Opinion
Case No. 2:04-cv-0523.
March 9, 2006
ORDER
In conjunction with the Court's ruling on a Rule 56(f) motion filed by plaintiff, Tina Lenker, which ruling is being filed concurrently with this order, the Court also considers a motion to compel discovery which Ms. Lenker filed on September 30, 2005. Atlantic had argued, in opposing Ms. Lenker's motion to compel discovery, that the discovery requested was irrelevant because Ms. Lenker would never be able to persuade the Court that the contract between the parties called for her to be paid commissions based upon actual profit margins earned by Atlantic on orders sold to Ms. Lenker's customers. The Court conducted a conference on that motion, after which it held the discovery motion in abeyance so that defendant, National Services Industries, Inc., dba Atlantic Envelope Company ("Atlantic") might move for summary judgment. The summary judgment motion would highlight for the Court those legal arguments which, according to Atlantic, presented the possibility of resolving the case without further discovery. Once the Court was able to view those arguments, it would then be in a better position to decide those issues necessary to resolve the motion to compel, taking into account (1) the relevance of the information sought, (2) whether any of the information would be needed by Ms. Lenker to oppose the summary judgment motion, (3) the likelihood that the motion would be dispositive of the liability issues and obviate the need for additional damages discovery, and (4) the relative value of the information to Ms. Lenker compared with the burden imposed upon Atlantic or the Court to compel it to respond to Ms. Lenker's discovery requests.
Atlantic has now filed its motion for summary judgment. The Court has concluded that the information sought by the motion to compel is not needed in order for Ms. Lenker to oppose the motion for summary judgment. However, that does not completely dispose of the motion to compel. For the following reasons, the Court concludes, after balancing the relevant factors, that the motion to compel should be granted.
I.
The general principles involving the proper scope of discovery are well known. The Federal Rules of Civil Procedure authorize extremely broad discovery. United States v. Leggett Platt, Inc., 542 F.2d 655 (6th Cir. 1976), cert. denied 430 U.S. 945 (1977). Therefore, Fed.R.Civ.P. 26 is to be liberally construed in favor of allowing discovery. Dunn v. Midwestern Indemnity, 88 F.R.D. 191 (S.D.Ohio 1980). Any matter that is relevant, in the sense that it reasonably may lead to the discovery of admissible evidence, and is not privileged, can be discovered. The concept of relevance during discovery is necessarily broader than at trial, Mellon v. Cooper-Jarrett, Inc., 424 F.2d 499 (6th Cir. 1970), and "[a] court is not permitted to preclude the discovery of arguably relevant information solely because if the information were introduced at trial, it would be `speculative' at best." Coleman v. American Red Cross, 23 F.3d 1091, 1097 (6th Cir. 1994).
Information subject to disclosure during discovery need not relate directly to the merits of the claims or defenses of the parties. Rather, it may also relate to any of the myriad of fact-oriented issues that arise in connection with the litigation. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340 (1978). On the other hand, the Court has the duty to deny discovery directed to matters not legitimately within the scope of Rule 26, and to use its broad discretionary power to protect a party or person from harassment or oppression that may result even from a facially appropriate discovery request. See Herbert v. Lando, 441 U.S. 153 (1979). Additionally, the Court has discretion to limit or even preclude discovery which meets the general standard of relevance found in Rule 26(b)(1) if the discovery is unreasonably duplicative, or the burden of providing discovery outweighs the benefits, taking into account factors such as the importance of the requested discovery to the central issues in the case, the amount in controversy, and the parties' resources. See Fed.R.Civ.P. 26(b)(2). Finally, the Court notes that the scope of permissible discovery which can be conducted without leave of court has been narrowed somewhat by the December 1, 2000 amendments to the Federal Rules. Rule 26(b) now permits discovery to be had without leave of court if that discovery "is relevant to the claim or defense of any party. . . ." Upon a showing of good cause, however, the Court may permit broader discovery of matters "relevant to the subject matter involved in the action." Id.
