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Best Buy Stores, L.P., A Virginia Limited Partnership v. Manteca Lifestyle Center

June 13, 2011


The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge


Currently pending before the court is plaintiff's Motion to Compel Defendant/ Counterclaimant's Production of Documents (the "Motion").*fn1 (Motion, Dkt. No. 41.) The parties timely filed a joint statement regarding their discovery disagreement (the "Joint Statement"). (Joint Statement, Dkt. No. 47.) The matter came on for hearing on the court's law and motion calendar on June 9, 2011. Attorney Amy Churan attended telephonically on behalf of the plaintiff. Attorney Howard Jeruchimowitz attended telephonically on behalf of the defendant. The undersigned has considered the briefs, oral arguments, and the appropriate portions of the record in this case and, for the reasons that follow, orders that plaintiff's motion is granted in part and denied in part.*fn2


On February 12, 2010, plaintiff Best Buy Stores, L.P. (the "plaintiff" or "Best Buy"), filed this action against defendant Manteca Lifestyle Center, LLC (the "defendant" or "Manteca"). (Dkt. No. 1.) The complaint contained causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing, and requesting a declaration of its rights and obligations under the lease. (Dkt. No. 1.) On March 12, 2010, defendant filed a Rule 12(b)(6) motion to dismiss the complaint for failure to state a claim on which relief can be granted, which was denied. (Dkt. No. 17.) Defendant filed cross-claims against plaintiff, including claims for breach of contract, breach of the implied covenant of good faith, and declaratory relief. (Dkt. No. 21.) On May 18, 2011, plaintiff subsequently filed a First Amended Complaint (the "FAC"), the operative pleading, to add a claim for declaratory relief. (FAC, Dkt. No. 44.)

This action arises from a written lease (the "Lease") whereby defendant agreed to lease plaintiff 30,038 square feet of space at a retail development known as the Promenade Shops at Orchard Valley (the "Promenade") in Manteca, California. (FAC ¶¶ 1, 8.) Article 8 of the Lease contains an "Opening Co-Tenancy" provision, which was subsequently modified by amendment of the parties on January 19, 2009. (Id. ¶¶ 8, 10.) The amended version of the provision states:

As used herein, the "Opening Co-Tenancy Condition" shall mean that, as of the Commencement Date, Tenant shall not be required to open for business unless sixty percent (60%) (not including Best Buy) of the gross leasable area of the Shopping Center are open and operating at the Shopping Center, or are to open concurrently with Tenant, including at least two (2) or more of the following tenants: (i) J.C. Penney; (ii) Bass Pro; (iii) a cinema.

Should the Opening Co-Tenancy Condition not be satisfied, Tenant may either (i) delay opening for business until the Opening Co-Tenancy Condition is satisfied . . . or (ii) open for business and, if the Opening Co-Tenancy

Condition remains unsatisfied on the Rent Commencement Date, then beginning on the Rent Commencement Date, pay fifty percent (50%) of the monthly Rent (and any additional other costs without reduction) payable pursuant to the terms of this Lease until such time as the Opening Co-Tenancy Condition has been satisfied.

(Id. ¶¶ 10, 12.) A proposed site plan ("Site Plan") for the Promenade was attached to the lease as Exhibit B. (Id. ¶¶ 8, 13(c).) The Site Plan includes a table that summarizes the amount of space allocated for different uses of buildings in the Promenade, such as the amount of space for small shops, a health club, a cinema, large shops, and restaurants. (Id. ¶ 13(c).) This table lists the "total gross leasable area" as 743,908 square feet. (Id.) Plaintiff alleges that it opted to open its store at the Promenade concurrently with J.C. Penny, Bass Pro, and the cinema. Plaintiff alleges that at the time it opened its store, 320,000 square feet of the Promenade were open and operating. (Id. ¶ 13(d).)

