Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-00329-WYD-CBS

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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, ROBERT DeGREGORIO Defendants. DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION IN LIMINE TO ALLOW EVIDENCE OF DEFENDANT'S DESTRUCTION OF EVIDENCE TO PROVE WILLFUL MISCONDUCT Defendants, through their undersigned counsel, respond to Plaintiff's Motion in Limine as follows: INTRODUCTION In his March 2, 2007 Order ("Order"), Magistrate Judge Shaffer expressly found that Land O' Lakes' failure to preserve electronic documents was not the product of bad faith. Nevertheless, Plaintiff seeks to introduce at trial six discrete factual findings from that Order as evidence that Land O' Lakes willfully infringed Plaintiff's "Profile" trademark in 2001. This is inappropriate for three independent reasons. First, it is contrary to the law of the case. Whether Land O' Lakes engaged in bad faith conduct in relation to discovery obligations has already been decided ­ twice. Judge Shaffer found that Land O' Lakes did not act in bad faith and rejected Plaintiff's request for adverse

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inferences of spoliation of documents. See ECF No. 310. Plaintiff filed objections to Judge Shaffer's holding, which this Court denied, again rejecting Plaintiff's request for adverse inferences. Plaintiff now attempts an end-run around the Court's decision by presenting the same discovery disputes to the jury. Paradoxically, the evidence Plaintiff wishes to give the jury to show Land O' Lakes' bad faith in discovery consists of selected statements Judge Shaffer made in the course of concluding that Land O' Lakes did not act in bad faith. The Court should deny Plaintiff's request to reargue the established law of the case. Second, the evidence Plaintiff seeks to present to the jury is not relevant to any issue the jury will decide. Plaintiff hopes to persuade the jury that Land O' Lakes improperly failed to preserve documents for discovery. Purported discovery abuses, however, are not an issue for trial. The Court will be summoning a jury to decide claims of trademark infringement, not discovery disputes. Plaintiff argues that Land O' Lakes' purported discovery abuses are evidence of willfulness, but this confuses willful infringement with any willful conduct. "Willfulness" has a specific meaning in the context of trademark infringement that has nothing at all to do with Plaintiff's discovery complaints. Third, even if there were some marginal relevance to Plaintiff's proposed evidence, its probative value would be significantly outweighed by its prejudicial effect. The evidence will inevitably confuse the jury regarding Plaintiff's burden of proof on willful trademark infringement. It may also mislead the jury into drawing an inference that Land O' Lakes destroyed documents unfavorable to it, exactly the adverse inference this Court rejected. BACKGROUND On the final day of the discovery period in this case ­ August 31, 2005 ­ Plaintiff filed a motion to compel, ECF No. 137, hypothesizing that Land O' Lakes ("LOL") withheld

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documents responsive to its requests for production, and that LOL "destroyed" or failed to preserve documents. Magistrate Judge Shaffer held a hearing on Plaintiff's motion, ultimately granting in part and denying in part Plaintiff's request for relief. As part of his Minute Order, ECF No. 194, dated October 14, 2005, Judge Shaffer found that because there was not sufficient factual record to address particular issues raised by Plaintiff, in part due to the excessive vagueness of Plaintiff's requests for production, he would permit Plaintiff to take a Rule 30(b)(6) deposition of LOL to explore the procedures that LOL employed to identify, preserve and produce responsive documents to specific items raised in Plaintiff's motion. On June 15, 2006, Plaintiff took a 30(b)(6) deposition of LOL. Based on that deposition, Plaintiff filed a second Motion for Discovery Violations on September 22, 2006. In that Motion, Plaintiff alleged that LOL failed to satisfy discovery obligations, and also that LOL intentionally destroyed "relevant" documents. Plaintiff requested a host of unorthodox relief, including the appointment of a special master to reopen discovery, and permission to submit numerous adverse inferences regarding, among others, LOL's "intent to knowingly infringe Plaintiff's `Profile' trademark" and "the intent of LOL to trade on the goodwill and reputation of CLP's `Profile' trademark." See Motion for Discovery Violations, ECF No. 291, pp. 37-39. Following briefing on Plaintiff's second Motion, Judge Shaffer issued a written Order on March 2, 2007, denying Plaintiff's request to appoint a special master and to issue adverse inferences. See March 2, 2007 Order, ECF No. 307, p. 43. In particular, Judge Shaffer held that Plaintiff's request to submit adverse findings at trial was not supported by Tenth Circuit precedent, because there was no evidence that Defendants' failure to preserve documents was the product of bad faith. March 2 Order, at 43-44. On the other hand, Judge Shaffer found that LOL did not adequately comply with Rules 26(g) and 34.

