LAUREL BEELER, Magistrate Judge.
The court held a final pretrial conference on June 20, 2019. The court issues the following pretrial order pursuant to Federal Rule of Civil Procedure 16(e).
A. The jury trial will begin on July 8, 2019, in Courtroom B, 15th Floor, U.S. District Court, 450 Golden Gate Avenue, San Francisco, California. The trial will last up to five days. The trial will be held Monday through Friday from 8:30 a.m. to approximately 1:30 or 2:00 p.m. (or slightly longer to finish a witness) and will include two fifteen-minute breaks. Counsel must arrive at 8:15 a.m. to address any issues (such as objections) before the trial day begins. Once the jury begins deliberations, it usually stays past 2:00 p.m. Also, Monday may run the full day and will include jury selection, opening statements, and two or three witnesses, as the day permits.
B. Each side will have 10 hours per side for direct examination of its witnesses and to cross examine the opposing party's witnesses, including all objections raised during the trial day. In addition, each party may have up to 45 minutes for its opening statement and one hour to close (including rebuttal closing for the plaintiff).
The parties should refer to the court's December 16, 2016 Pretrial Order
The parties will call the witnesses on their separate witness lists. As discussed at the pretrial conference, if the parties identify the same witnesses, the defendant will examine the witnesses when the plaintiff calls them (as opposed to recalling them).
Grouse River contends that NetSuite (now owned by Oracle) induced it to enter into a set of contracts for NetSuite's software and related services (the "Agreements") on March 29, 2014, by fraudulently making certain false representations. The actionable alleged representations that may form the bases for Grouse River's claims are listed in the court's order at ECF No. 291.
Grouse River dismissed with prejudice its claims for negligent misrepresentation and breach of contract.
Oracle denies Grouse River's claims. Oracle contends that NetSuite did not make any false representations to Grouse River and that NetSuite did not cause Grouse River any harm. Oracle also contends that Grouse River waived its fraud claims and failed to mitigate its alleged damages.
Grouse River seeks compensatory and punitive damages. Grouse River and Oracle both seek costs and attorney's fees if they prevail.
A. Grouse River will not introduce certain recorded phone conversations of NetSuite employees that Grouse River produced during discovery.
B. Grouse River will not introduce evidence or argument regarding communications between Plaintiff's counsel and Karen Messick, which resolves Oracle's Motion in Limine 2.
C. Grouse River will not introduce evidence regarding the compensation or wealth of Oracle's executives, including Larry Ellison. It is Grouse River's position that this does not prevent Grouse River from proving that before NetSuite was acquired by Oracle, NetSuite's executives were compensated in a manner that motivated them to inflate revenues by overselling the qualities of its systems and services.
D. All exhibits produced by a party or by Grant Thornton, Grouse River's accountant, are presumed to be authentic.
E. Exhibits listed on the parties' exhibit list are deemed admitted when mentioned by any party during trial unless there are previous objections to them.
F. The parties agree that demonstratives (i.e., charts, power point slides, models, etc. that do not go back into the jury room) need not be listed on the Trial Exhibit lists.
G. The jury will be given a notebook that includes a glossary, cast of characters, and chronology, assuming that the parties agree on a notebook and the court approves it. The court does not address at this time whether the jury will be given a list of the actionable alleged representations; the parties may raise this issue closer to trial or at trial.
For the reasons stated on the record and below, the court rules as follows.
Grouse River moves to exclude the limitations of liability contained in the Agreements, such as paragraph 10 of the March 30, 2014 NetSuite Subscription Service Agreement. The court denies the motion.
Grouse River dismissed its breach-of-contract claim with prejudice (and also dismissed its claim for negligent misrepresentation). Its remaining claims sound in fraud or misrepresentation, and it thus argues that the limitations-of-liability provisions are irrelevant, inadmissible, and confusing, given that California courts refuse to enforce contractual limitations on liability in cases involving fraud or misrepresentation. As Oracle argues, however, whether the limitations-of-liability provisions are legally enforceable as a contractual matter is a separate question from whether they are factually relevant to Grouse River's remaining fraud and misrepresentation claims, including the issue of whether Grouse River's reliance on any of NetSuite's alleged misrepresentations was reasonable. Grouse River's cases do not rebut Oracle's arguments regarding the factual relevance of these provisions or support its argument that the provisions should be excluded under Federal Rules of Evidence 401 or 403. Cf. ADT Sec. Servs., Inc. v. Swenson, No. 07-2983 (JRT/AJB), 2011 WL 4396918, at *2-3 (D. Minn. Sept. 21, 2011) (denying motion to redact limitation-of-liability contract provisions in a misrepresentation case and admitting into evidence the full, unredacted contract because "the jury must see the entire Agreement to fairly determine whether [plaintiff] was fraudulently induced into signing it and whether she reasonably relied on [defendant's] representations . . . . [T]he jury must evaluate whether [plaintiff] would have relied upon statements allegedly made to her by [defendant], despite the limitations of liability and other statements in the Agreement").
