PNY Technologies Inc. v. Polaroid Corporation

Filing 22

ORDER affirming the May 5, 2016, order of the Bankruptcy Court (Written Opinion). Signed by Chief Judge John R. Tunheim on March 29, 2017. (DML)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
BKY No. 08-46617

In re: POLAROID CORPORATION
Debtor.
PNY TECHNOLOGIES INC.,

Civil No. 16-1357 (JRT)
Appellant,
MEMORANDUM OPINION
AND ORDER AFFIRMING
THE BANRKUTPCY
COURT ORDER

v.
POLAROID CORPORATION,
Appellee.

David J. Adler, MCCARTER & ENGLISH LLP, Four Gateway Center,
100 Mulberry Street, Newark, NJ 07102; and Robert T. Kugler, STINSON
LEONARD STREET LLP, 150 South Fifth Street, Suite 2300,
Minneapolis, MN 55402, for appellant.
John R. Stoebner and Ralph V. Mitchell, Jr., LAPP LIBRA THOMSON
STOEBNER & PUSCH, CHARTERED, 120 South Sixth Street, Suite
2500, Minneapolis, MN 55402, for appellee.

This matter arises out of the bankruptcy proceedings of Debtor Polaroid
Corporation (“Polaroid”). Appellant PNY Technologies, Inc. (“PNY”) submitted a proof
of claim in the amount of $686,837.57 seeking payments related to its prior business
relationship with Polaroid. Polaroid’s trustee (“Trustee”) objected to a portion of PNY’s
proof of claim in 2011, and the Bankruptcy Court sustained the Trustee’s objection in
2013. PNY appealed, arguing that it should have been given an opportunity to conduct
discovery, and in 2015, this Court vacated the Bankruptcy Court’s 2013 order and
remanded for further proceedings. Subsequently, PNY conducted discovery and the

34

Trustee expanded its objection to cover all but a small portion of PNY’s proof of claim.
The Bankruptcy Court held a joint trial and evidentiary hearing on the Trustee’s objection
in October 2015. In May 2016, the Bankruptcy Court sustained the Trustee’s objection,
allowing only $41,923.57 of PNY’s original claim for $686,837.57.
PNY now appeals the order of United States Bankruptcy Judge Gregory F. Kishel
dated May 5, 2016, arguing that the Bankruptcy Court (1) should have considered certain
internal documents to be “admissions” binding on the Trustee; (2) should have drawn an
adverse inference against the Trustee for failure to produce certain documents during
discovery; (3) strayed from the mandate of the Court’s 2015 decision; and (4) erred in its
determination of PNY’s claim amount. For the reasons set forth below, the Court affirms
the order of the Bankruptcy Court.

BACKGROUND
I.

FACTS & PROCEEDINGS BEFORE 2015 1
On April 6, 2007, PNY and Polaroid executed a Support Services Agreement

(“SSA”) under which Polaroid would act as an intermediary in the sale of PNY’s goods
to the retailer Target Corporation (“Target”). (Appellant’s Br. (“PNY Br.”), Exs. 1-3
(“App.”) at 11-20, July 25, 2016, Docket No. 18.) 2 The process contemplated by the
SSA is as follows: Target would submit a purchase order for PNY-manufactured goods to
1

See the Court’s prior order, In re Polaroid Corp., 527 B.R. 335 (D. Minn. 2015), for a
more complete history of the litigation prior to March 2015.
2

PNY filed a three-volume appendix as attachments 1, 2, and 3 to its brief at Docket
Number 18. The appendix is consecutively paginated, and references to the appendix in this
Order will be to that pagination.

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Polaroid, Polaroid would then submit a purchase order reflecting Target’s order to PNY,
PNY would ship the products to Target, PNY would invoice Polaroid for the order,
Polaroid would then invoice Target for the order, Target would send payment to Polaroid,
and Polaroid would pass on the payment to PNY less a 1% service fee as described in the
SSA (the “Service Fee”).

(Id. at 11-12, 34.)

Under the SSA, Polaroid was never

obligated to pay PNY for its fulfillment of a purchase order unless and until Target first
paid Polaroid. 3 (Id. at 12.)
Occasionally, Target would deduct various costs associated with the sale of PNY’s
goods (for example, charge backs, price protections, discounts, and advertising costs)
from the overall amount it paid to Polaroid; these costs are referred to for purposes of this
Order as “deductions.” The SSA further provides that “PNY will be solely responsible
for any [deductions, including ]situations, risks, liabilities, and claims relating to charge
backs, price protections and discounts, marketing fees, late or incomplete shipments,
returns, recalls, consolidation fees and charges, and similar risks relating to or arising
from the sale of the Products to [Target].” (Id. at 13.)
The parties conducted business under the SSA until June 30, 2008. (Id. at 20.)
Polaroid filed for bankruptcy on December 18, 2008; on August 31, 2009, the
3

Section 2(d) of the SSA states that “[u]pon receipt of payments from [Target], Polaroid
shall remit the same, less the Service Fee, to PNY.” (App. at 12.) In practice, this was not
always a streamlined process because the identifying number for the Target-to-Polaroid purchase
orders and invoices between Target and Polaroid differed from the corresponding Polaroid-toPNY purchase orders and invoices between Polaroid and PNY. After receiving payment from
Target, Polaroid had to go back and find the PNY invoice that related to the recent payment from
Target. Occasionally, this process was slow and cumbersome. (E.g., id. at 666, 996, 1004,
1023.)

-3-

proceedings were converted from Chapter 11 to Chapter 7. (Id. at 124.) On February 20,
2009, PNY filed a Proof of Claim (referred to as “Claim 34”) against Polaroid in the
bankruptcy proceeding; PNY sought a total of $686,837.57 from Polaroid composed of
$111,713.60 in “Invoices” (the “Invoices Claim”) and $575,123.97 in “Deductions” (the
“Deductions Claim”). 4 (Id. at 21-27.)
On June 21, 2011, the Trustee filed a motion seeking to disallow the Deductions
Claim. (Id. at 28-32.) The Trustee argued that based on the SSA, PNY bore all risk for
Target’s deductions of various sorts, and therefore, Polaroid could only possibly owe
PNY $111,713.60 based on the Invoices Claim. (Id. at 30). PNY responded that it would
be premature for the Court to disallow the Deductions Claim without first giving PNY
leave to obtain “narrow” discovery from the Trustee 5 related to “the relationship between
Polaroid and Target,” “[t]he payments from Target to Polaroid and the invoices sent from
Polaroid to Target,” including whether Target withheld any portion of payment based on
4

