Otter Products, Llc v. H.L. Dalis Incorporated

BRIEF in Opposition to 101 MOTION to Compel Responses to Requests for Production or for Leave to Amend Pleadings

D. Colo.May 18, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:14-cv-03133-RPM FOREIGN TRADE CORPORATION d/b/a Technocel, a California corporation, Plaintiff and Counter Defendant, v. OTTER PRODUCTS, LLC, a Colorado limited liability company, Defendant and Counter Claimant, v. TESSCO TECHNOLOGIES, INC., a Delaware corporation; NITE IZE, INC., a Colorado corporation; BRIGHTSTAR CORPORATION, a Delaware corporation; and INGRAM MICRO, INC., a Delaware corporation, Defendants. _____________________________________________________________________________________________ Civil Action No. 15-cv-02575-RPM OTTER PRODUCTS, LLC, a Colorado limited liability company, Plaintiff and Counter Defendant, v. WIRELESS XCESSORIES GROUP, INC., a Delaware corporation, Defendant and Counter Claimant, v. TESSCO TECHNOLOGIES, INC., a Delaware corporation; NITE IZE, INC., a Colorado corporation; BRIGHTSTAR CORPORATION, a Delaware corporation; and INGRAM MICRO, INC., a Delaware corporation, Counter Defendants. ______________________________________________________________________________ Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 1 of 28 Civil Action No. 15-cv-02591-RPM OTTER PRODUCTS, LLC, a Colorado limited liability company, Plaintiff and Counter Defendant, v. H.L. DALIS, INC., a New York corporation, Defendant and Counter Claimant, v. TESSCO TECHNOLOGIES, INC., a Delaware corporation; NITE IZE, INC., a Colorado corporation; BRIGHTSTAR CORPORATION, a Delaware corporation; and INGRAM MICRO, INC., a Delaware corporation, Counter Defendants. ______________________________________________________________________________ DEFENDANT DISTRIBUTORS’ OPPOSITION TO THE PLAINTIFF DISTRIBUTORS’ MOTION TO COMPEL OR FOR LEAVE TO AMEND PLEADINGS ______________________________________________________________________________ Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 2 of 28 i TABLE OF CONTENTS Page I. INTRODUCTION .............................................................................................................. 1 II. RELEVANT PROCEDURAL HISTORY ......................................................................... 4 A. Plaintiff Distributors Amended the Pleadings to Add Antitrust Allegations and Assert Claims Against the Defendant Distributors Over a Year Ago ..................................................................................................... 4 B. Defendants’ Motions to Dismiss and the Service of the RFPs at Issue .................. 5 C. The Court’s Motion to Dismiss Ruling and the Parties’ Correspondence Regarding the RFPs at Issue ........................................................ 6 III. ARGUMENT ...................................................................................................................... 8 A. The Plaintiff Distributors’ Motion to Compel Should Be Denied .......................... 8 1. The Plaintiff Distributors’ “Waiver” Argument Inaccurately Represents the Facts and, in Any Event, Is Without Merit ......................... 8 2. The RFPs at Issue Are Irrelevant to the Remaining State Law Claims ....................................................................................................... 10 3. Searching for Materials Irrelevant to the Remaining Claims and Defenses Is Not Proportional to the Needs of the Litigations .................. 14 B. The Plaintiff Distributors’ Alternate Request for Leave to Amend Should Be Denied ................................................................................................. 16 1. The Plaintiff Distributors’ Request for Leave to Amend Should Be Rejected Due to Their Unexplained and Undue Delay ....................... 16 2. The Plaintiff Distributors’ Attempt to Add a Claim for Civil Conspiracy Is Futile .................................................................................. 18 3. Allowing the Plaintiff Distributors’ Untimely Amendment Would Be Prejudicial to the Defendant Distributors ................................ 19 IV. CONCLUSION ................................................................................................................. 20 Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 3 of 28 ii TABLE OF AUTHORITIES Page(s) Cases Arkansas River Power Auth. v. The Babcock & Wilcox Co., No. 14-CV-00638-CMA-NYW, 2016 WL 192269 (D. Colo. Jan. 15, 2016) .........................10 Chambers v. Mosness, No. 13-cv-393, 2015 WL 682821 (D. Colo. Feb. 17, 2015) ..............................................16, 18 Chawla v. Lockheed Martin Corp., No. 13-CV-00333-PAB-KLM, 2013 WL 5729817 (D. Colo. Oct. 18, 2013) .........................10 Echon v. Sackett, No. 14-cv-3420-PAB-NYW, 2016 WL 943485 (D. Colo. Jan. 27, 2016) ........................14, 15 Gianzero v. Wal-Mart Stores, Inc., No. 09-CV-00656-REB-BNB, 2011 WL 2683066 (D. Colo. July 8, 2011) ..............................3 Hayes v. Whitman, 264 F.3d 1017 (10th Cir. 2001) ...............................................................................................17 Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486 (Colo. 1989) .......................................................................................................18 Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937 (Cal. 2003) ...........................................................................................................16 Logan v. MGM Grand Detroit Casino, No. 4:16-CV-10585, 2017 WL 1684648 (E.D. Mich. May 3, 2017) ......................................15 Merican, Inc. v. Caterpillar Tractor Co., 596 F. Supp. 697 (E.D. Pa. 1984) ............................................................................................18 Minter v. Prime Equip. Co., 451 F.3d 1196 (10th Cir. 2006) ...............................................................................3, 16, 17, 19 Pallottino v. City of Rio Rancho, 31 F.3d 1023 (10th Cir. 1994) .................................................................................................17 Pertile v. Gen. Motors, LLC, No. 15-cv-0518-WJM-NYW, 2016 WL 1059450 (D. Colo. Mar. 17, 2016) ..........................15 Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 4 of 28 iii Pham v. Hartford Fire Ins. Co., 193 F.R.D. 659 (D. Colo. 2000) ..........................................................................................9, 10 Sackman v. Liggett Grp. Inc., 965 F. Supp. 391 (E.D.N.Y. 1997) ..........................................................................................13 Simpson v. Univ. of Colo., 220 F.R.D. 354 (D. Colo. 2004) ..............................................................................................10 Sonnino v. University of Kansas Hospital Authority, 220 F.R.D. 633 (D. Kan. 2004)..................................................................................................9 Swanson v. Aetna Life Ins. Co., No. 15-CV-0785-WYD-CBS, 2016 WL 54118 (D. Colo. Jan. 5, 2016) .................................18 Viernow v. Euripides Dev. Corp., 157 F.3d 785 (10th Cir. 1998) .................................................................................................17 Rules Fed. R. Civ. P. 26(b)(1)..................................................................................................................14 Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 5 of 28 1 Tessco Technologies, Inc. (“TESSCO”), Nite Ize, Inc. (“Nite Ize”), Brightstar Corp. (“Brightstar”),1 and Ingram Micro, Inc. (“Ingram Micro” and, together with TESSCO, Nite Ize, and Brightstar, the “Defendant Distributors”) submit this opposition to Foreign Trade Corporation d/b/a Technocel (“Technocel”), Wireless Xcessories Group, Inc. (“WireX”) and H.L. Dalis, Inc.’s (“H.L. Dalis” and, together with Technocel and WireX, the “Plaintiff Distributors”) Motion to Compel Responses to Requests for Production or for Leave to Amend Pleadings (the “Motion”). Case No. 14-3133, Dkt. 141; Case No. 15-2575, Dkt. 97; Case No. 15-2591, Dkt. 101.2 I. INTRODUCTION The Motion is the Plaintiff Distributors’ third attempt to circumvent the Court’s dismissal of the antitrust claims from these lawsuits. First, the Plaintiff Distributors requested that the Court enter the dismissal as a final order so an immediate appeal could be taken. Dkt. 131 at 6-9. The Court denied that request because Federal Rule 54(b)’s standards were not met. Dkt. 139 at 1-2. Second, the Plaintiff Distributors requested that the Court certify the dismissal for an interlocutory appeal. Dkt. 131 at 9-29. The Court denied that request because there was no “controlling question of law as to which there is a substantial ground for difference of opinion.” Dkt. 139 at 2. The Plaintiff Distributors now move to compel discovery relevant only to their dismissed antitrust allegations or, in the alternative only, to amend their pleadings to add a claim that repackages their dismissed antitrust allegations. This is another meritless effort to avoid the substance of the 1 “Brightstar Corp.” is improperly identified by the Plaintiff Distributors as “Brightstar Corporation.” 2 For ease of reference, and unless otherwise noted, in this Opposition all cites to docket entries refer to the Technocel litigation (Case No. 14-3133). In general, nearly identical pleadings, motions, and orders were also filed in the WireX (Case No. 15-2575) and H.L. Dalis (Case No. 15-2591) matters. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 6 of 28 2 Court’s dismissal. The extent to which the Plaintiff Distributor’s Motion grasps at straws is underscored by the fact that their lead argument is a “waiver” theory premised on both a misleading recitation of the factual record and service that was, even according to the Plaintiff Distributors, only three days late. Comparing the Plaintiff Distributors’ remaining state law claims to the requests for production at issue (the “RFPs”) shows beyond question that the RFPs are irrelevant. Pursuant to the pleadings, the remaining claims for tortious interference and unfair competition are based on allegations that “OtterBox shared [the Plaintiff Distributors’] confidential information with the Defendant Distributors,” which OtterBox and the Defendant Distributors purportedly used to transition customers from the Plaintiff Distributors to the Defendant Distributors. Dkt. 70 ¶¶ 139, 146, 155. Indeed, the Plaintiff Distributors previously summarized the basis of the unfair competition claims as “OtterBox’s misuse and wrongful disclosure of [Technocel’s/H.L. Dalis’s] confidential information to the Defendant Distributors.” Ex. 1 (June 21, 2016 Proposed Scheduling Order) at 9, 14.3 The complaint does not assert that the alleged factual basis of the remaining state law claims-Otterbox’s wrongful disclosure of confidential information to the Defendant Distributors-arose from concerted action among the Defendant Distributors. Yet the RFPs exclusively seek communications among the Defendant Distributors. While such communications could be relevant to an alleged antitrust conspiracy, they have nothing to do with allegations that OtterBox provided the Plaintiff Distributors’ confidential information to one or 3 The Court likewise has noted that the state law claims are based on allegations regarding the taking and misuse of putative “confidential” customer information, not any alleged conspiracy. See Dkt. 128 at 2 (finding Technocel alleged “unlawful and unfair conduct in the form of tortious interference with contract and the improper use of confidential or proprietary information obtained by the Distributor Defendants”). Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 7 of 28 3 more of the Defendant Distributors. Because the RFPs seek information that is irrelevant to the claims remaining in the case, the Court should deny the Plaintiff Distributors’ motion to compel. See, e.g., Gianzero v. Wal-Mart Stores, Inc., No. 09-CV-00656-REB-BNB, 2011 WL 2683066, at *3 (D. Colo. July 8, 2011) (denying motion to compel because “the relevancy of the discovery is not apparent on the face of the requests and the plaintiffs have failed to demonstrate the relevancy”). The Plaintiff Distributors’ request, “in the alternative only,” for leave to amend their pleadings to add claims for “common law civil conspiracy” is a transparent effort to repackage the dismissed antitrust claims. Nowhere in their Motion do the Plaintiff Distributors suggest that they have uncovered new facts linking their tortious interference or misappropriation of confidential information theories to any alleged conspiracy. The Plaintiff Distributors’ efforts to “salvage a lost case by untimely suggestion of new theories of recovery” and “present theories seriatim in an effort to avoid dismissal” are impermissible. Minter v. Prime Equip. Co., 451 F.3d 1196, 1206 (10th Cir. 2006) (citations and quotation marks omitted). Moreover, the Plaintiff Distributors make no effort to explain why they did not add their common law conspiracy claims earlier. And, based on their proposed second amended complaint, amendment would be futile. The “conspiracy” alleged in the proposed complaint is based on the same allegedly overt unlawful acts as the conspiracy alleged in the operative complaint. And those allegedly overt unlawful acts are not to tortiously interfere or misuse allegedly confidential information, but to restrain trade in violation of the antitrust laws. The Court already ruled that these acts were not unlawful. For these reasons, and because the Defendant Distributors would be prejudiced by having to incur the Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 8 of 28 4 expense of repeating the motion to dismiss process, the Court should deny the Plaintiff Distributors’ request for leave to amend. II. RELEVANT PROCEDURAL HISTORY A. Plaintiff Distributors Amended the Pleadings to Add Antitrust Allegations and Assert Claims Against the Defendant Distributors Over a Year Ago Technocel filed the first of these actions on November 20, 2014. Dkt. 1. In its initial complaint, Technocel asserted six claims against OtterBox, including claims for tortious interference. Id. at 9-19. Over a year later, and after several months of discovery during which thousands of documents were requested and produced (see Dkt. 55 at 3-4 & n.1), Technocel and OtterBox filed cross motions for summary judgment. Dkts. 38, 40, 42. At a scheduling conference on March 21, 2016-before the motions for summary judgment were considered-Technocel was granted leave to file an amended complaint to assert claims that OtterBox and the Defendant Distributors violated Section 1 of the Sherman Act through a “hub-and-spoke conspiracy” or through an “unreasonable vertical restraint of trade.” Dkt. 63 (Mar. 21, 2016 Hr. Tr.) at 5:24- 7:12, 12:15. During this scheduling conference, the Court noted, and the Plaintiff Distributors agreed, that the addition of the antitrust claims “changes the cases completely” and that “we maybe should be putting discovery on hold till [the antitrust claims] come[] in, because obviously the focus or the parameters of discovery change with an allegation of that type.” Id. at 12:8-11, 13:22- 14:6. The Court added that the antitrust allegations called for “a much broader range of relevance.” Id. at 14:5-6.4 4 See also Dkt. 126 (Order Dismissing Antitrust Claims) at 2 (“The scope of the litigation was drastically altered when Technocel filed an amended complaint” that “added the four remaining distributors as defendants and pleaded a claim against them and OtterBox for violation of Sherman Act § 1[.]”). Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 9 of 28 5 The Plaintiff Distributors filed their amended pleadings on April 14, 2016. Dkt. 70. In their amended pleadings, the Plaintiff Distributors maintained claims for breach of contract, breach of the duty of good faith and fair dealing, trade disparagement, and tortious interference against OtterBox; added a claim for alleged violations of the Sherman Act against OtterBox and the Defendant Distributors; and added claims for tortious interference against the Defendant Distributors. See id. ¶¶ 99-159. Technocel and H.L. Dalis also added claims for unfair competition under California statutory law and New York state law, respectively. See id. ¶¶ 136- 141; Case No. 15-2591, Dkt. 40 ¶¶ 142-147. Technocel and H.L. Dalis’s unfair competition claims are based on allegations that “OtterBox and the four Distributor Defendants . . . engaged in unfair competition by OtterBox’s misuse and wrongful disclosure of [Technocel’s/H.L. Dalis’s] confidential information to the Defendant Distributors.” Ex. 1 (June 21, 2016 Proposed Scheduling Order) at 9, 14. The Plaintiff Distributors’ tortious interference claims are based on allegations that “OtterBox and the four Defendant Distributors tortiously interfered with [the Plaintiff Distributors’] contractual relations [or prospective business relations] with [their] customers by failing to act with reasonable care in corresponding with those customers [and potential customers].” Id. at 9, 11, 14. B. Defendants’ Motions to Dismiss and the Service of the RFPs at Issue OtterBox and the Defendant Distributors moved to dismiss the claims in the amended complaint/counterclaims on June 10, 2016, based, in part, on the Plaintiff Distributors’ failure to allege facts plausibly suggesting any meetings or communications among the Defendant Distributors. Dkts. 94, 96. In an apparent attempt to address this weakness and bolster its antitrust allegations, on July 22, 2016 (before the motions to dismiss were fully briefed), the Plaintiff Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 10 of 28 6 Distributors served the RFPs. Two identical requests were served on each Defendant Distributor: 1. All Communications between You and any other Defendant Distributor Relating to OtterBox’s Smartphone Cases. 2. All Communications between You and any other Defendant Distributor Relating to any Plaintiff. Dkts. 141-1, 141-2, 141-3, 141-4 (italics in originals). Before the Defendant Distributors were required to object or otherwise respond to these requests, the Court entered an “Order Delaying Discovery,” stating: Upon consideration of the Proposed Coordinated Scheduling order submitted by the parties and a preliminary review of the motions to dismiss the First Amended Complaint filed by Foreign Trade Corporation in Civil Action No. 14-cv-03133- RPM and the amended counterclaims filed by Wirelexx [sic] Xcessories Group, Inc., and H.L. Dalis, Inc., in the related civil actions, it is this Court’s conclusion that no formal discovery is appropriate until the motions to dismiss are decided. Those motions have been briefed fully and oral argument will soon be scheduled. The distributor defendants’ participation in this litigation could be terminated if their motions are granted and the scope of discovery for all parties will be affected by the rulings to be made. Dkt. 111 at 2 (emphasis added). The Court then ordered that “the Proposed Coordinated Scheduling Order will not be entered and a Rule 16 Scheduling Conference will not be set until the motions to dismiss are decided.” Id. C. The Court’s Motion to Dismiss Ruling and the Parties’ Correspondence Regarding the RFPs at Issue On February 15, 2017, the Court dismissed the only claims involving an alleged conspiracy-the Plaintiff Distributors’ antitrust claims against OtterBox and the Defendant Distributors. Dkts. 126 at 11, 128 at 1. The Court denied the Defendant Distributors’ motion to dismiss the Plaintiff Distributors’ state law claims against them. Dkt. 128 at 2. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 11 of 28 7 On March 16, 2017-twenty-nine days after the entry of the Court’s orders on the motions to dismiss-counsel for Ingram Micro sent a letter to counsel for the Plaintiff Distributors noting that the RFPs relate entirely to the Plaintiff Distributors’ antitrust allegations, which the Court dismissed. Ingram Micro explicitly stated that because the requests are now irrelevant to the litigations, the Defendant Distributors did not intend to respond. In response to this correspondence, and as part of a meet-and-confer profess, the Plaintiff Distributors requested that each Defendant Distributor provide the legal basis for its refusal to respond by 5:00 p.m. on Thursday, March 23, 2017. The Defendant Distributors complied with the Plaintiff Distributors’ request and each served more formal objections and responses on March 23, 2017. See Dkts. 141- 6, 141-7, 141-8, 141-9. On April 4, 2017, counsel for the Plaintiff Distributors sent further correspondence stating the Defendant Distributors’ responses and objections to the RFPs were insufficient. In response to this correspondence, counsel for the Defendant Distributors expressed that their responses and objections were compliant with Rule 34, proposed that the parties meet and confer about discovery going forward, and suggested the parties present their positions regarding the scope of the discovery in a revised proposed scheduling order and seek guidance from the Court on that issue. Counsel for the Plaintiff Distributors responded on April 11, 2017. Although they agreed to meet and confer on other discovery issues, counsel for the Plaintiff Distributors expressed that further discussion regarding the RFPs would be “fruitless.” The Plaintiff Distributors then filed this Motion on April 27, 2017. Dkt. 141. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 12 of 28 8 III. ARGUMENT A. The Plaintiff Distributors’ Motion to Compel Should Be Denied The Plaintiff Distributors present two arguments in support of their motion to compel-(i) that the Defendant Distributors “waived” the right to object on relevance grounds, and (ii) that the RFPs are in fact relevant and proportional to the remaining state law claims.5 Both arguments fail for multiple reasons. 1. The Plaintiff Distributors’ “Waiver” Argument Inaccurately Represents the Facts and, in Any Event, Is Without Merit Although the Defendant Distributors reasonably interpreted the Court’s August 11, 2016 Order Delaying Discovery (Dkt. 111) as deferring all discovery deadlines until a Rule 16 Scheduling Conference is held and a case schedule is entered (events that have not yet occurred), the Defendant Distributors proactively addressed the RFPs within thirty days of the Court’s Order to ensure that there would be no ambiguity that the Defendant Distributors responded timely and in good faith to all discovery matters in this case. Specifically, as noted above, the Defendant Distributors sent a letter on March 16, 2016, unambiguously expressing their understanding that- in light of the dismissal of the antitrust claims-the RFPs sought discovery that was no longer relevant. And, after the Plaintiff Distributors objected to this view, the Defendant Distributors formally responded to the RFPs on the March 23, 2017 deadline requested by the Plaintiff Distributors. 5 In passing, the Plaintiff Distributors also argue that TESSCO’s objections are “non-compliant” with Rule 34 because TESSCO did not state whether any responsive materials are being withheld on the basis of those objections. Dkt. 141 at 14-15. This hyper-technical position affords the Plaintiff Distributors no basis for relief. Like the other Defendant Distributors, TESSCO declined to undertake a search for documents in response to the Plaintiff Distributors’ objectionable RFPs. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 13 of 28 9 Given this record, the Plaintiff Distributors’ assertions that “Defendants’ Responses were untimely” and “Defendants have no good cause for their failure to timely respond to the Requests” are, in a word, unfounded. The Defendant Distributors sua sponte informed the Plaintiff Distributors regarding their position on the RFPs within thirty days of the Court’s orders on the motions to dismiss, and the Defendant Distributors’ responded to the Plaintiff Distributors’ request for additional information about that position before the deadline set by the Plaintiff Distributors. The Plaintiff Distributors’ failure to inform the Court of those facts borders on disingenuous. Moreover, even if the record was different, and the Defendant Distributors’ service of their objections and responses to the RFPs could be accurately described as late, the Plaintiff Distributors’ waiver argument would still be meritless. In the context of written discovery responses, waiver of an objection only occurs where there is more than a de minimis delay for which a party cannot articulate good cause. Cf. Pham v. Hartford Fire Ins. Co., 193 F.R.D. 659, 662 (D. Colo. 2000) (“In this case . . . the objections were first asserted 71 days after the discovery was served, and then only in response to Judge Abram’s Minute Order; and no explanation or attempt to articulate good cause for the delay ever has been offered by Hartford.”).6 Here, even according to the Plaintiff Distributors, the Defendant Distributors’ objections were served three days late, and the Plaintiff Distributors assert no facts suggesting that they were prejudiced by this 6 The Plaintiff Distributors’ citation to Sonnino v. University of Kansas Hospital Authority is inapposite. 220 F.R.D. 633, 642 (D. Kan. 2004). In that case, the court overruled an objection because the defendants did “not identify that statute in their initial responses and objections,” “fail[ed] to identify it in their response to the Motion to Compel, and, more importantly, do not even address this particular objection in their response to the Motion to Compel.” Id. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 14 of 28 10 three-day delay.7 Furthermore, the Defendant Distributors have a legitimate explanation for the date on which they served their responses-it was the deadline set by the Plaintiff Distributors.8 2. The RFPs at Issue Are Irrelevant to the Remaining State Law Claims “Under this District’s applicable case law, the party seeking discovery has the burden of establishing that the information sought is relevant to a claim or defense in the case.” Arkansas River Power Auth. v. The Babcock & Wilcox Co., No. 14-CV-00638-CMA-NYW, 2016 WL 192269, at *4 (D. Colo. Jan. 15, 2016) (citing Simpson v. Univ. of Colo., 220 F.R.D. 354, 359 (D. Colo. 2004)). The burden to “establish lack of relevance or that the information is of such marginal relevance that the potential harm occasioned by the discovery outweighs the benefit of production” only shifts to the party opposing discovery if the “discovery sought appears relevant.” Arkansas River Power Auth., 2016 WL 192269, at *4. Here, the Plaintiff Distributors have not established that the “discovery sought appears relevant” to their remaining state law claims or defenses, nor can they. The RFPs are confined to “communications” between or among the “Defendant Distributors.” See Dkts. 141-1, 141-2, 141-3, 141-4. There is no nexus between such communications and the claims remaining in this case, which are based on allegations that OtterBox improperly provided and the Defendant Distributors improperly used confidential information belonging to the Plaintiff Distributors to (i) tortiously interfere with the Plaintiff 7 Compare Pham, 193 F.R.D. at 662, with Chawla v. Lockheed Martin Corp., No. 13-CV-00333- PAB-KLM, 2013 WL 5729817, at *4 (D. Colo. Oct. 18, 2013) (“[T]he Court also understands that mistakes are made, and relatively minor mistakes, like this one, should not impede adjudication of the claims on their merits. Furthermore, the 18-day delay does not appear to have prejudiced Plaintiff in any way.”). 8 The fact that there was no scheduling order in place is an additional good-faith reason justifying the timing of the Defendant Distributors’ responses to the RFPs. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 15 of 28 11 Distributor’s contractual or prospective business relationships (Colorado state law claims); or (ii) engage in unfair competition (California and New York state law claims). These state law claims revolve around what OtterBox sent to the Defendant Distributors, but have nothing to do with what the Defendant Distributors sent to one another. Indeed, there is no allegation that any Defendant Distributor possessed confidential information belonging to the Plaintiff Distributors other than by obtaining it from OtterBox. In the Motion, the Plaintiff Distributors attempt to obfuscate this basic fact by arguing that the “amended pleadings . . . alleged facts supporting all of Plaintiff Distributors’ claims against Defendants, not merely the claim for relief under Section 1 of the Sherman Act.” Dkt. 141 at 2. But that does not make inter-distributor communications (or the vast amount of documents that might be relevant in an antitrust conspiracy case) relevant to the remaining claims. The Plaintiff Distributors claim that Paragraphs 45, 102, and 147-149 of Technocel’s First Amended Complaint “relate as much to” the Plaintiff Distributors’ tortious interference claims “as they do to [the Plaintiff Distributors’] now-dismissed claim under the Sherman Act.” Dkt. 141 at 10. But Paragraphs 147-149 of Technocel’s complaint describe the basis for Technocel’s tortious interference with contract claim as “OtterBox’s attempts to transition Technocel’s customers” and do not assert that the tortious interference claims arise from an alleged conspiracy among the Defendant Distributors. Dkt. 70 ¶¶ 147-149. Paragraph 45 alleges that OtterBox and the Defendant Distributors entered into “collusive agreements” to exclude the Plaintiff Distributors from the new distribution regime-the crux of the now-dismissed antitrust claim-not that the Defendant Distributors conspired with each other to misappropriate the Plaintiff Distributors’ allegedly confidential information or to interfere with their contractual or prospective business Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 16 of 28 12 relationships. Paragraph 102 likewise is focused solely on the antitrust claims, as is reflected by the fact that the paragraph falls under the heading “First Claim for Relief For Violation of Sherman Act” and discusses the Defendant Distributors’ “unity of purpose, . . . common design and understanding, and . . . meeting of the minds” to enter a “conspiracy and agreement to unreasonably restrain trade.” See id. ¶¶ 101-102 (emphasis added). Thus, not one of the paragraphs cited in the Motion actually supports an argument that inter-Defendant Distributor communications are relevant to the limited state law claims. Moreover, prior to the dismissal of the antitrust claims, Technocel and H.L. Dalis themselves described their unfair competition claims as relating solely to the alleged misappropriation of their