BHC Development, LC et al v. Bally Gaming, Inc
Filing
174
ORDER denying 86 defendant's motion to strike, denying 118 plaintiffs' motion to exclude, and granting in part and denying part 136 plaintiffs' motion in limine. Signed by Magistrate Judge James P. O'Hara on 2/10/2014. (mb)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BHC DEVELOPMENT, LC, et al.,
Plaintiffs,
v.
Case No. 12-2393-JPO
BALLY GAMING, INC.,
Defendant.
ORDER
This case involves a contractual dispute arising from the sale of casino
management hardware and software by defendant, Bally Gaming, Inc. (“Bally”), to
plaintiffs, BHC Development, LC and BHCMC, LLC—the developers and operators of
Boot Hill Casino & Resort in Dodge City, Kansas. Plaintiffs filed suit against defendant
asserting claims for breach of contract, negligent misrepresentation, and breach of
implied warranty of merchantability.1 Defendant counterclaimed that plaintiffs failed to
make payments due under the purchase agreement and continued to use the software after
their license expired. Trial is scheduled to begin March 3, 2014. The matter is currently
before the undersigned U.S. Magistrate Judge, James P. O’Hara, on several motions:
defendant’s motion to strike expert and expert report of Bart A. Lewin (ECF doc. 86);
1
Plaintiffs also brought claims for fraudulent inducement and breach of express
warranty but defendant was granted summary judgment on those claims (See ECF doc.
152).
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plaintiffs’ motion to exclude expert testimony and report of Patrick Crawford (ECF doc.
118); and plaintiffs’ motion in limine (ECF doc. 136).
I.
Motions to Exclude Experts
Rule 702 of the Federal Rules of Evidence governs the admissibility of opinions
based on scientific, technical, or specialized knowledge. Under Rule 702, a witness who
is qualified by knowledge, skill, experience, training, or education (called an “expert
witness”) may testify in the form of an opinion or otherwise as to scientific, technical, or
other specialized knowledge if such testimony will assist the trier of fact to understand
the evidence or to determine a fact in issue, “if, (1) the testimony is based upon sufficient
facts or data, (2) the testimony is the product of reliable principles and methods, and (3)
the witness has applied the principles and methods reliably to the facts of the case.”2 A
district court has wide discretion in deciding whether to admit expert testimony. 3
The court employs a two-step analysis to determine the admissibility of an
expert’s opinion.
First, the court must determine whether the expert’s proposed
testimony has “a reliable basis in the knowledge and experience of his discipline.”4 The
court must then inquire into whether the proposed testimony is sufficiently “relevant to
2
Fed. R. Evid. 702.
3
Kieffer v. Weston Land, Inc., 90 F.3d 1496, 1499 (10th Cir. 1996) (citing Orth v.
Emerson Elec. Co., White-Rodgers Div., 980 F.2d 632, 637 (10th Cir. 1992)).
4
Belisle v. BNSF Ry. Co., 697 F. Supp. 2d 1233, 1238 (D. Kan. 2010) (citing Norris v.
Baxter Healthcare Corp., 397 F.3d 878, 884 (10th Cir. 2005) (quoting Daubert v. Merrell
Dow Pharmaceuticals, Inc., 509 U.S. 579, 592 (1993)).
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the task at hand.”5 An expert opinion “must be based on facts which enable [him] to
express a reasonably accurate conclusion as opposed to conjecture or speculation …
absolute certainty is not required.”6
A.
Defendant’s Motion to Strike Expert Bart A. Lewin
Plaintiffs have identified Bart Lewin as their expert to opine on whether the
software defendant sold: (1) was delivered in good working order; (2) included all
necessary functions to comply with the Kansas Expanded Lottery Act and Kansas
Administrative Regulations, plaintiffs’ contract with the Kansas Lottery, and plaintiffs’
internal controls; (3) included all necessary functions to conduct marketing operations;
(4) contained all functions on the Functionality Spreadsheet; and (5) met the minimum
standard of merchantability for similar products.7 Defendant moves the court to exclude
Mr. Lewin’s opinion because: (1) it is not based on sufficient facts and data; and (2) it
fails to meet the reliability test under Daubert.
1.
