X. The breaches of the settlement contract. 

The ink on the settlement contract was barely dry before the 89c1113 defendants breached their promises to produce documents, answer interrogatories, and produce a knowledgeable Rule 30(b)(6) witness. 

A. The broken promise to produce documents by April 9, 1990.

Everfresh was required to produce documents for inspection and copying on or before April 9, 1990.  Documents were not made available for inspection until June 6—58 days late.  The copies we requested were not delivered until 16 days after that, on June 22.[1]

B. The unilateral substitution of a useless, hearsay-filled affidavit for the binding interrogatory answers Grove Fresh had bargained for.

Everfresh’s amended answers to interrogatories were due by April 9, 1990.[2]  Instead of serving binding interrogatory answers that would be admissible in evidence,[3] Everfresh served an affidavit by Hugo Powell that had no chance of ever being received in evidence.

Powell had no personal knowledge of the illegal practices that occurred at Everfresh before he joined the company in January 1989, just a few weeks before Grove Fresh filed suit.  Consequently, every substantive statement in his two-and-one-half page affidavit was preceded by the phrase, “I have been told,” or “I was told,” or “I learned.”  He did not identify any of the persons who supplied him with his information. 

The anonymous hearsay, and the absence of basic details, made Powell’s affidavit useless as evidence. 

C. The broken promise to produce a knowledgeable Rule 30(b)(6) witness. 

During settlement negotiations Stetler told me that Powell had conducted a thorough investigation into Kotwicki's activities, and that he would testify for Everfresh on all 14 subjects listed in the Rule 30 (b) (6) deposition notices.[4]

As explained below, Powell was as useless to Grove Fresh as a live witness as he was as an affiant.

1. Powell’s “investigation.” 

Powell's so-called “investigation” was nothing more than a series of brief “get-acquainted” interviews with subordinates that he conducted in January 1989, during his first week on the job.  Only two of the persons he interviewed even touched on the subject of orange juice adulteration. Only one of those two—Michael Petric—had any personal knowledge of the problem.[5]

Petric was Everfresh’s Technical Director.  As such, he controlled the orange juice formulas, which meant he had personal knowledge of how Everfresh adulterated its products.  Nevertheless, Powell made no effort to get detailed information from Petric.  As Powell would later explain, he did “not... seek out extensive detail” from Petric because he, Powell, “didn't have the experience or skill” necessary to ask the right questions.[6]

The new CEO’s passive interview of Petric epitomized his lack of curiosity about information that would be relevant in the courtroom.

2. Labatt’s audit of Everfresh, made at Powell’s request. 

Because Powell deemed himself incapable of conducting an investigation, he asked Labatt's quality control department to do the job for him.[7]  He made this request on January 23, 1989.  Labatt agreed to conduct the audit, but it waited two weeks before hiring McDermott, Will & Emery to supervise it. 

The Labatt auditors spent a total of six working days interviewing employees and reviewing documents. Afterwards, the audit team prepared a comprehensive summary of their findings in a report dated February 21-22, 1989.[8]

Grove Fresh filed 89c1113 on February 10, 1989, while the audit was in progress. After Labatt learned about Grove Fresh's suit, McDermott, Will & Emery instructed Labatt to withhold the audit report from Powell, even though Powell is the one who had requested the audit in the first place. Labatt never rescinded this instruction.[9]

3. McDermott Will & Emery’s fraudulent misrepresentation regarding Powell’s knowledge. 

Disclosing the audit report to Powell was the only way for Powell to learn the facts that would make him a competent Rule 30(b)(6) witness.  Doing so, however, would jeopardize any claim of work product immunity for the report.  Accordingly, the instruction was never rescinded.

The negotiations over the 89c1114 settlement contract took place in March 1990, 13 months after the audit report was completed.  Thus, when McDermott, Will & Emery represented to Grove Fresh that Powell was a competent Rule 30(b)(6) witness, they knew that this representation was false, because they themselves had given the instruction to withhold the audit report from him.

Had I known that Powell would be such a thoroughly incompetent Rule 30(b)(6) witness, I would have advised Grove Fresh against executing the settlement contract.

3. The lost pecuniary benefit of the bargain for the Rule 30(b)(6) depositions. 

To fill the void left by Powell’s incompetence as a Rule 30(b)6) witness, Grove Fresh deposed seven out-of-town witnesses—five in Michigan and one in Canada.[10]  To round out testimony on the subjects listed in the Rule 30(b)(6) notices, Grove Fresh needed to depose at least six more out-of-town witnesses but it could not afford the travel expenses, so it did not depose those witnesses.[11]

The necessity to take seven out-of-town depositions, and the financial distress that required Grove Fresh to forego six others, deprived Grove Fresh of the pecuniary benefit of the bargain it had made when the defense agreed to Chicago as the venue for the Rule 30(b)(6) depositions.[12]

[1] For more details about the problems with the document production, see §XI-L, below.

[2] Under the rules governing discovery, Everfresh was obliged to provide answers that included information within the knowledge of (a) former employees employed as of February 10, 1989, when the lawsuit commenced, and (b) information possessed by corporate counsel. General Dynamics Corp. v. Selb Manufacturing Corp., 481 F.2d 1204, 1210-11 (8th Cir. 1983).  Accord, United States v. 3963 Bottles, more or less, 265 F.2d 332, 336 (7th Cir. 1959).

[3] Under FRE 801(d)(2), these answers would be admissible in evidence as admissions by a party opponent.

[4] Uncontested Facts, App. II-Ex. 33, Messina Affidavit ¶¶1-7

[5] Grove Fresh ‘s Amended Statement of Uncontested Facts Pursuant to Local Rule 12(m), ¶¶26-33, filed in 89c1114 (July 18, 1991) (“89c1114 12(m) Statement”).

[6] 89c1114 12(m) Statement  ¶30.

[7] 89c1114 12(m) Statement ¶31.

[8] 89c1114 12(m) Statement ¶¶33-44

[9] 89c1114 12(m) Statement ¶¶43-44. Powell claimed not to know whether the auditors had prepared a written report. Powell Dep., pp. 88-90 (April 1990).

[10] The Michigan deponents were Robert Heritier, Bruno Moser, Michael Kanan, Susan Guss, John Walker, and Doug Wells.  The Canadian deponent was David Murray, Labatt's Technical Director.

[11] The additional deponents and their domiciles were: Daniel Kotwicki (Florida); Albert Allen (Michigan); Dean Kitts (Canada); Michael Petric (Canada): Walter Gazo (Canada); and Glen Davis (Michigan) 

[12] See §IX-A-5, above.