The financial information sought by Ms. Lenker is limited to portions of years 2002, 2003, 2004. During those years, Atlantic developed a new system for measuring gross margins, which is described as the "BaaN System." While admittedly an imperfect system, the information entered into the BaaN System is the best data available from Atlantic showing its gross profit margins on sales to Ms. Lenker's customers. Although Ms. Lenker claims that she should have been paid based upon actual net profit margins, because net profit margins are related to gross profit margins, and because Ms. Lenker may be able to develop other evidence making that relationship quantifiable, the Court concludes that the BaaN information is relevant to a claim or defense of a party within the meaning of Rule 26(b). Specifically, it is relevant to Ms. Lenker's damage claim, a claim she will be entitled to present if the Court concludes that the contract between the parties is susceptible of the interpretation assigned to it by Ms. Lenker. That issue, of course, is the issue raised in the pending summary judgment motion.
Having concluded that the discovery is relevant, the only reason advanced for not granting the motion to compel is that the parties would save time and expense by not going through with the requested discovery if the Court grants summary judgment. Of course, that argument can be made in any case where a summary judgment motion is either likely to be filed or has already been filed. This Court is typically reluctant to impose a stay of discovery pending summary judgment proceedings unless the parties agree to such a stay or unless an evaluation of the strength of the summary judgment motion, coupled with the relative need for the information requested and the burden involved in producing it, suggests that a stay is a sound exercise of judicial discretion. See, e.g., Marrese v. American Academy of Orthopedic Surgeons, 706 F.2d 1488, 1493 (7th Cir. 1983);Chrysler Corp v. Fedders Corp., 643 F.2d 1229 (6th Cir. 1981).
Here, should the Court either construe the contract in Ms. Lenker's favor or conclude that there is ambiguity about the proper construction of the contract, the requested discovery may well produce the only data available on the issue of Atlantic's profit margins from 2002 through 2004 on orders sold to Ms. Lenker's customers. Although the Court recognizes that the information would be even more central to Ms. Lenker's damage claim if it revealed net margins, it would be improper to give the requested discovery less weight simply because Atlantic did not keep the information in the exact format which would make it most helpful to Ms. Lenker. Simply put, there does not appear to be any other information more pertinent to Ms. Lenker's attempt to calculate net margins for the years in question.
Further, the discovery does not appear to be particularly burdensome. Atlantic has represented that it would take approximately a week for an employee to compile spread sheets of the available BaaN information. Because Atlantic has not indicated that more than one person would be involved in this effort, the Court concludes that it represents the expenditure of approximately 40 hours of work. Atlantic has not identified any out-of-pocket costs which might be associated with the effort, nor has it indicated that the effort would interfere with its ability to carry on its business in the normal fashion. Consequently, the burden is not great, especially considering the amount of money potentially at stake in this case.
Finally, the Court has reviewed the pending summary judgment motion. Although a response has not yet been filed due to the pendency of the Rule 56(f) motion, the motion asks the Court to engage in contract construction and to determine whether language used in a contract and policies promulgated pursuant to the contract is clear and unambiguous or whether it is susceptible of differing interpretations. This is not the type of motion which raises either an issue of immunity, which ordinarily would counsel in favor of a stay of discovery, or raises some other fundamental issue such as a statute of limitations bar where the outcome seems fairly clear. Ultimately, it will be for the District Judge to determine whether Atlantic's arguments carry the day, but at this point in the litigation, it is not so apparent that Atlantic will prevail on the motion that the Court should delay this particular discovery pending a ruling. To do so would be to increase the amount of time it will take to get the case to trial, a delay which is not counterbalanced by any undue burden in requiring Atlantic to produce the information.
II.
For all of these reasons, the Court concludes that Ms. Lenker's motion to compel has merit, and the motion (#49) is therefore granted. Atlantic shall produce the requested discovery within 30 days of the date of this order.
Any party may, within ten (10) days after this Order is filed, file and serve on the opposing party a motion for reconsideration by a District Judge. 28 U.S.C. § 636(b)(1)(A), Rule 72(a), Fed.R.Civ.P.; Eastern Division Order No. 91-3, pt. I., F., 5. The motion must specifically designate the order or part in question and the basis for any objection. Responses to objections are due ten days after objections are filed and replies by the objecting party are due seven days thereafter. The District Judge, upon consideration of the motion, shall set aside any part of this Order found to be clearly erroneous or contrary to law.
This order is in full force and effect, notwithstanding the filing of any objections, unless stayed by the Magistrate Judge or District Judge. S.D. Ohio L.R. 72.4.