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. 10 TO PREVENT HYPERCOM CORPORATION FROM PURSUING RECOVERY OF ATTORNEYS' FEES FOR PURSUIT OF CLAIMS AGAINST OMRON AND COUNTERCLAIMS IN OTHER ACTIONS

Hypercom Corporation submits this Response in Opposition to Omron Corporation's Motion in Limine No. 10 To Prevent Hypercom Corporation From Pursuing Recovery Of Attorneys' Fees For Pursuit Of Claims Against Omron And Counterclaims In Other Actions. The Motion should be denied in its entirety because this is yet another improper attempt by Omron to obtain via a motion in limine relief that can only be granted by filing a motion for summary judgment under Rule 56, Fed. R. Civ. P. Alternatively, the relief Omron seeks should be denied because it is not legally justified or is moot. This Response is supported by the following Memorandum of Points and Authorities and the Court's entire file in this matter.

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MEMORANDUM OF POINTS AND AUTHORITIES OMRON CANNOT OBTAIN THE RELIEF IT SEEKS VIA A MOTION IN LIMINE THAT REALLY IS A MOTION FOR SUMMARY JUDGMENT Omron's so-called "Motion in Limine No. 10" is in reality a motion for partial summary judgment in Omron's favor on several aspects of Hypercom's claim for

5 compensatory damages. More specifically, Omron wants the Court to enter judgment in 6 its favor ruling that Hypercom cannot recover as compensatory damages: (1) the 7 attorneys' fees Hypercom incurred in prosecuting this case, (2) the attorneys' fees 8 Hypercom incurred in the International Trade Commission ("ITC") action after February 9 11, 2005, and (3) the attorneys' fees Hypercom incurred in prosecuting its counterclaims 10 against Verve L.L.C. in Verve L.L.C. v. Hypercom Corp., No. CV-05-0365-PHX-FJM. 11 Omron argues that Hypercom is precluded from recovering those categories of damages 12 as a matter of law based on the "American rule" that each party is generally responsible 13 for its own attorneys' fees. 14 The relief Omron demands would have the same effect as entry of partial summary 15 judgment for Omron on compensatory damages because, as to the three categories of 16 damages at issue, it would preclude Hypercom from adducing evidence to support those 17 damages at trial. Without such evidence, the Court would be required to grant judgment 18 as a matter of law for Omron on those aspects of compensatory damages. 19 As Hypercom points out in response to other of Omron's supposed "motions in 20 limine" that are really dispositive motions, it is simply too late for Omron to move for 21 summary judgment now. The deadline this Court established for filing dispositive 22 motions was July 24, 2006. See doc. 76 as modified by doc. 131. Omron's Motion in 23 Limine No. 10 is obviously untimely when viewed as what it actually is, a dispositive 24 motion. 25 Moreover, federal case law makes clear that a party cannot use a motion in limine 26 as a substitute for a summary judgment motion on the issue of damages or on substantive 27 issues of law, both of which Omron attempts to do in its Motion No. 10. The district court 28
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in Pivot Point Int'l, Inc. v. Charlene Products, Inc., 1996 WL 284940 *4 (N.D. Ill. May 23, 1996), 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." Another attempt to resolve a legal issue concerning damages via a motion in limine was rejected in Torah Soft Ltd. v. Drosnin, 2003 WL 22024074 (S.D.N.Y. August 28, 2003). There, the defendant's supposed motion in limine sought to exclude evidence of damages that occurred after a certain date based on a failure to mitigate. "While the defendant's legal theory is sound, the factual predicate is open to dispute. . . . "[T]hese facts have not been established, and it is inappropriate for [defendant] to seek what is effectively partial summary judgment in the guise of a motion in limine." Id. at *4 (emphasis added). 