Candy Craft Creations, LLC v. Gartner et al

Filing 426

ORDER denying 386 Motion in Limine to Preclude Evidence of Thomas Kwak's Actual or Apparent Authority by Defendants; denying 387 Motion in Limine to Preclude Any Mention of or Reference to Plaintiff's Create-a-Pack Theory of Recovery; denying as moot 388 Motion in Limine to Preclude Plaintiff from Stating that Reverse Engineering of a Trade Secret, Absent any Qualifications, is Unlawful; granting in part and denying in part 389 Motion in Limine to Exclude Testimony or Oral Argument that Defendants' Withheld Incriminating Evidence and to Exclude Evidence that Sanctions Against Defendants Arising out of Discovery Issues are Pending; denying 390 Motion in Limine to Exclude Evidence, Testimony, and Oral Argument of Damages Calculated on Plaintiff's Mechanized Process and Recipe; granting as unopposed 391 Motion in Limine to Prohibit Plaintiff's Expert J.P. Gingras from Offering Testimony During Phase One of Trial that is in Support of Opinion 5 i n his Expert Report or any Testimony Describing Defendants' Ability to Pay Money Damages; and granting as unopposed 416 Motion in Limine as to Defendant's Claims for Attorneys' Fees Pursuant to O.C.G.A. § 13-6-11. Signed by Magistrate Judge R. Stan Baker on 10/22/2015. (csr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF GEORGIA
BRUNSWICK DIVISION

CANDY CRAFT CREATIONS, LLC,
Plaintiff,

CIVIL ACTION NO.: 2:12-cv-91

v.
GREG GARTNER; GARTNER STUDIOS,
INC.; and TYLINA FOOD PRODUCTS
CORPORATION,
Defendant.

ORDER
This matter came before the Court on October 8, 2015, for a hearing on the parties’
Motions in Limine. 1 For the reasons set forth at the hearing and supplemented below, the Court
acts on the parties’ Motions as follows:
•

The Court DENIES Defendants’ Motion in Limine No. 1: Motion to Preclude Evidence
of Thomas Kwak’s Actual or Apparent Authority by Defendants, (doc. 386);

•

The Court DENIES Defendants’ Motion in Limine No. 2: Motion to Preclude Any
Mention of or Reference to Plaintiff’s Create-a-Pack Theory of Recovery, (doc. 387);

•

The Court DENIES AS MOOT Defendants’ Motion in Limine No. 3: Motion to
Preclude Plaintiff from Stating that Reverse Engineering of a Trade Secret, Absent any
Qualifications, is Unlawful, (doc. 388);

•

The Court GRANTS IN PART AND DENIES IN PART Defendants’ Motion in
Limine No. 4: Motion to Exclude Testimony or Oral Argument that Defendants’

1

At that hearing, the Court also heard from the parties on their respective objections to trial exhibits.
(Docs. 404, 405.) The Court will issue a separate Order on those objections.

Withheld Incriminating Evidence and to Exclude Evidence that Sanctions Against
Defendants Arising out of Discovery Issues are Pending, (doc. 389);
•

The Court DENIES Defendants’ Motion in Limine No. 5: Motion to Exclude Evidence,
Testimony, and Oral Argument of Damages Calculated on Plaintiff’s Mechanized
Process and Recipe, (doc. 390);

•

The Court GRANTS AS UNOPPOSED Defendants’ Motion in Limine No. 6: Motion to
Prohibit Plaintiff’s Expert J.P. Gingras from Offering Testimony During Phase One of
Trial that is in Support of Opinion No. 5 in his Expert Report or any Testimony
Describing Defendants’ Ability to Pay Money Damages (doc. 391); and

•

The Court GRANTS AS UNOPPOSED Plaintiff’s Motion in Limine as to Defendant’s
Claim for Attorneys’ Fees Pursuant to O.C.G.A. § 13-6-11, (doc. 416).
BACKGROUND
The background and facts of this case are laid out in detail in the Court’s prior Orders, in

particular the Court’s March 31, 2015, Order on Defendants’ dispositive Motions, (doc. 371), 2
and need not be laid out herein in detail. Succinctly, this case centers on Plaintiff’s fondant cake
decorating product, “Fondarific.” Plaintiff and Defendants discussed, but never reached, an
exclusive supply distribution agreement whereby Plaintiff would supply and Defendants would
market Fondarific on a national level. However, during the negotiation process, the parties
entered a non-disclosure agreement and operated under open purchase orders.

Ultimately,

Defendants developed their own fondant product, “Fontastic”, which garnered the same
endorsement deals and distribution agreements which Plaintiff hoped Fondarific would garner.
Plaintiff brought this action alleging, among other things, that, in developing Fontastic,

2

This Order is hereinafter referred to as the “Omnibus Order”.

2

Defendants defrauded Plaintiff, misappropriated Plaintiff’s trade secrets, and breached the
parties’ nondisclosure agreement. Defendants deny all of these allegations and claims. This case
is set for trial on December 8, 2015.
DISCUSSION
I.

