Gordon v. Virtumundo Inc et al

Filing 87

SEALED MOTION TO COMPEL FURTHER TESTIMONY OF JAMES GORDON RE PRIOR SETTLEMENTS re 86 MOTION for Leave to File Under Seal a Motion to Compel Discovery by Defendants Virtumundo Inc, Adknowledge Inc. Noting Date 1/26/2007. (Attachments: # 1 Proposed Order Granting Motion to Compel Deposition Testimony from James Gordon re Prior Settlements)(Newman, Derek) Modified text on 5/15/2007 (CL, ). (Unsealed as per Order, docket no. 121 .

Gordon v. Virtumundo Inc et al

Doc. 87

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION v. VIRTUMUNDO, INC, a Delaware corporation d/b/a ADNOWLEDGEMAIL.COM; ADKNOWLEDGE, INC., a Delaware corporation, d/b/a ADKNOWLEDGEMAIL.COM; SCOTT LYNN, an individual; and JOHN DOES, 1-X, Defendants. JAMES S. GORDON, Jr., a married individual, d/b/a `GORDONWORKS.COM'; OMNI INNOVATIONS, LLC., a Washington limited liability company, Plaintiffs,

The Honorable John C. Coughenour

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE NO. CV06-0204JCC DEFENDANTS' MOTION TO COMPEL DISCOVERY OF TESTIMONY RE SETTLEMENTS NOTE ON MOTION CALENDAR: January 26, 2007 CONFIDENTIAL INFORMATION

Defendants submit this motion to compel Plaintiffs James S. Gordon, Jr. ("Gordon") and Omni Innovations, LLC ("Omni") (together, "Plaintiffs") to provide further testimony regarding Gordon's prior settlement agreements in disputes involving his alleged receipt of unsolicited commercial email. The information Defendants seek is relevant for many reasons. In a recent deposition, Gordon admitted the settlement of lawsuits provides his sole source of income and has for several years (except for state
DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 1 (CV06-0204JCC)
NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

Dockets.Justia.com

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unemployment benefits). Further information concerning his prior settlements may provide evidence of Gordon's improper motives in filing lawsuits, including the case at bar. For example, Gordon admitted in deposition that he can block emails from Defendants but did not do so. He also admitted he encourages so-called clients to send him messages from email marketers in exchange for a share of case settlements. Further testimony relating to Gordon's settlements will help to establish that Gordon makes no efforts to mitigate alleged damages, but instead seeks to increase them to maintain his sole source of income. Further testimony may also reveal admissions against interest in Gordon's previous settlement agreements, and may provide evidence relating to his ability to pay a potential award of attorneys' fees in favor of Defendants. Defendants only seek discovery which may lead to the production of admissible evidence, and will not offer the requested testimony to prove the invalidity of Gordon's previous claims, as prohibited by Fed. R. Evid. 408. Defendants will maintain the confidentiality of information consistent with the protective order in this case. The discovery rights created by the Federal Rules of Evidence are broad, and the requested information is relevant to Defendants' case. Accordingly, Defendants request this Court allow them to question Gordon in deposition about his prior settlements, and compel Mr. Gordon to testify truthfully and fully in response to such questions. II. FACTS A. Gordon's sole source of income is settling cases like this one.

On January 9, 2007 and January 10, 2007, Defendants deposed Plaintiff James S. Gordon, Jr. ("Gordon") in the above-captioned lawsuit. (Declaration of Derek A. Newman in Support of Defendants' Motion to Compel Discovery ("Newman Decl.") ¶ 2.) Gordon testified that for years, he has made no income other than through settlement of lawsuits (except for state unemployment benefits). (Id. ¶ 2 Ex. A at 31:12 - 32:21; 45:2123; 46:20-22.) Each of the lawsuits Gordon has settled were based upon allegations relating to unsolicited commercial email, similar to Gordon's allegations in this matter. (Id. ¶ 2 Ex. A at 36:1-25; 41:6 - 42:8; 49:16 - 50:8.)
DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 2 (CV06-0204JCC)
NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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In this lawsuit, Gordon seeks statutory damages, and admits he suffered no actual damages, from the unsolicited commercial email he allegedly received from Defendants. (Dkt. #15 at 19:18-20.) However, at his deposition he admitted that the receipt of unsolicited commercial email actually benefits him. (Newman Decl. ¶ 2 Ex. A at 218:3 219:3 ("I'm doing research on the spam that I receive, and there is a benefit in receiving spam because of that.").) Indeed, Mr. Gordon was asked: "[t]he receipt of spam benefits you, correct?" (Id. at 218:3). After several objections from his lawyer, Mr. Gordon answered, "[y]es insofar as research and yes insofar as there have been settlement agreements". (Id. at 219:1-3.) Gordon also admitted he solicits unsolicited commercial email from so-called "clients" for the purpose of collecting statutory damages, and shares his litigation awards with them. (Id. ¶ 2 Ex. A at 416:5 - 417:6.) B. Gordon refuses to answer questions about his previous settlements without a court order.

Unless this Court orders him to do so, Gordon refuses to answer questions about the terms of his settlements in other cases involving his alleged receipt of unsolicited commercial email. (Newman Decl. ¶ 2 Ex. A at 33:7-8.) Gordon will not reveal this information even though the parties have negotiated a protective order which would ensure his settlement information remains confidential. (Id. ¶ 2 Ex. A at 34:3-6; see also Dkt. #37.) During Gordon's deposition, the parties sought the Court's guidance regarding this matter. (Newman Decl. ¶ 2 Ex. A at 43:18-25.) At that time, the Court indicated Defendants could file a motion to compel further deposition inquiry regarding Gordon's prior settlement agreements. (Id. ¶ 2 Ex. A at 71:17 - 72:17.) III. ARGUMENT & AUTHORITY A. The requested information may lead to the discovery of admissible evidence.

