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Arrow Enterprise Computing Solutions, Inc. v. BlueAlly, LLC

United States District Court, E.D. North Carolina, Western Division

March 3, 2017

Arrow Enterprise Computing Solutions, Inc., Plaintiff,
v.
BlueAlly, LLC, et al., Defendants.

          ORDER

          ROBERT T. NUMBERS, II UNITED STATES MAGISTRATE JUDGE

         The parties in this case entered into a bare-bones requirements contract and now disagree over their responsibilities under the agreement. There are no other documents showing their intentions as to any potential, implied terms. Can one party's contracts with third-party entities in similar situations potentially shed light on its intentions for this contract? Arrow argues that these documents are irrelevant in determining the parties' intentions in this contract because they show its intent only in those contracts and not in this one. The BlueAlly Defendants respond that the documents are relevant to show what implied terms Arrow typically uses in its requirements contracts. Based on the specific facts of this case, the court finds that Arrow must produce a limited subset of these documents because they are relevant, although only minimally, useful and proportional.

         I. Background

         Arrow Enterprise Computing Solutions, Inc. (Arrow) sells computer products and services to various types of companies, including value-added resellers such as Net Direct Systems (Net Direct). Order at 2-3, D.E. 34. For several years, Net Direct had contracted with Arrow to purchase computing products and receive advanced funds and loans. Id.

         In 2013, BlueAlly, LLC and BlueAlly Direct, LLC (BlueAlly) acquired most of Net Direct's assets. BlueAlly negotiated with Arrow to determine the acquisition's effect on Net Direct's contract with Arrow. Id. at 3. The result was a “letter agreement” where BlueAlly made the following commitment:

“Blue Ally [sic] agrees that, to the extent it either purchases the assets of NetDirect [sic] or has any control over the Net Direct operations, it will cause NetDirect [sic] to fulfill all purchase obligations required for forgiveness of the required Promissory Note, however, [sic] cannot ensure that aggregate purchases will be sufficient to result in full forgiveness of the Promissory Note[.]”

Id. at 3-4.

         After signing this agreement, BlueAlly and Net Direct continued ordering their computing products from Arrow for about nine months until BlueAlly told Arrow it would start buying from Arrow's competitor. Id. at 4. Unsurprisingly, Arrow sued BlueAlly for breach of contract and anticipatory breach. Second Am. Compl. at 8-11, D.E. 20.

         As part of discovery, BlueAlly seeks several documents: solution provider agreements; agreements with specific companies; and documents to other value-added resellers (VARs) including loans, debt reducing arrangements, credit policies and procedures, prebates, credit terms and conditions, Arrow's criteria for providing credit, and escrow programs. Reqs. for Produc. 19-20, 23-27, & 29-32, Ex. A, D.E. 71-1.

         Arrow objects. It argues that the requested documents are neither relevant to BlueAlly's defenses nor “proportional to the needs of the case.” Pl.'s Mem. Mot. to Compel at 3, D.E. 73. BlueAlly disagrees, so naturally it asks the court to compel production. Def's Br. Supp. Mot. to Compel at 3-8, D.E 72; Def's Mot. Compel Produc, D.E. 71.

         II. Discussion

         Under the Federal Rules of Civil Procedure, a party can discover “any nonprivileged matter that is relevant to any party's claim or defense and proportional to the needs of the case . . . .” Fed.R.Civ.P. 26(b)(1). It can do so by asking its opponent to provide them with specific documents. Fed.R.Civ.P. 34(a)(1)(A). The responding party may object to the request by specifying “the grounds for objecting to the request, including the reasons.” Fed.R.Civ.P. 34(b)(2)(B). “[T]he party resisting discovery bears the burden of showing why [the discovery requests] should not be granted.” Martin v. Bimbo Foods Bakeries Distribution, LLC, 313 F.R.D. 1, 5 (E.D. N.C. 2016) (alterations in original) (citations and quotation marks omitted).

         A. Relevance

         Requested documents must be “relevant to any party's claim or defense.” Fed.R.Civ.P. 26(b)(1). Courts have “broadly construed [the relevance standard] to encompass any possibility that the information sought may be ...


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