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FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024
Via Electronic Mail February 16, 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 update about
the status of discovery in this case.
MEC Continues to Obstruct Peloton’s Efforts to Obtain Discovery Relevant to Its
Counterclaim.
In the four months since Peloton served discovery requests relevant to its counterclaim, MEC
has (1) refused to answer any related interrogatories; (2) made a patently deficient production of
self-selected documents, many of which are so heavily redacted as to be useless; (3) refused to
answer basic questions essential to assess the adequacy of its production; and (4) refused
Peloton’s proposal to permit an inspection of documents that would alleviate any purported
burden concerns. Simply put, MEC has obstructed Peloton’s efforts to gather material and
necessary discovery. Presumably because the discovery will confirm that MEC has defrauded its
other customers, just as it defrauded Peloton, MEC will never comply with its discovery
obligations until the Court orders it to do so.
As the Court is aware, Peloton brought a counterclaim against MEC for fraudulent inducement
after discovery revealed that MEC made false representations about its anticipated costs and
profits in an effort to secure Peloton’s business. In particular, MEC inflated the labor, material,
and overhead costs it presented to Peloton and concealed that the “fixed” cost amounts it
presented to Peloton included millions in hidden profits. This fraud is confirmed by
presentations shared with MEC’s senior executives showing how MEC would provide Peloton
with transparency “on the surface” while carefully replacing its “actual” cost and profit
information with fake cost and profit information in the “Customer Document” it would provide
to Peloton. MEC’s deception is not limited to Peloton. MEC’s corporate witness testified that
MEC has provided at least three other customers—John Deere, PACCAR, and Oshkosh—with
cost information that is different from its internal cost information.
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024
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February 16, 2024
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It is against this backdrop that Peloton propounded discovery requests to MEC for both the cost
and profit information that MEC provided to the three customers specifically identified during
deposition testimony, and for the corresponding internal estimates. This Court has held that
such discovery is plainly relevant to Peloton’s counterclaim. However, in an effort to address
MEC’s claims of burden, the Court gave MEC the opportunity to make an initial production,
after which the parties could confer about its adequacy. As explained in detail below, MEC’s
production—limited to 260 documents—is not remotely reasonable, and Peloton’s efforts to
confer with MEC in good faith have been unsuccessful. Peloton accordingly requests that MEC
be ordered to (1) produce all documents responsive to RFP Nos. 44 and 45 by a date certain (see
Ex. A), (2) provide complete answers to Peloton’s second set of interrogatories, and (3) 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
First, MEC has failed to produce documents sufficient to compare its internal cost and profit
information with the “different” information MEC’s corporate witness testified was given to its
customers. With respect to Deere, for example, the vast majority of Deere documents consist
only of cost and profit information actually provided to Deere as part of the quotation process;
what is missing is the actual internal information outside of the quotation process that was
never intended to be customer-facing. MEC asserts that it has produced such internal
information by virtue of a single unmarked spreadsheet it produced well after close of business
this evening, minutes before the parties agreed to exchange updated drafts of their reports. Not
only does this belated production, which MEC failed to mention during the parties’ meet-and-
confers or in response to any of the numerous emails Peloton has sent on this issue, perfectly
exemplify MEC’s dilatory and obstructionist conduct, but it is also insufficient to address the
deficiency. MEC admits that this document, too, is generated from its “quote system,” which
would be used to generate external customer-facing quotes. Moreover, while MEC represents
that this spreadsheet provides “internal” information associated with its second production of
Deere documents, it has provided no similar spreadsheet for its first production of Deere
documents.
With respect to Oshkosh, MEC has refused to produce any documents, taking the position that it
does not provide cost or profit information to Oshkosh “in the ordinary course of quoting
Oshkosh parts,” without addressing whether MEC has ever provided such information to
Oshkosh outside of the quotation process—let alone reconciling its failure to produce these
documents with the sworn testimony of its Head of Sales establishing that Oshkosh received
false information.
