Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Sid Leach (#019519) Monica A. Limón-Wynn (#019174) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6372 Attorneys for Plaintiff Hypercom Corporation [email protected] [email protected] IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, vs. Omron Corporation, Defendant. No. CV 04-0400 PHX PGR HYPERCOM CORPORATION'S RESPONSE IN OPPOSITION TO OMRON CORPORATION'S MOTION IN LIMINE NO. 8 TO EXCLUDE EVIDENCE FROM THE ITC ADMINISTRATIVE ACTION

Hypercom Corporation submits this Response in Opposition to Omron Corporation's Motion in Limine No. 8 To Exclude Evidence from the ITC Administrative Action. This Motion should be denied for multiple reasons. First, the relief Omron seeks is essentially the dismissal of Hypercom's claims and should therefore have been sought in a motion for summary judgment, not through this motion in limine. Second, the doctrine of collateral estoppel cannot apply to a dismissal ruling made "without prejudice." Third, the investigation that Verve LLC commenced in the International Trade Commission ("ITC") against Hypercom and other respondents terminated in Hypercom's favor and thus is the proper subject of Hypercom's malicious prosecution claim. This Response is supported by the following Memorandum of Points and Authorities and the Court's entire file in this case.

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MEMORANDUM OF POINTS AND AUTHORITIES OMRON'S MOTION IS NOT A PROPER MOTION IN LIMINE BECAUSE IT SEEKS A SUMMARY JUDGMENT RULING IN ITS FAVOR ON HYPERCOM'S CLAIMS In its Motion in Limine No. 8, Omron seeks summary judgment in its favor on both liability and damages with respect to Hypercom's claims for abuse of process and malicious prosecution in the ITC Action. According to Omron, it is entitled to summary judgment in its favor based upon Judge Martone's August 16, 2006 summary judgment ruling in Verve L.L.C. v. Hypercom Corp., No. CV-05-0365-PHX-FJM. Omron argues that Judge Martone's ruling should be given collateral estoppel effect in this litigation. But Omron's so-called "Motion in Limine" must be denied because it is nothing but a disguised motion for summary judgment and the time for filing such a motion has long since passed. This Court's November 21, 2005 Scheduling Order (doc. 76) provided that dispositive motions had to be filed no later than July 15, 2006. That deadline was subsequently extended to July 24, 2006 by this Court's Order entered July 5, 2006 (doc. 131). Omron's Motion in Limine No. 8, filed April 13, 2007, is obviously untimely when viewed as what it actually is, a dispositive motion.1 Federal case law makes clear that a party cannot use a motion in limine either as a substitute for a summary judgment motion or as a vehicle for resolving substantive issues, as Omron attempts to do here. For example, as the district court in Natural Resources Defense Council v. Rodgers, 2005 WL 1388671 *1 n.2 (E.D. Cal. June 9, 2005) explained, motions in limine address evidentiary, not substantive issues : Motions in limine address evidentiary questions and are inappropriate devices for resolving substantive issues. See 75 AM.JUR.2D Trials §99 (2004) (explaining that motions in

That the summary judgment ruling and the trial in Verve v. Hypercom occurred after that deadline is of no moment, for Omron could have asked the Court for leave to file an untimely summary judgment motion raising the issue of the collateral estoppel effect of the judgment in the other case. Omron chose not to do so, however, but simply (and improperly) disguised a motion for summary judgment as a motion in limine.