PTT, LLC v. GIMMIE GAMES et al

Filing 485

ORDER & OPINION OF THE SPECIAL MASTER; This matter comes before the Special Master upon a motion by defendants, for reconsideration of portions the Special Master's May 15, 2019 Order & Opinion. After considering the submissions of Defendants and Plaintiff High 5 Games, LLC ("H5G"), Defendants' motion is Denied in part and Granted in part; etc. Signed by Special Master Dennis M. Cavanaugh, U.S.D.J.(Ret) on 9/23/2019. (sms)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

HIGHS GAMES, LLC, a Delaware Limited
Liability Company, Uk/a Pfl, LLC,

Case No.: 2:13-CV-07161-JMV-MF

Plaintiff/Counterclaim Defendant,
vs.
DANIEL MARKS, an individual; JOSEPH
MASCI, an individual; BRIAN KAVANAGH,
an individual; MARKS STUDIOS, LLC, an
entity d/b/a GIMME GAMES; ARISTOCRAT
TECHNOLOGIES, INC., an entity;
ARISTOCRAT TECHNOLOGIES
AUSTRALIA PTY LIMITED, an entity;
ARISTOCRAT LEISURE LIMITED, an
entity; PRODUCT MADNESS, INC., an
entity; GRANT BOLLING, an individual;
JOHN SMITH(s) 1-7; and XYZ COMPANIES
1-7,

ORDER & OPINION OF THE SPECIAL
MASTER

Defendants/Counterclaim Plaintiffs.
This matter comes before the Special Master upon a motion by defendants Daniel Marks,
Joseph Masci, Brian Kavanagh, Grant Bolling, Marks Studios, LLC (“Marks Studios”),
Aristocrat Technologies, Inc. (“ATI”), Aristocrat Technologies Australia Pty Ltd. (“ATA”),
Aristocrat

Leisure

Limited

(“ALL”),

and

Product

Madness,

Inc.

(“Product

Madness”)(collectively, “Defendants”) for reconsidcration of portions the Special Master’s May
15, 2019 Order & Opinion. After considering the submissions of Defendants and Plaintiff High 5
Games, LLC (“H5G”), Defendants’ motion is Denied in part and Granted in part.

DISCUSSION
I. Background

During a February 21, 2018 status conference, the Special Master discussed the issue of
H5G’s backup tapes with the parties. The Special Master made clear that if Defendants wanted
the tapes to be repaired, Defendants would be required to pay for it. Thereafter, the Special
Master issued his March 16, 2018 Order, which states:
By March 9, 2018, H5G shall famish its damaged back-up tapes that it has
located to eMag Solutions LLC to perform an analysis as to the cost to repair and
restore the back-up tapes in a readable and searchable form. Defendants shall
have the right to repair, at their sole expense, the back-up tapes but will not
review any portion of such back-up tapes until Defendants notify H5G’s
attorney’s in writing, that such back-up tapes have been restored and until the
thrther Order of the Special Master or Court. The parties shall work in good faith
to choose and retain, by March 1, 2018, a neutral third party forensic consultant to
repair and restore the damaged back-up tapes of H5G. If the parties can agree
upon such a consultant, that consultant shall, by March 151 2018 produce a
quotation for the work of repairing and restoring the damaged back-up tapes of
H5G to a condition wherein they can be thither processed as if such tapes were
never damaged.
Following another disagreement between the parties related to the backup tapes, the
Special Master issued an Order on May 15, 2019, which held that if Defendants wanted the tapes
restored they would bear the cost associated with any repair. The Special Master further ordered
that Defendants are responsible for all costs and fees associated with obtaining estimates for the
repair of restoring the back-up tapes, including any storage fees charged.
In the May 15, 2019 Order the Special Master also denied Defendants’ request to compel
H5G to provide a 30(b)(6) witness to sit with Defendants and go through the documents H5G
produced and identi’ whether each of the 13,000 documents identified by H5G concerns
development of the game Golden Goddess or Aphrodite. The Special Master did not believe this
would serve any purpose in the fartherunce of discovery in this matter. At that time, the parties
2

were arguing over the relevancy of the 13,000 documents H5G produced and thc Special Master
did not believe that the question of relevancy could be resolved by the production of a corporate
witness who would merely be able to opine on his or her own thoughts as to the relevancy of a
particular document. Accordingly, Defendants’ request that H5G produce a 30(b)(6) witness to
go through the 13,000 documents was denied. Defendants now seek reconsideration of those
rulings.
II. Artwments of the Parties
Defendants’ Arguments

