Opinion
No. 03-CV-6248T.
August 11, 2004
DECISION ORDER
BACKGROUND
By order dated July 10, 2003, the above-captioned matter has been referred to the undersigned for the supervision of pre-trial discovery and the hearing and disposition of all non-dispositive motions, pursuant to 28 U.S.C. §§ 636(b)(A) and (B). (Docket # 209).
Plaintiffs, a group of retirees from three plants formerly owned by Bendix Corporation (hereinafter "Bendix"), initially filed this action against Honeywell International, Inc. (hereinafter "Honeywell") seeking payment of retirement benefits guaranteed to them by Bendix in a 1976 agreement (hereinafter "the Guaranty"). The Guaranty issued at the time Bendix sold the plants to Facet Enterprises (hereinafter "Facet"). Through the Guaranty, Bendix provided that qualified employees affected by the sale would continue to receive health and life insurance coverage at the then-existing levels. During the years following the Guaranty, both Bendix and Facet underwent numerous changes in ownership and control. Honeywell became the ultimate successor to Bendix, and Motor Components, LLC (hereinafter "Motor Components") became the ultimate successor to Facet.
Honeywell has asserted third-party claims for reimbursement and indemnification against third-party defendants Motor Components, BAM Enterprises, Inc. (hereinafter "BAM"), Mark IV Industries, Inc. (hereinafter "Mark IV"), ArvinMeritor, Inc. (hereinafter "ArvinMeritor") and Purolator Products Company (hereinafter "Purolator"). According to Honeywell, in 1976 Facet signed a reimbursement agreement (hereinafter "the 1976 Agreement"), pursuant to which it agreed to reimburse Bendix for any payments made to retirees under the Guaranty. Similarly, Honeywell contends that Facet also signed an indemnification agreement in 1979 (hereinafter "the 1979 Agreement"), pursuant to which Facet agreed to indemnify Bendix against all liabilities suffered as a result of claims arising out of the businesses transferred to Facet. (Docket # 238). In this matter, Honeywell asserts that one or more of the third-party defendants is responsible for Facet's obligations under the 1976 and 1979 Agreements. Thus, Honeywell contends that the responsible party must reimburse and indemnify Honeywell to the extent it is liable to the plaintiffs under the Guaranty.
On August 7, 2003, United States District Judge Michael A. Telesca granted summary judgment in favor of plaintiffs on their contract law claim. By Decision and Order entered on September 19, 2003, Judge Telesca granted a preliminary injunction ordering Honeywell to comply with its obligations under the Guaranty. Those judgments were affirmed on appeal, although the case was remanded for clarification and modification of the preliminary injunction on grounds not relevant to the issues raised herein. LaForest v. Former Clean Air Holding Co., Inc., 2004 WL 1576486 (2d Cir. 2004).
Currently pending before this Court is Honeywell's motion to compel discovery responses from Mark IV and ArvinMeritor. (Docket # 237). For the following reasons, Honeywell's motion is granted in part and denied in part.
DISCUSSION
Honeywell moves to compel Mark IV's and ArvinMeritor's responses to discovery requests. Specifically, Honeywell seeks to compel the deposition of a corporate designee or designees pursuant to Federal Rule of Civil Procedure 30(b)(6). Honeywell also seeks to compel responses to specified document requests and interrogatories. (Docket # 237). Each motion will be addressed in turn below.
A. Deposition Witness: On or about March 20, 2003, Honeywell noticed the deposition of Mark IV pursuant to Federal Rule of Civil Procedure 30(b)(6). Under that rule:
A party may in the party's notice [of deposition] . . . name as the deponent a public or private corporation or a partnership or association or governmental agency and describe with reasonable particularity the matters on which examination is requested. In that event, the organization so named shall designate one or more officers, directors, or managing agents, or other persons who consent to testify on its behalf, and may set forth, for each person designated, the matters on which the person will testify. . . . The persons so designated shall testify as to matters known or reasonably available to the organization.