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 supposed motion in limine that argued the facts were insufficient to allow plaintiff to seek punitive damages; "that argument must be rejected because it should have been raised in a motion for summary judgment"). Factual question s are particularly inappropriate for resolution by means of a motion in limine. For example, in Liquid Dynamics Corp. v. Vaughan Co., Inc., 2004 WL 2260626 (N.D. Ill. Oct. 1, 2004), the defendant filed in limine seeking to bar any testimony relating to the plaintiff's claim of willful patent infringement on the theory that there could be no finding of willful infringement as a matter of law. The district court denied that motion, reasoning that "a willfulness determination typically required review of the `totality of circumstances,' an analysis of the factual record. [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 (emphasis added). And in Provident Life & Accident Ins. Co. v. Adie, 176 F.R.D. 246, 250 (D. Mich. 1997), the district court refused to allow a defendant to preclude the plaintiff from relying on certain defenses at trial by means of a motion in limine. Whether the defenses could be raised turned on a
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factual question and the court held that the plaintiff's "motion in limine is not the appropriate vehicle for resolving such a factual question. . . If [plaintiff] wanted to preclude [defendant] from raising these defenses at trial because there was no genuine issue of material fact as to them, then he should not have filed a motion in limine on the eve of trial, but should instead have filed a summary judgment motion pursuant to Federal Rule of Civil Procedure 56." 176 F.R.D. at 250. In sum, motions in limine are intended to address evidentiary issues, not to dispose of damage claims or resolve other substantive issues of law. Natural Resources Defense Council v. Rodgers, 2005 WL 1388671 *1 n.2 (E.D. Cal. June 9, 2005) ("[m]otions in limine address evidentiary questions and are inappropriate devices for resolving substantive issues"). Omron's supposed "Motion in Limine No. 10" runs afoul of these precepts. Not only does it seek the type of relief (essentially, dissimilar of portions of Hypercom's damages claim) that can only be awarded based upon a dispositive motion, but Motion No. 10 also requires the resolution of disputed factual issues. For example, Omron contends that the cut-off date for Hypercom seeking fees for the ITC action should be February 11, 2005, which is surely a question of fact. (Motion No. 10 at p. 4.) And Omron alleges that "[i]n the ITC Administrative Action, Hypercom spent an excessive amount of money, before and after Verve voluntarily dismissed its complaint, seeking sanctions against Verve for alleged misconduct by Verve in the ITC." (Motion No. 10 at p. 4.) This is another factual issue (and Hypercom vigorously disputes that it spent an "excessive" amount of money on any aspect of the Verve/Omron litigation). In addition, Omron compounds its error in raising factual issues in a motion in limine by not providing any support for the facts it asserts. That is, Omron's so-called Motion in Limine No. 10 is based on nothing but the ipse dixit of Omron's counsel. Just as in the many cases cited above, this Court should not permit Omron to raise dispositive matters or fact-based issues in a motion in limine. Omron's Motion No. 10 should be summarily denied.
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II.

