Opinion

Anaheim Gardens v. United States

125 Fed. Cl. 88
2016 U.S. Claims LEXIS 49
2016 WL 447099

Court: United States Court of Federal Claims
Filed: Feb 4, 2016
Status: Published
Author: Campbell-Smith
On the bench: Patricia E. Campbell-Smith
Cited by: 4 cases
Authority: More cited than 55.1%

asserting that “statements by the Government’s designee about lack of knowledge of evidence about particular topics preclude[] the Government from offering evidence at trial that would effectively change the Government’s position”

How later courts described this case

asserting that “statements by the Government’s designee about lack of knowledge of evidence about particular topics preclude[] the Government from offering evidence at trial that would effectively change the Government’s position”

Written by the judges who cited it.

The opinion

In the United States Court of Federal Claims

No. 93-655C

(E-Filed: February 4, 2016)

)

ANAHEIM GARDENS, et al., )

) Deposition Discovery; Protective

Plaintiffs, ) Order; RCFC 26(b); RCFC

) 26(c)(1); RCFC 30(b)(6)

v. )

)

THE UNITED STATES, )

)

Defendant. )

)

Harry J. Kelly, III, Washington, D.C., for plaintiffs.

David A. Harrington, Senior Trial Counsel, with whom were Joyce R. Branda, Acting

Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Franklin E. White,

Jr., Assistant Director, Commercial Litigation Branch, Civil Division, United States

Department of Justice, Washington, D.C., for defendant.

OPINION and ORDER

CAMPBELL-SMITH, Chief Judge

This is a temporary regulatory takings case. Plaintiffs are owners of low-income

housing who claim a taking of their contractual right to prepay government-insured

mortgages on their respective housing projects, and thus to terminate certain

governmental restrictions on rents and other aspects of the properties’ use. Defendant is

the United States Department of Housing and Urban Development (HUD, the

government, or defendant).

Presently before the court is defendant’s motion for a protective order in

connection with six Rule 30(b)(6) notices issued by plaintiffs. Def.’s Mot., ECF No. 353;

see also Def.’s Reply, ECF No. 362. Plaintiffs oppose defendant’s motion, defending

their requests as necessary to satisfy their burden of proof under Penn Central Transp. Co.

v. City of New York, 438 U.S. 104 (1978). Pls.’ Resp., ECF No. 358. Each party filed

an appendix in support of their briefs. Def.’s App. (DA), ECF No. 353-1; Def.’s Supp.

App. (DSA), ECF No. 362-1; Pls.’ App. (PA), ECF No. 358-1. Defendant’s motion is

ripe for decision.

For the reasons explained below, defendant’s motion is GRANTED-IN-PART

and DENIED-IN-PART.

I. Background

A. Preservation Statutes

Plaintiffs allege that the enactment of two federal statutes, the Emergency Low

Income Housing Preservation Act of 1987, Pub. L. No. 100-242, § 202, 101 Stat. 1877

(1988) (ELIHPA), and the Low-Income Housing Preservation and Resident

Homeownership Act of 1990, Pub. L. No. 101-625, 104 Stat. 4249 (1990) (LIHPRHA),

collectively known as the Preservation Statutes, prevented them from exercising their

contractual right to repay their mortgages upon the twentieth anniversary of the issuance

of the mortgage. Plaintiffs’ prepayment rights were later restored by a third federal

statute, the Housing Opportunity Program Extension Act of 1996 (Hope Act), Pub. L. No.

104-120, 110 Stat. 834 (1996).

The history and purpose of the Preservation Statutes have been set forth in detail

in prior decisions by both the Federal Circuit and this court. See Cienega Gardens v.

United States (Cienega X), 503 F.3d 1266, 1270-73 (Fed. Cir. 2007); Cienega Gardens v.

United States (Cienega VIII), 331 F.3d 1319, 1324-28 (Fed. Cir. 2003); Cienega Gardens

v. United States (Cienega IV), 194 F.3d 1231, 1234-35 (Fed. Cir. 1998); Anaheim

Gardens v. United States, 107 Fed. Cl. 404, 406-08 (2012), recons. granted-in-part, 109

Fed. Cl. 33 (2013), aff’d in part, rev’d in part & remanded sub nom. Biafora v. United

States, 773 F.3d 1326 (Fed. Cir. 2014)).

While a review of the entire history is unnecessary here, the court provides the

following brief relevant history for ease of reference:

In 1961, Congress amended the National Housing Act to allow private

developers to meet the needs of moderate income families. Cienega X, 503

F.3d at 1270. Among other things, the amendment provided financial

incentives to private developers to build low income housing. Id. These

incentives included below-market mortgages, which permitted the owners to

borrow 90% of the cost of the project. Id. While the term of the mortgage

was 40 years, the contracts allowed the developer to prepay the mortgage

after 20 years. Id. Congress also protected the lenders against default by

authorizing the Federal Housing Administration [FHA] to insure the

mortgages. Id. at 1270–71. The tax laws at the time provided a number of

tax incentives, which allowed general and limited partners to take large

deductions in the earlier years of the investment. Id. at 1271. The highly

leveraged nature of the investment made the tax benefits large in comparison

to the small up-front investment. Id.

These development programs were regulated by the Department of

Housing and Urban Development (HUD), and the developers were required

to sign a regulatory agreement binding them to get approval from HUD for

certain relevant decisions, for example increases in rent. Id. The developer

also signed a secured note and a mortgage. HUD, in turn, provided mortgage

insurance for the investment. Id. The restrictions in the regulatory agreement

were in effect as long as HUD insured the mortgage on the property; for

practical purposes this meant the developers were subject to HUD regulation

until the mortgage was paid off. Id. The twenty year prepayment option in

the mortgage therefore gave the developers an opportunity to cast off the

regulatory burden and convert their development to market rate housing.

While this plan induced developers to provide low income housing,

Congress ultimately grew worried that participants would prepay their

mortgages and exit the program en mass. Id. at 1272. In order to avoid the

resulting shortage of low income housing, Congress enacted ELIHPA and

LIHPRHA. Id. The exact restrictions placed on the developers are detailed

in, e.g., Cienega X, but the salient issue in this case is that an owner was no

longer free to prepay the mortgage after twenty years.

CCA Assocs. v. United States, 667 F.3d 1239, 1242-43 (Fed. Cir. 2011).

B. Plaintiffs

On April 30, 2013, the previously assigned judge consolidated Anaheim Gardens

v. United States, No. 93-655, and Algonquin Heights Assocs., L.P. v. United States, No.

97-582, and designated Anaheim Gardens as the lead plaintiff. Order, ECF No. 327.

Fifty-one plaintiffs are currently litigating their claims in this consolidated matter.

By agreement of the parties, plaintiffs are proceeding to trial in subsets known as

waves. See Joint Status Report 1, ECF No. 330; Discovery Order, ECF No. 331. The

parties jointly designated six plaintiffs as the First Wave plaintiffs, and only these six

plaintiffs are now conducting fact and expert discovery.1 Scheduling Order, ECF No.

378. The six First Wave plaintiffs are Algonquin Heights plaintiffs Buckman Gardens,

L.P. and Chauncy House Company, and Anaheim Gardens plaintiffs Cedar Gardens

Associates, Rock Creek Terrace L.P., 620 Su Casa Por Cortez, and 3740 Silverlake

Village, L.P. Joint Status Report, ECF No. 330; Notice, ECF No. 332.

C. Instant Discovery Dispute

Each First Wave plaintiff issued defendant a separate Rule 30(b)(6) notice seeking

testimony on essentially the same eight requests.2 See DA001-017.

Defendant moved for a protective order, arguing that plaintiffs’ requests were

vague, overly broad, and sought testimony about irrelevant subjects and time periods. 3

Def.’s Mot. 6-14. Defendant made specific objections to each of plaintiffs’ eight

requests, in some cases seeking to limit the request (first, seventh and eighth requests),

and in other cases seeking to strike the request in its entirety (second, third, fourth, fifth,

and sixth requests).

Defendant also moved for a protective order seeking to limit the six First Wave

plaintiffs to deposing its Rule 30(b)(6) witness over only one seven-hour day, rather than

the six days plaintiffs sought through their six separate notices. Def.’s Mot. 5-6. The

court previously ruled on this portion of defendant’s motion, deciding that plaintiffs

could depose defendant’s Rule 30(b)(6) witness for up to three seven-hour days.

