Microsoft Corporation v. Immersion Corporation

Filing 165

ORDER denying plaintiff's 74 Motion for Partial Summary Judgment; striking as moot plaintiff's 81 Motion to Compel by Judge Ricardo S Martinez.(RS)

Microsoft Corporation v. Immersion Corporation

Doc. 165

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Dockets.Justia.com

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

MICROSOFT CORPORATION, Plaintiff, v. IMMERSION CORPORATION, Defendant.

CASE NO. C07-936RSM ORDER DENYING MICROSOFT'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND STRIKING AS MOOT MICROSOFT'S MOTION TO COMPEL I. INTRODUCTION

This matter comes before the Court on "Plaintiff Microsoft Corporation's Motion for Partial Summary Judgment Regarding Immersion's Counterclaim" (Dkt. #74), and "Microsoft's Motion to Compel Responses to Discovery Related to Immersion's Counterclaim" (Dkt. #81). Plaintiff Microsoft Corporation ("Microsoft") argues that summary judgment on Defendant Immersion Corporation's ("Immersion") breach of contract counterclaim is warranted because Immersion has failed to produce any evidence that it has suffered any damages. Furthermore, because damages are an element of any breach of contract claim, Microsoft argues that no genuine issue of material fact exists with respect to Immersion's counterclaim. Additionally, Microsoft seeks to compel responses to discovery related to Immersion's counterclaim. Immersion responds that its counterclaim should not be dismissed because proof of actual pecuniary damages is not a necessary element of a breach of contract claim. In any event, Immersion argues that it has incurred actual damages relating to its counterclaim. With respect

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to Microsoft's motion to compel, Immersion indicates that it has agreed to supplement its responses, thereby rendering the motion moot. For the reasons set forth below, the Court DENIES "Plaintiff Microsoft Corporation's Motion for Partial Summary Judgment Regarding Immersion's Counterclaim," and STRIKES AS MOOT "Microsoft's Motion to Compel Responses to Discovery Related to Immersion's Counterclaim." II. DISCUSSION A. Background1 On September 4, 2007, Immersion filed a breach of contract counterclaim in its answer to Microsoft's complaint. (See Dkt. #8, Def.'s Countercl.). Immersion's counterclaim alleges that Microsoft had breached a confidentiality agreement entered into between the parties by publicly disclosing confidential terms related to a separate agreement Immersion entered into with two Sony entities (the "Immersion-Sony Agreement"). Specifically, the agreement between Immersion and Microsoft provided that Microsoft would agree not to disclose the Immersion-Sony Agreement to any person or entity other than certain specified persons within Microsoft. (See Dkt. #124, Decl. of Peters, Ex. 1). Immersion contends Microsoft disclosed these confidential terms by including such terms in the complaint filed in this case, and also by releasing such information to persons and entities who were outside the scope of the confidential agreement between Microsoft and Immersion. Nevertheless, Microsoft contends that Immersion has not suffered or otherwise proved any damages related to its counterclaim. Microsoft therefore filed the instant partial summary judgment motion, seeking dismissal of Immersion's breach of contract counterclaim. Notably, Microsoft also filed a concurrent motion to compel. Microsoft argues that Immersion has not yet come forward with sufficient responses related to the scope of its
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26 Denying Microsoft's Motion to Disqualify." (Dkt. #54). The Court has also discussed the relevant facts 27

The Court has previously discussed the relevant facts that gave rise to this lawsuit in its "Order

that gave rise to the instant partial summary judgment motion in its "Order Deferring Microsoft's Motion for Partial Summary Judgment." (Dkt. #106). Accordingly, a detailed discussion of these facts is 28 unnecessary here.