Defendants’ Motion in Limine No. 1 to Preclude Evidence of Thomas Kwak’s
Actual or Apparent Authority by Defendants’ Subsequent Acts (Doc. 386)
Plaintiff’s allegations that Defendants breached the nondisclosure agreement focuses in

large part on Gartner Studios’ employee Thomas Kwak’s visit to Plaintiff’s facility on March 18,
2010. Prior to Kwak’s visit, on December 3, 2009, Defendant Greg Gartner signed a “NonDisclosure and Confidentiality Agreement” (“the NDA”) on behalf of Defendant Gartner
Studios. (See Doc. 45-2, pp. 32–35.) Defendants argue that the NDA required Plaintiff to put in
writing any claim of confidentiality. Plaintiff counters that, even if the writing requirement was
applicable, Kwak waived that requirement during his March 2010 visit by agreeing that
everything he saw during that visit was confidential. Defendants argue that Kwak did not have
the authority to alter or modify the NDA or waive the writing requirement. In the Omnibus
Order, the Court concluded “there is at least a question of material fact” on that issue, and,
therefore, the jury will make this determination.” (Doc. 371, p. 46.)
Defendants’ first Motion in Limine focuses on what evidence the jury should consider to
make that determination. Defendants maintain that the Court should bar Plaintiff from offering
any evidence of Defendants’ acts subsequent to Kwak’s March 18, 2010, visit when assessing
Kwak’s actual or apparent authority to waive or modify the NDA. (Doc. 386, p. 1.) In support
of this position, Defendants cite to not only the Federal Rules of Evidence on relevancy, but also
Georgia law regarding principals and agents.

3

For the reasons the Court stated at the Motions in Limine hearing, Defendants argue for
far too strict of a limitation on the evidence relevant to Kwak’s actual or apparent agency. As an
initial matter, the evidence that Defendants are seeking to exclude will likely be introduced on
other issues. Moreover, Defendants’ subsequent conduct can be relevant to the scope of Kwak’s
actual authority on the date of his visit. As the Georgia Court of Appeals has explained, “[t]he
fact of agency may be established by proof of circumstances, apparent relations, and the conduct
of the parties.” Arrington & Blount Ford, Inc. v. Jinks, 270 S.E.2d 27, 29 (Ga. Ct. App. 1980)
(noting, “as uncontroverted proof of [salesman’s] agency”, among other things, salesman drove
cars with dealership’s “paper tags both before and after the transaction took place.”) (emphasis
supplied). For instance, evidence that Defendants permitted Kwak to enter contracts on their
behalf around the time that he visited Plaintiff’s facility makes it more likely that modification of
the NDA was within the scope of his agency. 3
Furthermore, Defendants’ actions subsequent to Kwak’s visit could help the jury assess
the issue of Kwak’s apparent agency and Plaintiff’s reliance thereon. See Capital Color Printing,
Inc. v. Ahern, 661 S.E.2d 578, 585 (Ga. Ct. App. 2008) (“The doctrine of apparent agency . . . is
determined by examining both the conduct of the alleged principal and the detrimental reliance
on that conduct by the third party asserting the doctrine. The acts of the agent which create
apparent authority may include written or spoken words or any other conduct of the principal
which, reasonably interpreted, causes the third person to believe that the principal consents to
have the act done on his behalf by the person purporting to act for him.”) (internal quotations and
3

In their Motion, Defendants specifically argued that Plaintiff should be precluded from offering
evidence that Kwak was promoted to vice-president of Gartner Studios after the visit to Plaintiff’s facility.
(Doc. 386, pp. 3, 5.) However, at the hearing on Defendants’ Motion, Defendants could not state when
Kwak was promoted to this position. Moreover, Defendants did not offer any evidence regarding how
Kwak’s duties or the scope of his agency changed with his new job title. Further, Defendants’ Motion
casts a far broader net than merely evidence of Kwak’s promotion and seeks to exclude any evidence of
Defendants’ acts subsequent to Kwak’s visit.

4

alterations omitted).

Plaintiff could also seek to offer acts subsequent to Kwak’s visit to

demonstrate that Defendants did not revoke Kwak’s agency.

Arrington, 270 S.E.2d at 29

(“Whenever a general agency has been established for any purpose, all persons who have dealt
with the agent have a right to assume that his authority to deal with them in behalf of his
principal continues, until notice, express or implied, has been conveyed to them that the agency
has been revoked. . . . Authority to an agent to do a thing generally includes authority to do
everything usual and necessary for the accomplishment of the main object.”) (internal quotations
and citations omitted). Lastly, the jury would have to consider evidence subsequent to Kwak’s
visit to determine whether Defendants ratified any waiver or modification of the NDA during his
visit.
For all of these reasons and for those stated at the hearing, the Court DENIES
Defendants’ Motion in Limine No. 1. (Doc. 386.)
II.

Defendants’ Motion in Limine No. 2 to Preclude any Mention of or Reference to
Plaintiff’s Create-a-Pack Theory of Recovery (Doc. 387)
Matt Engstrum is a former employee of Defendant Gartner Studios. 4 According to

Plaintiff, Engstrum was heavily involved in Defendants’ development of Fontastic.

For

example, Plaintiff points out that on August 30, 2010, Engstrum e-mailed Kwak and asked, “I
have a question in regards to your trip to Fondarific. Do you know or think that they [Plaintiff’s
representatives] are currently heating up the compound base of (white chocolate) in chip form or
could they be using a liquid white chocolate?”. (Doc. 384-2, p. 7.) Mr. Kwak responded, “They
are using chips and heating them in the microwave. It is actually white chocolate compound.”
Id.

4

There appears to be some discrepancy as to whether Engstrum also worked for Defendant Tylina Foods
Products. (Doc. 399, p. 2.)

