Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-00329-WYD-CBS CACHE LA POUDRE FEEDS, LLC Plaintiff, v. LAND O' LAKES, INC., LAND O' LAKES FARMLAND FEED, LLC., AMERICAN PRIDE CO-OP, POUDRE VALLEY COOPERATIVE ASSOCIATION, INC., FRANK BEZDICEK, and ROBERT DeGREGORIO Defendants. DEFENDANTS' REPLY IN SUPPORT OF MOTION IN LIMINE TO EXCLUDE EXPERT TESTIMONY OF A. CARR CONWAY Defendants, through their counsel, respectfully submit this reply in support of their motion in limine to exclude the expert testimony of A. Carr Conway: INTRODUCTION Plaintiff's expert A. Carr Conway has formed opinions regarding whether Land O' Lakes satisfied disclosure requirements in three specific SEC filings. Land O' Lakes argued in its motion in limine that this is not an issue in this case. Remarkably, in its Response, Plaintiff makes absolutely no attempt to argue that Land O' Lakes' compliance with SEC reporting requirements is an issue for trial. Indeed, Plaintiff expressly disclaims any intent to use Mr. Conway's opinions to establish that Land O' Lakes violated securities laws. Response, at 14. Instead, Plaintiff contends that Mr. Conway's opinions that Land O' Lakes engaged in fraudulent, misleading, and willful conduct are relevant to various claims before the Court. Yet

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Mr. Conway formed no such opinions. In fact, Mr. Conway declined to offer any opinion as to whether Land O' Lakes' conduct was fraudulent or misleading, stating only that it "could be." Even if he had formed one, an opinion that three specific Land O' Lakes SEC filings were fraudulent would do nothing to support Plaintiff's claims in this case. Mr. Conway's opinions are not probative of any of the issues Plaintiff identifies in its Response, and if they were the marginal probative value of the testimony would be outweighed by its prejudicial effect. I. MR. CONWAY FORMED NO OPINION AS TO WHETHER LAND O' LAKES' CONDUCT WAS MISLEADING, FRAUDULENT OR DECEPTIVE Plaintiff asserts that Mr. Conway's opinions that Land O' Lakes' conduct was misleading, fraudulent and deceptive are relevant to various issues in this case. E.g., Response at 1-2. The fundamental flaw in Plaintiff's position is that Mr. Conway did not offer any opinions that Land O' Lakes' conduct was misleading, fraudulent, or deceptive. Mr. Conway's expert opinions are directed to Land O' Lakes' compliance with securities laws and regulations. His passing observations that inadequate disclosures "could" "perhaps" "be considered" fraudulent or misleading do not constitute expert opinions worthy of the jury's consideration. It is apparent from a cursory review of his expert report that Mr. Conway's focus was on Land O' Lakes' disclosure obligations under the securities laws and SEC regulations. Defendants' Motion in Limine to Exclude Expert Testimony of A. Carr Conway, Exhibit 1. Mr. Conway was candid in his deposition that his expertise is in "accounting and securities disclosure" and his expert opinions pertained to "securities disclosure requirements and to accounting requirements, including disclosures specifically required by accounting standards." Motion in Limine, Exhibit 2, at 17:3-9, 32:3-7. He did not attempt to formulate an opinion as to whether Land O' Lakes committed fraud, a question he understood to be left to the finder of 2

