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Palm Bay International, Inc. v. Marchesi Di Barolo S.P.A.

November 9, 2009


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



Plaintiff Palm Bay International, Inc. ("Plaintiff" or "Palm Bay"), a New York wine distributor, brought this action against Defendant Marchesi Di Barolo, S.p.A. ("Defendant" or "Marchesi"), an Italian wine producer, for, inter alia, damages arising from defective wine which Marchesi sold to Palm Bay as well as Marchesi's subsequent termination of the parties' Importation Agreement. Presently before the Court are three motions pertaining to discovery:

(1) Defendant's motion to compel [DE 76] Plaintiff's responses to certain document requests and interrogatories related to Plaintiff's damages claim; (2) Defendant's motion to compel [DE 89] [a] Plaintiff's responses to certain document requests and interrogatories, [b] continuation of two 30(b)(6) depositions, [c] attorneys' fees and costs incurred as a result of continuing the depositions and making this motion, and [d] production of a privilege log; and (3) Plaintiff's motion to compel [DE 99] deposition testimony from Anna Abbona, Defendant's managing director.*fn1 Each of these motions is discussed in turn below.


In 1994, Palm Bay entered into a written agreement (the "Importation Agreement") with Marchesi for the exclusive right to import Marchesi's wine and other products ("Marchesi wine") in the United States. First Am. Compl. ("Compl.") [DE 61] ¶ 29. From 1994 through early 2008, Palm Bay was the exclusive importer of Marchesi wine in the United States.

In May 2007, Palm Bay entered into an agreement with the Olive Garden Restaurant (the "Olive Garden Agreement") to supply a large quantity of Moscato d'Asti wine bearing the label "Marchesi di Barolo" (the "Olive Garden Wine") -- to 635 Olive Garden Restaurants. Compl. ¶¶ 33, 34; Def.'s Answer to First Am. Compl. ("Answer") [DE 107] ¶ 34. Pursuant to the Olive Garden Agreement, Marchesi agreed to produce the Olive Garden Wine, which Palm Bay agreed to purchase and import pursuant to the Importation Agreement and then sell to Olive Garden. Compl., ¶ 34. In January 2008, Palm Bay received numerous complaints from Olive Garden that the Olive Garden Wine supplied by Marchesi was defective. Id., ¶ 37. According to Palm Bay, the wine had a "noxious smell and taste" and, in some instances, the bottles exploded or shattered. Id. ¶¶ 38, 40. Palm Bay recalled the offending wine and terminated the Olive Garden Agreement, allegedly incurring costs of $1.7 million as a result of having to reimburse Olive Garden. Id., ¶¶ 39, 43-44. Palm Bay then sought reimbursement from Marchesi. Marchesi alleges that it attempted to cure the defective product and resolve the dispute in good faith. Answer, ¶¶ 47-60, 64. However, the parties were unable to reach a resolution and in January 2009, Palm Bay deducted $650,000 from the amount it owed Marchesi to offset the losses incurred as a result of the recall of the defective wine. Compl., ¶¶ 46-47. Marchesi responded by terminating the Importation Agreement on the grounds that Palm Bay's set-off of the price paid for the Olive Garden wine constituted a breach of the Importation Agreement. Id., ¶ 48; Answer, ¶ 70.

In the First Amended Complaint [DE 61], Palm Bay asserts claims against Marchesi for breach of contract (Count I), breach of implied warranty of fitness for a particular purpose (Count II), and breach of implied warranty of merchantability (Count III). Palm Bay seeks damages in the amounts of $1.7 million stemming from the defective wine and $10 million arising from Marchesi's termination of the Importation Agreement. In the Answer to the First Amended Complaint [DE 107], Marchesi asserts counterclaims against Palm Bay for breach of contract (Counts I, VII, VIII) and breach of the Importation Agreement (Counts II-VI).


Federal Rule 26(b)(1) describes the scope of, and limitations on, discovery in civil litigation:

Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense . . . . For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(C).

Fed. R. Civ. P. 26(b)(1). "Relevance" under Rule 26 is "construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978); Barrett v. City of N.Y.,237 F.R.D. 39, 40 (E.D.N.Y. 2006) (noting that the information sought "need not be admissible at trial to be discoverable").

As in every discovery context, a motion to compel is entrusted to the sound discretion of the district court. American Savs. Bank v. UBS Paine Webber, Inc. (In re Fitch, Inc.), 330 F.3d 104, 108 (2d Cir. 2003); United States v. Sanders, 211 F.3d 711, 720 (2d Cir. 2000). The Second Circuit has noted that a "trial court enjoys wide discretion in its handling of pre-trial discovery, and its rulings with regard to discovery are reversed only upon a clear showing of an abuse of discretion." DG Creditor Corp. v. Dabah (In re DG Acquisition Corp.), 151 F.3d 75, 79 (2d Cir. 1998) (citing Cruden v. Bank of N.Y., 957 F.2d 961, 972 (2d Cir. 1992)). A district court is considered to have abused its discretion "if it bases its ruling on a mistaken application of the law or a clearly erroneous finding of fact." Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001).

