Cypress Insurance Company v. SK Hynix America, Inc.RESPONSEW.D. Wash.January 28, 2019 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE CYPRESS INSURANCE COMPANY, as subrogee of Microsoft Corporation Plaintiff, vs. HYNIX AMERICA INC. Defendant. ) ) ) ) ) ) ) ) ) ) ) ) Case No. 2:17-cv-00467-RAJ PLAINTIFF CYPRESS INSURANCE COMPANY’S OPPOSITION TO HYNIX’S MOTIONS IN LIMINE NOTE ON MOTION CALENDAR: ORAL ARGUMENT REQUESTED Plaintiff, Cypress Insurance Company (“Cypress”), as subrogee of Microsoft Corporation (“Microsoft”), by counsel, hereby opposes Defendant Hynix America, Inc.’s (“Hynix”) Motions In Limine as follows: Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 1 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE Page i LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 TABLE OF CONTENTS INTRODUCTION ........................................................................................................................1 1. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR MICROSOFT DAMAGES EXCEEDING $150 MILLION ..............................................................................1 2. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR MICROSOFT DAMAGES INCURRED AFTER JANURARY 1, 2014 ..........................................................3 3. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR DICTIONARY DEFINITIONS OF “PRIORITY”.....................................................................4 4. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR THE CAUSE OF THE WUXI FIRE ..........................................................................................5 5. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR HYNIX’S ABILITY TO CONVERT 2133 SPEED GRADE CHIPS TO LOWER SPEED GRADES (e.g., 1866, 1600), AND VICE VERSA .....................................................................................7 6. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR HYNIX’S ALLOCATION OF DRAM CHIPS TO OTHER CUSTOMER ................................................9 7. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR CUSTOMERS WHO DID NOT PURCHASE 2133 SPEED GRADE CHIPS FROM HYNIX IN 2013 ........11 8. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR WHETHER HYNIX WAS A “LAUNCHING PARTNER” OR SOLE SUPPLIER TO MICROSOFT .....13 9. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR ........................... MICROSOFT’S INCIDENTAL DAMAGES SUCH AS EXPEDITED SHIPPING COST AND LABOR COST ................................................................................................................14 10. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR ANY EVIDENCE LACKING AUTHENTICITY OR FOUNDATION – DEP EXHIBITS 66, 67, 90, 162 & 165 ...........................................................................................................................15 11. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR INTERNAL HYNIX COMMUNICATIONS COMMENTING ON ITS PERFORMANCE UNDER THE NINTH AMENDMENT ...........................................................................................................16 12. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR BELATEDLY DISCLOSED WITNESSES .............................................................................18 CONCLUSION ..........................................................................................................................18 Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 2 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE Page ii LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 TABLE OF AUTHORITIES Cases Bradley v. Pittsburgh Bd. Of Educ., 913 F.2d 1064 .......................................................................... 1 Daniels v. State Farm Mut. Automobile Ins. Co., 421 P.3d 996 (Wash. App. Div. 1 2018) ............ 2 Delgado v. United Facilities, Inc., 2012 WL 10717266 (E.D. Cal.) ................................................ 5 Discovery Property and Casualty Ins. Co. v. Blair, 2014 WL 4412339 (C.D. Cal.) ........................ 5 Grant County Port District No. 9 v. Washington Tire Corp., 187 Wash.App. 222, 349 P.3d 889 (Wash. Ct. App. 2015) .................................................................................................................. 5 In re Homestore.com, Inc. Securities Litigation, 347 F.Supp.2d 769 (C.D. Cal. 2004) ................. 16 International Marine Underwriters v. ABCD Marine, LLC, 179 Wash.2d 274 (2013) .................... 4 LA Printex Industries, Inc. v. Belk, Inc., 2011 WL 13213606 (C.D. Cal.) ....................... 1, 9, 11, 13 Linden v. X2 Biosystems, Inc., 2018 WL 2129729 (W.D. Wash. 2018) ........................................... 4 Lynott v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 123 Wash. 2d 678 ....................................... 5 Maljack Productions, Inc. v. Goodtimes Home Video Corp., 81 F.3d 881 (9th Cir. 1996) ............. 16 MGM Studios, Inc. v. Grokster, 454 F.Supp.2d 966 (CD Cal. 2006) ....................................... 16, 17 Northwest Land & Investment, Inc. v. New West Federal Savings and Loan Association, 786 P.2d 324, (Wash. App. 1990) ................................................................................................................ 3 Security State Bank v. Burk, et al., 995 P.2d 1272, 1277 (Wash. App. 2000) ............................ 7, 13 Syrovy v. Alpine Resources, Inc., 841 P.2d 1279 (Wash. App. Div. 3 1992), aff'd, 859 P.2d 51 (Wash. 1993) ................................................................................................... 6 Valve Corp. v. Sierra Ent. Inc., 431 F. Supp. 2d 1091 (W.D. Wash. 2004) ................................... 14 Wm. Dickson Co. v. Pierce Cnty., 128 Wash.App. 488, 116 P.3d 409 (2005) ................................. 5 Zenwork, Inc. v. Avalara, Inc., 2017 WL 4167986 (W.D. Wash. 2017) ...................................... 4, 5 Rules F.R.E. 801(d)(2) .............................................................................................................................. 17 F.R.E. 901(a) ................................................................................................................................... 15 Washington Pattern Civil Jury Instruction 303.01 ............................................................................ 