San Diego Comic Convention v. Dan Farr Productions et al

Filing 297

ORDER granting in part and denying in part 277 Defendants' Ex Parte Application for Reconsideration of the Court's Order Excluding the Testimony of Clarke Nelson. Signed by Judge Anthony J. Battaglia on 10/27/2017. (acc)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 SAN DIEGO COMIC CONVENTION, a California non-profit corporation, 15 16 17 18 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ EX PARTE APPLICATION FOR RECONSIDERATION OF THE COURT’S ORDER EXCLUDING THE TESTIMONY OF CLARKE NELSON Plaintiff, 13 14 Case No.: 14-cv-1865 AJB (JMA) v. DAN FARR PRODUCTIONS, a Utah limited liability company; DANIEL FARR, an individual; and BRYAN BRANDENBURG, an individual, Defendants. (Doc. No. 277) 19 20 Presently before the Court is Defendants Dan Farr Productions, Daniel Farr, and 21 Bryan Brandenburg’s (collectively referred to as “Defendants”) ex parte application for a 22 motion for reconsideration of the Court’s order excluding the testimony of Clarke Nelson. 23 (Doc. No. 277.) Plaintiff San Diego Comic Convention (“Plaintiff”) opposes the motion. 24 (Doc. No. 293.) As explained more fully below, the Court GRANTS IN PART AND 25 DENIES IN PART Defendants’ ex parte motion. 26 BACKGROUND 27 On August 7, 2014, Plaintiff filed a complaint against Defendants asserting causes 28 of action for (1) federal trademark infringement and (2) false designation of origin. (Doc. 1 14-cv-1865 AJB (JMA) 1 No. 1.) The heart of the instant lawsuit revolves around Defendants’ production of Salt 2 Lake Comic Con, which Plaintiff asserts infringes on their trademark “Comic-Con” 3 registered with the United States Patent and Trademark Office (“USPTO”). (Id. ¶¶ 13, 17.) 4 On June 23, 2017, both parties filed various motions. Relevant to the purposes of the 5 instant matter is Plaintiff’s motion to exclude Defendants’ expert Clarke B. Nelson. (Doc. 6 No. 91.) On September 12, 2017, the Court granted Plaintiff’s motion to exclude. (Doc. 7 No. 252.) On October 11, 2017, Defendants filed the present matter, their ex parte motion 8 for reconsideration. (Doc. No. 277.) This Order follows. 9 LEGAL STANDARD 10 A motion to alter judgment is brought under Federal Rule of Civil Procedure 59(e). 11 See Miller v. Transamerican Press, Inc., 709 F.2d 524, 527 (9th Cir. 1983). An amendment 12 to a judgment is appropriate under Fed. R. Civ. P. 59(e) if: “(1) the district court is 13 presented with newly discovered evidence, (2) the district court committed clear error or 14 made an initial decision that was manifestly unjust, or (3) there is an intervening change in 15 controlling law.” Zimmerman v. City of Oakland, 255 F.3d 734, 740 (9th Cir. 2001) (citing 16 School Dist. No. 1J, Multnomah Cty., v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). 17 The Ninth Circuit has recognized that in the interests of finality and conservation of judicial 18 resources, Rule 59(e) is an “extraordinary remedy to be used sparingly.” Kona Enter., Inc. 19 v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). 20 21 DISCUSSION A. Procedural Issues 22 As a threshold matter, the Court first notes that Defendants failed to follow the local 23 rules. Per the local rules, any application for reconsideration must be filed with a “certified 24 statement of an attorney setting forth . . . (1) when and to what judge the application was 25 made, (2) what ruling or decision or order was made thereon, and (3) what new or different 26 facts and circumstances are claimed to exist which did not exist, or were not shown, upon 27 such prior application.” CivLR 7.1.i.1. 28 Next, the Court highlights that the present motion represents Defendants’ second 2 14-cv-1865 AJB (JMA) 1 attempt at filing their ex parte application. Defendants filed their initial ex parte motion on 2 October 9, 2017, a day before the twenty-eight day deadline to file motions for 3 reconsideration was to expire. (Doc. No. 270 (See Fed. R. Civ. P. 59(e)). However, 4 Defendants’ failure to follow Judge Battaglia’s Civil Case Procedures resulted in this initial 5 ex parte motion being struck from the docket. Defendants then filed their amended ex parte 6 motion on October 11, 2017. (Doc. No. 277.) Thus, the present motion is untimely, as a 7 result of Defendants’ own actions. However, the Court declines to deny the motion based 8 on procedural grounds in light of the Court’s desire to decide matters on the merits. 