There may be limited exceptions in which a non-First Wave plaintiff is involved in

discovery to preserve witness testimony for trial. See Order, ECF No. 327.

Three requests sought testimony specific to the city in which each plaintiff’s

property was located (second, sixth and eighth requests), and three requests sought

testimony for slightly different time periods, which varied with the dates of each

plaintiff’s investment and alleged taking (sixth, seventh and eighth requests). See

DA001-017. In the second, sixth and eighth requests, plaintiffs seek testimony about the

rental markets in (1) Boston, Massachusetts, (2) Encinitas, California, (3) Rockville,

Maryland, (4) Los Angeles, California, (5) Fairfax County, Virginia, and Alexandria,

Virginia, and (6) Fresno, California. DA002, DA005, DA008, DA011, DA014 &

DA017.

In compliance with Rule 26(c)(1), of the Rules of the United States Court of

Federal Claims (RCFC), defendant stated it “conferred in good faith to attempt to resolve

this dispute without Court action, but such efforts have been unsuccessful.” Def.’s Mot.

1, ECF No. 353.

Anaheim Gardens v. United States, No. 93-655, 2014 WL 4401529, at *3-6 (Fed. Cl.

Sept. 5, 2014).

Finally, defendant asked this court to quash the deposition notice issued by First

Wave plaintiff 3740 Silverlake Village, L.P. (Silverlake Village). Def.’s Mot. 6 n.4.

Defendant argued that Silverlake Village was not a plaintiff in this matter, as explained in

its then-pending motion for summary judgment seeking the dismissal of Silverlake

Village. Id. The court denied defendant’s motion, Anaheim Gardens v. United States,

118 Fed. Cl. 669 (2014), thus mooting defendant’s request to quash the notice issued by

Silverlake Village.

II. Legal Standard

A. Rule 30(b)(6) Discovery

Either party may take discovery that is “relevant to any party’s claim or defense.”

RCFC 26(b)(1). With regard to Rule 30(b)(6) discovery,

[i]n its notice or subpoena, a party may name as the deponent . . . a

governmental agency . . . and must describe with reasonable particularity the

matters for examination. The named organization must then designate one

or more . . . persons who consent to testify on its behalf[.] . . . The persons

designated must testify about information known or reasonably available to

the organization.

RCFC 30(b)(6). The government agency then

has “an affirmative duty to produce a representative who can answer

questions that are both within the scope of the matters described in the notice

and are ‘known or reasonably available’ to the corporation.” King v. Pratt &

Whitney, 161 F.R.D. 475, 476 (S.D. Fla. 1995) (quoting FRCP 30(b)(6)),

aff’d, 213 F.3d 646 (11th Cir. 2000). . . . Thus, RCFC 30(b)(6) “implicitly

requires the designated representative to review all matters known or

reasonably available to it in preparation for the Rule 30(b)(6) deposition.

This interpretation is necessary in order to make the deposition a meaningful

one and to prevent . . . a half-hearted inquiry. . . .” Heartland Surgical

Specialty Hosp., LLC v. Midwest Div., Inc., No. 05–2164–MLB–DWB,

2007 WL 1054279, at *3 (D. Kan. Apr. 9, 2007).

A-G Innovations, Inc. v. United States, 82 Fed. Cl. 69, 80 (2008).4

However, “there exists no obligation to produce [Rule 30(b)(6)] witnesses who

know every single fact surrounding a matter, only those that bear relevance or are

material to events directly underlying a dispute.” Dairyland Power Coop. v. United

States, 79 Fed. Cl. 709, 715 (2007) (citing Banks v. Office of the Senate Sergeant–at–

Arms, 241 F.R.D. 370, 373 (D.D.C. 2007); Wilson v. Lakner, 228 F.R.D. 524, 529 n.7

(D. Md. 2005)). “[T]he designated deponent must be prepared ‘to the extent that matters

are reasonably available.”’ Banks, 241 F.R.D. at 373 (quoting Wilson, 228 F.R.D. at

528).

B. Rule 26 Protective Order

“A party or any person from whom discovery is sought may move for a protective

order.” RCFC 26(c)(1). If “good cause” exists, “[t]he court may . . . issue an order to

protect a party or person from annoyance, embarrassment, oppression, or undue burden

or expense.” Id.

“[T]he party seeking the protective order bears the burden of showing good

cause.” Forest Prods. Nw., Inc. v. United States, 62 Fed. Cl. 109, 114 (2004), aff’d, 453

F.3d 1355 (Fed. Cir. 2006). “Good cause requires a showing that the discovery request is

considered likely to oppress an adversary or might otherwise impose an undue burden.”

Forest Prods. Nw., Inc., 453 F.3d at 1361. “[B]road allegations of harm, unsubstantiated

by specific examples, are insufficient to justify issuance of a protective order.” Lakeland

Ptnrs, L.L.C. v. United States, 88 Fed. Cl. 124, 133 (2009). As this court has explained,

to prevail on an objection to allegedly burdensome discovery:

[T]he objecting party must do more than “simply intone [the] familiar litany

that the [discovery sought is] burdensome, oppressive or overly broad.” The

“[I]nterpretation of the court’s rules will be guided by case law and the Advisory

Committee Notes that accompany the Federal Rules of Civil Procedure.” RCFC rules

committee’s note to 2002 amendment, at 1. RCFC 26(b)(2)(C), RCFC 26(c)(1) and

RCFC 30(b)(6), all relevant to this motion, are identical to their counterparts in the

Federal Rules of Civil Procedure. The court therefore relies on cases interpreting each of

these federal rules, as well as cases interpreting this court’s rules. With regard to RCFC

26(b)(1), also relevant to this motion, the court is aware that the Advisory Committee on

Civil Rules significantly amended Fed. R. Civ. P. 26(b)(1) as of December 1, 2015. Prior

to this amendment, however, RCFC 26(b)(1) was identical to its federal counterpart.

With regard to Fed. R. Civ. P. 26(b)(1), the court relies only on cases issued prior to

December 1, 2015.

objecting party bears the burden of demonstrating “specifically how, despite

the broad and liberal construction afforded the federal discovery rules, each

[request] is not relevant or how each question is overly broad, [unduly]

burdensome or oppressive by submitting affidavits or offering evidence

revealing the nature of the burden.”

Id. at 133 n.6 (some alterations in original) (quoting Lamoureux v. Genesis Pharmacy

Servs., Inc., 226 F.R.D. 154, 158-59 (D. Conn. 2004)).

In deciding whether to limit discovery, a trial court should “consider ‘the totality

of the circumstances, weighing the value of the material sought against the burden of

providing it,’ and taking into account society’s interest in furthering ‘the truth seeking

function’ in the particular case before the court.” Patterson v. Avery Dennison Corp.,

281 F.3d 676, 681 (7th Cir. 2002) (quoting Rowlin v. Alabama, 200 F.R.D. 459, 461

(M.D. Ala. 2001)). Rule 26(b)(2)(C) authorizes the court to impose limits if:

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.

RCFC 26(b)(2)(C)(iii).

The Supreme Court has further opined that “discovery, like all matters of

procedure, has ultimate and necessary boundaries. . . . [A]s Rule 26(b) provides, . . .

limitations come into existence when the inquiry touches upon the irrelevant or

encroaches upon the recognized domains of privilege. Hickman v. Taylor, 329 U.S. 495,

507-08 (1947). Ultimately, whether to issue a protective order is subject to the broad

discretion of the trial court. Florsheim Shoe Co. v. United States, 744 F.2d 787, 797

(Fed. Cir. 1984) (“Questions of the scope and conduct of discovery are, of course,

committed to the discretion of the trial court.”). The court has a variety of options should

it find a motion for protective order is warranted, including “forbidding the disclosure or

discovery” or “forbidding inquiry into certain matters, or limiting the scope of disclosure

or discovery to certain matters.” RCFC 26(c)(1)(A), (D).

III. Discussion

The court considers defendant’s objections to each of First Wave plaintiffs’ eight

requests in turn.

A. Plaintiffs’ First Request

Plaintiffs seek testimony about studies prepared or commissioned by HUD, or any

other government agency, between 1970 and 1996, regarding the effects of any action—

including, but not limited to, the Preservation Statutes—by the United States to restrict

the ability of owners of HUD-financed housing properties to prepay their HUD-insured

mortgages.5 DA001, DA004, DA007, DA010, DA013 & DA016 (No. 1).

