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Moore v. Westgate Resorts

United States District Court, E.D. Tennessee, Knoxville

January 9, 2020

MARILYN MOORE, et al., Plaintiffs,
WESTGATE RESORTS, et al., Defendants.


         This case is before the undersigned pursuant to 28 U.S.C. § 636, the Rules of this Court, and Standing Order 13-02.

         Now before the Court are the following Motions: (1) Plaintiffs' Motion to Compel Production of Discovery and Memorandum of Law in Support [Doc. 62], filed on September 6, 2019; and (2) Plaintiffs' Motion for Entry of Order Regarding Discovery of Electronically Stored Information [Doc. 63], also filed on September 6, 2019. The parties first appeared before the Court for a motion hearing on October 23, 2019. Attorneys Wayne Ritchie, II, and Kenneth Byrd appeared on behalf of Plaintiffs. Attorneys Benjamin New and Gregory Logue appeared on behalf of Defendants. The parties subsequently appeared before the Court via telephone on October 30, 2019 to specifically address Plaintiffs' Motion for Entry of Order Regarding Discovery of Electronically Stored Information [Doc. 63]. Attorneys Ritchie and Byrd, as well as Attorneys Mark Chalos and Chris Coleman, appeared on behalf of Plaintiffs. Attorneys New and Logue appeared on behalf of Defendants. Following the telephone hearing, the Court allowed the parties to file supplemental briefing and propose sample orders regarding the discovery of electronically stored information (“ESI”).

         The Court has considered the filings in this case, and for the reasons further explained below, Plaintiffs' Motion to Compel [Doc. 62] will be GRANTED IN PART and DENIED IN PART, while Plaintiffs' Motion for Entry of Order Regarding Discovery of Electronically Stored Information [Doc. 63] will be DENIED.

         I. BACKGROUND

         Plaintiffs commenced this action on behalf of a Proposed Class on September 25, 2018. [Doc. 1]. Plaintiffs then filed a Second Amended Complaint, alleging that a number of individuals purchased “floating use plan” timeshare properties at the Westgate Smoky Mountain Resort (“the Resort”) from September 25, 2008 through the date of certification and were similarly injured by Defendants' omissions. [Doc. 46 at ¶ 114]. Plaintiffs allege that Defendants oversold timeshares and omitted material facts to induce the Proposed Class to purchase or upgrade units, pressured prospective buyers via their marketing strategies, omitted material facts and disclosures, including those required by the Tennessee Timeshare Act to induce buying units or upgrades, and failed to disclose material information regarding Plaintiffs' rights-including the right of rescission. [Id. at ¶¶ 147-50, 162, 174-76, 196-202]; see, e.g., [Doc. 62 at 6]. Plaintiffs bring suit against Defendants Westgate Resorts, Ltd., Westgate Marketing, LLC, and CFI Resorts Management, Inc. (collectively referred to as the “Resort Defendants”), as well as Defendants Central Florida Investments, Inc., Westgate Vacation Villas, LLC, and Westgate Resorts, Inc. (collectively referred to as the “Non-Resort Defendants”). [Id. at 11].

         Plaintiffs are now seeking precertification discovery beyond the class representatives, and subsequently filed two sets of Interrogatories and two sets of Requests for Production of Documents on Defendants. [Id.]. Plaintiffs served their First Set of Interrogatories and Requests for Production on Defendants on February 15, 2019, and their Second Set of Interrogatories and Requests for Production on Defendants on March 1, 2019. [Docs. 62-2 & 62-3]. Defendants served their responses and objections to Plaintiffs' Requests for Production and Interrogatories on April 1, 2019. [Id.]. Counsel for Plaintiffs and Counsel for the Resort Defendants engaged in two meet and confer sessions in May of 2019, and on August 13, 2019. See [Doc. 2-1 at ¶ 8].


         Plaintiffs seek [Doc. 62] for the Court to order Defendants to produce the responsive documents to their Requests for Production, as well as to respond to both sets of Interrogatories. Plaintiffs have detailed categories of discovery sought, along with citations to specific Requests for Production and Interrogatories. [Id. at 8-11]. Plaintiffs claim that their discovery requests are narrow and reasonable, and that they are entitled to establish the requirements for class certification under Federal Rule of Civil Procedure 23(a) and (b)(2). Plaintiffs further assert that Defendants' current production of discovery is inadequate, as Defendants failed to conduct basic searches for ESI, or disclose the location or custodians of relevant ESI. Additionally, Plaintiffs claim that Defendants' objection to producing discovery not directly related to the Named Plaintiffs is improper, as Plaintiffs assert that courts routinely allow discovery to enable Named Plaintiffs to establish their grounds for class certification.

