Free Response to Motion - District Court of Arizona - Arizona

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Charles F. Hauff, Jr. (AZ Bar No. 014465) Douglas W. Seitz (AZ Bar No. 004258) Daniel R. Pote (AZ Bar No. 018570) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Attorneys for Eberle Design, Inc. and Electronic Devices, Inc. UNITED STATES DISTRICT COURT

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DISTRICT OF ARIZONA
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Eberle Design, Inc., and Electronic Devices, Inc., Plaintiff/Counterdefendants,

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CIV 02 2575 PHX DGC (Lead) CIV 03 883 PHX DGC (Consolidated) PLAINTIFFS' RESPONSE TO RENO A & E'S MOTION TO ADMIT THE DECLARATION OF ALAIN LAMOUREUX

v.
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Snell & Wilmer L.L.P.

Reno A&E,
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Defendant/Counterplaintiff.
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Eberle Design, Inc. and Electronic Devices, Inc. (collectively, "Eberle") hereby file their opposition to the motion filed by Reno A & E ("Reno") to admit the Declaration of Alain Lamoureux (the "Lamoureux Declaration"). As set forth in detail below, the Lamoureux Declaration constitutes hearsay unrelieved by any exception to Rule 802, and must be excluded accordingly. I. THE LAMOUREUX DECLARATION IS HEARSAY The Lamoureux Declaration falls within the definition of hearsay set forth in Rule 801(c), Fed. R. Evid., because it is an out of court statement by Alain Lamoureux that Reno seeks to introduce to prove the truths of the matters asserted therein ­namely, the nature of the 1996 purchase order. Reno attempts to circumvent the definition of Rule 801(c), by arguing that the Lamoureux Declaration is not being offered to prove the truth of the matters asserted therein, but rather to demonstrate Mr. Potter's state-of-mind, i.e., that Mr. Potter did not intend to sell the Model C prior to the critical date.

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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

The Lamoureux Declaration, however, does not contain any statements about Mr. Potter's state of mind prior to the critical date, nor could it, as Mr. Lamoureux would have no foundation for any such speculative assertions. Instead, the Lamoureux Declaration only addresses what Mr. Lamoureux ostensibly believed the nature of the October 1996 orders to be. It makes no mention of Mr. Potter's state of mind.1 Any suggestion that the
Lamoureux Declaration concerning Mr. Lamoureux's state of mind is probative of Mr. Potter's state of mind is based upon unfounded speculation, and should be rejected as irrelevant accordingly. See Fed. R. Evid. 402.

Notably, there are no statements in the Lamoureux Declaration that specifically, or even generally, relate what Mr. Potter might have said to Mr. Lamoureux, or vice versa. Rather, the statements relate to Mr. Lamoureux's apparent 2005 recollection of events that took place nearly a decade earlier in February of 1996. These facts make clear that Reno's suggestion that the Lamoureux Declaration is indicative of Potter's state of mind is pretextual. II. RULES 803(3) SPECIFIES THE STATE OF MIND EXCEPTION TO THE HEARSAY RULE, AND IS NOT APPLICABLE Rules 803(3) sets forth the following exception for when out of court statements

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concerning an individual's state of mind may be admitted:
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A statement of the declarant's then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health), but not including a statement of memory or belief to prove the fact remembered or believed unless it relates to the execution, revocation, identification, or terms of declarant's will. The Lamoureux Declaration does not fall within the exception set forth in Rule 803(3) for several reasons. First, the rule requires that the statement be admitted for the

