Helena Agri-Enterprises, LLC v. Great Lakes Grain, LLC ( 2021 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 21a0031p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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HELENA AGRI-ENTERPRISES, LLC,
│
Plaintiff-Appellant, │
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v. > No. 20-1671
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GREAT LAKES GRAIN, LLC, et al., │
Defendants, │
│
│
NEW HEIGHTS FARM I, LLC; NEW HEIGHTS FARM II, │
LLC; STACY BOERSEN, NICHOLAS BOERSEN, │
Defendants-Appellees. │
┘
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 1:18-cv-00963—Robert J. Jonker, Chief District Judge.
Argued: January 29, 2021
Decided and Filed: February 10, 2021
Before: SUTTON, BUSH, and MURPHY, Circuit Judges.
_________________
COUNSEL
ARGUED: Zach Zurek, JACKSON WALKER L.L.P., San Antonio, Texas, for Appellant.
Ronald J. VanderVeen, CUNNINGHAM DALMAN, PC, Holland, Michigan, for Appellees.
ON BRIEF: Zach Zurek, Robert L. Soza, Jr., JACKSON WALKER L.L.P., San Antonio,
Texas, Mark J. Magyar, DYKEMA GOSSETT PLLC, Grand Rapids, Michigan, for Appellant.
Ronald J. VanderVeen, CUNNINGHAM DALMAN, PC, Holland, Michigan, for Appellees.
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 2
_________________
OPINION
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SUTTON, Circuit Judge. Through several corporations, members of the Boersen family
have planted corn and soybeans in Western Michigan for several generations. When 2016
delivered a poor crop year, the corporate entities that made up the Boersen operation could not
cover their debts. One creditor, Helena Agri-Enterprises, obtained a nearly fifteen-million-dollar
judgment against the Boersen entities and the family members who ran them. When they could
not pay that debt, Helena sued other Boersen family members and their newly formed
companies, claiming that these new corporate forms should not be respected and were
fraudulently designed to sidestep the debt. Because Helena has failed to offer a legitimate
explanation for slighting the corporate form, we affirm the district court’s grant of summary
judgment to the defendants.
I.
Arlan and Sandra Boersen are third-generation farmers and took over the family business
in 1987. They are the parents of Dennis and Ross Boersen. The brothers, together with their
parents, have run the Boersen farming enterprise together for some time. Dennis Boersen and
his wife, Stacy Boersen, have one son, Nicholas Boersen. Although the mother and son have
helped out with the operation in the past, neither one of them had an ownership stake or held a
management position in the entities that controlled the operation.
Family owned though it may have been, the Boersen operation was not a modest Amish
farm. At its height, the Boersens farmed about 100,000 acres in Zeeland, a rural community in
Western Michigan. The Boersen operation owned about 20,000 of those acres. Leased farmland
covered the rest. The operation rotated corn and soybean on the owned and leased land.
The Boersens took a path followed by many farmers. They grew. But expansions of
farms sometimes create problems of their own. Twin realities of modern farming are that “those
who could not get big have got out,” and those “who got big to stay in are now being driven out
by those who got bigger.” Wendell Berry, The Unsettling of America: Culture and Agriculture
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 3
41 (1977). To manage the operation, the Boersens created several corporations, including
Boersen Farms, Inc., Boersen Farms Properties, LLC, and Boersen Farms AG, LLC, among
others. Some were owned and operated by the parents and brothers together. Others were
owned by Dennis alone.
Large-scale farming, and for that matter, small-scale farming, comes with economic
complications and fated uncertainties. The complications arise from the yearly imperative of
up-front costs and back-end revenue. Farming has become “a way of dependence, not on land
and creatures and neighbors but on machines and fuel and chemicals of all sorts, bought things,
and on the sellers of bought things—which made it finally a dependence on credit.” Wendell
Berry, Jayber Crow 183 (2001). Every spring, as before as after, the farmer buys seeds, repairs
farm equipment, leases or purchases equipment, sometimes leases land, often buys fertilizers and
pesticides. Each cost amounts to a tribute to hope, an anticipation that crops will emerge and
that a reasonable market for the goods will exist. The cost-revenue gap usually requires loans or
purchases on credit, especially for large-scale, sometimes highly leveraged, operations like the
Boersen farms. Even the community gardener knows the uncertainties that come with farming
each year: too little rain or too much, too little sun or too much, late frosts, ravenous insects,
trespassing rodents. These unpredictable pestilences require crop insurance, which helps to
manage the cycle of broken promises that comes with farming. In modern times and with
large-scale farms, a large regulatory regime has arisen to handle the pricing and terms of this
insurance, often pegged to the Actual Production History of that farmland.