Second, MEC continues to limit all of its productions to (1) a unilaterally selected five-month
window, and (2) documents from or related to MEC’s quotation system (i.e., the process that
generates a quote for external purposes). But MEC’s fraud on its customers is relevant even if
happened outside of that arbitrary five-month window and even if the “different” cost and profit
information exists outside of MEC’s quotation system. Notably, the fraudulent cost and profit
information MEC provided to Peloton—and the internal MEC documents that prove that fraud—
were neither quotes nor materials generated by any quotation system.
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024
Mr. Michael Rand
February 16, 2024
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Third, Peloton has been unable to ascertain the scope of what MEC has produced and the
validity of any sampling method it has followed in selecting documents for production, in large
part because MEC refuses to answer basic questions about how it maintains cost and profit
information for each customer. For more than a month, MEC has refused to answer (1) whether
MEC has ever provided any cost and profit information to its customers outside of the quotation
process (as it did for Peloton) and (2) whether internal cost and profit information exists outside
MEC’s quote system. Indeed, while MEC asserts that the limitation of its production to its quote
system is reasonable, Peloton has no way to evaluate that representation because MEC refuses
to say whether any documents exist outside of that system.
Fourth, 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.
MEC continues to assert that Peloton’s document requests are burdensome, but it has never
quantified that burden or been willing to meaningfully engage with Peloton to explain that
burden. Indeed, the spreadsheet related to Deere products that MEC produced this evening
appears to have been automatically generated and MEC has not explained why this document
could not have been produced at any previous point in the last four months, or what burden
would be associated with including information about additional parts in the spreadsheet.
MEC Has Refused to Answer Interrogatories About Its Cost and Profit Information
In furtherance of its stonewalling, MEC has also refused to answer any of Peloton’s Second Set
of Interrogatories, which are also aimed at ascertaining where it maintains relevant cost and
profit information. Each of these interrogatories is plainly relevant.
Interrogatory Nos. 10–13
Interrogatory No. 10 asks MEC to “identify all persons to whom MEC has provided Cost or Profit
information that differs from its internal Cost or Profit information.” Interrogatory Nos. 11–12
ask MEC to identify the location of documents reflecting cost and profit information for the
persons identified in response to Interrogatory No. 10, and Interrogatory No. 13 seeks the
identity of MEC personnel with relevant knowledge about any response to Interrogatory No. 10.
MEC’s primary objection is that Interrogatory No. 10 is a contention interrogatory. See Ex. E at
3. 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
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024
Mr. Michael Rand
February 16, 2024
Page 4
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.
Interrogatory No. 14
Interrogatory No. 14 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. Again, MEC has refused to provide a
response, asserting that this interrogatory is not relevant. To the contrary, 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 request for inspection. Peloton did so, and yet MEC has
refused to permit any inspection. See Ex. F.
Peloton served requests to inspect ERP systems containing estimated cost or profit information
about parts made for Deere, Oshkosh, and PACCAR. 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 cannot claim that this information
is not relevant or 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 pages’ worth 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
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
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Mr. Michael Rand
February 16, 2024
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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 update to the Court purports to identify issues in attempt to distract from its own efforts
to stonewall Peloton’s counterclaim-related discovery.1
MEC’s RFP Nos. 44–48
Peloton has reviewed over 146,000 documents and produced more than 32,000 pages of
documents to MEC. These productions include thousands of pages about the negotiation and
execution of the Supply Agreement and include documents from the custodial files of the
Peloton employees with responsibility for negotiating the contract.
What MEC seeks now—documents about parts and products wholly unrelated to this dispute—is
unduly burdensome, irrelevant, and grossly disproportionate to the needs of this case. Nor is
this issue ripe for the Court’s review. During the parties’ only meet-and-confer call about these
RFPs, Peloton asked MEC to consider narrowing the time frame of these requests so it could
consider them further. Despite representing that it would get back to Peloton “shortly” about the
requested narrower date range, MEC never did.2 In effort to reach a compromise, however, and
without waiving its objections or conceding that any of MEC’s requests were relevant, Peloton
took the affirmative step of proposing the documents it would be willing to search for and
produce in the event that MEC agreed to Peloton’s proposed date range. Rather than respond to
that proposal, MEC has brought this issue to the Court without any discussion and falsely
asserted that Peloton reneged on a position Peloton never proposed in the first place.3
1
MEC complains about the deposition dates Peloton offered for its entity deposition and the
deposition of a third party. In doing so, MEC misrepresents the record. Peloton offered January
dates for its entity deposition. Instead of confirming those dates at any point, MEC responded
by asking for dates in February or March. Peloton has since provided a date within the fact
deposition period, but MEC has yet to accept that date or provide any justification for an
alternative date. MEC similarly has not accepted the dates offered for the deposition of the third
party.
