Fundamentals 201: Strategic Discovery Issues in Franchise Litigation

October 16, 2013 Published Work
American Bar Association 36th Annual Forum on Franchising

I. Introduction

Discovery rules and procedures have evolved over the years to serve many functions in the dispute resolution process. The goal of discovery is to ensure that the parties have as much information as possible in order to effectively and efficiently develop claims and defenses.[1] Further, effective discovery is key to successful dispositive motions and meaningful trial preparation. It is also an important means of gaining leverage in a negotiated settlement. This paper will identify various methods for obtaining discovery from both parties and non-parties. It will also address certain ethical issues that counsel should consider, and review effective tools for compelling and objecting to, or otherwise preventing, unwarranted disclosure. Importantly for franchise counsel, this paper will examine discovery issues from the different perspectives of franchisor and franchisee counsel and will also address sometimes overlooked areas of inquiry in particular types of franchise litigation.[2]

Generally, parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.[3] The client is, of course, usually the best initial source of information about the case and possible discovery. The client should identify the facts or series of events relevant to the claims or defenses, identify any individuals with knowledge of information supporting (or refuting) the client's factual contentions and provide background documents relating to the parties' relationship and dispute. The client should also be able to assist the attorney by identifying the location of documents and other tangible information in the client's possession as well as those which may be in another's possession but under the client's control.[4] As described below, there are multiple methods for obtaining discovery from adverse parties as well as non-parties, and counsel should consider each in any franchise dispute. Of course, the costs associated with litigation in general, and discovery in particular, will factor into the choices made as to the discovery to seek in a particular action.[5]


[1]ROGER S. HAYDOCK & DAVID F. HERR, DISCOVERY PRACTICE, § 1.01 (2012); Fiona A. Burke & Himanshu M. Patel, Common Discovery Issues in Franchising – From the Perspectives of the Advocates and a Decision-Maker in ABA 32nd Annual Forum on Franchising, W 10, 14 (2009).

[2]Discovery in arbitration is beyond the scope of this paper. However, for a detailed analysis of discovery in franchise arbitrations, see Bethany L. Appleby, Richard L. Rosen & David Steinberg, Inside a Franchise Arbitration in ABA 31st Annual Forum on Franchising, W22 (2008).

[3]FED. R. CIV. P. 26(b)(1). Unless stated otherwise, we have followed the Federal Rules of Civil Procedure and counsel are cautioned to review the rules of the court in which they are litigating to determine the scope of available discovery. On June 3, 2013, the federal judiciary's Committee on Rules of Practice and Procedure approved for publication proposals to limit the scope of discovery under the Federal Rules of Civil Procedure. The final amendments may be enacted by December 2015. One of the proposed amendments would be to limit the broad scope of discovery to what is relevant to the claims or defenses of the parties. This amendment would eliminate the language extending discovery to information that appears ‘reasonably calculated to lead to discovery of admissible evidence.' COMMITTEE ON RULES OF PRACTICE AND PROCEDURE OF THE JUDICIAL CONFERENCE OF THE UNITED STATES, JUNE 2013 AGENDA BOOK, at 64-67 (June 3-4, 2013) [hereinafter PROPOSED RULE AMENDMENTS],

[4]Kimberly S. Toomey & Arthur L. Pressman, Discovery Dilemmas and Opportunities: Ethical, Practical and Legal Issues in the Discovery Process in ABA 24th ANNUAL FORUM ON FRANCHISING, W 13 (2001) AT 15.