Moore v. Bass Pro Outdoor World LLC et al
Filing
151
ORDER AND OPINION Plaintiff's motion to compel (Dkt. No. 83 ) is GRANTED IN PART and DENIED IN PART. IT IS ORDERED THAT, within ten (10) days of the date of this Order, Defendants Global and Mainstream will produce to Plaintiff their current value and annual income for the most recent fiscal year. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 7/9/2019.(sshe, )
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Gene Victor Moore,
Plaintiff,
V.
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Civil Action No. 2: 17-3228-RMG
(Consolidated with 2:18-cv-3017-RMG)
ORDER AND OPINION
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Defendants.
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BPS Direct, LLC, Bass Pro, LLC, Global
Manufacturing Company, LLC, G.M.C. ,
LLC, and Mainstream Holdings, Inc.,
Before the Court is Plaintiff's motion to compel supplemental discovery responses
regarding Defendants' financial condition. (Dkt. No. 83.)
For the reasons set forth below,
Plaintiff's motion is granted in part and denied in part.
I.
Background
This is a product liability case arising out of an injury sustained by Plaintiff Gene Victor
Moore allegedly from use of an API Crusader Climbing Treestand ("Crusader Treestand")
manufactured by Defendants Mainstream Holdings, Inc. and Global Manufacturing Company,
LLC and sold by Defendants BPS Direct, LLC and Bass Pro, LLC ("Bass Pro Defendants"). (Dkt.
No. 53.) Plaintiff now seeks an order compelling Defendants to provide all financial statements
and tax returns for all Defendants from 2014 through 2017. 1 The motion is a renewed motion to
compel, previously filed as Docket Number 31, which the Court denied without prejudice pending
a determination that Plaintiff has made a prima facie showing that he is entitled to punitive
1
As to each Defendant, this is in response to: First, for the Bass Pro Defendants, Plaintiff's Second
Set of Requests for Production No. 5; Second, for Defendant Global, Plaintiff's Second Set of
Requests for Production No. 7; Third, for Defendant Mainstream, Plaintiff's First Request for
Production No. 19.
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damages. (Dkt. No. 46.) Plaintiff has renewed the motion, arguing that he has made out a prima
facie case and a dispute of material fact regarding liability and an entitlement to punitive damages.
(Dkt. No. 83.) Defendants oppose the motion. (Dkt. No. 90.)
II.
Legal Standard
Parties to a civil litigation may obtain discovery regarding "any nonprivileged matter that
is relevant to any party' s claim or defense" so long as the information is "proportional to the needs
of the case .... " Fed. R. Civ. P. 26(b)(l). The scope of discovery permitted by Rule 26 is designed
to provide a party with information reasonably necessary to afford a fair opportunity to develop
her case. See, e.g. , Nat 'l Union Fire Ins. Co. of Pittsburgh, P.A. v. Murray Sheet Metal Co., Inc. ,
967 F.2d 980, 983 (4th Cir. 1992) (noting that "the discovery rules are given ' a broad and liberal
treatment"') quoting Hickman v. Tay lor, 329 U.S . 495 , 507 (1947). The court "must limit the
frequency or extent of discovery .. .if it determines that the discovery sought is unreasonably
cumulative or duplicative, or can be obtained from some other source that is more convenient, less
burdensome, or less expensive." Fed. R. Civ. P. 26(b)(2)(C)(i). "The scope and conduct of
discovery are within the sound discretion of the district court." Columbus-Am. Discovery Grp. v.
Atl. Mut. Ins. Co., 56 F.3d 556, 568 n.16 (4th Cir. 1995); see also Carejirst ofMd, Inc. v. Carefirst
Pregnancy Ctrs., 334 F.3d 390, 402 (4th Cir. 2003) ("Courts have broad discretion in [their]
resolution of discovery problems arising in cases before [them].") (internal quotation marks
omitted). To enforce the provisions of Rule 26, under Federal Rule of Civil Procedure 37, a "party
may move for an order compelling disclosure or discovery." Fed. R. Civ. P. 37(a)(l).
III.
Discussion
In the first instance, the Parties, cognizant that the availability of punitive damages
ultimately is affected by whether Plaintiffs claims can survive summary judgment, dedicate
significant portions of their briefing to argue the merits of Plaintiffs claims. As the Court has held
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in recently issued orders, Plaintiffs claims for strict liability as to manufacturing defects survives
against Defendants Global and Mainstream, and Plaintiffs remaining three claims, for negligence,
breach of warranty, and under the South Carolina Unfair Trade Practices Act ("SCUTPA") survive
as to all parties. (Dkt. Nos. 149, 150.)
However, for the purpose of discovery, the documents related to Defendants' financial
condition only become relevant if Plaintiffs claim for punitive damages is viable. See, e.g. Nix v.
