United States District Court, N.D. Iowa, Western Division
WILLIAM S. WOLLESEN, et. al., Plaintiffs,
WEST CENTRAL COOPERATIVE, et. al., Defendants.
K.E.Mahoney United States Magistrate Judge
matter comes before the Court on two motions: (1) plaintiff
Iowa Plains Farms' (“Iowa Plains”) Motion to
Compel Against defendants West Central Cooperative, WestCo
Agronomy Company, LLC, and Farmers Cooperative Company d/b/a
Landus Cooperative (collectively “West Central
defendants”) and defendants Wixted Pope Nora Thompson &
Associates, LLC, Wixted, Inc., and Eileen Wixted
(collectively “Wixted Pope defendants”) (Doc.
169), and (2) Iowa Plains' Motion to Compel Against
Wixted Pope defendants (Doc. 172). The Wixted Pope defendants
timely filed their resistance (Doc. 181) and the West Central
defendants timely filed their resistance (Doc. 180) to Iowa
Plains' first motion to compel (Doc. 169). Iowa Plains
timely filed a single brief in response to both resistances.
(Doc. 189; see Doc. 186 (granting Iowa Plains an
extension of time to file its reply brief)). The Wixted Pope
defendants also timely filed their resistance to Iowa
Plains' second motion to compel (Doc. 172). Doc. 182.
Iowa Plains timely filed its reply brief. (Doc. 191;
see Doc. 186 (granting Iowa Plains an extension of
time to file its reply brief)). The Court entertained oral
argument on these motions on December 28, 2017 (Doc.
following reasons, Iowa Plains' Motion to Compel Against
West Central and Wixted Pope (Doc. 169) is granted in
part and denied in part and Iowa Plains' Motion
to Compel Against Wixted Pope (Doc. 172) is granted
in part and ruling is reserved in part.
factual history of this case is complex and need not be
recounted in full for purposes of the instant motions. The
Court recognizes that the following synopsis eliminates many
details, however, in the interest of brevity, the facts are
allege that defendants conspired “to hide and conceal
the known fraudulent conduct of Chad A. Hartzler.” Doc.
64 at 2. This conspiracy, plaintiffs allege, involved
devising a story in which plaintiffs and Hartzler, together,
engaged in fraudulent and illegal conduct. Doc. 64.
Subsequently, in an attempt to lessen the repercussions of
their own wrongful conduct, certain defendants used
plaintiffs as a scapegoat. Id. at 2. As a result,
plaintiffs plead damages in excess of $6 million.
Id. at 4.
began purchasing agronomy products from West Central, a
collection of farming companies and their shareholders, on a
prepay basis in February 2002. Id. at 14. On June
25, 2007, Iowa Plains Farms became a shareholder of West
Central Cooperative (“West Central”).
Id. at 23. Hartzler began working for West Central
in July 2002; plaintiffs claim that Hartzler's objective
was “to increase West Central's sales and to
improve its competitive position in the agronomy
industry” by increasing West Central's agronomy
sales. Id. at 14. In February 2003, Hartzler
allegedly began stealing seedcorn from West Central and
misappropriating it for personal profit. Id. at 17.
Although the exact facts of the multiple alleged
misappropriations were varied, plaintiffs claim that the bulk
of these misappropriations involved Hartzler stealing
seedcorn from West Central and selling it to unknowing West
Central customers, who paid Hartzler directly and personally
for the seedcorn. Id. In this manner, Hartzler
realized a personal profit on the stolen product.
2005, Hartzler was assigned to handle plaintiffs'
accounts with West Central. Id. at 18. During
plaintiffs' first meeting with Hartzler, Hartzler
informed plaintiffs “that he received product from
manufacturers that he could sell for his own benefit
(a.k.a. ‘rep. material').”
Id. This statement was not true. Id. at
18-19. From 2005 through 2010, Hartzler sold this “rep.
material” to plaintiffs, who paid Hartzler directly and
personally. Id. at 19. Instead of lawfully acquiring
the product, Hartzler was stealing the product from West
Central and selling it to plaintiffs for personal gain.
Id. Plaintiffs allege that they had no reason to
suspect any illicit activity. Id.
conceal his fraudulent conduct, plaintiffs claim Hartzler
engaged in a practice known as “lapping, ” in
which Hartzler would sell the stolen product to plaintiffs
for a personal profit, then enter a receivable on Iowa
Plains' book with West Central. Id. at 29. Thus,
Iowa Plains paid Hartzler directly for the product and was
also billed for the same product by West Central.
Id. Plaintiffs, however, were unaware that they were
billed twice and only had knowledge of the payment made
directly to Hartzler. Id. Iowa Plains did not pay
West Central for the product provided by Hartzler and for
which Hartzler personally received payment. Id. As a
result, an ever-increasing deficit in Iowa Plains' name
was created on West Central's books. Id. To
conceal the deficit, Hartzler solicited increasing payments
from plaintiffs each year; while a portion of the payment
went to Hartzler directly, a portion was applied to the
deficit on West Central's books. Id. This scheme
resulted in a greater deficit being created each time
Hartzler misappropriated product and sold it to plaintiffs
for personal gain. See id.
allege that because Iowa Plains expressly declined to open a
credit line with West Central, West Central should have
become aware of Hartzler's conduct at the time the
deficit first appeared on the books, but instead permitted
Hartzler's conduct to continue. Id. at 29-30.
Plaintiffs further argue that West Central became aware of
Hartzler's fraudulent conduct in 2007 and, in no case,
could West Central have become aware of the fraudulent
conduct any later than January 2009. Id. at 25-26.