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fact, and he expressly disclaimed any opinion about whether Land O' Lakes engaged in deceptive trade practices. Id. at 31:1-6, 112:16-113:15. Certainly Plaintiff was aware that disclosure obligations under the securities laws were the focus of Mr. Conway's testimony when it prepared its witness list attached to the Pretrial Order signed by the Court on April 10, 2007, which specified that Mr. Conway would opine as to the following: a. Because the use of the trademark "Profile" by LOL appears to have been a key factor to success and started at the earliest in late 2001, there should have been disclosure about its use in the Form S4 filed on or about March 18, 2002 by LOL. That disclosure should have included a full discussion of how LOL intended to use that trademark, including disclosure of any impediments to full and unfettered use of the mark. The disclosure should have included an appropriate discussion of any known use of a similar trademark by other parties, or, absent a thorough search before starting use of the trademark, the implications of less than a thorough search. b. There should have been much more extensive discussion of the trademark "Profile" in the Form 10-K for LOL Feed filed on or about March 18, 2002. The disclosure should have discussed in detail the ongoing dispute about ownership of the trademark. There should have been disclosures in the Business section, as well as Legal Proceedings and MD&A. c. There should have been a more extensive discussion of the trademark "Profile" in the Form 10-K for 2003 filed by LOL Feed. The discussion should have been expanded to address the dispute about the trademark and effects, and possible effects, on LOL's operations. d. Subject to further development of all facts, the disclosures and lack of information referenced above could mislead the general public and could appear to operate a deceit or perhaps even a fraud upon those relying upon such reports for accurate information, and may even be considered by some finders of fact as more apparent than a use of non-GAAP cookie jar reserves as deemed to be fraudulent in the Sunbeam situation and that the statements made regarding such lack of disclosures appeared truthful and well founded [sic].

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e. In the SEC filings above mentioned, LOL should have made an assessment of any necessary accrual and disclosures about any possible contingent liability relative to the trademark disputes. f. Appropriate disclosures should have been made by LOL of the risks and uncertainties in its SEC filings, including a detailed discussion of the ongoing dispute about the ownership of the trademark. g. The attempted purchase of the trademark "Profile" from Bioglan demonstrates the importance of the trademark to LOL. h. The proposed scheme involving the Bioglan transaction could be determined as an attempt to operate a deceit or perhaps even a fraud upon those who were to eventually have been lead [sic] to believe that unquestioned rights existed as a result of the intended transaction and that the statements made regarding such a situation appeared truthful and well founded. i. LOL had obligations to provide full and fair disclosure to investors about its business operations involving the "Profile" trademark, particularly disclosures pursuant to FAS5 and SOP 94-6, and depending on likelihood, whether the contingent loss could be reasonably estimated, accrued any contingent loss. Exhibit A to Final Pre-Trial Order, pp. 38-40. Most of the nine topics Plaintiff identified for Mr. Conway's expert testimony pertain to the adequacy of disclosures in three Land O' Lakes filings with the SEC. Only two topics ­ (d) and (h) ­ make any reference at all to whether inadequate disclosures "could" be misleading. Even though Plaintiff's list of topics for Mr. Conway primarily goes to the adequacy of disclosures in Land O' Lakes' SEC filings, Plaintiff now implicitly concedes that Land O' Lakes' compliance with securities laws and regulations is not at issue in this case.1 See Response to Land O' Lakes Motion in Limine, at 14 (Plaintiff "does not intend to argue that

1

Because Land O' Lakes' securities compliance was plainly never relevant to this case, Land O' Lakes did not endorse an expert on this topic. Plaintiff's suggestion that the Court should infer that Land O' Lakes "realizes that its disclosures were misleading," Response at 13, is preposterous.

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Land O' Lakes violated the securities law"). Rather, Plaintiff asserts that Mr. Conway's opinions are relevant to prove that Land O' Lakes misled the SEC and investors, Response at 46, that Land O' Lakes engaged in willful trademark infringement and other "corporate misconduct,' id. at 7-8, deceived the public, id. at 8-10, and acted maliciously and fraudulently, id. at 10-11. Yet Mr. Conway did not form any such opinions; indeed, he declined to make any pronouncement as to whether Land O' Lakes engaged in deceit or fraud. This is apparent from the language in Mr. Conway's report Plaintiff itself prominently quotes in its Response: Subject to further development of all facts, the disclosures and lack of information referenced above could mislead the general public and could appear to operate a deceit or perhaps even a fraud upon those relying upon such reports for accurate information and may even be considered by some finders of fact as more apparent than a use of non-GAAP cookie jar reserves as deemed to be fraudulent in the Sunbeam situation. Response at 6 (emphasis added).2 This is not an opinion that Land O' Lakes engaged in fraudulent or deceptive conduct; it is an acknowledgment of the mere possibility of deceit or fraud. Plaintiff may not present expert testimony on mere possibilities. Rather, "expert opinions must be based on facts which enable the expert to express a reasonably accurate conclusion as opposed to conjecture or speculation." Dodge v. Cotter Corp., 328 F.3d 1212, 1222 (10th Cir. 2003) (reversing trial court for failure to assure that expert testimony was relevant and based on valid reasoning) (quoting Gomez v. Martin Marietta Corp., 50 F.3d
2 This language also appears verbatim in Item (d) above from the witness list attached to the Final Pretrial Order. Item (h) is similarly couched in guarded, speculative terms: "The proposed scheme involving the Bioglan transaction could be determined as an attempt to operate a deceit or perhaps even a fraud ..." Exhibit A to Final Pre-Trial Order, at 40 (emphasis added).

