Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. La.: Questions about prior book of business lead to discovery friction in insurance franchise lawsuit, (May 16, 2025)

By Justin Marcus Smith, J.D.

Difficulty in distinguishing the different kinds of customers on a customer list did not entitle erstwhile franchisees to redact every customer name.

In deciding a motion to compel discovery, a magistrate judge of the federal district court in New Orleans found that certain insurance franchise defendants had not reviewed all sources of responsive information available to them. They did not provide responsive, relevant facts to the plaintiff franchisor. The court found it “inconceivable” that the defendants did not have records, including electronic records, that would enable them to identify all customers served from the beginning of 2024 to the present. Any difficulties in producing the requested list of customers by insurance type meant the defendants had to produce the entire customer list so the plaintiff could then discern which customers pertained to the disputed non-solicitation provision. The court held the defendants would also have to provide supplemental document production responses and a certification of diligent inquiry. The content of cell phone texts was discoverable if it were relevant. However, the defendants did not need to produce cumulative cell phone and text logs to the extent that subpoenaed third-party carriers were already providing the same information. Sensitive material might be marked “confidential” pursuant to the court’s protective order. The case illustrated the importance of specifying whether an existing book of business (Goosehead Insurance Agency, LLC v. Guillory, No. 2:24-cv-02146-JCZ-DPC (E.D. La. May 14, 2025)).

Background. Plaintiff Goosehead Insurance Agency, LLC, is a home, auto, life, and other insurance broker operating a franchise model that awarded franchise rights to third-party franchisees to develop and operate their own independent Goosehead insurance businesses within the Goosehead franchise system. Goosehead made its proprietary service systems available only to Goosehead franchisees. Defendants Guillory, Jr. and Pittman were insurance agents who formerly operated a Goosehead franchise.

Goosehead sued Guillory, Jr., Pittman, Guillory Sr., Guillory Pittman Insurance Agency, LLC, and Value Insurance Agency, LLC, alleging that they operated a competing insurance business in violation of the Goosehead franchise agreement. Goosehead asserted claims for breach of contract, violation of the Defend Trade Secrets Act, unfair trade practices, and fraud. The assigned judge previously dismissed the claims against Guillory, Sr.. The remaining defendants answered and filed counterclaims for conversion, breach of contract, unfair trade practices, violations of the uniform trade secrets act, and payment of a thing not due.

Goosehead filed a motion to compel arguing that it sought discovery about the defendants’ customer lists and communications with customers, including cell phone and text records reflecting same. The court previously addressed the defendants’ motion to quash involving cell phone logs, text logs, and text message content. Goosehead argued the defendants responded to written discovery with boilerplate objections, responded ambiguously, left Goosehead wondering whether it had all responsive documents, and, invoked privilege without providing a privilege log. During a Fed. R. Civ. P. 37 conference, the defendants said they would produce all responsive documents and that they were not withholding anything except documents related to commercial policy information, but they then provided supplemental responses that were not responsive.

In opposition to the Goosehead motion to compel, the defendants argued that a primary issue was who owned the book of business the defendants had before they joined Goosehead. The defendants said they had no intention to transfer that book of business to Goosehead. They also said they had great difficulty responding to premature discovery requests because they were locked out of the Goosehead system; Goosehead continued to modify its requests; they had properly objected; they advised they were not withholding anything; Goosehead did not confer about certain requests; they could not produce documents that did not exist; no comprehensive customer list existed; and, Goosehead could not modify its requests to seek multiple documents.

In reply, Goosehead asked the court to intervene to require the defendants to fully identify customers; produce copies of communications with customers; produce a list of Value Agency customers; and, produce a privilege log. Goosehead contended third-party discovery confirmed the defendants had not provided complete responses; supplementation suggested prior responses were incomplete; the defendants were allegedly playing games by suggesting Goosehead demanded a single comprehensive customer list; and, the defendants had not provided a privilege log.

During argument, the parties advised that the defendants provided supplemental responses and additional documents that included a 22-page list of customers with all names redacted because the list did not distinguish between property, flood, or commercial customers; and, the defendants also provided a privilege log identifying only the 22-page customer list with all names redacted.

The court agreed the dispute over customers was a fundamental issue in this case. Goosehead contended all customers the defendants served during the franchise relationship were subject to the non-solicitation provisions, while the defendants contended that customers they brought with them when they joined Goosehead remained their customers.

Analysis. The court overruled the defendants “general objections” because captioning discovery responses that way most likely failed the specificity requirements for objections required by Fed. R. Civ. P. 33(b)(4) and 34(b)(2)(B). The court held any response made in reliance on general objections must be supplemented.

Other objections were not improper general objections. The court found vagueness and ambiguity objections repeated throughout particular responses. These were not “general objections” because the defendants tied them to particular requests and explained why they believed they were vague and ambiguous.

However, the court overruled the specific objections on the merits. The fundamental issue was whether the defendants had improperly solicited former customers after leaving the Goosehead franchise. Identification of the defendants’ customers was critical to resolution of the lawsuit. Even if the defendants did not maintain records such that they could answer questions limited to property and flood insurance, the court ruled they must still identify all customers to enable Goosehead to discern whether it had any relationship with them.

Turning to cell phone records, although case law recognizes that parties can have a personal interest, discovery is still allowed where cell phone call logs or text logs are relevant to claims or defenses. As previously ruled, the cell phone and text logs were discoverable. However, inasmuch as Goosehead subpoenaed the carriers, and was starting to retrieve documents from them, the court denied its motion to compel the same information from the defendants as cumulative or duplicative and therefore no necessary.

As to text messages, however, the carriers denied having their content. The court accordingly held that the defendants must produce copies of any text or email messages with any customer served while affiliated with Goosehead or after the end of the franchise relationship. If the defendants were to contend they do not have the messages, then they must provide a certification of their efforts and swear that the records no longer exist.

Finally, the court overruled the defendants’ privilege objection in relation to the 22-page customer list produced in redacted form. The defendants were not entitled to redact every customer name because they could not distinguish commercial property or flood customers. The court said the defendants must produce the list in unredacted form, but they could mark it confidential under the terms of the protective order. They could also produce a list of only the flood and property customers if able to do that.

The Case is No. 2:24-cv-02146-JCZ-DPC.

Judge: Currault, D.

Attorneys: Chloe Marie Chetta (Barrasso Usdin Kupperman Freeman & Sarver, L.L.C.) for Goosehead Insurance Agency, LLC. Kellen James Mathews (Adams and Reese LLP) for Ben R. Guillory, Jr.

Companies: Goosehead Insurance Agency, LLC

Cases: FranchisingDistribution LouisianaNews