Tobacco & Allied Stocks, Inc. v. Transamerica Corp.

16 F.R.D. 537, 1954 U.S. Dist. LEXIS 4307
District Court, D. Delaware·Decided December 6, 1954·No. Civ. No. 1468·Published·Cited by 9 cases

Opinion

LEAHY, Chief Judge.

Plaintiffs put to defendant additional interrogatories 1 to 38, inclusive. Defendant answered interrogatories 16, 21, 22, 29, 33, 34 and 35. Defendant objects to interrogatories 1, 2, 24, 27 and 28 on the ground the information called for was not relevant to defendant’s affirmative defenses of statute of limitations, estoppel, laches and waiver. Additional ground of objection to interrogatory 1 was to make answer would be burdensome and vexatious. Objections under interrogatories 24, 27 and 28 were on the ground disclosures called for “work product”. Defendant objects to interrogatories 3-15, 17-20, 23, 25, 26 and 36-38, inclusive, on the ground of irrelevancy to the specific defenses noted, which were separated by order of the Court to be tried prior to the trial of the remaining issues of the case. Objection to interrogatory 17 is that the interrogation is based on a false premise. Additional grounds of objection to interrogatories 3, 4, 7, 8 and 9 are they call for the interviewing by defendant of thousands of persons in order to make answer. Additional ground of objection to interrogatories 23, 25 and 26 is they call for the disclosure of “work product” of defendant’s attorneys. Defendant objects to interrogatories 30, 31, and 32 ¡because answer calls for contentions, opinions and legal conclusions, as well as “work product”.

1. The first question involves interrogatories as to which defendant has already filed answers. The complaint alleges sale of 9,380 shares of Class A stock of the Axton-Fisher Tobacco Company by plaintiffs, minority stockholders, to defendant, Transamerica Corporation, at $47.50 per share on September 18, 1942. At this time, it is alleged, Transamerica was a majority stockholder of Axton-Fisher and, as such, had a secret design, undisclosed to plaintiffs, to capture for itself, in violation of fiduciary duty owed the minority stockholders, profit in Axton-Fisher resulting from increased value of inventory of leaf tobacco by liquidating Axton-Fisher so plaintiffs would be excluded from participation. The complaint, filed almost ten years later on July 10, 1952, charges violation also of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C.A. § 78j (b) and Rule X-10B-5. Defendant’s answer admits purchase of the shares but denies all other allegations of wrong-doing in the complaint. The noted affirmative defenses are relied on. Defendant moved for a separate trial of the issues of statute of limitations, estoppel, laches and waiver, and the postponement of trial of the remaining issues. Thereafter plaintiffs and defendant stipulated the defenses of statute of limitations, estoppel, laches and waiver should be tried to the Court. The stipulation was approved by order pursuant to Fed.Rules Civ.Proc. rule 42(b), 28 U.S.C.A.

2. Obviously, plaintiffs agreed to defendant’s motion for a separate trial of the four pleaded defenses prior to a trial of the remaining issues. It follows this voluntary limitation of issues should likewise apply to pre-trial discovery, otherwise the purpose of the stipulation and the Court’s order would be defeated. As noted, I have already ruled on limiting the scope of examination of one deponent.1 Other federal courts have likewise ordered deferment of discovery relating to other issues in a particular case pending preliminary determination of special defenses, which, if resolved in favor of a defendant, dis[540]*540poses of' the litigation. Momand v. Paramount Pictures Distributing Co., D.C. Mass., 36 F.Supp. 568; Pyle v. Pyle, D.C.W.D.La., 81 F.Supp. 207. This judicial limitation of the scope of pretrial discovery to matters relevant to defenses to be determined preliminarily is in accord with limitations of relevancy upon the scope of discovery by interrogatories. Sutton v. Warner Bros., D.C.E.D.Pa., 12 F.R.D. 192, 194; United States v. Columbia Steel Co., D.C.Del., 7 F.R.D. 183, 185. For example, Judge Rodney, in Cinema Amusements, Inc., v. Loew’s, Inc., D.C.Del., 7 F.R.D. 318, at page 320, wrote: “* * * While Hickman v. Taylor [329 U.S. 495, 67 S.Ct. 385, 91 L.Ed. 451] solved many problems concerning interrogatories, there is no indication that it solved the problems here present. It did not attempt to make irrelevant and immaterial matters proper subjects of interrogatories.” (Emphasis added.) In short, relevancy for purposes of discovery means relevancy to a particular pleaded affirmative defense of statute of limitations, etc.

Defendant should not be required to answer interrogatories not relevant to the trial of the defenses of statute of limitations, estoppel, laches and waiver where this Court, pursuant to stipulation of the parties, has entered an order these defenses will be tried prior to trial of any other issues in the case. While plaintiffs argue relevancy of interrogatories 3-15, 17-20, 23, 25, 26 and 36-38, inclusive, to the merits of other issues raised by the complaint and answer, such interrogatories are obviously not relevant to the trial of the four pleaded affirmative defenses.' This is true also as to interrogatories 1, 2, 24, 27 and 28, except as to those interrogatories relating to the allegations of paragraphs 30 and 31 of the answer filed by defendant.

I think defendant should be required to answer only those interrogatories as are relevant to its pleaded affirmative defenses of statute of limitations, estop-, pel, laches and waiver. After all, plaintiffs agreed to this limitation of subject matter and should not now be heard to-contend otherwise.

3. Defendant objects to certain in-' terrogatories' the answering of which requires research and compilation of data not known to defendant and answers to which would require interrogation of thousands of persons. Interrogatories 1, 3, 4, 7, 8 and 9 are broad and,, in addition to the objection of irrelevancy, defendant objects on the other grounds stated. For example, interrogatory 1 seeks the name and address of each director, officer, stockholder, employee or agent of defendant who has knowledge of the facts alleged in the complaint and answer. Interrogatory 3 inquires whether any such person had any plan at the time defendant contemplated the initial purchase of the 80,160 Class B shares of Axton-Fisher to liquidate that company. With the exception of interrogatories 3 and 4, interrogatories 1, 3, 4, 7, 8 and 9 are not limited;, as to time, as to directors, officers, stockholders, employees or agents of defendant required to be identified. In fact,, these interrogatories make inquiry concerning knowledge, state of mind, plan or purpose of defendant’s stockholders, which, in 1941, numbered approximately - 180,300 and which at no time between. 1941 and 1954 numbered less than 116,-300. Moreover from 1941 to 1954, 13,-800,000 shares of defendant’s stock were' traded on three exchanges on which the stock was listed and a list of persons-owning the stock for such period would contain at least 180,000 and possibly as many as 500,000 names. The specific-interrogation calls for questioning hundreds of thousands of persons. The task is impossible. To ascertain the knowledge, state of mind, plans or purposes of each in 1941-42 and subsequently would be vexatious to an extreme de[541]*541gree. The research project would have gigantic proportions. I have never observed an interrogatory so oppressive. Judge Rodney announced the rule of law for this District in United States v. Columbia Steel Co., D.C.Del., 7 F.R.D. 183, 184-185:

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Tobacco & Allied Stocks, Inc. v. Transamerica Corp., 16 F.R.D. 537, 1954 U.S. Dist. LEXIS 4307 (D. Del. 1954).

16 F.R.D. 537 (Tobacco & Allied Stocks, Inc. v. Transamerica Corp.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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