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Union Commercial Services Limited v. FCA International Operations LLC

United States District Court, E.D. Michigan, Southern Division

January 25, 2018

Union Commercial Services Limited, Plaintiff,
FCA International Operations LLC, FCA U.S. LLC, Defendants.

          Stephanie Dawkins Davis Mag. Judge.



         I. Background

         Plaintiff Union Commercial Services is a former Chrysler, Jeep, and Dodge automobile distributor based in the Republic of Angola. It filed suit against defendants FCA International Operations (“FCA IO”) and FCA U.S. (collectively, “defendants”) in response to a dispute arising out of defendants' termination of its distributorship agreement with plaintiff. The Court issued an order dismissing Counts II-XII of the complaint on November 10, 2016 (Dkt. 19), and only Count I remains.

         Count I alleges breach of contract. Plaintiff claims defendants breached the distributor agreement (“the agreement”) when they failed to repurchase auto parts plaintiff purchased from them during the course of their business relationship. (Dkt. 1 at 29.) Article 14.4(x) of the agreement requires defendants to repurchase parts when certain preconditions are met. (Dkt. 38 at 10-11.) Specifically, Article 14.4(x) states, in pertinent part, that defendants shall repurchase

all Parts delivered by CHRYSLER to DISTRIBUTOR . . . CHRYSLER will only be obliged to repurchase Parts that are unsold, undamaged, unused, in their original packaging, stored in a state of the art manner, and appear on CHRYSLER's then-current Parts' listing. The repurchase price for such Parts will be their landed cost to DISTRIBUTOR (CHRYSLER's invoice price plus unrebated duties, taxes and inland transportation costs) less 10% of such cost and less an adjustment to reflect any damage or other diminution in value not normal for current Parts being offered for sale at retail at the date of the repurchase. Together with the request to CHRYSLER to repurchase Parts, DISTRIBUTOR shall provide a complete list of Parts to be repurchased. The list shall contain the relevant Parts number, the invoice number, and the date of invoice and the amount of invoice for each of the Parts to be repurchased . . .

(Id. (emphasis added).) Plaintiff alleges defendants failed to repurchase $840, 000 worth of parts, causing damages in the amount of $760, 000. (Dkt. 38-3 at 7.)

         In the first set of interrogatories defendants served upon plaintiff, Interrogatory 7 asked plaintiff to “[s]tate the total amount of damages sought by you” and “[e]xplain in detail how such amounts were calculated.” (Id.) Defendants' Document Request 4 asked plaintiff to “[p]roduce all documents that refer, reflect or relate to the damages that you are seeking in this lawsuit.” (Dkt. 38-2 at 9.) Plaintiff explained that it calculated its damages “by determining the cost to UNION for the Parts at approximately $840, 000.00, and then subtracting 10% of such cost ($84, 000) so the total amount is approximately $760, 000.00.” (Dkt. 38-3 at 7.) Plaintiff relied on its “electronic inventory management system” to determine the price it paid for the parts, and deducted 10% of that price to comply with the requirements of Article 14.4(x). (Dkt. 38 at 10-11.)

         Defendants were not satisfied with plaintiff's response, and this dispute ensued. Defendants informed plaintiff that its interrogatory and document request required plaintiff to produce the parts purchase invoices underlying the data in its electronic inventory management system. (Dkt. 38 at 13.) Defendants also argue that plaintiff was obligated to produce this information as part of its initial disclosures under Fed.R.Civ.P. 26(a)(1)(A)(iii). (Id.)

         Plaintiff then served its own discovery on defendant asking for the same information, believing defendants, as the original sellers of the parts, had this information in their possession, custody, or control. (Dkt. 38-6.) Defendants tell the Court they do not have these invoices and related documents in their possession, custody, or control. (Dkt. 44 at 14-15.) Instead, the documents are contained in a parts database in France owned by Daimler AG, a competing automaker. (Id.) Plaintiff, by contrast, does possess hard copy invoices and other relevant documents in its storage container in Luanda, Angola. (Dkt. 43-1 at 3.) The documents are contained in “70 to 80 boxes” which are “organized by year” rather than by part number or type. (Id. at 3-4.) This method of organization makes the documents difficult to produce because the files cannot be pulled according to the part number, the key indicator of which parts are potentially eligible for repurchase. (Id.) Accordingly, it is not simple to separate the parts plaintiff alleges must be repurchased from those that need not be.

         The parties, unable to resolve this dispute on their own, requested a call with the Court on October 11, 2017. The parties could not come to a resolution, and the Court granted leave to file these cross motions to compel. (Dkts. 38, 39.)

         Each party asks the Court to order the other to produce the parts invoices described above. Defendants argue the invoices are relevant because, based on the invoices they have seen, plaintiff overstates the price it paid for the parts in the first instance, and plaintiff should produce those invoices because a “party's unwieldy record-keeping system is not an adequate excuse to frustrate discovery.” (Dkt. 38 at 14, 22.) According to plaintiff, finding the relevant hard copy documents and producing them is unduly burdensome and disproportionate to the needs of the case. (Dkt. 43 at 15-16.) Instead, the price information it has provided thus far is sufficiently trustworthy because its parts spreadsheet is an internal record created in the regular course of business. (Id.) In addition, the price plaintiff paid is higher than defendant expects because of the high costs associated with importing goods into Angola. (Id. at 17.)

         In its motion to compel, plaintiff asks the Court to order defendants to produce the invoice information, alleging the information is stored in a database that defendants can access. (Dkt. 41 at 19.) Defendants contend that the database is owned by Daimler AG, and it has no access to its contents. (Dkt. 44 at 15.) In addition, plaintiff seeks information from defendant about prior parts repurchases from former distributors in the United States. (Dkt. 41 at 12.)

         For the reasons set forth below, the Court grants defendants' motion to compel (Dkt. 38) and denies ...

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