Dana Limited v. American Axle and Manufacturing Holdings, Inc. et al

Filing 362

OPINION ; signed by Judge Robert Holmes Bell (Judge Robert Holmes Bell, kcb)

UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

DANA LIMITED, an Ohio limited
liability company,
Plaintiff,
File No. 1:10-CV-450
v.
HON. ROBERT HOLMES BELL
AMERICAN AXLE AND
MANUFACTURING HOLDINGS, INC.,
et al.,
Defendants.
/
OPINION
Prior to trial the parties filed six motions in limine. (Dkt. Nos. 306, 311, 313, 315,
317, 322.) American Axle has now withdrawn two of its motions in limine (Dkt. Nos. 313,
315) regarding the alleged failure to search computer network drives and evidence of lost
hard drives (Dkt. No. 352), and the parties have stipulated that their motions to exclude
expert witnesses Thomas Frazee and Bruce Knapp (Dkt. Nos. 311, 322) may be held in
abeyance until these witnesses are presented at trial (Dkt. No. 353, Stip.). The motions
remaining for this Court’s consideration are American Axle’s motion to limit testimony
regarding trade secrets, confidential and proprietary information, and expert testimony (Dkt.
No. 306), and Dana’s combined motion 1-3 to exclude documents, witnesses, and evidence
that were not produced during discovery (Dkt. No. 317).

Also before the Court is

Defendants’ objection to and appeal of Magistrate Judge Scoville’s ruling excluding exhibits
(Dkt. No. 327). (Dkt. No. 347, Obj. and Appeal).
The pending motions and the appeal concern the scope of the trade secrets at issue in
this case, and the evidence that may be used to defend against Plaintiff’s trade secrets claim.
American Axle contends that Dana should be limited at trial to the 15 trade secrets identified
and discussed by Dana’s expert, Herbert Larsen. Dana asserts that it should not be limited
because it had no obligation to identify its trade secrets.
Under Michigan law, a plaintiff alleging misappropriation of trade secrets is required
to identify the trade secrets at issue “clearly, unambiguously, and with specificity.” Utilase,
Inc. v. Williamson, Nos. 98-1233, 98-1320, 1999 WL 717969, at *6 (6th Cir. Sept. 10, 1999)
(quoting Shatterproof Glass Corp. v. Guardian Glass Co., 322 F. Supp. 854, 867 (E.D. Mich.
1970)); see also Compuware Corp. v. IBM, No. 02-CV-70906, 2003 WL 23212863, at *6
(E.D. Mich. Dec. 19, 2003) (“A party alleging trade secret misappropriation must
particularize and identify the purportedly misappropriated trade secrets with specificity.”).
However, this degree of particularity is not required at the pleading stage. It can occur
during discovery. See Ajuba Int’l LLC v. Saharia, 871 F. Supp. 2d 671, 690-91) (E.D. Mich.
2012) (denying motion to dismiss trade secrets claim for lack of sufficient particularity);
Interactive Solutions Group, Inc. v. Autozone Parts, Inc., No. 11-13182, 2012 WL 1288173,
at *2-3 (E.D. Mich. Apr. 16, 2012) (denying motion to dismiss trade secrets claim for
insufficient specificity). As long as the complaint gives adequate notice of the cause of

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action, “[a]ny further specificity desired by [the defendant] can be achieved through
discovery.” Compuware Corp. v. IBM, 259 F. Supp. 2d 597, 605 (E.D. Mich. 2002).
In its amended complaint filed on April 7, 2011, Dana identified 25 categories of
information that it alleged were the trade secrets and confidential information at issue. (Dkt.
No. 73, Am. Compl. ¶ 139(a)-(y).) Contrary to Dana’s assertions, Dana is under an
obligation to identify the trade secrets at issue with further specificity. The question is when
and how that identification must be made. In the absence of a case management or other
court order requiring disclosure by a date certain, the Court believes that Plaintiff is under
an obligation to identify the trade secrets at issue in response to discovery requests and
sufficiently in advance of trial to enable Defendants to prepare a defense. The close of
discovery was March 1, 2012. (Dkt. No. 119, Third Am. Case Mgmt. Order.) Because the
amended complaint was filed well before the close of discovery, Defendants had ample
opportunity to obtain further refinement of the issues.
During discovery, Plaintiff’s expert, Herbert Larsen, identified and discussed 15
alleged trade secrets. Because Larsen has not supplemented his expert report to identify
additional trade secrets, Defendants contend that trial should be limited to these 15 alleged
trade secrets. The Court disagrees. Larsen was engaged by Dana to apply his expertise in
the field of drive train engineering to provide an opinion on how American Axle used
documents and information belonging to Dana. (Dkt. No. 330, Ex. L, Larsen Rpt. 1.) Larsen
testified at his deposition that he was hired to discuss how certain documents could have

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been used by American Axle, not to discuss whether the documents were trade secrets. (Dkt.
No. 330, Ex. K, Larsen Dep. 49-50.) Dana provided Larsen with documents to review, and
did not rely on Larsen’s expertise to select the documents that might be considered trade
secrets. Although Larsen’s testimony at trial will be limited to those expressed in his expert
report, his discussion of the 15 alleged trade secrets does not preclude Dana from introducing
evidence of additional trade secrets.
Defendants also contend that the trial should be limited to the 15 alleged trade secrets
because Mark Davis, Plaintiff’s 30(b)(6) witness, refused to identify the trade secrets at issue
and only identified as confidential the same 15 documents considered by Larsen.
A review of Davis’s testimony reveals that while he declined to characterize specific
documents as trade secrets, he readily identified them as confidential and proprietary. (Dkt.
No. 328, Ex. B, Davis Dep. 168, 191, 210, 307, 312-13, 315.) And although Defendants
questioned Davis about the documents identified in Larsen’s report, it does not appear that
Defendants ever requested Davis to identify whether Dana intended to rely on any additional
documents in support of its trade secrets claim.