The parties' dispute centers on interpretation of the Co-Tenancy Condition and the condition of the Promenade at the time plaintiff opened for business. Plaintiff began making monthly rent payments to defendant for fifty percent of the amount of agreed-upon rent, contending that defendant had failed to meet the Co-Tenancy Condition in the lease because less than sixty percent of the gross leasable area was open and operating. (Id. ¶ 15.) Defendant threatened to evict plaintiff and demanded plaintiff pay one-hundred percent of the monthly rent. (Id. ¶ 16.) Defendant argues that the Co-Tenancy Condition was satisfied because buildings not "fully constructed" are not included in the "Shopping Center" for purposes of the condition, and that more than sixty percent of buildings that had been fully constructed were open and operating at the time plaintiff opened for business. (Id. ¶ 17.) Plaintiff subsequently paid the amount of rent demanded by defendant under protest. (Id. ¶ 18.) Both parties allege breaches of the Lease and, among other claims, seek declaratory relief.


1. Waiver of Privilege

Rule 34(b)(2) requires a party to respond to a request for production within 30 days, and the response must "either state that inspection and related activities will be permitted as requested or state an objection to the request, including the reasons." Fed. R. Civ. P. 34(b)(2)(B). Rule 34(b)(2)(A) requires that a written response to a discovery request be served within 30 days of the service of the request. Rule 34 provides that, when objecting to a request to produce documents, the responding party's objection "must specify the part and permit inspection of the rest." Fed. R. Civ. P. 34(b)(2)(C).

Rule 26(b)(5)(A) provides that, when claiming a privilege, a party must "(i) expressly make the claim; and (ii) describe the nature of the documents, communications, or other tangible things not produced or disclosed -- and do so in a manner that, without revealing information itself privileged or protected, will enable the other party to assess the claim." Fed. R. Civ. P. 26(b)(5)(A).

The Ninth Circuit Court of Appeals has analyzed Rule 26(b)(5)'s notice requirement and how it relates to Rule 34's 30-day deadline. Burlington Northern & Santa Fe Ry. Co. v. United States, 408 F.3d 1142, 1149 (9th Cir. 2005). The Court of Appeals has held that inserting "boilerplate" privilege objections into responses to a Rule 34 request for production is insufficient. Id. With respect to asserting privilege objections within the 30-day period envisioned by Rule 34, however, the Court of Appeals also rejected a per se waiver rule that would deem a privilege to be automatically waived if not asserted within Rule 34's 30-day period. Id.; accord Coalition for a Sustainable Delta, 2009 WL 3378974, at *3 ("The Ninth Circuit rejected a per se rule that 'failure to produce a privilege log in a timely manner triggers a waiver of privilege,' noting that Rule 26's requirement for proper assertion of a privilege does not correlate with Rule 34's 30-day deadline for serving written responses to discovery requests, 'nor does it explicitly articulate a waiver rule.'") (citing Burlington Northern); Jumping Turtle Bar and Grill v. City of San Marcos, No. 10-CV-270-IEG BGS, 2010 WL 4687805, at *2 (S.D. Cal. Nov 10, 2010) (unpublished) ("The Burlington court held that boilerplate objections in initial responses fail to adequately assert the privilege and that a later-produced privilege log could sufficiently assert privileges for the first time.

Therefore, the City's failure to assert inadequate boilerplate assertions within Rule 34's 30 day time period can not operate as a per se waiver of the privilege and the Court will apply the Burlington factors in order to determine the issue of waiver."). The court in Burlington Northern clarified that while "boilerplate" privilege objections made within the 30-day time limit are insufficient, detailed objections within a privilege log provided outside the 30-day time limit may be sufficient, depending on various factors weighed as part of a "holistic" case-by-case analysis. Burlington Northern, 408 F.3d at 1149-50.

Using the 30--day period as a "default guideline," the Burlington Northern court directed district courts to make "a case-by-case determination" of whether a privilege objection was sufficiently raised. Id. This determination should take several factors into account. Id. First, the degree to which the objection or assertion of privilege enables the litigant seeking discovery and the court to evaluate whether each of the withheld documents is privileged (where providing particulars typically contained in a privilege log is presumptively sufficient and boilerplate objections are presumptively insufficient). Id. Second, the timeliness of the objection and accompanying information about the withheld documents (where service within 30 days, as a default guideline, is sufficient). Id. Third, the magnitude of the document production and other particular circumstances of the litigation that make responding to discovery unusually easy (such as the fact that many of the same documents were the subject of discovery in an earlier action) or unusually hard. Id. These factors "should be applied in the context of a holistic reasonableness analysis, intended to forestall needless waste of time and resources, as well as tactical manipulation of the rules and the discovery process." Id. Likewise, "[t]hey should not be applied as a mechanistic determination of whether the information is provided in a particular format." Id. The application of these factors shall also be subject to "agreements or stipulations among the litigants" and discovery or protective orders. Id.*fn3

