Schnatter v. 247 Grp.

JOHN SCHNATTER, Plaintiff, v. 247 GROUP, LLC, et al., Defendants.

Civil Action No. 3:20-CV-3-BJB-CHL

United States District Court, W.D. Kentucky, Louisville Division

December 22, 2022

MEMORANDUM OPINION AND ORDER

COLIN H LINDSAY, MAGISTRATE JUDGE UNITED STATES DISTRICT COURT

Before the Court is a motion to quash (DN 202) filed by Non-Party Papa John's International, Inc. (“Papa John's”). Defendants 247 Group, LLC d/b/a Laundry Service (“Laundry Service”) and Wasserman Media Group, LLC (“Wasserman Media”) (collectively “Defendants”) and Plaintiff John Schnatter (“Schnatter”) filed responses (DNs 203 and 204) and the Company and Defendants filed replies (DNs 209 and 213). On September 3, 2022, Papa John's also filed a letter that this Court construed as a motion to supplement (DN 220) the motion to quash to which Defendants and Schnatter filed briefs in opposition (DNs 225 and 227). Therefore, this matter is ripe for review.

For the reasons set forth below, Non-Party Papa John's motion to quash (DN 202) is DENIED.

I. BACKGROUND

Schnatter is the founder of Papa John's and served as its CEO and Chairman until 2018. (DN 1-1 at 12, 17.). On May 22, 2018 Schnatter participated in a call (the “May 22 Call”) with Papa John's and Defendants, which at that time provided marketing services to Papa John's pursuant to a Master Services Agreement (“MSA”) between Papa John's and Defendants. (Id. at 16; See DN 202-2.) Schnatter alleges that part of the scope of Services under the MSA was to help Schnatter with his image. (DN 134 at 1627.) Additionally, Schnatter alleges that Defendants were subject to a Non-Disclosure Agreement (“NDA”) executed before the May 22 Call that provided Defendants would not “convey, divulge, make available or communicate such information to any third party or assist other is in using, copying, duplicating, posting or disclosing any of the foregoing.” (Id. at 1628; see DN 202-2 at 4103-06). During the May 22 Call, Schnatter made controversial comments regarding racial issues and uttered a racial slur. (DN 1-1 at 16.) Unbeknownst to Schnatter, the May 22 Call was recorded and subsequently disclosed to Forbes Magazine. (Id. at 16-17.) On July 11, 2018, Forbes published details about Schnatter's remarks on the call and, on the same day, Papa John's Chairman Agreement with Schnatter was terminated. (DN 111 at 1301-02; DN 187-1 at ¶ 3405.) Following these events, the Licensing Agreement concerning Papa John's use of Schnatter's name and likeness was also formally terminated on September 11, 2019. (DN 111 at 1302; DN 151-1 at 2617; DN 169-2 at 2834.) Defendants and Papa John's also terminated their contractual relationship shortly after the May 22 Call. (DN 119 at 1419.)

Schnatter filed suit against Defendants in state court on December 5, 2019, and the case was removed to this Court on January 2, 2020. (DN 1; DN 1-1.) Schnatter alleged claims for breach of contract, breach of implied covenant of good faith and fair dealing, tortious interference, and prima facie tort. (DN 111 at 1302-06.) On September 21, 2022, this Court granted dismissed Schnatter's claims against Defendants except for Count III for breach of the NDA. (DN 219.)

Between October and November 2021, counsel for Defendants and counsel for Papa John's discussed Defendants' need to depose additional and former current Papa John's employees, officers, and directors. (DN 202-1 at 4186.) Counsel for Papa John's proposed that Defendants consider utilizing a Rule 30(b)(6) deposition from Papa John's to streamline discovery and address Papa John's concerns about the number of potential depositions being contemplated. (Id.) Defendants agreed to use a Rule 30(b)(6) deposition to substantially reduce the number of depositions Defendants contemplated of Papa John's employees. (Id.) On December 7, 2021, Defendants provided Papa John's with a draft list of topics for a Rule 30(b)(6) deposition. (DN 202-2 at 3986.) From December 2021 to January 2022, Defendants and Papa John's negotiated Rule 30(b)(6) deposition topics. (Id.; DN 203-1 at 4187.) On January 27, 2022, Defendants and Papa John's reached an agreement regarding the topic list and Papa John's accepted service of the Defendants' Rule 30(b)(6) deposition subpoena (“Defendants' Subpoena”). (Id.)

From January 2022 to April 2022, Defendants and Papa John's were in frequent contact regarding the scheduling of the Rule 30(b)(6) deposition. During this time, Papa John's indicated it was working to locate and prepare a Rule 30(b)(6) witness accordingly. (Id. at 4188-89; DN 202-1 at 3978.) On March 3, 2022, Papa John's received a cross-notice from Schnatter for a Rule 30(b)(6) deposition. (DN 202-2 at 4108.) The cross-notice contained a deposition topics list that differed from Defendants' Subpoena. (Id.) On April 19, 2022, Papa John's requested Defendants withdraw the Subpoena, signaling that it would no longer cooperate in providing a Rule 30(b)(6) witness to Defendants. (Id. at 4114-15.)

