HCG Platinum v. Right Way Nutrition

HCG Platinum, LLC ("HCG") and Preferred Product Placement Corporation (“PPPC”) entered into a Marketing Agreement under which PPPC agreed to place HCG products into specified retailers in exchange for a percentage of the proceeds. Shortly thereafter, HCG filed the underlying breach-of-contract action against PPPC, seeking compensatory damages for PPPC’s alleged breaches and a declaratory judgment that HCG properly terminated the Marketing Agreement on account of these breaches. PPPC counterclaimed for breach of contract and asserted third-party contract claims against individuals and entities associated with HCG. Prior to trial, HCG moved to preclude PPPC from presenting evidence of damages, asserting that PPPC’s initial (and never supplemented) disclosures provided an insufficient description and computation of PPPC’s damages theory. Finding PPPC’s initial disclosures insufficient and its request to compel discovery untimely, the district court excluded the damages evidence from PPPC’s disclosures. Exclusion of that evidence, in turn, necessarily barred PPPC from pursuing its counterclaims, and the district court subsequently entered judgment against PPPC on that basis. PPPC appealed, arguing that the district court abused its discretion by imposing a discovery sanction that carried the force of dismissal, despite the fact that its discovery shortcomings resulted in only minimal and curable prejudice to HCG. After review, the Tenth Circuit reversed the district court’s judgment in favor of HCG on PPPC’s counterclaims ​and remanded for the district court to reconsider the exclusion of PPPC’s damages evidence under an analysis that considers, among other things, the availability of lesser sanctions. View "HCG Platinum v. Right Way Nutrition" on Justia Law