"The party seeking the discovery must make a prima facie showing that the discovery sought is more than merely a fishing expedition." Evans v. Calise, No. 02-cv-8430, 1994 WL 185696, at *1 (S.D.N.Y. May 12, 1994); United States v. Int'l Bus. Mach. Corp. 66 F.R.D. 215, 218 (S.D.N.Y. 1974) (burden is on moving party to establish relevance). "Disclosure should not be directed simply to permit a fishing expedition." United States v. Berrios, 501 F.2d 1207, 1211 (2d Cir. 1974). In a motion to compel, it is incumbent upon the moving party to provide the necessary linkage between the discovery sought and the claims brought and/or defenses asserted in the case.


A. Defendant's First Motion To Compel

In its first Motion to Compel [DE 76], Defendant Marchesi seeks Plaintiff Palm Bay's responses to Document Requests 28-30, 50, 54, 60, 74-76, and 86, which relate to the following categories: (1) sales reports for all Palm Bay Italian wines, by brand, from 1994 to the present; (2) annual financial statements from 1994 to the present; and (3) materials showing Palm Bay's efforts to mitigate damages by replacing the Marchesi wine. Marchesi asserts that it is entitled to receive these documents in electronic form. See DE 76. Defendant also seeks responses to Interrogatories 10 and 13, which pertain to: (1) Palm Bay's efforts to sell other Barolo wines; (2) Palm Bay's sales of rival Italian Cavit wines; and (3) Palm Bay's damages computations. Id. Marchesi contends that it needs these categories of discovery "to defend against Palm Bay's damages claim." Id. Palm Bay objects on the grounds that the discovery sought by Marchesi has already been produced or is irrelevant to the claims asserted in the First Amended Complaint. DE 83. Based upon my review of Defendant's motions and Plaintiff's opposition within the context of the standard of review discussed above, I am GRANTING, in part, and DENYING, in part, Defendant's first Motion to Compel to the extent set forth below.

1. Defendant's Request For Plaintiff's Sales Reports

Defendant's request for documents reflecting "sales reports for all Palm Bay Italian wines, by brand, from 1994 to the present" and responses to interrogatories related to Palm Bay's "efforts to sell other Barolo wines" and "its sales of rival Italian Cavit wines" is DENIED. In its July 31, 2009 Amended Complaint [DE 61], and as a result of Judge Spatt's denial of Plaintiff's application for a preliminary injunction [DE 52], Palm Bay withdrew, among other things, its claims relating to goodwill (i.e., related to its importation of brands of wine other than Marchesi). Palm Bay has asserted that it is willing to enter into a stipulation with Defendant withdrawing such claims to the extent that Defendant continues to interpret the Amended Complaint as seeking damages relating to goodwill [DE 83]. Plaintiff therefore is asserting damages based only upon the value or lost profit of the Marchesi wine. See DE 83. Accordingly, the categories of discovery which are the subject of this motion are no longer relevant to the claims asserted by Plaintiff nor to any defense corresponding to such claims. Significantly, Defendant does not argue that Plaintiff should not be permitted to withdraw its claims relating to goodwill. Rather, Defendant relies primarily on its position that Plaintiff has violated the Court's discovery Order of August 11, 2009. In light of Plaintiff's unopposed withdrawal of its claims relating to goodwill, whether Defendant chooses to enter in the stipulation or not does not change the fact that the damages associated with goodwill are no longer part of this litigation.

2. Defendant's Request For Plaintiff's Financial Statements

Defendant's request for Plaintiff's "annual financial statements from 1994 to the present" is GRANTED, in part. To the extent set forth here, the financial records sought by Defendant are discoverable and fall within the Federal Rules' definition of relevance because they are "reasonably calculated to lead to the discovery of admissible evidence." ABM Fin. Servs., Inc. v. Express Consol., Inc., No. 07-60294, 2008 WL 1776585, at *3 (S.D. Fla. Apr. 17, 2008); Ehrlich v. Inc. Village of Sea Cliff, CV 04-4025, 2007 WL 1593223, at *3 (E.D.N.Y. Jun. 1, 2007) (granting defendant's motion to compel production of financial records supporting plaintiff's damages claims); see also American Fast Freight, Inc. v. Nat'l Consol. & Distrib., Inc., No. C07-716, 2007 WL 3357694, at *3 (W.D. Wash. Nov. 7, 2007) ("Financial statements are clearly discoverable if they could lead to relevant evidence."). Thus, to the extent it has not already done so,*fn2 Plaintiff is directed to produce responsive documents for the period 2000 through the present, subject to the Confidentiality Stipulation [DE 56] in place in this case, and limited solely to Plaintiff's annual ...

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