Vantage Mobility International LLC v. Kersey Mobility LLC

• Court: District Court, D. Arizona
• Decided: January 15, 2021
• Docket: 2:19-cv-04684
• Status: Unknown

Opinion

1 2 WO 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA

10 Vantage Mobility International, LLC, No. CV-19-04684-PHX-JJT

11 Plaintiff, ORDER

12 v.

13 Kersey Mobility, LLC,

14 Defendant. 15 16 17 Pending before the Court is Kersey Mobility, LLC’s (“Defendant” or “Kersey”) 18 Motion to Compel (Doc. 284).1 Defendant moves to compel Plaintiff to designate 19 organizational representatives for Rule 30(b)(6) depositions. Vantage Mobility 20 International, LLC (“Plaintiff” or “VMI”) has filed a Response (Doc. 290), to which 21 Defendant has replied (Doc. 295). After reviewing the parties’ briefing, the Court does not 22 find that oral argument is necessary. For the reasons explained herein, the Court will grant 23 Defendant’s Motion (Doc. 284) as to all but one of the noticed deposition topics. 24 25 26

27 1 On October 21, 2020, the District Judge referred to the undersigned the discovery dispute outlined in the parties’ “Notice of Discovery Dispute Regarding Depositions 28 Noticed by Kersey for October 8 and October 9, 2020” (Doc. 260). (Doc. 268). The undersigned ordered full briefing. (Doc. 276). 1 I. LEGAL STANDARDS 2 “Parties may obtain discovery regarding any nonprivileged matter that is relevant to 3 any party’s claim or defense and proportional to the needs of the case, considering the 4 importance of the issues at stake in the action, the amount in controversy, the parties’ 5 relative access to relevant information, the parties’ resources, the importance of the 6 discovery in resolving the issues, and whether the burden or expense of the proposed 7 discovery outweighs its likely benefit.” Fed. R. Civ. P. 26(b)(1). “Information within this 8 scope of discovery need not be admissible in evidence to be discoverable.” Id. “Generally, 9 the purpose of discovery is to remove surprise from trial preparation so the parties can 10 obtain evidence necessary to evaluate and resolve their dispute.” Duran v. Cisco Sys., Inc., 11 258 F.R.D. 375, 378 (C.D. Cal. 2009) (citations omitted). 12 Since an organization itself cannot be deposed, Federal Rule of Civil Procedure 13 30(b)(6) allows the testimony to be taken from a person answering questions on behalf of 14 the entity. See Hooker v. Norfolk S. Ry. Co., 204 F.R.D. 124, 125 (S.D. Ind. 2001). Under 15 Rule 30(b)(6), a party may notice an organization’s deposition without specifically naming 16 the individual to be deposed, instead setting forth “with reasonable particularity” the 17 matters on which the examination is requested so the organization can designate one or 18 more individuals to testify. Rule 30(b)(6) was “intended to assist both sides in the 19 deposition process.” Memory Integrity, LLC v. Intel Corp., 308 F.R.D. 656, 660 (D. Or. 20 2015). On the one hand, Rule 30(b)(6) serves to “curb the ‘bandying’ by which officers or 21 managing agents of a corporation are deposed in turn but each disclaims knowledge of 22 facts that are clearly known to persons in the organization and thereby to it.” Rule 30, 23 Advisory Committee Notes (1970 Amendment). On the other hand, the “provision should 24 also assist organizations which find that an unnecessarily large number of their officers and 25 agents are being deposed by a party uncertain of who in the organization has knowledge.” 26 Id. 27 In response to a Rule 30(b)(6) deposition notice, “corporate parties have an 28 obligation to present witnesses who are capable of providing testimony on the noticed 1 topics regardless of whether the information was in the witness’s personal knowledge, 2 provided that the information is reasonably available to the corporation.” Memory 3 Integrity, 308 F.R.D. at 661; Great Am. Ins. Co. of New York v. Vegas Const. Co., Inc., 251 4 F.R.D. 534, 539 (D. Nev. 2008) (“The duty to prepare a Rule 30(b)(6) designee goes 5 beyond matters personally known to the witness or to matters in which the designated 6 witness was personally involved.”). The corporation must identify and prepare its 7 witnesses “so that they may give complete, knowledgeable and binding answers on behalf 8 of the corporation.” Sprint Commc’ns Co. L.P. v. Theglobe.com, Inc., 236 F.R.D. 524, 528 9 (D. Kan. 2006) (internal quotation marks and footnote omitted); Starlight Int’l Inc. v. 10 Herlihy, 186 F.R.D. 626, 639 (D. Kan. 1999) (corporation has “a duty to make a 11 conscientious, good-faith effort to designate knowledgeable persons for Rule 30(b)(6) 12 depositions and to prepare them to fully and unevasively answer questions about the 13 designated subject matter”). “The designating party has a duty to designate more than one 14 deponent if necessary to respond to relevant areas of inquiry on the noticed topics.” Great 15 Am. Ins. Co. of New York, 251 F.R.D. at 538-39. Although courts have recognized that 16 “[a]dequately preparing a Rule 30(b)(6) deposition can be burdensome, ‘this is merely the 17 result of the concomitant obligation from the privilege of being able to use the corporate 18 form in order to conduct business.’” Id. at 540 (quoting United States v. Taylor, 166 F.R.D. 19 356, 362 (M.D. N.C. 1996)). 