Free Pretrial Order - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03 - M - 2341 (MJW) LEGACY MANUFACTURING, LLC, Plaintiff, vs. STEVE BODEN, DANIEL W. LOYER, MVM PRODUCTS, LLC and JOHN DOES 1 THROUGH 10, Defendants.

FINAL PRETRIAL ORDER

1. DATE AND APPEARANCES November 4, 2005 at 3:00 p.m. Appearing for Plaintiff: Gregory G. Jones Andrew T. Snyder David A. Shore HOPP & SHORE, LLC 333 W. Hampden Ave., Suite 500 Englewood, Colorado 80110 303-806-8887 Appearing for Defendants: John R. Mann KENNEDY CHRISTOPHER CHILDS & FOGG, P.C. 1050 17th Street, Suite 2500 Denver, Colorado 80265 1

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(303) 825-2700 Stewart McNab CARVER KIRCHOFF SCHWARZ McNAB & BAILEY, LLC 1600 Stout Street, Suite 1700 Denver, Colorado 80202 (303) 893-1819 2. JURISDICTION Jurisdiction is predicated on 28 U.S.C. § 1331, as there is a claim arising under the laws of the United States, and on 28 U.S.C. § 1332, as there is complete diversity of citizenship between the Plaintiffs and the Defendants, and the amount in controversy, exclusive of fees and costs, exceeds the sum of Seventy-Five Thousand Dollars ($75,000.00). 3. CLAIMS AND DEFENSES Plaintiffs Plaintiff Legacy has asserted the following claims: 1. Breach of fiduciary duty (Count 1). In June of 2003, Defendants Loyer and Boden became employees and members of Legacy, and Loyer was made a Manager as well. This arrangement was advantageous to Loyer and Boden and their company, MVM, as they were out on their feet financially and knew their days were numbered as third-party middlemen for manufacturers like Legacy, with whom retailers wanted to deal directly. As employees, Loyer and Boden promised orally and in writing to be and employ loyal " Legacy personnel"to work on behalf of Legacy to develop customers and promote sales for Legacy. While the Defendants now claim there was a different relationship, the only documents actually signed by the Defendants that reflect their relationship

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with Legacy are the employment forms signed by Loyer and Boden making them employees of Legacy. As consideration for their equity membership valued at $150,000.00, Defendants transferred lists of customers to Legacy who would be developed for Legacy, agreed to update vendor agreements already in place under Legacy' name, and modify existing sales s representative agreements from MVM to Legacy. At the same time, Defendants agreed to transfer to Legacy the " World' Best Inkjet s CartridgeTM " trademark (the " trademark" or " mark" in exchange for the elimination of a past ) due accounts receivable debt of $136,987.20. This transfer was repeatedly reaffirmed orally and in writing by Defendant Loyer and included the promise to register the transfer with the United States Patent and Trademark Office. In these proceedings, Defendant Loyer, acting for himself and the other Defendants, has affirmatively sought to conceal the truth about the sale of the trademark to Legacy, and has affirmatively misrepresented the facts regarding the transfer in sworn affidavits on file with the Court. This Court has deferred until after trial a ruling on Legacy' Motion for Sanctions arising from this conduct. In this proceeding, Legacy seeks not s only sanctions but the amount of the debt forgiven for the mark as well as its market value, which Defendants have completely destroyed by their malicious and defamatory falsehoods concerning its ownership. Instead of employing and acting as " Legacy personnel," Loyer and Boden, almost immediately after their employment, began to solicit sales from Legacy' actual and potential s customers, including those transferred to Legacy, for themselves and MVM on sales trips paid for by Legacy to develop customers and sales for Legacy. Defendants went so far as to strike all references to Legacy from promotional materials distributed to customers, and actively sought to

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prevent true Legacy personnel from attending sales meetings. They actually fired one sales representative for working for Legacy. They promoted a competing entity, consisting of their wives, to sell inkjet products in competition with Legacy. And they failed and refused, despite oral and written promises to update the vendor agreements and sales representative agreements for the customer accounts transferred to Legacy. In this proceeding Legacy seeks disgorgement of the compensation paid to Defendants during the time of their employment by Legacy. Ultimately, Loyer and Boden were terminated and thereafter set out to destroy Legacy' s reputation through false and defamatory statements about Legacy, its principal, and its products. 2. Defamation (Count 2). At the time of the filing of Legacy' Verified Complaint, the full extent of Defendants' s malicious defamation of Legacy was not known. It still isn' The following is what is known. t. Most of it was revealed only in discovery: Sam' Wholesale Club (Mexico). On November 4, 2003, and orally on November 13, s 2003, Defendants portrayed Legacy as a liar in communications with Carlos Osada, the buyer for Sam' Wholesale Club (Mexico), by falsely claiming that Defendants, not Legacy, owned the s trademark. Defendant also defamed Legacy by telling Osada that Legacy was a mere " contract manufacturer" for MVM, thereby falsely and libelously implying that MVM, not Legacy, was the true owner of the molds and designs for the inkjet cartridges ordered by Osada and that Legacy merely assembled the cartridges pursuant to Defendants'instructions. Defendants knew this was absolutely false. Defendants in fact owned no inkjet cartridge molds or designs and manufactured nothing. Defendants also defamed by Legacy by accusing Legacy of supplying " misleading"information about MVM, again portraying Legacy as unethical and untrustworthy.

