Amanda Sateriale et al v. R J Reynolds Tobacco Co et al

Filing 192

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: Defendant R.J. Reynolds Tobacco Company's Motion to Reopen Discovery 180 is GRANTED. Specifically, the Court finds good cause to reopen discovery as follows: (1) Depositions of RJR's New Fact Witnesses: Plaintiffs may depose the witnesses disclosed by RJR in its supplemental Rule 26 disclosures. These depositions shall be limited to topics relevant to contract interpretation under California law. (2) Depositions of Three Named Plain tiffs: RJR may re-depose the named, California plaintiffs for no longer than two hours per plaintiff. RJR shall pose non-duplicative questions on topics relevant to contract interpretation under California law. (3) Expert Testimony: RJR may seek to a dduce expert evidence both as to the harm suffered by plaintiffs as a result of the alleged breach, and as to the interpretation of data obtained from RJR's proposed survey of Camel consumers. Plaintiffs may depose each expert and procure rebuttal experts. Discovery into the limited issues discussed above is hereby REOPENED until 9/15/2015. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:09-cv-08394-CAS(SSx)

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

Present: The Honorable

Date

‘O’

July 8, 2015

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS): DEFENDANT’S MOTION TO REOPEN
DISCOVERY (dkt. 180, filed June 5, 2015)

The Court finds this motion appropriate for decision without oral argument. Fed.
R. Civ. P. 78; Local Rule 7-15.
I.

INTRODUCTION & BACKGROUND

The facts of this case are known to the parties and are set forth in this Court’s prior
orders on defendant R.J. Reynolds Tobacco Company’s (“RJR”) motion for summary
judgment, dkt. 136, and plaintiffs Amanda Sateriale, Jeffrey Feinman, Pamela Burns,
Patrick Griffiths, Jackie Warren, and Donald Wilson’s motion for class certification, dkt.
135. The facts and procedural history most relevant to the present motion are as follows.
Plaintiffs filed this action in 2009, asserting claims for, inter alia, breach of
bilateral contract and promissory estoppel. The Court dismissed the entire action with
prejudice in December 2010, and plaintiffs subsequently appealed the Court’s decision to
the Ninth Circuit. The Ninth Circuit vacated dismissal of the breach of contract and
promissory estoppel claims, reasoning that plaintiffs had “adequately alleged the
existence of an offer to enter into a unilateral contract, whereby RJR promised to provide
rewards to customers who purchased Camel cigarettes, saved Camel Cash certificates and
redeemed their certificates in accordance with the catalogs’ terms.” Sateriale v. R.J.
Reynolds Tobacco Co., 697 F.3d 777, 787 (9th Cir. 2012) (emphasis added).
Accordingly, the action was remanded to this Court.
On remand, the parties engaged in discovery. Discovery closed on April 14, 2014,
and RJR moved for summary judgment on June 16, 2014. As is relevant here, RJR
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

asserted that it was entitled to summary judgment because, inter alia, the undisputed
evidence demonstrated that it had made cigarettes and coupons for cigarettes available for
redemption with Camel Cash during the final six months of the Camel Cash program.
According to RJR, since plaintiffs alleged that RJR breached the unilateral contract by
failing to provide “any merchandise” for redemption, the fact that RJR provided
cigarettes and coupons for cigarettes conclusively demonstrated the absence of breach.
Plaintiffs, in contrast, asserted that the claim for breach survived precisely because RJR
solely provided cigarettes and coupons for cigarettes for redemption—items which,
according to plaintiffs, did not constitute “merchandise” within the meaning of the
alleged contract.
By order dated December 19, 2014 (“Summary Judgment Order”), the Court
rejected RJR’s characterization of plaintiffs’ claim and denied RJR’s motion. Dkt. 136.
Construing the language contained in the Camel Cash—specifically, the words “goods,”
“stuff,” and “the best”—the Court concluded that the language was ambiguous as to the
nature of the “goods” RJR was obligated to provide. Noting the parties’ “differing
views” concerning resolution of the ambiguity, the Court cited to the depositions of
named plaintiffs Fred Javaheri and Daniel Polese, both of whom testified that they drew a
distinction between “merchandise” and “cigarettes”—specifically, that the latter term was
not a subset of the former.
Less than one month later, RJR filed a motion for reconsideration of the Summary
Judgment Order. On April 1, 2015—before the Court denied RJR’s motion for
reconsideration on April 8, 2014, dkt. 156—RJR served plaintiffs with
Supplemental Initial Disclosures pursuant to Federal Rule of Civil Procedure 26, Vogt
Decl. Decl., Ex. 1. RJR’s disclosures identified several additional fact witnesses, all of
whom “will testify regarding . . . [RJR’s] understanding of its commitments to consumers
as a result of the Camel Cash promotions.” Id.
On May 4, 2015, during a hearing on plaintiffs’ motion for approval of class
notice, RJR acknowledged that it had served plaintiffs with supplemental disclosures and
stated that it “would be happy” to make the newly identified witnesses available to
plaintiffs for depositions. Stone Decl., Ex. A (Hearing Transcript) at 16:1-3. RJR also
stated that it did not know if it would “need to file a motion to reopen discovery.” Id. at
16:7-8. In light of these statements, the Court suggested that the parties stipulate to
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

