Free Response to Motion - District Court of Arizona - Arizona

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GREENBERG TRAURIG, LLP
ATTORNEYS AT LAW SUITE 700 2375 EAST CAMELBACK ROAD PHOENIX, ARIZONA 85016 (602) 445-8000

Steven M. Weinberg, SBN 016817, [email protected] Brian J. Schulman, SBN 015286, [email protected] Kimberly A. Warshawsky, SBN 022083, [email protected] Attorneys for Plaintiff Awareness Corporation and Third Party Defendants Allcock and Schmidt IN THE UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Awareness Corporation, Plaintiff, v. Group Vision International, L.L.C., et al., Defendants. Plaintiff Awareness Corporation ("Awareness") hereby responds to the Defendants' Motion in Limine to exclude Awareness' exhibits numbered 194 and 195 and the testimony of certain (unnamed) witnesses1 at trial. The Defendants' Motion lacks both factual and legal support, and is little more than an ill-conceived, last minute effort to exclude relevant, admissible, and damaging evidence and testimony. Awareness therefore respectfully requests that the Court deny the Defendants' Motion, and award Awareness its reasonable attorneys' fees for responding to this baseless Motion. This The Distributor Defendants' Motion in Limine does not comply with the Court's May 31, 2005 Order Setting Final Pretrial Conference because it (i) fails to include a proposed Order granting the Motion in Limine and (ii) fails to state, with precision, the "great many witnesses" to whom the Distributor Defendants object. Awareness is therefore unable to determine to whom the Distributor Defendants object, and the specific basis for each objection.
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No. CV03-2024-PHX-DGC AWARENESS CORPORATION'S RESPONSE TO THE DISTRIBUTOR DEFENDANTS' MOTION IN LIMINE

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Response is supported by the attached Memorandum of Points and Authorities, the Declaration of John F. Lomax, Jr., attached hereto as Exhibit D, and the entire record, which is incorporated herein by this reference. MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION AND FACTUAL BACKGROUND. Prior to the December 4, 2003 Preliminary Injunction hearing (the "December 4 Hearing"), and as part of the expedited discovery taken in preparation for that hearing, Awareness requested, and the Defendants provided, copies of defendants Mattice's and Remelski's computer hard drives. Awareness made this request in response to the Defendants' discovery responses and to their counsel's statement that Ms. Mattice routinely and frequently deleted her emails. Awareness became concerned that relevant evidence may have been deleted from the Mattice and/or Remelski computer hard drives, and thus wanted to have a qualified computer forensic specialist examine their hard drives for "deleted" emails that the expert would be able to retrieve. Under the watchful eyes of defendants Remelski and counsel for the Defendants, Awareness' designated computer forensics expert Mark Cardwell imaged the defendants' computers in Mr. Eagleburger's offices on November 21, 2003. With everyone's consent and knowledge, Mr. Cardwell thereafter searched the imaged hard drives using a search term list agreed upon by the parties' respective counsel. Mr. Cardwell prepared an initial computer forensics report (the "initial Cardwell Report") summarizing his findings and attaching, in Zip format, all relevant, non-privileged and non-personal computer files from the Mattice's and Remelski's computers in early December 2003. Mr. Cardwell prepared a second report of the defendants' computer files in Spring 2004 (the "final Cardwell Report"). Counsel for Awareness emailed copies of the initial and final Cardwell Reports to the Defendants, with all exhibits attached thereto, on December 3, 2003 and March 10, 2004, respectively. Despite receiving multiple copies of the Cardwell Reports and their attachments well over a year and a half ago, the Defendants now claim, for the first time, and in an
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obvious last-ditch effort to conceal damaging evidence at trial, that Awareness' counsel should not be permitted to view or utilize the expert report the parties had agreed to receive. Obviously unable to dispute that fact, the Defendants' sole basis for objecting to Exhibits 1942 and 195 appears to be that Awareness' counsel should not ever have received these emails retrieved by the expert and forwarded to the Defendants. They also seem to be arguing that Awareness was somehow responsible for ensuring that the Defendants knew how to open the Zip electronic copies of the Cardwell Reports. The Defendants' Motion also seeks to exclude witnesses with relevant knowledge of the Defendants' scheme of unfair competition on the absurd argument that Awareness' only source of the names of Awareness' current and former distributors who were targeted as part of that tortious scheme was the Cardwell Reports. The Defendants' Motion provides no meaningful basis upon which to exclude Exhibits 194 and 195, tellingly provides the Court with only half of the relevant correspondence between the parties regarding the use of the Cardwell Reports, and does not otherwise explain how Awareness' proposed witness list could only have come from the Cardwell Reports. The Defendants' Motion must be denied. II. ARGUMENT. A. Awareness' Trial Exhibits 194 and 195 Should be Admitted at Trial. Awareness' proposed trial exhibits 194 and 195 consist of damaging admissions by the Defendants, including defendants Mattice, Remelski, and Betts. Because of these damaging admissions, the only basis upon which the Defendants can seek to have this evidence excluded is by falsely claiming that Awareness breached an alleged "clear" Regardless of whether the parties had an clear agreement regarding the use of the Cardwell Reports, the Defendants' objection to Exhibit 194 is untenable and cannot be sustained ­ David and Suzanne Betts voluntarily produced an identical copy of Exhibit 194 on December 1, 2003. A true and correct copy of that document is attached hereto as Exhibit A, and is incorporated herein by this reference. At a minimum, then, Awareness should be permitted to substitute Exhibit A, which was obtained from documents produced by the Betts, for Exhibit 194, which was obtained from the Cardwell Reports.
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agreement of the parties regarding the Cardwell Reports. Because there was no clear agreement between the parties, Awareness could have not have breached any alleged discovery obligations. Indeed, and regardless of whether Awareness was entitled to possess the Cardwell Reports, Exhibit 195 is relevant evidence that should have been ­ but was not ­ produced during the normal course of discovery, just as Exhibit 194 was independently produced. Exhibits 194 and 195 must therefore be admitted. 1. The Parties Agreed to a Computer Forensics Exam in November 2003.

