Nature's Plus Nordic A/S et al v. Natual Organics, Inc. et al
ORDER denying 101 Motion for Discovery. For the reasons set forth in the ATTACHED ORDER, Plaintiffs' motion to compel is DENIED. The parties are directed to participate in a telephone conference on May 25, 2012 at 3:30 p.m. Plaintiffs counsel is directed to initiate the call to Chambers. Ordered by Magistrate Judge A. Kathleen Tomlinson on 4/30/2012. (Spatola, Richard)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
NATURE’S PLUS NORDIC A/S and
- against CV 09-4256 (ADS) (AKT)
NATURAL ORGANICS, INC., HOUSE OF
NATURE A/S, HANS KARE LUNDESTAD,
and ORGANIC HOUSE A/S,
A. KATHLEEN TOMLINSON, Magistrate Judge:
Nature’s Plus Nordic A/S and Dermagruppen A/S (collectively,“Plaintiffs”) move this
Court for an Order compelling the deposition of Gerald Kessler (“Kessler”), owner and CEO of
Defendant Natural Organics, Inc. (“Natural Organics”) and a non-party manufacturing company
named Global Health Laboratories (“Global Health”). See DE 101. It is the Plaintiffs’ position
that Kessler can provide testimony that other Natural Organics witnesses have been unable to
provide. For the reasons set forth below, Plaintiffs’ motion to compel is DENIED.
On October 2, 2009, Plaintiffs filed this action alleging breach of contract and other
related claims arising out of a sole distribution agreement (“Agreement”) between Plaintiffs and
Natural Organics. On January 26, 2011, Judge Spatt granted Plaintiffs’ motion to amend the
complaint to add Organic House A/S as a Defendant. Plaintiffs filed the Amended Complaint
that same day. According to the Amended Complaint, Nature’s Plus Nordic is a distributor of
skin care, makeup, and health supplements in the Nordic region while Natural Organics is a
manufacturer and supplier of health supplement products sold under various trade names,
including “Nature’s Plus.” Am. Compl. ¶¶ 15, 17. Pursuant to the Agreement, Plaintiffs were to
serve as the exclusive distributor for “Nature’s Plus” products in Norway, Sweden, Denmark and
Finland, effective January 1, 2008, for at least the initial term of ten years. Id. ¶ 19. However,
Plaintiffs allege that on August 6, 2009, Natural Organics terminated the Agreement on the basis
that Plaintiffs failed to meet the minimum sales requirement of $600,000 for the 2008 contract
year. Id. ¶¶ 58-61. The Agreement stated that Natural Organics appointed Plaintiffs to be “its’
sole distributor for Nature’s Plus products (‘Products’)” and that in order for Plaintiffs “to
maintain the sole distributorship for the Products, [Plaintiffs] agree that it will purchase and pay
for Products from [Natural Organics] as follows . . . .” Id., Ex. 1.
On February 9, 2011, Natural Organics filed its Answer to the Amended Complaint and
asserted counterclaims against the Plaintiffs. See DE 61. One such counterclaim arises from
Natural Organics’ contention that Plaintiffs materially breached the Agreement by, inter alia,
failing to satisfy the minimum purchase requirements of the Agreement. Id. ¶ 275.
The Federal Rules of Civil Procedure makes it abundantly clear that the scope of
discovery in civil litigation is quite broad. Indeed, Rule 23 not only allows a party to obtain
discovery on “any nonprivileged matter that is relevant to any party’s claim or defense,” but also
allows a court, for good cause, to “order discovery of any matter relevant to the subject matter
involved in the action.” Fed. R. Civ. P. 23(b)(1). Consistent with this general rule, courts have
determined that even high-ranking corporate officers do not provide an exception, even where a
party asserts that the officer lacks knowledge of the issues present in the litigaiton. See Consol.
Rail Corp. v. Primary Indus. Corp., No. 92 Civ. 4927, 1993 WL 364471, at *1 (S.D.N.Y. Sept.
10, 1993) (“Highly-placed executives are not immune from discovery. . . . [A] claim that the
witness lacks knowledge is subject to testing by the examining party.”).
However, “permitting unfettered discovery of corporate executives would threaten
disruption of their business and could serve as a potent tool for harassment in litigation.” Id.