confidential information. In the parties’ June 21, 2016 Proposed Scheduling Order, Technocel and H.L. Dalis stated that their state law unfair competition claims are based on allegations that “OtterBox and the four Defendant Distributors . . . engaged in unfair competition by OtterBox’s misuse and wrongful disclosure of [Technocel’s or H.L. Dalis’s] confidential information to the Defendant Distributors.” Ex. 1 (June 21, 2016 Proposed Scheduling Order) at 9, 14 (emphasis added). The RFPs the Plaintiff Distributors now seek to enforce have nothing to do with the alleged transmission of their confidential information by OtterBox to the Defendant Distributors. As such, the RFPs are irrelevant to the remaining state law claims. The Plaintiff Distributors’ argument that “communications between any of the defendants” are “equally likely to uncover evidence in support of individual defendants’ liability, such as an admission” (Dkt. 141 at 11) is entirely speculative, and should be confined to discovery of each individual Defendant Distributor’s files that relate to the Plaintiff Distributors’ alleged confidential Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 17 of 28 13 information and the transitioning of customers from the Plaintiff Distributors to the Defendant Distributors.9 Likewise, the Plaintiff Distributors’ argument that the RFPs are relevant to “[t]he theory of concerted action” (Dkt. 141 at 11-12) does not show relevance to the state law claims. To the extent a concerted action theory of liability even applies outside of a products liability context, it requires “on the part of all defendants . . . an understanding, express or tacit, to participate in a common plan or design to commit a tortious act.” Sackman v. Liggett Grp. Inc., 965 F. Supp. 391, 396 (E.D.N.Y. 1997). To the extent the Plaintiff Distributors allege any express or tacit understanding among the Distributor Defendants, the object of that understanding-as the Plaintiff Distributors’ allege-was to unreasonably restrain trade, not to tortiously interfere with the Plaintiff Distributors’ contracts or to misuse their confidential information. The Plaintiff Distributors’ “example” “hypothetical email” that they claim demonstrates that the RFPs seek “plainly relevant and responsive document[s]” does nothing of the sort. Dkt. 141 at 11. The “hypothetical email” the Plaintiff Distributors identify is “between OtterBox and TESSCO.” Id. The RFPs, however, seek communications between or among the Defendant Distributors only.10 The fact that the “example” the Plaintiff Distributors chose to highlight for the Court has nothing to do with the RFPs demonstrates the irrelevance of the materials actually sought by the RFPs. 9 The Defendant Distributors have agreed to conduct a reasonable search for and produce relevant documents in response to the Plaintiff Distributors second set of RFPs. 10 As noted in the text relating to footnote 9 above, the Defendant Distributors have agreed to search for and produce communications between the Defendant Distributors and OtterBox relating to the termination of the Plaintiff Distributors or the transition of any resellers from the Plaintiff Distributors to the Defendant Distributors. Thus, the “hypothetical email between OtterBox and TESSCO” would be produced to the Plaintiff Distributors. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 18 of 28 14 Finally, contrary to the Plaintiff Distributors’ arguments, the Court’s statement in its April 6, 2017 Orders that “[c]ommon facts and legal elements underlie the [dismissed] antitrust claims and the remaining common law claims” (Dkt. 139 at 1-2) does not indicate that the Plaintiff Distributors’ state law claims entitle them to broad discovery into their dismissed antitrust conspiracy allegations. While there is factual overlap in the discovery relevant to the dismissed antitrust claims and the remaining state law claims (the communications between OtterBox and the Defendant Distributors being an example), this overlap does not mean all of the alleged facts relevant to the larger alleged antitrust conspiracy are relevant to the remaining state law claims. As such, now that the antitrust claims have been dismissed, the scope of appropriate discovery has been significantly narrowed and Plaintiff Distributors’ efforts to obtain discovery that is only relevant to those dismissed claims is improper. 3. Searching for Materials Irrelevant to the Remaining Claims and Defenses Is Not Proportional to the Needs of the Litigations Federal Rule of Civil Procedure 26(b)(1) permits discovery of a nonprivileged matter relevant to a party’s claim or defense if it is proportional to the needs of the case. Fed. R. Civ. P. 26(b)(1). To assess proportionality, the Court considers “the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Echon v. Sackett, No. 14-cv- 3420-PAB-NYW, 2016 WL 943485, at *2 (D. Colo. Jan. 27, 2016). Not one of these factors supports the Plaintiff Distributors’ requests for inter-Defendant Distributor communications. The Plaintiff Distributors’ state law claims are between corporate parties for tortious interference and unfair competition, the “importance of the issues at stake” is therefore relatively Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 19 of 28 15 low. Cf. id. (“the allegations as set forth in the Complaint raise serious issues of human trafficking and violations of labor and wage laws”). And the corporate parties here have relatively equal resources and access to information to support the remaining state law claims. Cf. Logan v. MGM Grand Detroit Casino, No. 4:16-CV-10585, 2017 WL 1684648, at *1 (E.D. Mich. May 3, 2017) (noting that “a pro se litigant who worked in a modest service job at Defendant Casino” had, “without a doubt” fewer resources and less access to information than Defendant MGM Grand Detroit Casino). Rather than explain why the RFPs are central to the remaining claims, the Plaintiff Distributors argue proportionality on the basis that the RFPs are of “direct relevance” and thus “are important to the issues in the actions.” Dkt. 141 at 13. But even assuming arguendo that such communications could be marginally relevant, they are not necessary to the remaining claims- especially considering the other categories of documents that the Defendant Distributors have agreed to produce, which include communications with OtterBox and documents relevant to the transitioning of customers from a Plaintiff Distributor to a Defendant Distributor. See Pertile v. Gen. Motors, LLC, No. 15-cv-0518-WJM-NYW, 2016 WL 1059450, at *4 (D. Colo. Mar. 17, 2016) (“Even accepting that the FEA Models are relevant, this court concludes that Plaintiffs have not established that they are necessary in this action.”). The Plaintiff Distributors’ unsupported speculation that they “anticipate that, collectively, their claims against the Defendants will be significantly more than the [$10 million] claims that have been asserted against them” (Dkt. 141 at 13) is insufficient to compel discovery into inter- Defendant Distributor communications. There is no factual basis in the pleadings to support such Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 20 of 28 16 a large damages figure. Indeed, there are no facts plead suggesting the revenues associated with any customer transitioned from a Plaintiff Distributor to a Defendant Distributor.11 Finally, and most importantly, the burden of searching for and producing inter-Defendant Distributor communications outweighs the likely benefit to the Plaintiff Distributors because such communications are irrelevant to the state law claims that remain in the case.12 B. The Plaintiff Distributors’ Alternate Request for Leave to Amend Should Be Denied “[T]he grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.” Minter, 451 F.3d at 1204. Courts may refuse leave where-as here-the proposed amendment is delayed, prejudicial, or futile. See Chambers v. Mosness, No. 13-cv-393, 2015 WL 682821, at **1, 4, 10 (D. Colo. Feb. 17, 2015) (adopting the recommendations of a magistrate judge, who denied request for leave to amend as futile and unduly delayed). 1. The Plaintiff Distributors’ Request for Leave to Amend Should Be Rejected Due to Their Unexplained and Undue Delay “Courts will properly deny a motion to amend when it appears that the plaintiff is using Rule 15 to make the complaint ‘a moving target,’ to ‘salvage a lost case by untimely suggestion 11 Damages are not even available to Technocel for its claim under Section 17200 of the California Business & Professions Code, even if it could prove a claim. Korea Supply Co. v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003). 12 The burden of searching for and responding to the RFPs may be substantial. For example, because Defendant Distributor Nite Ize has longstanding customer-supplier relationships with all of the Defendant and Plaintiff Distributors except Ingram Micro, through which it has supplied them with OtterBox and/or its own brand of Nite Ize smartphone cases, it cannot conduct a simple key word search to identify potentially responsive documents. Instead, it would likely be required to wade through large volumes of wholly irrelevant materials regarding these customer-supplier relationships to respond to the RFPs. It should not be required to incur the significant burden and expense of doing so where, as here: (i) the discovery sought is not relevant to the surviving state law claims and (ii) Nite Ize’s internal estimates indicate that the maximum damages Plaintiffs reasonably could seek against it on the state law claims are well below $100,000. The requested discovery is not proportional to the needs of the case and should be denied. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 21 of 28 17 of new theories of recovery,’ [or] to present ‘theories seriatim’ in an effort to avoid dismissal.” Minter, 451 F.3d at 1206 (quoting Viernow v. Euripides Dev. Corp., 157 F.3d 785, 800 (10th Cir. 1998), Hayes v. Whitman, 264 F.3d 1017, 1027 (10th Cir. 2001), and Pallottino v. City of Rio Rancho, 31 F.3d 1023, 1027 (10th Cir. 1994)). The Plaintiff Distributors’ requests to add claims of common law civil conspiracy are blatant attempts to “salvage” their now-dismissed antitrust claims. The circumstances here are similar to those in Pallottino and Viernow. In Pallottino, the Tenth Circuit affirmed the district court’s denial of a motion seeking leave to amend, finding: The proposed amendment was not based on new evidence unavailable at the time of the original filing. Instead, it proposed a theory that Mr. Pallottino did not choose to advance until after his primary theory had been dismissed. As other courts of appeal have stated: “A busy district court need not allow itself to be imposed upon by the presentation of theories seriatim.” . . . In his motion to amend, Mr. Pallottino did not explain his failure to amend the complaint earlier, especially as it was not based on new evidence. 31 F.3d at 1027 (internal citations omitted); see also Viernow, 157 F.3d at 800 (“[W]e do not favor permitting a party to attempt to salvage a lost case by untimely suggestion of new theories of recovery, especially after the trial judge has already expressed adverse rulings.”). Despite devoting three pages of the Motion to their “alternative” request for leave to amend, the Plaintiff Distributors do not mention one piece of “new evidence” that has come to light. And no “new evidence” is contained in the proposed amended complaint. To the contrary, the facts alleged in the proposed complaint are the same, while the “new theory” substitutes antitrust for civil conspiracy. And, just as in Pallottino, the Plaintiff Distributors have surfaced a new theory that they “did not choose to advance until after [their] primary theory had been dismissed.” 31 F.3d at 1027. The Plaintiff Distributors make no effort to explain why they did not Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 22 of 28 18 advance this theory until now, more than two years into this litigation. This indicates the Plaintiff Distributor’s attempt to amend could achieve the improper purpose identified in Viernow- “salvag[ing]” a dismissed claim. In light of these circumstances, the Plaintiff Distributors’ delay in seeking leave to amend is “undue” and their request should be denied. See Swanson v. Aetna Life Ins. Co., No. 15-CV-0785-WYD-CBS, 2016 WL 54118, at *3 (D. Colo. Jan. 5, 2016) (“In the Tenth Circuit, untimeliness alone may be a sufficient basis for denying a party leave to amend. . . . Delay is undue ‘when the party filing the motion has no adequate explanation for the delay.’”); Merican, Inc. v. Caterpillar Tractor Co., 596 F. Supp. 697, 704-06 (E.D. Pa. 1984) (rejecting amendment that “basically retains the factual allegations of plaintiffs’ previous complaints, but includes an additional claim for damages under the state common law of civil conspiracy” because “the proposed amendment [w]as an untimely and prejudicial attempt to revive plaintiffs’ dismissed antitrust damage claim”). 2. The Plaintiff Distributors’ Attempt to Add a Claim for Civil Conspiracy Is Futile “A proposed amendment is futile if the complaint, as amended, would be subject to dismissal.” Chambers, 2015 WL 682821, at *5 (quotation marks omitted). There are five elements required to establish a civil conspiracy under Colorado law: There must be (1) two or more persons, and for this purpose a corporation is a person; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more unlawful overt acts; and (5) damages as the proximate result thereof. Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486, 502 (Colo. 1989) (brackets in original omitted). Technocel’s proposed amended complaint does not allege facts sufficient to show that OtterBox and the Defendant Distributors sought to tortiously interfere with the Plaintiff Distributors’ current Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 23 of 28 19 or prospective business relations or to misappropriate the Plaintiff Distributors’ “confidential” customer information, had a meeting of the minds on those objectives or any related course of action, or took one or more unlawful overt acts in furtherance of those objectives. Because they have not plead facts sufficient to show these elements of common law conspiracy, the Plaintiff Distributors’ proposed amendment is futile and should not be permitted. The Plaintiff Distributors rely on the fact that “the Court determined that Plaintiff Distributors’ respective pleadings . . . adequately allege a hub-and-spoke conspiracy” and argue that “[t]hese conspiracy allegations support many of Plaintiffs Distributors claims, under tort and breach of contract, rather than just the dismissed antitrust claims.” Dkt. 141 at 15-16. While it is correct that the Court indicated the Plaintiff Distributors pleaded facts sufficient to allege a hub- and-spoke antitrust conspiracy, the Court stated that the object of this conspiracy was to “form a horizontal agreement to restrict sales in furtherance of a network that excludes other distributors, establishes exclusive territories, and limits sales to those who have agreements with OtterBox restricting their reselling freedom.” Dkt. 126 at 7. The Court was also clear that this so-called “conspiracy” or joint conduct was not unlawful. Id. at 11. This conclusion in no way supports that a “conspiracy” existed for some other purpose, and thus does not support the Plaintiff Distributors’ argument that amendment is appropriate at this late stage. 