Defendant states it knows of only three reports that satisfy this request, as below,

and will prepare its witness to answer appropriate questions about each report. See Def.’s

Mot. 8; Def.’s Reply 9.

(1) U.S. General Accounting Office,6 GAO/RCED-94-177FS, Multifamily

Housing, Information on Projects Eligible for Preservation Assistance (1994);

(2) HUD Office of Inspector General, 95-BO-114-0001, Evaluation Report – HUD

Multifamily Preservation Program (1995); and

(3) Congressional Budget Office Staff Memorandum, Implications of the

Prepayment Provisions in the Cranston-Gonzalez Act (1992).

Def.’s Mot. 8; Def.’s Reply 7-8, 19.

Defendant otherwise asserts plaintiffs’ first request is “vague and breathtaking in

scope,” and is “not stated with ‘reasonable particularity.”’ Def.’s Mot. 7 (quoting RCFC

30(b)(6)). Defendant points out that the request concerns a time period of twenty-six

years, seeks information from every federal government agency, and extends beyond the

Preservation Statutes. Id. Accordingly, defendant seeks a protective order to preclude

Any analysis, study, summary, investigation, evaluation, or examination,

conducted, prepared or commissioned by HUD or any other Government agency, at

any time between 1970 and 1996, whether formal or informal, and whether complete

or incomplete, related to or regarding the impact(s), effect(s) and/or consequence(s) of

any action by the United States to restrict the ability of the owners of Section 22 l (d)(3)

or Section 236 housing properties to prepay the HUD-insured mortgages on their

properties, including without limitation, the provisions and terms of the Emergency

Low Income Housing Preservation Act of 1987 (“ELIHPA”) and/or the Low Income

Housing Preservation and Resident Homeownership Act of 1990 (“LIHPRHA”).

DA001, DA004, DA007, DA010, DA013 & DA016 (No. 1).

The United States General Accounting Office (GAO) is now known as the

Government Accountability Office.

plaintiffs from inquiring about any report other than the three identified reports. Def.’s

Mot. 8; Def.’s Reply 9.

1. Twenty-Six Year Period

Plaintiffs defend the twenty-six year period for their request by pointing out that

defendant’s own discovery requests cover the same period, Pls.’ Resp. 2-3, and that “the

entire twenty-six year period is relevant because it is directly tethered to the facts and

events at issue, and as a result, it is not unnecessarily broad or ‘breathtaking’ in scope.”

Id. at 3.

That a time period is relevant for some requests, however, does not necessarily

mean that it is relevant for all requests. In determining a relevant time period for

plaintiffs’ first request, the task is to identify the earliest date the concerns that led to the

enactment of ELIHPA, on February 5, 1988, could have resulted in the type of study

contemplated by plaintiffs. The legislative history for ELIHPA shows that Congress

became concerned about the impact of owners exercising their prepayment rights on the

low-income housing stock as early as the mid-1980s.

Over the past year, the Committee has had several hearings on the potential

loss of units from the subsidized housing stock due to the prepayment of

insured multifamily mortgages. The potential loss of units to low and

moderate income families over the next several years could be anywhere

from 500,000 to 1 million units.

H.R. Rep. No. 100-122(I), at 35 (1987), as reprinted in 1987 U.S.C.C.A.N. 3317, 3351;

see also CCA Assocs. v. United States, 91 Fed. Cl. 580, 587 (2010) (“In the mid-1980s,

Congress became concerned that owners of housing insured under Section 221(d)(3)

would begin to exercise their prepayment rights, thereby reducing the total number of

low-income housing units.”), aff’d in part, rev’d in part & remanded, 667 F.3d 1239 (Fed.

Cir. 2011).

Plaintiffs provide no information to support a finding that information responsive

to their first request existed prior to the mid-1980s, and the court is aware of none. The

court finds that plaintiffs’ request is overbroad, and defendant is granted a protective

order for plaintiffs’ first request for information prior to 1982.

2. Every Federal Government Agency

Plaintiffs take the position that a “common sense” interpretation of their request

would mean “the only federal agencies the Government needs to seek information from

are those that are reasonably likely to possess relevant responsive information, and that is

most certainly not ‘every agency in the entire Federal government.’” Pls.’ Resp. 4.

Plaintiffs claim this is not the first time the government has argued that one of their

deposition topics is overly broad, relying on an unreasonable interpretation of their

deposition notice. “[T]he Government has already been admonished in this case that

discovery requests are not to be read in a vacuum and interpreted in an unreasonable

manner just so that they can be objected to as overly broad.” Pls.’ Resp. 3 (citing

Algonquin Heights v. United States, No. 97-582, 2008 WL 2019025, at *4 (Fed. Cl. Feb.

29, 2008) (order granting plaintiffs’ motion to compel additional Rule 30(b)(6)

testimony)).

Plaintiffs misstate the issue in the Algonquin Heights ruling, which was not

whether plaintiffs’ deposition request was overly broad. In Algonquin Heights, plaintiffs

noticed a Rule 30(b)(6) deposition to include testimony about the “document retention

policies of HUD.” Algonquin Heights, 2008 WL 2019025, at *2. After defendant’s

witness, according to plaintiffs, was unprepared to answer its questions “concerning how

HUD managed the actual files of the Plaintiffs in this case, including what would be

included in those files and where they would be kept,” id., plaintiffs moved to compel

additional testimony “about [HUD’s] document retention practices and policies,” id. at

*1. In its opposition, defendant argued that plaintiffs’ attempt to compel testimony about

HUD’s document retention “practices and policies” went beyond the scope of their

deposition notice, in which they sought testimony about HUD’s document retention

“policies.” Id. at *3.

The court was unpersuaded by defendant’s attempt to draw a distinction between

the terms practice and policy, finding that to do so “would write into RCFC 30(b)(6) a

much more stringent standard than what the rule requires,” which is “reasonable

particularity.” Id. at *4.

Common sense dictates that it would be both counterproductive and wasteful

for plaintiffs to inquire solely into HUD’s document retention policy without

also intending to place that inquiry within a relevant litigation context, i.e.,

how HUD effectuated, or did not effectuate, that policy in this case. See Pls.’

Mot. 5 (“The fact that HUD had a policy, however, does not explain how

HUD followed-or did not follow-that policy in practice.”).

Id. Thus the Algonquin Heights court refused to permit defendant to rely on its narrow

interpretation of plaintiffs’ notice, an interpretation the court found at odds with common

sense.

In this matter, plaintiffs argue that defendant is required to use its common sense

to narrow the boundaries of their first request, as “the outer limits of the First subject

matter are clear if common sense is used.” Pls.’ Resp. 4. The Algonquin Heights ruling

provides plaintiffs with no support, as nothing in that ruling suggests that the testifying

party (defendant) has the burden of using its “common sense” to determine the “outer

limits” of the examining party’s (plaintiffs) notice.

Rather, the burden of defining its deposition topics with reasonable particularity

rests with plaintiffs, not defendant. See, e.g., 8A Charles Alan Wright et al., Federal

Practice & Procedure § 2103, Westlaw (database updated Apr. 2015) (footnote omitted)

(stating that if “the party seeking [Rule 30(b)(6) deposition] discovery has [failed to]

adequately designate[] the subjects on which it wants information . . ., the corporate party

may seek relief from the court.”); see also Whiting v. Hogan, No. 12-cv-8039, 2013 WL

1047012, at *11 (D. Ariz. Mar. 14, 2013) (“The burden is on . . . the party requesting the

deposition[] to satisfy the ‘reasonable particularity’ standard of Rule 30(b)(6).”)

Defendant’s obligation is to prepare its witness to “testify about information

known or reasonably available to the organization.” RCFC 30(b)(6) (emphasis added).

In effect, plaintiffs have acknowledged their first request goes beyond this standard, and

is overbroad, as they have indicated their willingness to eliminate a few federal agencies

from their first request.

Fundamentally, the only federal agencies the Government needs to seek

information from are those that are reasonably likely to possess relevant

responsive information, and that is most certainly not “every agency in the

entire Federal government.” If the Government requires assistance to figure

it out, the First Wave Plaintiffs are comfortable concluding that it is unlikely

that the Department of Transportation, Department of Defense, Department

of Health and Human Services, or other like agencies will possess any

relevant responsive information, and so those agencies are not captured by

the scope of the subject matter.

Pls.’ Resp. 4.

