The opinion of the court was delivered by: Sweet, District Judge.
Plaintiff Paper Corporation of the United States ("Paper
Corporation") has moved pursuant to Rule 15, Fed.R.Civ.P. to
amend its complaint in its action against defendant Schoeller
Technical Papers, Inc. ("Schoeller") as well as to compel
discovery from Schoeller pursuant to Rule 37, Fed.R.Civ.P. The
instant motions mark another round in the litigation between
the sales representative, Paper Corporation, and the
manufacturer, Schoeller, that arose out of an alteration in
their relationship. For the reasons set forth below, the motion
to amend is denied, and the motion to compel is granted in part
and denied in part.
The motion to amend comes in response to the court's opinion
of July 10, 1990, (the "Amended Complaint Opinion"), granting
in part and denying in part Schoeller's motion to dismiss Paper
Corporation's amended complaint.
The Amended Complaint Opinion dismissed all claims except the
breach of contract claim as it related to Hallmark, and the
quantum meruit claim based on the Hallmark account.*fn1 The
Amended Complaint Opinion noted:
While it is unlikely that further discovery will
change the position of the parties, such a change
is possible. In the event of additional
information, a further amendment may be proposed
Paper Corporation of United States v. Schoeller Technical
Papers, 742 F. Supp. 808, 814 (S.D.N.Y. 1990) ("Schoeller II").
This court had previously granted and part and denied in part
Schoeller's motion to dismiss the original complaint in an
opinion of October 11, 1989, (the "Opinion"). Paper Corporation
of United States v. Schoeller Technical Papers, Inc.,
724 F. Supp. 110, 117 (S.D.N.Y. 1989) ("Schoeller I").
Since the filing of the Amended Complaint Opinion, discovery
proceeded until the cut-off date of November 30, 1990. On
November 19, 1990, Paper Corporation filed its motion for leave
to file a second amended complaint. Oral argument on the motion
to amend was heard on December 7, 1990, and the motion was
considered fully submitted as of that date.
On February 19, 1991, Paper Corporation moved to compel
discovery. The court heard oral argument on the discovery
motion on February 22, 1991. The court will address both
motions in this opinion.
Familiarity with the background of this dispute is assumed,
as the court has previously set forth the history of the market
conditions and the relationship between Paper Corporation and
Schoeller in the Opinion. The following factual recitation
assumes the facts as alleged by Paper Corporation in its
proposed second amended complaint as submitted in connection
with this motion. This statement of facts will therefore be
limited to placing in context only those facts as alleged by
Paper Corporation that are new.
Paper Corporation — a division of Paper Corporation of
America — is a Delaware Corporation with its principal place
of business in Valley Forge, Pennsylvania. Paper Corporation is
an independent distributor of paper products. Among the
companies for which Paper Corporation serves as a distributor
is Schoeller. Paper Corporation has been distributing Schoeller
products to manufacturers of "every day greeting cards" (the
"greeting card business") since 1964. Among Paper Corporation's
accounts in the greeting card business is Hallmark Cards,
In 1979, Paper Corporation began distributing Schoeller
polycoated paper products in markets other than the
photographic paper market (the "polycoated business"). Among
Paper Corporation's accounts in the polycoated business is
Avery International Fasson Division ("Fasson").
Schoeller is a wholly-owned subsidiary of Felix Schoeller,
Jr. Gmbh ("FSG"), a German corporation. Before February 1986,
FSG had only a 50% interest in Schoeller, with Mead Corporation
("Mead") owning the other half. In February, 1986, Mead sold
its interest in Schoeller to FSG (the "acquisition").
At a management meeting held shortly after the acquisition,
Hans Michael Gallenkamp ("Gallenkamp"), the chief executive
officer of FSG as well as the chairman of the board of
Schoeller, called a meeting of Schoeller's management. Present
at the meeting were, among others, Arlon King ("King"), a
member of Schoeller management. King and Gallenkamp agreed and
decided that Schoeller would terminate Paper Corporation as a
One of the issues which Gallenkamp and King sought to resolve
was the termination of STP's then president, Richard O. Gall
("Gall"). Gall supported Schoeller's relationship with Paper
Corporation, and so Gallenkamp and King took the decision not
to inform Gall of their plans for Paper Corporation's
termination, and, moreover, to engineer his departure.
THE GREETING CARD BUSINESS
In 1986, at a meeting following the Schoeller management
meeting, Gallenkamp assured Robert F. Fitzgerald
("Fitzgerald"), the President of Paper Corporation, that
Schoeller would continue to sell greeting card paper through
Paper Corporation for a minimum of eight to 10 more years.
Gallenkamp did not at this time disclose to Fitzgerald his
intent to terminate Paper Corporation once it had secured from
customers future commitments for Schoeller products.
In the spring of 1987, Gallenkamp and FSG became aware of
increased demand for the photographic paper produced by FSG. To
fill that demand, FSG management determined to commit Schoeller
to producing photographic paper rather than greeting card
paper. Gallenkamp accordingly asked Gall to arrange for Paper
Corporation to announce to customers that Schoeller intended to
stop producing greeting card papers. When it later became clear
that Schoeller would not be experiencing as much increased
demand in the photographic paper business as anticipated,
Schoeller management decided that Schoeller would have to
attempt reentry in to the greeting card business. Schoeller
asked Paper Corporation to effect reentry.
In March of 1988, Paper Corporation negotiated with its
customer Hallmark a price increase on Schoeller's behalf. The
following month, Fitzgerald warned Gary Richmond of Schoeller
that the recent price increases were endangering the Hallmark
account. Schoeller accordingly revised its procedures for
filling Hallmark's orders.
In May 1988, Gallenkamp requested Gall's resignation. Gerald
Kempner ("Kempner") replaced Gall as President of Schloeller.
On approximately June 29, 1988, Schoeller wrote to Paper
Corporation enclosing an internal memorandum of Schoeller
confirming Schoeller's guarantee to sell to Hallmark through
Paper Corporation 4,000 tons in 1988, 6,000 tons in 1989, and
5,000 tons per year "in 1990 and beyond." The letter requested
discussions with Paper Corporation regarding Schoeller's
proposed pricing structure through April 1989.
At a meeting between Kempner, King, and Robert Bishop
("Bishop"), manager of production services for Schoeller, and
Fitzgerald, Fitzgerald advised the Schoeller representatives
that Hallmark wanted Schoeller's five year commitment expressed
in writing. On approximately August 18, 1988, Kempner wrote to
Fitzgerald "to reiterate our commitment to supply Hallmark with
greeting card paper in the following quantities . . .".
In anticipation of a meeting between Paper Corporation and
Hallmark on September 30, 1988, Fitzgerald requested that
Schoeller outline areas of discussion. In a letter to
Fitzgerald responding to Fitzgerald's request, King reiterated
the commitment made by Kempner on August 18, 1988, and stated
that Schoeller looked forward to "the continuation of ...