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FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024
Via Electronic Mail March 7, 2024
Mr. Michael Rand
Supreme Court of the State of New York, New York County
Commercial Division, Part 54
60 Centre Street
New York, New York 10007
Re: Mayville Engineering Company, Inc. v. Peloton Interactive,
Inc., Index No. 652735/2022
Dear Mr. Rand:
We write on behalf of Peloton Interactive, Inc. (“Peloton”) to provide an additional update about
the status of discovery in this case. 1
MEC Continues to Obstruct Peloton’s Efforts to Obtain Discovery Relevant to Its
Counterclaim.
In the five months since Peloton served discovery requests for the cost and profit information
MEC provided to its other customers, MEC has slowly dribbled out fewer than 300 documents
that appear to have been carefully selected to conceal evidence of MEC’s fraud. MEC’s
production has also been improperly limited to documents related to its quotation program,
which appears built to capture only information intended to be sent to a customer, to the
exclusion of internal cost and profit estimates that were never intended to be customer-facing.
And while MEC’s corporate witness testified that MEC provides cost and profit information that
is “different from” its internal cost and profit information to at least three customers—Oshkosh,
Deere, and PACCAR—MEC has only produced documents for two of those customers, arbitrarily
focusing on the quotation process and taking the position that MEC does not provide cost and
profit information to Oshkosh in “the ordinary course of quoting Oshkosh parts.” Letter from B.
Bassoff to M. Rand, at 7 (Feb. 16, 2024).
MEC has coupled its paltry productions with a refusal to answer basic questions necessary to
evaluate the scope and reasonableness of those productions, including, crucially, whether MEC
maintains any cost and profit information, whether internal to MEC or transmitted to a
customer, that exists outside of the quotation system, including for Oshkosh. MEC’s refusal to
Peloton submitted its portion of the joint update on March 5, in order to comply with the
1
Court’s deadlines. For ease of review, this letter contains both Peloton’s original March 5
arguments as well as responses to the new arguments and issues raised in MEC’s portion of the
joint update.
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answer these questions while limiting its production to documents related to the quotation
process is especially concerning because MEC’s fraud on Peloton was evidenced not through
quotes or its quotation system, but through spreadsheets and presentations transmitted via
email. If given the same type of information MEC has produced regarding its other customers,
Peloton would not have been able to uncover the fraud MEC perpetrated against it.
While the Court permitted MEC the opportunity to determine the parameters of its initial
production in order to alleviate purported burden concerns, MEC has never quantified what
burden, if any, exists with making a broader production of cost and profit information. To the
contrary, the documents that MEC has produced to date—including what appears to be an
automatically-generated spreadsheet that aggregates cost and profit information for multiple
products—suggest that any burden associated with expanding the scope of MEC’s production is
minimal.
MEC’s unwillingness to be forthcoming about the cost and profit information it maintains is not
limited to its document production. MEC has also refused to explain what the information it has
produced means, refused to answer any related interrogatories, and refused to comply with
Peloton’s Request for Inspection. Peloton respectfully requests that MEC be ordered to (1)
remedy the deficiencies in its document productions, (2) submit to a further entity deposition,
for which there is good cause, (3) provide complete answers to Peloton’s second set of
interrogatories, and (4) comply with Peloton’s Request for Inspection. In the alternative,
Peloton respectfully requests leave to file a formal motion to compel this discovery.
MEC’s Document Production Is Inadequate.
In addition to the fundamental failure to appropriately scope its production, MEC’s production
suffers from myriad other deficiencies it has refused to correct. Peloton respectfully requests
that MEC be ordered to remedy each of the below deficiencies and also produce responsive
documents based on a search of the documents in Mr. Raber’s possession, including his email.
Improper redactions. As described in Peloton’s update submitted on February 16, 2024 (the
“February update,” attached here as Ex. A), the vast majority of the documents MEC has
produced continue to be heavily redacted to the point that many of these documents are
incomprehensible. See, e.g., Exs. B, C. While MEC claims that all of the information Peloton
requires is already visible, that is not the case. In fact, many of the redactions obscure the
descriptions of what certain dollar figures represent. See, e.g., Ex. D. More generally, Peloton is
entitled to view the entire document and not rely on the representations of counsel about which
portions are relevant. To the extent that MEC has concerns over the confidentiality of
information in these documents, those concerns can be addressed by designating the documents
as Confidential or Highly Confidential-Attorneys’ Eyes Only, in accordance with the existing
protective order. See NYSCEF No. 57. Peloton respectfully requests that MEC be ordered to
produce unredacted versions of its cost and profit information.