         Plaintiffs proceed to state that discovery pertinent to Defendants' sales and marketing practices, employment and managerial policies, the Proposed Class members' rights under the Tennessee Timeshare Act, Resort Defendants' reservation and booking records, and issues of personal jurisdiction over the Non-Resort Defendants are warranted and properly discoverable. Plaintiffs assert that Defendants improperly generally objected to all of Plaintiffs' Requests for Production and Interrogatories, and discovery is necessarily broad at the early stage of litigation to encompass an alleged pattern of conduct. Plaintiffs also claim that Defendants' objections on the grounds of cost are improper as Defendants are in possession of almost all of the relevant discovery and Defendants have failed to establish that the data, the production of which they argue would be costly, was inaccessible. Plaintiffs claim that the requested discovery is readily accessible by Defendants through their databases and records. Lastly, Plaintiffs maintain that Defendants' cited cases in support of the remaining objections are distinguishable regarding discovery produced from related litigations and related to complaints filed against Defendants by individuals other than the Named Plaintiffs.

         The Non-Resort Defendants respond [Doc. 68], claiming that they are improper parties because they have no connections to Plaintiffs' allegations and the Court lacks personal jurisdiction over them. First, the Non-Resort Defendants claim that the Court should exercise its discretion to stay discovery pending the outcome of the filed Motion to Dismiss for lack of personal jurisdiction [Doc. 48], asserting that the requested discovery is not likely to result in evidence to overcome the motion to dismiss. Further, the Non-Resort Defendants maintain that documents do not exist that detail their connection with Tennessee, because such connections do not exist. The Non-Resort Defendants claim that the Affidavit of John Willman, Treasurer and Vice President for Defendant Westgate Resorts, Ltd. [Doc. 48-1], submitted as an exhibit to the Motion to Dismiss, states the relationship between the respective Defendants and establishes why the Non-Resort Defendants are not subject to personal jurisdiction. However, the Non-Resort Defendants also claim that to the extent the Court allows limited discovery, such discovery should be limited to only addressing issues of personal jurisdiction, and Plaintiffs' jurisdictional discovery requests are overbroad and not proportional.

         The Resort Defendants respond [Doc. 70] that they did not limit their discovery responses to only the Named Plaintiffs, as they have produced over 17, 000 documents, including data reflecting the identities and purchase details of every resort owner during the proposed class period of 11 years, as well as data at monthly snapshots detailing the number of units available for reservations and the reservations made by all owners during this time period. Therefore, the Resort Defendants also maintain that they should not be required to produce the requested discovery, as the Named Plaintiffs seek to maintain a class of over 73, 000 timeshare owners based on their highly-individualized fraud claims over a decade period.

         Further, the Resort Defendants state that they have provided the training and employee manuals for sales and closing representatives, full discovery as to the Named Plaintiffs, all complaints levied against any of the sales or closing representatives involved in the transactions with the Named Plaintiffs, as well as other policy-level documents. The Resort Defendants assert that Plaintiffs' discovery requests are vague and overbroad, as well as not proportional to the needs of the case, and seek owner-specific discovery for highly individualized potential fraud claims. Additionally, the Resort Defendants state that they are working in good faith to produce supplemental documents related to certain requests. Lastly, the Resort Defendants also claim that Plaintiffs' motion is procedurally improper, as the Resort Defendants made legitimate objections in good faith to Plaintiffs' discovery requests, and allege that Plaintiffs now seek to compel responses to a new set of discovery requests.

         Plaintiffs then replied [Doc. 73] that they were not seeking to compel responses to a new set of discovery requests; rather, in their Motion to Compel, they summarized the previously served Interrogatories and Requests for Production into categories for the benefit of the Court. Additionally, in response to the Resort Defendants, Plaintiffs assert that the Resort Defendants explicitly limited their discovery responses as to the Named Plaintiffs-for example, in response to Plaintiffs' request for allegations of concealment of information from or misrepresentations made to owners or prospective owners, the Resort Defendants only provided documents regarding reservation complaints made by the Named Plaintiffs or about their sales agents. Plaintiffs also state that the Resort Defendants did not allege that the requested discovery was not relevant, and that their requests are reasonable and proportional. With respect to the Non-Resort Defendants, Plaintiffs asserts that they are entitled to discovery regarding the Non-Resort Defendants' contacts with Tennessee, and the jurisdictional discovery requests are not overbroad.


         Federal Rule of Civil Procedure 26(b)(1) provides as follows:

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.

Fed. R. Civ. P. 26(b)(1). Courts have explained that the “scope of discovery under the Federal Rules of Civil Procedure is traditionally quite broad.” Meredith v. United Collection Bureau, Inc., 319 F.R.D. 240, 242 (N.D. Ohio 2017) (quoting Lewis v. ACB Bus. Serv., Inc., 135 F.3d 389, 402 (6th Cir. 1998)). Courts have cautioned, however, that “[d]iscovery requests are not limitless, and parties must be prohibited from taking ‘fishing expeditions' in hopes of developing meritorious claims.” Bentley v. Paul B. Hall Reg'l Med. Ctr., No. 7:15-CV-97-ART-EBA, 2016 WL 7976040, at *1 (E.D. Ky. Apr. 14, 2016). “[T]he [C]ourt retains the final discretion to determine whether a discovery request is broad or oppressive.” Id. (citing Surles v. Greyhound Lines, Inc., 474 F.3d 288, 305 (6th Cir. 2007)). Further, the proponent of a motion to compel discovery bears the initial burden of demonstrating relevance. See Gruenbaum v. Werner Enters., Inc., 270 F.R.D. 298, 302 (S.D. Ohio 2010); Anderson v. Dillard's, Inc., 251 F.R.D. 307, 309-10 (W.D. Tenn. 2008).

