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Raines v. Allied Construction Services, Inc.

United States District Court, D. Minnesota

August 5, 2019

John Raines and Tim McGough, as Trustees of the Carpenters & Joiners Welfare Fund and Twin City Carpenters Pension Master Trust Fund; John Raines as Trustee of the Carpenters of Joiners Apprenticeship and Journeymen Training Trust Fund, and each of their successors, Plaintiffs,
Allied Construction Services, Inc. a/k/a ABC Building Products, a/k/a Color, Inc., Defendant.



         This matter is before the Court on the plaintiffs' Motion to Compel Discovery and the defendant's Motion for a Protective Order. [Pls.' Mot., ECF No. 42; Def.'s Mot., ECF No. 46.] The Court held a hearing on the motions on July 9, 2019, and took the matter under advisement. As discussed below, both motions are granted in part and denied in part.

         I. Background

         The plaintiffs are trustees (“the Trustees”) of several multi-employer pension funds (“the Funds”) governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). 29 U.S.C. § 1001 et seq. The Trustees allege that Allied Construction Services (“Allied”) is required to make contributions to the Funds for covered work performed within a specified geographic area by Allied's employees pursuant to collective bargaining agreements (“CBAs”) entered with a labor union. The CBAs also provide that if Allied subcontracts covered work to a non-union subcontractor, it must arrange for the subcontractor to make the required contributions or do so itself. The Trustees further allege that between January 2015 and December 2017, Allied paid Ray's Drywall, a non-union subcontractor, at least $2.7 million to perform work on construction projects for which contributions should have been made. However, Allied allegedly breached the CBAs by failing to make contributions for that subcontracted work. In their prayer for relief in this litigation, the Trustees seek an order requiring Allied to make unpaid contributions to the Funds for the work Ray's Drywall performed. [Am. Compl., ECF No. 9.] Allied denies that it subcontracted work to Ray's Drywall at all, asserts that the payments referenced by the Trustees were loans, and denies that it breached any provision of the CBAs.

         The CBAs also give the Trustees the power to audit Allied under certain circumstances. Wilson-McShane, a company that administers the Funds, audited Allied for the period of 2015- 2017 (the “audit period”). The Trustees allege that Allied failed to comply with the audit by impermissibly limiting the records to which the auditors had access. Specifically, the Trustees assert that Allied did not produce records relating to work it may have subcontracted out to Ray's Drywall. Based on the claims that Allied failed to comply with the CBAs' audit requirements, the Trustees' prayer for relief seeks an order requiring Allied to provide sixteen categories of documents for the audit period. [Am. Compl. at 10-11.] Allied asserts that it fully complied with its obligations to participate in Wilson-McShane's audits, claims that the CBAs do not require it to produce the broad scope of information the Trustees seek in this litigation, and denies that it breached the CBAs.

         The Trustees served discovery on Allied seeking answers to interrogatories and production of documents. Unsatisfied with several of Allied's responses, the Trustees moved to compel Allied to provide answers to six interrogatories and fifteen document requests pursuant to Fed.R.Civ.P. 37. [Pls.' Mot.; Pls.' Mem. in Supp. of Mot. to Compel (“Pls.' Mem.”), ECF No. 56.] The Trustees also served a subpoena on Ray's Drywall, seeking production of documents and a notice of deposition under Fed.R.Civ.P. 30(b)(6). [See Def.'s Mem. in Supp. of Mot. for Protective Order (Def.'s Mem.”) at 13, 26-31, ECF No. 48.]

         Allied opposes the Trustees' motion [Def.'s Mem. in Opp'n to Mot. to Compel (“Def.'s Opp'n”), ECF No. 57], but also filed its own motion for a protective order aimed, in part, at the exact same set of discovery requests that are the subject of the motion to compel [Def.'s Mem. at 16-18]. In addition, Allied seeks a protective order limiting the non-party discovery the Trustees may obtain from Ray's Drywall. [Def.'s Mem. at 26-31.] The Court heard oral argument on the motions on July 9, 2019, and took the matters under advisement.