2
Only at 8:30 PM today and as part of the second exchange of drafts of this update did MEC
agree to limit the timeframe of its requests to Peloton’s proposal, and only with the caveat that
MEC reserves the right to seek documents from an expanded date range in the future. Peloton
objects to any attempt by MEC to expand the date range for these requests. Indeed, MEC’s RFPs
span a twelve-year period ranging from the founding of Peloton (January 3, 2012) to the
present.
3Indeed, on the parties’ February 12 meet-and-confer call, MEC specifically asked if Peloton was
proposing to produce all documents requested in the RFPs if MEC would agree to the narrowed
date range, and Peloton told MEC that was not Peloton’s proposal.
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024
Mr. Michael Rand
February 16, 2024
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If the Court is nevertheless inclined to consider MEC’s unripe request that Peloton be ordered to
produce all documents responsive to its RFP Nos. 44-48, that request should be denied. As set
forth below, MEC’s requests seek irrelevant information and would impose an undue burden on
Peloton that is disproportionate to the needs of this case.
Products: MEC’s requests seek documents related to all Peloton fitness products. But
MEC has not explained why documents that do not relate to Bikes, the only product
covered by the Supply Agreement—or documents that do not relate to mechanical
components, the only components that Peloton had the option to buy from MEC—are
relevant to this dispute. Peloton’s proposal, by contrast, balances the purported
relevance of these requests, if any, with the undue burden they impose. For each of the
requests that MEC claims are at issue, Peloton is willing to search for documents, if any,
that relate to mechanical components for Bikes.
RFP Nos. 44 and 45: MEC seeks documents sufficient to show all factors and criteria
that Peloton considers in selecting manufacturers or suppliers to supply parts for any
component of any product and all documents reflecting or containing any policies,
practices, standards, or factors utilized by Peloton in selecting manufacturers or
suppliers for any component of any product. The company-wide policies, manuals, or
training materials that Peloton agreed to search for, if any, are likely the best source for
identifying the factors and criteria that Peloton considered in selecting suppliers for the
parts at issue in this case.
RFP No. 46: MEC seeks documents and communications sufficient to show the
precautions and due diligence that Peloton “regularly, ordinarily, or customarily”
undertakes to protect itself against the risk of false material misrepresentations or
omissions by a contractual counterparty. Peloton’s proposal to look for company-wide
policies would capture documents, if any, most likely to reflect the company’s regular,
ordinary, and customary precautions and measures.
RFP No. 47: MEC has not even attempted to explain why Peloton’s proposal with respect
to this RFP is deficient. Peloton has proposed to search for documents sufficient to show
any formal training related to selecting a source for mechanical parts for Bikes that was
received by or made available to the individuals who participated in the negotiation of
the Supply Agreement. MEC has not explained why any broader scope would be justified.
RFP No. 48: MEC seeks all documents and communications relating to or reflecting the
precautions, measures, steps, research, procedures, analyses, and due diligence that
Peloton undertook to protect itself against the risk of MEC’s false material
representations and omissions. This request is unduly burdensome, particularly given
the number of documents that Peloton has already collected, reviewed, and produced.
Peloton therefore proposed searching for documents sufficient to show the subject
matter of this request. MEC’s complaint that this 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
FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022
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Mr. Michael Rand
February 16, 2024
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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 identify flaws (if any).
Slack
MEC’s request that Peloton produce documents embedded within a chat message is nothing
more than a burdensome fishing expedition. Peloton has fulfilled its obligations by producing
full families of responsive and non-privileged chat messages, including all attachments to those
messages.
MEC now asks Peloton to manually retrieve the results of all hyperlinks within messages (i.e., a
website link within a message), and to produce the results. As Peloton has repeatedly explained
to MEC, it would be unduly burdensome to collect such linked documents, as they 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. MEC has provided no justification for requiring
Peloton to undergo such a time-intensive process, especially in light of the tens of thousands of
pages of material that Peloton produced to MEC already.
