*1 Sheng International Co. LTD. (“Sheng”), has sued Defendants for allegedly failing to pay for tennis merchandise that Sheng shipped to Defendants pursuant to several purchase orders. Sheng also seeks to hold Defendants jointly and severally liable by piercing the corporate veil. Before the Court is Sheng's Motion for Sanctions, which asks the Court to sanction Defendants for purported discovery misconduct by deeming Defendants to be alter egos. Filing 115. Also before the Court is Defendants’ Motion for Summary Judgment. Filing 125. For the reasons stated herein, the Court grants Sheng's Motion for Sanctions and grants in part and denies in part Defendants’ Motion for Summary Judgment.

This suit concerns seventeen purchase orders for Prince- and Ektelon-branded sports merchandise filled by plaintiff Sheng for which it allegedly never received payment. Filing 108 at 1–2; Filing 63-1 at 7–34. Sheng has sued Defendants, claiming that they are responsible for paying for the purchase orders it filled. Filing 108 at 1–2.

In 2010, Authentic Brands Group (“ABG”), a nonparty, acquired the Prince brand intellectual property and trademark. Filing 127-1 at 6–7; Filing 127-2 at 1. ABG then licensed the use of the Prince brand[1] to defendant Prince Global Sports, LLC, (“Prince Global”) in 2013. Filing 138-4 at 3. The sole member of Prince Global was Competitive Sports Holding Company, LLC, (“Competitive Sports”), whose sole member was defendant Waitt Brands, LLC.[2] Filing 127-1 at 7–8. Defendant Dana Bradford was a director of Prince Global and Waitt Brands. Filing 127-1 at 9. Both parties agree that Waitt Brands had two members—an affiliate owned by a nonparty investor and Bradford Family Holdings, an entity owned by Bradford—although they dispute the nature of the interest each member had. Filing 118-3 at 3; Filing 127-1 at 8.

Prince Global operated the Prince business through its subsidiaries defendant Prince Americas, LLC, defendant Ektelon Racquets, LLC,[3] and nonparty Prince EMEA. Filing 127-1 at 6. For clarity, the Court will refer to Prince Global and its subsidiaries collectively as “the Prince licensees.” Unfortunately, the Prince business was never profitable. Filing 127-1 at 7–8. Consequently, Prince Global defaulted on the royalty payments it owed to ABG under the Prince licensing agreement, causing ABG to suspend the Prince license in 2015. Filing 127-1 at 6; Filing 127-2 at 2. Defendants claim that once ABG suspended the Prince license it began to “shadow” the Prince business operated by Defendants with the goal of ultimately transferring the Prince business to ABG. Filing 127-1 at 8. Sometime in the middle of 2015, Prince Global and ABG began negotiating the termination of the Prince license agreement and the sale of the Prince licensees’ inventory to ABG. Filing 127-2 at 2. Eventually, Prince Global and ABG agreed that they would terminate the Prince license agreement and transfer the inventory in March of 2016. Filing 127-2 at 2.

*2 Meanwhile, in late 2015, plaintiff Sheng received seventeen purchase orders for Prince-and Ektelon-branded merchandise. Filing 63-1 at 18–34. Although each purchase order lists the issuing party as either Prince Americas, Ektelon Racquets, or Prince EMEA, Filing 63-1 at 18–34, Defendants claim that these purchase orders were actually issued by ABG. Filing 126 at 11–12, 18; Filing 127-1 at 19. According to Defendants, the suspension of the Prince license meant that the Prince licensees could no longer order Prince- and Ektelon-branded products from Sheng and would have no business reason to do so. Filing 127-1 at 19–20. Instead, Defendants claim that ABG ordered products so that ABG could run the Prince business after Prince Global transferred the business to it in March of 2016. Filing 127-3 at 2. Sheng denies knowing that ABG issued the purchase orders, Filing 137-4 at 3–4, and Bradford admitted in his deposition that a vendor would not know that ABG was issuing the purchase orders. Filing 127-1 at 23.

After suspension of the Prince license, Bradford started defendant C3 Brands on January 28, 2016. Filing 89 at 9 n.2; Filing 95-1 at 7. Bradford directly manages C3 Brands and its parent company, defendant C3 Holding Company. Filing 127-1 at 46, 54. Although Defendants claim that C3 Brands and Waitt Brands are completely unrelated entities, Filing 127-1 at 30, 46–47 (Bradford testifying that C3 Brands “has nothing to do with Waitt Brands”), Sheng asserts that evidence it procured in discovery suggests that C3 Brands was formerly Waitt Brands’ subsidiary. Filing 119-2 at 2 (corporate diagram showing C3 Brands as a subsidiary of Waitt Brands); Filing 119-3 at 2 (Transition Services Agreement between Waitt Brands and C3 Brands). Sheng believes that this evidence shows a link between Bradford's old businesses, Waitt Brands and the Prince licensees, and his new business, C3 Brands. Filing 116 at 3–4.

On March 16, 2016, ABG terminated the Prince licensing agreement with Prince Global pursuant to a License Termination Agreement. Filing 127-2 at 2; Filing 137-8 at 3; Filing 138-4 at 3–7. Contemporaneous with the License Termination Agreement, Prince Global and Waitt Brands executed an Inventory Purchase Agreement and a Transition Services Agreement with ABG. Filing 127-2 at 2; Filing 138 at 2–15; Filing 138-2 at 3–20. In general, the Transition Services Agreement governed how the Prince business would run while it transitioned from Prince Global to ABG. Filing 138 at 3–15. The Inventory Purchase Agreement transferred the Prince licensees’ inventory to ABG. Filing 138-2 at 6. It further states that the Prince licensees remained solely liable for their liabilities, including accounts payable, and that any accounts receivable collected by the Prince licensees would be used to pay down their accounts payable. Filing 138-2 at 6, 10. Bradford signed both the Transition Services Agreement and the Inventory Purchase Agreement on behalf of Waitt Brands and the Prince Licensees as their “manager,” Filing 138-2 at 19–20, although he denies that he actually held the position of manager. Sheng argues that it is a third-party beneficiary of the Inventory Purchase Agreement because the agreement states that the Prince licensees will use their accounts receivable to pay down their accounts payable. Filing 108 at 12. All companies associated with the Prince business, including the Prince licensees and Waitt Brands, dissolved soon after executing the Inventory Purchase Agreement and the Transition Services Agreement. Filing 127-1 at 6, 54.

Sheng sued Defendants on March 30, 2020. Filing 1. In its Second Amended Complaint, Sheng brings a breach-of-contract claim based on one of the seventeen purchase orders against the Prince licensees;[4] a breach-of-contract claim as a third-party beneficiary of the Inventory Purchase Agreement against Waitt Brands and the Prince licensees; and an unjust enrichment claim against the Prince licensees. Filing 108 at 11–13. Sheng also seeks to hold all Defendants jointly and severally liable under a piercing-the-corporate-veil theory. Filing 108 at 13. On December 20, 2021, Sheng filed a Motion for Sanctions. Filing 115. In its Motion, Sheng asks the Court to sanction Defendants by deeming them to be alter egos, thereby establishing joint and several liability by piercing the corporate veil. Filing 116 at 2. Defendants filed a Motion for Summary Judgment on January 14, 2022. Filing 125.

