Affiliated Foods Midwest Cooperative, Inc. v. SuperValu Inc.

Filing 199

ORDER - In the Member Case, on or before October 5, 2018, AFM/AWG is to produce documents responsive to SuperValu's Request for Production of Document Nos. 1 and 25-29, in accordance with SuperValu's last offered compromise (Ex. A ). In the Lead Case, on or before October 5, 2018, AFM/AWG is to identify by Bates number (or some other easily identifiable manner) the 70-plus emails they assert were produced by SuperValu to both parties in the Member Case that should ha ve been produced by Borowiak; Thereafter, on or before October 19, 2018, Borowiak is to conduct a reasonable investigation into why these emails were not produced, and provide an affidavit to AFM/AWG identifying its efforts to obtain and pr ovide responsive documents and indicating whether all responsive documents have been produced after a diligent and good faith effort to locate and identify responsive materials. Borowiak shall also produce any additional responsive documents located after its search. Member Cases: 8:16-cv-00466-JFB-MDN, 8:16-cv-00465-JFB-MDN Ordered by Magistrate Judge Michael D. Nelson. (LKO)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
AFFILIATED FOODS MIDWEST
COOPERATIVE, INC., a Nebraska
corporation; and ASSOCIATED
WHOLESALE GROCERS, INC.,
Plaintiffs,

8:16CV465
MEMBER CASE

vs.
SUPERVALU INC., a Delaware corporation;

ORDER

Defendant.
BOROWIAK IGA FOODLINER, INC.,
Plaintiff,
vs.
AFFILIATED FOODS MIDWEST
COOPERATIVE, INC., and ASSOCIATED
WHOLESALE GROCERS, INC.,
Defendants,
Counterclaimants, and
Third-Party Defendants,

8:16CV466
LEAD CASE
ORDER

vs.
TREVOR BOROWIAK,
Third-Party Defendant.

This matter is before the Court following a telephone conference held on September 19,
2018, with counsel for the parties in both the Lead and Member Cases. Counsel for SuperValu
Inc., (“SuperValu”) requested the conference to resolve a discovery dispute in the Member Case,
and counsel for Affiliated Foods Midwest Cooperative, Inc. and Associated Wholesale Grocers,
Inc. (“AFM/AWG”) requested to join to the conference a separate discovery dispute in the Lead
Case with Borowiak IGA Foodliner, Inc. (“Borowiak”).

The discovery dispute between SuperValu and AFM/AWG in the Member Case was
partly addressed during a telephone conference held before the undersigned magistrate judge on
August 29, 2018. In advance of that telephone conference, the Court received by email the
following submissions related to the Member Case discovery dispute: a joint Discovery Dispute
Chart (Exhibit A), SuperValu’s letter argument dated August 27, 2018, (Exhibit B), and
AFM/AWG’s letter argument dated August 27, 2018, (Exhibit C).
The Court received the following submissions by email in advance of the September 19,
2018, telephone conference: SuperValu’s letter argument dated September 18, 2018, (Exhibit D),
Borowiak’s letter argument dated September 18, 2018, (Exhibit E), and AFM/AWG letter
argument dated September 18, 2018, (Exhibit F).
During the telephone conference, all parties agreed that the Court may enter rulings on
the discovery disputes raised in the above documents without formal motion practice, with the
exception that AFM/AWG objects to Court resolution of the issues raised in Borowiak’s letter
(Exhibit E) because they have not yet met and conferred on those issues.

Member Case Dispute
SuperValu generally requests that AFM/AWG produce financial information regarding
their actual profits and Board of Director meeting documents related to Borowiak, SuperValu, or
the AWG/AFM merger. SuperValu’s Requests for Production Nos. 25-29 seek documents that
SuperValu assert are relevant to assess AFM/AWG’s claim for lost profit damages calculated as
far as ten years into the future resulting from SuperValu’s alleged tortious interference. (Ex. B at
p. 2). SuperValu has agreed to limit these requests to the following documents:
(1) Documents sufficient to show AFM/AWG total sales revenue on wholesale grocery
supply contracts by year, January 1, 2013 to date;
(2) Documents sufficient to show AFM/AWG’s total cost of goods sold and direct and/or
allocated costs on wholesale grocery supply contracts by year, January 1, 2013 to date,
(3) Documents sufficient to show AFM/AWG’s average profits on wholesale grocery
supply contracts by year, January 1, 2013, to date;
(4) AFM/AWG’s financial statements – audited, reviewed or compiled by a public
accounting firm, January 1, 2013 to date; and
(5) AFM/AWG’s budgets, forecasts or projections relating to Borowiak’s stores.
AFM/AWG primarily objects to producing profit information and financial statements
from 2013 and 2014. (Ex. C).

