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 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. 4 TO EXCLUDE EVIDENCE INCONSISTENT WITH HYPERCOM'S PRIOR TESTIMONY (Oral Argument Requested)

Defendants.

Hypercom Corporation's entire case rests on Omron Corporation's knowledge. To prove any of its claims, Hypercom must demonstrate that Omron assigned its patents to

Case 2:04-cv-00400-PGR

Document 166

Filed 04/13/2007

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Verve for the purpose of filing baseless patent infringement lawsuits, and that Omron knew the lawsuits were baseless. However, when asked point-blank for "any evidence in the form of documents, witness statements, testimony, anything that's been disclosed thus far in this litigation or any other litigation that demonstrates Omron knew Hypercom was not infringing any of the patents when it assigned those patents to Verve," Hypercom responded: "I am not aware of such evidence, but as I stated before, there may exist facts or documents or testimony that can shed further light on that." Deposition of Hypercom's Rule 30(b)(6) Corporate Representative ("Hypercom Depo."), at 128:16-129:3, attached as Exhibit A to this Motion. Hypercom repeatedly confirmed, however, that it did not have access to the "facts or documents or testimony" that would support its claims. This evidence, according to Hypercom, was unavailable to Hypercom because either Hypercom did not know the answer or because a protective order in the ITC precluded its disclosure. Hypercom was a party to the ITC proceeding, but it repeatedly refused to disclose information from that proceeding to Omron. With the case headed to trial, Omron anticipates that Hypercom may now proffer the same evidence previously withheld as confidential or just unknown. The Court should not allow this to happen. Hypercom is bound by the admissions of its 30(b)(6) witness that Hypercom was not privy to the evidence in the International Trade Commission ("ITC") because that evidence is confidential or that it did not know the evidence available to support its claims. And principles of fairness dictate that Hypercom should be precluded from introducing any evidence from the ITC, including the testimony of Hypercom's 30(b)(6) designee, Douglas Reich, to prove its claims against Omron. -2Case 2:04-cv-00400-PGR Document 166 Filed 04/13/2007 Page 2 of 11

I. A.

ARGUMENT

The Court Should Not Permit Hypercom To Offer Any Evidence That Was Unknown To Hypercom Or Unavailable Due To The Confidentiality Order In The ITC Under Rule 30(b)(6) of the Federal Rules of Civil Procedure, "[a] party may in the

party's notice . . . name as the deponent a public or private corporation . . . and describe with reasonable particularity the matters on which examination is requested." In response, the corporation must designate a corporate representative to testify on behalf of the corporation regarding the issues set forth in the notice. Id.; Sanders v. Circle K Corp., 137 F.R.D. 292 (D. Ariz. 1991) ("The purpose behind Rule 30(b)(6) is to create testimony that will bind the corporation."). Omron deposed Hypercom pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure. See Notice Of Videotaped Rule 30(B)(6) Deposition Of Hypercom Corporation, attached as Exhibit B to this Motion. Hypercom designated Douglas Reich, the general in-house counsel for Hypercom, as its Rule 30(b)(6) corporate representative on all of the issues set forth in the deposition notice, which included Hypercom's knowledge of evidence to support all of its claims against Omron. Id. Reich confirmed during the deposition that he understood his testimony was that of Hypercom, and his answers were binding on Hypercom. Hypercom Depo. at 8:22-9:6. Hypercom made clear at the beginning of the deposition that based on the terms of the protective order in the ITC, Hypercom had little, if any, knowledge of the information or evidence involved in the ITC. See Hypercom Depo. at 22-23. Then, throughout the remainder of the deposition, Reich confirmed that he could not answer most of Omron's questions regarding the bases for Hypercom's claims because that

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evidence was confidential or Hypercom just did not know of any supporting evidence. Thus, despite having already filed a lawsuit against Omron, Hypercom could not identify any evidence regarding the following issues: · "other than the lawsuits that Verve was filing . . . any other evidence that Omron was directing conduct at Hypercom in Arizona." Id. at 51:12-25. "Any of the evidence or facts that would have led Hypercom to believe that Omron had some role in deciding where to file these particular lawsuits [the lawsuits filed by Verve against Hypercom]." Id. at 53:1-25. "any other evidence since filing [Hypercom's] amended complaint that Omron has directed conduct at Hypercom in Arizona." Id. at 61:13-21. "[Hypercom's] understanding that Omron had approved Hypercom as a target [of the lawsuits]." Id. at 66:16-67:12. "evidence of an unwritten agreement that Omron could veto the lawsuit[s]" or "approve targets prior to filing." Id. at 71:13-72:20. evidence supporting an alleged conspiracy. Id. at 76:12-24. any evidence or facts that Omron approved of Verve's litigation tactics, including the approval of Hypercom as a defendant in any lawsuits, knowledge of lawsuits that Verve intended to file, failing to stop Verve from suing Hypercom, and filing lawsuits in inconvenient forums. Id. at 82:22-83:18. evidence supporting the claim that Omron could veto any lawsuits. Id. at 84:20-85:3. "other facts or evidence to support the position that Omron knew about the abuse of judicial process by Verve." Id. at 87:16-22. any evidence of actions by Omron that would constitute extortion. Id. at 88:7-14.