Fed.R.Civ.P. 30(b)(6). Under this rule, the deponent "must make a conscientious good-faith endeavor to designate the persons having knowledge of the matters sought by [the noticing party] and to prepare those persons in order that they can answer fully, completely, unevasively, the questions posed . . . as to the relevant subject matters." Sec. and Exch. Comm'n v. Morelli, 143 F.R.D. 42, 45 (S.D.N.Y. 1992) (quoting Mitsui Co. v. Puerto Rico Water Res. Auth., 93 F.R.D. 62, 67 (D.P.R. 1981)). The designee must be prepared to testify concerning issues about which information is reasonably available, "whether from documents, past employees, or other sources." Bank of New York v. Meridien BIAO Bank Tanzania Ltd., 171 F.R.D. 135, 151 (S.D.N.Y. 1997) (citations omitted).
Here, the Rule 30(b)(6) notice issued by Honeywell to Mark IV identified, inter alia, the following eight issues for the deposition:
(1) Whether Mark IV has assumed the Reimbursement Obligation under the 1976 Agreement, and if not, why not.
(2) Whether Mark IV was assigned the Reimbursement Obligation under the 1976 Agreement, and if not, why not.
(3) Whether Mark IV is a successor to Facet for purposes of the Reimbursement Obligation under the 1976 Agreement, and if not, why not.
(4) Whether Mark IV is bound by the Reimbursement Obligation under the 1976 Agreement, and if not, why not.
(5) Whether Mark IV has assumed the Indemnification Obligation under the 1979 Agreement, and if not, why not.
(6) Whether Mark IV was assigned the Indemnification Obligation under the 1979 Agreement, and if not, why not.
(7) Whether Mark IV is a successor to Facet for purposes of the Indemnification Obligation under the 1979 Agreement, and if not, why not.
(8) Whether Mark IV is bound by the Indemnification Obligation under the 1979 Agreement, and if not, why not.
(Docket # 237, Ex. 1).
In response to Honeywell's notice, Mark IV named Richard Grenolds, Vice-President and Chief Accounting Officer, as its corporate designee for the deposition, which was conducted on May 8, 2003. Honeywell contends that Grenolds was unprepared to provide testimony on the noticed topics. (Docket # 238). Specifically, Honeywell references the following testimony:
Q: At what point in time did Mark IV become aware of the . . . 1979 agreement?
A: I'm going to have to say I don't know. By default it has to be in that same period I have referenced before [between 1994 and the present], but I'm just sorry. I don't have a working knowledge of this document.
* * *
Q: But what is Mark IV's understanding of what the 1979 Agreement is?
A: I have to — I'm not prepared to respond to that.
* * *
Q: My question is what was Mark IV's understanding of what Facet's obligations under the 1979 agreement were?
A: I'm saying I'm not prepared to provide an observation on the provisions of this agreement.
* * *
Q: In preparation for this deposition what, if anything, did you do in relation to the 1979 agreement in terms of gaining an understanding of it?
A: Like I said, I don't have a working understanding of this document. I know I have seen it.
* * *
Q: On what documents do you rely for your position that Mark IV is not presently responsible for Facet's obligations under the 1976 agreement and the 1979 agreement?
A: I'm not aware of any documents that make us responsible for them.
Q: What else, if anything?
A: That's all.
Q: Well, what documents would you look to in order to determine whether or not Mark IV was responsible for Facet's obligations under the 1976 agreement and the 1979 agreement? Are you saying there could be a document out there that you just haven't seen or are you saying with certainty that you have looked at the universe of documents that would be applicable?
A: I don't know what the universe of documents would be. I'm not aware of any documents that say Mark IV is responsible.
* * *
Q: So pursuant to the Assignment and Assumption Agreement dated March 1, 2002, Mark IV was assigning and Former Clean Air Holding Company and Motor Components, LLC were assuming certain liabilities, correct?
A: Again, I guess I view this as a legal document that I'm not really capable to respond to that specifically.
(Docket # 237, Ex. 11 at 32, 35, 36-37, 38, 53-54, 114).
Honeywell contends that Grenolds's inability to answer questions relating to when Mark IV first became aware of the agreements, as well as his admitted lack of "working knowledge" of the 1979 Agreement, evidenced a lack of preparation for the deposition and thus constituted a failure to comply with Rule 30(b)(6). (Docket # 238). Mark IV counters that Honeywell's questions exceeded the scope of topics designated in the 30(b)(6) notice. (Docket # 269).
