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RxUSA Wholesale, Inc. v. McKesson Corp.

June 25, 2007

RXUSA WHOLESALE, INC., PLAINTIFF,
v.
MCKESSON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: A. Kathleen Tomlinson, Magistrate Judge

ORDER

Plaintiff has filed a letter motion, pursuant to Local Civil Rule 37.3(c) and Rule III(A)(1) of my Individual Practice Rules, seeking permission to take depositions in excess of the presumptive limit of ten (10) provided for in Fed. R. Civ. P. 30(a)(2)(A). See DE 22. Specifically, Plaintiff seeks to conduct 21 depositions and notes that such testimony is neither cumulative nor duplicative, adding that the information sought is not obtainable from other sources.

Defendant opposes the motion, stating that it is willing to agree to 15 depositions, but asserting that Plaintiff has failed to meet its burden with respect to the other six proposed deponents, including Paul Julian (Executive Vice-President and Group President of McKesson) and John Hammergren (Chairman, President and Chief Executive Officer of McKesson). See DE 23. According to Defendant, these two depositions in particular "would be cumulative and prohibited under Rule 26(b)(2)(C)(I)." Id.

A party may request leave to conduct more than ten depositions. The Court should grant such a request if it is consistent with the principles stated in Rule 26(b)(2). Gross v. Bare Escentuals, Inc., No. 03-CV-3089, 2006 WL 316386, at *1 (S.D.N.Y. Oct. 30, 2006). Plaintiff relies upon several factors to support this motion. For example, Plaintiff points to the fact that (1) the amount in controversy here is in excess of $50 million, (2) the Defendant is the largest distributor of pharmaceutical products in the world and has ample resources, and (3) the information sought is necessary to establish the elements of Plaintiff's claims and to resolve the issues in this litigation. In further support, Plaintiff has provided a list of the witnesses from whom deposition testimony is sought, along with identifying information about each witness and the information Plaintiff maintains the witness has which is directly relevant to Plaintiff's claims. Also, Plaintiff has categorized these witnesses as employees/former employees who were directly involved in matters relating to the Supply Agreement at issue in this case, employees who managed Defendant's Distribution Centers, and manufacturers from whom Plaintiff sought to obtain product directly by way of drop-ship or dock-to-dock ship.

Aside from proposed witnesses Hammergren and Julian, Defendant objects to the depositions of the three employees in charge of Defendant's Distribution Centers, including Newcastle and Buffalo. Defendant's primary objection is that Plaintiff cannot identify these individuals and therefore lacks a sufficient basis for exceeding the deposition limit. In addition, Defendant objects to the deposition of a designated representative of Proctor & Gamble ("P & G") (1) because Plaintiff has failed to state with specificity the identity of the P & G witness it claims to have spoken with and (2) that such testimony is in any event duplicative of testimony from the five other manufacturers whose witnesses have been specifically identified. Essentially, Defendant requests that Plaintiff's motion be denied and that each side be limited to fifteen depositions.

With regard to exceeding the ten-deposition limit of Rule 30(a)(2)(A), Defendant relies upon Rule 26(b)(2)(C)(i) and principally upon two cases, namely, Sigala v. Spikouris, No. 00-CV- 0983, 2002 WL 721078, at *3 (E.D.N.Y. Mar. 7, 2002) and General Electric Co. v. Indemnity Insurance Co., No. 06-CV-232, 2006 WL 1525970, at *2 (D. Conn. May 25, 2006). Rule 26(b)(2)(C)(i) provides that

C) The frequency or extent of use of the discovery methods otherwise permitted under these rules and by a local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive....