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As a result, Legacy lost a $509,000 sales order, as well as the goodwill it had developed for the mark throughout Mexico. Sam' Wholesale Club (U.S.). On November 5, 2003, and November 14, 2003, s Defendants defamed Legacy by written statements to buyer representatives for Sam' Wholesale s Club (U.S.) that there was a " performance" problem with Legacy' cartridges, that these s cartridges did " fit correctly"and that there was a " not problem with the ink"in the cartridges. As a result of this malicious libel, Legacy lost a $2.5 million order for Sam' Wholesale Club (U.S.) s as well as any chance of becoming a Wal-Mart vendor in the future. Costco of Canada. Legacy lost a sales order of $80,000 and likely future orders following defamatory statements by Loyer to Greg Shavey, a representative of Costco, on or about October 27, 2003, in which Loyer similarly stated falsely that MVM was the owner of the trademark. On December 10, 2003, Loyer defamed Legacy maliciously by advising another Costco buyer (Peter Clark) that Legacy' cartridges were " s end of life" products and " failed in tests" when Loyer knew that this was false and totally misleading. The only such " failure" had occurred many months earlier, was likely attributable to the print head in the machine, not the inkjet cartridge, and the individual (Steve Messmer, another Costco representative) in whose machine the

cartridge had " failed"had thereafter expressly advised Loyer in writing in August of 2003 that the cartridge " perform[ed] well." Other sales representatives. On October 25, 2003, Defendants falsely and maliciously told Brad Meyer, a sales representative who handled several Legacy customers that MVM replaced Legacy as its " contract manufacturer"for " cause"and suggested that Legacy products violated patents, used inferior ink and that Legacy did not own their own product molds. On

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December 5, 2003, Defendants again defamed Legacy by stating that Legacy attempted to " hijack"sales representatives Investors. On November 18, 2003, Defendants defamed Legacy in a communication to Robert Wax, a principal investor of MVM, by falsely and defamatorily accusing Legacy of " theft,"and calling Legacy' owners " s thieves." Each of the foregoing defamatory statements was made with actual malice in that Defendants knew at the time they made the statement that it was false or made the statement with a reckless disregard for its truth, and with common law malice in that the statement was made with ill will and an intent to injure Legacy in its business and reputation. To the extent required, Legacy requests that this Court conform the pleadings to the proof, as Defendants have had ample and timely notice of the defamation, which came to light only upon discovery in this case. See Miller v. Mutual of Omaha Ins. Co., 1976 U.S. Dist. LEXIS 12904, 4-6 (D. Kans. 1976)(courts may allow the pleadings to be amended to conform with the evidence at any time, and should freely do if the opposing party cannot show it was prejudiced); Hoffman v. Charnita, 58 F.R.D. 86, 94-95 (D. M.D. Penn. 1973)(allowing pleadings to be conformed to evidence where defendants had ample notice of claims and preparation of no new defenses would be required).Defendants in fact solicited such information from Legacy. See Defendants'First Set of Interrogatories to Plaintiff dated March 12, 2004, No. 10. And Legacy timely and explicitly advised Defendants of its defamation claims as soon as the fact of defamation became clear. See e.g. Depo. of Dan Loyer, July 8, 2004, p. 169-170; Depo. of Steve Boden, June 25, 2004, p. 454, l. 20-25; p. 455, l. 1; p. 465, l. 5-10; Depo. of Steve Boden, July 8, 2004, p. 64, l. 1-5. Defendants had ample opportunity thereafter to discover on the claims and exercised their