Deficient Metadata. MEC has produced numerous documents with plainly insufficient
metadata, in violation of the parties’ ESI Protocol. These documents have been produced, for
example, without accurate date information or author information. Peloton respectfully
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requests that MEC be ordered to provide complete and accurate metadata for the documents
produced to date and for any future productions.
Arbitrary Limit to Quotation System. MEC’s production also continues to suffer from other
deficiencies identified in Peloton’s prior updates to the Court, including that the production has
been arbitrarily limited to the quotation system, as described above. Given that the fraudulent
documents are not likely to be found in the customer-facing quotation system—as evidenced by
the fact that the documents proving MEC’s deception of Peloton were not quotes—there should
clearly be a broader production. It should begin with providing discovery of all documents in
the possession of Mr. Raber, including email correspondence, relating to cost or profit
information for John Deere, PACCAR, and Oshkosh. Given Mr. Raber’s sworn testimony that
these customers were provided with information that did not match MEC’s internal information,
a targeted search of his email is plainly appropriate.
Failure to Produce Documents Relating to Oshkosh. MEC has not produced any documents
relating to Oshkosh whatsoever, despite Mr. Raber’s testimony that Oshkosh was among the
customers that received cost and profit information that did not match MEC’s internal
estimates. This is another reason to order the production of Mr. Raber’s relevant documents.
Date range. To date, MEC’s document production has been unilaterally limited to a five-month
period. During the parties’ meet-and-confer on March 1, MEC agreed for the first time to
produce documents related to the top five quotes, sorted by revenue, for each month of the date
range requested by Peloton (January 1, 2020 through the date for production). Peloton reserves
its right to assess the adequacy of that supplemental production once it is made, but notes that
MEC’s insistence until March 1 on arbitrary date ranges has delayed the completion of
discovery, and its current restriction to the “top 5” quotes for a broader date range is likely too
narrow, given the volume of quotes issued during the period.
Peloton has been fully willing to discuss MEC’s burden concerns, but the issue here is not truly
one of burden, and MEC has never quantified or described any burden. What is happening here
is that MEC is continuing to conceal its fraud and is seeking the Court’s assistance in doing so;
that effort should be rejected.
There Is Good Cause for a Further Entity Deposition of MEC.
Peloton respectfully requests that the Court permit a further three-hour entity deposition of
MEC at a location of MEC’s choosing. There is ample cause to do so. See Commercial Division
Rule 11-d(f) (noting that the “court may alter the limits on the number of depositions or the
duration of an examination” for good cause shown).
Peloton took MEC’s entity deposition in August 2023, well before Peloton asserted a
counterclaim for fraudulent inducement and propounded the discovery requests at issue.
During that deposition, MEC’s corporate witness, Ryan Raber, revealed MEC provides
fraudulent information to customers other than Peloton, including Oshkosh, Deere, and
PACCAR. MEC’s counsel obstructed Peloton from further deposing Mr. Raber on the issue of
MEC’s fraud, interposing meritless instructions not to answer. Ex. E at 362:4-371:19. MEC’s
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position is now that because Mr. Raber provided damning testimony in August, Peloton should
not be allowed to obtain highly relevant testimony to support its counterclaims, which were
added subsequent to (and in part because of) Mr. Raber’s testimony. Cf. Germana v. Chase
Manhattan Bank, N.A., 124 A.D.2d 500, 501 (1st Dept. 1986) (holding defendant was entitled to
further deposition of plaintiff as to new matters alleged after first deposition occurred); Prote
Contracting Co. v. Bd. Of Educ. Of City of New York, 249 A.D.2d 178, 179 (1st Dept. 1998)
(holding that defendant may re-depose corporation’s president based on newly interposed
counterclaim). A further deposition of MEC would permit Peloton an opportunity to obtain
information about the questions that MEC has refused to answer to date, including the types
and locations of documents in which MEC maintains cost and profit information. That
information would assist the parties in negotiating searches for documents with the benefit of
more equal information.
MEC Has Refused to Answer Interrogatories About Its Cost and Profit Information.
As described in the February update, MEC has refused to answer any of Peloton’s Second Set of
Interrogatories, which are also aimed at ascertaining where MEC maintains relevant cost and
profit information. Ex. F. MEC’s primary objection to answering these interrogatories has been
that Interrogatory No. 10, which asks MEC to “identify all persons to whom MEC has provided
Cost or Profit information that differs from its internal Cost or Profit information” is a
contention interrogatory. Id. at 2. Not so. Interrogatory No. 10 seeks the identities of potential
witnesses material and necessary to Peloton’s counterclaim. The interrogatory has a good faith
basis in the testimony of MEC’s corporate witness, who testified that (1) MEC provides profit
figures to customers that understate actual profit in MEC’s systems, and (2) MEC decides on a
“discretionary” basis to provide certain customers with cost information that is different from its
actual cost information. See NYSCEF No. 164 at 6–7. Notwithstanding this testimony, MEC has
refused to answer this interrogatory and Interrogatory Nos. 11-13, which seek the location of
documents and identity of witnesses related to MEC’s response to Interrogatory No. 10. Ex. F at
3-6.