Applying these principles, it is apparent that even though a witness may have discoverable information, that fact alone does not always entitle a party to depose that individual. Gross, 2006 WL 316386, at *1; Commodity Futures Trading Comm'n v. Commodity Inv. Group, Inc., No. 05-CV-5741, 2005 WL 3030816, at *1 (S.D.N.Y. Nov. 10, 2005); Sigala, 2002 WL 721078, at *3. Fed. R. Civ. P. 30(a)(2)(A) presumptively limits the number of depositions each side may conduct to ten. The purpose of that rule is to "enable courts to maintain a 'tighter rein' on the extent of discovery and to minimize the potential cost of [w]ide-ranging discovery. . . ." Whittingham v. Amherst Coll., 163 F.R.D. 170, 171-72 (D. Mass. 1995) (citingNotes of the Advisory Committee (1993), Fed. R. Civ. P. 26(b)(2)). Where a party who is seeking discovery has demonstrated why the additional testimony is necessary, a court has discretion to allow more than ten depositions. Gross, 2006 WL 316386, at *1; Sigala, 2002 WL 721078, at *1.

In Sigala, the plaintiff sought to recover $200,000 she allegedly loaned to the defendants. There, Magistrate Judge Go questioned why Defendants needed to take so many depositions given the issues involved and the amount of the damages, and she limited the number of depositions to thirteen in total. Sigala, 2002 WL 721078, at *1, 2. In ruling on defendant's appeal of that order, Judge Glasser affirmed the decision, finding that Magistrate Go had fully considered the criteria spelled out in Rule 26(b)(2), including the needs of the case, the amount in controversy, the importance of the issues at stake and the importance of the proposed discovery in resolving the issues. Id. at *4. Moreover, Judge Glasser found that the defendant failed to come forward with any evidence "beyond pure speculation that the additional persons he sought to depose would provide any evidence that was not cumulative of that he could obtain (or had obtained) from persons he was permitted to depose." Id.

In this regard, Sigala is distinguishable from the present circumstances. Plaintiff asserts that the damages in this case are in excess of $50 million -- 200 times the damages at issue in Sigala. Moreover, Defendant does not dispute Plaintiff's allegation that McKesson is the largest distributor of pharmaceutical products in the world and ranks 16 on the Fortune 500 list, with annual net earnings in excess of $80 million. Nor are the circumstances here akin to General Electric Co. v. Indemnity Insurance Co., an insurance coverage dispute, where plaintiff requested 15 depositions and defendant wanted 75 as part of the proposed discovery plan submitted before any actual discovery had taken place. See 2006 WL 1525970 at *1. There, the court preliminarily limited the number of depositions to 15, a minimum number agreed upon by the parties. Id. at *2. In doing so, the court noted that discovery had not yet begun, the moving party had not provided the specific names of the proposed witnesses, nor made a particularized showing of why the discovery was necessary. Id. (citing Scanlan v. Potter, No. 05-CV-291, 2006 WL 1207748, at *1 (D. Vt. May 4, 2006)). The court declined to grant the large number of depositions, finding that the application was premature but also noted that the defendant was not prohibited from moving to expand the number of depositions at a future point in the litigation.

Id.

I have been engaged with the discovery phase of the instant litigation since this lawsuit was commenced. This is not a "simple" breach of contract/specific performance case. Plaintiff here alleges that the Defendant breached its contractual obligations to supply products ordered by Plaintiff from either Defendant's primary distribution center, another of Defendant's distribution centers, or by way of drop shipment directly from the manufacturer. See DE 22 at 2. Plaintiff further claims that Defendant also breached its contractual requirement to accept for return those goods which had become unsaleable.

The parties here have engaged in their good faith discussions pursuant to Local Rule 37.3 to try to resolve this issue and have not been able to do so. Plaintiff has set forth three categories of witnesses who comprise the list of 21 proposed deponents and further argues that these witnesses are necessary for Plaintiff to establish its claims regarding the alleged breach of contract. In addition to delineating these categories, Plaintiff has also provided a schedule of the specific individuals or positions which it seeks to depose, along with a description of the information Plaintiff contends the respective witness has. I have reviewed these categories and the schedule explaining the information each witness purportedly possesses and have weighed the arguments of both sides with respect to whether additional depositions should be granted. Each of these groupings is addressed individually below.

1. Employees Involved in the Negotiation, Execution and Performance of the Supply Agreement ...


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