Things did not go well for the Boersen farming operation in 2016. The combination of a
poor crop and tumbling crop prices led the Boersen operation to fall behind on its financial
obligations. Lenders and suppliers soon came after the Boersen entities and family members for
unpaid debts.
One unpaid creditor was Helena Agri-Enterprises, LLC, an agricultural distributor that
sells seed, fertilizer, and chemicals. It sold quite a bit of these products on credit to some
Boersen family members and several of the Boersen companies. The Boersen entities were not
able to pay Helena what they owed it.
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 4
In 2018, Helena sued Dennis, his parents, and various Boersen entities in federal court.
For some of Helena’s claims, the defendants consented to a partial judgment on the pleadings for
nearly $15,000,000. Stacy (Dennis’s wife) and Nick (Dennis’s son) were not parties to the case,
and they were not owners or officers in the relevant corporations. While Helena’s lawsuit was
pending, Stacy created several “Great Lakes Grain” entities—Great Lakes Grain I, II, III, and
IV—in an effort to obtain credit for the upcoming season. That did not work.
Without credit, the Boersen operation closed down because it could no longer “obtain
financing,” and “without financing” it “could not conduct farming operations.” R.140-13 at 4.
Instead of seeking bankruptcy relief, the companies made arrangements with creditors. Various
creditors repossessed most of the Boersen farmland. The rest of their land was subject to
mortgage and judgment debts that “exceed[ed] the value of the real property.” Id. at 5. Similar
arrangements were made with respect to the Boersens’ farming equipment. Secured creditors
repossessed most, but not all, of the operation’s equipment assets. All told, the Boersen
operation avoided bankruptcy but did not have the means to continue farming for a few years.
As the 2019 season approached, Nick Boersen approached his mom Stacy Boersen about
a “business opportunity.” R.148-1 at 14. He proposed that they farm some of the same land that
the Boersen entities had once plowed. Stacy agreed to “partner with [Nick] and move forward
[together].” R.148-3 at 4.
Stacy formed New Heights Farm I, LLC, and Nick formed New Heights Farm II, LLC.
Each of them is the sole record owner of their respective company. And each company is
“separate and independent of the Boersen legacy [entities].” R.140-16 at 3.
Stacy and Nick relied on the farmland’s production history to secure funding. They used
the credit to lease land and equipment. Some of their leases were from Boersen-judgment
defendants (Dennis, Ross, their parents, and several corporations); some were not.
When Helena learned of the New Heights companies, it added them as well as Stacy and
Nick to the 2018 lawsuit as defendants. Although none of the new defendants owed Helena
money, Helena alleged that Stacy and Nick created “sham” companies to evade the $15,000,000
judgment against the Boersen operation. R.75 at 1. Helena filed state law claims against these
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 5
new defendants premised on Michigan’s Uniform Voidable Transactions Act, successor liability,
and veil piercing. The district court granted summary judgment in favor of the new defendants
on each claim.
II.
The Uniform Voidable Transactions Act. The Act permits a creditor to void a fraudulent
asset transfer from a debtor. Mich. Comp. Laws § 566.37(1)(a). The Act defines a debtor as “a
person that is liable on a claim.” Id. § 566.31(f). It defines a covered asset as “property of a
debtor.” Id. § 566.31(b). And it defines a covered transfer to mean “every mode, direct or
indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an
asset or an interest in an asset.” Id. § 566.31(q). Taken together, the provisions of the Act mean
that a creditor may void the fraudulent disposal of property belonging to a person who is liable
on a claim. See Swirple v. MGM Grand Detroit, LLC, No. 345284, 2020 WL 561904, at *2–3
(Mich. Ct. App. Feb. 4, 2020) (per curiam). A transfer of assets can be fraudulent when
evidence shows the transferor intended to commit fraud or the economic realities of the
transaction confirm that fraud was afoot. Id.; see also Mich. Comp. Laws §§ 566.34(1)(a),
566.35(1).