Defendants seek reconsideration of the Special Master’s May 15, 2019 Order & Opinion
with respect to (1) Defendants’ motion to compel H5G to produce a limited 30(b)(6) witness to
testify regarding 1-150’s possible spoliation of evidence and (2) the proper party to pay certain
storage fees of H5G’s back-up tapes currently owed to eMag Solutions LLC (eMag), Defendants
also request that H50 be ordered to restore the damaged back-up tapes.
Defendants argue that HSG has admitted that it failed to collect, review, and produce all
documents relevant to this litigation and responsive to Defendants’ discovery requests.
Defendants continue to believe that H5G has not produced all of the relevant documents
concerning its knowledge of Konami’s Rawhide game. Defendants argue that the individual
defendants are all former H5G employees and are thus aware that the Supcr Stacks concept was
derived from the Rawhide game and that as such the ‘852 patent and Super Stacks trade secrets
are likely either invalid or unenforceable. Defendants allege that H5G obtained the PAR sheet
for the Rawhide game, which it referred to as “salmon recipe” and used this to make the Super
Stacks game. Defendants assert that despite their best efforts, H5G has not produced all of the
documents relating to Konami’s Rawhide game or “salmon recipe”.
I

Defendants also argue that HSG had a duty to preserve emails relevant to this litigation
that predate 2011 because it was involved in unrelated threatened litigation and had already
threatened Defendant Daniel Marks with litigation related to possible violation of his separation
agreement. Defendants argue that the Special Master’s March 2018 Order was based on incorrect
unswom representations by H5G that (1) Mr. Marks and others had somehow caused the
destruction of their emails; (2) certain documents were lost when H50 was under no obligation
to preserve them; and (3) H5G had already performed certain analyses of the back-up tapes and
received an estimate of SI million to recover the data. Defendants argue that it is clear that N5G
failed to preserve relevant documents while it was responding to threatened litigation
(concerning Witches Riches) and in the process of threatening litigation against Mr. Marks.
Defendants argue they should not have to pay for H50’s negligence or deliberate misconduct
and subsequent concealment.
Second, Defendants argue that had H5G properly searched and produced relevant
documents, including the five emails produced by Defendants, there would be no reason for
Defendants to seek restoration of the damaged backup tapes. Defendants argue that they only
sought restoration of the backup tapes because they had reason to believe that H5G’s production
was incomplete with respect to conception and reduction to practice documents. Defendants
maintain that since H5G has conceded that all relevant documents have not been produced,
seWed law requires that H5G should be ordered to pay eMag’s costs to date. Defendants also
argue that had HSG run search terms through all relevant sewers in 2017, it would have located
the emails in the Marks PST file.
Defendants also argue that H50 should be compelled to produce a witness to testify on
its admitted spoliation of evidence. Defendants assert that their motion to compel additional
4

conception documents for the period between August 2008 and February 2009 or compel a
related 30(b)(6) witness relies primarily on two bases: (1) H5G’s failure to preserve emails and
other documents relevant to this litigation, in particular certain Super Stacks conception
materials; and (2) a suspicious dearth of technical documents that should have been maintained
in a game folder on H5G’s servers. Defendants argue that H50 has never submitted any sworn
statement of anyone with actual knowledge of its document creation and retention policies at the
time. Defendants argue they are entitled to know the extent of H5G’s spoliation and the extent of
its efforts to determine the circumstances of destruction. Defendants argue that someone from
H50 should be required to investigate and testify about the extent of files deleted by H5G,
including the scope of deletion and the names of relevant custodians. Defendants argue they are
merely asking for an H5G employee to review the relevant game folders and confirm on the
record that these materials have been produced, either in the 13,000 documents previously
identified by H5G as relcvant or elsewhere in the production. While Defendants ackiiowledge
that they already conducted the deposition of Mr. Fallon on November 21, 2017, Defendants
argue that his involvement with H50 did not begin until 2011 and that he did not have firsthand
knowledge of what happened to the PST files at the time they were “converted.”
Defendants flurthcr argue that whether or not Mr. Marks properly had the PST file has
nothing to do with H5G’s responsibilities to preserve and produce documents, and does not
excuse H5G from producing the documents ifom that PST file.
HSG’s Arguments
H5G provides a detailed explanation as to the background of this dispute. H5G explains
that during 2017, H50 discovered damaged back-up tapes in the basement of its facility in
Mahwah, New Jersey (the “Tapes”). H5G thereafter sent the Tapes to a company called TDS. By
5