This Court should grant the relief Defendants seek. "The Federal Rules of Evidence create a `broad right of discovery' because `wide access to relevant facts serves the integrity and fairness of the judicial process by promoting the search for the truth.'"
DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 3 (CV06-0204JCC)
NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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Epstein v. MCA, 54 F.3d 1422, 1423 (9th Cir. 1995) citing Shoen v. Shoen, 5 F.3d 1289, 1292 (9th Cir. 1993). "Litigants `may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party.'" Survivor Media, Inc. v. Survivor Productions, 406 F.3d 625, 635 (9th Cir. 2005), quoting FED. R. CIV. P. 26(b)(1). For purposes of discovery, relevance is defined broadly to include "all information `reasonably calculated to lead to the discovery of admissible evidence'". Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir. 1992), quoting FED. R. CIV. P. 26(b)(1). Parties may obtain information which is inadmissible, provided there is a reasonable chance that information will lead to the discovery of other evidence which is admissible. FED. R. CIV. P. 26(b)(1). In this case, information concerning Gordon's prior settlements may well lead to the discovery of admissible evidence. B. The requested information may be admissible for specific purposes.

As provided by FED. R. EVID. 408, information regarding Gordon's previous settlements may be admissible for certain purposes at trial. FED. R. EVID. 408 bars the admission of settlement evidence "to prove liability for or invalidity of the claim or its amount", but does not "require the exclusion of any evidence otherwise discoverable merely because it is presented in the course of compromise negotiations." In Fireman's Fund Ins. Co. v. City of Lodi, 296 F. Supp.2d 1197 (E.D.Cal. 2003), the court determined a settlement agreement was admissible because Rule 408 does not require exclusion when the evidence is offered for another purpose [aside from proving liability or the lack thereof], such as proving bias or prejudice of a witness . . . The use of the phrase "such as" . . . implies that the ensuing list is not exhaustive, but is only illustrative. (Cites omitted.) 296 F.Supp.2d at 1208-09. The district court admitted the settlement agreement in question because the document provided relevant evidence of the obligations it imposed on the parties who signed it. Id. at 1209. See also Bennett v. La Pere, 112 F.R.D. 136, 139 (D.R.I. 1986) (granting motion to compel disclosure of settlement agreements because such discovery was the only method to determine whether those documents were admissible pursuant to the exceptions in FED. R. EVID. 408).
DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 4 (CV06-0204JCC)
NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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The information Defendants request is relevant to the affirmative defenses they allege in their Answer to the First Amended Complaint (Dkt. #31). For example, Defendants allege failure to mitigate. (Id. ¶ 6.2.) Evidence pertaining to Gordon's previous settlements may indicate a strong motivation to create damages to increase his income through settlements, rather than mitigating. Defendants also allege Gordon has already been compensated for any damages he has allegedly suffered. (Id. ¶ 6.7.) It is possible, for example, that Gordon released claims against the defendants in this case through earlier settlement agreements. The information Defendants request may substantiate that allegation. Unless Defendants have the opportunity to question Gordon about his settlement agreements in past actions, Defendants cannot know what exculpatory evidence or other relevant information is contained therein. Finally, Gordon's past settlements are germane to whether he has the ability to pay a judgment against him, which is relevant to Defendants' pending Motion for an Undertaking (Dkt. No. 38). C. This Court should compel plaintiffs to produce the requested discovery.

A party suffers prejudice if the opposing party's failure to cooperate in discovery "impair(s) the [discovering party's] ability to go to trial." Adriana Int'l Corp. v. Lewis & Co., 913 F.2d 1406, 1412 (9th Cir. 1990); Henry v. Gill Industries, Inc., 983 F.2d 943, 948 (9th Cir. 1993) (A "defendant suffers prejudice if the plaintiff's actions impair the defendant's ability to go to trial or threaten to interfere with the rightful decision of the case") (citation omitted). The information Defendants request is unquestionably relevant to their defenses in this lawsuit, and Defendants will maintain its confidentiality to the extent required by this Court and the parties' prior agreements. However, unless this Court orders Gordon to provide information relating to his prior settlement agreements, Defendants' ability to discover relevant evidence will be significantly impaired. This will cause them substantial prejudice and interfere with the rightful decision of this case ­ precisely the outcome the Ninth Circuit cautioned against in Adriana and Henry, supra. ///
DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 5 (CV06-0204JCC)
NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP 505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]

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IV.

CONCLUSION Defendants respectfully request that this Court order Plaintiffs to provide further

testimony regarding Gordon's prior settlement agreements in cases involving his alleged receipt of unsolicited commercial email, and specifically to order Gordon to answer any questions regarding those past settlements and settlement agreements. DATED this 11th day of January, 2007. NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP /s/ Derek A. Newman Derek A. Newman, WSBA No. 26967 Roger M. Townsend, WSBA No. 25525 Attorneys for Defendants

By:

DEFS.' MOT. TO COMPEL DISCOVERY RE SETTLEMENTS - 6 (CV06-0204JCC)

NEWMAN & NEWMAN, ATTORNEYS AT LAW, LLP

505 Fifth Ave. S., Ste. 610 Seattle, Washington 98104 [phone]