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Equal Employment Opportunity Commission v. Roark-Whitten Hospitality 2, LP

United States District Court, D. New Mexico

August 17, 2017

ROARK-WHITTEN HOSPITALITY 2, LP d/b/a Whitten Inn, and JAI HANUMAN, LLC, d/b/a Whitten Inn Taos and/or El Camino Lodge, Defendants.


          Laura Fashing United States Magistrate Judge

         THIS MATTER comes before the Court on plaintiff Equal Employment Opportunity Commission's (“EEOC”) Motion to Compel Discovery of Defendants' Financial Information (Doc. 134) filed on May 3, 2017, and fully briefed on June 23, 2107. See Docs. 141, 151, 152. Having reviewed the submissions of the parties, the relevant law, and being fully advised in the premises, the Court finds that the motion is well taken and will be granted.

         I. Background

         This case arises from allegations of racial discrimination and retaliation by Roark-Whitten Hospitality 2 (“RW2”), in violation of Title VII of the Civil Rights Act of 1964[1] and Title I of the Civil Rights Act of 1991.[2] The EEOC alleges that RW2 created a hostile work environment and discriminated against a class of minority workers. See generally Doc. 87. The EEOC's claims are based on RW2's former owner Larry Whitten's behavior at the Whitten Inn in Taos, New Mexico. As described in their motion to compel, Mr. Whitten

routinely used vulgar language and directed racial slurs at the hotel's Hispanic employees, demoted an employee because of his Hispanic accent, Anglicized the names of Hispanic employees, forb[ade] the use of Spanish in his presence and/or on hotel premises, imposed more onerous work standards on Hispanic employees than Anglo employees, directed employees not to rent rooms to Hispanic customers, terminated and forced the resignation of Hispanic employees, and retaliated against employees who brought the discriminatory employment practices to Mr. Whitten's attention.

Doc. 134 at 2-3.

         Although the second amended complaint focuses on the minority employees who were employed by Whitten Inn in Taos, the EEOC initially also brought its claims against three other hotels that were owned and operated by Larry Whitten: Roark-Whitten Hospitality 3, LP, in Santee, South Carolina (“Whitten Santee”); Abilene TravelLodge, Ltd, in Abilene, Texas (“Whitten Expo”); and Better Hotels, Ltd., also in Abilene, Texas (“Whitten University”). Doc. 1. The Court dismissed Whitten Santee, Whitten Expo, and Whitten University for lack of personal jurisdiction, and they are no longer parties to this lawsuit. Doc. 29. Larry Whitten was the owner of all four Whitten hotels and owned a 99% partnership in the Texas corporation Eastside Hotels, Inc., which managed all four hotels.[3] Doc. 22 at 3. In May of 2014, however, Whitten sold RW2 to Jai Hanuman, LLC (“Jai”). Doc. 134-3 at 2. In its Second Amended Complaint, the EEOC added defendant Jai as a successor employer. See Doc. 87. Jai subsequently sold the hotel to SGI, LLC (“SGI”). Doc. 134 at 4. The EEOC has moved to amend its complaint to add SGI as a defendant. Doc. 86. That motion is pending before the Court.

         In its motion to compel, the EEOC requests the Court to compel financial information from defendants RW2 and Jai, as well as from the non-party hotels Whitten Santee, Whitten Expo, and Whitten University. The EEOC contends that the information is relevant to its claims for integrated enterprise, punitive damages, and successor employer liability. See Doc. 134 at 10-12; Doc. 151 at 5-7.[4] Defendants maintain that they have produced certain financial information concerning RW2, and that any further production is unnecessary and immaterial. See Doc. 141. I find that the information requested is relevant and proportional to the needs of the case and will grant the motion.

         II. Standard for Discovery

         Parties may discover “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case . . . .” Fed.R.Civ.P. 26(b)(1). The factors that bear upon proportionality are: “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.” Id.

         The scope of discovery under rule 26 is broad. See Gomez v. Martin Marrietta Corp., 50 F.3d 1511, 1520 (10th Cir. 1995) (“the scope of discovery under the federal rules is broad”). The federal discovery rules reflect the courts' and Congress' recognition that “[m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.” Hickman v. Taylor, 329 U.S. 495, 507 (1947). As a result of this policy, Rule 26 “contemplates discovery into any matter that bears on or that reasonably could lead to other matter[s] that could bear on any issue that is or may be raised in a case.” Anaya v. CBS Broad., Inc., 251 F.R.D. 645, 649-50 (D.N.M. 2007) (internal quotations marks omitted)(brackets in original). “[B]road discovery is not without limits and the trial court is given wide discretion in balancing the needs and rights of both plaintiff and defendant.” Gomez, 50 F.3d at 1520 (internal quotation marks omitted).

When the discovery sought appears relevant, the party resisting the discovery has the burden to establish the lack of relevance by demonstrating that the requested discovery (1) does not come within the scope of relevance as defined under Fed.R.Civ.P. 26(b)(1), or (2) is of such marginal relevance that the potential harm occasioned by discovery would outweigh the ordinary presumption in favor of broad disclosure.

Johnson v. Kraft Foods N. Am., Inc., 238 F.R.D. 648, 653 (D. Kan. 2006). “Conversely, when the request is overly broad on its face or when relevancy is not readily apparent, the party seeking the discovery has the burden to show the relevancy of the request.” Id.

         III. Discussion

         A. The financial information requested by the EEOC is relevant and proportional.

         The EEOC's motion specifically requests that RW2 provide full and complete responses to Interrogatory No. 9 and Request for Production No. 7. Doc. 134 at 5-6. Interrogatory No. 9 asks:

For Defendant Roark-Whitten Hospitality 2, LP d/b/a Whitten Inn; Roark-Whitten Hospitality 3, LP d/b/a Whitten Inn; TravelLodge, Ltd, d/b/a Whitten Inn Expo; and Better Hotels, Ltd, d/b/a Whitten Inn; Eastside Hotels, Inc.; Roark-Whitten Investment, LLC, and/or any other entity that is in partnership with, owned by, or operated by Defendant or any of its affiliates, state the total gross revenues earned by each entity and any of its subsidiaries or affiliates from 2009 to the present time.

Id.[5] RW2 answered:

See RW2's answer, including objections, to Interrogatory No. 1.[6]Objection is further made to this Interrogatory on the grounds that it is not reasonably calculated to lead to the discovery of admissible evidence and that it seeks proprietary and confidential information. To the extent Plaintiff alleges any relevance to a claim for punitive damages, Plaintiff has failed to establish a prima facie showing that it is entitled to punitive damages. Moreover, the only relevant net worth is the net worth of RW2 at the time of trial. Accordingly, this Interrogatory is both premature and overly broad.

         Without waiving said objections, RW2 states: With regard to Roark-Whitten Hospitality 2, LP:

2009 - $205, 755.05;
2010 - $947, 395.61;
2011 - $863, 073.78;
2012 - $794, 169.24;
2013 - $866, ...

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