Holbrook, No. CIV.A. 5:13-02173 , 2015 WL 791213, at *3 (D.S.C. Feb. 25, 2015) ("the court
declines at this time to require production of sensitive financial documents until after Plaintiff has
established the viability of his claim for punitive damages.") (collecting cases).
In the first
instance, the Court notes that punitive damages are not available under South Carolina law for the
breach of warranty claims. See Rhodes v. McDonald, 345 S.C. 500, 504, 548 S.E.2d 220, 222 (Ct.
App. 2001) ("Had the legislature intended that punitive damages be available in breach of warranty
cases, they could easily have included a provision providing for the recovery of damages of that
kind."). Further, under the SCUTP A, the statute itself controls the damages available, and provides
that a court may award treble damages for a "willful or knowing violation" of the SCUTP A. See
Smith v. Strickland, 314 S.C. 192, 197, 442 S.E.2d 207, 210 (Ct. App. 1994) (holding that "trebled
damages" are "punitive in nature"). Therefore, under the SCUTP A, as the amount of damages for
a willful or knowing violation is circumscribed by the statute, the financial condition of Defendants
is not relevant under the SCUTP A.
Therefore, the sole question is whether Plaintiff can make a prima facie showing of
entitlement to punitive damages for his tort claims under Illinois law. See Browning-Ferris Indus.
of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 278, 109 S. Ct. 2909, 2921-22, 106 L. Ed.
2d 219 ( 1989) ("In a diversity action, or in any other lawsuit where state law provides the basis of
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decision, the propriety of an award of punitive damages for the conduct in question, and the factors
the jury may consider in determining their amount, are questions of state law.")2 Regarding
punitive damages in products liability cases under Illinois law:
[P]unitive damages may be awarded when the defendant acted 'with fraud, actual
malice, deliberate violence or oppression, or when the defendant act[ed] willfully,
or with such gross negligence as to indicate a wanton disregard for the rights of
others.' . .. 'A defendant is guilty of willful and wanton conduct when he
demonstrates knowledge that his conduct poses an increased risk of serious physical
harm to another.' In the product liability context, punitive damages are appropriate
if 'the manufacturer's conduct evinced a flagrant disregard for public safety.'
Ross v. Black & Decker, Inc., 977 F .2d 1178, 1187-88 (7th Cir. 1992) (citations omitted).
At this stage, Plaintiff has clearly made a sufficient prima facie showing to submit the issue
of punitive damages as to Defendants Global and Mainstream to the jury. As the Court already
held, it is undisputed that the Crusader Treestand here had a small "burn hole," and that this was
known by the manufacturers as a common by-product of welding. (Dkt. Nos. 77-1at14; 77-10 at
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17; 77-3 at 60.)
Further, Plaintiff identified at least one prior incident, Vandermast,
demonstrating that Defendants Global and Mainstream knew that a similar, though not identical,
Crusader Treestand split at a planned heel cord hole in the foot section. 3 (Dkt. Nos. 77-3 at 15 18; 77-14 at 27; 96-19.) See Barton v. Chicago & N. W Transp. Co., 325 Ill. App. 3d 1005, 1031,
757 N.E.2d 533, 555 (2001) (permitting jury instruction on punitive damages where evidence of
2
Nonetheless, the Court applies Federal procedural rules, namely Federal Rule of Civil Procedure
56, to determine whether Plaintiff has presented sufficient evidence to submit punitive damages to
the jury. See Hoskins v. King, 676 F. Supp. 2d 441, 450 (D.S.C. 2009) ("The Fourth Circuit has
repeatedly held that in diversity cases, the federal standard controls the question of the sufficiency
of evidence to go to the jury.") citing Charleston Area Med. Ctr., Inc. v. Blue Cross & Blue Shield
Mut. of Ohio, Inc., 6 F.3d 243, 247 (4th Cir. 1993).
3
As addressed in the Court's Order on summary judgment (Dkt. No. 150 at 15 - 16), the fact that
the Crusader Treestand at issue in the Vandermast case was manufactured in 2013 by a different
manufacturer, Worldwide Industrial Corporation, does not negate the evidence's relevance where
that same design ultimately was used in part to manufacture the Crusader Treestand here when the
manufacturer for the API brand was changed to Defendant Global in 2014.
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substantially similar occurrences (SSOs) was admitted at trial). These facts at least raise a prima
facie case that Defendants Global and Mainstream had "knowledge that [their] conduct poses an
increased risk of serious physical harm to another" and disregarded public safety issues. Therefore,
Plaintiff is entitled to evidence of Defendant Global and Mainstream's financial condition.
Defendants attempt to argue that Defendant Mainstream is an "improper party" as it was
only the holding company for Defendant Global and, since it did not take part in any of the
manufacturing or sale of the Treestand, could not act with disregard for Plaintiff. (Dkt. No. 90 at
31.) To begin with, Defendants have not made a motion to dismiss Defendant Mainstream as an
improper party. Regardless, the record evidence is clear that, although Defendant Mainstream is
the parent company of Defendant Global, the two are inextricably intertwined. Todd Quiring is
the sole shareholder of Defendant Mainstream and is also the owner of Defendant Global. (Dkt.
