Free Reply in Support of Motion - District Court of Arizona - Arizona

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Joel L. Herz, Esq. State Bar No. 015105 Law Offices of Joel L. Herz 3573 East Sunrise Drive, Suite 215 Tucson, AZ 85718 Telephone: 520-529-8080 Facsimile: 520-529-8077 Attorneys for Defendant GTFM, LLC UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA MEADOWLARK LEMON, et al., Plaintiffs vs. HARLEM GLOBETROTTERS INTERNATIONAL, INC., et al., Defendants ) ) ) ) ) ) ) ) ) )

Case No. CV 04-0299 PHX-DGC Case No. CV 04-1023-PHX-DGC

REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS' MOTION TO STRIKE THE NEW ANALYSES OF OLIVER PHIPPS AND PLAINTIFFS' JOINT SUPPLEMENTAL DISCLOSURE STATEMENTS Defendants submit this reply memorandum of law in further support of their Motion to Strike ("Motion to Strike" or "Motion") the New Analyses of Oliver Phipps, dated October 27, 2006 (the "Phipps II Analysis") and October 31, 2006 (the "Phipps III Analysis"), as well as Plaintiffs' Joint Supplemental Disclosure Statement and Second Joint Supplemental Disclosure Statement (the "New Disclosures") (collectively referred to as the "Untimely Disclosures"). Plaintiffs' Opposition (the "Opposition") is filled with inaccuracies and provides no basis to deny Defendants' Motion to Strike. First, it remains plain that the Phipps II and III Analyses violate several court orders. Plaintiffs have attempted to mask the Untimely Disclosures as mere summaries of data.
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As we demonstrated in the

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Memorandum of Law in support of the Motion (the "Memo of Law"), that is wrong. They are expert reports, concededly done in the manner that GTFM suggested in its motion to strike the Abalos Report. See October 27, 2006 Phipps Aff., ¶15, attached as Exhibit B to the declaration of Ira S. Sacks in support of the Motion to Strike, dated November 1, 2006 ("Sacks Decl.") (Dkt # 470-472). Moreover, the Phipps II and III Analyses are fraught with false assumptions and errors. Sacks Decl. ¶¶ 28-40. Second, Defendants have been prejudiced by the Phipps II and III Analyses: if the Phipps II and III Analyses had been submitted in August 2005, GTFM would have retained a rebuttal expert, done a survey regarding the marketing impact of hangtags and taken the deposition of Mr. Phipps regarding his analyses.1 I. The Phipps II and III Analyses Violate Several Court Orders and Should Be Precluded As set forth in the Memo of Law and the Sacks Decl., the Phipps II and III Analyses are in violation of this Court's August 3, 2005, August 18, 2005 and June 27, 2006 Orders. The Phipps II and Phipps III Analyses do far more than summarize voluminous data. To the contrary, these Analyses are expert reports that attempt to give the illusion of accuracy, but instead are allocations fraught with assumptions and calculations of the very type Ms. Abalos could have done and did not do. The calculations in the Phipps II and II Analyses are far more than a matter of "a juror [looking] at FUBU's business records, and [seeing] that the sales for a dress bearing Marques Haynes' name and player number are so many units for total revenue of X."

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Plaintiffs' Opposition is untimely. Pursuant to Local Rule 7.2(c), Plaintiffs had 10 days after service within which to serve and file a responsive memorandum. Defendants filed their motion on November 1, 2006. Therefore, Plaintiffs' Opposition was due on November 15, 2006; it was not filed until November 20, 2006. Plaintiffs' failure to timely respond constitutes consent to the granting of the motion. EEOC v. Lennar Homes of Arizona, Inc., 2006 WL 1734594, at *1 (D. Ariz. 2006); Local Rule 7.2(i).
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Opposition, at 15. That is precisely what this Court indicated that it would not allow jurors to do. June 27 Order, at 23. In their attempt to defend these Analyses, Plaintiffs rely on a parade of inaccurate statements. For example, Plaintiffs suggest that Defendants have had the Phipps

