United States District Court, M.D. North Carolina
ADA LISS GROUP (2003) LTD, formerly known as ADA LISS LTD, Plaintiff,
SARA LEE CORPORATION (formerly d/b/a Sara Lee Branded Apparel), and HANESBRANDS, INC., Defendants.
MEMORANDUM OPINION AND ORDER
N. CARLTON TILLEY, Jr., Senior District Judge.
On September 3, 2013, the United States Magistrate Judge filed a Recommendation and Order (Doc. #278) providing recommended dispositions as to the following motions: (1) Plaintiff's Renewed Motion for Partial Summary Judgment (Doc. #218); (2) Defendant's Motion for Partial Summary Judgment on their Counterclaim for Breach of the 2004 Distributorship Agreement (Doc. #224); and (3) Defendant's Motion for Partial Summary Judgment on Plaintiff's Claim for Breach of the 2004 Distributorship Agreement (Doc. #226). In addition, the United States Magistrate Judge made rulings on: (1) Defendant's Motion to Strike (Doc. #247); (2) Defendant's Motion to Strike Portions of the Second and Third Declarations of Scott A. Miskimon (Doc. #260); and (3) Plaintiff's Motion to Strike (Doc. #264). All Parties filed objections. (Docs. #280, 284.) The Court has appropriately reviewed those matters to which an objection was made and issues this Order addressing those objections.
This action arises primarily out of the alleged breach of a 2004 Agreement between Plaintiff and Sara Lee Branded Apparel ("SLBA") granting Plaintiff the exclusive distribution rights to certain Sara Lee products in Israel. To protect those rights, the 2004 Distributorship Agreement prohibited SLBA from selling certain defined "Products" to "anyone whom SLBA... knows or has reason to believe is likely to resell or deliver the Products to customers located in [Israel.]" Doc. #227-1 at 3. The "Products" at issue refer generally to "BALI"-branded intimate apparel garments, although there is some dispute among the Parties regarding the exact meaning of that term.
Relevant to the instant motions, an earlier Distributorship Agreement granted Plaintiff those same exclusive distribution rights. See Doc. #122-1, ¶ 2(b). Plaintiff's allegations of violations of the exclusivity provisions of that prior agreement led the Parties to enter into a Settlement Agreement in 2004 - contemporaneously with the 2004 Distributorship Agreement. The 2004 Settlement Agreement provided that Defendants would mark "Bali product" sent to various wholesalers "[t]o help reduce the alleged flow of parallel Bali product into Israel." Doc. #122-4 at 1. As a result of the ruling on a prior Motion for Partial Summary Judgment (Doc. #133), the Court found that there is no genuine issue of material of fact that Defendants breached the marking provision of the 2004 Settlement Agreement. See Doc. #175 at 36-37.
At issue currently are the following: (1) Plaintiff's motion for summary judgment on Defendants' counterclaim that Plaintiff also breached the 2004 Settlement Agreement by failing to purchase minimum amounts of Sara Lee product; (2) cross motions for summary judgment on Plaintiff's claim that Defendant breached the 2004 Distributorship Agreement by selling "Products to anyone whom [they] [knew] or [had] reason to believe [was] likely to resell or deliver the Products to customers located in [Israel]"; and (3) cross motions for summary judgment on Defendants' counterclaim that Plaintiff breached provisions of the 2004 Distributorship Agreement related to rolling forecasts (see Doc. #227-1, ¶ 3(a)), quarterly reports of sales (id., ¶ 4(f)), annual statements of advertising and sales promotion expenditures (id., ¶ 5(g)), as well as a number of post-termination obligations (id., ¶¶ 5(e), 7(c), 9(b), 9(c)). The Parties filed three Motions to Strike, each addressing the propriety of certain evidence offered in support of those dispositive Motions. Docs. #247, 260, 264. The Magistrate Judge's Recommendation and Order addressing the foregoing motions was filed on September 3, 2013. Doc. #278. The Parties have objected (see Docs. #280, 284), responded (see Docs #286, 287), and replied (see Docs. #288, 289). Because the Parties' evidentiary objections are relevant to a determination of the material that is properly reviewed in resolving the pending summary judgment motions, those are addressed first.
