Nerium SkinCare Inc v. Nerium International LLC
3:16-cv-01217
N.D. Tex.Jan 20, 2017Background
- Plaintiffs Nerium SkinCare, Inc. and Nerium Biotechnology, Inc. sued; defendant Nerium International, LLC (NI) filed counterclaims including breach of the Company Agreement based on alleged diversion of product distribution and communications with third parties.
- NI moved to compel production of documents responsive to several RFPs (Nos. 36, 39, 41–45, 44, 46–47), narrowing disputes; the magistrate judge heard argument and ruled on most RFPs (46–47 deferred).
- Discovery disputes centered on whether Plaintiffs must produce documents about exploratory or potential discussions with third parties and Brand Partners concerning distribution or sale of products listed in Exhibit C to the Company Agreement.
- Plaintiffs argued exploratory discussions are not actionable breach and producing them would cause competitive harm; NI argued such communications are relevant to its breach and injunctive-relief claims and defenses.
- The court applied the Federal Rules’ proportionality and specificity requirements (Rules 26, 34, 37), rejecting boilerplate objections and emphasizing the resisting party’s burden to show undue burden or nonrelevance.
- Rulings: RFPs 39, 41–45, and 44 were granted in part (with scope limits and Attorneys’ Eyes Only protection); RFP 36 was denied; parties to bear their own expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope/relevance of RFP No. 45 ("all documents relating to the possibility of supplying or selling" Exhibit C products to third parties) | Exploratory talks are not actionable; request is overbroad and harms competitive planning | Such communications are relevant to NI’s breach and injunctive claims and to defenses; need evidence of attempts to divert exclusive products | Granted in part: produce internal/third-party communications that discuss or refer to such possibilities; excludes finalized agreements; AEO protection ordered |
| Scope/relevance of RFP No. 36 (all communications with anyone believed to be a NI Brand Partner) | Overbroad, unduly burdensome, not practicable to search by subjective belief; asks for "all" communications | Communications with Brand Partners show efforts to recruit NI salesforce to distribute exclusive products | Denied as drafted: court found it overbroad and not proportional given other RFPs |
| Scope/relevance of RFP No. 39 (communications with/ about Rain International, Jeunesse, or other direct-sales companies) | Overbroad; many solicitations irrelevant; exploratory talks not relevant | Shows attempts to bypass NI and undermine exclusivity; relevant to injunction and trial | Granted: produce responsive documents limited to communications relevant to NI’s counterclaim; AEO protection ordered |
| RFPs 41–43 (communications with named former NI Brand Partners and related meetings) | Overbroad; discussions about possibilities not relevant; competitive harm | Named individuals were involved in meetings/communications about distributing products NI refused to sell; relevant to breach claim | Granted: produce responsive communications and documents; AEO protection ordered |
| RFP No. 44 (drafts, proposals, and final agreements with other direct-sales companies or Brand Partners) | Plaintiffs will produce final agreements but refuse drafts/proposals as exploratory and competitively sensitive | Timing, content, and sequence of drafts/proposals are relevant to threatened breaches and injunctive relief | Granted: Plaintiffs must produce drafts, proposals, and final agreements responsive to the request; AEO protection ordered |
| Award of expenses for motion to compel | Plaintiffs sought to avoid cost award based on asserted competitive harm and other circumstances | NI sought fees as prevailing party on parts of the motion | Court declined to award expenses; each party bears its own fees |
Key Cases Cited
- OrchestrateHR, Inc. v. Trombetta, 178 F. Supp. 3d 476 (N.D. Tex. 2016) (discussing specificity required for discovery objections and burden on objecting party)
- Heller v. City of Dallas, 303 F.R.D. 466 (N.D. Tex. 2014) (invalidating boilerplate objections and outlining duties to explain withheld responsive materials)
- Carr v. State Farm Mut. Auto. Ins. Co., 312 F.R.D. 459 (N.D. Tex. 2015) (criticizing "subject to" objections and explaining responding-party duties)
- Booth v. City of Dallas, 312 F.R.D. 427 (N.D. Tex. 2015) (summarizing scope of discovery under amended Rule 26)
- McLeod, Alexander, Powel & Apffel, P.C. v. Quarles, 894 F.2d 1482 (5th Cir. 1990) (resisting party must show how each request is objectionable)
- Crosby v. La. Health Serv. & Indem. Co., 647 F.3d 258 (5th Cir. 2011) (courts must limit discovery that is not proportional to needs of case)
- In re United States, 864 F.2d 1153 (5th Cir. 1989) (untimely objections to discovery are generally waived)
- Merrill v. Waffle House, Inc., 227 F.R.D. 475 (N.D. Tex. 2005) (party resisting discovery must submit evidence of burden to support undue-burden claim)