Analyses since February 18, 2005 and could have taken discovery of Mr. Phipps about them. Opposition, at 5, 15; Preadmission Motion, at 5. This is false. As Defendants stated in opposition to Plaintiffs' Preadmission Motion, Defendants were not aware of even the Phipps I Analysis until November 2005, when Plaintiffs submitted it in connection with the summary judgment motions. The charts Plaintiffs refer to in their February 18 Letter only included sales for eight styles and did not have any information regarding Plaintiff Lemon. Moreover, the charts that were sent were represented to be attorney work product, without any suggestion that Mr. Phipps had anything to do with them. See Declaration of Ira S. Sacks, dated November 16, 2006, in Opposition to Plaintiffs' Preadmission Motion (Dkt # 516) ("Sacks Nov. Decl.") ¶ 20.2 One other example of Plaintiffs' false desperation: Plaintiffs state that they were not informed about Japanese sales until September 13, 2005, days before discovery cutoff, and were unaware that those sales were made by a licensee and GTFM only received a royalty, not sales revenues. Opposition, at 9, 10 n.5. That is false. Plaintiffs were well aware that sales in Japan were made by a licensee. In his deposition on August 3, 2005, Bruce Weisfeld testified that there is a sub-licensing agreement in Japan with Itochu. See Weisfeld Tr. pgs. 43-44 attached as Exhibit A. GTFM produced the Itochu

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Plaintiffs state that "Plaintiffs' first chart and letter of February 18, 2005 to Defendants' list 58 styles, not including the charts attached." Opposition, at 9. While the letter may have listed a number of women's styles, Plaintiffs only included sales information and a damage claim relating to eight styles in the letter or in their attached work product. And Plaintiffs did not disclose any involvement by Mr. Phipps in the analysis.
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sublicense agreement during discovery. Not only that, Plaintiffs questioned Mr. Blenden about a royalty report from Japan in his deposition on August 2, 2005 (see Blenden Tr., pgs. 52-53, attached as Exhibit B) and Ms. Abalos included Japanese sales in her precluded expert report, which was submitted August 19, 2005. Sacks Decl. ¶ 30. II. The Untimely Analyses and Disclosures Are Not Justified and are Extremely Prejudicial to Defendants The untimely Phipps II and III Analyses and New Disclosure are not substantially justified and are extremely prejudicial to Defendants. Plaintiffs falsely attempt to blame Defendants for their deficiencies, and assert that this gives them "good cause" to serve the untimely Phipps II and III Analyses and New Disclosures. As with the discovery issues regarding the Abalos Report raised by Plaintiffs in August 2005 ­ when this Court repeatedly noted Plaintiffs' belated and untimely discovery efforts ­ the untimeliness here is Plaintiffs' fault. Plaintiffs' false and misleading accusations include, but are not limited to, the following: "Defendants have not provided one single garment sample to Plaintiffs, nor have

they stated that they possess any that Plaintiffs could have inspected." Opposition, at 4. Plaintiffs did not request samples in any of their numerous discovery requests. "Plaintiffs' Item #126, Style HGB 3545S was purchased at Marshall's...and HAS

NEVER been disclosed by FUBU as a garment bearing Curly Neal's name, number or hang tag before." Opposition, at 5. Style HGB 3545S does not bear Curly Neal's name or alleged likeness anywhere on the garment (see Exhibit C attached hereto) and GTFM has no records of the garments on which particular hangtags were used. Plaintiffs state that they have "independent EVIDENCE" that FUBU sales have Opposition, at 3-4. The fact that retailers are still selling

occurred after 2004.

FUBU/HGI Apparel does not mean that GTFM is still making sales. It just shows the slow sales of these goods. The GTFM/HGI License Agreement expired on November
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30, 2004 and permitted GTFM a 180 day sell-off period.

GTFM is not currently

manufacturing and/or selling any Alleged Infringing FUBU/HGI Apparel. Nonetheless, GTFM's customers continue to sell off the merchandise they had previously purchased. These retail stores do not have any impact on GTFM's present or future revenues and such sales are not reported to GTFM. See Weisfeld Decl. ¶¶ 6-7, attached as Exhibit D. Plaintiffs assert that they "are still awaiting the results of the [Philippines]

investigation." Opposition, at 2 n.2. The Philippines have nothing to do with this case! This Court ordered on October 7, 2005 that "no additional production of documents will be required by the FUBU Defendants related to foreign sales." See October 7, 2005 Order, ¶ 5 (Dkt #173). What is more, apparently Plaintiffs intend to spring new irrelevant information on the Court and Defendants until the jury comes in with a verdict. Plaintiffs argue that they were extremely diligent throughout this litigation. That

