IceMOS Technology Corporation v. Omron Corporation
Filing
485
ORDER that the Motion to Strike (Doc. 468 ) is GRANTED IN PART and DENIED IN PART as described herein. IT IS FURTHER ORDERED that the Clerk of Court shall strike the Joint Proposed Final Pretrial Order (Doc. [457-1]) from the docket. IT IS FURTHER O RDERED that the parties shall file a notice by Tuesday, 5/26/2020, that designates one attorney who will serve as lead counsel for the duration of this case and that indicates whether they have agreed to one characterization of each contested issue. If the parties indicate in this notice that they were unable to do so, designated lead counsel shall appear, in person, before this Court on Wednesday, 6/3/2020, to mediate any dispute as to the characterization of any contested issues. IT IS FURTHER ORDERED that the parties shall correct the errors identified above in the Joint Proposed Final Pretrial Order (Doc. [457-1]) and then finalize and sign the revised joint proposed final pretrial order and lodge it with the Court by Friday, 6/5/2020. IT IS FURTHER ORDERED that the Clerk of Court shall strike the Proposed Jury Instructions (Doc. 460 ; Doc. [460-1]; Doc. [460-2]). See attached order for additional information. Signed by Senior Judge James A. Teilborg on 5/18/2020. (RMW)
1
WO
2
3
4
5
6
IN THE UNITED STATES DISTRICT COURT
7
FOR THE DISTRICT OF ARIZONA
8
9
IceMOS Technology Corporation,
Plaintiff,
10
11
ORDER
v.
12
No. CV-17-02575-PHX-JAT
Omron Corporation,
13
Defendant.
14
15
Pending before the Court is Plaintiff IceMOS Technology Corporation’s Motion to
16
Strike and Preclude Defendant’s Contract Invalidity Defense (Doc. 468). The Motion has
17
been fully briefed. (Doc. 468; Doc. 473; Doc. 476). The Court now rules.
18
I.
BACKGROUND
19
A contested issue of fact listed in the Joint Proposed Final Pretrial Order is
20
“[w]hether the Supply Agreement is a valid and enforceable contract.” (Doc. 457-1 at 5).
21
Specifically, Defendant’s position is:
22
23
24
25
26
27
28
The Supply Agreement provides that [Plaintiff] was not required to place any
orders and [Defendant] was not required to accept any orders, as set forth in
Section 4.1 of the Supply Agreement, making it unenforceable. Furthermore,
however, [Plaintiff] has asserted that [Defendant] was required to accept
[Plaintiff]’s orders and was not free to reject them, despite the language in
Section 4.1 of the Supply Agreement that [Defendant] could reject orders.
See, e.g., Doc. 308 at ¶24. If this [Plaintiff] interpretation of the Supply
Agreement is correct, then there is no enforceable contract because it is an
indefinite quantities contract.
1
(Doc. 457-1 at 5–6). Plaintiff asserts that the validity and enforceability of the Supply
2
Agreement—the parties’ contract—had never been contested until Plaintiff received
3
Defendant’s “initial draft of the Proposed Joint Final Pretrial Order” on February 7, 2020.
4
(Doc. 468 at 5). Plaintiff argues that the Court must prohibit Defendant from contesting the
5
validity and enforceability of the Supply Agreement. (Id. at 8).
6
Defendant responds that Plaintiff misunderstands Defendant’s argument. (Doc. 473
7
at 2). Defendant claims it only argues that, if the finder of fact concludes that the Supply
8
Agreement restricts Defendant’s ability to reject Plaintiff’s purchase orders, then the
9
Supply Agreement is an invalid requirements contract. (Id. at 7–9). At any rate, Defendant
10
claims the Motion to Strike (Doc. 468) is improper as it was not required to disclose any
11
defense relating to the validity of the Supply Agreement under General Order No. 17-08
12
(D. Ariz. Nov. 1, 2018). And, even if the General Order did require Defendant to disclose
13
such a defense, Defendant claims it did so as soon as Plaintiff proffered its view that the
14
Supply Agreement limits Defendant’s ability to reject Plaintiff’s purchase orders.
15
(Doc. 473 at 9). In response to that point, Plaintiff asserts that Defendant has known that
16
Plaintiff asserts that Defendant breached the Supply Agreement at least since filing of the
17
Second Amended Complaint (Doc. 59), in which Plaintiff alleged that Defendant breached
18
the Supply Agreement “by refusing to accept new purchase orders from [Plaintiff].”
