Document Page 1 of 12 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: CAESARS ENTERTAINMENT OPERATING COMPANY, INC., et al. Debtors. ) ) ) ) ) ) Chapter 11 Case No. 15-01145 (Jointly Administered) Hon. A. Benjamin Goldgar GORDON RAMSAY AND GORDON RAMSAY HOLDINGS LIMITED S RESPONSE IN OPPOSITION TO MOTION TO COMPEL OF LLTQ ENTERPRISES, LLC AND FERG, LLC Gordon Ramsay and Gordon Ramsay Holdings Limited (collectively, Ramsay ), by and through their attorneys, Sugar Felsenthal Grais & Hammer LLP, hereby respond to the Motion to Compel Gordon Ramsay and Gordon Ramsay Holdings, Ltd. to Fully Respond to the First Requests for Production of Documents and to Set a Deadline for Production the ( Motion ) [Dkt. 7156] filed by FERG, LLC ( FERG ) and LLTQ Enterprises, LLC ( LLTQ and together with FERG, Movants ). I. INTRODUCTION Movants are not entitled to the extensive additional discovery that they seek from Ramsay, regarding documents in possession of Ramsay s counsel, and additional so-called contemplated ventures. This is a contested matter between Movants and the Debtors arising from Movants contention that section 13.22 of the LLTQ Agreement between Movants and the Debtors survived the Debtors rejection of the agreement. Discovery should be limited documents and information relevant to resolving that dispute. Ramsay is not a party to the underlying agreement and is not a party to the contested matter. Nonetheless, Movants issued broad discovery requests to Ramsay that are essentially
Document Page 2 of 12 duplicative of their discovery requests to the Debtors, and Ramsay has undertaken significant effort and expense over the past year to respond. The additional discovery that Movants now seek from Ramsay is grossly disproportional to the needs of the case, would impose unreasonable burdens on Ramsay, is not relevant to resolving Movants dispute with the Debtors regarding whether section 13.22 of the LLTQ Agreement survived rejection, and is largely duplicative and cumulative of discovery that has already been conducted. Accordingly, the Motion should be denied. II. LEGAL STANDARD Rule 26 of the Federal Rules of Civil Procedure is applicable to this contested matter pursuant to Rule 9014(c) of the Federal Rules of Bankruptcy Procedure. The rule states, in relevant part: [T]he scope of discovery is as follows:... 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 parties relative access to relevant information,... the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Fed. R. Civ. P. 26(b)(1). [T]he scope of discovery has limits, and particularly as it relates to electronically stored information. Archer Daniels Midland Co. v. Chemoil Corp., 15-2199, 2016 WL 9051173, at *2 (C.D. Ill. Oct. 19, 2016) (denying motion to compel). The district court exercises significant discretion in ruling on a motion to compel. It may grant or deny the motion in whole or in part. In exercising its discretion, the district court may deny discovery to protect a party from undue burden. Id. (citations omitted). Additionally, the court must limit the frequency or extent of discovery... if it determines that... the discovery sought is unreasonably cumulative or duplicative, or can be 2
Document Page 3 of 12 obtained from some other source that is more convenient, less burdensome, or less expensive. Fed. R. Civ. P. 26(b)(2)(C)(i); see also Bell v. Taylor, 827 F.3d 699, 711 (7th Cir. 2016) (denying plaintiff s motion to compel where it had already received the same information from another source). [C]ourts frequently restrict discovery based on relevance objections. Uppal v. Rosalind Franklin Univ. of Med. & Sci., 124 F. Supp. 3d 811, 814 (N.D. Ill. 2015) (granting motion to quash discovery). The discovery rules are not a ticket, Judge Moran has wisely observed, to an unlimited, never-ending exploration of every conceivable matter that captures an attorney s interest.... Parties are entitled to a reasonable opportunity to investigate the facts-and no more. Id., quoting Vakharia v. Swedish Covenant Hosp., 1994 WL 75055 at *2 (N.D.Ill.1994). The court may consider a person s status as a non-party when determining whether a person will be subject to an undue burden in responding to a discovery request. Id. at 813. Non-parties have a different set of expectations. Accordingly, concern for the unwanted burden thrust upon non-parties is a factor entitled to special weight in evaluating the balance of competing needs. Id. (emphasis in original). If a court grants a motion to compel, the Court must not [order payment of the movant s attorney s fees in bringing the motion] if... the opposing party s nondisclosure, response, or objection was substantially justified. Fed. R. Civ. P. 37(a)(5)(A)(ii) (emphasis added). In this context, substantial justification means that reasonable people could differ as to the appropriateness of the contested action. Clark v. Ruck, 13-CV-03747, 2014 WL 1477925, at *3 (N.D. Ill. Apr. 15, 2014) (granting motion to compel in part, but denying request for attorneys fees), quoting Stein v. Sullivan, 966 F.2d 317, 320 (7th Cir. 1992). 3