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prerogative to the extent they thought useful. See e.g., Depo. of Charles Duke, July 14, 2004, p.381-384. 3. Infringement, Lanham Act, 15 U.S.C. § 1114 and destruction of trademark (Counts 6, 7 and 8). As discussed above, Defendants sold the World' Best trademark to Legacy, and then s wrongfully used that trademark without permission in October 2003 and beyond, infringing Legacy' rights in the mark and, ultimately, destroyed its value by embroiling the mark in s controversy by their continuing and false claims of ownership. 4. Tortious Interference and unfair competition (Counts 2 and 3). In the summer and fall of 2003, Defendants, while working as Legacy' employees, s members and managers, wrongfully diverted actual and potential sales of products from Legacy to MVM, and wrongfully sabotaged relationships between Legacy and actual and potential customers and sales representatives. 5. Breach of Contract (Count 4). Defendants Loyer and Boden have breached their agreement to work as employees of Legacy to develop customers of Legacy, to modify sales representative agreements and vendor agreements to include Legacy' name, to transfer customer accounts from MVM to Legacy, and s to transfer ownership of the World' Best Inkjet Cartridge to Legacy with the United States s Patent and Trademark Office. 6. Relief Sought by Plaintiff. Plaintiff seeks compensatory damages as follows: (a) $136,987.20 for the destruction of the trademark; (b) disgorgement of compensation paid to, but unearned by, Defendants; (c) the

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net incremental profits associated with the following lost orders due to Defendants'defamation of Legacy and related wrongful acts: Sam' Wholesale Club (Mexico)($509,000); Sam' s s Wholesale Club (U.S.)($2,500,000); Krogers ($600,000); Wal-Mart Dept. 82 ($188,000); CVS ($500,000) and Costco of Canada ($80,000); damages in an amount to be determined at trial due to the injury and damage to Legacy' reputation and goodwill arising from Defendants' s defamation of Legacy; and exemplary damages as Defendants'defamation and related tortuous conduct was malicious. Plaintiff also seeks it attorney' fees for this action, pursuant to the s Legacy Manufacturing Operating Agreement. Plaintiff' Defenses to Defendant' counterclaims s s 1. General denial of right to relief. Plaintiff denies that Defendant MVM is

entitled to any injunctive or monetary relief in that Defendant is unable to establish facts to support its counterclaims. In May and June of 2003, Defendants expressly agreed to assign to Legacy the trademark at issue, MVM' customer accounts, sales representatives and to update all s existing vendor agreements with Legacy' name in exchange for the elimination of a substantial s past due accounts receivable, membership equity interest in Legacy, and regular salaries. Legacy also holds no property of MVM that was not purchased by Legacy or that has any value, as Defendant MVM has admitted in filing and other representations in this and other cases. 2. Unclean hands. Defendant' claims for equitable relief are barred by the s

doctrine of unclean hands. Defendant MVM has acted inequitably toward Legacy, including defaming Legacy to multiple parties, including actual and potential customers, attempting to solicit Legacy' customers for themselves, while being paid by Legacy as employees and s

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members, and using Legacy' proprietary information in chips, which Defendant falsely claims s to have exclusively designed and manufactured. 3. Contract defenses. Defendant' claim for breach of contract is barred in whole or s

in part by the failure of consideration, and in whole or in part by payments made by Legacy to Defendants. Defendant' breach of contract claim is also barred by accord and satisfaction. s Defendants were in fact overpaid for any efforts they exerted with or for Legacy. 4. Estoppel, Waiver, acquiescence and ratification.

Without more, for example, MVM's claim for "conversion" should be barred by its admission that the purportedly "converted" items are "worthless." See order dated March 2, 2005. (California pleadings, in which Defendants admit that the allegedly converted goods are " worthless,"are admissible in this proceeding to rebut MVM' claim for conversion.) s Defendants Defenses to Plaintiff' Claims: s 1. General denial of right to relief. Defendants deny that Plaintiff is entitled to

injunctive or monetary relief in that Plaintiff will be unable to establish the factual predicate necessary to establish its claims for relief. In 2003, the parties entered into a joint venture to market inkjet printer cartridges under the brand name " World's Best Inkjet CartridgeTM " . Plaintiff, a manufacturer of inkjet printer cartridges, wanted to use this brand name because it did not want its other customers to know it was competing directly against them, and wanted to use Defendant MVM Products as a front for marketing its products for this reason. At all times during their relationship, Defendants used their best efforts to market and procure sales for Plaintiff, and did not breach any fiduciary duty owed to Plaintiff arising from the joint venture.

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In the course of their relationship, however, Plaintiff attempted to appropriate MVM Products' customers and sales representatives, and to marginalize Defendants'role in the joint venture. In October 2003, the relationship ended by mutual agreement after Plaintiff attempted to demote Defendants to the role of mere commissioned sales agents rather than as equal partners in the joint venture. Upon the termination of their relationship with Plaintiff, Defendants became free to compete with Plaintiff in the open market, including soliciting the same customers and accounts to whom they had previously sold product, both prior to and during their joint venture with Plaintiff. 2. Lack of standing to sue. Plaintiff lacks standing to sue on some of its claims.