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1522, 1519 (10th Cir. 1995)); see also 31A Am. Jur. 2d Expert and Opinion Evidence § 66 (2007) ("expert opinions, if not stated in terms of the certain, must at least be stated in terms of the probable, and not merely the possible"). Mr. Conway declined to do more than speculate that Land O' Lakes' SEC filings "could" constitute fraud or deceit. Moreover, as Mr. Conway did not reach a conclusion on this question, he likewise did not attempt to state a basis for any conclusion.3 See Gallegos v. Swift & Co., 237 F.R.D. 633, 640 (D. Colo. 2006) (Babcock, C.J.) (finding expert statement inadmissible under Rule 702 because "it provides no basis for his conclusions"). Plaintiff may not present Mr. Conway to testify as an expert on whether Land O' Lakes' conduct was fraudulent or deceptive, when he never reached or disclosed any expert opinion on that question. II. OPINIONS THAT LAND O' LAKES' SEC FILINGS WERE DECEPTIVE ARE NOT PROBATIVE OF ANY ISSUES AT TRIAL Even if Mr. Conway had offered the opinions Plaintiff mistakenly believes he stated, opinions as to the supposed fraudulent or deceptive nature of Land O' Lakes' SEC filings is not probative of the issues before this Court. Plaintiffs' assertions to the contrary are flawed generally because they proceed from the false assumption that any misconduct is relevant to prove willful infringement and deceptive trade practices. Expert testimony about SEC filings is not probative of any of the specific issues Plaintiff raises. Finally, any tangential probative value is outweighed by its prejudicial effect.

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Of course, if Mr. Conway had reached a conclusion that Land O' Lakes' SEC filings were deceitful or fraudulent, Land O' Lakes would have been able to challenge the basis for his findings under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Since he made no such determination, there was no opportunity and no need for Land O' Lakes to challenge his methodology.

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A.

Plaintiff Is Not Entitled to Present Evidence of Purported Misconduct Unrelated to the Claims at Issue.

Plaintiff repeatedly suggests that Mr. Conway's opinions are evidence of "corporate misconduct" by Land O' Lakes. E.g., Response at 7 ("Mr. Conway's opinions are, at least, circumstantial evidence of willful corporate misconduct"), 8 (Mr. Conway's opinions are "obviously relevant to prove LOL's corporate misconduct in regard to the Profile trademark"), 10 ("LOL's misconduct as will be testified to by Mr. Conway is evidence of corporate misconduct which shows LOL's intent to deceive"). This incorrectly assumes that any corporate misconduct is relevant to Plaintiff's various claims.4 There is a complete disconnect between Plaintiff's purported evidence of Land O' Lakes' "misconduct" in preparing SEC filings and the misconduct that would be relevant to the claims before this Court. An officer driving recklessly in a company delivery truck might be evidence of "corporate misconduct," but it would have nothing to do with this case. Plaintiff may not present Mr. Conway's expert testimony unless it can show that it has probative value on the claims at issue. B. Mr. Conway's Opinions Are Not Probative of Any of the Claims At Issue.

Plaintiff contends that Mr. Conway's testimony is probative of its claims for intentional trademark infringement, trademark disparagement, and deceptive trade practices, and is further probative of Plaintiff's request for punitive and enhanced damages and Defendants' counterclaim for libel. None of these assertions withstands scrutiny.

