Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Sid Leach (#019519) Andrew F. Halaby (#017251) 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] [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 OPPOSITION TO OMRON'S MOTION FOR EXTENSION OF DISCOVERY DEADLINE

Omron Corporation's ("Omron") Motion seeks a one-sided extension of the discovery deadline so that Omron can take additional discovery, but apparently Plaintiff Hypercom Corporation ("Hypercom") would not be allowed to take any discovery. The recitation of facts submitted in support of the Motion omits several crucial facts, which will be discussed below. However, putting aside disputes over who said what to whom and when, Omron's Motion should be denied because Omron is required to show "good cause" in order to obtain an extension of the deadline set in the Scheduling Order. Omron has not done so. A. This Court Warned The Parties That The Deadlines In The Scheduling Order Would Not Be Extended "Unless Very Good Cause Is Shown"

This Court entered a Scheduling Order in this case on November 21, 2005 warning the parties that "[a]ll discovery, including answers to interrogatories, shall be completed by June 15, 2006 . . . . Discovery which cannot be timely responded to prior to the discovery deadline will be met with disfavor, and could result in denial of an extension, exclusion of evidence, or the imposition of other sanctions." (Doc. #76, at 2 (emphasis in

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original). This Court's Scheduling Order further provided: The parties are cautioned that the deadlines set in the Scheduling Order shall be enforced, and that the Court will not entertain any stipulations to continue them ­ any request to extend any of the deadlines set herein must be made by means of a motion, joint or otherwise, and no such motion shall be granted unless very good cause is shown. (Doc. #76, at 4 (emphasis in original).) During the seven months between entry of the Scheduling Order and the June 15, 2006 deadline, Omron did not take one single fact deposition. Not one. Omron had ample time to conduct discovery in this case. There is a complete failure in the motion papers to show any diligence by Omron during the seven months that Omron had available to take discovery in this case. At best, Omron's Motion is an attempt to blame Hypercom for Omron's eleventh hour efforts to take discovery and Omron's failure to diligently pursue discovery. Omron's Motion admits that the witnesses whom Omron now seeks to depose were disclosed in Hypercom's initial disclosures served upon Omron back on January 17, 2006. (Doc. #129, at 3 ("William Dowlin, Chris Alexander, and George Wallner are listed by Hypercom in their Rule 26(a)(1) Initial Disclosure Statement as `Individuals Likely To Have Discoverable Information.'"); see also Doc. #97.) Omron knew about these witnesses six months prior to the discovery deadline. (Doc. #97). Omron's Motion fails to show good cause justifying why Omron did not depose these witnesses at any time during the six months that have elapsed since these witnesses were disclosed, and prior to the June 15, 2006 deadline in this case. Omron's excuse for its lack of diligence is that at the eleventh hour, two of the attorneys working on this case had conflicts. According to Omron's Motion, David Irmscher had "other work commitments." (Doc. #129, Omron's Motion, at 5.) This is not a valid excuse for failing to take a single fact deposition during the seven-month discovery period in this case. Instead of demonstrating good cause, Omron's Motion in fact