*3 “Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Garrison v. ConAgra Foods Packaged Foods, LLC, 833 F.3d 881, 884 (8th Cir. 2016) (citing Fed. R. Civ. P. 56(c)). “[S]ummary judgment is not disfavored and is designed for every action.” Briscoe v. Cnty. of St. Louis, 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (internal quotation marks omitted) (quoting Torgerson v. City of Rochester, 643 F.3d 1031, 1043 (8th Cir. 2011) (en banc)). In reviewing a motion for summary judgment, the Court will view “the record in the light most favorable to the nonmoving party ... drawing all reasonable inferences in that party's favor.” Whitney v. Guys, Inc., 826 F.3d 1074, 1076 (8th Cir. 2016) (citing Hitt v. Harsco Corp., 356 F.3d 920, 923–24 (8th Cir. 2004)). Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, “Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves.” Se. Mo. Hosp. v. C.R. Bard, Inc., 642 F.3d 608, 618 (8th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The moving party need not produce evidence showing “an absence of a genuine issue of material fact.” Johnson v. Wheeling Mach. Prods., 779 F.3d 514, 517 (8th Cir. 2015) (citing Celotex, 477 U.S. at 323). Instead, “the burden on the moving party may be discharged by ‘showing’ ... that there is an absence of evidence to support the nonmoving party's case.” St. Jude Med., Inc. v. Lifecare Int'l, Inc., 250 F.3d 587, 596 (8th Cir. 2001) (quoting Celotex, 477 U.S. at 325).

In response to the moving party's showing, the nonmoving party's burden is to produce “specific facts sufficient to raise a genuine issue for trial.” Haggenmiller v. ABM Parking Servs., Inc., 837 F.3d 879, 884 (8th Cir. 2016) (quoting Gibson v. Am. Greetings Corp., 670 F.3d 844, 853 (8th Cir. 2012)). The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial.” Wagner v. Gallup, Inc., 788 F.3d 877, 882 (8th Cir. 2015) (quoting Torgerson, 643 F.3d at 1042). “[T]here must be more than ‘the mere existence of some alleged factual dispute’ ” between the parties in order to overcome summary judgment. Dick v. Dickinson State Univ., 826 F.3d 1054, 1061 (8th Cir. 2016) (quoting Vacca v. Viacom Broad. of Mo., Inc., 875 F.2d 1337, 1339 (8th Cir. 1989)).

The Court begins with Defendants’ Motion for Summary Judgment. In their summary judgment motion, Defendants seek judgment in their favor on Sheng's breach-of-contract claim for purchase order 101056, its breach-of-contract claim as a third-party beneficiary of the Inventory Purchase Agreement, and its unjust enrichment claim. Defendants’ main arguments are that ABG, not Defendants, ordered the merchandise from Sheng, that the Inventory Purchase Agreement did not intend to confer a benefit on Sheng, and that the unjust enrichment claim is barred by the statute of limitations. Sheng responds that triable issues of fact preclude entering summary judgment in Defendants’ favor. The Court grants Defendants summary judgment on Sheng's breach-of-contract claim as a third-party beneficiary and Sheng's unjust enrichment claim as to all the merchandise Sheng shipped except for the merchandise shipped pursuant to purchase order 101056. The court denies Defendants summary judgment on Sheng's breach-of-contract claim for purchase order 101056 and its unjust enrichment claim for the purchase-order-101056 merchandise.

1. Sheng's Breach-of-Contract Claim for Purchase Order 101056 Survives

Sheng's breach-of-contract claim appears straightforward: purchase order 101056—issued on November 16, 2015—bears Prince Americas’ name, Sheng shipped the merchandise to Prince Americas, and Sheng allegedly never received payment. Filing 137-3 at 2–3. Defendants’ argument for summary judgment, however, paints a more complicated picture. According to Defendants, by the time of purchase order 101056's issuance, ABG had suspended the Prince license and was preparing to transfer the Prince business to itself in March of 2016. Filing 126 at 11–14. Defendants assert that ABG was effectively running the Prince business and that Prince Americas would have no ability or business reason to order merchandise. Filing 126 at 12; Filing 127-1 at 19–20. Relying chiefly on principles of agency law, Defendants argue that it would have been unreasonable for Sheng to believe that Prince Americas, not ABG, issued purchase order 101056. Sheng responds that a genuine dispute over who issued purchase order 101056 precludes granting summary judgment. Filing 136 at 10–13.

*4 In diversity-jurisdiction cases, like this one, Nebraska law dictates whether an agency relationship exists and under what authority an agent acts. See Boudwin v. Hastings Bay Marina, Inc., 614 F.3d 780, 783 (8th Cir. 2010) (“In a diversity action such as this, we apply the substantive law of the forum State ....”). The Nebraska Supreme Court defines an agent as “a person authorized by the principal to act on the principal's behalf and under the principal's control.” Koricic v. Beverly Enterprises--Nebraska, Inc., 773 N.W.2d 145, 150 (Neb. 2009). Usually, the existence of an agency relationship and the scope of the agent's authority is a question of fact. Id. at 149. To create an agency relationship, the principal must “manifest assent” to the agent that the agent will “act on the principal's behalf and subject to the principal's control,” while the agent must “manifest[ ] assent or otherwise consent[ ] so to act.” Id. at 150 (quoting Restatement (Third) of Agency § 1.01). “An agency relationship may be implied from the words and conduct of the parties and the circumstances of the case evidencing an intention to create the relationship irrespective of the words or terminology used by the parties to characterize or describe their relationship.” RM Campbell Indus., Inc. v. Midwest Renewable Energy, LLC, 337, 886 N.W.2d 240, 251–52 (Neb. 2016).

If the Court determines an agency relationship exists between the Prince licensees and the individual or individuals issuing purchase order 101056, it will turn to the nature of those agents’ authority. “Actual authority is authority that the principal expressly grants to the agent or authority to which the principal consents.” Koricic, 773 N.W.2d at 150. “Apparent authority is authority that is conferred when the principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon an agent's apparent authority.” RM Campbell, 886 N.W.2d at 252. It exists when the principal acts “in a way that induces a reasonable third person to believe that another person has authority to act for him or her.” Id.