20 Because “Rule 30(b)(6) places substantial responsibilities and burdens on the 21 responding corporate party,” Memory Integrity, 308 F.R.D. at 661, for the Rule “to 22 effectively function, the requesting party must take care to designate, with painstaking 23 specificity, the particular subject areas that are intended to be questioned, and that are 24 relevant to the issues in dispute.” Prokosch v. Catalina Lighting, Inc., 193 F.R.D. 633, 638 25 (D. Minn. 2000). While an organization must make a good faith effort to prepare a Rule 26 30(b)(6) witness to “fully and unevasively answer questions about the designated subject 27 matter . . . that task becomes less realistic and increasingly impossible as the number and 28 breadth of noticed subject areas expand.” Apple Inc. v. Samsung Elecs. Co., No. C 11- 1 1846 LHK PSG, 2012 WL 1511901, at *2 (N.D. Cal. Jan. 27, 2012) (internal quotation 2 marks omitted). Rule 30(b)(6) does not permit “burdening the responding party with 3 production and preparation of a witness on every facet of the litigation.” Apple, 2012 WL 4 1511901, at *2. 5 II. DISCUSSION 6 The factual background concerning this litigation is summarized in the Court’s prior 7 Orders and will not be repeated here. (Doc. 103 at 2-3; Doc. 168 at 1-2; Doc. 207 at 1-3). 8 The parties’ instant dispute concerns Defendant’s “First Amended Notice of Deposition 9 30(b)(6) Representative of Vantage Mobility International, LLC” (the “Amended Notice”) 10 (Doc. 284-1 at 3-5) served on Plaintiff on October 6, 2020. The Amended Notice identifies 11 eleven topics for examination, which are discussed below. It is first noted that the Court 12 is not persuaded by Plaintiff’s assertion (Doc. 290 at 7-9) that by filing its Motion for 13 Summary Judgment, Defendant has no good-faith basis to take the depositions. The parties 14 notified the Court of the pending dispute on October 8, 2020 (Doc. 260), well before 15 Defendant filed its Motion for Summary Judgment (Doc. 281) on November 20, 2020. The 16 Motion to Compel was filed upon the Court’s directive for full briefing of the dispute. 17 (Doc. 276). The affidavit from Defendant’s damages expert that is attached to the Motion 18 to Compel is dated October 7, 2020. (Doc. 284-1 at 16). 19 A. Topic 1 20 As Defendant notes (Doc. 284 at 4), the remaining claim in this matter is “VMI’s 21 claim for breach of the Control Policy as it pertains to the Authorized Dealer Agreement.” 22 (Doc. 103 at 16). The Control Policy states that, without the prior written consent of VMI, 23 Kersey may neither “assign any or all of its rights or delegate the performance of any or all 24 of its duties and obligations” under the agreements with VMI nor transfer control of 25 Kersey. (Id. at 2). Defendant asserts that Plaintiff’s claim fails as Defendant never assented 26 to the Control Policy. 27 Topic 1 of the Amended Notice seeks a Rule 30(b)(6) witness who can testify as to 28 “[w]hy the Change of Control Policy was not mailed to dealers.” (Doc. 284-1 at 4). 1 Defendant asserts that this topic is relevant to its defense that Plaintiff’s concealment of 2 the Control Policy failed to observe reasonable commercial standards of fair dealing in the 3 trade. (Doc. 284 at 5-6). The Court finds that Topic 1 of the Amended Notice is relevant, 4 proportional to the needs of the case, and is stated with reasonable particularity. The 5 Motion to Compel is granted as to Topic 1. 6 B. Topics 2, 4, and 5 are Not in Dispute 7 It appears that Plaintiff does not object to providing a Rule 30(b)(6) witness as to 8 Topics 2, 4, and 5 of the Amended Notice. (Doc. 284 at 6-7; Doc. 260-3). The Court finds 9 that Topics 2, 4, and 5 of the Amended Notice are relevant, proportional to the needs of the 10 case, and are stated with reasonable particularity. The Motion to Compel is granted as to 11 Topics 2, 4, and 5. 