19
(Doc. 476 at 6–7 (citing Doc. 59 at 31, 33–34)).
20
II.
LEGAL STANDARD
21
District of Arizona Local Rule of Civil Procedure 7.2(m) governs motions to strike.
22
It provides, “[u]nless made at trial, a motion to strike may be filed only if it is authorized
23
by statute or rule, such as Federal Rules of Civil Procedure 12(f), 26(g)(2) or
24
37(b)(2)(A)(iii), or if it seeks to strike any part of a filing or submission on the ground that
25
it is prohibited (or not authorized) by a statute, rule, or court order.” LRCiv 7.2(m)(1).
26
III.
ANALYSIS
27
The Court begins by addressing terminology. The Court finds that there are two
28
specific defenses listed by Defendant in the Joint Proposed Final Pretrial Order (Doc. 457-
-2-
1
1). One defense is that the Supply Agreement is unenforceable as “[t]he Supply Agreement
2
provides that [Plaintiff] was not required to place any orders and [Defendant] was not
3
required to accept any orders, as set forth in Section 4.1 of the Supply Agreement.” (Id. at
4
5–6). The Court will refer to this defense as the “Complete Invalidity Defense.” Defendant
5
also stated:
6
7
8
9
Furthermore, however, [Plaintiff] has asserted that [Defendant] was required
to accept [Plaintiff]’s orders and was not free to reject them, despite the
language in Section 4.1 of the Supply Agreement that [Defendant] could
reject orders. See, e.g., Doc. 308 at ¶24. If this [Plaintiff] interpretation of the
Supply Agreement is correct, then there is no enforceable contract because it
is an indefinite quantities contract.
10
11
(Doc. 457-1 at 6). The Court will refer to this defense as the “Contingent Invalidity
12
Defense.” The Court now addresses each defense.
13
a.
Complete Invalidity Defense
14
The Court will grant the Motion to Strike (Doc. 468) as to the Complete Invalidity
15
Defense. Defendant not only admitted that the Supply Agreement is a valid and enforceable
16
contract, (Doc. 60 at 52), but it also pleaded that the Supply Agreement is a valid and
17
enforceable contract as part of its own breach of contract counterclaim, (see Doc. 28 at 28).
18
Therefore, Defendant has made judicial admissions as to the validity and enforceability of
19
the Supply Agreement. Defendant is estopped from taking the inconsistent position, on the
20
eve of trial, of asserting there is not a valid and enforceable contract. See Am. Title Ins. v.
21
Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988); Valdiviezo v. Phelps Dodge Hidalgo
22
Smelter, Inc., 995 F. Supp. 1060, 1065 (D. Ariz. 1997); John v. Timm, 190 N.W. 890, 891
23
(Minn. 1922) (“When the answer admitted the contract, its existence and validity were
24
established.” (citing Campbell v. Wilcox, 77 U.S. (10 Wall.) 421 (1870))).
25
The final pretrial order supersedes each of the parties’ prior pleadings and controls
26
the course and scope of the action. Rockwell Int’l Corp. v. United States, 549 U.S. 457, 474
27
(2007); see Fed. R. Civ. P. 16(d) (“After any conference under this rule, the court should
28
issue an order reciting the action taken. This order controls the course of the action unless
-3-
1
the court modifies it.”). As a result, typically the pleadings are merged into the final pretrial
2
order. See Session v. Romero, No. 14-CV-02406-PAB-KLM, 2019 WL 190987, at *5 (D.
3
Colo. Jan. 14, 2019). Because Defendant has included a defense that is diametrically
4
opposed to the pleadings, the Court will not accept the Joint Proposed Final Pretrial Order
5
(Doc. 457-1), and it will be stricken from the record.1
6
Defendant must revise the Proposed Final Pretrial Order and remove any reference
7
to the Complete Invalidity Defense. The parties must then finalize and file the revised
8
version of the joint proposed final pretrial order by Friday, June 5, 2020.
9
b.
Contingent Invalidity Defense
10
The Motion to Strike (Doc. 468) as to the Contingent Invalidity Defense will be
11
denied. To the extent Defendant was required to disclose the Contingent Invalidity
12
Defense, the Court finds that any sanction—including striking of the defense—for failure
13
to disclose would be unjust.
1.
14
15
Defendant first claims Plaintiff’s Motion to Strike (Doc. 468) is procedurally
16
17
Procedural Propriety of the Motion to Strike under Local Rule
7.2(m)
improper. The Court disagrees.
