Cypress Insurance Company v. SK Hynix America, Inc.

Filing 257

Court's Rulings on Cypress' Objections to Hynix's Counter-Designations (Dkt. 251 ), by Judge Richard A. Jones. (SWT)

Cypress Insurance Company v. SK Hynix America, Inc.
C17-467 RAJ
Court’s Rulings on Cypress’ Objections to Hynix’s Counter-Designations (Dkt. # 251)
SHERRIL KIST

PAGE /
LINE
41:4 – 16

NATURE OF
OBJECTION
Foundation;
Relevance

43:1 – 11

Relevance

REASON
Premiums not relevant to
coverage of the underlying
claim and the witness has no
basis as the claims preparer
to testify regarding premiums
Microsoft paid or Cypress
received. F.R.E. 401, 602

Premiums not relevant to
coverage of the underlying
claim and the witness has no
basis as the claims preparer
to testify regarding premiums
Microsoft paid or the
Reinsurers received. F.R.E.
401, 602

RESPONSE

COURT’S RULING

Ms. Kist’s answer relates to
OVERRULED
the issue of voluntary payor
and is thus relevant.
Moreover, she is being
questioned on an email
(Exhibit 196) that was
directed to her. Additionally,
parties have stipulated
admissibility to that email on
March 4, 2019.
Ms. Kist’s answer relates to
OVERRULED
the issue of voluntary payor
and is thus relevant.
Q. Were reinsurance
premiums relevant to this
particular policy?
...
A. Because reinsurance
premiums are part of what
makes up the policy.

PAGE /
LINE
45:19 –
46:7

NATURE OF
OBJECTION
Relevance

48:13 – 20 Relevance

REASON
Business impact analysis has
no relevance to any issues in
the case including the
insurance claim, payment of
the underlying contingent
business interruption claim to
Cypress, or the voluntary
payment defense of Hynix.
F.R.E. 401

Pre-loss conduct has no
relevance to any issues in the
case including the insurance
claim, coverage of the

RESPONSE
(Kist Dep., 43:1-6.)
Ms. Kist’s answer relates to
the issue of voluntary payor
and Cypress’ evidence of
damages.

COURT’S RULING
OVERRULED

Q. Can you tell me what this
analysis is for?
A. Yes. It’s a business
impact analysis that actually
reviews Microsoft’s, you
know, revenues and impacts
to their revenues throughout
the year.
Q. Impact of what?
A. It could be the impact of a
loss.
Q. Do you know who came
up with the data that’s
contained in this document?
A. Yes.
Q. Who was it?
A. Microsoft.
(Kist Dep., 45:22-46:7.)
Per the Court’s ruling on
OVERRULED
Limiting Instruction Nos. 58
and 59, it follows that preloss conduct is relevant to the

PAGE /
LINE

NATURE OF
OBJECTION

REASON

RESPONSE

underlying contingent
business interruption claim to
Cypress, or the voluntary
payment defense of Hynix.
F.R.E. 401

54:18 –
54:24

Relevance

issues in the case. (Dkt. No.
245.) Here, such testimony
goes to whether Microsoft
acted in a commercially
reasonable manner or
whether payments made by
Cypress to Microsoft were
properly made under the
insurance policy.
Microsoft claim history has
Ms. Kist’s testimony is part
no relevance to any issues in of a longer line of
the case including the
questioning (including the
insurance claim, payment of below), which goes to
the underlying contingent
Microsoft’s pre-fire conduct
business interruption claim to vis-à-vis Hynix’s voluntary
Cypress, or the voluntary
payor defense.
payment defense of Hynix.
F.R.E. 401
Per the Court’s ruling on
Limiting Instruction Nos. 58
and 59, pre-loss conduct is
relevant to the issues in the
case. (Dkt. No. 245.) Such
testimony goes to whether
Microsoft acted in a
commercially reasonable
manner or whether payments
made by Cypress to
Microsoft were properly