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 limine are improper vehicles to raise motions for summary judgment or motions to dismiss because "[m]otions in limine are not to be used as a sweeping means of testing issues of law," Provident Life & Accident Ins. Co. v. Adie, 176 F.R.D. 246, 250 (D. Mich. 1997) (motion in limine cannot be used as a substitute for summary judgment)). (emphasis added). In Liquid Dynamics Corp. v. Vaughan Co., Inc., 2004 WL 2260626 (N.D. Ill. Oct. 1, 2004), the district court denied a motion in limine that sought to bar any testimony relating to the plaintiff's claim of willful patent infringement. "[Defendant's] motion is an inappropriate attempt to limit the scope of trial issues in a manner more appropriately raised in a motion for summary judgment. The motion in limine to exclude evidence of willfulness must be denied." Id. at *10. The district court in Pivot Point Int'l, Inc. v. Charlene Products, Inc., 1996 WL 284940 *4 (N.D. Ill. May 23, 1996), similarly denied a motion in limine seeking to exclude evidence of damages because "[a] motion in limine is not a substitute for a motion for summary judgment." See also Figgins v. Advance America Cash Advance Centers of Mich., Inc., ___ F. Supp. 2d ___, 2007 WL 1017273 *7 (E.D. Mich. March 27, 2007) (denying part of motion in limine on punitive damages that should have been raised as a motion for summary judgment). The principle that a motion in limine should not be used as a substitute for a summary judgment motion or as a vehicle for resolving substantive issues flows naturally from the purpose for which motions in limine are properly put. "A motion in limine is `[a] pretrial request that certain inadmissible evidence not be referred to or offered at trial.' Black's Law Dictionary, 1038 (8th Ed. 2004)." Pinal Creek Group v. Newmont Mining Corp., 2006 WL 1766494 *1 (D. Ariz. June 26, 2006). Motions in limine typically involve matters sought to be excluded from the jury's consideration because of the possibility of prejudice. "The primary purpose of a motion in limine is to prevent prejudice at trial." Hess v. Inland Asphalt Co., 1990 WL 51164 *1 (E.D. Wash. Feb. 20, 1990). See also Provident, supra. As the Liquid Dynamics court noted, "[e]vidence is excluded on a motion in limine only if the evidence is clearly inadmissible for any
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purpose. Motions in limine are disfavored; admissibility questions should be ruled on as they arise at trial." 2004 WL 2260626 at *1. See also Hess, supra (motions in limine are disfavored because "[i]n many instances, prior to trial, the court has no way of knowing (1) whether any or all of the challenged evidence will be offered at trial, (2) if so, for what purpose or purposes, (3) whether, if offered, some or all of such evidence might be admissible for one or more purposes and (4) if admissible, whether its probative value might be outweighed by prejudicial effect"). Through the filing of a motion styled as "Motion in Limine No. 8," Omron actually seeks both a ruling on a substantive issue of law (whether collateral estoppel applies to various issues) and relief (a ruling on both liability and damages as to other of Hypercom's claims) that should have been requested by means of a motion for summary judgment. Omron's Motion in Limine No. 8 is therefore an improper motion in limine and should be summarily denied. II. COLLATERAL ESTOPPEL CANNOT APPLY TO JUDGE MARTONE'S "WITHOUT PREJUDICE" RULING Omron asks the Court, based on Judge Martone's summary judgment ruling, to essentially grant summary judgment in favor of Omron on both liability and damages with

17 respect to Hypercom's claims for abuse of process and malicious prosecution in the ITC 18 Action. But Judge Martone's Order stated that he was "GRANTING Verve's motion to 19 dismiss count II [malicious prosecution] as to the Texas and ITC actions without 20 prejudice." 8/16/06 Order in Verve v. Hypercom at p. 13 (doc. 167-2 at p. 14 of 14 in this 21 case) (emphasis added). Because Judge Martone dismissed those claims "without 22 23 collateral estoppel is inapplicable. Therefore, Hypercom cannot be precluded from 24 25 As the Ninth Circuit counseled in Frankfort Digital Servs., in order for collateral 26 27 28 See also 8/16/06 Order in Verve v. Hypercom at p. 8 (doc. 167-2 at p. 9 of 14 in this case). 3 Regardless of the doctrine of collateral estoppel, Hypercom does not contend in this suit that its abuse of process claim could lie as to the ITC Action.
