Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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Matthew A. C. Zapf (pro hac vice) A. Colin Wexler (pro hac vice) GOLDBERG KOHN 55 East Monroe Street, Suite 3300 Chicago, Illinois 60603-5792 Telephone: 312.201.3914 Facsimile: 312.863.7414 [email protected] [email protected] H. Michael Clyde (009647) PERKINS COIE BROWN & BAIN P.A. 2901 North Central Avenue, Suite 2000 Phoenix, Arizona 85012-2788 Telephone: 602.351.8000 Facsimile: 602.648.7000 [email protected] Attorneys for Omron Corporation UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA

Hypercom Corporation, Plaintiff, v. Omron Corporation, Defendants.

No. CV 04-0400-PHX-PGR

DEFENDANT OMRON CORPORATION'S MOTION FOR LEAVE TO DESIGNATE POTENTIAL NON-PARTIES AT FAULT AND MEMORANDUM IN SUPPORT (Assigned to Hon. Paul G. Rosenblatt)

Defendant Omron Corporation ("Omron") respectfully moves this Court for leave to file instanter its Designation of Potential Non-Parties At Fault, a true and correct copy of which is attached hereto as Exhibit A, identifying Verve LLC ("Verve") as a nonparty at fault pursuant to A.R.S. § 12-2506. Verve was a party defendant in this action for one and a half years, and Hypercom Corporation ("Hypercom") had a full opportunity to take discovery on Verve's potential liability before voluntarily dismissing Verve in August

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2005. Hypercom is not prejudiced by this disclosure, which is made to ensure there is a fair allocation of any fault related to Hypercom's claims. I. BACKGROUND 1. On February 25, 2004, Hypercom filed this suit against Verve. In that

pleading (the "Original Complaint"), Hypercom alleged that 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." See Original Complaint, attached hereto as Exhibit B. 2. On July 12, 2004, Hypercom filed its First Amended Complaint, adding

Omron as a defendant. See First Amended Complaint, attached hereto as Exhibit C. Like the Original Complaint, the First Amended Complaint alleged that Verve was responsible for filing vexatious litigation without basis. However, the First Amended Complaint also alleged that Omron was liable with Verve for injury Hypercom claimed it suffered from such suits. 3. All of Hypercom's theories of liability and alleged damages arise out of

patent infringement lawsuits filed by Verve against Hypercom. 4. On August 29, 2005, Hypercom voluntarily dismissed Verve as a defendant in

this suit. See Voluntary Dismissal Order, attached hereto as Exhibit D. In that Order, Hypercom represented that it would pursue the claims at issue in this suit against Verve in a parallel action between Hypercom and Verve pending in front of Judge Martone, Case No. CV-05-365. 5. Hypercom proceeded to trial and judgment against Verve in that matter.

Hypercom continued to litigate the instant matter against only Omron. 6. Omron seeks to now identify Verve, the previously named defendant in this

action, as a non-party at fault for the damages Hypercom claims against Omron.

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II.

ARGUMENT 7. In Arizona, "the liability of each defendant for damages is several only and is

not joint." A.R.S. § 12-2506A. In the case of non-parties, Arizona Rule of Civil Procedure 26(b)(5) provides that any defendant who alleges that a nonparty is partially or entirely responsible for a plaintiff's injuries "shall provide the identity, location, and the facts supporting the claimed liability of such nonparty" within, at the latest, 150 days of the filing of the party's answer. See Ariz. R. Civ. P 26(b)(5). 8. Although Omron's formal designation of Verve as a non-party at fault falls

outside the time limits set by Ariz. R. Civ. P. 26(b)(5), Hypercom has known from the inception of this litigation that Verve was potentially at fault for some or all of the liability asserted in this action. Verve was the first, and for a period of time the only, party against whom Hypercom sought damages in this litigation. Courts in Arizona have made clear that "[t]he purpose of the notice requirement is to deal with situations where the plaintiff is unaware of a nonparty's fault." Lyphomed, Inc. v. Superior Court, 172 Ariz. 423, 427-28 (Ct. App. 1992) (citing legislative history); see also Bridgestone/Firestone N. Amer. Tire, L.L.C. v. Naranjo, 206 Ariz. 447, 451 n.2 (Ct. App. 2003) (plaintiff was "fully aware of [non-party's] identity, involvement, and potential liability"). 9. For more than one year during which Omron was a party to this case,Verve

