Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20131217_0001375.WPA.htm/qx
Timestamp: 2019-04-24 12:20:35+00:00

Document:
PITTSBURGH & WEST VIRGINIA RAILROAD AND POWER REIT, Defendants.
TERRENCE F. McVERRY, District Judge.
Pending before the Court is a MOTION FOR PROTECTIVE ORDER SHIFTING THE COSTS OF ADDITIONAL DISCOVERY TO THE PLAINTIFFS and a MOTION FOR SANCTIONS (ECF No. 124) filed by Defendant Pittsburgh & West Virginia Railroad Company ("PWV") with a brief (ECF No. 125) and the Declaration of David H. Lesser (ECF No. 126) in support. Plaintiffs Norfolk Southern Railway Company ("Norfolk Southern") and Wheeling & Lake Erie Railway Company ("WLE") filed a brief in opposition (ECF No. 124); PWV filed a reply brief (ECF No. 145) and the Declaration of Edward P. Gilbert, Esq. (ECF No. 146) in further support. The Court heard oral argument from counsel on December 13, 2013. Accordingly, the motions are ripe for disposition.
The parties, counsel, and the Court are familiar with the background of this case and, therefore, the Court will not recite the underlying facts or procedural history at any length again. The following is a brief recitation of the issues presently before the Court.
PWV seeks a protective order shifting the costs of additional discovery onto Plaintiffs and moves for sanctions to be imposed. PWV argues that such discovery is now necessary due to the delayed production of 23, 000 pages of documents in April 2013 and that the costs of discovery would unduly burden it due to the disparity in the relative resources of the parties. Likewise, PWV requests that the Court sanction Plaintiffs for their alleged failure to produce all relevant documents in response to repeated discovery demands and award costs and fees associated with filing this motion as well as the May 2013 motion for leave to file a second supplement to counterclaims. As part of its motion for sanctions, PWV again raises the reimbursement provision under Section 4 of the Lease and highlights that Plaintiffs have yet to provide a full accounting of the proceeds received from the demised property despite a May 8, 2013 representation that they would "endeavor to create an accounting."
Plaintiffs argue that PWV's motion is an underhanded attempt to force them to fund its pursuit of the newly added counterclaims, maintaining that "[its] protestations of ignorance are unfounded and contradicted not only by the plain language of the Lease but also by the very documents produced by Defendants in this litigation." (ECF No. 140 at 4). Plaintiffs similarly contest the accusation that they failed to comply with opposing counsels' discovery requests and note that Defendants never filed a motion to compel in this case.
The Court has considered the various arguments of the parties and their extensive filings in support. The Court will address the two motions seriatim.
Rule 26 of the Federal Rules of Civil Procedure provides that "[t]he 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). See also Pansy v. Borough of Stroudsburg , 23 F.3d 772, 786 (3d Cir. 1994). The party seeking a protective order bears the burden of proof to establish good cause, which requires more than mere allegations of unspecified, theoretical or generalized harm. See Kuhns v. City of Allentown , 264 F.R.D. 223, 228 (E.D. Pa. 2010) (citing Fed.R.Civ.P. 26(c); Cipollone v. Liggett Group, Inc. , 785 F.2d 1108, 1121 (3d Cir. 1986)).
This Rule sets forth a wide range of protective measures, such as limiting the scope of a disclosure, prescribing different discovery methods, designating who may be present while the discovery is conducted, sealing a deposition, or prohibiting disclosure altogether. Fed.R.Civ.P. 26(c)(1)(A)-(H). However, this list is non-exhaustive. See 8A THE LATE CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 2036 (3d ed. 2010) ("It is impossible to set out in a rule all of the circumstances that may require limitations on discovery or the kinds of limitations that may be needed."). The federal rules instead permit the district court to decide what restrictions may be necessary in a particular case. See Seattle Times Co. v. Rhinehart , 467 U.S. 20, 36 (1984). "To be sure, Rule 26(c) confers broad discretion on the trial court to decide when a protective order is appropriate and what degree of protection is required." Id.
Among the non-explicit measures, Rule 26(c) empowers district courts to shift pretrial discovery costs either fully or partly. See Oppenheimer Fund, Inc. v. Sanders , 437 U.S. 340, 358 (1978). As the Supreme Court has stated, "[u]nder th[e] [discovery] rules, the presumption is that the responding party must bear the expense of complying with discovery requests, but [it] may invoke the district court's discretion under Rule 26(c) to grant orders protecting him from undue burden or expense' in doing so, including orders conditioning discovery on the requesting party's payment of the costs of discovery." Id. The exercise of this discretion is often guided by the proportionality test under Rule 26(b). See 8 THE LATE CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 2008.1 n.26 (3d ed. 2010) ("[W]hen a request violates the proportionality test, the court may condition discovery on the requesting party's payment of the costs of the discovery.") (citing Hagemeyer North America, Inc. v. Gateway Data Sciences Corp. , 222 F.R.D. 594 (E.D. Wis. 2004)). Those considerations include "the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues." Fed.R.Civ.P. 26(b)(2)(C)(iii).

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