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. 6 TO EXCLUDE EVIDENCE RELATED TO PUNITIVE DAMAGES

Hypercom Corporation submits its Response in Opposition to Omron Corporation's Motion in Limine No. 6 To Exclude Evidence Related To Punitive Damages. The Motion should be denied because the relief Omron seeks is nothing less than summary judgment on Hypercom's punitive damages claims and such relief cannot be obtained under the guise of a motion in limine. 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. OMRON CANNOT SEEK SUMMARY JUDGMENT ON THE ISSUE OF PUNITIVE DAMAGES BY MEANS OF A MOTION IN LIMINE Despite its name, Omron's supposed "Motion in Limine No. 6" actually demands summary judgment in its favor on Hypercom's claim for punitive damages. Omron tries to justify the relief requested, "an order excluding any evidence related to punitive damages" (Motion No. 6 at p. 8), by arguing that "Hypercom cannot prove a prima facie case that comes close to satisfying the standard for punitive damages." (Motion No. 6 at

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p. 2). That is exactly the language defendants use in moving for summary judgment on a claim for punitive damages. Omron's Motion goes on to discuss the standard for imposing punitive damages under Arizona law and then asserts that "Hypercom cannot prove the `something more' element for punitive damages." (Motion No. 6 at p. 5.) Later, Omron concludes that "Omron's conduct, therefore, falls far short of acting with the `evil mind' required for an award of punitive damages." Once again, these are statements found in a motion for partial summary judgment, not a proper motion in limine. And, of course, the relief Omron demands would have the same effect as entry of summary judgment for Omron on punitive damages because it would preclude Hypercom from adducing any evidence to support its punitive damages claim at trial. Without such evidence, the Court would be required to grant judgment as a matter of law for Omron on that claim. The fatal flaw in Omron's disguised motion for summary judgment on punitive damages is that the time for filing a summary judgment motion expired some nine months ago. 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. 6, filed April 13, 2007, is obviously untimely when viewed as what it actually is, a dispositive motion. Federal case law makes clear that a party cannot use a motion in limine as a substitute for a summary judgment motion on the issue of punitive damages, which is precisely what Omron's Motion No. 6 would do. Just last month, the district court in Figgins v. Advance America Cash Advance Centers of Mich., Inc., ___ F. Supp. 2d ___, 2007 WL 1017273 (E.D. Mich. March 27, 2007), denied a defendant's supposed motion in limine that argued the facts were insufficient to allow the plaintiff to seek punitive damages from the jury. The Figgins court held that "that argument must be rejected because it should have been raised in a motion for summary judgment." Id. at *7.
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Finding that the motion in limine on punitive damages was not filed until after six weeks after the deadline for filing dispositive motions had passed, the court denied the motion because the defendant had not included the argument regarding the supposed lack of factual support for the punitive damages claim in a proper summary judgment motion. Id. Similarly, the district court 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. 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). The fact is that motions in limine are intended to address evidentiary issues, not to resolve substantive issues of law, such as whether a plaintiff can establish a prima facie case for its punitive damages claim. As one federal court admonished:

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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 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)). Natural Resources Defense Council v. Rodgers, 2005 WL 1388671 *1 n.2 (E.D. Cal. June 9, 2005) (emphasis added). Applying these precepts, the district court in the Provident Life & Accident Ins. Co. case 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 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. Omron's supposed "Motion in Limine No. 6" actually seeks the dismissal of Hypercom's punitive damages claim, which is relief that Omron was required to seek by means of a timely-filed motion for partial summary judgment. It is far too late for Omron to initiate a factual inquiry as to what evidence Hypercom has to support its claim for punitive damages. Because Omron's Motion in Limine No. 6 is an improper attempt to avoid the Court's dispositive motion deadline, that Motion should be summarily denied.1

Omron argues that it would be "unfairly prejudicial" to permit Hypercom to present evidence on the issue of punitive damages. (Motion No. 6 at pp. 7-8.) Such evidence may be "prejudicial" but it is certainly not "unfair." Omron must be charged with the knowledge that the only legitimate way to keep a punitive damages claim from the jury is to move for partial summary judgment within the time allowed by the Court's Scheduling Order.
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II.

OMRON'S REQUEST TO PRECLUDE HYPERCOM FROM OFFERING EVIDENCE OF VERVE'S CONDUCT TOWARD OTHERS IS CONTRARY TO THE SUPREME COURT'S RECENT RULING IN PHILIP MORRIS In a throw away (and not entirely intelligible) argument at the end of the Motion,

Omron asks for alternative relief. "If Hypercom is permitted to seek punitive damages against Verve [sic], it should not be permitted, under Philip Morris, to introduce evidence of the suits Verve brought against the other defendants in support of Hypercom's punitive damages." (Motion No. 6 at p. 8.) Omron's belief that anything in Philip Morris USA v. Williams, ___ U.S. ___, 127 S. Ct. 1057 (2007), prevents Hypercom from introducing evidence of the other baseless patent infringement suits brought by Verve demonstrates that Omron grossly misapprehends the teaching of Philip Morris. The Supreme Court went out of its way to explain that there is a proper role for evidence of a defendant's acts that harmed others in addition to the plaintiff in a punitive damages case. More specifically, such evidence is relevant to show the reprehensibility of the defendant's conduct: [Plaintiff] argues that she is free to show harm to other victims because it is relevant to a different part of the punitive damages constitutional equation, namely, reprehensibility. That is to say, harm to others shows more reprehensible conduct. Philip Morris, in turn, does not deny that a plaintiff may show harm to others in order to demonstrate reprehensibility. Nor do we. Evidence of actual harm to nonparties can help to show that the conduct that harmed the plaintiff also posed a substantial risk of harm to the general public, and so was particularly reprehensible -- although counsel may argue in a particular case that conduct resulting in no harm to others nonetheless posed a grave risk to the public, or the converse. 127 S. Ct. at 1063-64 (emphasis added). Hypercom is thus constitutionally permitted to introduce evidence of the baseless suits that Omron's co-conspirator Verve brought against other companies to show the reprehensibility of Omron's conduct. This is because "we recognize that conduct that risks harm to many is likely more reprehensible than conduct that risks harm to only a few. And a jury consequently may take this fact into account in determining reprehensibility." Id. at 1065. Reprehensibility is significant because the determination
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of whether a punitive damages award is excessive depends, inter alia, "upon the reprehensibility of the defendant's conduct." Id. at 1062-63, citing BMW of North America, Inc. v. Gore, 517 U.S. 559, 574-85 (1996). What the Supreme Court precluded in Philip Morris is not introducing evidence of the defendant's [or its co-conspirator's] conduct towards others, but allowing a jury to award damages to punish the defendant for its conduct towards others. "Yet for the reasons given above, a jury may not go further than this and use a punitive damages verdict to punish a defendant directly on account of harms it is alleged to have visited on nonparties." Philip Morris, 127 S. Ct. at 1064. Ensuring that a jury does not do so should be accomplished by well-crafted jury instructions, not by a motion in limine to preclude Hypercom from introducing the type of evidence of harmful conduct toward others that the Supreme Court specifically allowed in Philip Morris. III. CONCLUSION For the foregoing reasons, Hypercom Corporation requests that the Court deny in its entirety Omron's Motion in Limine No. 6 to Exclude Evidence Related To Punitive Damages. Hypercom has no obligation to establish its prima facie case concerning punitive damages in response to a motion in limine. 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. 6 TO EXCLUDE EVIDENCE RELATED TO PUNITIVE DAMAGES 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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