PNY’s argument regarding the Invoices Claim is that at the time it filed Claim 34, PNY
had a number of open invoices with Polaroid for products PNY had already sent to Target, and
Polaroid had sent to PNY either no payment or only partial payment on those invoices and had
also not provided documentation showing why there was not full payment. PNY posits that
Target may have remitted payment to Polaroid that corresponds to some or all of these open
invoices, and if that were the case, Polaroid would be required to pass on payment to PNY under
the SSA.
While the SSA does place the “sole responsibility” for risks related to deductions made
by Target from the total it owed to Polaroid (and then paid to PNY less the Service Fee), PNY’s
argument about the Deductions Claim is that Target may have reversed some or all of the
claimed deductions and paid Polaroid, in which case Polaroid would have been required to remit
those funds minus the Service Fee to PNY. (See App. at 180, 217-35.)
5

On June 3, 2011, in separate adversary proceedings regarding a claim by Polaroid’s
Trustee against PNY for breach of contract, PNY served discovery requests on the Trustee.
(App. at 205, 217-35, 316-19.) The Trustee never responded to the requests, maintaining that
PNY was not entitled to discovery in the adversary proceeding. (Id. at 319.)

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a “deduction” and also whether any payments from Target were based on Target’s
reversal of previous deductions or chargebacks.

(Id. at 180-81, 194-95.)

On

December 30, 2013, the Bankruptcy Court denied PNY’s request for discovery and
disallowed the Deductions Claim as a matter of law based on its interpretation of the SSA
(the Bankruptcy Court’s decision is referred to as the “2013 Claims Order”). (Id. at 13355.) The Bankruptcy Court, however, allowed the Invoices Claim because “the Trustee
had not met his burden[,] as objector, to rebut the prima facie validity assigned to that
component of the claim under Fed. R. Bankr. P. 3001(f).” (Id. at 923.)
In February 2014, the Bankruptcy Court denied PNY’s motion to reconsider the
2013 Claims Order, and PNY subsequently appealed the 2013 Claims Order and the
denial of the motion to reconsider to the District Court. (Id. at 343-44, 339-40.)

II.

PNY’S FIRST APPEAL
On appeal, the Court vacated the 2013 Claims Order. PNY Techs., Inc. v. Polaroid

Corp. (In re Polaroid Corp.), 527 B.R. 335 (D. Minn. 2015). In In re Polaroid Corp.
(also referred to as the “Remand Order”), the Court reasoned that the Bankruptcy Court
had abused its discretion in not permitting discovery before the entry of judgment under
Rule 56(d) of the Federal Rules of Civil Procedure. 6 Id. at 347-48. The Court explained:
[The Court] will remand to allow PNY to conduct discovery with respect to
its entitlement to the $575,123.97 sought in its proof of claim. The Court
notes, however, that such discovery will be limited to the document
6

Rule 56(d) sets out the procedure by which a nonmovant may request additional time
for discovery if “it cannot present facts essential to justify its opposition” at the time that a
summary judgment motion is pending. Fed. R. Civ. P. 56(d).

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production requests that PNY has cited in its brief before this Court,[ 7] as
these are the materials that PNY indicated would be probative on its proof
of claim.
Id. at 350-51 (footnotes omitted). As for the Invoices Claim, the Court explained:
PNY has not, . . . provided a basis for allowing additional discovery with
respect to the $111,713.69 sought in invoices, and therefore may not
conduct discovery to ascertain if any additional invoices would entitle PNY
to more than the $111,713.69 relief it claims.
Id. at 351 n.8. The Court remanded the matter to the Bankruptcy Court for “further
proceedings consistent with this Order.” Id. at 351.

III.

PROCEEDINGS ON REMAND
After remand, at a status conference on May 26, 2015, the Trustee’s counsel

announced, for the first time, his position that the Invoices Claim should be disallowed,
stating that Polaroid’s “obligation to [pay the invoices PNY sent to Polaroid] arose only if
and when [Polaroid] received payments from Target, so [Polaroid] had no liability for
invoices at all.” (App. at 534.) The Trustee’s counsel did not formally object to the
Invoices Claim at that time, but stated that the Trustee was “looking into whether he
wants to amend his objection since the whole order came back and was reversed and
remanded, including the allowance of [the Invoices Claim].” 8 (Id.)
Subsequently, the Bankruptcy Court directed PNY to serve discovery requests
“within the subject-matter limits imposed by the district court on remand,” cautioning
7

In its appeal brief, PNY quoted three enumerated requests originally from the document
request PNY served on Polaroid in June 2011. (App. at 412-13.)
8

Apparently the Trustee raised this issue to “tee[ it] up” in advance of settlement
discussions. (App. at 534.)

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that the requests must be “directed toward the specific factual question of whether Target
Corporation ever rectified the account chargebacks in dispute by making payment to the
Debtors that the Debtors then did not pay over to PNY.” (App. at 555-56 (citing In re
Polaroid Corp. at 351 & n.8).)
On June 9, 2015, PNY served Polaroid with a formal request for documents which
included a modified, rather than verbatim, version of its 2011 discovery request. 9 A
dispute ensued over whether PNY’s discovery requests were proper, and PNY filed a
motion to compel. 10 (Id. at 558-98). On August 24, 2015, PNY withdrew its motion to
compel, stating that “on August 19-20, 2015 Plaintiff, through its counsel, provided PNY
with answers to the relief requested in the Motion.” (Id. at 603.)
9

(Compare App. at 412-13 (PNY’s briefing before the Court during the first appeal,
quoting a portion of PNY’s 2011 discovery request in the adversary proceeding) with id. at 56061 (PNY’s 2015 document requests).)
10

In briefing regarding the motion to compel, PNY argued that the Trustee had not
provided, as requested, any of the “purchase orders and invoices generated by Polaroid to
Target,” (App. at 561), or a “listing of all payments from Target to Polaroid,” (id. at 591). The
Trustee objected, arguing that the document requests went beyond the scope of discovery
authorized by the Court in the Remand Order. The Trustee also asserted that it had already
provided all responsive documents based on its interpretation of the Remand Order. (Id. at 561,
582-86, 588-89.)
PNY countered that even under the Trustee’s narrow reading of the Remand Order, PNY
was still entitled to discover the purchase orders, invoices, and a list of payments from Target to
Polaroid. (Id. at 594.) Polaroid responded that even if the request for invoices did not exceed
what the Court permitted in the Remand Order, and even if invoices were otherwise discoverable
under the order, there are no paper invoices from Polaroid to Target. (Id. at 600.) Instead,
according to Polaroid, “all invoicing was done electronically through Target’s proprietary vendor
ordering and billing software,” and the Trustee has no access to that system. (Id.) Lastly,
Polaroid asserted that it had “requested that James Dolan, an estate employee with access to the
computer records, attempt to extract from the records of [Polaroid], an accounting of payments
received from Target for PNY product and payments remitted to PNY after deducting the
commission payable under the [SSA]. A report of the reconciliation attempt [(referred to
throughout as the “Dolan Reconciliation”)] has been provided to PNY.” (Id. at 601.)

