Court Opinion

ID: 4109155
Source: CourtListenerOpinion
Date Created: 2016-12-20 21:03:18.490651+00
Date Added: 2024-06-11T14:28:12.008597
License: Public Domain

In the United States Court of Federal Claims
                                  No. 14-250 C
                           (Filed December 20, 2016)
                                UNPUBLISHED

**********************
CALIFORNIA RIDGE WIND     *
ENERGY LLC and INVENERGY  *
WIND LLC,                 *                 Motion to Compel Responses to
                          *                 Interrogatories; Expert Discovery
              Plaintiffs, *                 Appropriate to Explore
                          *                 Government’s Contentions
          v.              *                 of Fact and Law Regarding Fair
                          *                 Market Value of Wind Energy
THE UNITED STATES,        *                 Facility Development Fee.
                          *
              Defendant.  *
**********************

     John C. Hayes, Jr., Washington, DC, for plaintiffs. Alycia A. Ziarno, Brian
P. Donnelly and Brian J. Whittaker, Washington, DC, of counsel.

      Miranda Bureau, United States Department of Justice Tax Division, with
whom were Caroline D. Ciraolo, Principal Deputy Assistant Attorney General,
David I. Pincus, Chief, G. Robson Stewart, Assistant Chief, S. Starling Marshall
and Blaine G. Saito, Trial Attorneys, Washington, DC, for defendant.

                          ________________________

                                  OPINION
                          ________________________

Bush, Senior Judge.

       The court has before it Plaintiffs’ Motion to Compel Discovery Responses,
filed July 21, 2016. Oral argument on the motion was held on November 29,
2016. During the briefing of plaintiffs’ motion the parties were able to resolve
some of their disputes, and just before oral argument the government
supplemented its response to two of plaintiffs’ contention interrogatories. Thus, in
the court’s view, the outstanding controversy concerns five of the government’s
responses to plaintiffs’ contention interrogatories. According to plaintiffs’ reply
brief, plaintiffs seek “an order compelling Defendant to provide timely
amendments to its responses to Invenergy’s contention interrogatories.” Pls.’
Reply at 10. Plaintiffs’ motion is denied, for the reasons stated below.

I.    Contention Interrogatories in General

        The court need not dwell overlong on the caselaw cited by the parties which
states and restates various perspectives regarding the appropriateness and timing
of contention interrogatories. Much of the caselaw cited by plaintiffs, see id. at
6-7, is focused specifically on patent litigation discovery, a type of discovery not
at issue in this case. The government, for its part, relies on a number of cases that
are not binding on this court, and which are not sufficiently analogous to this case
to provide much useful guidance. See Def.’s Opp. at 7-8, 14-15. Defendant does
cite to one case, however, which has a great number of parallels to the current
dispute, and which evinces a well-reasoned analysis of the proper use and timing
of contention interrogatories in circumstances similar to those present in this case.
Id. at 16. The case cited by defendant, BB & T Corp. v. United States, 233 F.R.D.
447 (M.D.N.C. 2006), provides a persuasive analysis that guides this court in
resolving the parties’ discovery dispute. The court notes, too, that it enjoys wide
discretion in resolving discovery disputes and scheduling discovery so that cases
before it may proceed justly and efficiently. See, e.g., Schism v. United States, 316
F.3d 1259, 1300 (Fed. Cir. 2002) (en banc) (“A trial court ‘has wide discretion in
setting the limits of discovery.’” (quoting Moore v. Armour Pharm. Co., 927 F.2d
1194, 1197 (11th Cir. 1991))).

      BB & T provides an explanation of the use of contention interrogatories:

             [When a] plaintiff seeks to discover [a] defendant’s
             factual and legal bases for its defense[,] [t]his type of
             discovery is termed “contention discovery” and is
             usually conducted by serving “contention
             interrogatories” as opposed to taking a deposition of a
             party or its attorneys.

