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Beef Products, Inc. v. Hesse

United States District Court, D. South Dakota, Southern Division

December 16, 2019




         Plaintiff, Beef Products, Inc., filed a complaint against defendant, Michael Hesse, alleging a breach of contract claim for solicitation of employees. Docket 64. Beef Products moves to compel Hesse and interested parties, Automatic Equipment Manufacturing Co., Jeff Carlson, Cameron Jacobs, Alec Hannah, Chuck Szitas, Britton Wall, and Bryce Snyder[1] (collectively, “Third Parties”), to respond to specific discovery requests for production and forensic examinations. Docket 125. Hesse resists the motion to compel. Docket 132. The Third Parties also resist the motion. Docket 131. For the following reasons, Beef Products' motion to compel is granted.


         On January 26, 2018, Beef Products served its First Set of Interrogatories and its First Set for Request for Production on Hesse. Docket 127 ¶ 3; Docket 127-6. On February 9, 2018, Beef Products served Third-Party Subpoenas on Carlson, Jacobs, Wall, Szitas, Snyder, Hannah, and Automatic. Docket 127 ¶ 4. Beef Products, Hesse, and the Third Parties participated in written discovery. Id. ¶ 5. There have been several discovery disputes between the parties; the parties have filed three motions to compel. Id. ¶ 5; see Dockets 32, 55, 80.

         In a letter to Hesse's counsel, dated March 11, 2019, Beef Products identified eight outstanding categories of documents that were responsive to Beef Products' discovery requests. Docket 127 ¶ 6. On March 13, 2019, Hesse responded that the March 11th letter was the first time Beef Products raised these issues; he stated that he would “do [his] best to timely respond.” Docket 127-1 at 8. On March 15, 2019, Hesse had not provided a substantive response to the March 11th letter, so Beef Products asked Hesse for a response date. Docket 127 ¶ 7; Docket 127-1 at 10. On March 19, 2019, Hesse responded that his “goal” was to provide a written response by April 1, 2019. Docket 127-1 at 12. On March 20, 2019, Beef Products asked Hesse and Automatic to provide a response by March 22 as to whether they intended to respond to Beef Products' requests or whether any documents would be produced. Id. at 14. That same day, Hesse responded that he produced several responsive documents and did not see how his production was deficient. Id. at 16. On March 21, 2019, Beef Products sent an email describing why Hesse's discovery was deficient. Id. at 19.

         On March 22, 2019, Hesse emailed Beef Products a timeline regarding the current discovery dispute. Id. at 22-24. Hesse maintained his position that he produced all responsive documents and alleged that any attempt for judicial relief for the dispute was premature. Id. at 23. On March 25, 2019, Beef Products responded that though Hesse had produced documents responsive to the eight categories of outstanding discovery, there were still “holes” in his production. Id. at 26-30. In this email, Beef Products provided a list of the types of documents it believed Hesse should produce in response. Id. at 26-29.

         On March 27, 2019, Hesse responded that he was amendable to producing documents to respond to some of the requests, but he viewed other requests to be unduly burdensome and disproportionate. Id. at 32. Hesse informed Beef Products that he did not believe he could produce the requested documents by the April 3rd deadline because he was focused on producing other documents that were due April 8th. Id. The next day, Beef Products inquired about the date that the requested documents would be produced. Id. at 34. On April 1, 2019, Hesse emailed Beef Products that he was working with Automatic to produce documents around April 19th. Id. at 36. On April 19, 2019, Hesse began producing responsive documents. Id. at 40. But on April 23, 2019, Beef Products informed Hesse by email that he was still deficient in producing responsive documents beyond his initial production on April 19th. Id. at 42. Hesse did not respond. Docket 127 ¶ 11.

         Beef Products also met and conferred with the Third Parties by phone and email to discuss the outstanding discovery, privilege and redaction logs, and forensic examination. Id. ¶ 12. On February 11, 2019, Beef Products and the Third Parties had a meet-and-confer call. Id.; see Docket 127-2 at 5-9. On the call, the Third Parties agreed to produce Carlson's supplemental production responses and their privilege and redaction logs by March 15, 2019. Docket 127 ¶ 12. Beef Products inquired about conducting a forensic examination of the Third Parties' computer systems and devices. Id. ¶ 13; Docket 127-2 at 9.

         Following the meet-and-confer call, the Third Parties informed Beef Products that they would not agree to a forensic examination. Docket 127-2 at 11. The Third Parties also requested two extensions of the deadline for their response to the February 11th letter and for production of the requested items. Id. at 18, 22; Docket 127 ¶ 14. Beef Products was reluctant to grant the extensions, but agreed to both. Docket 127 ¶¶ 14, 15; Docket 127-2 at 20, 24, 28. On two occasions Beef Products emailed the Third Parties inquiring about the status of the outstanding discovery. Docket 127 ¶ 15; Docket 127-2 at 24, 26. On April 23, 2019, Beef Products told the Third Parties that it intended to seek relief from the court because of the extended delay in production. Docket 127-2 at 32. In response, the Third Parties noted the large amount of discovery they were involved in and that they were continuing to work on producing supplemental discovery and the logs. Id. at 35.

