CLIENTRON CORP. v. DEVON IT, INC.

Filing 259

MEMORANDUM AND/OR OPINION SIGNED BY HONORABLE MICHAEL M. BAYLSON ON 3/23/16. 3/24/16 ENTERED AND COPIES MAILED, E-MAILED.(ti, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CLIENTRON CORP.,
Plaintiff
v.

CIVIL ACTION
NO. 13-05634

DEVON IT, INC., JOHN
BENNETT, and NANCE DIROCCO,
Defendants
MEMORANDUM OPINION RE: CLIENTRON MOTIONS IN LIMINE
Michael M. Baylson, USDJ

March 23, 2016

As this case proceeds towards trial beginning on Monday, April 4, 2016, the parties have
filed various motions in limine. This Memorandum will constitute preliminary rulings on the
Clientron Corp. (“Clientron”) motions in limine, and will note where definitive rulings may not
be possible until trial begins. The Court will not repeat any details about the procedural or
factual background of this complex case, which are set forth in several pretrial memoranda.
Stated most briefly, Clientron is proceeding on claims of breach of contract and fraud against
Devon IT, Inc. (“Devon”), and two individual defendants-owners (husband John Bennett and
wife Nance DiRocco) of Devon as to whom Clientron asserts the Court should allow “piercing
the corporate veil.”
Devon is proceeding against Clientron on a counterclaim for breach of contract.
A.

Clientron MIL #1 (ECF 226/241) to Preclude Devon from Offering 30(b)(6)
Testimony
MIL #1 seeks two things: 1) an order precluding Devon from offering testimony at trial

from any of the topics on Clientron’s Rule 30(b)(6) deposition notices; and 2) an adverse
inference instruction.

The Court will deny the adverse inference request because it amounts to an untimely
Motion for Reconsideration of the Court’s sanctions opinion and orders (ECF 169, 170, 181,
196).
As to preclusion, while the Court has already held that “Clientron has carefully
documented, in its motion for sanctions, the complete failure of Devon IT to comply with Rule
30(b)(6),” ECF 169 at 5, Clientron appears to want to preclude any testimony on the same
topics, as opposed to testimony from a Devon witness on those matters. For example, individual
non-Devon witnesses may have evidence concerning, e.g., “[t]he preparation of Devon IT’s
corporate records” (ECF 226-1, Clientron Notice of Rule 30(b)(6) Dep. at ¶ 8).
Devon’s and Bennett’s failure to comply with Rule 30(b)(6) necessarily only warrants
exclusion of that evidence by Devon’s officers and employees. This ruling does not include
testimony by the individual defendant, DiRocco, because she was not involved in the affairs of
Devon, but does include Bennett because he was an officer of Devon and is, thus, bound by the
Court’s findings concerning Devon’s lack of responsiveness to the Rule 30(b)(6) notices.
Defendants may, of course, cross-examine Clientron witnesses on any of these topics, and may
produce non-Devon witnesses.
As Defendants have correctly noted in the past, see ECF 157 (Sanctions Opp.) at 6 n.2,
topics 20-27 of Clientron’s 30(b)(6) notice (ECF 226-1) deal with Bennett and DiRocco’s
personal accounts and assets and are not proper subjects for Devon to produce a 30(b)(6)
witness.
B.

Clientron MIL #2 (ECF 227/242) to Preclude Testimony Regarding Robert Chin
It is unclear exactly what Clientron wants to exclude. The MIL mentions testimony

“regarding [Robert Chin’s] departure from Clientron, or any other matters related to his

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personnel file at Clientron or his alleged threats to Devon IT’s business.” ECF 227 at 3.
Defendants argue that they “should be permitted to explore whether Mr. Chin’s testimony is
credible or unbiased by examining the terms of his separation from Clientron,” ECF 242 at 2,
and further demand to be “permitted to issue a subpoena duces tecum to Clientron’s corporate
designee to appear at trial and bring Chin’s personnel file,” id. at 4-5, which Clientron opposes,
ECF 255 at 2-4. The subpoena is plainly improper, but the Court cannot evaluate the Motion
without knowing what testimony is actually at issue. Mr. Chin will be required to testify about
any facts related to Devon, including whether Devon was a factor in his leaving Clientron.
C.

Clientron MIL #3 (ECF 228/243) to Preclude Testimony Regarding J.P. Morgan
Chase (“JPMC”) and Clientron MIL #7 (ECF 232/247) to Preclude Evidence of
Damages re JPMC and Dell Contracts
Defendants argue that evidence of their perception of why JPMC terminated its contract

with Devon is relevant to their state of mind in delaying payments to Clientron. Clientron asserts
that that argument should be precluded because the underlying motivations as to why Defendants
decided to delay payments to Clientron have no relevance to whether Defendants committed
fraud by saying they would pay Clientron when they knew they would not. Furthermore,
Clientron argues admitting this testimony would violate Rule 403 by creating a substantial risk of
confusion of the issues. The Court will require defendants to make an offer of proof before a
final ruling on MIL #3.
MIL 7 duplicates MIL 3 in substantial part, as Clientron seeks exclusion of all evidence
Defendants may seek to introduce in support of their counterclaims involving termination of the
Dell and JPMC contracts. The Court has already granted Clientron summary judgment on these
counterclaim allegations, ECF 215. Defendants’ attempt to rehash their arguments and recast
Clientron’s alleged performance issues as going to Devon’s state of mind in delaying payments

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to Clientron fails. Any testimony regarding the counterclaim for damages with regards to the
Dell or JPMC contracts will be excluded, unless Defendants can make an offer of proof at trial
showing relevance without confusion.
D.

