NL Enterprises, LLC v. United Pacific Pet, LLC
Filing
106
ORDER on Parties' discovery disputes. Ordered by Magistrate Judge Cheryl R. Zwart. (Zwart, Cheryl)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
NL ENTERPRISES, LLC,
Plaintiff,
4:15CV3163
vs.
ORDER
UNITED PACIFIC PET, LLC,
Defendant.
For the reasons stated on the record, (Filing No. 104), UP’s objections to NL’s
discovery (as outlined in the attached chart), are overruled in part and sustained in part as
follows:
1)
As to Production Request 24 and 40, and Interrogatory No. 21, the parties
have reached a stipulation and no further assistance is needed from the
court.
2)
As to remaining discovery disputes outlined by the parties, for the
timeframe beginning in 2013 and to present, United Pacific Pet (UP) shall:
a. Produce its quarterly financial statements;
b. Investigate whether any documents exist which will aid in determining
the cost of goods sold; direct costs; overhead costs; and indirect costs
associated with UP’s sale of NL products specifically. If such
documents exist, they must be promptly produced. If they do not exist,
UP shall provide a statement, signed under oath, stating that such
documents do not exist.
c. Produce all documents underlying UP’s determination of its gross profit
margin and net profit margin for the sale of NL products, including all
documents underlying UP’s 24.5% profit margin calculation, along with
any other documents useful in determining its profit margins for the sale
of NL products, including documents reflecting purchases and sales of
NL products, and the sales and overhead costs incurred and specifically
attributable to the sale of NL products.
d. Provide an interrogatory response, signed under oath by UP, explaining
the methodology used by UP to track profit margins for the sale of its
products in general, and if a different method was used for NL product
sales, a description of the method used as to NL products specifically.
e. To the extent not already disclosed, produce UP’s monthly sales reports
for NL products for the time period from 2013 to present.
f. For each pet food manufacturer or other individual or business that UP
has begun a distribution relationship with since November 25, 2015,
identify (broken down by month) the amount of product UP has
ordered/purchased since November 25, 2015.
All documents
produced in response to this subparagraph 2(f) shall be disclosed to
only counsel and the parties’ specially retained expert witnesses
until such time as the court both: i) determines that failure to mitigate
can be raised as a defense to a claim for breach of an exclusive
distributorship contract, and ii) enters an order specifically permitting
disclosure to NL itself.
g. Produce all documents reflecting the projection of sales, forecasts, or
estimations of all of UP’s proposed purchases and/or sales of Nature’s
Logic products.
September 16, 2016.
BY THE COURT:
s/ Cheryl R. Zwart
United States Magistrate Judge
2
Moving Party:
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
NL Enterprises, LLC v. United Pacific Pet, LLC, Case No. 4:15-cv-03163-JMG-CRZ
To assist the Court in more efficiently addressing the parties’ discovery dispute(s), the parties shall meet and confer, and jointly
complete the following chart. The purpose of this chart is to succinctly state each party’s position and the last compromise offered
when the parties met and conferred. The fully completed chart shall be e-mailed to chambers at zwart@ned.uscourts.gov.
The moving party is:
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
The responding party is:
Defendant/Counterclaimant United Pacific Pet, LLC
Note: If discovery from both parties is at issue, provide a separate sheet for each moving party.
Discovery Request at
Issue
First RFPD No. 18
“Each of your financial
statements (including all
supporting work papers) for
the years 2011-2015.”
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Defendant objected that the
Request was "overly broad,
unduly burdensome and
sought production of
documents not relevant to
any parties' claim or
defense and which were
unlikely to lead to
discoverable information."
Defendant also objected on
the grounds that it sought
confidential and proprietary
commercial information.
Counsel for UPP indicated on
8/3/16, that it would produce
“financial information.”
Counsel for NL prior to seeing
any of the documents
referenced by counsel UPP,
indicated that it would review
the documentation to be
produced, but without having
seen the “financial
information” to be provided,
could not have, and did not,
agree that such information
would be sufficient. The
documents received on
8/24/2016 – the first time NL
counsel saw what “financial
information” was going to be
produced – was a two page of
The documents provided to
Plaintiff allowed it to
determine the Company's
financial condition and
profitability prior to the alleged
breach of contract. UPP
001236 and UPP 001237 sets
forth YTD income for 2015
including gross sales, net
sales, cost of goods sold,
gross profit, overhead, etc.
On 8/3/16, counsel agreed
to accept financial
statements prior to the
alleged breach of contract
sufficiently detailed to
1
Moving Party:
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
First RFPD No. 19
“Your latest financial
statement (including copies
of all supporting work
papers) prepared in 2016.”
Relevant to
prove...