         On May 3, 2019, Beef Products filed the present motion to compel forensic examination and production of documents. Docket 125.


         Federal Rule of Civil Procedure 26 governs the scope of discovery in civil matters, providing:

Unless otherwise limited by court order, the scope of discovery is 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. Information within this scope of discovery need not be admissible in evidence to be discoverable.

Fed. R. Civ. P. 26(b)(1). If a party does not produce requested documents, the party seeking discovery requests may move for an order compelling production. See Fed. R. Civ. P. 37(a)(3)(B).

         The scope of discovery under Rule 26(b) is extremely broad. See 8 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2007 (3d ed. 2015). The reason for the broad scope of discovery is that “[m]utal knowledge of all the relevant facts gathered by both parties is essential to proper litigation. To that end, either party may compel the other to disgorge whatever facts he has in his possession.” Id. (quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947)). The federal rules distinguish between discoverability and admissibility of evidence. Thus, the rules of evidence assume the task of keeping out incompetent, unreliable, or prejudicial evidence at trial. But these considerations are not inherent barriers to discovery. Christensen v. Quinn, 2013 WL 1702040, at *4 (D.S.D. Apr. 18, 2013).


         I. Michael Hesse

         Beef Products moves to compel Hesse to produce relevant, non-privileged documents responsive to Beef Products' First Set of Requests for Production (Docket 127-6). Docket 125 at 1; Docket 126 at 17-18. Beef Products alleges that Hesse has outstanding or deficient discovery for seven categories of documents. Docket 126 at 18-19; see also Docket 127-1 at 4-6. Hesse argues that he produced all responsive documents for these requests and supplemented his responses. Docket 132 at 3. The court will address each of the seven categories in turn.

         A. Documents Evidencing Salary, Bonus, and Benefits Paid to the Subject Individuals for the Relevant Time Period

         Beef Products made a number of requests for production that relate to the compensation and benefits of the Subject Individuals. Docket 127-1 at 5.

REQUEST NO. 19: Any and all DOCUMENTS RELATING TO the compensation AUTOMATIC has paid or will pay each of the SOLICITED EMPLOYEES, including, but not limited to, salary, bonus, and benefits.
REQUEST NO. 22: Any and all DOCUMENTS sufficient to show the compensation AUTOMATIC has paid or will pay individuals within AUTOMATIC's sales group or department during the RELEVANT TIME PERIOD, including, but not limited to, salary, bonus, and benefits.
REQUEST NO. 71: ANY and all DOCUMENTS RELATING TO compensation paid to the SOLICITED EMPLOYEES during the RELEVANT PERIOD, including, but not limited to, commissions, “fixed salary, ” and “perks.”

Docket 127-6 at 12, 13, 20.

         Hesse objects to this category and argues that he produced the personnel files for the Subject Individuals. Docket 132 at 3. Hesse states that the personnel files contain compensation information, W-2s showing 2017 and 2018 salaries, benefit information, employee handbook, and documents covering travel, vacation, and retirement information. Id. Hesse also argues that if Beef Products has any additional questions regarding this topic, Beef Products can ask such questions at the depositions. Id. at 4.

         Beef Products contends that the personnel files do not contain sufficient information to fully respond to the requests. Docket 142 at 13. First, Beef Products would like Hesse to produce W-2s from 2016. Id. Second, Beef Products alleges that the benefits information only pertains to those currently offered in 2019 and does not provide information for 2016-2018. Id. at 14.

         Hesse does not object to the relevancy of these requests. Thus, the court considers the requests to be relevant. Hesse needs to produce W-2s for the Subject Individuals and Automatic's employees for 2016. Additionally, Hesse must produce any benefit documents for the Subject Individuals and Automatic's other sales employees for 2016-2018.

         B. Documents Evidencing the Start of Health and/or other Benefits for the Subject Individuals

         Beef Products' requests #19 and 22 call for the production of documents that refer to the start of benefits for the Subject Individuals. Docket 127-1 at 5; Docket 127-6 at 12, 13. Hesse objects to the motion as it relates to this category and argues that the category does not fall within the scope of the requests. Docket 132 at 5.

         Request #19 pertains to “any and all documents relating” to compensation including benefits. Docket 127-6 at 12 (emphasis added). The term “relating” encompasses the start date of health and other benefits. Thus, this objection is overruled.

         Hesse also objects to this category because he already produced this information. Hesse alleges that he produced information regarding benefits given to the salespeople (health, financial, and wellness benefits) and information about offer and hire dates for the Subject Individuals. Docket 132 at 5. Beef Products argues that Hesse has not produced any documents that show the date the Subject Individuals started to receive benefits from Automatic. Docket 142 at 15. The documents produced showing the offer and hire dates are not responsive to the requests for production on the benefits' start dates. The fact that an employee was offered a job or hired on a certain date does not illustrate when the employee began to receive benefits.

         Beef Products' motion to compel for this category of documents is granted. Hesse should provide any documents that show the start of health and/or other benefits for the Subject Individuals.

         C. Full Salary and Compensation Information for Individuals Employed in Sales Positions at Automatic other than the Solicited Employees, including ...

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