Mark IV also argues that the questions raised by Honeywell more appropriately should have been raised as contention interrogatories. (Docket # 269). A party seeking discovery, however, is generally free to choose the method it deems most appropriate. Colonial Capital Co. v. General Motors Corp., 29 F.R.D. 514, 518 (D. Conn. 1961). Mark IV has not demonstrated to this Court good cause for altering the method of discovery chosen by Honeywell.
To evaluate fairly Honeywell's argument, it is necessary to consider the challenged testimony in the context of Grenolds's complete testimony. Having reviewed the entire transcript, this Court notes that Grenolds testified concerning Mark IV's understanding of the Guaranty and the 1976 Agreement. (Docket # 269, Ex. D at 16-17, 21, 25-29, 166). According to Grenolds, the 1976 Agreement committed Facet to reimburse Bendix for any payments made under the Guaranty. ( Id. at 25-29). While Grenolds stated that he did not have a "working knowledge" of the 1979 Agreement ( id. at 35-36), he testified that the Agreement "relate[d] substantially to the pension funding agreements that existed between the parties" ( id. at 32) and "reaffirm[ed]" Facet's commitments to Bendix ( id. at 40).
As Grenolds further testified, Facet later changed its name to Purolator Products, and Purolator succeeded to Facet's commitments. ( Id. at 18, 27). According to Grenolds, when Mark IV purchased the stock of Purolator in 1994, it did not assume either the assets or the liabilities of Purolator, which remained with Purolator, Mark IV's subsidiary. ( Id. at 73-76). At this time, Purolator had three principal lines of businesses, one of which was the motor components business that retained Facet's liabilities under the Agreements. ( Id. at 75).
During this transaction, Mark IV Acquisition Corporation, a subsidiary of Mark IV, acquired Purolator and then merged into Purolator, leaving Purolator as a wholly-owned subsidiary of Mark IV. ( Id. at 75).
In 1999, Purolator spun off all of its divisions, save the automotive filter business, which ArvinMeritor thereafter purchased. ( Id. at 86-88, 95-96). The Facet liabilities, which had been retained by the motor components business, were assigned by Purolator to a newly-created entity, Motor Components, LLC, in anticipation of the spin-off. ( Id. at 85-88, 93-96). In 2002, BAM Enterprises, Inc. and Mark IV entered into a purchase agreement pursuant to which BAM bought the stock of Facet Holding, the sole member of Motor Components. ( Id. at 112-24).
In addition to explaining his understanding of the Guaranty, the 1976 Agreement, and the 1979 Agreement insofar as it reaffirmed Facet's commitments under the 1976 Agreement, Grenolds also testified to Mark IV's understanding that none of Facet's commitments under these Agreements were ever assigned to or assumed by Mark IV. ( Id. at 52-53). As set forth above, he detailed the corporate transactions to which Mark IV was a party since 1994, when Mark IV acquired the stock of Purolator, and explained the company's understanding of which entity retained or succeeded to Facet's obligations following each of these transactions. He further testified that he was aware of no documents to support the proposition that Mark IV ever acquired or succeeded to Facet's liabilities. ( Id. at 54-56, 77-78).
The central issue in this case is which, if any, of the third-party defendants assumed Facet's commitments under the 1976 and 1979 Agreements. I agree that Honeywell's questions concerning when Mark IV first learned of the two agreements were relevant: if, for example, Mark IV did not learn of the agreements until after its 1994 acquisition of Purolator, then it would appear less likely that it assumed, or had been assigned, such obligations at that time.
Finding that Honeywell's questions were relevant does not end the inquiry, however. I must also determine whether such questions were within the scope of topics enumerated in Honeywell's 30(b)(6) deposition notice. I find that they were not. Honeywell's notice identified questions relating to whether Mark IV had assumed or was assigned obligations under the 1976 and 1979 Agreements — questions Grenolds answered unequivocally in the negative, explaining Mark IV's understanding of which corporate entity had those obligations at which time. That Grenolds could not testify definitely concerning the precise time that Mark IV learned of the 1976 and 1979 Agreements does not, on this record, compel the conclusion that he was inadequately prepared under Rule 30(b)(6). He testified that Mark IV did not learn of them at the time they were executed, but learned of them at the earliest during due diligence in connection with its acquisition of Purolator in 1994. ( Id. at 11). Considering Mark IV's testimony that it was never bound by the agreements, Grenolds's inability to testify precisely as to when it learned of the Agreements — a matter not designated in the deposition notice — cannot be deemed a violation of Rule 30(b)(6).
