Free Motion in Limine - District Court of Arizona - Arizona

Matthew A. C. Zapf (pro hac vice) A. Colin Wexler (pro hac vice) GOLDBERG KOHN 55 East Monroe Street, Suite 3300 Chicago, IL 60603-5792 Telephone: 312.201.3914 Facsimile: 312.863.7414 [email protected] [email protected] David P. Irmscher (15026-02) John K. Henning (25203-49) BAKER & DANIELS LLP 111 East Wayne Street, Suite 800 Fort Wayne, IN 46802 Telephone: 260-424-8000 Facsimile: 260-460-1700 [email protected] [email protected] H. Michael Clyde (009647) PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue, Suite 2000 Phoenix, AZ 85012-2788 Telephone: 602.351.8000 Facsimile: 602.648.7000 [email protected] Attorneys for the defendant, Omron Corporation UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, vs. Omron Corporation, ) ) ) ) ) ) ) ) ) ) ) CAUSE NO. CV04-0400 PHX PGR DEFENDANT OMRON CORPORATION'S MOTION IN LIMINE NO. 7 TO EXCLUDE ANY EVIDENCE OF POST-FILING CONDUCT (Oral Argument Requested)

Defendants.

The defendant, Omron Corporation ("Omron"), moves this Court to exclude any evidence relating to events, conduct or actions that occurred after Verve L.L.C. ("Verve")

Case 2:04-cv-00400-PGR

Document 170

Filed 04/13/2007

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filed its four lawsuits because this evidence is not relevant under Rule 401 of the Federal Rules of Evidence. This motion is based on the consistent position of Hypercom Corporation ("Hypercom") during this litigation that evidence of conduct or actions that occurred after Verve filed each of the four patent infringement lawsuits is not relevant to Hypercom's claims against Omron. Moreover, the Court should exclude any post-filing conduct because the probative value of this evidence is substantially outweighed by the danger it will only cause confusion of the issues and mislead the jury. With respect to each individual action for which Hypercom seeks damages, Omron seeks the exclusion of any evidence following the filing of that particular suit. In accordance with this logic, because the last suit was filed on August 30, 2004, any evidence of conduct after that date should be excluded. I. A. ARGUMENT

Evidence Of Post-Filing Conduct Is Not Relevant To Hypercom's Claims Or Omron's Defenses The premise for this motion in limine is that under the law governing abuse of

process and malicious prosecution claims, Omron's actions following the initiation of its suits against Hypercom are irrelevant. This is consistent with the legal position taken by

Hypercom repeatedly during this litigation. In its response to Omron's second motion for summary judgment, as well as correspondence from Hypercom, Hypercom argued that any information or evidence Omron learned after the lawsuits were filed is not relevant to Hypercom's claims in the Second Amended Complaint. See, e.g., Hypercom Corporation's Response To Omron Corporation's Second Motion For Summary Judgment ("Hypercom's Response to Second MSJ"), at 9. With respect to the malicious prosecution claim, Hypercom argued: -2Case 2:04-cv-00400-PGR Document 170 Filed 04/13/2007 Page 2 of 9

[O]n a malicious prosecution claim, "probable cause is determined under an objective standard on the basis of the facts known to the defendant." Hydranautics v. FilmTec Corp., 204 F.3d 880, 886 (9th Cir. 2000). 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 . . .".). Hypercom's Response To Second MSJ at 9 (emphasis in original). Thus, the malicious prosecution claim does not and cannot rest on any evidence of actions, events, or conduct (hereinafter referred to as "post-filing conduct") after the lawsuits were filed by Verve against Hypercom. Any such evidence should be excluded. The same goes for all other claims. Hypercom later clarified in correspondence to Omron that the same argument applied not just to the malicious prosecution claim, but to all claims filed against Omron in the Second Amended Complaint: The motion proposed by Omron incorrectly contends that Omron's knowledge of noninfringement is the 'central evidence' of its claims. In setting forth this contention, Omron ignores a key fact: the only time period relevant to the claims asserted in the Second Amended Complaint is the time prior to the filing of each lawsuit commenced by Verve LLC against Hypercom. What information or 'evidence' Omron alleges it may have subsequently learned has no bearing on Omron's liability. (Emphasis added). With respect to the abuse of process claim, Hypercom alleges that Verve's actions in filing multiple lawsuits constitutes an abuse of process. Second Amended Complaint at 17-18. Thus, if there was an abuse of process by Verve, the abuse occurred at the time