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The Bankruptcy Court held a joint evidentiary hearing and trial on October 28 and
29, 2015. The parties submitted exhibit lists in advance of the hearing, and they jointly
stipulated to the admission of certain exhibits. 11 In the Trustee’s pre-hearing brief filed
September 11, 2015, the Trustee formally objected to the Invoices Claim for the first
time, echoing the arguments the Trustee made in the status conference on May 26, 2015.
(Id. at 644.) PNY’s pre-hearing brief, filed on October 3, 2015, did not directly address
the Trustee’s new objection to the Invoices Claim, nor did it request additional discovery,
though it did state that “it is troubling that many responsive documents were not
produced” and “[a]s a result of this, these issues will need to be explored with the
witnesses at the evidentiary hearing.” (Id. at 652.)
At the evidentiary hearing, PNY relied on Polaroid’s internal reports summarizing
all SSA-related transactions with Target and PNY on a monthly basis (the “Monthly
Reconciliations”). The reports, which the Trustee provided to PNY in February 2015,
showed that overall, Target paid $5,511,844 to Polaroid in connection with the SSA and
that Polaroid remitted $5,079,316 to PNY over the life of the SSA. (See, e.g., id. at 990.)
A PNY employee testified that she could not verify the accuracy of the $5,511,844 figure
because the exhibit “[was not her] document,” and it came from Polaroid. (Id. at 681.)
The Monthly Reconciliations did not provide an accounting of each and every transaction
that took place each month; rather, they were contemporaneously-created summaries

11

(See App. at 608-17 (both parties’ exhibit lists, filed September 11, 2015); id. at 636-38
(joint stipulation as to admissibility of certain exhibits, filed October 2, 2015).)

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created monthly, and the data on them was pulled from Polaroid’s more-detailed ledger
books.
The Trustee’s witness, James Dolan, testified that the Monthly Reconciliations
showing Target had paid Polaroid $5,511,844 were not accurate. 12 (See generally id. at
931-32.) According to Dolan, in the course of responding to PNY’s discovery request, he
discovered that the underlying source documents (the ledger books) were correct, but that
when Polaroid personnel created the Monthly Reconciliation for March 2008, they had
pulled data from the wrong part of the ledger books, thus resulting in an inflated sum on
the Monthly Reconciliations. (Id. at 695-98, 701-04, 766-67, 777, 780-81.) Dolan
testified that based on his review of the ledger books, to his knowledge Target had
actually only paid Polaroid $5,172,970, rather than $5,511,844. (Id. at 704.) Dolan also
testified that the error was discovered “about two weeks after [he] prepared the
reconciliation schedule.” (Id. at 781.)
Based on the evidence produced at the evidentiary hearing as well as the parties’
post-hearing briefing, on May 5, 2016, the Bankruptcy Court issued an order (the “2016
Claims Order”) sustaining the Trustee’s objection to PNY’s proof of claim to the extent
of all but $41,923.57 (the difference between $5,172,970 and $5,079,316, less the Service
Fee). (Id. at 920-41.) On May 19, 2016, PNY filed a Notice of Appeal regarding the
2016 Claims Order. (Id. at 942-45.) PNY now appeals pursuant to 28 U.S.C. § 158(a).

12

The parties do not disagree that over the life of the SSA, Polaroid paid PNY
$5,079,316.

-9-

ANALYSIS
I.

STANDARD OF REVIEW
In bankruptcy proceedings the District Court sits as an appellate court and reviews

the Bankruptcy Court’s conclusions of law de novo and its findings of fact for clear error.
Reynolds v. Pa. Higher Educ. Assistance Agency, 425 F.3d 526, 531 (8th Cir. 2005). “A
finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing
court on the entire evidence is left with the definite and firm conviction that a mistake has
been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); see
DeBold v. Case, 452 F.3d 756, 761 (8th Cir. 2006). A trial court’s decisions regarding
discovery sanctions are subject to abuse-of-discretion review. Smith v. AS Am., Inc., 829
F.3d 616, 624 (8th Cir. 2016); Sentis Grp., Inc. v. Shell Oil Co., 559 F.3d 888, 898
(8th Cir. 2009). “To the extent a discovery sanction depends upon an interpretation of
law, our review of the underlying legal determination is de novo.” Sentis Grp., 559 F.3d
at 899 (citing United States v. Gonzalez-Lopez, 403 F.3d 558, 564 (8th Cir. 2005)). To
the extent a discovery sanction depends on a ruling under Fed. R. Civ. P. 26(e), the 26(e)
ruling is reviewed “for gross abuse of discretion and [should be] reverse[d] only if it
resulted in fundamental unfairness.” United States v. STABL, Inc., 800 F.3d 476, 487
(8th Cir. 2015).
An appellate court’s prior opinion binds the trial court on remand regarding “all
matters within the compass of [the] prior opinion.” Houghton v. McDonnell Douglas
Corp., 627 F.2d 858, 865 (8th Cir. 1980). “[O]n remand the trial court is free to pass
upon any issue which was not expressly or impliedly disposed of on appeal.” Thornton v.

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Carter, 109 F.2d 316, 320 (8th Cir. 1940). However, later decisions must “not [be]
inconsistent with either the spirit or express terms of [the appellate court’s] decision.”
Quern v. Jordan, 440 U.S. 332, 347 n.18 (1979); Houghton, 627 F.2d at 865.