Defendants argue that an agent of ABG, Olaf Kreuger, issued purchase order 101056 on ABG's behalf. Filing 126 at 11–13. Because the Prince licensees were winding down at the time Kreuger issued purchase order 101056, Defendants assert that it would have been unreasonable for Sheng to believe that Kreuger had actual or apparent authority to act on the Prince licensees’ behalf. Filing 126 at 11–14. Unfortunately, Defendants have not provided any evidence demonstrating that Kreuger issued purchase order 101056. See Moore v. Martin, 854 F.3d 1021, 1025 (8th Cir. 2017) (“The party moving for summary judgment bears the initial burden to ‘bring up the fact that the record does not contain’ a genuine dispute of material fact ‘and to identify that part of the record which bears out his assertion.’ ” (quoting Counts v. MK-Ferguson Co., 862 F.2d 1338, 1339 (8th Cir. 1988))). The declaration of Olaf Kreuger Defendants cite in support of their argument does not say that he issued purchase order 101056 to Sheng.

In contrast, Sheng has provided evidence that individuals who had issued purchase orders to Sheng for the Prince licensees in the past issued purchase order 101056. Defendants have not provided evidence that these individuals were no longer the Prince licensees’ employees. And Sheng has pointed to enough evidence to create a triable issue of fact on whether, at the time these individuals issued purchase order 101056, they were working for the Prince licensees and acting on their behalf. The record shows that these individuals had performed work for the Prince licensees in the past; Defendants’ auditor listed purchase order 101056 as a liability for Prince Global in a December 31, 2016 accounts payable aging worksheet; and ABG's chief legal officer averred that ABG never issued purchase order 101056. Filing 137-4 at 3; Filing 138-1 at 2; Filing 137-8 at 3. At the very least, therefore, there is a factual dispute about whether the individuals who issued purchase order 101056 were employees of the Prince licensees’ and had actual or apparent authority to act on their behalf.

*5 But even assuming that these individuals were now employees of ABG does not protect Defendants from liability. Sheng has provided evidence that it was unaware ABG existed until after it shipped merchandise pursuant to purchase order 101056. Filing 137-4 at 3–4. From Sheng's perspective, the Prince licensees’ employees issued purchase order 101056 for Prince Americas. Defendants’ failure to inform Sheng that these individuals were now ABG's employees estops them from denying the existence of an agency relationship. See Ryder Truck Rental, Inc. v. Transportation Equip. Co., 339 N.W.2d 283, 286 (Neb. 1983) (“A party who has knowingly permitted others to treat one as his agent is estopped to deny the agency.”). Having placed these individuals in a position where Sheng would reasonably believe that they acted on the Prince licensees’ behalf—and failing to disclose that ABG now controlled the Prince business—the Prince licensees are a party to purchase order 101056 by virtue of these individuals’ apparent authority. See Dep't of Banking & Fin. of State of Neb. v. Davis, 416 N.W.2d 566, 569 (Neb. 1987) (“Apparent or ostensible authority to act as an agent may be conferred if the alleged principal affirmatively, intentionally, or by lack of ordinary care causes third persons to act upon the apparent agency.” (quoting Wolfson Car Leasing Co. v. Weberg, 264 N.W.2d 178, 182 (Neb. 1978)); Corman v. Musselman, 439 N.W.2d 781, 787 (Neb. 1989) (“A principal is bound by, and liable for, the acts which an agent does within her or his actual or apparent authority.”).

Therefore, at the very least, a factual dispute exists as to whether the Prince licensees’ employees issued purchase order 101056 or whether Sheng was aware that ABG was running the Prince business. Perhaps the Prince licensees’ employees, acting with actual or apparent authority, issued purchase order 101056. Or maybe they were now employees of ABG, but acted with apparent authority because Defendants never informed Sheng that ABG was running the Prince business. In either scenario, Defendants cannot escape liability. Accordingly, the Court denies Defendants summary judgment on Sheng's breach-of-contract claim for purchase order 101056.

2. Sheng's Breach-of-Contract Claim as a Third-Party Beneficiary Does Not Survive

Sheng's breach-of-contract claim as a third-party beneficiary of the Inventory Purchase Agreement relies on a provision of the agreement stating “Seller [(the Prince licensees and Waitt Brands)] hereby agrees all accounts receivable collected by Seller shall be used exclusively to pay down Seller's accounts payable.” Filing 138-2. Sheng claims that, as a supplier owed money by the Prince licensees, the Inventory Purchase Agreement required the Prince licensees to use their accounts receivable to pay Sheng. Filing 136 at 13–16. Therefore, Sheng asserts that it is a third-party beneficiary of the Inventory Purchase Agreement and entitled to sue for Defendants’ breach of that agreement. Filing 136 at 13–16. Defendants respond that the terms of the Inventory Purchase Agreement rebut Sheng's claim that it is an intended third-party beneficiary. Filing 126 at 14–17.

The Court looks to Nebraska law to decide this contract dispute.[5] See Orion Fin. Corp. of S. Dakota v. Am. Foods Grp., Inc., 281 F.3d 733, 738 (8th Cir. 2002) (“In a diversity case, the contract must be construed according to state law.”). “Third-party-beneficiary theory is a common-law doctrine that allows a nonparty to a contract to enforce an interest owed by a promisor under the contract.” Equestrian Ridge Homeowners Ass'n v. Equestrian Ridge Ests. II Homeowners Ass'n, 953 N.W.2d 16, 29 (Neb. 2021). Nebraska has “strictly construed who has the right to enforce a contract as a third-party beneficiary.” Palmer v. Lakeside Wellness Ctr., 798 N.W.2d 845, 850 (Neb. 2011). “The fact that a third party would be better off if a contract were enforced does not give him or her standing to enforce the contract.” Equestrian Ridge Homeowners, 953 N.W.2d at 29. Instead, the alleged third-party beneficiary must show that it was “an intended, not incidental, beneficiary of rights under the contract.” Id.

*6 “A third-party beneficiary's rights depend upon, and are measured by, the terms of the contract between the promisor and promisee.” Marten v. Staab, 543 N.W.2d 436, 442 (Neb. 1996). “This generally means that the third party's rights must appear by express stipulation or it must appear by reasonable intendment that the rights and interest of such unnamed parties were contemplated and that provision was being made for them.” Equestrian Ridge Homeowners, 953 N.W.2d at 29.

Looking at the Inventory Purchase Agreement, most of the contract concerns the purchase of the Prince licensees’ inventory by ABG. Filing 138-2 at 4–9. The contract delineates the inventory, the purchase price, and the representation and warranties of both parties to the contract. Filing 138-2 at 4-9. The provision on which Sheng relies comes from Section 5.08 of Article V of the Inventory Purchase Agreement. Filing 138-2 at 9. Article V, titled “Additional Agreements,” lists several agreements the parties propose to execute along with the Inventory Purchase Agreement, and Section 5.08, titled “Sellers [sic] Accounts Receivable and Accounts Payable,” discusses the money owed to and owed by the Prince licensees. Filing 138-2 at 10. Sheng points to one sentence in Section 5.08 in support of its third-party-beneficiary argument that says, “Seller [(the Prince licensees)] hereby agrees all accounts receivable collected by Seller shall be used exclusively to pay down Seller's accounts payable.” Filing 138-2 at 10.

