TIGI Linea Corp. v. Professional Products Group, LLC

District Court, E.D. Texas·Decided June 29, 2021·No. 4:19-cv-00840·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

TIGI LINEA CORP., § § Plaintiff, § § LEAD CASE 4:19-cv-840-RWS-KPJ v. § CONSOLIDATED CASE 4:20-cv-87 § PROFESSIONAL PRODUCTS GROUP, § LLC § Defendant. §

MEMORANDUM OPINION AND ORDER On June 11, 2021, Professional Products Group, LLC (“PPG”) filed a Motion for Leave of Court to Take Three Additional Depositions (the “Motion”) (Dkt. 192), which TIGI Linea Corp. (“TIGI”) opposes. The Court ordered expedited briefing, which the parties timely submitted. See Dkts. 193, 194, 195. Having considered the arguments and applicable authorities, the Court finds PPG’s Motion (Dkt. 192) is hereby GRANTED. I. BACKGROUND A. THE ALLEGATIONS TIGI, a subsidiary of Unilever, manufactures professional hair care, body, and cosmetic products. See Dkt. 89 at 2; Dkt. 143 at 2. PPG is a distribution company that distributes professional hair care products from manufacturers directly to retailers, as well as to other distributors and wholesalers. See Dkt. 13-1 at 1; Dkt. 143 at 2. PPG alleges that, since 2008, PPG has continuously acted as an exclusive distributor and supplier of TIGI products. Dkt. 89 at 2–3. In 2011, the parties “memorialized” this agreement through an Exclusive Agreement, which purports to grant PPG “an exclusive right to sell TIGI Products to distributors and wholesalers that sell to mass retailers and to sell TIGI Products directly to mass retail stores such as Wal-Mart, club stores, drug store chains, food stores, or wherever professional hair-care products can be found located in North America (the “North America Mass Retail Market”).” See id.; Dkt. 89-1 at 3. The Exclusive Agreement also provides, “TIGI shall not sell, directly or indirectly, to the North American Mass Retail Market other than to PPG without

the prior written approval of PPG.” Dkt. 89-1 at 3. According to PPG, “In 2011, TIGI and PPG agreed that the Exclusive Agreement would have a retroactive effective date of January 1, 2008, to encompass the period that PPG had been operating as the exclusive supplier and distributor of TIGI Products in the U.S. Mass Retail Market.” See Dkt. 89 at 2–3. In August 2017, TIGI informed PPG of its decision to move to a direct distribution model. Dkt. 143 at 6. TIGI alleges “[a]t that time, and for the first time,” PPG notified TIGI management of the Exclusive Agreement, and “PPG represented to TIGI that it had a valid and enforceable [exclusive distribution contract] dating back to January 1, 2008.” Id. On these facts, TIGI brought suit against PPG, alleging PPG is liable for fraud, fraud by

nondisclosure, aiding and abetting a TIGI employee’s breach of his fiduciary duties, and entering into a civil conspiracy against TIGI. Id. at 12–16. In the event TIGI is bound by the Exclusive Agreement, TIGI pleads, in the alternative, that PPG is liable for breach of contract, as PPG did not fulfill its obligation to “diligently” promote TIGI products as specified in the Exclusive Agreement. See id. at 16–18. PPG asserts counterclaims against TIGI. See Dkt. 89. PPG alleges TIGI “chronically” breached the Exclusive Agreement’s express terms, wrongfully terminated the Exclusive Agreement, breached the implied covenant of good faith and fair dealing, tortiously interfered with PPG’s business relationships, and defrauded PPG. See Dkt. 89 at 4, 12–23. Specifically, PPG alleges TIGI deliberately circumvented the Exclusive Agreement’s terms by creating a “vast ‘grey market,’” whereby TIGI sold its products directly to PPG’s customers at a lower price than what PPG could offer. Id. at 6. PPG further alleges TIGI intentionally sold products to Latin American entities, knowing they would sell TIGI products to the North American Mass Retail Market at “rock-bottom prices.” See Dkt. 192 at 12. PPG alleges TIGI’s “flouting” of PPG’s exclusivity