A

reviewing court “may construe its own [prior] mandate,” which “is ‘to be interpreted
reasonably and not in a manner to do injustice.’” Bailey v. Henslee, 309 F.2d 840, 84344 (8th Cir. 1962) (quoting Wilkinson v. Mass. Bonding & Ins. Co., 16 F.2d 66, 67
(5th Cir. 1926)). “The question of whether the bankruptcy court exceeded [a reviewing
court’s prior] mandate is a question of law and is thus subject to de novo review.” In re
Tri-State Fin., LLC, 519 B.R. 759, 765 (B.A.P. 8th Cir. 2014).
Rule 8014(a) of the Federal Rules of Bankruptcy Procedure – like Rule 28(a) of
the Federal Rules of Appellate Procedure – requires an appellant’s brief to include “a
statement of the issues presented” and an “argument, which must contain the appellant’s
contentions and the reasons for them, with citations to the authorities and parts of the
record on which the appellant relies.” Fed. R. Bankr. P. 8014(a)(5), (a)(8); see Fed. R.
App. P. 28(a)(5), (a)(8). “To be reviewable, an issue must be presented in the brief with
some specificity. Failure to do so can result in waiver.” Meyers v. Starke, 420 F.3d 738,
743 (8th Cir. 2005) (interpreting Fed. R. App. P. 28(a)(5)).

II.

BURDENS IN CLAIM OBJECTION PROCEEDINGS
First, the Court provides a brief discussion of the Bankruptcy Court’s application

of the burden-shifting framework set out in the Federal Rules of Bankruptcy Procedure.
A properly filed proof of claim constitutes prima facie evidence of the
validity and amount of the claim. Fed. R. Bankr. P. 3001(f); Dove-Nation
v. eCast Settlement Corp. (In re Dove-Nation), 318 B.R. 147, 152 (B.A.P.
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8th Cir. 2004). If a proof of claim is not objected to, it “is deemed allowed.”
11 U.S.C. § 502(a). To rebut the “presumptive validity” of a claim an
objector bears the burden of producing “substantial evidence.” Brown v.
IRS (In re Brown), 82 F.3d 801, 805 (8th Cir. 1996) (internal quotation
marks omitted), abrogated on other grounds by Raleigh v. Ill. Dep't of
Revenue, 530 U.S. 15 (2000).
In re Polaroid Corp., 527 B.R. at 345-46. “Substantial evidence” is “evidence sufficient
to rebut” the prima facie case as set out in the proof of claim. In re Brown, 82 F.3d at
805. If the objector produces such evidence “the ultimate burden of persuasion” shifts
back to the claimant “to establish its entitlement to the claims.” In re Dove-Nation, 318
B.R. at 152; see also In re SendMyGift.com, Inc., 280 B.R. 667, 674 (Bankr. D. Minn.
2002).
On the other hand, if the proof of claim does not conform with the bankruptcy
rules and thus is “not entitled to prima facie validity, [it is] some evidence of the
Claimant’s claims.” In re Dove-Nation, 318 B.R. at 152 (citing In re Cluff, 313 B.R. 323,
340 (Bankr. D. Utah 2004)). “To overcome a proof of claim [that is not entitled to a
presumption of validity,] the Debtor[] must come forward with ‘some evidence’ to ‘meet,
overcome, or at least equalize’ the statements on the proof of the claim.” In re Cluff, 313
B.R. at 340 & n.62 (quoting In re All-Am. Auxiliary Ass'n, 95 B.R. 540, 545 (Bankr. S.D.
Ohio 1989)).
Here, the Trustee objected to the entirety of PNY’s proof of claim, and the
Bankruptcy Court placed the ultimate burden of persuasion on PNY. (App. at 924-25 &
n.5.) The Bankruptcy Court concluded that Claim 34 was “uncertain” and “murky,”
lacking “allegations of those historical specifics on [its] face” that might show “that
Target did pay [Polaroid] in whole or in part, on account of the itemized chargebacks.”
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(Id. at 925 n.5) The Bankruptcy Court properly held that the proof of claim “was not
prima facie evidence of a matured pre-petition right to payment from [Polaroid] on the
transactions cryptically itemized on its face,” and therefore, the Trustee’s objection,
though lacking in “substantial evidence,” was sufficient to shift the ultimate burden of
persuasion to PNY. (Id.) 13

III.

ISSUES ON APPEAL
PNY’s enumerates five issues for appeal; the Court discusses each below. 14

A.

FAILURE TO DRAW AN ADVERSE INFERENCE AGAINST THE
TRUSTEE (ISSUE 5)

PNY asks the Court to resolve “[w]hether the Bankruptcy Court erred in issuing
the 2016 Claims Order when it failed to draw an adverse inference against the Trustee as
a result of the failure of . . . the Trustee to produce relevant and responsive documents in

13

At various points in its briefing to the Court, PNY suggests that the Bankruptcy Court
failed to hold the Trustee to his burden of proof. The Court finds that even if Claim 34 was
facially sufficient to entitle PNY to a presumption of the claim’s validity, the Trustee
nevertheless produced sufficient evidence, as discussed in more detail below, to fully rebut the
contents of Claim 34. Therefore, it was proper for “the ultimate risk of nonpersuasion as to the
allowability of the claim [to] reside[] with [PNY, as] the party asserting the claim.” In re Brown,
82 F.3d at 805 (quoting Junior Dev. Grp. v. Kahn (In re Hemingway Transp., Inc.), 993 F.2d
915, 925 (1st Cir. 1993)).
14

In Issue 3, PNY urges the Court to consider “[w]hether the Bankruptcy Court erred in
the 2016 Claims Order when it concluded that the Monthly Reconciliations were not admissions
of Polaroid that were binding on the Trustee?” (PNY Br. at 6.) Because PNY did not “argue
[Issue 3] with any specificity whatsoever” in its briefing, PNY “has waived this claim” and the
Court will not consider it. Sweet v. Delo, 125 F.3d 1144, 1159 (8th Cir. 1997); see also Meyers,
420 F.3d at 743.

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his possession?” (PNY Br. at 7.) 15 PNY argues that the Trustee possesses “records,”
also described as “the underlying documents between Target and Polaroid,” which
“would permit PNY to verify whether it has received all of the payments and/or credits
for which it is entitled.” (Reply Br. of PNY (“PNY Reply Br.”) at 12, Sept. 8, 2016,
Docket No. 21.) PNY argues that because the Trustee never produced these “records” in
discovery, the Bankruptcy Court should have drawn an adverse inference against the
Trustee pursuant to Fed. R. Civ. P. 37(b) or the Bankruptcy Court’s inherent authority.
PNY also asserts for the first time on appeal that the Bankruptcy Court erred in failing to
draw an adverse inference based on the Trustee’s failure to supplement discovery
pursuant to Fed. R. Civ. P. 37(c).
Rule 37 of the Federal Rules of Civil Procedure governs sanctions against a party
for failure to cooperate in discovery in contested bankruptcy matters. 16

Rule 37(a)

provides that a party “may move for an order compelling disclosure or discovery” if
another party “fails to produce [requested] documents,” including providing a response
that is “evasive or incomplete.” Fed. R. Civ. P. 37(a)(1), (3), (4). A court may impose
15

