Mitsui O.S.K. Lines, Ltd. v. Seamaster Logistics, Inc.

Filing 103

ORDER RE: JOINT STATEMENT REGARDING DISCOVERY DISPUTE re 95 Joint Discovery Letter Brief Re MOL Audits filed by Toll Global Forwarding (Americas) Inc., Seamaster Logistics, Inc. Signed by Judge Jacqueline Scott Corley on December 7, 2012. (wsn, COURT STAFF) (Filed on 12/7/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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Northern District of California

United States District Court

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MITSUI O.S.K. LINES, LTD.,

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Case No.: 10-cv-5591 SC (JSC)
ORDER RE: JOINT STATEMENT
REGARDING DISCOVERY DISPUTE,
(Dkt. No. 95)

Plaintiff,
v.

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SEAMASTER LOGISTICS, INC., et al.,
Defendants.

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Pending before the Court is a Joint Statement regarding a discovery dispute whereby

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Defendant SeaMaster Logistics, Inc. (“SeaMaster”) moves to compel responses to a

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document request regarding internal audits conducted by Plaintiff Mitsui O.S.K. Lines, Ltd.

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(“MOL”). (Dkt. No. 95.) Having considered the arguments raised by the parties and the

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pleadings in this case, the Court GRANTS Defendant’s request in part as set forth below.

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DISCUSSION
Under the Federal Rules of Civil Procedure a party “may obtain discovery regarding

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any non-privileged matter that is relevant to any party’s claim or defense. . . . Relevant

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information need not be admissible at the trial if the discovery appears reasonably calculated

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to lead to the discovery of admissible evidence.” See Fed. R. Civ. P. 26(b)(1). The Court

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has broad discretion to permit discovery of potentially relevant evidence. See Surfvivor

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Media, Inc. v. Survivor Prods., 406 F.3d 625, 635 (9th Cir. 2005).

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Defendant moves to compel responses to four document requests seeking the
following:
Request 24: MOL internal audit reports, including but not limited to
“Audit Observation Summary” reports described by Geoffrey Chan at his
deposition, that refer or pertain to Shipments originating in Hong Kong.

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Request 25: MOL internal audit reports, including but not limited to
“Audit Observation Summary” reports described by Geoffrey Chan at his
deposition, that refer or pertain to Shipments originating in Shenzhen.

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Request 26: MOL internal audit reports, including but not limited to
“Audit Observation Summary” reports described by Geoffrey Chan at his
deposition, that refer or pertain to MOL’s calculation of freight and
charges for the Shipments.

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Northern District of California

United States District Court

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Request 41: The MOLIPS INDIA freight audits which covered any
shipment under the SERVICE CONTRACTS. Alexander Ng described
such freight audits at his deposition in July 2012.

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One of Plaintiff’s claims is a breach of contract claim whereby Plaintiff alleges that it
undercharged Defendants for certain shipments and seeks to recover the difference between
what Plaintiff charged and what it should have charged. Plaintiff’s outside auditor and
designated trial expert TAG/ICIB Services (“TAG”) calculated the amount of undercharges
as $19,136,840.16. Through this disputed discovery Defendant seeks the results of any
internal MOL audits of the work of the freight rating teams who were responsible for
selecting the charges under the service contracts for each shipment. Defendant contends that
MOL’s freight rating teams reviews TAG’s work and disagreed with TAG’s calculation for
many shipments. Defendant thus seeks additional information regarding MOL’s internal
audit of the freight rating teams to discover evidence regarding how Plaintiff’s employees
behaved under the contract, how they interpreted the contract, and how they applied the
contract.
Plaintiff has agreed to respond to Requests 24-26 with respect to audit reports
performed by a Mr. Chan; however, Plaintiff states that it “cannot locate any copies of Mr.

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Chan’s audit reports or records showing any finding or audit of calculation of freight and

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charges of Seamaster and/or Summit shipments” (Dkt. No. 95 at 5.) Plaintiff does not explain

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why it limited its response to Mr. Chan’s audit reports. Absent any argument to the contrary,

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the Court finds that Defendant is entitled to any MOL internal audit responsive to Requests

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24-26. Plaintiff shall respond to these Requests within 10 days of the filing of this Order.
With respect to Request 41 seeking the MOLIPS audits, Plaintiff objects as untimely

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and overly burdensome. As the Court previously noted, serving a discovery request on the

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last day to do so does not make it untimely in and of itself. Plaintiff’s burden argument is

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more compelling. Plaintiff estimates that between 2008 and 2010 MOLIPS audited 938,000

Northern District of California

shipments, less than 5% of which were under SeaMaster or Summit service contracts.

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United States District Court

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Further, Plaintiff’s objections to Request 41 stated that “[t]he reports generated were

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summary reports of the shipments checked,” rather than compilations of data regarding the

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rating of particular shipments. The Court must balance the burden of this discovery on

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Plaintiff with the likelihood that it will produce relevant evidence. The burden here is

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significant given that the data contains potentially confidential information regarding third-

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party shipments which Plaintiff would either have to redact or produce subject to a protective

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order.1 The Court finds that the likelihood that this discovery would produce relevant,

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probative discovery is low given that less than 5% of the MOLIPS audit data relates to the

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service contracts at issue and the data that does would be in summary form which would not

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provide Defendant additional information regarding particular rating decisions and the

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corresponding alleged undercharges. Accordingly, the Court declines to order any additional

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response to Request 41.

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This Order disposes of Docket No. 95 in Case No. 10-5591.

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IT IS SO ORDERED.

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The Court is not persuaded by Defendant’s argument that the audits of third-party shipments
are relevant to the claims here. The fact that other shipments involved similar goods is
irrelevant when the amount charged for a particular good is governed the specific service
contract between MOL and the other party.
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Dated: December 7, 2012
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

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Northern District of California

United States District Court

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