MEC has also refused to answer Interrogatory No. 14, which asks MEC to identify the location of
policies, practices, guidelines, or other standards maintained by MEC for preparing and
presenting quotes to customers, setting prices for customers, and calculating cost and profit
information. Ex. F at 7-8. While MEC asserts that this interrogatory is not relevant, MEC’s
policies and practices related to setting prices and quotes will, at a minimum, allow Peloton to
ascertain information MEC has continually refused to provide—the process MEC follows for
calculating cost and profit information and the location of related documents.
MEC Has Refused to Permit an Inspection of Relevant Data Systems.
It was revealed during deposition testimony that MEC maintains enterprise resource planning
(“ERP”) systems that house material and relevant information about, among other things, the
costs associated with particular manufacturing projects, including the Peloton project. MEC
refused to produce any documents from its ERP systems, instead delaying the discovery process
by demanding that Peloton serve a separate request for inspection. Peloton did so, but MEC has
refused to permit any inspection to date. See Ex. G.
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Peloton served requests to inspect ERP systems containing estimated cost or profit information
about parts made for Deere, Oshkosh, and PACCAR. MEC’s primary objection is relevance; the
Court has already rejected this argument. See NYSCEF No. 207. Furthermore, an inspection
alleviates any burden arguments that MEC has made about producing this information, as
Peloton, not MEC, would incur the time and cost associated with the inspection. MEC has
provided no detail about the purported burden that Peloton’s inspection would impose, other
than requiring counsel and some unspecified number of MEC employees to be present for a
single day, during which they could largely attend to other tasks as Peloton performs its
inspection. MEC cannot claim that this information is not relevant, nor that there is any other
valid basis to prevent the inspection.
MEC Has Refused to Permit an Inspection of Data Systems Relevant to the Supply
Agreement.
Peloton also served a request to inspect MEC’s ERP systems related to Peloton and the Supply
Agreement. See Ex. G. This request stems from the testimony of MEC’s former COO, Rand
Stille, who testified that MEC maintains an ERP system called “MMS” that contains relevant
information about MEC’s readiness to produce parts for Peloton under the Supply Agreement.
MEC did not disclose the system in the parties’ ESI protocol, and instead has stated that the
MMS system does not contain any non-cumulative responsive information. But MEC has never
indicated that it actually produced documents related to each of the categories of responsive
information that Mr. Stille testified exists within the system. Indeed, Mr. Stille offered more
than six transcript pages of testimony about the contents of MEC’s ERP system for the Peloton
project, which apparently included information about “all of the assets [and] depreciation
schedules,” “measurables,” such as “quality performance,” “scanning hours,” “supply
information,” “order scheduling,” “PPAP information,” information about “facility buildout,”
and “information about the acquisition and disposal of any equipment and tooling.” See Ex. H
at 27-33. Accordingly, Peloton respectfully requests that MEC be ordered to comply with
Peloton’s Request for Inspection.
MEC’s Purported Discovery Issues Are Meritless.
MEC’s RFP Nos. 44-48 Are Unduly Burdensome and Seek Irrelevant Information.
The Court should deny MEC’s request that Peloton be ordered to produce all documents
responsive to MEC’s RFP Nos. 44-48.
First, MEC’s requests are unduly burdensome. As described in the February update, Peloton
has already reviewed more than 146,000 documents and produced more than 32,000 pages of
documents, including thousands of pages from the custodial files of the Peloton employees with
responsibility for negotiating the Supply Agreement. Indeed, because Peloton applied very
broad relevance criteria in its initial productions, Peloton has already searched for and produced
numerous documents relevant to its counterclaim against MEC for fraudulent inducement,
including documents related to the negotiation of the Supply Agreement and the diligence
Peloton undertook during that process. In light of the extensive amount of discovery conducted
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on these issues to date, MEC’s RFP Nos. 44-48 seek to impose an undue burden. These requests
would require Peloton to conduct email and other searches over the documents of a number of
current and former Peloton employees, including but not limited to the four employees who
negotiated the Supply Agreement, and whose documents were already searched and reviewed
pursuant to the parameters set forth in the ESI protocol that took the parties several months to
negotiate.