9 B. Motion for Reconsideration 10 Defendants seek reconsideration of three categories of rebuttal opinions provided by 11 their expert Mr. Nelson: (1) identification of costs and expenses incurred by Defendants to 12 generate the $22.8 million of gross revenue accused of infringement by Plaintiff’s financial 13 expert, Dr. Patrick Kennedy, and deduction of the same; (2) a rebuttal to Plaintiff’s 14 financial expert’s opinion of up to $9.8 million in potential corrective advertising damages; 15 and (3) various economic data points in rebuttal to Plaintiff’s financial expert’s failure to 16 provide any meaningful analysis of the potential contribution of the asserted marks to 17 Defendants’ profits. (Doc. No. 292 at 2–3.) Defendants make clear that they are not seeking 18 reconsideration of the exclusion of Mr. Nelson’s 5-10% conclusion.1 (Id. at 3.) 19 Plaintiff states in opposition that Defendants’ motion (1) fails to address the proper 20 legal standard; (2) is attempting to reargue issues already briefed by the parties and ruled 21 upon by the Court; (3) incorrectly argues that Plaintiff failed to address certain opinions in 22 its motion to exclude Mr. Nelson; and (4) allowing Mr. Nelson to testify to Defendants’ 23 aforementioned topics would render the gatekeeping function of the Court meaningless. 24 (See generally Doc. No. 293.) 25 26 27 28 1 After analyzing over fifteen various qualitative and quantitative considerations in his expert report, Mr. Nelson concluded that “it [was] his opinion that not more than 5% to 10% of [Defendants’] operating profits could be attributed to the accused marks.” (Doc. No. 234-2 at 58.) 3 14-cv-1865 AJB (JMA) 1 The Court will take each of Defendants’ reconsideration requests in turn. 2 i. 3 Under this first category, Defendants ask the Court to reconsider its order excluding 4 Mr. Nelson’s cost opinions. (Doc. No. 292 at 4.) Specifically, Defendants seek to have Mr. 5 Nelson opine as to his financial analysis of Defendants’ accounting records to determine 6 which of Defendants’ costs should be applied to accused revenues to then calculate their 7 total profits—as reflected in Schedule 3. (Id.) Plaintiff retorts that Mr. Nelson’s cost 8 opinions fail to engage in any discussion or analysis of any methodology for calculating 9 deductions from their expert’s $22,099,489 revenue figure. (Doc. No. 293 at 7.) Identification of Costs and Expenses 10 The Court notes that it was not its intention to exclude the data represented in 11 Schedule 3. The Court clarifies that it found Schedule 3 inextricably intertwined with the 12 various considerations the Court finds unsupported and unreliable as discussed infra pp. 13 6–7. However, having reviewed Schedule 3 on its own, the Court finds that the data fits 14 within the definition of expenses under 17 U.S.C. § 504(b)—“Expenses are all operating 15 costs] [overhead costs][and] production costs incurred in producing the defendant’s gross 16 revenue. The defendant has the burden of proving the defendant’s expenses by a 17 preponderance of evidence.” Accordingly, upon reconsideration, and if authenticated, the 18 Court would allow a summary of the data from Defendants’ accounting records, (FRE 19 1006) (presumably Schedule 3), to be offered. Thus, Defendants’ motion is GRANTED in 20 part, and in this regard. 21 On a side note, the Court makes clear that the data within Schedule 3, if otherwise 22 admissible as matters of fact, is simply monetary amounts associated with advertising, 23 sales, and costs of goods, etc. (Doc. No. 234-2 at 75–78.) Thus, an expert is not required 24 to testify to these data points. However, if Defendants wish to call upon Mr. Nelson to 25 testify to the creation of Schedule 3, he is to only testify to the numbers presented in the 26 schedule and their source. He is precluded from giving any opinions about or drawn from 27 the data. Of course, any defense witness with personal knowledge could do the same. From 28 the data itself, the jury, consistent with Ninth Circuit Model Jury Instruction 15.29, could 4 14-cv-1865 AJB (JMA) 1 deduct relevant sums in considering profits. 2 One further note, the Court finds the litigation fees and costs associated with this 3 data fall outside of “operating, overhead, and production costs incurred in producing the 4 gross revenue,” (See Model Instruction 15.29), and would need to be redacted from the 5 data presented. 