UPP’s claimed
damages / lost
profits
Moving Party’s
Initial Position
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Responding Party’s Initial
Position
Moving Party’s Last Offered
Compromise
demonstrate UPP's
financial condition and
profitability. These
documents were produced
as UPP 001236 - UPP
001237.
Discovery Request at
Issue
summary financial information
(for the years 2014-2015
only), contains no supporting
documentation, which is
required by NL’s expert in
order to calculate UPP’s lost
profits.
Defendant objected that the See last offered compromise
Request was "overly broad, to First RFPD 18.
unduly burdensome and
sought production of
documents not relevant to
any parties' claim or
defense and which were
unlikely to lead to
discoverable information."
Defendant also objected on
the grounds that it sought
confidential and proprietary
commercial information.
See Response to RFPD
No. 18. UPP produced
UPP 00001238 through
UPP 001239.
2
Responding Party’s Last
Offered Compromise
The documents produced
(UPP 001238-UPP 001239)
permit the Plaintiff to
determine the profitability of
the Company and its financial
condition based upon its most
recent financial statement
(June, 2016). The documents
detail gross sales, net sales,
cost of sales, gross profit,
overhead, operating income,
net income, etc.
Moving Party:
Discovery Request at
Issue
First RFPD No. 20
“Your monthly financial
statements for January
2016-present.”
Relevant to
prove...
Moving Party’s
Initial Position
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Responding Party’s Initial
Position
Moving Party’s Last Offered
Compromise
See Response to RFPD
No. 18. UPP produced
documents demonstrating
its financial condition post
alleged breach.
See last offered compromise
to First RFPD 18.
3
Responding Party’s Last
Offered Compromise
The produced financial
information (UPP 0012381239) for June, 2016 show
financial condition and
profitability through June,
2016. UPP will update said
statements to present.
Moving Party:
Discovery Request at
Issue
First RFPD No. 23
“Your electronic ledger with
transaction detail for
January 1, 2011 – present.”
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Defendant objected that the
Request was "overbroad,
unduly burdensome, not
reasonably limited in time
or scope, and sought the
production of documents
not relevant to any parties'
claim or defense and which
were unlikely to lead to
discoverable information."
Moreover, the information
sought trade secret and
other confidential and
proprietary information.
On 8/3/16 counsel agreed
to withdraw RFPD No. 23 if
it was provided with the
documents demonstrating
UPP's financial condition
and profitability before and
after the alleged breach of
contract, which were
produced.
4
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
NL did not agree to withdraw the
request, because it had not seen
what documents UPP was going
to produce. UPP’s counsel
represented that the information
would be contained in the
“financial information” to be
provided by UPP. Upon receipt
The Defendant's electronic
ledger is merely being
requested to harass the
Plaintiff. Each check, credit,
debit, etc., since January 1,
2011, which have no
relationship to this litigation or
to the Plaintiff, is clearly an
inappropriate request. The
financial statements produced
prior to January 1, 2016 and
thereafter demonstrate the
Company's profitability and
financial condition (UPP
001236-UPP 001239).
of the “financial information”
on 8/24/2016 – the first time
NL counsel saw what
“financial information” was
going to be produced - it was
discovered that the requested
information was not included in
the four pages produced.
Moving Party:
Discovery Request at
Issue
First ROGs No. 18
“Provide complete detail
(including methodology of
determination), for each
year from 2013-2015, for all
costs (both fixed and
variable) associated with
distributing Plaintiff’s
products, including, but not
limited to:
(a) Cost of goods sold;
(b) Direct costs;
(c) Overhead costs; and
(d) Indirect costs.
First RFPD No. 21
“Each of your monthly sales
reports, broken out by
product line, for January
2012-present.”
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Counsel agreed on 8/3/16
that documents provided in
Response to RFPD's 18,
19, 20 would suffice to
answer this Interrogatory.
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
UPP continues to object as
such information is unduly
burdensome given its
limited probative value and
is confidential and
proprietary. NL has no
need to know sales reports
for non-NL product lines.
UPP’s claimed
damages / lost
profits
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
UPP’s counsel represented on
8/3/16 that the information would
be contained in the financial
documents to be provided by
UPP. Upon receipt of the
This information is contained
in UPP 001236-UPP 001239.
“financial information” on
8/24/2016 – the first time NL
counsel saw what “financial
information” was going to be
produced - it was discovered
that the requested information
was not included in the four
pages produced.
5
This information is necessary
in order for NL’s expert to
calculate lost profits. The few
documents provided by UPP
show that UPP’s net profit
margin is less than 1% of its
cost-of-goods sold. However,
UPP’s expert has asserted a
profit margin of 24%, and NL’s
expert needs to compare the
profit margin by product to
determine how UPP’s expert
reached his conclusions,
since his report does not
indicate how that was done.