5

In April 2014, Engstrum apparently left Gartner Studios and began to work at Create-aPack, a competitor of Plaintiff that also makes and markets fondant. In the proposed Pretrial
Order, filed on July 24, 2015, Plaintiff indicated that it intended to introduce evidence of
Engstrum’s employment with Create-a-Pack and that company’s sales of fondant. (Doc. 384,
pp. 19, 27.) In their second Motion in Limine, Defendants seek to exclude any “any evidence
related to [Plaintiff’s] contention that non-party Create-a-Pack Foods, Inc.[,] . . . has also
misappropriated Plaintiff’s trade secrets or other confidential information, and that the jury
should hold Defendants, or any of them, liable for that alleged misappropriation[ ]” in the abovestyled action. (Doc. 387, p. 1.) Defendants offer two arguments for exclusion of such evidence:
1) that Plaintiff did not disclose its intention to offer evidence regarding Engstrum’s employment
with Create-a-Pack until the night before the pretrial order was due; and 2) that evidence of
Engstrum’s employment with Create-a-Pack is irrelevant and unduly prejudicial.
The Court recognizes that one of the primary purposes of discovery is to avoid undue
“surprises” at trial. See King v. City of Waycross, No. CV 5:14-CV-32, 2015 WL 5468646, at
*3 (S.D. Ga. Sept. 17, 2015) (“A major purpose of discovery is eliminating surprise.”).
However, in this case, the belated discovery and disclosure of Engstrum’s employment with
Create-a-Pack does not warrant the encompassing relief that Defendants seek. Plaintiff could not
have disclosed Engstrum’s employment with Create-a-Pack during discovery, as this
employment did not begin until well after the discovery deadline of February 17, 2014.
(See Doc. 210.) As other courts have held, events that occurred after discovery should not be
excluded from trial merely because they were not disclosed during discovery. See, e.g., Hart v.
Rick’s Cabaret Int’l, Inc., 967 F. Supp.2d 901, 943 (S.D.N.Y. 2013) (“Because the evidence
relates to events that occurred after the close of discovery and is potentially probative as to the

6

determination whether [the defendants] were plaintiffs’ employers, the Court grants the motion
[to supplement the record with new evidence].”); Phillips v. Irvin, No. CIV.A. 05-0131-WS-M,
2007 WL 2156412, at *6 (S.D. Ala. July 25, 2007) (denying motion to exclude evidence of
plaintiff’s post-discovery sale of business on issue of lost wages).
Furthermore, according to Plaintiff’s counsel, it did not learn of Engstrum’s change of
employment until months after the transition. In contrast, because Engstrum was an employee of
Defendants, they presumably knew about his employment with Create-a-Pack much sooner.
Consequently, Engstrum’s new employment is not a surprise to Defendants.

Additionally,

Plaintiff does not seek to offer any documentary or opinion evidence regarding Engstrum’s
employment with Create-a-Pack. Rather, it proposes to ask questions of Engstrum and other
already-identified witnesses regarding his employment with Create-a-Pack. Defendants have
equal, if not superior, access to these witnesses. Thus, it does not appear that Plaintiff is seeking
to offer any evidence that is in Plaintiff’s custody or control that has not been disclosed to
Defendants. 5
Lastly, Defendants could have cured any surprise through measures short of the drastic
remedy of excluding this evidence. Phillips, No. CIV.A. 05-0131-WS-M, 2007 WL 2156412, at
*6 (“Moreover, rather than seeking the draconian remedy of excluding this evidence altogether,
defendant could have requested limited supplemental discovery of [plaintiff] relating specifically
to the sale of his business. Given the narrowness of the issue and the fact that the sale occurred
after discovery closed, this could have represented a viable way of vindicating defendant’s
interest in discovery in an efficient and inexpensive manner. That defendant chose not to go that
route does not constitute unfair prejudice justifying the exclusion of plaintiff’s evidence.”); see
5

Further, Defendants have not identified any discovery request pertinent to this issue that Plaintiff has
failed to supplement.

7

also Thornton v. United States, No. CV 111-106, 2013 WL 443666, at *8 (S.D. Ga. Feb. 5,
2013) (“Instead of attempting to resolve the Rule 26 dispute during discovery and cure any
surprise or harm it felt it had suffered, Defendant moved for summary judgment—effectively
seeking the harshest sanction available.”). Defendants were aware of Plaintiff’s intention to
offer evidence regarding Engstrum’s employment with Create-a-Pack more than four months
before the start of trial when the pretrial order was filed on July 24, 2015. Accordingly,
Defendants had sufficient time to cure any undue surprise as to this issue.
Defendants also argue that Engstrum’s employment with Create-a-Pack is irrelevant and
unduly prejudicial.

They argue that Create-a-Pack was advertising confection processing

services for fondant on its website prior to Engstrum’s employment. Thus, Defendants argue,
“Create-a-Pack developed and sold its processing services for fondant before Matt Engstrum
ever arrived there.” (Doc. 387, p. 5.) Plaintiff counters that, though it does not know whether
Engstrum took Candy Craft’s trade secrets to Create-a-Pack, its attorneys should be allowed to
inquire into such evidence at trial. (Doc. 399.) Plaintiff contends that Gartner Studios’ sales
from fondant have decreased since Engstrum went to work for Create-a-Pack, and Plaintiff
should be allowed to explore “whether Defendants have entered into a business relationship with
Create-a-Pack to disguise sales in an effort to minimize damages in this case.” (Id. at p. 3.)
The Court rejects Defendants’ argument that this evidence is irrelevant because Create-aPack was in the fondant industry before Matt Engstrum worked there. (Doc. 387, p. 4.) The
limited evidence before the Court, four sentences of marketing from Create-a-Pack’s website
regarding “Confection Processing”, is not sufficient for the Court to gauge the status of Create-aPack’s fondant business. (See Doc. 387-1.) Moreover, even if Create-a-Pack had already
developed processing services for fondant prior to Engstrum’s employment, that does not

8

foreclose the possibility that Create-a-Pack used Plaintiff’s trade secrets to improve those
services or to modify its business model. Indeed, to find otherwise would be to essentially
conclude that a competitor could not misappropriate a trade secret as long as they were involved
in the industry prior to the misappropriation.
For these reasons, the Court rejects Defendants’ stated objections to evidence of
Engstrum’s employment with Create-a-Pack and DENIES their Motion in Limine No. 2.
(Doc. 387.) However, this ruling should not be construed as a determination on whether any
misappropriation by Create-a-Pack is attributable to Defendants. The evidence and arguments
before the Court are insufficient for such a determination. However, Plaintiff has made a
sufficient showing of relevance (for example, that Create-a-Pack’s use of Plaintiff’s trade secrets
could potentially be tied to Defendants or that such use could be relevant to the value of
Plaintiff’s trade secrets) to allow it to inquire into Engstrum’s employment with Create-a-Pack
and whether Create-a-Pack used Plaintiff’s trade secrets. The Court emphasizes that this inquiry
should not be protracted. As noted above, Plaintiff has not indicated that it has any additional
documentary evidence or opinion testimony on this issue. Consequently, the presentation on this
issue will be limited to the questioning of witnesses who have already been identified. 6
III.