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Arguably setting forth a new standard under these rules, Judge Shaffer indicated that a party (i.e., in-house counsel) and its outside attorney cannot certify that he or she made a "reasonable inquiry" to respond to a request for documents if the in-house and outside attorney simply relied on employees to provide the documents that were requested of them by the attorneys. Id. at 30. Rather, in-house and outside counsel have an independent obligation to verify the accuracy and completeness of the production, and cannot rely on statements by employees or others that the materials received were complete and the product of a thorough search. Id. In light of this standard, Judge Shaffer found that LOL did not undertake a reasonable investigation to identify and preserve relevant materials, and did not take affirmative and effective steps to monitor compliance with discovery obligations. Id. at 47. Thus, Judge Shaffer ordered Defendants (i) to pay a $5,000 fine and the fees and costs associated with the Rule 30(b)(6) deposition, and (ii) to produce particular categories of documents, to the extent that such documents existed. Id. at 49-50. LOL complied with Judge Shaffer's Order on April 2, 2007. Plaintiff objected to Judge Shaffer's Order to the extent that the Order rejected its request to submit proposed adverse findings at trial. See Plaintiff's Objection to March 2, 2007 Order, ECF No. 308. Plaintiff argued that, although Judge Shaffer found that LOL did not engage in bad faith destruction of documents, certain discrete statements contained in Judge Shaffer's written Order suggested that LOL did indeed act willfully and in bad faith. Id. at 3-5. The statements Plaintiff cited to this Court encompassed all of the six statements it now seeks to present to the jury. Id. This Court overruled Plaintiff's objection, holding that Plaintiff failed to show Judge Shaffer's decision was either contrary to law or clearly erroneous under F.R.C.P. 72(a).

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Plaintiff now asks the Court to ignore the previous holdings, and rule that Plaintiff can present to the jury certain carefully selected statements from Judge Shaffer's Order as evidence of "willful misconduct and bad faith." Motion in Limine, at 7. ARGUMENT Plaintiff should not be permitted to sidestep the law of the case and reargue its position on discovery disputes the Court has already decided. In any case, discovery conduct is not relevant to the ultimate dispute in this case. The six factual findings Plaintiff has selected regarding discovery will have no tendency to make it any more or less probable that Land O' Lakes intentionally infringed Plaintiff's mark. Even if relevant, the evidence would confuse and mislead the jury.1 I. PLAINTIFF'S MOTION IS CONTRARY TO THE LAW OF THE CASE Plaintiff's request to use discovery disputes as evidence of willful misconduct by Land O' Lakes is directly at odds with the law of the case that Land O' Lakes' discovery violations did not reflect willful misconduct. Judge Shaffer determined that Land O' Lakes' discovery conduct was not willful, and this Court approved and affirmed Judge Shaffer's Order following Plaintiff's objection. Plaintiff is not entitled to yet another bite at the apple. Generally, once a court decides an issue, the same issue may not be relitigated in subsequent proceedings in the same case. Wessel v. City of Albuquerque, 463 F.3d 1138, 1143 (10th Cir. 2006). The rule is "designed to bring about a quick resolution of disputes by preventing continued re-argument of issues already decided." Major v. Benton, 647 F.2d 110, 112 (10th Cir. 1981).

1 In addition to the arguments set forth in this response, Defendants note that the jury need not hear any evidence of

alleged willful conduct by Land O' Lakes because willfulness is an equitable decision for the Court to make. Defendants' position is set forth in its Trial Brief filed on April 27, 2007. See ECF No. 343.