The court finds that plaintiffs’ notice for testimony about reports from “any other

Government agency” is overbroad. Defendant’s request for a protective order as to the

federal agencies from which it must seek information is granted-in-part. Defendant may

limit its search to the U.S. Department of Housing and Urban Development, and any of

its predecessors, the U.S. Government Accountability Office, and any of its predecessors,

and the Congressional Budget Office.

3. Preservation Statutes

Plaintiffs posit that the ideas resulting in the Preservation Statutes preceded their

enactment, and that such information, if it exists, is relevant. Pls.’ Resp. 5. “If in fact the

Government did study, analyze, investigate or evaluate another means of taking away the

First Wave Plaintiffs’ prepayment rights other than by having Congress enact ELIHPA

and LIHPRHA, then that information is encompassed within the scope of the First subject

matter.” Id. Defendant offered no reply to plaintiffs’ explanation.

The court finds that plaintiffs are correct, that such information would be relevant

to plaintiffs’ first request, and this part of plaintiffs’ first request is not overbroad.

Defendant’s request for a protective order is denied to the extent it seeks to limit its

inquiry to the Preservation Statutes.

Defendant’s motion for a protective order for plaintiffs’ first request is

GRANTED-IN-PART and DENIED-IN-PART. Defendant may limit its search to

information from 1982 to 1996 from the U.S. Department of Housing and Urban

Development, and any of its predecessors, the U.S. Government Accountability Office,

and any of its predecessors, and the Congressional Budget Office. Defendant’s motion is

otherwise denied.

B. Plaintiffs’ Second Request

Plaintiffs seek testimony about studies prepared by HUD, or any other government

agency, between 1970 and 1996, regarding the effects of ELIHPA or LIHPRHA on the

rental market in which the property of each First Wave plaintiff is located. 7 DA001-002,

DA004-5, DA007-8, DA010-11, DA013-14 & DA016-17.

Defendant states that plaintiffs have not specified any report, Def.’s Mot. 12, and

that it “is unaware of any such report,” Def.’s Reply 14. Defendant “seeks a protective

order stating that it need not designate a witness to address the second matter for

examination;” defendant reasons that when an organization possesses no knowledge as to

“Any analysis, study, summary, investigation, evaluation, or examination,

conducted, prepared or commissioned by HUD or any other Government agency, at

any time between 1970 and 1996, whether formal or informal, and whether complete or

incomplete, related to or regarding the impact(s), effect(s) and/or consequence(s) of the

provisions and terms of ELIHPA and/or LIHPRHA on the rental markets in Boston,

Massachusetts.” DA001-002, DA004-5, DA007-8, DA010-11, DA013-14 & DA016-17.

(No. 2).

matters listed in the notice and is unable to prepare a witness, it has no duty to proffer a

witness.8 Def.’s Mot. 13 (citing Barron v. Caterpillar, Inc., 168 F.R.D. 175, 177-78 (E.D.

Pa. 1996); 7 Moore’s Federal Practice § 30.25[3] (2014)).

Plaintiffs respond that they expect the government’s witness to testify “about the

existence or lack thereof of the requested reports, analyses, studies, etc.” Pls.’ Resp. 8.

Rule 26(b) provides that any party “may obtain discovery regarding any

nonprivileged matter that is relevant to any party’s claim or defense—including the

existence, description, nature, custody, condition, and location of any documents or other

tangible things and the identity and location of persons who know of any discoverable

matter.” RCFC 26(b) (emphasis added). “A witness ordinarily cannot escape

examination by denying knowledge of any relevant facts, since the party seeking to take

the deposition is entitled to test the witness’s lack of knowledge.” 8A Charles Alan

Wright et al., Federal Practice & Procedure § 2037, Westlaw (database updated Apr.

2015); cf. Iris Corp. Berhad v. United States, 84 Fed. Cl. 489, 494 (2008) (declining to

issue protective order for a Rule 30(b)(6) deposition, despite the testifying party’s

argument that it had already produced all available evidence, as “[p]arties to litigation do

not have to accept their opponent’s statement that all relevant evidence has been

produced[,] . . . they are entitled to test this assertion in questioning witnesses during

depositions.”)

Nor does defendant’s cited authority provide it with support, as the court in Barron

addressed an inapposite point—that is, whether a testifying party must provide a second

Rule 30(b)(6) witness when the examining party found the testimony of the first witness

to be deficient. See Barron, 168 F.R.D. at 177. While the cited portion of Moore’s

Federal Practice does state that “if an organization truly does not possess knowledge as to

matters listed in the notice, and is unable to prepare a designee, it has no duty to make a

designation under Rule 30(b)(6),’” the case law in support of this statement shows that

this treatise similarly considers the testifying party’s duty when the examining party is

dissatisfied with its Rule 30(b)(6) witness’s testimony. 7 Moore’s Federal Practice §

30.25[3] n.15 (2014) (citing Barron, 168 F.R.D. at 177-78; Dravo Corp. v. Liberty Mut.

Ins. Co., 164 F.R.D. 70, 75-76 (D. Neb. 1995) (considering whether a testifying party

must designate a second Rule 30(b)(6) witness for additional testimony when the

examining party was dissatisfied)).

Defendant also notes that four of the six First Wave plaintiffs did not allege a

taking claim under ELIHPA; thus it argues these four plaintiffs are not entitled to

discovery on ELIHPA. See Def.’s Mot. 12 n.10. As discussed later, this argument is

unpersuasive. See infra Part III.D.2 (fourth and fifth requests).

At this point, the court would ordinarily deny defendant’s request for a protective

order for plaintiffs’ second request. But, the court observes that plaintiffs’ second request

includes the same two parameters for which the court granted defendant a protective

order as to plaintiffs’ first request—the time period (1970 to 1996) and the information

source (any other Government agency). Notwithstanding defendant’s position that it is

aware of no responsive reports, there is no purpose served in protecting defendant from

these overbroad parameters in one request, but not in another. And “[i]t is ‘axiomatic

that a trial court has broad discretion to fashion discovery orders[.]”’ AG-Innovations,

Inc., 82 Fed. Cl. at 76 (quoting White Mountain Apache Tribe of Ariz. v. United States, 4

Cl. Ct. 575, 583 (1984)).

As plaintiffs seek studies about the “impact(s), effect(s) and/or consequence(s) of

the provisions and terms of ELIHPA and/or LIHPRHA,” see supra note 7, the enactment

of ELIHPA on February 5, 1988 would be the earliest possible date of such a study. For

the reasons discussed in plaintiffs’ first request, see supra Part III.A.2, plaintiffs’ second

request is limited to the U.S. Department of Housing and Urban Development, and any of

its predecessors, the U.S. Government Accountability Office, and any of its predecessors,

and the Congressional Budget Office.

Defendant’s motion for a protective order for plaintiffs’ second request is

GRANTED-IN-PART and DENIED-IN-PART. Defendant may limit its search to

information from 1988 to 1996 from the U.S. Department of Housing and Urban

Development, and any of its predecessors, the U.S. Government Accountability Office,

and any of its predecessors, and the Congressional Budget Office. Defendant’s motion is

otherwise denied.

C. Plaintiffs’ Third Request

Plaintiffs seek testimony regarding any oral or written communication, between

HUD and the owners of each property, directly or indirectly related to the development

or construction of their property.9 DA002, DA005, DA008, DA011, DA014 & DA017.

“Any communications, oral or written, between HUD (or its predecessor agency

the Federal Housing Administration (“FHA”)) and the owner(s) (or the owner’s

representative(s) or agent(s)) of [the property], directly or indirectly, related to the

development and/or construction of the property.” DA002, DA005, DA008, DA011,

DA014 & DA017.

1. Oral Communications

Defendant states that it is “unaware of any particular verbal communications

between HUD and plaintiffs regarding the development or construction of the plaintiffs’

respective multi-family housing projects.” Def.’s Mot. 9 n.7. Defendant takes the

position that it is not obligated to “designate a witness to testify about information that is

not reasonably available,” which would include “verbal discussions that took place . . .

more than forty years ago,” if at all, with employees who “retired long ago.” Def.’s Mot.

9 (citing Barron, 168 F.R.D. at 177-78). As previously discussed in the second request,

Barron provides defendant with no support for this position. See supra Part III.B.