The Court concludes as a matter of law that this single sentence, contained in an agreement mostly concerned with ABG purchasing inventory from the Prince licensees, was not intended by the parties to the Inventory Purchase Agreement to benefit Sheng. Bierman v. Benjamin, 943 N.W.2d 269, 273 (Neb. 2020) (“The interpretation of a contract ... [is a] question[ ] of law ....”); see also Equestrian Ridge, 953 N.W.2d at 29 (“An intended beneficiary is one whose rights and interest were apparently contemplated by the contract's language itself.”). Rather, the aim of Section 5.07 is to allocate the amounts owed to and owed by the Prince licensees as the Prince business transitioned from them to ABG. There is no textual support for the notion that ABG was giving money to the Prince licensees for the purpose of paying off vendors like Sheng. Instead, ABG was giving money to purchase inventory. The sentence on which Sheng relies simply lists a business obligation the Prince licensees had while the Prince business transitioned to ABG.

The Nebraska Supreme Court's opinion in Spring Valley IV Joint Venture v. Nebraska State Bank of Omaha, 690 N.W.2d 778 (Neb. 2005), is instructive. In Spring Valley, the defendant bank entered into several loan agreements with a third-party business on March 8 and April 12, 2001. See Spring Valley IV Joint Venture v. Nebraska State Bank of Omaha, 690 N.W.2d 778, 780–81 (Neb. 2005). Along with the loan agreements, the third-party business filled out disbursement request and authorization forms. Id. These forms indicated that the purpose of the loans was to fund interests in several partnerships but ordered the proceeds to be paid directly to the third-party business. Id. When the partnerships did not receive the proceeds to the loans, they sued the bank, arguing that they were intended third-party beneficiaries of the loan agreements. Id at 781.

*7 The Nebraska Supreme Court held that the partnerships were not intended third-party beneficiaries. Id. at 782–83. The Supreme Court compared the situation to an illustration in the Restatement (Second) of Contracts that states:

Id. at 782 (quoting Restatement (Second) of Contracts § 302 cmt. b., illus. 3) (emphasis in original). Holding that the partnerships were, at most, incidental beneficiaries of the loan agreement, the Nebraska Supreme Court wrote, “[T]he evidence indicates that the Bank was under no obligation to disburse funds directly to the Partnerships, but, rather, was obligated to disburse the funds to the individual borrower, who would then be able to invest the sums in the Partnerships.” Id. at 783.

The current case is analogous to Spring Valley. Here, ABG provided money to purchase inventory from the Prince licensees. Purchasing inventory was the purpose of the agreement. Nothing in the Inventory Purchase Agreement obligates ABG, the Prince licensees, or Waitt Brands to provide the money directly to Sheng. While, undoubtedly, the Prince licensees were to use the money to pay down their accounts payable, such a situation makes Sheng an incidental, rather than intended, beneficiary of the Inventory Purchase Agreement. Id. at 782 (“An incidental beneficiary acquires no right against the promisor or promise.”). Accordingly, the Court grants Defendants summary judgment on Sheng's breach-of-contract claim as a third-party beneficiary of the Inventory Purchase Agreement.

3. Sheng's Unjust Enrichment Claim Survives in Part

In Count Three of its Second Amended Complaint, Sheng brings an unjust enrichment claim against the Prince licensees for their “failure to pay for the benefit they received from [Sheng] in the form of merchandise.” Filing 108 at 13. Sheng has requested restitution damages for its unjust enrichment claim. Filing 108 at 13. Defendants make two arguments in support of their motion for summary judgment on this claim. First, Defendants argue that the statute of limitations bars Sheng's unjust enrichment claim. Alternatively, Defendants argue that they were not unjustly enriched because ABG, not the Prince licensees, received the merchandise.

Defendants assert, and Sheng does not challenge, that the applicable limitations period for Sheng's unjust enrichment claim is four years.[6] See Neb. Rev. Stat. § 25-212 (providing a four-year statute of limitations for any action not specified in Chapter 25 of the Nebraska Revised Statutes). Sheng's unjust enrichment claim must have been brought “within four years after the cause of action ... accrued.” Id. “Generally, a cause of action accrues and the statute of limitations begins to run when the aggrieved party has the right to institute and maintain suit.” Ohio Nat. Life Ins. Co. v. Rust, 585 N.W.2d 438, 443 (1998). The Court thus turns to the elements required to bring an unjust enrichment claim and the record in this case to determine when Sheng could have first brought its lawsuit. See Manker v. Manker, 644 N.W.2d 522, 531 (Neb. 2002) (“The point at which a statute of limitations begins to run must be determined from the facts of each case ....”).

*8 “An unjust enrichment claim embodies the equitable doctrine that one will not be allowed to profit or enrich oneself unjustly at the expense of another.” Marmo v. Tyson Fresh Meats, Inc., 457 F.3d 748, 755 (8th Cir. 2006) (citing Hoffman v. Reinke Mfg. Co., 416 N.W.2d 216, 219 (Neb. 1987)). Unjust enrichment claims arise “when justice and equity require the defendant to disgorge a benefit that he or she has unjustifiably obtained at the plaintiff's expense.” DH-1, LLC v. City of Falls City, 938 N.W.2d 319, 327 (Neb. 2020). “When the inequitable and unconscionable retention of a benefit occurs, Nebraska law requires the recipient to pay for the reasonable value of the benefit received.” Marmo, 457 F.3d at 755 (citing Bush v. Kramer, 173 N.W.2d 367, 369 (Neb. 1969)). The issue, therefore, in determining the accrual of Sheng's unjust enrichment claim is “when the inequitable and unconscionable retention of a benefit” occurred in this case.

Defendants argue that Sheng's unjust enrichment claim accrued upon receipt of the merchandise Sheng shipped. Filing 126 at 18. Because the purchase orders show a delivery date prior to March 30, 2016—which is four years before Sheng filed suit on March 30, 2020—Defendants contend that Sheng's unjust enrichment claim is time-barred. Filing 63-1 at 18–34 (purchase orders listing delivery dates); Filing 126 at 19. In response, Sheng contends that the Prince licensees became unjustly enriched when they collected accounts receivable and, instead of paying Sheng, kept the accounts receivable for themselves. Filing 136 at 17–18. According to Sheng, there is a dispute of material fact about when the Prince licensees obtained accounts receivable that should have been used to pay Sheng, and therefore finding its unjust enrichment claim time-barred at this time is inappropriate. Filing 136 at 18.

