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Woodmen of World Life Insurance Society v. Ligon

United States District Court, D. Nebraska

February 13, 2019

WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY, a Nebraska Fraternal Benefit Society; Plaintiff,
v.
JOHN BRAD LIGON, and SCOTTIE D. CLARK, Defendants.

          ORDER

          Cheryl R. Zwart United States Magistrate Judge

         This matter is before the court on a motion for an order overruling the defendants' objections and permitting Plaintiff Woodmen of the World Life Insurance Society (“Woodmen”) to serve a subpoena duces tecum on First Heartland Capital, Inc. ("First Heartland"). (Filing No. 46). For the following reasons, the motion will be granted in part and denied in part.

         BACKGROUND

         Defendants, John Ligon (“Ligon”) and Scottie Clark (“Clark”), sold life insurance and annuity products pursuant to Recruiting Sales Manager Contracts (“RSM” Contracts) with Plaintiff. In early 2018, both Defendants terminated their employment relationships with Plaintiff and joined First Heartland.

         On May 18, 2018, Woodmen filed the above-captioned action seeking injunctive relief.[1] Woodmen alleges that under the RSM Contracts, Defendants agreed to the following provisions:

[T]he RSM will not, directly or indirectly, alone or in association with others, at any time while this contract is in force:…(b) Induce or attempt to induce any WoodmenLife member or certificate owner to surrender, cancel, lapse, forfeit, or otherwise terminate any WoodmenLife insurance certificates or annuity certificates[.]
[D]ue to the position of trust and confidence in which the RSM is placed as WoodmenLife's principal contact with the members and certificate owners with whom the RSM has contact, that for a period of two (2) years following termination of this contract, the RSM will not, directly or indirectly, alone or as an employee or contractor of any other organization, (i) induce or attempt to induce any WoodmenLife member or certificate owner with whom the WoodmenLife Representative did business and had personal contact during the term of this contract, to surrender, cancel, lapse, forfeit, or otherwise terminate any WoodmenLife insurance certificates or annuity certificates (ii) provide or offer to provide any insurance product which is competitive to Insurance products offered by WoodmenLife, to any member or certificate owner with whom the RSM did business and had personal contact during the term of this contract, or (iii) induce or attempt to induce any WoodmenLife employee or sales representative with whom the RSM actually worked and had personal contact while employed by WoodmenLife, to terminate their relationship with WoodmenLife, except to the extent such inducement or solicitation is for an enterprise that is not competitive with the business, products or services RSM offered or provided on behalf of WoodmenLife and cannot adversely affect WoodmenLife's relationship or volume of business. The parties agree that the covenants contained in this paragraph are fair and reasonable in light of all of the facts and circumstances of the relationship between the RSM and WoodmenLife[.]

Filing No. 1-2, at CM/ECF pp. 4-5, ¶ 8.

         Plaintiff alleges that upon termination of their employment with Woodmen, Defendants “instantly began violating their RSM Contracts by soliciting and inducing Plaintiff's members, certificate holders, representatives, and employees to sever their relationships with Plaintiff and begin doing business with Defendants.” (Filing No. 46, at CM/ECF p. 1). Plaintiff seeks a court order enjoining Defendants from continuing their alleged breach of the RSM Contracts. (Filing No. 1).

         “To determine to what extent Defendants have breached their RSM Contracts and harmed Plaintiff, Plaintiff seeks certain information and documents from closely related third-parties who Defendants now work on behalf of; namely, First Heartland.” (Filing No. 46, at CM/ECF p. 1). On October 17, 2018, Woodmen served Notice upon Defendants it intended to serve a subpoena upon First Heartland, requesting it to produce:

[The] complete and entire personnel, contract, and commissions file for John B. Ligon, Scottie D. Clark, Robert Clark, John M. "Mike" Ellis, George W. "Dinky" Crowder, and Leslie R. "Les" Miles, as well as any payroll records, payment records, commission statements (including the names of each individual to whom the foregoing individuals provided services or sold products on behalf of any First Heartland Capital, Inc., entity and the product sold), communications with any former WoodmenLife customers (including, but not limited to, documents referring to the solicitation, quotation of policy prices, and placement of insurance with any First Heartland Capital, Inc., entity, affiliate, or subsidiary); and all communications regarding any of the foregoing individuals' WoodmenLife Advantage Contract and/or its restrictive covenants.

(Filing No. 31, at CM/ECF p. 1).

         On October 24, 2018, both Defendants objected to the issuance of the subpoena as to First Heartland.[2] Although the proposed subpoena seeks information regarding several individuals, both Defendants object only to the extent the subpoena seeks information about each respective Defendant himself. (Filing No. 46, at CM/ECF pp. 8, 16.)

         ANALYSIS

         Rule 26(b)(1) of the Federal Rules of Civil Procedure was amended on December 1, 2015. The scope of permissible discovery ...


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