Defendants’ Motion in Limine No. 3 to Preclude Plaintiff from Stating that Reverse
Engineering of a Trade Secret, Absent any Qualifications, is Unlawful (Doc. 388)
Plaintiff agreed at the Motions in Limine hearing that it had no intention of arguing that

reverse engineering of a trade secret, absent any qualifications, is unlawful.

Accordingly,

Defendants’ Motion in Limine No. 3, (doc. 388), is DENIED AS MOOT.

6

Should any party seek to introduce any other evidence regarding Mr. Engstrum’s employment with
Create-a-Pack, it must obtain leave of Court to do so well in advance of trial. Furthermore, it must
provide good cause for the introduction of such evidence and, if such evidence has not already been
disclosed, it must be prepared to explain why.

9

IV.

Defendants’ Motion in Limine No. 4 to Exclude Testimony or Oral Argument that
Defendants Withheld Incriminating Evidence and to Exclude Evidence that
Sanctions Against Defendants Arising out of Discovery Issues are Pending
(Doc. 399)
Defendants’ lackluster and evasive discovery efforts plagued the early litigation of this

case. The Court has previously found clear and convincing evidence that Defendants employed
abusive behavior during the discovery process and, therefore, that sanctions are warranted.
Through their Motion in Limine Number 4, Defendants seek to exclude evidence of that ruling as
well as Defendants’ conduct underlying it. For the reasons and in the manner set forth below,
Defendants’ Motion is GRANTED IN PART AND DENIED IN PART.
A.

Background of the Court’s Ruling on Plaintiff’s Motion for Sanctions

Defendants’ misconduct during discovery is well-documented through numerous
pleadings in this case and need only be summarized herein. Plaintiff brought several motions to
remedy Defendants’ discovery deficiencies. See, e.g., doc. 100 (Motion to Strike Answer and
for Sanctions); doc. 109 (Motion to Compel and for Sanctions); doc. 118 (Motion to Strike
Declaration). The Court first held a hearing on these motions on July 17, 2013 and, then, due to
the “fairly stunning behavior” of Defendants, held an evidentiary hearing on December 3, 2014.
(Doc. 213, p. 5.)
At the evidentiary hearing, the Court heard approximately six and a half hours of
testimony regarding Defendants’ discovery failures. (Doc. 213.) That testimony came from
Defendants’ officers and employees, as well as their former counsel. Id. Generally, the evidence
submitted at that hearing revealed that Defendants’ discovery conduct had been abusive in
several areas including: 1) incomplete initial Rule 26 disclosures; 2) woefully inadequate initial
responses to Plaintiffs’ Requests for Production of Documents and deposition subpoenas; 3)
evasive and contradictory (at the least) answers at depositions; 4) and troublesome sworn

10

declarations. On February 6, 2014, after additional briefing by both sides, the Court issued an
Order granting Plaintiff’s Motion for Sanctions. (Doc. 223.) The Court found that Defendants
failed to “participate in discovery in a forthcoming and timely manner” and that their discovery
efforts “show disdain for opposing counsel, opposing parties, and for the Court’s function, rules,
and processes.” (Id. at p. 15.) However, the Court declined to employ the drastic remedy of
striking Defendants’ Answer and instead ruled that monetary sanctions were a sufficient remedy
for Defendants’ misconduct. Id. 7 The Court will determine the amount of monetary sanctions
following the trial of this case.
B.

Discussion of Defendants’ Motion in Limine No. 4

Through their Motion in Limine Number 4, Defendants argue that “permitting Plaintiff to
admit evidence of the prior, yet remedied, discovery issues and pending sanctions[ ] would be
entirely outweighed by the prejudicial effect such information would have on the jury.”
(Doc. 389, p. 1.)

In response, Plaintiff argues that Defendants’ discovery misconduct,

particularly their concealment of “incriminating” e-mails, is pertinent to several issues including
their claim for attorneys’ fees and punitive damages. (Doc. 401.) Plaintiff also argues that this
evidence demonstrates Defendants’ state of mind, which Plaintiff must prove to recover under
the Georgia Trade Secrets Action (“GTSA”) and on its claim of fraud. Id.
1.

Evidence of the Court’s Ruling on Plaintiff’s Motion for Sanctions

As an initial matter, Plaintiff will not be permitted to introduce evidence of the Court’s
Order granting its Motion for Sanctions. It appears that Plaintiff agrees the Court’s ruling itself
will not be admitted because Plaintiff’s Response does not specifically argue that the Court’s
decision would be probative on any issue. (See Doc. 401.) Furthermore, any probative value of
7

The Court declined to strike the answer, in large part, due to the “scrupulous efforts of Defendants’ new
counsel in attempting to remedy discovery deficiencies.” Id.

