Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-01935/USCOURTS-casd-3_09-cv-01935-4/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JOHNS et al., Civil No. 09-cv-1935-AJB (DHB)

Plaintiffs,

ORDER GRANTING PLAINTIFFS’

MOTION TO COMPEL FED. R. CIV. P.

30(b)(6) DEPOSITION OF BAYER

REGARDING SALES AND EXPENSES

[ECF No. 122]

v.

BAYER CORPORATION, et al.,

Defendants.

On April 4, 2012, the Court held a Discovery Conference during which counsel for the parties

advised the Court that they had come to an impasse with respect to certain subject matters contained in

Plaintiffs’ Notice of Fed. R. Civ. P. 30(b)(6) Deposition of Bayer Regarding Sales and Expenses and

Fed. R. Civ. P. 30(b)(2) Document Requests (“Deposition Notice”). The Court ordered that the parties

each submit briefs setting forth their respective positions concerning the disputed Rule 30(b)(6)

deposition subject matter areas. (ECF No. 118.) On April 16, 2012, the parties timely submitted their

briefs. (ECF Nos. 122, 125.)1

 Based upon a careful review of the parties’ papers and for the following

reasons, Plaintiffs’ motion to compel2

 is hereby GRANTED.

1

The Court’s briefing schedule required the parties to submit their briefs no later than April 15,

2012 (a Sunday). Counsel were subsequently advised telephonically that the briefs would be considered

timely if received on or before the following Monday, April 16, 2012. Defendants timely submitted

their brief directly to the Magistrate Judge’s chambers via e-mail on April 16, 2012 and electronically

filed their brief on April 25, 2012.

2

While Plaintiffs have not technically filed a motion to compel the Rule 30(b)(6) deposition of

Bayer, the Court construes the parties’ dispute and subsequent briefing as a motion to compel.

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I.

BACKGROUND

David Johns and Marc Bordman (collectively, “Plaintiffs”) bring this class action against Bayer

Corporation and Bayer Healthcare, LLC (collectively, “Bayer”) on behalf of themselves and a class

certified by the Honorable Anthony J. Battaglia on February 3, 2012. Plaintiffs assert causes of action

under California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200, et seq., and

Consumers Legal Remedies Act (“CLRA”), Cal. Civ. Code § 1750, et seq. 

Bayer sells the popular “One A Day” line of multivitamins. Plaintiffs challenge statements

Bayer made about its One A Day Men’s Health Formula and One A Day Men’s 50+ Advantage vitamins

(collectively, “Men’s Vitamins”). Specifically, Bayer’s Men’s Vitamins packaging and advertising

states that taking Men’s Vitamins daily would “support prostate health.” Bayer asserted that its Men’s

Vitamins provided the prostate health benefit because they contained the antioxidant lycopene and, later,

the trace mineral selenium.

Plaintiffs allege that for this promised material benefit, Bayer charged a price premium over

other multivitamins, but that in truth, the Men’s Vitamins did not provide any prostate health benefits. 

In fact, according to Plaintiffs, recent clinical studies have shown that for some men, increased selenium

consumption may increase their prostate cancer risk. 

Plaintiffs claim that Bayer’s decision to focus on the prostate health claim was a direct result of

its market research into what would sell—not a decision based on a competent and reliable scientifically

supported benefit to the consumer. Despite the promise of improved prostate health, Plaintiffs allege

that throughout the class period, Bayer never had credible and reliable scientific support for the promise.

Bayer denies Plaintiffs’ allegations that the prostate health representations contained in its Men’s

Vitamins packaging and advertising was not supported by competent and reliable scientific evidence. 

Bayer further denies Plaintiffs’ allegations that Bayer charged a premium over other comparable

multivitamins.

/ / /

/ / /

/ / /

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II.

