Opinion
No. 00-2043-CM.
August 31, 2001
MEMORANDUM AND ORDER
Pending before the Court is Plaintiff's Motion to Compel Defendants' Responses to Request No. 15 of Western's First Set of Document Production Requests (doc. 110). Upon review of the arguments presented, Plaintiff's Motion is granted 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.
On July 15, 2000, Plaintiff served its First Set of Document Production Requests upon Defendants. Relevant to the issue before the Court, Request 15 seeks production of "all PRB Agreements in effect at any time during the period between January 1, 1990 and the present, by and between [Railroads] (either independently or jointly with another carrier) and any shipper other than [Plaintiff]." Both Defendants objected to the request on grounds that it is overly broad, unduly burdensome and seeks confidential, proprietary and trade secret documents that are neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. Defendants ultimately agreed, however, to produce contracts in effect on or after January 1997 subject to their ability to obtain consent from the other party to the particular contract at issue
As required by local rule, the parties met and conferred in an attempt to resolve this discovery dispute. In response to Defendants' objections based on temporal scope, Plaintiff agreed to limit the time frame in Request 15 to the period from January 1, 1993 to present. Defendants continue to object to producing additional contracts. Plaintiff now moves to compel Defendants to produce all contracts in effect on or after January 1993, regardless of Defendants' ability to obtain consent for the production from the other party to the contract at issue.
II. Discussion
• Relevancy of the Contracts in Effect from 1993-1997
The Court first will turn to Defendants' first and fourth objections: that Request 15 is overly broad in scope and time and seeks 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). This includes any objection to the temporal scope of the request. 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 Request 15 appears on its face to be relevant to the claims set forth by Plaintiff in its Amended Complaint. In the Amended Complaint, Plaintiff claims Defendants breached an implied duty of good faith and fair dealing in performing the contracts at issue. In maintaining the 1993-1997 contracts are relevant to its claim of breach of an implied duty of good faith and fair dealing, Plaintiff asserts that Defendants were aware of significant infrastructure and capacity shortfalls within their organizations in 1993 while they were negotiating the terms of their Agreements with Plaintiff and that Defendants never advised Plaintiff of such constraints or the related impact of these constraints on service capabilities.
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).
It appears to the Court that information contained in the 1993-1997 contracts could support Plaintiff's claim that Defendants breached their implied duty of good faith and fair dealing in that the contracts may lead to the discovery of admissible evidence regarding whether Defendants knew or should have known in 1993 when they entered into the contracts with Plaintiff 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, Defendants now have 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, Defendants argue Request 15 is irrelevant and overly broad because it seeks contracts that (1) were not in effect during the "service crisis" of 1997-1998; (2) were not in effect during the time period when Plaintiff claims Defendants were in material breach of contract; and (3) were not in effect during the time period for which Plaintiff claims damages.
The Court is unpersuaded by Defendants' arguments. As a preliminary matter, Defendants' arguments fail to rule out the possibility the information contained in the 1993-1997 contracts are relevant because they support Plaintiff's claim that Defendants breached their implied duty of good faith and fair dealing in 1993 when they entered into the contracts with Plaintiff.
Moreover, Defendants fail to demonstrate that the potential harm occasioned by production of the 1993-1997 contracts would outweigh the relevance of such contracts to Plaintiff's breach of implied duty of good faith and fair dealing claim. Although Defendants claim production of the 1993-1997 contracts would be unduly burdensome in terms of the amount of time it would take to locate the files and obtain consent from the other party to the contract, Defendants fail to designate the amount of time it would take to accomplish this task; thus, the Court cannot, and does not, deem this speculative burden to outweigh the potential relevance of the 1993-1997 contracts. And, although Defendants also assert harm in the form of prospective confidentiality violations, Defendants already have produced numerous post-1997 contracts pursuant to the June 26, 2001 Stipulated Protective Order (doc. 27) in this matter. That the other party to the post-1997 contracts consented to such production is immaterial to the fact that the confidentiality of the information within the contracts is protected by the Protective Order to which the parties stipulated. The Court finds any potential harm based on discovery of the confidential contracts is outweighed by the potential relevance of such contracts to Plaintiff's breach of implied duty of good faith and fair dealing claim.