18
Local Rule 7.2(m)(1) provides that a party may move to strike any part of a filing if
19
it is prohibited by rule or court order. Plaintiff asserts that Defendant did not properly
20
disclose the invalidity defense under General Order No. 17-08. (Doc. 468 at 7). General
21
Order No. 17-08 requires the parties to provide “mandatory initial discovery responses,”
22
and it “sets forth the categories of information that must be provided.” Gen. Order No. 17-
23
08, at 2. Specifically, General Order No. 17-08 provides that the parties “must provide
24
relevant legal theories in response to paragraph B.4 below,” which states, “[f]or each of
25
1
26
27
28
Defendant claims that its position on the validity and enforceability of the Supply
Agreement does not include that it is invalid and unenforceable on its face. (Doc. 473 at 2–
3). In other words, Defendant asserts that it did not include the Complete Invalidity Defense
in the Joint Proposed Final Pretrial Order (Doc. 457-1). The language that Defendant
included in the Joint Proposed Final Pretrial Order (Doc. 457-1) contradicts that assertion.
Because a final pretrial order supersedes the pleadings, the Court will not risk allowing a
defense that is diametrically opposed to the pleadings go to trial.
-4-
1
your claims or defenses, state the facts relevant to it and the legal theories upon which it is
2
based.” Id. at 2, 5 (emphasis added).
3
Accordingly, the Court must determine what General Order No. 17-08 means when
4
it says a party must disclose “the legal theories” upon which its “claims or defenses” are
5
“based.” Id. at 5. To start, the plain language of General Order No. 17-08 indicates that it
6
requires disclosure of the legal theories that support “[a] defendant’s stated reason why the
7
plaintiff . . . has no valid case.” Defense, Black’s Law Dictionary (11th ed. 2019). In other
8
words, General Order No. 17-08 requires defendants to explain the legal theories in support
9
of any defense—that is, why the plaintiff should not prevail.
10
Arizona Rule of Civil Procedure 26.1 supports this reading. Rule 26.1 uses the same
11
operative language as General Order No. 17-08; it provides that a party must disclose “the
12
legal theory on which each of the disclosing party’s claims or defenses is based.” Ariz. R.
13
Civ. P. 26.1(a)(2). That requirement means that the parties must give “adequate notice of
14
what arguments will be made.” Clark Equip. Co. v. Ariz. Prop. & Cas. Ins. Guar. Fund,
15
943 P.2d 793, 800 (Ariz. Ct. App. 1997) (interpreting Arizona Rule of Civil Procedure
16
26.1(a)’s disclosure requirement). “[T]he disclosure statement is the primary vehicle by
17
which the parties are informed of their opponent’s case,” and thus, “it should fairly expose
18
the facts and issues to be litigated.” Bryan v. Riddel, 875 P.2d 131, 136 (Ariz. 1994).
19
Therefore, General Order No. 17-08 requires parties to “fairly expose the facts and
20
issues to be litigated” within their initial discovery response and provide “adequate notice
21
of what arguments will be made.” Bryan, 875 P.2d at 136; Clark Equip. Co., 943 P.2d at
22
800. An issue that Defendant now apparently is litigating is the validity and enforceability
23
of the Supply Agreement. General Order No. 17-08 required disclosure of that argument.
24
The Court rejects Defendant’s attempt to avoid its disclosure obligations by arguing
25
that it was only required to disclose affirmative defenses. (See Doc. 473 at 7). The General
26
Order indicates each legal theory for any defense must be disclosed. As noted, a defense
27
includes any argument that illustrates why the plaintiff should not prevail. In fact,
28
Defendant’s own legal authority cuts against its position. (See id.). While Defendant is
-5-
1
correct that “[a] defense which demonstrates that plaintiff has not met its burden of proof
2
is not an affirmative defense,” (id. (emphasis added) (quoting Zivkovic v. S. Cal. Edison
3
Co., 302 F.3d 1080, 1088 (9th Cir. 2002))), it is indeed a defense, and thus, must be
4
disclosed. Stated differently, the argument that the plaintiff cannot meet the elements of its
5
claim is a defense. Zivkovic, 302 F.3d at 1088; see Defense, Black’s Law Dictionary, supra.
6
The key issue here is whether Defendant can contest whether the Supply Agreement
7
is a valid and enforceable agreement if the Supply Agreement limits Defendant’s ability to
8
reject purchase orders, as Plaintiff contends. If Defendant is right that that interpretation
9
would render the contract unenforceable, then Plaintiff cannot establish its breach of
10
contract action. That argument is therefore clearly a defense as it is a reason why Plaintiff
11
should not prevail. General Order No. 17-08 required Defendant to disclose the Contingent
12
Invalidity Defense.