Pursuant to 15 U.S.C. § 1114(1), only the registrant of a federally registered trademark may bring a civil action for its infringement. Moreover, under 15 U.S.C. §§ 1116 and 1117, only the registrant of a federally registered trademark may seek to enjoin its alleged infringement and recover damages for its alleged infringement. See 15 U.S.C. § 1116(a) (injunctive relief allowed only " prevent a violation of any right of the registrant of a mark registered in the Patent and to Trademark Office" 15 U.S.C. § 1117(a) (affording monetary relief only to " registrant of a ); a mark registered in the Patent and Trademark Office" ). Because Defendant MVM Products,

LLC is the sole registrant of the federally registered trademark " World's Best Inkjet CartridgeTM " Plaintiff lacks standing to sue for federal trademark infringement or for unfair , competition based on Defendants' alleged use of the " World's Best Inkjet CartridgeTM " trademark. 3. Unclean hands. Plaintiff' claims for equitable relief are barred by the doctrine s Plaintiff has acted inequitably toward Defendants, including enticing and

of unclean hands.

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attempting to entice Defendant MVM Products' sales representatives away from MVM, attempting to misappropriate Defendants' patent for HP-compatible inkjet printer cartridges, using MVM' UPC numbers on its own products, and expelling Defendants Loyer and Boden as s members of Plaintiff without returning the consideration given therefore. 4. Contract defenses. Plaintiff' claim for breach of contract is barred in whole or s

in part by the failure of consideration, is also barred because Plaintiff or its agents prevented or substantially interfered with Defendants'performance of the alleged contract. Plaintiff' claim s for breach of contract is based on the Legacy Operating Agreement, to which Defendants Loyer and Boden became parties in June 2003 in consideration for their transfer of certain accounts (NEAMCO and Duckwall) to Plaintiff, and on the joint venture between Plaintiff and Defendant MVM. The breach of contract claim based on the Legacy Operating Agreement is barred for failure of consideration because Plaintiff terminated the Operating Agreement as to Defendants after receiving consideration from Defendants and without returning the consideration given for it. The breach of contract claim based on the parties'joint venture is barred for failure of consideration because Plaintiff failed to pay certain expenses of Defendants that Plaintiff initially agreed to pay, and is barred because Plaintiff substantially interfered with Defendants' performance of the contract by terminating Defendants. 5. Statute of Frauds. Plaintiff' claims for trademark infringement and unfair s

competition are barred by the federal Statute of Frauds for assignment of a federally registered trademark, 15 U.S.C. § 1060. Legacy has not produced any such written agreement for the assignment of the " World' Best Inkjet CartridgeTM " trademark. Legacy has produced no s evidence to show that it is the registrant of the trademark, or to show that there has been an

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executed, written assignment of the trademark from MVM to it, as required by 15 U.S.C. § 1060 for the assignment of a federally registered trademark to be valid and effective. See 15 U.S.C. § 1060(a)(3) (" Assignments shall be by instruments in writing duly executed" Legacy can ). show only that there were oral promises by Defendants to transfer the trademark to Legacy, which the parties intended to finalize in a written agreement at a later date, but which was never done. Legacy' claims for federal trademark infringement or for unfair competition based on s Defendants'alleged use of the " World's Best Inkjet CartridgeTM "trademark are therefore barred by the Statute of Frauds, 15 U.S.C. § 1060. 6. Defamation defenses: Qualfied Privilege and Substantial Truth. Plaintiff' s

claims for defamation are barred by the qualified privilege that attaches to statements made to those with a common interest in the subject matter, and because Defendants'statements are true or substantially true, which is an absolute defense pursuant to COLO. CONST. art. II, § 10 and COLO. REV. STAT. § 13-25-125. In its Verified Complaint, Plaintiff identified only three All of these alleged

statements attributed to Defendants and alleged to be defamatory.

statements were made to persons who shared a common interest in the subject matter with Defendants, such that Plaintiff must prove that the alleged statements were made by Defendants with either knowledge of their falsity or reckless disregard for their truth or falsity, and all of these alleged statements were true or substantially true. Any other affirmative defenses asserted in Defendants'Answer are hereby withdrawn, with the exception of the defense of failure to state a claim upon which relief may be granted, which may be raised at trial as warranted by the evidence pursuant to Fed.R.Civ.P. 12(b)(6), 12(h)(2) and 41.

