Free Answering Brief in Opposition - District Court of Delaware - Delaware

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE TESLA INDUSTRIES, INC., a Delaware Corporation, Plaintiff, v. DAVID C. WALDMANN, LYNDOL W. HOLLINGSWORTH, CHARLES MINNICK a/k/a CHUCK MINNICK, and NEW MILLENNIUM TOOLS, INC., an Oregon Corporation, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action No. 06-55-GMS

PLAINTIFF, TESLA INDUSTRIES INC.'S MEMORANDUM IN OPPOSITION TO DEFENDANTWALDMANN'S MOTION IN LIMINE TO PRECLUDE REFERENCE TO ITS PRODUCTS AS "CLASSIFIED" OR "TOP SECRET"-DOCKET ITEM NO. 141

Brian A. Sullivan (#2098) Robert D. Wilcox (#4321) Amy D. Brown (#4077) WERB & SULLIVAN 300 Delaware Avenue, 13th Floor P.O. Box 25046 Wilmington, Delaware 19899 Telephone: 302-652-1100 [email protected] Paul E. Crawford (#493) CONNOLLY BOVE LODGE & HUTZ LLP 1007 N. Orange Street P.O. Box 2207 Wilmington, Delaware 19899 Telephone: 302-888-6262 [email protected] April 19, 2007 Attorneys for Plaintiff Tesla Industries Inc.

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TABLE OF CONTENTS I. II. Nature and Stage of Proceedings ............................................................................................ 1 Summary of Argument ........................................................................................................... 1

III. Counterstatement of Facts....................................................................................................... 1 IV. Argument ................................................................................................................................ 2 V. Conclusion .............................................................................................................................. 4

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TABLE OF AUTHORITIES

Rules Fed. R. of Evid. 403.......................................................................................4

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This Memorandum is submitted by Plaintiff, Tesla Industries Inc. ("Tesla"), in opposition to Defendants Waldmann's "Motion in Limine To Preclude Tesla From Referring To Its Products As `Classified', `Top Secret' Or Any Such Other Similar Designation" (DI 141). As it is the third of four such motions, it will be referred to herein as "Waldmann MIL 3".

I.

NATURE AND STAGE OF PROCEEDINGS

The Verified Complaint for, inter alia, "Theft of Trade Secrets" and "Conversion" in this action was filed January 27, 2006. Defendant Waldmann has filed Waldmann MIL 3 to preclude ant reference to such property as being "Classified" or "Top Secret" or similarly designated. This is Tesla's response in opposition to Waldmann MIL 3.

II.

SUMMARY OF ARGUMENT

Fundamentally, the Waldmann MIL 3 motion misstates the facts as developed in the case when it states that there is no evidence that Tesla's information and products are "classified". It ignores the fact that there is deposition testimony from two witnesses on that point. As a result, the blanket prohibition Defendant Waldmann seeks is not necessary and is inappropriate.

III.

COUNTERSTATEMENT OF FACTS

The Verified Complaint in this action was filed January 27, 2006 with attached affidavits and exhibits (A-I) chronicling the systematic transfer of Tesla's confidential information and Trade Secrets to Defendants. The majority of Tesla's products, and the products at issue in this litigation, are used by the United States Department of Defense in situations where a remote power source is required for military operations. The Trade Secrets at issue relate to the uniqueness of the design, materials, construction, functionality and durability of Tesla's products. Many of those Trade Secrets are incorporated in the Tesla products used by the

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Department of Defense in classified military settings, as will be testified to at trial by, inter alia, Donald Stewart, United States Military (Ret.).

IV.

ARGUMENT

Defendant Waldmann argues in essence that the notion that Tesla's products have military sensitivity, and that the documents and other items he is accused of wrongfully removing from Tesla are confidential or classified, is a figment of Mr. Masilotti's imagination. Mr. Waldmann alleges that "Mr. Masilotti was unable to identify any product, component, or other piece of information embodying the alleged trade secrets at is issue in this case that is designated as `classified,' `top secret, or some other such similar designation". Waldmann MIL 3, page 5. The fundamental premise of Waldmann MIL 3 is manifestly false, and is directly contradicted by the testimony of both Mr. Masilotti and Mr. Stewart. In the "Expert Testimony of Donald P. Stewart" ("Expert Report") attached as Exhibit "1", Mr. Stewart states as follows: "I will discuss my concern about the sensitive military information obtained by Mr. Waldmann which was resident on his home computer. The customer file information on his personal computer is considered sensitive and confidential by the US Army and the Department of Defense". Expert Report, page 1. "Also while reviewing documents in preparation for this report, I came across a listing out of a military database called LOGSA (Logistics Report Agency), This info is confidential to government employees only. In particular it gives the requesting unit and the unit's current location which is secure and