Sufficient Facts or Data
Defendant argues Mr. Lewin’s insufficient knowledge of the Bally software or its
operation render his opinions suspect.8
5
First, defendant asserts that Mr. Lewin’s
Daubert, 509 U.S. at 597.
6
Belisle, 697 F. Supp. 2d at 1238 (quoting Dodge v. Cotter Corp., 328 F.3d 1212,
1222 (10th Cir. 2003)).
7
ECF doc. 86-1 at 4.
8
ECF doc. 86 at 5.
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qualifications combined with his deposition testimony show he had insufficient
knowledge about the system or how it was operated at the Boot Hill Casino. Defendant
emphasizes the fact that Mr. Lewin could not testify with certainty about whether there
was related hardware or third-party systems plaintiffs were required to purchase under the
agreement. Because Mr. Lewin testified that he did not inquire about Boot Hill Casino’s
information technology (“IT”) department, defendant also claims Mr. Lewin lacks
familiarity with how the system operated at the casino.
Plaintiffs respond that there is no question Mr. Lewin is qualified to opine on
casino management software, including defendant’s systems software. Mr. Lewin was
the Chief Technology Officer of a multinational casino operator, where he oversaw an IT
department that operated Bally’s software. Mr. Lewin has written over twenty articles
that have been published in gaming industry trade magazines.
In addition, he has
operated the same Bally software used by plaintiffs and developed software that
interfaces with it. Finally, Mr. Lewin has served as an industry consultant, advising
casinos on how to make effective use of the same Bally software at issue here.
Plaintiffs also respond that Mr. Lewin’s failure to consider hardware or third-party
systems as alternative explanations for their software problems goes to the weight and not
the admissibility of his opinions. Mr. Lewin’s assumption that plaintiffs used third-party
systems was based on his professional experience that use of such systems is necessary
for any casino operating progressive slot machines. Similarly, plaintiffs assert that Mr.
Lewin’s failure to investigate the IT department is an alternative explanation that goes to
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the weight and not the admissibility of his opinions. Regardless, plaintiffs point out that
Mr. Lewin observed notes within defendant’s issue logs that suggest it is very unlikely
certain issues were related to inadequate training.
“The Tenth Circuit employs a quantitative, rather than a qualitative analysis when
examining the sufficiency of the facts and data used by the witness.” 9
Mr. Lewin
reviewed over fifty issue logs authored by defendant’s employees to track the casino’s
complaints as well as numerous other documents. Since defendant does not challenge the
accuracy of information written by its own employees, plaintiffs insist that Mr. Lewin’s
opinions are based on sufficient facts and data and should not be excluded.
Mr. Lewin’s background includes twenty-five years of experience in the gaming
industry in which he performed jobs as a chief technology officer, director of software
development, chief executive officer of a gaming industry software supplier, and an
industry consultant to casinos regarding Bally software. He has experience developing
and operating casino management software. Specifically, he has experience working
with defendant’s software. As earlier indicated, he also has written over twenty articles
that have been published in gaming trade magazines.
Mr. Lewin’s report indicates that he intends to testify on the performance of
defendant’s software.
The court has no doubt Mr. Lewin is able to opine on the
9
McDaniel-Sharp v. Wal-Mart Stores, Inc., No. 11-2518, 2012 WL 4210511, at *3 (D.
Kan. Sept. 18, 2012) (citing United States v. Lauder, 409 F.3d 1254, 1264 n.5 (10th Cir.
2005); Fed. R. Evid. 702, Advisory Committee’s Note to the 2000 Amendments).
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performance of defendant’s casino management software based on his background and
extensive experience. Therefore, to the extent defendant moves to exclude Mr. Lewin’s
testimony on the basis of his qualifications, the court denies its motion.
Moreover, the court agees with plaintiffs that Mr. Lewin’s admission that he failed
to investigate the IT department or consider the hardware or third-party systems as
alternative explanations for the software’s performance goes to the weight and not the
admissibility of Mr. Lewin’s opinions.10 Mr. Lewin’s failure to rule out all possible
alternative causes of the software’s performance does not render his opinions
inadmissible. Defendant may challenge Mr. Lewin’s opinions via “[v]igorous crossexamination, presentation of contrary evidence, and careful instruction on the burden of
proof …. the tradition and appropriate means of attacking shaky but admissible
evidence.”11 The rejection of expert testimony is the exception rather than the rule.12
Here, plaintiffs have met their burden to show Mr. Lewin’s opinion is based on sufficient
facts or data. Therefore, defendant’s request to strike Mr. Lewin’s opinion on this basis
is denied.