UPP sends monthly reports to
Reports for non-NL product
lines relate to NL as a
competitor and would be to
the competitive disadvantage
of the companies with which
NL competes. Profit margin
are not set forth on the sales
reports. The designation of
such information is currently
being challenged by Plaintiff
as they wish to show this type
of information, including
Schedule A of the Expert
Report to their clients, even
though it contains information
unrelated to NL product lines.
Moving Party:
Discovery Request at
Issue
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
its manufacturers, so the
information should be readily
available and not unduly
burdensome.
Further, the Court’s Amended
Protective Order is in place to
protect confidential and
proprietary information.
First RFPD No. 22
“Each of your monthly
financial projections, broken
out by product line, for May
2016 – December 31,
2016.”
First RFPD No. 24
“Each of your monthly sales
reports involving Nature’s
Logic products (including
the locations where the
products were sold.”
UPP’s claimed
damages / lost
profits
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
UPP continues to object as
such information is unduly
burdensome given its
limited probative value and
is confidential and
proprietary. NL has no
need for UPP's financial
projections for non-NL
product lines.
See last offered compromise
to First RFPD No. 21.
NL has no need for UPP's
financial projections for nonNL product lines. The Expert
Report projects sales of nonNL product line based upon
past performance.
Monthly sales reports were
provided by UPP to NL and
is in NL's possession. NL
is aware of the amount of
product purchased by UPP.
NL only has in its possession
those sales reports that were
actually provided to it in the
course of its business by UPP
from 2012 to March 2016. No
responsive documents have
been produced in discovery.
UPP will stipulate that if the
sales reports, if provided to
NL, during the period of the
Distribution Contract were
accurate and no additional
different monthly sales reports
will be offered by UPP.
If UPP is willing to stipulate
6
Moving Party:
Discovery Request at
Issue
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
necessary to
calculation of lost
profits.
First RFPD No. 25
“Each document which in
any way reflects profits you
have made on the sale of
Nature’s Logic products.”
UPP’s claimed
damages / lost
profits
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
that the sales reports provided
by UPP to NL during that
period are true, correct,
accurate, and that no
additional or different reports
will be offered or used by UPP
in this litigation, NL agrees
limit this request to UPP’s
sales reports from May 2016
to present which have not
been provided
by UPP and which UPP has
directly put at issue in its
preliminary injunction briefing.
UPP objected that the
Request was "overly broad,
unduly burdensome, not
reasonably limited in time
or scope" and said
documents constituted
trade secret or are
commercially confidential
and proprietary. Moreover,
the Defendant is unable to
ascertain what is meant by
the phrase "reflects profits."
Counsel agreed on 8/3/16
that if documents were
produced as to overall
7
NL did not agree to withdraw the
request, because it had not seen
what documents UPP was going
to produce. UPP’s counsel
represented that the information
would be contained in the
financial documents to be
provided by UPP. Upon receipt
of the “financial information”
on 8/24/2016 – the first time
NL counsel saw what
“financial information” was
going to be produced - it was
discovered that the requested
information was not included in
the four pages produced.
Any document which "reflects"
profits made on the sale of
Nature's Logic products may
involve every single piece of
correspondence, sales
reports, orders, returns, and is
simply not reasonably
calculated to find discoverable
information.
Further, the Expert Report
states exactly how the expert
witness reached his
conclusions. Moreover, the
expert's deposition is
scheduled for September 22,
Moving Party:
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Relevant to
prove...
Moving Party’s
Initial Position
Responding Party’s Initial
Position
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
profitability in addition to
UPP 000300-000435, no
further documents were
required.
Discovery Request at
Issue
This information is necessary
in order for NL’s expert to
calculate lost profits. The few
documents provided by UPP
appear to show that UPP’s net
profit margin is less than 1%
of its cost-of-goods sold.
However, UPP’s expert has
asserted a profit margin of
24%, and NL’s expert needs
to compare the profit margin
by product to determine how
UPP’s expert reached his
conclusions, since his report
does not indicate how that
was done. UPP sends
monthly reports to its
manufacturers, so the
information should be readily
available and not unduly
burdensome.
2016 and Plaintiff's counsel
may ask him to clarify his
methodology and the
documents relied upon for his
conclusions as set forth in his
report.
Further, the Court’s Amended
Protective Order is in place to
protect confidential and
proprietary information.