3. Allowing the Plaintiff Distributors’ Untimely Amendment Would Be Prejudicial to the Defendant Distributors The “most important” factor in determining whether to grant a motion to amend the pleadings under Rule 15 “is whether the amendment would prejudice the nonmoving party.” Minter, 451 F.3d at 1207. Allowing the Plaintiff Distributors to again amend their complaint and counterclaims would be prejudicial to the Defendant Distributors because it would lead to the Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 24 of 28 20 Defendant Distributors incurring the expenses of (i) moving to dismiss the conspiracy allegations and, (ii) unless a stay of discovery were granted, the initiation of expensive discovery based on an unduly broad set of allegations. The Plaintiff Distributors have already had ample opportunity to amend their complaints to assert claims against the Defendant Distributors. They should not be permitted to prejudice the Defendant Distributors by filing further amended complaints that merely repackage their dismissed antitrust claims. IV. CONCLUSION The Plaintiff Distributors’ Motion attempts to sidestep the implications of the Court’s dismissal of the antitrust claims, and seeks to proceed into discovery as if that dismissal never occurred. During recent discussions relating to a potential case schedule, the Plaintiff Distributors took the position that fact discovery should be open for the same amount of time (approximately fourteen months) that the parties proposed when the antitrust claims were pending. Ex. 1 (June 21, 2016 Proposed Scheduling Order) at 26. The Defendant Distributors respectfully submit that discovery should be tailored and proportional to the narrow state law claims that remain at issue and that the Plaintiff Distributors’ Motion should be denied. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 25 of 28 21 Dated: May 18, 2017 Denver, Colorado Respectfully submitted, s/ Richard H. Cunningham . Richard H. Cunningham Gregory J. Kerwin Allison Kostecka GIBSON, DUNN & CRUTCHER LLP 1801 California Street, Suite 4200 Denver, CO 80202-2642 Telephone: (303) 298-5700 Facsimile: (303) 298-5907 Email: rhcunningham@gibsondunn.com Email: gkerwin@gibsondunn.com Email: akostecka@gibsondunn.com Counsel for Defendant Ingram Micro, Inc. Dated: May 18, 2017 Denver, Colorado s/ Kathryn A. Reilly . Kathryn A. Reilly Tommy A. Olsen WHEELER TRIGG O’DONNELL LLP 370 Seventeenth Street Suite 4500 Denver, CO 80202 Telephone: (303) 244-1800 Facsimile: (303) 244-1879 Email: reilly@wtotrial.com Email: olsen@wtotrial.com Counsel for Counter Defendant TESSCO Technologies, Inc. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 26 of 28 22 Dated: May 18, 2017 Chicago, Illinois s/ Paul Olszowka Paul Olszowka Brian Lewis BARNES & THORNBURG LLP One North Wacker Drive, Suite 4400 Chicago, IL 60606 Telephone: (312) 214-5608 Facsimile: (312) 759-5646 Email: paul.olszowka@btlaw.com Email: brian.lewis@btlaw.com Frank Visciano SENN VISCIANO CANGES P.C. 1700 Lincoln Street, Suite 4500 Denver, CO 80203 Telephone: (303) 298-1122 Facsimile: (303) 296-9101 Email: FVisciano@SennLaw.com Counsel for Counter Defendant Brightstar Corp. Dated: May 18, 2017 Denver, Colorado s/ Jeffrey S. Roberts Jeffrey S. Roberts FAEGRE BAKER DANIELS 3200 Wells Fargo Center 1700 Lincoln Street Denver, CO 80203 Telephone: (303) 607-3500 Facsimile: (303) 607-3600 Email: jeff.roberts@FaegreBD.com Matthew D. Clark FAEGRE BAKER DANIELS 1470 Walnut Street, Suite 300 Boulder, CO 80302 Telephone: (303) 447-7727 Facsimile: (303) 447-7800 Email: matthew.clark@FaegreBD.com Counsel for Counter Defendant Nite Ize, Inc. Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 27 of 28 23 CERTIFICATE OF SERVICE I hereby certify that on this the 18th day of May, 2017, I served the following DEFENDANT DISTRIBUTORS’ OPPOSITION TO THE PLAINTIFF DISTRIBUTORS’ MOTION TO COMPEL OR FOR LEAVE TO AMEND PLEADINGS to the e-mail addresses denoted on the Court’s Electronic Mail Notice List. s/ Donna Luca Donna Luca Case 1:15-cv-02591-RPM Document 103 Filed 05/18/17 USDC Colorado Page 28 of 28 EXHIBIT 1 June 21, 2016 [Proposed] Coordinated Scheduling Order Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 1 of 47 Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 2 of 47 2 The parties submit this Coordinated Scheduling Order in the related cases of Foreign Trade Corporation d/b/a Technocel v. Otter Products, LLC, Case No. 14-cv-03133-RPM (filed November 10, 2014), Otter Products, LLC v. Wireless Xcessories Group, Inc., Case No. 15-cv- 02575-RPM (removed November 24, 2015), and Otter Products, LLC v. H.L. Dalis, Inc., Case No. 15-cv-02591-RPM (removed November 25, 2015). Foreign Trade Corporation is referred to in this Scheduling Order as “Technocel” and Otter Products is referred to as “OtterBox.” On April 14, 2015, Technocel amended its complaint against OtterBox, and Wireless Xcessories Group and H.L. Dalis amended their counterclaims against OtterBox. For purposes of this Scheduling Order, Technocel, Wireless Xcessories Group, Inc. (“WireX”), and H.L. Dalis, Inc. (“H.L. Dalis”) are referred to as the “Plaintiff Distributors”). The Plaintiff Distributors also asserted claims against four new parties: BrightStar Corporation (“BrightStar”), Ingram Micro, Inc., Nite Ize, Inc., and TESSCO Technologies, Inc. For purposes of this Scheduling Order, BrightStar, Ingram Micro, Nite Ize, and TESSCO Technologies are collectively referred to as “Defendant Distributors.” This Scheduling Order is being submitted by OtterBox, the Plaintiff Distributors, and the Defendant Distributors. References to “party” and “side” are included throughout the Scheduling Order. “Party” shall mean the individual parties in the three related cases, and “Side” shall mean OtterBox and the Defendant Distributors on the one hand, and Plaintiff Distributors on the other. 1. DATE OF CONFERENCE AND APPEARANCES OF COUNSEL A scheduling conference before Senior Judge Richard P. Matsch was held in this case on ____ __, 2016 at __:00 _.m. in Courtroom A, Second Floor, Byron White United States Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 3 of 47 3 Courthouse, 1823 Stout Street, Denver, Colorado. The parties were represented by the counsel listed below: 1. OtterBox was represented by Lauren Schmidt of Brownstein Hyatt Farber Schreck, LLP, and Karma Giulianelli and Eric Olson of Bartlit Beck Herman Palenchar & Scott LLP. 2. Technocel was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. 3. WireX was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. 4. H.L. Dalis was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. 5. TESSCO Technologies was represented by Kathryn Reilly of Wheeler Trigg O’Donnell, LLP. 6. Nite Ize was represented by Jeffrey Roberts and Matthew Clark of Faegre Baker Daniels LLP. 7. BrightStar was represented by Paul Olszowka and Brian Lewis of Barnes & Thornburg, LLP, and by Frank Visciano of Senn Visciano Canges, P.C. 8. Ingram Micro was represented by Richard Cunningham and Reid Rector of Gibson Dunn & Crutcher, LLP. 2. STATEMENT OF JURISDICTION For Plaintiff’s Sherman Act claims, jurisdiction is proper in the United States District Court for the District of Colorado pursuant to 28 U.S.C. §§ 1331 and 1337(a). This Court has Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 4 of 47 4 supplemental jurisdiction over Plaintiffs and Otter Product LLC’s state law claims under 27 U.S.C. § 1367. Jurisdiction is also proper pursuant to 28 U.S.C. § 1332(a). The parties are of diverse citizenship, and the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs. 3. STATEMENT OF CLAIMS AND DEFENSES A. OtterBox’s Claims and Defenses 1. Claims Against Technocel OtterBox claims that Technocel breached the parties’ Distributor/Reseller Agreement by failing to pay OtterBox amounts owed when due and failing to pay substantial amounts owed at all. In October 2014, OtterBox initiated a plan to reduce the number of Master Distributors servicing its Core Channel from approximately ten to five. Technocel was among the Master Distributors that OtterBox terminated for reasons including but not limited to Technocel’s late payment history. OtterBox terminated Technocel in accordance with the provisions of the Agreement, which allow either party to terminate the Agreement upon ninety days’ written notice without cause. Pursuant to this notice, Technocel would have been terminated in January 2015. Technocel made no additional payments after receiving the notice of termination, causing OtterBox to terminate Technocel for cause in November 2014. Instead of paying OtterBox what it owed, Technocel initiated this retaliatory lawsuit. Technocel owes OtterBox $3,534,246 for unpaid goods under the Distributor/Reseller Agreement plus contractual interest at the rate of 1.5% per month. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 5 of 47 5 2. Claims Against WireX and H.L. Dalis OtterBox claims that WireX and H.L. Dalis breached the parties’ Distributor/Reseller Agreements by failing to pay OtterBox for goods delivered under the Agreement. WireX and H.L. Dalis were among the distributors OtterBox terminated when it reduced the number of Master Distributors servicing its Core Channel. In October 2014, OtterBox notified WireX and H.L. Dalis that OtterBox was invoking its unqualified right to terminate the parties’ Agreement in ninety days. During the ninety days following OtterBox’s notice letter, OtterBox continued to operate under the Agreement and shipped WireX and H.L. Dalis products in good faith. However, neither WireX nor H.L. Dalis paid OtterBox for goods shipped after the ninety-day notice. WireX owes OtterBox $4,672,424.45 under the Distributor/Reseller Agreement plus contractual interest at the rate of 1.5% per month. H.L. Dalis owes OtterBox $1,138,938.39 under the Distributor/Reseller Agreement plus contractual interest at the rate of 1.5% per month. 3. Defenses a. Defense Against Technocel, WireX, and H.L. Dalis’s Antitrust Claims OtterBox denies that it violated Section 1 of the Sherman Act. OtterBox specifically denies it instituted a distribution system that provides the Defendant Distributors with exclusive geographic territories and customers. OtterBox also denies that it facilitated a per se illegal horizontal agreement between the Defendant Distributors. To the contrary, OtterBox unilaterally changed its distribution strategy by reducing the size of its distribution network and permitting each OtterBox retailer to select a “preferred distributor”-which retailers may ask OtterBox to change at any time-in order to maximize revenue, reduce logistical problems, reduce brand erosion, and reduce customer dissatisfaction. Each of the Defendant Distributors individually Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 6 of 47 6 agreed with OtterBox to participate as a distributor under the new distribution system OtterBox unilaterally created. The new distribution system has numerous procompetitive benefits which allow OtterBox to better compete against its inter-brand rivals. The new distribution system does not result in harm to consumers, such as increasing prices or reducing choices within the smartphone case market. OtterBox’s decision to streamline its distribution model and, as part of that decision, exercise its contractual right to terminate its distributor agreements with the Plaintiff Distributors, was both unilateral and lawful. In short, OtterBox’s distribution system does not constitute an unreasonable restraint of trade. b. Defense Against Technocel, WireX, and H.L. Dalis’s State Law Claims OtterBox also denies that it breached the Distributor/Reseller Agreement with the Plaintiff Distributors and denies each of those parties’ remaining claims in their entirety. At all times during the parties’ contractual relationship, OtterBox complied with its obligations under the Agreements, up to and including OtterBox’s termination of the Plaintiff Distributors. OtterBox further denies the Plaintiff Distributors’ claims for tortious interference with contract on their merits, and affirmatively states that those claims are barred by the economic loss rule because they arise exclusively from duties under the parties’ Agreement. Specific to Technocel, OtterBox denies Technocel’s claim for trade disparagement on its merits. At a minimum, the allegedly disparaging statements made by OtterBox were true, which is a complete defense to Technocel’s trade disparagement claim. OtterBox also denies Technocel’s California Unfair Competition Act claim on its merits. OtterBox denies that it improperly disclosed Technocel’s confidential information. Additionally, both claims are barred Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 7 of 47 7 by the economic loss rule, and Technocel’s California Unfair Competition Act claim is barred by the Colorado choice-of-law clause in the Parties’ Agreement. Specific to H.L. Dalis, OtterBox denies H.L. Dalis’s New York common law unfair competition claim on its merits. OtterBox denies that it improperly disclosed H.L. Dalis’s confidential information. This claim is also barred by the economic loss rule and by the Colorado choice-of-law clause in the Parties’ Agreement. OtterBox further denies that it acted improperly in terminating H.L. Dalis’s Distributor/Reseller Agreement in light of OtterBox’s 2008 “Letter of Support” to the General Services Administration (GSA) and denies that the Letter of Support constitutes an actionable contract. B. Technocel’s Claims and Defenses 1. Claims. Technocel alleges seven causes of action: one federal, antitrust claim and six state law claims. Without limiting the allegations in its pleadings, Technocel’s causes of action are the following: Count 1: Against all Defendants - violation of Sherman Act, Section 1 (conspiracy in unreasonable restraint of trade). Through a series of meetings and other communications in 2014, OtterBox (a manufacturer of smartphone cases) and TESSCO Technologies, Nite Ize, BrightStar, and Ingram Micro (distributors of smartphone cases) entered into a horizontal conspiracy to unreasonably restrain trade in the U.S. market for smartphone cases, and/or the two U.S. sub- markets for such cases: “mass market” and “protective” cases. The conspiracy, among other things, arose from OtterBox’s and the Defendant Distributors’ shared motive to stabilize and increase the prices for, and Defendants’ margins on, sales of OtterBox smartphone cases. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 8 of 47 8 Through their meetings and other communications, the Defendants reached a conspiratorial agreement, whereby the Defendants, among other things: (1) eliminated OtterBox’s non- exclusive wholesale distribution model and replaced it with an exclusive model, (2) allocated among the Defendant Distributors smartphone case customers (resellers) and geographic sales territories, (3) assured one another that each conspirator would participate in their unlawful agreement and honor the terms of that agreement, (4) terminated distributors that were not party to the agreement, including the Plaintiff Distributors - Technocel, HL Dalis, and WireX, (5) acted to conceal the conspiracy through, among other things, creating a sham paper trail relating to the change in distribution model, (6) developed, coordinated, and implemented a plan to transition terminated distributors’ customers among the Defendant Distributors according to the Defendants’ agreement, and (7) stifled customer choice and access to competitive smartphone case prices by, among other things, assigning customers a single distributor from whom the customer had to purchase OtterBox smartphone cases and requiring customers to agree not to buy or otherwise acquire from other smartphone case suppliers cases “similar” to OtterBox smartphone cases. Count 2: Technocel alleges that OtterBox breached multiple agreements entered by and between them by failing to provide promised credits, incentives, and rebates, by misusing and wrongfully disclosing Technocel’s confidential information, and by making late product shipments, among other conduct. Count 3: Technocel alleges that OtterBox breached the covenant of good faith and fair dealing and abused its discretion by unilaterally changing and/or setting the invoicing, credit, and payment terms under its agreements with Technocel in a manner harmful to Technocel. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 9 of 47 9 Count 4: Technocel alleges that OtterBox disparaged Technocel to Technocel’s customer T-Mobile by making untrue statements of fact by and through OtterBox’s agent Clay Rogers. Count 5: Technocel alleges that OtterBox and the four Defendant Distributors violated California Business & Professions Code § 17200 when they engaged in unfair competition by OtterBox’s misuse and wrongful disclosure of Technocel’s confidential information to the Defendant Distributors. Count 6: Technocel alleges that OtterBox and the four Defendant Distributors tortiously interfered with Technocel’s contractual relations with its customers by failing to act with reasonable care in corresponding with those customers. Count 7: Technocel alleges that OtterBox and the four Defendant Distributors tortiously interfered with Technocel’s prospective business relations by failing to act with reasonable care in corresponding with Technocel’s customers and potential customers. 2. Defenses. Defense 1: OtterBox’s failure to state a claim upon which relief can be granted. Defense 2: OtterBox’s failure to mitigate its damages. Defense 3: OtterBox’s claim is barred by the doctrine of unclean hands. Defense 4: OtterBox’s loss, damage, and injury were due to OtterBox’s own actions, inactions, or omissions, and/or were not proximately caused by any conduct or inaction of Technocel. Defense 5: OtterBox’s claim is barred by the statute of frauds. Defense 6: OtterBox’s claim is barred by OtterBox’s failure to perform and material breach of the agreements between OtterBox and Technocel. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 10 of 47 10 Defense 7: OtterBox’s claim is barred by a lack of good faith in actions towards Technocel. Defense 8: OtterBox’s damages are due to OtterBox’s own misconduct towards Technocel. Defense 9: OtterBox’s claim is barred because there was a lack of consideration in the agreements between OtterBox and Technocel. Defense 10: OtterBox is barred from recovery because OtterBox excused any non- performance by Technocel. Defense 11: OtterBox is barred from recovery because OtterBox actively prevented Technocel from performing its obligations under the agreements. Defense 12: OtterBox is barred from recovery based on the doctrine of estoppel. Defense 13: OtterBox is barred from recovery because OtterBox induced Technocel to enter into the Agreement through fraudulent means, misrepresentations, and fraudulent concealment of material facts. Defense 14: Technocel raises as affirmative defenses any matters implicit within the pleadings. Defense 15: Other defenses not presently known. C. WireX’s Claims and Defenses 1. Claims WireX alleges five causes of action: one federal, antitrust claim and four state law claims. Without limiting the allegations in its pleadings, WireX’s causes of action are the following: Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 11 of 47 11 Count 1: Against all Defendants - violation of Sherman Act, Section 1 (conspiracy in unreasonable restraint of trade). WireX adopts Technocel’s summary of the antitrust claim. Count 2: WireX alleges that OtterBox breached multiple agreements entered by and between them by failing to provide promised credits, incentives, and rebates, by misusing and wrongfully disclosing WireX’s confidential information, and by failing to provide WireX with a transition plan, among other conduct. Count 3: WireX alleges that OtterBox breached the covenant of good faith and fair dealing and abused its discretion by unilaterally changing and/or setting the invoicing, credit, and payment terms under its agreements with WireX, by refusing approval or unjustifiably withdrawing approval of WireX’s long-standing customers, and by refusing to assist WireX in liquidating obsolete OtterBox inventory, all in a manner harmful to WireX. Count 4: WireX alleges that OtterBox and the four Defendant Distributors tortiously interfered with WireX’s contractual relations with its customers by failing to act with reasonable care in corresponding with those customers. Count 5: WireX alleges that OtterBox and the four Defendant Distributors tortiously interfered with WireX’s prospective business relations with its customers and potential customers by failing to act with reasonable care in corresponding with those customers and potential customers. 2. Defenses Defense 1: OtterBox’s failure to state a claim upon which relief can be granted. Defense 2: OtterBox’s failure to mitigate its damages. Defense 3: OtterBox’s claims are barred by the doctrine of unclean hands. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 12 of 47 12 Defense 4: OtterBox’s loss, damage, and injury were due to OtterBox’s own actions, inactions, or omissions, and/or were not proximately caused by any conduct or inaction of WireX. Defense 5: OtterBox’s claims are barred by OtterBox’s failure to perform the agreements between OtterBox and WireX. Defense 6: OtterBox’s claims are barred by OtterBox’s material breach of the agreements between OtterBox and WireX. Defense 7: OtterBox’s loss, damages, and injury were due to OtterBox’s own misconduct. Defense 8: OtterBox’s claims are barred because there was a lack of consideration in the agreements between OtterBox and WireX. Defense 9: OtterBox’s claims are barred by virtue of WireX’s legal and equitable rights of offset. Defense 10: OtterBox is barred from recovery because OtterBox excused any non- performance by WireX. Defense 11: OtterBox is barred from recovery because OtterBox actively prevented WireX from performing its obligations under the agreements. Defense 12: OtterBox is barred from recovery because OtterBox waived any right to recovery upon the facts alleged. Defense 13: OtterBox is barred from recovery based on the doctrine of estoppel. Defense 14: OtterBox is barred from any recovery against WireX because OtterBox is culpable and the parties stand in pari delicto. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 13 of 47 13 Defense 15: OtterBox’s claims are barred by a lack of good faith in its performance of the agreements or in its actions towards WireX. Defense 16: OtterBox is barred from any recovery because through its own conduct OtterBox approved, authorized, and/or ratified the transactions and actions at issue. Defense 17: OtterBox is barred from recovery because WireX was induced into entering the agreements by a mistake as to material facts regarding the purpose which the agreements would serve. Defense 18: OtterBox is barred from recovery because OtterBox induced WireX to enter into the agreements through fraudulent means, misrepresentations, and fraudulent concealment of material facts. Defense 19: Other defenses not presently known. D. H.L. Dalis’s Claims and Defenses 1. Claims H.L. Dalis alleges seven causes of action: one federal, antitrust claim and six state law claims. Without limiting the allegations in its pleadings, H.L. Dalis’s causes of action are the following: Count 1: Against all Defendants - violation of Sherman Act, Section 1 (conspiracy in unreasonable restraint of trade). H.L. Dalis adopts Technocel’s summary of the antitrust claim. Count 2: H.L. Dalis alleges that OtterBox breached a letter of support agreement entered by and between them by refusing to perform under that agreement. Count 3: H.L. Dalis alleges that OtterBox breached multiple agreements entered by and between them by failing to provide promised credits, incentives, and rebates, by misusing and Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 14 of 47 14 wrongfully disclosing H.L. Dalis’ confidential information, and by failing to provide H.L. Dalis with a transition plan, among other conduct. Count 4: H.L. Dalis alleges that OtterBox breached the covenant of good faith and fair dealing and abused its discretion by unilaterally changing and/or setting the invoicing, credit, and payment terms under its agreements with H.L. Dalis, by refusing approval or unjustifiably withdrawing approval of H.L. Dalis’ long-standing customers, all in a manner harmful to H.L. Dalis. Count 5: H.L. Dalis alleges that OtterBox and the four Defendant Distributors tortiously interfered with H.L. Dalis’ contractual relations with its customers by failing to act with reasonable care in corresponding with those customers. Count 6: H.L. Dalis alleges that OtterBox and the four Defendant Distributors tortiously interfered with H.L. Dalis’ prospective business relations with its customers and potential customers by failing to act with reasonable care in corresponding with those customers and potential customers. Count 7: H.L. Dalis alleges that OtterBox and the four Defendant Distributors engaged in unfair competition in violation of New York common law by OtterBox’s misuse and wrongful disclosure of H.L. Dalis’ confidential information to the Defendant Distributors 2. Defenses Defense 1: OtterBox’s failure to state a claim upon which relief can be granted. Defense 2: OtterBox’s failure to mitigate its damages. Defense 3: OtterBox’s claim is barred by the doctrine of unclean hands. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 15 of 47 15 Defense 4: OtterBox’s loss, damage, and injury were due to OtterBox’s own actions, inactions, or omissions, and/or were not proximately caused by any conduct or inaction of H.L. Dalis. Defense 5: OtterBox’s claim is barred by OtterBox’s failure to perform the agreements between OtterBox and H.L. Dalis. Defense 6: OtterBox’s claim is barred by OtterBox’s material breach of the agreements between OtterBox and H.L. Dalis. Defense 7: OtterBox’s loss, damages, and injury were due to OtterBox’s own misconduct. Defense 8: OtterBox’s claim is barred because there was a lack of consideration in the agreements between OtterBox and H.L. Dalis. Defense 9: OtterBox’s claim is barred by virtue of H.L. Dalis’ legal and equitable rights of offset. Defense 10: OtterBox is barred from recovery because OtterBox excused any non- performance by H.L. Dalis. Defense 11: OtterBox is barred from recovery because OtterBox actively prevented H.L. Dalis from performing its obligations under the agreements. Defense 12: OtterBox is barred from recovery because OtterBox waived any right to recovery upon the facts alleged. Defense 13: OtterBox is barred from recovery based on the doctrine of estoppel. Defense 14: OtterBox is barred from any recovery against H.L. Dalis because OtterBox is culpable and the parties stand in pari delicto. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 16 of 47 16 Defense 15: OtterBox’s claim is barred by a lack of good faith in its performance of the agreements or in its actions towards H.L. Dalis. Defense 16: OtterBox is barred from any recovery because through its own conduct OtterBox approved, authorized, and/or ratified the transactions and actions at issue. Defense 17: OtterBox is barred from recovery because H.L. Dalis was induced into entering the agreements by a mistake as to material facts regarding the purpose which the agreements would serve. Defense 18: OtterBox is barred from recovery because OtterBox induced H.L. Dalis to enter into the agreements through fraudulent means, misrepresentations, and fraudulent concealment of material facts. Defense 19: Other defenses not presently known. E. The Distributor Defendants’ Claims and Defenses Presumably unable to refute they owe OtterBox millions of dollars for smartphone cases, the Plaintiff Distributors recently filed amended complaints seeking to drag their competitors, the Defendant Distributors, into the litigation. The Plaintiff Distributors now allege that OtterBox and the Defendant Distributors violated Section 1 of the Sherman Act and various state laws when OtterBox implemented a new, allegedly exclusive distribution system and terminated the Plaintiff Distributors as distributors. These claims are baseless; the Defendant Distributors compete vigorously with one another and all of their competitors and did not violate the antitrust laws or any state tort laws in distributing OtterBox’s products. On June 10, 2016, Distributor Defendants filed motions to dismiss in each of the three cases pursuant to F.R.C.P. 12(b)(6). If the Court grants the motions, Distributor Defendants will no longer be parties to the cases. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 17 of 47 17 The Defendant Distributors each specifically deny any violation of Section 1 of the Sherman Act. Each Defendant Distributor further denies that they entered into an illegal horizontal agreement with any other Defendant Distributor. And the Defendant Distributors each deny that their conduct, alone or together with the other Defendants’ conduct, constitutes an unreasonable restraint of trade. Contrary to the Plaintiff Distributors’ central contention, the new distribution system does not grant exclusive territories to the Defendant Distributors. The Plaintiff Distributors are merely disappointed distributors, not victims of an antitrust conspiracy. The Defendant Distributors also each deny tortiously interfering with the Plaintiff Distributors’ existing or prospective contracts or customer relationships. The Plaintiff Distributors have not (1) identified any valid contractual rights (either existing or prospective) the Distributor Defendants interfered with, or (2) alleged any interfering conduct by the Distributor Defendants, much less conduct that is intentional and improper. Instead, the Plaintiff Distributors’ tortious interference claims are based solely on conduct by OtterBox and allege disruption to the Plaintiff Distributors’ unspecified, non-exclusive business expectancy of continuing to sell OtterBox products without any right to do so. In addition, because the Plaintiff Distributors are Defendant Distributors’ business competitors, the Plaintiff Distributors’ tortious interference claims are subject to heightened standards the Plaintiff Distributors do not come close to meeting. The Defendant Distributors each further deny that they improperly took, disclosed or used Technocel’s confidential information or committed any violation of California’s unfair competition statute, and likewise deny that they engaged in unfair competition against H.L. Dalis under New York common law. In addition, Technocel and H.L. Dalis are equitably estopped Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 18 of 47 18 from asserting these unfair competition claims because their Master Distributor Agreement with OtterBox dictates that Colorado, not California or New York, law applies to this dispute. 