Second, MEC’s requests are overbroad and seek irrelevant information. RFP Nos. 44, 45, and 47
seek information about all “parts for Peloton’s fitness products, including but not limited to
Bikes.” But the only parts at issue in the Supply Agreement are mechanical parts and the only
products at issue are bikes. RFP No. 46 similarly seeks irrelevant information related to
Peloton’s “third-party vendors, manufacturers, or suppliers,” including third parties who were
not considered for supplying or manufacturing the parts at issue in this case. MEC has never
offered any justification for the production of documents wholly unrelated to this case.
Third, Peloton’s proposal to search for documents responsive to each of these RFPs reasonably
balances the burden imposed by these requests with their relevance, if any. As described in the
February update, with respect to RFP Nos. 44-45, which seek documents related to the factors
and criteria that Peloton “regularly, ordinarily, or customarily” considers in selecting suppliers,
Peloton has agreed to produce company-wide policies, manuals, or training materials, if any,
utilized by Peloton for selecting a supplier for sourcing mechanical components for Bikes. With
respect to RFP No. 46, Peloton has similarly agreed to search for company-wide policies related
to the subject matter of the request in connection with Peloton’s agreements with manufacturers
or suppliers of mechanical parts for bikes. With respect to RFP No. 47, Peloton agreed to search
for documents sufficient to show any formal training received by or made available to the
Peloton employees involved in negotiating the Supply Agreement. Such documents are likely to
be the best evidence of what Peloton generally considers in selecting suppliers and the diligence
it ordinarily conducts. Peloton is still in the process of determining whether any such policies,
manuals, or training materials exist, a process that has been complicated by the fact that such
documents are now several years old and individuals who would have maintained or utilized
them are no longer with the company.
With respect to RFP No. 48, which seeks documents and communications “relating to or
reflecting the precautions, measures, steps, research, procedures, analyses and due diligence
that Peloton undertook” to protect itself against MEC’s fraudulent conduct in connection with
the Supply Agreement, Peloton has agreed to produce documents sufficient to show the subject
matter of the request. MEC’s complaint that Peloton’s proposal allows Peloton to “cherry pick”
documents is baseless. Peloton has already produced thousands of pages of documents
related to the negotiation of the Supply Agreement, including documents related to Peloton’s
evaluation of MEC’s quotes and its various representations during the negotiation. And MEC’s
complaints that Peloton’s proposal might prevent identification of flaws in Peloton’s diligence
process makes no sense: if Peloton produces documents “sufficient to show” its diligence efforts,
MEC will be able to mount whatever argument it may have that its fraud should be excused
because Peloton failed to detect it.
Peloton Has Diligently Complied With Its Discovery Obligations.
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MEC’s complaints distort the record of the parties’ communications regarding Peloton’s entity
deposition and other topics.
First, with respect to its entity deposition, Peloton has now offered seven separate dates of
availability. Until today, when it finally accepted one of the dates offered by Peloton, MEC had
either unilaterally taken the offered dates off calendar, or rejected them, summarily claiming
that it was unavailable without offering any details about the reasons for that unavailability.
Second, with respect to responses to MEC’s second set of interrogatories, Peloton has informed
MEC that it anticipates amending those responses by March 12.
Third, with respect to documents responsive to MEC’s second set of requests for production,
Peloton has informed MEC that it will produce documents sufficiently in advance of any relevant
depositions, including Peloton’s entity deposition. As described above, as a result of MEC’s
purported unavailability, any entity deposition of Peloton cannot take place until May. Peloton
is currently in the process of collecting documents that are potentially responsive to MEC’s
second set of RFPs and anticipates providing an update soon about when it can begin producing
documents.
MEC’s Request for the Production of Embedded Links is Unduly Burdensome.
MEC’s request that Peloton produce documents embedded within a chat message is unduly
burdensome and disproportionate to the needs of this case. As explained in the February
update, documents hyperlinked within a chat message cannot be collected in any automated
way. Instead, each hyperlink from each message would have to be accessed manually, and then
each document associated with each hyperlink located and collected on a document-by-
document basis. Nor is it clear that undergoing this burdensome manual process will yield
anything else that needs to be produced; for example, some of the hyperlinks refer to documents
that may exist on Google Drive, and consistent with the parties’ ESI Protocol, Peloton already
has separately collected and produced responsive and non-privileged documents located on
Google Drive.
Notably, MEC has similarly refused to embark on a manual process of collecting documents
cross-referenced in MEC’s production. Specifically, MEC has refused to produce documents
that are “cross-referenced in other documents in MEC’s production” on the basis it would place
an “undue burden on MEC” and “excee[d] the scope of permissible discovery.” Ex. I at 1–2.
