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 TESLA FROM REFERRING TO "LOST" OR "STOLEN"PROPERTY -DOCKET ITEM NO. 142

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....................................................................................................... 2 IV. Argument ................................................................................................................................ 2 V. Conclusion .............................................................................................................................. 4

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TABLE OF AUTHORITIES

Cases ABB Air Pre-heater Inc. v. Regenerative Environmental Equipment Co., 167 F.R.D. 668, 673 (D. N.J. 1996)..................................................................................................3 Poulis v. State Farm Fire & Cas. Co., 747 F. 2d 863 (3rd Cir. 1984)..................................4

Tracinda Corp v. DaimlerChrysler AG, 362 F. Supp. 2d 487 (D. Del. 2005)........................4 See, United States v. Gonzales-Benitez, 537 F.2d 1051, 1053 (9th Cir. 1976)........................4 Rules Fed. R. of Civ. Pro. 37(c)(1).................................................................................3 Fed. R. of Evid. 1002............................................................................................. 4

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This Memorandum is submitted by Plaintiff, Tesla Industries Inc. ("Tesla"), in opposition to Defendants Waldmann's "Motion in Preclude Tesla from Referring to `Lost' or `Stolen' Property" (DI 141). As it is the fourth of four such motions, it will be referred to herein as "Waldmann MIL 4".

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 4 to preclude ant reference to "Lost" or "Stolen" property. This is Tesla's response in opposition.

II.

SUMMARY OF ARGUMENT

Waldmann MIL 4 is in effect, a motion seeking summary judgment on the Theft of Trade Secrets" and "Conversion" counts as a discovery sanction. Waldmann would have this Court bar Tesla from any reference to the theft of its property, even though the allegations of theft are sworn to in the Verified Complaint, in the Affidavits attached to the Verified Complaint, have been addressed in the depositions of the parties at length, and form the basis of the action. Waldmann tries to raise a discovery dispute for the first time in this Motion and seek a deathsentence sanction. Moreover, he provides no case citations from this Court, any Delaware Court, or any court in the Third Circuit to support the broad relief he seeks. The very exhibits to the Verified Complaint support the theft allegations it contains. Waldmann MIL 4 shows that there is direct testimony verifying the thefts. Waldmann's remedy at trial is cross-examination, not a Motion in Limine unsupported by any facts or case law.

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III.

COUNTERSTATEMENT OF FACTS

The Verified Complaint in this case is a voluminous pleading with attached affidavits and exhibits (A-I) chronicling the systematic transfer of Tesla's confidential information and Trade Secrets to Defendants. The affidavits and exhibits establish that items were, in fact, removed from Tesla's premises. Since the Complaint was filed and served, the parties have engaged in months of discovery, taken and defended numerous depositions, and exchanged thousands of pages of documents, and the issues of "theft" underlie all that activity. As even Waldmann MIL 4 acknowledges at pages 2 and 3, there is evidence of "theft" as testified to by Mr. David Masilotti, President of Tesla. In addition, there is testimony by other witnesses confirming the theft. As a result, the representation that "there was no such theft" on page 5 of Waldmann MIL 4 is contrary to other evidence and is nothing more than an aspirational statement of what Defendant Waldmann hopes he can prove at trial.

IV.

ARGUMENT

In the Motion, Defendant Waldmann seeks to bar any reference to "theft", "stolen property", "missing sales inventory". Waldmann MIL 4, page 5. As the basis for this incredibly broad relief, Waldmann asserts that Tesla failed to supplement in response to a catch-all discovery request by another party for "any documents that support the allegations set forth in your Verified complaint... not disclosed in response in response to the Previous Requests for Production."1

The fact that at least three of Waldmann's four Motions in Limine are complaints concerning responses to the NMT Defendants' discovery leads to the suspicion that Waldmann's Motions are an attempt to avoid the numerical limitation on the number of such Motions.