3 Regulations WAC § 284-30-393 ........................................................................................................................... 2 Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 3 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 1 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 INTRODUCTION Hynix’s Motions are carefully tailored to ignore and/or misconstrue the facts and the law, so that Hynix might obtain inappropriate, favorable pre-trial rulings from the Court substantially beyond the intended boundaries of a Motion In Limine. More importantly, many of these Motions are improper attempts to have the Court adjudicate, as a matter of law, issues of fact which are for the jury to consider when determining whether Hynix breached its contract with Microsoft. See LA Printex Industries, Inc. v. Belk, Inc., 2011 WL 13213606, *3 (C.D. Cal.) citing Bradley v. Pittsburgh Bd. Of Educ., 913 F.2d 1064, 1069-70 (“Unlike a summary judgment motion, which is designed to eliminate a trial in cases where there are no genuine issues of fact, a motion in limine is designed to narrow the evidentiary issues for trial and to eliminate unnecessary trial interruptions”). To be sure, Hynix literally seeks to have this Court decide the outcome of this factually based breach of contract action by way of its Motions in Limine.1 As explained and supported below, Hynix’s Motions In Limine should be denied in their entirety because: 1) they are contrary to and misrepresent the facts in evidence and the applicable law; 2) they seek mandates from the Court beyond the permissible scope of a Motion In Limine; and 3) they would eviscerate the role of the jury by making this Court the sole arbiter of the facts and the law in this case. 1. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR MICROSOFT DAMAGES EXCEEDING $150 MILLION As acknowledged by Hynix in its Motion, Cypress is seeking damages of $175,000,000, not $150,000,000. This amount is comprised of the $150,000,000 in policy benefits paid to Microsoft and Microsoft’s $25,000,000 deductible pursuant to the policy. This is not disputed by 1 Hynix’s Motions In Limine stand in stark contrast to the Motions In Limine filed by Cypress. On their face, all of Cypress’ Motions are specifically crafted to merely narrow issues to be addressed before the jury at trial; none of them seek to have the Court unilaterally adjudicate any genuine issue of material fact reserved for the jury. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 4 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 2 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 the Parties (See Hynix’s Motions In Limine, P. 1), and Cypress’ pursuit of Microsoft’s $25,000,000 deductible is in accordance with, and indeed required by, Washington law.2 Accordingly, damages evidence in excess of $150,000,000 is directly relevant and admissible to Cypress’ claim in excess of that amount for damages of $175,000,000. Hynix also argues that evidence of Microsoft’s total damages, which were well in excess of $150,000,000, is irrelevant and prejudicial because it would somehow confuse the jury into making an unfair damages award in Cypress’ favor. Hynix is mistaken. The facts and law are that Cypress may only recover up to $175,000,000. The Jury will be instructed on the extent of Cypress’ subrogation rights up to but not exceeding that amount. Accordingly, there will be no danger of any potential unlawful or unfair damage award. In addition, evidence of the full amount of damages sustained by Microsoft in excess of $175,000,000 is necessary to present all of the facts for the jury to consider. Such evidence is particularly necessary and appropriate to be presented to the jury because Hynix insists (wrongfully so) on pursuing a defense that Cypress did not properly investigate and adjust Microsoft’s loss. Further, the relief requested by Hynix in its Motion would place an undue and unrealistic burden on Cypress and its witnesses and would only serve to confuse the jury on the issue of damages by giving an incomplete picture of all of the relevant evidence. Lastly, Hynix wrongly argues that allowing evidence of the full extent of damages sustained by Microsoft would create undue burden and delay at trial because it would require presentation of “a number of reinsurance witnesses, claims files and review of underlying support 2 As set forth in Cypress’ Reply in Support of its Motion for Partial Summary Judgment (ECF No. 157), Cypress is obligated to seek recovery from Hynix for the deductible of Microsoft pursuant to Washington regulation. See WAC § 284-30-393; see also Daniels v. State Farm Mut. Automobile Ins. Co., 421 P.3d 996 (Wash. App. Div. 1 2018). Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 5 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 3 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 for such figures.”3 Cypress will not require a multitude of witnesses in addition to the fact and expert witnesses Cypress will be presenting in order to establish the full amount of its damages. The same damage witnesses and evidence that support a claim for damages up to $175,000,000 establish the amount of damages sustained by Microsoft. As such, Hynix’s Motion In Limine No. 1 should be denied. 2. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR MICROSOFT DAMAGES INCURRED AFTER JANURARY 1, 2014 Cypress’ claim is for breach of contract based upon Hynix’s multiple breaches of the Component Purchase Agreement and its Ninth Amendment. (ECF No. 34). To the extent that those same breaches of contract, which occurred in 2013, continued to result in damages in 2014, Cypress is entitled to pursue and present evidence at trial in support of all such damages naturally accruing from the breaches of contract. See Northwest Land & Investment, Inc. v. New West Federal Savings and Loan Association, 786 P.2d 324, 329-30 (Wash. App. 1990); see also Washington Pattern Civil Jury Instruction 303.01. In fact, Cypress’ damage expert, William Bradshaw, will address Cypress’ damages under three different scenarios, one of which is based upon the total number of chips referenced in Microsoft’s pre-loss forecasts to Hynix through January 2014 for total damages of approximately $154,298,973. (ECF No. 173-3, Bradshaw Rep. Sch. 1, P. 3 of 69). Evidence of the full amount of damages sustained by Microsoft, which extended into 2014, is necessary to present all of the relevant facts for the jury to consider, rather than artificially dissected or segregated evidence of damages based upon the random and self-serving January 1, 2014 deadline promulgated by Hynix. 