Clientron MIL #4 (ECF 229/244) to Preclude Testimony Regarding Taiwanese Law
This MIL seeks to “preclude any argument from Devon IT relying on interpretation of

Taiwan [sic] law, including but not limited to relying on testimony from . . . Mr. Chung-Teh
Lee.” ECF 229 at 1. Although this purported testimony is unspecified, it appears to encompass:
•

Mr. Lee’s testimony as a fact witness about the conduct of the Taiwanese arbitration
proceedings, which would go to whether Devon had a full and fair opportunity to present
its setoff defense for purposes of issue preclusion;

•

Mr. Lee’s expert testimony on Chinese arbitration law, including whether Clientron
waived its claims for the Purchase Order products by not bringing them in the Taiwanese
arbitration (see ECF 244 at 2); and

•

other exhibits on Defendants’ exhibit list suggesting that Defendants intend to introduce
evidence of Taiwanese law (see ECF 220-1 Def. Ex. List at D1, D3-D5, D7-17 and D28).
The Court does not believe either party has filed a specific request for a hearing under

Rule 44.1 which governs procedures when foreign law may be applicable. The Court had a
hearing on Taiwanese law at an early stage of this case in connection with Clientron’s motion for
confirmation of the arbitration award and heard testimony from Mr. Lee. The Court will not
completely preclude Mr. Lee from testifying in this trial, but requests the parties to file, within
seven (7) days, a statement as to their intentions on introducing evidence about Taiwanese law.
E.

Clientron MIL #5 (ECF 230/245) to Preclude “Evidence Excluded by the Court’s
Orders”

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Clientron points to exhibits D1-D19, D22-D26, D28 and D31 on Defendants’ exhibit list
(ECF 220-1) and characterizes them as evidence Defendants intend to offer in support of
Devon’s Pennsylvania’s Uniform Foreign Money Judgment Recognition Act non-recognition
defense. Clientron’s claim is confusing because its own prior objections to Defendants’ exhibit
list, did not mention Exhibits D2-5, D7, D9, D12, D15-19, D22-26, and D31 as being barred by
the Court’s prior orders. ECF 237-2 Pl. Ex. B. Clientron’s Reply in Support of MIL 5 (ECF 255
at 7) also appears to inaccurately contend that these documents were not disclosed during pretrial
proceedings.
This motion will be denied without prejudice because the documents referenced may be
relevant on some issues. Furthermore, the Court hesitates to make any binding rulings as to
evidence potentially relevant to damages which may arise as a result of the jury’s verdict on
liability. Defendants should be prepared to clarify, with an offer of proof, what they will be
attempting to prove if as and when it comes to introduce these documents into evidence either by
their own witnesses or Clientron witnesses called as of cross-examination.
On this point, to make sure that trial moves smoothly, the Court will require both parties
within seven (7) days to provide a list of witnesses they intend to call, and whether they will
produce their witness by live testimony or deposition. If either side wishes to call a
representative of another party via cross-examination it must specify whether the witness will be
produced voluntarily, whether the witness can be required to attend by subpoena, and if
necessary, whether the testimony will be introduced by deposition, videotape or live internet
streaming. If the latter, arrangements must be made ahead of time with the Court’s staff.
The Court also notes that it does not allow sidebar discussions in the middle of a trial
unless there is some sort of an emergency. In this Court’s experience, almost all issues raised by

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counsel at trial where counsel requests a sidebar conference, can be made either prior to trial,
which will be required in this case given the complexity of the pretrial proceedings and the
current issues. If necessary, a legal issue that requires discussion with the Court can be raised
verbally during a trial recess, at the close of the Court’s proceedings, or before trial resumes the
following morning.
F.

Clientron MIL #6 (ECF 231/246) to Preclude Evidence of Defendants’ Setoff
Argument and Clientron MIL #8 (ECF 233/248) to Preclude New Evidence
Supporting Devon’s Purported Overcharge Argument
MILs 6 and 8 appear to seek exclusion of the same evidence pertaining to Defendants’

lone counterclaim for $3.3 million in BOM +10% overcharge damages: MIL 6 frames the issue
in terms of collateral estoppel by arguing that Devon had a full and fair opportunity to present
the offset in the Taiwanese arbitration, while MIL 8 focuses on how the BOM +10% overcharge
was not raised until Defendants’ Opposition to Clientron’s Motion for Summary Judgment. Both
motions argue that Devon has failed to offer competent proof of damages: MILs 6 and 8 object
to the testimony of Mark Sieczkowski regarding the alleged overcharge as improper opinion
testimony 1 and MIL 8 claims Joseph Makoid relies on “statements of hearsay and speculation.”
MIL 8 also notes Defendants produced no documents or testimony regarding these damages
during discovery. Although Clientron MIL 7 (ECF 232/247) purports to concern itself with
damages concerning the Dell and JPMC contracts, it also mirrors MILs 6 and 8 in arguing that
testimony from Sieczkowski and Joseph Makoid cannot prove the overcharges.
Both MILs 6 and 8 shall be denied because, as Defendants note, the Court’s December
22, 2015 ruling held that the BOM +10% overcharge counterclaim is a jury question. ECF 215