Thus, MEC is in no position to require Peloton to manually locate and collect documents that
are hyperlinked in other produced documents.
Respectfully submitted,
/s/Christopher Y. L. Yeung
Christopher Y. L. Yeung
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FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Via Electronic Mail March 7, 2024 Mr. Michael Rand Supreme Court of the State of New York, New York County Commercial Division, Part 54 60 Centre Street New York, New York 10007 Re: Mayville Engineering Company, Inc. v. Peloton Interactive, Inc., Index No. 652735/2022 Dear Mr. Rand: We write on behalf of Peloton Interactive, Inc. (“Peloton”) to provide an additional update about the status of discovery in this case. 1 MEC Continues to Obstruct Peloton’s Efforts to Obtain Discovery Relevant to Its Counterclaim. In the five months since Peloton served discovery requests for the cost and profit information MEC provided to its other customers, MEC has slowly dribbled out fewer than 300 documents that appear to have been carefully selected to conceal evidence of MEC’s fraud. MEC’s production has also been improperly limited to documents related to its quotation program, which appears built to capture only information intended to be sent to a customer, to the exclusion of internal cost and profit estimates that were never intended to be customer-facing. And while MEC’s corporate witness testified that MEC provides cost and profit information that is “different from” its internal cost and profit information to at least three customers—Oshkosh, Deere, and PACCAR—MEC has only produced documents for two of those customers, arbitrarily focusing on the quotation process and taking the position that MEC does not provide cost and profit information to Oshkosh in “the ordinary course of quoting Oshkosh parts.” Letter from B. Bassoff to M. Rand, at 7 (Feb. 16, 2024). MEC has coupled its paltry productions with a refusal to answer basic questions necessary to evaluate the scope and reasonableness of those productions, including, crucially, whether MEC maintains any cost and profit information, whether internal to MEC or transmitted to a customer, that exists outside of the quotation system, including for Oshkosh. MEC’s refusal to Peloton submitted its portion of the joint update on March 5, in order to comply with the 1 Court’s deadlines. For ease of review, this letter contains both Peloton’s original March 5 arguments as well as responses to the new arguments and issues raised in MEC’s portion of the joint update. 1 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 2 answer these questions while limiting its production to documents related to the quotation process is especially concerning because MEC’s fraud on Peloton was evidenced not through quotes or its quotation system, but through spreadsheets and presentations transmitted via email. If given the same type of information MEC has produced regarding its other customers, Peloton would not have been able to uncover the fraud MEC perpetrated against it. While the Court permitted MEC the opportunity to determine the parameters of its initial production in order to alleviate purported burden concerns, MEC has never quantified what burden, if any, exists with making a broader production of cost and profit information. To the contrary, the documents that MEC has produced to date—including what appears to be an automatically-generated spreadsheet that aggregates cost and profit information for multiple products—suggest that any burden associated with expanding the scope of MEC’s production is minimal. MEC’s unwillingness to be forthcoming about the cost and profit information it maintains is not limited to its document production. MEC has also refused to explain what the information it has produced means, refused to answer any related interrogatories, and refused to comply with Peloton’s Request for Inspection. Peloton respectfully requests that MEC be ordered to (1) remedy the deficiencies in its document productions, (2) submit to a further entity deposition, for which there is good cause, (3) provide complete answers to Peloton’s second set of interrogatories, and (4) comply with Peloton’s Request for Inspection. In the alternative, Peloton respectfully requests leave to file a formal motion to compel this discovery. MEC’s Document Production Is Inadequate. In addition to the fundamental failure to appropriately scope its production, MEC’s production suffers from myriad other deficiencies it has refused to correct. Peloton respectfully requests that MEC be ordered to remedy each of the below deficiencies and also produce responsive documents based on a search of the documents in Mr. Raber’s possession, including his email. Improper redactions. As described in Peloton’s update submitted on February 16, 2024 (the “February update,” attached here as Ex. A), the vast majority of the documents MEC has produced continue to be heavily redacted to the point that many of these documents are incomprehensible. See, e.g., Exs. B, C. While MEC claims that all of the information Peloton requires is already visible, that is not the case. In fact, many of the redactions obscure the descriptions of what certain dollar figures represent. See, e.g., Ex. D. More generally, Peloton is entitled to view the entire document and not rely on the representations of counsel about which portions are relevant. To the extent that MEC has concerns over the confidentiality of information in these documents, those concerns can be addressed by designating the documents as Confidential or Highly Confidential-Attorneys’ Eyes Only, in accordance with the existing protective order. See NYSCEF No. 57. Peloton respectfully requests