DISCOVERY DISPUTE

Presently before the Court is a dispute between the parties concerning Plaintiffs’ Deposition

Notice. Specifically, Plaintiffs seek to take Bayer’s deposition on various topics relating to the Men’s

Vitamins including Bayer’s annual cost of goods sold; annual cost of selenium and lycopene; annual

advertising, promotion, research and development expenses; and annual operating profits and gross

margins. Plaintiffs’ Deposition Notice also requests production of documents from Bayer on similar

topics. Specifically, the parties disagree over the following:

Rule 30(b)(6) Subject Matters3

1. The data kept and maintained in Bayer’s ordinary course of business that relates

to revenues, profits and/or loses [sic], cost of goods sold, profit margin, and retail

pricing attributable to the sale of Bayer’s Men’s Health Formula and Bayer’s

One A Day Men’s 50+ Advantage throughout the relevant time period.

5. The annual cost of goods sold attributable to the sale of Bayer’s Men’s Health

Formula in California throughout the relevant time period.

6. The annual cost of goods sold attributable to Bayer’s One A Day Men’s 50+

Advantage in California throughout the relevant time period.

7. The annual cost of selenium attributable to Bayer’s Men’s Health Formula in

California throughout the relevant time period.

8. The annual cost of selenium attributable to Bayer’s One A Day Men’s 50+

Advantage in California throughout the relevant time period.

9. The annual cost of lycopene attributable to Bayer’s Men’s Health Formula in

California throughout the relevant time period.

10. The annual cost of lycopene attributable to Bayer’s One A Day Men’s 50+

Advantage in California throughout the relevant time period.

11. The annual advertising and promotion expenses attributable to Bayer’s Men’s

Health Formula in California throughout the relevant time period.

12. The annual advertising and promotion expenses attributable to Bayer’s One A

Day Men’s 50+ Advantage in California throughout the relevant time period.

13. The annual research and development expenses attributable to Bayer’s Men’s

Health Formula in California throughout the relevant time period.

3

A copy of the Deposition Notice is attached as Exhibit A to Plaintiffs’ brief. (ECF No. 122-1.) 

Bayer contends that the issues in dispute are limited to Subject Matters 5-10, 15-18 and 28-32, and

Document Requests 4-5 and 13-14. However, upon review of the Deposition Notice and the parties’

meet and confer correspondence (ECF No. 122-2), the Court concludes that Subject Matters 1 and 11-14

are also in dispute and encompassed within Plaintiffs’ motion to compel.

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14. The annual research and development expenses attributable to Bayer’s One A

Day Men’s 50+ Advantage in California throughout the relevant time period.

15. The annual operating profit, or lack thereof, attributable to Bayer’s One A Day

Men’s 50+ Advantage in California throughout the relevant time period.

16. The annual operating profit, or lack thereof, attributable to Bayer’s Men’s Health

Formula in California throughout the relevant time period.

17. The annual gross margin for Bayer’s Men’s Health Formula and all of your other

multivitamin products, including sub-brands throughout the relevant time period.

18. The annual gross margin for Bayer’s One A Day Men’s 50+ Advantage and all

of your other multivitamin products, including sub-brands throughout the

relevant time period.

28. Where the data utilized to generate the costs of goods sold, operating income,

and gross margins is maintained, and who maintains it.

29. The software of systems that are utilized to prepare and/or compute data

regarding revenue, and profits and/or losses regarding the sales of your Men’s

Vitamins.

30. What systems or safeguards, if any, are in place to assure the data regarding

revenue, profits and/or losses, gross margin, and cost of goods sold is accurate

and reliable attributable to the sale of your Men’s Vitamins.

31. The specific accounting processes utilized to generate the data regarding

revenue, profits and/or losses, cost of goods sold, and gross margins attributable

to the sale of your Men’s Vitamins.

32. All assumptions that are made with respect to the data regarding revenue and

profits and/or losses attributable to the sale of your Men’s Vitamins. If so, why

the assumptions are made.

Rule 30(b)(2) Document Requests

4. Documents summarizing by year, the gross profit margin for Bayer’s Men’s

Health Formula, your other multivitamin products, including sub-brands, and

other multivitamin products throughout the relevant time period.

5. Documents summarizing by year, the gross profit margin for Bayer’s One A Day

Men’s 50+ Advantage, your other multivitamin products, including sub-brands,

and other multivitamin products throughout the relevant time period.