11

the Court’s ruling would be substantially outweighed by its propensity to cause Defendants
unfair prejudice and to mislead the jury. Fed. R. Evid. 403. Given the inherent respect jurors
afford judges, the jury would undoubtedly give undue weight to the Court’s ruling against
Defendants. If the jurors were to hear that the Court had found Defendants are subject to
sanctions, they would like be biased against Defendants. As a result, it would then be difficult
for jurors to take an objective view of Defendants, their evidence, and their witnesses. This
would inhibit the jury’s truth-seeking function. Moreover, such bias is beyond the relief the
Court contemplated in issuing its Order granting Plaintiff’s Motion for Sanctions. As the Court
made clear, monetary sanctions will suffice to remedy Defendants’ discovery misconduct.
(Doc. 223, p. 15.)

Furthermore, as discussed in more detail below, in finding sanctions

warranted, the Court cited not only Defendants’ conduct, but also the conduct of their former
counsel.

However, if the ruling were introduced, the jury would likely be left with the

misimpression that Defendants were solely responsible for the imposition of sanctions. For all of
these reasons, Defendants’ Motion in Limine is GRANTED to the extent it seeks to exclude
evidence of the Court’s ruling granting Plaintiff’s Motion for Sanctions.
2.

Defendants’ Prior Statements

In contrast, Defendants’ Motion is DENIED to the extent it seeks to exclude prior
statements of Defendants’ principals, employees, and witnesses. As noted above, the Court cited
Defendants’ Rule 30(b)(6) depositions and their representatives’ declarations in its February 6,
2014, Order. Plaintiff characterizes Defendants’ statements and declarations as not merely
misleading but perjurious. Defendants’ principals and employees have written communications
during this litigation that Plaintiff contends bear upon the substance of its claims. Merely
because these communications were part of the discovery dispute in this case does not cause

12

them to be inadmissible. 8 Accordingly, evidence of Defendants’ prior statements will not be
excluded by Defendants’ Motion in Limine No. 4 and will be subject to the same rules of
admissibility as in any other case. See, e.g., Fed. R. Evid. 613, 801(d)(1), & 801(d)(2).
3.

Defendants’ Failure to Produce Documents

The litigation regarding Defendants’ discovery misconduct has primarily focused on their
failure to produce documents. The unfortunate history of Defendants’ document production was
explored at length during the December 3, 2013, hearing and detailed in the Court’s February 6,
2014, Order. (Doc. 223, pp. 2–7.) Defendants’ original attorney, John M. Weyrauch, conducted
the initial document production which resulted in Defendants producing 1,307 documents on
September 21, 2012. (Doc. 213-1, p. 42.) In approximately October 2012, after concerns arose
regarding the extent of production, Russell Slygh, Defendants’ Information Technology Director,
conducted a keyword search of Defendants’ representatives’ e-mails which produced over
10,000 documents. (Doc. 213-3, p. 18.) Slygh testified that he turned all of these documents
over to Weyrauch and that he also sent copies of the respective e-mail searches to Defendant
Gartner and the other employees whose e-mail was searched. (Doc. 213-5, pp. 24–25, 33–34.)
However, after reviewing these documents, Weyrauch did not produce any of the documents to
Plaintiff’s counsel because he believed the documents were either not pertinent or duplicative of
the documents that were already provided. (Doc. 213-3, pp. 12, 20–21.)
In March 2013, Kaufman, Miller & Forman, PC, (“the Kaufman firm”), replaced
Weyrauch as lead defense counsel. Thereafter, the Kaufman firm performed an extensive search
of Defendants’ computer systems. The Court held a hearing on discovery issues on July 17,
2013, and ordered Defendants to produce all relevant documents. (Doc. 164.) On October 15,
8

At the Motions in Limine hearing, Defendants’ counsel seemed to agree that, if otherwise admissible,
any witness’ prior statements should not be excluded by Defendants’ Motion in Limine No. 4.

13

2013, the Kaufman firm produced over 60,000 pages of highly pertinent documents to Plaintiff
that Defendants had never before produced. (Doc. 190, p. 2.) These never-before-produced
documents included several e-mails that Plaintiff refers to as “smoking gun” type documents.
(See Doc. 190, pp. 6–10.)
Plaintiff has indicated that it seeks to introduce Defendants’ withholding of this evidence
in the trial of this case. Indeed, in its brief statement of the case contained in the pretrial order,
which the parties are cautioned that the Court will use to instruct the jury, Plaintiff includes the
following: “Gartner Studios concealed incriminating emails and evidence of its conduct in this
Litigation.” (Doc. 384, p. 6.) Through its brief in Response to the instant Motion and at the
hearing, Plaintiff has laid out three grounds which it contends Defendants’ concealment of
evidence is pertinent: 1) to show Defendants’ state of mind; 2) to support Plaintiff’s claim for
attorneys’ fees under O.C.G.A. § 13-6-11; and 3) to support Plaintiff’s claim for exemplary
damages under the GTSA and punitive damages under O.C.G.A. § 51-12-5.1. For the reasons
set forth below, these grounds do not provide a basis for introduction of this evidence; therefore,
Defendants’ Motion in Limine No. 4 is GRANTED to the extent it seeks to exclude evidence of
Defendants’ withholding of e-mails and other documents during discovery.
a. Whether Plaintiff can offer Defendants’ withholding of documents during
discovery to prove Defendants’ state of mind.
In order to prove its claims of trademark infringement, Plaintiff must demonstrate: “(A)
Acquisition of a trade secret of another by a person who knows or has reason to know that the
trade secret was acquired by improper means” or “(B) disclosure or use of a trade secret of
another without express or implied consent by a person who used improper means to acquire
knowledge of a trade secret.” O.C.G.A. § 10-1-761(2). In addition, Plaintiff’s claims of fraud,
attorneys’ fees, and punitive damages involve elements pertaining to Defendants’ state of mind

14

in their dealings with Plaintiff. Plaintiff argues that Defendants’ withholding of documents
during this litigation is probative of their state of mind before the litigation. Succinctly, Plaintiff
argues that “Defendants hid incriminating evidence because they knew they used improper
means to misappropriate Plaintiff’s trade secrets.” (Doc. 401, p. 4.)
Plaintiff has not cited any cases in which a court has found that a party’s discovery
misconduct during litigation could be used as evidence of that party’s state of mind prior to the
litigation.