As discussed at the pretrial conference, the court will instruct the jury that Grouse River is not bringing a breach-of-contract claim and that the limitation-of-liability provisions are not legally applicable to Grouse River's fraud claims.
Grouse River withdrew this motion in limine.
Grouse River moves the court to enter fifteen "rules" that Grouse River has drafted to govern the conduct of the trial. The court denies the motion.
"The purpose of a motion in limine is to admit or preclude specific [evidence]." M.H. v. Cty. of Alameda, No. 11-cv-02868-JST, 2015 WL 894758, at *9 (N.D. Cal. Jan. 2, 2015) (citing cases). "To serve th[eir] purposes effectively, however, motions in limine must identify the evidence at issue and state with specificity why such evidence is inadmissible." Colton Crane Co., LLC v. Terex Cranes Wilmington, Inc., No. CV 08-8525 PSG (PJWx), 2010 WL 2035800, at *1 (C.D. Cal. May 19, 2010) (citing United States v. Cline, 188 F.Supp.2d 1287, 1292 (D. Kan. 2002)). "Additionally, matters of day-to-day trial logistics, common professional courtesy, and jury selection are not proper subjects of motions in limine." Id. (citing Kelly v. New West Fed. Sav., 49 Cal.App.4th 659, 671 (1996)).
Grouse River does not identify any specific evidence in its motion in limine and thus provides no basis for the court to make an in-limine ruling. Cf. M.H., 2015 WL 894758, at *9 (denying motion in limine where "Defendants offer no examples from which the Court could fashion a ruling"). Many of Grouse River's requests are procedural or logistical, not evidentiary, and thus are not the proper subjects of motions in limine. Cf. Colton Crane, 2010 WL 2035800, at *1. The court's denial of this motion is without prejudice to either side's objecting to any evidence or conduct at trial.
Grouse River moves to strike Oracle's affirmative defenses, particularly its affirmative defense of waiver. The court denies the motion.
Grouse River filed its motion in limine on May 24, 2019, when the operative answer was Oracle's answer to Grouse River's second amended complaint. On May 31, 2019, Grouse River filed a third amended complaint,
Oracle moves to exclude any evidence or argument regarding (1) other litigation brought against NetSuite or Oracle and (2) NetSuite's relationships with, or work for, other customers. It argues that any evidence is improper propensity evidence under Federal Rule of Evidence 404(b) and in any event is prejudicial under Federal Rule of Evidence 403. The court grants the motion in part and excludes (1) evidence or argument about the fact that NetSuite or Oracle may have been sued by other customers and (2) Colorado Kayak Supply's review of NetSuite and news articles about Billabong's NetSuite implementation. Beyond that, the court declines to enter an order categorically excluding evidence or argument about other lawsuits (beyond the fact of lawsuits being filed) or NetSuite's relationships with or work for other customers and will address issues in context as they may arise at trial.
"Evidence of . . . other act[s] is not admissible to prove a person's character in order to show that on a particular occasion the person acted in accordance with the character." Fed. R. Evid. 404(b)(1). "This evidence may be admissible for another purpose, such as proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident." Fed. R. Evid. 404(b)(2). Even if evidence is admissible under Rule 404(b)(2), "[t]he court may exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence." Fed. R. Evid. 403.
Beyond the fact of lawsuits being filed against NetSuite or Oracle, it is possible that evidence of customer complaints may be permitted under Rule 404(b)(2). The court cannot evaluate that possibility on this record (or evaluate whether the evidence is more probative or more prejudicial under Rule 403). Grouse River must make a proffer outside of the jury's presence before posing any questions regarding NetSuite's work for other customers or other customer complaints.
Oracle did not file a Motion in Limine 2 because the parties resolved it.
Oracle moves to exclude any evidence of NetSuite advertisements or marketing material published after Grouse River and NetSuite entered into their Agreements in March 2014. The court grants the motion in part. Grouse River may introduce those portions of post-Agreements advertisements or marketing materials that characterize a feature as "new" for the sole purpose of arguing that NetSuite's describing the feature as "new" after March 2014 implies that the feature did not exist in March 2014 when the parties entered into their Agreements. The court otherwise excludes post-Agreements advertisements or marketing materials.