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The more accurate objection appears to be hearsay, as flagged in the Court’s December 22
ruling, as Sieczkowski’s only proof of the overcharge comes from an unnamed industry source.
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at 24. Denial should be without prejudice to objecting to hearsay, improper opinion testimony
and speculation from Makoid and Sieczkowski, however.
Furthermore, because bifurcation of liability of damages has been ordered, the Court will
deny these motions without prejudice to being raised, if necessary, following the jury’s verdict
on liability.
G.

Clientron MIL #9 (ECF 234/249) to Preclude Evidence of Bennett’s Bankruptcy
As Defendants note, evidence of Bennett’s personal bankruptcy is relevant to rebut

conclusions in the report of Clientron’s expert Kyle Anne Midkiff such as “[t]he financial
records provided by Bennett and DiRocco indicate that they maintain a lifestyle, which cannot be
sustained by their reported income without funds from other sources.” ECF 249-1 Ex. A
(Midkiff Report) at 2. Clientron has offered no justification for why Bennett’s bankruptcy
should be excluded.
The Court notes that there is a Devon motion in limine pending as to Ms. Midkiff’s
testimony. The Court also notes that assuming Bennett’s bankruptcy status is admitted, the
Court may wish to give the jury an instruction of law at that time and welcomes requested
instructions from counsel on this point prior to trial.
H.

Clientron MIL #10 (ECF 235/250) to Preclude Evidence Regarding Whether
Clientron Should Have Brought the P.O. Product Claims in the Taiwanese
Arbitration
Defendants correctly note that this MIL mischaracterizes the Court’s December 22

summary judgment opinion: Clientron argues that the Court held that Defendants had waived
any argument regarding claim preclusion and the P.O. Products, when in fact the Court held only
that Defendants had waived their subject matter jurisdiction argument surrounding those
products. This MIL will be denied because evidence of Clientron’s reasons for not bringing the

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P.O. Product claims to arbitration weighs directly on whether Clientron is now claim precluded
from suing on them here.
I.

Clientron MIL #11 (ECF 236/251) to Preclude Reliance on Unverified Corporate
Documents
MIL 11 argues for the exclusion of certain “unverified” corporate documents because it

misconstrues the Court’s December 22 statement regarding Defendants’ failure to submit the
documents as part of the MSJ briefing, see ECF 215 at 4 (“While Clientron does not appear to
dispute that these documents were produced, these documents have not been provided with any
of the parties’ submissions for verification”) to be a holding that Defendants have failed to
authenticate them. MIL 11 and Clientron’s Reply (ECF 255 at 14-15) also note that Defendants
never presented a 30(b)(6) witness on these documents even though Clientron’s notice included
several of the materials. ECF 226-1 Ex. A at ¶ 1.
The Court will require, consistent with its practice rule, that any disputes about the
authenticity of any exhibit be raised pursuant to the Court’s final pretrial order, and if not
resolved by counsel, must be brought to the Court’s attention prior to the trial starting.
J.

Clientron MIL #12 (ECF 252/256) to Preclude Certain Trial Exhibits
This MIL seeks exclusion of three categories of exhibits, none of which, according to

Clientron, were produced from Defendants to Clientron per the Court’s scheduling order (ECF
218) even after multiple requests from Clientron (ECF 252-1 Ex. A):
•

Specifically identified documents D22, D37, D40, D43, D62, D64-65, D76, and D78-82
(see ECF 220-1);

•

D94, labeled “Emails from representatives of Devon IT, Inc. and/or Clientron Corp.”; and

•

D95-99, which are further broad categories of exhibits such as “Documents relating to
rent payments made by Devon IT” rather than specifically enumerated exhibits.
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In their Opposition, filed on March 10, 2016, Defendants offer no excuse for why they did not
provide these documents by the Court’s deadline of January 29 (ECF 218) or in advance of
Clientron filing MIL 12 on March 3. Nor have Defendants offered any clarification for the
documents referred to as D94-99, stating as to D94 that “Defendants do not know how Clientron
intends to use Exhibits at trial and anticipates [sic] that it may be necessary to reference these
Exhibits in rebuttal” and as to D95-99 that “Defendants have been working diligently to identify
which of these documents are relevant to the Court’s questions and anticipate being able to
identify them in advance of trial.”
The Court will give defense counsel a chance to explain why these documents were not
produced and why Defendants should be allowed to produce them during trial. Clientron will be
allowed to argue any prejudice from the late production.
Therefore, the Court will not rule on this motion at this time.
O:\CIVIL 13\13-5634 clientron v. devon it\13cv5634 MemoOp on Clienton MILs.docx

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