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The Court has already concluded that Land O' Lakes' discovery violations were not the product of bad faith. Moreover, the Court rejected Plaintiff's argument that Judge Shaffer's findings, including the findings Plaintiff now seeks to submit to the jury, established bad faith. Nothing has changed between this Court's Order overruling Plaintiff's objection and Plaintiff's motion in limine. Plaintiff's request to present selected findings by Judge Shaffer as evidence of bad faith infringement would invite the jury to disregard the Court's decision and make a new determination of bad faith in discovery, based on six statements taken out of context. This is in direct defiance of the confines of the law of the case. Not only does Plaintiff seek to nullify the Court's general holding that Land O' Lakes did not act in bad faith, it has selected statements from Judge Shaffer's Order in hopes of undercutting the specifics of Judge Shaffer's findings. For example, Plaintiff seeks to use the statement that "Land O' Lakes adopted an automatic email destruction program in May 2002." Plaintiff's assertion that this is evidence of willful infringement is predicated on its belief that Defendants should have anticipated litigation with Plaintiff as early as April 4, 2002. Yet Judge Shaffer squarely rejected this position. Judge Shaffer held that Defendants' duty to preserve evidence was not triggered until Plaintiff filed its Complaint on February 24, 2004 ­ almost 2 years after Land O' Lakes adopted the email retention program. See March 2 Order, p. 19. Fundamentally, Plaintiff wishes to use selected statements from the March 2 Order to argue to the jury that Judge Shaffer's conclusions in the Order were incorrect. Plaintiff is not entitled to ask the jury to overturn the law of the case. II. THE STATEMENTS PLAINTIFF SEEKS TO INTRODUCE ARE NOT RELEVANT TO ANY ISSUE BEFORE THE JURY Under FRE 401, relevant evidence means "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or 6

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less probable than it would be without the evidence." Sims v. Great American Life Ins. Co., 469 F.3d 870, 895 (10th Cir. 2006). Evidence that is not relevant is not admissible at trial. FRE 402. Here, whether Land O' Lakes failed to preserve certain documents is not relevant. In general, a claim of discovery abuse is not an issue for trial. Plaintiff asserts that Land O' Lakes' discovery conduct is relevant to the issue of willfulness, but this falsely equates any sort of willfulness with willful trademark infringement. Judge Shaffer's discovery findings are not relevant to whether Land O' Lakes intentionally infringed Plaintiff's PROFILE mark. A. Whether Land O' Lakes Committed Discovery Abuses Is Not An Issue For Trial Plaintiff's motion seeks to present to the jury evidence of the parties' discovery disputes already decided by the Court. The parties' conduct in discovery, however, is not an issue before the jury. Permitting Plaintiff to offer evidence of supposed discovery abuses by Land O' Lakes would sidetrack the trial with discovery disputes outside the scope of what the jury is to decide. Other courts have held that instructions regarding discovery abuses are not admissible at trial, because discovery conduct is not relevant to the ultimate dispute between the parties. See e.g. Strasser v. Yalamanchi, 783 So.2d 1087, 1093 (Fla. 4th DCA 2001) ("evidence related to the history of pre-trial discovery should normally not be a matter submitted for the jury's consideration on issues of liability"). This is particularly true where the court has already addressed the parties' discovery disputes. Thus, the court in Jinks-Umstead v. England, 2005 WL 3312947, * 3 (Dec. 7, 2005 D.D.C.), noted that the defendant had "paid its dues" for its earlier violations of discovery obligations, and refused to admit evidence regarding the discovery abuses. The court noted that "there is no evidence that the Defendant acted willfully, intentionally, or in bad faith" and "it would be extremely prejudicial for the Court to give such an instruction, and Defendant has already been sanctioned for its conduct." Id at *5. Finally, the

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court stated that "the bottom line is that the case is about discrimination and retaliation. The case will not be turned into a trial about discovery." Id. A trial about discovery is just what Plaintiff's motion would invite. The evidence Plaintiff seeks leave to present is not actually "evidence" at all, but rather Judge Shaffer's conclusions based upon analyzing the underlying facts of the parties' discovery disputes. Introducing those statements would place those same discovery disputes before the jury, and require Land O' Lakes to defend its discovery conduct at trial. At a minimum, Land O' Lakes would be entitled to respond with favorable statements from Judge Shaffer's Order, including his conclusion that Land O' Lakes did not act in bad faith. Moreover, Land O' Lakes would need to provide the underlying facts to put Judge Shaffer's statements in context. For example, Plaintiff proffers the statement that Land O' Lakes expunged the hard drives of employees after this litigation commenced. This calls for responsive testimony to show that none of the expunged hard drives were of employees involved in the decision to use the name "Profile." Permitting Plaintiff to introduce evidence of purported discovery abuses would thus convert a trademark infringement action centering on Land O' Lakes' conduct in 2001-2002 into a trial regarding Land O' Lakes' discovery conduct in 2005-2006. A Land O' Lakes technology specialist would have to testify regarding its document preservation policies. It could require hours for Land O' Lakes in-house counsel to testify on what he did to preserve and produce responsive documents. Indeed, Plaintiff deposed him for a full day on this subject matter. Other witnesses will likely need to be called to discuss what they did to locate and produce documents from their hard drives and in their files. The trial would be diverted by a sideshow regarding discovery abuses for which the Court has already awarded appropriate sanctions. Courts should not permit presentation of discovery misconduct at trial where it serves no remedial purpose and