From where Helena sits, three fraudulent asset transfers occurred under the Act. Each
deserves a turn.
1. Equipment and Land Leases. Helena claims that several equipment and land leases by
Stacy and Nick (and their companies) should be voided. Stacy and Nick leased equipment from
Boersen Farms & Affiliates, LLC, an entity not subject to the Boersen judgment. And they
leased land from Ceres, a third party not subject to the Boersen judgment.
This theory does not work because the statute applies only to “transfer[s] made or
obligation[s] incurred by a debtor.” Mich. Comp. Laws §§ 566.34, 566.35. Nothing in the
statute suggests that arrangements between non-debtors come within its sweep. The statute
instead presumes that “the transferor must actually be liable for the claim.” Mather Invs., LLC
v. Larson, 720 N.W.2d 575, 578 (Mich. Ct. App. 2006). Helena acknowledges that it does
not seek to void any transfer involving a Boersen-judgment debtor. Appellant’s Br. 25–27.
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 6
That concession, when combined with the language of the statute, puts Helena’s claim in a
difficult place.
Even so, Helena points out, Dennis Boersen will benefit from the equipment lease
arrangement because he owns Boersen Farms & Affiliates, LLC, the non-debtor entity leasing
equipment to Stacy and Nick. But that does not eliminate the problem. The reality that a debtor
benefits from the lease arrangement does not expose non-debtors to liability under the statute.
These benefits may even help Helena in the long run. Nothing prevents Helena, for example,
from going after Dennis’s proceeds from the arrangement. None of this shows fraud anyway.
So far as the record shows, the leases all adhered to fair market prices.
Helena argues in the alternative that we should treat the lease arrangements as transfers
involving Dennis Boersen, a judgment debtor, because he qualifies as an “[i]nsider” of the
New Heights companies under the statute. Mich. Comp. Laws § 566.31(h). But the purpose of
the “insider” provision is to determine whether a transfer involving a debtor is fraudulent,
not to determine whether a transfer involves a debtor in the first place. Id. § 566.34(2)(a).
Helena at any rate has no response to the unchallenged reality that the leases do not transfer
the debtors’ assets because none of the involved entities owes any money to Helena.
The statute voids “transfer[s] . . . incurred by a debtor.” Id. § 566.34(1). It does not void
transfers by non-debtors.
2. Actual Production History. Noting that the New Heights companies’ crop insurance
application used production history from land owned by the Boersen companies, Helena argues
that this fact establishes a fraudulent transfer. We disagree, though the disagreement requires
some background and elaboration.
Recall that Stacy and Nick and their companies, like many farming operations, needed
up-front funding to start their operation. To get funding, they needed crop insurance, which
covers losses in crop yields resulting from unexpected damage. Benefits under a crop insurance
plan depend in part on production history, a record of the prior crop yield that insurance
underwriters use to determine premiums and financing terms.
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 7
Recall also that Stacy and Nick’s operations took place on Boersen farmland. In his crop
insurance application, Nick used the production history of Boersen Farms AG, LLC, an entity
indebted to Helena. In her crop insurance application, Stacy relied on the production history of
Boersen Farms Grain, an entity not indebted to Helena.
