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Grand River Enterprises Six Nations, Ltd. v. King

January 30, 2009

GRAND RIVER ENTERPRISES SIX NATIONS, LTD., PLAINTIFF,
v.
TROY KING, ET AL., DEFENDANTS.



The opinion of the court was delivered by: John F. Keenan, United States District Judge*fn1

MEMORANDUM OPINION AND ORDER

Before the Court is Plaintiff's objection to Magistrate Judge Douglas F. Eaton's June 27, 2008, discovery order. Plaintiff argues that Magistrate Judge Eaton erred in permitting Defendants to withhold from discovery R.J. Reynolds Tobacco Company's ("RJR") operating and strategic plans (the "Plans"). Specifically, Plaintiff argues that Magistrate Judge Eaton erred by (1) finding that disclosure of the Plans would harm RJR, (2) withholding the Plans from even Plaintiff's counsel and experts, and (3) denying Plaintiff access to evidence relevant to its claims. For the reasons outlined below, the Court affirms the June 27 order in its entirety.

I. BACKGROUND

The Court assumes familiarity with its earlier opinions in this case and discusses only those facts related to the current discovery dispute. For a detailed summary of the facts, see Grand River Enterprises Six Nations, Ltd. v. Pryor, No. 02 Civ. 5068, 2006 U.S. Dist. LEXIS 35614 (S.D.N.Y. May 31, 2006), and Grand River Enterprises Six Nations, Ltd. v. Pryor, No. 02 Civ. 5068, 2003 U.S. Dist. LEXIS 16995 (S.D.N.Y. Sept. 29, 2003).

In 2005, Defendants and the Original Participating Manufacturers ("OPMs") engaged in three arbitrations to determine whether to adjust payments made by the OPMs to Defendants under the Master Settlement Agreement. The arbitrations concerned one of three years: 2003, 2004, and 2005. As part of the arbitrations, three OPMs -- RJR, Lorillard Tobacco Company, and Philip Morris U.S.A., Inc., -- provided a great deal of econometric data to Defendants' experts, who in turn made submissions to the arbitrator based on the data.

During discovery in the instant case, Plaintiff asked Magistrate Judge Eaton in a letter dated May 28, 2008, to order the production of, among other things, "[a]ll submissions made by the parties in connection with the 2003 [arbitration]" (the "2003 Submissions") and "[a]ll pricing and other econometric data that was in the possession of the States' experts in connection with any of the three [arbitrations]" (the "Pricing and Econometric Data"). (Pl.'s Objection to Mem. and Order of Magistrate Judge Eaton ("Pl.'s Br.") Ex. 1 at 1-2.) The OPMs did not object to the production of the 2003 Submissions, but did object to the production of the Pricing and Econometric Data.*fn2 On June 4, 2008, shortly after the issuance of a confidentiality order that covered the Pricing and Econometric Data, the OPMs provided Magistrate Judge Eaton with samples of the data for in camera review and explained the risks posed by its dissemination. The in camera submission also discussed the extreme sensitivity of the Plans, which are based on and derived from the Pricing and Econometric Data. As RJR explained in its brief to this Court:

The Plans requested by Plaintiff in its Objection use and build on [RJR's] proprietary data to assess [RJR's] market performance and the pricing and competitive environments in which its brands compete. Based on those assessments, the Plans set forth objectives for [RJR's] wholesale and trade marketing groups and outline which brands to support and with what level of resources. Among other things, the Plans use this data to formulate competitive strategy and develop current and future marketing plans for [RJR's] various brands.

In addition, the Plans draw their conclusions from company analysis of that data and therefore provide a roadmap for how the data can be interpreted and used in the competitive planning processes. (RJR's Resp. to Objection to Mem. and Order of Magistrate Judge Eaton ("RJR's Br.") 3.)

In an order dated June 10, 2008, Magistrate Judge Eaton required Defendants to produce only two categories of the Pricing and Econometric Data. He wrote that he would explain his reasons for permitting Defendants to withhold the remaining data "in a later opinion." Grand River Enters. Six Nations, Ltd. v. Pryor, No. 02 Civ. 5068, at 2 (S.D.N.Y. June 10, 2008). Magistrate Judge Eaton fulfilled that promise in an order dated July 14, 2008, a little more than two weeks after issuing the June 27 order, which the instant objection opposes.*fn3 In the July 14 order, he cited as the rationale for his June 10 order that "set forth in [RJR's] letters [of June 19, June 25, and July 7], especially [RJR's] June 25 letter at pages 8-9 and 12-16." In relevant part, the June 25 letter reads,

[The Plans] identify trends and strategies which can be (and in the case of certain of the [P]lans, are) extrapolated out to the present day and show how [RJR] intends to compete. Thus, even if historical, they remain competitively sensitive. [The Plans] draw their conclusions from company analysis of the [Pricing and Econometric Data] and therefore provide a roadmap for how the [Pricing and Econometric Data] can be interpreted and used in the competitive planning processes. A competitor such as Plaintiff (or its consultants) could use these documents as a guide to replicate [RJR's] methods of analysis and predict [RJR's] next strategic moves for a specific brand or more generally within the market. (Pl.'s Br. Ex. 6 at 16.)

In June, Defendants produced the 2003 Submissions as promised, but did not include an appendix to one of the submissions. Following a request from the Plaintiff in late June, Magistrate Judge Eaton ordered the production of the 2003 Submissions in their entirety, including the missing appendix. However, in the June 27 order, Magistrate Judge Eaton stated that he had made the previous ruling "[w]ith undue haste," since the appendix contained the Plans, which he had previously permitted Defendants to withhold.*fn4 Grand River Enters. Six Nations, Ltd. v. Pryor, No. 02 Civ. 5068, at 1 (S.D.N.Y. June 27, 2008).

Plaintiff now objects to the June 27 order to the extent that it permits Defendants to withhold the Plans.

II. DISCUSSION

Plaintiff raises three objections: (1) The June 27 order incorrectly presumes that disclosure of the Plans will harm RJR. (2) The order withholds the Plans even from Plaintiff's counsel and experts. (3) The order ...


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