1

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Waldmann asserts that there has somehow been a deficiency in Tesla's response to the catch-all document request, although he fails to identify the documents allegedly not produced. In fact, the cited portions of the deposition transcript are themselves ambiguous as to what information is being discussed and in what form. The document most clearly at issue is the "company policy on checking out equipment". See Exhibit 1 to Waldmann MIL 4, pp. 229:16230:3. The documents reflecting that company policy, and Defendant Waldmann's signed Agreement of Non-Disclosure to abide by it, are made part of the Complaint as Exhibit "C". Importantly, Court held discovery conferences in this case on October 20, 2006 and on January 18, 2007 to address the various cross-complaints regarding alleged discovery defects. The January 18, 2007 conference was held well past the November 30, 2006 fact discovery cutoff. In neither conference did any Defendant raise any concern about the alleged absence of the document that Waldmann asserts is so crucial as to now justify the relief he seeks. Copies of the transcripts of the conferences are attached as Exhibit "1" and "2". Moreover, there is no evidence of any violation of any discovery rules and Defendant Waldmann fails to allege that he filed a Motion to Compel relating to such alleged violation. This is clearly an instance of a party who, having laid back and done nothing on discovery, now finds it convenient to raise his technical complaint in a Motion in Limine. It is telling that Waldmann MIL 4 cites no decisions supporting Defendant's supposition that the broad sanction he seeks is justified under Fed. R. of Civ. Pro. 37(c)(1). Such relief is inconsistent with the ample decisional law after the seminal decision in Poulis v. State Farm Fire & Cas. Co., 747 F. 2d 863 (3rd Cir. 1984), which mandates a deliberate analysis of specific factors as part of a consideration of sanctions. Further, Defendant Waldmann's attempted

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reliance on Fed. R.of Evid. 1002 is misplaced. That "best evidence" rule clearly is designed to prevent, in most instances, a party from testifying about the contents of a document unless he has made the document itself available. See, Tracinda Corp v. DaimlerChrysler AG, 362 F. Supp. 2d 487 (D. Del. 2005) ("Federal Rule of Evidence 1002 provides that `to prove the content of a writing, recording or photograph the original writing, recording or photograph is required, except as otherwise provided in these rules or by Act of Congress'"). That is not the case at bar. Waldmann attempts to turn the Rule on its head and argue in effect that if there is no document showing "theft" then no evidence of theft can be presented.2 In this case, it is proof of theft, not the contents of a document, which are at issue. See, United States v. Gonzales-Benitez, 537 F.2d 1051, 1053 (9th Cir. 1976) (holding that best evidence rule did not preclude use of witness testimony concerning the substance of a conversation despite existence of a recording of the conversation). Courts in the this Circuit have noted an "aversion, absent extreme circumstances, to the exclusion of crucial evidence." ABB Air Pre-heater Inc., 167 F.R.D. 668, 673 (D. N.J. 1996); see also In Re Paoli Railroad Yard PCB Litigation, 35 F.3d 717, 792-793 (3d Cir. 1994) (overturning district court's decision to exclude expert testimony where prejudice was "extremely minimal"), cert. denied, 513 U.S. 1190, 131 L. Ed. 2d 134, 115 S. Ct. 1253 (1995). Indeed, exclusion of evidence is a severe sanction and is therefore often inappropriate unless the failure to disclose or supplement is in bad faith or the resultant prejudice to the opposing party cannot be cured because, for example, use of the evidence is "imminent or in progress." ABB Air Preheater, Inc., supra, 167 F.R.D. at 671-72.

2

As stated above, Tesla disputes vehemently that there is no documentary evidence of theft.

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Although Waldmann MIL 4 is not well-founded, the Defendants have a remedy in the form of cross-examination at trial of the witnesses alleging that Tesla's property was stolen. The Defendant's attempt to prevent the trier of fact from even hearing such allegations is an attempt to preclude Tesla from presenting its case at trial, and is a severe sanction unsupported by fact or law.

V.

CONCLUSION

For the foregoing reasons, this Court should deny Waldmann MIL 4 in its entirety.

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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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 MEMORANDUM IN OPPOSITION TO DEFENDANT WALDMANN'S MOTION IN LIMINE TO PRECLUDE TESLA FROM REFERRING TO "LOST" OR "STOLEN" PROPERTY -DOCKET ITEM NO. 142 was caused to be served on the following via CM/ECF filing: VIA HAND DELIVERY AND VIA HAND DELIVERY AND ELECTRONIC MAIL ELECTRONIC MAIL John D. Demmy Steven J. Balick Stevens & Lee John G. Day 1105 North Market Street Ashby & Geddes 7th Floor 222 Delaware Avenue Wilmington, Delaware 19801 P.O. Box 1150 [email protected] Wilmington, Delaware 19899 [email protected] VIA ELECTRONIC MAIL John A. Adams Adam C. Gerber Susanin, Widman & Brennan, P.C. South Gulph Road, Suite 240 King of Prussia, PA 19406 [email protected] VIA ELECTRONIC MAIL 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]

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/s/ Robert Wilcox Robert D. Wilcox, Esquire (#4321) [email protected]

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