Machinery Solutions, Inc. v. Doosan Corporation et al

Filing 196

ORDER granting in part and denying in part 131 Motion to Compel. Response to Interrogatory No. 10 should be supplemented as specified on or about February 8, 2018. Signed by Honorable J Michelle Childs on 01/26/2018.(vdou, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
Machinery Solutions, Inc.

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Plaintiff,
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v.
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Doosan Infracore America Corporation,
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and Ellison Technologies, Inc.,
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Defendants.
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___________________________________ )

Civil Action No.: 3:15-cv-03447-JMC

ORDER

Plaintiff Machinery Solutions, Inc. (“MSI” or “Plaintiff”) filed this action seeking
damages from Defendant Doosan Infracore America Corporation (“Doosan”) for terminating its
dealership contract with MSI and for contracting with another distributor, Ellison Technologies,
Inc. (“Ellison”). (See generally ECF No. 37.)
This matter is before the court on Plaintiff’s Motion to Compel against Ellison (ECF No.
131).
I.

FACTUAL AND PROCEDURAL BACKGROUND

Doosan manufacturers machine tools. (ECF No. 25-1 at 3 ¶¶ 8–9.) MSI alleges that it
has had an ongoing contractual relationship with Doosan since 1997. (ECF No. 37 at 3 ¶ 17.)
On February 10, 2009, Doosan sent MSI a “Letter of Understanding” or “Distributor
Agreement” to outline the sale of new machine tool products in North Carolina, South Carolina,
and Georgia. (ECF No. 1-1 at 22–25.) Pursuant to the terms of the Distributor Agreement,
either party could terminate the agreement, at any time for any reason whatsoever, by giving the
other party prior written notice of at least 30 days. (ECF No. 1-1 at 24 ¶ XIII.)
On August 21, 2015, MSI received a letter (the “August Letter”) from Doosan’s
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President in which he communicated the intent of Doosan to terminate the Distributor
Agreement with MSI. (Id. at 28-30.) The August Letter stated that MSI would have 30 days to
finalize all existing projects, and, after that time, MSI must cease pursuing any future business or
representing that MSI is an authorized Doosan dealer. (Id. at 28.) The letter also included an
attachment entitled “Conduct of Business During Transition Period.” (Id. at 29–30.) In the
attachment, Doosan identified Ellison as the new Doosan dealer in North Carolina, South
Carolina, and Georgia.1 (Id. at 30 ¶ 6.)
On August 25, 2015, MSI filed a Complaint against Doosan and Ellison (together
“Defendants”) in the Court of Common Pleas for Lexington County, South Carolina. (ECF No.
1-1.)

Specifically, MSI alleged claims against Defendants jointly for civil conspiracy and

against Doosan singularly for breach of contract, breach of contract accompanied by a fraudulent
act, violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”), S.C. Code Ann. §
39-5-10 to -560 (2014), and violation of the Fair Practices of Farm, Construction, Industrial, and
Outdoor Power Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act (“FPA”),
S.C. Code Ann. § 39-6-10 to -180 (2014). (ECF No. 1-1 at 10 ¶ 32–19 ¶ 88.) Doosan removed
MSI’s action from state court to this court on August 27, 2015, pursuant to 28 U.S.C. § 1332
claiming that “this civil action is ‘between citizens of different States’ and the amount ‘in
controversy exceeds the sum or value of $75,000, exclusive of interest and costs.’”2 (ECF No. 1
at 2 ¶ 3 (quoting 28 U.S.C. § 1332(a)(1)).) MSI then filed an Amended Complaint on October 8,
2015, alleging claims against Doosan and Ellison jointly for violation of the SCUTPA, civil