6 ii. 7 Next, Defendants ask the Court to reconsider exclusion of Mr. Nelson’s rebuttal 8 corrective advertising opinions as they are vital to demonstrating how Plaintiff’s expert Dr. 9 Kennedy’s corrective advertising claim is unsupported. (Doc. No. 292 at 6–7.) Plaintiff 10 retorts that Mr. Nelson’s corrective advertising claim does nothing more than criticize the 11 advertising methodology employed by Dr. Kennedy, which Plaintiff’s argue Mr. Nelson is 12 not qualified to do. (Doc. No. 293 at 8.) Moreover, Plaintiff claims that Mr. Nelson failed 13 to address Dr. Kennedy’s $2,832,363 alternative damages figure. (Id.) Corrective Advertising Damages 14 Defendants’ motion for reconsideration as to this factor does not meet any of the 15 specified criteria for a motion for reconsideration. Rather, the motion addresses the 16 contention that Mr. Nelson’s rebuttal opinions are “reliable and important considerations 17 for the trier of fact to properly assess damages and evaluate deficiencies in Dr. Kennedy’s 18 opinions.” (Doc. No. 292 at 6.) However, the Court disagrees. In contrast, the Court finds 19 Mr. Nelson’s corrective advertising arguments unreliable and unsupported. 20 First, the Court notes that Mr. Nelson’s report is lacking in any substantive financial 21 analysis as to how Dr. Kennedy’s corrective advertising figure is erroneous. Instead, Mr. 22 Nelson states that Dr. Kennedy’s opinion is “speculative and unreliable” and that Dr. 23 Kennedy’s estimate “appears to be nothing more than a loosely constructed memo 24 proposing a ‘campaign’ having two key targets.” (Doc. No. 234-2 at 59–60.) Moreover, 25 the various rebuttal opinions he makes against Dr. Kennedy are so heavily entrenched in 26 unsupported arguments that the Court is concerned that these opinions would not be 27 reasonably accurate so as to help the trier of fact make an appropriate determination 28 regarding corrective advertising. See In re Silicone Gel Breasts Implants Prods. Liab. 5 14-cv-1865 AJB (JMA) 1 Litig., 318 F. Supp. 2d 879, 893–94 (C.D. Cal. 2004) (holding that a court under Rule 702 2 must make an inquiry into whether an expert’s opinion would be useful or helpful to the 3 trier of fact). 4 Second, the Court finds Mr. Nelson unqualified to provide an opinion on the various 5 conclusions he made within this portion of his report. Mr. Nelson’s opinion jumps from 6 public confusion, license agreements as related to corrective advertising, the value of the 7 trademarks in question, to the survey commissioned by Plaintiff. (Doc. No. 234-2 at 60– 8 62.) As Defendants repeatedly declare in their motion, Mr. Nelson is a certified public 9 accountant, a member of the American Institute of Certified Public Accountants, is 10 certified in Financial Forensics, and Accredited in Business Valuation. (Doc. No. 292 at 11 4.) Taking a closer look at Mr. Nelson’s curriculum vitae reveals that he states that he has 12 “experience” in intellectual property matters, has assisted intellectual property holders with 13 “licensing negotiations,” and engaged in various trademark “business disputes.” (Doc. No. 14 234-2 at 70.) However, the majority of his experience is centered on accounting and his 15 publications mainly revolve around patent infringement. (Id. at 70, 72.) Consequently, the 16 Court finds that Mr. Nelson goes beyond his expertise and formulates unreliable opinions 17 regarding trademark law. See Fed. R. Civ. P. 702 (holding that a person is qualified to 18 testify as an expert if he or she has the “knowledge, skill, experience, training, or 19 education” sufficient to qualify them as an expert on the subject to which their testimony 20 relates).2 Thus, the Court DENIES Defendants’ motion in this aspect. 21 The Court clarifies that testimony as to the amount of money either party has spent 22 23 24 25 26 27 28 Defendants broadly mischaracterize Mr. Nelson’s intellectual property experience. Defendants’ motion states that Mr. Nelson “is a highly experienced intellectual property damages expert . . . given his education, training, experience . . . [and] recognition.” (Doc. No. 292 at 9.) However, experience in intellectual property damages does not render Mr. Nelson an expert on trademark law in general. Moreover, Mr. Nelson’s education and training, as reflected in his resume, are centered in accounting, financial forensics, and business valuation. (Doc. No. 234-2 at 70.) Mr. Nelson does not hold a degree or certification in intellectual property, nor does he have any legal training in trademark law. 2 6 14-cv-1865 AJB (JMA) 1 on advertising or corrective advertising are simply data points that can be testified to by a 2 fact witness with appropriate personal knowledge. However, the various opinions detailed 3 above are improper and are thus appropriately excluded. 