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classified data. I was extremely surprised that Mr. Waldmann had forwarded this from a Tesla email account to his home email account which is prohibited conduct". Expert Report, page 5. "Among the documents I reviewed are those attached to the complaint which, in part, comprise spreadsheet listings containing DODDAC (sic) numbers for a particular Tesla product....This listing, that Mr. Waldmann received from Mr. Cassity, contains classified military data..." Id. It is abundantly clear that the military importance of the items at issue in this lawsuit is real and not an invention of Mr. Masilotti. Mr. Masilotti has also testified, as is noted in Waldmann MIL 3, that some of the information Plaintiff believes one or more Defendants improperly came to possess, including the list of recent and pending sales to the Department of Defense, was classified. That same sales information is described as "Tesla Industries Pending Sales and Customer Lists" in the Verified Complaint, and is alleged to have been stolen. See, Complaint, attached as Exhibit "2", paragraph 14, sub B. Mr. Stewart's deposition testimony further undermines Waldmann MIL 3. He testified that "And in my time in the government, putting a DODAAC with a supplementary address and quantities is classified information". Transcript of Deposition of Donald Paul Stewart, Exhibit 3, p. 147:17-19.

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At trial Tesla should be allowed to present evidence concerning about its products and the trade secrets they contain. It must also be able to describe accurately the type of information, including its "Pending Sales and Customer Lists" that it alleges Defendant Waldmann misappropriated. Tesla has an obligation to present that information accurately to the trier of fact, and as further protection the Defendants have the right of cross-examination. Defendant Waldmann's position that such information is inherently prejudicial and must be barred under Fed. R. Evid. 403 is unsupported by the facts of the case.

V.

CONCLUSION

For the foregoing reasons, this Court should deny Waldmann MIL 3. Respectfully submitted,

Dated: April 19, 2007

/s/ Robert D. Wilcox Robert D. Wilcox (#4321) Brian A. Sullivan (#2098) Amy D. Brown (#4077) WERB & SULLIVAN 300 Delaware Avenue, 13th Floor P.O. Box 25046 Wilmington, Delaware 19899 Telephone: 302-652-1100 Paul E. Crawford (#493) CONNOLLY BOVE LODGE & HUTZ LLP 1007 N. Orange Street P.O. Box 2207 Wilmington, Delaware 19899 Telephone: 302-888-6262 Attorneys for Plaintiff Tesla Industries Inc.

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EXHIBIT 1

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EXHIBIT 2

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EXHIBIT 3

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE TESLA INDUSTRIES, INC., a Delaware Corporation, Plaintiff, v. DAVID C. WALDMANN, LYNDOL W. HOLLINGSWORTH, CHARLES MINNICK a/k/a CHUCK MINNICK, and NEW MILLENNIUM TOOLS, INC., an Oregon Corporation, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action No. 06-55-GMS

CERTIFICATE OF SERVICE I hereby certify that on April 19, 2007, a true and correct copy of the foregoing PLAINTIFF, TESLA INDUSTRIES INC.'S MEMORANDUM IN OPPOSITION TO DEFENDANTWALDMANN'S MOTION IN LIMINE TO PRECLUDE REFERENCE TO ITS PRODUCTS AS "CLASSIFIED" OR "TOP SECRET" was caused to be served on the following via CM/ECF filing and electronic mail: John D. Demmy Stevens & Lee 1105 North Market Street 7th Floor Wilmington, Delaware 19801 [email protected] Steven J. Balick John G. Day Ashby & Geddes 222 Delaware Avenue P.O. Box 1150 Wilmington, Delaware 19899 [email protected] Louis S. Mastriani Rodney R. Sweetland, III David F. Nickel Adduci, Mastriani & Schaumberg, L.L.P. 1200 Seventeenth Street, N.W., Fifth Floor Washington, District of Columbia 20036-3006 [email protected] /s/ Robert D. Wilcox Robert D. Wilcox, Esquire (#4321)

John A. Adams Adam C. Gerber Susanin, Widman & Brennan, P.C. South Gulph Road, Suite 240 King of Prussia, PA 19406 [email protected]