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Effective September 1, 2015, through Ellison’s dealership in Charlotte, North Carolina, Ellison
became a dealer for Doosan machine tools servicing customers in North Carolina, South
Carolina, and Georgia. (ECF No. 26–1 at 4 ¶¶ 9–10.)
2
In the Notice of Removal, Doosan stated that MSI had served the Complaint on Ellison, which
consented to the removal “[u]pon information and belief.” (ECF No. 1 at 3 ¶ 5.)
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conspiracy, and interference with existing and prospective contracts (count 6); and against
Doosan singularly for violation of the FPA, breach of contract and breach of contract
accompanied by fraudulent act. (ECF No. 37 at 7 ¶ 36–17 ¶ 98.) On May 12, 2016, the court
granted in part Ellison’s Motion to Dismiss (ECF No. 42) and dismissed MSI’s causes of action
for violation of SCUTPA, tortious interference with existing contracts, and tortious interference
with prospective contracts. (ECF No. 55 at 14.)
On July 31, 2017, MSI filed the instant Motion to Compel seeking to “compel full and
proper answers and responses to the following discovery responses . . . : 1. Plaintiff’s First Set of
Interrogatories to Defendant Ellison 5, 8, 10, 11[;] 2. Production of documents improperly
designated as Attorney-Client privilege[;] and 3. Those document[s] withheld by Defendant
Ellison on the ground of relevancy claiming that general discussions about replacing many
dealers in the United States are not ‘relevant.’” (ECF No. 130 at 1.) Ellison filed a Response
stating generally its opposition to this Motion on August 24, 2017, but it did assert that the
dispute regarding Interrogatory No. 8 was moot based on additional information provided to
MSI. (ECF No. 136 at 7.) On September 7, 2017, MSI filed a Reply in which it did not dispute
Ellison’s contention regarding Interrogatory No. 8 and further acknowledged that the privilege
log issue no longer needed the court’s attention.

(ECF No. 144 at 5.)

Additionally, on

November 3, 2017, MSI filed a Notice of Partial Resolution of Motion to Compel advising the
court as follows:
Specifically, the parties have resolved the majority of issues set forth in Section I.
of Plaintiff’s Memorandum in Support of its Motion to Compel relating to the
“Relevance of Ellison’s ‘Global Plan.’” (ECF No. 131-1 at 2-5). Accordingly,
Plaintiff hereby withdraws its Motion to Compel as to any “Global Plan”
documents, which encompasses those documents sought in connection with
Interrogatory Number 5, Request to Produce Number 1, Request to Produce
Number 3, and Request to Produce Number 6.

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The discovery disputes set forth in Section I. related to Interrogatory Number 11
still remain. Additionally, the additional discovery disputes Section II. and
Section III. of Plaintiff’s Memorandum in Support of its Motion to Compel (ECF
No. 131-1 at 5-10) have not been resolved and remain before the Court for
disposition.
(ECF No. 163.)
II.

JURISDICTION

The court has subject matter jurisdiction over this action, pursuant to 28 U.S.C. § 1332,
because the parties are citizens of different states and the amount in controversy exceeds
$75,000.00. MSI is a corporation organized under the laws of South Carolina with its principal
place of business in Lexington County, South Carolina. (ECF No. 37 at 1 ¶ 1.) Doosan is
incorporated in the State of New York and Ellison is incorporated in the State of Delaware. (Id.
at 2 ¶¶ 5 & 7; see also ECF No. 1 at 2–3.) Moreover, the court is satisfied that the amount in
controversy exceeds $75,000.00 in accordance with MSI’s representation. (ECF No. 37 at 3 ¶
11.)
III.
A.

LEGAL STANDARD

Discovery Generally
Amended Rule 26 of the Federal Rules of Civil Procedure provides that “[p]arties 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, . . . .” Fed. R. Civ. P. 26(b)(1). The scope of
discovery under Rule 26 is defined by whether the information sought is (1) privileged, (2)
relevant to a claim or defense and (3) proportional to the needs of the case. E.g., Gordon v.
T.G.R. Logistics, Inc., Case No. 16-cv-00238-NDF, 2017 WL 1947537, at *2 (D. Wyo. May 10,
2017).