13
2.
Whether Sanctions Are Appropriate
14
While Defendant asserts it properly disclosed the Contingent Invalidity Defense
15
under General Order No. 17-08, (Doc. 473 at 8–10), the Court finds that, even if Defendant
16
did violate General Order No. 17-08, sanctions would not be just. The Court will therefore
17
deny the Motion to Strike (Doc. 468).
18
A violation of General Order No. 17-08 is sanctionable under Federal Rule of Civil
19
Procedure 37(b)(2). Gen. Order No. 17-08, at 4. Under Rule 37(b)(2), the court “may issue
20
further just orders” for sanctionable conduct, including prohibiting a “disobedient party
21
from supporting or opposing designated claims or defenses.” Fed. R. Civ. P.
22
37(b)(2)(A)(ii). An order sanctioning a party under Rule 37(b)(2) must be “just.” Id.;
23
Navellier v. Sletten, 262 F.3d 923, 947 (9th Cir. 2001). The court is not required to order
24
sanctions even where the court has the authority to do so under Rule 37(b)(2). See Fed. R.
25
Civ. P. 37(b)(2)(A) (providing that the court “may” issue a sanction for failure to obey a
26
discovery order); Fontana Prods. Inc. v. Spartech Plastics Corp., 6 F. App’x 591, 594 (9th
27
Cir. 2001) (stating that Rule 37(b)(2) grants district courts “broad discretion” on whether
28
to order sanctions and how to shape them).
-6-
1
As noted above, General Order No. 17-08 requires: “For each of your claims or
2
defenses, state the facts relevant to it and the legal theories upon which it is based.” Gen.
3
Order No. 17-08, at 5. In response, both parties incorporated the pleadings and briefly
4
elaborated on their claims and defenses. (Doc. 419-2 at 17–21; Doc. 468-1 at 10).
5
Neither party offered a thorough exposé of the legal theories in support of their
6
claims and defenses as it relates to Plaintiff’s breach of contract claim. The Second
7
Amended Complaint alleges that “[Defendant] has further breached the Supply Agreement
8
by refusing to accept new purchase orders from [Plaintiff], in violation of, inter alia, §§ 2.0,
9
4.15 and 6.2 of the Supply Agreement.” (Doc. 59 at 31). Plaintiff asserted in its mandatory
10
initial discovery responses that Defendant breached the Supply Agreement by “refusing to
11
accept new purchase orders from [Plaintiff].” (Doc. 419-2 at 18). Defendant denied all of
12
Plaintiff’s breach of contract allegations. (Doc. 60 at 49–54).
13
It appears Defendant did not expressly articulate the Contingent Invalidity Defense
14
until summary judgment when Plaintiff responded to Defendant’s assertion that “there is
15
no express limitation as to [Defendant]’s ability to reject purchase order[s] placed by
16
[Plaintiff].” (Doc. 308 at 16). Plaintiff asserted, in response, that Defendant does not have
17
“an unfettered right to reject purchases orders from [Plaintiff].” (Id.). It seems that this
18
exchange was the first time the parties disputed whether the Supply Agreement’s
19
provisions allow Defendant to reject any purchase order for any reason.
20
To the extent Defendant violated General Order No. 17-08’s requirement that it
21
provide the legal theories underlying its defenses, the Court finds that striking any legal
22
theory that is consistent with the pleadings would be unjust. See Fed. R. Civ. P.
23
37(b)(2)(A). Plaintiff states that it does not “seek[] to preclude [Defendant] from asserting
24
at trial that it was free to reject [Plaintiff]’s purchase orders,” but rather, “if the jury does
25
not accept this interpretation, [Defendant] should not be able to argue the Supply
26
Agreement is therefore unenforceable.” (Doc. 476 at 8 n.2); see Fed. R. Civ. P.
27
37(b)(2)(A)(ii). If the Court were to grant Plaintiff’s requested sanction, the Court would
28
not only preclude the Contingent Invalidity Defense but it would also effectively preclude
-7-
1
Defendant from introducing evidence in support of the Contingent Invalidity Defense. See
2
Sarytchev v. Korolev, No. 12-CV-02284-NJV, 2013 WL 6138969, at *5 (N.D. Cal. Nov.
3
21, 2013).