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purpose of establishing the declarant's state of mind, yet Reno claims that it wants to
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admit the Lamoureux Declaration to establish Potter's state of mind.
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Second, the statement must address the "then existing" state of mind of the
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Additionally, Mr. Potter's state of mind is not at issue. Rather, the issue for purposes of the on-sale bar is whether Potter made an offer of sale of the Model C, regardless of whether he intended to do so. See Elan Corp. v. Andrx Pharmaceuticals, Inc., 272 F. Supp. 2d 1325, 1351 (S.D. Fla. 2003) (stating that the determination of whether an offer has been made is an objective one, and finding that a commercial offer was made despite the testimony of the executive who wrote the letter that he did not intend for the letter to be an offer of sale).
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declarant. The Lamoureux Declaration, however, purports to establish what Lamoureux's state of mind was not at the time of the declaration, but rather what his state of mind was almost eight (8) years earlier when he and Potter were negotiating the purchase of detectors. Third, the Lamoureux Declaration contains statements of memory of events almost eight years prior that purport to prove the fact remembered (that the sales were allegedly not for Model C detectors), which the Rule specifically forbids unless the statements concern the declarant's will. Again, the plain language of 803(3) does not permit out of court statements to be used for such purposes. Accordingly, for any and all of these four reasons, the Lamoureux Declaration does not fall within the state of mind exception set forth in Rule 803(3). While Reno did not argue Rule 803(3), consideration of that rule is important to the resolution of this issue. Reno's argument seeks to constrict the definition of hearsay set forth in Rule 801(c) to the point where it would threaten to eviscerate the hearsay rule (802) and render the foregoing third exception itemized in Rule 803 meaningless. Put differently, all out of court statements are indicative of the speaker's intent to say what the words mean and of the speaker's intent to say what he believed, and if Congress did not intend to exclude the admission of statements to establish the same through the definition of hearsay, then Congress would not have enacted the exception to the hearsay rule in 803(3) that specifically details the limited circumstances under which out of court statements may be admitted to prove state of mind. Indeed, the Advisory Committee Note to Paragraph 3 of Rule 803 identifies the very threat posed by arguments like those being made here by Reno: The exclusion of "statements of memory or belief to prove the fact remembered or believed" is necessary to avoid the virtual destruction of the hearsay rule which would otherwise result from allowing state of mind, probably by a hearsay statement, to serve as the basis for an inference of the happening of the event which produced the state of mind. Here, Reno seeks to introduce statements made by Lamoureux concerning what he believes or remembers about the 1996 purchase order, allegedly to prove state of mind, in an effort to bolster its claims about whether an offer of sale was made almost eight years
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ago. This Court should not permit Reno to make such an illegitimate end-run around 803(3) that would render the hearsay rules enacted by Congress meaningless. III. THE RESIDUAL EXCEPTION IN RULE 807 IS INAPPLICABLE TO THE LAMOUREUX DECLARATION Rule 807 provides in pertinent part that statements not excepted by Rule 803 and 804, may be admitted if they have "equivalent circumstantial guarantees of

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trustworthiness" and the court determines:
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(A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence; and (D) the proponent of it makes known to the adverse party sufficiently in advance of the trial or hearing to provide the adverse party with a fair opportunity to prepare to meet it. . . . The residual exception is considered to be a narrow one, and must, of necessity, be

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narrow or it would soon swallow the hearsay rule itself. See Central Freight Lines, Inc. v.
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NLRB, 653 F.2d 1023, 1026 (5th Cir. 1981) ("Unless application of Rule 804(b)(5) 2 be limited to circumstances evidencing a clear basis of trustworthiness, exceptions to the rule

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against hearsay could swallow the rule.") In United States v. Heyward, 729 F.2d 297 (4th
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Cir. 1984), the Fourth Circuit described the residual exception set forth in Rule 804(b)(5)
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as follows:
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We are mindful that Rule 804(b)(5) was not written to be used as a "new and broad hearsay exception," but was meant to be "invoked sparingly." The legislative history of the rules puts it more strongly: "It is intended that the residual hearsay exceptions will be used very rarely, and only in exceptional circumstances." 729 F.2d at 299-300 (internal citations omitted) (quoting, in latter part, Fed. R. Evid. 803
The residual exception to the hearsay rule was originally codified in Rule 803(24) and 804(b)(5), which were identically worded. In 1997, Congress transferred 803(24) and 804(b)(5) out into a combined Rule, 807. The Advisory Committee made clear that through the combination of the two rules, "no change in meaning is intended." Adv. Comm. Note. on 1997 Amendments. Therefore, case law from prior to 1997 that addresses the residual exception in the context of Rules 803(24) and 804(b)(5) can be relied upon as authoritative.

