United States District Court, M.D. Louisiana
BAYOU INDUSTRIAL SALES, L.L.C.
RICHARD L. BOURGEOIS, JR. UNITED STATES MAGISTRATE JUDGE
the Court is Petro-Valve, Inc.'s
(“Petro-Valve”) Motion to Compel (R. Doc. 35)
filed on April 27, 2017. Petro-Valve seeks an order requiring
supplemental responses to requests for production served on
Bayou Industrial Sales, L.L.C. (“Bayou”) on
February 1, 2016 (R. Doc. 35-7), and Keith Foote and David
Foote on June 7, 2016 (R. Doc. 35-2; R. Doc. 35-3). The
Motion to Compel is opposed. (R. Doc. 43).
before the Court is Petro-Valve's Motion for Extension of
Time to File Expert Reports (R. Doc. 36) filed on April 28,
2017. Petro-Valve seeks an order extending its deadline to
provide expert reports to Bayou until 21 days after the Court
rules on the pending Motion to Compel. The Motion for
Extension of Time to File Expert Reports is opposed. (R. Doc.
the foregoing motions involve related issues, the Court
considers will consider them together.
is a distributor of industrial valves. Petro-Valve and Bayou
entered into a Consulting Agreement with an effective date of
April 21, 2014 for an “agreement term” of three
years. (R. Doc. 1-2 at 7-8). Through the Consulting
Agreement, Bayou agreed to perform certain “outside
sales” for Petro-Valve in return for a “Base
Payment” of $42, 083.33 per month ($505, 000.00
annually), predetermined expense reimbursements, and
time the parties entered into the Consulting Agreement, the
sole members of Bayou were David Foote and Kevin Barre. (R.
Doc. 15 at 3; see R. Doc. 15-1). On May 2, 2014,
Bayou amended its Articles of Organization to identify its
sole members as David Foote Consulting, LLC, Keith Foote,
LLC, and Barre Industrial, LLC. (R. Doc. 15 at 3;
See R. Doc. 15-1).
September 29, 2014, a corporate representative of Petro-Valve
notified David Foote and Keith Foote (collectively,
“the Footes”) that Petro-Valve was cancelling the
Consulting Agreement effective that day. (R. Doc. 43-2). The
corporate representative stated that the Consulting Agreement
“included Kevin Barre and this agreement should have
been cancelled when he departed.” (R. Doc. 43-2).
Furthermore, the corporate representative stated that a
“new employment agreement” that the parties had
been discussing would be effective that day upon cancellation
of the Consulting Agreement and that the employment agreement
would be provided to the Footes by the end of the day. (R.
October 6, 2014, the Footes entered into employment
agreements with Petro-Valve providing them with respective
annual salaries of $125, 000 (David Foote) and $200, 000
(Keith Foote) as Territory Sales Managers for Petro-Valve.
(R. Doc. 14-1 at 1-8). The Footes also entered into
Nondisclosure Agreements with Petro-Valve. (R. Doc. 14-1 at
March 17, 2015, Bayou again amended its Articles of
Organization to identify its sole members as David Foote
Consulting, LLC (the sole member of which is David Foote),
Keith Foote, LLC (the sole member of which is Keith Foote).
(R. Doc. 15 at 3; See R. Doc. 15-1).
April 9, 2015, Bayou initiated the instant breach of contract
action in state court. (R. Doc. 1-2 at 3-6,
“Petition”). Bayou alleges that prior to
cancellation of the Consulting Agreement, Petro-Valve made
base payments to Bayou in the amount of $180, 719, 71.
(Petition, ¶ 11). Bayou claims that it is owed $44,
999.97 in base payments, as well as certain commissions,
prior to the cancellation of the Consulting Agreement.
(Petition, ¶¶ 12-13). Bayou also claims that it is
owed base payments in the amount of $1, 289, 280.32 that
would have been payable from the date the Consulting
Agreement was cancelled through the end of the three-year
term of the contract. (Petition, ¶ 16). Finally, Bayou
claims that it is entitled to an additional $252, 499.98 in
base payments that it was entitled to receive at the end of
the three-year term of the contract if it did not engage in
certain business activity for 6 months after the Consulting
Agreement's expiration. (Petition, ¶¶ 17-18).
removed the action on May 3, 2015. (R. Doc. 1).
November 6, 2015, the Court entered into the record
Petro-Valve's Amended Answer, Counterclaim, and Third
Party Complaint. (R. Doc. 14). Among other affirmative
defenses, Petro-Valve asserts that the Consulting Agreement
was modified by the parties in light of Kevin Barre's
departure from Bayou; that Petro-Valve had the right to
terminate the Consulting Agreement; that the subsequent entry
of employment agreements by Petro-Valve and the Footes
constituted a novation of the Consulting Agreement; and that
Bayou's claims are barred by fraud and/or fraud in the
inducement. (R. Doc. 14 at 4-5).
counterclaims against Bayou and third-party demands against
the Footes, Petro-Valve asserts that it hired Bayou and
entered into the Consulting Agreement in reliance on
representations that Bayou and the Footes “had the
ability to bring in $15-$20 million a year in business from
Louisiana customers.” (R. Doc. 14 at 6). According to
Petro-Valve, only after it opened a branch in Louisiana based
on these representations did it became clear that neither
Bayou nor the Footes had the ability to bring in $15-$20
million in business in Louisiana. (R. Doc. 14 at 7).