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Upon consideration of the matter, the Court will grant SuperValu’s request and order
AFM/AWG to search for and produce all documents responsive to SuperValu’s compromised
document requests set forth above.

AFM/AWG allege that SuperValu began tortiously

interfering with Borowiak IGA and AFM/AWG’s relationship in July 2016. (Filing No. 54 at
pp. 7-8 in the Member Case). According to SuperValu, AFM/AWG seek lost profit damages up
to ten years into the future. Under Nebraska law, “[A] claim for lost profits must be supported
by some financial data which permit an estimate of the actual loss to be made with reasonable
certitude and exactness.” Racicky v. Farmland Indus., Inc., 328 F.3d 389, 397 (8th Cir.
2003)(quoting World Radio Labs., Inc. v. Coopers & Lybrand, 557 N.W.2d 1, 13 (Neb.
1996)(citations omitted)). “[T]he key to establishing lost profits is the establishment of a course
of business activity through business records.” Racicky, 328 F.3d at 397 (quoting Triple R
Indus., Inc. v. Century Lubricating Oils, Inc., 912 F.2d 234, 238 (8th Cir. 1990)). SuperValu’s
request for AFM/AWG’s historical financial statements and financial data for three years prior to
when SuperValu began its alleged tortious interference is clearly relevant to SuperValu’s defense
to AFM/AWG’s claims for future damages, and such request is relevant and proportional to the
needs of the case. See Fed. R. Civ. P. 26(b)(1).
SuperValu’s Request for Production No. 1 asked AFM/AWG to produce, “For the period
January 1, 2015 to present, all documents, including without limitation agendas, packets,
minutes, notes, or presentations, relating to any meeting(s) of the Board of Directors of AFM
and/or AWG, or any committees of the Board of Directors of AFM and/or AWG; and (a)
Borowiak IGA and its stores; (b) SUPERVALU; or (c) a potential or actual merger or acquisition
transaction involving AFM.” AFM/AWG objected to this request as confusing and unintelligible
as written. (Ex. B, Ex. C). During the parties’ meet and confer on August 23, 2018, SuperValu
clarified that this request generally “seeks board minutes of AFM or AWG related to Borowiak,
Supervalu, or a merger transaction with AFM” and also referred AFM/AWG to the Discovery
Dispute Chart (Ex. A), wherein Supervalu clarified that Request No. 1 “seeks documents relating
to board or board committee meetings of AFM and/or AWG; and which relate to one or more of
the following topics: (a) Borowiak IGA and its stores; (b) SUPERVALU; (c) a potential or actual
merger or acquisition transaction involving AFM.” (Ex. A at pp. 7-8). SuperValu asserts such
documents are relevant to show “The importance of Borowiak to the AWG transaction and
whether AFM and AWG knew that they would have to get Borowiak and other retailers to sign
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new agreements before they would supply them with groceries.” AFM/AWG has still not
responded to Request No. 1, and as of the September 19, 2018, telephone conference, could not
say whether they would be objecting to the revised request.
Upon consideration, the Court will grant SuperValu’s request and order AFM/AWG to
search for and produce documents responsive to revised Request No. 1, without objections.
SuperValu first served AFM/AWG with Request No. 1 two months ago. Though AFM/AWG’s
assertion that such request was so categorically unintelligible that it could not provide any
response is somewhat dubious, the Court nevertheless initially instructed the parties to meet and
confer to reach some compromise. SuperValu’s revised request is clear and seeks documents
relevant to AFM/AWG’s claims and SuperValu’s defenses. Accordingly, AFM/AWG shall
search for and produce documents responsive to SuperValu’s revised Request No. 1.
Finally, for clarification, SuperValu’s requests for production are directed to both
plaintiffs, which include AFM and AWG. AFM/AWG are represented by the same counsel and
have the same interests in this action, and thus any objection that SuperValu did not properly
request or is not entitled to documents from AFM is overruled.