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counterclaim. Microsoft indicates that the Court need only rule on the motion to compel in the event that the Court denied its partial summary judgment motion. Microsoft's partial summary judgment motion was originally noted for the Court's consideration on May 9, 2008. The Court deferred ruling on Microsoft's motion, finding it premature to rule on the motion because discovery had not yet concluded. Additionally, the Court directed Immersion to come forward with particularized information regarding the scope of damages related to its counterclaim by June 27, 2008. Immersion responded as directed. In its supplemental response, Immersion makes four arguments to support its breach of contract counterclaim. First, Immersion argues that it has been forced to expend resources to remedy Microsoft's breach of confidentiality. Second, Immersion argues that its bargaining position with prospective licencees may have suffered as a result of Microsoft's breach of confidentiality. Third, Immersion argues that in a breach of contract claim, a party is entitled to recover nominal damages as a matter of law, even if it fails to establish actual pecuniary harm. Lastly, Immersion argues that Microsoft's conduct is the sort of harm that allows Immersion to seek injunctive relief, thereby also precluding dismissal of its breach of contract counterclaim. B. Summary Judgment Standard Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The Court must draw all reasonable inferences in favor of the non-moving party. See F.D.I.C. v. O'Melveny & Meyers, 969 F.2d 744, 747 (9th Cir. 1992), rev'd on other grounds,

23 512 U.S. 79 (1994). The moving party has the burden of demonstrating the absence of a 24 genuine issue of material fact for trial. See Anderson, 477 U.S. at 257. Mere disagreement, or 25 the bald assertion that a genuine issue of material fact exists, no longer precludes the use of 26 summary judgment. See California Architectural Bldg. Prods., Inc., v. Franciscan Ceramics, 27 Inc., 818 F.2d 1466, 1468 (9th Cir. 1987). 28 Genuine factual issues are those for which the evidence is such that "a reasonable jury MEMORANDUM ORDER PAGE - 3

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could return a verdict for the non-moving party." Anderson, 477 U.S. at 248. Material facts are those which might affect the outcome of the suit under governing law. See id. In ruling on summary judgment, a court does not weigh evidence to determine the truth of the matter, but "only determine[s] whether there is a genuine issue for trial." Crane v. Conoco, Inc., 41 F.3d

5 547, 549 (9th Cir. 1994) (citation omitted). Furthermore, conclusory or speculative testimony 6 is insufficient to raise a genuine issue of fact to defeat summary judgment. Anheuser-Busch, 7 Inc. v. Natural Beverage Distributors, 60 F. 3d 337, 345 (9th Cir. 1995). 8 9 C. Damages It is well established that in any breach of contract claim, the aggrieved party must prove

10 damages. Lehrer v. DSHS, 101 Wash. App. 509, 516, 5 P.3d 722 (2000). In addition, the 11 claimant has the duty of proving that the damage was proximately caused by the breach. Nw. 12 Indep. Forest Mfrs. v. Dep't. of Labor and Indus., 78 Wash. App. 707, 712, 899 P.2d 6 (1995) 13 (citations omitted). Moreover, "as a general rule, every breach of contract gives rise to a cause 14 of action, even when the aggrieved party has not suffered any actual damage." Jacob's 15 Meadow Owners Ass'n v. Plateau 44 II, LLC, 139 Wash. App. 743, 754, 162 P.3d 1153 (2007) 16 (citations omitted). Nominal damages may be recovered in the absence of proof of actual 17 damages. See, e.g., Ford v. Trendwest Resorts, Inc., 146 Wash.2d 146, 158, 43 P.3d 1223 18 (2002) (noting that nominal damages are appropriate "where, from the nature of the case, some 19 injury has been done, the amount of which the proofs fail entirely to show.") (citations omitted). 20 However, "in suits for damages only . . . a court may dismiss a breach of contract action if

21 damages have not been suffered." Id. (emphasis added) (citing Ketchum v. Albertson Bulb 22 Gardens, Inc., 142 Wash. 134, 139, 252 P. 523 (1927)). 23 Based on this case law, Microsoft argues that Immersion's breach of contract

24 counterclaim should be dismissed because it claims that this is a suit for damages only, and 25 therefore Immersion must prove actual damages. Furthermore, Microsoft argues that 26 Immersion has failed to meet this burden. Immersion responds by indicating that Microsoft 27 mischaracterizes the law in Washington regarding nominal damages, and argues that it does not 28 have to prove actual damages to maintain its breach of contract counterclaim. MEMORANDUM ORDER PAGE - 4

