Attorneys for 7-Eleven, Inc. have lost their battle to keep from disclosing internal documents regarding “Project P” (aka “Project Philly”), a controversial initiative to target and terminate multiple 7-Eleven franchise owners.
(UnhappyFranchisee.Com) 7-Eleven franchisees involved in three lawsuits against 7-Eleven, Inc. have won their bid to get access to internal documents and correspondence they believe will prove that they were victims of a malicious, orchestrated and unlawful plot by the franchisor to seize their stores and resell them for profit – a practice known as “churning.”
7-Eleven franchisees involved in three combined lawsuits (SAM YOUNES, et al., v. 7-ELEVEN, INC. ; 7-ELEVEN, v. KARAMJEET SODHI, et al.; NEIL NAIK, et al. v. 7-ELEVEN, INC.) being argued in U.S. District Court, Camden, NJ claim that they are victims of a predatory corporate initiative in which their franchise stores were unfairly seized for financial, political and racially discriminatory reasons.
Whistleblower and 7-Eleven insider Kurt McCord previously indicated, in a sworn certification, the existence of such a program:
7-Eleven, Inc. has designed and implemented a predatory program to increase corporate profits by unethically stealing the equity and goodwill of its franchisees. In some cases, these franchisees spent decades of hard work and financial investment building their businesses.
7-Eleven’s scheme was to use its superior financial, legal, and corporate strength to seize the stores of profitable franchisees without providing them fair compensation for the years of goodwill they accumulated. The 7-Eleven Corporation would then resell those stores at an enormous profit.
Using an internal team masquerading as an Asset Protection (Loss Prevention) Department, 7-Eleven set a yearly number of stores to take back, prioritizing locations in areas with the highest resale values or, in some cases, operated by respected franchisees who had spoken out about the corporate giant’s corrupt practices.
One part of the alleged internal initiative has come to be known as “Project P” or “Project Philly.”
In oral arguments on behalf of the 7-Eleven franchisees, attorneys from Marks & Klein argued that 7-Eleven should turn over all internal documents related to “Project P.”
Despite strenuous objections from 7-Eleven’s attorneys, Judge Joel Schneider agreed with Marks & Klein and issued this order:
O R D E R
The Court having heard oral argument on March 6, 2015 involving, inter alia, discovery disputes concerning the production of 7-Eleven’s documents; and the Court noting that the production of 7-Eleven’s “Project P” documents has been a continuing source of dispute in the case; and this Order further clarifying the Project P documents 7-Eleven must produce; and all references to “documents” in this Order intending to also refer to ESI; and for good cause shown,
IT IS HEREBY ORDERED this 11th day of March, 2015, that 7- Eleven shall produce the “Project Philly” or “Project P” information and documents designated in this Order; and it is further
ORDERED that all references to Project Philly or Project P shall also include “Operation Philadelphia,” “Operation Take Back,” “Philadelphia Project,” “Operation P,” “Philly Project,” “Penn Jersey,” and what Mr. Sussman referred to as 7-Eleven’s “accountability project” or “accountability efforts.” These references shall refer to the effort 7-Eleven apparently started in the 2011/2012 time frame to either terminate or take back franchises. These references shall also refer to what 7-Eleven refers to as the “staffing initiative” resulting from the anticipated termination of multiple franchise agreements following investigations for franchise fraud; and it is further ORDERED that 7-Eleven shall produce the following documents regarding Project P or Project Philly:
1. All Project P or Project Philly documents mentioning or referring to the franchisee parties in these cases or their stores;
2. All documents 7-Eleven relied upon to decide that Sodhi’s franchises should or might be terminated;
3. All documents 7-Eleven relied upon to list Younes and Atalla on P20, 22, 25, 26 and 33B;
4. All summaries, notes and minutes of meetings where Project P or Project Philly was addressed including, but not limited to, all PowerPoint presentations created for or shown at at the meetings;
5. All documents sent to or received from 7-Eleven’s Executive Committee regarding Project P or Project Philly; and
6. All documents regarding how and why 7-Eleven decided which stores to list on Exhibits P26 and 33B; and it is further
ORDERED that 7-Eleven’s document production shall include an affidavit from an authorized company representative attesting: (1) that to the best of the affiant’s knowledge all sources of information where responsive documents and ESI could reasonably be expected to be located were searched; (2) that all individuals who reasonably could be expected to possess or control documents responsive to this Order were contacted regarding the Order; and (3) that 7-Eleven’s search for documents responsive to this Order was reasonably designed and calculated to identify and locate responsive documents; and it is further
ORDERED that this Order does not excuse 7-Eleven from producing other relevant non-privileged documents requested by the franchisee parties or other responsive documents required to be produced pursuant to Fed. R. Civ. P. 26(a)(1) and 26(e). All alleged privileged documents shall be included on a privilege log; and it is further
ORDERED that all documents responsive to this Order shall be produced by April 1, 2015.
s/Joel Schneider JOEL SCHNEIDER
United States Magistrate Judge
Judge Schneider’s ORDER is a significant win for the franchisees, and the documents and correspondence related to “Project P” could provide clear evidence as to 7-Eleven, Inc.’s true motivation for selecting, targeting and terminating the franchisee stores that it has.
Read Judge Schneider’s Order in PDF form: 7-Eleven Project P Order.
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