MOST OF OMRON'S ARGUMENTS ABOUT DAMAGES ARE FLAWED The Court should not entertain Omron's erroneously-styled "Motion in Limine No.

10," which really seeks partial summary judgment on damages. Even if the Court considers the Motion, however (which it should not), Omron's positions are not well taken. A. Hypercom Is Entitled To Fees For The Initial Portion Of This Litigation, Which Sought Declaratory Relief Against Verve

Hypercom agrees that, in the normal course of events, the American Rule requires each party to be responsible for its own attorneys' fees. (Motion No. 10 at p. 3, citing 9 Cortaro Water Users' Ass'n v. Steiner, 148 Ariz. 314, 316, 714 P.2d 807, 809 (1986).) 10 What is significant here, however, is the more specific rule that when the plaintiff's claim 11 is one for malicious prosecution or abuse of process, the plaintiff's damages do properly 12 include the attorneys' fees that the plaintiff incurred in the prior actions as a result of the 13 defendant's tortious conduct. See, e.g., Ackerman v. Kaufman, 41 Ariz. 110, 15 P.2d 966 14 (1932) (affirming judgment for plaintiff in malicious prosecution action that awarded as 15 damages the amounts the plaintiff had incurred in attorneys' fees in defending himself in 16 the malicious actions). 17 That Omron itself understands that attorneys' fees are recoverable as damages in 18 the malicious prosecution or abuse of process context is apparent from Omron's Motion 19 No. 10 itself, which does not attempt to preclude Hypercom from recovering as damages 20 any of the attorneys' fees it incurred in the Michigan, Texas, or California Actions filed 21 by Verve. Nor does Omron attempt to preclude Hypercom from recovering attorneys' 22 fees it incurred in the action initiated against Hypercom by Verve in the ITC prior to 23 Omron's chosen cut-off date of February 11, 2005. (Motion No. 10 at p. 4.) 24 Just as Omron concedes that those types of attorneys' fees are properly recoverable 25 as damages in a malicious prosecution/abuse of process lawsuit, so too is Hypercom 26 entitled to recover as damages the attorneys' fees it incurred in this action (No. CV 0427 0400 PHX PGR) prior to the time that Omron was added as a defendant. The original 28
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complaint in this action was filed on February 25, 2004 by Hypercom against only Verve L.L.C. (doc. 1.) The substantive relief Hypercom sought in that complaint was a judgment declaring that "the patents-in-suit are invalid and are not infringed, that Hypercom Corporation is not liable for infringement of any of the patens-in-suit." (doc. 1 at p. 8.) As the original Complaint explains, the only reason Hypercom was forced to file that declaratory action (which was filed after Verve had initiated the Michigan Action and the Texas Action) was because "Verve has launched a campaign against Hypercom and others for the purpose of instituting costly and inconvenient litigation alleging multiple claims of patent infringement in order to secure `settlements' that extract monetary tribute from Hypercom in order to stop Verve's harassment." (doc. 1 at p. 2, ¶ 7.) The character of the lawsuit changed when Omron was added as a defendant and a tort claim for conspiracy was asserted (in addition to declaratory judgment claims). See First Amended Complaint (doc. 17), filed July 12, 2004. Omron appeared in the action on September 15, 2004. (doc. 29.) Because the original declaratory judgment action filed by Hypercom against Verve was an integral part of Hypercom's efforts to defend itself against Verve's (and its co-conspirator Omron's) tortious campaign of harassment, Hypercom is entitled to recover as compensatory damages the attorneys' fees it expended in this action prior to the time that Omron appeared and the case became a combination of a declaratory judgment action and a tort action. Thus, Hypercom is entitled to recover the fees it incurred in this action beginning with its preparations to file this case and continuing through the date of Omron's appearance. Hypercom agrees that it may not recover as damages the attorneys' fees it has incurred in this litigation since that date. B. Hypercom Can Recover Fees For The ITC Action Through July 2005

Omron contends that Hypercom's recovery of damages for the attorneys' fees it incurred in the ITC Action instituted against it by Verve should be cut off as of February 11, 2005. That is the date on which Verve filed with the ITC (1) a statement that Omron did not intend to participate in the investigation and (2) a motion to withdraw the
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complaint and terminate the ITC's investigation. Verve's unilateral action, however, could not and did not terminate the ITC investigation. It was not until June 8, 2005 that the ITC Administrative Law Judge issued his initial determination, Order No. 49, granting Verve's motion for withdrawal of the complaint and termination of the investigation. On June 14, 2005, Hypercom (jointly with the other respondents in the ITC Action) filed a petition for review by the ITC of Order No. 49. On July 8, 2005, the ITC issued a notice that it had determined not to review Order No. 49. Thus, it was not until July 8, 2005 that the ITC investigation initiated by Verve was officially concluded. It follows that there is no rational basis for using the February 11, 2005 cut-off date selected by Omron. Hypercom is entitled to claim as damages its attorneys' fees from the ITC Action through at least July 8, 2005. C. Hypercom Does Not Seek The Fees It Incurred For Its Counterclaims

Because Hypercom does not claim as damages in this case the attorneys' fees it incurred in pursuing its counterclaims against Verve in Verve L.L.C. v. Hypercom Corp., No. CV-05-0365-PHX-FJM, that portion of Motion No. 10 is moot. III. CONCLUSION For the foregoing reasons, Hypercom Corporation respectfully requests that the Court deny Omron's Motion in Limine for Pursuit Of Claims Against Omron And Counterclaims In Other Actions in its entirety. Alternatively, the Court should rule that Hypercom may claim as damages in this case, inter alia, (1) the attorneys' fees Hypercom incurred in this action beginning with its preparations to file the declaratory judgment complaint against Verve and continuing through the date of Omron's appearance, which was September 15, 2004, and (2) the attorneys' fees Hypercom incurred in the ITC Action through at least July 8, 2005, when the ITC investigation was officially concluded.

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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. 10 TO PREVENT HYPERCOM CORPORATION FROM PURSUING
RECOVERY OF ATTORNEYS' FEES FOR PURSUIT OF CLAIMS AGAINST OMRON AND COUNTERCLAIMS IN OTHER ACTIONS 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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