simply is untrue, and deposing three FUBU executives in New York in early August 2005 does not show Plaintiffs' diligence. Indeed, this Court has already noted that Plaintiffs took these depositions after they should have already completed their expert disclosures. See August 18 Order (Dkt # 148); August 3 Order (Dkt # 143). Nor are the Phipps II and III Analyses and the New Disclosure harmless. If Plaintiffs had submitted the Phipps II and III Analyses as an expert report on the revised final date when their expert report was due on August 19, 2005, GTFM would have retained two experts: one in rebuttal to the numbers set forth in the Phipps II and III Analyses and one on causation relating to the effect of hangtags and labels. GTFM did not do so because at that time GTFM relied on the Abalos deposition to test Plaintiffs' expert's numbers and Ms. Abalos sought no damages regarding the hangtags or labels. Defendants were successful in their attempt to preclude the Abalos Report. To permit the Phipps II and III Analyses now would vitiate this Court's prior rulings and be highly prejudicial to Defendants. See Sacks Decl. ¶¶ 24-26.

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III.

SUPPLEMENTAL DISCLOSURES MUST CEASE Rule 26 disclosures cannot go on forever. At some point the parties need to rely

on the evidence they have and try the case. However, Plaintiffs continue to search for new garments around the globe and will continue to serve supplemental disclosures and amended expert reports if the Court does not put a stop to it now. Plaintiffs argue that the information set forth in the Untimely Disclosures was not untimely discovery because the Untimely Disclosures are not discovery efforts directed toward Defendants of the kind contemplated by F.R.C.P. 26(a)(5) and instead contain evidence obtained independent of the discovery process. That is both incorrect and irrelevant. First, Plaintiffs admit that Mr. Phipps did his damage analyses based on the information provided by Defendants during discovery. disclosed and tested during discovery. Moreover, Plaintiffs cite to an unpublished decision, MRO Communs., Inc. v. AT&T, 1999 U.S. App. LEXIS 32522 (9th Cir. 1999) for the proposition that the Court clearly has wide discretion in determine whether a disclosure is untimely.3 MRO actually is contrary to Plaintiffs' position. In MRO, plaintiff invited the court to find that Rule 26(e)(1) creates a loophole through which a party who submits partial expert witness disclosures can add to them to its advantage after the court's deadline for doing so has passed. The court declined, explaining that the "language and spirit of Rule 26(e)(1) weigh against this reading of the rule....`supplementation under the Rules means correcting inaccuracies, or filling the interstices of an incomplete report based on Thus, it should have been

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Reliance on this decision is improper for two reasons: Ninth Circuit Rules state that "[u]npublished dispositions and orders of this Court are not binding precedent, except where relevant under the doctrine of law of the case, res judicata, and collateral estoppel... A copy of any cited unpublished disposition or order must be attached to the document in which it is cited, as an appendix." See 9th Cir. Rule 36-3. There are no "law of the case, res judicata, and collateral estoppel" effects of the MRO decision in this case and Plaintiffs did not attach it.
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information that was not available at the time of the initial disclosure.'" See id. at *17-18 (citations omitted). The Court found that the exhibit and additional expert testimony ­ which was presented two years after the court's deadline ­ did not correct, clarify or fill in a gap in the original expert disclosure based on information that was not available at the time of the initial disclosure, and was inadmissible. Id. at *18. Much like in MRO, here Plaintiffs are attempting to submit exhibits with new damage analyses 14 months after the deadline. The Phipps II and III Analyses do not merely correct inaccuracies, or fill the interstices of an incomplete report based on information that was not available at the time of the initial disclosure. On the contrary, the Phipps II and III Analyses correct and expand the precluded Abalos Report based on data that was fully available to Ms. Abalos, and which Ms. Abalos ignored. This cannot be allowed. IV. DEFENDANTS' MOTION IS A PROPER MOTION TO STRIKE Plaintiffs incorrectly state that "Defendants' Motion is improper as any objections to Plaintiffs' disclosure containing proposed exhibits should be in the form of a three page in limine" and also misstate this Court's June 27 Order. See Opposition, at 7, 8 n.3. On the contrary, the June 27 Order related to two other untimely disclosures by Plaintiffs, as to which Defendants had moved to strike. The Court denied the motions to strike as moot, stating that the Court had not considered the untimely disclosures "because the submissions were untimely and Plaintiffs failed to show good cause for their untimeliness." See June 27 Order, at 29. The Court went on: "[t]o the extent Plaintiffs intend to offer at trial evidence contained in their second and third supplemental disclosure statements, Defendants may raise objections to such evidence in pretrial motions in limine." See June 27 Order, at 30. This Court's June 27 Order did not find