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prejudice" to Hypercom's right to reassert the claims in another action,2 the doctrine of

pursuing its malicious prosecution claims as to the ITC Action.3

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estoppel to apply, one requirement is that "the first proceeding ended with a final judgment on the merits." 477 F.3d at 1122 (emphasis added). A judgment dismissing a claim "without prejudice" is most certainly not a judgment "on the merits." After all, "an `adjudication upon the merits' is the opposite of a `dismissal without prejudice.'" Lambert v. Blodgett, 393 F.3d 943, 966 (9th Cir. 2004), quoting Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 505 (2001); see also Rule 41(a)(1), Fed.R.Civ.P. Thus, the Court in Scholastic Entertainment, Inc. v. Fox Entertainment Group, Inc., 336 F.3d 982, 989 n.4 (9th Cir. 2003), noted that "collateral estoppel does not apply to claims which are not litigated or decided on the merits." (emphasis added). See also Samadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1159 (9th Cir. 2002); Restatement (Second) of Judgments § 27, Comment n ("[i]f, however, a judgment of dismissal is wholly without prejudice, then it has no conclusive effect between the parties in a subsequent action on the same or a different claim"). The only authority Omron cites for its illogical notion that the dismissal of a claim "without prejudice" can have a preclusive effect is Offshore Sportswear, Inc. v. California Shirt Printer, Inc., 114 F.3d 848 (9th Cir. 1997), a case involving issue preclusion in the very specific context of a contractual forum selection clause. "We hold that an order dismissing an action to enforce a forum selection clause is preclusive on the issue of the applicability, and the enforceability, of the clause when the issues and the parties remain the same. Accordingly, Offshore may not relitigate these issues even though the dismissal of the prior action was `without prejudice.'" Id. at 849. Patently, this case does not involve either the applicability or the enforceability of a forum selection clause. It follows that Judge Martone's "without prejudice" dismissal of Hypercom's malicious prosecution claim concerning the ITC Action cannot have collateral estoppel effect in this lawsuit. III. THE ITC ACTION HAS TERMINATED IN FAVOR OF HYPERCOM A careful consideration of the ITC rules, practice and procedure, as well as the procedural history of the ITC Action, all of which is discussed in detail below, will demonstrate that the investigation instituted against Hypercom and the other respondents
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has been terminated in Hypercom's favor. Any right to appeal the termination of the investigation that Verve may have had has expired. The sanctions proceedings that are still pending are collateral proceedings that began as a result of a show cause order issued by the administrative law judge, and the sanctions proceedings have no effect on the final termination of the underlying investigation. A. ITC Procedure in a Section 337 Investigation

In this case, we have referred to the proceedings before the International Trade Commission as the "ITC Action." However, the ITC uses the term "investigation" to refer to its proceedings under section 337 of the Tariff Act of 1930. The statutory authority for the agency proceedings is codified in 19 U.S.C. § 1337. Under section 337, the importation into the United States of articles that infringe a valid and enforceable United States patent is declared to be "unlawful." 19 U.S.C. § 1337(a)(1)(B). The statute provides that "[t]he Commission shall investigate any alleged violation of this section on complaint under oath . . . . ." 19 U.S.C. § 1337(b)(1). The statute provides that the Commission "shall determine, with respect to each investigation conducted by it under this section, whether or not there is a violation of this section." 19 U.S.C. § 1337(c). In short, the key features of ITC practice and procedure that are relevant here are that the Commission conducts an "investigation," and is required to make a "determination." Therefore, the final agency action in a section 337 proceeding is a "determination" of whether or not there was a violation. The Commission delegates to administrative law judges the initial task of presiding over an investigation, supervising discovery, holding a hearing, and making an initial determination. Here, the administrative law judge's Order No. 49 was the "initial determination." (See ITC Order No. 49: Initial Determination Granting Complainant Verve's Motion to Withdraw the Complaint dated June 8, 2005, and previously filed with this Court as Exhibit 43 to Hypercom's Statement of Facts in Opposition to Omron's MSJ (doc #85) referred to hereinafter as "ITC Order No. 49".) Verve moved to terminate the investigation pursuant to ITC Rule 210.21(a), which