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the lawsuits were filed.1 It appears that Hypercom is trying to proceed with a theory that much of Omron's involvement in the tort stems from the fact that it did not step in to stop the litigation upon allegedly learning of the defects of Verve's claims. Hypercom ignores the fact that Arizona law does not recognize an abuse of process claim for failing to terminate litigation after allegedly becoming aware that the lawsuit is baseless. Morn v. City of Phoenix, 152 Ariz. 164, 168, 730 P.2d 873, 876-77 (Ct. App. 1986) (rejecting an abuse of process claim predicated on the alleged tortfeasor's failure to "terminate her litigation after she allegedly became aware of its baseless nature"). An abuse of process claim requires that there be some specific legal process that the defendant abused by way of a particular act:

[S]ome definite act or threat not authorized by the process, or aimed at an objective not legitimate in the course of the process, is required; and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.
Id. at 877 (citing Prosser and Keeton on the Law of Torts § 121 at 897 (5th ed. 1984)). As in Morn, Omron cannot be held liable for its failure to terminate the litigation once it was underway; the only relevant question is whether Omron abused the judicial process by initiating litigation. In accordance with Fed. Rs. Evid. 402 and 403, then, Hypercom should be prohibited from introducing evidence of Omron's post-filing conduct. Similarly, Hypercom's aiding and abetting claim requires evidence that Omron intended to aid and abet a tort. Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 485, 38 P.3d 12, 23 (2002). The tort occurred, according to Hypercom, when unfounded lawsuits were filed
1

This argument by Hypercom ignores well-established Ninth Circuit caselaw that the initiation of a lawsuit cannot be sanctioned as an abuse of process. However, Hypercom has failed to identify any other legal

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against it by Verve in multiple jurisdictions.2 And finally, on the claim of civil conspiracy for abuse of process and malicious prosecution, Hypercom must demonstrate the existence of an underlying tort. See Second Amended Complaint at 17-18. As Hypercom has conceded these torts are proven based on what happened or Omron's state of knowledge before or at the time the lawsuits were filed, evidence of post-filing conduct is not relevant and should be excluded. B. Any Evidence Of Post-Filing Conduct After Each Lawsuit Filed By Verve, Or At A Minimum After The Last Lawsuit Was Filed On August 30, 2004, Should Be Excluded Hypercom has claimed that the Court should not permit the jury to hear any evidence of conduct by Omron, Verve, or Hypercom after the lawsuits were filed. Accordingly, this Court should exclude any evidence from the time after Verve filed the last suit about which Verve is entitled to introduce evidence. The following are undisputed facts. Verve filed four patent infringement actions against Hypercom (and other parties) in the following jurisdictions: (1) the Eastern District of Michigan on September 11, 2003, alleging infringement of U.S. Patent No. 4,678,895; (2) the Western District of Texas on February 4, 2004, alleging infringement of U.S. Patent No. 4,562,341; (3) the International Trade Commission on August 2, 2004, alleging infringement of U.S. Patent No. 5,012,077; and (4) the Northern District of California on August 30, 2004, alleging infringement of U.S. Patent No. 5,012,077. See Hypercom Corporation's Response To Omron Corporation's Second Motion For Summary Judgment at pp. 2-3.

process that Verve or Omron abused. 2 "Omron acted willfully and wantonly in encouraging and substantially assisting Verve to bring unfounded patent infringement suits against Hypercom without having a good faith basis for believing that Hypercom had infringed upon any of the asserted patents." See Second Amended Complaint at ¶ 93.