Petro-Valve further allege that the Footes represented that
“it was essential that they become employees of
Petro-Valve so that they could have access to confidential
customer information” not available to them under the
Consulting Agreement. (R. Doc. 14 at 7). Petro- Valve further
represents that the Footes terminated their employment on or
about April 9, 2015, and, in violation of their Nondisclosure
Agreements, “downloaded and forwarded to their personal
email addresses confidential and trade secret information of
Petro-Valve in violation of their Nondisclosure
Agreements.” (R. Doc. 14 at 8). Petro-Valve brings
causes of action against Bayou and/or the Footes for common
law fraud, fraud in the inducement, breach of contract, theft
and misappropriation of trade secrets, and conspiracy. (R.
Doc. 14 at 8-10). Petro-Valve seeks recovery of exemplary
damages and attorney's fees. (R. Doc. 14 at 11-12).
February 1, 2016, Petro-Valve served requests for production
on Bayou. (R. Doc. 35-7).
February 25, 2016, the Footes filed a Counterclaim against
Petro-Valve. (R. Doc. 25). The Footes allege that they are
“owed sums by Petro-Valve, Inc. under the terms of
their employment with Petro-Valve, Inc. in the form of
salary, commissions, and paid vacation time.” (R. Doc.
25 at 1). The Footes are demanding Petro-Valve “to pay
all sums due and owning” by Petro-Valve, and for
payment of penalties and attorney's fees as set forth in
La. R.S. 23:632. (R. Doc. 25 at 2).
March 17, 2016, Petro-Valve filed an Answer to the
Footes' Counterclaim. (R. Doc. 29). Among other things,
Petro-Valve raises the affirmative defendant that to the
Footes are barred from recovery to the extent they
“failed to focus 100% of their time and effort on
Petro-Valve, or received income or compensation from Bayou
Industrial Sales, LLC, or other company, while employed with
Petro-Valve, their claims are barred by prior breach of their
employment agreements.” (R. Doc. 29 at 2).
7, 2016, Petro-Valve served requests for production on Keith
Foote and David Foote. (R. Doc. 35-2; R. Doc. 35-3).
28, 2016, the Court entered a Joint Protective Order into the
record. (R. Doc. 31). This protective order allows the
parties to designate information as
“confidential” prior to production and restricts
the use of such confidential information.
21, 2016, Bayou provided its initial objections and responses
to Petro-Valve's requests for production. (R. Doc. 35-8).
April 5, 2017, counsel held a telephone discovery conference
regarding the responses provided by Bayou and the absence of
any responses by the Footes. According to an e-mail
memorializing the conference by defense counsel, Bayou agreed
to produce documents responsive to Request Nos. 36-42, 45-53,
56, 70-76, 79-80, and 86 by April 20, 2017; Petro-Valve would
file a motion to compel Bayou to respond to Request Nos.
26-28; and the Footes would provide responses to the
outstanding discovery requests on or before April 20, 2017.
(R. Doc. 35-6).
April 20, 2017, Keith Foote and David Foote provided their
initial objections and responses to Petro-Valve's
requests for production. (R. Doc. 35-5).
April 21, 2017, Bayou provided supplemental responses to
Petro-Valve's requests for production. (R. Doc. 35-9).
April 27, 2017, the deadline for it to provide expert
reports, Petro-Valve filed its Motion to Compel. (R. Doc.
35). Petro-Valve argues that because responses were not
provided to the requests for production within the 30-day
limit provided by Rule 34, all objections to the request for
production are waived. In the alternative, Petro-Valve argues
that the objections are without merit. Petro-Valve seeks
recovery of fees associated in bringing the motion in the
amount of $4, 900. (R. Doc. 35-13).
April 28, 2017, Petro-Valve filed its Motion for Extension of
Time to File Expert Reports. (R. Doc. 36). In support of the
motion, Petro-Valve asserts that until the Court rules upon
the motion to compel, and it obtains the discovery sought, it
“does not have sufficient information to provide to its
expert so that he may render an opinion” on
Petro-Valve's counterclaims and third party claims. (R.
Doc. 36 at 2).
current discovery deadline is July 14, 2017. (R. Doc. 48).
Law and Analysis A.Petro-Valve's Motion
otherwise limited by court order, the scope of discovery is
as follows: Parties may obtain discovery regarding any
non-privileged 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. Information within this scope
of discovery need not be admissible in evidence to be
discoverable.” Fed.R.Civ.P. 26(b)(1). The court must
limit the frequency or extent of discovery if it determines
that: “(i) 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; (ii) the party seeking discovery has had ample
opportunity to obtain the information by discovery in the
action; or (iii) the proposed discovery is outside the scope
permitted by Rule 26(b)(1).” Fed.R.Civ.P. 26(b)(2)(C).
court may, for good cause, issue an order to protect a party
or person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed.R.Civ.P. 26(c)(1). Rule
26(c)'s “good cause” requirement indicates
that the party seeking a protective order has the burden
“to show the necessity of its issuance, which
contemplates a particular and specific demonstration of fact
as distinguished from stereotyped and conclusory
statements.” In re Terra Int'l, Inc., 134
F.3d 302, 306 (5th Cir. 1998) (quoting United States v.
Garrett, 571 F.2d 1323, 1326 n.3 (5th Cir. 1978)).
34 provides a party with 30 days after service of the
discovery to respond or object. See Fed. R. Civ. P.
34(b)(2)(A). If a party fails to respond fully to discovery
requests made pursuant as to Rule 34 in the time allowed, the
party seeking discovery may move to compel disclosure and for
appropriate sanctions under Rule 37. An “evasive or
incomplete disclosure, ...