Plaintiffs respond that defendant’s inability to identify particular verbal

communications is “not a sufficient basis” for a protective order, and that defendant has a

duty to contact its former employees. Pls.’ Resp. 10 (citing QBE Ins. Corp. v. Jorda

Enters., 277 F.R.D. 676, 689 (S.D. Fla. 2012) (“[A] corporation with no current

knowledgeable employees must prepare its designees by [conducting] . . . if necessary,

interviews of former employees or others with knowledge.”)).

Defendant replies that the “[f]ederal employees involved during the development

phase retired decades ago and are unavailable.” Def.’s Reply 9. Defendant repeats that it

is unaware of any particular verbal communications and points to an interrogatory

response in which it stated as much. Def.’s Reply 9 (citing DSA12 (Def.’s Resp.

Interrog. No. 12)).

Defendant’s interrogatory response notwithstanding, plaintiff is entitled to

question defendant’s witness about any matter “relevant to any party’s claim or

defense—including . . . the identity and location of persons who know of any

discoverable matter.” RCFC 26(b)(1). Plaintiffs correctly rely on QBE Insurance

for defendant’s duty to prepare its 30(b)(6) witness by attempting, if necessary, to

interview knowledgeable former employees. See Pls.’ Resp. 10. However, the court in

QBE Insurance also said that a corporation “must perform a reasonable inquiry for

information that is reasonably available to it,” QBE Ins. Corp., 277 F.R.D. at 689, and

that a “corporation cannot be faulted for not interviewing individuals who refuse to speak

with it,” id. at 691.

Defendant’s motion for a protective order for the third request is denied with

respect to oral communications.

2. Written Communications

The dispute regarding written communications centers on a set of documents

defendant produced to each First Wave plaintiff—known as the Washington Docket—

that relates to the construction and development of each project. Def.’s Mot. 9.

Defendant acknowledges that the documents contained therein are relevant, as they

“could conceivably relate to the investment-backed expectations prong of Penn Central.”

Id. Defendant describes each of the six Washington Dockets as “voluminous,” and

because of this, it wants plaintiffs to identify those documents about which plaintiffs seek

to question defendant’s Rule 30(b)(6) witness. Id.

Plaintiffs agree that the relevant documents are voluminous. “[T]here are six First

Wave plaintiffs, which means that, collectively, there is a large volume of documents

required to prepare a witness for each individual Plaintiff’s case . . . .” Pls.’ Resp. 12.

Plaintiffs nonetheless refuse to identify specific documents within each Washington

Docket, leading defendant to argue that plaintiffs have “failed to provide reasonable

specificity about the matters for examination.” Def.’s Mot. 10.

Plaintiffs suggest that if they are forced to specify particular documents in each

Washington Docket, they will be unable to ask defendant about the existence of relevant

written communications other than those included in each Washington Docket.

First Wave Plaintiffs should be allowed to confirm under oath what

communications took place. If under oath, the Government’s deponent

identifies other communications beyond what is in the Washington Dockets,

those other communications are also relevant subject matters for discussions.

The wrong approach would be to grant a protective order to prevent the First

Wave Plaintiffs from confirming the extent of those communications, or [to]

require them, as a precondition, to identify a specific list of documents.

Pls.’ Resp. 12 n.3.

Plaintiffs are correct that they are entitled to ask defendant about the existence of

written communications. See RCFC 26(b)(1) (“Parties may obtain discovery regarding

any nonprivileged matter that is relevant to any party’s claim or defense—including the

existence, description, nature, custody, condition, and location of any documents . . . .”)

(emphasis added). Plaintiffs do not explain, however, how identifying documents within

each Washington Docket would prevent them from asking defendant’s witness about the

existence of other written communications, and the court is aware of no reason why this

would be so.

Plaintiffs rely on Magnesium Corporation of America for the proposition that a

protective order is not justified merely because a Rule 30(b)(6) witness is called upon to

testify about a large volume of documents, as defendant’s witness will be in this case.

Pls.’ Resp. 12 (citing United States v. Magnesium Corp. of Am., No. 2:01-cv-40, 2006

WL 6924985, at *4 (D. Utah Nov. 27, 2006) (order granting Magnesium’s motion to

compel designation of Rule 30(b)(6) witnesses)).

Magnesium Corporation sought to depose the United States Environmental

Protection Agency (EPA) about three subject matters, including the “EPA’s evaluation of

ecological and human risk at the Rowley[, Utah] facility and similar sites elsewhere, and

facts pertaining to EPA’s practices regarding remediation and corrective action at the

Rowley facility and similar other sites.” Magnesium Corp., 2006 WL 6924985, at *1

(emphasis added). The EPA refused to designate a witness, claiming that the notices

were not stated with reasonable particularity, as the EPA had thousands of environmental

sites nationwide, and it was unable to designate a witness unless Magnesium Corporation

specified the sites for which it sought information. Id. at *2.

The district court found the EPA’s objection unpersuasive, pointing both to the

plain text of the notices and a limitation to which Magnesium Corporation agreed during

briefing. Id. at *3. As the court saw it, “more than half of the subjects upon which

[Magnesium] seeks information pertain only to the Rowley, Utah facility” and with

regard to information for “other sites,” Magnesium sought only “those risk assessments

that were relied upon as a substantial factor in corrective or remedial action decisions,”

for which the court found the EPA should be able to identify a witness. Id. As neither

the text of the First Wave plaintiffs’ notice—nor plaintiffs’ briefing on the motion for

protective order—provides the particularity found in the Magnesium Corporation notice,

this case does not support plaintiffs’ position.

The court finds more persuasive here the reasoning of a different district court

called upon to decide whether Rule 30(b)(6) deposition topics were stated with

reasonable particularity.

Some of the requested categories cover a large amount of information that

may be irrelevant to Plaintiffs’ [the examining party’s] claims. The

categories “company policies and procedures,” “company employee

retention process,” “employer handbooks”, “employment manuals” are

overbroad as they are not limited to areas relevant to this personal injury

matter. Although the categories of “employee specific employment file” and

“any file materials” are limited to Defendant Dana Hogan, there may be

numerous records contained therein. The inquiry into Hogan’s employment

file should be further limited to the relevant topics in this case. The burden

is on Plaintiffs, as the party requesting the deposition, to satisfy the

“reasonable particularity” standard of Rule 30(b)(6). Without further

clarification, Defendants cannot reasonably designate and prepare a

corporate representative to testify on their behalf regarding these broad lines

of inquiry.

Whiting, 2013 WL 1047012, at *11 (emphasis added) (order amending plaintiff’s Rule

30(b)(6) deposition notice and granting motion to compel deposition). Similarly, the

documents at issue in First Wave plaintiffs’ deposition of defendant are “voluminous,”

and as they “relate[] to the construction and development of each project,” they will

cover numerous topics that are not relevant to plaintiffs’ investment-backed expectations.

The court also considers the recommendation of the Advisory Committee on Civil

Rules on the factors that weigh in favor of permitting extended time for a deposition.

The court previously granted plaintiffs an extended period in which to depose defendant’s

Rule 30(b)(6) witness, over the objection of defendant. See Anaheim Gardens, 2014 WL

4401529, at *7. According to the Advisory Committee,

[p]arties considering extending the time for a deposition--and courts asked to

order an extension--might consider a variety of factors. . . . If the examination

will cover events occurring over a long period of time, that may justify

allowing additional time. In cases in which the witness will be questioned

about numerous or lengthy documents, it is often desirable for the

interrogating party to send copies of the documents to the witness sufficiently

in advance of the deposition so that the witness can become familiar with

them.

Fed. R. Civ. P. 30(d) advisory committee’s note to 2000 amendment (emphasis added).

The court finds it would be an undue burden, in terms of time and expense, for

defendant to prepare a witness about a large number of documents that will be of no

interest to plaintiffs. Defendant’s motion for a protective order for plaintiffs’ third

request is GRANTED-IN-PART and DENIED-IN-PART. Plaintiffs are directed to

identify those documents within each of the six Washington Dockets about which it

wishes to question defendant’s Rule 30(b)(6) witness. Defendant’s motion is otherwise

denied.

The court notes that defendant attempts to take the position that it will limit

preparation of its witness to “authenticat[ing] documents in the Washington Dockets and

to answer[ing] basic questions about those documents.” Def.’s Mot. 9. Plaintiffs are

correct that defendant may not limit itself solely to authenticating documents. Pls.’ Resp.

12-13 (citing Wilson, 228 F.R.D. at 528).