Nonetheless, Defendants’ misconduct during the litigation could be somewhat

probative of their intent in dealing with Plaintiff. The jury could infer Defendants withheld
documents because they knew that they obtained Plaintiff’s trade secrets improperly and dealt
with Plaintiff in bad faith. However, the withholding of documents would only be minimally
probative of Defendants’ knowledge and intent. There could be a number of reasons that
Defendants withheld documents other than a guilty mind.

Moreover, as Defendants’ new

counsel has repeatedly stressed, the withholding of documents is at least partially attributable to
Defendants’ former counsel, Weyrauch. Thus, Defendants argue, the withholding of documents
is not probative of their intent. Rather, Defendants maintain, this withholding illuminates the
failings of their past counsel. (See Doc. 201.) Plaintiff disputes this attribution to Weyrauch and
cites to an e-mail whereby Defendant Greg Gartner directed Slygh to show Gartner any e-mails
before Slygh released them. (See Doc. 213, pp. 7–10.) However, the evidence was undisputed
that Slygh gave Weyrauch over 10,000 pages of documents which Weyrauch then failed to
produce. Consequently, any probative value that the withholding of documents may have as to
Defendants’ state of mind is at least diluted by the involvement of their past counsel. For these
reasons, the withholding of documents is only minimally probative of Defendants’ prelitigation
state of mind.

15

In contrast, this evidence has a significant danger of causing unfair prejudice and
confusion of the issues, as well as misleading the jury, unduly delaying the trial of this case, and
wasting time. See Fed. R. Evid. 403. As the Court’s hearing on Plaintiff’s Motion for Sanctions
demonstrates, the presentation of Defendants’ withholding of documents would require a
significant amount of testimony and time. (See Docs. 213–213-5.) Much of this evidence, such
as dates of production, search terms and protocol, and discovery software would be far removed
from the substance of Plaintiff’s claims. Consequently, presentation on this issue could cause the
trial to become more about discovery than whether Defendants misappropriated Plaintiff’s trade
secrets.

The confusion caused by and time spent on such a “trial within a trial” would

substantially outweigh any benefits this evidence would lend to the jury’s fact-finding mission.
Additionally, as one of the cases cited by Plaintiff demonstrates, if the Court were to
allow evidence of Defendants’ withholding of documents, it would have to allow Defendants an
opportunity to explain their conduct. In Kroger Co. v. Walters, 735 S.E.2d 99, 104 (Ga. Ct. App.
2012), the Georgia appellate court agreed with the trial court’s allowance of evidence that the
defendant spoliated and altered video evidence. However, the appellate court then reversed the
judgment because the trial court had not allowed the defendant to call a witness to explain its
conduct. In the case at hand, affording Defendants the opportunity to explain their conduct
would not only require a significant amount of time, it would also involve troublesome evidence.
For instance, Defendants would likely have to call their former counsel and delve into issues of
attorney-client relationships and discovery strategy. This evidence is not only likely confidential
(at the very least) and far afield from Plaintiff’s claims, it also involves issues that could confuse
and mislead jurors. 9
9

Further, this presentation could delve into Plaintiff’s discovery efforts if Defendants sought to explain
away their discovery efforts by comparing them to those of Plaintiff. In addition, Defendants would

16

Lastly, there exists a significant probability that the jury would not merely use evidence
that Defendants withheld documents during discovery to gauge Defendants’ knowledge, intent,
or bad faith, but also as an impetus to punish Defendants for conduct during the litigation. Such
punishment for litigation conduct is not within the purview of the jury and would constitute
unfair prejudice to Defendants.

Again, Chief Judge Wood has already determined that

Defendants will be sanctioned and that those monetary sanctions are sufficient to remedy their
misconduct.
Thus, the potential to cause unfair prejudice, confuse the issues, mislead the jury, unduly
delay the trial of this case, and waste time substantially outweighs the minimal probative value
that evidence of Defendants’ withholding of documents would have as to Defendants’ state of
mind. For these reasons, Defendant’s Motion is GRANTED to the extent it seeks to bar Plaintiff
from offering Defendants’ withholding of documents to prove their state of mind.
b. Whether Plaintiff can offer Defendants’ withholding of documents during
discovery to support its claim for attorneys’ fees under O.C.G.A. § 13-611.
As a general rule, under Georgia law, a party cannot recover its expenses of litigation.
David G. Brown, P.E., Inc. v. Kent, 561 S.E.2d 89, 90–91 (Ga. 2002). However, O.C.G.A. § 136-11 permits recovery of fees where the jury determines that a defendant has acted in bad faith,
has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense.
Plaintiff claims that Defendants’ discovery misconduct constitutes stubborn litigiousness and that
the conduct has caused Plaintiff unnecessary trouble and expense. 10 However, Georgia courts

likely need to introduce mitigating evidence of their new counsel’s more commendable discovery efforts
so that jurors would not be left with the impression that Defendants never produced the documents.
Again, this expansion of the record is far removed from the merits of Plaintiff’s claims.
10

Plaintiff also argues that Defendants’ discovery misconduct is not only substantive proof of stubborn
litigiousness and causing Plaintiff unnecessary trouble and expense during this litigation but also