Therefore, when it comes to deposing a high-ranking officer, courts have concluded that
“[u]nless it can be demonstrated that a corporate official has ‘some unique knowledge’ of the
issues in the case, ‘it may be appropriate to preclude a[ ] deposition of a highly-placed executive’
while allowing other witnesses with the same knowledge to be questioned.” Retail Brand
Alliance, Inc. v. Factory Mut. Ins. Co., No. 05 Civ. 1031, 2008 WL 622810, at *5 (S.D.N.Y.
Mar. 7, 2008) (quoting Consol. Rail Corp., 1993 WL 364471, at *1); see also Harris v.
Computer Assocs. Int’l, Inc., 204 F.R.D. 44, 46 (E.D.N.Y. 2001) (“Depositions of high level
corporate executives may be duplicative, cumulative and burdensome where the person sought to
be deposed has no personal knowledge of the events in dispute.”).
Generally speaking, Plaintiffs proffer two reasons why the Court should compel the
deposition of Kessler. First, Plaintiffs argue that as the CEO of Natural Organics, they are
entitled to inquire as to what Kessler knows about the contract in dispute. This argument,
however, is legally unsupported. Simply being the CEO of Natural Organics does not, by itself,
open the door to Kessler’s deposition. Instead, the Plaintiffs must demonstrate that Kessler has
“some unique knowledge” regarding the Agreement at issue. This, unfortunately, Plaintiffs fail
to do. Kessler submitted to the Court a declaration setting forth his lack of knowledge of this
lawsuit or anything else related to the Agreement.1 See Decl. of Gerald Kessler (“Kessler Decl.”)
¶¶ 1-3. The testimony of Natural Organics’ Rule 30(b)(6) witness, James Gibbons, supports
Kessler’s declaration. Gibbons testified that Kessler was primarily involved with domestic sales
and was not part of the group of individuals who decided to terminate the Agreement. See Decl.
of Christopher R. Kinkade (“Kinkade Decl.”), Ex. A (“Gibbons Dep.”) at 67, 188. Plaintiffs, on
the other hand, do not come forward with any evidence that Kessler possesses any unique
knowledge regarding the Agreement to which other lower level employees of Natural Organics
could not adequately testify. Nor do the Plaintiffs provide an affidavit or declaration from any
employee or representative of Nature’s Plus Nordic or Dermagruppen detailing any
communications or interactions with Kessler regarding the Agreement or any other matter. In
For example, Kessler states the following:
I have not had any dealings or discussions with either of the plaintiffs
named in the above caption or any other party to this lawsuit or any
of their representatives. Nor have I had any discussions or
communications with Natural Organics personnel about any dealings
with either of the plaintiffs, the other parties or anyone affiliated with
them. I have not negotiated, reviewed, executed, or otherwise been
involved in any way with any agreements between Natural Organics
and any other party to this lawsuit or any distributor of any of its
products in any of the Scandinavian countries. I have not been
involved in any communications with anyone as may concern any
aspect of this case. I do not know anything about any dispute
between plaintiffs and Natural Organics, including concerning any
agreement that may have existed between them.
Kessler Decl. ¶ 3.
such situations, the deposition of the corporate executive is found to be cumulative and courts
have not allowed the deposition to go forward. See Harris, 204 F.R.D at 46 (“When a vice
president can contribute nothing more than a lower level employee, good cause is shown to not
take the deposition.”).
Second, Plaintiffs argue that they are entitled to depose Kessler based on his knowledge
of the business operations and relationship between Natural Organics and Global Health.
Plaintiffs go so far as to claim that he is “the only man who ties all the companies together.”
Whether or not Kessler contains unique knowledge as to Global Health presupposes that
testimony about Global Health is relevant to this action. Plaintiffs maintain that the relationship
between Natural Organics and its manufacturing facilities, such as Global Health, are highly
relevant to both parties’ claims and defenses since “Natural Organics has taken the position that
certain of Plaintiffs’ purchases do not count toward the Distribution Agreement’s minimum
purchase requirements because the products were manufactured by Global Health as private label
products, and not by Natural Organics itself.” The Court, however, does not find any support for
Plaintiffs’ interpretation of what Natural Organics’ purported position is.