4 iii. 5 Under this final category, Defendants seek reconsideration of Mr. Nelson’s 6 contribution opinions, “which represent the types of information considered and analyses 7 commonly applied by other courts to assess the contribution of the asserted trademarks to 8 Defendants’ profits.” (Doc. No. 292 at 9.) Specifically, Defendants point to various license 9 and proposed license agreements for the asserted trademarks. (Id.) Plaintiff argues that 10 reconsideration as to this factor is not warranted as these various considerations, detailed 11 in around fifty-seven pages, are not tied to a particular methodology or reliable damages 12 opinion. (Doc. No. 293 at 9.) Contribution Rates 13 First, the Court disagrees with Defendants’ assertion that the Court offered no 14 criticism of any of the specific economic data points discussed by Mr. Nelson—geographic 15 characteristics of the parties’ customers, revenue by various geographies, the parties 16 advertising and promotional expenditures, national attendance figures, and competition 17 between the parties. (Doc. No. 292 at 10.) The Court’s previous order clearly stated that 18 the various considerations presented by Mr. Nelson were produced for the Court without 19 any background as to why “Mr. Nelson chose to focus on the considerations he did” nor 20 “why the factors he chose were important.” (Doc. No. 263 at 15.) 21 Next, Defendants have not set forth any basis that warrants reconsideration. Rather, 22 in their motion to reconsider, Defendants appear to be re-litigating issues the Court 23 considered when ruling on Plaintiff’s motion to exclude. (See generally Doc. No. 263.) 24 This is improper. See, e.g., Costello v. U.S. Gov’t, 765 F. Supp. 1003, 1009 (C.D. Cal. 25 1991) (holding that in general, “courts avoid considering Rule 59(e) motions where the 26 grounds for amendment are restricted to either repetitive contentions of matters which were 27 before the court on its prior consideration or contentions which might have been raised 28 prior to the challenged judgment.”); Above the Belt, Inc. v. Mel Bohannan Roofing, Inc., 7 14-cv-1865 AJB (JMA) 1 99 F.R.D. 99, 101 (E.D.Va. 1983) (holding that “Plaintiff improperly used the motion to 2 reconsider to ask the Court to rethink what the Court had already thought through—rightly 3 or wrongly.”). 4 The Court reiterates that it finds that Mr. Nelson’s various contribution opinions are 5 essentially pure argument without any methodology to support his conclusions. See Diviero 6 v. Uniroyal Goodrich Tire Co., 114 F.3d 851, 853 (9th Cir. 1997) (holding that expert 7 testimony is “unreliable and inadmissible” when an expert fails to “satisfactorily [] explain 8 the reasoning behind his opinions,” rendering his opinions “unsubstantiated and 9 subjective”). Moreover, the Court is puzzled as to how these considerations are relevant as 10 they are directly connected to Mr. Nelson’s 5-10% conclusion. (See Doc. No. 234-2 at 58 11 (“Based on the above qualitative and quantitative considerations . . . it is my opinion that 12 not more than 5% to 10% of [Defendants’] operating profits could be attributed to the 13 accused marks.”)). Defendants assert that the various contribution opinions will help the 14 trier of fact assess the contribution of the trademarks to Defendants’ profits. (Doc. No. 292 15 at 9.) In direct opposition, the Court finds that these various qualitative and quantitative 16 considerations would be wholly unconstructive and impractical as the trier of fact would 17 be left with a smattering of opinions without any direction as to how much each 18 consideration weighed in its analysis or how to put these considerations together to come 19 to a percentage. Based on the foregoing, Defendants’ motion as to this factor is DENIED. 20 21 // 22 // 23 // 24 // 25 // 26 // 27 // 28 // 8 14-cv-1865 AJB (JMA) 1 2 CONCLUSION 3 As explained more thoroughly above, the Court GRANTS IN PART AND 4 DENIES IN PART Defendants’ ex parte motion for reconsideration. See Navajo Nation 5 v. Confederated Tribes and Bands of the Yakama Indian Nation, 331 F.3d 1041, (9th Cir. 6 2003) (“Whether or not to grant reconsideration is committed to the sound discretion of the 7 court.”). 8 9 10 IT IS SO ORDERED. Dated: October 27, 2017 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 14-cv-1865 AJB (JMA)

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