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demonstrates that Omron's counsel was indifferent to the provisions of this Court's Scheduling Order. Odie v. General Motors Corp., 131 F.R.D. 365 (D. Mass. 1990) ("[P]laintiff's counsel's actions evidence a deliberate indifference to the provisions of the scheduling orders of this Court. Such an attitude, if not the subject of sanctions when manifested in violations of the scheduling orders, tends to make a mockery of the Court's effort to manage civil cases in an efficient manner."). While Mr. Henning's excuse has more substance, it still fails to establish good cause for Omron not taking any depositions between the date that the Scheduling Order was entered and June 15, 2006. Omron's Motion fails to account for the other lawyers who could have taken depositions on behalf of Omron. First, Omron has two local lawyers identified as counsel of record in this case. In addition, Nancy G. Tinsley from the Baker & Daniels law firm has appeared in this case on behalf of Omron, although she subsequently withdrew. (Doc. ## 28, 29 and 54.) The web site for the Baker & Daniels law firm states that the Baker & Daniels firm has "more than 370 professionals in eight Baker & Daniels offices worldwide." (Copy of pertinent pages from web site for Baker & Daniels attached hereto as Exhibit 1.) If Omron had been diligent in pursuing discovery in this case, one would think that they could have found one of those 370 lawyers at the firm who could take a deposition for Omron in this case. Omron has failed to show good cause for why Omron did not do so. Without getting into the one-sided version of the story told by Omron's Motion, even if we take the whole story at face value, it is apparent that Omron could have noticed the depositions prior to the deadline if Omron had wanted to do so. Omron admits that it noticed the depositions without obtaining any agreement on dates. (Doc. #129, at 4 ("[H]aving received no responses from Hypercom's counsel with available dates, Omron noticed the Hypercom Witnesses for depositions . . . .").) More importantly, however, Omron admits that it unilaterally chose to notice the depositions after the deadline for completion of discovery because "lead counsel for Omron, David Irmscher, was not available to take the depositions during the first two weeks of June 2006 due to other work
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commitments." (Doc. #129, at 5.) Thus, although Omron attempts to blame Hypercom and imply that it was Hypercom's fault that Omron did not take depositions before the June 15, 2006 deadline, the truth is that even if Hypercom had given Omron every date between June 1 and June 15 for these depositions, Omron would not have completed the discovery in a timely manner. According to Omron, none of Omron's attorneys cared to make themselves available to take the depositions prior to the June 15, 2006 deadline even assuming that Omron had been provided with dates for those witnesses during that period. Omron's arguments attempting to blame Hypercom for Omron's failure to timely complete discovery are specious. Under Rule 16(b) of the Federal Rules of Civil Procedure, this Court was required to enter a scheduling order at the outset of the case "that limits the time (1) to join other parties and to amend the pleadings; (2) to file motions; and (3) to complete discovery." Rule 16(b), Fed.R.Civ.P. (emphasis added). These deadlines are mandatory. "A scheduling order is an important tool in controlling litigation." Rouse v. Farmers State Bank, 866 F. Supp. 1191, 1198 (N.D. Iowa 1994). This Court's Scheduling Order "is not a frivolous piece of paper, idly entered, which can be cavalierly disregarded by counsel without peril." Rouse v. Farmers State Bank, 866 F. Supp. 1191, 1198 (N.D. Iowa 1994), quoting from Gestetner Corp. v. Case Equipment Co., 108 F.R.D. 138, 141 (D. Me. 1985). The "flouting of discovery deadlines causes substantial harm to the judicial system." Rouse v. Farmers State Bank, 866 F. Supp. at 1199. The Ninth Circuit allows a district court wide discretion in enforcing its scheduling orders, and applies a deferential standard in its appellate review of such decisions. In the case of Wong v. Regents of the University of California, 379 F.3d 1097 (9th Cir. 2004), the court said: The abuse of discretion standard is deferential, and properly so, since the district court needs the authority to manage the cases before it efficiently and effectively. In these days of heavy caseloads, trial courts in both the federal and state systems routinely set schedules and establish deadlines to foster the efficient treatment and resolution of cases. Those efforts will be successful only if the deadlines are taken
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seriously by the parties, and the best way to encourage that is to enforce the deadlines. Parties must understand that they will pay a price for failure to comply strictly with scheduling and other orders, and that failure to do so may properly support severe sanctions and exclusions of evidence. 379 F.3d at 1103 (emphasis added). In this case, it appears that Omron's attorneys did not take this Court's Scheduling Order seriously. Not enforcing the deadlines merely rewards Omron for disregarding this Court's Order. Rouse v. Farmers State Bank, 866 F. Supp. 1191, 1198 (N.D. Iowa 1994) ("Adherence to reasonable deadlines is therefore critical to maintaining integrity in court proceedings."); In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 652, 654 (E.D. Mich. 1989) ("The Advisory Committee notes indicate that the `explicit reference [of Rule 16] to sanctions reinforces the rule's intention to encourage forceful judicial management.'"), aff'd without opinion, 917 F.2d 24 (6th Cir. 1990). Omron Refused To Allow Hypercom To Take Any Discovery After The June 15 Deadline And Would Not Respond To Hypercom's Written Discovery Requests

