Shaklee Corp. v. Gunnell, s. 82-1380

• Decision Date: 16 November 1984
• Docket Number: Nos. 82-1380,82-1381,s. 82-1380
• Citation: 748 F.2d 548
• Parties: SHAKLEE CORPORATION, Plaintiff, Appellee, Cross-Appellant, v. El Marie GUNNELL and Franklin Gunnell, Defendants, Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 548

748 F.2d 548

40 Fed.R.Serv.2d 1005

SHAKLEE CORPORATION, Plaintiff, Appellee, Cross-Appellant, v. El Marie GUNNELL and Franklin Gunnell, Defendants Appellants, Cross-Appellees.

Nos. 82-1380, 82-1381.

United States Court of Appeals Tenth Circuit.

Nov. 16, 1984.

Daniel P. O'Keefe of Dorsey & Whitney, Minneapolis, Minn. (Roger J. Magnuson of Dorsey & Whitney, Minneapolis, Minn., Robert B. Hansen of Cannon, Hansen & Wilkinson, Salt Lake City, Utah, with him on the brief), for defendants, appellants, cross-appellees.

John E. Carne of Crosby, Heafey, Roach & May, P.C., Oakland, Cal. (E. Scott Savage and Samuel O. Gaufin of Van Cott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah, on the brief), for plaintiff, appellee, cross-appellant.

Before SETH, DOYLE and McKAY, Circuit Judges.

SETH, Circuit Judge.

This appeal arises from a suit brought by the plaintiff corporation against two individuals who had been active in plaintiff's direct selling program. Plaintiff's complaint alleged causes of action for defamation, product disparagement, unfair competition, and willful interference with its business. The complaint was based on statements made by the defendants at meetings, to individuals, and in a variety of circumstances. Some of the statements had been recorded at meetings and during conversations.

The defendants brought a cross-action for wrongful termination of their distributorship contract with plaintiff, for retirement rights, and also for defamation.

The jury found for the plaintiff; the trial judge found for defendants on the contract termination issue. Both parties have appealed.

The trial was preceded by a series of hearings and discussions on the scope of discovery. This concerned for the most part the discovery sought by the defendants. This comprises several hundred pages of the record. It would serve no purpose to detail the positions of the parties except to note that plaintiff sought to narrow discovery to one or two subjects. The complaint in part alleged defamatory statements made by the defendants over a period of time and in a variety of circumstances, as mentioned.

The basic order issued by the trial court was dated November 14, 1979. There was a later hearing on discovery in August 1980 but it did not change the November 14 order. This order limited discovery for all practical purposes to two questions: (1) whether an alfalfa product of plaintiff contained sugar; (2) whether a calcium product of plaintiff could be assimilated by the human body.

The discovery by defendants was thus limited to these two subjects which had been included with many other matters in the statements made by defendants. Other subjects in their statements were excluded, such as plaintiff's health claims for other products, health hazards and other product claims including claims as to the alfalfa product and calcium product referred to, and the qualifications of plaintiff's officers as represented to the public as to skills and education. The defendants sought mandamus in this court to have the deposition not so limited.

Thus before trial the court made the relevance determinations included in the November 14 order, and discovery was so limited to sugar in alfalfa and assimilation of a calcium product. The parties went to trial on that basis. The trial thereafter began and when the plaintiff was into its case it became evident that the case was expanding by ruling on admissibility and testimony soon was directed to statements the defendants had made on a variety of subjects. This testimony went beyond the initial relevancy determination the court had made as to discovery sought by defendants. There was thus a wide departure by the proof and the court's rulings from the sugar in alfalfa and the assimilation of calcium. It went to all public statements defendants had made and conversations which had been taped.

The plaintiff in its responsive and reply brief when presenting another subject lists witnesses who gave direct testimony in its case in chief. This list demonstrates the departure which had taken place in the trial from the initial relevancy determination. This list at footnote 17 of plaintiff's brief includes testimony by named witnesses who heard defendants say "that Shaklee was a hoax"; that the FDA "was about to make a seizure at Shaklee"; that "products were adulterated"; that the products were "no good"; that they "contained a petroleum base"; and "several tape recordings of the Gunnells making such statements were authenticated by those present at the meetings they recorded, and these tapes were played to the jury."

The trial court thus adopted a different relevancy standard as the trial progressed than applied to discovery. The business interference causes of action, the unfair competition cause, product disparagement and breach of contract issues all generated inquiry into issues beyond those contemplated by the...