M.L.C., Inc. v. North American Philips Corp.

109 F.R.D. 134, 1986 U.S. Dist. LEXIS 30908
CourtDistrict Court, S.D. New York
DecidedJanuary 2, 1986
DocketNo. 78 Civ. 6080 (SWK)
StatusPublished
Cited by26 cases

This text of 109 F.R.D. 134 (M.L.C., Inc. v. North American Philips Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M.L.C., Inc. v. North American Philips Corp., 109 F.R.D. 134, 1986 U.S. Dist. LEXIS 30908 (S.D.N.Y. 1986).

Opinion

MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

Plaintiff, M.L.C., Incorporated (“MLC”), is before the Court on its fourth1 motion for sanctions pursuant to Fed.R.Civ.P. 37(b)(2) against Philips Business Systems, Inc. (“PBSI”) and North American Philips [136]*136Corporation (“NAPC”).2 On October 11, 1985, in a pre-trial conference, this Court denied plaintiffs request for an order striking defendants’ answer to plaintiff’s second amended complaint and denied plaintiff’s motion for a default judgment.

However, the Court reserved decision on other possible sanctions, pending its consideration of the arguments offered at that pre-trial conference. After considering the arguments and the post-conference affidavits submitted by the parties, the Court rules that sanctions should be imposed upon PBSI and NAPC.

I. FACTUAL BACKGROUND

Between April, 1972 and May, 1975 MLC engaged in the importation and distribution of business forms known as magnetic ledger cards. These cards were used with business machines produced in the Netherlands by N.V. Philips. NAPC imported these machines and PBSI distributed these machines throughout the United States.

In 1973, PBSI entered the business forms business. MLC contends that PBSI, in violation of the antitrust laws, successfully orchestrated a plan to drive MLC out of business, which ended with PBSI’s purchase of MLC in 1975.

The instant discovery dispute concerns various documents which MLC alleges were either produced by defendants in an untimely fashion, suppressed, or destroyed. MLC moves for the imposition of sanctions. Defendants maintain that they did not possess or exercise control over these documents, and thus, were not obligated to produce them. Defendants cross-move for sanctions, contending that no basis exists for MLC’s motion.

II. THE LAW

A motion for the production of documents is entitled to broad and liberal treatment. Goldman v. Checker Taxi Company, 325 F.2d 853 (7th Cir.1963). Documents need not be in a party’s possession to be discoverable; they need only be in the party’s custody or control. In Re Folding Carton Antitrust Litigation, 76 F.R.D. 420, 423 (N.D.Ill.1977) (“It is well settled that a party need not have actual possession of documents to be deemed in control of them.”).

Control includes the legal right of the producing party to obtain documents from another source upon demand. See Searock v. Stripling, 736 F.2d 650, 653 (11th Cir.1984). A party may be ordered to produce documents where that party has the legal right to obtain the documents, even though that party retains no copy, and regardless of whether the documents are beyond the jurisdiction of the court. Zervos v. S.S. Sam Houston, 79 F.R.D. 593, 595-96 (S.D.N.Y.1978).

The term “control” is broadly construed. In Herbst v. Able, 63 F.R.D. 135 (S.D.N.Y.1972), the court ordered a corporate defendant to produce transcripts of former and present employees’ testimony before the Securities and Exchange Commission (“SEC”), even though the corporation could only obtain transcripts from the SEC if the employees requested it. The Court found that the corporation’s employees were “persons within its control” and that the corporation was obligated to produce the documents. Id. at 138. See also Hanson v. Gartland Steamship Company, 34 F.R.D. 493, 496 (N.D.Ohio 1964) (Whether documents in the possession of a party’s attorney are under the control of the party is resolved by discerning their origin. “If the items were originally produced by the party or his agents, and then turned over to the attorney, they are considered under the party’s control.”).

Similarly, in Cooper Industries, Inc. v. British Aerospace, 102 F.R.D. 918 (S.D.N.Y.1984), the Court ordered defendant to produce documents in the possession of its affiliate, which was not a party to the action. Defendant was wholly owned by [137]*137the affiliate when the suit was filed. Plaintiff sought production of certain documents that defendant asserted were not in its possession. The plaintiff maintained, and the defendant did not deny, that the documents were in the possession of defendant’s British affiliate.

In granting plaintiff’s motion for sanctions and to compel production, the Court stated “it is inconceivable that defendant would not have access to these documents and the ability to obtain them for its usual business.” Id. at 919-20. The Court also stated: “[defendant cannot be allowed to shield crucial documents from discovery by parties with whom it has dealt in the United States merely by storing them with its affiliate abroad.” Id. at 920. The Court ordered the defendant to produce the documents demanded if the documents were in either defendant’s possession or in the possession of the British affiliate. Id. With these principles in mind, the Court turns to defendants’ arguments.

III. THE BLANKET SUPPLY AGREEMENTS

In December, 1979, MLC served its first request for production of documents, demanding, inter alia, the production of all contracts and agreements made between PBSI, NAPC, or N.V. Philips (parent corporation) and Jollenbeck and Kasten (“J & K”) or Magnetdruck (“MD”), defendants’ West German suppliers. In January, 1980, MLC then served its first set of interrogatories upon the defendants.

In April, 1980, MLC moved to compel the production of documents and answers to interrogatories. Defendants objected to the scope of these requests, arguing, inter alia, that defendants should not be required to produce any documents belonging to N.V. Philips, the parent corporation, because N.V. Philips was not a party in the action.

United States Magistrate Nina M. Gershon granted plaintiff’s motion to compel production of documents and answers to interrogatories, and stated, in pertinent part:

With respect to the requests addressed to the parent corporation, N.[V]. Philips, which has not been served in this action, although named as a party, it is correct that they need not respond as parties since they are not in the case. However, the fact that they are not in the case does not mean that other defendants should not be required to produce documents in their control relating to N.[V], Philips, so long as they are otherwise relevant. Accordingly, the objection raised by the defendants is overruled.

Tr. of September 12, 1980 hearing, at 24-25 (emphasis added).

In February, 1983, in a surreply to MLC’s cross motion for summary judgment,3 defendants produced two exclusive distributor agreements known as blanket supply agreements (the “Agreement(s)”). One Agreement was formed by N.V. Philips and J and K, while the other was formed by N.V. Philips and MD. In these Agreements, which are substantially identical, the West German suppliers allegedly ceded worldwide distribution rights in their magnetic ledger cards to N.V. Philips.

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Cite This Page — Counsel Stack

Bluebook (online)
109 F.R.D. 134, 1986 U.S. Dist. LEXIS 30908, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mlc-inc-v-north-american-philips-corp-nysd-1986.