Neither did Defendants serve an

interrogatory requesting Dana to identify the trade secrets at issue. In sum, it does not appear
that Plaintiff has refused to identify what is at issue during discovery. Moreover, it does not
appear that Plaintiff is relying on any documents that were not disclosed during discovery.
In response to Defendants’ motion for summary judgment, Dana produced an itemized list
of trade secrets with corresponding exhibits. (Dkt. No. 245, Pl.’s Resp. 15-19.) Dana has

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now produced an amended proposed pretrial order in which it has listed the alleged trade
secrets by category and corresponding exhibit number.

(Dkt. No. 355.)

Under the

circumstances, the Court is satisfied that Dana may introduce the trade secrets identified in
its proposed pretrial order.
Defendants contend that because they did not learn the scope of Dana’s trade secrets
claim until after discovery was concluded and they received Dana’s response to their motion
for summary judgment, they did not make necessary disclosures during discovery because
they did not appreciate what evidence would be relevant. Defendants accordingly contend
that if Dana is permitted to introduce evidence of more than the 15 alleged trade secrets,
Defendants should be allowed to introduce evidence to defend against the additional claims
that were not identified during discovery.
The Magistrate Judge has made it clear during the course of this case that the parties
would be limited to presenting evidence disclosed during discovery. Through Plaintiff’s
amended complaint, Defendants were aware of the broad scope of Plaintiff’s trade secrets
claim. Defendants did not use discovery to ascertain the precise scope of that claim.
Defendants had access to all of the Dana documents that had been removed by the individual
Defendants, and could have determined, even on their own, what items were arguably trade
secrets. Moreover, Defendants were aware as of June 29, 2012, that this Court was likely to
allow Dana to use more than 15 documents for purposes of its trade secrets claim, yet
Defendants did not move for further discovery or for reconsideration. Defendants did not

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alert the Court to this issue until the eve of trial. It appears to the Court that Defendants’
decision not to ascertain the precise scope of Plaintiff’s claim and to limit their disclosure of
documents they would use in their own defense was a strategic decision, and that Defendants
should not now be heard to complain that they lacked notice of the scope of Plaintiff’s trade
secrets claim.
On February 4, 2013, Magistrate Judge Scoville issued an order excluding from
evidence at trial over 4,000 documents disclosed by American Axle well after the close of
discovery, except for purposes of impeachment. (Dkt. No. 327.) Defendants have filed
objections and an appeal from that order. (Dkt. No. 347.) Defendants contend that the
Magistrate Judge decided the matter incorrectly because he was unaware of all of the issues
raised by the parties’ motions in limine. For the reasons stated above, the Court is satisfied
that the Magistrate Judge decided the matter correctly. Defendants have not shown that their
failure to disclose the evidence that they plan to use to defend was substantially justified or
harmless. See Fed. R. Civ. P. 37(c)(1). The Court will accordingly affirm the Magistrate
Judge’s order. The Court will, however, correct the order to read that Bates numbers
482360-486407, rather than Bates numbers 48360-486407 as noted in the order, are excluded
from use at trial, except for impeachment purposes.
Plaintiff has filed a cross-motion for an order excluding argument, testimony, and
evidence regarding Defendants’ independent development of axles and axle products because
Defendants have failed to produce documents supporting this defense. Defendants’ reliance
on the defense of independent development was not unknown to Plaintiff, and Defendants

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contend that much of their evidence of independent development is found in their document
production in response to Dana’s Fourth Request for Production of Documents. The Court
will not preclude Defendants from arguing independent development to the extent they can
do so without bringing in evidence that was not disclosed during discovery.
Plaintiff has also moved to bar evidence and testimony of former Dana employees
William Ecklund, Robert Gerlach, Damir Yaksic, and Dick Lord, because they were not
disclosed during discovery, and Plaintiff had no opportunity to depose them, investigate the
scope of their knowledge, or review any documents they might possess. In response,
Defendants have advised that they do not intend to call Dick Lord, and that they will only call
William Ecklund and Damir Yaksic if necessary for impeachment. With respect to Robert
Gerlach, Defendants note that Dana acknowledged in a footnote that Gerlach was disclosed
on February 23, 2012, within the discovery period. Dana simply argues that he was not
disclosed in time to depose him. The Court will permit Defendants to call Robert Gerlach
in their case in chief, and to call William Ecklund and Damir Yaksic for impeachment
purposes.
To the extent Defendants contend that Dana should not be permitted to offer evidence
on damages beyond that disclosed in Mr. Frazee’s report and testimony provided before the
close of discovery, the Court will address this issue at trial in conjunction with Defendants’
motion to exclude the testimony of Mr. Frazee.
An order consistent with this opinion will be entered.
Dated: February 19, 2013

/s/ Robert Holmes Bell
ROBERT HOLMES BELL
UNITED STATES DISTRICT JUDGE

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