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that the motions to strike were an improper method of challenging the untimely disclosures.4 Moreover, Plaintiffs allegation that "Defendants have already attacked Plaintiffs' proposed Summary in several other pleadings" is incorrect. Opposition, at 8. The only time Defendants have "attacked" the Phipps II and III Analyses is in Defendants' Opposition to Plaintiffs' Preadmission Motion. Contrary to Plaintiffs' assertions,

Defendants GTFM's First Motion In Limine to Exclude the Analysis of Oliver Phipps from Trial (Doc #427) and Defendants' Joint In Limine Motion to Exclude Any Evidence of Sales Allegedly Violating Plaintiffs' Rights Other than as Expressly Set Out in the June 27, 2006 Order (Doc #458) addressed the Sales Chart ­ the Phipps I Analysis ­ and did not deal with the Phipps II and III Analyses, as they had not been disclosed to Defendants at that time.5 V. PLAINTIFFS AND THEIR COUNSEL SHOULD BE SANCTIONED Finally, Plaintiffs and their counsel should be sanctioned. This Court observed in the June 27 Order that Plaintiffs' prior supplemental disclosures had not been considered by the Court in connection with the summary judgment motions "because the submissions were untimely and Plaintiffs failed to show good cause for their untimeliness." See June 27 Order, at 29. That Order has not stilled the constant stream of supplemental disclosures by Plaintiffs. As previously noted, Fed. R. Civ. P. 37(c)(1) allows for the award of fees and costs incurred in these circumstances. Here, Plaintiffs

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Much like Plaintiffs' Motion for Preadmission of Exhibits and Evidence (Dkt # 474-475) (the "Preadmission Motion") and Plaintiffs' Joint Motion to Strike GTFM Defendant's Untimely Disclosures to Present Evidence to the Jury and for Sanctions (Dkt # 485) ("Plaintiffs' Motion to Strike"), the present Motion is not merely an in limine motion. It seeks to strike the disclosures in their entirety and not merely exclude certain exhibits from trial.
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Plaintiffs state that "Defendants' Motion ... includes an eighteen page Declaration of Ira Sacks, that is improper "expert testimony." Opposition, at 7. Plaintiffs never explain how Mr. Sacks' declaration pointing out inaccuracies in Mr. Phipps' Analyses constitutes an expert report.

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are attempting to submit expert reports over 14 months after their expert report was due, after their original expert report was excluded and 13 months after the close of discovery, all in violation of at least three Court orders. The untimely disclosures are extremely prejudicial to Defendants and are not substantially justified. Such conduct warrants sanctions.6 CONCLUSION For all of the foregoing reasons and the reasons previously set forth in our papers supporting the Motion, Defendants respectfully request that the Court grant the Motion and enter an order (i) striking the Phipps II and Phipps III Analyses in their entirety; (ii) striking the New Disclosures in their entirety; and (iii) imposing sanctions on Plaintiffs and their counsel.7 DATED: November 27, 2006

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Plaintiffs cite to Eleventh Circuit precedent to argue that even if untimely discovery has been served, such undisclosed evidence may still be used for impeachment. While Fed.R.Civ.P. 26(a)(3) does exempt parties from disclosing evidence they may present at trial solely for impeachment purposes (Bearint v. Dorell Juvenile, 389 F.3d 1339, 1353 (11th Cir. 2004)), that is not the case here. The Phipps II and III Analyses and New Disclosures are not impeachment materials. They are affirmative evidence that Plaintiffs intend to use during their case in chief.
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This case is ready to go to trial and Defendants are fully prepared to go to trial. If the Court allows Plaintiffs to rely on the Phipps II and III Analyses, due process requires that expert discovery be reopened for several reasons, all as set forth in our moving papers.

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DREIER LLP

GARVEY McNEIL & McGILLIVRAY, S.C. By /s/ Edward R. Garvey___________ Edward R. Garvey Christa Westerberg 634 W. Main St. #101 Madison, WI 53703 Telephone: 608-256-1003 Ray K. Harris Fennemore Craig, P.C. 3003 North Central Avenue, Suite 2600 Phoenix, AZ 85012-2913 Telephone: 602-916-5000 Attorneys for Defendants Harlem Globetrotters Int'l, Inc. and Mannie L. & Catherine Jackson

By

/s/ Ira S. Sacks__________ Ira S. Sacks Safia A. Anand 499 Park Avenue New York, New York 10022 Telephone: 212-328-6100 Joel L. Herz, Esq. State Bar Number 015105 La Paloma Corporate Center 3573 E. Sunrise Dr., Suite 215 Tucson, Arizona 85718-3206 Telephone: 520-529-8080 Attorneys for Defendant GTFM, LLC

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