BARTLE, District Judge.
Plaintiff De Lage Landen Operational Services, LLC ("DLL") has sued defendant Third Pillar Systems, Inc. ("Third Pillar") for breach of contract and violation of the California Uniform Trade Secrets Act ("CUTSA"), Cal. Civ.Code § 3426 et seq.
DLL's claims stem from a series of agreements in which DLL engaged Third Pillar to develop and customize a software platform, known as the "Beacon" project, for use in DLL's vendor finance lending and leasing business. After a three-day permanent injunction hearing,
The remainder of the case was scheduled for trial on May 11, 2011. However, the trial was postponed because the parties revived settlement discussions and negotiated for several months under the court's supervision. When the parties failed to reach a settlement, the court entered a Fifth Scheduling Order, calling for plaintiff's motions in limine to be served on or before December 22, 2011 and defendant's motions in limine to be served on or before January 9, 2012.
Under CUTSA, three kinds of damages are available. See Cal. Civ.Code § 3426.3. This section of the CUTSA provides in relevant part:
Accordingly, depending on the circumstances of the case, a plaintiff may recover damages for actual loss, unjust enrichment, or a reasonable royalty. Reasonable royalty damages, however, are only available if both actual loss and unjust enrichment are unprovable. See Cal. Civ.Code § 3426.3; Ajaxo, Inc. v. E*Trade Fin. Corp., 187 Cal.App.4th 1295, 115 Cal.Rptr.3d 168, 179 (2010). DLL and Third Pillar have agreed that damages in the form of actual losses cannot be proven. DLL's expert Barry Sussman opined in his report that there was insufficient evidence to prove unjust enrichment damages and then proceeded to calculate a reasonable royalty to be paid to DLL. In contrast, Third Pillar's expert James Woods set forth in his report in response that DLL's unjust enrichment damages were calculable and provable. Accordingly, based on this part of Woods' report, DLL would have no basis to obtain a reasonable royalty. Thereafter, each expert was deposed.
In an Order dated May 9, 2011, the court granted the motion of Third Pillar in limine to exclude the testimony of Sussman regarding a reasonable royalty. The court explained that Sussman's opinion was unreliable because it lacked a "factual foundation in the record" for the point in time when Third Pillar's misappropriation of DLL's trade secret information began. See De Lage Landen Operational Servs., LLC v. Third Pillar Sys., LLC, 2011 WL 1752330, 2011 U.S. Dist. LEXIS 49438 (E.D.Pa. May 9, 2011). With no expert testimony on the issue of a reasonable royalty, DLL has now moved to introduce the deposition testimony of Woods, Third Pillar's expert, to prove unjust enrichment damages.
The weight of authority favors allowing DLL to introduce the opinion testimony of Third Pillar's expert. See, e.g., Peterson v. Willie, 81 F.3d 1033 (11th Cir. 1996); Penn Nat'l Ins. Co. v. HNI Corp., 245 F.R.D. 190 (M.D.Pa.2007); House v. Combined Ins. Co. of Am., 168 F.R.D. 236 (N.D.Iowa 1996). Rule 26(b)(4)(A) of the Federal Rules of Civil Procedure provides that "[a] party may depose any person who has been identified as an expert whose opinions may be presented at trial." See Fed.R.Civ.P. 26(b)(4)(A); 245 F.R.D. at 193. Under this Rule, DLL deposed Woods months ago. Clearly, a party may introduce the deposition testimony of its expert at trial should the expert become unavailable and such testimony may be used for impeachment purposes. See Penn Nat'l Ins., 245 F.R.D. at 193. The Penn National court reasoned persuasively that because an expert's deposition would already be admissible at trial in these circumstances, there is no reason not to allow a party to call the opposing party's expert witnesses to testify at trial. Id. at 194-95.
We also agree with the analysis of other courts that either party may introduce the deposition of an opposing party's expert if the expert is identified as someone who may testify at trial because "those opinions do not belong to one party or another but rather are available for all parties to use at trial." See, e.g., Olsen v. Delcore, No. 2:07-CV-334 TS, 2009 WL 3055411 at *1, 2009 U.S. Dist. LEXIS 88263 at *2-3 (D.Utah Sept. 24, 2009) (citations omitted).
Allowing one party to use the testimony of the opponent's expert witness causes no "undue prejudice" particularly when timely notice of the intention to call the expert has been given. See Penn Nat'l Ins., 245 F.R.D. at 194. Here, DLL listed Woods in its pre-trial memorandum on April 21, 2011 when it identified witnesses from whom it "reserve[d] the right to present direct or rebuttal testimony ...
Third Pillar contends that DLL should be barred from using Woods' testimony because judicial estoppel prevents parties from changing their positions in legal proceedings. The Supreme Court has found that judicial estoppel should generally only be invoked where three factors are present:
New Hampshire v. Maine, 532 U.S. 742, 750-751, 121 S.Ct. 1808, 149 L.Ed.2d 968 (U.S.2001) (internal citations omitted). Although DLL's current effort to put on evidence of unjust enrichment may be inconsistent with its earlier position that it was entitled to a reasonable royalty since unjust enrichment was not provable, this court has never accepted this earlier position. Further, DLL will not derive an unfair advantage if it is allowed to use Woods' expert testimony since both parties have had access to this testimony and both parties named Woods in their witness lists. Thus, DLL is not precluded from introducing evidence of unjust enrichment because of judicial estoppel.
Third Pillar has suggested that Woods' testimony does not meet the requirements of Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). However, Third Pillar filed no motion in limine to exclude Woods' testimony based on Daubert by the deadline set by the Fifth Scheduling Order. Furthermore, Third Pillar's minimalist Daubert argument is not convincing. It merely states that Woods does not meet the Daubert standard because Third Pillar intended to offer his testimony to rebut Sussman's opinion testimony that unjust enrichment damages are not provable
Accordingly, DLL may introduce evidence of unjust enrichment damages through the expert testimony of Woods.
DLL, in the alternative, seeks to obtain payment of a reasonable royalty. It may not do so because under CUTSA, a party is not entitled to a reasonable royalty where, as here, unjust enrichment damages are provable. See Cal. Civ.Code § 3426.3; Ajaxo, Inc. v. E*Trade Fin.
Finally, the renewed motion of Third Pillar for summary judgment will be denied.
AND NOW, this 2nd day of February, 2012, for the reasons set forth in the accompanying Memorandum, it is hereby ORDERED that:
(1) the motion of plaintiff De Lage Landen Operational Services, LLC in limine to introduce evidence in support of unjust enrichment damages and/or a reasonable royalty for Third Pillar's Misappropriation of plaintiff's trade secrets (Doc. # 285) is GRANTED to the extent that plaintiff may introduce into evidence the deposition testimony of Dr. James Woods in support of unjust enrichment damages, but the motion is otherwise DENIED; and
(2) the renewed motion of defendant Third Pillar Systems, Inc. for summary judgment (Doc. # 291) is DENIED.