2. Compelling Responses to Discovery Requests

A motion to compel is appropriate when a party fails to produce relevant, non-privileged documents requested pursuant to Rule 34. Fed. R. Civ. P. 37(a)(3)(B)(iv), (a)(4). The party seeking to compel discovery has the burden of establishing that its request satisfies the relevancy requirements of Rule 26(b)(1). Soto v. City of Concord, 162 F.R.D. 603, 610 (N.D. Cal. 1995) (holding that a relevant matter is "any matter that bears on, or that reasonably could lead to other matters that could bear on, any issue that is or may be in the case." )*fn4 The scope of discovery under Fed. R. Civ. P. 26(b)(1) is broad. Discovery may be obtained as to any unprivileged matter "relevant to the claim or defense of any party...." Id. Discovery may be sought of relevant information not admissible at trial "if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. The broad scope of permissible discovery encompasses any matter that bears on, or that reasonably could lead to other matters 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). Discovery is not limited to the merits of a case, "for a variety of fact-oriented issues may arise during litigation that are not related to the merits." Id. A district court has wide latitude in controlling discovery, and its rulings will not be overturned in the absence of a clear abuse of discretion. Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1416-17 (9th Cir. 1987).

The court, however, may limit discovery if it ". . . is unreasonably cumulative or duplicative," or can be obtained from another source "that is more convenient, less burdensome, or less expensive"; or if the party who seeks discovery "has had ample opportunity by discovery . . . to obtain the information sought"; or if the proposed discovery is overly burdensome. Fed. R. Civ. P. 26(b)(2)(i)(ii) and (iii).

After the moving party makes the requisite showing of relevance, the party opposing the discovery has the burden of showing that it should be prohibited, as well as the burden of clarifying, explaining, and supporting its objections. DIRECTV, Inc. v. Trone, 209 F.R.D. 455, 458 (C.D. Cal. 2002) (citing Blankenship v. Hearst Corp., 519 F.2d 418, 429 (9th Cir. 1975)). As to requests for production of documents, Federal Rule of Civil Procedure 34(b)(2)(c) provides that "[a]n objection to part of a request must specify the part and permit inspection of the rest." Each party generally has the right to discover "any non-privileged matter that is relevant to any party's claim or defense." Fed. R. Civ. P. 26(b)(1).

If a motion to compel is granted, unless certain exceptions are present, "the court must, after giving an opportunity to be heard, require the party or deponent whose conduct necessitated the motion, the party or attorney advising that conduct, or both to pay the movant's reasonable expenses incurred in making the motion, including attorney's fees." Fed. R. Civ. P. 37(a)(5)(A). However, the court "must not order this payment if . . . (i) the movant filed the motion before attempting in good faith to obtain the disclosure or discovery without court action;

(ii) the opposing party's nondisclosure, response, or objection was substantially justified; or (iii) other circumstances make an award of expenses unjust." Id. If the motion to compel is granted in part and denied in part, the court may . . . after giving an opportunity to be heard, apportion the reasonable expenses for the motion. Fed. R. Civ. P. 37(a)(5)(C).


1. Waiver of Privilege

Defendant failed to specifically assert "privilege" objections in response to three of plaintiff's Requests for Production of Documents ("RFPs"). (Joint Statement at 12; Dkt. No. 47-1(Declaration of Amy Churan ("Churan Decl.") at ΒΆ 6); Exh. E to Churan Decl. at pp. 10-11.) While defendant raised privilege objections in response to other RFPs, it did not specifically raise such objections in response to RFP Nos. 18-20. Defendant notes that its responses to all RFPs were preceded by standard "boilerplate" objections, which included "privilege" objections. (Joint Statement at 12.) Defendant also claims that, because it objected to these requests on grounds that they were "redundant of Request for Production #4 and others above" (id.), and because defendant's responses to "Request for Production #4" included a privilege objection, that objection was incorporated into the responses to RFP Nos. 18-20. (Joint Statement at 12-13.) During the meet and confer process, defendant's correspondence to plaintiff confirmed that defendant intended to object to RFP Nos. 18-20 only ...

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