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Counterclaims Against Plaintiff: Defendant MVM has asserted the following counterclaims: 1. Lanham Act, 15 U.S.C. § 1114 and 1125. MVM is the registered owner of the World' Best Inkjet Cartridge7, registered trademark. Legacy has continued to sell products s using the trademark, outside of the limited area where its use was licensed. The unauthorized use has created confusion among actual and potential customers about the origin of goods bearing the World' Best Inkjet Cartridge7, trademark. Legacy has also used MVM' trade s s dress, U.P.C. Number, sales aids and product packaging, without permission. MVM seeks

damages and injunctive relief preventing Legacy' further use of the World' Best Inkjet s s Cartridge7 trademark, and of MVM' trade dress, UPC Number, sales aids and product s packaging. 2. Breach of Contract. MVM and Legacy had a contract for the joint sales of inkjet cartridges to large retail customers. Legacy had permission to use MVM' trademarked brand s name, World' Best Inkjet CartridgeTM , for the joint sales and for certain of its own sales in s Mexico. In addition to sharing profits, Legacy agreed to pay MVM its expenses and consulting fees for its principals'marketing and engineering advise to Legacy. Legacy has breached the agreement by unlicensed use of the World' Best Inkjet Cartridge7 trademark, and by not paying s MVM amounts due. MVM seeks compensatory damages. 3. Conversion. In 2003, certain personal property belonging to MVM was sent to Legacy' manufacturing plant. s The property consists of inkjet cartridge packaging (boxes),

plastic parts for inkjet refill kits, product floor displays, plastic clamshell packaging and associated tooling, and computer chips. Legacy used some of MVM' property without paying s

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for it. Other MVM property has either been discarded or destroyed by Legacy. Legacy has refused to return any of MVM' personal property remaining in its possession. MVM seeks s compensatory damages for the value of the property and exemplary damages. 4. Tortious Interference. In the fall of 2003, Legacy contacted independant sales representatives under contract with MVM and attempted to have them terminate those contracts and enter into similar contract with Legacy. In one case a sales representative did so. Legacy also contacted MVM customers and attempted to steer them to Legacy. In at least one instance, Legacy substituted its name for MVM in proposal documents MVM had prepared. Legacy contacted the manufacturer of MVM' proprietary SmartChips and attempted to buy the chips s for itself. MVM seeks to recover compensatory and exemplary damages arising from Legacy' s conduct. 5. Unfair Competition. Beginning in late 2003, Legacy shipped products using MVM' s World' Best Inkjet CartridgeTM trademark, MVM' trade dress and MVM' UPC code. s s s Coupled with calls to MVM' independent sales representatives and some of its customers that s MVM was no longer in business or could not provide certain products, created confusion about the origin of inkjet refill kits and cartridges. exemplary damages. 6. Declaratory Judgment. To the extent that it is not established by the resolution of the other claims and counterclaims, MVM seeks a declaratory judgment confirming its rights in the World' Best Inkjet CartridgeTM trademark and a ordering that Legacy is not entitled to use s MVM' UPC code, MVM' trade dress or MVM' proprietary technology. s s s MVM seeks to recover compensatory and

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Defendant MVM Products hereby withdraws its counterclaim for misappropriation of trade secrets and no longer asserts this claim. 4. STIPULATIONS

5. PENDING MOTIONS No motions by Plaintiff are pending, although by Court Order dated March 2, 2005, Plaintiff' motion for Rule 11 sanctions against Defendants has been deferred until after trial. s No motions by Defendants are currently pending. Defendants reserve the right to renew their Motion to Strike Plaintiff' experts at trial. s 6. WITNESSES a. Non-expert witnesses (1) 1. Plaintiff ­Will Call Charles Duke 518 17th Street, Suite 1630 Denver, CO 80202

Mr. Duke is President of Plaintiff and will testify to as to all facts and matters in dispute concerning Plaintiff' claims and defenses, including damages, and Defendants' defenses and s counterclaims. Mr. Duke will testify in person. 2. Ben Lyles 122 West Stern Pkwy Littleton, Co 80120

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Mr. Lyles is a former employee of Plaintiff and will be called concerning the falsity of Defendants'statements regarding Legacy' products, as well as any other matters within his s knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Lyles will testify in person. 3. Manual Mimiaga 1803 W. Monte Vista Way Nogales, AZ 85628

Mr. Mimiaga is an employee of Plaintiff and will be called concerning Plaintiff' s relationship with Defendants, lost sales caused by the conduct of Defendants, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Mimiaga will testify in person.

2) Plaintiff may call 1. Dan Loyer MVM Products, LLC 940 Calle Amanecer, Suite K San Clemente, CA 92673

Mr. Loyer is a Defendant and will testify as to all facts and matters in dispute concerning Plaintiff' claims, and Defendants'defenses and counterclaims. Mr. Loyer will testify in person. s In addition, portions of his deposition may be read into the evidence pursuant to Fed.R.Civ.P. 32. 2. Steve Boden MVM Products, LLC 940 Calle Amanecer, Suite K San Clemente, CA 92673

Mr. Boden is a Defendant and may testify as to all facts and matters in dispute

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concerning Plaintiff' claims, and Defendants' defenses and counterclaims. s

Mr. Boden will

testify in person. In addition, portions of his deposition may be read into the evidence pursuant to Fed.R.Civ.P. 32. 3. Robert Baydo, Formulabs 529 W. 4th Ave. Escondido, CA, 92025.

