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Riley v. Newpenn Kilt, LLC

United States District Court, W.D. Kentucky, Paducah Division

January 6, 2020

JAY RILEY PLAINTIFF
v.
NEWPENN KILT, LLC DEFENDANT

          MEMORANDUM OPINION AND ORDER

          H. Brent Brennenstuhl United States Magistrate Judge

         Before the Court is the motion of Plaintiff Jay Riley to compel Defendant NewPenn Kilt, LLC to provide documents in discovery (DN 41). NewPenn has filed a response in opposition (DN 45). No. reply has been filed and the matter is ripe for decision.

         Background

         Tilted Kilt is a franchised casual dining and bar enterprise. Tilted Kilt Franchise Operating, LLC (“TKFO”) is the national franchisor. Riley was an area developer in the franchise system, recruiting and supporting franchisees in a defined geographic territory. Riley was compensated through a share of royalties paid by the franchisees to TKFO. Riley sold his area developer rights to NewPenn. Their agreement provided that NewPenn would pay Riley a portion of NewPenn's net income from the franchisees. Further, the parties agreed he would receive 20% of NewPenn's net proceeds if it subsequently sold or assigned the area developer rights to a third party. NewPenn subsequently sold the area developer rights back to TKFO and the parties disagree over whether this resulted in net proceeds to which Riley is entitled a share.

         Riley's Motion

         Riley propounded a request for production of documents on NewPenn seeking information about the sale or assignment of the area developer agreement:

Request No. 5: Please produce for copying and inspection any and all correspondence, contract, assignments, or other documents evidencing your sale or assignment of a Replacement Developer Agreement or any party thereof to TKFO.

         NewPenn responded as follows:

Response: Defendant objects to this request as overbroad, unduly burdensome, and disproportionate to the needs of the case in that it calls for “any and all correspondence, contracts, assignments, or other documents.” Subject to and without waiving the foregoing, Defendant will produce responsive, non-privileged documents located after a reasonable search.

(DN 45 PageID # 179).

         NewPenn subsequently produced the contract between itself and TKFO regarding the sale of the area developer rights. NewPenn also produced documents related to an offer from a third party to buy NewPenn's area developer rights.

         Riley believes that this production is insufficient (DN 41 PageID # 159-62). He notes that NewPenn and TKFO were involved in litigation over money allegedly owed by TKFO to NewPenn on TKFO's purchase of NewPenn's area developer rights. He further contends that NewPenn and TKFO were involved in arbitration over liquidated damages when NewPenn closed three franchise locations operating within the developer territory. Riley asserts:

The store closures resulted in arbitration between defendant and TKFO whereby defendant was to pay to TKFO a substantial amount of money although a cash buyout allegedly never occurred. Instead, it is plaintiff's understanding, the amount defendant owed TKFO through the arbitration award . . . was offset by the amount of money TKFO was to pay to ...

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