As part of the expedited discovery taken prior to the December 4 Hearing, Awareness issued discovery requesting all correspondence and other documents exchanged between the Defendants regarding Awareness and GVI. The original discovery responses received from the Defendants, particularly those provided by defendant Mattice, were sorely deficient. When questioned about Mattice's complete failure to produce email correspondence between she and the other defendants, counsel for Ms. Mattice advised Awareness that she "deletes" her email. See Exhibit B. In response, Awareness served additional discovery seeking to inspect certain defendants' computers. On November 20, 2003, counsel for the Defendants agreed to make Mattice's and Remelski's computer hard drives, disks, and CD ROMs available for a forensic inspection. Defendants proposed seven conditions for that inspection, including the condition that "a copy of the disk of the extracted materials [would] be retained by the tester [the forensic computer expert] in escrow but not revealed to Plaintiff's counsel without a court order." See Exhibit C. Counsel for Awareness immediately advised counsel for the Defendants by telephone that these terms were not acceptable to Awareness. See Exhibit D. Still hoping to obtain information that would be useful at the December 4 Hearing, counsel for Awareness agreed to use a qualified computer forensic expert, Mr. Cardwell, to copy the Defendants' hard drives and search for potentially relevant documents using a

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list of search terms that would be provided to counsel for the Defendants. See Exhibit D. Counsel for Awareness also agreed to advise Mr. Cardwell not to look for attorney-client privileged communications or personal financial information, but rather to seek documents that were related solely to the parties' disputes. Counsel for the Defendants agreed to proceed with the forensic examination on November 21, 2003. Id. Upon information and belief, counsel for Defendants contacted the expert prior to November 21 to discuss the process of conducting the forensic examination. Mr. Cardwell imaged defendant Mattice's and Remelski's hard drives in Mr. Eagleburger's offices on November 21, 2003. Counsel for the Defendants, David Grieme, and defendant Remelski, who brought both Mattice's and Remelski's computers to Mr. Eagleburger's office, supervised Mr. Cardwell's progress in imaging the computers. That same day, and as promised, counsel for Awareness advised counsel for the Defendants of the search terms that "we are requesting Forentech to run on the saved hard drives." See Exhibit E (emphasis added). As of November 21, 2003, then, only one issue regarding the computer forensics exam remained ­ whether all documents copied and identified were to be labeled as "Confidential" and/or "For Attorneys' Eyes Only" pursuant to the parties' agreed-upon Protective Order. Until that issue was resolved to the Defendants' satisfaction, Awareness agreed to treat all documents contained in Cardwell's Reports as both "Confidential" and "For Attorneys' Eyes Only." Consistent with its agreement with the Defendants, and because the Defendants have never indicated otherwise, Awareness has at all times treated the Cardwell Reports, and the documents contained therein, as both "Confidential" and "For Attorneys' Eyes Only." 2. The Distributor Defendants have had Copies of the Computer Forensic Report Since December, 2003.

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On December 3, 2003 ­ the day before the December 4 Hearing ­ Mr. Cardwell emailed his initial Report containing documents to Mr. Lomax. That same day, Mr.