D. Plaintiffs’ Fourth and Fifth Requests

Plaintiffs seek testimony regarding any oral or written communication, between

HUD and the owners of the property, related to the mortgage—including, but not limited

to—the right to prepay the mortgage without HUD’s consent (fourth request10), and the

impact on plaintiffs of the provisions in the Preservation Statutes that restricted each

plaintiff’s ability to prepay the mortgage without HUD’s consent (fifth request11).

DA002, DA005, DA008, DA011, DA014 & DA017.

Defendant seeks a protective order “precluding the fourth and fifth matters for

examination” for two reasons. Def.’s Mot. 13-14. First, defendant objects that “plaintiffs

seek testimony about the effect of the Preservation Statutes on the contractual right to

prepay their respective mortgages,” a question settled in February 2013 when the judge

previously assigned to this case ruled that plaintiffs’ claims were ripe, because it was

futile for plaintiffs to seek permission to prepay their mortgages. Id. at 13 (citing

Anaheim Gardens v. United States, 109 Fed. Cl. 33 (2013). Defendant argues that re-

litigation of a settled issue is precluded under the law of the case doctrine, and any

discovery on this issue would be unduly burdensome. Def.’s Reply 15.

Second, defendant points out that the four Anaheim Gardens First Wave plaintiffs

brought their claims under LIHPRHA only. Def.’s Mot. 13-14. Thus defendant seeks a

protective order to preclude those plaintiffs from seeking testimony about the effect of

ELIHPA on them. Id.

“Any communications, oral or written, between HUD (or its predecessor agency

FHA) and the owner(s) ((or the owner’s representative(s) or agent(s)) of [the

property] related to the terms of the mortgage and mortgage note, including but not

limited to, the right to prepay the mortgage without HUD’s consent after [the date of

the alleged taking].” DA002, DA005, DA008, DA011, DA014 & DA017 (No. 4).

“The impact(s), effect(s) or consequence(s) on the Plaintiff of the

provisions and terms of ELIHPA and/or LIHPRHA that restricted the ability of

the Plaintiff to prepay the mortgage on [the property] without HUD’s consent

after [the date of the alleged taking].” DA002, DA005, DA008, DA011, DA014

& DA017 (No. 5).

1. Plaintiffs’ Right to Prepay Their Mortgages

Plaintiffs acknowledge that both requests “involve” their prepayment rights, but

dispute “that the subject matter [of either request] is solely and exclusively related to

ripeness.” Pls.’ Resp. 13-14.

Defendant replies that “[p]laintiffs’ discovery is not objectionable because it

relates to ripeness; it is objectionable because the viability of a request to prepay under

the Preservation Statues was determined by the Court during the ripeness phase.” Def.’s

Reply 15 (citing Anaheim Gardens, 109 Fed. Cl. 33).

Defendant is correct that neither party could re-litigate previously settled issues,

including the ripeness of plaintiffs’ claims. “The law of the case doctrine ‘posits that

when a court decides upon a rule of law, that decision should continue to govern the same

issues in subsequent stages in the same case.”’ Sacramento Mun. Utility Dist. v. United

States, 566 F. App’x 985, 995 (Fed. Cir. 2014) (citing Christianson v. Colt Indus.

Operating Corp., 486 U.S. 800, 815-16 (1988)). The court agrees that testimony about

the viability of a request to prepay under the Preservation Statues is unnecessary in the

merits phase of this litigation, and thus is unduly burdensome.

Defendant’s objection, however, assumes that whether plaintiffs could prepay

their mortgages is the only question that falls within their fourth and fifth requests.

Considering the text of plaintiffs’ requests, it is not apparent to the court that plaintiffs

seek such testimony. Nor is it clear why plaintiffs would do so, as they were the

prevailing party on the ripeness issue. See Anaheim Gardens, 109 Fed. Cl. at 39

(“Plaintiffs’ motion for summary judgment on ripeness is granted . . . .”).

The court does not read plaintiffs’ requests as narrowly as defendant.

2. ELIHPA Discovery for Four First Wave Plaintiffs

Defendant objects to discovery about ELIHPA as irrelevant, because plaintiffs

have no ELIHPA claim. Def.’s Mot. 13. By so objecting, defendant effectively takes the

position that it is impossible for discovery about ELIHPA to be relevant to plaintiffs’

LIHPRHA claims.

Plaintiffs disagree, characterizing LIHPRHA as the “successor statute to ELIHPA,

and not a separate, unrelated replacement statute.” Pls.’ Resp. 18. Further, plaintiffs

point out that their discovery rights are not limited by defendant’s view of a legal

argument or theory, and defendant may not “use its theory of a legal issue to block

relevant discovery.” Id. at 20.

In reply, defendant emphasizes that “ELIHPA and LIHPRHA are distinct statutes[,

and] taking claims based on ELIHPA and LIHPRHA are distinct.” Def.’s Reply 18

(citing Cienega X, 503 F.3d at 1279). The portion of Cienega X on which defendant

relies is provided below.

[W]e consider whether ELIHPA constituted a taking. The owners do

not separately argue that ELIHPA constitutes a taking, and there is no basis

for treating ELIHPA and LIHPRHA the same. ELIHPA was a temporary

restriction that was enacted on February 5, 1988, and was only in effect until

LIHPRHA was enacted on November 28, 1990. None of the owners’ twenty-

year prepayment deadlines expired during the period that ELIHPA was in

effect, and the owners that entered into use agreements all signed the

agreements well after LIHPRHA was enacted. There has been no showing

that ELIHPA restricted the plaintiff owners’ freedom of action in any

meaningful way. . . . Accordingly, we find that ELIHPA did not effectuate a

taking with respect to these owners.

Cienega X, 503 F.3d at 1279 (emphasis added) (footnote omitted). The court does not

read the Cienega X decision that no taking occurred to limit discovery in the way

defendant urges.

It is not the case that “a fact must be alleged in a pleading for a party to be entitled

to discovery of information concerning that fact. [Rather,] that . . . fact must be germane

to a specific claim or defense asserted in the pleadings for information concerning it to be

a proper subject of discovery.” AG-Innovations, Inc., 82 Fed. Cl. at 77 (quoting 6 James

Wm. Moore et al., Moore’s Federal Practice ¶ 26.41 (3d ed. 2008)12). Nothing in

defendant’s argument supports a finding that discovery about ELIHPA is irrelevant to

plaintiffs’ LIHPRHA claims.

Defendant has failed to show good cause for a protective order. Defendant’s

motion for a protective order for the fourth and fifth requests is DENIED.

The quoted material now appears in 6 James Wm. Moore et al., Moore’s Federal

Practice ¶ 26.42[1] (3d ed. 2015).

E. Plaintiffs’ Sixth Request

Plaintiffs seek testimony about eleven identified categories of information about

the rental market13 in which each property is located, for a time period ranging from

twenty-three to twenty-six years.14 DA002, DA005, DA008, DA011, DA014 & DA017.

For both the low to moderate income rental housing and conventional market

rental housing markets, plaintiffs seek testimony about:

(1) supply and demand;

(2) vacancy rates;

(3) quality of the rental units;

(4) forecasted, planned, expected or actual development of rental units;

(5) the market value of rental housing units;

(6) the type and mix of available residential rental housing.

(7) forecasted, planned, expected or actual growth of businesses;

(8) market trends, including economic, population, employment, and

development trends;

(9) unemployment rates;

(10) proximity of retail stores and businesses within 10 miles of the property;

and

The terms rental housing market, geographic area, geographic location or

geographic market are used interchangeably.

Plaintiffs’ request for Chauncy House, owned by First Wave plaintiff Chauncy

House Company, is included below in its entirety.

The low to moderate income housing rental market and the conventional rental

market in Boston, Massachusetts from 1973 through 1996, including but not

limited to, the following types of information: the supply of and demand for low

to moderate income housing and conventional market rental units, vacancy rates

for and the quality of both types of rentals, all forecasted, planned, expected, or

actual development of low to moderate income housing and conventional units,

the market value of residential rental housing units, the type and mix of available

residential rental housing, all forecasted, planned, expected or actual growth of

business(es), market trends (economic, population, employment, and

development), unemployment rates, the proximity of retail stores and businesses

within 10 miles of Chauncy House, and access to public transportation.

DA002 (No. 6) (emphasis added).

(11) access to public transportation.

Id.