The Magistrate Judge's rulings on non-dispositive matters will be modified only if "clearly erroneous or contrary to law." Fed.R.Civ.P. 72(a). "A finding is clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co. , 333 U.S. 364, 395 (1948). However, "contrary to law" indicates plenary review of legal conclusions. See PowerShare Inc. v. Syntel, Inc. , 597 F.3d 10, 15 (1st Cir. 2010). Accordingly, for legal determinations, "there is no practical difference between review under Rule 72(a)'s contrary to law standard and [a] de novo standard." HSBC Bank USA, Nat'l Ass'n v. Resh, No. 3:12-CV-00668, 2014 WL 317820, at *7 (S.D. W.Va. Jan. 28, 2014) (unpublished).
In his Recommendation and Order, the Magistrate Judge found that, by failing to timely object, Defendants had waived any privilege objection to a memo drafted by SLBA Export Manager, Fabian Bouquet, documenting his investigation into parallel imports. See Doc. #278 at 9-10. Defendants now object to the Magistrate Judge's ruling on the basis that they were unaware of the circumstances surrounding Plaintiff's acquisition of the Bouquet Memo until recently, thereby preventing them from raising their objections earlier. Defendants describe those circumstances as wrongful, unauthorized and surreptitious. See Doc. #281 at 4-8.
The Recommendation and Order is affirmed as to the Bouquet Memo. Plaintiff attached the Bouquet Memo to its re-filed Complaint in August 2008 (see Doc. #107-1), cited it in support of a prior summary judgment motion in December 2008 (see Doc. #136 at 3, 15), and this Court relied on the Bouquet Memo in a prior Memorandum Opinion in April 2010 (see Doc. #175 at 9, 18, 21). Defendants did not challenge the Bouquet Memo's admissibility until their instant Motion to Strike, filed in May 2011. See Doc. #247. These circumstances render Defendants unable to show that they took reasonable steps to rectify any disclosure (see Fed.R.Evid. 502(b)(3)), and Defendants' recent knowledge of the circumstances surrounding Plaintiff's acquisition of the Bouquet Memo would not affect this analysis as it would not weigh on the privileged nature of the document at the time it first became a part of the record.
Defendants also challenge the following statement in the Bouquet Memo as hearsay: "Another owner of 5 stores told me that he was supplied directly from the U.S. by Atlantic Hosiery." (Doc. 248 at 8.) That statement is relevant to, and will accordingly be considered only regarding, whether Defendants had reason to believe any purchaser of its products was likely to resell or deliver those products to Israel and not the truth of the matter asserted (i.e., that those products were actually supplied directly from the United States by Atlantic Hosiery).
The Magistrate Judge also found that Defendants had waived any objection to the consideration of an email drafted by Defendants' employee Phyllis Roopchan summarizing SLBA employee Shishir Babu's recounting of his investigation into parallel imports by failing to timely object or, alternatively, that the Roopchan Email meets the business record exception under Fed.R.Evid. 803(6). (See Doc. #278 at 10.) Defendants contend that they did not waive objections to the Roopchan Email's admissibility and that the Roopchan Email was an informal communication containing multiple levels of hearsay such that it would not qualify under the business record exception. (See Doc. #281 at 11-12.)
Plaintiff raises the argument that Defendants waived hearsay objections by failing to object to certain evidence when presented in support of a prior summary judgment motion multiple times. Unlike with respect to privilege objections, the Court declines to apply waiver to hearsay defects on these facts. Although a party must timely object or move to strike, see Fed.R.Evid. 103, as Defendants note, "[t]here is no apparent reason why a movant, having had its motion [for summary judgment] denied in light of inadmissible evidence, might not renew the motion and lodge an objection to the admissibility of the nonmovant's evidence - in which event it would be granted a second time around." Bush v. District of Columbia , 595 F.3d 384, 389 (D.C. Cir. 2010) (Randolph, J., concurring). Moreover, there would be no bar to a party raising a previously un-asserted evidentiary objection to hearsay at trial. See, e.g., Yeager v. Bowlin, No. CIV. 2:08-102 WBS JFM, 2010 WL 952242, at *2 n.3 (E.D. Cal. Jan. 6, 2010) (unpublished) ("To this court's knowledge, failure to object to evidence presented in connection with a summary judgment motion does not waive any objection to that evidence at trial."). Thus, any benefit to the instant summary judgment motion would be lost should the instant claims proceed on inadmissible evidence. See, e.g., Adams II v. Cousins, No. 06-40117-FDS, 2009 WL 1873584, at *5 (D. Mass. Mar. 31, 2009) (unpublished) ("It would be grossly inefficient to permit a claim to survive summary judgment on the basis of inadmissible hearsay, only to have the evidence excluded at trial."). Although Defendants may have waived any hearsay objections on an appeal or reconsideration of the prior summary judgment order which relied on that evidence absent Defendant's objection, see Wiley v. United States , 20 F.3d 222, 226 (6th Cir. 1994), United States v. Parodi , 703 F.2d 768, 783 (4th Cir. 1983), that is not the procedural posture of this action.