Honeywell also challenges as insufficient Grenolds's responses to questions concerning a 2002 assumption and assignment agreement entered into in connection with the Mark IV-BAM transaction. While his initial testimony on the topic was confused, his overall testimony on this subject, which also was not explicitly designated in the 30(b)(6) notice, was adequate under the circumstances. Grenolds testified that following the 2002 transaction, BAM owned Former Clean Air Holding, a holding company for Motor Components, LLC; the Facet liabilities remained with Motor Components, LLC. ( Id. at 117-24).
In sum, this Court finds that Grenolds's deposition testimony was not inadequate under Fed.R.Civ.P. 30(b)(6).
B. Second Set of Interrogatories and Document Requests:
Honeywell also moves to compel specific responses to its Second Set of Interrogatories and document requests. These requests seek information relating to the dates and circumstances under which Mark IV and ArvinMeritor received documents relating to the Guaranty, the 1976 Agreement and the 1979 Agreement. Specifically, Honeywell requests responses to Interrogatories Nos. 5 through 8 and seeks to refine the responses it received to Document Requests Nos. 3 and 4. The third-party defendants contend that they have adequately responded to such requests.
The document requests at issue are the following:
Document Request No. 3: Any and all documents that relate or refer to the 1976 Agreement and/or the Reimbursement Obligation, including but not limited to, documents obtained and/or exchanged in connection with any corporate transaction, due diligence documents, documents provided by any international or local union, and documents obtained in the course of any other litigation.
Document Request No. 4: Any and all documents that relate or refer to the 1979 Agreement and/or the Indemnification Obligation, including but not limited to, documents obtained and/or exchanged in connection with any corporate transaction, due diligence documents, documents provided by any international or local union, and documents obtained in the course of any other litigation.
"Reimbursement Obligation" is defined in the requests to refer to the first paragraph of the second page of the 1976 Agreement.
"Indemnification Obligation" is defined to refer to sections 5.01(c) and (d) of the 1979 Agreement.
The parties apparently do not dispute that Mark IV and ArvinMeritor have produced all documents in their possession responsive to these requests.
Although both third-party defendants interposed various objections, they nonetheless produced responsive documents "without waiving such objections." (Docket # 237, Exs. 4 and 5). Their counsel has affirmed that "Mark IV and ArvinMeritor provided all [responsive] documents" and that they will supplement their responses, if necessary, in accordance with Fed.R.Civ.P. 26(e). (Docket # 269 at 7, 15).
Rather, the dispute concerns the fact that Mark IV and ArvinMeritor produced one set of documents in response to Requests Nos. 3 and 4, which were also responsive to Request No. 2. Request No. 2 sought documents relating to the Guaranty or retiree medical benefits, including — as with Requests 3 and 4 — "documents obtained or exchanged in connection with corporate documents, due diligence documents, documents provided by any international or local union, and documents obtained in the course of any litigation." In response to Request 2, Mark IV and ArvinMeritor identified thirty-two categories of responsive documents, providing the Bates stamp numbers of each, which either had previously been produced or were being provided with the written response. In response to Requests 3 and 4, Mark IV and ArvinMeritor simply stated " see Response to Document Request No. 2." Honeywell challenges as deficient their failure to identify separately which documents were responsive to Request 3 and which were responsive to Request 4.
The term "Guaranty" was defined in the requests to mean the 1976 guarantee agreement issued by Bendix.
This Court cannot agree with Honeywell's characterization. The heart of the dispute at this stage of the litigation is which of the third-party defendants, if any, has succeeded to Facet's obligations to Bendix under the 1976 and 1979 Agreements. No dispute exists that the 1979 Agreement — insofar as it is relevant to this litigation — reaffirms the obligations in the 1976 Agreement. Thus, documents relating to one agreement are likely to relate to the other. Moreover, the reimbursement obligations that are the subject of the 1976 and 1979 Agreements arise from and relate to the Guaranty issued by Bendix. Any documents in the possession of Mark IV and ArvinMeritor responsive to the request for documents relating to the 1976 and 1979 Agreements, which themselves refer to and relate to the 1976 Guaranty, likewise appear responsive to the request for documents relating to the Guaranty. This is especially likely considering that Mark IV and ArvinMeritor, which had no connection to Facet until 1994, would not have received copies of any responsive documents until well after all three — the Guaranty, the 1976 and 1979 Agreements — were executed. Accordingly, Honeywell's motion to compel on this issue is denied.