13. Monthly manufacturing cost statements for the Men’s Vitamins and all of your

other multivitamin products, including sub-brands and each of their countervarieties throughout the relevant time period.

14. Monthly detailed profit and loss statements for the Men’s Vitamins and all of

your other multivitamin products throughout the relevant time period.

/ / /

/ / /

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III.

DISCUSSION

A. Legal Standard

“Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s

claim or defense.” Fed. R. Civ. P. 26(b)(1). In addition, “[f]or good cause, the court may order

discovery of any matter relevant to the subject matter involved in the action. Relevant information need

not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of

admissible evidence.” Id. 

B. Plaintiffs’ Position

Plaintiffs generally contend that the requested information is relevant to the materiality of

Bayer’s prostate health advertising and that it will allow Plaintiffs’s expert to opine as to the appropriate

measure of damages and restitution. Plaintiffs’ principal arguments are that the Court has broad

discretion to fashion an appropriate remedy, both the UCL and the CLRA permit a prevailing plaintiff

to recover restitution, and the requested information going to Bayer’s profits generated by the Men’s

Vitamins is relevant to Plaintiffs’ claim for restitutionary disgorgement.

C. Bayer’s Position4

Bayer generally contends that evidence of its costs of goods sold, profits and margins is not

relevant to the issues in this litigation and is therefore not discoverable. Bayer argues that, assuming

Plaintiffs can prevail on their claim that the Men’s Vitamins provided no support for prostate health to

the class, Plaintiffs may only recover the difference between what the class paid for the Men’s Vitamins

and what the class would have paid for the Men’s Vitamins absent the alleged misrepresentations

concerning prostate health. Bayer contends that an order of restitution based on its cost of goods sold,

profits and margins would amount to improper non-restitutionary disgorgement.

/ / /

/ / /

4

The Court notes that during the April 4, 2012 Discovery Conference, counsel for Bayer

contended that the disputed subject matters were overly burdensome. However, aside from counsel’s

representations, Bayer has not presented the Court with any evidence of undue burden. Accordingly,

the Court finds that Bayer’s claim that responding to the Deposition Notice would be unduly

burdensome is not grounds for denying Plaintiffs’ motion to compel.

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D. Analysis

 In essence, the instant discovery dispute centers around whether evidence of Bayer’s profits

generated by the sale of its Men’s Vitamins is proper in determining the measure of restitution Plaintiffs

would be entitled to if they prevail on their claims. Plaintiffs say that it is. Bayer says that it is not. In

resolving the instant discovery dispute, the Magistrate Judge is careful to avoid making a determination

as to which parties’ measure of restitution should be applied in this case. Such determination is the

province of the District Judge assigned to this matter. However, for the reasons stated below, Plaintiffs

should not now be precluded from seeking the evidence in which they may later use to support their

claim for restitutionary disgorgement.

As noted, the parties differ as to whether Plaintiffs’ proffered measure of damages amounts to

improper non-restitutionary disgorgement. As Judge Battaglia previously recognized in this litigation,

“[a]lthough Defendants are correct that nonrestitutionary disgorgement is unavailable under the UCL,

disgorgement is available to the extent it is restitutionary.” (ECF No. 21 at 5:10-11.) Without now

deciding the scope of available restitutionary disgorgement, the Court notes that other courts have drawn

a distinction between the source of the funds sought to be disgorged. For example, the California

Supreme Court explained that restitution under the UCL does not require the “surrender of all profits

earned as a result of an unfair business practice regardless of whether those profits represent money

taken directly from persons who were victims of the unfair practice.” Korea Supply Co. v. Lockheed

Martin Corp., 29 Cal. 4th 1134, 1145 (2003) (quoting Kraus v. Trinity Mgmt. Serv., Inc., 23 Cal. 4th

116, 127 (2000)). In contrast, however, “[u]nder the UCL, an individual may recover profits unfairly

obtained to the extent that these profits represent monies given to the defendant [by the plaintiff] or

benefits in which the plaintiff has an ownership interest.” Id. at 1148. Furthermore, the California