August 2017, TDS was able to restore some, but not all of the Tapes. TDS placed information
from the restored Tapes onto a Network Attached Storage Unit (the “TDS NAS”) and returned
the Tapes and the TDS NAS to 1150. In September 2017, 1150 copied the TDS NAS onto a
second NAS Unit (the “Sfile NAS”) and sent it to Stile, the technology company that H50
retained to host the repository where documents relating to this litigation are stored, for an initial
analysis. In September 2017, D4NX, N5G’s third party technology support expert, reported back
to 1150’s outside counsel in this action with details regarding the back-up tape information on
the Sfile NAS and Tapes.
In early October 2017, 1150 learned that the Tapes and NAS drive consisted of 32
terabytes of data that had not been indexed and was not searchable. It was estimated by D4NX,
that afier indexing and dc-duplicating, there would be approximately 7 terabytes of data. D4NX
estimated that the cost of indexing, de-duplicating and processing this information would be in
the range of £1,000,000. D4NX also stated that, in processing this backup material, there was a
high likelihood that few, if any new documents would come from the expensive process. H5G
informed Defendants’ counsel of the cost and informed Defendants’ counsel that if it wanted to
process the duplicative information, Defendants could do so.
Defendants’ counsel was unwilling to spend thc $1 million necessary to restore and
process the Tapes and sought to have H5G bear that cost. Because H50 believed that the
information on the Tapes was largely duplicative of discovery that H5G had already produced in
this action, 1150 declined to pay for the restoration and processing cost. Stile, therefore, retained
the NAS Unit and Tapes.
During the early part of 2018, the parties brought their dispute to the Special Master. The
Special Master’s March 2018 Order then required H50 to furnish its damaged back-up tapes to
6

eMag Solutions, to perform an analysis as to the cost to repair and restore the back-up tapes in a
readable and searchable form. The Order then provided that Defendants would “have the right to
repair, at their sole expense, the back-up tapes.”
H5G’s counsel retrieved the NAS Unit from Sfile and sent that NAS Unit plus all the
related Tapes to eMag. eMag provided an initial estimate of $13,850 to provide an initial
estimate to repair, restore, process and host the data on the NAS Unit and Tapes. But eMag never
provided an overall estimate to restore and process the Tapes. Consequently, the NAS Unit and
Tapes were never processed and eMag continues to charge for storing the NAS Unit and Tapes.
On April 25, 2019, Defendants produced a PST file of Daniel Marks. On May 16, 2019.
Defendants identified references in H5G’s document production to certain files that H5G
maintained and possessed in 2011. Among those referenced was a .pst named “DMMEmailthm
123 108.pst” (the “Subject PSV’) that appears to be the same PST file Defendants produced on
April 25, 2019. H5G then searched its active system for the Subject PST and was unable to find
it. The email and attachment which Defendants identified were from January 2011. During the
period 2010-2011, HSG converted its older email files to an archived email server without
preserving those particular PST files after the conversion. H5G believed any emails within the
PST files on the H: Drive (including DMM_EmailthmJ 231 08.pst) were included in that
conversion. On May 21, 2019, H5G’s counsel sent an email to Defendants’ counsel stating that
during the 2010-2011 period, H5G converted all of its older email files to an archived email
sewer and HSG did not preserve specific PST files. Because it was FISG’s understanding that the
emails within the Subject PST file were converted at that time, HSG believed there was no
reason to preserve that specific PST file.