Document Page 4 of 12 III. ARGUMENT A. Discovery should be limited to whether section 13.22 of the LLTQ Agreement survives rejection. The Court should limit discovery to matters relevant to the parties claims and defenses. Fed. R. Civ. P. 26(b)(1). This contested matter arises from a dispute between Movants and the Debtors about one question: whether the Debtors obligations under section 13.22 of the LLTQ Agreement between Caesars and LLTQ survives the Debtors termination and rejection of the LLTQ Agreement. 1,2 Section 13.22 provides that, if Caesars elects to enter into any future ventures with Ramsay for certain types of restaurants (collectively, Pub Ventures ), then Caesars and LLTQ will enter into a development and operation agreement relating to the other venture under similar terms to the LLTQ Agreement. Movants contend that section 13.22 survives rejection, and that it requires the Debtors to give them a cut of all future deals between the Debtors and Ramsay from now until the end of time, for any Pub Venture. The Debtors dispute Movants contention. The outcome of this dispute could have a lasting impact. Movants argue that, if they prevail, they will have rights to participate in the Debtor s current and future Pub Ventures long after these bankruptcy cases are over, including Pub Ventures that have not even been conceived at the present time. But the fate of those Pub Ventures that the Debtors may actually pursue far in the future is not before the Court. The threshold issue, and the only issue that is before the Court, is whether section 13.22 survived the Debtors termination and rejection of the LLTQ Agreement. 1 The Debtors motion to reject the LLTQ Agreement is at Dkt. 1755. Movants preliminary objection to that motion is at Dkt. 1774. 2 Movants likewise have a dispute with the Debtors regarding the survivability of section 4.1 of the FERG Agreement, between Movants and the Debtors, which is limited to Caesar s property in Atlantic City. 4
Document Page 5 of 12 Accordingly, the Court should limit discovery to matters relevant to the survivability of section 13.22 of the LLTQ Agreement. B. The undue burden to Ramsay should be given special consideration because Ramsay is not a party. The agreement that contains section 13.22 the LLTQ Agreement is between LLTQ and Caesars. Ramsay is not a party to that agreement and has no obligations under it. Movants contend that Ramsay entered into a separate agreement with Caesars at the same time that Caesars entered into the LLTQ Agreement with Movants, and that the two agreements were part of the same transaction. But even Movants do not argue that Ramsay is a party to the LLTQ Agreement, or that Ramsay has obligations to Movants under the LLTQ Agreement, or section 13.22 of that agreement. Further, Ramsay is not a party to this contested matter. The parties to the contested matter are the parties who are contesting it the Debtors, who filed the motion to reject the LLTQ Agreement, and Movants, who filed an objection to the motion. Ramsay has not objected to or contested the rejection motion. The Debtors also filed a motion to reject certain Ramsay agreements, and Movants also filed an objection to that motion. But Ramsay also did not file an objection to or contest that motion. Ramsay is before the Court only to object to the unreasonably cumulative and burdensome discovery requests that Movants have served upon them. Accordingly, concern for the unwanted burden thrust upon Ramsay is a factor entitled to special weight in evaluating the balance of competing needs of Ramsay and the actual parties to the contested matter(s). Uppal, 124 F. Supp. 3d at 813. 5
Document Page 6 of 12 C. Ramsay has already borne an excessive burden in responding to Movants discovery requests. Ramsay has undertaken substantial efforts to respond to Movants discovery requests over the past 9 months. Ramsay s attorneys in the U.S. and the U.K. have collectively logged hundreds of hours of time worth tens of thousands of dollars dealing with Movants discovery requests. Ramsay s e-discovery vendor TransPerfect has billed 44,124.36 ($56,424.25) as of August 1, 2017. Ramsay s IT services provider Control Escape billed 4,548.00 ($5,815.78) for services including data storage and retrieval. All of these expenses continue to accrue and increase. In December 2016, Movants counsel provided Ramsay with a proposed protocol for a search of Ramsay s electronically stored information ( ESI ) for documents responsive to Movants discovery requests. Movants protocol identified specific custodians and search terms. During December 2016 and January 2017, Ramsay and Movants had numerous discussions regarding Ramsay s ESI, including the data sources to be searched, defining the scope of ESI discovery, and allocating the significant cost of ESI discovery. The process was complicated because Ramsay, and its personnel and lead counsel, are all based in the U.K. Throughout this case, it has been necessary for Ramsay s U.S. counsel to confer closely with Ramsay s U.K. counsel and TransPerfect, the ESI vendor that Ramsay retained to assist with the gathering of ESI and provide the Relativity e-discovery platform for Ramsay to search Ramsay s ESI for relevant documents. TransPerfect began collecting ESI data from the Ramsay custodians in early February 2017. On February 9, 2017, Ramsay s counsel informed Movants counsel that, based on Movant s proposed ESI protocol, TransPerfect estimated that it would need to process a huge amount of data 130.49 gigabytes at a cost of 26,000. Movants and Ramsay agreed to work 6
