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Scentsy, Inc., An Idaho Corporation v. B.R. Chase

October 2, 2012

SCENTSY, INC., AN IDAHO CORPORATION, PLAINTIFF,
v.
B.R. CHASE, L.L.C., A UTAH LIMITED LIABILITY COMPANY; AND HARMONY BRANDS, LLC, A UTAH LIMITED LIABILITY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: B. Lynn WINMILLChief U.S. District Court Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it several discovery motions: Defendants' Discovery Motions Regarding Jeffery Palmer (Dkt. 41); Plaintiff's Motion for Determination of claim of Protection as Trial-Preparation Material (Dkt. 48); Plaintiff's Motion to Cancel or Modify "Attorneys' Eyes Only" Confidentiality Designation (Dkt. 49); and Defendants' Motion to Compel Forensic Examination of Scentsy's Computer Systems and/or Other Appropriate Relief (Dkt. 59).

ANALYSIS

1. Defendants' Discovery Motion Regarding Jeffery Palmer

Harmony asks the Court for an order: (1) compelling Scentsy and Jeffery Palmer to produce in discovery Scentsy's prior settlement agreement with Palmer individually and his company; (2) compelling Palmer to resume his deposition and to answer questions which he was improperly instructed by counsel not to answer; (3) compelling Scentsy to designate a witness to be examined regarding Scentsy's settlement agreement with Palmer and his company, as well as communications between Scentsy and Palmer; and, (4) disqualifying Palmer from serving as an expert because of his disabling conflicts of interests and financial stake in the outcome of this lawsuit.

A. Settlement Agreement and Other Responsive Records

Palmer and his company once litigated claims with Scentsy similar to the claims in this case. The parties settled that case with a confidential settlement agreement. Scentsy has now identified Palmer as both a fact witness and an expert witness in this case. Harmony asks the Court to order Scentsy to produce the settlement agreement and other related documents. Harmony suggests that the agreement and related documents may evidence a bias on the part of Palmer against Harmony, and there is at least some indication that Palmer competes with Harmony in the scented candle market place.

"[T]he 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. . . ."

Fed.R.Civ.P. 26(b). For discovery purposes, relevancy is not related to admissibility; "relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence." Id. Here, the requested material meets the discoverability standard. The settlement agreement and related documents will undoubtedly shed light on the relationship between Palmer and Scentsy. It may also reflect bias on the part of Palmer. That is enough for it to be discoverable. The Court need not review the agreement in camera as suggested by Scentsy, but the parties should be careful to make sure it is disclosed within the contours of the protective order in this case.

There is one caveat to the ordered disclosure. Scentsy need not produce any communications between Palmer and Scentsy's counsel covered by Rule 26(b)(4)(C). But Scentsy is cautioned that Rule 26(b)(4)(C) is not a blanket privilege protecting all such communications; it only protects those "communications between the party's attorney" and Palmer.

Finally, Scentsy's argument that this Court is not the proper forum for ordering disclosure of these documents is unpersuasive. Rule 45(c)(2)(B) does state that "the serving party may move the issuing court for an order compelling production."

Fed.R.Civ.P. 45(c)(2)(B). The Utah District Court is, in fact, the issuing court here. However, the Court understands that Scentsy has a copy of the agreement and related documents, and this Court may order Scentsy to produce them. If Scentsy does not have the documents, Harmony may be required to go to the Utah court, but as explained below regarding the Palmer deposition, the Court hopes that will not be necessary.

B. Palmer Deposition

Similar to the Rule the 45(c)(2)(B) argument above, Scentsy argues that this is not the proper forum for requesting Palmer to resume his deposition and answer the questions he was initially instructed not to answer. Here, Scentsy cites Rule 37(a)(2), which states that "[a] motion for an order to a nonparty must be made in the court where the discovery is or will be taken." Fed.R.Civ.P. 37(a)(2). Scentsy is technically correct. In fact, this Court has been burdened by such motions from cases pending in other jurisdictions.

In order to alleviate the burden on the District of Utah, this Court will outline how it would rule if it had jurisdiction. The parties may choose to follow this guidance, and not burden the District of Utah, but that is entirely up to the parties. However, if they choose to pursue the motion in Utah, that court may be inclined to review this Court's opinion on the issue because this is the presiding court over the merits of the case.

"A person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation ordered by the court, or to present a motion under Rule 30(d)(3)." Fed.R.Civ.P. 30(c)(2). Scentsy suggests that the instructions to Palmer not to answer were given to protect expert-related work product from disclosure under Rule 26(b)(4)(C). Without addressing each objection line by line, the Court will note that it is proper for Scentsy to instruct Palmer not to answer when the answer would invade the attorney-client privilege or work product doctrine. However, as noted above, the settlement agreement and related documents are discoverable, and Palmer should answer all questions related to them. Rule 26(b)(4)(C) protects only those "communications between the party's attorney" and Palmer.

The Court understands that the parties will proceed with an expert deposition of Palmer regardless of what happened in the initial deposition. Under these circumstances, the Court recommends that the parties also use that deposition to resume the deposition of Palmer as a fact witness. During that deposition, counsel may object to questions related to the settlement agreement and related documents, but Palmer should not be instructed not to answer the questions except when necessary to preserve other privileged communication. Privilege in this circumstance does not involve ...


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