that MEC be ordered to produce unredacted versions of its cost and profit information. Deficient Metadata. MEC has produced numerous documents with plainly insufficient metadata, in violation of the parties’ ESI Protocol. These documents have been produced, for example, without accurate date information or author information. Peloton respectfully 2 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 3 requests that MEC be ordered to provide complete and accurate metadata for the documents produced to date and for any future productions. Arbitrary Limit to Quotation System. MEC’s production also continues to suffer from other deficiencies identified in Peloton’s prior updates to the Court, including that the production has been arbitrarily limited to the quotation system, as described above. Given that the fraudulent documents are not likely to be found in the customer-facing quotation system—as evidenced by the fact that the documents proving MEC’s deception of Peloton were not quotes—there should clearly be a broader production. It should begin with providing discovery of all documents in the possession of Mr. Raber, including email correspondence, relating to cost or profit information for John Deere, PACCAR, and Oshkosh. Given Mr. Raber’s sworn testimony that these customers were provided with information that did not match MEC’s internal information, a targeted search of his email is plainly appropriate. Failure to Produce Documents Relating to Oshkosh. MEC has not produced any documents relating to Oshkosh whatsoever, despite Mr. Raber’s testimony that Oshkosh was among the customers that received cost and profit information that did not match MEC’s internal estimates. This is another reason to order the production of Mr. Raber’s relevant documents. Date range. To date, MEC’s document production has been unilaterally limited to a five-month period. During the parties’ meet-and-confer on March 1, MEC agreed for the first time to produce documents related to the top five quotes, sorted by revenue, for each month of the date range requested by Peloton (January 1, 2020 through the date for production). Peloton reserves its right to assess the adequacy of that supplemental production once it is made, but notes that MEC’s insistence until March 1 on arbitrary date ranges has delayed the completion of discovery, and its current restriction to the “top 5” quotes for a broader date range is likely too narrow, given the volume of quotes issued during the period. Peloton has been fully willing to discuss MEC’s burden concerns, but the issue here is not truly one of burden, and MEC has never quantified or described any burden. What is happening here is that MEC is continuing to conceal its fraud and is seeking the Court’s assistance in doing so; that effort should be rejected. There Is Good Cause for a Further Entity Deposition of MEC. Peloton respectfully requests that the Court permit a further three-hour entity deposition of MEC at a location of MEC’s choosing. There is ample cause to do so. See Commercial Division Rule 11-d(f) (noting that the “court may alter the limits on the number of depositions or the duration of an examination” for good cause shown). Peloton took MEC’s entity deposition in August 2023, well before Peloton asserted a counterclaim for fraudulent inducement and propounded the discovery requests at issue. During that deposition, MEC’s corporate witness, Ryan Raber, revealed MEC provides fraudulent information to customers other than Peloton, including Oshkosh, Deere, and PACCAR. MEC’s counsel obstructed Peloton from further deposing Mr. Raber on the issue of MEC’s fraud, interposing meritless instructions not to answer. Ex. E at 362:4-371:19. MEC’s 3 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 4 position is now that because Mr. Raber provided damning testimony in August, Peloton should not be allowed to obtain highly relevant testimony to support its counterclaims, which were added subsequent to (and in part because of) Mr. Raber’s testimony. Cf. Germana v. Chase Manhattan Bank, N.A., 124 A.D.2d 500, 501 (1st Dept. 1986) (holding defendant was entitled to further deposition of plaintiff as to new matters alleged after first deposition occurred); Prote Contracting Co. v. Bd. Of Educ. Of City of New York, 249 A.D.2d 178, 179 (1st Dept. 1998) (holding that defendant may re-depose corporation’s president based on newly interposed counterclaim). A further deposition of MEC would permit Peloton an opportunity to obtain information about the questions that MEC has refused to answer to date, including the types and locations of documents in which MEC maintains cost and profit information. That information would assist the parties in negotiating searches for documents with the benefit of more equal information. MEC Has Refused to Answer Interrogatories About Its Cost and Profit Information. As described in the February update, MEC has refused to answer any of Peloton’s Second Set of Interrogatories, which are also aimed at ascertaining where MEC maintains relevant cost and profit information. Ex. F. MEC’s primary objection to answering these interrogatories has been that Interrogatory No. 10, which asks MEC to “identify all persons to whom MEC has provided Cost or Profit information that differs from its internal Cost or Profit information” is a contention interrogatory. Id. at 2. Not so. Interrogatory No. 10 seeks the identities of potential witnesses material and necessary to Peloton’s counterclaim. The interrogatory has a good faith basis in the testimony of MEC’s corporate witness, who testified that (1) MEC provides profit figures to customers that understate actual profit in MEC’s systems, and (2) MEC decides on a “discretionary” basis to provide certain customers with cost information that is different from its actual cost information. See NYSCEF No. 164 at 6–7. Notwithstanding this testimony, MEC has refused to answer this interrogatory and Interrogatory Nos. 11-13, which seek the location of documents and identity of witnesses related to MEC’s response to Interrogatory No. 10. Ex. F at 3-6. MEC has also refused to answer Interrogatory No. 14, which asks MEC to identify the location of policies, practices, guidelines, or other standards maintained by MEC for preparing and presenting quotes to customers, setting prices for customers, and calculating cost and profit information. Ex. F at 7-8. While MEC asserts that this interrogatory is not relevant, MEC’s policies and practices related to setting prices and quotes will, at a minimum, allow Peloton to ascertain information MEC has continually refused to provide—the process MEC follows for calculating cost and profit information and the location of related documents. MEC Has Refused to Permit an Inspection of Relevant Data Systems. It was revealed during deposition testimony that MEC maintains enterprise resource planning (“ERP”) systems that house material and relevant information about, among other things, the costs associated with particular manufacturing projects, including the Peloton project. MEC refused to produce any documents from its ERP systems, instead delaying the discovery process by demanding that Peloton serve a separate request for inspection. Peloton did so, but MEC has refused to permit any inspection to date. See Ex. G. 4 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 5 Peloton served requests to inspect ERP systems containing estimated cost or profit information about parts made for Deere, Oshkosh, and PACCAR. MEC’s primary objection is relevance; the Court has already rejected this argument. See NYSCEF No. 207. Furthermore, an inspection alleviates any burden arguments that MEC has made about producing this information, as Peloton, not MEC, would incur the time and cost associated with the inspection. MEC has provided no detail about the purported burden that Peloton’s inspection would impose, other than requiring counsel and some unspecified number of MEC employees to be present for a single day, during which they could largely attend to other tasks as Peloton performs its inspection. MEC cannot claim that this information is not relevant, nor that there is any other valid basis to prevent the inspection. MEC Has Refused to Permit an Inspection of Data Systems Relevant to the Supply Agreement. Peloton also served a request to inspect MEC’s ERP systems related to Peloton and the Supply Agreement. See Ex. G. This request stems from the testimony of MEC’s former COO, Rand Stille, who testified that MEC maintains an ERP system called “MMS” that contains relevant information about MEC’s readiness to produce parts for Peloton under the Supply Agreement. MEC did not disclose the system in the parties’ ESI protocol, and instead has stated that the MMS system does not contain any non-cumulative responsive information. But MEC has never indicated that it actually produced documents related to each of the categories of responsive information that Mr. Stille testified exists within the system. Indeed, Mr. Stille offered more than six transcript pages of testimony about the contents of MEC’s ERP system for the Peloton project, which apparently included information about “all of the assets [and] depreciation schedules,” “measurables,” such as “quality performance,” “scanning hours,” “supply information,” “order scheduling,” “PPAP information,” information about “facility buildout,” and “information about the acquisition and disposal of any equipment and tooling.” See Ex. H at 27-33. Accordingly, Peloton respectfully requests that MEC be ordered to comply with Peloton’s Request for Inspection. MEC’s Purported Discovery Issues Are Meritless. MEC’s RFP Nos. 44-48 Are Unduly Burdensome and Seek Irrelevant Information. The Court should deny MEC’s request that Peloton be ordered to produce all documents responsive to MEC’s RFP Nos. 44-48. First, MEC’s requests are unduly burdensome. As described in the February update, Peloton has already reviewed more than 146,000 documents and produced more than 32,000 pages of documents, including thousands of pages from the custodial files of the Peloton employees with responsibility for negotiating the Supply Agreement. Indeed, because Peloton applied very broad relevance criteria in its initial productions, Peloton has already searched for and produced numerous documents relevant to its counterclaim against MEC for fraudulent inducement, including documents related to the negotiation of the Supply Agreement and the diligence Peloton undertook during that process. In light of the extensive amount of discovery conducted 5 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 6 on these issues to date, MEC’s RFP Nos. 44-48 seek to impose an undue burden. These requests would require Peloton to conduct email and other searches over the documents of a number of current and former Peloton employees, including but not limited to the four employees who negotiated the Supply Agreement, and whose documents were already searched and reviewed pursuant to the parameters set forth in the ESI protocol that took the parties several months to negotiate. Second, MEC’s requests are overbroad and seek irrelevant information. RFP Nos. 44, 45, and 47 seek information about all “parts for Peloton’s fitness products, including but not limited to Bikes.” But the only parts at issue in the Supply Agreement are mechanical parts and the only products at issue are bikes. RFP No. 46 similarly