4

This repeats the faulty premise of Plaintiff's Motion in Limine to Allow Evidence of Defendants' Destruction of Evidence to Prove Willful Misconduct. In that motion, Plaintiff falsely assumed that willful conduct in discovery is probative of willfulness in the context of trademark infringement. See Defendants' Response Plaintiff's Motion in Limine to Allow Evidence of Defendants' Destruction of Evidence to Prove Willful Misconduct, at 10-11.

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Plaintiff utterly fails to show any connection between Land O' Lakes' SEC filings and Plaintiff's claim for intentional trademark infringement. Plaintiff asserts that it may prove willful infringement through circumstantial evidence, Response at 7-8, but fails to explain how supposed "misconduct" in a 10-K filing provides any support (either direct or circumstantial) for the conclusion that Defendants intended to benefit from the goodwill that Plaintiff created in the mark. See, e.g., Western Diversified Services, Inc. v. Hyundai Motor America, Inc., 427 F.3d 1269, 1273 (10th Cir. 2005); King of the Mountain Sports, Inc v. Chrysler Corp. 185 F.3d 1084, 1089 (10th Cir. 1999). Similarly, Plaintiff attempts to tie Mr. Conway's testimony to Land O' Lakes' good faith junior user defense, but Land O' Lakes good faith in preparing its SEC filings has nothing to do with its good faith in adopting the mark at issue. Plaintiff contends that Mr. Conway's testimony will support a claim for trademark disparagement. Response at 8-9. However, no claim for trademark disparagement appears in Plaintiff's Third Amended Complaint. Plaintiff claims to find support for this nonexistent claim in that "Mr. Conway's opinions reveal that LOL willfully misrepresented the strength of its alleged Profile trademark to the detriment of [Plaintiff] and [Plaintiff's] Profile trademark." Response at 9.5 This is directly contrary to Mr. Conway's deposition testimony: Q. Did you do anything to attempt to determine whether Land O'Lakes disclosures had any impact at all on Cache LaPoudre's business? A. No, I did not make an assessment of that. Motion, Ex. 2, at 35:22-25.

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Plaintiff cites pages 19-20 of Mr. Conway's report for this statement, but nothing in those pages states that Land O' Lakes "willfully misrepresented" anything or that its SEC filings caused any "detriment" to Plaintiff.

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Next Plaintiff argues that Mr. Conway's opinions support a claim for deceptive trade practices, arising out of the fact that Land O' Lakes improperly used the "®" trademark symbol.6 Response at 9-10. Plaintiff offers no authority that misuse of the "®" symbol constitutes a deceptive trademark practice within the meaning of the Colorado Consumer Protection Act, nor any explanation for why the Colorado Legislature omitted any trademark provisions from its extensive list of statutory violations that it defined as deceptive practices. See C.R.S. § 6-1-105. More to the point, Plaintiff ignores that fact that Mr. Conway says absolutely nothing about Land O' Lakes' use of the "®" symbol anywhere in his report, and at his deposition disclaimed any opinion as to whether Land O' Lakes engaged in a deceptive trade practice: Q Did you form an expert opinion as to whether Land O' Lakes engaged in deceptive trade practices? A I did not form an opinion to that end. That was not within the scope that I was asked to review. Motion, Ex. 2 at 31:1-6. Plaintiff's contention that Mr. Conway's opinions have some bearing on its claims for punitive or enhanced damages and attorneys' fees, Response at 10-11, again proceeds from equating any misconduct with misconduct in the context of trademark infringement. By Plaintiff's own authority, the issue is whether "the trademark infringement is `malicious, fraudulent, deliberate or willful.'" Response at 11 (quoting VIP Funds, Inc. v. Vulcan Pet, Inc., 675 F.2d 1106, 1107 (10th Cir. 1982)).

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Of course, Land O' Lakes does not agree its use of this symbol was improper, since it had purchased rights to the "Profile" name from Bioglan.