4
“Evidentiary preclusion is a harsh sanction that generally is not imposed where the
5
failure to provide discovery was either substantially justified or harmless.” Rooney v.
6
Sierra Pac. Windows, No. 10-CV-00905-LHK, 2011 WL 2149097, at *3 (N.D. Cal. June
7
1, 2011) (citations omitted) (denying request to preclude evidence under Rule
8
37(b)(2)(A)(ii)). A sanction is “particularly harsh” when it disposes of an issue. See R & R
9
Sails, Inc. v. Ins. Co. of Pa., 673 F.3d 1240, 1247 (9th Cir. 2012) (“[T]he sanction was
10
particularly harsh, because it dealt a fatal blow not only to [Plaintiff]’s entire Brandt fees
11
claim but also its request for punitive damages.”); see Sarytchev, 2013 WL 6138969, at *5
12
(describing sanction that precluded an argument under Rule 37(b)(2)(A)(ii) as “severe”).
13
Plaintiff seeks the “particularly harsh” sanction of precluding Defendant from offering
14
argument and evidence in support of the Contingent Invalidity Defense. (See Doc. 468 at
15
7 (noting that violation of General Order No. 17-08 can result in the sanction of
16
“prohibiting the disobedient party from supporting or opposing designated claims or
17
defenses” (quoting Fed. R. Civ. P. 37(b)(2)(A)(ii)))).
18
Defendant essentially asserts through the Contingent Invalidity Defense that, if the
19
Supply Agreement requires Defendant to accept purchase orders, then Plaintiff cannot
20
prevail on its breach of contract claim as Plaintiff will be unable to establish all elements
21
of its claim. (See Doc. 473 at 4–6, 8–10). A plaintiff claiming breach of contract must show
22
“an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound.”
23
Kasowitz, Benson, Torres & Friedman, LLP v. Reade, 950 N.Y.S.2d 8, 9 (App. Div. 2012)
24
(citation omitted).2 “There can be no contract absent a mutual intent to be bound.” Four
25
Seasons Hotels Ltd. v. Vinnik, 515 N.Y.S.2d 1, 5 (App. Div. 1987) (citing Joseph Martin,
26
Jr., Delicatessen v. Schumacher, 417 N.E.2d 541, 543 (N.Y. 1981)); see also In re
27
Cablevision Consumer Litig., 864 F. Supp. 2d 258, 263 (E.D.N.Y. 2012) (rejecting party’s
28
2
The Court applies New York law consistent with the Supply Agreement’s choice-of-law
provision. (See 59-1 at 9).
-8-
1
interpretation of contract because it would have rendered it “arguably illusory” such that
2
contract would lack a mutual intent to be bound). Mutual assent requires that the parties
3
manifested agreement to all the material terms. Express Indus. & Terminal Corp. v. N.Y.
4
State Dep’t of Transp., 715 N.E.2d 1050, 1053 (N.Y. 1999) (“The inquiry is twofold: do
5
the blanks in the [agreement] render those terms impenetrably vague and uncertain, and
6
are the terms themselves material?”). Defendant argues that, if the Supply Agreement is
7
construed as to limit its ability to reject purchase orders without requiring Plaintiff to
8
purchase exclusively from Defendant and with no minimum purchase requirement, then
9
there would be a lack of mutual assent for absence of material terms and lack of mutual
10
intent to be bound, either of which would render the Supply Agreement unenforceable.3
11
(See Doc. 473 at 5). See generally Corning Inc. v. VWR Int’l, Inc., No. 05 CV 6532 CJS,
12
2007 WL 841780 (W.D.N.Y. Mar. 16, 2007) (finding a valid requirements contract despite
13
the fact that the agreement was not “entirely exclusive”). As such, if Defendant is correct,
14
then Plaintiff’s interpretation must be rejected. See Blandford Land Clearing Corp. v. Nat’l
15
Union Fire Ins. Co. of Pittsburgh, Pa., 698 N.Y.S.2d 237, 243 (App. Div. 1999).
16
It would be unjust to preclude the Contingent Invalidity Defense. First, as noted,
17
both parties were vague in their mandatory initial discovery responses. Plaintiff did not
18
advance any legal theory supporting its allegation that Defendant breached by rejecting
19
purchase orders nor did it articulate how it intended to meet the elements of a breach of
20
contract claim under New York law for that alleged breach. (Doc. 419-2 at 17–21).
