Riseandshine Corporation v. Pepsico, Inc.

Background

Magistrate Judge Cave had ordered Pepsico to produce a witness for testimony about modified versions of three topics in Riseandshine’s Rule 30(b)(6) deposition notice. That rule allows a party to require an organization to designate a witness to testify about specified subjects. The modified topics concerned information about sales, gross profit, net profit, competitors or other sellers of nitro coffee, the placement of MTN DEW RISE ENERGY and Starbucks Nitro products in stores, and related market-share documents.

Pepsico objected, arguing that Starbucks Nitro products were irrelevant to Riseandshine’s claims and that allegations about Pepsico’s knowledge of Riseandshine did not justify broad discovery into Starbucks Nitro’s financial information and strategy. Pepsico also moved to stay enforcement of the magistrate judge’s order. The court had granted a stay while considering the objections.

Non-party Starbucks moved to intervene under Federal Rule of Civil Procedure 24 for the limited purpose of seeking a protective order to prevent the discovery allowed by the magistrate judge’s order. Riseandshine opposed Starbucks’ motion.

Court’s Analysis

The court reviewed the magistrate judge’s nondispositive discovery order under the standard that permits modification or setting aside only when the order is clearly erroneous or contrary to law. The court explained that a finding is clearly erroneous only when the reviewing court is firmly convinced that a mistake was made, and that an order is contrary to law when it fails to apply or misapplies relevant statutes, case law, or procedural rules. The court also stated that magistrate judges’ decisions on nondispositive matters receive substantial deference.

The court rejected Pepsico’s relevance argument. Riseandshine’s amended complaint alleged that Pepsico likely knew the launch of its PepsiCo RISE drink could destroy a leading competitor to Starbucks’ ready-to-drink coffee products, which Pepsico distributed through its partnership with Starbucks. Based on those allegations, the court held that Judge Cave did not clearly err or act contrary to law by finding the modified deposition topics and document request relevant to Riseandshine’s claims.

Disposition

The court overruled Pepsico’s objections to the April 14, 2022, discovery order. The order permitting discovery from Pepsico concerning Starbucks Nitro products remained in effect. The court denied as moot Starbucks’ motion to intervene because it had found no error in the discovery order. This opinion addressed discovery and related procedural motions, not the ultimate merits of Riseandshine’s claims.