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Lombardo v. R.L. Young, Inc.

United States District Court, D. Connecticut

September 6, 2019

R.L. YOUNG, INC. d/b/a YOUNG & ASSOCIATES Defendants. R.L. YOUNG, INC. d/b/a YOUNG & ASSOCIATES Counterclaim Plaintiff,



         I. BACKGROUND

         The plaintiff, Don Lombardo (“Lombardo”), initiated this case on February 1, 2018 to recover sums due from his business relationship with defendant R.L. Young, Inc. d/b/a Young & Associates (“YA”). Lombardo alleges that his business relationship was with YA, incorporated in Nevada (“YANV”). (Doc. No. 1). YANV is a building consulting company providing, among other things, building damage assessments and restoration estimates for various customers, including insurance companies. YANV's predecessor is a California corporation, R. L. Young, Inc. d/b/a Young & Associates (“YACA”).[1]

         On April 19, 2018, Lombardo filed a Second Amended Complaint in which he asserts the following causes of action: 1) declaratory judgment as to the successor liability of YANV for YACA's debts to Lombardo; 2) estoppel as to YANV's joint venturer status; 3) breach of a joint venture agreement; 4) alternative claim for breach of a partnership agreement; 5) alternative claim for breach of an independent contractor agreement; 6) unjust enrichment; 7) an accounting; and 8) enforcement of a settlement agreement. (Doc. No. 27).

         On May 31, 2018, YA filed an Amended Answer, Affirmative Defenses and Amended Counterclaims (“Amended Counterclaims”) against Lombardo and third-party defendant DND Construction Services, LLC (“DND”). (Doc. No. 39). YA's Amended Counterclaims consist of four tortious interference claims against Lombardo and DND. (Doc. No. 39 at 12-17). It claims that Lombardo and DND knowingly and wrongfully interfered with YA's business by inducing its former consultants to breach their respective consulting agreements with YA, soliciting YA's customers and potential referrals, using YA's confidential information, and misusing YA's confidential and proprietary information. (Id.).

         On June 20, 2018, Lombardo and DND filed their Amended Counterclaims, and asserted nine special defenses. (Doc. No. 43). The First Affirmative Defense is based on the alleged illegality of YA's business model. The claim is that YA's so-called independent consultant agreements are illegal and unenforceable because they are an attempt by YA to evade the true employee status of its consultants, enabling YA to ignore payroll tax liabilities, unemployment compensation and numerous government laws and regulations affecting employees. (Doc. No. 43 at 5-6). Lombardo and DND allege further that YA's sham business model includes the use of the children of Ray and Linda Young, the persons who control YA, as purported independent contractors in administrative roles. (Id.).


         There are two sets of discovery at issue in this underlying motion. On January 24, 2019, Lombardo served YANV with Interrogatories and Requests for Production Regarding Plaintiff's Claims Directed to Defendant R.L. Young, Inc. d/b/a Young & Associates (“Plaintiff's Discovery”), and on the same day, Lombardo and DND served YANV with their Interrogatories and Requests for Production Regarding Counterclaims and Third Party Claims Directed to Defendant R.L. Young, Inc. d/b/a Young & Associates (the “Counterclaim Discovery”). YANV filed its objections and responses to both sets of discovery on February 26, 2019. (See Doc. No. 82, App'x A-B). After several discovery conferences and related communications between the parties, YANV filed its supplemental responses. (See Doc. No. 82, Ex. 1). On July 22, 2019, Lombardo and DND filed the pending Motion to Compel regarding the sufficiency of YANV's compliance. (Doc. No. 82). Specifically, Lombardo and DND request that this Court overrule YANV's general objections B-E and H-J to both sets of discovery and its objections to Production Requests Nos. 1, 2, 9-12 and 21-23 of the Plaintiff's Discovery, and Interrogatories Nos. 4-9 and 11-16 and Production Requests Nos. 2-8, 12 and 19 of the Counterclaim Discovery. (Doc. No. 82 at 9). On August 12, 2019, the defendant filed its brief in opposition (Doc. No. 83), and on August 20, 2019, Lombardo and DND filed their reply brief. (Doc. No. 86).


         Rule 26(b)(1) of the Federal Rules of Civil Procedure sets forth the scope and limitations of permissible discovery:

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 important of the issues at stake in the action, the amount in controversy, the parties' relative access to the 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). The Advisory Committee's Notes to the 2015 amendment of Rule 26 further explain that

[a] party claiming that a request is important to resolve the issues should be able to explain the ways in which the underlying information bears on the issues as that party understands them. The court's responsibility, using all the information provided by the parties, is to consider these and all the other factors in reaching a case-specific determination of the appropriate scope of discovery.

Fed. R. Civ. P. 26 Advisory Committee's Note to 2015 amendment.