Lead Case Disputes
The primary dispute in the Lead Case pertains to AFM/AWG’s allegation that Borowiak
has either willfully not produced or destroyed/deleted relevant emails. AFM/AWG bases this
claim on SuperValu’s production of over 70 emails to or from Trevor Borowiak in the Member
Case that Borowiak did not produce in the Lead Case. AFM/AWG asks the Court to require
Borowiak to either produce all responsive documents it has not yet produced or provide an
affidavit from Borowiak detailing when and how this large cache of responsive documents was
deleted. (Ex. F). During the September 19, 2018, telephone conference, Borowiak stated it has
been willing to investigate and conduct a further inquiry with Mr. Borowiak as to why the emails
were not produced, but AFM/AWG has not identified which documents they are referring to.
Rule 34(a) contemplates production of responsive materials, within the scope of Rule
26(b), which are in the possession, custody or control of the responding party. “[D]ocuments are
deemed to be within the ‘possession, custody or control’ for purposes of Rule 34 if the party has
actual possession, custody or control, or has the legal right to obtain the documents on demand.”
Healthcare Mgmt. Sols., Inc. v. Hartle, No. 8:07CV05, 2007 WL 1726585, at *3 (D. Neb. June
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13, 2007). “All parties are entitled reasonable access to ‘all evidence bearing on the controversy
between them, including that in control of adverse parties. This, of course, requires the absolute
honesty of each party in answering discovery requests and complying with discovery orders.’”
Wagner v. Dryvit Sys., Inc., 208 F.R.D. 606, 609 (D. Neb. 2001) (quoting Litton Sys., Inc. v. Am.
Tel. & Tel. Co., 91 F.R.D. 574, 576 (S.D. N.Y. 1981)).
After consideration of the arguments made by the parties during the telephone
conference, AFM/AWG is to identify by Bates number (or some other easily identifiable
manner) the 70-plus emails they assert were produced by SuperValu to both parties in the
Member Case that should have been produced by Borowiak. Thereafter, Borowiak is to conduct
a reasonable investigation into why these emails were not produced, and provide an affidavit
identifying its efforts to obtain and provide responsive documents and indicating whether all
responsive documents have been produced after a diligent and good faith effort to locate and
identify responsive materials. Borowiak is to produce any additional responsive documents
located after its search.
AFM/AWG objects to Court resolution of Borowiak’s issues in its letter to the Court at
Exhibit E. The Court will not order AFM/AWG to do so, but for purposes of the parties’ meet
and confer, the Court notes that, at this time, Borowiak has made a colorable argument that
AFM/AWG should provide all the documents identified in Borowiak’s letter at Exhibit E.

IT IS ORDERED:
1.

In the Member Case, on or before October 5, 2018, AFM/AWG is to produce
documents responsive to SuperValu’s Request for Production of Document Nos. 1
and 25-29, in accordance with SuperValu’s last offered compromise (Ex. A);

2.

In the Lead Case, on or before October 5, 2018, AFM/AWG is to identify by Bates
number (or some other easily identifiable manner) the 70-plus emails they assert
were produced by SuperValu to both parties in the Member Case that should have
been produced by Borowiak; Thereafter, on or before October 19, 2018, Borowiak
is to conduct a reasonable investigation into why these emails were not produced,
and provide an affidavit to AFM/AWG identifying its efforts to obtain and provide
responsive documents and indicating whether all responsive documents have been
produced after a diligent and good faith effort to locate and identify responsive
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materials. Borowiak shall also produce any additional responsive documents located
after its search.
Dated this 21st day of September, 2018.
BY THE COURT:
s/ Michael D. Nelson
United States Magistrate Judge

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