4. STIPULATIONS OF FACTS The following facts are undisputed: 1. Technocel is a California corporation with its principal place of business in Simi Valley, Ventura County, California. 2. OtterBox is a Colorado limited liability company with its principal place of business in Fort Collins, Colorado. 3. WireX is a Delaware corporation with its principal place of business in Huntingdon Valley, Pennsylvania. 4. H.L. Dalis is a New York corporation with its principal place of business in Long Island City, New York. 5. TESSCO Technologies is a Delaware corporation with its principal place of business in Hunt Valley, Maryland. 6. Nite Ize is a Colorado corporation with its principal place of business in Boulder, Colorado. 7. BrightStar is a Delaware corporation with its principal place of business in Miami, Florida. 8. Ingram Micro is a Delaware corporation with its principal place of business in Irvine, California. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 19 of 47 19 9. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b) and (c) because OtterBox resides in the judicial district and a substantial part of the events or omissions giving rise to the claims occurred here. 10. Venue is also proper in this district because OtterBox entered into Distributor/Reseller Agreements with Technocel, WireX, and H.L. Dalis under which those parties agreed that the courts of the State of Colorado or the United States District Court for the District of Colorado have exclusive jurisdiction to resolve all disputes under the parties’ contracts. 11. Technocel and OtterBox are parties to a Distributor/Reseller Agreement dated November 15, 2013. 12. In conjunction with the Distributor/Reseller Agreement, Technocel and OtterBox also entered into a Side Letter to Distributor/Reseller Agreement dated November 15, 2013; a First Amendment dated January 1, 2014; and a Second Amendment dated January 1, 2014. 13. On October 27, 2014, OtterBox sent Technocel a letter giving Technocel ninety days’ notice that OtterBox would terminate the Distributor/Reseller Agreement on January 31, 2015. 14. On November 11, 2014, OtterBox sent Technocel a notice letter demanding payment of all past due amounts under the Distributor/Reseller Agreement within ten (10) business days. OtterBox told Technocel that Technocel would not be permitted to purchase additional product from OtterBox until Technocel’s account was brought current. 15. On November 26, 2014, OtterBox gave written notice to Technocel that OtterBox was terminating the Distributor/Reseller Agreement, effective immediately. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 20 of 47 20 16. WireX and OtterBox are parties to a Distributor/Reseller Agreement dated December 30, 2011. 17. In conjunction with the Distributor/Reseller Agreement, WireX and OtterBox also entered into a Side Letter to Distributor/Reseller Agreement dated December 30, 2011; a First Amendment dated October 7, 2013; and a Second Amendment dated January 1, 2014. 18. On October 27, 2014, OtterBox sent WireX a letter giving WireX ninety days’ notice that OtterBox would terminate the Distributor/Reseller Agreement on January 31, 2015. 19. WireX’s Distributor/Reseller Agreement was terminated on January 31, 2015. 20. H.L. Dalis and OtterBox are parties to a Distributor/Reseller Agreement dated May 1, 2012. 21. In conjunction with the Distributor/Reseller Agreement, H.L. Dalis and OtterBox also entered into a Side Letter to Distributor/Reseller Agreement dated June 1, 2012; a First Amendment dated October 7, 2013; a Second Amendment dated January 1, 2014; and a Third Amendment dated June 1, 2014. 22. On October 27, 2014, OtterBox sent H.L. Dalis a letter giving H.L. Dalis ninety days’ notice that OtterBox would terminate the Distributor/Reseller Agreement on January 31, 2015. 23. H.L. Dalis’s Distributor/Reseller Agreement was terminated on January 31, 2015. 5. SUMMARY OF DAMAGES CLAIMED A. OtterBox 1. Against Technocel OtterBox claims the following damages against Technocel for breach of contract: Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 21 of 47 21 a. $3,534,246 for amounts owed under the Distributor/Reseller Agreement, exclusive of interests and costs; and b. Contractual interest at the rate of 1.5% per month, assessed against all unpaid balances under the Distributor/Reseller Agreement. 2. Against WireX OtterBox claims the following damages against WireX for breach of contract: a. $4,672,424.45 for amounts owed under the Distributor/Reseller Agreement, exclusive of interests and costs; and b. Contractual interest at the rate of 1.5% per month, assessed against all unpaid balances under the Distributor/Reseller Agreement. OtterBox claims damages against WireX pursuant to 15 U.S.C. § 1117 for WireX’s infringing use of OtterBox’s trademarks, including Wireless Accessories Group’s profits, OtterBox’s damages, and attorneys’ fees and costs. 3. Against H.L. Dalis OtterBox claims the following damages against H.L. Dalis for breach of contract: a. $1,138,938.39 for amounts owed under the Distributor/Reseller Agreement, exclusive of interests and costs; and b. Contractual interest at the rate of 1.5% per month, assessed against all unpaid balances under the Distributor/Reseller Agreement. B. Technocel 1. Sherman Act (Conspiracy in Unreasonable Restraint of Trade) Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 22 of 47 22 Technocel’s actual damages arising from its antitrust injury cannot be calculated without discovery on its antitrust claim and the assistance of FRE 702 opinion and, as necessary, lay witnesses. With that caveat, Technocel previously disclosed that for its state law claims arising from its termination as an OtterBox distributor, it had preliminarily calculated that, but for its termination as an OtterBox distributor, it reasonably had an expectation of receiving “$11,008,076 in profits from continuing the relationship with OtterBox for an additional three years, using the rate of growth experienced from 2013 to 2014. At an additional five years, Technocel had a reasonable expectation of receiving $20,303,748 in profit. Technocel additionally incurred $1.6 million in damages by its purchase of OtterBox and LifeProof inventory from NuCourse in late 2014.” This preliminary calculation of state law damages will be further assessed as Technocel calculates its actual antitrust damages. Any actual antitrust damages found for Technocel will be subject to trebling, pre and post judgment interest, and the costs of suit, including reasonable attorney’s fees, and any further relief ordered by the Court. 2. State law claims Technocel contends that it has been damaged by OtterBox and the Defendant Distributors in the following amounts: a. Compensatory damages and lost profits in excess of $5 million. b. Loss of prospective economic advantage and expected contractual benefit as a result of tortious interference in excess of $7.5 million. c. Affirmative damage to the value of Technocel’s business, goodwill, and reputation in excess of $2 million. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 23 of 47 23 C. WireX 1. Sherman Act (Conspiracy in Unreasonable Restraint of Trade) WireX’s actual damages arising from its antitrust injury cannot be calculated without discovery on its antitrust claim and the assistance of FRE 702 opinion and, as necessary, lay witnesses. Any actual damages found for WireX will be subject to trebling, pre and post judgment interest, and the costs of suit, including reasonable attorney’s fees, and any further relief ordered by the Court. 2. State law claims WireX contends that it has been damaged by OtterBox and the Defendant Distributors in the following amounts: a. Compensatory damages and lost profits in excess of $5 million. b. Loss of prospective economic advantage and expected contractual benefit as a result of tortious interference in excess of $7.5 million. D. H.L. Dalis 1. Sherman Act (Conspiracy in Unreasonable Restraint of Trade) H.L. Dalis’s actual damages arising from its antitrust injury cannot be calculated without discovery on its antitrust claim and the assistance of FRE 702 opinion and, as necessary, lay witnesses. Any actual damages found for H.L. Dalis will be subject to trebling, pre and post judgment interest, and the costs of suit, including reasonable attorney’s fees, and any further relief ordered by the Court. 2. State law claims. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 24 of 47 24 H.L. Dalis contends that it has been damaged by OtterBox and the Defendant Distributors in the following amounts: a. Compensatory damages and lost profits in excess of $3 million. b. Loss of prospective economic advantage and expected contractual benefit as a result of tortious interference in excess of $6 million. E. Defendant Distributors The Defendant Distributors do not currently claim any damages against any of the Plaintiff Distributors; however, each Defendant Distributor expressly reserves the right to seek damages, attorney fees, and costs. 6. REPORT OF MEETING UNDER FED R. CIV. P. 26(f) A. Date of Rule 26(f) Meeting The Rule 26(f) meeting was held on June 7, 2016. B. Names of Each Participant and Party Represented 1. OtterBox was represented by Lauren Schmidt of Brownstein Hyatt Farber Schreck, LLP, and Karma Giulianelli and Eric Olson of Bartlit Beck Herman Palenchar & Scott LLP. 2. Technocel was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. 3. WireX was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. 4. H.L. Dalis was represented by Farhad Novian of Novian & Novian LLP and John Parks, Todd Seelman and Chris Wood of Lewis Brisbois Bisgaard & Smith LLP. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 25 of 47 25 5. TESSCO Technologies was represented by Kathryn Reilly of Wheeler Trigg O’Donnell, LLP. 6. Nite Ize was represented by Jeffrey Roberts and Matthew Clark of Faegre Baker Daniels LLP. 7. BrightStar was represented by Paul Olszowka and Brian Lewis of Barnes & Thornburg, LLP, and by Frank Visciano of Senn Visciano Canges, P.C. 8. Ingram Micro was represented by Richard Cunningham and Reid Rector of Gibson Dunn & Crutcher, LLP. C. Any Disputes Concerning Disclosures The parties did not identify any disputes concerning disclosures. D. Statement as to Whether the Parties Anticipate That Their Claims or Defenses Will Involve Extensive Electronically Stored Information, or That a Substantial Amount of Disclosure or Discovery Will Involve Information or Records Maintained in Electronic Form All parties anticipate their claims and defenses will require a substantial amount of discovery and disclosure of Electronically Stored Information and that the majority of discovery will involve information or records maintained in electronic form. E. Statement of Any Agreements for Preservation and Production of Electronically Stored Information The parties intend to file a separate Stipulated Order Regarding Discovery of Electronically Stored Information that will govern electronic discovery in this case.1 1 OtterBox and Technocel are parties to a Stipulated Order Regarding Discovery of Electronically Stored Information in the Foreign Trade Corporation case (Civil Action No. 1:14- cv-03133-RPM) (Doc No. 30). Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 26 of 47 26 F. Agreements the Parties Have Reached for Asserting Claims of Privilege or of Protection as Trial-Preparation Materials After Production of Computer-Generated Records The parties intend to file a separate Stipulated Confidentiality Agreement and Protective Order that governs the treatment of discovery materials, including but not limited to confidential information. The Protective Order will also address Fed. R. Evid. 502(d), Fed. R. Civ. P. 26(b)(5), and the claw back of inadvertently-produced information that is subject to the attorney- client privilege or the attorney work product protection. This claw back provision will include both electronic and non-electronic records. 7. CASE PLAN AND SCHEDULE A. The filing of amended and supplemental pleadings will be made pursuant to Fed.R.Civ.P. 15. B. Discovery Cut-Off The fact discovery cut-off will be July 28, 2017. Third-party discovery shall also be completed on or before this date. FRE 702 witness disclosures and depositions will take place after the July 28, 2017 fact discovery cut-off as set forth in Section 7.D.2. 1. Timing of Discovery The Parties disagree about the start date for discovery. a. OtterBox and Defendant Distributors’ Position OtterBox and the Defendant Distributors propose a phased discovery schedule that would allow OtterBox and the Plaintiff Distributors to begin discovery after the Scheduling Conference on all state law claims and counterclaims that are not subject to OtterBox’s motions to dismiss, Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 27 of 47 27 but would stay all discovery related to (1) the Plaintiff Distributors’ antitrust claims and (2) the Plaintiff Distributors’ state law claims against the Defendant Distributors until the Court rules on the parties’ motions to dismiss, which are not yet fully briefed. OtterBox and the Defendant Distributors’ arguments are set forth more fully in Section 8, Scheduling Issues. 2. Plaintiff Distributors’ Position Plaintiff Distributors propose that discovery on the claims and defenses of all parties proceed concurrently. As Plaintiff Distributors summarize in Section 8, below, Defendants cannot demonstrate good cause for proceeding with discovery on OtterBox’s claims only, and staying discovery on Plaintiff Distributors’ antitrust claim and certain state law claims solely because Defendants have filed motions to dismiss. Stays pending 12(b)(6) motions in this District are disfavored and this litigation calls for no different result. C. Dispositive Motion Deadline: February 9, 2018. D. Opinion Witness Disclosures 1. Anticipated fields of opinion testimony under FRE 702, if any: OtterBox and the Defendant Distributors anticipate that they will offer expert testimony on the following topics: (i) economic issues such as relevant market definition, the procompetitive benefits of OtterBox’s distribution agreements with the Defendant Distributors, and the injury to competition, if any, caused by such agreements; (ii) distribution and other aspects of the protective cover industry; and (iii) damages. OtterBox and the Defendant Distributors also expect to designate employees of some or all of the Defendant Distributors who may provide lay opinion testimony under FRE 702 about the market and industry at issue in this case. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 28 of 47 28 OtterBox also anticipates expert testimony from an expert on government contracts in the H.L. Dalis case. Technocel, WireX, and H.L. Dalis anticipate that they will offer FRE 702 opinion testimony on (a) OtterBox’s and the Defendant Distributors’ antitrust liability, (b) OtterBox and the Defendant Distributors’ state law defenses, (c) Technocel, WireX, and H.L. Dalis’s respective defenses to OtterBox’s state law claims (for example, without restriction, industry practices and terms of dealing) and associated damages calculations, and (d) damages for each such party’s (Technocel’s, WireX’s, and H.L. Dalis’s) individual claims for relief. 