per pound exceeds contract." Paragraph 9 is not a guarantee that Defendant would maintain contractual relationships with Plaintiffs and never impose any new housing requirements; it is instead part of the contract's explanation of how Plaintiffs could qualify for pay raises. Put simply, paragraphs 8 and 9 are about payment-not Defendant's right to impose housing specifications.
In addition to ignoring the plain language of the BPAs, Plaintiffs misunderstand the implied duty of good faith and fair dealing recognized under Georgia law. Plaintiffs contend that Defendant violated this duty when it imposed new AAA housing requirements because the BPAs did not expressly give Defendant the sole discretion to define "proper housing" under paragraph H(1). This implied duty, however, does not prevent Defendant from doing what the parties agreed to do. It simply requires the performance of that agreement to be done in good faith. As explained by the Georgia courts, "[t]his implied duty requires both parties to a contract to perform their promises and provide such cooperation as is required for the other party's performance. And, where the manner of performance is left more or less to the discretion of one of the parties to the contract, he is bound to the exercise of good faith." Hunting Aircraft, Inc. v. Peachtree City Airport Auth. , 281 Ga.App. 450, 636 S.E.2d 139, 141 (2006) (quoting Camp v. Peetluk , 262 Ga.App. 345, 585 S.E.2d 704, 708 (2003) ). But "[t]here can be no breach of an implied covenant of good faith where a party to a contract has done what the provisions of the contract expressly give him the right to do." Cox v. Athens Reg'l Med. Ctr., Inc. , 279 Ga.App. 586, 631 S.E.2d 792, 797 (2006) (quoting Automatic Sprinkler Corp. of America v. Anderson , 243 Ga. 867, 257 S.E.2d 283, 284 (1979) ).
Here, paragraph H(1) states unequivocally that Plaintiffs "shall provide and maintain proper housing ... in accordance with [Defendant's] specifications and applicable regulations." Echols BPA ¶ H(1). Under the plain and ordinary meaning of the words of paragraph H(1), Defendant had the contractual right to impose housing specifications on Plaintiffs and did not violate the implied duty of good faith when it exercised that right. As recognized by the Court in its previous ruling on Defendant's motion to dismiss, Defendant would have violated this duty if it prevented Plaintiffs from making the upgrades to comply with the new specifications; but this duty was not breached when Defendant required the upgrades in the first place, something the contract expressly gave Defendant the right to do.
It does not matter if Defendant did not require other growers to make the same upgrades that it required of its Athens-based growers. The BPAs gave it the right to do so. And Defendant violated no implied duty of good faith by treating different growers differently in light of the unambiguous language in the BPAs. Thus, the evidence that Plaintiffs seek regarding Defendant's relationships with other non-Athens based growers and its non-Athens facilities is not relevant. The Court also finds Plaintiffs' argument that this evidence is relevant and proportional regarding their PSA claims unpersuasive. Accordingly, Plaintiffs' motion to compel responses to the following interrogatories and requests for production are denied: requests for production 13-15, 36, and 44-50 (Pls.' Mot. to Compel, Exhibit N, Pls.' First Req. for Produc. of Docs. to Def. Pursuant to Rules 26 and 34 of the Federal Rules of Civil Procedure, ¶¶ 13-15, 36, and 44-50, ECF No. 53-14); and interrogatories 10, 11, and 22-33 (Pls.' Mot. to Compel, Exhibit Q, Pls.' First Interrogs. to Def. Pursuant to Rules 26 and 33 of the Federal Rules of Civil Procedure, ¶¶ 10, 11, and 22-33, ECF No. 53-17).
II. Employees' Text Message and Cell Phone Records
Plaintiffs also seek text messages exchanged between several of Defendant's employees, Plaintiffs, and other broiler growers who initially received notice that Defendant planned to transition its Athens facility to NAE chicken between January 2016 and February 2018. They argue that these text messages may show Defendant's interactions with Plaintiffs and other similarly situated growers.
The Court is unconvinced that Defendant's interactions with other growers is relevant, particularly in light of its interpretation of the BPAs. Requiring Defendant to engage in the extensive review of records that it may not even have direct access to is disproportional to the needs of this case. Authorizing the search for the proverbial needle in the haystack is inconsistent with the proportionality considerations underlying Rule 26. Accordingly, Plaintiffs' motion to compel the production of these records is denied.
III. Sales Reports and Contract Information
Next, Plaintiffs seek to compel Defendant to produce sales reports and contracts with Defendant's customers. The Court finds that some of the information sought by Plaintiffs is relevant to their claims and proportional to the needs of the case. In London v. Fieldale Farms Corporation , the Eleventh Circuit explained that "to prevail under the PSA, a plaintiff must show that the defendant's deceptive or unfair practice adversely affects competition or is likely to adversely affect competition." 410 F.3d 1295, 1305 (11th Cir. 2005) (affirming judgment as a matter of law because plaintiffs failed to present evidence about the total number of chicken growers in the north Georgia area or the defendant's "relative stature within the chicken industry").
Here, evidence about Defendant's sales volume and prices could show Defendant's "relative stature within the chicken industry" and could support Plaintiffs' claims about Defendant's anticompetitive behavior. Therefore, the Court orders Defendant to respond to Plaintiffs' interrogatory 14 and to produce the requested sales reports identified in response to that interrogatory. The Court denies Plaintiffs' motion to compel responses to requests for production numbers 52 and 55 to the extent that they seek information in addition to that sought in interrogatory 14.
IV. USDA Notices of Citations and Violations
Finally, Plaintiffs move the Court to compel Defendant to produce all USDA notices of violations, citations, or other similar documents that it has received since 2010. They also seek any comparable documents from any other government entity. They contend that this evidence is relevant to their claims for punitive damages. The Court finds this request overbroad. The relevant conduct here is Defendant's decision to convert some of its facilities, including the Athens facility, to NAE production, to require Plaintiffs to upgrade their housing, and then to allegedly prevent them from doing so. Therefore, Defendant shall produce any USDA notices of violations, citations, or other similar documents related to its decision to change its facilities to NAE production received in 2010 or later.
CONCLUSION
For the foregoing reasons, the Court grants in part and denies in part Plaintiffs' motion to compel (ECF No. 53). Defendant shall comply with today's order by responding to the discovery requests within 28 days of today's order.
IT IS SO ORDERED, this 28th day of May, 2020.