Mr. Baydo may testify regarding Legacy's standing and reputation in the compatible inkjet cartridge industry and the quality of the ink used in Legacy's cartridges, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Baydo will testify in person. 4. Charles LeCompte Lyra Research 320 Nevada Street, Newtonville, MA, 02460-9143 inkjet

Mr. LeCompte may testify regarding Legacy's standing and reputation in the

cartridge industry; the state of the market for inkjet cartridges in 2003 and the requirements for success in such a market, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. LeCompte will testify in person. 5. Al Lucas Spring, Texas, 77391

Mr. Lucas may testify regarding Legacy's standing and reputation in the inkjet cartridge industry and the quality of Legacy's cartridges, as well as any other matters within his

knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Lucas will testify in person.

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6.

Brian Addy 7887 E. Belleview Ave. Englewood, CO 80111

Mr. Addy may testify regarding Defendants' relationship with Legacy, Defendants' representations to Legacy, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Addy will testify in person.

7.

John Brady 30220 Rancho Viejo Road, Suite E San Juan Capistrano, CA 92675

Mr. Brady is MVM' accountant who will testify as to facts regarding MVM' sale of the s s trademark at issue to Plaintiff, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. Boden will testify in person or, if unavailable, his deposition may be read into the evidence pursuant to Fed.R.Civ.P. 32. 8. C. Kimball McCusker 25150 Windy Way Drive Scottsdale, AZ 85255

Mr. McCusker is a former sales representative of MVM and Legacy may be called concerning Defendants'relationship with Legacy, defamatory statements made by Defendants, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr. McCusker will testify in person. 9. Robert Shankle 29161 Alfieri Street Laguana Niguel, CA 92677

Mr. Shankle is a former consultant for MVM. He may testify as to MVM' financial s difficulties prior to Defendants'association with Legacy, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. -1818 Mr. Shankle will

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testify in person. 10. Tom List 1228 15th Street Denver, Co 80202 He may testify as to

Mr. List previously served as legal counsel for Legacy.

communications with Defendants regarding the World' Best Inkjet Cartridge Trademark. s Mr.List will testify in person. 11. Carlos Asada Mexico City, Mexico

Mr. Asada is a representative of Sam'Wholesale Club (Mexico). He may testify as to false and defamatory statements made by Defendants and the order for inkjet cartridges which was ultimately withheld from Legacy. 12. Mr. Asada will testify in person.

Thomas A. Kennon TAK Marketing 5435 Horsebarn Lane Rogers, AR 72758

Mr. Kennon may testify as to false and defamatory statements made by Defendants. Mr. Kennon will testify in person, if unavailable, his deposition may be read into the evidence pursuant to Fed.R.Civ.P. 32. 13. Golnar Fozi 462 Stevens Ave., Suite 201 Solana Beach, CA 92075

Ms. Fozi has knowledge and may testify regarding the settlement negotiations between Epoch and MVM in Epoch' suit for payment in California. Among other facts, s she has knowledge regarding the lack of settlement value of the parts allegedly converted

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by Legacy as claimed by Defendant Loyer in his affidavit in this Court dated August 2, 2004. 14. (2) 1. Plaintiffs may also call any of Defendants'additional witnesses. Defendants - Will Call Dan Loyer MVM Products, LLC 940 Calle Amanecer, Suite K San Clemente, CA 92673

Mr. Loyer is a Defendant and will testify as to all facts and matters in dispute concerning Plaintiff' claims, and Defendants'defenses and counterclaims. Mr. Loyer will testify in person. s 2. Thomas A. Kennon TAK Marketing 5435 Horsebarn Lane Rogers, AR 72758

Mr. Kennon is an agent of Defendant MVM and a sales representative for MVM with respect to Wal-Mart Stores and Sam' Club. He will testify concerning MVM' marketing s s efforts with Wal-Mart Stores and Sam' Club, as well as contacts he had with Plaintiff' s s president, Charles Duke, in October 2003. 3. Mr. Kennon will testify in person.

Charles Duke 4 E. Belleview Place Englewood, CO 80110

Mr. Duke is president of Plaintiff and will be called as an adverse witness to testify as to all facts and matters in dispute concerning Plaintiff' claims, and Defendants' defenses and s counterclaims. Mr. Duke will testify in person. In addition, portions of his deposition and the Fed.R.Civ.P. 30(b)(6) deposition of Legacy Manufacturing, LLC will be read into the evidence pursuant to Fed.R.Civ.P. 32.

