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DeGeer v. Gillis

September 17, 2010

RANDALL S. DEGEER PLAINTIFF,
v.
M. SCOTT GILLIS; JOSEPH R. SHALLECK; AND LEROY J. MERGY, DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Nan R. Nolan

MEMORANDUM OPINION AND ORDER

This breach of contract action arises from the alleged failure of Defendants M. Scott Gills, Joseph R. Shalleck, and Leroy J. Mergy (hereinafter collectively referred to as "Defendants") to abide by the terms of a partnership agreement to pay a bonus or incentive compensation for Plaintiff Randall S. DeGeer's ("DeGeer") services in 2008 and 2009 as a Managing Director of the Galt division of Huron Consulting Services LLC ("Huron"). Before the Court are several discovery disputes between the parties. For the following reasons, the Court denies Plaintiff's Motion to Compel the Depositions of Defendants in Chicago, Illinois [#84], grants Defendants' Motion to Compel Plaintiff's Production of Documents [#86] to the extent described below, and overrules in part and sustains in part Defendants' Objections to Plaintiff's Designation of Certain Materials As Privileged [#88].

Background

DeGeer and Defendants are in the management consulting business. DeGeer was employed as a Managing Director in the Galt division of Huron from July 2006 to October 28, 2009. Defendants were the practice leaders of the Galt division at Huron from March 2006 through December 2009. DeGeer claims entitlement to a bonus calculated on the basis of a formula applied to annual Earn-Out payments made by Huron to Defendants' liability corporation as part of the purchase price for Huron's acquisition of certain assets of MSGalt & Company LLC ("Galt"), of which Defendants were the sole members and owners. DeGeer brought what eventually became a five-count complaint. Count I alleges Breach of Contract; Count II alleges Breach of Partnership Agreement; Count III alleges Promissory Estoppel; Count IV alleges Quantum Meruit; and Count V alleges Breach of Fiduciary Duty. Defendants filed counterclaims for breach of fiduciary duty, tortious interference with business expectancy, and breach of contract.

Discussion

Pursuant to Federal Rule of Civil Procedure 26(b)(1), "[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense." Upon a showing of good cause, a court may order "discovery of any matter relevant to the subject matter involved in the action." Magistrate judges are granted broad discretion in addressing and resolving discovery disputes. W eeks v. Samsung Heavey Indus., Co., Ltd., 126 F.3d 926, 943 (7th Cir. 1997).

I. Location of Depositions of Defendants

The parties cannot agree on the location for the individual Defendants' depositions. DeGeer has noticed the depositions of Defendants in Chicago, Illinois. Defendants object to their depositions taking place in Chicago since they are citizens of other states. Gillis is a citizen of South Carolina, and Shalleck and Mergy of Connecticut. Defendants work out of their places of residence in South Carolina and Connecticut or on-site at client locations.

The Federal Rules of Civil Procedure do not state where depositions may be taken. "Thus the examining party may set the place for the deposition of another party wherever he or she wishes subject to the power of the court to grant a protective order under Rule 26(c)(1)(B) designating a different place." 8A W right, Miller & Marcus, Federal Practice and Procedure § 2112 (2010). Under Rule 26(c)(1)(B), a court "may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: . . . specifying terms, including time and place, for the disclosure or discovery . . . ." Fed. R. Civ. P. 26(c)(1)(B). This Court has previously recognized, however, that "[a]s a general matter, there is a presumption that a defendant . . . shall be deposed in the district where the deponent resides." Healthsouth Corp. v. Sussman, 2003 W L 685576, at *2 (N.D. Ill. Feb. 26, 2003). A court has "wide discretion in selecting the place of examination." 8A W right, Miller & Marcus, Federal Practice and Procedure § 2112 (2010).

In this case, good cause has been shown for a protective order designating the districts in which the Defendants reside as the sites for their depositions. Defendants have submitted uncontroverted evidence establishing that having to travel to Chicago for their depositions will impose a substantial hardship on them. On December 31, 2009, Defendants repurchased assets of the Galt business. Since January 1, 2010, Defendants have been engaged more than full-time rebuilding, operating and managing Galt as a independent firm, without the benefit of support services previously provided under Huron's ownership. (Defendants' Declarations at ¶ 4). Defendants state that in addition to having to attend to new administrative and organizational responsibilities, this requires extensive time and effort from each of them in servicing existing clients, soliciting new clients, and in recruiting and training new employees and independent contractors. Id. Traveling to Chicago for a deposition will disrupt Defendants' already overcrowded and busy business schedule.

DeGeer's expense analysis does not compel a different result. DeGeer's assertion that it would be more cost efficient to proceed with the depositions in Chicago is based on the fact that "Defendants have offices in Chicago, and so do their attorneys." (Doc. 84, at 3). In response, Defendants explain that the assets they acquired in the repurchase from Huron included a mailing address in Chicago but none of the Defendants actually conducts any business out of that Chicago address. Moreover, Defendants will be represented at their depositions by their lead counsel, whose office is in New York. Finally, DeGeer has not argued that Defendants' counterclaim is permissive. So, the fact that Defendants filed a counterclaim is not sufficient to require them to travel to Chicago for their depositions. Sears v. American Entertainment Group, Inc., 1995 W L 66411, at * 2 (N.D. Ill. Feb. 13, 1995) (stating that if the counterclaim is compulsory, the defendant "remains entitled to protection from deposition anywhere but for his or her residence or business location.").

Ristevski v. S&P Carrier, LTD, 2010 W L 1687878 (N.D. Ill. Apr. 26, 2010), the only case cited by DeGeer, is distinguishable. In Ristevski, the magistrate judge concluded that a retired truck driver would not suffer undue physical hardship to his injured right shoulder nor financial hardship if required to be deposed outside his district of residence. The court distinguished two other cases involving working truck drivers who would suffer financial hardship by being pulled away from one of their runs to make a trip to another state for a deposition. Here, Defendants have demonstrated the disruption to Galt that travel to a deposition in Chicago would cause. Defendants are the sole owners of Galt and are currently engaged more than full-time in operating and managing Galt as an independent firm. Depositions in Chicago will interfere with Defendants' busy business schedules. Under the circumstances of this case, the general presumption in favor of Defendants being deposed in their home districts controls.

II. Defendants' Document Request Nos. 50 and 51

Defendants seek an order compelling DeGeer to comply with Request Nos. 50 and 51 of Defendants' First Request for ...


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