United States District Court, D. Nebraska
D. Thalken, United States Magistrate Judge
matter is before the court on Deborah Rasby's (Rasby)
Motion to Compel (Filing No. 77). Rasby seeks further answers
to interrogatories, production of documents, and leave to
serve subpoenas on non-party accountants to obtain
information about the financial condition of Progressive
Swine Technologies, Inc. (PST) and other companies owned or
controlled by James D. Pillen (Pillen). Rasby filed a brief
(Filing No. 79) and an index of evidence (Filing No. 78) in
support of the motion. Pillen filed a brief (Filing No. 83)
and an index of evidence (Filing No. 82) opposing additional
discovery. Rasby did not file a reply.
case arises from the parties' business relationship,
which culminated in an agreement between them for Pillen to
purchase Rasby's business ownership interest in
associated companies such as PST, a management company for
various entities dealing with pork production including
farms, feed mills, and swine genetics. See Filing No. 5 -
Amended Complaint ¶¶ 7-8, 11. PST began operations
on January 1, 1994, when Pillen held a 90% interest and Rasby
held the remaining 10%. Id. ¶ 8. Each party
received a salary from 2001 to 2011. Id. ¶ 9.
Since 1994 PST paid distributions to the parties based on
their ownership interests, with Rasby receiving approximately
$2, 250, 471 between the years 2000 through 2011.
Id. ¶ 10. Rasby alleges she learned Pillen was
using their company assets to benefit himself and his
personal companies to her disadvantage. Id.
¶¶ 12-16. Rasby states she confronted Pillen with
her information, but he became hostile and refused to discuss
it. Id. ¶ 16. In May of 2011, Rasby decided to
retire from PST with the understanding she would still
receive monthly distributions. Id. ¶ 17. After
Rasby's retirement, Pillen increased his salary from
$110, 000 to $1, 000, 000 and stopped making distribution
payments. Id. ¶¶ 19-21. On April 13, 2012,
Pillen offered to purchase Rasby's interest in the
companies at less than market value and warned her he planned
to liquidate PST and stop cash distributions from her other
companies. Id. ¶¶ 23-24, 26. Rasby
understood if she retained her business interests she would
have substantial tax liability exposure without the income or
distributions to pay it. Id. ¶¶ 22, 24,
27. Rasby alleges Pillen's agent told her Pillen
“was going to ‘F' with her” and he
threatened to “blow up PST” so she “would
be looking for work again.” Id. ¶ 28.
Rasby searched for investors to buy her interest but, due to
Pillen's actions, investors refused. Id. ¶
29. Pillen gave Rasby two weeks to agree to sell to him or he
would close PST. Id. ¶ 30. On June 29, 2012,
Rasby executed the Unit Purchase Agreement, selling her
interests in the companies to Pillen. Id. ¶ 31.
on these facts, Rasby alleges Pillen forced her to enter into
the Purchase Agreement by virtue of his threats and actions,
which destroyed her ability to make a voluntary choice and
affected her actions and state of mind. Id.
¶¶ 35-37. In addition to claiming duress and undue
influence (Count I), Rasby claims fraudulent
misrepresentation (Count II), securities fraud (Count III),
loss of corporate opportunities (Count IV), and breach of
fiduciary duty (Count V) against Pillen. Id.
generally denies liability on Rasby's claims. See Filing
No. 15 - Answer. Additionally, Pillen alleges Rasby engaged
in “wrongdoings in how [she] accounted for PST
expenses” while working as an accountant. Id.
at 10-11. Moreover, Pillen asserts claims for breach of
contract for filing this lawsuit in violation of the express
terms of the Purchase Agreement (First Counterclaim), breach
of fiduciary duty (Second Counterclaim), breach of duty of
loyalty (Third Counterclaim), unjust enrichment (Fourth
Counterclaim), fraud (Fifth Counterclaim), conversion (Sixth
Counterclaim), and civil extortion (Seventh Counterclaim).
Id. at 13-17. Rasby generally denies liability on
Pillen's counterclaims. See Filing No. 18.
parties' current discovery dispute arose when Rasby
requested production of documents from Pillen and the
accounting firm of Kruse, Schumacher & Smejkal (Kruse).
See Filing No. 79 - Brief p. 2. Initially, on March 10, 2016,
Rasby served a notice of her intent to subpoena financial
information from Kruse. See Filing No. 50 - Notice & Ex.
1 Proposed Subpoena. Pillen filed a timely objection. See
Filing No. 52 -Certificate of Service. Subsequently, the
parties agreed Rasby would seek additional information and
documents from Pillen prior to proceeding with the subpoena.