The problem with Helena’s argument is that Stacy and Nick’s use of the family farm’s
production history does not constitute a “transfer of assets” under the statute. An “[a]sset,” the
statute says, must be “property of a debtor,” Mich. Comp. Laws § 566.31(b), and property
includes “anything that may be the subject of ownership,” see id. § 566.31(l). Ownership turns
on the possession of legal title. See Franklin v. Franklin, No. 289255, 2010 WL 2178550, at *3
(Mich. Ct. App. June 1, 2010) (per curiam); All. Bancorp v. Select Mortg., L.L.C., No. 274853,
2008 WL 724092, at *2 (Mich. Ct. App. Mar. 18, 2008) (per curiam).
People do not own crop production histories any more than they own facts or history
itself. Cf. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344 (1991) (noting that “facts
are not copyrightable” and may not be owned or licensed). A crop production history is a
“simple average of between four and ten years of [] production data.” Ausmus v. Perdue, 908
F.3d 1248, 1250 (10th Cir. 2018); see also W. Cent. Packing, Inc. v. Empire Fire & Marine Ins.
Co., 826 F. Supp. 248, 250 (W.D. Mich. 1993). It is little different from any company’s
profit/loss history. As historical averages of profit or lack of profit, they cannot be transferred,
possessed, or sold, and they do not amount to assets under the Act.
Even if that were not the case, even if this production history somehow could qualify as
an asset under the Act, no qualifying transfer occurred anyway. Although complex regulations
may govern the use of crop production histories, Ausmus, 908 F.3d at 1250–51; Adkins v.
Silverman, 899 F.3d 395, 399 (5th Cir. 2018); 7 U.S.C. § 1501 et seq.; 7 C.F.R. § 400.51–.56, no
Boersen entity ever transferred the production history to anyone. The statutory regime requires
the crop insurer to supply the congressionally created Federal Crop Insurance Corporation with
the insurance applicant’s proposed production history for purposes of obtaining crop insurance.
7 U.S.C. § 1501 et. seq. While it may be the insured’s responsibility to submit evidence to
support a claim, it is the insurance provider, not the predecessor entity, that uses the production
history. That arrangement means no Boersen-judgment entity ever transferred an asset within
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 8
the meaning of the statute because the debtor never delivered the production history. See Mich.
Comp. Laws § 566.31(q).
Helena’s case citations do not come to grips with the point. None of them addresses
whether the use of a previous landowner’s production history qualifies as a transfer of assets.
See Adkins, 899 F.3d at 399; Ausmus, 908 F.3d at 1250; Bush v. AgSouth Farm Credit, ACA,
816 S.E.2d 728, 731 (Ga. Ct. App. 2018). A production history for a farm, like a profit/loss
history for a company, might have value to an applicant seeking crop insurance, just as an
individual’s driving record might have value when it comes to the cost of car insurance. But
these situations still would not call for transfers of assets or property.
How have Stacy and Nick’s applications for crop insurance harmed Helena anyway? The
insurance has permitted Stacy and Nick to farm land owned by Boersen-judgment debtors, which
puts money into the debtors’ pockets and which in turn may help creditors such as Helena.
Successor Liability. Helena separately argues that Stacy and Nick created successor
companies to the Boersen-judgment entities. When someone creates new companies that are the
“mere continuity” of debtors, creditors may recover against them under Michigan law (and the
law of most States). C.T. Charlton & Assocs., Inc. v. Thule, Inc., 541 F. App’x 549, 552, 554
(6th Cir. 2013). But this is a “narrow” theory. Id. at 552. And Helena must make a threshold
showing of “common ownership” to invoke it. Id. at 554; see also Stramaglia v. United States,
377 F. App’x 472, 475–76 (6th Cir. 2010) (per curiam); Turner v. Bituminous Cas. Co.,
244 N.W.2d 873, 892 (Mich. 1976); RDM Holdings, LTD v. Cont’l Plastics Co., 762 N.W.2d
529, 552 (Mich. Ct. App. 2008); Lakeview Commons v. Empower Yourself, LLC, 802 N.W.2d
712, 716 (Mich. Ct. App. 2010) (per curiam); In re Clements Mfg. Liquidation Co., 521 B.R.
231, 256–57 (Bankr. E.D. Mich. 2014).
Helena has not met this burden. Neither Stacy nor Nick was an owner, manager, or
shareholder of any of the Boersen entities covered by the judgment. And no Boersen legacy
owner or guarantor serves as an officer of, or is otherwise employed by, either New Heights
company. “Just having the name ‘Boersen’ and deciding to farm in West Michigan,” as the
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 9
district court aptly put it, does not satisfy the “indispensable” common-ownership element.