Also in Issue 5, PNY asserts that it was error for the Bankruptcy Court to fail to draw
an adverse inference against the Trustee because Polaroid failed to “maintain records under the
SSA.” PNY does not explain what it means by the allegation that Polaroid failed to “maintain
records under the SSA.” Therefore, the Court construes sub-part (i) of Issue 5 as waived.
Meyers, 420 F.3d at 743; Sweet, 125 F.3d at 1159. Absent waiver, this argument would still fail
because there is no question that Polaroid did maintain records of business conducted under the
SSA. (See generally App. at 691-718, 746-83.)
16

See Fed. R. Bankr. P. 3007, advisory committee’s note to 1983 rules (“The contested
matter initiated by an objection to a claim is governed by rule 9014, unless a counterclaim by the
trustee is joined with the objection to the claim.”). Fed. R. Bankr. P. 9014(c) directs that Fed. R.
Bankr. P. 7037 applies to contested bankruptcy matters, and Fed. R. Bankr. P. 7037 in turn
directs that Bankruptcy Courts apply Fed. R. Civ. P. 37 in such proceedings.

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sanctions, including “directing that the matters embraced in the order or other designated
facts be taken as established for purposes of the action,” if a party fails to comply with a
court order compelling discovery. Fed. R. Civ. P. 37(b)(2).
Courts also possess inherent authority to impose discovery sanctions, which may
be imposed “[e]ven in the absence of a discovery order,” Residential Funding Corp. v.
DeGeorge Fin. Corp., 306 F.3d 99, 106-07 (2d Cir. 2002); this authority “is a broad and
powerful tool” that “should be used sparingly,” Sentis Grp., 559 F.3d at 900. “[C]ourts
first should turn to specific rules tailored for the situation at hand, such as Rule 37, to
justify sanctions. Then, as an alternative basis for support or in circumstances where
specific rules are insufficient, i.e., where ‘there [is] a need,’ it may be appropriate to
invoke their inherent authority.” Id. (quoting Societe Internationale Pour Participations
Industrielles Et Commerciales, S.A. v. Rogers , 357 U.S. 197, 207 (1958)).
In addition, Rule 37(c) provides that “[i]f a party fails to provide information . . .
as required by [Rule 26(e) 17], the party is not allowed to use that information . . . on a
motion, at a hearing, or at a trial, unless the failure was substantially justified or is
harmless.” The Court may also impose a number of other sanctions for failure to comply
17

Rule 26 obligates a party who has responded to a discovery request to supplement or
correct its response:
(A)

in a timely manner if the party learns that in some material respect the
disclosure or response is incomplete or incorrect, and if the additional or
corrective information has not otherwise been made known to the other
parties during the discovery process or in writing; or

(B)

as ordered by the court.

Fed. R. Civ. P. 26(e)(1). Like Rule 37, Rule 26 applies to contested bankruptcy matters. See
Fed. R. Bankr. P. 7026, 9014.

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with the Rule 26(e) duty to supplement or correct a discovery response “on motion and
after giving an opportunity to be heard.” Fed. R. Civ. P. 37(c)(1).
First, the Court addresses whether it was an abuse of discretion for the Bankruptcy
Court to decline to impose discovery sanctions under Rule 37(b). PNY filed a motion
under Rule 37(a) to compel a response to its request for documents on July 17, 2015.
(App. at 558-98.) However, after receiving the Trustee’s discovery response, PNY
withdrew its motion to compel on August 24, 2015. (Id. at 603-04.) As a result, PNY
never presented to the Bankruptcy Court the question of whether the Trustee’s discovery
response was incomplete, nor did PNY present the underlying task of interpreting the
scope of permissible discovery. Because Rule 37(b) “has no application if there has not
been a court order” compelling discovery under Rule 37(a), Fox v. StudebakerWorthington, Inc., 516 F.2d 989, 994 (8th Cir. 1975), the Bankruptcy Court did not abuse
its discretion by declining to draw an adverse inference against the Trustee as permitted
by Rule 37(b).
Second, the Court addresses whether it was an abuse of discretion for the
Bankruptcy Court to refuse to impose discovery sanctions as a matter of its inherent
authority based on an allegedly incomplete response from the Trustee. The Court places
great weight on the fact that in a status conference on May 26, 2015, the Bankruptcy
Court explicitly contemplated a process to determine the proper scope of discovery on
remand, given PNY’s and the Trustee’s intense disagreement on the topic. (App. at 53841.)

The Bankruptcy Court anticipated a heated discovery dispute, yet PNY later

withdrew its motion to compel because the Trustee “provided PNY with answers to the

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relief requested in the Motion.” (Id. at 603.) Under these circumstances, in which the
Bankruptcy Court clearly endeavored to manage the course of the litigation and PNY
then withdrew its motion to compel, it made sense for the Bankruptcy Court to reject
PNY’s later arguments about incomplete discovery. Furthermore, there is no indication
that the “specific rules tailored for the situation at hand, such as Rule 37” are
“insufficient” to provide PNY with full discovery.

Sentis Grp., 559, F.3d at 900.

Therefore, it was not an abuse of discretion for the Bankruptcy Court to decline to impose
discovery sanctions against the Trustee as an exercise of inherent authority.
Lastly, the Court turns to whether the Bankruptcy Court erred by failing to impose
discovery sanctions under Rule 37(c). PNY asserts that “the Trustee failed to supplement
its document responses to Request No. 4” as required by Fed. R. Civ. P. 26(e) following
the Trustee’s belated objection to the Invoices Claim. (PNY Reply Br. at 13.) PNY’s
briefing on this issue is very sparse and lacks clarity, but the Court construes PNY’s
assertion 18 to be that when the Trustee discovered an error in the Monthly

18

An alternative argument PNY could be asserting is that the Trustee always had an
underlying responsibility to produce Polaroid’s financial ledgers showing the individual inflows
and outflows of cash that the monthly reports and, later, the reconciliation, summarized (see
App. at 780), because those financial ledgers are responsive to Request No. 4. Such an argument
must fail, because if PNY took this view of what documents were covered by Request No. 4,
then it should never have abandoned its motion to compel. At the time PNY withdrew the
motion to compel, it had received the Dolan Reconciliation as well as voluminous records from
the Trustee that did not include the financial ledgers, yet PNY stated at that time that the Trustee
“provided PNY with answers to the relief requested in the Motion.” (Id. at 603.) PNY may not
now re-characterize its failure to pursue complete discovery responses under the process set out
in Rule 37 as a failure by the Trustee to supplement discovery. Furthermore, it is not clear to the
Court that if PNY had pursued a motion to compel asking for the underlying ledgers used in
compiling the Dolan Reconciliation, the Bankruptcy Court would have necessarily agreed that
those ledgers fall under the language of Request No. 4. The lack of clarity about what
documents were responsive to Request No. 4, given the request’s ambiguous language, is an
(Footnote continued on next page.)