The Court first rejects Sheng's argument because it would virtually eliminate any statute-of-limitations defense against unjust enrichment claims. Under Sheng's argument, a plaintiff could contend that the statute of limitations period should begin whenever the defendant collected money that could have been used to pay the plaintiff. Such an argument ignores the long-recognized rule in Nebraska: “[A] cause of action accrues and the statute of limitations begins to run when the aggrieved party has the right to institute and maintain a suit.” Susman v. Kearney Towing & Repair Ctr., Inc., 970 N.W.2d 82 (Neb. 2022).

However, the Court also disagrees with Defendants that Sheng's cause of action accrued upon delivery of the merchandise. Because “[t]he point at which a statute of limitations begins to run must be determined from the facts of each case,” Manker, 644 N.W.2d at 531, the Court cannot ignore that Sheng shipped merchandise pursuant to several purchase orders. These purchase orders provided that payment was due 30 days after shipment except purchase order 101056, which had a payment period of 90 days after shipment. Filing 63-1 at 18–34. Sheng could not have instituted a suit for unjust enrichment before payment was due, because it was only until after payment was due that Sheng conferred an “allegedly inequitable benefit” on the Prince licensees by providing them with merchandise. Ag Servs. of Am., Inc. v. Empfield, 587 N.W.2d 871, 874 (Neb. 1999) (“[A] party cannot recover for unjust enrichment until the allegedly inequitable benefits have been received and retained.”); see also Ahrens v. Dye, 302 N.W.2d 682, 684 (Neb. 1981) (“A person is enriched if he has received a benefit ....”) (quoting 66 Am. Jur. 2d Restitution and Implied Contracts § 3). When the Prince licensees retained the merchandise without paying Sheng, they were unjustly enriched and Sheng was injured. See Bloedorn Lumber Co. of N. Platte v. Nielson, 915 N.W.2d 786, 793 (Neb. 2018) (holding that a party was entitled to restitution after partially performing a contract for which it did not receive payment); City of Scottsbluff v. Waste Connections of Nebraska, Inc., 809 N.W.2d 725, 738 (Neb. 2011) (noting that unjust enrichment claims seek to “disgorge a benefit [the defendant] has unjustifiably obtained at the plaintiff's expense”). As the Court found in its October 22, 2020 Order, all the purchase orders, except purchase order 101056, had payment due outside the statute of limitations period. Therefore, besides the merchandise shipped under purchase order 101056, Sheng has failed to file its unjust enrichment suit within the statute of limitations.[7] The Court grants Defendants summary judgment on Sheng's unjust enrichment claim except for merchandise shipped pursuant to purchase order 101056.

*9 The Court now turns to Sheng's Motion for Sanctions. The Motion requests that the Court sanction Defendants by deeming them to be alter egos, thereby establishing joint and several liability by piercing the corporate veil. Filing 116 at 2. Sheng's piercing-the-corporate-veil theory of liability alleges that the Prince licensees channeled money earmarked for Sheng through various entities purportedly controlled by Bradford to capitalize Bradford's new business, C3 Brands. Filing 116 at 1. According to Sheng, it has been unable to verify these allegations because Defendants have obstructed discovery by “serving frivolous objections to written discovery, refusing to produce responsive documents, [and] making claims in written discovery responses and in deposition testimony contradicted by documentary evidence.” Filing 116 at 1. Sheng now accuses Defendants of violating the Magistrate Judge's October 21, 2021 order compelling discovery relevant to Sheng's alter ego allegations. Filing 116 at 2; see also Filing 97 (Magistrate Judge's order compelling discovery). Defendants deny that they have failed to comply with the Magistrate Judge's order compelling discovery and claim that the requested documents do not exist. Filing 123 at 3, 8–11. Instead, Defendants charge Sheng with “attempting to use Rule 37 as a means to accomplish that which it cannot accomplish through the application of the facts of this case.” Filing 123 at 3.

1. Relevant Background

Both parties have fiercely litigated discovery. One of Sheng's goals in discovery has been to trace the money allegedly owed to it through the corporate entities Sheng claims Bradford controls. Sheng believes that, ultimately, discovery will point to Bradford using the money allegedly owed to Sheng to fund C3 Brands. However, the parties have been unable to agree on the scope of discovery and what information Defendants should produce.

After receiving Defendants’ discovery responses—which included several objections stating that the discovery requests were overbroad, disproportionate, and harassing—the parties had a discovery-dispute conference with the Magistrate Judge on April 8, 2021. Filing 54. At the hearing, Defendants’ counsel stated that Defendants had provided a summary of a 2016 audit of the Prince licensees showing that all the money received from the Inventory Purchase Agreement and accounts receivable went to the Prince licensees’ secured and unsecured creditors. Filing 54 (audio file) at 12:19–12:28. Sheng's counsel argued that the audited summary was insufficient because the audit did not include Ektelon Racquets and Waitt Brands, did not address accounts receivable collected after December 31, 2016, and did not identify the unsecured creditors. Filing 54 (audio file) at 15:55–16:03, 16:15–17:10, 27:30–27:42. Defendants responded that the audit summary would cover all the entities at issue and that a supplement to the audit summary addressed post-December 31, 2016, activity. Filing 54 (audio file) at 17:50–18:30, 24:00–24:40. To resolve this dispute, the Magistrate Judge ordered production of all the underlying financial information provided to the auditor. Filing 54 (audio file) at 28:40–28:56. For unclear reasons, Sheng needed to subpoena the auditor to acquire the underlying financial information rather than receiving it from Defendants directly. The Magistrate Judge also ordered Defendants to provide the operating agreements for Prince Global, Prince Global's subsidiaries, C3 Brands, and Waitt Brands, and to provide Dana Bradford's 2016 and 2017 tax returns. Filing 54 (audio file) at 38:48–39:39, 51:27–54:45.

After another disagreement over discovery arose, the Magistrate Judge held a second discovery-dispute conference on June 22, 2021. Filing 76. At this point, Sheng had discovered the existence of C3 Holding Company and that Bradford Family Holdings capitalized it with 4.7 million dollars in November of 2016. Filing 76 (audio file) at 7:35–8:40. Sheng reiterated that it still could not identify the Prince licensees’ unsecured creditors and contended that the information Defendants had produced did not explain Prince Global's use of some of its accounts receivable. Filing 76 (audio file) at 18:22–19:54. The Magistrate Judge ordered the parties to meet and confer to supplement Bradford's declaration about whether he received money from one of the corporate entities associated with Prince Global, and if Sheng reasonably believed that Bradford's declaration was insufficient Defendants would have to turn over his 2016 and 2017 tax returns as well as any bank account statements relating to money received from any of Prince Global's accounts receivable. Filing 76 (audio file) at 45:45–46:57, 54:50–55:05.