R.163 at 25; C.T. Charlton & Assocs., Inc., 541 F. App’x at 554.
It is true, as Helena points out, that while this lawsuit was pending, Stacy created several
Great Lakes Grain entities in a failed effort to obtain credit for the upcoming season. But no
evidence exists of fraud. Plus, the creation of the new Great Lakes Grain entities has no bearing
on the common ownership between the indebted Boersen entities and the New Heights
companies.
Handwritten notes from meetings between the Boersen family and their lenders do not
show common ownership either. Not one of the notes contains any evidence of common
ownership.
Advertisements about how the Boersen family operation has passed the farm down to
Nick also do not satisfy the common-ownership requirement. While Nick has worked on the
Boersen farms since the age of 14, that does not show he played an ownership role in the
Boersen operation before forming his own company. Nick maintains, to the contrary, that he
never held an organizational role in the Boersen debtor entities. Helena offers no contrary
evidence. Without more, the debts of the father do not become the debts of the son.
Veil Piercing. In a variation on this argument, Helena seeks to recover against the New
Heights companies under a veil-piercing theory. Under Michigan law, courts start with the
presumption that the corporate form will be respected. See Seasword v. Hilti, Inc., 537 N.W.2d
221, 224 (Mich. 1995); Wells v. Firestone Tire & Rubber Co., 364 N.W.2d 670, 674 (Mich.
1984). To overcome the presumption—to evade the corporate form and to impose liability on
the individual owners—three things must happen. The target corporate entity must be a “mere
instrumentality” of another entity. The target entity must have been used to commit a wrong.
And that wrong must have resulted in loss to the plaintiff. See Foodland Distribs. v. Al-Naimi,
559 N.W.2d 379, 381 (Mich. Ct. App. 1996); see also Florence Cement Co. v. Vettraino, 807
N.W.2d 917, 922 (Mich. Ct. App. 2011) (per curiam).
On this record, Helena may not ignore the corporate form. Seasword, 537 N.W.2d at
224; Wells, 364 N.W.2d at 674. Nick and Stacy created their companies on their own. They
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 10
respected corporate formalities in doing so. Neither Dennis Boersen nor any Boersen legacy
entity received anything of value from the New Heights companies other than fair market value
payments on equipment and land leases. Dennis does not control either company and is not an
owner or officer in either of them. Mere allegations to the contrary do not alter this conclusion.
Evidence must back the points up. None does.
Nor was either company used to commit a wrong against Helena. No evidence shows
that these companies failed to follow any statute or regulation in their formation or that they
misused the actual production histories assigned to them.
Foodland Distributors v. Al-Naimi, 559 N.W.2d 379 (Mich. Ct. App. 1996), is not to the
contrary. In that case, the owner of the legacy company ran the new company, making him
indeed the de facto owner. Id. at 381. Here, by contrast, Stacy and Nick formed and ran their
own companies. So far as the record shows, Dennis never pulled the strings in running the new
companies.
We appreciate Helena’s anxiety that the formalities of corporate ownership and
the informalities of family life present risks. But courts have respected the corporate form in
this area, too. See Comm’r of Env’t Prot. v. State Five Indus. Park, Inc., 37 A.3d 724, 728–30,
734–35, 738–39 (Conn. 2012). And suspicions about separate ownership by a husband and wife
present risks of their own. We have long since left the time when a woman’s property became
her husband’s upon marriage. Back then, the two spouses became one under the law, and the
one was the husband. Burdeno v. Amperse, 14 Mich. 91, 92 (1866); see William E. McCurdy,
Torts Between Persons in Domestic Relation, 43 Harv. L. Rev. 1030, 1031–32 (1930).
Michigan, like other States, left that era long ago. N. Ottawa Cmty. Hosp. v. Kieft, 578 N.W.2d
267, 269 (Mich. 1998); Mich. Comp. Laws § 557.21; see United States v. Craft, 535 U.S. 274,
281 (2002). A wife is not liable for the debts of her husband, Mich. Comp. Laws § 557.21, and
each is allowed to own separate companies.