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provides that "[a]ny party may move at any time prior to issuance of an initial determination on violation of section 337 of the Tariff Act of 1930 for an order to terminate an investigation in whole or in part as to any of the respondents, on the basis of withdrawal of the complaint...". 19 C.F.R. § 210.21(a). Verve's motion was granted on June 8, 2005, in Order No. 49. (See ITC Order No. 49.) In this instance, the ALJ's initial determination was filed pursuant to ITC Rule 210.42(c), which provides that an administrative law judge is to grant a motion for termination pursuant to Rule 210.21 (which was the type of motion that Verve filed) by issuing an initial determination. 19 C.F.R. § 210.42(c). The agency procedure for making a final "determination" is summarized in the last paragraph of the ALJ's Order No. 49. (See ITC Order No. 49 at 5.) "An initial determination [by an administrative law judge] filed pursuant to § 210.42(c) shall become the determination of the Commission 30 days after the date of service of the initial determination," unless the Commission orders a review of the initial determination. 19 C.F.R. § 210.42(h)(3). In the event that a violation of section 337 is found, the ITC may grant an order to exclude from entry into the United States the imported articles at issue. 19 U.S.C. § 1337(d)(1). In this instance, there no longer is pending any investigation in which any exclusion order could be granted against Hypercom. The investigation has been terminated, and the time for appeal has expired. B. The ITC Investigation Terminated In Hypercom's Favor on July 8, 2005

The ALJ's initial determination granting Verve's motion to terminate the investigation was served on June 8, 2005. (ITC Order No. 49.) Under the ITC rules and 23 procedure, that initial determination became "the determination of the Commission" 30 24 days after June 8, 2005 barring a decision by the Commission that it would review the 25 initial determination. 19 C.F.R. § 210.42(h)(3). The time to file a review expired 30 days 26 later on July 8, 2005. The Commission did not review the initial determination. Instead, 27 the Commission issued a notice stating that the Commission would not review the initial 28
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determination. (See ITC Notice of Commission Decision Not to Review Order and Initial Determination Terminating Investigation dated July 8, 2005, attached hereto as Exhibit 1.) Therefore, ITC Order No. 49 terminating the investigation became the statutory "determination" by the International Trade Commission on the complaint that Verve filed under section 337. The ITC published a notice in the Federal Register of the termination of this investigation. The published notice was entitled "Notice of Commission Decision Not To Review an Order and an Initial Determination Terminating the Investigation Based on Withdrawal of the Complaint." 70 Fed. Reg. 40730 (July 14, 2005). The ITC is not required to publish a notice in the Federal Register except for "each Commission order that terminates an investigation in its entirety." 19 C.F.R. § 210.41 (emphasis added). In a brief that Verve filed in the ITC investigation in response to the show cause order, Verve acknowledged that Verve's motion to terminate the investigation was a motion to "terminate the investigation in its entirety." (See Excerpts from Verve's Reply to Staff's Joint Response to Respondents' Motions for Sanctions and Order to Show Cause dated April 1, 2005, attached hereto as Exhibit 2 at p. 5.) The International Trade Commission's web site indicates that the section 337 investigation against Hypercom was terminated on July 8, 2005. (See Printout of OUII 337 Investigative History, attached hereto as Exhibit 3.) C. The Sanctions Proceedings Is A Collateral Proceeding Involving Different Parties And Which Does Not Involve Any Claim For Relief Against Hypercom Or In Favor Of Hypercom

The investigation involving a section 337 claim against Hypercom was initiated when Verve filed a complaint with the ITC. That investigation and all claims against Hypercom were terminated on July 8, 2005, which was 30 days after service of the ALJ's initial determination in Order No. 49. The Commission did not review the initial determination, and it therefore became the "determination" of the International Trade Commission on the claims asserted against Hypercom. It was a favorable termination for Hypercom. The time for filing an appeal expired 60 days after July 8, 2005.
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The sanctions order issued by the ALJ in the ITC case was a separate proceeding initiated by the ALJ's sua sponte order to show cause in Order No. 40. See Precision Speciality Metals, Inc. v. United States, 315 F.3d 1346, 1353 (Fed. Cir. 2003) (sanction imposed by the Court of International Trade "was the completion and end of the procedure that the order to show cause had initiated."). The sanctions proceeding involved different parties. The sanctions proceeding included the SGF law firm, Raymond Galasso, and Kevin Imes ­ none of whom were parties to the section 337 investigation. The sanctions proceeding does not involve any relief that can be granted in favor of Hypercom; the sanctions ordered by the ALJ were payable to the International Trade Commission. (See ITC Order No. 48: Imposing Sanctions, Jointly and Severally, on Complainant Verve; Simon, Galasso and Frantz; and Raymond Galasso and Kevin Imes dated June 7, 2005, previously filed with this Court (doc. 61), and re-filed with the Court as Exhibit A to doc #169 (referred to hereinafter as "ITC Order No. 48") at pp. 2 and 33.) The sanctions proceeding does not involve any relief that can be granted against Hypercom either. In fact, respondents technically are not parties to the sanctions proceeding. The respondents' participation in the sanctions proceedings at this point is optional, and some of the respondents have ceased to participate. A sanctions proceeding is a collateral proceeding that can be initiated and may proceed even after a case has been finally terminated. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-98 (1990); Moore v. Permanete Medical Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992) ("[I]t is clear that an award of attorney's fees is a collateral matter over which a court normally retains jurisdiction even after being divested of jurisdiction on the merits.") (emphasis added); Federated Mutual Insurance Co., 329 F.3d 805, 809 n.5 (11th Cir. 2003) ("We note that under Cooter & Gell v. Hartmarx Corp . . . a motion for Rule 11 sanctions involves a collateral proceeding that can be initiated and decided after the case on which it is based is finally resolved and no longer pending.") (emphasis added); Greenberg v. Sala, 822 F.2d 882, 885 (9th Cir. 1987) (voluntary dismissal of case does not deprive court of jurisdiction to consider Rule 11 sanctions); Evans v. Justice of
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the Peace Court No. 19, 652 A.2d 574, 578 (Del. 1995) ("The Justice of the Peace initiated the collateral proceeding and imposed a sanction upon Evans for the purpose of preserving the integrity of the judicial process."). In the Cooter & Gell case, the plaintiff unilaterally dismissed his complaint pursuant to Rule 41(a)(1) before sanctions were imposed, and then argued that the district court was powerless to impose sanctions thereafter. 496 U.S. at 394-95. The Supreme Court said, "It is well established that a federal court may consider collateral issues after an action is no longer pending." 496 U.S. at 395. The Court noted that motions for costs and attorneys fees "are independent proceedings supplemental to the original proceeding." Id. (internal quotation marks and citation omitted). The fact that the investigation was a separate proceeding from the pending sanctions proceeding is underscored by the fact that appellate review falls under different statutory provisions, and any appeal from the sanctions order will go to a different court of appeals. The Federal Circuit's authority to review a decision of the International Trade Commission is limited by § 1337(c), which states in relevant part that "Any person adversely affected by a final determination of the Commission under subsection (d), (e), (f), or (g) of [section 1337] may appeal such determination, within 60 days after the determination becomes final, to the United States Court of Appeals for the Federal Circuit." 19 U.S.C. §1337(c). "This language has been interpreted as requiring a `final determination decision on the merits, excluding or refusing to exclude articles from entry' under section 1337(d), (e), (f) or (g)." Amgen Inc. v United States International Trade Comm., 902 F.2d 1532, 1535 (Fed. Cir. 1990) (emphasis in original), quoting from Block v. United States International Trade Comm., 777 F.2d 1568, 1571, (Fed. Cir. 1985) (emphasis in original). The Federal Circuit has repeatedly acknowledge that it has appellate jurisdiction to consider only Commission determinations under 1337(d) (excluding articles from entry), 1337(e) (excluding articles from entry during an investigation), 1337(f) (cease and desist
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orders), or 1337(g) (default exclusion orders and general exclusion orders). For example, the Federal Circuit has held that it does not have jurisdiction to review a Commission decision on a motion filed to declassify confidential materials under a protective order: Commission determinations under subsections (d), (e), and (f) are those excluding articles from entry, excluding articles from entry during an investigation except under bond, and cease and desist orders, respectively. The Commission's refusal to declassify the confidential material, however, was not "a determination" under any of those subsections. Viscofan, S.A. v. United States International Trade Comm., 787 F.2d 544, 552 (Fed. Cir. 1986). Any appeal from the ITC determination terminating the investigation involving claims against Hypercom would have gone to the Federal Circuit. The termination of that investigation became final on July 8, 2005. The time for appeal expired 60 days after the ITC determination became final. 