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/Neha Jaganathan
Neha Jaganathan
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FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Via Electronic Mail February 16, 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 update about the status of discovery in this case. MEC Continues to Obstruct Peloton’s Efforts to Obtain Discovery Relevant to Its Counterclaim. In the four months since Peloton served discovery requests relevant to its counterclaim, MEC has (1) refused to answer any related interrogatories; (2) made a patently deficient production of self-selected documents, many of which are so heavily redacted as to be useless; (3) refused to answer basic questions essential to assess the adequacy of its production; and (4) refused Peloton’s proposal to permit an inspection of documents that would alleviate any purported burden concerns. Simply put, MEC has obstructed Peloton’s efforts to gather material and necessary discovery. Presumably because the discovery will confirm that MEC has defrauded its other customers, just as it defrauded Peloton, MEC will never comply with its discovery obligations until the Court orders it to do so. As the Court is aware, Peloton brought a counterclaim against MEC for fraudulent inducement after discovery revealed that MEC made false representations about its anticipated costs and profits in an effort to secure Peloton’s business. In particular, MEC inflated the labor, material, and overhead costs it presented to Peloton and concealed that the “fixed” cost amounts it presented to Peloton included millions in hidden profits. This fraud is confirmed by presentations shared with MEC’s senior executives showing how MEC would provide Peloton with transparency “on the surface” while carefully replacing its “actual” cost and profit information with fake cost and profit information in the “Customer Document” it would provide to Peloton. MEC’s deception is not limited to Peloton. MEC’s corporate witness testified that MEC has provided at least three other customers—John Deere, PACCAR, and Oshkosh—with cost information that is different from its internal cost information. FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 2 It is against this backdrop that Peloton propounded discovery requests to MEC for both the cost and profit information that MEC provided to the three customers specifically identified during deposition testimony, and for the corresponding internal estimates. This Court has held that such discovery is plainly relevant to Peloton’s counterclaim. However, in an effort to address MEC’s claims of burden, the Court gave MEC the opportunity to make an initial production, after which the parties could confer about its adequacy. As explained in detail below, MEC’s production—limited to 260 documents—is not remotely reasonable, and Peloton’s efforts to confer with MEC in good faith have been unsuccessful. Peloton accordingly requests that MEC be ordered to (1) produce all documents responsive to RFP Nos. 44 and 45 by a date certain (see Ex. A), (2) provide complete answers to Peloton’s second set of interrogatories, and (3) 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 First, MEC has failed to produce documents sufficient to compare its internal cost and profit information with the “different” information MEC’s corporate witness testified was given to its customers. With respect to Deere, for example, the vast majority of Deere documents consist only of cost and profit information actually provided to Deere as part of the quotation process; what is missing is the actual internal information outside of the quotation process that was never intended to be customer-facing. MEC asserts that it has produced such internal information by virtue of a single unmarked spreadsheet it produced well after close of business this evening, minutes before the parties agreed to exchange updated drafts of their reports. Not only does this belated production, which MEC failed to mention during the parties’ meet-and- confers or in response to any of the numerous emails Peloton has sent on this issue, perfectly exemplify MEC’s dilatory and obstructionist conduct, but it is also insufficient to address the deficiency. MEC admits that this document, too, is generated from its “quote system,” which would be used to generate external customer-facing quotes. Moreover, while MEC represents that this spreadsheet provides “internal” information associated with its second production of Deere documents, it has provided no similar spreadsheet for its first production of Deere documents. With respect to Oshkosh, MEC has refused to produce any documents, taking the position that it does not provide cost or profit information to Oshkosh “in the ordinary course of quoting Oshkosh parts,” without addressing whether MEC has ever provided such information to Oshkosh outside of the quotation process—let alone reconciling its failure to produce these documents with the sworn testimony of its Head of Sales establishing that Oshkosh received false information. Second, MEC continues to limit all of its productions to (1) a unilaterally selected five-month window, and (2) documents from or related to MEC’s quotation system (i.e., the process that generates a quote for external purposes). But MEC’s fraud on its customers is relevant even if happened outside of that arbitrary