Supreme Court “defined an order for ‘restitution’ as one ‘compelling a UCL defendant to return money

obtained through an unfair business practice to those persons in interest from whom the property was

taken, that is, to persons who had an ownership interest in the property or those claiming through that

person.’” Id. at 1144-45 (quoting Kraus, 23 Cal. 4th at 126-27); see also Lee Myles Assoc. Corp. v. Paul

Rubke Enter., Inc., 557 F. Supp. 2d 1134, 1144 (S.D. Cal. 2008) (“Disgorgement of profits earned by

defendants as a result of allegedly unfair practices, where the money sought to be disgorged was not

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taken from the plaintiff and the plaintiff did not have an ownership interest in the money, is not

authorized.”); Madrid v. Perot Sys. Corp., 130 Cal. App. 4th 440, 462 (“[T]he money to be disgorged

. . . was money taken from the victims (i.e., restitutionary disgorgement), not money obtained from third

parties (nonrestitutionary disgorgement).”). 

Thus, because Bayer’s profits for its Men’s Vitamins would seemingly have originated from the

class members’ purchases of the products, Plaintiffs’ contention that they are seeking restitutionary

disgorgement of Bayer’s profits is arguably accurate. Again, while it is for the District Judge to

determine which measure of restitution is appropriate in this case, Plaintiffs should not be precluded

from obtaining the evidence which supports a theory of restitutionary disgorgement which appears

plausible on its face. 

In support of its position, Bayer cites to In re Vioxx Class Cases, 180 Cal. App. 4th 116, 131

(2009), which states that “[t]he difference between what the plaintiff paid and the value of what the

plaintiff received is a proper measure of restitution.” Emphasis added (citing Cortez v. Purolator Air

Filtration Products Co., 23 Cal. 4th 163, 174 (2000). However, neither that case nor any other case

relied upon by Bayer suggest that the difference in price paid and value received is the only proper

measure of restitution.

Finally, trial courts have “broad discretion” under the UCL and CLRA to grant equitable relief

and fashion an appropriate award of restitution, subject to the limitation that the remedy must be

supported by substantial evidence. See Colgan v. Leatherman Tool Group, Inc., 135 Cal. App. 4th 663,

700 (2006). Bayer contends that Plaintiffs’ theory of restitution is improper because it is not based on

a “measurable amount” supported by evidence. However, although the Court does not decide which

proffered measure of restitution should apply here, it is reasonable to conclude that Bayer’s profits and

expenses are “measurable amounts,” therefore suggesting that discovery into those figures is relevant

to this litigation and discoverable.

In conclusion, the Court finds that evidence tending to support a party’s theory of damages (i.e.,

Plaintiffs’ theory of restitutionary disgorgement) is relevant to that party’s claim and therefore

discoverable. Moreover, the Court finds that good cause exists for the discovery of evidence of Bayer’s

costs of goods sold, profits and margins as it is relevant to the subject matter of this litigation.

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III.

CONCLUSION AND ORDER

Based on the foregoing, Plaintiffs’ motion to compel the Rule 30(b)(6) deposition of Bayer is

hereby GRANTED. Accordingly, IT IS HEREBY ORDERED:

1. Plaintiffs are entitled to take the Rule 30(b)(6) deposition of Bayer with respect to

Subject Matters 1, 5-18 and 28-32 as contained in Plaintiffs’ Deposition Notice. 

2. Bayer shall identify the deponent(s) on or before May 17, 2012.

3. The deposition shall take place on or before May 31, 2012.

4. Plaintiffs are also entitled to receive all non-privileged documents in Bayer’s possession,

custody or control that are responsive to Document Requests 4-5 and 13-14 of Plaintiffs’

Deposition Notice. To the extent such responsive documents have not already been

produced to Plaintiffs, Bayer shall produce all such responsive, non-privileged

documents on or before May 24, 2012.

IT IS SO ORDERED.

DATED: April 30, 2012

DAVID H. BARTICK

United States Magistrate Judge

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