seeks irrelevant information related to Peloton’s “third-party vendors, manufacturers, or suppliers,” including third parties who were not considered for supplying or manufacturing the parts at issue in this case. MEC has never offered any justification for the production of documents wholly unrelated to this case. Third, Peloton’s proposal to search for documents responsive to each of these RFPs reasonably balances the burden imposed by these requests with their relevance, if any. As described in the February update, with respect to RFP Nos. 44-45, which seek documents related to the factors and criteria that Peloton “regularly, ordinarily, or customarily” considers in selecting suppliers, Peloton has agreed to produce company-wide policies, manuals, or training materials, if any, utilized by Peloton for selecting a supplier for sourcing mechanical components for Bikes. With respect to RFP No. 46, Peloton has similarly agreed to search for company-wide policies related to the subject matter of the request in connection with Peloton’s agreements with manufacturers or suppliers of mechanical parts for bikes. With respect to RFP No. 47, Peloton agreed to search for documents sufficient to show any formal training received by or made available to the Peloton employees involved in negotiating the Supply Agreement. Such documents are likely to be the best evidence of what Peloton generally considers in selecting suppliers and the diligence it ordinarily conducts. Peloton is still in the process of determining whether any such policies, manuals, or training materials exist, a process that has been complicated by the fact that such documents are now several years old and individuals who would have maintained or utilized them are no longer with the company. With respect to RFP No. 48, which seeks documents and communications “relating to or reflecting the precautions, measures, steps, research, procedures, analyses and due diligence that Peloton undertook” to protect itself against MEC’s fraudulent conduct in connection with the Supply Agreement, Peloton has agreed to produce documents sufficient to show the subject matter of the request. MEC’s complaint that Peloton’s proposal allows Peloton to “cherry pick” documents is baseless. Peloton has already produced thousands of pages of documents related to the negotiation of the Supply Agreement, including documents related to Peloton’s evaluation of MEC’s quotes and its various representations during the negotiation. And MEC’s complaints that Peloton’s proposal might prevent identification of flaws in Peloton’s diligence process makes no sense: if Peloton produces documents “sufficient to show” its diligence efforts, MEC will be able to mount whatever argument it may have that its fraud should be excused because Peloton failed to detect it. Peloton Has Diligently Complied With Its Discovery Obligations. 6 of 7 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 218 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand March 7, 2024 Page 7 MEC’s complaints distort the record of the parties’ communications regarding Peloton’s entity deposition and other topics. First, with respect to its entity deposition, Peloton has now offered seven separate dates of availability. Until today, when it finally accepted one of the dates offered by Peloton, MEC had either unilaterally taken the offered dates off calendar, or rejected them, summarily claiming that it was unavailable without offering any details about the reasons for that unavailability. Second, with respect to responses to MEC’s second set of interrogatories, Peloton has informed MEC that it anticipates amending those responses by March 12. Third, with respect to documents responsive to MEC’s second set of requests for production, Peloton has informed MEC that it will produce documents sufficiently in advance of any relevant depositions, including Peloton’s entity deposition. As described above, as a result of MEC’s purported unavailability, any entity deposition of Peloton cannot take place until May. Peloton is currently in the process of collecting documents that are potentially responsive to MEC’s second set of RFPs and anticipates providing an update soon about when it can begin producing documents. MEC’s Request for the Production of Embedded Links is Unduly Burdensome. MEC’s request that Peloton produce documents embedded within a chat message is unduly burdensome and disproportionate to the needs of this case. As explained in the February update, documents hyperlinked within a chat message cannot be collected in any automated way. Instead, each hyperlink from each message would have to be accessed manually, and then each document associated with each hyperlink located and collected on a document-by- document basis. Nor is it clear that undergoing this burdensome manual process will yield anything else that needs to be produced; for example, some of the hyperlinks refer to documents that may exist on Google Drive, and consistent with the parties’ ESI Protocol, Peloton already has separately collected and produced responsive and non-privileged documents located on Google Drive. Notably, MEC has similarly refused to embark on a manual process of collecting documents cross-referenced in MEC’s production. Specifically, MEC has refused to produce documents that are “cross-referenced in other documents in MEC’s production” on the basis it would place an “undue burden on MEC” and “excee[d] the scope of permissible discovery.” Ex. I at 1–2. Thus, MEC is in no position to require Peloton to manually locate and collect documents that are hyperlinked in other produced documents. Respectfully submitted, /s/Christopher Y. L. Yeung Christopher Y. L. Yeung 7 of 7