19 U.S.C. § 1337(c). Moreover, Verve admitted in briefs filed during the ITC investigation that because Verve filed its motion to withdraw the complaint and terminate the investigation, Verve would not be able to pursue an appeal of such termination, since termination was granted at Verve's request. (See Verve LLC's Motion to Withdraw the Complaint and Terminate the Present Investigation dated February 11, 2005, attached hereto as Exhibit 4 at 3; and Exhibit 2 at 2 n.3 ("Certainly one of the most severe sanctions a complainant can suffer is to have its suit dismissed with prejudice and be precluded from appeal to the full Commission or the Federal Circuit.").) In contrast, any future Commission determination on the pending sanctions order does not fall under the statutory provisions under which the Federal Circuit has jurisdiction. The sanctions determination falls under 19 U.S.C. § 1337(h). 19 U.S.C. § 1337(h) ("The Commission may by rule prescribe sanctions for abuse of discovery and abuse of process to the extent authorized by Rule 11 and Rule 37 of the Federal Rules of Civil Procedure."). Section 1337(c) provides that "[d]eterminations by the Commission . . . under subsection (h) of this section with respect to the imposition of sanctions for abuse of discovery or abuse of process shall also be reviewable in accordance with section 706 of Title 5." 19 U.S.C. § 1337(c). Section 706 of Title 5 is part of the statutory provisions
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originally known as the Administrative Procedure Act. That Act provided for appeals from agency actions in situations where no other route of appeal is specified. 5 U.S.C. § 703. Determinations by the Commission with respect to the imposition of sanctions fall in this category. Any appeal for a Commission determination on sanctions would not go to the Federal Circuit, but would instead go to the regional circuit court where the petitioner resides or the D.C. Circuit. 28 U.S.C. § 2343. On December 12, 2006, Verve and the ITC Commission Investigative Staff ("OUII" or "Staff") filed a joint motion to terminate the remanded ALJ's sua sponte sanction's proceedings on the basis that Verve LLC and the Staff had entered into an agreement. (See Commission Investigative Staff's and Complainant Verve LLC's Joint Motion for Termination of the Remand Proceedings dated December 12, 2006, attached hereto as Exhibit 5.) Under their agreement, among other terms, the "settlement" would be kept confidential and Verve would not concede liability, culpability, or fault. (Id.) In addition, Verve would pay only $30,000 in sanctions. (Id.) On February 6, 2007, in response to the Commission's Opinion and Order on February 28, 2006 remanding to the ALJ the determinations in his June 7, 2005 Order No. 48 of the amount of the sanctions and against whom the sanctions should be imposed, the ALJ entered ITC Order No. 63 on February 6, 2007. (See ITC Order No. 63 attached hereto as Exhibit 6.) Finding that the agreed-upon settlement would be inappropriate for a number of reasons, including that a judicially imposed sanction cannot be settlement by agreement of the parties, the ALJ rejected the proposed agreement between Verve and the Staff. (Order No. 63 at Exhibit 6.) In Order No. 63, the ALJ imposed a $30,000 sanctions upon Verve LLC, Simon, Galasso & Frantz, PLC, and Raymond Galasso to be made payable to the United States Treasury, and rejected the notion that the terms of the settlement should be kept confidential. (Id.) The ALJ also concluded that in analyzing Verve's conduct pursuant to an objectively reasonable standard, Verve, Galasso, Imes, and Simon, Galasso & Frantz, PLC did not conduct a pre-filing investigation that was reasonable under the circumstances. (Id. at 22.)
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On March 23, 2007, Verve filed a Petition for Review as to Order No. 63. The OUII submitted a response to Verve's Petition on April 4, 2007 asking that the Commission deny Verve's Petition. (Office of Unfair Import Investigation's Response to "Verve LLC's Simon, Galasso & Frantz, PLC's, and Raymond M. Galasso's Petition for Review of Order 63 Revised Sanctions [sic] Order" attached hereto as Exhibit 7.) On April 6, 2007, Hypercom filed its Response to Verve's Petition asking the Commission to decline to accept review of Order No. 63. (Respondent Hypercom Corporation's Response to Verve LLC's, Simon, Galasso & Frantz, PLC's, and Raymond M. Galasso's Petition for Review of Order 63 Revised Sanctions Order, attached hereto as Exhibit 8.) In sum, the collateral sanctions proceedings pending in the International Trade Commission will not have any impact upon Hypercom's malicious prosecution claim in this case. The ITC sanctions proceeding does not involve any relief against or in favor of Hypercom. In reality, the sanctions proceeding is between Verve, Galasso, Imes and SGF on one hand, and the Commission on the other hand. See Evans v. Justice of the Peace Court No. 19, 652 A.2d 574, 578 (Del. 1995). The section 337 investigation filed against Hypercom is over, and no further appeal can be pursued based upon the Commission determination to terminate the investigation. IV. OMRON'S CLAIM THAT HYPERCOM FAILED TO PRODUCE RELEVANT DOCUMENTS FROM THE ITC PROCEEDING HAS NO MERIT The issue of what discovery is "relevant" in this action is not new. The only facts relevant on a malicious prosecution claim are those facts that were known to Omron and Verve at the time that the lawsuits were filed. Hydranautics v. FilmTec Corp., 204 F.3d at 886 ("[T]he lack of probable cause question must be answered based upon the facts actually known to FilmTec at the time it prosecuted its patent application and infringement case ...".). Any information or evidence obtained by Omron and all events that took place after the filing of the malicious lawsuits are irrelevant to the question of probable cause. Hite v. Triton Energy Ltd., No. 99-56975, 2002 U.S. App. LEXIS 7518, 35 Fed. Appx. 434, 437 (9th Cir. April 23, 2002) ("[A]ll events subsequent to the filing of