Grouse River's claims are all predicated on the theory that NetSuite's alleged misrepresentations induced Grouse River to enter into the Agreements.
Additionally, post-Agreements advertisements and marketing materials have little probative value. Grouse River acknowledges that "[t]he differences between the 2013 and 2015 NetSuite on-line representations are, on their faces, no material differences at all."
In addition to their limited relevance, the post-Agreements materials confuse the issues and would mislead the jury by suggesting that representations in the materials can form the basis of Grouse River's claims. They cannot.
Grouse River's arguments do not alter the court's conclusion that the materials are not relevant and, in any event, confuse the issues and would mislead the jury.
For example, Grouse River argues that if NetSuite issued advertisements and marketing materials in 2015 about features and functionalities, and it knew then that it could not deliver those features and functionalities, "that is strong evidence of fraud."
Grouse River also argues that if (after the Agreements were in place) NetSuite knew that it could not provide the features and functionalities it had contracted to provide, then further post-Agreements statements that it could "fix" these issues are "more fraud piled on the initial fraud."
Grouse River argues that because pre-contractual promises can be the basis of a fraud claim, post-contractual promises are also relevant "[b]y the same token[.]"
In short, the court finds that post-Agreements advertisements and marketing materials have limited relevance, and any probative value is substantially outweighed by their cumulative nature and their potential for confusing the issues and misleading the jury. The court excludes the evidence under Federal Rules of Evidence 401 and 403, other than the one exception discussed above.
Oracle moves to exclude two video recordings that Grouse River's founder and former CEO Glen Fallis made five weeks before this lawsuit was filed that purport to show Grouse River's website and certain searches Mr. Fallis ran on the website. The court grants in part and denies in part the motion. The court does not admit the videos as substantive evidence but will allow Mr. Fallis to use the videos as demonstratives during his testimony at trial, provided that Grouse River removes the videos' audio tracks and provided that Mr. Fallis can lay a foundation for the videos.
Oracle argues that Mr. Fallis's commentary on the videos is excludable as hearsay. Grouse River notes that removing the audio tracks eliminates the hearsay issue regarding Mr. Fallis's audible commentary that accompanies the demonstration.
Oracle argues the visual portions of the videos also are inadmissible hearsay. Mr. Fallis's use of the videos (with their audio tracks removed) as demonstratives during his live, in-court testimony does not run afoul of the hearsay rules. Cf. Jones v. Kearfott Guidance and Navigation Corp., No. CIV. 93-64 (DRD), 1998 WL 1184107, at *4 (D.N.J. Nov. 17, 1998) ("If [a witness] testifies at trial and [the party] has him use the video as an aid in describing what he witnessed that day, the video is not hearsay and is merely a classic demonstrative exhibit.").
Oracle argues that the videos are unfairly prejudicial. They are not (provided that Mr. Fallis can lay a foundation). Oracle can challenge Mr. Fallis's methods (such as how he selected search terms) on cross examination.
At the pretrial conference, Oracle said that in addition to the two videos that were the subject of its motion in limine, Grouse River has six other videos. The court's recollection (which can be borne out by the transcript) is that Grouse River said at the pretrial conference that it would not use the new videos. But if this was not the case, then the court cannot evaluate whether the additional videos are unfairly prejudicial because the videos were not identified in the motion in limine and the court has not seen them. That said, the court's ruling on the two videos that were submitted with the motion (that they were not unfairly prejudicial) may provide guidance to the parties regarding the other videos.
In sum, Grouse River must remove the audio tracks, and Mr. Fallis must lay a foundation for any video before he can use it.
Oracle contends that Grouse River never produced relevant information regarding its financial condition and that as a result, the court should preclude it from putting in evidence about its lost profits or give an adverse-inference instruction about Grouse River's spoliation because "Grouse River has successfully suppressed or destroyed numerous categories of documents that would further reveal its precarious financial position and undermine its attempts to blame NetSuite for its downfall."
From this record, it is not possible to discern who is right about the allegations about spoliation or Grouse River's alleged failure to produce information. On the one hand, Oracle contends that Grouse River failed to produce documents and failed to preserve documents.
A court can decide the issue of spoliation in a motion in limine. See Bordegaray v. Cty. of Santa Barbara, No. 2:14-cv-8610-CAS(JPRx), 2016 WL 7260920, at *5-6 (C.D. Cal. Dec. 13, 2016). That said, determining whether spoliation has occurred and the scope of any sanction (including any adverse-inference instruction) generally is decided on a fuller record, during discovery, backed up by declarations. This allows an appropriate determination of sanctions under Federal Rule of Civil Procedure 37. Also, that process allows the court to fashion solutions (such as third-party subpoenas or other interventions) to address any harm. That approach makes sense especially when, as here, a party (Oracle) wants to preclude all evidence about damages or have a sanction untethered to methodical consideration (through the motions process) about the scope of the sanction.