Defendant objects that the sixth request is excessively broad, to the point of being

“staggering and unbounded.” Def.’s Mot. 10-11. No part of plaintiffs’ request, argues

defendant, bears on the economic impact of either Preservation Statute “on plaintiffs’

properties at the time of the alleged takings in the 1990s, or on any other issue relevant to

the first wave plaintiffs’ claims.” Id. at 11. Defendant seeks a protective order striking

the sixth request from plaintiffs’ deposition notices. Id.

Plaintiffs argue that the testimony they seek is relevant to the Penn Central

investment-backed expectations prong, which requires them to show that their

expectations were “objectively reasonable.” Pls.’ Resp. 15. To satisfy this burden,

plaintiffs assert they must provide the court with

[d]etailed facts about the geographic market where the properties were

located when they were developed or purchased, as compared to the markets

years later, when prepayment would have been possible but for ELIHPA and

LIHPRHA, [because such facts] are necessary to meet the Plaintiffs’ burden

under Penn Central. Specifically, facts such as the rents charged, the actual

and potential for growth in the area, increases in population, the local job

market, surrounding commercial development, and the desirability of living

in the area, as evidenced in part by vacancy rates, all directly bear on the

reasonableness of the Plaintiffs’ expectations related to their investments.

Id. (emphasis added).

In effect, plaintiffs take the position that satisfying the Penn Central investment-

backed expectations prong requires a showing that as reexamined at the time of the

alleged taking, their early investment-backed expectations were accurate. Stated another

way, if plaintiffs based their investment on an expectation that the geographic location of

their property would prosper and result in an increase in property value, then plaintiffs

must show that the expected growth did occur.15 Plaintiffs, however, provide no

authority for this position, and the court is aware of none.

As discussed later, this was the investment strategy pursued by the plaintiff in

CCA Associates. See CCA Assocs. v. United States, 91 Fed. Cl. 580, 609-10 (2010),

aff’d in part, rev’d in part & remanded, 667 F.3d 1239 (Fed. Cir. 2011).

While plaintiffs are correct that certain evidence about the location and character16

of a property may be relevant to proving that their expectations at the time of investment

were objectively reasonable, it is clear that evidence collected years after plaintiffs’

investment—even if it shows that plaintiffs’ expectations turned out to be correct—does

not satisfy plaintiffs’ legal burden. As the Federal Circuit has observed:

The Court of Federal Claims explained that “factors associated with the

location and character of projects strongly influenced the reasonable

expectation of the owners, judged on an objective and not a subjective basis.”

CCA, 91 Fed. Cl. at 609. While this may be true, the only objective evidence

of the industry’s investment backed expectations is a quote from a 1972

guide17 which indicated that a project located “in a growing suburban or

exurban area, . . . may increase in value over the years, [and create]

substantial residual profits to the investors upon sale or other disposition.”

Id. (quotations and citations omitted, emphasis added).

CCA Assocs., 667 F.3d at 1247-48 (emphasis added).

In accepting only the 1972 guide as objective evidence of the industry’s

investment-backed expectations,18 the Federal Circuit necessarily rejected the remainder

of the evidence on which the trial court relied in its finding that CCA Associates carried

its burden for the investment-backed expectations prong. In relevant part, the trial court’s

consideration of the evidence is included below.

[I]n the instance of Chateau Cleary, the potential returns very much depended

on its geographical location. “[T]he Norman Brothers chose . . . to invest in

a property in West Metairie, [Louisiana] then considered to be in the path of

future development in the New Orleans area and an emerging middle-class

neighborhood.” CCA Assocs., 75 Fed. Cl. at 192. The reasonableness of

Location has been defined as the property’s development area, and its character as

including the quality of construction and type of amenities provided. See CCA Assocs.,

91 Fed. Cl. at 608 (citing testimony of the government’s tax accounting expert).

Charles L. Edson & Bruce S. Lane, Bureau of National Affairs, Inc., A Practical

Guide to Low– and Moderate–Income Housing 11:8 (student ed. 1972) (“1972 guide”).

While the Federal Circuit did find that the 1972 guide provided objective

evidence, it also found that this evidence was insufficient to carry plaintiff’s burden, as

the discussion was hypothetical, rather than specific to the location of CCA Associates’

property. See CCA Assocs. v. United States, 667 F.3d 1239, 1247-48 (Fed. Cir. 2011).

this projection was confirmed by the development of West Metairie, as

evident from a site visit in 2006. Id. at 193. . . .

. . . In short, factors associated with the location and character of projects

strongly influenced the reasonable expectations of the owners, judged on an

objective and not a subjective basis.

....

[A] 1972 guide to low– and moderate-income housing stated that “[o]ne of

the principal benefits of ownership of a federally assisted housing project is

the tax shelter that it generates.” Edson & Lane, at 11:6. Yet, in a section

summarizing the advantages of obtaining a limited partnership interest in

federally assisted projects, the guide also states, “[w]here a project is located

in a growing suburban or exurban area, it may increase in value over the

years, thus creating substantial residual profits to the investors upon sale or

other disposition.” Id. at 11:8. CCA’s Chateau Cleary project falls into this

latter category where the prospect of long-term appreciation was the chief

incentive and thus the prepayment right was critically important.

....

. . . CCA had a long-term strategy based on Chateau Cleary’s location. CCA

invested in a property they considered to be “located in a growing suburban

or exurban area” that they hoped would “increase in value over the years”

and “creat[e] substantial residual profits . . . upon sale or other disposition.”

Edson & Lane, at 11:8. Subsequent events have born[e] out CCA’s

investment strategy, as growth has come to the area. Chateau Cleary was

recently appraised at approximately $5 million. 2009 Tr. 46:1–12 (Norman).

CCA Assocs., 91 Fed. Cl. at 609-10 (emphasis added).

The trial court concluded that “CCA had an objectively reasonable, investment-

backed expectation with respect to the right to prepay.” Id. at 610. The Federal Circuit

found that the trial court “erred by holding [that] this factor weighed in favor of a taking,”

as the evidence “fail[ed] to demonstrate that CCA’s investment-backed expectations were

objectively reasonable in light of industry practice as a whole, as required by Cienega X.”

CCA Associates, 667 F.3d at 1248. The Federal Circuit thus rejected as objective

evidence of the industry’s investment-backed expectations both the confirmed

development in the West Metairie area and the value of Chateau Cleary at the time of the

trial.

The Federal Circuit’s rejection of evidence that was available in 2006, long after

CCA Associates’ initial investment in 1971, is consistent with the settled authority that

plaintiffs must establish that their expectations were reasonable at the time of investment.

“As with the other [Penn Central] factors, the burden is on the owners to establish a

reasonable investment-backed expectation in the property at the time it made the

investment.” Cienega X, 503 F.3d at 1288 (emphasis added) (citing Forest Props., Inc. v.

United States, 177 F.3d 1360, 1367 (Fed. Cir. 1999)). “The point in time when the

[reasonable investment-backed expectations] analysis is conducted is the time at which

the complaining party entered into the activity that triggered the obligation,

Commonwealth Edison Co. v. United States, 271 F.3d 1327, 1350 (Fed. Cir. 2001) (en

banc)), specifically when the [owners] entered the [HUD] programs.” Chancellor Manor

v. United States, 331 F.3d 891, 904 (Fed. Cir. 2003). “Cienega X indicates that

contemporaneous documents, such as prospectuses, may help prove the existence of

objectively reasonable investment strategies. Cienega X, however, does not require the

use of prospectuses, and other kinds of evidence may be equally enlightening.” CCA

Associates, 667 F.3d at 1248 n.4 (emphasis added) (citing Cienega X, 503 F.3d at 1290-

91).

Having closely reviewed the governing authority, the court concludes that with

regard to the investment-backed expectations prong, plaintiffs’ position that they must

provide information about the geographic market in which their properties are located at

the time of the alleged taking—rather than at the time of the initial investment—is based

on a misreading of the pertinent cases.

With regard to the economic impact prong of the Penn Central test, plaintiffs

assert, without further discussion, that “testimony about the markets where the properties

are located affects . . . th[is] . . . prong.” Pls.’ Resp. 14. The Federal Circuit, however,

has identified at least two ways to evaluate economic impact.

First, a comparison could be made between the market value of the property

with and without the restrictions on the date that the restriction began (the

change in value approach). The other approach is to compare the lost net

income due to the restriction (discounted to present value at the date the

restriction was imposed) with the total net income without the restriction over

the entire useful life of the property (again discounted to present value).

Neither approach appears to be inherently better than the other, and on

remand the Court of Federal Claims should consider both as well as any other

possible approaches that determine the economic impact of the regulation on

the value of the property as a whole.