         “[T]o fall within the scope of permissible discovery, information must be ‘relevant to any party's claim or defense.' In order to be ‘relevant' for Civil Rule 26 discovery purposes, information and evidentiary material must be ‘relevant' as defined in Rule of Evidence 401.” Bagley v. Yale Univ., No. 13 CV 1890 (CSH), 2015 WL 8750901, at *8 (D. Conn. Dec. 14, 2015); see Fed.R.Civ.P. 26(b)(1), Advisory Committee Notes to the 2015 amendments. “Discovery, however, ‘is concerned with ‘relevant information'-not ‘relevant evidence'-and that as a result the scope of relevance for discovery purposes is necessarily broader than trial relevance.'” A.M. v. Am. Sch. for the Deaf, No. 3:13 CV 1337 (WWE), 2016 WL 1117363, at *2 (D. Conn. Mar. 22, 2016) (quoting Steven S. Gensler, 1 Federal Rules of Civil Procedure, Rules and Commentary Rule 26, V. Depositions and Discovery (February 2016 Update)) (footnotes omitted). Moreover, “[t]he Court ‘must limit' discovery otherwise allowed if the discovery sought is ‘unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive[.]'” Family Wireless #1, LLC v. Auto. Techs., Inc., No. 3:15 CV 01310 (JCH), 2016 WL 3911870, at *2 (D. Conn. July 15, 2016) (quoting Fed.R.Civ.P. 26(b)(2)(C)(i)).


         As an initial matter, Lombardo takes issue with the general objections B-E and H-J YANV asserted to all interrogatories and production requests. (Doc. No. 82, App'x A at 2-4 & App'x B at 2-5). Pursuant to Rule 34(b)(2)(C), “[a]n objection must state whether any responsive materials are being withheld on the basis of that objection.” The 2015 Advisory Committee Notes to Rule 34 emphasize that the Rule was amended “to require that objections to Rule 34 requests be stated with specificity.” YA argues that it complied with Lombardo's discovery requests, notwithstanding its objections, and it “made clear that it was not withholding any documents or information on the basis of general objections.” (Doc. No. 83).

         After the December 1, 2015 amendments to the Rules, “[g]eneral objections should be rarely used” unless “each such objection applies to each document request . . . .” Fischer v. Forrest, 14 Civ. 1304 (PAE) (AJP), 2017 WL 773694, at *3 (S.D.N.Y. Feb. 28, 2017). Thus, while YA did not withhold any documents on the basis of these general objections, YA is reminded that courts within the Second Circuit have held that such general objections should not be asserted unless they apply to each document request. See id.; see also CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 13-CV-2581 (PKC) (JLC), 2019 EL 2224503, at *11 (S.D.N.Y. July 25, 2019) (requiring the defendant to withdraw their general objections and not include general objections in their revised responses unless they truly apply to each request); Futreal v. Ringle, No. 7:18 CV 00029-FL, 2019 WL 137587, at *4 (E.D.N.Y. Jan. 8, 2019) (“The relevant language in Fischer does not approve the use of general objections in every instance, or even in every instance when a party believes privileged materials are at issue. Instead, the court in Fischer contended that general objections are appropriate if the objection applies to every response to every document request.”); CapRate Events, LLC v. Knobloch, 17-CV-5907 (NGG) (SJB), 2018 WL 4378167, at *1 (E.D.N.Y. Apr. 18, 2018) (holding that “[t]he 2015 Amendments to the Federal Rules no longer permits global, generalized objections to each request”.).


         In its Requests for Production, Lombardo seeks the following:

1. Copies of any documents relating to how YANV and/or YACA established or utilized a rate of $5.00 per billable hour for overhead charges deducted from sums payable or allocated to Lombardo and/or any other Regional Partner, Individual Partner or Consultant
2. Copies of any documents relating to how YANV and/or YACA established or utilized a rate of $8.00 per hour for its Technical Development Team charges deducted or allocated to Lombardo and/or any other Regional Partner, Individual Partner or Consultant.

         In response to Requests Nos. 1 and 2, YA argues that it has provided the one responsive email it has it its possession and provided an explanation in response to interrogatories requesting the same. (Doc. No. 83 at 6). Moreover, YA explains that the billable hour rate was explained by Eric Emme, YA's chief financial officer, at his deposition. (Id.). Additionally, YA produced a report it believed responsive to this request: the OH Rate Assessment report for the First Quarter of 2014. (See Doc. No. 82, App'x A, Ex. 1).

         Lombardo argues that the information provided is not complete as Emme testified that the rate that would be charged for overhead charges would be derived from estimated budgets which he reconciled with actual budgets, but, “[w]ith possible limited exceptions, these estimates and budgets have not been produced[, ]” nor have actual overhead expenses which “presumably . . . would have had to [be] examine[d]” in order to calculate a “billable hour overhead charge rate.” (Doc. No. 86 at 1). In light of the production made by YA, Lombardo proposed to limit the scope to the production of YA's quarterly “OH Rate Assessment” reports from the First Quarter of 2014 through the Second Quarter of 2017 and its April 2017 Monthly Rate Assessment Report for April 2017. (Doc. No. 82, App'x A at 5). YA, however, informed Lombardo that additional OH Assessment Reports and summary of overhead cost reports do not exist. To the extent YA has documents setting forth its overhead for 2015 and the first half of 2016, as requested by ...

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