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233 F.R.D. at 447. It is important to note that in BB & T, the contention discovery
targeted the government’s rejection of certain deductions on the plaintiff’s tax
return. Id. Similarly, in this case, plaintiffs’ contention discovery targets
Treasury’s rejection of the amount of plaintiffs’ claimed cost basis for a wind
power facility, an amount which is determinative of the size of a grant award by
Treasury to plaintiffs. See Pls.’ Reply at 7 (noting that plaintiffs’ contention
discovery focuses on the “central issue to Plaintiffs’ claim,” i.e., “the very
justification given by Treasury for reducing California Ridge’s grant award”).
Thus, the contention discovery disputes in BB & T and in this case are quite
similar in focus.1

        The basic framework of the contention discovery dispute in BB & T
involved both contention interrogatories and contention depositions, as does the
litigation in the present case and its companion case, Bishop Hill Energy LLC v.
United States, No. 14-251C. Just as in this case and Bishop Hill, the plaintiff in
BB & T began with contention interrogatories and later turned to contention
depositions when the contention interrogatories were not fruitful:

              Plaintiff did first attempt to use contention
              interrogatories. Seven months [before noticing
              contention depositions], BB & T served eleven
              interrogatories seeking contention information. It
              complains that the response by the United States fails to
              identify any relevant facts and provides only a superficial
              discussion of the United States’ legal basis for its
              defense. . . . The Court agrees that th[e] answer given by
              the United States is rather cursory.

233 F.R.D. at 448-49. In the subject matter, plaintiffs have similar complaints
regarding the government’s responses to their contention interrogatories. See Pls.’
Mot. at 16-19.

       1
         / The taxpayer in BB & T also engaged in complicated business transactions, 233 F.R.D.
at 448, analogous to the complex business transactions that underlie the wind power facility
investments of plaintiffs.

                                               3
      Although the BB & T court agreed with the plaintiff that the government’s
response to the contention interrogatories was “rather cursory and unhelpful,” the
court nonetheless quashed the contention depositions sought by the plaintiff. Id.
at 449. The court offered several reasons why the plaintiff would be denied
contention discovery at that stage of the litigation. Of most interest here, the
timing of the contention discovery was held to be premature. The following
excerpts of the court’s decision explain that ruling:

            A third reason for granting the protective order [in favor
            of the government] concerns the element of timing. And,
            the timing issue implicates the much larger and more
            general issue of whether contention discovery should be
            allowed at all. Contention discovery, whether in the
            form of contention interrogatories or contention
            depositions, can be disruptive mainly because the very
            nature of such questions will normally require the help of
            an attorney to assist the client in providing answers.
            This type of discovery can add considerable expense to
            any lawsuit. In addition to the extra cost, when lawyers
            craft responses they will necessarily do so in a way that
            most minimizes jeopardy to their client and, therefore,
            contention discovery may yield little additional useful
            information. Consequently, when the facts, evidence,
            and law are relatively straightforward such as in a simple
            traffic accident case, the need for contention discovery
            may be outweighed by the burdens of contention
            interrogatories, much less contention depositions of
            attorneys. On the other hand, when a case involves
            complicated technical issues such as may arise in patent
            litigation, contention interrogatories may be useful.

            The instant case lies somewhere between the two. The
            necessity for contention interrogatories seemingly arises
            in government litigation because the government is often
            making policy through an enforcement action and not
            just relying on past decisions. Thus, in the instant case,
            plaintiff perceives that the government, for policy

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reasons, altered its position when it decided to go after
[complex business transactions] such as plaintiff’s.
From plaintiff BB & T’s viewpoint, the government’s
defense seems like a moving target and it would like to
have the government commit itself to a particular
position and explain its reasons.

With this last proposition, the government does not
disagree, but argues that the real issue concerns the
appropriate time and manner for such revelations. The
government asserts that it has been busy during
discovery trying to learn facts and until it has a
sufficient, comprehensive view of the facts, it will not be
able to provide a final opinion concerning its
contentions. It continues that its earlier answers to the
contention interrogatories at least provided the broad
outlines of its defense. However, the Fed. R. Civ. P.
26(a)(2) report of its expert witness to be served on
February 15, 2006 will allegedly contain a complete
statement of the expert’s opinion concerning the defense,
the basis and reasons for that opinion, and the data and
information on which the expert relied. At that time,
defendant contends BB & T will have full knowledge of
the facts and legal theory of the government’s defense.