10
See McDonald v. N. Am. Specialty Ins. Co., 224 F. App’x 747, 767 (10th Cir. 2007);
see also Goebel v. Denver and Rio Grande Western R.R. Co., 346 F.3d 987, 998-99 (10th
Cir. 2003) (indicating that an expert’s failure to rule out all possible alternative causal
sources does not render the expert’s testimony inadmissible).
11
Daubert, 509 U.S. at 596.
12
In re Universal Serv. Fund Tel. Billing Practices Litig., No. 02-MD-1468, 2008 WL
4382141, at *1 (D. Kan. Sept. 26, 2008) (See Fed. R. Evid. 702 Advisory Committee
notes).
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2.
Reliability Test of Daubert
Mr. Lewin opined that defendant’s systems software was not delivered to plaintiffs
in “good working order” and that defendant never fully repaired or restored the software
to “good working order.”13 Defendant argues that Mr. Lewin’s testimony and report fail
to meet Daubert’s reliability test because Mr. Lewin is “insufficiently familiar with the
Bally software and his standard of ‘good working order’ has no definition or basis in the
computer software industry.”14
Specifically, defendant argues that Mr. Lewin’s
testimony is nothing more than a subjective, personal opinion that the software was not in
“good working order.” Defendant asserts that “good working order” is a vague term,
which Mr. Lewin could not articulate as an industry standard.
Plaintiffs respond that Mr. Lewin’s explanation of his opinion is substantiated by
evidence and thus is sufficiently reliable to be admitted under Daubert and Rule 702.
First, plaintiffs assert that Mr. Lewin did articulate a basis for his conclusion that
defendant’s systems software was not in good working order— a basis supported both by
evidence in the record and Mr. Lewin’s professional experience. Mr. Lewin stated in his
report that he would consider casino management software to be in good working order if
it performs as the vendor represents during the sales process and in accordance with the
terms outlined in the sales contract. Additionally, Mr. Lewin testified that to be in good
13
ECF doc. 86-1 at 4.
14
ECF doc. 86 at 9.
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working order, the software should be able to comply with the regulations of the casino’s
jurisdiction and its own internal controls. Finally, Mr. Lewin stated that most people in
the gaming software industry would apply the same, or a very similar definition.
Second, plaintiffs assert that Mr. Lewin reached his conclusion by reviewing
defendant’s issue logs in light of applicable state regulations, the casino’s internal
controls, and representations made by defendant to plaintiffs prior to the purchase of the
software.
Plaintiffs assert Mr. Lewin’s analysis of the evidence was based on his
extensive professional experience, which allowed him to apply his definition of “good
working order” to the facts of this case. Plaintiffs state that any further dispute with the
definition of “good working order” goes to the weight and not the admissibility of Mr.
Lewin’s opinion. Therefore, plaintiffs argue, Mr. Lewin’s report is sufficiently reliable
and should be admitted.
Reliability analysis applies to all aspects of the expert’s testimony, including the
facts underlying the opinion, the methodology, and the link between the facts and the
conclusion drawn.15 Consequently, the court must make a practical, flexible analysis of
the reliability of the testimony, considering relevant factors and the circumstances of the
case.16 The court has discretion on how to approach the task of making reliability
15
Parker v. Wal-Mart Stores, Inc., 267 F.R.D. 373, 375 (D. Kan. 2010) (citing Starling
v. Union Pac. R. Co., 203 F.R.D. 468, 475 (D. Kan. 2001)).
16
Id.
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findings.17 Although the rejection of expert testimony is the exception rather than the
rule,18 the court will not allow expert testimony that invades the province of the jury or
renders opinions on issues of law.19
The court already has determined that Mr. Lewin is qualified to opine on the
performance of defendant’s software and that his opinion is based on sufficient facts and
data. Now the court must decide if Mr. Lewin’s opinion is sufficiently reliable.