In light of Papa John's refusal to cooperate further, Defendants requested the depositions of five individual fact witnesses that are current or former Papa John's employees: Caroline Oyler, Olivia Kirtley, Madeline Chadwick, Peter Collins, and Victoria Russell. (Id. at 3987.) Papa John's offered to produce two of the five, Caroline Oyler (General Counsel) and Olivia Kirtley (a sitting member of Papa John's Board of Director), and Defendants declined this proposal. (Id.) At the time, the Parties planned to depose Steve Ritchie (Papa John's former CEO) and were seeking to depose Sonya Medina (Papa John's then-member of the Board of Directors). (Id. at 4114.)

Additionally, Defendants had already deposed Steve Ritchie once before, Brandon Rhoten (Papa John's former Global Chief Marketing Officer) and Katie Wollrich (Papa John's former Vice President of Marketing & Advertising). (Id.) Papa John's expressed to Defendants in a letter dated April 19, 2022 that, in consideration of the depositions already completed or pending and the documents already provided, forcing Papa John's to “designate and educate yet another witness [was] wasteful.” (Id. at 4115.) Papa John's filed a motion to quash Defendants' Subpoena on June 10, 2022.

II. ANALYSIS

Rule 26(b) of the Federal Rules of Civil Procedure governs the scope of discovery. Rule 26(b)(1) provides that “[p]arties 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 . . .” Fed.R.Civ.P. 26(b)(1). This language is broadly construed by the federal courts to include “any matter that bears on, or that reasonably could lead to other matter[s] that could bear on, any issue that is or may be in the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). “When faced with questions over, or disputes about, what information or documents may be obtained based on their relevancy, it is axiomatic that the trial court is afforded broad discretion to determine the boundaries of inquiry.” Janko Enters. v. Long John Silver's, Inc., 2013 WL 5308802, at *2 (W.D. Ky. Aug. 19, 2013) (citing Chrysler v. Fedders Corp., 643 F.2d 1229, 1240 (6th Cir. 1981)). However, either on motion or on its own, the Court must limit discovery that is unreasonably cumulative or duplicative; that can be obtained from another “more convenient, less burdensome, or less expensive” source; that the seeking party has had ample opportunity to obtain; or that is outside the scope permitted by Rule 26(b)(1). Fed.R.Civ.P. 26(b)(2)(C)(i)-(iii).

Rule 45 of the Federal Rules of Civil Procedure allows parties, inter alia, to command a nonparty to appear at a certain time and place to testify or produce documents. Fed.R.Civ.P. 45(a)(1)(A)(iii). Under Rule 45, the court must, upon timely motion, quash or modify a subpoena that subjects a person to undue burden. Fed.R.Civ.P. 45(c)(3)(A)(iv). “The party seeking to quash a subpoena bears the ultimate burden of proof.” Hendricks v. Total Quality Logistics, 275 F.R.D. 251, 253 (S.D. Ohio 2011). Whether a subpoena imposes an “undue burden” depends on the facts of the case including the need for the documents or their relevance. Kessler v. Palstar, Inc., 2011 Wl 4036689, *1 (S.D.Ohio 2011) (citing American Elec. Power Co. v. United States, 191 F.R.D. 132, 136 (S.D.Ohio 1999)). In making this determination, the court must weigh the relevance of the requested material against the burden of producing the material. E.E.O. C. v. Ford Motor Credit Co., 26 F.3d 44, 47 (6th Cir.1994). Non-party status is a significant factor to be weighed in the undue analysis burden. Hansen Beverage Co. v. Innovation Ventures, LLC, No. 09-50630, 2009 WL 2351769, at *1 (E.D.Mich. July 28, 2009).

Additionally Rule 45(d)(3)(A) requires that a motion to quash a subpoena must be “timely” filed. Fed.R.Civ.P. 45(d)(3)(A). A motion made prior to the return date on the subpoena is timely. Maysey v. Henkel Corp., 2018 WL 314859, at *2 (W.D. Ky. Jan. 5, 2018) (quoting FTC v. Trudeau, 2012 WL 5463829, at *3 (N.D. Ohio Nov. 8, 2012)). “However, in unusual circumstances and for good cause shown, failure to make a timely objection to a subpoena... will not bar consideration of the objection. Trudeau, WL 5463829, at *3 (quoting Halawani v. Wolfenbarger, 2008 WL 5188813, at *4 (E.D.Mich.Dec.10.2008)). In determining whether “unusual circumstances” or “good cause” exist, a court must examine whether: “(1) the subpoena is overbroad on its face and exceeds the bounds of fair discovery; (2) the subpoenaed witness is a non-party acting in good faith; and (3) counsel for [affected person] and counsel for subpoenaing party were in contact concerning the [affected person's] compliance prior to the time the [affected person] challenged...