Free Reply Brief - District Court of Delaware - Delaware

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE X : : : : : Plaintiffs, : : against : : ATP TOUR, INC., ETIENNE DE VILLIERS, : CHARLES PASARELL, GRAHAM PEARCE, : JACCO ELTINGH, PERRY ROGERS, and IGGY : JOVANOVIC, : : : Defendants. ----------------------------------- X ----------------------------------DEUTSCHER TENNIS BUND (GERMAN TENNIS FEDERATION), ROTHENBAUM SPORT GMBH, and QATAR TENNIS FEDERATION,

C.A. No. 07-178-GMS

DEFENDANTS' REPLY MEMORANDUM: MOTION IN LIMINE NO. 2 TO EXCLUDE EXPERT OPINIONS PROFFERED BY CHARLES ELSON ASHBY & GEDDES Philip Trainer, Jr. (I.D. #2788) Carolyn Hake (I.D. #3839) Tiffany Geyer Lydon (I.D. #3950) 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, Delaware 19899 (302) 654-1888 [email protected] [email protected] [email protected] Of Counsel: Bradley I. Ruskin Colin A. Underwood Jennifer R. Scullion Julie A. Tirella PROSKAUER ROSE LLP 1585 Broadway New York, NY 10036-8299 (212) 969-3000 Dated: June 2, 2008 Attorneys for Defendants

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Defendants submit this reply on their motion to exclude Charles Elson ("Elson"). ARGUMENT Plaintiffs do not ­ and cannot ­ dispute that Elson is not permitted to testify to the law of fiduciary duty. Yet even a cursory examination of Elson's "opinions" confirms that that is exactly what he is doing, often word for word. Ex. A (Comparing Elson statements to Plaintiffs' proposed jury instructions). Merely saying that he is not usurping the Court's role does not change the fact that he is. Nor does it obviate the recognized danger and prejudice that flows from allowing an expert to testify about the law to a jury. E.g., In re Intel Corp., 526 F. Supp. 2d 461, 466 (D. Del. 2007) ("the prohibition against allowing expert witnesses to opine on legal issues is most significant in the context of a jury trial.") The Cantor case on which Plaintiffs rely is not to the contrary. Unlike Elson, the expert in Cantor, Longstreth, did not simply relabel the law as "custom and practice." As shown in the attached, and explained in Cantor, Longstreth opined on "the process" for handling a transaction with a potentially interested director, including the specific types of investigation, discussions, and vetting. Cantor v. Perelman, 2006 WL 3462596, at *5 (D. Del. Nov. 30, 2006); Ex. B (Expert Report of Bevis Longstreth). If properly supported, such specialized knowledge could be useful to a lay jury. What is not helpful, but harmful, is to have an expert such as Elson tell a jury, in words or substance, what the law is before they are charged by the Court. The teaching of In re Walt Disney Co, 907 A.2d 693 (Del. Ch. 2005) is that ­ even in a non-jury trial ­ it does not matter whether the expert claims that the testimony is only about "custom and practice." What matters is that, in substance, the testimony is about the law and therefore must be excluded. Plaintiffs also do not dispute that Elson's report discloses zero examination of the facts in this case. Pltfs. Opp. at 4. Elson's testimony should be excluded on this basis alone.

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Incredibly, Plaintiffs try to blame Defendants for this fatal flaw in Elson's report by arguing that he would have applied his conclusory statements to the actual facts of the case in post-report testimony. Id. at n. 2 ("deposition testimony would doubtless have expanded upon the opinions of Professor Elson."). Plaintiffs only confirm their intent to try to sandbag Defendants at trial with new opinions from Elson.1 Conclusory opinions cannot be remedied after the fact in deposition, let alone at trial. See Honeywell Int'l v. Universal Avionics Sys., 347 F. Supp. 2d 129, 135 (D. Del. 2004) (Rule 26(a)(2) requires "a complete statement of all opinions the witness will express and the basis and reasons for them."). A testifying expert "must prepare a detailed and complete written report, stating the testimony the witness is expected to present during direct examination, together with the reasons therefore" such that "a party will not ordinarily be permitted to use on direct examination any expert testimony not so disclosed." Fed. R. Civ. P. 26(a)(2), Advisory Comm. Notes, 1993 ("the report, which is intended to set forth the substance of the direct examination, should be written in a manner that reflects the testimony to be given by the witness . . . .") (emphasis added). The sole case Plaintiffs cite, Kelly v. GAF Corp., 115 F.R.D. 257 (E.D. Pa. 1987), pre-dates the 1993 reforms. See Advisory Comm. Notes (1993 reforms responded to history of "sketchy and vague" reports). CONCLUSION For all the foregoing reasons, Defendants respectfully request that the Court grant their motion to exclude the opinions proffered by Charles Elson.