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Rather than identify the evidence that supported its claims, Hypercom relied on a blanket assertion of confidentiality in the ITC Administrative Action. Indeed, the following -4Case 2:04-cv-00400-PGR Document 166 Filed 04/13/2007 Page 4 of 11

exchange regarding the existence of unwritten conspiratorial agreements during Hypercom's Rule 30(b)(6) deposition best summarizes Hypercom's position regarding its knowledge of evidence to support its claims: Q: So Hypercom doesn't have any specific evidence other than what's in the ITC and which you don't actually know about to support the claim that there was an unwritten agreement? I believe that's correct.

A:

Hypercom Depo. at 72:16-20. Arizona law makes clear that a party "'is not permitted to thrust his . . . knowledge into the litigation as a foundation . . . to sustain his claim . . . while simultaneously retaining the lawyer-client privilege to frustrate proof . . . negating the claim asserted.'" State Farm Mut. Auto. Ins. Co. v. Lee, 199 Ariz. 52, 67, 13 P.3d 1169, 1184 (Ariz. 2000) (citing Ulibarri v. Superior Court in and for County of Coconino, 184 Ariz. 382, 385, 909 P.2d 449, 453 (Ariz. Ct. App. 1995)). Hypercom's assertion of confidentiality is akin to the assertion of a privilege as both a sword and a shield. See Genentech, Inc. v. Insmed Inc., 442 F. Supp. 2d 838, 844 (N.D. Cal. 2006). A party may not assert a privilege, such as the attorney-client privilege, as a sword to waive the privilege with respect to evidence that is favorable to that party's claim, and then assert the privilege to shield non-favorable evidence. Id. Moreover, "[i]n the course of litigation, a party may not use the privilege as 'both a sword and a shield,' . . . by asserting a particular factual position and then invoking the privilege not only to 'buttress such a position' but also to prevent the opposing party from impeaching or otherwise challenging it." State v. Wilson, 200 Ariz. 390, 396, 26 P.3d 1161, 1167 (Ct. App. 2001) (internal citation omitted).

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But that is exactly what Hypercom has done here, using the confidentiality of a protective order to shield discovery from Omron. In addition, Hypercom further admitted that it had no evidence to support the claims against Omron other than the fact that Verve filed four lawsuits against Hypercom: Q: The conduct that Hypercom is alleging that Omron directed at Hypercom in Arizona essentially are the lawsuits filed by Verve; correct? Yes. Okay. Is there any other conduct other than those lawsuits that Hypercom is aware of? Nothing that I can recall at the current time.

A: Q: A:

Hypercom Depo. at 59:25-60:11. Moreover, when asked whether there was any particular evidence other than what was discovered in the ITC "that supports the allegation of a conspiracy to do any of the things alleged in the amended complaint," Hypercom responded that there was no other evidence other than "[t]he actions of Omron and Verve in bringing the lawsuits through the discussion with Kerner and Nakano." Hypercom Depo. at 76:12-24. Hypercom cannot hide evidence supporting its claims against Omron, under the guise of a protective order in another case, and then propose to use that same evidence at trial. Moreover, Hypercom cannot claim ignorance of evidence that supports its claims, and then offer that same evidence at trial. Counsel for Hypercom made clear during Hypercom's Rule 30(b)(6) deposition regarding Hypercom's allegations against Omron that Hypercom did not know the facts supporting its allegations because a protective order precluded Hypercom from reviewing that information. Hypercom Depo. at 54:4-