Hypercom served written discovery requests upon Omron on May 17, 2006. (Copies of these discovery requests are attached hereto as Exhibits 2-4.) Due to an inadvertent error in calculating the deadline for serving written discovery, responses to the discovery requests did not fall due until June 16, 2006 ­ one day after the deadline for completing discovery ended. Omron fails to mention in its recitation of facts relevant to its Motion that Omron itself objected to the taking of any fact discovery after the June 15, 2006 deadline in which to complete discovery. Specifically, in a letter dated May 24, 2006, Omron refused to respond to Hypercom's discovery requests on grounds that the responses were not due until after the June 15, 2006 deadline. (See Letter from J. Henning dated May 24, 2006, attached hereto as Exhibit 5.) Yet on that same day, Omron served notices of deposition (see Exhibit I to Motion, Doc #129) in an attempt to depose fact witnesses after the expiration of the discovery deadline. Omron's Motion acknowledges that Hypercom had attempted to schedule the

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depositions of Thomas Anderson and Christopher Walton, and could not get available dates from Omron prior to the June 15, 2006 deadline. Hypercom noticed the deposition of Christopher Walton for May 10, 2006 (Doc. #111) and Thomas Anderson for May 17, 2006 (Doc. #112), but Omron's counsel was not available on those dates. Hypercom postponed these deposition dates in an attempt to find a date that was convenient for Omron's attorneys. Hypercom was never able to re-schedule those depositions on a date that Omron's attorneys were "available" and the witnesses were available. It was only after Omron had objected to Hypercom taking any discovery after the deadline that the present discovery dispute arose. Omron refused to respond to any of Hypercom's discovery requests after the June 15, 2006 deadline on the same date that Omron served the deposition notices at issue in this Motion. It hardly can appear fair or equitable for Omron to insist on the one hand that it should be able to take discovery after the deadline, while at the same time refusing to respond to Hypercom's discovery requests on grounds that the responses fell due one day after the June 15, 2006 deadline. It was only after Omron refused to allow Hypercom to take any discovery after the June 15, 2006 deadline that Hypercom took a similar position with respect to the discovery sought by Omron. C. Hypercom Will Be Prejudiced By An Eleventh Hour Extension Of The Discovery Deadline

Omron's Motion argues that the extension requested by Omron "will not prejudice either party." This is not true. The one-sided extension sought by Omron will prejudice 21 Hypercom by giving Omron the unfair advantage of allowing Omron to take additional 22 discovery after the June 15, 2006 deadline, when Omron has refused to respond to 23 discovery requests served by Hypercom on grounds that the response would fall due one 24 day after the June 15, 2006 deadline. This one-sided position taken by Omron brings to 25 mind the old equitable maxim that he who seeks equity must do equity. Omron's Motion 26 fails to satisfy that test. 27 In addition, allowing Omron to take depositions just prior to the deadline for 28
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dispositive motions will prejudice Hypercom by interfering with Hypercom's preparation of a dispositive motion, both by tying up Hypercom's principal counsel during the period when attention needs to be focused upon dispositive motions, and by leaving open the possibility that deposition testimony elicited immediately prior to or after the deadline for filing the dispositive motion may have some impact on Hypercom's motion. It is also fair to say that any delay in the ultimate resolution of this case prejudices Hypercom. Granting Omron's Motion will result in a delay in the determination of this action, and will increase Hypercom's litigation expenses. Geiserman v. MacDonald, 893 F.2d 787, 792 (5th Cir. 1990) ("Regardless of [Plaintiff's] intentions, or inattention, which led to the flouting of discovery deadlines, such delays are a particularly abhorrent feature of today's trial practice. They increase the cost of litigation, to the detriment of the parties enmeshed in it"). Under the provisions of Rule 1, Fed.R.Civ.P., the Court should administer the rules "to secure the just, speedy, and inexpensive determination of every action." Granting Omron's motion will accomplish none of these objectives. Scheduling orders and their enforcement "are regarded as the essential mechanism for cases becoming trial-ready in an efficient, just, and certain manner." Kramer v. Boeing Co., 126 F.R.D. 690, 696 (D. Minn. 1989). It is unjust to reward Omron by extending the deadlines in the case, when Omron has not taken a single fact deposition during the seven months that have elapsed since the Scheduling Conference. Omron has failed to demonstrate good cause for flouting this Court's Scheduling Order and ignoring this Court's warnings that the deadlines would be strictly enforced in this case. In re Air Crash Disaster at Detroit Metropolitan Airport, 130 F.R.D. 652, 654 (E.D. Mich. 1989) (failure to enforce scheduling order will "reward [Plaintiff] for acting in deliberate disregard of an Order of this Court, and . . . render judicial directives as nugatory and without legal efficacy."), aff'd without opinion, 917 F.2d 24 (6th Cir. 1990). In any event, there is no burden upon Hypercom to establish any prejudicial effects caused by Omron's refusal to obey the Court's Scheduling Order. In re Air Crash
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Disaster at Detroit Metropolitan Airport, 130 F.R.D. 652, 653-54 (E.D. Mich. 1989), aff'd without opinion, 917 F.2d 24 (6th Cir. 1990). D. Hypercom Could Not Provide Dates For a Rule 30(b)(6) Deposition Without Knowing What The Topics Of The Deposition Would Be