12 C. Topic 3 13 Topic 3 of the Amended Notice seeks a witness concerning “VMI’s use and the 14 features of Constant Contact.” (Doc. 284-1 at 4). Defendant explains that it “seeks to 15 understand how VMI used the mass-mailing software Constant Contact to communicate 16 with dealers, including the Control Policy.” (Doc. 284 at 6). Defendant further explains 17 that “the Control Policy was sent via Constant Contact, and VMI has consistently asserted 18 that its internal Constant Contact data shows that Mr. Kersey opened the email containing 19 the Control Policy and clicked on the link to open it.” (Id.). 20 Plaintiff objects to Topic 3 on the grounds that it is vague, ambiguous, and 21 overbroad. (Doc. 290 at 10). These objections are overruled. The Court finds that Topic 22 3 of the Amended Notice is relevant, proportional to the needs of the case, and is stated 23 with reasonable particularity. The Motion to Compel is granted as to Topic 3. 24 D. Topics 6, 7, and 11 25 Topics 6, 7, and 11 seek a Rule 30(b)(6) witness to testify on the following issues: 6. Sales leads and other sales support provided to VMI dealers 26 and AMS Vans from Jan. ’15 to the present. 27 7. VMI’s warranty claim occurrence rate from Jan. ’15 to 28 present. 1 . . . . 2 11. The following for VMI and AMS Vans: 3 a) Monthly balance sheets, profit and loss statements, and cash flow statements from Jan. ’15 to the present. 4 b) Financial statements and source documents from Jan. 5 ’15 to the present, including all of the following by 6 product type (vehicle, conversion, parts, etc.): revenue, sales, fixed and variable costs, gross profit 7 and profit margin. 8 c) Any valuations, appraisals, or the like of VMI’s or AMS Vans’ value, whether internal or external, 9 including those based on any analysis of market 10 comparable companies or an analysis of the companies’ discounted cash flows from Jan. ’15 to 11 the present. 12 d) From January 2019 to present, sales projections, 13 forecasts, and budgets that forecast manufacturing and sales. 14 (Doc. 284-1 at 4-5). The Court agrees with Plaintiff that Topics 6, 7, and 11 seek the same 15 or similar information as Defendant’s prior discovery requests that were denied in the 16 Court’s August 6, 2020 Order. (Doc. 290 at 6). Yet, the Court is persuaded by Defendant’s 17 assertion that the “state of play has changed considerably” since the issuance of that Order. 18 (Doc. 284 at 11). On September 4, 2020, Plaintiff disclosed that its current assessment of 19 total damages is at least $25,244,590, which includes lost sales, decreased purchase orders, 20 decreased shipments, harm to VMI’s business reputation and good will, diminished market 21 share, decreased business value, lost business opportunities, and value of confidential, 22 sensitive and proprietary business information to a primary competitor. (Doc. 229-5 at 4). 23 Regarding Topics 6 and 7, Defendant states that it “seeks to understand whether and 24 how VMI’s support for its dealers has dropped in the past 5 years, which would be relevant 25 for putting any alleged drop in sales of manual products in context. So too would a decline 26 in quality of VMI’s products, as evidenced by an increase in warranty claims.” (Doc. 295 27 at 6). The Court finds that Topics 6 and 7 are relevant, proportional to the needs of the 28 1 case, and are stated with reasonable particularity. The Motion to Compel is granted as to 2 Topics 6 and 7. 3 Defendant has provided an October 7, 2020 Declaration of its damages expert Keith 4 Bierman, CPA. (Doc. 284-1 at 11-16). Mr. Bierman explains that the information in Topic 5 11(a) is needed because “any review of VMI’s alleged lost profits would require the 6 establishment of VMI’s profitability, cost structure and financial trends as would be 7 revealed by the requested financial statements.” (Id. at 14). Mr. Bierman also states that 8 “in assessing lost profits, it is important to consider any factors that could have affected the 9 financial performance of the dealerships in question such as: changes in market conditions, 10 competition, pricing pressures, consumer preferences, cost structures (both variable and 11 fixed costs) and a number of other factors.” (Id.). 12 Mr. Bierman states that the information in Topic 11(b) is necessary in order to 13 “understand the details behind the changes in revenue, profitability, sales volumes, and 14 pricing as it relates to the actual products being sold at issue.” (Id.). Understanding such 15 details, Mr. Bierman explains, is critical in determining whether there is a specific 16 connection between the alleged wrongful acts and the resulting damages, and to the 17 quantification of such damages. (Id. at 15). Mr. Bierman further states that the information 18 in Topics 11(c) and 11(d) is needed in order to test VMI’s assumptions used to calculate 19 lost profits. (Id. at 15-16). The Court finds that Topics 6, 7, and 11 are relevant, 20 proportional to the needs of the case, and are stated with reasonable particularity. The 21 Motion to Compel is granted as to Topics 6, 7, and 11. 