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4.

Charles Wargin 11891 W. Stanford Place Morrison, CO 80465

Mr. Wargin is a former purchasing manager of Plaintiff and will be called as an adverse witness to testify concerning Plaintiff' relationship with the chip manufacturer 1Talon and to s matters concerning the inks used by Plaintiff in its inkjet cartridges, as well as any other matters within his knowledge relevant to the claims, defenses, and counterclaims in this case. Mr.

Wargin will testify in person, unless he is unavailable for trial, in which case his deposition will be read into evidence pursuant to Fed.R.Civ.P. 32. (2) 5. Defendants - May Call Steve Boden MVM Products, LLC 940 Calle Amanecer, Suite K San Clemente, CA 92673

Mr. Boden is a Defendant and may testify as to all facts and matters in dispute concerning Plaintiff' claims, and Defendants' defenses and counterclaims. s Boden will testify in person. 6. Gary Whittaker 1Talon 746 Rustic Lane Mountain View, CA 94040 If called, Mr.

Mr. Whittaker is a principal in 1Talon, a manufacturer of chips for inkjet printer cartridges, and may testify concerning 1Talon' business relationship with MVM Products and s lack of business relationship with Plaintiff. If called, Mr. Whittaker will testify in person.

7.

Debbie Banuelos MVM Products, LLC 940 Calle Amanecer, Suite K -2121

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San Clemente, CA 92673 Ms. Banuelos is an employee of MVM Products, LLC and may testify concenring her knowledge of facts and matters in dispute concerning Plaintiff' claims, and Defendants' s

defenses and counterclaims. If called, Ms. Banuelos will testify in person. 8. Sherry L. Snead 7028 S. Kline Way Littleton, CO 80217

Ms. Snead is an employee of Plaintiff and may be called to testify concerning information provided by Plaintiff about communications to ADP Totalsource concerning Defendants' alleged employment with Plaintiff. If called, Ms. Snead will testify in person. 9. Greg Shavey Costco 999 Lake Drive Issaquah, WA 98027

Mr. Shavey is a buyer for Costco and may testify concerning Plaintiff' and Defendants' s sales of inkjet printer cartridges to Costco, of problems with and defects in the inkjet printer cartridges manufactured by Plaintiff, and of his contact with Plaintiff' representative, Kimball s McKusker, and president, Charles Duke, in October and November 2003. If called, Mr. Shavey will testify in person. 6. Jason Zapp Costco Canada 415 West Hunt Club Road Ottawa, Ont K2E 1C5 Canada

Mr. Zapp is a buyer for Costco Canada and may testify concerning Plaintiff' and s Defendants' sales of inkjet printer cartridges to Costco Canada, and of his contact with representatives of Plaintiff and the president of Plaintiff, Charles Duke, in late 2003, early 2004. -2222

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If called, Mr. Zapp will testify in person. 7. Bob Hickey Hickey & Assoc. 3 Clarendon Ave. Brockton, MA 02301

Mr. Hickey is a sales representative for and agent of Defendant MVM Products, LLC, and may testify concerning his contact with the president of Plaintiff, Charles Duke. If called, Mr. Hickey will testify in person.

8.

Dave Rice IJR 17453 North 25th Avenue Phoenix, AZ 85023

Mr. Rice is a former employee of Formulabs and may testify concerning returns of defective ink to Plaintiff. If called, Mr. Rice will testify in person. (3) Plaintiffs: Plaintiffs may introduce the following deposition testimony 1. 2. 3. 4. Steve Boden, Deposition of June 24-25 and July 8. Dan Loyer, Deposition of July 7-9. Tom Kennon, Deposition of June 11. Steve Brady, Deposition of June 17. Deposition testimony

Defendants: Defendants will introduce the following deposition testimony into evidence at trial: 1. Charles B. Duke, Deposition of July 13-15, 2004. -2323

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2.

Fed.R.Civ.P. 30(b)(6) Deposition of Legacy Manufacturing, LLC, July 13-15, 2004. Charles Wargin, Deposition of July 12, 2004 (if unavailable for trial).

3. b.

Expert witnesses

Defendants II. Mark Pedigo, CPA/CVA GELFOND HOCHSTADT PANGBURN, P.C. 1600 Broadway, Suite 2500 Denver, Colorado 80202 (303) 831-5044

Mr. Pedigo is an expert accountant and will testify to the damages allegedly sustained by Legacy Manufacturing, LLC consistent with the opinions in his expert report. 7. EXHIBITS a. (1) Plaintiff

See attached list. Plaintiffs also include any document on Defendants'list any document needed for rebuttal. a. (2) Defendants

See attached list of Defendants' Exhibits A-1 through L-10. b. Copies of exhibits must be provided to opposing counsel no later than 30 days

before trial. The objections contemplated by Fed.R.Civ.P. 26(a)(3) shall be filed with the clerk and served by hand delivery or facsimile no later than 11 days after the exhibits are provided. 8. DISCOVERY Discovery has been completed. 9. SPECIAL ISSUES Defendants: -2424

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1.