COURT’S RULING

OVERRULED

PAGE /
LINE

NATURE OF
OBJECTION

57:3 – 5

Relevance

59:15 –
61:16

Relevance

REASON

RESPONSE

made under the insurance
policy.
Warehouse locations has no
Ms. Kist’s testimony is part
relevance to any issues in the of a longer line of
case including the insurance questioning (including the
claim, payment of the
below), which goes to
underlying contingent
Microsoft’s pre-fire conduct
business interruption claim to vis-à-vis Hynix’s voluntary
Cypress, or the voluntary
payor defense.
payment defense of Hynix.
F.R.E. 401
Per the Court’s ruling on
Limiting Instruction Nos. 58
and 59, pre-loss conduct is
relevant to the issues in the
case. (Dkt. No. 245.) Such
testimony goes to whether
Microsoft acted in a
commercially reasonable
manner or whether payments
made by Cypress to
Microsoft were properly
made under the insurance
policy.
Microsoft risk in its
Ms. Kist’s testimony is part
insurance program has no
of a longer line of
relevance to any issues in the questioning (including the
case including the insurance below), which goes to
claim or coverage of the
Microsoft’s pre-fire conduct
underlying contingent

COURT’S RULING

SUSTAINED

OVERRULED

PAGE /
LINE

62:9 –
63:2

NATURE OF
OBJECTION

Relevance

REASON

RESPONSE

business interruption claim to vis-à-vis Hynix’s voluntary
Cypress as the issues are pre- payor defense.
loss. F.R.E. 401
Per the Court’s ruling on
Limiting Instruction Nos. 58
and 59, pre-loss conduct is
relevant to the issues in the
case. (Dkt. No. 245.) Such
testimony goes to whether
Microsoft acted in a
commercially reasonable
manner or whether payments
made by Cypress to
Microsoft were properly
made under the insurance
policy.
Suppliers named in the
Ms. Kist’s testimony is part
Cypress policy has no
of a longer line of
relevance to any issues in the questioning, which goes to
case including the insurance Microsoft’s pre-fire conduct
claim, payment of the
vis-à-vis Hynix’s voluntary
underlying contingent
payor defense.
business interruption claim to
Cypress, or the voluntary
Per the Court’s ruling on
payment defense of Hynix.
Limiting Instruction Nos. 58
F.R.E. 401
and 59, pre-loss conduct is
relevant to the issues in the
case. (Dkt. No. 245.) Such
testimony goes to whether

COURT’S RULING

SUSTAINED

PAGE /
LINE

NATURE OF
OBJECTION

65:13 – 17 Relevance

67:3 – 11

Relevance

REASON

RESPONSE

COURT’S RULING

Microsoft acted in a
commercially reasonable
manner or whether payments
made by Cypress to
Microsoft were properly
made under the insurance
policy.
Business Impact Analysis has Exhibit 199, to which parties OVERRULED
no relevance to any issues in stipulated to admissibility on
the case including the
March 4, 2019, is Microsoft’s
insurance claim, payment of internal report risk analysis
the underlying contingent
on the launch of the Xbox
business interruption claim to One, discussing its
Cypress, or the voluntary
contingent business
payment defense of Hynix.
interruption of its Xbox One
F.R.E. 401
console and its “key”
suppliers. Such documents
are relevant to the issues of
commercially reasonable
efforts and/or voluntary
payor.
Suppliers names in the
Exhibit 199, to which parties SUSTAINED
Cypress policy has no
stipulated to admissibility on
relevance to any issues in the March 4, 2019, is Microsoft’s
case including the insurance internal report risk analysis
claim or coverage of the
on the launch of the Xbox
underlying contingent
One, discussing its
business interruption claim to contingent business
Cypress. F.R.E. 401
interruption of its Xbox One