3 Hynix’s position is ironic since it is Hynix who is compelling the introduction of reinsurance-based evidence at trial by pursuing its legally unsound arguments that Cypress lacks standing and was a voluntary payor of Microsoft’s insured loss. Given Hynix’s argument of undue burden and delay at trial, Cypress fully expects that Hynix will enter into whatever stipulation(s) is necessary and reasonable for the parties to minimize the presentation of reinsurance evidence at trial in the interests of expediency and efficiency, while concurrently preserving for Cypress the fair opportunity to meet its burden on proof in its Case In Chief. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 6 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 4 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 Granting Hynix’s Motion would also place an undue and unrealistic burden on Cypress and its witnesses, and would only serve to confuse the jury on the issue of damages by giving an incomplete picture of all of the relevant evidence. As set forth above, Cypress’ damage expert, Mr. Bradshaw, will address Cypress’ damages under three different scenarios and will discuss 2014 damages because they were part of the insurance loss adjustment and will explain and support why Cypress justifiably paid $150,000,000 pursuant to the policy. See id. Because evidence of 2014 damages is both relevant and necessary for the jury to fully and properly consider the issue of Cypress’ damages, this Motion should be denied. 3. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR DICTIONARY DEFINITIONS OF “PRIORITY” Hynix’s Motion is based upon a fundamentally flawed assumption that the jury will be considering evidence on what the term “priority” meant in § 4.2 in the Microsoft-Hynix Component Purchase Agreement. is not defined in the Agreement. Contract interpretation is a question of law. Zenwork, Inc. v. Avalara, Inc., 2017 WL 4167986, *2 (W.D. Wash. 2017). The Washington Supreme Court set forth the contractual interpretation rules in International Marine Underwriters v. ABCD Marine, LLC, 179 Wash.2d 274 (2013). During the interpretation process, “a court’s primary goal is to ascertain the parties’ intent at the time they executed the contract.” Id. at 282. Washington follows the “objective manifestation theory” of contract interpretation, under which determining the parties’ intent begins with a focus on the reasonable meaning of the contract language. Linden v. X2 Biosystems, Inc., 2018 WL 2129729, *4 (W.D. Wash. 2018). To determine this intent, courts should consider “only what the parties wrote, giving words in a contract their ordinary, usual, and popular meaning unless the agreement, as a whole, clearly demonstrates a contrary intent.” Grant County Port District No. 9 v. Washington Tire Corp., 187 Wash.App. 222, 233, 349 P.3d 889 (Wash. Ct. App. 2015). Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 7 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 5 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 The fact that a term is undefined or subject to two different meanings does not automatically render a provision ambiguous. Wm. Dickson Co. v. Pierce Cnty., 128 Wash.App. 488, 493-94, 116 P.3d 409 (2005). Dictionary definitions are often used by courts to assist in contract interpretation, and in some cases courts even take judicial notice of such definitions, so as to give words in a contract their ordinary, usual and popular meaning. See Zenwork, Inc. v. Avalara, Inc., 2017 WL 8727856, *1 (W.D. Wash. 2017), citing Lynott v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 123 Wash. 2d 678, 692; see also Wm. Dickson Co. v. Pierce Cty., supra. at 493; see also Delgado v. United Facilities, Inc., 2012 WL 10717266, *4-5 (E.D. Cal.); see also Discovery Property and Casualty Ins. Co. v. Blair, 2014 WL 4412339, 7-8(C.D. Cal.). Accordingly, contrary to Hynix’s Motion, the jury will not be considering evidence regarding the intent of the parties with respect to the term in § 4.2 of the Component Purchase Agreement. That is a matter for the Court to consider and is one of the subjects of the Parties’ pending Motions for Summary Judgment. Moreover, to the extent that Hynix is permitted to introduce evidence at trial of the alleged intent of its witnesses relating to the term “priority” allocation in Section 4.24, Cypress should be permitted to introduce contra evidence including, but not limited to, dictionary definitions of the term “priority” (ECF No. 186 Exs. 5 & 6), in order to properly give the words in the Component Purchase Agreement their ordinary, usual and popular meaning. As such, Hynix’s Motion In Limine should be denied. 4. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR THE CAUSE OF THE WUXI FIRE 4 Hynix implies that it will attempt to introduce such evidence of intent at trial by citing selected testimony from its representative Paul Palonsky as to what the parties allegedly intended. Significantly, Hynix only cites to its representative and ignores contrary testimony from Microsoft on what “priority” meant. (ECF No. 155-1, Dep. of Terry King (Exhibit A), p. 69:2-5; Ex. A, Dep. of Arnon Kraft, P. 37:23-38:12; Ex. B, Dep. of Antonio Storniolo, P. 31:6-32:4). Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 8 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 6 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 While Cypress has not asserted a claim of breach of contract or negligence against Hynix for causing or contributing to the fire, Hynix has asserted defenses such as commercial impracticability and commercial reasonableness which make the circumstances of the cause of the fire relevant. The cause of the fire as acknowledged by Hynix’s expert, Jason McAlexander, and as set forth in the official fire report by the investigating authority, was the improper purging of a piping system at the Wuxi facility using flammable hydrogen gas rather than nitrogen gas. (Ex. C, McAlexander Dep. 98:6-100:21; ECF No. 158.1 Ex. F, Fire Report). These facts are not disputed by the Parties and are directly relevant and admissible to counter Hynix’s defense that its failure to meet its contractual obligations was excused by the doctrine of commercial impracticability.5 The defense of impracticability applies to excuse performance if an event is not foreseen or anticipated – a “wholly unexpected contingency”. Syrovy v. Alpine Resources, Inc., 841 P.2d 1279, 1283 (Wash. App.1992), aff'd, 859 P.2d 51 (Wash. 1993). The facts regarding the cause of the fire are directly relevant to establish that it was not a “wholly unexpected contingency” such as one caused by a freak act of nature or Act of God. Fires at manufacturing facilities are not “wholly unexpected contingencies”, and the facts regarding the cause of the fire due to operational error by plant personnel make that abundantly clear. See id. Indeed, the parties contemplated events such as fires in the Agreement and Ninth Amendment. (ECF 155.1, Ex. C, ¶12.1). This is especially evident given that Hynix’s own expert, Jason McAlexander, acknowledged the use of various hazardous gases in the fabrication process which present, among other things, risk of fire and explosion. (Ex. C, McAlexander Dep. P. 98:6 – 100:21). The facts surrounding the cause of the fire are relevant to Hynix’s defense that it acted in a commercially reasonable manner. Commercial reasonableness is a question of fact for the jury. 5 Cypress is willing to not contest this Motion In Limine if Hynix will dismiss its commercial impracticability defense (which is legally baseless) and its commercial reasonableness defense (which is factually baseless). Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 9 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 7 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 Security State Bank v. Burk, et al., 995 P.2d 1272, 1277 (Wash. App. 2000). As such, the jury should consider all of the facts surrounding the cause of the fire to determine whether Hynix’s conduct was commercially reasonable. This is particularly true given that an important issue in the case is whether Hynix timely and properly advised its customers, including Microsoft, about the true severity and impact the fire had on Hynix’s production capabilities. Hynix also argues that introduction of the undisputed facts regarding the cause of the fire will somehow prejudice it by focusing the jury on the question of whether Hynix is at fault for causing the fire. Cypress is not alleging any negligence claim against Hynix and it is not basing any of its multiple breaches of contract allegations upon Hynix causing or contributing to causing the fire. The jury will therefore not be deciding any issue of fault by any person or party for causing or contributing to the fire. Accordingly, Hynix’s Motion should be denied. 5. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR HYNIX’S ABILITY TO CONVERT 2133 SPEED GRADE CHIPS TO LOWER SPEED GRADES (e.g., 1866, 1600), AND VICE VERSA Hynix seeks to bar evidence that it had the ability to “convert” 2133 speed DRAM chips to lower speed chips, such as 1866 or 1600 speed DRAM chips and vice versa, and cites a lone deposition excerpt from its corporate representative Richard Chin who testified that it is not possible to “convert” DRAM chips in this manner. The Motion is baseless. First, Hynix has made glaring admissions to the contrary. For example, Mr. Chin himself admitted that “. . . there isn’t much difference in yield between 2133 and 1866 . . . the issue isn’t about bin portions on 1866 or 2133. Rather it’s about allocation.” (Ex. D, Dep. Ex, 28; see also Ex. B, Dep. of A. Storniolo P. 83:15-84:24). Additionally, Hynix admitted via letter by its counsel dated March 27, 2018 that over of DRAM chips produced were 2133 chips. As such, Hynix admitted that it produced more than sufficient 2133 DRAM chips to meet all of Microsoft’s orders. Instead, Hynix Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 10 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 8 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 allocated these chips as 1866 and/or 1600 speed chips to fetch higher prices and more profit for Hynix in breach of its contract with Microsoft. (See ECF No. 183.1, Ex. 6, Dep. Exhibit 58; see also ECF No. 173-7, Penn Rep. pp. 11-12; see also ECF No. 183.1, Ex. 4, Penn Supp. Dec. ¶¶ 3-5; see also ECF No. 173-8 Penn Supp. Rep. pp 8-9; see also ECF No. 183.1, Ex. 7, P. Palonsky 30(b)(6) Dep. pp. 92:9-95:25; see also ECF No. 160-3, Ex. 3, McAlexander Rep. ¶¶ 89-92; see also ECF No. 183.1, Ex. 1, Bradshaw Dec. ¶¶ 14-21; see also ECF No. 173-5, Bradshaw Rep. Schedule 5; see also Exhibits D – I, Dep. Exhibits 20, 28, 46, 75, 77 & 96; see also Ex. J, Dep. of Seung Wook Jeong, P. 135:10-136:2; see also Ex. K, Dep. of R. Chin, P. 106:4-107:22, 185:16- 187:17; see also Ex. L, Dep. of N. Taluja, P. 98:8-104:1, 116:15-119:1; see also Ex. B, Dep. of A. Storniolo, P. 83:15-84:24; see also ECF No. 183.1, Ex. 8, Dep. of S. Lee pp. 74:25-75:3, 77:5-22). The production and sales data from Hynix based upon its yield data for 2133 DRAM shows that Hynix produced approximately million 2133 DRAM chips in 2013, but elected to sell most of these to other customers as 1600 or 1866 lower grade devices at a significantly higher price rather than fulfill Microsoft’s orders for 2133 speed DRAM chips which were far less than the million 2133 DRAM chips produced. See id. Secondly, Hynix’s Motion completely misconstrues the facts and is an improper attempt to have the Court adjudicate as a matter of law what an issue of fact for the jury to consider when determining whether Hynix breached its contract with Microsoft. Cypress is not arguing that Hynix had the ability to physically “convert” or magically physically transform DRAM chips of one speed to another speed. Rather, Cypress is arguing, based upon a plethora of facts and opinion evidence in the record as well as industry custom and practice, that DRAM chips of a certain speed 2133 were categorized or “binned” by Hynix as lower speed chips of 1866 or 1600 Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 