*10 The parties were still unable to resolve their differences, causing Sheng to file a motion to compel. Filing 88. In the Motion to Compel, Sheng asked the Magistrate Judge to compel Defendants to respond to several discovery requests related to the identity of Prince Global's unsecured creditors; Prince Global's use of its accounts receivable to pay off its debts; the relationship between Waitt Brands and C3 brands; and Mr. Bradford's personal bank records and tax returns. Filing 89 at 5–7. Although Sheng had reviewed the financial information underlying the 2016 audit of Prince Global, Sheng claimed that the documents did not include pertinent financial records and data, such as the identity of unsecured creditors and records of Prince Global's accounts receivable and accounts payable. Filing 89 at 7. Sheng's Motion also alleged that Bradford's supplemental declaration did not address whether Bradford received funds from C3 Brands. Filing 89 at 10. Defendants responded by emphasizing that the thousands of pages given to Sheng in discovery were contrary to the allegations in Sheng's complaint; claiming that they did not have some of the documents requested by Sheng; and accusing Sheng of using discovery as a fishing expedition. Filing 94 at 6–12.

The Magistrate Judge granted Sheng's Motion to Compel. In his order, the Magistrate Judge ordered Defendants to respond fully to Sheng's interrogatories asking Defendants to identify Prince Global's creditors and to produce financial records for the Prince licensees, Waitt Brands, C3 Brands, and C3 Holding Company. Filing 97 at 4–6. The Magistrate Judge further compelled Defendants to produce all iterations of C3 Brands’ operating agreement through January of 2017 and a Membership Interest Purchase Agreement between Waitt Brands and C3 Brands, which purportedly divested Waitt Brands of its interest in C3 Brands.[8] Filing 97 at 6. Finally, the Magistrate Judge ordered Defendants to turn over several financial documents, including Bradford's personal bank records and his 2015 tax return, Bradford Family Holdings’ financial records and operating agreements, and C3 Holding Company's complete tax returns and financial statements for 2016 and 2017. Filing 97 at 6–8. If Defendants did not possess the compelled documents, they were ordered to supplement their discovery responses to state that certain documents were not in their possession. Filing 97 at 6–8.

2. Sheng's Motion for Sanctions

The discovery disputes in this case have culminated with Sheng filing its present Motion for Sanctions. According to Sheng, Defendants responded to the Magistrate Judge's order compelling discovery by producing one document after the court-ordered deadline, “implausibly claim[ing]” some documents do not exist, and failing to address “multiple categories of documents ordered produced by [the Magistrate Judge].” Filing 116 at 2. Specifically, Sheng alleges that Defendants failed to offer any response to the Magistrate Judge ordering Defendants to produce 2017 financial records and tax information for C3 Holding Company, all the C3 Brands’ operating agreements, the Membership Interest Purchase agreement between Waitt Brands and C3 Brands, and Bradford's income from Bradford Family Holdings in 2017. Filing 116 at 6. Sheng further claims that Defendants supplemented their discovery responses by stating that Bradford received no income from C3 Holding Company in 2017, that they did not know the identities of Prince Global's unsecured creditors, and that they did not possess financial records for Prince Global, Prince Global's subsidiaries, Waitt Brands, C3 Brands, and Bradford Family Holdings. Filing 116 at 6; see also Filing 118-8 at 6–9 (supplemental discovery responses). In response, Defendants claim that all the documents at issue are not in their possession or do not exist. Filing 123 at 8–12.

3. The Court Will Impose Sanctions

The Court finds that sanctions against Defendants are warranted. The record and the history of this dispute demonstrate that Defendants have resisted discovery into matters relevant to Sheng's alter ego allegations and have failed to comply with the Magistrate Judge's order compelling discovery. Accordingly, the Court grants Sheng's Motion for Sanctions. Under Federal Rule of Civil Procedure 37(b)(2)(A)(i), the Court will consider Defendants’ status as alter egos established for purposes of this action. Additionally, the Court awards Sheng the expenses it incurred preparing its Motion for Sanctions and the Motion to Compel under Rule 37(b)(2)(C), to be paid by Defendants.

*11 Federal Rule of Civil Procedure 37 authorizes federal courts to sanction a party who “fails to obey an order to provide or permit discovery ....” Fed. R. Civ. P. 37(b)(2)(A). The rule outlines several types of sanctions, including “directing that the matters embraced in the order or other designated facts be taken as established for purposes of the action, as the prevailing party claims.” Fed. R. Civ. P. 37(b)(2)(A)(i). Sanctions under Rule 37 are aimed at both penalizing improper conduct during discovery and deterring others who may act similarly. See Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643 (1976) (stating that the purpose of sanctions under Rule 37 is “not merely to penalize those whose conduct may be deemed to warrant such a sanction, but to deter those who might be tempted to such conduct in the absence of such a deterrent”); see also Roadway Exp., Inc. v. Piper, 447 U.S. 752, 763–64, 100 S. Ct. 2455, 2462–63, 65 L. Ed. 2d 488 (1980) (“Rule 37 sanctions must be applied diligently ....”).

Sanctions under Rule 37 require “(1) an order compelling discovery, (2) a willful violation of that order, and (3) prejudice to the other party.” Sentis Grp., Inc., Coral Grp., Inc. v. Shell Oil Co, 559 F.3d 888, 899 (8th Cir. 2009). These requirements are met in this case. The Magistrate Judge issued an order compelling discovery. In the order, the Magistrate Judge directed Defendants to fully respond to Sheng's interrogatories requesting the identity of Prince Global's creditors and to produce several financial documents, bank statements, tax returns, and operating agreements. See Filing 97. Defendants never objected to the Magistrate Judge's order. Instead, their supplemental responses stated they could not identify Prince Global's creditors, did not address several of the documents compelled by the Magistrate Judge's order, and claimed scores of financial documents and operating agreements necessary to running the defendant LLCs do not exist. The Court finds that Defendants’ responses willfully violated the Magistrate Judge's order. As a result of Defendants’ insufficient discovery responses, Sheng has been prejudiced because it has been unable to test its allegations that Defendants are alter egos and attempt to pierce the corporate veil. Sanctions are therefore warranted.

First, Defendants’ responses did not address several documents the Magistrate Judge ordered to be produced. In particular, Defendants’ supplemental responses are silent about C3 Holding Company's complete tax returns and financial statements for 2016 and 2017, the Membership Interest Purchase agreement, income Bradford received from Bradford Family Holdings and C3 Holdings in 2017, and all iterations of C3 Brands operating agreement though January 1, 2017. Filing 97 at 6–8; Filing 118-8 at 8–9; Filing 118-9 at 2–4. Even Defendants’ Brief in Opposition to Sheng's Motion for Sanctions fails to explain Defendants’ noncompliance as to Bradford's 2017 income from Bradford Family Holdings and C3 Holdings’ complete tax returns and financial statements for 2016 and 2017. See Filing 123 at 8–12. The failure to produce these documents or explain their whereabouts, especially after having an opportunity to respond to Sheng's Motion for Sanctions, constitutes a willful violation of the Magistrate Judge's order.