continue the discovery cutoff to a date that would “permit [plaintiffs] to take the
depositions.” Id. at 16:9-12. The parties failed to stipulate to the proposed continuance.1
RJR subsequently filed the instant motion to reopen discovery on June 5, 2015,
dkt. 180, which plaintiffs opposed on June 15, 2015, dkt. 183. RJR replied on June 22,
2015, dkt. 189, and plaintiffs filed a sur-reply on June 29, 2015, dkt. 191. Having
carefully considered the parties’ arguments, the Court finds and concludes as follows.
II.

LEGAL STANDARD

A scheduling order may be modified only for good cause. See Fed. R. Civ. P.
16(b)(4). In determining whether to reopen discovery, the Court considers such factors
as “1) whether trial is imminent, 2) whether the request is opposed, 3) whether the nonmoving party would be prejudiced, 4) whether the moving party was diligent in obtaining
discovery within the guidelines established by the court, 5) the foreseeability of the need
for additional discovery in light of the time allowed for discovery by the district court,
and 6) the likelihood that the discovery will lead to relevant evidence.” G.C. & K.B.
Investments, Inc. v. Zenon Komarczyk, 2008 U.S. Dist. LEXIS 48520, 2008 WL
1825905 (N.D. Cal. 2007); United States ex rel Schumer v. Hughes Aircraft, 63 F.3d
1512, 1526 (9th Cir. 1995).
III.

DISCUSSION

RJR seeks to reopen discovery from July 15, 2015 through September 15, 2015 “to
permit both sides to conduct some additional discovery on key issues to be tried in
the case.” Mot. Reopen Disc. at 2. At bottom, RJR’s motion is premised on its
contention that plaintiffs refashioned their theory of the case on remand from the Ninth
Circuit—namely, RJR contends that plaintiffs did not draw a distinction between
“merchandise” and “non-tobacco merchandise” until RJR moved for summary judgment
in July 2014. See id. at 2-3. In light of this, RJR states that discovery was necessarily
focused on plaintiffs’ claim that RJR “failed to make ‘any’ Camel Cash rewards available

1

Since the May 4, 2015 hearing, the Court has denied RJR’s motion to certify the
Summary Judgment Order for interlocutory appeal, dkt. 186, and has approved the
proposed form of class notice, dkt. 188.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

