ADT Security Services, Inc. v. Security One International, Inc. et al

Filing 344

Pretrial Order No. 8 re: Defedants' Objections to Plaintiff's Exhibits 15-18. Signed by Judge Yvonne Gonzalez Rogers on 09/14/2013. (ygrlc3S, COURT STAFF) (Filed on 9/14/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
Northern District of California

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ADT SECURITY SERVICES,

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Plaintiff,
v.

Case No.: 11-CV-5149 YGR
PRETRIAL ORDER NO. 8 RE: DEFENDANTS’
OBJECTIONS TO PLAINTIFF’S EXHIBITS 15
THROUGH 18

SECURITY ONE INTERNATIONAL, INC., et al.,
Defendants.

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Defendants object to Plaintiff ADT’s introduction of Exhibits 15, 16, 17, and 18. The Court

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has reviewed the four exhibits in camera. They are recordings of a person, apparently male, calling

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ADT customer service, giving an apparently false name, and attempting to cancel an ADT

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customer’s account. ADT asserts that the calls are linked to a phone number which Defendants

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admitted during discovery to be associated with Security One. Dkt. No. 343. ADT represents that

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the recordings in Exhibits 15 through 17 were made on October 1, 2010, and the recording in

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Exhibit 18 was made on October 14, 2010.

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In Exhibit 15 (bates-stamped ADT0000390), the caller appears to give a false name, “Bell,”

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and apparently the telephone number and address of Bell. ADT queries him as to his identity,

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apparently because he has provided the number and address for a different ADT customer, Carlson.

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The caller can be heard to mutter before abruptly hanging up. In Exhibit 16 (ADT0000385), the

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caller gives Bell’s name and other details, and, when asked why he is cancelling, offers a detailed

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account of financial hardship. The call ends after the caller fails to produce Bell’s account

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password after three unsuccessful tries and then expresses an intent to fax ADT a cancellation letter

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instead. In Exhibit 17 (ADT0000399), the male caller impersonates a female voice with a

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“Southern” accent. He provides correct authentication information, including password, for a

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customer named “Bradley.” The ADT representative then appears to call the real Bradley—a

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woman who speaks with a Southern accent—and apparently confirms her intent to cancel the

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account. The ADT representative then returns to the male caller and challenges him as to his true

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identity, whereupon the male caller abruptly hangs up. In Exhibit 18 (ADT0000401), the caller

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gives the authentication details and name of a female caller named Perez. He impersonates a
female voice and, when asked why he is canceling, gives a detailed account of financial hardship.

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United States District Court
Northern District of California

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He appears to succeed in cancelling the account.

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Plaintiff offers the recordings for four purposes: (1) to demonstrate customer confusion, in

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support of their Lanham Act claim; (2) to demonstrate why Plaintiff is unable to offer more

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substantial evidence of damages during the early portion of its claimed damages period, i.e., in

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2009 and 2010, before Plaintiff discovered the conduct at issue after receiving an influx of form

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cancellation letters; (3) to demonstrate similarity between the recorded conduct and conduct alleged

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in ADT’s operative, Fourth Amended Complaint, which allegedly occurred later in ADT’s damages

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period; and (4) to demonstrate Defendants’ lack of control over their telephone sales agents, in

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support of the negligence count in the Fourth Amended Complaint, which sounds in negligent

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supervision and hiring. The Court notes that these purposes have changed over the course of the

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pretrial proceedings.

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Defendants objected in their written submissions (Dkt. Nos. 314, 340) on relevance,

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character and hearsay grounds. During two proceedings on September 13, 2013, Defendants orally

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raised the issue of prejudice and thereby a Rule 403 objection. The Court addresses each of

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Defendants’ four objections in turn.

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First, as to relevance, the recordings are relevant to the issue of whether Plaintiff has

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sufficient evidence of damages in 2009 and 2010 to support an award of compensatory damages

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under the Lanham Act’s flexible approach to proving damage. The recordings are also relevant to

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Plaintiff’s negligence count, which focuses on Defendant’s hiring and control of its telemarketers.

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They are not, however, probative of confusion. Second, as to character, the Court is not persuaded

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that the recordings are character evidence. Defendants have not articulated upon whose character

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the recordings reflect or how the recordings are being offered to show action in accordance with

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character “on a particular occasion.” See Fed. R. Evid. 404(b)(1).1 Third, as to hearsay, although

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the recordings capture out-of-court statements, those statements are not offered for the truth of the

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matters asserted therein.

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Defendants’ fourth objection raises a more pressing issue, that of prejudice and the

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possibility of using the evidence for an improper purpose. Rule 403 permits the Court to “exclude
relevant evidence if its probative value is substantially outweighed by a danger of,” among other

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United States District Court
Northern District of California

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things, “unfair prejudice.” Here, the recordings clearly have the potential to be prejudicial to

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Defendants. However, evidence that casts a party in a bad light is not necessarily unfairly

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prejudicial, and it is not necessarily appropriate to exclude such evidence if it is sufficiently

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probative of the facts for which it is offered. The question turns on the recordings’ probative value

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in light of the purposes for which ADT offers them. The Court concludes that the recordings are

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sufficiently probative of the length of time of Plaintiff’s damages period, the similarity of conduct,

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and Defendants’ supervision of its sales agent to outweigh the risk of unfair prejudice as to those

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purposes. The evidence is not, however, sufficiently probative of customer confusion to outweigh

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the risk of unfair prejudice with respect to that issue, since nothing in the recordings indicates a

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customer being confused. The one customer whose voice is heard on the recording, Bradley,

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appears to consent to the cancellation of her account.
The Court notes that, although Defendants have admitted in their answers to ADT’s

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operative complaint that some misrepresentations of the type captured in Exhibits 15 through 18

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occurred, see Dkt. Nos. 205 ¶ 14, 206 ¶ 14, the parties’ list of stipulated facts for trial purposes does

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not include such an admission, see Dkt. No. 277. Such a stipulation might make the recordings’

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probative value weigh far less than the risk of unfair prejudice they entail, as well as make the

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Even if the recordings do constitute character evidence, “‘[p]rior bad acts’ evidence may be
admissible to establish a party’s ‘modus operandi.’” Rutter Group Prac. Guide Fed. Civ. Trials &
Ev. § 8:1195.
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recordings needlessly cumulative. The recordings would thus be more readily excludable on Rule

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403 grounds. However, in the absence of such a stipulation, the recordings are admissible,

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assuming a proper foundation.

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The Court concludes that it will not exclude the recordings on the grounds offered by

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Defendants. Assuming ADT lays a proper foundation for the recordings, they may be admitted,

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though not to show customer confusion.

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IT IS SO ORDERED.

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Dated: September 14, 2013

_______________________________________
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

United States District Court
Northern District of California

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