“While the party seeking discovery has the burden to establish its relevancy and

proportionality, the party objecting has the burden of showing the discovery should not be
allowed and doing so through ‘clarifying, explaining and supporting its objections with
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competent evidence.’” Wilson v. Decibels of Or., Inc., Case No. 1:16-cv-00855-CL, 2017 WL
1943955, at *2 (D. Or. May 9, 2017) (quoting La. Pac. Corp. v. Money Mkt. 1 Institutional Inv.
Dealer, 285 F.R.D. 481, 485 (N.D. Cal. 2012) (internal citations omitted). A discovery request
is relevant “if there is any possibility that the information sought might be relevant to the subject
matter of [the] action.” Wilson, 2017 WL 1943955, at *5 (quoting Jones v. Commander, Kan.
Army Ammunitions Plant, 147 F.R.D. 248, 250 (D. Kan. 1993)). Whether a discovery request is
proportional is determined by “considering the importance of the issues at stake in the action, the
amount in controversy, the parties’ relative access to the 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.” Fed. R. Civ. P. 26(b)(1).
“Information within this scope of discovery need not be admissible in evidence to be
discoverable.” Fed. R. Civ. P. 26(b)(1).
The scope of discovery permitted by Rule3 26 is designed to provide a party with
information reasonably necessary to afford a fair opportunity to develop its case. Nat’l Union
Fire Ins. Co. of Pittsburgh, P.A. v. Murray Sheet Metal Co., Inc., 967 F.2d 980, 983 (4th Cir.
1992) (“the discovery rules are given ‘a broad and liberal treatment’”) (quoting Hickman v.
Taylor, 329 U.S. 495, 507 (1947)). That said, discovery is not limitless and the court has the
discretion to protect a party from “oppression” or “undue burden or expense.” Fed. R. Civ. P.
26(c).
B.

Motions to Compel
If a party fails to make a disclosure” required by Rule 26, “any other party may move to

compel disclosure and for appropriate sanction” after it has “in good faith conferred or attempted
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The court observes that from this point forward, “Rule” refers to the Federal Rules of Civil
Procedure.
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to confer with the person or party failing to make disclosure or discovery in an effort to obtain it
without court action.” Fed. R. Civ. P. 37(a). Specifically, a party “may move for an order
compelling an answer, designation, production, or inspection.” Fed. R. Civ. P. 37(a)(3)(B).
Broad discretion is afforded a district court’s decision to grant or deny a motion to compel. See,
e.g., Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 929 (4th Cir. 1995)
(“This Court affords a district court substantial discretion in managing discovery and reviews the
denial or granting of a motion to compel discovery for abuse of discretion.”) (Internal citation
omitted); Erdmann v. Preferred Research Inc., 852 F.2d 788, 792 (4th Cir. 1988); LaRouche v.
Nat’l Broad. Co., 780 F.2d 1134, 1139 (4th Cir. 1986) (“A motion to compel discovery is
addressed to the sound discretion of the district court.”).
IV.

ANALYSIS

After the partial resolution of the dispute, MSI now seeks responses to its First Set of
Interrogatories to Ellison Nos. 10 and 11. (ECF Nos. 131-1 at 4–6 & 163 at 2.) Additionally,
MSI seeks production of documents containing general discussions about replacing dealers
improperly withheld on the ground of relevancy. (ECF No. 131 at 1.) Upon review and
consideration of the parties’ respective positions (see ECF Nos. 131-1, 136, 144 & 163), the
court adjudicates each disputed discovery request as follows:
A.

First Set of Interrogatories to Defendant Ellison
Interrogatory No. 10: Describe fully all efforts you have made or are aware of
wherein or whereby any supplier of parts used in manufacturing or repair of any
Doosan manufactured machine tools were discouraged in any form from selling
or shipping any such parts directly to customers in the United States. In the
description give the identity of the people involved on both ends of the
communication, the date, the substance of the communication and identify any
documents related thereto. The relevant time period of this inquiry is August 1,
2015 to the present.