Cienega X, 503 F.3d at 1282.

The relevance of plaintiffs’ sixth request to the economic impact prong is not

apparent on its face, and the party seeking discovery bears the burden of explanation.

See, e.g., In re Jemsek Clinic, P.A., Nos. 06-31766, 06-31986, 2013 WL 3994666

(Bankr. W.D.N.C. Aug. 2, 2013) (“[W]hen a request for discovery is overly broad on its

face or when relevancy is not readily apparent, the party seeking discovery has the

burden to show the relevancy of the request.” (quoting Cunningham v. Std. Fire Ins. Co.,

No. 07-02538, 2008 WL 2668301, at *4 (D. Colo. Jul. 1, 2008))).

Moreover, as defendant points out, plaintiffs have failed to limit their sixth request

to the eleven identified categories of information. Instead, plaintiffs seek information

“including but not limited to” the identified categories. See Def.’s Mot. 10 (emphasis

added) (quoting Pls.’ Sixth Request). Defendant is correct that the plain text of plaintiffs’

sixth request is unbounded, and courts have found such language to be overbroad because

the testifying party is unable to prepare its witness to respond to such a request. For

example, in Reed v. Bennett, the court found:

[P]laintiff’s Rule 30(b)(6) notice to be overbroad. Although plaintiff ha[d]

specifically listed the areas of inquiry for which a 30(b)(6) designation [was]

sought, she [also] indicated that the listed areas [were] not exclusive.

Plaintiff broadens the scope of the designated topics by indicating that the

areas of inquiry will “includ[e], but not [be] limited to” the areas specifically

enumerated. An overbroad Rule 30(b)(6) notice subjects the noticed party to

an impossible task. . . . Where, as here, the defendant cannot identify the

outer limits of the areas of inquiry noticed, compliant designation is not

feasible.

Reed v. Bennett, 193 F.R.D. 689, 692 (D. Kan. 2000) (emphasis added) (order, inter alia,

granting motion to quash Rule 30(b)(6) deposition notice, pending modification); accord

8A Charles Alan Wright et al., Federal Practice & Procedure § 2103 n.11, Westlaw

(database updated Apr. 2015) (quoting Reed, 193 F.R.D. 689); see also Tri-State Hosp.

Supply Corp. v. United States, 226 F.R.D. 118, 125 (D.C.D.C. 2005) (adopting Reed v.

Bennett reasoning to find an individual topic incorporating the phrase “including but not

limited to” to be overbroad).

Accordingly, defendant’s motion is GRANTED as to plaintiffs’ sixth request.

Plaintiffs, however, may revise and reissue their request. Plaintiffs are cautioned

to carefully review their request and take care to avoid reissuing an overbroad request.

For example, the court notes that plaintiffs requested information about “the proximity of

retail stores and businesses” within 10 miles of each property. Using simple geometry—

with each property sitting at the center of a circle with a 10 mile radius—the court

concludes that plaintiffs requested information for an area comprising approximately 314

square miles. On its face, such a request is overbroad. Plaintiffs are cautioned that

should defendant again seek a protective order for plaintiffs’ revised sixth request, the

court will require plaintiffs to clearly explain the relevance of each category of requested

information under Penn Central.

F. Plaintiffs’ Seventh and Eighth Requests

In their seventh request, plaintiffs seek testimony about the physical condition of

each property for a period of time ranging from twenty to twenty-four years, beginning

with the year in which each plaintiff developed or purchased the property, and ending

with the year in which the alleged taking of each property occurred.19 DA002, DA005,

DA008, DA011, DA014 & DA017.

In their eighth request, plaintiffs seek testimony about both the rents received by

each property, and the actual market rents for the market in which each property is

located, for the same twenty to twenty-four year period of time.20 Id.

For the seventh request, and for the portion of the eighth request that seeks

testimony about rents received by each property, defendant objects on the ground that the

time period for which plaintiffs seek information is overly broad and abusive. Def.’s

Mot. 14. While defendant acknowledges that testimony on both topics is relevant to the

economic impact prong, it asserts that “[u]nder Penn Central, the pertinent inquiry is the

economic effect of the Government regulation on [the] parcel as a whole at the time of

the alleged taking.” Id. (emphasis added) (citing Cienega X, 503 F.3d at 1280-82). Thus

defendant seeks a protective order narrowing the time period for both the “seventh and

eighth requests to the period beginning five years before the alleged takings.” Id.

“The physical condition of [the property] from [the year of the property

development or purchase] through [the year of the alleged taking].” DA002, DA005,

DA008, DA011, DA014 & DA017 (No. 7). The year of property development or

purchase ranged from 1970 to 1973, and the year of the alleged taking ranged from 1991

to 1995.

“The rents received by the property from [the year of the property development

or purchase] through [the year of the alleged taking], and the actual market rents for the

same period in the market in which [the property] was located.” Id. (No. 8).

Additionally, for the portion of the eighth request that seeks testimony about the

actual market rents for the market in which each property is located, defendant interprets

this request as seeking opinion testimony about hypothetical market rents for the First

Wave plaintiffs’ properties, which it contends plaintiffs must seek from a qualified

expert, not its Rule 30(b)(6) witness. Id. at 11-12. Accordingly, defendant seeks a

protective order to prevent plaintiffs from questioning its witness about this portion of the

eighth request.

1. Seventh Request – Physical Condition

Plaintiffs argue that the testimony they seek is relevant to their investment-backed

expectations, and that defendant’s proposed five-year limitation would hinder their ability

to obtain relevant testimony. See Pls.’ Resp. 16. In opposing defendant’s motion,

plaintiffs take the position that “HUD’s views about the physical condition of the

properties from development through the prepayment date . . . are highly relevant.” Id.

(emphasis added). In support of this position, plaintiffs provide an example pertaining to

First Wave plaintiff Cedar Gardens and its owner, Mr. James Bancroft. Mr. Bancroft

testified that at the time he was developing Cedar Gardens, FHA representatives noted

that he appeared to be spending more money to build his property than was necessary; in

turn, Mr. Bancroft replied that he was doing so knowingly, as he wanted the property to

be easily convertible into a conventional market rent property at the expiration of the

twenty year prepayment restriction. See id. (citing PA063).

But plaintiffs’ mere description of Mr. Bancroft’s conversation with a FHA

representative fails to explain how the FHA representative’s opinion about the physical

condition of his property is relevant to plaintiffs’ burden of proving their investment-

backed expectations. Nor have plaintiffs provided either an explanation or any authority

that would help explain their position. As defendant correctly has observed, plaintiffs

simply “provide no cogent support” for their position. Def.’s Reply 16.

The Federal Circuit has stated that it is the owners’ expectations that are relevant

in the Penn Central analysis, not those of the United States. “In considering any requests

for further discovery, the court must recognize that the pertinent reasonable expectations

are those of the project owners, not of the United States.” Chancellor Manor, 331 F.3d at

906 n.8. Given this authority, the court is unable to find that the testimony of defendant’s

representative is relevant to plaintiffs’ investment-backed expectations.

As to the economic impact prong, plaintiffs have offered no objection to

defendant’s proposed five-year limitation. Accordingly, the court concludes that five

years’ worth of information is sufficient for the purpose of the economic impact prong.

Defendant’s motion for a protective order for the seventh request is GRANTED

for the period beginning five years prior to the date of the alleged taking for the property

of each First Wave plaintiff.

2. Eighth Request – Rents Received

Regarding the portion of the eighth request in which plaintiffs seek testimony

about the rents received by each property, plaintiffs assert that their request “directly

relate[s] to the economic impact and investment-backed expectations prongs of the Penn

Central test, as well as to damages,” and defendant’s attempt to limit this request to five

years prior to the date of the alleged taking is “unfair because it unreasonably constrains

exploration of a subject that is essential to the First Wave Plaintiffs’ claims.” Pls.’ Resp.

18. Plaintiffs, however, provide neither argument nor authority to support their

conclusory assertion.

As an initial matter, damages discovery is premature at this stage of the

proceedings. The parties are now conducting fact and expert discovery. See Scheduling

Order, ECF No. 378. The court will not consider whether the information plaintiffs seek

is relevant to their possible damages.

Regarding economic impact, the Federal Circuit has provided two possible, but

not exclusive, methods to determine economic impact, neither of which requires

information about rent payments dating back twenty years from the date of the alleged

taking.