US Polymers-Accurez, LLC v. Kane International Corporation et al

Filing 188

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Kane International Corp.'s Motion to Compel US Polymers-Acc urez, LLC's Production of Financial Documents (ECF No. 174 ) is GRANTED, in part. USP A shall produce the requested documents, dating back 10 years from the date of this Order, no later than June 20, 2019. Signed by District Judge Ronnie L. White on 06/11/2019. (KCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
US POL YMERS-ACCUREZ, LLC,
Plaintiff,
v.
KANE INTERNATIONAL CORP. et al.,
Defendants.

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No. 4:17-CV-2371 RLW

MEMORANDUM AND ORDER
This matter is before the Court on Kane International Corp.' s Motion to Compel US
Polymers-Accurez, LLC's Production of Financial Documents (ECF No. 174). 1 This matter is
fully briefed and ready for disposition.

LEGAL STANDARD
Rule 37 of the Federal Rules of Civil Procedure governs motions to compel discovery.
See Fed. R. Civ. P. 37 (a)(l) ("On notice to other parties and all affected persons, a party may

move for an order compelling disclosure or discovery."). Likewise, Rule 26 governs the scope
of discovery in federal matters:
Unless otherwise limited by court order, the scope of discovery is as follows: Parties may
obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or
defense and proportional to the needs of the case, considering the importance of the issues at
stake in the action, the amount in controversy, the parties' relative access to relevant
information, the parties' resources, the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery outweighs its likely benefit.
Information within this scope of discovery need not be admissible in evidence to be
discoverable.
Fed.R.Civ.P. 26(b)(l).

1

The Court previously provided a "Background" of this case in its September 19, 2018
Memorandum and Order (ECF No. 82) and does not repeat that information here. The Court
refers to Kane International Corp. as "Kane" and US Polymers-Accurez, LLC as "USPA".

DISCUSSION
I. Kane's Motion to Compel against USPA
Kane seeks USP A to produce:
(a) Balance sheets,
(b) Cash flow statements,
(c) Income statements,
(d) Profit and loss statements,
(e) General ledgers,
(f) Pro forma financial statements,

(g) Audited financial statements,
(h) Unaudited financial statements,
(i) Compiled financial statements,
(j) Internal financial statements,

(k) Valuations,
(1) Quality of earnings reports,

(m)Sales by customer and product,
(n) And other financial documents and analyses, to the extent that the same exist for the
years 1997 to the present.
USP A claims that this request is overbroad and unduly burdensome. In particular, USP A
notes that Kane seeks documents dating from 1995, even though it only alleges damages from
January 2017. (ECF No. 180 at 2). USPA asserts that it has produced financial records related
to the ink resins sold. Having these records, Kane should be able to perform a lost profits

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analysis. (ECF No. 180 at 4).

USPA asserts that Kane has never identified a "specific list" of

documents needed to perform its analysis needed for an effective mediation. USP A argues that,
from the documents already produced, "Kane can determine: (1) USPA's lost gross revenue and
gross profits on the sale of products 7890 and 2085 (the two ink resins USPA alleges Kane
misappropriated); (2) USPA's lost gross revenue from the raw material pricing and pricing
manipulation Kane induced by illegal payments to USPA employees; and (3) importantly,
Kane's own alleged lost profits from January 2017 to the present." (ECF No. 180 at 8).
Kane responds that the purported financial documents produced by USP A are not as
USP A alleges they are. Rather, Kane states that the only "financial record" produced was a 900
page PDF document (sorted in a manner that rendered it useless) and a list of sales since May
2017 (which lacks crucial information). (ECF No. 183 at 4). Kane further notes that USPA
asserts $30 Million in damages for actual loss caused by the misappropriation of USP A's trade
secrets, as well as actual and consequential damages caused by the employees' alleged breach of
fiduciary duty in an amount to be proven at trial. (ECF No. 183 at 4 (citing Complaint, ECF No.
1)). Kane asserts USP A has put its financial condition at issue with its damages claim, and Kane
should be afforded discovery related to USP A's benefits from USP A's breach of its non-compete
agreement and misappropriation of Kane's trade secrets. (ECF NO. 183 at 4).
The Court agrees that USP A has put its financial condition at issue based upon its claim
that it lost money due to Kane's misappropriation of trade secrets. CitiMortgage, Inc. v. Allied

Mortg. Grp., Inc., No. 4:10CV01863 JAR, 2012 WL 1554908, at *3 (E.D. Mo. May 1, 2012)
("The Court also finds that Allied's financial condition is relevant to its affirmative defenses.").
The Court, however, agrees that discovery requests seeking documents dating back from 1995

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are overbroad and unduly burdensome. Accordingly, the Court orders USPA to produce the
requested documents, dating back 10 years from the date of this Order.
IT IS HEREBY ORDERED that Kane International Corp.'s Motion to Compel US

Polymers-Accurez, LLC's Production of Financial Documents (ECF No. 174) is GRANTED, in
part. USP A shall produce the requested documents, dating back 10 years from the date of this
Order, no later than June 20, 2019.

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Dated this 11th day of June, 2019.

RONNIE L. WHITE
UNITED STATES DISTRICT JUDGE

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