21
However, Plaintiff contends that Defendant “cannot credibly ask the Court to believe that
22
it was surprised and first learned that [Plaintiff] claimed [Defendant] could not freely reject
23
orders in the summary judgment briefing.” (Doc. 476 at 7). The Court disagrees. It is
24
possible that Defendant would not have gleaned from the mere allegation that Defendant
25
breached the Supply Agreement by “refusing to accept new purchase orders” that Plaintiff
26
would support that allegation by arguing in favor of an interpretation of the Supply
27
3
28
As such, if Defendant is correct, it is unclear how the Court could even preclude the
Contingent Invalidity Defense given that a contract that lacks either mutual assent as to the
essential terms or mutual intent to be bound is unenforceable as a matter of law.
-9-
1
Agreement that would arguably make the Supply Agreement unenforceable. (Doc. 59 at
2
31). Under these circumstances, precluding the Contingent Invalidity Defense would be
3
unjust.
4
Second, the particularly harsh sanction of precluding the Contingent Invalidity
5
Defense is inappropriate because Plaintiff has not shown that any failure to disclose the
6
Contingent Invalidity Defense was not harmless. As noted above, evidence preclusion is a
7
harsh sanction that will not be imposed where a discovery violation is harmless. See, e.g.,
8
Rooney, 2011 WL 2149097, at *3. Plaintiff contends that it was prejudiced “by its inability
9
to conduct discovery and retain experts on the issue” of whether Defendant breached the
10
Supply Agreement by rejecting purchase orders. (See Doc. 476 at 8). This argument strains
11
credulity.
12
It is beyond dispute that Defendant categorically denied it breached the Supply
13
Agreement by “[r]efusing to accept new purchase orders from [Plaintiff].” (Doc. 60 at 50,
14
53–54). Consequently, Plaintiff was on notice that Defendant denied liability for
15
“[r]efusing to accept new purchase orders.” (Id.). General Order No. 17-08 does not relieve
16
Plaintiff of its responsibility to ensure that it can establish its own claims under the relevant
17
law. Plaintiff cannot assert prejudice when the essence of its claim for relief for refusal to
18
accept purchase orders arises from the Supply Agreement itself, which it had in its
19
possession throughout this litigation. Cf. Patsystems (NA) LLC v. Trend Exch., Inc., 695 F.
20
App’x 206, 208–09 (9th Cir. 2017). If Plaintiff failed to ensure that it could prove the
21
elements necessary to establish any theory in support of its claim that Defendant breached
22
the Supply Agreement, that is self-inflicted harm.
23
As such, Plaintiff has not adequately shown prejudice. Morales v. Barnett, No. 2
24
CA-CV 2007-0118, 2008 WL 4638133, at *8–9 ¶¶ 27, 31 (Ariz. Ct. App. Feb. 25, 2008)
25
(holding that trial court did not err in rejecting motion for new trial after disclosure of new
26
legal theory in the middle of trial as “no prejudice affirmatively appear[ed] from the
27
record”).4 Plaintiff has not been prejudiced by any failure to disclose the Contingent
28
4
As noted above, Arizona Rule of Civil Procedure 26.1(a) includes the same operative
language as General Order No. 17-08 as to the requirement that the parties disclose the
- 10 -
1
Invalidity Defense as the defense adds no new issues to the case. Cf. Englert v. Carondelet
2
Health Network, 13 P.3d 763, 768 ¶ 11 (Ariz. Ct. App. 2000) (affirming preclusion of
3
undisclosed affirmative defense because defendant “improperly added issues to the
4
litigation” as “he attempted to reduce his liability on entirely new grounds”). It has always
5
been Plaintiff’s burden to prove that the Supply Agreement restricted Defendant’s ability
6
to reject purchase orders and that Defendant’s failure to accept purchase orders amounts to
7
breach. It cannot be understated that it is Plaintiff’s responsibility to ensure it can prove its
8
breach of contract claim against Defendant for “refusing to accept new purchase orders
9
from [Plaintiff]” under New York law. (Doc. 59 at 31; see also id. at 33–34).
10
If Defendant violated General Order No. 17-08 by failing to disclose the Contingent
11
Invalidity Defense, sanctioning Defendant by precluding that defense would be unjust.
12
Therefore, assuming there was a violation of the General Order’s requirements, the Court
13
will not sanction Defendant under Rule 37(b)(2). The Motion to Strike (Doc. 468) will be
14
denied as it relates to the Contingent Invalidity Defense.
15
IV.