Mr. Lewin relied upon his professional experience working with, implementing,
and operating casino management software within the gaming industry, along with his
familiarity and experience with defendant’s software to determine that the software was
not delivered to plaintiffs in “good working order.” Mr. Lewin also based his opinion on
his review of the agreement at issue, Kansas state regulations, the casino’s internal
controls, and issue logs authored by defendant’s employees, which track the casino’s
complaints with the software.
Mr. Lewin explained his basis or methodology for
determining if casino management software was in good working order and, as earlier
indicated, stated that most people in the software industry would apply the same, or a
very similar definition.
Based on the foregoing, the court finds that Mr. Lewin’s opinion does have a
reliable basis in the knowledge and experience of his discipline. Plaintiffs need not show
17
Id. (citing Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 152 (1999)).
18
Id. (citing Daubert, 509 U.S. at 595).
19
Id. (citing Specht v. Jensen, 853 F.2d 805, 807 (10th Cir. 1988)).
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that Mr. Lewin is indisputably correct. Plaintiffs have shown that Mr. Lewin’s opinion is
based on facts which sufficiently satisfy Rule 702’s reliability requirement. Defendant
will have an opportunity to challenge any issues it has with Mr. Lewin’s opinion through
cross-examination or contrary evidence.
For the first time, defendant challenges the relevancy of Mr. Lewin’s opinion in
the final paragraph of its reply brief. Defendant asserts that its liability is limited by the
warranties and disclaimers provided in the agreement with plaintiffs.
Therefore,
defendant argues, whether the software was in “good working order” will have no
relevance to the validity of the disclaimers or breach of the express warranty. Courts in
this district generally refuse to consider issues raised for the first time in a reply brief.20
At this time and based on the information currently before it, the court finds that Mr.
Lewin’s opinion will assist the trier of fact and is relevant to the “task at hand.”21
Therefore, defendant’s motion to strike the expert testimony and report of Mr. Lewin is
denied.
B.
Plaintiffs’ Motion to Exclude Expert Patrick Crawford’s Testimony
Plaintiffs contend the testimony of Patrick Crawford, defendant’s expert regarding
the functionality of defendant’s software, is inadmissible under Daubert,22 because it is
20
Lieuau v. Columbia Cas. Co., 176 F. Supp. 2d 1236, 1244 (D. Kan. 2001).
21
See ECF doc. 103 at 5 (citing Heartland Surgical Specialty Hosp. LLC v. Midwest
Div. Inc., No. 05-2164, 2007 WL 6215929, at *1 (D. Kan. Dec. 19, 2007)).
22
509 U.S. at 589.
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not based on sufficient facts or data to render it reliable.
Defendant argues that plaintiffs’ motion must be denied as untimely. The pretrial
order states that all motions to exclude testimony of expert witnesses pursuant to Fed. R.
Evid. 702-05, Daubert, or similar case law, must be filed by twenty-eight days before
trial unless the motion will be case-dispositive, or if an evidentiary hearing on the motion
is reasonably anticipated.23 The instant motion was filed on November 11, 2013, as of
that time, trial was set to begin on December 9, 2013, before the presiding U.S. District
Judge, Kathryn H. Vratil.
Trial is now scheduled to begin before the undersigned
magistrate judge on March 3, 2014. Defendant did not ask for an evidentiary hearing and
the court has concluded that one is not necessary. Further, plaintiffs’ motion is not casedispositive. Therefore, defendant’s request to deny plaintiffs’ motion as untimely is
denied.
Defendant has identified Patrick Crawford as its expert to opine on whether the
software sold to plaintiffs was : (1) functional; (2) in compliance with Kansas Racing and
Gaming Commission standards; and (3) consistent in function to the rest of the industry.24
Plaintiffs move the court to exclude Mr. Crawford’s opinion because he failed to consider
sufficient facts and data to render his report reliable. As noted earlier, the Tenth Circuit
23
ECF doc. 92 at 27.
24
ECF doc. 119-1 at 2.
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employs a quantitative, rather than qualitative analysis when examining the sufficiency of
the facts and data used by the witness.25
Plaintiffs assert that Mr. Crawford considered only seven documents before
reaching his conclusions: a compilation of the Boot Hill Casino & Resort’s monthly
revenue figures, a single Bally issue log, and five certification documents issued by
Gaming Laboratories International (“GLI”). Additionally, plaintiffs emphasize that Mr.