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Reconciliations, “about two weeks after” the preparation of the Dolan Reconciliation,19
(App. at 781), perhaps the Trustee failed to timely supplement its discovery response by
notifying PNY of the error. See Fed. R. Civ. P. 26(e). 20
However, PNY never asked the Bankruptcy Court to draw an adverse inference
against the Trustee based on a failure to supplement discovery responses under Rule
26(e). 21 (App. at 887.) As a general rule, appellate courts “do not consider issues not
presented to the [trial] court.” Universal Title Ins. Co. v. United States, 942 F.2d 1311,
1315 (8th Cir. 1991).
Even if PNY’s more generalized request for an adverse inference based on
incomplete discovery in Bankruptcy Court were enough to preserve the issue of
discovery sanctions under Rule 37(c), PNY’s argument would still fail. 22 PNY has not
____________________________________
(Footnote continued.)

additional basis why the Bankruptcy Court did not abuse its discretion in declining to sanction
the Trustee for failing to supplement discovery.
19

The Court assumes PNY received the Dolan Reconciliation in late August 2015. (See
App. at 603.)
20

In Request No. 4 of its request for documents, PNY sought: “Any and all documents
relating to any internal communications, correspondence, and/or analysis within Polaroid
regarding (i) invoices or purchase orders generated by Polaroid for products purchased by
Target; (ii) payments, credits, disputes or holdbacks from Target; and (iii) reconciliations of
amounts owed by Target.” (App. at 579-80.)
21

The single case PNY cited to support its request for an adverse inference from the
Bankruptcy Court refers only to discovery sanctions imposed under Rule 37(b) and the courts’
inherent authority. See Residential Funding Corp., 306 F.3d at 106-07.
22

PNY maintains that the Trustee’s belated objection to the Invoices Claim somehow
expanded the universe of documents responsive to PNY’s document request. (PNY Reply Br. at
3.) PNY does not explain why this would be the case; the Court rejects this argument.

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demonstrated that any untimely correction of the Trustee’s supposed error was not
harmless. Fed. R. Civ. P. 37(c); see STABL, Inc., 800 F.3d at 487. Based on the record
and the briefs, the Court does not know when PNY first learned that the Monthly
Reconciliations the Trustee provided in February 2015 contained an error, but the Court
suspects that PNY became aware of this by October 2, 2015 at the latest. 23 PNY does not
explain what it would have done differently had it actually received word of the error in
early September, immediately after the error was discovered, as opposed to receiving it in
early October.
For all of these reasons, the Bankruptcy Court did not abuse its discretion in
declining to impose discovery sanctions under Rule 37(c).

B.

THE COURT’S MANDATE ON REMAND (ISSUE 1)

The parties next dispute whether the Bankruptcy Court misinterpreted the scope of
the Court’s mandate in the Remand Order. PNY’s position can be broken into two key
arguments: (1) the Bankruptcy Court misconstrued the scope of the Remand Order by
erroneously failing to consider certain theories and pieces of evidence PNY produced at
trial, and (2) the Bankruptcy Court violated the mandate rule by either refusing to
entertain the Trustee’s belated objection to the Invoices Claim, or alternatively, by not
23

This assumption is based on the fact that both parties included on their proposed
exhibit lists, in advance of the evidentiary hearing, documents that purported to be the Dolan
Reconciliation. (See App. at 609, 612.) Perhaps the two versions were different, with PNY’s
version including the error and the Trustee’s updated version correcting the error. The parties
did not stipulate to the admission of the Dolan Reconciliation along with other stipulations for
admissions of evidence, on October 2, 2015, (Id. at 636-38), suggesting that by this date, PNY
was aware that the Trustee would argue that the original Dolan Reconciliation contained an
error.

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providing PNY with an additional discovery opportunity after the Trustee voiced the new
objection.

1.

Whether the Bankruptcy Court Misinterpreted the Scope of the
Court’s Mandate on Remand Regarding Permissible Theories of
Fact or Law

PNY argues that the Bankruptcy Court erred in interpreting the Remand Order as
“expressly prohibit[ing PNY] from advancing new theories in fact or law for the
allowance of its claim, beyond an unreported receipt by [Polaroid] of then-unremitted
funds from Target in reversal of prior chargebacks, up to the amounts itemized in PNY’s
proof of claim.” (App. at 935.) PNY argues that because of this erroneous interpretation
of the Remand Order, the Bankruptcy Court refused to consider PNY’s “new theory,”
which PNY refers to as the “Section 2(d) Claim” – a claim that PNY is entitled to the
total sum Target paid to Polaroid on account of business under the SSA, net the Service
Fee and the amount Polaroid actually passed on to PNY. PNY further argues that the
Bankruptcy Court refused to consider PNY’s evidence substantiating the Deductions
Claim beyond a very narrow type of “direct evidence” that the Bankruptcy Court
believed was the only evidence permitted to prove the claim under the Remand Order.
There are statements of dicta in the 2016 Claims Order indicating that the
Bankruptcy Court did take a somewhat narrow view of the types of arguments PNY
might make 24 on remand and the type of evidence PNY might be permitted to adduce. 25

24

(See, e.g., App. at 929-30 (explaining that PNY’s attempt to submit evidence of net
inflows and outflows of cash (from Target to Polaroid and from Polaroid to PNY) as a type of
circumstantial evidence that there were certain deductions that Target had in fact reversed was a
(Footnote continued on next page.)

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However, as to the limits on PNY’s potential arguments, the Remand Order supports the
Bankruptcy Court’s conclusion that PNY’s claim on remand was limited to what it
sought in its proof of claim. Thus, merely showing a difference between the total money
passing from Target to Polaroid and the total money passing from Polaroid to PNY,
without some link to Claim 34, was not necessarily sufficient to prove any precise portion
of the proof of claim.