The Court agrees with defendant that when there is an
expert report which will touch on the very contentions at
issue, the Court should normally delay contention
discovery until after the expert reports have been served,
which may then render moot any further contention
discovery. Even in a case not involving expert
witnesses, contention interrogatories should normally be
conducted at the end of discovery. Thus, an additional
reason to quash the deposition[] notices is that they are
premature.

The final reason for quashing the “contention

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             depositions” is that it is not clear that they are necessary.
             A court may be well advised to examine whether
             contention discovery is truly necessary in any particular
             case. As the United States points out, contention
             discovery often requires a party to, in essence, prepare a
             trial brief at an earlier time in the litigation process than
             normally occurs. Without some specific reason to
             require such an acceleration, the Court may well deem
             the burden to outweigh the benefit. In the ordinary case,
             the complaint, answer, disclosures, and discovery will
             provide sufficient information about a party’s position
             until such time as the filing of the dispositive motions or
             trial briefs. In other cases, contention discovery may be
             necessary to avoid surprises at trial. Courts may wish to
             confine contention discovery to those cases where there
             is a compelling, specific need for the information prior to
             the filing of dispositive motions in order to keep
             litigation costs down.

Id. at 449-451 (footnote and citations omitted).

       Given the parallels between the discovery dispute in BB & T and the
discovery dispute in this case and its companion case Bishop Hill, the court views
the analysis of the discovery scheduling dispute in BB & T, particularly as to the
timing of contention discovery, to be persuasive. The court also agrees with the
BB & T court’s general preference for contention interrogatories, rather than
contention depositions. See 233 F.R.D. at 449 (“[U]ntil a party has first shown
that the interrogatory process cannot be used, it may not seek to use depositions
for contention discovery.”). The court turns now to the contention discovery
requested by plaintiffs in this case.

II.   Plaintiffs’ Contention Interrogatories

       The five contention interrogatories for which defendant’s responses are still
in dispute in this case are as follows:

             Interrogatory 1: Do you contend that the development

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            fee of $50,000,000 included as part of the cost basis in
            the California Ridge Application exceeded open market
            expectations for projects of the size of California Ridge
            and in the location of California Ridge?

            Interrogatory 2: If the answer to the foregoing
            interrogatory is yes, set forth all facts which you contend
            support that contention.

            Interrogatory 15: Do you contend that the amount of
            the development fees included in the cost basis of other
            wind energy facilities similar in size to California
            Ridge’s and placed in service around the same time as
            California Ridge’s are not relevant to a determination of
            the fair market value of the development fee included in
            the claimed qualified cost basis of the California Ridge
            facility?

            Interrogatory 16: If the answer to interrogatory number
            15 is yes, set forth all facts upon which you rely to
            support that contention.

            Interrogatory 17: If the answer to interrogatory 15 is
            that the amount of the development fees included in the
            cost basis of other wind energy facilities similar in size
            to California Ridge’s and placed in service around the
            same time as California Ridge’s are relevant, identify
            each and every one of those wind energy projects.

Pls.’ Mot. at 5-6. Broadly, these contention interrogatories seek defendant’s
position on the fair market value of the development fee paid by California Ridge
Wind Energy LLC (California Ridge), the relevance of the development fees paid
by other wind power facility developers for determining the fair market value of
California Ridge’s development fee, and the identification of wind power projects
that would be relevant for making a comparative analysis to determine the fair
market value of California Ridge’s development fee. The court agrees with
plaintiffs that defendant has not responded, substantively, to these contention

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interrogatories.

       Defendant argues that these contention interrogatories are premature, and
that the government should not be compelled to respond with information which
would be more appropriately disclosed during expert discovery. According to the
government’s opposition brief:

                    Defendant’s objection states that if it does submit
             evidence regarding the fair market value of the purported
             development fee in its defense, it will do so through an
             expert. Because expert reports have not been exchanged
             yet, Plaintiffs’ request for such information is premature.

                    For example, Interrogatory No. 15 asks whether
             Defendant contends that certain factors are not relevant
             to a determination of the fair market value of California
             Ridge’s development fee. But the relevant factors in
             determining fair market value are, necessarily, part of an
             expert’s approach to valuation. For example, an expert
             may determine that the amount of development fees
             included in the cost basis of wind energy facilities
             similar in size to California Ridge’s are relevant to the
             fair market value of the development fee included in the
             claimed qualified cost basis of the California Ridge
             facility, or, he or she may not consider that information
             relevant at all.