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has the potential to create a distracting and confusing side-issue that would divert the jury from its main task. Richardson v. Union Oil Co., 170 F.R.D. 333, 334 (D.D.C. 1996). B. Judge Shaffer's Discovery Findings Have Nothing To Do With The Issue Of Willful Trademark Infringement Plaintiff contends that Judge Shaffer's findings bear on the question of Land O' Lakes' purported willful misconduct. But Judge Shaffer did not find any willful misconduct. In any event, misconduct in the course of discovery is entirely unrelated to willfulness in the context of trademark infringement. Evidence of discovery violations has nothing to do with whether Land O' Lakes intended to benefit from the goodwill or reputation of Plaintiff's "Profile" mark. Judge Shaffer's findings cannot be deemed probative evidence of willful misconduct, when he expressly rejected Plaintiff's contention that Land O' Lakes acted willfully. Judge Shaffer found that "Cache la Poudre has not established that Defendants intentionally destroyed electronically stored information to deprive Plaintiff of discoverable information." Order, at 29. Judge Shaffer determined rather that Defendants were merely "less than thorough" to ensure that discoverable information would be preserved. Id. at 29-30. In recognizing the Tenth Circuit rule that only bad faith destruction of documents can support a spoliation instruction, Judge Shaffer denied Plaintiff's request for adverse inferences because he found Defendants' failure to preserve relevant documents was not the product of bad faith. Id. at p. 44. Under these findings, at worst Land O' Lakes conduct constituted negligence, but evidence of negligent conduct is not relevant to prove willful misconduct. Cf. United States v. Winchell, 129 F.3d 1093, 1096 (10th Cir. 1997) ("negligent conduct is not sufficient to constitute willfulness") (quoting this Court's jury instructions). Thus, Plaintiff's argument that Judge Shaffer's findings are probative on the issue of willfulness fails.

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Even if there were any evidence of willful misconduct in discovery, this would have nothing to do with the issue of willfulness in the context of trademark infringement. Supposed discovery abuses by Land O' Lakes do not demonstrate willful trademark infringement. Plaintiff attempts to equate willful trademark infringement with willful misconduct in general, but there is no connection.2 For Plaintiff to prevail on its claims of trademark infringement, Plaintiff must prove that there is a likelihood of confusion between its PROFILE products and Land O' Lakes' PROFILE products. See King of the Mountain Sports, Inc v. Chrysler Corp. 185 F.3d 1084, 1089 (10th Cir. 1999). To prove that Defendants willfully infringed the mark, Plaintiff must further show that Defendants intended to benefit from the goodwill that Plaintiff created in the mark. See Western Diversified Services, Inc. v. Hyundai Motor America, Inc., 427 F.3d 1269, 1273 (10th Cir. 2005). Whether hard drives were destroyed in 2004 or 2005 has no conceivable connection to whether Land O' Lakes intended to benefit from the goodwill of Plaintiff's mark when it adopted "Profile" in 2001. Plaintiff acknowledges that Judge Shaffer's findings were made "in the different context of discovery obligations." Plaintiff's Motion, at 5. Because this context is entirely divorced from the context of intentional trademark infringement or bad faith adoption of the mark, the factual findings by Judge Shaffer are not probative evidence of willful trademark infringement. III. THE STATEMENTS PLAINTIFF SEEKS TO INTRODUCE WOULD ONLY CONFUSE AND MISLEAD THE JURY Even if the Court determines that the six factual findings by Judge Shaffer have some remote relevance to proof of willfulness, they should be excluded as confusing and unfairly prejudicial. Disputes about discovery are so remote from the issues before the jury that

2 Conversely,

if there were a connection, then Land O' Lakes would be entitled to rely on Judge Shaffer's finding of no bad faith in discovery as proof that Land O' Lakes did not willfully infringe.