Omron argues that it sought dates from Hypercom for a Rule 30(b)(6) deposition, and blames Hypercom for not providing date to Omron. Putting aside the fact that Omron 6 waited until the last minute to ask for such a deposition, Omron's Motion admits that 7 Hypercom asked what topics would be covered by the Rule 30(b)(6) deposition. (Doc. 8 #129, at 4 ("On May 18, 2006, Hypercom's counsel requested from Omron additional 9 information regarding the topics on which Omron wanted testimony from a Hypercom 10 corporate representative under Rule 30(b)(6).").) Under Rule 30(b)(6) of the Federal 11 Rules of Civil Procedure, a corporation may be deposed by serving a notice specifying the 12 subject matter to be covered in the deposition. Once the corporation is aware of the topics 13 to be covered in the deposition, it can determine who to designate to testify on behalf of 14 the corporation. 15 It is unrealistic for Omron to expect Hypercom to be able to determine what dates a 16 witness would be available, because Hypercom could not know who would be designated 17 to testify without knowing what topics would be covered by the deposition. Omron's 18 argument puts the cart before the horse. Hypercom could not determine dates when a 19 witness would be available until Omron specified the topics to be covered in the 20 deposition. On May 18, 2006, Hypercom requested that Omron provide even a draft of 21 the Rule 30(b)(6) notice in order for Hypercom to identify the appropriate individuals to 22 testify on its behalf. (Doc #129 at Exhibit H.) But Omron did not provide Hypercom 23 with any Rule 30(b)(6) notice until May 24, 2006 when it noticed such deposition based 24 on Omron's counsel's availability (see Doc #129 at p. 5) for June 28, 2006 ­ two weeks 25 after the close of discovery. 26 Notably, Omron already has taken a Rule 30(b)(6) deposition of Hypercom in this 27 action. During the period of time that the Court allowed jurisdictional discovery, Omron 28
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took Hypercom's deposition on a number of topics. (Doc. #49.) In fact, several of the subject matters identified in the prior Rule 30(b)(6) are identical to the matters identified in the Rule 30(b)(6) notice dated May 24, 2006. For example, almost every matter listed on pages 8-10 of the current Rule 30(b)(6) notice regarding the "facts and circumstances" of the specific allegations from Hypercom's Complaint, also was listed in the prior Rule 30(b)(6) notice. E. Omron Has Failed To Demonstrate That The Discovery Sought Is Relevant Or Necessary