                   ....

                    Defendant also objected to interrogatories 2, 16,
             and 17, which seek the identification of facts or projects
             underlying the responses to Interrogatories 1 and 15, as
             calling for the disclosure of expert work product and/or
             expert discovery prior to the deadlines for providing
             such discovery. Because the questions posed by
             interrogatories 2, 16, and 17 refer to facts that may
             underlie potential arguments that Defendant may make

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               based on an expert opinion, they also fall within the
               realm of expert discovery, and cannot be answered
               absent expert opinion. And if an expert chose to analyze
               certain wind projects in the context of his or her expert
               report, the identity of those projects would be revealed in
               the report.

Def.’s Opp. at 15-16. The court agrees with defendant that these particular
contention interrogatories contain requests for information that is more
appropriately obtained during expert discovery. The government’s disclosure of
its expert report, should this case proceed to expert discovery, is the appropriate
time for plaintiffs to obtain the information they seek in these five contention
interrogatories.

       Plaintiffs offer a number of unpersuasive arguments contending that
plaintiffs are entitled to contention discovery now, not later in this litigation. The
court examines the most substantive of those arguments here.2 First, plaintiffs
suggest that their contention interrogatories are not early, or premature, according
to caselaw which has resolved analogous disputes over the timing of contention
discovery. Pls.’ Reply at 6-8. To the extent that the cases cited by plaintiffs
address the specific circumstances of contention discovery in patent litigation,
those cases are inapposite. None of plaintiffs’ cases are more on point than
BB & T; the court views BB & T as the most persuasive authority for the resolution
of the parties’ dispute over contention discovery.

       Next, plaintiffs assert that contention discovery is essential before the
parties complete depositions during the fact discovery period. Pls.’ Reply at 8-9.
To the extent that defendant’s deposition witnesses will provide testimony of their
personal knowledge of the contemporaneous review of California Ridge’s
development fee, that is a narrower topic than any of the five interrogatories at
issue in plaintiffs’ motion. See Oral Argument Recording, at 2:21-24 PM
(plaintiffs’ counsel noting that Interrogatory #1 asks for the government’s current
contentions regarding plaintiffs’ development fee). To the extent that plaintiffs
seek foundational information to support certain topics in their Rule 30(b)(6)

       2
        / The court has considered each of plaintiffs’ arguments, and finds them insufficient to
invalidate the sound approach taken by the court in BB & T.

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deposition, those contention deposition topics will be addressed in the opinion
filed in the companion case Bishop Hill on this date. The court sees no need for
substantive responses to these five contention interrogatories before any fact
witness depositions are taken in this case.

       Finally, in Bishop Hill, plaintiffs allege that they will be handicapped in
expert discovery if their proposed contention discovery is not completed during
the fact discovery period. Pls.’ Bishop Hill Opp. of Sept. 29, 2016, at 12. The
essence of their argument is two-fold. According to plaintiffs, their expert will be
forced to construct an opinion without the benefit of all of the data that the
government’s expert will be able to access. In addition, plaintiffs allege that the
government will be free to “cherry pick” the data it presents to both its own expert
and to plaintiffs’ expert. As the court has previously stated, however, expert
discovery allows a party access to the data underlying its opponent’s expert
opinions. Opin. of Dec. 21, 2015, at 12. To the extent that plaintiffs predict that
the government will unfairly manipulate expert discovery to its advantage, that is a
speculative concern with no basis in fact. See Oral Argument Recording, at
2:53-54 PM (defendant’s counsel stating that she has no intention of cherry
picking data to influence expert opinion). The court expects both parties to
collaborate in discovery in full accordance with the letter and the spirit of the
court’s rules.

III.   Conclusion

       For the foregoing reasons, plaintiffs’ request that defendant substantively
respond to its five contention interrogatories at this point in the litigation must be
rejected as premature. The court also notes that expert discovery in this case is
contingent upon plaintiffs’ claim surviving summary judgment proceedings.
Accordingly, it is hereby ORDERED that Plaintiffs’ Motion to Compel Discovery
Responses, filed July 21, 2016, is DENIED.

                                                     /s/Lynn J. Bush
                                                     LYNN J. BUSH
                                                     Senior Judge

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