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the allegedly malicious lawsuit . . . are irrelevant to the question of probable cause.") (unpublished); Gill v. Kostroff, 82 F. Supp. 2d 1354, 1364 (M.D. Fla. 2000) ("A determination of whether probable cause exists is based on the facts known by the defendant in the malicious prosecution action at the time the underlying action was initiated, not some later point in time."); Owens v. Carpenay, 939 F. Supp. 558, 565 (E.D. Mich. 1996) ("[T]his Court cannot indulge in hindsight, but instead must focus on Defendants' roles in the criminal prosecution of Plaintiff in light of what they knew at the time."); Martin Centers v. Dollar Markets, 99 Cal. App.2d 534, 543, 222 P.2d 136 (Cal. App. 2d Dist. 1950) ("The knowledge of facts which may justify the alleged malicious prosecution is that which is possessed at the time of its occurrence; not that which is subsequently acquired."). Verve and Omron were required to investigate the basis for the patent infringement claims against Hypercom before the lawsuits were filed, not after. View Engineering, Inc. v. Robotic Vision Systems, Inc., 208 F.3d 981, 986 (Fed. Cir. 2000) ("In bringing a claim of infringement, the patent holder, if challenged, must be prepared to demonstrate to both the court and the alleged infringer exactly why it believed before filing the claim that it had a reasonable chance of proving infringement.") (emphasis added). Filing first and investigating later is not acceptable. Burnette v. Godshall, 828 F. Supp. 1439, 1448 (N.D. Cal. 1993) ("Plaintiff's attorney chose to `file first and investigate later,' which is unacceptable."), aff'd, 72 F.3d 766 (9th Cir. 1995); Ultra-Temp Corp. v. Advanced Vacuum Systems, Inc., 194 F.R.D. 378, 382 (D. Mass. 2000) ("[I]t should be obvious that the requirement of a pre-filing investigation would be utterly meaningless if a party could file a complaint without having done the requisite investigation, do some discovery, and then file an amended complaint and thereby insulate itself from any possibility of being sanctioned for the failure to conduct a pre-filing investigation before filing the original claim."); Garr v. United States Healthcare, Inc., 22 F.3d 1274, 1279 (3d Cir. 1994) (if a reasonable inquiry has not been conducted, attorney will not be shielded from sanctions by ``the stroke of luck that the document happened to be justified''); Vista Manufacturing,
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Inc. v. Trac-4 Inc., 131 F.R.D. 134, 138 (N.D. Ind. 1990) ("A shot in the dark is a sanctionable event, even if it somehow hits the mark."); Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990) (if a lucky shot could save the signer from sanctions, the purpose of Rule 11 "to deter baseless filings" would be frustrated). Thus, evidence or information that may have been obtained by Omron after Verve filed the lawsuits is irrelevant to the issue of whether Verve had probable cause at the time the lawsuits were commenced. In this case, the assertion by Omron in its Motion in limine No. 8 that Hypercom did not produce the documents that Verve produced during discovery in the ITC investigation is false. In June 2006, Omron complained that Hypercom had not produced documents in response to certain requests contained in Omron's First Set of Requests for Production of Documents, which were request nos. 4, 11-12, and 24-30. These Requests included production of source code, software, manuals and instructions to use the software, and written opinions from Hypercom's counsel re infringement. Hypercom objected to production of documents responsive to these Omron Requests (among other Requests), on grounds that, among others, as follows: Hypercom objects to his request as seeking information that is neither relevant nor reasonably calculated to lead to the discovery of admissible evidence. Information that is relevant to the malicious prosecution claims and aiding and abetting claims pending in this case would appear to be limited to the information about Hypercom's accused products (or lack thereof) that was in the possession of Omron when the baseless lawsuits were filed against Hypercom by Verve with the aid of Omron. Omron and Verve cannot file a baseless lawsuit and then later seek discovery in an effort to justify their abuse of process. By the end of June 2006, however, Hypercom had produced thousands of pages of

24 documents to Omron. Thus, Hypercom had produced to Omron the documents that Verve 25 had produced in the ITC Action as of that time. Indeed, if Omron had disagreed and 26 believed that any deficiencies existed as to Hypercom's discovery responses, Omron 27 surely would have raised them in the oral argument that the Court conducted between the 28
