American Bottling Company v. Repole

• Court: Superior Court of Delaware
• Decided: May 5, 2020
• Docket: n19C-03-048 AML CCLD
• Status: Published

Opinion

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE THE AMERICAN BOTTLING ) COMPANY, ) ) Plaintiff, ) ) v. ) C.A. No. N19C-03-048 AML CCLD ) MIKE REPOLE and BA SPORTS ) NUTRITION, LLC, ) ) Defendants. )

Submitted: April 30, 2020 Decided: May 5, 2020

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO COMPEL FIJI WATER COMPANY LLC’S COMPLIANCE WITH SUBPOENA WHEREAS, on January 9, 2020, Defendants BA Sports Nutrition LLC and

Mike Repole (“Defendants”) served a subpoena (the “Subpoena”) upon third-party

FIJI Water Company, LLC (“FIJI”);

WHEREAS, on February 28, 2020, Defendants filed their Motion to Compel

FIJI’s Compliance with the Subpoena (the “Motion”); and

WHEREAS, on April 30, 2020, the Court heard the parties’ arguments

regarding the relevance and scope of the materials requested in the Subpoena;

NOW, THEREFORE, IT IS HEREBY ORDERED this 5th day of May, 2020,

that:

1. The Motion is GRANTED in part; 2. This litigation involves the termination of a distribution agreement

between The American Bottling Company (“ABC”) and BA Sports Nutrition, LLC

(“BA”). The distribution agreement contained a clause that required ABC to obtain

BA’s prior approval before ABC could transfer its duties and privileges under the

agreement by “merger, consolidation, reorganization or similar event, [or] change in

the management or control of [ABC].”1 If such a transfer occurred without BA’s

approval, which it could not unreasonably withhold, BA was entitled to terminate

the distribution agreement. 2

3. After ABC’s parent company, Dr. Pepper Snapple Group (“DPSG”),

merged with Keurig Green Mountain (“Keurig”), BA terminated the distribution

agreement. ABC contends that termination was not proper because: (1) the merger

and related changes at DPSG and ABC did not result in a transfer of ABC’s duties

and privileges, (2) if there was any transfer, BA approved it, or (3) if BA did not

approve any transfer, its refusal to do so was unreasonable.

4. ABC also had at least two distribution agreements with FIJI, who is the

subject of this subpoena. Those agreements contained termination clauses that were

similar, although not identical, to the termination provision at issue in this case. FIJI

terminated its distribution agreements with ABC immediately after the merger.

1 Defs.’ Mot. to Dismiss, Ex. A § 10.2. 2 Id. § 11.3.

2 5. The subpoena BA issued to FIJI contains broadly phrased document

requests that seek FIJI’s external communications with DPSG and ABC as well as

FIJI’s internal analyses regarding the merger and how it might affect the parties’

distribution relationship. FIJI objected to all the requests in the subpoena on the

basis of relevance and burden. Very little meaningful pre-Motion conversation

occurred between BA and ABC regarding the scope of the subpoena because FIJI

largely refused to engage. Accordingly, BA sought the Court’s intervention.

6. Even the brief factual recitation above demonstrates why

communications between FIJI and either DPSG or ABC could be relevant to the

issues before the Court in this case. What DPSG or ABC may have said to FIJI

regarding changes in control or management as a result of the merger directly relates

to the core facts in dispute. Accordingly, to the extent the subpoena seeks documents

constituting or reflecting such external communications, those documents are

relevant and their production should not be overly burdensome in light of the further

limitations on dates and custodians discussed below.

7. In contrast, the requests for FIJI’s internal analyses regarding the

merger and its implications on distribution is not relevant to whether there actually

was a change of control at ABC or whether BA reasonably could withhold its

approval for any transfer of ABC’s duties and privileges under the ABC-BA

distribution agreement. BA and FIJI are two distinct companies with different

3 products, distribution needs, markets, and projections. Whatever FIJI anticipated

would happen to the distribution of its products as a result of the merger is not

relevant to whether BA reasonably could withhold its consent. Moreover, unlike

DPSG or ABC’s communications with FIJI, what FIJI internally concluded

regarding ABC’s management personnel or board composition post-merger is not

relevant to whether there actually was a change of control that triggered the ABC-

BA termination clause.

8. Accordingly, the Motion to Compel is GRANTED IN PART, and FIJI

shall produce documents responsive to the following amended requests, subject to

the limitations in paragraphs 9(a)-(c), below:

a. Any Documents constituting or reflecting Communications between

You and the Distributor Parties regarding how the Merger, or any

changes to management personnel, Board composition, or control of

ABC relating to or following the Merger, would impact or

potentially impact the distribution of Your products or other Allied

Brands’ products. 3

3 See Subpoena duces tecum Directed to FIJI Water Co., LLC (hereinafter “Subpoena”), Request 2. Capitalized terms shall have the meaning contained in the Subpoena. The parties resolved their disputes regarding Requests 1 and 5, so those requests are not addressed in this order.

4 b. Any Documents constituting or reflecting Communications between

You and the Distributor Parties regarding whether the Merger, or

any changes to management personnel, Board composition, or

control of ABC relating to or following the Merger, provided an

opportunity or cause or basis, contractual or otherwise, for You or

other Allied Brands to terminate distribution agreement(s) with the

Distributor Parties.4

c. Any Documents constituting or reflecting Communications between

You and the Distributor Parties regarding the perceived or actual

impact of the Merger, or any changes to management personnel,

Board composition, or control of ABC relating to or following the

Merger, on the distribution of Your products or other Allied Brands’

products.5

d. Any Documents constituting or reflecting Communications by the

Distributor Parties informing You of the Merger or any changes to

management personnel, Board composition, or control of ABC

relating to or following the Merger.6

4 See Subpoena Request 3. 5 See Subpoena Request 4. 6 See Subpoena Request 6.

5 9. The foregoing production shall be limited as follows:

a. FIJI shall produce responsive documents generated between the date

the Keurig-DPSG merger was announced and one month after FIJI

terminated its distribution agreements.

b. FIJI and BA shall work cooperatively to identify a reasonable

number of custodians at FIJI who were the key individuals involved

in deciding whether to terminate FIJI’s distribution agreements with

ABC. FIJI’s search shall be limited to those custodians’ documents.

FIJI shall disclose those custodians’ identity to BA.

c. The parties shall work together to develop reasonable ways to lessen

the burden on FIJI of creating a privilege log. If a substantial

number of documents are withheld on the basis of privilege, the

parties should discuss using a categorical log to reduce FIJI’s

burden.

10. FIJI may produce these documents subject to the Order Governing the

Production and Exchange of Confidential and Highly Confidential Information,

entered by the Court in this action on December 11, 2019.

6 11. If FIJI desires to use search terms to locate responsive documents, FIJI

shall confer with Defendants regarding the selection of search terms and shall

provide hit reports if requested by Defendants.

Abigail M. LeGrow The Honorable Abigail M. LeGrow