17

have repeatedly held that, when contemplating an attorneys’ fees claims under O.G.G.A. § 13-611, the jury should not consider conduct during the litigation itself. See, e.g., Id. at 90 (“[T]he
element of bad faith that will support a claim for expenses of litigation under [O.C.G.A.] § 13-611[ ] must relate to the acts in the transaction itself prior to litigation, not to the motive with
which a party proceeds in the litigation.”)); M & H Const. Co. v. N. Fulton Dev. Corp., 519
S.E.2d 287, 288–89 (Ga. Ct. App. 1999); Stone v. King, 396 S.E.2d 45, 46 (Ga. Ct. App. 1990)
(“[Section] 13–6–11, which permits an award of attorney fees ‘where the defendant has acted in
bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and
expense,’ has been held to apply to conduct arising from the transaction underlying the cause of
action in litigation.”); Padgett v. Moran, 306 S.E.2d 96, 97 (Ga. Ct. App. 1983); Raiford v. Nat’l
Hills Exch., LLC, No. CV 111-152, 2013 WL 1286204, at *27 (S.D. Ga. Mar. 27, 2013)
reconsideration denied by No. CV 111-152, 2014 WL 97359 (S.D. Ga. Jan. 8, 2014) (“An award
under Section 13-6-11 must relate to conduct arising from the underlying cause of action being
litigated, as opposed to conduct during the course of litigation.”); Gayton v. Trux Transp., Inc.,
No. 1:05-CV-3249-TWT, 2006 WL 3266488, at *4 (N.D. Ga. Nov. 9, 2006) (“However,
Georgia’s courts have clearly stated that a claim under [Section] 13-6-11 applies to a defendant’s
conduct before the commencement of litigation, and necessarily does not encompass conduct in
the course of litigation.). 11
At the Motions in Limine hearing, Plaintiff’s counsel stated that, while this pre-litigation
limitation applies to attorneys’ fees claims premised in bad faith, it does not apply to claims
circumstantial proof of Defendants’ bad faith state of mind prior to the litigation. For the reasons set forth
in subsection IV.B.3(a) above, any probative value that Defendants’ withholding documents may have as
to Defendants’ state of mind is outweighed by other factors.
11

“Conversely, [O.C.G.A. §§] 9-15-14(a) [and] (b), which authorize[ ] the recovery of attorney fee
expenses incurred in responding to certain claims, defenses, or litigation tactics, ha[ve] been interpreted to
govern conduct occurring during the litigation.” Stone, 396 S.E.2d at 46.

18

premised in unnecessary trouble and expense or stubborn litigiousness. 12 However, Georgia
courts have repeatedly rejected such a distinction. For example, in Padgett, the Georgia Court of
Appeals stated, “the only evidence concerning appellant’s alleged stubborn litigiousness dealt
with discovery filed in his defense in this action. . . . [T]he Civil Practice Act contains remedies
available to a party litigant when he feels he has been the subject of burdensome discovery. . . .
Allowance of attorney fees pursuant to [Section] 13-6-11 based upon a party’s conduct in the
course of litigation is wholly improper.” 306 S.E.2d at 97 (citing Raybestos-Manhattan, Inc. v.
Friedman, 275 S.E.2d 817, 821 (Ga. Ct. App. 1981)). Similarly, the Northern District of Georgia
stated, “any alleged stubbornly litigious conduct occurring over the course of this litigation
cannot justify an award of attorney’s fees under [O.C.G.A. § 13-6-11.]” Gayton, No. 1:05-CV3249-TWT, 2006 WL 3266488, at *4. Rather than being premised in conduct occurring during
the course of litigation, “statutory recovery for stubborn litigiousness or causing unnecessary
trouble and expense is authorized if there exists no bona fide controversy or dispute regarding
12

Plaintiff cites the case of Kroger 735 S.E.2d at 104, for the proposition that “evidence of events
occurring after a cause of action in tort arises may be admissible to demonstrate the defendant caused the
plaintiff unnecessary trouble and expense.” (Doc. 401, p. 4.) However, “events occurring after a cause of
action in tort arises” do not equate to events that occurred after a lawsuit was filed. For instance, in
Kroger, the primary conduct at issue, spoliation of evidence, occurred after the accident but prior to the
filing of the lawsuit, and there was a jury question as to when the other conduct, the manipulation of a
surveillance camera, occurred. 735 S.E.2d at 104–05. This difference is further demonstrated by the case
which is often cited for the principle that Plaintiff cites, U-Haul Co. of W. Ga. v. Ford, 320 S.E.2d 868
(Ga. Ct. App. 1990). In U-Haul, the court affirmed the award of attorneys’ fees because of the numerous
ways the defendant refused to respond to the plaintiff or pay her claims before she filed suit. 320 S.E.2d
at 871–72. Furthermore, the court in Kroger reaffirmed that the key inquiry in an attorneys’ fees claim
for stubborn litigiousness or unnecessary trouble and expense is whether “there exists no bona fide
controversy or dispute regarding the liability for the underlying cause of action.” David G. Brown, P.E.,
561 S.E.2d at 91. A defendant causes unnecessary trouble and expense for the purposes of O.C.G.A. §
13-6-11 by demonstrating a “post-collision-pre-litigation attitude of ‘so sue me’ without having a valid
reason for questioning [plaintiff’s] claim,” thereby “forcing plaintiff to resort to the courts in order to
collect.” Brown v. Baker, 398 S.E.2d 797, 800 (Ga. Ct. App. 1990) (emphasis supplied). Because
Defendants’ withholding of discovery documents obviously occurred after Plaintiff resorted to this Court
to collect, that conduct cannot be part of their “pre-litigation attitude.” Plaintiff also cites the case of
Friday v. United Parcel Serv. of Am., Inc., No. 1:04-CV-1351-TWT, 2006 WL 648758, at *3 (N.D. Ga.
Mar. 10, 2006). (Doc. 401, p. 4.) However, that case dealt with a request for sanctions under Federal
Rule of Civil Procedure 37, not a claim for fees under O.C.G.A. § 13-6-11