rights has substantially and negatively impacted PPG’s business relationships. Dkt. 89 at 6. In response, TIGI counters that it only directly sold “overstocks” and “slow-moving and obsolete” items (“SLOB’s”) to mass retailers—not bestselling products. See Dkt. 192 at 9. TIGI avers such direct sales were made with PPG’s consent. See id. On March 3, 2020, the Court entered its Order Governing Proceedings (Dkt. 35), and the parties commenced discovery. On June 11, 2021, PPG filed the present Motion, wherein PPG seeks leave to take three depositions. See Dkt. 192. Because of the parties’ imminent discovery deadline of July 30, 2021, the Court ordered expedited briefing, which the parties timely submitted. See Dkts. 193, 194, 195.

B. DEPOSITIONS ALREADY TAKEN OR SCHEDULED In its Motion, PPG represents that TIGI has stipulated to the depositions of twelve individuals. The deponents, their employer, and their job title(s) are as follows: No. Name Employer Title 1. Karen W. Smith* TIGI/Unilever Former Commercial Marketing Lead of Consumer Retail; Former Head of Marketing in the Americas 2. Rebecca (Doluisio) TIGI/Unilever Head of Customer Service Landrey* 3. Elisa Fischer* TIGI/Unilever Current General Manager of the Americas and Asia Pacific; Former General Manager of the Americas 4. Davis Schwartz* TIGI/Unilever Vice President and General Counsel of North America; Former Associate General Counsel 5. Tom Monaghan* TIGI/Unilever Former Global President 6. Saurabh Nayyar* TIGI/Unilever Former Finance Manager for the Americas; Former Global Finance Director; Former Finance Director 7. Phil Cheadle* TIGI/Unilever General Manager of Global Retail 8. Alan Wilkins TIGI/Unilever Global Finance and Operations Director; Former Operations Director; Former Global Finance Director; Former Finance Director 9. Mark Bleathman TIGI/Unilever Global General Manager 10. Patricia Benavides TIGI/Unilever Sales Director for Latin America 11. Lorri Hughes* Advantage Client Development Manager 12. TBD Pharmapacks Representative Dkt. 192 at 11–12.1 PPG further represents that TIGI previously stipulated to PPG deposing fourteen individuals; however, TIGI subsequently reneged on this stipulation. Id. at 1–2. C. DESIRED DEPOSITIONS In addition to the twelve individuals listed above, PPG seeks leave to depose three other individuals: Scott Antony (“Antony”), former director of Unilever’s team at Target until February 2020; Manjula Kekulthotuwa (“Kekulthotuwa”), former Global Head of Supply Chain at TIGI from 2013 to January 2021; and Simon Cooper (“Cooper”), Head of U.S. Consumer Retail at TIGI beginning in September 2020. Id. at 2. These three proposed deponents are not part of the fourteen to which the parties originally stipulated. Id. PPG avers Antony’s testimony is particularly relevant to PPG’s counterclaims, as PPG believes Antony, who was responsible for directly managing TIGI’s relationship with Target, facilitated direct sales to Target in violation of the Exclusive Agreement. See id. at 6. PPG cites an email it obtained from written discovery, in which a former TIGI employee states: I’ve re-read [Antony’s] email: I’m very worried that he says Kees and Neva have already “committed” to Target re. direct supply. . . . I’m afraid PPG will find out about our plans somehow through Target.

1 An asterisk (*) indicates PPG has already taken the witness’s deposition. Id. at 11. Dkt. 191-1 at 2 (emphasis added).

PPG advances similar arguments regarding Kekulthotuwa, whose name appears on over 650 emails produced by TIGI. See Dkt. 192 at 2. PPG believes Kekulthotuwa can provide relevant testimony regarding TIGI’s laser coding operations, TIGI’s direct sales of overstock and SLOB items, and TIGI’s executive-level discussions on transitioning to a direct sales strategy in the North American Mass Retail Market. Id. at 7–9.

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