UNACCEPTABLE DEPARTURES FROM COURT INSTRUCTIONS
16
The Joint Proposed Final Pretrial Order (Doc. 457-1) and the Joint Proposed Jury
17
Instructions (Doc. 460; Doc. 460-1; Doc. 460-2) include unacceptable departures from this
18
Court’s instructions. The parties shall ensure that these errors are corrected.
19
First, the parties provided diverging characterizations of contested issues. The Court
20
must have one characterization of each contested issue. (See Doc. 202 at 17 (providing
21
example of contested issues of fact and law section of joint proposed final pretrial order)).
22
If the parties cannot agree to one characterization of each issue, then the parties shall appear
23
before this Court to mediate the dispute, and the Court will frame the contested issues that
24
the parties cannot agree on. To that end and for the duration of this case, each party shall
25
designate one attorney to serve as lead counsel and spokesperson for that party. The parties
26
shall file a notice on or before Tuesday, May 26, 2020, indicating who designated lead
27
counsel is and stating whether they were able to come to agreement on each contested
28
legal theories in support of their claims and defenses. Case law applying Rule 26.1(a) is
therefore instructive and persuasive.
- 11 -
1
issue. If the notice indicates they did not agree to one characterization for each contested
2
issue, the designated lead counsel for each party shall appear, in person, before this Court
3
at 2:00 p.m. on Wednesday, June 3, 2020, and the Court will mediate and decide any
4
dispute as to the characterization of any contested issues. If the Court deems that either
5
side has taken an unreasonable position, the Court will issue sanctions.
6
Second, the Joint Proposed Final Pretrial Order (Doc. 457-1) also unnecessarily
7
includes hundreds of contested issues of fact that are only distinguishable based on lot
8
number. For example, there is no need to have two hundred issues relating to Defendant’s
9
alleged failure to meet the lead time for each particular lot number. (See Doc. 202 at 17).
10
Because it appears that Plaintiff made the decision to structure these contested issues of
11
fact in this way, (Doc. 457-1 at 37–38), Plaintiff shall revise the following issues. Plaintiff
12
shall strike issue numbers 72 to 268 and shall include one issue at what is currently issue
13
number 71 that discusses breach due to the alleged failure to meet lead times and shall list
14
all the lot numbers at issue. As for issue numbers 292 to 702, Plaintiff shall strike issue
15
numbers 293 to 702 and shall take what is currently issue number 292 and list the lot
16
numbers that fell below the alleged yield requirement. There is simply no need to have
17
hundreds of issues that are only distinguishable by the lot number at issue.
18
Third, Defendant failed to follow the Court’s instructions regarding the information
19
that must be included within the list of witnesses. (Doc. 202 at 17). The parties were
20
required to provide “a brief statement as to the testimony of each witness” listed. (Id.).
21
Defendant shall include this information in the revised joint proposed final pretrial order.
22
The revised joint proposed final pretrial order shall be filed (and emailed to
23
chambers) by Friday, June 5, 2020. The parties shall file it in accordance with the Court’s
24
prior instructions in the Order Setting Final Pretrial Conference. (Doc. 202). The parties
25
shall also specifically ensure that the four issues identified herein are corrected (the three
26
issues just discussed as well as the removal of any reference to the Complete Invalidity
27
Defense).
28
- 12 -
1
2
The Court also ordered the parties to file the proposed jury instructions in the
following format for a disputed jury instruction:
7
If the instruction is disputed, the party proposing the instruction shall include
citation to authority to support the requested instruction. The party opposing
the instruction shall state all objections to such instruction immediately
following the instruction and the opposing party’s authority for such
objection. If the opposing party offers an alternative instruction, such
alternative instruction shall immediately follow the opposing party’s
objection.
8
(Doc. 202 at 6 (emphasis omitted)). Based on the parties’ comments within the Joint
9
Proposed Jury Instructions, the parties understood what was required of them and for a
10
variety of finger-pointing reasons, failed to comply. (Doc. 460). At this point, each party
11
has seen the other party’s proposed instructions, so this hurdle is overcome. The parties
12
must have a conference call within the next five days to discuss which instructions are in
13
dispute, and the nature of the dispute. If the parties cannot agree on a time for this call, the
14
call must take place at 8:00 a.m., Arizona time, Thursday, May 21, 2020.