First RFPD No. 40
“Each document reflecting
any order(s) placed by
UPP’s request
for preliminary
injunction and
assertion of
Please update
response with
current
information
UPP produced documents
UPP 001071 through UPP
001074
8
UPP 001071 – 001074 only
includes purported lost sales
through 5/28/2016. UPP has
alleged that preliminary
UPP will agree to update
current information to
demonstrate lost sales
through the present on
Moving Party:
Discovery Request at
Issue
Relevant to
prove...
retailers/customer, or other
accounts, of Nature’s Logic
products from January 2012
to present that you were
unable to fill.”
irreparable and
immediate
harm
through present
First ROGs No. 7
UPP’s
mitigation of
damages
UPP agreed to
produce
responsive
documents upon
entry of protective
order, which has
now been
entered.
Withdraw
objections and
“For each [pet food
manufacturer or other
individual or business that
you have begun a
distribution relationship with
since November 25, 2015],
identify (broken down by
month) the amount of
product you have
ordered/purchased since
November 25, 2015.”
First ROGs No. 10
UPP’s claimed
damages / lost
Moving Party’s
Initial Position
Responding Party’s Initial
Position
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
injunctive relief is necessary
due to immediate, irreparable
harm in the form of lost sales
that is purportedly still
occurring. UPP has an
ongoing obligation to
supplement its discovery
responses as additional
responsive material is
obtained. We are merely
asking that they do so at this
time in light of their recent
representations of ongoing
and immediate harm.
Nature's Logic products.
UPP continues to object to
said Interrogatory as
overbroad and unduly
burdensome. Moreover,
there is no relationship
between the information
sought in Interrogatory No.
7 and the injury suffered by
NL's breach of contract.
UPP agreed to produce
responsive documents upon
entry of protective order,
which has now been entered.
UPP has identified all of its
product lines to Plaintiff.
Mitigation does not apply in a
breach of an exclusive
distributorship case. The
damages caused by the
breach of the NL Contract are
not offset by other business
after the breach.
This Interrogatory is not a
RFPD and is inappropriate
Withdraw objections and
provide responsive answer.
9
NL has raised the defense of
failure to mitigate in response
to UPP’s claims. UPP’s ability
to devote efforts to other pet
food lines and generate sales
for those lines are directly
related and relevant to UPP’s
mitigation efforts.
The Expert Report sets forth
the manner in which the
Moving Party:
Discovery Request at
Issue
Relevant to
prove...
Moving Party’s
Initial Position
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Responding Party’s Initial
Position
Moving Party’s Last Offered
Compromise
“Identify and describe in
profits
detail any projections,
forecasts, or estimations of
all of your proposed
purchases of and/or sales of
Nature’s Logic products.”
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
calculation of lost
profits.
and unduly burdensome.
The information is relevant
and necessary to calculation
of UPP’s claimed lost profits.
First ROGs No. 21
Withdraw
objections and
produce all
responsive
documents
because
requested
documents are
relevant and
necessary to
UPP will produce
documents relative to the
loss of customers as a
result of the alleged breach
of the contract.
If UPP will stipulate that
“documents relative to” means
all documents sought in the
interrogatory and not merely
some selected documents
that are responsive, NL
agrees to accept UPP’s initial
position.
Responding Party’s Last
Offered Compromise
“Provide detailed financial
information (including, but
not limited to, sales,
expenses, profits, etc.) for
all retailers/customers lost
as a result of the
termination of the
Distribution Contract with
UPP’s claimed
damages / lost
profits, as well
as UPP’s
request for
preliminary
injunction and
assertion of
irreparable and
immediate
10
expert calculated future
sales/purchases. The report
sets forth the manner in which
all calculations were
UPP’s expert has purportedly performed to determine the
damages allegedly suffered
based his calculation of lost
by UPP. The expert witness'
profits upon some unknown
and unexplained method of
deposition is scheduled for
“linear regression” to estimate September 22, 2016 and he
future sales/purchases. NL is can be asked the manner in
which he performed the linear
entitled to know whether or
not there were any actual
regression and other
calculations based on
projections, forecasts, or
estimations made by UPP
projections and future
prior to litigation concerning its forecasts of product sales.
purchases and/or sales, so
that the actual projections
made by UPP can be
compared to the estimations
of its expert.
UPP will produce documents
relative to the loss of
California Pet as a client due
to the alleged breach of
contract by NL Enterprises.
Moving Party:
Discovery Request at
Issue
Plaintiff for the period:
(a) January 1, 2011 –
December 2015, by year;
and
(b) November, 2015 –
present.”
Relevant to
prove...
harm
Moving Party’s
Initial Position
Responding Party’s Initial
Position
calculation of lost
profits and claim
of immediate
irreparable harm.
The above table outlines the Parties’ written discovery disputes.
Counsel for [Plaintiff]:
s/Jason Smith
Counsel for [Defendant]:
s/Patrick Barrett
11
Plaintiff/Counterclaim Defendant NL Enterprises, LLC
Moving Party’s Last Offered
Compromise
Responding Party’s Last
Offered Compromise
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?