Opinion
Civil No. 01-1108-HA.
May 20, 2004
ORDER
Before the court are the parties' consolidated motions in limine. The court heard oral argument on May 14, 2004. At the hearing, the court ruled on all of the motions except Sunrich's first and second motions and Pacific's sixth motion, which concern Pacific's status as an alleged lost volume seller. For the following reasons, the motions are granted in part and denied in part.
Sunrich moves for an order precluding Pacific from presenting its lost volume seller damages claim at trial. Sunrich argues that the claim should be precluded because Pacific failed to comply with discovery requests relevant to the claim.
During discovery Sunrich attempted to inquire into Pacific's production capacity to determine whether Pacific could prove damages as a lost volume seller caused by Sunrich's alleged breach of the Packing Agreement.
Although a seller of goods normally recovers the profits from a contract less the mitigation profits obtained through sales to alternative buyers, Or. Rev. Stat. § 7080(1), a lost volume seller is one who would have sold its goods to the original buyer, as well as alternative buyers due to a surplus of the goods. Trienco, Inc. v. Applied Theory, Inc., 794 P.2d 1239, 1241-42 (Or.App. 1990). Thus, the normal measure of contract damages would not place the seller in as good of a position as the seller would have been in had the contract been performed. Or. Rev. Stat. § 7080(1). Accordingly, the seller qualifies as a lost volume seller. Or. Rev. Stats. 72.7080(2). In order to recover damages as a lost volume seller, Pacific bears the burden of proving that after Sunrich's alleged breach of the Packing Agreement, Pacific completed sales to alternative buyers that Pacific would have completed even in the absence of a breach. Trienco, Inc., 794 P.2d at 1241.
By definition, a seller cannot qualify as a lost volume seller if the seller did not have the manufacturing capacity to sell goods to both the original buyer as well as the alternative buyer. As an alleged lost volume seller, Pacific therefore bears the burden of establishing that its production capacity was such that, if Sunrich had not breached the Packing Agreement, Pacific would have been able to meet Sunrich's requirements, as well as the needs of alternative buyers.
During the course of discovery, Pacific objected to Sunrich's attempt to gather information regarding Pacific's production capacity. On July 17, 2002, when Pacific's Chief Financial Officer (CFO) was deposed, Sunrich's counsel asked, "[B]ased on the production schedule that you're running today, is there excess capacity at Pacific Foods or are you nearly maxed out on your production capacity." Jonathan Gehrs Deposition at 166. Pacific's counsel directed Pacific's CFO not to answer the question and objected, challenging the relevance of the question and raising concerns about the disclosure of proprietary information. Pacific's counsel advised the CFO not to answer a reworded question as well. Id. at 167. Although Pacific's counsel allowed the CFO to answer certain questions from which limited production information could be extrapolated, Pacific's counsel explicitly directed the CFO not to answer at least two questions directly related to Pacific's production capacity.
On December 6, 2002, Sunrich served its third set of interrogatories. The fourth interrogatory asked Pacific to "[d]escribe and identify the finished unit production capacity of Pacific's plant, assuming a production schedule of six days a week, twenty-four hours a day, for each month during the period January 1, 1998 through the present." Pacific refused to answer the interrogatory, challenging its relevance and expressing concern that proprietary information might be disclosed.
Sunrich filed a Motion to Compel Pacific to respond to the fourth interrogatory, among other discovery requests. By Order dated March 4, 2003 (Doc. #350), the court directed Pacific to respond to the fourth interrogatory on the grounds that the request was likely to lead to the discovery of admissible evidence. Fed.R.Civ.P. 26(b)(1). March 4, 2003, Order at 7.
On March 7, 2003, Pacific purported to comply with the court's Order by disclosing to Sunrich that in 2001, Pacific possessed the capacity to produce eight million cases of products, and that its actual production was thirty-seven percent of capacity. Sunrich filed another Motion to Compel, arguing that this response was incomplete. Pacific responded to the motion by asserting that it had provided a complete response to the fourth interrogatory. Based on Pacific's representations that it had responded fully and that 2001 was the only relevant time period regarding the issue of its production capacity, the court denied Sunrich's subsequent Motion to Compel.
Pacific cannot maintain its claim as a lost volume seller at trial. The fourth interrogatory directed Pacific to describe and identify its finished unit production capacity "during the period January 1, 1998 through the present." Pacific's response that it produced thirty-seven percent of its total capacity in 2001 failed to completely answer the interrogatory, which requested information from 1998 through the present. Such information was critical to Sunrich's defense to Pacific's lost volume seller claim. Sunrich was entitled to information that would allow it to calculate Pacific's production capacity from the time period prior to the cancellation of the Packing Agreement through the present and to challenge Pacific's claim that it maintained excess production capacity during the relevant time period. Pacific failed to provide that information, despite unambiguous discovery requests and a court Order directing it to respond. Pacific's limited discovery responses concerning its production capacity failed to cure the prejudice Sunrich suffered from not having the benefit of such evidence during depositions and other phases of discovery.
Pacific's conduct here is similar to other failures and discovery abuses Pacific has committed in this litigation. The Federal Rules of Civil Procedure state the consequences faced at trial by parties who abuse the discovery process. Fed.R.Civ.P. 37(c). Requested evidence that is withheld without substantial justification cannot be offered at trial, unless the nondisclosure was harmless. Id. Because Pacific neither provided adequate responses to Sunrich's discovery requests nor complied with this court's Order regarding the fourth interrogatory, Pacific cannot offer evidence portraying Pacific as a lost volume seller.
For the foregoing reasons, Sunrich's first Motion in Limine (Doc. #455) is granted. Accordingly, Sunrich's second Motion in Limine is denied as moot. Pacific's sixth Motion in Limine (Doc. #459) is denied as moot.
IT IS SO ORDERED.