In addition to the above requests, Honeywell also moves to compel responses to the following interrogatories.
Interrogatory No. 5: For each document produced in response to Document Request No. 2 above: (a) state the date such document was obtained; (b) identify from whom the document was obtained; and (c) describe in detail the circumstances under which you obtained such document.
Interrogatory No. 6: For each document produced in response to Document Request No. 3 above: (a) state the date such document was obtained; (b) identify from whom the document was obtained; and (c) describe in detail the circumstances under which you obtained such document.
Interrogatory No. 7: For each document produced in response to Document Request No. 4 above: (a) state the date such document was obtained; (b) identify from whom the document was obtained; and (c) describe in detail the circumstances under which you obtained such document.
Interrogatory No. 8: For each document you previously produced to Honeywell that is responsive to Document Requests Nos. 2, 3, or 4 above: (a) state the date such document was obtained; (b) identify from whom the document was obtained; and (c) describe in detail the circumstances under which you obtained such document.
(Docket # 237, Ex. 2, 3).
The third-party defendants' response to each Interrogatory was identical:
Response: Mark IV specifically objects to Interrogatory No. [ X] because it is overly broad, unduly burdensome and not reasonably calculated to lead to the discovery of admissible evidence. Moreover, by and large, the documents themselves are dated, indicate the parties to whom they are addressed and indicate who generated them.
(Docket # 237, Ex. 4, 5).
The third-party defendants contend that information sought by Honeywell is not relevant to this case and that the burden of producing such information would outweigh its likely benefit. (Docket # 269). Under Rule 26(b)(2), discovery may be limited by the court if it determines that:
(1) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive;
(2) the party seeking discovery has had ample opportunity to obtain such discovery; and
(3) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues.
I find that the information requested by Honeywell in its second set of interrogatories is relevant to this case. Honeywell has asserted claims for indemnification and reimbursement against Mark IV, ArvinMeritor and the other third-party defendants, which are based upon the 1976 and 1979 Agreements. Through its interrogatories, Honeywell seeks information relating to the circumstances under which Mark IV and ArvinMeritor learned of the Agreements "so that it can better ascertain Mark IV and ArvinMeritor's potential liability to Honeywell." (Docket # 301, p. 8). If either Mark IV or ArvinMeritor became aware of the 1976 and 1979 Agreements during due diligence in connection with its 1994, 1998, 2002 transactions, Honeywell would have been reasonable to investigate whether the parties discussed the obligations under those agreements at such time.
Of course, the possible relevance of the information must be balanced against the burden of its production. Fed.R.Civ.P. 26(b)(2). See In Re Subpoena Issued to Friedman, 350 F.3d 65, 69 (2d Cir. 2003). Here, counsel has represented that it has produced "forty-eight sets of documents," apparently consisting of thousands of pages of documents. To require counsel to ascertain and "describe in detail" the circumstances under which each document was obtained, as well as the precise date it was obtained and from whom — particularly where such documents may have been obtained as long as ten years ago — imposes an undue burden. To attempt to strike the appropriate balance, this Court grants in part the motion to compel with the following limitation: Honeywell may identify no more than ten documents each for ArvinMeritor and Mark IV as to which they must identify the date the document was obtained, the source from whom or which it was obtained and the circumstances under which it was obtained, if known by the companies. Honeywell's identification shall be served on ArvinMeritor and Mark IV within fourteen days after entry of this Decision and Order; ArvinMeritor and Mark IV's responses shall be served within thirty days after receipt of Honeywell's identification.
Such demand also plainly violates the rule limiting to twenty-five the number of interrogatories a party may serve. See Fed.R.Civ.P. 33(a).
CONCLUSION
For the foregoing reasons, Honeywell's motion to compel the production of a corporate designee of Mark IV for deposition under Fed.R.Civ.P. 30(b)(6) (Docket # 237) is DENIED. In addition, Honeywell's motion to compel discovery responses (Docket # 237) is GRANTED IN PART as to its requests for responses to interrogatories and DENIED as to its requests for documents.
IT IS SO ORDERED.