Document Page 7 of 12 together to narrow the universe of Ramsay ESI. On March 13, 2017, Movants and Ramsay agreed to a revised ESI protocol, which called for searches of both e-mails and files stored on network data sources. Movants and Ramsay agreed to hold off Movants request for a search and production of files on the computer servers of Ramsay s outside attorneys. TransPerfect began processing the ESI for e-discovery review. Then, Ramsay s counsel began to review the data for responsiveness to Movants discovery requests, and privilege. Still, the universe of data that Ramsay s attorneys were reviewing proved to be larger and more burdensome than they could review in a timely manner and at a reasonable cost. Ramsay proposed that a technology assisted review ( TAR ) protocol be implemented. TAR uses a computerized search technology whereby attorneys, with the technical assistance of an e- discovery vendor, train the e-discovery application to determine whether a document is responsive or non-responsive. Through TAR, the discovery respondent is able to disregard documents that the e-discovery application identifies as likely non-responsive and focus efforts on manually reviewing documents that the system identifies as more likely responsive. Movants agreed to implement TAR, and the parties negotiated and agreed to a TAR protocol in May 2017. Ramsay s U.K. and U.S. counsel then began to manually review the documents filtered through the TAR process for relevance and privilege, and made the first document production on June 13, 2017, and a second document production on August 18, 2017. Ramsay s attorneys are continuing to review the TAR data and plan to produce additional documents to Movants. Much of the remaining production will relate to the following contemplated ventures that Ramsay has actually pursued with the Debtors: Gordon Ramsay Pub & Grill in Atlantic City; Gordon Ramsay Steak at Paris, Las Vegas; GR BurGR at Planet Hollywood; Gordon Ramsay Fish & Chips at the Linq; and Gordon Ramsay Pub & Grill at Caesars Palace, Las Vegas. Additionally, 7
Document Page 8 of 12 after further review and consideration, Ramsay has agreed to produce documents regarding a Gordon Ramsay restaurant at Caesars property in Baltimore, Maryland, which has not yet opened. D. Adding more ventures to the list of actually pursued contemplated ventures will be unduly burdensome and will not help the Court determine whether section 13.22 survived rejection. The central issue in this contested matter is whether section 13.22 of the LLTQ Agreement survived rejection. Discovery should be limited to material that is relevant to that issue. Fed. R. Civ. P. 26(b)(1). Documents regarding restaurant ventures that the Debtors and Ramsay are now pursuing or may pursue at some indefinite time in the future are not relevant to that issue. Movants have not explained how adding more restaurants to the list of contemplated ventures will assist the Court in determining whether section 13.22 of the LLTQ Agreement survived the Debtor s termination and rejection. If the Debtors and Ramsay decide to actually pursue a new Pub Venture next year, or in five years or ten years, documents regarding those ventures will be no more helpful to determining the survivability of section 13.22 than what Movants already have received from the Debtors and Ramsay through discovery. Nonetheless, Ramsay agreed to produce documents identified through the TAR, which relate to six specific contemplated ventures that the Debtors have actually pursued. These are all of the Gordon Ramsay restaurants currently open in the United States, or scheduled to open later in 2017. 3 The Debtors and Movants have previously litigated the definition of contemplated ventures, and the Court ruled, after extensive oral argument, that it refers to ventures that the debtors actually pursued with Gordon Ramsay. [Dkt. 4775 (emphasis added)] 3 Except for Hell s Kitchen at Caesar s Palace in Las Vegas, scheduled to open winter of 2017, which Movants have not claimed is a contemplated venture. 8
Document Page 9 of 12 Movants have not identified any contemplated ventures that the Debtors and Ramsay actually pursued, other than those listed above. Ramsay s production of documents regarding these entities is more than adequate to satisfy the Movants discovery requests for documents regarding contemplated ventures. Through discovery supplied by the Debtors and by Ramsay, at great cost and effort, Movants have been provided a reasonable opportunity to investigate the facts regarding contemplated ventures, and they are entitled to no more. Uppal v. Rosalind Franklin Univ. of Med. & Sci., 124 F. Supp. 3d 811, 814 (N.D. Ill. 2015). E. The additional discovery that Movants seek from Ramsay s attorneys and additional contemplated ventures is grossly disproportional to the needs of the case. The Court should quash Movants further discovery of Ramsay because the great burden and expense required to comply with it is grossly disproportional to any conceivable benefit. Ramsay has already borne substantial burden and