7

After

May

21,

2019,

HSG

continued

to

investigate

and

search

for

DMMEmailthru_123108.pst. In H5G’s further investigation, it determined that the emails on
DMMEmai1_thru_l 23 108.pst were not included in the 2010-2011 conversion. Based on its
investigation, H50 understands that the file likely was not part of the conversion because Dan
Marks archived his emails, Therefore, the emails were not on the active network.
On June 5, 2019, Jon Fallon, Esq., H5G’s General Counsel, reviewed a NAS unit at
H5G’s offices, which included some of the tapes restored by TDS. H5G there identified the PST
files referenced in P000804704 P000804708. H5G thereafter confirmed that all of the PST files
-

listed in P000804704

-

P000804708 associatcd with the relevant custodians Anthony Singer,

Brian Kavanagh, Joseph Masci, Michael Belofti and Philip Welty were included in the document
collection previously conducted in this litigation, and thus were encompassed by HSG’s prior
document productions as those files were on the active server,
H5G also located the PST file of Mr. Marks referenced in P000804704 P000804708 on
-

the TDS NAS drive. After analyzing the DMMEmail_thrul 231 08.pst produced by the Defendant
and DMMEmaiI_thrul23lOS.pst on the TDS NAS drive, the version in H5G’s possession did not
contain any additional emails that were not present on Defendants’ PST file. Thus, according to
H5G, Defendants have been in possession of the exact file in H5G’s possession for the last two
years.
H5G also performed an analysis of the other Marks PST files referenced in P000804704

-

P000804708 (i.e. archive.pst and DMM_Emthl_Archive 2009.pst) and identified four emails
from those PST files that were not uploaded or reviewed in HSG’s document repository for this
litigation. After review of the emails, H5G believes they are not relevant to this litigation and
therefore were not collected and reviewed earlier. However, H5G nevertheless produced them.
S

H5G identified an additional 247 files on the TDS NAS drive as possibly containing
relevant information. HSG believes these files are likely duplicative of its previous production of
materials stored on its source code computer, which has been available to Defendants for review
and inspection, but nevertheless produced them on July 3, 2019.
H5G argues that Defendants’ counsel has been is possession of the Subject PST File for
two years and therefore suffered no prejudice, and in fact, gained an advantage by refusing to
provide it to H5G during that time. H5G argues there is no basis for reconsideration of the
Court’s prior orders as there is no evidence that 1450 destroyed any documents that would now
shift the cost of restoring the Tapes from Defendants to H5G.
Opinion

Local Rule 7.1(i) “governs motions for reconsideration filed in New Jersey.” Byrne v.
Calastro, No. 05-cv-68, 2006 WL 2506722, at l (D.N.J. Aug. 28, 2006). Motions for
reconsideration are proper pursuant to this District’s Local Civil Rule 7.10) if there are “matters
or controlling decisions which counsel believes the Judge

...

has overlooked.” L.Civ.R. 7.10);

Dunn v Reed Grp., Inc., No. 06-1632, 2010 WL 174861, at *1 (D.N.J. Jan 13, 2010). A motion
for reconsideration is inappropriate when a party merely disagrees with a court’s ruling or when
a party simply wishes to re-argue or re-hash its original motion. Sch. Specialty, J;zc. v.
Ferrenti no, No. 14-4507, 2015 WL 4602995, *23 (D.NJ. July 30, 2015); see also Florham
Park Chevron, Inc. v. Chevron U.S.A., 680 F. Supp. 159, 162 (D.N.J. 1988),
The comments to that Rule make clear that “reconsideration is an extraordinary remedy
that is granted ‘very sparingly.’ “L.Civ.R. 7.10) cmt, 6(d) (quoting Bracket! v. Ashcrofr, No. 033988, 2003 WL 22303078, *2 (D.N.J. Oct. 7, 2003)). The Third Circuit has held the scope of a
motion for reconsideration is “extremely limited.” Blystone v. Horn, 664 F.3d 397, 415 (3d Cir.
9

2011). “Such motions are not to be used as an opportunity to relitigate the case; rather, they may

be used only to correct manifest errors of law or fact or to present newly discovered evidence.”
Id. A court commits clear error of law “only if the record cannot support the findings that led to
the ruling.” ABS Brokerage Servs. v. Penson Fin. Servs., Inc., No. 09-4590, 2010 WL 3257992,
at *5 (D.NJ. Aug. 16, 2010) (citing United States v. Grape, 549 F. 3d 591, 603-04 (3d Cir.
2008)).