Crawford did not compensate for his lack of documentary support by conducting an
independent investigation. Instead, he spoke only to one of defendant’s executives and
defense counsel.
Further, plaintiffs contend that the factors on which Mr. Crawford bases his
opinions are plainly contradicted by evidence in the record. For example, plaintiffs argue
that Mr. Crawford lists sixteen “critical modules” which were not related to issues
reported on the single issue log that he examined, and cites this as evidence that
defendant’s software was functioning properly. Plaintiffs argue this is incorrect because
the issue logs have items relating to two of the critical modules that Mr. Crawford
identified. Plaintiffs argue this discrepancy alone is enough to exclude Mr. Crawford’s
testimony.
Defendant responds that Mr. Crawford’s extensive experience in the development
of gaming management systems has provided him with the knowledge that casinos would
25
McDaniel-Sharp, 2012 WL 4210511, at *3 (citing Lauder, 409 F.3d at 1264 n.5;
Fed. R. Evid. 702, Advisory Committee’s Note to the 2000 Amendments).
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not be able to operate without critical “system modules” performing. Mr. Crawford
opined that there “was an obvious absence of critical items” on the latest “issues list.” 26
Therefore, Mr. Crawford’s analysis of this information combined with his seventeen
years of experience in the casino industry led him to conclude the software was
functioning properly.
Defendant also responds that Mr. Crawford’s opinion rests on sufficient
foundation to withstand exclusion. Defendant asserts that plaintiffs’ argument is based
solely upon Bart Lewin’s rebuttal report. Given the fact that Mr. Crawford reviewed Mr.
Lewin’s report and file, defendant responds that if Mr. Crawford failed to review
sufficient documents, then so did plaintiffs’ expert, Mr. Lewin.
Plaintiffs respond that defendant’s contention conflicts with Mr. Crawford’s
statement in his report that “[a]ll documents” he used in creating his report are included
in Appendix B, as Appendix B contains only seven documents. However, plaintiffs
concede that Mr. Crawford stated in his report that he “reviewed the report prepared by
Mr. Lewin,” which is not included in Appendix B but was reviewed by Mr. Crawford
nonetheless. Regardless, plaintiffs argue that Mr. Crawford makes no references to any
of the hundred-plus documents considered by Mr. Lewin and his rebuttal contains only
two conclusory statements.
26
ECF doc. 119-1 at 2.
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To clarify, Mr. Crawford’s report states that he has “used various documents
provided by Bally’s counsel, as well as documents found in the public realm.” This
statement is then followed by the following sentence, “All documents are attached as
Appendix B: Supporting Documentation.” Without taking the foregoing sentence out of
context and reading Mr. Crawford’s report in its totality, it appears that Mr. Crawford has
read and taken into account the report and file of Bart Lewin in forming his opinion.
After reviewing Mr. Crawford’s opinions, the court finds those opinions rest on
facts which enable him to express reasonably accurate conclusions.
Mr. Crawford
appears to have reviewed everything that plaintiffs’ expert reviewed along with the
documents included in Appendix B to his report and simply reached a different
conclusion than plaintiffs’ expert. The fact that experts may have differing opinions does
not warrant exclusion.27 Plaintiffs try to dismiss Mr. Crawford’s experience as irrelevant.
However, an expert’s qualifications are relevant to the inquiry as to whether an expert’s
opinion is based on facts that enable him to express a reasonably accurate conclusion.28
If plaintiffs take issue with Mr. Crawford’s’ qualifications or the accuracy of his findings,
they may address these issues through vigorous cross-examination or through the
presentation of contrary evidence to show any weakness in Mr. Crawford’s conclusions.
27
Belisle, 697 F. Supp. 2d at 1242 (See Daubert, 509 U.S. at 595 (stating the court’s
analysis is on the methodology and principles an expert used, not the conclusions
generated)).
28
Id. (citing In re Cessna 208 Series Aircraft Prod. Liab. Litig., 2009 WL 3756980, at
*6 (D. Kan. Nov. 9, 2009) (citations omitted)).
