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. 9 TO EXCLUDE EVIDENCE FROM PRIOR HYPERCOM/VERVE ACTION

Hypercom Corporation submits this Response in Opposition to Omron Corporation's Motion in Limine No. 9 To Exclude Evidence From Prior Hypercom/Verve Action. Motion No. 9 should be denied because, as to many matters it wishes to exclude, it is moot, and as to the remaining the motion is not well founded as a matter of law. This Response is supported by the following Memorandum of Points and Authorities and the Court's entire file in this matter. MEMORANDUM OF POINTS AND AUTHORITIES I. THE MOTION'S PREMISE IS CONTRADICTED BY OMRON ITSELF Motion in Limine No. 9 demands sweeping relief, for it seeks "to bar Hypercom Corporation from introducing evidence of any order, finding, testimony, or other evidence from proceedings in Verve v. Hypercom Corp., No. CV-05-033650-PHX-FJM (D. Ariz.)." (Motion No. 9 at p. 2.) The first basis for excluding the evidence is that such evidence supposedly "Is Not Relevant To Hypercom's Claims Against Omron In This Case." (Motion No. 9 at p. 2.) But Omron's "lack of relevancy argument" is belied by Omron's

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next words: "[T]o prevail at trial, Hypercom must establish (inter alia) that Verve lacked probable cause to prosecute the patent infringement claims against Hypercom, and that Omron intended and/or agreed to aid what it knew to be frivolous prosecutions." (Motion No. 9 at p. 2) (emphasis added). But since the Verve v. Hypercom proceeding involved that very issue of whether Verve lacked probable cause to prosecute the patent infringement claims against Hypercom, and since Judge Martone ruled in Verve v. Hypercom that Verve did in fact lack such probable cause1, it is impossible to understand how evidence from the prior proceeding would not be relevant to Hypercom's claims against Omron in this action. Similarly, the fact that Judge Martone specifically ruled that there was "an agreement" between Omron and the Verve v. Hypercom counterdefendants and that those counterdefendants "worked in concert with Omron in furtherance of the litigation harassment scheme"2 is certainly relevant to proving Hypercom's claims against Omron in this case. After all, Omron concedes that one of the issues in this case is whether "Omron intended and/or agreed to aid what it knew to be frivolous prosecutions." The fact is that Omron's Motion No. 9 simply makes no logical sense. Of course what transpired in Verve v. Hypercom is highly "relevant" to the claims that Hypercom asserts against Omron in this action. II. OMRON'S MOTION IS LARGELY MOOT Most of the relief Omron seeks is unnecessary. First, Hypercom has never taken the position that any "order, finding, testimony, or other evidence" from Verve v. Hypercom is automatically admissible in this action simply because it was part of the Verve v. Hypercom action. As for "testimony or evidence," when at the trial of this action Hypercom offers any testimony or exhibit into evidence, such matter will only be "The record is simply devoid of any evidence supporting Verve's claim that an adequate pre-filing investigation was conducted in any action." 8/18/06 Order in Verve v. Hypercom (doc. 287) at p. 7 (attached as Exhibit A to Omron's Motion in Limine No. 5, at p. 8 of 14). 2 8/18/06 Order in Verve v. Hypercom (doc. 287) at p. 10 (attached as Exhibit A to Omron's Motion in Limine No. 5, at p. 11 of 14).
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admitted if Hypercom can demonstrate that it meets the usual evidentiary requirements (i.e., relevance, foundation, etc.). Whether or not that same testimony or exhibit was used in the Verve v. Hypercom action is of absolutely no moment. In other words, the fact that an exhibit was previously used in Verve v. Hypercom does not render such exhibit automatically admissible in this trial, but nether does such use in the prior action render the exhibit inadmissible here, as Omron demands. As for the "orders" or "findings" from Verve v. Hypercom that Omron seeks to bar in this case, Omron's Motion No. 9 is especially disingenuous in claming lack of relevancy, for Omron itself seeks to use certain "orders" and "findings" from the previous action to collaterally estop Hypercom from raising those matters in this action. See Omron's Motion in Limine No. 5. Hypercom, in contrast, has not attempted to collaterally estop Omron based on any orders or findings made by Judge Martone. Because orders or findings from the Verve v. Hypercom case are certainly relevant to the issues to be decided in this case, however, Hypercom should be able to introduce such orders or findings as some evidence for the jury to consider. That is, even though orders or findings from the previous case do not necessarily have any preclusive effect in this case, they are certainly relevant evidence on the issues before this Court as framed by Omron itself: "[T]o prevail at trial, Hypercom must establish (inter alia) that Verve lacked probable cause to prosecute the patent infringement claims against Hypercom, and that Omron intended and/or agreed to aid what it knew to be frivolous prosecutions." (Motion No. 9 at p. 2.) Asking the Court to exclude broad categories of matters, without identifying specific exhibits or testimony or knowing the context in which the matter will arise at trial, is also inappropriate. It is impossible to expect the Court to be able to intelligently rule on Omron's Motion No. 9 to exclude such broad expanses of obviously relevant evidence before trial has even begun. As one federal court explained, 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
