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South Pointe Wholesale, Inc. v. Vilardi

United States District Court, W.D. Kentucky, Bowling Green Division

April 9, 2018

SOUTH POINTE WHOLESALE, INC. PLAINTIFF
v.
MARIE T. VILARDI DEFENDANT

          MEMORANDUM, OPINION, AND ORDER

          H. Brent Brennenstuhl United States Magistrate Judge.

         Before the Court is the motion of Plaintiff South Pointe Wholesale, Inc., DN 71, for reconsideration of this Court's earlier ruling at ¶ 67 on discovery issues. Defendant Marie T. Vilardi has filed a response in opposition at ¶ 87 and South Pointe has replied at ¶ 92.

         Nature of the Case

         According to South Pointe's complaint, South Pointe is a Kentucky Corporation organized in 2001 and operates as a pharmaceutical distributor. South Pointe purchases inventory either directly from pharmaceutical manufacturers or from other distributors. These purchases require price negotiations conducted by either distributor or vendor employees or independent brokers working on a commission basis (DN 1, p. 2).

         South Pointe hired Vilardi on March 8, 2004, as a pharmaceuticals purchaser. In 2006, Vilardi purchased a forty-five percent ownership in South Pointe and was elected to South Pointe's board of directors. She was later elected as vice president and chief operating officer (Id. at p. 4-5). In 2015, South Pointe employees became suspicious that Vilardi was making purchases that were not in the company's best interests and South Pointe began restricting Vilardi's purchasing autonomy. In 2017, South Pointe obtained information which led it to believe that Vilardi was performing work for a South Pointe competitor. As a result, South Pointe terminated Vilardi's employment on March 14, 2017 (Id. at p. 6-7). Subsequent to her termination, South Pointe conducted further investigation and concluded that Vilardi had worked for other competitors and engaged in self-dealing (Id. at p. 8-11). South Pointe's complaint against Vilardi alleges violation of fiduciary duties under Kentucky statutes (Id. at p. 11-12).

         Vilardi has asserted counterclaims against South Pointe. She contends she made two loans to South Pointe, one in 2006 in the principal sum of $300, 000.00 and another in 2007 in the principal sum of $205, 000.00. These loans were made because South Pointe “was in desperate financial condition, ” and were both demand notes. She states she made demands for repayment, along with interest, and South Pointe is in default on its repayment obligation (DN 10, p. 9-10). Vilardi further contends that her termination from employment was wrongful and motivated by age discrimination. As a shareholder in South Pointe, Vilardi claims that she has been wrongfully denied access to South Pointe's business and financial records to which she is entitled under Kentucky law and demands an accounting (Id. at p. 10-11).

         Prior Ruling

         The order in question ruled on Vilardi's motion to compel discovery from South Pointe. In DN 54 Vilardi moved for documentation between South Pointe and eleven named pharmaceutical industry-related business entities, documentation related to communications or business between South Ponte principal Jarrod Shirley, on behalf of South Pointe, and L.A.L. Consultants and Peter Peller, and for bank statements, checkbook ledgers and QuickBook Reports for South Pointe financial matters from January 1, 2006, to the present.

         In ruling on the motion to compel, the undersigned conducted an evaluation of whether the requested information bore relevance to any of Vilardi's claims or defenses. The undersigned concluded that the discovery was not relevant to Vilardi's claims for wrongful denial of shareholder access to business records or fraudulent inducement to loan money. The undersigned agreed, however, with Vilardi's contention that the information could be relevant to her defense based on the equitable principal of “unclean hands” and ordered production of the documents (DN 67).

         South Pointe's Motion to Reconsider

         A motion to reconsider is treated as a motion to alter or amend a judgment under Fed.R.Civ.P. 59(e). Inge v. Rock Fin. Corp., 281 F.3d 613, 617-18 (6th Cir. 2002). Such a motion may be granted where there is a clear error of law, newly discovered evidence, an intervening change of law or to prevent manifest injustice. GenCorp, Inc. v. Am. Int'l Underwriters, 178 F.3d. 804, 824 (6th Cir. 1999). A motion under Rule 59(e), however, is not an opportunity to re-argue a case. Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998).

         South Pointe notes that Vilardi's initial motion to compel was barren of argument as to the relevance of the discovery she sought to have compelled. It was in Vilardi's reply that she first set forth an argument that the unclean hands doctrine provided a basis upon which to find the discovery relevant to that defense. South Pointe asserts that, while it attempted to anticipate her arguments when it made its response, it did not foresee that she would assert the unclean hands argument. South Pointe states that the undersigned considered Vilardi's argument without the benefit of South Pointe's counter argument. South Pointe's position is well-taken. In addition to being heard on the substance of its opposition to Vilardi's unclean hands contention, South Pointe also argues that producing the ordered discovery is unduly prejudicial because the documents contain proprietary and sensitive information.

         Finally, South Pointe argues that production of the documents will be unduly burdensome and disproportional to the needs of the case. South Ponte contends that the responsive documents are contained in over 530 banker's boxes and it would take three South Pointe employees a week to review the documents for production. However the undersigned concludes this argument could have been advanced during the initial briefing on the motion to compel, as ...


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