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Plaintiffs make a brief reference to the inadmissibility of the methodology used by
Mr. Crawford in the final paragraph of their reply brief but fail to provide any support for
this argument. Upon review, the court finds no issue with Mr. Crawford’s methodology
and finds that plaintiffs’ argument goes to the weight and not the admissibility of the
evidence. Any of plaintiffs’ remaining concerns regarding the information Mr. Crawford
considered (or failed to consider) to form his opinion may be addressed on crossexamination at trial. In consideration of the foregoing, plaintiffs’ motion to exclude
expert testimony and report of Mr. Crawford is denied.
II.
Plaintiffs’ Motion in Limine
Plaintiffs’ motion in limine seeks to exclude the following evidence from trial: (1)
evidence relating to allegations that plaintiffs did not pay GHI Solutions, Inc. (“GHI”);
(2) evidence relating to plaintiffs’ temporary withholding of payments to defendant for
gaming machines; and (3) evidence relating to plaintiffs’ initial damage disclosures.
Defendant opposes plaintiffs’ motion on all three grounds. Plaintiffs did not file a reply
brief. For the reasons explained below, plaintiffs’ motion is granted in part and denied in
part.
In deciding motions in limine, the court applies the following standard:
The movant has the burden of demonstrating that the evidence is
inadmissible on any relevant ground. The court may deny a motion in
limine when it lacks the necessary specificity with respect to the evidence
to be excluded. At trial, the court may alter its limine ruling based on
developments at trial or on its sound judicial discretion. Denial of a motion
in limine does not necessarily mean that all evidence contemplated by the
motion will be admitted at trial. Denial only means that the court cannot
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decide admissibility outside the context of trial. A ruling in limine does not
relieve a party from the responsibility of making objections, raising
motions to strike or making formal offers of proof during the course of
trial.29
A.
Evidence Regarding Payments Owed to GHI
Plaintiffs object to the admission of evidence that plaintiffs did not pay GHI in
full. Plaintiffs hired GHI to help them select a casino management software system.
Because GHI is not a party to this litigation and the amount plaintiffs paid GHI is not an
element of either party’s damages claim, plaintiffs argue such evidence is irrelevant,
unduly prejudicial, and improper character evidence.
Specifically, plaintiffs argue evidence of their withheld payment to a non-party is
barred by Federal Rules of Evidence 401, 403, and 404(b)(1). Under Fed. R. Evid. 401,
“[e]vidence is relevant if: (a) it has any tendency to make a fact more or less probable
than it would be without the evidence; and (b) the fact is of consequence in determining
the action.” As to prejudice, Fed. R. Evid. 403 provides that “[a]lthough relevant,
evidence may be excluded if its probative value is substantially outweighed by the danger
of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations
of undue delay, waste of time, or needless presentation of cumulative evidence.” Finally,
Fed. R. Evid. 404(b) provides, “[e]vidence of a crime, wrong, or other act is not
admissible to prove a person’s character in order to show that on a particular occasion the
29
Schipper v. BNSF Ry. Co., No. 07-2249, 2009 WL 997149, at *1 (D. Kan. Apr. 14,
2009) (quoting First Sav. Bank, F.S.B. v. U.S. Bancorp, 117 F. Supp. 2d 1078, 1082 (D.
Kan. 2000)).
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person acted in accordance with the character.”
However, this evidence may be
admissible for another purpose, such as proving motive, opportunity, intent, preparation,
plan, knowledge, identity, absence of mistake, or lack of accident.30
Defendant responds that any evidence regarding plaintiffs’ dealings with GHI
would not be offered for the purpose of proving plaintiffs’ character.
However,
defendant argues that such evidence is relevant to the jury to determine plaintiffs’ course
of dealings with defendant. Defendant has a counterclaim that plaintiffs failed to make
payments due under the purchase agreement and continued to use the software after their
license expired. Defendant asserts that evidence of plaintiffs’ withheld payment under a
contract with GHI would give the jury a basis for making an inference regarding its
counterclaim.
Federal Rule of Evidence 404 bars using evidence of a specific instance of
conduct to show a party had a propensity to act in conformity therewith. On one hand,
defendant claims it is not using evidence of plaintiffs’ alleged withheld payment to a nonparty “for the purpose of proving plaintiffs’ character, or that plaintiffs acted in
conformance with that character.”31 Yet, in the next breath defendant asserts that this
evidence would allow the jury to infer plaintiffs failed to make payment to defendant.