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be admissible for one or more purposes and (4) if admissible, whether its probative value might be outweighed by prejudicial effect." Hess v. Inland Asphalt Co., 1990 WL 51164 *1 (E.D. Wash. Feb. 20, 1990). III. RULE 403 AFFORDS NO BASIS FOR EXCLUDING THESE MATTERS Omron also argues that the matters it seeks to bar Hypercom from introducing at trial should be excluded because of a danger of unfair prejudice or jury confusion. Neither of these considerations under Rule 403 of the Federal Rules of Evidence supports the relief Omron seeks. The concept of "unfair prejudice" generally relates to a tendency to suggest that the jury render a decision on an emotional basis: The Rule [403] is not designed to exclude any prejudicial evidence, only "unfairly" prejudicial evidence substantially outweighed by its probative value. U.S. v. Hankey, 203 F.3d 1160, 1172 (9th Cir. 2000). "The application of Rule 403 must be cautious and sparing. Its major function is limited to excluding matter of scant or cumulative probative force, dragged in by the heels for the sake of its prejudicial effect." Id. Evidence is unfairly prejudicial when it has an "`undue tendency to suggest decision on an improper basis, commonly, though not necessarily, an emotional one.'" Id. (quoting Advisory Committee Notes to Federal Rule of Evidence 403). Schmelling v. Thomas, 2005 U.S. Dist. LEXIS 6467 *37 (D. Nev. March 4, 2005) (emphasis added). The matters at issue here from the Verve v. Hypercom trial involve nothing of an emotional nature and could not possibly have any tendency to suggest a decision on an emotional basis (or on any other improper basis). Notably, Omron never explains exactly what this supposed danger of "unfair prejudice" is. Because Omron has not demonstrated any "unfair prejudice" here, Omron is not entitled to the relief it requests. More specifically, with respect to Omron's claim that evidence of the jury's award of damages in Verve v. Hypercom would be unfairly prejudicial, that damage award is something that Omron, not Hypercom, asks be accorded collateral estoppel effect. See Omron's Motion in Limine No. 5. Of course what the jury awarded in the other action is relevant here because it constitutes some evidence of Hypercom's damages, but is not conclusive on that issue in this case. See Hypercom's Response to Omron's Motion in
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Limine No. 5. Particularly given the premise underlying this action that Omron was a co-conspirator of Verve it is certainly not "unfairly prejudicial" to let the jury in this case know the amount of damages that the jury in Verve v. Hypercom awarded for Omron's co-conspirator's tortious conduct. Omron ignores the fact that "[v]irtually all evidence is prejudicial -- if the truth be told, that is almost always why the proponent seeks to introduce it -- but it is only unfair prejudice against which the law protects." United States v. Pitrone, 115 F.3d 1, 8 (1st Cir. 1997). As for what Omron calls Judge Martone's ruling "that Omron and Verve were involved in a conspiracy and that Verve failed to conduct an adequate pre-filing investigation" (Motion in Limine No. 9 at p. 3), that too is not "unfairly prejudicial." After all, "[r]elevant evidence is inherently prejudicial; but it is only unfair prejudice, substantially outweighing probative values, which permits exclusion of relevant matter under Rule 403." United States v. McRae, 593 F.2d 700, 707 (5th Cir. 1979). Moreover, Omron mischaracterizes Judge Martone's ruling on "conspiracy" in an effort to make it appear improper. (Motion in Limine No. 9 at pp. 4-5.) Judge Martone knew full well that there was no claim for "civil conspiracy" in that lawsuit. The issue of "conspiracy" only came up in connection with the issue of whether the counterdefendants in Verve v. Hypercom could be held jointly liable. As Judge Martone explained, "[t]he purpose of civil conspiracy is not to impose additional liability, but to identify joint tortfeasors." (8/18/06 Order in Verve v. Hypercom (doc. 287) at p. 10 (attached as Exhibit A to Omron's Motion in Limine No. 5, at p. 11 of 14) (emphasis added).) It was in this context that Judge Martone properly ruled that there was "an agreement" between Omron and the Verve v. Hypercom counterdefendants and that those counterdefendants "worked in concert with Omron in furtherance of the litigation harassment scheme. (Id.) If Omron is concerned that the jury would accord too much weight to Judge Martone's rulings then the correct course of action is for Omron to request an appropriate limiting instruction, see Evidence Rule 105, not to prevent the jury from hearing the evidence at all. The same is true with respect to Omron's cry of possible jury
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"confusion." Proper jury instructions and limiting instructions will prevent juror confusion, unfair prejudice, and any other Rule 403-type problem that Omron can posit. Finally, Omron cites two cases for the proposition that "[f]undamental issues of fairness" require the exclusion of the evidence of Judge Martone's ruling as to conspiracy. (Motion No. 9 at p. 5.) Neither of those cases, however, supports Omron's position. The landmark case of Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322 (1979), involved the application of offensive collateral estoppel and Chase Manhattan Bank, N.A. v. Celotex Corp., 56 F.3d 343 (2d Cir. 1995), involved the use of res judicata. But, as stated above, Hypercom does not contend that any orders or findings Judge Martone made in the Verve v. Hypercom action should have either collateral estoppel or res judicata effect here as to Omron. Omron has cited no case that even suggests that orders or findings from another action, if relevant to the issues to be litigated in the second action, may not be introduced into evidence for the jury's consideration. Although orders or findings are not conclusive, they do constitute relevant evidence that the jury should be permitted to consider. IV. CONCLUSION For the reasons set forth above, the Court should deny in its entirety Omron's Motion in Limine to Exclude Evidence From Prior Hypercom/Verve 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. 9 TO EXCLUDE EVIDENCE FROM PRIOR HYPERCOM/VERVE 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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