         II. Cross Motions and Compromise Positions

         At bottom, the disagreement between the parties is about whether broad or narrow discovery is the appropriate path given the nature of the claims set forth in the Plaintiffs' Complaint. The Trustees take the position that broad discovery is a hallmark of federal civil litigation, and pursuant to that principle, Allied is required to provide answers to the interrogatories they served and to produce the documents they requested. In addition, the Trustees suggest that they are largely seeking information that should have been provided during the audit that is the subject of their complaint, so requiring its disclosure at this stage is proper.

         Allied essentially counters that the scope of discovery should be limited in this case because: it complied with the CBAs audit provisions; it did not have any subcontractor relationship with Ray's Drywall; and the Trustees cannot receive more through the discovery process than they would have obtained in the audit. Allied also suggests that it is improper for the Court to issue a discovery order providing the same relief that will ultimately be granted if the Trustees succeed on the merits, namely the provision of information that the Trustees argue should have been provided during the audit.

         Although Allied opposed the Trustees' Motion to Compel in full, during the meet and confer process and briefing in this matter, it offered two suggestions for a middle-ground solution. First, Allied suggested the proposal for providing discovery to the Trustees for the calendar years 2015-2016:

1. Plaintiffs may seek discovery as to Allied's compliance, or lack thereof, with audits by Wilson-McShane Company or its representatives for the years 2015 and 2016, including documents and information requested by Wilson-McShane Company, documents and information Allied provided to Wilson-McShane Company, and documents or information Allied failed or refused to provide upon request from Wilson-McShane Company.
2. With regard to any information or documents actually requested from Allied by Wilson-McShane Company or its representatives during audits for the years 2015 and 2016, and which Plaintiffs allege that Allied failed or refused to provide at the time of the audit, Plaintiffs may seek from Allied the actual information or documents originally requested by the Auditors. However, Allied's production of this information should be under the following conditions: (i) the information or documents must be reviewed by representatives of Wilson-McShane Company at Allied's corporate offices in Des Moines, Iowa, (ii) personal contact information of Allied employees may be redacted, (iii) the Auditors may not make copies, reproductions, or take any documents from Allied's offices, and (iv) the Auditors may not share any information they receive with any representative of the Union, including but not limited to the Union's General Counsel and Deputy General Counsel.

[Def.'s Opp'n at 3 (italics added).] Allied also proposed providing the following information concerning payments that it made to Ray's Drywall during the calendar years 2015 and 2016:

1. The names of any Allied employees or representatives who have authority to subcontract bargaining unit work;
2. Copies of any contracts or agreements between Ray's Drywall and Allied;
3. The substance and formation of any verbal agreements between Ray's Drywall and Allied for Allied to subcontract bargaining unit work to Ray's Drywall;
4. A list of any payments Allied made to Ray's Drywall, including the dates of the payments;
5. The nature of the payments from Allied to Ray's Drywall, specifically including what the payments were for;
6. Whether Ray's Drywall repaid Allied and when repayment occurred; and
7. Evidence demonstrating Ray's repayment to Allied [subject to Allied's right to redact information from any bank records that does not provide evidence of money exchanged between Allied and Ray's Drywall].

[Id. at 14.]

         III. Analysis

         Having considered the nature of the allegations in the Amended Complaint, the specific discovery requests at issue, and the entire record, the Court finds that neither party's most extreme position represents the proper scope of discovery in this matter. Accordingly, the motion to compel and the motion for protective order are granted in part and denied in part as set forth more fully in this Order.

         A. Legal Standard

         The Federal Rules of Civil Procedure allow:

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.

Trainer v. Cont'l Carbonic Prod., Inc., No. 16-CV-4335 (DSD/SER), 2018 WL 3014124, at *2 (D. Minn. June 15, 2018) (quoting Fed.R.Civ.P. 26(b)(1)). This concept of relevance is broad, “‘encompass[ing] any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case.'” Paisley Park Enters., Inc. v. Boxill, No. 17-cv-1212 (WMW/TNL), 2019 WL 1036059, at ...

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