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Sen. Comm. Note). Congress carefully considered the circumstances under which hearsay should be admitted for the purposes of demonstrating state of mind. Consequently, here, the court should be particularly loathe to apply Rule 807 to the Lamoureux Declaration. A. The Lamoureux Declaration is Not "More Probative" Than Any Other Evidence

Reno argues that the Lamoureux Declaration should be admitted to establish Mr. Potter's state of mind in October of 1996 when Lamoureux and Potter were discussing the
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sale of detectors. In order to fall within the hearsay exception set forth in Rule 807, the
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Lamoureux Declaration would have to be "more probative on the point for which it is
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offered than any other evidence which the proponent can procure through reasonable
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efforts." Clearly, the most probative evidence of Potter's state of mind in October 1996 is
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the testimony of Mr. Potter himself, which Reno intends to elicit at trial.3 Accordingly, Rule 807 does not apply to the Lamoureux Declaration, and the statements contained

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therein must be excluded.
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The Fourth Circuit addressed a similar situation in United States v. Heyward, 729
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F.2d 297, 299 (4th Cir. 1984), where a criminal defendant sought to establish that he did
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not receive $175,000 through illegal drug sales, but rather, that he had received the money
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through a loan from a deceased individual named Robert Horan. In an effort to support
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this defense by establishing that Horan had sufficient liquid assets, Heyward sought to
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introduce a memorandum written by Robert Horan's deceased attorney that described how
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Horan had received $100,000 from the sale of an airplane, which he had converted to a
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cashier's check at Savannah Bank. The Fourth Circuit affirmed the district court's
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exclusion of the memorandum from the deceased attorney on the grounds that evidence,
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which would have equally probative of this point, could have been procured by Heyward
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in the form of testimony from an officer of Savannah Bank. Id. at 299-300. Here, just as
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in Heyward, the same or more probative evidence can be obtained through different
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means, and therefore, Rule 807 is inapplicable. B. The Lamoureux Declaration does not have Sufficient Guarantees of Trustworthiness