Because the Bankruptcy Court ultimately rejected PNY’s

“Section 2(d)” claim based on a theory that it did not relate to a pre-petition entitlement
under Claim 34, the Court finds no fault with the Bankruptcy Court’s reasoning. (See
App. at 924 n.4.)
As to the Bankruptcy Court’s treatment of evidence, reading the 2016 Claims
Order as a whole, the Bankruptcy Court considered all of the evidence PNY submitted.
PNY argues that the Bankruptcy Court allowed the Trustee to adduce testimony about the
net flows of cash from Target to Polaroid and from Polaroid to PNY, yet refused to
____________________________________
(Footnote continued.)

“theory” that was a “surprise” when it first came out at the evidentiary hearing, and that the
theory “did not match the directive at all”); id. at 924 n.4.)
25

(See, e.g., App. at 924 (“The point of fact to be addressed on remand was whether
Target had ever reviewed or rectified any of those specific chargebacks, by making a
compensating payment or payments to [Polaroid] that [Polaroid] then failed to remit to PNY net
of its service charge.”); id. at 927 (explaining that “comparative accounting among records from
PNY, Target, and [Polaroid]” was “the direct evidence that the district court contemplated”); id.
(stating that the district court identified two “predicate facts” that PNY needed to prove on
remand in relation to the Reversed Deductions claim: “[(1)] reversals of chargebacks by Target
and compensating payment to [Polaroid, and (2) Polaroid’s] remittance or non-remittance to
PNY correspondingly and in like amount”); see also id. at 928-30 (rejecting the sufficiency of
PNY’s evidence to prove any portion of the Deductions Claim because while PNY produced
some direct evidence of the first predicate fact – payment by Target to Polaroid – in the amount
of $157,780.30, PNY produced no direct evidence of the second predicate fact – that Polaroid
did not remit payment of the $157,780.30 to PNY as the SSA required).)

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consider similar evidence from PNY (the “Section 2(d)” argument).

However, the

Bankruptcy Court in fact considered the numbers submitted by both sides and ultimately
accepted as true the Trustee’s witness testimony about the error in the summary of cash
flows that PNY relied on.

(Id. at 932-33.)

The Trustee’s evidence showing only

$41,923.57 payable to PNY that Polaroid had failed to remit was one way to rebut PNY’s
claims that it was owed any greater amount. Therefore, the Bankruptcy Court’s ultimate
holding rested on a consideration of all evidence, rather than – as PNY argues – a refusal
to consider some of PNY’s evidence based on the Bankruptcy Court’s interpretation of
the Remand Order. 26

2.

Whether the Mandate Rule Precluded the Trustee’s Objection to
the Invoices Claim

PNY asserts that, based on the mandate rule, “[b]ecause the Trustee did not appeal
from the adverse ruling in the 2013 Claims Order, . . . either the Trustee was precluded in
raising the Renewed Objection or PNY was entitled to limited discovery on the Unpaid
Invoices Claim, consistent with the letter and spirit of [the Remand Order].” (PNY Reply
Br. at 7 (citing Klein v. Arkoma Prod. Co., 73 F.3d 779, 784-85 (8th Cir. 1996)).)
The Court’s review is limited to those issues raised below, since “[t]he function of
the appellate court is not to make an initial decision but simply to review the action of the
trial court.” Booker v. Special Sch. Dist. No. 1, 585 F.2d 347, 353 (8th Cir. 1978); see
Bethea v. Levi Strauss & Co., 916 F.2d 453, 456 (8th Cir. 1990).
26

The Bankruptcy Court found that “[o]n all of the evidence of record, the Trustee’s
proof preponderates.” (App. at 933; see id. at 935 (“Even if . . . broader bases for an allowable
claim were entertained, PNY did not produce any evidence to meet them anyway.”).)

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On remand, the Trustee made a belated objection to the Invoices Claim, first
formally asserted in pre-trial briefing on September 11, 2015. (App. at 644.) While at
hearing the Bankruptcy Court did question whether Polaroid’s late objection was proper,
PNY’s counsel conceded that the Bankruptcy Court could consider the new objection.
(See App. at 661.) 27 Furthermore, PNY never requested additional discovery in response
to the new objection. PNY could have made a request to the Bankruptcy Court for
additional discovery after the Trustee formally objected to the Invoices Claim in
September, or PNY could have argued the same in its post-trial briefing before the
Bankruptcy Court. Therefore, as the Court is “bound to simply review the action of the
trial court,” PNY is not entitled to the relief it seeks for failure to first raise the issue
before the Bankruptcy Court. Booker, 585 F.2d at 353.
Additionally, the Remand Order hinged on the fact that PNY had presented a clear
request for certain discovery prior to summary judgment after having never had the
opportunity to conduct discovery before. See In re Polaroid Corp., 527 B.R. at 346-50.
Here, PNY argues that the Bankruptcy Court failed to adhere to the mandate rule even
though the circumstances were distinguishable: PNY has now had a discovery
opportunity, and it never formally requested additional discovery based on the Trustee’s
new objection.

Therefore, the Bankruptcy Court’s failure to provide PNY another

discovery opportunity does not implicate the mandate rule as articulated in Klein. 73
F.3d at 784-85.
27

Additionally, the Remand Order did vacate the 2013 Claims Order in full, and PNY
has provided no legal authority supporting the argument that it was procedurally improper for the
Bankruptcy Court to consider Polaroid’s objection to the Invoices Claim.

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C.

DETERMINATION OF THE AMOUNT OF PNY’S CLAIM (ISSUES
2 & 4)

Issues 2 and 4 pose the same question worded in two different ways – whether the
Bankruptcy Court clearly erred when it determined that the allowable amount of PNY’s
claim is $41,923.57. (PNY Br. at 6-7.) PNY asserts that it was clearly erroneous for the
Bankruptcy Court to determine PNY’s claim was for any amount less than $157,780.30.
First, PNY argues, citing U.S. Gypsum Co., 333 U.S. 364, and Anderson v. City of
Bessemer City, 470 U.S. 564 (1985), that Dolan’s “uncorroborated” testimony regarding
the error in the Monthly Reconciliations was “entitled to little evidentiary weight”
because this testimony conflicts with contemporaneously-created documents – the
Monthly Reconciliations themselves. In U.S. Gypsum Co., the United States alleged that
the corporate defendants engaged in a conspiracy in which they acted in concert in
entering into certain license agreements. 333 U.S. at 371-72. To support this allegation,
the United States introduced the “license agreements [and] more than 600 documentary
exhibits consisting of letters and memoranda written by officers of the corporate
[defendants], and examined 28 witnesses, most of whom were officers of the corporate
defendants.” Id. at 372. On cross-examination, the witnesses largely denied acting in
concert and also denied “that they had agreed to do the things which in fact were done.”
Id. at 395-96. The Supreme Court held that the decision below, finding the corporate
defendants did not act in concert, was clearly erroneous because “[w]here such testimony
is in conflict with contemporaneous documents, we can give it little weight, particularly
when the crucial issues involve mixed questions of law and fact.” Id. at 396.