22 E. Topic 8 23 In Topic 8 of the Amended Notice, Defendant seeks a designated VMI 24 representative who can testify on the following topic: “For any VMI dealer locations in 25 which the location transitioned to dual line while a VMI dealer, sales the three years before 26 and after the location transitioned to dual line.” (Doc. 284-1 at 4). Plaintiff contends that 27 the Court’s August 6, 2020 Order already denied discovery on this subject. (Doc. 290 at 28 6). Defendant responds that although Request For Production No. 1 sought five years of 1 information covering all VMI dealers, Topic 8 seeks a deponent to testify about a more 2 limited set of data about a more limited set of dealers. (Doc. 295 at 4). Defendant asserts 3 that it “is entitled to know how its performance compares to other dealers that have made 4 that perfectly lawful switch, to establish that VMI’s damages are merely the natural 5 consequence of Kersey doing something that it was always entitled to do, broaden its 6 product line-up for customers.” (Id.). The Court finds that Topic 8 is relevant, proportional 7 to the needs of the case, and is stated with reasonable particularity. The Motion to Compel 8 is granted as to Topic 8. 9 F. Topic 9 10 Topic 9 seeks information concerning “[o]ther VMI dealers who have sold any 11 interest in a dealership since the Control Policy issued in Nov. ’18, including VMI’s 12 consent or lack thereof.” (Doc. 284-1 at 4). Defendant explains that because this case 13 centers on the value, if any of VMI’s alleges rights of first refusal and first-offer, its 14 damages expert cannot accurately assess the impact of Kersey’s sale without understanding 15 the effects of comparable transactions. (Doc. 284 at 9). In his Declaration, Mr. Bierman 16 states that: Rights of first refusal and topping rights have the tendency to 17 “chill” the interest of third-party buyers who are not willing to 18 go through the expense and effort of due diligence and committing to an offer if they know that VMI can simply beat 19 their offer by just a nominal amount. It is important to 20 understand whether these rights have been enforced with respect to other dealerships and what effect those rights had on 21 the dealership’s sale process and/or ultimate value received, if 22 sold. From a damages perspective, it would be necessary to understand the effect such alleged contract rights have on the 23 value of any dealerships whereby these alleged rights have 24 been actually implemented, including whether there was any deleterious effect on the value of the dealerships as a result. 25 (Doc. 284-1 at 13-14). The Court finds that Topic 9 is relevant, proportional to the needs 26 of the case, and is stated with reasonable particularity. The Motion to Compel is granted 27 as to Topic 9. 28 1 G. Topic 10 2 Topic 10 of the Amended Notice concerns “VMI’s responses to discovery requests, || including the ‘increased support’ described in VMI’s response to Interrogatory No. 3.” (Doc. 284-1 at 4). Plaintiff asserts that Topic 10 fails to reasonably specify any other || discovery response on which Kersey seeks testimony, explaining that Kersey has propounded multiple sets of discovery requests covering numerous facts and issues. 7\|| Plaintiff contends that “‘[w]ithout knowing the specific discovery responses Kersey wants 8 || to depose VMI on, it is unreasonable to require a witness to pour over every single 9|| discovery response VMI has made in this action.” (Doc. 290 at 12). 10 The Court finds that Topic 10 does not provide reasonably particularized notice such 11 || that Plaintiff can meet its obligation to prepare its representative. The Motion to Compel is granted as to Topic 10 to the following extent: Plaintiff shall produce a Rule 30(b)(6) 13 || witness to testify as to VMI’s response to Interrogatory No. 3. Defendant’s Motion to || Compel is otherwise denied as to Topic 10. 15 Il. CONCLUSION 16 Based on the foregoing, 17 IT IS ORDERED granting in part and denying in part Defendant’s Motion to 18 || Compel (Doc. 284) as set forth herein. 19 Dated this 15th day of January, 2021. 20 G Ig bf □ 21 Honorable Eileen S. Willett 09 United States Magistrate Judge 23 24 25 26 27 28

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