PAGE /
LINE

NATURE OF
OBJECTION

73:1 – 10

Relevance

77:5 – 16

Foundation;
Relevance

91:11 – 25 Relevance

REASON

RESPONSE

COURT’S RULING

console and its “key”
suppliers. Such documents
are relevant to the issues of
commercially reasonable
efforts and/or voluntary
payor.
Business Impact Analysis has Exhibit 199, to which parties OVERRULED
no relevance to any issues in stipulated to admissibility on
the case including the
March 4, 2018, is Microsoft’s
insurance claim or coverage
internal report risk analysis
of the underlying contingent on the launch of the Xbox
business interruption claim to One, discussing its
Cypress. F.R.E. 401
contingent business
interruption of its Xbox One
console and its “key”
suppliers. Such documents
are relevant to the issues of
commercially reasonable
efforts and/or voluntary
payor.
No foundation and not
Hynix’s counter-designation SUSTAINED
relevant as the civil authority establishes what Ms. Kist
provision of the Cypress
knows or does not know,
policy was not at issue in the which goes to the foundation
adjustment of the claim.
of Cypress’ designations.
F.R.E. 401
Testimony has no relevance
Ms. Kist is being question on OVERRULED
to any issues in the case
Exhibit 200, to which parties
including the insurance claim stipulated admissibility on

PAGE /
LINE

95:20 –
96:1

NATURE OF
OBJECTION

Foundation;
Relevance

REASON

RESPONSE

or coverage of the underlying
contingent business
interruption claim to
Cypress. F.R.E. 401
No foundation and has no
relevance to the insurance
claim or coverage of the
underlying contingent
business interruption claim to
Cypress. F.R.E. 401

March 4, 2019, and it goes to
Hynix’s defense of voluntary
payor as it is part of how the
insurance claim was handled.
Hynix’s counter-designation
establishes what Ms. Field
knows or does not know,
which goes to the foundation
of Cypress’ designations.

COURT’S RULING

SUSTAINED

LAUREN FIELD

PAGE /
LINE
47:8 –
47:16

NATURE OF
OBJECTION
Foundation

REASON

RESPONSE

The testimony was provided
in response to an incomplete
hypothetical and thus, is an
improper opinion. F.R.E. 701

Ms. Field’s response was not
in response to an incomplete
hypothetical but a line of
questioning based off of a
document that she was being
question on:
Q And did you review any
materials other than what
Microsoft provided you
directly?
A With respect to this
particular bullet point?
Q Yes.
A No.
Q And submitting a claim
for incremental freight
expenses would only have
been appropriate if the
incremental expenses were
caused by the fire, right?
A Correct.
Q If those extra expenses
were caused by reasons other
than the fire, then submitting
a claim for that amount

COURT’S RULING
OVERRULED

PAGE /
LINE

NATURE OF
OBJECTION

REASON

RESPONSE

COURT’S RULING

would not have been
appropriate?
A Correct.

64:15 – 16

Foundation

66:16 –
67:22

Relevance

(Field Dep., 47:2-16.)
The question posed lacks
Ms. Field’s answer is
OVERRULED
foundation as to whether the
permissible under FRE 701
witness is qualified to offer an as it is based on her
opinion re: “best practice” and perception as someone who
submission to an insurance
has substantial experience.
company as she is employed
Her answer puts in context
by a claim preparation
her other testimony regarding
company, not an insurance
the handling of the insurance
company. F.R.E. 701
claim and is thus helpful.
Moreover, it is not based on
any specialized knowledge as
prohibited under FRE 701.
Ex. 207 related to negotiations Ms. Field’s answer goes to
OVERRULED
in 2014 and is not relevant to
the calculation of
the fire that occurred in 2013
consequential incremental
or to any issue in the case.
chip costs that Cypress
F.R.E. 401
potentially paid for and is
therefore relevant.
Q. When you say what
amount is incremental, you
wanted to get an idea of what
the baseline to compare it
against it was.

PAGE /
LINE

NATURE OF
OBJECTION

REASON

RESPONSE

COURT’S RULING

A. Yes.

67:23 –
69:1

Relevance

Issues of sole source and
primary sourcing are not
relevant to the payment of the
insurance claim. F.R.E. 401

(Field Dep., 66:15-18.)
Ms. Field’s answer relating to OVERRULED
sole sourcing and primary
sourcing goes to the issue of
voluntary payor. Moreover,
her testimony discusses
consequential incremental
chip costs that Cypress
potentially paid for and is
therefore relevant.
Q. And when calculating the
incremental chip costs, was it
your understanding that the
incremental cost was based
on a comparison between
what Microsoft paid for
Samsung chips compared to
what they would have paid
for Hynix chips?
A. Yes.