expense in responding to Movants discovery requests. Movants now seek to compel Ramsay to start an entirely new process of collecting, reviewing and producing additional documents and information from their attorneys, and of reviewing and producing documents regarding additional supposed contemplated ventures which Movants have not identified. Responding to Movants additional discovery requests will significantly increase the burden and costs to Ramsay. Ramsay and Movants would likely need to negotiate a new ESI protocol. Ramsay would need to collect hundreds or even thousands of documents and electronic files collected from the file servers of Ramsay s attorneys, then carefully review them not only for relevance, but also for inevitable issues of attorney-client privilege and attorney work product privilege. This would take substantial time, and be expensive. Much of the additional discovery of would be largely duplicative of discovery already produced by Ramsay 9
Document Page 10 of 12 and the Debtors, as Ramsay s attorneys were included in many of the documents and communications that have already been reviewed and produced. Further, the parties to the LLTQ Agreement and the contested matter, not Ramsay, are the proper sources of documents and information. They, not Ramsay, negotiated, drafted, executed, and performed the LLTQ Agreement. It is the statements, impressions and meeting of the minds of the parties to the LLTQ Agreement that are relevant to determining whether section 13.22 survived rejection. Ramsay cannot provide documents and information that are more relevant to the survivability of section 13.22 of the LLTQ Agreement than what the parties to that agreement are themselves privy to. F. Ramsay s objections to Movants additional discovery requests are substantially justified. If the Court grants Movants Motion, it should not order Ramsay to pay Movants expenses and attorneys fees because Ramsay s objections to the Motion are substantially justified. Ramsay has raised reasonable differences with Movants regarding the appropriateness of their additional discovery requests (Clark v. Ruck, 2014 WL 1477925, at *3). Movants acknowledge that they and Ramsay have engaged in numerous Rule 37 consultations as part of their good-faith efforts to resolve their differences with respect to the Discovery Disputes. (Motion at 15). Ramsay is a non-party to this contested matter who has nonetheless borne massive costs in responding to Movants discovery requests. Regardless of what the Court ultimately decides after weighing all of the factors, Ramsay s position is well founded in law and fact: that Movants additional discovery requests are unduly burdensome, disproportionate to the needs of this case, and unreasonably cumulative and duplicative of discovery responses already provided by the Debtors and Ramsay. 10
Document Page 11 of 12 Ramsay has acted in good faith in raising a principled objection to Movants requests for additional discovery, and should not be required to pay Movants attorneys fees and expenses. If the Court grants the Motion and allows further discovery, however, Ramsay asserts that costshifting is appropriate, and Movants should be required to pay all fees and expenses arising from the additional discovery they seek. See DeGeer v. Gillis, 755 F. Supp. 2d 909, 928 (N.D. Ill. 2010) (cost-shifting should occur when an order requiring compliance subjects a non-party to significant expense.). IV. CONCLUSION The substantial additional discovery that Movants have demanded is beyond the scope of discovery permitted under Rule 26(b)(1). The material that Movants seek from Ramsay s outside attorneys, and regarding additional contemplated ventures, is not relevant to the Court s deciding whether section 13.22 of the LLTQ Agreement survived rejection by the Debtors. The additional requests would place a significant, undue burden of time and expense upon Ramsay to collect, review and produce voluminous additional material. The excessive burden far outweighs any incremental benefit that Movants may obtain from this discovery, particularly in light of the substantial discovery that Movants have already obtained from the Debtors and Ramsay. Further, the additional discovery is duplicative and cumulative of discovery that Movants have already requested. The Court has broad discretion to weigh the appropriateness of the additional discovery that Movants have requested. The Court should deny the Motion and protect Ramsay from the undue burden they would bear if forced to engage in the unreasonable additional discovery. In the alternative, the Court should order that Movants must bear the cost of the additional discovery. 11
Document Page 12 of 12 WHEREFORE, Gordon Ramsay and Gordon Ramsay Holdings Limited respectfully request that the Court enter an order denying the Motion and granting such other and further relief as the Court deems just and equitable. Gordon Ramsay and Gordon Ramsay Holdings Limited By: /s/ Elizabeth B. Vandesteeg One of Their Attorneys Elizabeth B. Vandesteeg (6291426) David M. Madden (6280517) SUGAR FELSENTHAL GRAIS & HAMMER LLP 30 N. LaSalle St., Ste. 3000 Chicago, Illinois 60602 Telephone: 312.704.9400 Facsimile: 312.372.7951 evandesteeg@sfgh.com dmadden@sfgh.com 12