after October 1, 2006,” id. at 4 (emphasis in original), rather than on the type of rewards
RJR made available. According to RJR, “[t]his change of theory, in and of itself,
compels the reopening of discovery.” Id.
Further, RJR correctly points out that the Court’s Summary Judgment Order
concluded that the ambiguity in the language of the alleged contract would be resolved by
reference to extrinsic evidence. RJR contends that limited, additional discovery into
relevant “extrinsic evidence regarding the parties’ expectations” is thus warranted. Id. at
9. In its reply briefing, RJR further contends that the Court’s conclusion that the harm
caused by RJR’s alleged breach was the “loss of the opportunity to redeem C-Notes for
non-tobacco merchandise,” dkt. 135 at 8, likewise merits reopening discovery, since this
issue “arose for the first time in the Court’s summary judgment order,” Reply at 13.
In sum, RJR states that it will seek discovery into the following issues, should the
Court grant the instant motion: (1) the expectations of the parties at the time of
contracting and (2) the value of the loss of the opportunity to redeem C-Notes for nontobacco rewards. RJR states that such discovery will entail “a limited (two hours per
witness, non-duplicative questions) deposition of the three California class
representatives,” Mot. Reopen Disc. at 4, as well as the designation of two additional
experts.2 RJR states that one expert will “conduct a survey of non-California Camel
consumers” regarding their expectations concerning the contract, id. at 6, and a second
expert will opine “on the issue of the value of the ‘loss of the opportunity’ to redeem CNotes for ‘non-tobacco’ rewards . . . as well as other issues pertaining to claimed
damages,” Reply at 6. RJR further states that the expert disclosures and reports will be
provided to plaintiffs on or before August 5, 2015, which is 90 days before trial. Reply at
6.
The Court concludes that RJR has demonstrated good cause to reopen
discovery—but not fully to the extent requested by RJR. As to the first factor in the good
cause analysis, trial in this case is set for November 2015, nearly five months from now.
Thus, trial is not imminent, weighing in favor of reopening discovery.

2

In RJR’s reply briefing, two hours per witness becomes “three additional hours.”
Reply at 4.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

Second, although RJR contends that its request to reopen discovery is not opposed,
plaintiffs plainly oppose reopening discovery to the extent proposed by RJR. See, e.g.,
Opp’n at 2 (“RJR is not entitled to reopen Plaintiffs’ depositions because RJR already
deposed each class representative extensively . . .”). Indeed, as RJR points out, plaintiffs
contend that they are entitled to depose the witnesses identified in RJR’s Rule 26
supplemental disclosures, but assert that RJR cannot “bootstrap the limited discovery . . .
that was necessitated only because of RJR’s belated Rule 26 disclosures [] into broad fact
discovery.” Id.
Turning to prejudice, plaintiffs contend that they will “incur unnecessary expense
and inconvenience if RJR is permitted to reopen discovery to conduct irrelevant
depositions and designate a witness on irrelevant and inadmissible issues.” Opp’n at 8.
First, as explained below, RJR’s proposed discovery is not irrelevant. Second,
“[a]lthough the existence or degree of prejudice to the party opposing the modification
might supply additional reasons to deny a motion, the focus of the inquiry is upon the
moving party's reasons for seeking modification.” Johnson, 975 F.2d at 609. Here, RJR
argues that its “ability to defend itself against plaintiffs’ refashioned claims on critical
trial issues will be severely comprised if this motion is denied.” Reply at 7. While RJR’s
contention may be overstated, it is not without merit. Further, although plaintiffs’ assert
that “it is unlikely that the parties can conduct additional expert discovery” before trial,
Opp’n at 8, RJR states that it will disclose any expert reports by August 5, 2015 and
correctly points out that this date “is 90 days before the start of trial, and precisely what
the Federal Rules require,” Reply at 2. See Fed. R. Civ. P. 26(a)(2)(D) (“Absent a
stipulation or a court order, the [expert] disclosures must be made: . . . at least 90 days
before the date set for trial or for the case to be ready for trial[.]”). Thus, the lack of
prejudice to plaintiffs weighs in favor of reopening discovery.
The fourth and fifth factors—diligence and forseeability—are largely coextensive
in the case at hand. The crux of RJR’s argument is that the Court’s rulings following the
close of discovery “have materially altered the factual and legal issues to be resolved at
trial.” Mot. Reopen Disc. at 6. To the extent that the Court has concluded that plaintiffs
may be able to show that the harm caused by RJR’s alleged breach is the loss of the
opportunity to redeem Camel Cash for non-tobacco products, RJR’s contention has merit.
However, as the deposition transcripts submitted by plaintiffs demonstrate, RJR was well
aware of plaintiffs’ theory that the cigarettes and cigarette coupons offered by RJR do not
constitute “merchandise.” See, e.g., Stone Decl., Ex. F (Jahaveri Depo.) at 39:17-19 (“Q:
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