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Here – in contrast with the situation in U.S. Gypsum Co. – Dolan’s testimony was
not inconsistent with the existence or contents of the Monthly Reconciliations on which
PNY relies. Dolan acknowledged that the Monthly Reconciliations were genuine, in the
sense that they were in fact Polaroid’s contemporaneously-created documents, and he
presented a “coherent and facially plausible story” to explain the error in those
documents. Anderson, 470 U.S. at 575. PNY did not counter with evidence showing that
the numbers reflected on the Monthly Reconciliations were accurate, nor could it do so,
because PNY failed to pursue the records from the Trustee and from Target 28 that could
have rebutted Dolan’s testimony. The Bankruptcy Court was not faced with a situation
like that in U.S. Gypsum Co., in which the trial court was presented with extensive
documentary evidence, yet chose to credit the dishonest and directly conflicting live
testimony. Instead, the Bankruptcy Court decided a purely factual matter – how much
money Target had paid to Polaroid – after the parties presented two different numbers,
and Dolan supported the lower number with a coherent and credible explanation. Thus, it
was not clear error for the Bankruptcy Court to make the factual determination that
Target had paid Polaroid $5,172,970, rather than $5,511,844, based on Dolan’s
testimony.

28

At some point, PNY served Target with a subpoena seeking documentation of Target’s
PNY-related transactions with Polaroid. PNY’s counsel reported that “Target would have
produced to me if I had gone through all their hoops all their, I think, underlying data.” (App. at
782.) PNY’s counsel explained he decided not to follow up on the Target subpoena because it
would have been “a complete universe of nonsense” to him without the corresponding data from
Polaroid’s records showing which Target transactions corresponded with which PNY
transactions. (Id. at 782-83.) Again, the Court notes PNY never pursued a motion to compel
production of the corresponding data from the Trustee.

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Second, PNY argues that the Trustee was under a continuing obligation to produce
documents pursuant to PNY’s discovery request, including documents that might have
supported Dolan’s testimony about the accounting error. PNY argues that it should have
been provided with the underlying ledger books supporting Dolan’s testimony, and when
the Trustee failed to provide these source documents, the Bankruptcy Court clearly erred
in crediting Dolan’s testimony over the Monthly Reconciliations PNY provided.
However, PNY has not shown that it ever requested the ledger books in discovery.
Because PNY withdrew its motion to compel, whether the Bankruptcy Court erred during
the discovery process is not properly before the Court. Additionally, PNY does not argue
that Dolan’s testimony was inadmissible based on the Federal Rules of Evidence – PNY
merely argues that the Bankruptcy Court erred in weighing the evidence because of
allegedly incomplete discovery. As previously explained, under the deferential clearerror standard of review, the Court holds that the Bankruptcy Court did not clearly err in
weighing the evidence the parties actually presented regarding the total payments from
Target to Polaroid.
Third, PNY argues that the Bankruptcy Court’s conclusion that the “Price
Protection Chargeback” in the amount of $150,765.30 was “simply a book entry” is
clearly erroneous. 29 Although the Bankruptcy Court referred to the $150,765.30 as a
“book entry,” (App. at 927), its determination to allow PNY’s claim up to only a fraction
29

At the evidentiary hearing, PNY submitted emails related to one of the itemized
deductions in Claim 34 – a “Price Protection Chargeback” in the amount of $150,765.30. PNY
argues that Target had erroneously deducted this amount from payments to Polaroid related to
PNY business, and then Target realized the deduction was an error and subsequently paid
Polaroid this sum, which should have then been remitted to PNY.

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of this amount was not based on a determination that Target never paid $150,765.30 to
Polaroid, as PNY insinuates. Instead, the Bankruptcy Court determined that even if
Target did reverse this deduction and actually paid Polaroid $150,765.30, PNY failed to
show that Polaroid never remitted those funds to PNY. (Id. at 929-930 & n.10.) 30 Thus,
the Bankruptcy Court did not commit clear error in its fact-finding regarding the
$150,765.30 deduction. 31
Overall, the parties did not present the Court or the Bankruptcy Court with a clear
picture of exactly what transactions did or did not occur between Target, Polaroid and
PNY. PNY attributes the ambiguity to Polaroid’s failure to produce certain discovery.
But the Court concurs with the Bankruptcy Court’s conclusion that PNY had ample
opportunity to procure evidence, (id. at 936), yet instead of pursuing discovery to support
its claims, PNY withdrew its motion to compel before it had received the documents it
now argues that the Trustee should have provided. The Trustee presented evidence to the
Bankruptcy Court rebutting the majority of Claim 34; PNY does not argue that this
evidence was inadmissible under the Federal Rules of Evidence. The Bankruptcy Court,
as fact-finder, weighed the evidence and determined to allow a PNY claim of $41,923.57.
30

The Trustee put on evidence showing Polaroid made two payments to PNY in
September 2008 totaling $479,205.33, (App. at 778); the parties also agree that overall Polaroid
paid PNY more than $5 million. PNY did not prove that funds corresponding to the $150,765.30
deduction were not included in the multiple payments Polaroid made to PNY.
31

PNY also argues that the Bankruptcy Court further erred in not allowing a claim for an
additional $7,015 because PNY produced evidence from Target showing a rebate reduction for
$7,015 was incorrectly matched with a PNY invoice and should have been applied to Polaroid’s
sales. The Bankruptcy Court noted that “PNY did not link this small reversal to any of the
categories of chargebacks itemized in its proof of claim,” and also that PNY never proved that
Polaroid never “pass[ed] payment on to PNY.” (App. at 928-29.) The record supports the
Bankruptcy Court’s conclusion.

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The Bankruptcy Court reasonably determined that Dolan’s testimony was credible, and
the Court is not left with a “definite and firm conviction that a mistake has been
committed.” U.S. Gypsum Co., 333 U.S. at 395. Therefore, the Bankruptcy Court’s
factual determination of the amount of PNY’s claim was not clearly erroneous.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that the Court AFFIRMS the May 5, 2016, order of the
Bankruptcy Court.

LET JUDGMENT BE ENTERED ACCORDINGLY.

DATED: March 29, 2017
at Minneapolis, Minnesota.

____s/
____
JOHN R. TUNHEIM
Chief Judge
United States District Court

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