Any showing of good cause to extend the deadline for completion of discovery would necessarily require a showing of the relevance and importance, if any, of the 10 discovery sought. Omron has failed to make any such showing. 11 Much of the discovery sought by Omron is not relevant and is not likely to lead to 12 the discovery of admissible evidence. Omron sought to take depositions of "a Rule 13 30(b)(6) Hypercom representative with knowledge of technical issues relating to 14 Hypercom's products accused of infringement." (Doc. #129, Omron's Motion, at 3.) 15 This attempt by Omron to get testimony from Hypercom at this late date on the technical 16 details of Hypercom products that Omron's agent, Verve, accused of infringement, long 17 after the lawsuits were filed without any basis for accusing Hypercom of infringement, is 18 irrelevant discovery. View Engineering, Inc. v. Robotic Vision Systems, Inc., 208 F.3d 19 981, 986 (Fed. Cir. 2000) ("In bringing a claim of infringement, the patent holder, if 20 challenged, must be prepared to demonstrate to both the court and the alleged infringer 21 exactly why it believed before filing the claim that it had a reasonable chance of proving 22 infringement.") (emphasis added). 23 This case is about lawsuits that were filed by Verve against Hypercom using 24 Omron's patents without any good faith basis for believing that Hypercom's accused 25 products actually infringed the Omron patents. Omron's Rule 30(b)(6) witness has 26 already admitted that Omron had no good faith basis for accusing any Hypercom product 27 of infringement of any of the asserted Omron patents. Omron cannot send Verve off to 28
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sue Hypercom on Omron's patents without any basis for accusing Hypercom of infringement. The tactic of filing lawsuits first and investigating later is not acceptable. Burnette v. Godshall, 828 F. Supp. 1439, 1448 (N.D. Cal. 1993) ("Plaintiff's attorney chose to `file first and investigate later,' which is unacceptable."), aff'd, 72 F.3d 766 (9th Cir. 1995); Ultra-Temp Corp. v. Advanced Vacuum Systems, Inc., 194 F.R.D. 378, 382 (D. Mass. 2000) ("[I]t should be obvious that the requirement of a pre-filing investigation would be utterly meaningless if a party could file a complaint without having done the requisite investigation, do some discovery, and then file an amended complaint and thereby insulate itself from any possibility of being sanctioned for the failure to conduct a pre-filing investigation before filing the original claim."); Garr v. United States Healthcare, Inc., 22 F.3d 1274, 1279 (3d Cir. 1994) (if a reasonable inquiry has not been conducted, attorney will not be shielded from sanctions by "the stroke of luck that the document happened to be justified"); Vista Manufacturing, Inc. v. Trac-4 Inc., 131 F.R.D. 134, 138 (N.D. Ind. 1990) ("A shot in the dark is a sanctionable event, even if it somehow hits the mark."); Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990) (if a lucky shot could save the signer from sanctions, the purpose of Rule 11 "to deter baseless filings" would be frustrated). Nor can Omron claim at this point that the depositions may lead to the discovery of admissible evidence, because the period for such discovery has passed. There is no opportunity for follow up discovery that might lead to admissible evidence. Any attempt to take deposition after the deadline for completion of discovery cannot rely upon any argument that the depositions may lead to the discovery of admissible evidence. F. Conclusion

Omron failed to take any fact depositions during the seven months available for discovery in this case. Omron has failed to show good cause sufficient to justify rewarding Omron for its lack of diligence with the advantage of a one-sided extension of the deadline so that Omron can take discovery while precluding Hypercom from doing so. For the foregoing reasons, Plaintiff Hypercom Corporation respectfully requests that the
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Court deny Omron's Motion for an Extension of the Deadline for Discovery Set in the Scheduling Order. RESPECTFULLY SUBMITTED this 3rd day of July, 2006. SNELL & WILMER L.L.P.

By s/Monica A. Limón-Wynn Sid Leach Andrew F. Halaby Monica A. Limón-Wynn SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Attorneys for Plaintiff Hypercom Corporation

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CERTIFICATE OF SERVICE I hereby certify that on July 3, 2006, I electronically transmitted HYPERCOM CORPORATION'S OPPOSITION TO OMRON'S MOTION FOR EXTENSION OF DISCOVERY DEADLINE 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] Paul Moore Ray K. Harris FENNEMORE CRAIG, P.C. 3003 N. Central Avenue, Suite 2600 Phoenix, AZ 85012-2913 Phone: 602-916-5414 Fax: 602-916-5614 [email protected] [email protected] Attorneys for Defendant Omron Corporation s/ Monica A. Limón-Wynn
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