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Plaintiff's evidence will unavoidably confuse the jury's consideration of the case. Moreover, there is a significant danger that the evidence would prejudice Land O' Lakes by improperly prompting the jury to make adverse inferences about evidence that might have been destroyed. Evidence may be excluded under FRE 403 if "after balancing its probative value against certain competing considerations set forth in the rule the court concludes that the costs of the evidence outweigh its benefits." United States v. Mangiameli, 668 F.2d 1172, 1176 (10th Cir. 1982). In particular, Rule 403 authorizes the exclusion of relevant evidence when countervailing considerations such as danger of confusion of the issues, misleading the jury, or waste of time, "substantially outweigh" the probative value of that evidence. See SEC v. Peters, 978 F.2d 1162, 1171 (10th Cir. 1992). The danger in admitting unfairly prejudicial evidence is that any marginally probative value would be given undue or preemptive weight by the jury, or "would invite the jury to render a verdict on an improper emotional basis." United States v. Varoudakis, 233 F.3d 113, 122 (1st Cir. 2000). It is inherently confusing or misleading to isolate statements purportedly showing willfulness from an Order that found no willful misconduct. The jury could only be perplexed by Plaintiff's suggestion that it interpret discovery violations as evidence of willful trademark infringement. Land O' Lakes will respond with the fact that Judge Shaffer ultimately determined that the discovery violations were not the product of bad faith, leaving the jury at a loss what to make of Plaintiff's isolated statements from the Order. Moreover, it could take days for Land O' Lakes to rebut this evidence, turning the trial into a case about destruction of documents and not about trademark infringement, wasting the jury's valuable time and clouding the jurors' understanding of what is to be decided. See Richardson, supra, 170 F.R.D. at 334.

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Even worse, the introduction of this evidence could cause the jury to undertake its own spoliation analysis, despite a judicial finding of no bad faith. The jury might infer that information helpful to Plaintiff was destroyed. Tenth Circuit law is clear, however, that "failure to produce records is not sufficient to warrant a spoliation instruction absent a showing of bad faith." Aramburu v. The Boeing Co., 112 F.3d 1398 n.3 (10th Cir. 1996). Rather, only "bad faith destruction of a document relevant to proof of an issue at trial gives rise to an inference that production of the document would have been unfavorable to the party responsible for the destruction." Id. That is, no adverse inference should arise where the destruction of a document resulted from mere negligence, because only bad faith would support an "inference of consciousness of a weak case." Id. By potentially circumventing Tenth Circuit law on this point, Plaintiff's proffered evidence would significantly and improperly prejudice Land O' Lakes' defense. CONCLUSION The gravamen of this action is whether Land O' Lakes infringed Plaintiff's PROFILE mark and whether Land O' Lakes intended to benefit from the goodwill or reputation of Plaintiff's PROFILE mark when it adopted "Profile" in 2001 for its products. Alleged discovery violations that occurred in 2005-2006 have already been fully addressed by the Court, and have no rational relation to Plaintiff's claims that Land O' Lakes infringed its trademark in 2001. It would only confuse and mislead the jury for Plaintiff to present evidence of Land O' Lakes' discovery conduct to prove its claim of intentional trademark infringement. Thus, the Court should deny Plaintiff's motion in limine.

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Respectfully submitted this 4th of May, 2007. s/ Van Aaron Hughes Gregory S. Tamkin Elizabeth L. Morton DORSEY & WHITNEY LLP 370 Seventeenth Street, Suite 4700 Denver, CO 80202-5647 Telephone: (303) 629-3400 Facsimile: (303) 629-3450 E-mail: [email protected] [email protected] Attorneys for Land O' Lakes, Inc.; Land O' Lakes Farmland Feed, LLC; American Pride Co-Op; Poudre Valley Cooperative Association, Inc.; Frank Bezdicek and Robert DeGregorio CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on May 4, 2007, I caused the foregoing document, DEFENDANTS' RESPONSE TO PLAINTIFF'S MOTION IN LIMINE TO ALLOW EVIDENCE OF DEFENDANT'S DESTRUCTION OF EVIDENCE TO PROVE WILLFUL MISCONDUCT, 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 Gregory S. Tamkin 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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