19

liability for the underlying cause of action.” David G. Brown, P.E., 561 S.E.2d at 90–91; see
also M & H Const. Co., 519 S.E.2d at 288–89 (“Thus, in a case where bad faith is not an issue,
attorney[ ] fees are not authorized under [Section] 13-6-11 if the evidence shows that a genuine
dispute exists-whether of law or fact, on liability or amount of damages, or on any comparable
issue[.]”).
Accordingly, to establish that Defendants were stubbornly litigious or caused Plaintiff
unnecessary trouble and expense, Plaintiff must demonstrate that there was no bona fide
controversy on its claims rather than relying upon Defendants’ discovery abuses and other
conduct during the course of this lawsuit. 13
For these reasons, evidence that Defendants withheld documents is not admissible to
prove Plaintiff’s claims for attorneys’ fees under O.C.G.A. § 13-6-11.
c. Whether Plaintiff can offer Defendants’ withholding of documents during
discovery to support its claims for punitive and exemplary damages.
Plaintiff also argues that it should be allowed to enter evidence of Defendants’
withholding of documents to prove its claim of exemplary damages under the GTSA, as well as
its claim for punitive damages under O.C.G.A. § 51-12-5.1. (Doc. 401, p. 5.) Plaintiff primarily
seeks to introduce this evidence to prove Defendants’ prelitigation state of mind, which it
contends warrants these types of damages. Id.
The Court rejected offering this evidence for this purpose in subsection (a) above.
Furthermore, to the extent Plaintiff argues that Defendants’ conduct during this litigation directly
13

The fact that Defendants’ post-litigation misconduct cannot be considered by the jury to support
Plaintiff’s attorneys’ fees claims supports the above analysis that evidence of this misconduct could cause
confusion and undue prejudice. For example, if evidence of the misconduct was introduced for the
purpose of showing Defendants’ intent as to the misappropriation claim, there is danger that the jury
would be confused that it could also use evidence of the discovery misconduct to determine that
Defendants were stubbornly litigious or caused Plaintiff unnecessary trouble or expense. Consequently,
the presence of an attorneys’ fees claim actually cuts against, rather than supports, the admission of such
evidence.

20

warrants exemplary or punitive damages, Georgia law forecloses that line of reasoning. Georgia
courts have repeatedly held that a party cannot recover punitive damages for conduct during the
litigation. Citizens & S. Nat’l Bank v. Bougas, 265 S.E.2d 562, 563 (Ga. 1980) (“There is no
provision for punitive damages arising because of conduct occurring during the litigation. The
aggravating circumstance must relate to the tort being sued on, which in this case was wrongful
conversion.”); Kurtz v. Brown Shoe Co., 637 S.E.2d 111, 112–13 (Ga. Ct. App. 2006) (“First of
all, the trial court correctly ruled that there is no statutory or common law basis for [plaintiff] to
bring a punitive damages claim based on an alleged discovery dispute wholly unrelated to her
injuries.”); Holmes v. Drucker, 411 S.E.2d 728, 729–30 (Ga. Ct. App. 1991) (“Georgia law
generally excludes, as irrelevant and prejudicial, evidence of defendant's conduct occurring after
the act giving rise to plaintiff’s claim.”) Consequently, Plaintiff may not introduce Defendants’
withholding of documents to prove its claim of exemplary or punitive damages.
V.

Defendants’ Motion in Limine No. 5 to Exclude Evidence, Testimony, and Oral
Argument of Damages Calculated on Plaintiff’s Mechanized Process and Recipe
(Doc. 390)
Defendants’ Motion in Limine No. 5 is DENIED for the reasons stated at the Motions in

Limine Hearing.
VI.

Defendants’ Motion in Limine No. 6 to Prohibit Plaintiff’s Expert J.P. Gingras from
Offering Testimony During Phase One of Trial that is in Support of Opinion No. 5
in his Expert Report or any Testimony Describing Defendants’ Ability to Pay
Money Damages (Doc. 391)
Defendants’ Motion in Limine No. 6 is GRANTED AS UNOPPOSED, as stated during

the hearing.

21

VII.

Plaintiff’s Motion in Limine as to Defendants’ Claim for Attorneys’ Fees Pursuant
to O.C.G.A. § 13-6-11 (Doc. 416)
Plaintiff’s Motion as to Defendants’ claim for attorneys’ fees is GRANTED AS

UNOPPOSED, as stated during the hearing.
CONCLUSION
The Court hereby issues the above rulings on the parties’ Motions in Limine for the
reasons stated above and at the hearing. (Docs. 386, 387, 388, 389, 390, 391, 416.) Any party
seeking to object to these rulings must file specific objections within fourteen (14) days of the
date of this Order.
Any objections asserting that the Magistrate Judge failed to address any contention raised
in the Motions must also be included. Failure to do so will bar any later challenge or review of
the factual findings or legal conclusions of the Magistrate Judge. See 28 U.S.C. § 636(b)(1)(C);
Thomas v. Arn, 474 U.S. 140 (1985). A copy of the objections must be served upon all other
parties to the action.
The filing of objections is not a proper vehicle through which to make new allegations or
present additional evidence.

Furthermore, it is not necessary for a party to repeat legal

arguments in objections.
Upon receipt of Objections meeting the specificity requirement set out above, a United
States District Judge will make a de novo determination of those portions of the report, proposed
findings, or recommendation to which objection is made and may accept, reject, or modify in
whole or in part, the findings or recommendations made by the Magistrate Judge. Objections not
meeting the specificity requirement set out above will not be considered by a District Judge. A
party may not appeal a Magistrate Judge’s ruling directly to the United States Court of Appeals

22

for the Eleventh Circuit. Appeals may be made only from a final judgment entered by or at the
direction of a District Judge.
SO ORDERED, this 22nd day of October, 2015.

R. STAN BAKER
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF GEORGIA

23