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parties regarding discovery on July 18, 2006. In November 2006, however, in response to the Commission Investigative Staff's Second Request for the Production of Documents and Things, Verve produced in the ITC Action a CD containing its documents beginning with bates-label VER0010000VER0015750. Since Omron apparently concedes that it did not have any of this information when the malicious lawsuits were filed or were pending, Omron's attempt to obtain the documents after-the-fact is irrelevant. None of this information is relevant or likely to lead to the discovery of admissible evidence. None of these documents had any effect upon the revised sanctions order issued by the ALJ in the ITC sanctions proceedings. See Exhibit 6. Moreover, of the documents contained on the CD, Verve identified only certain of those documents important enough to submit to the Commission and attached them as exhibits to its Petition for Review filed on March 23, 2007. Hypercom has produced that Petition for Review (and its exhibits) to Omron. For these reasons, Omron's position that Hypercom is withholding "relevant" documents is without merit. V. OMRON DID NOT SIGN A PROTECTIVE ORDER IN THIS CASE UNTIL APRIL 2006 On March 4, 2005, Hypercom forwarded a draft stipulation and proposed form of order to counsel for both Omron and Verve for their review and approval. Hypercom had

19 been seeking documents that Omron and Verve had withheld under a claim of 20 confidentiality. No agreement was reached. Hypercom renewed its efforts to obtain a 21 stipulation to an agreed-form of protective order in March 2006. Unable to get either 22 Omron's agreement to the form or suggested changes to make it acceptable to Omron, 23 Hypercom again wrote to Omron in April 2006 seeking Omron's agreement to entry of a 24 form of protective order. Hypercom finally obtained Omron's agreement to the form on 25 April 25, 2006. 26 At the time when Omron took the Rule 30(b)(6) deposition of the Hypercom 27 corporate representative in March 2005 about which it now complains in its Motion in 28
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limine No. 8, the parties were engaged in limited discovery on the issue of whether this Court had subject matter jurisdiction over the claims asserted against Omron. (doc. #31.) Omron moved to dismiss Hypercom's Amended Complaint on grounds that the Court lacked subject matter jurisdiction because Hypercom had failed to allege an actual controversy against it. Concluding that Hypercom's claims were the product of a conspiracy between Verve and Omron to extort money from Hypercom, the Court found that an actual controversy existed and denied Omron's motion to dismiss on August 9, 2005. (doc. #62.) On November 21, 2005, the Court entered a Scheduling Order under which the parties were to complete discovery by June 15, 2006. During the seven months between entry of the Scheduling Order and the discovery deadline, Omron did not take one single fact deposition. Not one. On May 24, 2006, Omron served a Rule 30(b)(6) deposition notice upon Hypercom seeking to schedule the deposition of its corporate designee on June 28, 2006 ­ about two weeks after the close of discovery. Omron moved to extend the discovery deadline (doc #129), but because Omron failed to show good cause for such extension, the Court denied it. (doc #134.) VI. CONCLUSION For the foregoing reasons, Hypercom Corporation respectfully requests that the Court deny in its entirety Omron's Motion in Limine No. 8 to Exclude Evidence from the ITC Administrative Action. RESPECTFULLY SUBMITTED this 30th day of April, 2007. SNELL & WILMER L.L.P.

By s/ Monica A. Limón-Wynn Sid Leach Monica A. Limón-Wynn SNELL & WILMER L.L.P. One Arizona Center Phoenix, AZ 85004-2202 Attorneys for Plaintiff Hypercom Corporation

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CERTIFICATE OF SERVICE I hereby certify that on April 30, 2007, I electronically transmitted HYPERCOM CORPORATION'S RESPONSE TO OMRON CORPORATION'S MOTION IN LIMINE NO. 8 TO EXCLUDE EVIDENCE FROM THE ITC ADMINISTRATIVE ACTION to the Clerk's Office using the ECF System for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: David P. Irmscher John K. Henning, IV BAKER & DANIELS 300 N. Meridian Street, Suite 2700 Indianapolis, IN 46204 Phone: 317-237-1317 Fax: 317-237-1000 [email protected] [email protected] Attorneys for Defendant Omron Corporation A. Colin Wexler Matthew A.C. Zapf GOLDBERG KOHN BELL BLACK ROSENBLOOM & MORITZ, LTD. 55 E. Monroe Street, Ste. 3300 Chicago, IL 60603 Ph. 312-201-4000 Fax: 312-332-2196 [email protected] [email protected] Attorneys for Defendant Omron Corporation s/ Monica A. Limón-Wynn
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H. Michael Clyde Todd R. Kerr PERKINS COIE BROWN & BAIN P.A. 2901 N. Central Ave., Ste. 2000 Phoenix, AZ 85012-2788 Ph.: 602-351-8000 Fax: 602-648-7000 [email protected] [email protected] Attorneys for Defendant Omron Corporation

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