Also falling short is Helena’s effort to look past corporate formalities on the ground that
“the record indicates a community of interest.” See L.A. Walden & Co. v. Consol. Underwriters,
25 N.W.2d 248, 249 (Mich. 1946); Kline v. Kline, 305 N.W.2d 297, 299 (Mich. Ct. App. 1981)
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 11
(per curiam); Scarff Bros. v. Bischer Farms, Inc., 386 F. App’x 518, 524 (6th Cir. 2010).
Nothing in the record shows a community of interest between the old and the new companies.
The new entities, unlike the old entities, were created and are operated by Boersens other than
Dennis, his brother, or their parents. No injustice arises from allowing the unencumbered
members of a family to move on and to start a new family business, even one that involves the
same trade and skill set.
One last point on this score. It remains unclear what Helena means to accomplish with
this veil-piercing theory. The conventional idea would be to look through the corporate form of
Stacy and Nick’s companies to impose individual liability on them. But Helena has no qualm
with them and no independent claim to their assets, as they never borrowed money from Helena.
That leaves Dennis. But the company already has a judgment against Dennis. And there is no
evidence that Dennis has any role in Stacy and Nick’s companies. What Helena seems to want is
something different—access to Stacy’s assets and Nick’s too simply because they are related to
Dennis. That is not veil piercing. It is making a wife and a child automatically liable for the
debts of a husband and father, a principle that neither Michigan law nor any law supports.
III.
Discovery Requests. Helena separately argues that the district court erred when it denied
a trio of discovery-related motions. We review each claim for an abuse of discretion. See
Perkins v. Am. Elec. Power Fuel Supply, Inc., 246 F.3d 593, 604 (6th Cir. 2001).
Request to Modify Discovery Calendar. The first question is whether the district court
abused its discretion when it denied a motion to amend the discovery period. District courts
have broad leeway over the discovery process. See Pittman v. Experian Info. Sols., Inc., 901
F.3d 619, 642 (6th Cir. 2018). It takes more than disagreement with a district court’s efforts at
docket control for an appellate court to reverse. See Logan v. Dayton Hudson Corp., 865 F.2d
789, 790 (6th Cir. 1989).
No abuse occurred. After Helena learned of Stacy and Nick’s creation of the New
Heights companies, it requested a third discovery extension. The district court heard oral
argument on the motion and doubted whether additional discovery would reap any reward. The
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 12
pleadings, in the court’s view, offered no indication that more discovery would unearth
potentially troublesome asset transfers or otherwise support Helena’s claims. The futility of
additional discovery prompted the court to deny the motion for an extension. That decision came
well within a trial judge’s broad discretion.
The district court’s failure to analyze the request for additional discovery under Rule
16(b)(4) also does not amount to reversible error. A scheduling order establishing discovery
deadlines “may be modified only for good cause and with the judge’s consent.” Fed. R. Civ. P.
16(b)(4). “The primary measure of Rule 16’s ‘good cause’ standard is the moving party’s
diligence in attempting to meet the case management order’s requirements.” Inge v. Rock Fin.
Corp., 281 F.3d 613, 625 (6th Cir. 2002) (quotation omitted). Bound up in the good cause
standard is an examination into the potential for prejudice to the non-moving party. Id. Even
though the district court did not cite Rule 16(b)(4), it satisfied the rule by concluding that even if
Helena could prevail on the merits, a victory would beget no practical financial benefit.
Proceeds from prior crop years had already been disbursed. To reach future profits, Helena
would have to show that Stacy and Nick’s allegedly fraudulent insurance applications, which
secured those profits, harmed Helena. Helena couldn’t do that then, and it can’t do that now.