April 20, 2011, Hartzler submitted his resignation, in which
he accepted full responsibility for the alleged malfeasance.
Id. at 35. Plaintiffs believe that Hartzler's
resignation was strategically planned to draw attention away
from defendants' failure to act with respect to
Hartzler's malfeasance. Id. Shortly thereafter,
plaintiffs allege, in an attempt to cover up Hartzler's
actions, certain defendants suggested to Hartzler that
Hartzler had been bribed by plaintiffs; Hartzler adopted this
suggestion and later gave a sworn statement to the effect
that plaintiffs had bribed Hartzler. Id. at 35-36.
Subsequently, certain defendants pursued a legal action
against Iowa Plains Farms in Story County, Iowa. Id.
at 37. That lawsuit (which was filed on May 12, 2011)
resulted in a verdict in favor of the Wollesens and Iowa
Plains Farms. Westco Agronomy Co., LLC v. Wollesen,
No. LACV046817, 2014 WL 5389985 (Iowa Dist. Aug. 7, 2014).
The Supreme Court of Iowa upheld the verdict as it pertained
to the Wollesens. Westco Agronomy Co., LLC v.
Wollesen, No. 15-0471, 2017 WL 6545853 (Iowa Dec. 22,
Central retained Wixted Pope Nora Thompson & Associates, LLC
(“Wixted Pope”) to serve as West Central's
public relations firm amidst the scandal involving Hartzler.
Id. at 40. At some point, defendant Eileen Wixted
was a business partner at Wixted Pope. The Wixted Pope
defendants actively attempted to promote a positive image for
West Central. Id. at 40-41. West Central
representatives allegedly delivered speeches crafted by the
Wixted Pope defendants that were intended to restore and
promote West Central's image by using the Wollesens as a
scapegoat for both Hartzler's theft and other unrelated
losses. Id. at 44. By turning the Wollesens into a
scapegoat, the West Central defendants and the individual
defendants were able to escape liability and accountability
at the hands of West Central's shareholders. Id.
Alicia Clancy, as West Central's Director of
Communications, became involved in the “cover-up”
scheme by making public statements relating to the scheme.
Id. at 69. Alicia Clancy, notably, is not named as a
defendant in this action.
motions currently under consideration by the Court are
motions to compel and seek discovery that has been withheld
based on objections for relevance, attorney-client privilege,
and the work-product doctrine. Though each motion,
resistance, and reply may present a distinct legal issue, the
law common to both motions is set forth below.
Motion to Compel
Rule of Civil Procedure 37(a)(1) provides that a party moving
to compel discovery “must include a certification that
the movant has in good faith conferred or attempted to confer
with the person or party failing to make disclosure or
discovery in an effort to obtain it without court
action.” See also LR 37(a). An exchange of
written communications or a single telephone message will
not, by itself, satisfy the requirements.” LR 37(1).
“The meet-and-confer requirement is not an empty
formality.” Williams v. Cent. Transp. Int'l.,
Inc., No. 4:13-CV-2009 (CEJ), 2014 WL 6463306, at *2
(E.D. Mo. Nov. 17, 2014) (citation and internal quotation
26(b)(1) of the Federal Rules of Civil Procedure provides:
Unless otherwise limited by court order, the scope of
discovery is as follows: Parties may obtain discovery
regarding any nonprivileged 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
Fed. R. Civ. P. 26(b)(1). Rule 26 is “liberal in scope
and interpretation” and extends to matters that
“are relevant and reasonably calculated to lead to the
discovery of admissible evidence.” Hofer v. Mack
Trucks, Inc., 981 F.2d 377, 380 (8th Cir. 1992)
(citation omitted). Whether the discovery sought would be
admissible in evidence is inconsequential when considering a
motion to compel discovery. Id. Thus, evidence that
may be inadmissible may properly be discoverable.
Id. “[T]here must be at least a
‘threshold showing of relevance' before requiring a
party to disclose ‘information which does not
reasonably bear upon the issues in the case.'”
Liguria Foods, Inc. v. Griffith Labs., Inc., 309
F.R.D. 476, 479 (N.D. Iowa 2015). Once this showing is made,
the burden shifts to the resisting party to show the
requested information is not relevant for discovery.
Rules of Civil Procedure 33 and 34 state that objections to
discovery requests must be stated with
“specificity.” Indeed, the Honorable Mark W.
Bennett, United States District Judge, who is the District
Judge presiding over the instant case, has admonished parties
against “asserting boilerplate objections that the
discovery sought is vague, ambiguous, overbroad, unduly
burdensome, etc. . . . without specifying how each
interrogatory or request for production is deficient and
without articulating the particular harm that would accrue if
the responding party were required to respond to the
proponent's discovery requests.” Liguria Foods,
Inc. v. Griffith Labs., Inc., 320 F.R.D. 168, 185 (N.D.
Iowa 2017) (alteration in original) (citation and internal
quotation marks omitted).
will not be permitted if responding to a specific request
would be unduly burdensome, or if “harm to the person
from whom discovery is sought outweighs the need to the
person seeking discovery of the information.”
Nachurs Alpine Solutions, Corp. v. Nutra-Flo Co.,
No. 15-CV-4015-LTS, 2017 WL 1380460, at *2 (N.D. Iowa Apr.
17, 2017); see also Fed. R. Civ. P. 26(b)(1)
(requiring discovery be proportional to the needs of the
case). This Court has established several factors that may be
considered in assessing whether responding to a discovery
request would present an undue burden: 1) relevance of the
requested information; 2) the party's need for the
discovery; 3) the breadth of the discovery request; 4) the
time period covered by the request; 5) ...