Here, like Grouse River's delay in moving to strike affirmative defenses in Oracle's answer, Oracle's delay in raising issues — and the resulting loss of a considered approach to evaluating any failure to produce — militates in favor of denying the motion. The court recognizes that Grouse River's expert's deposition was on May 24, 2019, but the issues regarding production of financial information were persistent in the litigation.
Grouse River moved to strike Oracle's Motion in Limine 5.
Oracle moves to exclude Grouse River's expert Paul McEwen from testifying about his opinions regarding Grouse River's past and future losses purportedly caused by NetSuite. The court grants the motions and excludes Mr. McEwen's testimony regarding Grouse River's losses.
Mr. McEwen's first step in calculating past losses was to come up with a dollar figure that he calls "Unaffected Sales."
Mr. McEwen first adopts projections that Grouse River's CEO prepared in its 2013 "Business and Financial Plan" for fiscal years 2014 through 2016 and assumes that those forward-looking projections reflect what Grouse River's actual sales would have been.
As an alternative, Mr. McEwen takes Grouse River's sales from fiscal year 2014 (the "last twelve months" or "LTM") and assumes that its sales would have been the same in fiscal year 2015 and would have grown by 10 percent a year in fiscal years 2016 and 2017.
Additionally, even assuming that Mr. McEwen's Unaffected Sales figures were reliable, Mr. McEwen does not provide a reliable basis for opining on economic losses caused by NetSuite. Mr. McEwen arrives at his putative loss figures by starting with his Unaffected Sales figures and comparing them against the sales Grouse River actually was able to achieve after accounting for various costs.
Mr. McEwen did not address other possible causes for Grouse River's purported losses. To take one example, Mr. McEwen did not know or consider the fact that a significant direct competitor to Grouse River opened a new store in 2014-2015 in the same area as Grouse River's stores or whether that competition caused any of Grouse River's losses.
Oracle also asks in a footnote for the court to exclude Grouse River's founder and former CEO Glen Fallis from testifying about Grouse River's lost-profit damages.
Grouse River moved to strike Oracle's Motions in Limine 6 through 8, arguing that Oracle's spreading its arguments against Mr. McEwen's opinions across three separate motions was an improper attempt to evade the court's motion-in-limine page limits.
Oracle moves to exclude evidence and argument that NetSuite breached its Agreements with Grouse River and to preclude evidence of damages that post-date the Agreements. The court denies the motion.
Oracle argues that Grouse River's dismissal of its breach-of-contract claim with prejudice resulted in an "adverse determination of its claim on the merits" and that "Grouse River may not argue — inconsistent with the adverse determination — that NetSuite failed to perform its contractual commitments."
Oracle nonetheless argues that Grouse River cannot demonstrate any damages that post-date the Agreements because "proximate cause is lacking where the defendant performed its obligations under the contract that was allegedly fraudulently induced[.]"
Oracle also argues that the court should exclude evidence related to NetSuite's performance under the Agreements, particularly evidence related to performance not tied to the specific misrepresentations at issue with respect to Grouse River's misrepresentation claims. The court denies the motion for lack of specificity, in part because Oracle has not specified what it seeks to exclude. Cf. M.H., 2015 WL 894758, at *9; Colton Crane, 2010 WL 2035800, at *1.
As noted above, the court will instruct the jury that Grouse River is not bringing a breach-of-contract claim.
The court will address the objections separately.
The court filed preliminary jury instructions and will file (proposed) final jury instructions and will hold an instructions conference during trial and before closing argument to finalize the final instructions.
The court will use its questionnaire.
The court will allow attorney voir dire of up to 30 minutes per side.
The court allows the jury to ask questions and will provide its standard form
The court filed a proposed verdict form, which the jury will have before it deliberates.
At the end of each trial day (generally, by 2:00 p.m.), counsel must give notice of the order of proof (meaning, the order of witnesses and the exhibits, including illustrative exhibits) for the next trial day. The parties must notify the court of any issues by the end of the day so that the court can resolve them. To the extent that the parties will call hostile witnesses, which means that the opposing party's "cross examination" will be its direct examination, counsel must provide a list of all exhibits to be used with the same witness on cross examination (other than for impeachment). The parties will call their joint witnesses only once (which means that those witnesses will be called during the plaintiff's case).