• Undue Burden in Producing Contracts In Effect from 1993-1997
As the party resisting the discovery, Defendants have the burden to show facts justifying their objections. See Snowden v. Connaught Lab., Inc., 137 F.R.D. 325, 332 (D.Kan. 1991). Those resisting discovery must demonstrate that the time or expense involved in responding to requested discovery is unduly burdensome. Williams v. Bd. of Cty. Commissioners of the Unified Government of Wyandotte Cty., 98-2485-JTM, 2000 WL 1475873, *1 (D.Kan. Aug. 14, 2000). Moreover, the party resisting discovery has the obligation to provide sufficient detail and explanation about the nature of the burden in terms of time, money and procedure which would be required to produce the requested documents. Id. This information is necessary to enable the Court to determine the burden imposed by the discovery. "In making a decision regarding burdensomeness, a court should balance the burden on the interrogated party against the benefit to the discovering party of having the information." Hoffman v. United Telecomms., Inc., 117 F.R.D. 436, 438 (D.Kan. 1987). Discovery should be allowed unless the hardship is unreasonable in the light of the benefits to be secured from the discovery. Snowden, 137 F.R.D. at 333.
In support of its assertion of undue burden, Defendants state as follows:
[T]o ensure a complete response to [Plaintiff's] Request No. 15, UP would necessarily have to search its files. The search, moreover, would pose a substantial burden, because UP does not maintain a single file or set of files that contain all of its coal contracts. Instead, UP would need to search individual customer files, as well as other filed maintained by individual Business Managers and Directors in UP's Energy Marketing Department. UP and BNSF would also suffer substantial and undue burden associated with providing contractually required notice and obtaining contractually required consent from parties to the pre-1997 contracts. BNSF alone has 169 such contracts with 77 other parties. There are a number of steps that the Railroads must take before they could produce these contracts.
Defendants suggest that providing such notice would be even more difficult and burdensome given many utilities have merged and/or changed names.
Defendants suggest that providing such notice would be even more difficult and burdensome given many utilities have merged and/or changed names.
Plaintiff states it needs the contracts requested to establish the claim it asserts against Defendants in the Complaint for breach of implied duty of good faith and fair dealing. Defendants have not shown the discovery to be irrelevant. Neither have Defendants provided details of the alleged burden upon them in terms of time and money required to produce the requested documents. This detailed information is necessary to enable the Court to determine the burden imposed by the discovery. On the facts before it, the Court finds Plaintiff's need for the documents requested outweighs any speculative burden to Defendants.
• Confidentiality of Contracts In Effect From 1993-Present
The Court next will address Defendants' objections to producing contracts in effect from 1993-present where consent to production has not been obtained from the other contracting party. In its briefing, Defendants acknowledge they already have produced numerous post-1997 contracts pursuant to the June 26, 2001 Stipulated Protective Order (doc. 27) in this matter. Nevertheless, Defendants argue they should not be required to turn over any contracts from 1993-present where the consent to such production has not been obtained from the other contracting party.
Pursuant to the Protective Order, any producing party may designate any discovery material as "Confidential" and thus restrict its dissemination after production to the other side.
Defendants' argument is without merit. First, even if the contracts at issue contain trade secrets or similar confidential information, there is no absolute privilege for such trade secrets or similar confidential information. Federal Open Market Comm. of Federal Reserve Sys. v. Merrill, 443 U.S. 340, 362 (1979) Centurion Indus., Inc. v. Warren Steurer Assocs., 665 F.2d 323, 325 (10th Cir. 1981). Moreover, the Court finds the confidentiality concerns asserted by Defendants in their brief to be disingenuous given the fact that Defendants already have produced numerous post-1997 contracts pursuant to the June 26, 2001 Protective Order (doc. 27) to which the parties voluntarily stipulated. Such prior disclosure demonstrates to the Court that Defendants support the adequacy of the Protective Order in place as it relates to confidentiality. Accordingly, Defendants' objections based on confidentiality are overruled.
Defendants voluntarily entered into a stipulated protective order and voluntarily gained consent from relevant third-parties to produce post-1997 contracts; these were not prerequisites imposed by the Court.
Conclusion
Based on the discussion above, Plaintiff's Motion to Compel is granted to the extent that Defendants shall produce all documents responsive to Request 15 in effect on or after January 1993, regardless of Defendants' ability to obtain consent for the production from the other party to the contract at issue.
IT IS SO ORDERED.