69:10 –
71:19

Foundation and
Relevance

The email relates to a
Samsung part that was the
next generation and was not
available prior to or at the

(Field Dep., 68:10-15.)
Ms. Field’s testimony goes to OVERRULED
both voluntary payor and the
consequential incremental
chip costs. Furthermore, Ms.

PAGE /
LINE

NATURE OF
OBJECTION

REASON
time of the fire. The fact that
Microsoft was going to
consider purchasing these
chips from Samsung in 2014
regardless of whether the fire
occurred is not relevant to this
litigation and no foundation
has been provided by Hynix.
F.R.E. 401

82:25 –
84:1

Foundation;
relevance

This is not relevant to the fire
and the claim as submitted to
the insurers. F.R.E. 401

RESPONSE

COURT’S RULING

Field’s testimony is also
based on an email, (Exhibit
207)—to which parties
stipulated admissibility on
March 4, 2019—where she
was a recipient,
Q. So if we look back at the
document at Exhibit 207, Mr.
King tells you (reading) . . . .
A. Right.
(Field Dep., 70:24-71:6.)
Ms. Field’s answer relates to
the issue of voluntary payor
and is thus relevant.
Moreover, the questions are
an attempt to establish
foundation through her
memory:
Q. Do you recall ever
seeing . . .
...
Q. Do you recall ever asking
Microsoft to provide
you . . . .
(Field Dep., 82:25-83:11.)

OVERRULED

PAGE /
LINE
84:8 – 25

NATURE OF
OBJECTION
Foundation;
relevance

REASON

RESPONSE

This is not relevant to the fire
and the claim as submitted to
the insurers. F.R.E. 401

Ms. Field’s answer relates to
the issue of voluntary payor
and is thus relevant.
Moreover, her answer is
based on her recollection of
discussions.

COURT’S RULING
OVERRULED

Q. What basis do you have
to conclude that it was an
immaterial amount then?
A. My recollection of the
discussion.

89:12 – 17

Foundation

Witness has no recollection of
the question posed.

91:6 – 16

Incomplete
Hypothetical

The testimony was provided
in response to an incomplete

(Field Dep., 84:18-20.)
Hyinx’s counter-designation OVERRULED
is being used to establish
what Ms. Field knows or
does not know, which goes to
the foundation of Cypress’
designations. See Fed R.
Evid. 602 (“A witness may
testify to a matter only if
evidence is introduced
sufficient to support a finding
that the witness has personal
knowledge of the matter.”).
Ms. Field’s testimony is not
OVERRULED
an incomplete hypothetical
and is based on a document

PAGE /
LINE

NATURE OF
OBJECTION

REASON
hypothetical and thus, is an
improper opinion. F.R.E. 701

92:14 – 25

Foundation and
No Knowledge

RESPONSE

COURT’S RULING

(Exhibit 212)—to which
parties stipulated
admissibility on March 4,
2019—that was presented to
her. Her testimony is
rationally based on her
perception of that document
and the situation surrounding
that document, is helpful to
clearly understanding the rest
of her testimony, and is not
based on scientific, technical,
or other specialized
knowledge. Thus, it is
admissible. Fed. R. Evid.
701.
The witness had never seen
Ms. Field’s testimony goes to OVERRULED
the email shown to her and the her knowledge of whether
email does not state what
she had seen information
Hynix claims it does, i.e.
similar to what was contained
inconsistent with the ability of in the document presented
Hynix to supply 30.6 million
before her. In other words,
DRAM chips. F.R.E. 801
her knowledge regarding the
exact document before her is
not at issue. Moreover, this
counter-designation is meant
to establish what Ms. Field
knows or does not know,

PAGE /
LINE

NATURE OF
OBJECTION

REASON

93:1 –
95:19

Foundation and
Hearsay

The witness has not seen the
email and therefore, the
testimony is hearsay as Hynix
is offering it for the truth of
the matter asserted, that the
September support plan does
not support the contract
values. F.R.E. 602, 801