five-month window and even if the “different” cost and profit information exists outside of MEC’s quotation system. Notably, the fraudulent cost and profit information MEC provided to Peloton—and the internal MEC documents that prove that fraud— were neither quotes nor materials generated by any quotation system. FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 3 Third, Peloton has been unable to ascertain the scope of what MEC has produced and the validity of any sampling method it has followed in selecting documents for production, in large part because MEC refuses to answer basic questions about how it maintains cost and profit information for each customer. For more than a month, MEC has refused to answer (1) whether MEC has ever provided any cost and profit information to its customers outside of the quotation process (as it did for Peloton) and (2) whether internal cost and profit information exists outside MEC’s quote system. Indeed, while MEC asserts that the limitation of its production to its quote system is reasonable, Peloton has no way to evaluate that representation because MEC refuses to say whether any documents exist outside of that system. Fourth, 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. MEC continues to assert that Peloton’s document requests are burdensome, but it has never quantified that burden or been willing to meaningfully engage with Peloton to explain that burden. Indeed, the spreadsheet related to Deere products that MEC produced this evening appears to have been automatically generated and MEC has not explained why this document could not have been produced at any previous point in the last four months, or what burden would be associated with including information about additional parts in the spreadsheet. MEC Has Refused to Answer Interrogatories About Its Cost and Profit Information In furtherance of its stonewalling, MEC has also refused to answer any of Peloton’s Second Set of Interrogatories, which are also aimed at ascertaining where it maintains relevant cost and profit information. Each of these interrogatories is plainly relevant. Interrogatory Nos. 10–13 Interrogatory No. 10 asks MEC to “identify all persons to whom MEC has provided Cost or Profit information that differs from its internal Cost or Profit information.” Interrogatory Nos. 11–12 ask MEC to identify the location of documents reflecting cost and profit information for the persons identified in response to Interrogatory No. 10, and Interrogatory No. 13 seeks the identity of MEC personnel with relevant knowledge about any response to Interrogatory No. 10. MEC’s primary objection is that Interrogatory No. 10 is a contention interrogatory. See Ex. E at 3. 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 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 4 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. Interrogatory No. 14 Interrogatory No. 14 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. Again, MEC has refused to provide a response, asserting that this interrogatory is not relevant. To the contrary, 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 request for inspection. Peloton did so, and yet MEC has refused to permit any inspection. See Ex. F. Peloton served requests to inspect ERP systems containing estimated cost or profit information about parts made for Deere, Oshkosh, and PACCAR. 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 cannot claim that this information is not relevant or 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 pages’ worth 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 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 5 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 update to the Court purports to identify issues in attempt to distract from its own efforts to stonewall Peloton’s counterclaim-related discovery.1 MEC’s RFP Nos. 44–48 Peloton has reviewed over 146,000 documents and produced more than 32,000 pages of documents to MEC. These productions include thousands of pages about the negotiation and execution of the Supply Agreement and include documents from the custodial files of the Peloton employees with responsibility for negotiating the contract. What MEC seeks now—documents about parts and products wholly unrelated to this dispute—is unduly burdensome, irrelevant, and grossly disproportionate to the needs of this case. Nor is this issue ripe for the Court’s review. During the parties’ only meet-and-confer call about these RFPs, Peloton asked MEC to consider narrowing the time frame of these requests so it could consider them further. Despite representing that it would get back to Peloton “shortly” about the requested narrower date range, MEC never did.2 In effort to reach a compromise, however, and without waiving its objections or conceding that any of MEC’s requests were relevant, Peloton took the affirmative step of proposing the documents it would be willing to search for and produce in the event that MEC agreed to Peloton’s proposed date range. Rather than respond to that proposal, MEC has brought this issue to the Court without any discussion and falsely asserted that Peloton reneged on a position Peloton never proposed in the first place.3 1 MEC complains about the deposition dates Peloton offered for its entity deposition and the deposition of a third party. In doing so, MEC misrepresents the record. Peloton offered January dates for its entity deposition. Instead of confirming those dates at any point, MEC responded by asking for dates in February or March. Peloton has since provided a date within the fact deposition period, but MEC has yet to accept that date or provide any justification for an alternative date. MEC similarly has not accepted the dates offered for the deposition of the third party. 