See Filing No. 78 - Vogt Aff. ¶ 5. The parties exchanged
requests and responses from June through August, 2016. See
Filing No. 79 - Brief p. 2 (citing correspondence). Counsel
for the parties conferred but were unable to agree on the
scope of relevant financial information responsive to the
discovery requests, in the context of Rasby's claims. See
argues the discovery sought is relevant to this lawsuit,
which is “an action to set aside a release and obtain
the fair value for the interest [she] formerly owned in
business entities in which [Pillen] retains his
interest.” See Filing No. 79 - Brief p. 1.
Specifically, Rasby contends the financial information is
relevant to “damages for [Pillen's] breach of the
corporate opportunity doctrine in establishing multiple
businesses in addition to PST . . . which were engaged in
businesses related to the business of PST without offering to
[Rasby] and PST the opportunity to participate in ownership
of those businesses.” Id. Therefore, Rasby
asserts, this lawsuit, “relates entirely to the
financial condition of PST and other companies owned or
controlled by [Pillen] and [his] actions which divested Ms.
Rasby of her interest in those companies.” Id.
at 4. Rasby contends the proposed subpoena seeks records to
establish Pillen “made intentional misrepresentations
regarding his plans to furnish money to related entities and
to demonstrate the value of those entities for which Ms.
Rasby should have been given the opportunity for
ownership.” Id. Finally, Rasby states
Pillen's expert witness criticized Rasby's expert
witness for failure to consider certain of this requested
argues the requests are neither relevant nor proportional to
the needs of the case. See Filing No. 83 - Response p. 3.
Pillen contends the requests are overly broad by virtue of
seeking records covering the period after Rasby's buyout
and beyond those entities she had an interest in, such as
Pillen's personal financial records and the records of
companies with which only he has been affiliated.
Id. at 3-4. Pillen suggests the relevant time period
ends on the effective date of the buyout because Rasby
alleges damages suffered based on the difference between the
amount of her payout and “the actual value of her
shares on or about June 29, 2012.” Id. at 4
(quoting Filing No. 82 -Ex. 3 Plaintiff's Initial
Disclosures p. 6-7). Further, Pillen contends Rasby's
claims are based on alleged conduct, events, and
opportunities occurring prior to January 1, 2012.
Id. at 4-6. Next, Pillen argues the outside
companies about which Rasby seeks financial information were
unrelated to the policies and purposes of PST and Rasby's
other business interests, even though they were managed by
PST, and thus do not bear on the corporate opportunity
claims. Id. at 6-7. Finally, Pillen attempts to
shield his own personal financial information from discovery
because Rasby alleges claims associated with the financial
condition of PST. Id. at 8.
discovery is an important tool for the litigant, and so
‘[r]elevant information need not be admissible at the
trial if the discovery appears reasonably calculated to lead
to the discovery of admissible evidence.'” WWP,
Inc. v. Wounded Warriors Family Support, Inc.,
628 F.3d 1032, 1039 (8th Cir. 2011) (alteration in
original)(quoting Fed. R. Civ. P. 26(b)(1)). The
federal rules provide for broad, but not unlimited,
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
Civ. P. 26(b)(1). Accordingly, relevant information includes
“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.” Oppenheimer Fund, Inc. v.
Sanders, 437 U.S. 340, 351 (1978); see Fed. R. Civ. P.
26(c)(1). Mere speculation that information might be useful
will not suffice; litigants seeking to compel discovery must
describe with a reasonable degree of specificity the
information they hope to obtain and its importance to their
case. See Cervantes v. Time, Inc., 464 F.2d 986, 994
(8th Cir. 1972). Once the requesting party meets the
threshold relevance burden, generally “[a]ll discovery
requests are a burden on the party who must respond thereto.
Unless the task of producing or answering is unusual, undue
or extraordinary, the general rule requires the entity
answering or producing the documents to bear that
burden.” Continental Ill. Nat'l Bank &
Trust Co. of Chicago v. Caton, 136 F.R.D. 682, 684-85
(D. Kan. 1991) (citation omitted). The court has authority to
limit the scope of discovery. Roberts v. Shawnee Mission
Ford, Inc., 352 F.3d 358, 361 (8th Cir. 2003).
has met her burden of demonstrating the relevance of the
discovery sought. The requests and proposed subpoenas seek
information bearing on her claims about the value of PST and
Pillen's conduct with respect to PST. Rasby's
allegations also encompass the value and financial
information from Pillen and companies he owned or controlled.
Pillen's arguments about the precise relative importance
or connection of the outside companies to PST and Rasby or
the merits of Rasby's claims need not be resolved at this
stage. Rasby has shown the requested information bears on her
claims and are appropriate even when considering the
pertinent factors indicative of the proportional needs of the
case. Nevertheless, Rasby fails to sustain her burden for the
time period listed in the requests as “through the
present.” However, a reasonable period of time would
incorporate the period shortly after her ...