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57:14. Omron, therefore, had no way of obtaining this information because it was not a party to the ITC Administrative Action. Hypercom is bound by its answers in the Rule 30(b)(6) deposition. Based on Hypercom's use of the shield and its general lack of knowledge, Hypercom should be precluded from offering any evidence from the ITC Administrative Action or that Hypercom has since discovered after the deposition. The same argument made by Hypercom - that Omron and Verve cannot avoid its obligation to conduct a reasonable pre-filing investigation by filing its lawsuit first and then seeking discovery to validate it bars Hypercom from altering its testimony now. At the very least, Hypercom should be precluded from offering any testimony about the information Reich asserted as confidential and unknown to Hypercom. B. Hypercom Should Be Precluded From Offering Any Testimony From Reich Regarding The September 16, 2004, Settlement Conference Hypercom further testified that one of the bases for suing Omron alleging a civil conspiracy were statements made by Omron's outside counsel after the lawsuit was already filed. These statements allegedly were made by Omron during a settlement conference initiated and requested by Hypercom. For the same reasons set forth in Motion in Limine No. 2 filed concurrently with this Motion, Rule 408 precludes the use of statements made during a settlement conference to prove the elements of Hypercom's conspiracy claims. Moreover, given that Hypercom's conspiracy claims rest so heavily on statements made by Omron after Hypercom filed its lawsuit, Hypercom's actions raise a question as to whether Hypercom properly investigated its claims against Omron prior to filing a lawsuit.

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C.

Hypercom Should Be Precluded From Offering Any Evidence Regarding Omron's Alleged Ability To Control Verve Hypercom further should not be permitted to offer any testimony or evidence

regarding Omron's alleged control over Verve, including Omron's ability to veto any lawsuits or to settle the claims, because Hypercom testified that there were no specific statements from Omron on that point. Hypercom alleges that Omron had the power to "veto" any lawsuits based on statements from Omron during a settlement conference on September 16, 2004. In addition to having no evidence regarding this "veto" power because it is confidential, see supra, Hypercom admits that it could not specifically recall any statements by Omron that it had any power over Verve to settle these lawsuits: Q: Okay. And the vetoing of lawsuits is based on representations made by Mr. Kerner at the meeting in Arizona? I don't recall that he specifically said that.

A:

Hypercom Depo. at 84:20-24. Moreover, Hypercom offered the following waffling testimony, which indicates that Hypercom had no specific recollection of any statements made by Omron that it could control Verve: Q. Do you recall with any specificity exactly what Mr. Kerner said when he indicated to you that Omron had some power to help settle these lawsuits? There wasn't a -- there wasn't a clear statement as to the means of control, but it was a rather clear statement that they had the ability to make the lawsuits go away including the Verve actions. Okay. What statements led you -- lead you to that conclusion? There were discussions with regard to, of course, the pending lawsuits, and Mr. Kerner indicated that Omron had several additional patents that it was about to assign to Verve, and we said that we needed to get information with regard to those patents so -8Case 2:04-cv-00400-PGR Document 166 Filed 04/13/2007 Page 8 of 11

A.

Q. A.

that we could determine whether we had any potential exposure so that we could intelligently discuss what was going on. And they really weren't very clear as to how many patents or what they covered other than the fact that they were about to assign a number of additional patents to Verve. And our concern was that we don't want to be facing additional Verve lawsuits in the future over a variety of patents that may come to light or be asserted against us in the future, and therefore, we wanted to -- our preference would be to have, if you will, a global resolution of these matters. And Mr. Kerner indicated that Omron was in a position to make that happen. Q. A. How did he indicate that Omron was in a position to make that happen? I don't think it was very clear. I think it was more of a statement largely as I described it that yes, for purposes of any further discussions, they would be able to resolve the matters on a global basis. You don't recall any specific statements directly to that effect? No. No. Essentially to that effect, but I -- unfortunately I don't have a recollection of something more specific than that, but we clearly indicated that we were only interested if we are talking about global settlement of the patents that had been raised in the Verve lawsuits and any other patents that Omron might be in the process of assigning or in the future assign to Verve.

Q. A.

Hypercom Depo. at 44:2 to 45:19. Hypercom further confirmed that it "[could not] recall specifically" any statements that "Omron had some role in deciding which patents it was going to enforce against Hypercom." Id. at 48:13-49:1. Hypercom should not be permitted to present testimony and evidence at trial that is inconsistent with these positions.

II.

CONCLUSION

Based on Hypercom's Rule 30(b)(6) testimony, the Court should bind Hypercom to its prior testimony and preclude Hypercom from offering into evidence any -9Case 2:04-cv-00400-PGR Document 166 Filed 04/13/2007 Page 9 of 11

discovery, documents, or evidence about which Hypercom refused to testify or about which Hypercom testified it had no knowledge. RESPECTFULLY SUBMITTED on April 13, 2007. Respectfully submitted,

/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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