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Notwithstanding the parties' arguments with respect to this issue, the Court finds summary judgment is inappropriate because Immersion has come forward with specific evidence of actual damages. As laid out in its supplement response, Immersion has spent considerable time and money in response to Microsoft's breach of the confidentiality agreement. For example, Laura Peter ("Ms. Peter"), Vice President and General Counsel for Immersion indicates that: [REDACTED] (Decl. of Peters, ¶ 3). In addition, David Kaplan ("Mr. Kaplan"), counsel for Immersion in the instant

8 9 litigation, contends that he has sent [REDACTED] (Dkt. #123, Decl. of Kaplan, ¶ 6). Mr. 10 Kaplan further states that these efforts [REDACTED] (Id.). In support of the statements made 11 by both Ms. Peters and Mr. Kaplan, Immersion attaches examples of correspondence it has sent 12 to individuals to remedy Microsoft's public disclosure of the Immersion-Sony Agreement. 13 There is no doubt that these efforts constitute damages in a breach of contract claim. 14 "Consequential damages are sustainable if they flow naturally and inevitably from a breach of 15 contract and are so related to it as to have been within the contemplation of the parties when 16 they entered into it." Pettaway v. Commercial Automotive Service, Inc., 49 Wash. 2d 650, 655, 17 306 P.2d 219 (1957) (citation omitted); see also 25 Wash. Prac., Contract Law and Practice § 18 14:7 (collecting cases). Here, Immersion's efforts to remedy Microsoft's public disclosure of 19 confidential information contained in the Immersion-Sony Agreement are a direct result of 20 Microsoft's violation of its agreement with Immersion. Furthermore, Microsoft does not 21 dispute that it disregarded this confidential agreement. Microsoft attempts to soften the blow 22 by indicating that it quickly took steps to remedy its public disclosure of the Immersion-Sony 23 Agreement, and also by arguing that Immersion's alleged harm is merely speculative. 24 Regardless of such mitigating steps and arguments, the fact remains that Microsoft disclosed 25 information it specifically agreed not to disclose. And Immersion has established that it has 26 suffered actual damages as a result of Microsoft's conduct. Accordingly, the Court finds no 27 28 MEMORANDUM ORDER PAGE - 5

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justification to grant Microsoft's partial summary judgment motion.2 D. Microsoft's Motion to Compel As noted above, Microsoft sought an order compelling Immersion to respond to discovery related to its counterclaim. Microsoft alleged that Immersion has failed to produce any documents or evidence to support its breach of contract counterclaim. Immersion responded by indicating that the Court's involvement was unnecessary. Specifically, Immersion informed the Court that it had agreed to supplement its responses one week after the noting date of Microsoft's motion to compel. The Court finds no reason to believe that Immersion did not follow through on its promise. In any event, Microsoft's arguments have also been rendered moot by the fact that Immersion has submitted its supplemental response and the accompanying exhibits that lay out its damages to not only this Court, but to Microsoft as well. Accordingly, Microsoft's motion shall be stricken as moot. III. CONCLUSION Having reviewed the relevant pleadings, the declarations and exhibits attached thereto, and the remainder of the record, the Court hereby finds and orders: (1) "Plaintiff Microsoft Corporation's Motion for Partial Summary Judgment Regarding Immersion's Counterclaim" (Dkt. #74) is DENIED. (2) "Microsoft's Motion to Compel Responses to Discovery Related to Immersion's Counterclaim" (Dkt. #81) is STRICKEN AS MOOT. (3) The Clerk is directed to forward a copy of this Order to all counsel of record.

DATED this 1st day of August, 2008.

A

RICARDO S. MARTINEZ UNITED STATES DISTRICT JUDGE
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Because summary judgment is improper on this ground, the Court finds it unnecessary to address 28 the remaining arguments made in Immersion's supplemental response.

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