<b><i>Online Extra: </b></i> 7-Eleven Hit With Discovery Sanctions in NJ Franchise Case </b></i>

A federal magistrate judge in Camden has sanctioned 7-Eleven Inc. for what he said were repeatedly deficient discovery responses in a case alleging the company unlawfully targeted South Jersey franchisees and owners for termination.

While U.S. Magistrate Judge Joel Schneider of the District of New Jersey stopped short of finding that 7-Eleven intentionally withheld relevant information, he said the company's “obfuscation” has made the litigation much more expensive and time-consuming than it should have been.

“The court cannot underestimate the amount of time and resources that were wasted because 7-Eleven did not do what it was supposed to do,” Schneider said in a Dec. 11 opinion. “One might ask how could the failure to properly answer two interrogatories cause so many problems. This case is a 'poster child' for the havoc that could result.”

Schneider said 7-Eleven violated Federal Rule of Civil Procedure 26(g) by failing to conduct a reasonable search for information requested by the plaintiffs in their interrogatories, and Rule 37(b)(2) by making a “lackluster and half-hearted effort to comply” with an Oct. 16, 2014, discovery order.

The magistrate judge said the appropriate sanction for the 26(g) violation was an admonishment of the company and its counsel at Philadelphia-based Duane Morris, including a warning “that similar conduct will be addressed more harshly in the future.”

Schneider also ordered 7-Eleven to pay the plaintiffs' fees and costs associated with trying to get the company to comply with the Oct. 16, 2014, order. Schneider did not give a dollar figure but did lay out the specific work that must be reimbursed, adding that plaintiffs counsel must show good cause for any other requested reimbursements.

The plaintiffs in'Younesv. 7-Eleven Inc.'have alleged that 7-Eleven undertook a coordinated effort to terminate weak South Jersey franchises and oust franchisees and owners who complained about the company. Some of the plaintiffs have also alleged that the company specifically targeted South Indian owners and franchisees, according to court documents.

The plaintiffs served two interrogatories in November 2013 seeking “all policies, plans or internal communications” regarding the company's intention to terminate franchise agreements with the plaintiffs and others in South Jersey, according to Schneider. The plaintiffs also produced affidavits from two former 7-Eleven employees who attested to the fact that such a plan existed.

In its January 2014 answer, 7-Eleven failed to identify any such plan, Schneider said. Several months and numerous discovery conferences later, however, the company “grudgingly acknowledged” the plan, which it referred to internally as “Project P” or “Project Philly,” according to Schneider.

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Zack Needles is the Bureau Chief of the New Jersey Law Journal, an ALM sibling of Franchising Business & Law Alert.

A federal magistrate judge in Camden has sanctioned 7-Eleven Inc. for what he said were repeatedly deficient discovery responses in a case alleging the company unlawfully targeted South Jersey franchisees and owners for termination.

While U.S. Magistrate Judge Joel Schneider of the District of New Jersey stopped short of finding that 7-Eleven intentionally withheld relevant information, he said the company's “obfuscation” has made the litigation much more expensive and time-consuming than it should have been.

“The court cannot underestimate the amount of time and resources that were wasted because 7-Eleven did not do what it was supposed to do,” Schneider said in a Dec. 11 opinion. “One might ask how could the failure to properly answer two interrogatories cause so many problems. This case is a 'poster child' for the havoc that could result.”

Schneider said 7-Eleven violated Federal Rule of Civil Procedure 26(g) by failing to conduct a reasonable search for information requested by the plaintiffs in their interrogatories, and Rule 37(b)(2) by making a “lackluster and half-hearted effort to comply” with an Oct. 16, 2014, discovery order.

The magistrate judge said the appropriate sanction for the 26(g) violation was an admonishment of the company and its counsel at Philadelphia-based Duane Morris, including a warning “that similar conduct will be addressed more harshly in the future.”

Schneider also ordered 7-Eleven to pay the plaintiffs' fees and costs associated with trying to get the company to comply with the Oct. 16, 2014, order. Schneider did not give a dollar figure but did lay out the specific work that must be reimbursed, adding that plaintiffs counsel must show good cause for any other requested reimbursements.

The plaintiffs in'Younesv. 7-Eleven Inc.'have alleged that 7-Eleven undertook a coordinated effort to terminate weak South Jersey franchises and oust franchisees and owners who complained about the company. Some of the plaintiffs have also alleged that the company specifically targeted South Indian owners and franchisees, according to court documents.

The plaintiffs served two interrogatories in November 2013 seeking “all policies, plans or internal communications” regarding the company's intention to terminate franchise agreements with the plaintiffs and others in South Jersey, according to Schneider. The plaintiffs also produced affidavits from two former 7-Eleven employees who attested to the fact that such a plan existed.

In its January 2014 answer, 7-Eleven failed to identify any such plan, Schneider said. Several months and numerous discovery conferences later, however, the company “grudgingly acknowledged” the plan, which it referred to internally as “Project P” or “Project Philly,” according to Schneider.

'

Zack Needles is the Bureau Chief of the New Jersey Law Journal, an ALM sibling of Franchising Business & Law Alert.