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Lomax asked one of his firm's information technology professionals to forward that file to David Grieme, Mr. Eagleburger's associate at the time. See Exhibit F. The December 3 email contained a zipped file that, when unzipped, could be used to launch Internet Explorer and permit the viewer to click on HTML links to view the retrieved documents. Out of consideration for the Defendants, and to ensure that the Defendants could open Mr. Cardwell's electronic file, Awareness' counsel offered to transmit the data contained in the initial report as "individual attachments" via email. See Exhibit F. Counsel for the Defendants never responded to that invitation. Instead, Mr. Eagleburger acknowledged receipt of the initial Cardwell Report on Monday, December 8, 2003 and noted that the "report itself was harmless." See Exhibit G. Mr. Eagleburger further acknowledged receiving the "Bookmarks" list Mr. Cardwell created to identify the documents contained in his report. Id. Each Bookmark contained a link to the actual documents in the report. Counsel for Awareness responded to Mr. Eagleburger's December 8 letter on December 9, 2003. Recognizing the parties had not resolved all the issues regarding the Cardwell Report, Mr. Lomax noted that "[Awareness] requested Forentech (in fact, last week) not to send us additional documents or reports until counsel for the parties can work out discovery protocols." See Exhibit H. Again, the only outstanding issue was how retrieved documents would be labeled for purposes of the Protective Order and Awareness' counsel was treating the documents as "For Attorneys' Eyes Only" until the issue was resolved. Mr. Eagleburger agreed that the discovery protocols for handling the forensic exam had not been ironed out: within a week after receiving Mr. Lomax' letter, he wrote "[w]e also need to talk about the computer forensic exam." See Exhibit I. Two days later, Mr. Lomax responded, "[i]f you would like to discuss the computer forensics exam, please call me later this week or next Monday." See Exhibit J. Counsel for the Defendants failed to provide the Court with these last two letters which show that, as of
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mid-December, the parties had not resolved what, if any, additional protocols would be necessary for handling the forensic examination. Records of Awareness' counsel show that the parties did not discuss the forensic exam again until March 10, 2004, when Mr. Lomax received unsolicited from Mr. Cardwell an electronic copy of the final Cardwell Report which Mr. Lomax then forwarded electronically to Mr. Eagleburger (the "March 10 email"). As noted, Mr. Cardwell sent this final report to Awareness' counsel without having been asked to do so. See Exhibit D. Like the December 3 email, the March 10 email contained a zipped file that, when unzipped, launched Internet Explorer and permitted the reader to click on HTML links to pull up the individual documents. Before sending him this email, Mr. Lomax called Mr. Eagleburger to advise that he had received a final report from Mr. Cardwell containing additional documents retrieved from the defendants' hard drives. To ensure the Defendants could access the entire contents of the final Cardwell Report, the March 10 email advised Mr. Eagleburger about the form of the attached report: "I' told if you use m WinZip to unzip the file, you should be able to read all documents as if you were on the Internet as they are in the html format. Please contact Nancy Giles if you have questions." See Exhibit K. The March 10 email also invited Mr. Eagleburger to review the documents and advise if any of the retrieved documents should be labeled "Confidential" or "Attorneys' Eyes Only." Two days later Mr. Eagleburger wrote to Ms. Giles asking to review "the computer forensic scan of my clients' hard drives." See Exhibit L. Ms. Giles responded that Awareness had already sent him a copy of the information Awareness' counsel received from Mr. Cardwell. 3. See Exhibit M. Mr. Eagleburger never responded, and never complained that Awareness' counsel had copies of the Cardwell Reports. The Distributor Defendants Knew Awareness' Counsel had Copies of the Cardwell Reports and, Until Now, Have Never

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Objected to Awareness' Counsel's Review and Use of the Cardwell Reports. Counsel for the Defendants also had actual knowledge that counsel for Awareness reviewed the contents of the Cardwell Reports. On April 6, 2004, Awareness' counsel Kimberly Warshawsky returned several documents retrieved from the Cardwell Report that she believed could be subject to the attorney-client privilege. See Exhibit N. Subsequent communications from counsel for the Defendants, rather than showing concern, acknowledged not only their knowledge of Awareness' counsels' review, but also that Awareness' counsel was being careful to deliver any privileged communications to the Defendants' counsel: by letter dated April 12, 2004, Mr. Grieme noted that "[w]ith respect to the items from the computer hard drives, I believe that you are correct that the items are communications with our office and are privileged as such." See Exhibit O (emphasis added). Even if, as the Defendants now contend, they were unaware that the Cardwell Reports contained "700 pages of information," Motion at 4, Ms. Warshawsky's April 6 letter put the Defendants on notice that the Cardwell Reports included copies of documents from the defendants' hard drives, and Mr. Grieme's April 12 letter confirms just that. reports. In fact, until receiving Awareness' draft pretrial order on July 22, 2005, it appeared that counsel for the Defendants had completely disregarded the Cardwell Reports. The Cardwell Reports, and the alleged discovery dispute, was not referenced in the parties' Joint Case Management Plan, filed on January 7, 2004. Nor were they the subject of any of the numerous discovery disputes brought before the Court by the Defendants in the Spring and Summer of 2004, or part of the extensive charts each party prepared regarding outstanding discovery in August 2004. In fact, the Defendants have never ­ until now ­ raised a concern about counsel for Awareness' possession of those documents; never Counsel for the Defendants has never requested Awareness' assistance in retrieving the complete Cardwell Report, and has never questioned the contents of the