The Plaintiffs apparently believe that Paragraph 275 of Natural Organics’ Answer
somehow supports Plaintiffs’ view of what Natural Organics’ position is regarding the minimum
purchase requirement in the Agreement. All that Paragraph 275 alleges is that Plaintiffs
“breached the Distribution Agreement in material respects, including but not limited to failing to
satisfy the minimum purchase requirements.” Nowhere in the pleading is there any reference to
Plaintiffs’ proffered theory as to why Natural Organics claims that Plaintiffs breached the
Agreement – namely, that products manufactured by Global Health did not count toward the
minimum purchase requirements. Natural Organics provided the Court with a copy of the
relevant portion of its Supplemental Responses to Plaintiffs’ First Set of Interrogatories which
lays out in specific detail why Natural Organics believes the minimum purchase requirement was
not satisfied by the Plaintiffs. See DE 104, Ex. 3 at 3-6. A portion of Natural Organics’
explanation regarding the failure to meet the minimum purchase requirement is that the Plaintiffs
purchased items other than “Products” – a term defined in the Agreement as “Nature’s Plus”
products. Lacking from Natural Organics’ response is any mention of Global Health, or any
other manufacturing facility. As such, there is nothing to support the position that what
constituted a “Product” under the Agreement was somehow related to the manufacturer of the
In essence, it is the Plaintiffs’ belief that Natural Organics “is playing a shell game with
corporate identities that are all controlled by Natural Organics” which serves as the basis for
Plaintiffs seeking to question Kessler on Global Health. However, after reviewing the deposition
testimony of James Gibbons, the Court concludes that the Plaintiffs have not established Global
Health’s relevance to the subject matter of this action to justify the taking of Kessler’s
deposition. Gibbons’ testimony confirmed Natural Organics’ opinion that the Agreement
covered only “Nature’s Plus” products. See Gibbons Dep. at 131. Plaintiffs draw attention to a
point during the deposition where Gibbons testified that Global Health manufactures all of
Natural Organics’ products. Id. at 52. Plaintiffs, however, neglect to mention Gibbons’ later
testimony where he states that Global Health did not manufacture any “Nature’s Plus” products.
Id. at 183-84. What is significant here regarding Gibbons’ testimony is the lack of any factual
basis to suggest that Plaintiffs’ ability to purchase “Nature’s Plus” products was somehow
impacted or dependent on information regarding when Global Health was formed, what products
Global Health manufactured and what was Global Health’s relationship with Natural Organics.
While the Court is aware of the parties’ varying interpretations of the Agreement, the
Court finds the following statement from Natural Organics to be informative, logical, and
NPN bought both Nature’s Plus products from Natural Organics and
products that were ultimately sold retail under the brand name Daily
Wellness, for another company. These were the private label
products that were not included in the Distribution Agreement or the
minimum purchase requirements. Indeed, if such private label
purchases were attributed to the minimum requirements an absolutely
absurd situation could result. NPN would be able to completely shut
Nature’s Plus brand products out of the Scandinavian market by
purchasing only private label products from Natural Organics and,
since it would then be able to maintain the exclusive right to
distribute Nature’s Plus brand products simply by buying private label
products, it could prevent the sale (by Natural Organics itself or by
any distributor other than NPN) of any Nature’s Plus brand products
within the four countries covered by the Distribution Agreement for
as many as 10 years, by simply buying private label products for
another company to sell.2
DE 104 at 2. Since it was “Nature’s Plus” products which Plaintiffs had to purchase to satisfy
the minimum purchase requirement in the Agreement, the Court fails to see the relevance of
discovery regarding Global Health.3
“NPN” was Defendants’ shorthand for Plaintiff Nature’s Plus Nordic A/S.
Even had Plaintiffs provided a sufficient basis as to why discovery regarding Global
Health would be relevant, the Court would not have allowed the deposition of Kessler to go
forward. For one, Kessler disclaims any knowledge regarding the activities of Global Health.
See Kessler Decl. ¶ 4. Moreover, it is the Court’s view that other witnesses have been available
to provide adequate testimony regarding Global Health. While Gibbons’ testimony during the
August 8, 2011, deposition shows that he may not be that person, Gibbons identified another
individual, James Madden, who apparently runs Global Health. See Gibbons Dep. at 52-53.
For the reasons set forth above, Plaintiffs’ motion to compel is DENIED. The parties are
directed to participate in a telephone conference on May 25, 2012 at 3:30 p.m. Plaintiffs’
counsel is directed to initiate the call to Chambers.
Dated: Central Islip, New York
April 30, 2012
/s/ A. Kathleen Tomlinson
A. KATHLEEN TOMLINSON
U.S. Magistrate Judge
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