Regardless, Ms. Roopchan's email summary, and the statements attributed to Mr. Babu therein, qualify as admissions of a party opponent under Fed.R.Evid. 801(d)(2)(D). In this regard, Defendants contend that Plaintiff failed to establish agency and the scope of Ms. Roopchan's employment and thus cannot meet the exception for admission of a party opponent. However, the Declaration of Ms. Roopchan, offered by Defendants, provides that, in October 2005, Ms. Roopchan was "the Sales Representative for the Bali branded product line responsible for Hosiery Street's account with Sara Lee." See Doc. #249, ¶ 3. With respect to the composition of the email, it provides that Ms. Roopchan "attended a meeting on or about October 17, 2005 in which Shishir Babu relayed an account of a recent trip he had taken to evaluate [Plaintiff's] complaints" and that she "sent this e-mail to Ms. Rossi because she was unable to attend the meeting that day." Id., ¶ 6-7. Those averments are sufficient to establish Ms. Roopchan's agency and the scope of her employment. Accordingly, Ms. Roopchan's email is properly considered.
Defendants next object to the Magistrate Judge's ruling that they waived any hearsay objection to Ervin Lissauer's own summary of SLBA employee Shishir Babu's 2005 trip to Israel (Doc. #219-10) by failing to timely object to that evidence. Because, as noted above, the Court will not deem hearsay objections waived by failure to previously object, and no exception that would allow the admission of this document is otherwise apparent, it will not be considered in evaluation of the instant Motions.
Y&M Wholesalers, Inc. Documents
The Magistrate Judge found invoices and packing slips from Y&M Wholesalers, Inc. ("Y&M Wholesalers") qualified as business records under Fed.R.Evid. 803(6). Defendants object to that ruling on the basis that the invoices are not accurate records of sales and that they are not maintained in the ordinary course of business. See Doc. #281 at 13. They further object to the admissibility of certain handwriting on those documents.
The Magistrate Judge's determination as to the admissibility of the Y&M Wholesalers documents is affirmed, with the exception of the pricing information and handwriting contained therein. The owner of Y&M Wholesalers testified that he created the documents (see Doc. #246 at 21), that he did so for customs purposes (see id. at 23, 25), and that it was standard practice for Y&M Wholesalers to create such documents (see id. at 24). Although he further testified that the quantities are not always accurate, he seemingly attributed any inaccuracies to possible counting errors but conceded an obligation to have an accurate count for the purposes of clearing customs. See id. at 29. However, because the owner of Y&M Wholesalers also testified that the documented pricing information is not related to actual pricing (id. at 35-36) and that the handwriting contained on those documents is unknown (see id. at 39), those items will not be considered for purposes of ruling on the pending summary judgment motions.
Paragraph 9 of Scott Miskimon's Declaration
The Magistrate Judge denied Defendants' Motion to Strike as to paragraph 9 of Plaintiff's counsel's declaration because it addressed the Y&M Wholesaler's documents and, thus, given the determination regarding those underlying documents, argument regarding Plaintiff's counsel's averments as to the private investigator who obtained those documents was "unconvincing." See Doc. #278 at 11. Because Mr. Miskimon does not have personal knowledge of the hiring of a private investigator, and because paragraph 9 as a whole offers little to either support or contradict either side's position, it will not be considered for purposes of evaluating the pending summary judgment motions.
Shay Shitrit and Yitzhak Geulayev Declarations
The Magistrate Judge struck the statement in paragraph 12 of Shay Shitrit's Declaration that another individual located in Israel "had been buying from Atlantic Hosiery from 1998 or 1999 and continued to do so until 2007 (and may still by buying from Atlantic Hosiery)" because the facts did not indicate Mr. Shitrit had personal knowledge of the subject matter after 2002. See Doc. #278 at 11. Plaintiff objects to that ruling on the basis that Defendants waived any objection to the Shitrit Declaration and that Mr. Shitrit's many years of business transactions with the relevant parties demonstrate his personal ...