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asked how to unzip the files, and never indicated which documents should be labeled as "For Attorneys' Eyes Only" or "Confidential." The bottom line here is that there was no "clear" agreement regarding whether Awareness' counsel could or could not review the documents, Awareness' counsel maintained strict confidentiality regarding them in any event, the Defendants' counsel acquiesced in Awareness' counsel's review (as shown by the Grieme April 12 letter and not a peep to the contrary from Defendants' counsel since then), Exhibit 194 had been produced by the Defendants independently, and Exhibit 195 should have been. B. The Defendants' Baseless and General Objections to Awareness' Witnesses are Without Merit and must be Rejected.

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The Defendants' Motion also claims, without any evidence whatsoever, that Awareness' proposed witnesses were identified by alleged improper means, and should be excluded. The Defendants are wrong, and Awareness' witnesses ­ each of whom have relevant knowledge of the Defendants' wrongful conduct ­ must be permitted to testify. Awareness created its witness list while reviewing documents voluntarily produced by all defendants, including GVI, during the normal course of discovery in this matter ­ not from reviewing documents contained in the Cardwell Report. Specifically, Awareness used emails produced by the Defendants, including defendants Betts and MacGregors, to identify those Awareness distributors who the defendants targeted while building their GVI businesses. Awareness also referred to other documents and genealogy lists provided by all defendants. Even if certain of Awareness' witnesses are named in the Cardwell Report, the Defendants cannot seriously contend that witnesses identified by other means and in documents produced by the defendants in response to discovery requests should be excluded. Awareness also objects to the Defendants' request to add additional witnesses to the Joint Pretrial Order. As set forth in the Court's May 31 Order Setting Final Pretrial Conference, all witnesses were required to be listed in the final pretrial order, which the

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parties filed on August 8, 2005.

The Defendants admit they received the Cardwell

Reports prior to the August 8 deadline, Motion at 3-4, and could have reviewed the reports and included any necessary witnesses prior to August 8. In addition, and as ordered by the Court, counsel for Awareness re-forwarded a copy of the final Cardwell Report on July 29, 2005 (the "July 29 email"). See Exhibit P. Counsel for the Defendants did not respond to the July 29 email and, despite constant daily communication with counsel for Awareness regarding the draft pretrial order since July 29, never requested that Awareness provide the Defendants with a printed version of the Cardwell Reports. The Defendants have had ample opportunity to review the Cardwell Reports and add witnesses. They have failed to do so, and any additional proposed witnesses should be stricken. III. SANCTIONS ARE NOT APPROPRIATE. The Defendants cite no authority warranting the imposition of sanctions. They have not alleged, nor could they in good faith, that Awareness or its counsel violated a court order, failed to disclose the existence the Exhibits 194 and 195, made false or misleading disclosures, failed to participate in a discovery plan, or altered or destroyed any evidence. See FED.R.CIV.P. 37 (enumerating the traditional bases for sanctions). Counsel for Awareness did not hide evidence retrieved by its expert Mr. Cardwell, and timely shared both reports with counsel for the Defendants. The Defendants' failure to review documents produced during this litigation cannot serve as a basis to award sanctions against Awareness. V. CONCLUSION. For the foregoing reasons, Plaintiff Awareness Corporation respectfully requests that this Court deny the Defendants' Motion in Limine and award Awareness its reasonable attorneys' fees and costs in responding to this baseless Motion.

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RESPECTFULLY SUBMITTED this 15th day of August, 2005. GREENBERG TRAURIG, LLP By: /s/ Kimberly A. Warshawsky Steven M. Weinberg Brian J. Schulman Kimberly A. Warshawsky Attorneys for Awareness Corporation and Third Party Defendants Allcock and Schmidt

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CERTIFICATE OF SERVICE I hereby certify that on August 15, 2005, I electronically transmitted the attached document to the Clerk' Office using the CM/ECF System for filing and transmittal s of a Notice of Electronic Filing to the following CM/ECF registrants: Curtis D. Drew, Esq. 2342 North Pima Road Scottsdale, Arizona 85257-2405 [email protected] Attorney for Defendant Group Vision International, L.L.C. G. Gregory Eagleburger, Esq. The Eagleburger Law Group 2999 North 44th Street, Suite 303 Phoenix, Arizona 85018 [email protected] Attorneys for Distributor Defendants I hereby certify that on August , 2005, I served the attached document by facsimile and United States mail on the following, who are not registered participants of the CM/ECF System:

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/s/ Kimberly A. Warshawsky

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