The Lamoureux Declaration also fails to satisfy the requirements of Rule 807 because it does not rise to the same (or greater) level of trustworthiness as the hearsay
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exceptions that Congress codified in Rules 803 and 804 after careful consideration. The
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following five factors all mitigate against a finding that the Declaration rises to the same
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level of trustworthiness as the exceptions set forth in 803 and 804 ­ (1) the declaration
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was prepared for litigation purposes; (2) the declaration was written by Reno's counsel to
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support Reno's case; (3) Reno admits that Lamoureux is a close personal friend of Potter;
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(4) Lamoureux has never been cross-examined about the contents of the affidavit; and (5)
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Lamoureux resides in Canada and therefore would not be subject to perjury or contempt
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sanctions by this Court - i.e., he is not subject to the laws specifically designed to deter
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making false statements in this Court.
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Despite Reno's argument to the contrary, the mere fact that the Lamoureux
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Declaration was made while sworn under oath is not sufficient to establish its
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trustworthiness for admissibility under Rule 807. In NLRB v. United Sanitation Service,
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737 F.2d 936, 940 (11th Cir. 1984), the court remanded a NLRB decision for
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reconsideration because the board had improperly admitted and considered an affidavit
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from a deceased employee who claimed that he had been unlawfully dismissed for
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engaging in union activity. The NLRB argued, in part, that the affidavit, which the
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General Counsel had procured, was sufficiently trustworthy because it was a sworn
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statement that would have subjected the affiant to criminal charges if he had perjured
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himself. The Eleventh Circuit rejected that argument and noted that there was no
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evidence in the affidavit or anywhere in the record that the affiant knew of his potential
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liability for perjury from signing a false affidavit. Id. at 940; see also United States v.
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Fernandez, 892 F.2d 976, 981 (11th Cir.1989) (finding that grand jury testimony should
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have been excluded and noting that an oath "is an inadequate safeguard to meet the
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requirement of Rule 804(b)(5) that the statement have `equivalent circumstantial guarantees of trustworthiness'"). More fundamentally, the unsworn declaration is not recognizable in the first instance. While unsworn declarations can be received pursuant to 28 U.S.C. 1746, the statute itself requires that if the declaration is executed outside of the United States, that the declaration say "I declare (or certify, verify or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct." The Lamoureux Declaration does not so state, and although it is not clear from its face where the declaration was executed, absent a showing that it was in fact executed in the United States, the declaration is flawed. This Court should also be skeptical that the Lamoureux Declaration has the same indicia trustworthiness as the hearsay exceptions set forth in Rules 803 and 804 because the Declaration was written by Reno's attorney for purposes of this litigation. In Central Freight, 653 F.2d at 1026, the Fifth Circuit modified a ruling of the NLRB , because the NLRB had erred in admitting an affidavit from a deceased former employee of Central Freight. The Court, in explaining why the affidavit did not have sufficient trustworthiness for the residual exception to apply, noted that the affidavit had been written by the General Counsel and merely signed by the employee, and stated that "The Court is well aware of the subtle shifts in meaning that can occur when one's statement is recorded by another." Id.; quoting Workman v. Cleveland-Cliffs Iron Co., 68 F.R.D. 562, 565 (N.D. Ohio 1975)); see also Broga, 315 F. Supp. 2d at 217-18 (finding that sworn affidavits did not meet the trustworthiness requirements for admission under Rule 807 because, in part, they were prepared by (or in conjunction with) a party's counsel for the purposes of the litigation). Even further, the Lamoureux Declaration itself evidences indicia of untrustworthiness. For example, self serving and otherwise inadmissible evidence of Mr. Potter's character (¶ 6); unsubstantiated references to documents which documents were not attached (See, e.g., ¶ 10), and while the declaration purports to be made on Mr.
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LAW OFFICES One Arizona Center, 400 E. Van Buren Phoenix, Arizona 85004-2202 (602) 382-6000

Lamoureux's personal knowledge, there is frequent reference to "we," without any clear indication of who "we" is. (See, e.g., ¶ 3, ¶ 7). The Court should disregard Reno's attempt to turn the evidentiary burden on its head by arguing that Eberle's failure to depose a Canadian citizen outside this Court's subpoena power provides a safe haven for the introduction of the Lamoureux Declaration. As the Eighth Circuit noted in its decision in Stokes v. City of Omaha where it found that the trial court had abused its discretion by admitting a sworn affidavit from the deceased former deputy of police relating to the plaintiff police officer's age discrimination suit, if the plaintiff had believed the affiant's testimony to be crucial to his case, then the plaintiff should have deposed the witness instead of procuring an affidavit. 23 F.3d 1362, 1366 (8th Cir. 1994). The same holds true here ­ Reno is the party moving to introduce the evidence and, as such, bears the burden of demonstrating its admissibility, and the hazards associated with any shortcoming in that regard should befall Reno, not Eberle. C. The Interests of Justice Dictate that the Declaration should be Excluded