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Based on Hypercom's argument, as set forth in this Motion, evidence of postfiling conduct that occurred in each case after the lawsuit was filed is not relevant and "has no bearing on Omron's liability." The only relevant evidence is "facts that were known to Omron and Verve at the time that the lawsuits were filed." Hypercom's Response to Second MSJ at 9 (citing Hydranautics, 204 F.3d at 886) (emphasis in original). In other words, events or conduct after Verve filed its lawsuit in the Eastern District of Michigan is not relevant to proving Hypercom's claims with respect to that particular lawsuit. The same goes for each of the other actions ­ evidence of actions or conduct occurring after the lawsuit was filed in each action is not relevant to claims that those actions constitute malicious prosecution, abuse of process, or any other claim. Moreover, nothing that occurred after the last action was filed in the Northern District of California is relevant to proving Hypercom's claims against Omron with respect to any of the actions. Thus, the date that the lawsuit was filed in California ­ August 30, 2004 ­ serves as a bright-line date for the exclusion of any evidence. Thus, by way of examples, none of the following evidence is relevant and should be excluded: (1) Any evidence related to the meeting on September 16, 2004, between Omron and Hypercom representatives, or any mention of the alleged demonstration of non-infringement performed by Hypercom during that meeting. Any evidence of what investigation was conducted after the lawsuits were filed, including but not limited to, any statements from Tetsuyuki Nakano that after the lawsuits were filed he did not investigate the patent infringement claims filed by Verve against Omron. Any evidence of litigation conduct or actions taken by litigants or the courts in the respective actions, including but not limited to, any orders issued in the other four actions, Omron's decision not to -6Case 2:04-cv-00400-PGR Document 170 Filed 04/13/2007 Page 6 of 9

(2)

(3)

intervene or participate in any of the lawsuits, Verve's alleged concealment of the Assignment Agreements and any activity during the ITC Action. In addition to being irrelevant under Hypercom's argument, this evidence should be excluded to avoid this Court and a jury from conducting a trial within a trial and judging the validity of litigation conduct taken by all parties after the lawsuits were filed. Such post-filing conduct does not fall within the relevant period of time, which Hypercom defines to be "the time prior to the filing of each lawsuit commenced by Verve LLC against Hypercom." Moreover, a jury is likely to be misled by any evidence of Omron's litigation conduct and strategy decisions after Verve had filed its lawsuits against Hypercom, including but not limited to evidence from the settlement conference on September 16, 2004, between Omron and Hypercom. Finally, since post-filing conduct is irrelevant to the claims at issue in this case, any evidence of such conduct seems calculated to introduce evidence of Omron's general character. This attempt to impugn Omron's integrity is improper, and should be rejected in accordance with Fed. Rs. Evid. 403 and 404.3 II. CONCLUSION

Hypercom repeatedly argued during this litigation that the only relevant evidence is what happened before Verve's lawsuits were filed, and what happened after the lawsuits were filed is not relevant. Based on Hypercom's own arguments, this Court should exclude from evidence any mention of conduct, actions, or events that occurred after each lawsuit was filed. Moreover, any post-filing conduct that occurred after August 30, 2004, the date that the last lawsuit was filed should be excluded. To the

3

This motion is not intended to deal with evidence relating to Hypercom's alleged damages. Evidence relating to damages should be excluded for the reasons explained Motion In Limine No. 1.

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extent that any of this evidence is admitted, Omron respectfully requests that in the alternative, any post-filing conduct relating to Hypercom's abuse of process claims be excluded. RESPECTFULLY SUBMITTED on April 13, 2007.

By: /s/ Matthew A.C. Zapf Matthew A.C. Zapf A. Colin Wexler GOLDBERG KOHN 55 East Monroe Street Suite 3300 Chicago, IL 60603-5792 David P. Irmscher (15026-02) John K. Henning (25203-49) BAKER & DANIELS LLP 111 East Wayne Street Suite 800 Fort Wayne, IN 46802 H. Michael Clyde (009647) PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue Suite 2000 Phoenix, AZ 85012-2788 Attorneys for Defendant Omron Corporation

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CERTIFICATE OF SERVICE I hereby certify that on April 13, 2007, I electronically transmitted the attached documents to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Andrew Foster Halaby Ray Kendall Harris John Kenyon Henning, IV David P. Irmscher Sid Leach Monica Anne Limon-Wynn Paul Moore A. Colin Wexler Matthew A.C. Zapf [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

I hereby certify that on April 16, 2007, I caused the attached document to be served by hand delivery on Judge Paul G. Rosenblatt, United States District Court of Arizona, 401 West Washington Street, Phoenix, Arizona 85003-2118.

/s/ Lisa M. Sandoval

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