No. 76-3 at 4.) Defendant Global also does not have "any employees that are specifically Global
employees" and instead "the payroll is done through Mainstream holdings" where some "job duties
cross over." (Id. at 9.) Indeed, Mainstream also provided the quality assurance policy applicable
to the Crusader Treestand here and provides the customer support for the API Crusader Treestands,
including for prior incidents oftreestand failure such as the Vandermast claim, demonstrating that
they had some knowledge of prior incidents. (Dkt. No. 83-23; 96-9.) There is further some
evidence that the employees who ultimately do work for Global do so "as directed by Mainstream
Holdings." (Dkt. No. 76-3 at 10.) Defendants reliance on the corporate distinction between
Defendant Mainstream and Defendant Global is therefore misplaced.
There is evidence of
Mainstream' s direct actions, through their customer service line and quality assurance program,
permitting a prima facie case for punitive damages, as described above. Furthermore, as there is
evidence that the employees ultimately working for Global are paid by Mainstream and ultimately
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directed to work for Global by Mainstream, there is a dispute regarding whether Defendant Global
was merely acting as an agent for Defendant Mainstream. 4
However, Plaintiff has not presented any evidence that the Bass Pro Defendants are guilty
of "willful and wanton conduct." Notably, Plaintiffs evidence regarding Bass Pro centers almost
exclusively on them deferring to Defendant Global to manufacture, design and inspect the
Treestand. There is also no evidence indicating that the Bass Pro Defendants had any knowledge
of holes commonly occurring on Tree stands through the welding process. Plaintiff, therefore, have
not identified any evidence which would create a prima facie case as to whether the Bass Pro
Defendants have the "knowledge" that their conduct surrounding the manufacture and sale of the
Crusader Treestand posed "an increased risk of serious physical harm to another" or that they acted
with flagrant disregard to public safety. Plaintiff has therefore not made out a prima facie case for
punitive damages against the Bass Pro Defendants.
Plaintiff is therefore entitled to some information regarding Defendants Global and
Mainstream's financial condition. However, Plaintiffs request for all financial statements and tax
returns from 2014 through 2017 clearly contains irrelevant information, is overbroad and
burdensome.
To begin with, "a defendant's financial position is a proper consideration in
assessing punitive damages[.]" Stamathis v. Flying J, Inc., 389 F.3d 429, 442 (4th Cir. 2004).
However, as the purpose of punitive damages is to punish and deter, Id., the most relevant inquiry
4
Though Plaintiffs did not brief the issue, the exceptionally close nature of Defendants
Mainstream and Global, most notably the dual role of Todd Quiring and the fact that all Defendant
Global employees are employed and paid by Defendant Mainstream, raises an issue regarding
whether Global can be treated as an alter ego of Mainstream. See Gass v. Anna Hosp. Corp., 392
Ill. App. 3d 179, 185, 911N.E.2d1084, 1090 (2009) ("A subsidiary, as a separate and distinct
legal entity, will be treated as the alter ego of the parent, and the corporate veil pierced, where the
subsidiary is 'so organized and controlled, and its affairs so conducted by a parent, that observance
of the fiction of separate identities would sanction a fraud or promote injustice under the
circumstances."').
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is to a defendant's current financial status. See Nix v. Holbrook, No. CIV.A. 5:13-02173, 2015
WL 791213, at *3 (D.S.C. Feb. 25, 2015) ("Plaintiff. .. is entitled to discover STI's current.financial
status as it relates to the issue of punitive damages.") (emphasis added); Hester v. Cottrell
Contracting Corp., No. 7:00-CV-70-BR(l), 2001WL1764200, at *4 (E.D.N.C. Apr. 27, 2001)
("the court will limit the disclosure to Cottrell's current financial condition.").
Further, cognizant that Rule 26 requires weighing the importance of the discovery and its
burden versus its benefit, the Court finds that requiring four years of past financial statements and
state and federal tax returns is clearly excessive and burdensome.
Instead, Plaintiff needs
information sufficient to inform the jury of Defendant Global and Mainstream's "financial
position." Therefore, the Court will Order Defendants Global and Mainstream to produce their
current value and annual income for the most recent fiscal year. See Hester, 2001 WL 1764200,
at *4 (ordering production of"current value and annual income for 2000").
IV.
Conclusion
For the foregoing reasons, Plaintiffs motion to compel (Dkt. No. 83) is GRANTED IN
PART and DENIED IN PART. IT IS ORDERED THAT, within ten (10) days of the date of
this Order, Defendants Global and Mainstream will produce to Plaintiff their current value and
annual income for the most recent fiscal year.
AND IT IS SO ORDERED.
United States District Court Judge
July ~, 2019
Charleston, South Carolina
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