Furthermore, as to the Membership Interest Purchase agreement and C3 Brands’ operating agreements, Defendants now state in their Brief in Opposition that these documents do not exist. The Court finds this statement difficult to believe. Bradford founded C3 Brands on January 28, 2016, and C3 Brands was a party to a July 10, 2016 loan agreement, Filing 131-2 at 2; Filing 119-3 at 2. It is highly doubtful that C3 Brands existed for all of 2016 and was a party to a loan agreement without any documents governing its organization and operations. See Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 291 (Del. 1999) (describing operating agreements as the “cornerstone[s]” of LLCs); Condo v. Conners, 266 P.3d 1110, 1115 (Colo. 2011) (“An LLC's operating agreement serves as a multilateral contract among the members, who agree that the exercise of their membership and management rights and duties will be bound by the terms set forth.”). Additionally, the Membership Interest Purchase agreement is referenced in two agreements signed by Bradford: the Transition Services Agreement between Waitt Brands and C3 Holding Company and the loan guaranty for the loan from UMB Bank to Waitt Brands. Filing 119-3 at 2–6; Filing 131-2 at 2. The Court finds it to be not credible that Defendants have no knowledge of the Membership Interest Purchase agreement when Bradford signed documents acknowledging their existence. Cf. Lincoln Composites, Inc. v. Firetrace USA, LLC, 825 F.3d 453, 460 (8th Cir. 2016) (“Under Nebraska law, a party is generally charged with knowledge of the contents of a writing he or she signs ....”).

*12 Finally, the Court addresses Defendants’ failure to identify Prince Global's creditors or to produce various business records—such as financial statements, profit and loss statements, and balance sheets—from Prince Global, Prince Global's subsidiaries, and Waitt Brands. Defendants have been dragging their feet on responding to these requests since discovery began. Initially, Defendants responded to these requests by objecting that they were overbroad, harassing, and not proportional. Filing 118-5 at 4–5; 8–10. Such objections are generally insufficient, standing alone, to resist discovery, because it prevents courts from ascertaining the validity of the objection. See Wagner v. Dryvit Sys., Inc., 208 F.R.D. 606, 610 (D. Neb. 2001) (“[A]n objection that discovery is overly broad and unduly burdensome must be supported by affidavits or offering evidence revealing the nature of the burden and why the discovery is objectionable.”); see also Cold Spring Granite Co. v. Matthews Int'l Corp., No. CV 10-4272 (JRT/LIB), 2012 WL 13026738, at *12 (D. Minn. Aug. 20, 2012) (describing these objections as “boilerplate”). At the first discovery-dispute conference on April 8, 2021, the Magistrate Judge rejected these objections.[9] However, for unclear reasons, Defendants suggested that Sheng subpoena the auditor to obtain information relevant to their requests rather than divulging the information themselves. According to Sheng, the documents they received from the auditor did not adequately address their discovery requests. Filing 89 at 3–4.

Eventually, Defendants represented in their brief opposing Sheng's Motion to Compel that they did not have any information regarding Prince Global's creditors or the financial records of Prince Global, Prince Global's subsidiaries, and Waitt Brands. Filing 94 at 8–9. But Defendants have not explained why they are not in possession of these basic business records and information. The summary of Prince Global's 2016 audit implies that Defendants possessed the relevant documents on December 31, 2016. Filing 138-3 at 4 (stating that the audit included the consolidated balance sheet and other related documents “for the year ended December 31, 2016”). And the Court cannot imagine any legitimate reason why Defendants would not preserve these documents until the inception of this case.[10] See Paisley Park Enterprises, Inc. v. Boxill, 330 F.R.D. 226, 232 (D. Minn. 2019) (“A party is obligated to preserve evidence once the party knows or should know that the evidence is relevant to future or current litigation.”). Thus, the Court concludes that Defendants’ failure to identify Prince Global's creditors; to produce the financial records of Prince Global, Prince Global's subsidiaries, and Waitt Brands; and their refusal to explain why they do not possess this information are willful violations of the Magistrate Judge's order.

Having concluded that Defendants willfully violated the Magistrate Judge's order compelling discovery—thereby preventing Sheng from testing its alter-ego allegations or attempting to pierce the corporate veil—the Court addresses what sanctions are appropriate. The Eighth Circuit Court of Appeals affords district courts “a large measure of discretion in deciding what sanctions are appropriate for misconduct.” Hutchins v. A. G. Edwards & Sons, Inc., 116 F.3d 1256, 1260 (8th Cir. 1997) (quoting Givens v. A.H. Robins Co., 751 F.2d 261, 263 (8th Cir. 1984)). “Imposition of a sanction is proper only if just and expressly related to the particular claim.” MacGregor v. Mallinckrodt, Inc., 373 F.3d 923, 935 (8th Cir. 2004). “The district court is not ... constrained to impose the least onerous sanction available, but may exercise its discretion to choose the most appropriate sanction under the circumstances.” Keefer v. Provident Life & Acc. Ins. Co., 238 F.3d 937, 941 (8th Cir. 2000).

*13 Defendants have refused to turn over several documents and claim that scores of documents do not exist or are not in their possession. They have proffered no reason why information that should be under their control is not. These documents are necessary for Sheng to verify the accuracy of its alter-ego and piercing-the-corporate veil allegations and were compelled by the Magistrate Judge for that purpose. See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 707 (1982) (holding that sanctions under rule 37(b)(2) “must be specifically related to the particular ‘claim’ which was at issue in the order to provide discovery”). Defendants have not demonstrated that the requested information is readily available from another source. The only way to remedy how Defendants’ discovery responses have handicapped Sheng's case is to deem that Defendants are alter egos of each other.

Holding all Defendants responsible, including Bradford, is just. Not only has Bradford verified all of Defendants’ discovery responses, the record shows that he was substantially involved in winding down the Prince licensees’ business in 2016. See Filing 127-1 at 10–11, 21 (Bradford characterizing himself as the “lead director” of Prince Global, stating that he was the only person available to sign the Transition Services Agreement for Prince Global, and explaining that he was the only person able to negotiate the Inventory Purchase Agreement on Prince Global's behalf); Filing 131 (settlement agreement between ABG and Prince Global signed by Bradford). Indeed, Bradford signed the Inventory Purchase Agreement with ABG as the “Manager” of the Prince licensees. Filing 138-2 at 19–20; see Neb. Rev. Stat. § 21-136(a)–(b) (stating that, in manager-managed LLCs, managers have a duty to furnish information “concerning the company's activities, financial condition, and other circumstances”). Thus, Bradford was uniquely situated to ensure the preservation of Defendants’ business records. Accordingly, under Federal Rule of Civil Procedure 37(b)(2)(A)(i), the Court sanctions Defendants for violating the Magistrate Judge's order compelling discovery by deeming Sheng's allegations that Defendants are alter egos as established for the purposes of this case. See S. New England Tel. Co. v. Glob. NAPs Inc., 624 F.3d 123, 147 (2d Cir. 2010) (affirming district court order sanctioning defendant entities for failing to comply with discovery by deeming alter ego allegations as established).