3
4
5
6
15
After this call, the parties must utilize Defendant’s proposed jury instruction format
16
(Doc. 460-2)—which is the closer of the two proposals to the Court’s required format. The
17
parties will start with Plaintiff’s proposed instructions. As to each, Defendant shall state
18
“no objection” or “objection.” If there is an objection, immediately below the objection,
19
Defendant shall identify the precise words or lines rendering the instruction an incorrect
20
statement of law. Next, Defendant shall provide the precise language that would correct
21
the asserted incorrect statement. If necessary, Defendant may submit an alternative
22
instruction. Next, if necessary, Plaintiff may state any objection below the language of
23
Defendant’s alternative instruction. Once the parties complete review of Plaintiff’s
24
proposed instructions, they should go to Defendant’s proposed instructions and use the
25
same procedure. The parties may not submit competing versions of the same instruction
26
unless there is a good faith objection to a party’s proposed version. The revised joint
27
proposed jury instructions, in the format required by the Court, (Doc. 202 at 6–7), must be
28
filed (and emailed to chambers) by Thursday, May 28, 2020. If the parties cannot file in
- 13 -
1
this format, they shall show cause why they should not be sanctioned at the final pretrial
2
conference (set for Wednesday, June 10, 2020).
3
The Court is perplexed by counsels’ inability to complete what should be simple
4
administrative tasks to get this case ready for trial. Some of the failures described in this
5
Order are, unfortunately, issues of first impression for the undersigned. Judicial resources
6
have been wasted due to the continued gamesmanship that is rising to the level of bad faith.
7
The parties’ counsel are again reminded and strictly warned that continued failure to
8
exercise professionalism in their dealings before this Court will result in sanctions being
9
issued.
10
V.
CONCLUSION
11
The Court will grant the Motion to Strike (Doc. 468) to the extent it seeks preclusion
12
of the Complete Invalidity Defense. Accordingly, as noted, the Court rejects the Joint
13
Proposed Final Pretrial Order (Doc. 457-1), and the Court will strike it from the record.
14
The Court will deny the Motion to Strike (Doc. 468) to the extent it seeks preclusion of the
15
Contingent Invalidity Defense. Either party may file an appropriate5 motion pursuant to
16
Federal Rule of Civil Procedure 50(a) if that party believes that the evidence establishes,
17
as a matter of law, whether Defendant is permitted under the Supply Agreement to reject
18
any purchase order for any reason. The parties shall file revised versions of the joint
19
proposed final pretrial order and joint proposed jury instructions in accordance with the
20
instructions above.
21
Based on the foregoing,
22
IT IS ORDERED that the Motion to Strike (Doc. 468) is GRANTED IN PART
23
and DENIED IN PART as described above.
24
25
IT IS FURTHER ORDERED that the Clerk of Court shall strike the Joint
Proposed Final Pretrial Order (Doc. 457-1) from the docket.
26
27
The Court stresses the word, “appropriate,” and reminds the parties’ counsel of its
admonition that the gamesmanship that has plagued this litigation will not be tolerated.
(Doc. 474 at 5).
5
28
- 14 -
1
IT IS FURTHER ORDERED that the parties shall file a notice by Tuesday, May
2
26, 2020, that designates one attorney who will serve as lead counsel for the duration of
3
this case and that indicates whether they have agreed to one characterization of each
4
contested issue. If the parties indicate in this notice that they were unable to do so,
5
designated lead counsel shall appear, in person, before this Court on Wednesday, June 3,
6
2020, at 401 W. Washington Street, Phoenix, Arizona, Courtroom 503, to mediate any
7
dispute as to the characterization of any contested issues. If either side takes an
8
unreasonable position, the Court will issue sanctions.
9
IT IS FURTHER ORDERED that the parties shall correct the errors identified
10
above in the Joint Proposed Final Pretrial Order (Doc. 457-1) and then finalize and sign
11
the revised joint proposed final pretrial order and lodge it with the Court (by electronically
12
filing a notice of lodging with the joint proposed final pretrial order) by Friday, June 5,
13
2020. The revised version must be in accordance with the Court’s prior instructions
14
(Doc. 202) and the instructions contained herein.
15
IT IS FURTHER ORDERED that the Clerk of Court shall strike the Proposed
16
Jury Instructions (Doc. 460; Doc. 460-1; Doc. 460-2). The parties shall confer within the
17
next five days (as described above) and shall file (and email to chambers) a revised version
18
of the proposed jury instructions by Thursday, May 28, 2020, that is in accordance with
19
the Court’s prior instructions (Doc. 202) and the instructions contained herein.
20
Dated this 18th day of May, 2020.
21
22
23
24
25
26
27
28
- 15 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?