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Due Process, the Rules of Evidence, and the interests of justice do not permit the admission of a declaration prepared for litigation by a party's counsel when the declarant has never been deposed or otherwise examined about the contents of the declaration, and the declarant is a foreign citizen not subject to the country's penalties for perjury and/or contempt of court that ordinarily deter the making of a false statement. Further, Reno failed to give Eberle sufficient notice that it intended to seek the admission of the Lamoureux Declaration rather than call Lamoureux to testify as a witness. While this is not the fault of Reno, the fact remains that Eberle has not been given sufficient notice to develop an alternative method to "meet" the Declaration as required since Eberle had planned to do so through a thorough examination of Lamoureux at trial. See Fed. R. Evid. 807. Accordingly, the Lamoureux Declaration should not be admitted. IV. RULE 403 PRECLUDES THE ADMISSION OF THE DECLARATION The Lamoureux Declaration should also be excluded because its probative value (if
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any) concerning Potter's state of mind is substantially outweighed by the dangers of confusion of the issues, misleading the jury and undue prejudice. The Lamoureux Declaration adds little or nothing to Potter's own testimony about Potter's state of mind in October of 1996, yet there is a grave danger that the admission of the Lamoureux Declaration for the intended purpose of establishing Potter's mindset in October of 1996 might result in the jury being confused or misled into believing that it could consider the statements in the Lamoureux Declaration for purposes of determining whether Reno did in fact make an offer of sale to Lamoureux for the Model C detector in October of 1996. Indeed, the Lamoureux Declaration is replete with self-serving statements reflecting Mr. Potter's alleged character and/or Mr. Lamoureux's perceived impression of the same. Such confusion or improper inference would be highly prejudicial to Eberle, and the prejudice is greatly compounded by the fact that Eberle will not be able to cross-examine Lamoureux on the statements contained therein. These dangers substantially outweigh the probative value (if any) of the Lamoureux Declaration, and the Declaration should be excluded accordingly. Fed. R. Evid. 403; see also Stokes v. City of Omaha, 23 F.3d 1362, 1366 (8th Cir. 1994) (finding that the trial court abused its discretion in admitting an affidavit and that the trial court's cautionary instructions to the jury about considering the affidavit carefully did not alleviate the prejudice to the defendant caused by the affidavit's erroneous admission). V. ANY TESTIMONY BY MR. POTTER ABOUT HIS CONVERSATIONS WITH MR. LAMOUREUX WOULD BE INADMISSIBLE HEARSAY
Reno, without citing any authority or even making any argument in support of its position,

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requests that the Court permit Mr. Potter to testify about his conversations with Mr. Lamoureux if 23 the court excludes the Lamoureux Declaration. Any such testimony by Mr. Potter would 24 constitute hearsay for the same reasons that the statements contained in the Lamoureux 25 Declaration constitute hearsay. Further, references to statements made by Lamoureux about 26 things told to him by Potter would constitute hearsay within hearsay, making it further removed 27 from the standards for admissibility. 28

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VI.

CONCLUSION
For any and all of the foregoing reasons, Eberle respectfully requests that the Court deny

Reno's Motion to Admit the Declaration of Alain Lamoureux.

RESPECTFULLY SUBMITTED this 31st day of August, 2005. SNELL & WILMER L.L.P.

By

s/Charles F. Hauff, Jr. Charles F. Hauff, Jr. Douglas W. Seitz Daniel R. Pote Attorneys for Plaintiff, Eberle Design, Inc.

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CERTIFICATE OF SERVICE Pursuant to Fed. R. Civ. P. 5(b), I certify that I am an employee of the law offices of Snell & Wilmer, and that on this date I deposited for mailing and/or hand delivery, with first-class postage thereupon prepaid, a true and correct copy of the foregoing response, addressed as follows: The Honorable David G. Campbell (Hand-Delivered) United States District Judge District of Arizona Sandra Day O'Connor U.S. Courthouse, Suite 623 401 W. Washington Street SPC 58 Phoenix, Arizona 85003-2156 Michael D. Rounds, Esq. WATSON & ROUNDS 5371 Kietzke Lane Reno, Nevada 89511 Henry C. Bunsow HOWREY, SIMON, ARNOLD & WHITE 525 Market Street Suite 3600 San Francisco, CA 94105 George C. Chen (Hand-Delivered) BRYAN CAVE Two North Central Avenue, Suite 2200 Phoenix, AZ 85004-4406

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Dated: August 31, 2005 s/Deborah Giancaterin An Employee of Snell & Wilmer L.L.P.

1719867.4

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