98:5 – 23

Foundation

The witness has not seen the
email and therefore, the
testimony is hearsay as Hynix
is offering it for the truth of
the matter asserted, that the
September support plan does
not support the contract

RESPONSE

COURT’S RULING

which goes to the foundation
of Cypress’ designations.
As explained in the previous OVERRULED
response, Ms. Field’s
testimony goes to her
knowledge of whether she
had seen information similar
to what was contained in the
document presented before
her. Thus, because her
testimony is about her
knowledge and is not
testifying as to the document
before her, her testimony is
not hearsay and is admissible.
Fed. R. Evid. 701, 801.
Moreover, Hynix’s counterdesignation is meant to
establish what Ms. Field
knows or does not know,
which goes to the foundation
of Cypress’ designations.
As explain in the previous
OVERRULED
responses, Ms. Field’s
testimony goes to her
knowledge of whether she
had seen information similar
to what was contained in the
document presented before

PAGE /
LINE

NATURE OF
OBJECTION

REASON
values. Moreover, the witness
indicated that the email was
not within the scope of
information that she reviewed
in preparation for the
deposition. F.R.E. 602, 801

101:4 – 6

Argumentative

Improper question as
argumentative.

RESPONSE

COURT’S RULING

her. Thus, because her
testimony is about her
knowledge and is not
testifying as to the document
before her, her testimony is
not hearsay and is admissible.
Fed. R. Evid. 701, 801.
The question is not
OVERRULED
argumentative as is meant to
clarify her preceding
testimony.
Q. If a determination had
been made that the limits
would have been exhausted,
how does that affect the
disposition of the remaining
portion of the claim?
A. Generally we’ll cease
working.
Q. So it’s kind of like a
mercy rule in effect?
A. Exactly.

105:19 –
112:23

Relevance;
Prejudicial

The questioning relates to
whether Microsoft ever
provided email
communications to Cypress or

(Field Dep., 100:25-101:6.)
Ms. Field’s testimony goes to OVERRULED
the issue of voluntary payor,
such as what type of

PAGE /
LINE

NATURE OF
OBJECTION

REASON

RESPONSE

Re-Insurers. Such
documentation was not
relevant to the claim.
Moreover, Hynix cannot
identify any email
communications between
Microsoft and Hynix in which
Hynix advised Microsoft that
Hynix would not have
supplied the DRAM chips to
Microsoft even if the fire had
not occurred. The one
document shown to the
witness does not contain that
information. In fact, the email
indicates that Hynix noted that
they were still ramping up and
that yields would improve.
Since there is no HynixMicrosoft email that would
support Hynix’s position that
they would not have supplied
Microsoft with the DRAM
chips had the fire not
occurred, it is prejudicial for
Hynix to submit this line of
questioning to the jury.
F.R.E. 401, 403

information was provided by
Cypress to its reinsurers:
Q. And was it Aon’s view
that email correspondence
from Hynix to Microsoft in
relation to the fire was not
related to getting this claim
approved?
A. If it wasn’t an item that
was requested, then we
wouldn’t have pulled it.
(Field Dep., 108:6-13.)
Moreover, Ms. Field is being
questioned on documents to
which parties have stipulated
admissibility on March 4,
2019.

COURT’S RULING

PAGE /
LINE
114:13 –
115:9

NATURE OF
OBJECTION
Foundation

129:15 –
130:2

Foundation

REASON
Witness has no recollection of
the questions posed to her
relating to information to
support the claim.

Witness has no recollection of
the questions posed to her
relating to information to
support the claim.

RESPONSE
This counter-designation is
meant to establish what Ms.
Field knows or does not
know, which goes to the
foundation of Cypress’
designations.
This counter-designation is
meant to establish what Ms.
Field knows or does not
know, which goes to the
foundation of Cypress’
designations.