Whether Plaintiff' claims against the " s John Doe" Defendants should be

dismissed for failure to identify or join such unknown persons as parties Defendant? 2. events? 3. Whether Plaintiff may use at trial videotaped depositions that were not taken in Whether Plaintiff' claims for injunctive relief are moot due to subsequent s

compliance with Fed.R.Civ.P. 28 and 30(b)(1)(4)? 4. Whether Plaintiff may recover attorney fees on its claim for breach of fiduciary

duty, in light of Moore v. Edwards, ___ P.3d ___ (Colo. App. No. 04CA0332, Mar. 24, 2005) and Anstine v. Alexander, ___ P.3d ___ (Colo. App. No. 03CA1037, Apr. 21, 2005)? 5. Whether Defendants are entitled to recover attorney fees pursuant to C OLO. REV.

STAT. § 7-70-111(2) as the prevailing party in Plaintiff' unsuccessful state law trademark s infringement claim and the amount of such fees? 6. Whether Plaintiff may assert claims for defamation that were never specifically

pleaded in the Complaint and on which the one-year statute of limitations has already run? See Lininger v. Knight, 226 P.2d 809, 812 (Colo. 1951); Pittman v. Larson Distrib. Co., 724 P.2d 1379, 1387 (Colo. App. 1986); Corporon v. Safeway Stores, Inc., 708 P.2d 1385, 1389 (Colo. App. 1985); Walker v. Associated Press, 417 P.2d 486, 488 (Colo. 1966); Russell v. McMillen, 685 P.2d 255, 258 (Colo. App. 1984); Dorr v. C.B. Johnson, Inc., 660 P.2d 517, 520 (Colo. App. 1983); Even v. Longmont United Hosp. Assn., 629 P.2d 1100, 1103 (Colo. App. 1981); Rickman v. Cone Mills Corp., 129 F.R.D. 181, 185-86 (D. Kan. 1989); COLO. REV. STAT. § 13-80103(1)(a). 7. Whether Plaintiff may assert claims for defamation that are not " and of

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concerning"the Plaintiff? See Stump v. Gates, 777 F. Supp. 808, 825-26 (D. Colo. 1991), aff' d, 986 F.2d 1429 (10th Cir. 1993); Dorr v. C.B. Johnson, Inc., 660 P.2d 517, 519 (Colo. App. 1983); Martin v. Weld County, 598 P.2d 532, 535 (Colo. App. 1979); Inter-State Detective Bureau, Inc. v. Denver Post, Inc., 484 P.2d 131, 133 (Colo. App. 1971). 8. Whether Plaintiff may be prevented from calling Tom List or Golnar Fozi as

witnesses at trial pursuant to Fed. R. Civ. P. 37(c)(1), in light of its failure to disclose said witnesses' identity and the subjects of discoverable information they are likely to possess?

10. EFFECT OF FINAL PRETRIAL ORDER Hereafter, this Final Pretrial Order will control the subsequent course of this action and the trial, and may not be amended except by consent of the parties and approval by the Court or by Order of the Court to prevent manifest injustice. The pleadings will be deemed merged herein. This Final Pretrial Order supersedes the Scheduling Order. In the event of ambiguity in any provision of this Final Pretrial Order, reference may be made to the records of the pretrial conference to the extent reported by stenographic notes and to the pleadings.

11. TRIAL AND ESTIMATED TRIAL TIME; FURTHER TRIAL PREPARATION PROCEEDINGS 1. Trial is to the Court beginning January 9, 2006 for five days on the issues of liability only. Situs of trial is United States District Court, District of Colorado.

2.

DATED this 4th day of November, 2005.

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BY THE COURT: s/Richard P. Matsch _________________________ Richard P. Matsch United States District Judge APPROVED:

______________________________ John R. Mann KENNEDY CHRISTOPHER CHILDS & FOGG, P.C. 1050 17th Street, Suite 2500 Denver, Colorado 80265 (303) 825-2700

______________________________ Stewart McNab CARVER KIRCHOFF SCHWARZ McNAB & BAILEY, LLC 1600 Stout Street, Suite 1700 Denver, Colorado 80202 (303) 893-1819 Attorneys for Defendants

_______________________________ Gregory G. Jones Andrew T. Snyder David A. Shore HOPP & SHORE, LLC 333 W. Hampden Ave., Suite 500 Englewood, CO 80110 Attorneys for Plaintiff

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