Plaintiffs similarly try to improperly expand their damages claims post hac by asserting that they "seek damages for . . . breaches of fiduciary duty." Pltfs. Opp. at 1. As explained in our Motion to Bifurcate and Motions in Limine Nos. 3 and 4, since the outset of the case, Plaintiffs have specifically limited damages being sought to alleged damage to the Hamburg tournament due to Defendants' alleged antitrust and tortious interference claims. D.I. 50 at 48-50 (Prayer for Relief A and B). Plaintiffs cannot, just before trial, expand or change their damages theories.

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ASHBY & GEDDES /s/ Tiffany Geyer Lydon ________________________ Philip Trainer, Jr. (I.D. #2788) Carolyn S. Hake (I.D. #3839) Tiffany Geyer Lydon (I.D. #3950) 500 Delaware Avenue, 8th Floor P.O. Box 1150 Wilmington, Delaware 19899 (302) 654-1888 [email protected] [email protected] [email protected] Attorneys for Defendants Of Counsel: Bradley I. Ruskin Colin A. Underwood Jennifer R. Scullion Julie A. Tirella PROSKAUER ROSE LLP 1585 Broadway New York, NY 10036-8299 (212) 969-3000 Dated: June 2, 2008

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EXHIBIT A

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Elson's Opinion (relevant part) Opinion 2: It is generally accepted custom and practice for the directors of a corporation to act in accordance with the corporation's governing documents, corporate tax status and enumerated purpose. Opinion 3: It is generally accepted custom and practice for the directors of a corporation to not place their personal interests, . . . ahead of those of the non-profit corporation and its members. Stated another way, directors act, as a matter of general custom and practice, in a manner that is unselfish and that is intended to benefit the enterprise and its members . . . . Opinion 4: It is generally accepted custom and practice for the directors of a corporation to be fully informed as to facts that are material to their oversight of the operation and management of the corporation. Opinion 6: It is generally accepted custom and practice for directors of a corporation to act in accordance with applicable law and to avoid knowing violations of law.

Plaintiffs' Jury Instruction (relevant part)1 Jury Instruction 52: The duty of loyalty also required that the ATP Director Defendants not violate the laws the ATP is obliged to obey, including tax laws, competition laws, and laws relating to the ATP's corporate status. Jury Instruction 52: The duty of loyalty means essentially that . . . the ATP Director Defendants may not put their own personal interests ahead of those of ATP Tour, Inc. or its members . . . . The ATP Director Defendants were required . . . to exercise the utmost good faith in furthering the interests of ATP Tour, Inc. and its members and conserving its property. Jury Instruction 53: This duty includes a duty of the ATP Director Defendants to inform themselves of all material information, . . . reasonably available to them prior to making a business decision. Jury Instruction 52: The duty of loyalty also required that the ATP Director Defendants not violate the laws the ATP is obliged to obey, including tax laws, competition laws, and laws relating to the ATP's corporate status. Jury Instruction 54: Two types of conduct constitute a breach of the duty of good faith: . . . (2) . . . for example, a fiduciary acts with the intent to violate applicable positive law.

Opinion 7: Where a director has a personal business or financial interest in a decision being contemplated by the Board of Directors, it is generally accepted custom and practice for that director to fully disclose such interest to the Board of Directors . . .
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Jury Instruction 56: [T]he ATP Director Defendants must not have an undisclosed personal financial interest in the transaction that is the subject of the directors' or officers' business judgment[.]

Defendants cite Plaintiffs' Proposed Jury Instructions only to show that Elson's proffered opinions parallel those instructions. Defendants maintain their objection to charging the jury on any fiduciary duty claims given that (a) they are traditionally equitable in nature and (b) Plaintiffs have not sought any damages with respect to those claims. Defendants also maintain each of their objections to Plaintiffs' Proposed Jury Instructions.

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EXHIBIT B

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