11 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 9 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 so that Hynix could sell them to other customers at higher prices.6 Indeed, Hynix’s own internal email correspondence support that this is exactly what Hynix did in order to maximize its profits rather than to fulfill its contractual obligations to Microsoft by giving it priority allocation of DRAM chips to satisfy Microsoft’s orders for 2133 chips. (See Exhibits D – I, Dep. Exhibits 20, 28, 46, 75, 77 & 96; Ex. J, Dep. Seung Wook Jeong, P. 135:10-136:2; Ex. K, Dep. of R. Chin, P. 106:4-107:22, 185:16-187:17). Hynix next concludes that such evidence is irrelevant without providing a reasonable explanation. The simple and unassailable fact is that evidence establishing that Hynix binned 2133 DRAM chips as 1866 or 1600 so that they could be sold to other customers at higher prices goes directly to the heart of the matter of whether Hynix breached its contract with Microsoft, and is also directly relevant to Hynix’s commercial reasonableness defense. This is a quintessential issue of material fact for the jury to resolve, not for the Court to determine in a Motion In Limine. Cypress is entitled to present fact and expert testimony and documentary evidence in support of its allegations so that the jury can properly decide whether Hynix breached its contract with Microsoft. Hynix’s Motion In Limine is an attempt to circumvent the law and have the Court effectively adjudicate this critical factual issue as a matter of law. See LA Printex Industries, 2011 WL 13213606 at *3 (C.D. Cal.). 6. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR HYNIX’S ALLOCATION OF DRAM CHIPS TO OTHER CUSTOMER Similar to its immediately prior Motion In Limine, Hynix argues that evidence of Hynix’s allocation of DRAM chips to its customers other than Microsoft is irrelevant. Again, Hynix is 6 In the manufacture of DRAM chips, there is always a spread in the various chip characteristics even though they originate from the same source or die. (See ECF No. 173-7, Penn Rep., pp 10-11). The selection process by which the chips are graded for their performance characteristics such as speed is called “binning”. Id. The binning or selection process is such that higher performing parts can always be ‘downgraded’ or categorized for use as lower speed devices. Id. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 12 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 10 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 mistaken as to what is or is not factually relevant to Cypress’ breach of contract claim. Cypress’ claim for breach of contract contains many allegations of breach of the Component Purchase Agreement and Ninth Amendment, including allegations that Hynix failed to accord Microsoft priority status and to allocate all of its available 2133 DRAM chips to Microsoft. Numerous facts and expert opinions in the record and industry custom and practice show that 2133 DRAM chips were “binned” by Hynix as lower speed chips of 1866 or 1600 so that Hynix could sell them to other customers at higher prices.7 Hynix’s internal email correspondence support that this is exactly what Hynix did to maximize its profits rather than to fulfill its contractual obligations to Microsoft by giving it priority allocation of DRAM chips to satisfy Microsoft’s orders for 2133 chips. See id. This is also demonstrated by production and sales data which establish that Hynix produced approximately million 2133 DRAM chips in 2013 but elected to sell most of these to other customers as 1600 or 1866 lower grade devices at a significantly higher price. See id. Evidence of chips Hynix allocated to its customers other than Microsoft and in what manner bears directly on the factual issue of whether Hynix could have provided Microsoft with a quantity of 2133 DRAM chips sufficient to meet Microsoft’s orders pursuant to the terms of the contract. Hynix further argues that the jury would be confused by considering such evidence because it may believe Hynix’s manner of allocating chips to one customer should have applied to Hynix’s allocation of chips to Microsoft, without the jury having knowledge of the other customers’ DRAM chip supply agreements with Hynix. Hynix’s argument lacks support, and once again invades the province of the jury by asking the Court to adjudicate a genuine issue of 7 See ECF No. 183.1, Ex. 6, Dep. Exhibit 58; see also ECF No. 173-7, Penn Rep. pp. 11-12; see also ECF No. 183.1, Ex. 4, Penn Supp. Dec. ¶¶ 3-5; see also ECF No. 173-8 Penn Supp. Rep. pp 8-9; see also ECF No. 183.1, Ex. 7, P. Palonsky 30(b)(6) Dep. pp. 92:9-95:25; see also ECF No. 160.3, Ex. 3, McAlexander Rep. ¶¶ 89-92; see also ECF No. 108.1, Ex. 1, Bradshaw Dec. ¶¶ 14-21; see also ECF No. 173-5, Bradshaw Rep. Schedule 5; see also Exhibits D – I, Dep. Exhibits 20, 28, 46, 75, 77 & 96; see also Ex. J, Dep. of Seung Wook Jeong, P. 135:10-136:2; see also Ex. K, Dep. of R. Chin, P. 106:4-107:22, 185:16-187:17; see also Ex. L, Dep. of N. Taluja, P. 98:8-104:1, 116:15-119:1; see also Ex. B, Dep. of A. Storniolo, P. 83:15-84:24; see also ECF No. 108.1, Ex. 8, Dep. of S. Lee pp. 74:25-75:3, 77:5- 22. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 13 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 11 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 material fact that goes to the heart of Hynix’s liability to Microsoft for breach of contract via a Motion In Limine. The issue of whether Hynix complied with the priority allocation provision in its contract with Microsoft must be determined by examining some of the most important facts relevant to that issue – namely, did Hynix give Microsoft the priority it was promised. If every customer had priority, then no customer had priority. Contrary to Hynix’s argument, the jury need not have full knowledge of all of the terms of Hynix’s other customers agreements in order to make a determination of whether Hynix fulfilled the terms of its contract with Microsoft.8 Hynix’s Motion should be denied as yet another thinly veiled attempt to have the Court adjudicate the factual issue of whether Hynix breached its contract as a matter of law. See LA Printex Industries, 2011 WL 13213606 at *3. 7. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR CUSTOMERS WHO DID NOT PURCHASE 2133 SPEED GRADE CHIPS FROM HYNIX IN 2013 This Motion is simply a variation on the two prior, flawed Motions and ignores the relevant facts. Cypress alleges that Hynix failed to give Microsoft priority status and allocate all of its supply of 2133 DRAM chips to Microsoft in violation of the Component Purchase Agreement and Ninth Amendment. These allegations are at the crux of Cypress’ breach of contract claim. Directly relevant and in support of these allegations are numerous facts, expert opinions and industry custom and practice (identified in the previous two sections including footnote 7) which show that 2133 DRAM chips, which could have been provided to Microsoft to fulfill all of its orders, were “binned” by Hynix as lower speed chips of 1866 or 1600 so that Hynix could sell them to other customers at higher prices. Hynix’s internal email correspondence support that this 8 However, Cypress submits that limited evidence of the provisions in Hynix’s other customers’ chip supply contracts is directly relevant and admissible as to the issue of Hynx’s breach of contract in this case. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 14 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 12 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 is exactly what Hynix did to maximize its profits rather than to fulfill its contractual obligations to Microsoft by giving it priority allocation of DRAM chips to satisfy Microsoft’s 2133 chip orders. See id. This is also reflected in production and sales data, which establish that Hynix produced approximately million 2133 DRAM chips in 2013, a portion of which could have been shipped to Microsoft to fulfill all of Microsoft’s orders which are the subject of this lawsuit, but elected to sell most of these to other customers as 1600 or 1866 lower grade devices at a significantly higher price. See id. Evidence showing that Hynix sold chips of speeds other than 2133, such as 1600 or 1866, to its other customers, when Cypress alleges and can prove that Hynix produced more than sufficient 2133 grade chips to fulfill all of Microsoft’s orders, is directly relevant to the issue of whether it provided Microsoft with all of Hynix’s 2133 DRAM chips pursuant to the terms of the Component Purchase Agreement and the Ninth Amendment. Hynix once again regurgitates its tired argument that the jury would be confused by such evidence because it may believe Hynix’s manner of allocating chips to one customer should be applied to Hynix’s method of allocating chips to Microsoft. Hynix refers specifically to and argues that evidence of provision in its contract with Hynix, which required that be provided its product before any other Hynix customer in the event of a capacity constraint, is not relevant because they are different agreements with different products produced at a separate facility. Hynix’s argument is not persuasive because these are critical issues of fact for the jury to decide at trial, not for the Court to adjudicate via a Motion In Limine. The issue of whether Hynix complied with the priority allocation provision in its contract with Microsoft must be resolved by collectively examining some of the most important facts relevant to that issue – namely, how did Hynix treat Microsoft as to DRAM chip allocation in relation to its other customers, including but Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 15 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 13 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 not limited to , given the express wording of Microsoft’s provision in the contract. Moreover, Hynix’s selective cite to its corporate representative’s deposition wherein Mr. Chin claimed that the Wuxi plant did not make DRAM for is misleading. During that same line of questioning, Mr. Chin Hynix admitted that Wuxi did make some DRAM for . (Ex. K, Dep. of R. Chin, P. 163:14-18; P. 198:23-200:18). Once again, Hynix seeks to have the Court adjudicate the factual issue of whether Hynix breached the priority allocation provision of its contract as a matter of law which is improper. See LA Printex Industries, 2011 WL 13213606 at *3. Therefore, Hynix’s Motion In Limine should be denied. 8. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR WHETHER HYNIX WAS A “LAUNCHING PARTNER” OR SOLE SUPPLIER TO MICROSOFT Whether Hynix was a launch partner and/or sole supplier to Microsoft for 2133 DRAM for the rollout or launch of the Xbox One is highly relevant to whether Hynix exercised commercially reasonable efforts to supply 2133 DRAM to Microsoft following the fire. Whether a party acts commercially reasonable is a factual inquiry necessarily dependent upon all of the facts and circumstances surrounding the Parties and their business relationship. See, e.g., Security State Bank v. Burk, et al., 100 Wash. App. 94, 101, 995 P.2d 1272, 1277 (2000). In this case, Hynix knew prior to the fire that it was the sole supplier of 2133 DRAM to Microsoft and its goal as early as February 2013 was to become a launching partner for the Xbox One. (Ex. M, Dep. of S. Kaye, P. 32:21-33:20, P. 34:8-12; Ex. N, Dep. Ex. 162, p. 7). Whether Hynix acted commercially reasonably in its efforts to supply DRAM chips to Microsoft following the fire must be examined against the totality of the factual circumstances, including whether Hynix was a launch partner and/or a sole supplier to Microsoft, as well as with due consideration of other factors such as Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 16 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 14 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 , buffer inventory and the Disaster Recovery Plan, all of which were express obligations owed by Hynix to Microsoft pursuant to contract. See id. Finally, the facts that Hynix was the sole supplier of 2133 DRAM chips and was a launch partner with Microsoft will not improperly confuse the jury into holding Hynix to a higher standard. The jury will be instructed, according to the law and terms of the Component Purchase Agreement and the Ninth Amendment, and the instructions will not include any allegedly heightened contractual standard of care as implied by Hynix. Hynix was required to use commercially reasonable efforts to supply Microsoft with 2133 DRAM chips per Microsoft’s orders, and whether Hynix did so is a highly factual inquiry to which these two facts are directly relevant and necessary. Accordingly, Hynix’s Motion In Limine should be denied. 9. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR MICROSOFT’S INCIDENTAL DAMAGES SUCH AS EXPEDITED SHIPPING COST AND LABOR COST Cypress is entitled to recover from Hynix for incremental freight charges as well as other miscellaneous costs because those damages flow directly from Hynix’s breaches of contract, as explained at length at Pages 18-22 of Cypress’ Response to Hynix’s Motion for Summary Judgment (ECF No. 168) which Cypress expressly incorporates herein. Washington has defined “general damages” (in contrast with incidental or consequential damages) as those that “flow naturally from the breach of a contract.” Valve Corp. v. Sierra Ent. Inc., 431 F. Supp. 2d 1091, 1101 (W.D. Wash. 2004). The general measure of damages for a breach of contract action entitles the injured party “(a) to recovery of all damages that accrue naturally from the breach, and (b) to be put into as good a position pecuniarily as it would have been had the contract been performed.” Id. at 1101; Diedrick v. Sch. Dist. 81, 555 P.2d 825, 833 Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 17 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 15 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 (Wash. 1976). In Valve Corp., the Court found that lost profits were general or direct damages not barred by a contractual limitation of liability provision. Here, the incremental freight charges and miscellaneous costs flow naturally from Hynix’s breaches of contract. Hynix knew time was of the essence. When Hynix failed to timely supply the chips Microsoft ordered, Microsoft was forced to incur additional air freight charges and miscellaneous costs to support its holiday Xbox One shipment requirements. Had Hynix honored the contract, Microsoft would not have been forced to incur these costs to timely complete its shipments. As stated above, the general measure of damages for breach of contract actions entitles the injured party to be put into as good a position as it would have occupied had the contract been performed. Recovering the extra freight costs would put Microsoft in the same position it would have been in had Hynix performed pursuant to the Agreement. Accordingly, Cypress is able to recover incremental freight costs and other miscellaneous costs which are not precluded by Section 14.6 of the Component Purchase Agreement. Moreover, the limitation of liability provision relied upon by Hynix is also invalid as a matter of law because it is unconscionable. As set forth at length in Cypress’ Opposition to Hynix’s Motion for Summary Judgment (ECF No. 168, pp. 19-21), which Cypress expressly incorporates herein, Hynix’s knowing, repeated misrepresentations and/or bad faith conduct toward Microsoft rendered the limitation of liability provision unconscionable, thereby negating the limitation of liability. Accordingly, Hynix’s Motion In Limine should be denied. 10. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR ANY EVIDENCE LACKING AUTHENTICITY OR FOUNDATION – DEP EXHIBITS 66, 67, 90, 162 & 165 Authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 18 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 16 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 See F.R.E. 901(a); see also MGM Studios, Inc. v. Grokster, 454 F.Supp.2d 966, 971-975 (CD Cal. 2006). Authentication can be accomplished by judicial admission, such as a stipulation or production of the items at issue in response to a discovery request. See id. [emphasis added] citing Maljack Productions, Inc. v. Goodtimes Home Video Corp., 81 F.3d 881, 889 fn. 12 (9th Cir. 1996)(authentication met where documents at issue were produced in discovery and offered by party opponent) & In re Homestore.com, Inc. Securities Litigation, 347 F.Supp.2d 769, 781 (C.D. Cal. 2004). In this case, deposition exhibits 66, 67, 90 and 162 were all produced by Hynix in discovery in response to requests for production and are clearly Hynix generated documents as evidenced by Hynix’s customer or product numbering, data, logo and/or name on the documents.9 As such, they are properly authenticated and admissible under long standing 9th Circuit law. See, e.g., MGM Studios, Inc., 454 F.Supp.2d at 974-75 (documents such as emails, business plans and PowerPoint presentations produced by party met authentication requirement and were admissible).10 Accordingly, Hynix’s Motion In Limine should be denied. 11. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR INTERNAL HYNIX COMMUNICATIONS COMMENTING ON ITS PERFORMANCE UNDER THE NINTH AMENDMENT A quote from Hynix’s own Motion clearly establishes the untenability of its position: “Hynix’s internal communications during that time reflect a company scrambling to understand the scope of the supervening disaster, and figuring out - through frank and sensitive discussion - how best to serve their customers despite the catastrophe.” (emphasis added). 9 See Ex. O, Exhibit 66 (SKHA464); Ex. P, Exhibit 67 (SKHA424); Ex. Q, Exhibit 90 (SKHA23439-SKHA23451) & Ex. N, Exhibit 162 (SKHA21695-21703); see also Ex. R, Dep. of P. Palonsky, P. 184:4-186:1). 10 The remaining deposition exhibit 165 is a document not authored by Hynix and consists of a slide show presentation at the SEMICON West Manufacturing Forum on July 15, 2015, regarding the Wuxi fire including relevant photographs of the damage to the facility and a causation section consistent with what the Parties agree was the root cause of the fire – improper purging of piping with flammable hydrogen rather than nitrogen. Exhibit S, Dep. Exhibit 165. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 19 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 17 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 There is scarcely anything more relevant to Cypress’ breach of contract claim against Hynix than “frank” discussions or communications by Hynix regarding its contractual obligations to Microsoft and the extent of Hynix’s performance or lack thereof of those obligations. Because those communications destroy Hynix’s defenses to Cypress’ breach of contract claim, Hynix calls for their preclusion at trial as they present “an unacceptably high risk of prejudicing Hynix.” However, just because evidence is unfavorable (or even highly unfavorable) to a party does not provide a sound basis for its preclusion at trial. Hynix’s internal, self-critical communications are prime examples of party admissions, which are clearly admissible at trial. See F.R.E. 801(d)(2); see also MGM Studios, Inc. v. Grokster, 454 F.Supp.2d 966, 974-975 (CD Cal. 2006).11 Hynix claims that because Microsoft was not copied on internal communications at Hynix those communications are immaterial and inadmissible. Hynix cites no legal support for its argument. To the contrary, the fact that Hynix did not copy Microsoft on many of those communications is highly material and relevant, because it supports Cypress’ breach of contract claim, as well as Cypress’ counter to Hynix’s limitation of liability defense based on Hynix’s misrepresentations to Microsoft. Moreover, Hynix is trying to prevent the jury from seeing, hearing, and considering key evidence directly relevant to how Hynix conducted itself as to the performance of its contractual obligations to Microsoft. According to Hynix’s position, the only relevant evidence is the misleading reports it conveyed to Microsoft downplaying the severity and impact of the fire on chip production known to Hynix alone, while Hynix “scrambled” in the wake of the fire without, among other things, the contractually required buffer inventory or the Disaster Recovery Plan to support Microsoft’s orders. This Motion amounts to nothing more than yet 11 These internal communications address, among many other things, Hynix’s conduct in continuing to accept and not reject Microsoft’s purchase orders despite Hynix’s knowledge that it could not or would not fulfill these orders. Contrary to Hynix’s assertion that its state of mind, reflected in its internal communications, is not relevant to any issue in the case, these communications provide exactly the type of information a jury should consider in determining whether Hynix breached its contract with Microsoft - the prime issue in the case. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 20 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 18 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 another improper attempt by Hynix to try to convince the Court to withhold evidence from the jury that is relevant to deciding ultimate genuine issues of material fact. As a result, the Motion should be denied. 12. CYPRESS’ OPPOSITION TO HYNIX’S MOTION IN LIMINE TO BAR BELATEDLY DISCLOSED WITNESSES Hynix argues that Cypress improperly disclosed eleven reinsurance witnesses on July 30, 2018 - three months after the original fact discovery cutoff of May 14, 2018. However, what Hynix fails to acknowledge in its inaccurate timeline is that on April 30, 2018, the Court extended the fact discovery deadline to October 15, 2018. (ECF No. 38). Thus, contrary to what Hynix claims in its Motion, Cypress supplemented its initial disclosures 75 days before the fact discovery deadline – more than enough time for Hynix to depose any of the reinsurance witnesses if it chose to do so. Moreover, these witnesses were identified timely in response to Hynix’s defense that Cypress and its reinsurers failed to conduct an adequate investigation and are voluntary payors. Lastly, other fact discovery, including written discovery propounded by Hynix, proceeded after the Mary 14, 2018 “deadline” set forth in Hynix’s Motion. Hynix chose to never inquire about deposing any of these witnesses and also never objected regarding Cypress’ supplemental disclosure. Hynix should not be permitted to bar Cypress’ reinsurance witnesses, who were disclosed within the applicable fact discovery deadlines allowing ample time (75 days) for Hynix to conduct their depositions.12 Accordingly, Hynix’s Motion In Limine should be denied. CONCLUSION WHEREFORE, Cypress requests that Hynix’s Motions In Limine be denied in their entirety. 12 Hynix twists the facts and deadlines to come up with the false conclusion that Cypress gave roughly one month to Hynix to depose the additional reinsurance witnesses. The Court ordered fact discovery to be extended to October 15, 2018. Cypress supplemented its initial disclosure on July 30, 2018, thereby leaving 75 days prior to the fact discovery cutoff. Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 21 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 19 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 DATED this 28th day of January, 2019. COZEN O’CONNOR By: /s/ Mark S. Anderson Mark S. Anderson, WSBA 17951 999 Third Avenue Suite 1900 Seattle, WA 98104 Telephone: 206.340.1000 Toll Free Phone: 800.423.1950 Facsimile: 206.621.8783 Email James B. Glennon (Pro Hac Vice) George D. Pilja (Pro Hac Vice) FORAN GLENNON PALANDECH PONZI & RUDLOFF PC 222 North LaSalle Street, Suite 1400 Chicago, Illinois 60601 Phone: (312) 863-5000 Facsimile: (312) 863-5099 Email: jglennon@fgppr.com Email: gpilja@fgppr.com Diana R. Lotfi (Pro Hac Vice) FORAN GLENNON PALANDECH PONZI & RUDLOFF PC 450 Newport Center Drive, Suite 630 Newport Beach, California 92660 Phone: (949) 791-1060 Facsimile: (949) 791-1070 Email: dlotfi@fgppr.com Attorneys for Plaintiff Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 22 of 23 CYPRESS’ OPPOSITION TO HYNIX’S MOTIONS IN LIMINE 20 LAW OFFICES OF COZEN O’CONNOR A PROFESSIONAL CORPORATION 999 THIRD AVENUE SUITE 1900 SEATTLE, WASHINGTON 98104 (206) 340-1000 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 CERTIFICATE OF SERVICE I hereby certify that on this day I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Alex A. Baehr, WSBA No. 25320 Summit Law Group PLLC 315 Fifth Avenue South, Suite 1000 Seattle, WA 98104-2682 alexb@summitlaw.com Timothy B. Yoo, CA Bar No. 254332 Ekwan E. Rhow, CA Bar No. 174604 Jennifer C. Won, CA Bar No. 307807 Bird, Marella, Boxer, Wolpert, Nessim Drooks, Lincenberg & Rhow, P.C. 1875 Century Park West, 23rd Floor Los Angeles, CA 90067-2561 tyoo@birdmarella.com dchao@birdmarella.com erhow@birdmarella.com Attorneys for Defendant Dated: this 28th day of January, 2019 /s Renita Cook Renita Cook Legal Assistant Case 2:17-cv-00467-RAJ Document 191 Filed 01/28/19 Page 23 of 23