2. Limitations proposed on the use or number of opinion witnesses: The parties agree to limit the number of retained affirmative expert witnesses to five per Side. 3. The party bearing the burden of persuasion on the issues for which opinion is to be offered under FRE 702 shall designate the witness and provide opposing counsel with all information specified in Fed.R.Civ.P. 26(a)(2) on or before: September 15, 2017. 4. The parties shall designate all contradicting opinion witnesses and provide opposing counsel with all information specified in Fed. R. Civ. P. 26(a)(2) on or before: October 27, 2017. 5. Any rebuttal opinions will be exchanged on or before: November 22, 2017. 6. All depositions of expert witnesses shall be complete on or before: January 12, 2018. Nothing in this section shall prevent a Party from taking an expert deposition prior to the November 22, 2017 deadline for rebuttal opinions. If an expert submits more than one report (for example, an opening report and then a rebuttal), a Side may depose that expert, in separate Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 29 of 47 29 depositions, concerning each report. The Parties agree to use their best efforts to reach an agreement regarding the time limit for each occasion on which an expert is deposed, starting with the premise that the total duration of deposition testimony for any one expert will not exceed seven hours. E. Deposition Schedule Both Sides have agreed that each Side may take one deposition of each opposing party under Federal Rule of Civil Procedure 30(b)(6). For illustrative purposes only, OtterBox and Defendant Distributors, collectively, could take separate 30(b)(6) depositions of corporate representatives for Technocel, WireX, and H.L. Dalis. If a Party offers more than one corporate representative to be deposed in response to a 30(b)(6) notice, the deposition, regardless of the number of witnesses offered, will constitute a single deposition. The Parties agree to use their best efforts to reach an agreement regarding the time limit of each 30(b)(6) deposition. Pursuant to Federal Rule of Civil Procedure 30(a)(2), a Side may seek leave of court to depose additional fact witnesses, beyond the number stated in the parties’ respective positions below. If a Party’s Rule 30(b)(6) corporate representative is also a fact witness, the parties will use best efforts to condense such deposition to seven hours of testimony. Depositions, shall be limited to seven (7) hours of testimony unless otherwise agreed to by the Party noticing the deposition and the Party producing the deposition witness, The limitations on fact witness depositions set forth below do not apply to non-Party and opinion/expert witness depositions. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 30 of 47 30 1. List the names and addresses of persons each party expects to depose under Rule 30. An initial list of the fact witnesses the parties expect to depose under Rule 30, exclusive of party depositions under Rule 30(b)(6), is set forth below. With the assistance of further discovery, the Parties may identify additional persons to be deposed under Rule 30. All Parties reserve their rights to object to or contest the deposition of any fact witness identified in this Scheduling Order. OtterBox and Defendant Distributors expect to depose: Name of Deponent Party Affiliation Address 1 Dan Kenderdine WireX 1840 County Line Rd # 301, Huntingdon Valley, PA 19006 2 Steve Rade WireX 1840 County Line Rd # 301, Huntingdon Valley, PA 19006 3 Peter Blumenfeld H.L. Dalis 3535 24th St, Long Island City, NY 11106 4 Isabella Diep Technocel 685 Cochran St #200, Simi Valley, CA 93065 5 Frank Greico Technocel 685 Cochran St #200, Simi Valley, CA 93065 6 Tom Nelson Technocel 685 Cochran St #200, Simi Valley, CA 93065 7 Rami Rostami Technocel 685 Cochran St #200, Simi Valley, CA 93065 8 Andrea Roten Technocel 685 Cochran St #200, Simi Valley, CA 93065 9 Marty Wolf Technocel 685 Cochran St #200, Simi Valley, CA 93065 Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 31 of 47 31 Technocel, WireX, and H.L. Dalis expect to depose: Name of Deponent Party Affiliation Address 1 James Drobnick OtterBox C/O Lauren Schmidt. Brownstein Hyatt Farber Schreck, LLP 410 Seventeenth Street, Suite 2200 Denver, Colorado 80202-4432 2 James Myers OtterBox C/O Lauren Schmidt 3 Tyler Smith OtterBox C/O Lauren Schmidt 4 Peter Maher OtterBox C/O Lauren Schmidt 5 Kevin Flynn OtterBox C/O Lauren Schmidt 6 Peter Lindgren OtterBox C/O Lauren Schmidt 7 Kevin McPherson OtterBox C/O Lauren Schmidt 8 Larry Barker OtterBox C/O Lauren Schmidt 9 Glen Gregoris OtterBox C/O Lauren Schmidt 10 Brian Jacoby OtterBox C/O Lauren Schmidt 11 Brian Thomas OtterBox C/O Lauren Schmidt 12 Curt Richardson OtterBox C/O Lauren Schmidt 13 Michael Boyd Nite Ize C/O Jeffrey Roberts. Faegre Baker Daniels LLP Wells Fargo Center 1700 Lincoln Street, Suite 3200 Denver, CO 80203-4532 14 Jen Bryan Nite Ize C/O Jeffrey Roberts 15 Jan Greenspan Nite Ize C/O Jeffrey Roberts Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 32 of 47 32 Name of Deponent Party Affiliation Address 16 Rick Case Nite Ize C/O Jeffrey Roberts 17 Nick Salatino TESSCO Technologies C/O Kathryn A. Reilly. Wheeler Trigg O’Donnell, LLP 370 17th Street, Suite 4500 Denver, CO 80202-5647 2. List the names and addresses of persons each party expects to depose by written interrogatories under Rule 31. The parties do not anticipate deposing persons by written interrogatories under Rule 31. 3. State any disputes regarding the number of depositions and length of depositions. The parties disagree on the number of depositions to be taken in the three related cases. a. OtterBox and Defendant Distributors’ Position The Parties shall be limited to ten (10) fact witnesses per Side, in addition to corporate depositions under Federal Rule of Civil Procedure 30(b)(6). Depositions of any fact witnesses who have already been deposed in the Foreign Trade Corporation case (Civil Action No. 1:14- cv-03133-RPM) shall be limited to 3 ½ hours. b. Technocel, WireX, and H.L. Dalis’s Position OtterBox and Defendant Distributors, collectively, may depose up to 20 fact witnesses of the Plaintiff Distributors, with the allocation of such depositions among the Plaintiff Distributors to be decided at OtterBox and Defendant Distributors’ discretion. For illustrative purposes only, OtterBox and Defendant Distributors, collectively, could take five depositions of Technocel, eight depositions of WireX, and seven depositions of H.L. Dalis fact witnesses. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 33 of 47 33 Plaintiff Distributors, collectively, may depose up to 15 OtterBox fact witnesses (some potential witnesses identified above) and up to 12 Defendant Distributor fact witnesses (some potential witnesses identified above), with the allocation of such depositions among the Defendant Distributors to be decided at Plaintiff Distributors’ discretion. For illustrative purposes only, Plaintiff Distributors, collectively, could take five depositions of TESSCO Technologies, three of Ingram Micro, two of BrightStar, and two depositions of Nite Ize. 4. State any limitations which any party proposes on number of requests for production of documents and/or requests for admissions. The Parties agree that requests for production of documents and requests for admission shall be served as attachments to email, in which case service shall be deemed to be made when the e-mail is sent. a. Requests for production Proposed limitations are set forth in Section 7.G of this Scheduling Order. b. Requests for admission The parties agree to a limit of forty (40) requests for admission per Side, exclusive of requests for admission to establish the authenticity of documents, which shall be unlimited. If the same request for admission is served on more than one Party, the request shall be counted as one request for admission. F. Schedule for written interrogatories and responses. Each Side may serve up to twenty-five (25) interrogatories, excluding subparts, to each Opposing Party. Subparts must directly pertain to and reasonably derive from the subject of the interrogatory and cannot be used to avoid the prescribed limit on the number of interrogatories. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 34 of 47 34 The Parties agree that written interrogatories shall be served as attachments to e-mail, in which case service shall be deemed to be made when the e-mail is sent. G. Schedule for Requests for Production under Rule 34. 1. OtterBox and the Defendant Distributors’ Position Under the phased discovery schedule proposed by OtterBox and the Defendant Distributors under Section 8 of this Scheduling Order: During Phase I of the discovery period, OtterBox, WireX, and H.L. Dalis may issue requests for production for a period of 60 days beginning the Monday after the Scheduling Conference. OtterBox and Technocel will not issue any additional requests for production, but Technocel will re-do its original document production as set forth in Section 7.I.4 of this Scheduling Order. OtterBox will be limited to twenty (20) requests for production each to WireX and H.L. Dalis, and WireX and H.L. Dalis will be limited to thirty (30) combined requests for production to OtterBox. Request for production exchanged during Phase I of the discovery period shall not include requests for production concerning the Plaintiff Distributors’ antitrust claims against OtterBox. Responses and objections are due 30 days after service. During Phase II of the discovery period, all parties may issue requests for production for a period of 60 days from the date the Court rules on OtterBox and the Defendant Distributors’ motions to dismiss. Each Side may issue up to twenty (25) requests for production to each opposing Party, including all discrete subparts. Responses and objections are due 30 days after service. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 35 of 47 35 The parties must produce documents on a rolling basis, but no later than 120 days after service of written responses and objections to requests for production of documents. 2. Technocel, WireX, and H.L. Dalis’s position While Plaintiff Distributors do not interpret Federal Rules of Civil Procedure 26 and 34 as imposing limits on the number of requests for production a party can serve on another party and do not believe limitations are necessary here, given the claims and defenses in the three related cases, Plaintiff Distributors propose the following limitations: OtterBox may serve up to forty five (45) requests for production on WireX and H.L. Dalis, respectively, and WireX and H.L. Dalis, respectively, may serve up to forty five (45) requests for production on OtterBox. OtterBox and Technocel may serve up to 30 requests for production on one another. The Defendant Distributors, collectively, may serve up to thirty (30) requests for production to each Plaintiff Distributor. The Plaintiff Distributors, collectively, may serve up to thirty (30) requests for production to each Defendant Distributor. A Party served with a request for production will respond in writing to the request in the time permitted by Fed. R. Civ. P. 34(b)(2)(A). A Party will produce documents in response to a “set” of requests for production on a rolling basis, with the first such production, unless the producing Party and requesting Party otherwise agree, to occur within 45 days of receipt of the requests and with the last production in response to the requests to occur no later than 90 days after receipt. Neither a Side nor a Party may issue more than three sets of requests on an opposing Party. All requests for production will be issued no later than 90 days before the close of fact Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 36 of 47 36 discovery, except with leave of the Court or through agreement of a producing and receiving Party. H. Schedule for Requests for Admission under Rule 36. All requests for admission shall be served so that responses are due by the fact discovery cutoff established in Section 7.B of this Scheduling Order. Written responses and objections are due 30 days after service. I. Other Planning or Discovery Orders 1. Use of Information All information produced by any Party to the three related matters dating from the initiation of the Foreign Trade Corporation case (Civil Action No. 1:14-cv-03133-RPM), including but not limited to written discovery responses, document productions, deposition testimony, and information obtained from third parties, will be equally available to any party in the related matters for use in all three of the related matters, subject to the terms of the parties’ Stipulated Confidentiality Agreement and Protective Order. 2. Third party discovery The parties intend to seek discovery from third parties, including depositions. The parties have agreed that third-party discovery is not subject to the limitations set forth above, with the exception of fact witnesses who are former party employees. The parties agree that depositions of former party employees will count toward the total deposition limits established in Section 7.E of this Scheduling Order. 3. Federal Rules The December 1, 2015, amendments to the Federal Rules of Civil Procedure shall govern all three related cases unless the Court directs otherwise. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 37 of 47 37 4. Technocel’s Document Production a. OtterBox’s Position Technocel will re-run its electronic document production under the terms agreed to between OtterBox and Technocel on December 9, 2015. Under that agreement-which Technocel also agreed to in the Joint Statement for Consolidated Discovery filed with this Court in paper form on March 8, 20162 (Civil Action No. 14-cv-03133-RPM, Section II.2.a.1)- OtterBox is permitted to delineate the parameters, custodians, and search terms for Technocel’s production through a meet and confer process with Technocel. Technocel’s document production shall be due on September 2, 2016. OtterBox reserves the right to re-open depositions to address any new information produced by Technocel in its revised production. b. Technocel’s Position Technocel and OtterBox did not come to an agreement to re-run Technocel’s electronic document production. During correspondence in early December 2015, OtterBox threatened to file a motion to compel regarding Technocel’s electronic document production. On December 4, 2015, seeking to avoid the need for judicial intervention for a discovery issue, Technocel set forth a proposal whereby Technocel would re-run its electronic document production under the terms OtterBox set forth above. However, by email response on December 5, 2015, OtterBox rejected Technocel’s proposal and set forth a counterproposal. In response thereto on December 9, 2015, Technocel rejected OtterBox’s counterproposal, and, frustrated by OtterBox’s continuing unreasonable demands, stated a refusal to continue negotiations on the subject. In a further email on December 9, 2015, OtterBox purported to accept Technocel’s proposal of 2 The Joint Statement for Consolidated Discovery was filed directly with the Court per the Court’s February 23, 2016 Minute Order (Doc. No. 61). Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 38 of 47 38 December 4, 2015, which proposal OtterBox had rejected and which proposal was no longer on the table. Moreover, in this purported acceptance, OtterBox added contrary terms, in particular a reservation of rights to file a motion to compel. In that the negotiations had been conducted in an attempt to avoid a motion to compel, such a reservation would have been counterproductive and rejected by Technocel outright. As such, contrary to OtterBox’s position, Technocel and OtterBox did not in fact come to an agreement on December 9, 2015 whereby Technocel would re-run its electronic document production. 8. SCHEDULING ISSUES A. Timing of Discovery 1. OtterBox and Defendant Distributors’ Position Following a good faith effort, the parties have been unable to reach an agreement on the timing of discovery. Broadly, OtterBox and the Defendant Distributors propose a phased discovery schedule that would allow OtterBox and the Plaintiff Distributors to begin discovery after the Scheduling Conference on all state law claims and counterclaims that are not subject to OtterBox’s motions to dismiss, but would stay all discovery related to (1) the Plaintiff Distributors’ antitrust claims and (2) the Plaintiff Distributors’ state law claims against the Defendant Distributors until the Court rules on the parties’ motions to dismiss, which are not yet fully briefed. Burdensome antitrust discovery should be postponed until it is clear that Plaintiffs have stated a viable antitrust claim. The Supreme Court has recognized “the unusually high cost of discovery in antitrust cases” and that even “careful case management” is often unable to weed Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 39 of 47 39 out groundless antitrust claims early enough in the discovery process to protect defendants from discovery abuse. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007); see also Compliance Mktg., Inc. v. Drugtest, Inc., No. 09-cv-01241-JLK, 2010 WL 1416823, at *3 n.16 (D. Colo. Apr. 7, 2010); TV Commcn’s Network, Inc. v. ESPN Inc., 767 F. Supp. 1062 (D. Colo. 1991) (discussing the “heavy cost of modern antitrust litigation”). Accordingly, the Court has emphasized that “before proceeding to discovery, a complaint must allege facts suggestive of illegal conduct.” Twombly, 550 U.S. at 559. In other words, in view of the extraordinary costs of antitrust discovery, a trial court should require an antitrust plaintiff to establish its complaint satisfies Twombly’s pleading standards before allowing burdensome discovery on sprawling antitrust claims to proceed. Id. The recent amendments to the Federal Rules of Civil Procedure also emphasize the need for proactive steps to reduce the costs of litigation. See Fed. R. Civ. P. 1, Advisory Comm. Note (2015). The Federal Rules expressly authorize phasing as an appropriate component of a discovery plan. See Fed. R. Civ. P. 26(f)(3)(B) (requiring statement on “whether discovery should be conducted in phases”). Defendants’ phasing proposal is also an appropriate exercise of this Court’s discretion under Rule 26(c) and String Cheese to stay discovery on Plaintiffs’ antitrust claims while Defendants’ motions to dismiss those claims are pending, but to allow discovery to proceed on claims that are not subject to pending motions to dismiss. See String Cheese Incident, LLC v. Stylus Shows, Inc., No. 1:02-cv-01934-LTB-PAC, 2006 WL 894955, at *2 (D. Colo. Mar. 30, 2006); see also Harbinger Capital Partners LLC v. Ergen, No. 14-cv-01907-WJM-KMT, 2015 WL 1133503, at *1 (D. Colo. Mar. 10, 2015) (citing cases). Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 40 of 47 40 (1) The interest of the plaintiff. The Plaintiff Distributors have demonstrated a diminished interest in proceeding expeditiously. Technocel filed the original iteration of this lawsuit over a year and a half ago. During that time Technocel sought numerous extensions from OtterBox (see Doc. No. 45 in Case No. 14-cv-03133-RPM (cataloging these requests)), culminating in a December 2015 motion to extend discovery and dispositive motions deadlines (Doc. No. 36 in Case No. 14-cv-03133-RPM). Similarly, H.L. Dalis and WireX filed counterclaims in December 2015, only to overhaul their pleadings and effectively restart the case in April 2016. Plaintiffs’ slow-moving prosecution of their case weighs in favor of phased discovery. Nor will phased discovery prejudice the Plaintiffs. The parties have stipulated to a fact discovery cut-off of July 28, 2017, twelve months after the motions to dismiss are fully briefed, which will leave the parties sufficient time to conduct antitrust discovery if the antitrust claims survive. In addition, Defendants’ phased discovery proposal contemplates that discovery regarding the state law claims between OtterBox and the Plaintiff Distributors-which is substantial-will begin immediately after the initial scheduling conference, alleviating any concern that discovery will be unduly delayed while the motions to dismiss are pending. (2) The burden on the defendant. Permitting antitrust discovery to begin immediately will cause an undue burden, especially upon the Distributor Defendants, who are strangers to this case and who may be dismissed from this case entirely if their motions are granted. See Thornton, 2013 WL 5567560, at *2 (“Where a pending motion may dispose of an action, however, a stay of discovery may allow the Court to avoid expending resources in managing an action that ultimately will be dismissed.”) The antitrust claims will involve discovery among Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 41 of 47 41 eight parties who are spread out between California and New York, creating significant travel and logistical costs. Moreover, Plaintiffs are proposing extensive (and in Defendants’ view grossly excessive) discovery limits including 47 fact witness depositions plus an additional Rule 30(b)(6) deposition for each party, for a total of 55 depositions. This burden is exceptional. See Thornton v. DaVita Healthcare Partners, Inc., No. 13-cv-00573-RBJ-KMT, 2013 WL 5567560, at *2 (D. Colo. Oct. 8, 2013) (finding 150 potential discovery requests and 40 potential depositions to be unduly burdensome); Warad West LLC v. Sorin CRM USA Inc., No. 14-cv- 03242-WJM-KLM, 2015 WL 1577635, at *2 (D. Colo. Apr. 3, 2015) (finding requests for 15 depositions, 100 interrogatories, 100 requests for production, and 100 requests for admission to be unduly burdensome). Moreover, even if antitrust discovery is reasonably circumscribed, the costs incurred will be wasteful if these claims are dismissed. See Owens v. Nationstar Mortgage LLC, No. 14-cv-01434-PAB-KLM, 2014 WL 6733051 at *2 (D. Colo. Nov. 24, 2014) (potential wastefulness favors stay). (3) The convenience to the court of staying discovery. Postponing potentially contentious antitrust discovery will conserve the Court’s time and resources. This is particularly true as to the Distributor Defendants, whose omnibus motions to dismiss may dispose of the entire case against them. See Thornton, 2013 WL 5567560, at *2. (4) The interests of nonparties. Antitrust discovery likely will entail discovery of other industry participants, including smartphone manufacturers, distributors, and retailers. These parties will be unnecessarily burdened if Plaintiffs’ antitrust claims are dismissed. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 42 of 47 42 (5) The public interest. The “public’s only interest in this case is a general interest in its efficient and just resolution. Avoiding wasteful efforts by the Court clearly serves this interest.” See Harbinger Capital, 2015 WL 1133503, at *2. The String Cheese factors favor phasing discovery and deferring antitrust discovery until Defendants’ motions to dismiss are resolved. 2. Technocel, WireX Group, and H.L. Dalis’s Position 2. Technocel, Wireless Xcessories Group, and H.L. Dalis Position Defendants are asking this Court to order that discovery (a) proceed on OtterBox’s state claims, and (b) be stayed on Technocel, WireX, and H.L. Dalis’ antitrust and certain state claims.3 Stays of proceedings are the exception and “disfavored in this District.” Christou v. Beatport LLC, 2011 U.S. Dist. LEXIS 19055, at *4 (D. Colo. Feb. 10, 2011). See Jayne v. Bank of Am., N.A., 2012 U.S. Dist. LEXIS 150834, at *3 (D. Colo. Oct. 19, 2012 (noting “disfavored status of stays in this District); Commodity Futures Trading Com ‘n v. Chilcott Portfolio Mgmt., Inc., 713 F.2d 1477, 1484 (10th Cir. 1983) (“The right to proceed in court should not be denied except under the most extreme circumstances.”). Defendants seek the stay until the Court decides their motions to dismiss. Yet, it “generally is the policy in this district not to stay discovery pending a ruling on a motion to dismiss.” Chavez v. Young Am. Ins. Co., 2007 U.S. Dist. LEXIS 15054, at *2 (D. Colo. Mar. 2, 2007) (citing Ruampant v. Moynihan, 2006 U.S. Dist. LEXIS 57304, at *4-5 (D. Colo. Aug. 14, 2006)). This rule equally applies to antitrust 3 Plaintiff Distributors asked Defendants to address their request for stay pursuant to Fed. R. Civ. P. 26(c). Under Rule 26(c), the “party seeking a protective order … has the burden of demonstrating good cause and cannot sustain that burden simply by offering conclusory statements. [It] must make a particular and specific demonstration of fact in support of its request.” Christou, at *4. Defendants declined to file a 26(c) motion. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 43 of 47 43 cases. See, e.g., SolidFX, LLC v. Jeppesen Sanderson, Inc., 2011 U.S. Dist. LEXIS 101787, at *5 (D. Colo. Sept. 8, 2011) (noting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) does not “erect an automatic, blanket prohibition” on discovery pending a 12(b)(6) motion in an antitrust case and using the “sound discretion of the district court” to deny stay pending motion to dismiss antitrust claims). String Cheese Incident, LLC v. Stylus Shows, Inc., 2006 U.S. Dist. LEXIS 97388, at *4-5 (D. Colo. March 30, 2006) identifies five factors courts in this District typically apply when considering requests for stay: “(1) plaintiff’s interests in proceeding expeditiously with the civil action and the potential prejudice to plaintiff of a delay; (2) the burden on the defendants; (3) the convenience to the court; (4) the interests of persons not parties to the civil litigation; and (5) the public interest.” None of them weigh in favor of Defendants’ request here. Plaintiff Distributors are happy to elaborate on their position as to each factor as the Court directs and add that OtterBox’s request to proceed with its discovery on its breach of contract and related claims only heightens the need to deny the stay. Because the parties’ various claims and defenses arise, in many respects, from the same, general bed of facts, all discovery should proceed without delay. For example, facts relevant to Plaintiff Distributors’ antitrust claim may also be relevant to their claim that OtterBox breached its implied covenant of good faith and fair dealing. As the court in SolidFX (at *9) recognized, “staying the antitrust discovery while allowing discovery on the breach of contract claim could lead to increased discovery disputes requiring greater rather than less judicial involvement in the discovery process.” Moreover, prohibiting Plaintiff Distributors from taking discovery on their antitrust and state claims while OtterBox presses its claims would unfairly prejudice Plaintiff Distributors - discovery on Plaintiff Distributors’ claims will inform Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 44 of 47 44 and assist them in mounting their respective defenses to OtterBox’s claims, which, in essence, are the flip side of Plaintiff Distributors’ state claims. If the Court decides to grant a partial stay and subsequently denies Defendants’ motions to dismiss, Plaintiff Distributors would ask the Court to take the period of the stay into consideration if Plaintiff Distributors seek an extension of discovery deadlines and modifications to other aspects of the Scheduling Order (e.g., duration of depositions). 9. TRIAL DATE AND LENGTH OF TRIAL WILL BE SET AT THE PRE-TRIAL CONFERENCE TO BE SCHEDULED AFTER COMPLETION OF DISCOVERY. 10. AMENDMENTS TO SCHEDULING ORDER This Scheduling Order may be altered or amended only upon a showing of good cause. DATED this _____ day of ____________, 2016. BY THE COURT: _________________________________ Richard P. Matsch, Senior District Judge Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 45 of 47 45 Scheduling Order Reviewed June 21, 2016: s/ Lauren E. Schmidt Lauren E. Schmidt Elizabeth G. Tillotson Patrick B. Hall BROWNSTEIN HYATT FARBER SCHRECK, LLP 410 Seventeenth Street, Suite 2200 Denver, Colorado 80202-4432 Telephone: 303.223.1100 E-mail: lschmidt@bhfs.com; etillotson@bhfs.com; phall@bhfs.com Karma M. Giulianelli Eric R. Olson BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP 1899 Wynkoop Street, 8th Floor Denver, CO 80202 Telephone: 303.592.3100 E-mail: karma.giulianelli@bartlit-beck.com; eric.olson@bartlit-beck.com Counsel for Defendant and Counter Claimant Otter Products, LLC s/ Farhad Novian John Cardinal Parks Todd R. Seelman Christopher H. Wood Robin E. Alexander Alyssa Watzman LEWIS BRISBOIS BISGAARD & SMITH, LLP 1700 Lincoln Street, Suite 4000 Denver, CO 80203 Telephone: 303.861.7760 E-mail: john.parks@lewisbrisbois.com; todd.seelman@lewisbrisbois.com; christopher.wood@lewisbrisbois.com; robin.alexander@lewisbrisbois.com; alyssa.watzman@lewisbrisbois.com Farhad Novian Jonathan A. Schaub NOVIAN & NOVIAN LLP 1801 Century Park East, Suite 1201 Los Angeles, CA 90067 Telephone: 310-553-1222 E-mail: farhad@novianlaw.com; jonathan@novianlaw.com Counsel for Plaintiff and Counter Defendant Foreign Trade Corporation d/b/a Technocel; Counsel for Defendant and Counter Claimant Wireless Xcessories Group, Inc.; Counsel for Defendant and Counter Claimant H.L. Dalis, Inc. Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 46 of 47 46 s/ Kathryn Reilly Kathryn A. Reilly Thomas A. Olsen WHEELER TRIGG O’DONNELL, LLP 370 17th Street, Suite 4500 Denver, CO 80202-5647 Telephone: 303-244-1800 E-mail: reilly@wtotrial.com; olsen@wtotrial.com Counsel for Defendant TESSCO Technologies, Inc. s/ Richard H. Cunningham Gregory J. Kerwin Richard H. Cunningham Reid F. Rector GIBSON DUNN & CRUTCHER LLP 1801 California Street, Suite 4200 Denver, CO 80202-2642 Telephone: 303.298.5700 E-mail: gkerwin@gibsondunn.com; rhcunningham@gibsondunn.com; rrector@gibsondunn.com Counsel for Defendant Ingram Micro, Inc. s/ Jeffrey S. Roberts Jeffrey S. Roberts FAEGRE BAKER DANIELS LLP Wells Fargo Center 1700 Lincoln Street, Suite 3200 Denver, CO 80203-4532 Telephone: 303-607-3792 E-mail: jeff.roberts@faegrebd.com Matthew D. Clark FAEGRE BAKER DANIELS LLP 1470 Walnut Street, Suite 300 Boulder, CO 80302-5335 Telephone: 303-447-7727 E-mail: matthew.clark@faegrebd.com Counsel for Defendant Nite Ize, Inc. s/ Paul Olszowka Paul Olszowka Brian W. Lewis BARNES & THORNBURG, LLP One North Wacker Drive, Suite 4400 Chicago, IL 60606-2833 Telephone: 312-357-1313 E-mail: paul.olszowka@btlaw.com; brian.lewis@btlaw.com Frank W. Visciano Devin N. Visciano SENN VISCIANO CANGES, P.C. 1700 Lincoln Street, Suite 4500 Denver, CO 80203 Telephone: 303-298-1122 E-mail: fvisciano@sennlaw.com; dvisciano@sennlaw.com Counsel for Defendant BrightStar Corporation 013970\0016\14787361.10 Case 1:15-cv-02591-RPM Document 103-1 Filed 05/18/17 USDC Colorado Page 47 of 47