“Thus, a party must

...

demonstrate that (1) the holdings on which it bases its request

were without support in the record, or (2) would result in ‘manifest injustice’ if not addressed.”
Id. In short, “[mjcre ‘disagreement with the Court’s decision’ does not suffice.” ABS Brokerage
Set-vs., 2010 WL 3257992, at *6 (quoting P. Schoenfeld Asset Mgmt. LLC v. Cendant Corp., 161
F. Supp. 2d 349, 353 (D.N.J. 2001)); see also United States v. Compaction Sys. Corp., 88 F.
Supp. 2d 339, 345 (D.N,J. 1999) (“Mere disagreement with a court’s decision normally should
be raised through the appellate process and is inappropriate on a motion for [reconsideration].”);
Florham Park Chevron, Inc. v. Chevron USA., Inc., 680 F. Supp. 159, 163 (D.N.J. 1988);
Schiano v. MBNA Corp., No. 05-1771, 2006 WL 3831225, at *2 (D.N.J. Dec. 28, 2006) (“Mere
disagreement with the Court vill not suffice to show that the Court overlooked relevant facts or
controlling law,

...

and should be dealt with through the normal appellate process

....“)

(citations

omitted).
Defendants have failed to demonstrate that subsequent developments regarding 1150’s
document collection and production efforts justify the extraordinary remedy of reconsideration.
H50 has filly detailed its efforts with respect to document collection and production and nothing
has been brought to the Special Master’s attention that warrants reconsideration of the Special
Master’s prior Orders regarding the backup tapes and eMags. The Special Master therefore
10

denies Defendants’ request to make H5G responsible to pay storage fees owed to eMag and
denies Defendants’ request to compel H5G to restore the damaged backup tapes.
With respect to Defendants’ request for a 30(b)(6) witness, the Special Master notes that
Defendants’ current 30(b)(6) witness request is different than the 30cb)(6) witness request they
sought in their pdors papers and that the Special Master ruled on in his May 15, 2019 Order. The
May 15, 2019 Order dealt with Defendants’ request for a 30(b)(6) witness to answer two
questions: “(I) other than the handfiil of known documents (which would be presented to the
witness), can you identify any other (including in particular from the 13,000) that are responsive
to Defendants’ specific inquiry; and (2) if so, what are they?” Defendants now seek a 3OQi)(6)
witness to testify as to H50’s document collection and production efforth.
The Special Master notes that Defendants previously requested a 30(b)(6) witness to
testify as to H5G’s document collection and production efforts and that on November 21, 2017,
Defendants took Mr. Faflon’s deposition in this regard. Defendants now argue that because Mr.
Fallon was not associated with H5G until April 201!, Mr. Fallon did not have first-hand
knowledge of H5G’s conversion of its older email files to an archived server in 2010-2011.
Because this 30(b)(6) witness request is different than the request addressed in its prior
motion, the Special Master will not apply the rigid standard for a motion for reconsideration.
Accordingly, the Special Master will allow Defendants to conduct a very limited 30(b)(6)
deposition for the sole purpose of (1) obtaining information regarding 1450’s conversion of its
older email files to an archived email server and (2) H5G’s document creation and retention
policies prior to April 2011. Defendants are prohibited from questioning the 30(b)(6) witness
about the relevancy of any documents already produced. The Special Master believcs that
counsel and Mr. Fallon, through hiè prior deposition testimony and certification in support of
11

H5G’s opposition to Defendants’ motion, has otherwise adcquately detailed H5G’s doemnent
collection and production efforts.

Date: September 23, 2019

Special Master

12