And what obligations were those, sir? A: To have merchandise available besides
cigarettes.”). These two factors thus weigh in favor of permitting expert testimony
concerning the harm caused by RJR’s alleged breach, but against permitting duplicative
questioning of plaintiffs concerning the rewards RJR was obligated to make available.
Turning to the final factor, plaintiffs contend that the subjective, unexpressed
understanding of the parties concerning the meaning of the ambiguous contract terms is
irrelevant. Opp’n at 6. Although RJR acknowledges that “the question ultimately
presented to the jury will be an objective one,” Mot. Reopen Disc. at 2, it contends that
the Court must receive “all credible evidence” to resolve that ambiguity—including
evidence of the parties’ subjective expectations, id.
Contrary to RJR’s assertion, “California recognizes the objective theory of
contracts [], under which ‘[i]t is the objective intent, as evidenced by the words of the
contract, rather than the subjective intent of one of the parties, that controls
interpretation.’ ” Founding Members of the Newport Beach Country Club v. Newport
Beach Country Club, Inc., 109 Cal. App. 4th 944, 956 (2003) (internal citation omitted)
(quoting Titan Group, Inc. v. Sonoma Valley County Sanitation Dist., 164 Cal. App. 3d
1122, 1127 (1985)); accord Kashmiri v. Regents of Univ. of California, 156 Cal. App. 4th
809, 838 (2007) (“Although the intent of the parties determines the meaning of the
contract, the relevant intent is the objective intent as evidenced by the words used by the
parties and not either party's subjective intent.”). “The parties’ undisclosed intent or
understanding is irrelevant to contract interpretation.” Id. (citing Winograd v. American
Broadcasting Co., 68 Cal. App. 4th 624, 632 (1998) and Berman v. Bromberg, 56 Cal.
App. 4th 936, 948 (1997)) (emphasis added).
When a contract is ambiguous, however, “[p]arol or extrinsic evidence is
admissible to resolve [the] ambiguity.” WYDA Associates v. Merner, 42 Cal. App. 4th
1702, 1710 (1996) (citing, inter alia, Pac. Gas & Elec. Co. v. G. W. Thomas Drayage &
Rigging Co., 69 Cal. 2d 33, 38 (1968)). “Such evidence includes testimony as to the
circumstances surrounding the making of the agreement . . . including the object, nature
and subject matter of the writing so that the court can place itself in the same situation in
which the parties found themselves at the time of contracting.” Pac. Gas, 69 Cal. 2d at 40
(internal citations and quotations omitted).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:09-cv-08394-CAS(SSx)

July 8, 2015

Title

AMANDA SATERIALE ET AL. V. RJ REYNOLDS TOBACCO CO.

Accordingly, while plaintiffs’ unexpressed subjective contractual expectations are
not relevant, evidence concerning the circumstances surrounding contract formation is
relevant. Thus, without making any rulings regarding the admissibility of any evidence,
the Court concludes that RJR should be able to conduct limited depositions of named
plaintiffs concerning such circumstances. Likewise, RJR should be permitted to survey
both California and non-California Camel consumers to discern reasonable, objective
expectations concerning the alleged contract. Finally, RJR should be allowed to procure
an expert to opine on the relevant theory of damages.
In summary, RJR’s motion is GRANTED. Specifically, the Court finds good
cause to reopen discovery as follows:
(1)

(2)

Depositions of Three Named Plaintiffs: RJR may re-depose the named,
California plaintiffs for no longer than two hours per plaintiff. RJR shall
pose non-duplicative questions on topics relevant to contract interpretation
under California law.

(3)

IV.

Depositions of RJR’s New Fact Witnesses: Plaintiffs may depose the
witnesses disclosed by RJR in its supplemental Rule 26 disclosures. These
depositions shall be limited to topics relevant to contract interpretation under
California law.

Expert Testimony: RJR may seek to adduce expert evidence both as to the
harm suffered by plaintiffs as a result of the alleged breach, and as to the
interpretation of data obtained from RJR’s proposed survey of Camel
consumers. Plaintiffs may depose each expert and procure rebuttal experts.

CONCLUSION

In accordance with the forgoing, RJR’s motion is GRANTED. Discovery into the
limited issues discussed above is hereby REOPENED until September 15, 2015.
IT IS SO ORDERED.
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Initials of Preparer

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CMJ

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