In addition, Rule 37 requires the imposition of monetary sanctions upon the disobedient party. Fed. R. Civ. P. 37(b)(2)(C). The Court must order the party to pay reasonable expenses, including attorney fees, caused by the party's failure to obey a discovery order “unless the failure was substantially justified or other circumstances make an award of expenses unjust.” Id. Defendants’ position throughout this dispute has not been substantially justified. They have refused to turn over clearly relevant documents and have stated that they are not in possession of documents that should be under their control.

Sheng requests fees and costs associated with its Motion for Sanctions, the investigation into the Motion for Sanctions, and its prior motion practice and discovery dispute conferences. The Court grants this request in part. While the discovery-dispute conferences are related to Defendants’ misconduct, they are not so connected with Defendants’ failure to abide by a Court order that such wide-ranging attorney fees for all discovery disputes between the parties is justified. See Guifu Li v. A Perfect Day Franchise, Inc, 281 F.R.D. 373, 395 (N.D. Cal. 2012) (declining to award attorney fees and costs incurred that were unconnected from the underlying motions to compel). However, Sheng's Motion to Compel and its Motion for Sanctions are directly related to Defendants’ violation of the Magistrate Judge's order compelling discovery. Therefore, the Court grants Sheng's request for fees and costs associated with preparing its Motion to Compel and its Motion for Sanctions. Sheng shall file a declaration tabulating and demonstrating the reasonableness of its fees and costs within 14 days of this order. The Court refers the issue of the reasonableness of Sheng's fees and costs to the Magistrate Judge.

*14 The Court grants Sheng's Motion for Sanctions and will deem Defendants’ status as alter egos established for the purposes of this litigation. Sheng is entitled to fees and costs associated with preparing its Motion to Compel and its Motion for Sanctions. The Court further grants in part and denies in part Defendants’ Motion for Summary Judgment. Sheng's breach-of-contract claim for purchase order 101056 and its unjust enrichment claim for the merchandise shipped under purchase order 101056 remain pending. Accordingly,

IT IS ORDERED:

Dated this 26th day of April, 2022.

The Ektelon brand was also part of the Prince license from ABG. Filing 127-1 at 7.

According to Bradford, the only entity Waitt Brands had an interest in was Competitive Sports. Filing 127-1 at 8.

There is some confusion over whether Ektelon Racquets was a direct subsidiary of Prince Global or a direct subsidiary of Active Brands, LLC, a nonparty owned by Competitive Sports. See Filing 127-1 at 56–57. Given that this detail is unimportant to the current motions, for the purposes of clarity the Court will treat Ektelon Racquets as a subsidiary of Prince Global in this order.

In the Court's October 22, 2021 Order, it found that the statute of limitations barred Sheng's breach-of-contract claim on all of the purchase orders. Filing 98 at 6–11. However, it granted Sheng leave to file a second amended complaint to allege that one of the purchase orders—purchase order 101056—had payment due in ninety days. Filing 107 at 6–8. This change caused Sheng's breach-of-contract claim on purchase order 101056 to be timely. See Filing 98 at 10–12.

The Inventory Purchase Agreement states that it is to be construed under New York law. Filing 138-2 at 13. However, Defendants cite Nebraska law exclusively in their briefing and Plaintiff cites both Nebraska and New York law while stating that each state's law is essentially the same on this issue. Filing 136 at 13 n.5. The law in both states governing third party beneficiaries appears substantively similar. Accordingly, the Court will apply Nebraska law. See Mod. Equip. Co. v. Cont'l W. Ins. Co., 355 F.3d 1125, 1128 n.7 (8th Cir. 2004) (stating a choice-of-law analysis was unnecessary when both parties stated, and the court agreed, that the laws of each state were not substantially different).

Defendants cite Nebraska Revised Statute § 25-206, which provides a four-year statute of limitations for actions “upon a contract, not in writing, expressed or implied ....”. Neb. Rev. Stat. 25-206. However, Sheng's unjust enrichment claim seeks restitution in the amount of the value of the merchandise it shipped to the Prince licensees. Under Nebraska law, such a claim is properly called a quasi-contract claim. See City of Scottsbluff v. Waste Connections of Nebraska, Inc., 809 N.W.2d 725, 738 (Neb. 2011) (“Quasi-contract claims are restitution claims to prevent unjust enrichment.”). Because “[a] quasi-contract is not a contract,” id., Sheng's unjust enrichment claim is not “an action upon a contract” under § 25-206. In the Court's view, the correct statute to apply is Nebraska Revised Statute § 25-212, which provides a limitations period for any action not otherwise specified in Chapter 25 of the Nebraska Revised Statutes. This point makes little difference, however, because § 25-212, like § 25-206, provides a four-year statute of limitations.

Defendants also argue that if the goods were delivered after March 16, 2020, then Sheng cannot maintain an action for unjust enrichment because, by that point, all inventory transferred to ABG under the Inventory Purchase Agreement. Filing 126 at 19–20; Filing 127-2 at 2. The Court rejects this argument for two reasons. First, as Defendants acknowledge, purchase order 101056 shows that it was delivered on March 8, 2016. Filing 63-1 at 34. Second, Sheng shipped the merchandise pursuant to purchase order 101056 prior to February 26, 2016. Filing 63-2 at 4–7. The Inventory Purchase Agreement transferred all inventory, including in-transit inventory, from the Prince licensees to ABG. Filing 138-2 at 5. Accordingly, even if the purchase-order-101056 merchandise was still in-transit by March 16, 2020, Defendants received a benefit at Sheng's expense by selling that merchandise to ABG through the Inventory Purchase Agreement.

Defendants have consistently denied that C3 Brands was ever a subsidiary of Waitt Brands. Sheng contends that Waitt Brands being a parent company of C3 Brands establishes a link between Bradford's old business and his new one.

Defendants have repeatedly resisted discovery by arguing that the summary of Prince Global's 2016 audit demonstrates that further discovery is unnecessary. See, e.g., Filing 54 (audio file); Filing 94 at 6–7; Filing 123 at 5–7. According to Defendants, the audit summary definitively proves that Bradford did not funnel money from the Prince businesses for his own personal benefit instead of paying the purchase orders issued to Sheng. Filing 123 at 6–7. However, as Sheng has pointed out, the audit summary is inadequate because it does not include Ektelon Racquets or address all post-2016 activity. See Filing 138-3 at 11 (showing that the audit did not consider Ektelon Racquets to be a subsidiary of Prince Global). In any event, Defendants’ attempt to block discovery by advancing arguments related to the merits of Sheng's claims is improper. Sheng is permitted to test its allegations and review Defendants’ financial records to determine why it was not paid.

Sheng has pointed to cases that show that the Prince licensees have been engaged in litigation since 2016. Filing 116 at 9.