COURT’S RULING
OVERRULED

OVERRULED

S.W. JEONG
PAGE /
LINE
57:19 – 24

NATURE OF
OBJECTION
Relevance

REASON

RESPONSE

Number of lines at Icheon
Icheon is the facility listed in
has no relevance to the issues the Ninth Amendment that
in the case. F.R.E. 401
produced Microsoft’s 2133
DRAM chips. Given that
Cypress’ claim is that Hynix
did not produce enough 2133
DRAM chips when Hynix
allegedly could have, such
information goes to the core
of the litigation and is thus
relevant.

COURT’S RULING
OVERRULED

Q. Okay. How many lines
were there at Icheon for the
manufacture of the DRAM
chip?
A. Are you talking about the
2013?
Q. Yes.
A. One.

58:25 –
59:7

Foundation;
Relevance

The witness said that he is
not related to production and
cannot address capacity
changes. F.R.E. 401, 602

(Jeong Dep., 57:19-24.)
Hynix is providing its
counter-designations to
establish what Mr. Jeong
knows or does not know,

OVERRULED

PAGE /
LINE

NATURE OF
OBJECTION

REASON

60:11 – 24

Foundation;
Relevance

The testimony has no
relevance to the issues and
the witness has no
recollection of the issue of
capacity. F.R.E. 401, 602

133:20 –
134:5

Foundation;
Relevance

The testimony has no
relevance to the issues and
the witness has no
recollection of the document.
F.R.E. 401, 602

RESPONSE

COURT’S RULING

which goes to the foundation
of Cypress’ designations.
Hynix is providing its
OVERRULED
counter-designations to
establish what Mr. Jeong
knows or does not know,
which goes to the foundation
of Cypress’ designations.
Cypress only partially
OVERRULED
designates Mr. Jeong’s
response. To address the
omission of Mr. Jeong’s full
answer, Hynix has counter
designated the rest of his
answer. Moreover, Hynix is
providing its counterdesignations to establish
what Mr. Jeong knows or
does not know, which goes to
the foundation of Cypress’
designations.

SAM LEE
PAGE /
LINE
43:25 –
44:4

NATURE OF
OBJECTION
Duplicative

REASON

RESPONSE

COURT’S RULING

Witness previously answered Witness did not previously
SUSTAINED
this question
answer the line of
questioning:
Q: Do you recall when the
first time Hynix was able to
Q. As you sit here today, do
produce 2133 megahertz
you know what percentage of
chip?
chips – DRAM chips
produced by Hynix in 2013
A: No. I do not.
were 2133 megahertz?
A. I don’t quite recall.
(Sam Lee, 23:15 – 17)
(Lee Dep., 44:5-12.)
Furthermore, Hynix is
providing its counterdesignations to establish
what Mr. Jeong knows or
does not know, which goes to
the foundation of Cypress’
designations.

PETER JONES
PAGE /
LINE
32:10 – 20

NATURE OF
OBJECTION
Relevance and
prejudicial

REASON

RESPONSE

Reinsurance of Hynix and the Cypress only partially
market of reinsurers is not
designates Mr. Jones’

COURT’S RULING
SUSTAINED

PAGE /
LINE

NATURE OF
OBJECTION

REASON
relevant to any issue in the
case. Further, the testimony
is prejudicial because it
identifies AIG as a member
of the market of Hynix
reinsurers, which is a
reinsurer of Cypress. F.R.E.
401, 403

RESPONSE
response. To address the
omission of Mr. Jones’ full
answer, Hynix has counterdesignated the rest of his
answer.
Q. And do you know who
the reinsurance carrier was?
A. It was a market panel.
Q. Any U.S. insurers that
made up part of the
reinsurance panel relative to
this loss?
A. There were U.S. based
parent companies –
insurance companies
involved. I don’t – I don’t
know if there was a separate
legal entity in Hong Kong
that handled it or something.
Q. Which local – which U.S.
parent companies are you
aware of that were involved
in the reinsurance market?
Q. Let’s see. AIG.
(Jones Dep., 31:11-32:2)

COURT’S RULING

PAGE /
LINE

NATURE OF
OBJECTION

REASON

RESPONSE
Thus, the testimony is
relevant to provide the full
answer of what Cypress has
designated and is not
prejudicial for that reason.

COURT’S RULING