Rule 56(d) Discovery Motion. Helena adds that the district court abused its discretion
when it denied a motion for additional discovery under Rule 56(d) of the Federal Rules of Civil
Procedure. When a party moves for summary judgment, Rule 56(d) allows the “nonmovant [to]
show[] by affidavit or declaration that, for specified reasons, it cannot present facts essential to
justify its opposition,” and after that “the court may: (1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations to take discovery; or (3) issue any other
appropriate order.” Fed. R. Civ. P. 56(d). When reviewing such motions, we consider:
(1) when the issue arose; (2) whether the discovery might change the summary judgment ruling;
(3) the time for discovery already allowed; (4) any delay in seeking the discovery; and (5) the
responsiveness of the other party to prior discovery requests. Doe v. City of Memphis, 928 F.3d
481, 491 (6th Cir. 2019).
The district court did not abuse its discretion in denying the motion. Helena had four
months of discovery after learning of the New Heights companies. During that time, it failed to
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 13
identify any viable theory that could support its claims against Stacy, Nick, and the New Heights
companies. Helena offers no explanation how one of its requests—to obtain Stacy and Nick’s
applications for crop insurance—would have uncovered material information for its claim. After
sizing up the situation and the history of discovery in the case, the district court determined that
additional discovery would not outweigh the “proportionality” concerns implicated by the delay
and cost generated by continued discovery. R.163 at 19 n.11.
The court appropriately considered proportionality in denying the request. In 2015, Rule
26 of the Federal Rules of Civil Procedure was amended to require that all discovery be
“proportional” in nature. The old rule permitted discovery of any information “reasonably
calculated to lead to the discovery of admissible evidence.” Fed. R. Civ. P. 26(b)(1) (2010). The
new rule permits discovery only of information “relevant to any party’s claim or defense and
proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). The change ensures that the
parties and courts share the “collective responsibility to consider the proportionality of all
discovery and consider it in resolving discovery disputes.” Fed. R. Civ. P. 26(b) advisory
committee’s note to 2015 amendment. The objective was hard to miss. It was “to improve a
system of civil litigation that ‘in many cases . . . has become too expensive, time-consuming, and
contentious, inhibiting effective access to the courts.’” United States ex rel. Customs Fraud
Investigations, LLC. v. Victaulic Co., 839 F.3d 242, 258 (3d Cir. 2016) (quotation omitted).
Instead of facilitating costly and delay-inducing efforts to look under every stone in an
e-discovery world populated by many stones, the new rule “crystalizes the concept of reasonable
limits on discovery through increased reliance on the common-sense concept of proportionality.”
John G. Roberts, Jr., 2015 Year-End Report on the Federal Judiciary 6 (2015).
By “emphasiz[ing] proportionality as the governing principle,” the changes “tightened discovery
deadlines and so shortened the opportunities for delay.” Neil M. Gorsuch, A Republic, If You
Can Keep It 260 (2019). It is now “the power—and duty—of the district courts actively to
manage discovery and to limit discovery that exceeds its proportional and proper bounds.”
Noble Roman’s, Inc. v. Hattenhauer Distrib. Co., 314 F.R.D. 304, 306 (S.D. Ind. 2016); cf. In re
State Farm Lloyds, 520 S.W.3d 595, 614 (Tex. 2017) (the new rule sought “to chang[e] the
existing mindset that relevance is enough, restoring proportionality as the collective
responsibility of the parties and the court”) (quotation omitted). No abuse of discretion occurred.
No. 20-1671 Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, et al. Page 14
Motion to Compel. Last and least, Helena claims that the district court abused its
discretion when it denied a motion to compel Stacy and Nick to execute document authorization
requests. See Pittman, 901 F.3d at 642. Parties may demand “any nonprivileged material that is
relevant to any party’s claim or defense.” Fed. R. Civ. P. 26(b)(1). But the trial court must limit
discovery where 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. Id. 26(b)(1), (2)(C)(iii).
Helena sought to compel Stacy and Nick to authorize the disclosure of information
pertaining to crop insurance and the New Heights companies’ use of the Boersen legacy entities’
actual production history. But for the reasons already given, that information would not have
supported Helena’s theories of liability and ample time in discovery had already passed before it
made the request. Here, too, the district court did not abuse its discretion in concluding that
“further time and money in discovery . . . would not be proportional to the needs of the case.”
R.163 at 19 n.11.
We affirm.