(ECF No. 131-2 at 7.)
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The Court’s Ruling: Ellison objects to Interrogatory No. 10 and argues that it is vague
and seeks irrelevant information. (Id.)
In the Interrogatory No. 10, MSI essentially asks Ellison to identify and describe all
efforts in which suppliers of parts were discouraged from selling parts directly to customers in
the United States, regardless of whether Ellison discouraged the sales itself. To the extent this
Interrogatory requests information regarding parties, other than Doosan or Ellison, who
discouraged suppliers from directly selling parts to customers, it is overly broad, unduly
burdensome, not proportional, and most likely irrelevant. In this regard, the court finds that
information regarding other parties discouraging suppliers from directly selling parts would not
further MSI’s claim that Ellison and Doosan conspired to hinder its ability to acquire parts.
However, the court finds that this Interrogatory would be proportional and relevant if it is limited
to only require Ellison to disclose efforts that it took to discourage suppliers of parts, used in
manufacturing or repair of any Doosan tools, to sell parts to MSI. Accordingly, the court
GRANTS IN PART MSI’s Motion to Compel a response to Interrogatory No. 10 and ORDERS
Ellison to provide information regarding efforts it took to discourage suppliers from selling parts
to MSI on or before February 8, 2018.
Interrogatory No. 11: Identify any documents which reflect any calculation of
profit which Ellison expected to make by way of its sale of Doosan Machine tools
in the United States. “Profit” in this interrogatory shall mean the same thing as
that term meant in the Declaration of Amy Odell dated September 11, 2015 filed
in this action. The relevant time period for this interrogatory is January 1, 2015
through September 30, 2016.
(ECF No. 131-2 at 8.)
The Court’s Ruling: Ellison objects to Interrogatory No. 11 asserting that it “has already
produced nonprivileged projections and budgets related to sales of Doosan products in 2015 and

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2016 in North Carolina, South Carolina, and Georgia. (Id.) In this regard, Ellison asserts that
any additional information sought by Interrogatory No. 11 is not relevant “to any party’s claims
or defenses” in this matter.
In assessing the adequacy of Ellison’s production in response to Interrogatory No. 11, the
court observes that there is no evidence before it that Ellison both possesses and is withholding
additional “documents which reflect any calculation of profit which Ellison expected to make by
way of its sale of Doosan Machine tools in the United States.” Absent some indicia that this
documentation exists, the court cannot compel Ellison to produce documents they do not
possess. See, e.g., Payless Shoesource Worldwide, Inc. v. Target Corp., No. 05-4023, 2008 WL
973118, at *4 (D. Kan. Apr. 8, 2008) (“Fed. R. Civ. P. 34 does not require a party to create
responsive documents if they do not exist in the first instance” and “the Court cannot compel a
party to produce documents that do not exist.”) (Citation omitted). Therefore, the court DENIES
WITHOUT PREJUDICE MSI’s Motion to Compel as it relates to Interrogatory No. 11. If
MSI can substantiate the existence of additional “documents which reflect any calculation of
profit which Ellison expected to make by way of its sale of Doosan Machine tools in the United
States,” the court expressly gives leave to submit such support by motion.4
B.

Documents Declared Irrelevant by Ellison
MSI makes a general request for an order requiring Ellison to produce documents

withheld “on the ground of relevancy.” (ECF No. 131 at 1.) These documents allegedly contain
“general discussions about replacing many dealers in the United States.” (Id.)
The Court’s Ruling: MSI is entitled to “discovery regarding any nonprivileged matter that
is relevant to [] [its] claim or defense and proportional to the needs of the case, . . . .” Fed. R.
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The court observes that Ellison’s did not object to Interrogatory No. 11 on the basis that it is
overly broad, unduly burdensome and not proportional.
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Civ. P. 26(b)(1). However, this request by MSI does not specify a disclosure that Ellison failed
to make as required by Rule 26. Accordingly, the court DENIES MSI’s Motion to Compel as it
relates to its general request for relevant documents.
V.

CONCLUSION

After extensive review of the parties’ arguments and submissions, the court for the
reasons set forth above GRANTS IN PART AND DENIES IN PART MSI’s Motion to
Compel against Defendant Ellison Technologies, Inc. (ECF No. 131.) Ellison shall supplement
its response to Interrogatory No. 10 of the First Set of Interrogatories as specified in this Order
on or before February 8, 2018.
IT IS SO ORDERED.

United States District Judge
January 26, 2018
Columbia, South Carolina

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