was a co-defendant, and for this reason alone, Arizona courts would hold that Omron is not required to disclose Verve as a party whose fault should be considered at trial. The Lyphomed, Inc. v. Superior Court case illustrates this point. Lyphomed, Inc., 172 Ariz. at 427-28. 10. In Lyphomed, the plaintiff brought suit against a hospital that prescribed

medication and the manufacturer of medication alleged to have caused the death of a patient. Id. at 425. Prior to trial, but after the deadline set forth in Rule 26(b)(5),

Lyphomed identified the hospital as a potential party at fault. Id. at 426. In denying the plaintiff's motion to strike the late designation, the Arizona Court of Appeals made clear

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that defendants are not required to provide notice pursuant to Rule 26(b)(5) of parties at fault who are already a defendant in the litigation. Id. at 427-28. 11. The Lyphomed Court reasoned that the purpose of the disclosure rule was to

be certain that all parties potentially at fault are identified to the plaintiffs. Where the plaintiffs themselves identified the party as potentially at fault--by naming the party as a defendant--the disclosure rule has no purpose and no application. Id. 12. Hypercom has had the opportunity to take discovery about the role of Verve Accordingly, Hypercom cannot

in this and the parallel case before Judge Martone.

seriously argue that it is not fully aware of the conduct of Verve for which it is now seeking to hold Omron liable in tort. 13. As Judge Campbell noted in a decision issued only weeks ago, "Arizona cases

reflect a recognition of the Arizona legislature's strong desire to ensure the comparative fault principles are applied in most cases where the actions of more than one party combined to cause harm." Wilson v. Maricopa County, 2007 WL 686726, at *12 (D. Ariz. Mar. 2, 2007). 14. Giving due accord to Arizona's abolition of joint liability, Judge Campbell

allowed the late disclosure of non-parties at fault because it was clear "from the outset of th[e] case" that several parties were responsible for the plaintiff's damages. Id. Similarly here, Hypercom believed from the outset of this case that Verve played the primary role in causing its damages. Hypercom identified Verve as a defendant, and ultimately proceeded to judgment on the very torts at issue here against the party Omron seeks to identify as a nonparty at fault: Verve. 15. The Wilson Court further considered the fact that there remained time in the

discovery period to depose the newly identified nonparties at fault. While discovery is closed here, the plaintiff has already deposed Verve. Accordingly, no further discovery is required, and as Judge Campbell concluded, "[t]he purposes of Rule 26(b)(5) have been satisfied."

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WHEREFORE, Omron Corporation respectfully requests that the Court grant it leave to file its Designation of Non-Parties At Fault, identifying Verve LLC as a nonparty at fault, in the form attached hereto as Exhibit A instanter. Respectfully submitted,

April 5, 2007
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By: /s/ Matthew A.C. Zapf Matthew A.C. Zapf A. Colin Wexler GOLDBERG KOHN 55 East Monroe Street, Suite 3300 Chicago, Illinois 60603-5792 H. Michael Clyde PERKINS COIE BROWN & BAIN, P.A. 2901 North Central Avenue, Suite 2000 Phoenix, Arizona 85012-2788 Attorneys for Omron Corporation

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CERTIFICATE OF SERVICE I hereby certify that on April 5, 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 Hennung, IV David P Irmscher Sid Leach Monica Anne Limon-Wynn Paul Moore A. Colin Wexler Matthew AC 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 5, 2007, I caused the attached document to be served by hand delivery or overnight mail on Judge Paul G. Rosenblatt, United States District Court of Arizona, 401 West Washington Street, Phoenix, Arizona 85003-2118.

/s/ Matthew A.C. Zapf

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