This type of character evidence is susceptible of being used for the purpose of suggesting
30
Fed. R. Evid. 404(b)(2).
31
ECF doc. 148 at 3.
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an inference that a person acted on the occasion in question consistently with his
character. Plaintiffs’ alleged failure to pay a non-party for services completely unrelated
to the contract in dispute has slight probative value to the issues in this case and may be
very prejudicial.32 Such evidence would only distract the trier of fact from what occurred
between plaintiffs and defendant. None of the exceptions to Rule 404 appear to apply
and defendant fails to cite any. Therefore, defendant is barred from presenting evidence
that plaintiffs withheld payment to GHI. Plaintiffs’ motion in limine is granted as to this
issue.
B.
Evidence Relating to Plaintiffs’ Withholding of Payment to Defendant
Similarly, plaintiffs move to prohibit defendant from offering evidence that
plaintiffs “briefly withheld from Bally certain payments for electronic gaming
machines.”33 Plaintiffs do not dispute that they withheld payment. However, plaintiffs
assert the contract that governed the purchase and payments of the gaming machines is
different and separate from the agreement that is central to this case. Plaintiffs argue that,
similar to evidence of their withheld payment to GHI, this evidence should not be
allowed because it is irrelevant, unduly prejudicial, and improper character evidence.
32
See Unit Drilling Co. v. Enron Oil & Gas Co., 108 F.3d 1186, 1194 (10th Cir. 1997)
(defendant’s alleged breach of its contract with non-party would not be admissible to
prove that defendant breached contracts, and therefore, that defendant breached its
contract with plaintiff).
33
ECF doc. 137 at 4.
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Defendant responds that any non-payment by plaintiffs to defendant for its
products and services is highly relevant to its counterclaim. In contrast to plaintiffs’
assertion, defendant insists that the contract regarding the gaming machines and the
agreement at issue should be considered in their entirety by the trier of fact.
This evidence is distinguishable from plaintiffs’ non-payment to GHI because it
involves a related contract to the agreement at issue, the same facts, and a contract
actually between the parties. This evidence could be relevant to the issue of motive,
intent, or plan—exceptions to Rule 404(b).34 Although the probative value is not great
because plaintiffs’ motive is not at issue for a breach of contract claim, the court is not
convinced that this evidence should not come in under an exception to Rule 404(b)(2).35
Additionally, under the Rule 401 relevancy standard, the court finds this evidence
could shed light on facts material to the outcome of this litigation. Plaintiffs have failed
to meet their burden of showing the evidence should be excluded as irrelevant, at least
prior to trial. The court will save for trial any ruling on objections based on asserted
prejudice to plaintiffs. In the court’s experience, any potential prejudice can often be
34
Fed. R. Evid. 404(b)(2) allows evidence of other acts to be admitted for purposes
other than action in conformity therewith, such as proof of “motive, opportunity, intent,
preparation, plan, knowledge [or] identity….”
35
See Zimmerman v. First Fed. Sav. & Loan Ass’n, 848 F.2d 1047, 1056-57 (10th Cir.
1988) (in claim of promissory estoppel for failure to loan money, evidence of similar
unfulfilled promises held admissible under Rule 404(b)).
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cured by giving the jury an instruction limiting the use for which the evidence may be
considered.
C.
Evidence of Initial Damage Disclosures
Plaintiffs move the court to exclude reference to plaintiffs’ computation of
damages set out in their initial disclosures. Fed. R. Civ. P. 26(a)(1)(A)(iii) required
plaintiffs to provide a computation of each category of damages they claimed. Plaintiffs’
initial computation of damages is relevant to the issue of damages the jury must decide.
Plaintiffs have cited no authority for the proposition that such damage computations
should be barred from admission at trial. Therefore, this request is denied.
In consideration of the foregoing,
1.
Defendant’s motion to strike expert and expert report of Bart A. Lewin
(ECF doc. 86) is denied.
2.
Plaintiffs’ motion to exclude expert testimony and report of Patrick
Crawford (ECF doc. 118) is denied.
3.
Plaintiffs’ motion in limine (ECF doc. 136) is granted in part and denied
in part.
IT IS SO ORDERED.
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Dated February 10, 2014, at Kansas City, Kansas.
s/ James P. O’Hara
James P. O’Hara
U. S. Magistrate Judge
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