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If Mr. Conway's testimony is not probative of any of its own claims for relief, Plaintiff asserts that it is still probative as to Land O' Lakes' counterclaim for libel, because it demonstrates that Mr. Treiber's statement that "Land O' Lakes went so far as to mislead both the Securities and Exchange Commission and investors in its 10-K filing" was true. Response, at 4-6. This is a transparent last-minute attempt to reform Mr. Conway's expert opinions ­ there is absolutely no mention of Land O' Lakes' counterclaims or Mr. Treiber's allegedly defamatory statements to be found either in Mr. Conway's expert report or the nine topics for his testimony in Plaintiff's pretrial witness list quoted above. This belated attempt to reframe Mr. Conway's opinions fails, because Plaintiff can direct the Court to no statement in Mr. Conway's report or his deposition testimony concluding that Land O' Lakes misled the SEC and investors with its 10-K filing. As discussed above, Mr. Conway states at most that the disclosures in Land O' Lakes' filings "could mislead" the general public, which hardly "directly disprove[s]" Land O' Lakes claim for libel. Response, at 6. Even if the Court deemed Mr. Conway's opinions probative on this point, this would not justify introducing Mr. Conway's testimony in Plaintiff's case in chief, but at most would leave the door open to potential testimony in the rebuttal phase of trial. Because Mr. Conway's opinions do not support any of Plaintiff's remaining claims for relief, the Court should exclude his expert testimony under Rules 402 and 702. C. Even if Relevant, Mr. Conway's Testimony Is Unduly Prejudicial and Will Confuse and Mislead The Jury.

Even if the Court were prepared to give some credence to Plaintiff's contention that any "corporate misconduct" could bear on the claims at issue, the tangential support Plaintiff might claim from evidence about Land O' Lakes' SEC filings is far outweighed by its unfairly 10

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prejudicial effect. Plaintiff argues that any danger of confusion or an emotional response can be eliminated with an instruction to the jury that it decide the case "without bias or prejudice." Response at 13-14.7 While it is pleasant to imagine so, if it were actually such a trivial matter to eliminate prejudice, Rule 403 would not exist. The jury should not be burdened with evaluating Land O' Lakes' compliance with securities laws, when Plaintiff concedes that any such violation forms no part of its case. CONCLUSION The Court should excluded Mr. Conway's testimony pursuant to Fed. R. Evid. 402, 403, and 702. Respectfully submitted this 11th day of May, 2007. s/ Van Aaron Hughes Tucker K. Trautman Gregory S. Tamkin V. Aaron Hughes Elizabeth L. Morton DORSEY & WHITNEY LLP 370 17th Street, Suite 4700 Denver, CO 80202-5647 Telephone: (303) 629-3400 Facsimile: (303) 629-3450 E-mail: [email protected] [email protected] [email protected] [email protected] Attorneys for Defendants Land O' Lakes, Inc.; Land O' Lakes Farmland Feed, LLC; American Pride Co-Op; Poudre Valley Cooperative Association, Inc.; Frank Bezdicek; and Robert DeGregorio

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Plaintiff also suggests a remarkably slanted jury instruction about Mr. Conway, Response at 14, which Land O' Lakes submits only illustrates the extent to which Plaintiff hopes to confuse and prejudice the jury with Mr. Conway's testimony.

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on May 11, 2007, I caused the foregoing document, DEFENDANTS' REPLY IN SUPPORT OF MOTION IN LIMINE TO EXCLUDE EXPERT TESTIMONY OF A. CARR CONWAY, to be electronically filed with the Clerk of Court using the CM/ECF system. Notification of such filing will be sent to the following e-mail addresses: [email protected] [Luke Santangelo] [email protected] [Cheryl Lynn Anderson] [email protected] [Thomas R. French] [email protected] [Randy E. Dunn] s/ Van Aaron Hughes V. Aaron Hughes Attorneys for Defendants DORSEY & WHITNEY LLP 370 Seventeenth Street, Suite 4700 Denver, CO 80202-5647 Telephone: (303) 629-3400 Facsimile: (303) 629-3450 E-mail: [email protected]

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