2 Only at 8:30 PM today and as part of the second exchange of drafts of this update did MEC agree to limit the timeframe of its requests to Peloton’s proposal, and only with the caveat that MEC reserves the right to seek documents from an expanded date range in the future. Peloton objects to any attempt by MEC to expand the date range for these requests. Indeed, MEC’s RFPs span a twelve-year period ranging from the founding of Peloton (January 3, 2012) to the present. 3Indeed, on the parties’ February 12 meet-and-confer call, MEC specifically asked if Peloton was proposing to produce all documents requested in the RFPs if MEC would agree to the narrowed date range, and Peloton told MEC that was not Peloton’s proposal. FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 6 If the Court is nevertheless inclined to consider MEC’s unripe request that Peloton be ordered to produce all documents responsive to its RFP Nos. 44-48, that request should be denied. As set forth below, MEC’s requests seek irrelevant information and would impose an undue burden on Peloton that is disproportionate to the needs of this case. Products: MEC’s requests seek documents related to all Peloton fitness products. But MEC has not explained why documents that do not relate to Bikes, the only product covered by the Supply Agreement—or documents that do not relate to mechanical components, the only components that Peloton had the option to buy from MEC—are relevant to this dispute. Peloton’s proposal, by contrast, balances the purported relevance of these requests, if any, with the undue burden they impose. For each of the requests that MEC claims are at issue, Peloton is willing to search for documents, if any, that relate to mechanical components for Bikes. RFP Nos. 44 and 45: MEC seeks documents sufficient to show all factors and criteria that Peloton considers in selecting manufacturers or suppliers to supply parts for any component of any product and all documents reflecting or containing any policies, practices, standards, or factors utilized by Peloton in selecting manufacturers or suppliers for any component of any product. The company-wide policies, manuals, or training materials that Peloton agreed to search for, if any, are likely the best source for identifying the factors and criteria that Peloton considered in selecting suppliers for the parts at issue in this case. RFP No. 46: MEC seeks documents and communications sufficient to show the precautions and due diligence that Peloton “regularly, ordinarily, or customarily” undertakes to protect itself against the risk of false material misrepresentations or omissions by a contractual counterparty. Peloton’s proposal to look for company-wide policies would capture documents, if any, most likely to reflect the company’s regular, ordinary, and customary precautions and measures. RFP No. 47: MEC has not even attempted to explain why Peloton’s proposal with respect to this RFP is deficient. Peloton has proposed to search for documents sufficient to show any formal training related to selecting a source for mechanical parts for Bikes that was received by or made available to the individuals who participated in the negotiation of the Supply Agreement. MEC has not explained why any broader scope would be justified. RFP No. 48: MEC seeks all documents and communications relating to or reflecting the precautions, measures, steps, research, procedures, analyses, and due diligence that Peloton undertook to protect itself against the risk of MEC’s false material representations and omissions. This request is unduly burdensome, particularly given the number of documents that Peloton has already collected, reviewed, and produced. Peloton therefore proposed searching for documents sufficient to show the subject matter of this request. MEC’s complaint that this 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 FILED: NEW YORK COUNTY CLERK 03/12/2024 03:34 PM INDEX NO. 652735/2022 NYSCEF DOC. NO. 219 RECEIVED NYSCEF: 03/12/2024 Mr. Michael Rand February 16, 2024 Page 7 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 identify flaws (if any). Slack MEC’s request that Peloton produce documents embedded within a chat message is nothing more than a burdensome fishing expedition. Peloton has fulfilled its obligations by producing full families of responsive and non-privileged chat messages, including all attachments to those messages. MEC now asks Peloton to manually retrieve the results of all hyperlinks within messages (i.e., a website link within a message), and to produce the results. As Peloton has repeatedly explained to MEC, it would be unduly burdensome to collect such linked documents, as they 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. MEC has provided no justification for requiring Peloton to undergo such a time-intensive process, especially in light of the tens of thousands of pages of material that Peloton produced to MEC already. 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/Neha Jaganathan Neha Jaganathan