         With respect to precertification discovery, such discovery is:

[L]imited and in the discretion of the court. Generally, a plaintiff bears the burden of advancing a prima facie showing that the class action requirements of [Rule 23] are satisfied, or that discovery is likely to produce substantiation of the class allegations. [D]iscovery often has been used to illuminate issues upon which a district court must pass in deciding whether a suit should proceed as a class action under Rule 23, such as numerosity, common questions, and adequacy of representation.

Kane v. Nat'l Action Fin. Servs., Inc., No. 11-11505, 2012 WL 1658643, at *6 (E.D. Mich. May 11, 2012) (internal citations and quotation marks omitted); see, e.g., Del Campo v. Kennedy, 236 F.R.D. 454, 459 (N.D. Cal. 2006). “The permitted discovery should be broad enough to give plaintiffs a realistic opportunity to satisfy the Rule 23 requirements, but narrow enough to prevent defendants from being unduly burdened by discovery that is irrelevant, privileged, or confidential.” Firneno v. Nationwide Mktg. Servs., Inc., No. 14-CV-10104, 2016 WL 11582360, at *2 (E.D. Mich. Mar. 24, 2016) (citing Nash v. City of Oakwood, 90 F.R.D. 633, 636 (S.D. Ohio 1981)). “Discovery is not to be used as a weapon, nor must discovery on the merits be completed precedent to class certification . . . Unnecessarily broad discovery will not benefit either party.” Firneno, 2016 WL 11582360, at *2 (quoting Nash, 90 F.R.D. at 636). Additionally, “the need for precertification discovery is subject to limitations within the discretion of the Court.” Miller v. Kent Nutrition Grp., Inc., No. 1:15 CV 2116, 2018 WL 2266866, at *2 (N.D. Ohio Feb. 27, 2018) (internal citation omitted).


         In reviewing Plaintiffs' requested relief, the Court will analyze the categories, supported by citations to specific discovery requests, as set forth in Plaintiffs' Motion to Compel, which the parties also utilized in their arguments during the October 23, 2019 hearing.

         A. Jurisdictional Discovery of Non-Resort Defendants

         Plaintiffs maintain that issues of personal jurisdiction are properly discoverable, and the Non-Resort Defendants have refused to respond to Plaintiffs' discovery requests on the grounds that they are not subject to the Court's personal jurisdiction. [Doc. 62 at 21]. Further, Plaintiffs maintain that Resort Defendants have failed to provide documents detailing the connection Non-Resort Defendants have with the state. [Id.].

         As the Court has previously detailed, Non-Resort Defendants claim that Plaintiffs failed to plead facts necessary to establish personal jurisdiction, and seek for the Court to deny Plaintiffs' Motion to Compel with respect to the jurisdictional discovery. [Doc. 68 at 4]. However, if the Court allows limited discovery, Non-Resort Defendants request that this discovery should be limited to only addressing issues of personal jurisdiction, and that Plaintiffs' jurisdictional discovery requests are overbroad and not proportional.

         Here, the Court declines to stay discovery pending the resolution of the Non-Resort Defendants' Motion to Dismiss [Doc. 48], and will allow limited jurisdictional discovery of the Non-Resort Defendants. However, the Court agrees that several of Plaintiffs' discovery requests are overbroad and not proportional to the needs of the present case, especially prior to a motion for class certification. Therefore, the Court will allow limited jurisdictional discovery to the extent set forth in this opinion to establish the relationship that the Non-Resort Defendants have with the Resort Defendants and the forum state.

         B. Discovery Regarding Relationship Non-Resort Defendants Have with Resort Defendants and Tennessee

         Plaintiffs seek discovery establishing the relationship that the Non-Resort Defendants have with the Resort Defendants, [1] discovery related to the Non-Resort Defendants' connections with the state of Tennessee, [2] and documents establishing Defendants' profits, losses, sources of revenue, and reports detailing the relationships between the respective Defendants.[3] Plaintiffs state that the Non-Resort Defendants improperly objected that the Court lacks personal jurisdiction, while the Resort Defendants have not produced any documents or discovery related to the connection between the respective parties. [Doc. 62 at 8, 12, 21]. For example, Plaintiffs assert that Non-Resort Defendant Central Florida Investments, Inc., is involved in handling the “property and affairs” of the Gatlinburg Owners' Association and is a subsidiary of Resort Defendant CFI Resorts Management, Inc. [Id. at 21-22]. With respect to discovery related to ...

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