Paice, LLC v. Hyundai Motor Co.

PAICE, LLC, et al., Plaintiffs v. HYUNDAI MOTOR COMPANY, et al., Defendants.

CIVIL NO. WDQ-12-499

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

Date: July 7, 2014

MEMORANDUM OPINION AND ORDER

Now pending before the Court is intervenor Toyota's Motion for a Protective Order (ECF No. 177) and Plaintiffs' Motion to Compel Non-Party Toyota to Comply with Subpoenas (ECF No. 251).

This Court granted non-party Toyota Motor Company and its affiliates' (collectively "Toyota") motion to intervene (ECF No. 111) in order to oppose Defendants' then pending motion to compel (ECF No. 108). (ECF No. 112). Defendants' motion to compel sought certain Toyota litigation materials from Plaintiff Paice's prior collateral litigation with Toyota ("Paice-Toyota litigation"), such as expert reports (including technical, damages, and other reports), expert deposition transcripts, materials cited in those reports and transcripts, and settlement agreements, which Defendants had sought in their request for production of documents. (ECF No. 108). On April 4, 2014, theCourt entered a stipulation and order (ECF No. 171), wherein Defendants withdrew their motion to compel and Toyota agreed to produce certain of the aforementioned litigation documents. (ECF No. 171). Notably, however, the stipulation provided that Toyota would not produce to Defendants the Settlement Agreement which resolved the Paice-Toyota litigation ("Paice-Toyota Settlement Agreement" or "Agreement"). (ECF No. 171, 13). Subsequently, Defendants expressly withdrew their document request directed to the Settlement Agreement or to the disclosure of its terms. (ECF No. 177, Ex B). Defendants also abandoned in their motion to compel (ECF No. 184), certain financial documents from Plaintiffs essentially revealing the monetary terms of the Paice-Toyota Settlement Agreement. (ECF No. 244, 3). Nonetheless, thereafter, Paice stated its intention to "disclose the Settlement Agreement in litigation pursuant to the terms of Section 5.9(b)(1)[of the Settlement Agreement]." (ECF No. 177, Exh. A). Consequently, Toyota filed the present motion for a protective order seeking to prohibit Paice from disclosing and using the Paice-Toyota Settlement Agreement in the present case. Briefing is complete. (ECF Nos. 186, 209). A hearing was held on this motion on May 13, 2014. At the May 13, hearing, the Court stated its tentative conclusion that, as a matter of contract law, Paice had contracted away its right to disclose and use the SettlementAgreement in this instant litigation against Hyundai.

Thereafter, on May 14, 2014, Paice and Abell served subpoenas on Toyota Motor Corporation and Toyota Motor Sales, USA ("Toyota") (ECF No. 235) requesting production of the 2010 Settlement Paice-Toyota Agreement. (ECF No. 251). Toyota objected to the subpoenas. Paice and Abell filed a motion to compel non-party Toyota to comply with the subpoenas (ECF No. 251). Briefing is now complete on that motion as well. (ECF No. 251, 282, 304, 321).

For the reasons discussed herein, Toyota's motion for a protective order (ECF No. 177) is GRANTED, insofar as Paice is not permitted to disclose and use the Settlement Agreement under the confidentiality provision in the Settlement Agreement. However, the motion of Abell, but not Paice, to compel (ECF No. 251) is GRANTED as Abell is not bound by the confidentiality provision as a matter of contract law or substantive patent law. While the Court has grave reservations regarding the ultimate admissibility of the Agreement and/or expert reliance on the same in any damages analysis, in light of the broad scope of discovery under Rule 26 and the governing case law, Abell is entitled to discovery of the Settlement Agreement. The question of admissibility is properly reserved for the trial judge.I. Discussion

A. Motion for Protective Order

Vis a vis Paice, Toyota's motion for protective order asserts two bases for the protective order precluding the disclosure and/or use of the Paice-Toyota Settlement Agreement in the instant litigation: (1) that the terms of the Agreement clearly prohibit disclosure by Paice; and (2) that the Agreement is irrelevant pursuant to Fed. R. Evid. 403, and therefore, should not be "discovered" or disclosed pursuant to Fed. R. Civ. P. 26(b).¹ (ECF No. 177, 3-7). Plaintiffs dispute Toyota's strict reading of the Agreement and contend that "discoverability," not "admissibility," is the standard the Court should consider at this stage in the litigation. (ECF No. 186, 11-22).

(1) Confidentiality of the Paice-Toyota Settlement Agreement

Toyota principally contends that the terms of the Paice-Toyota Settlement Agreement (ECF No. 177, 3). Conversely, Paice argues that (ECF No. 186, 13) andthat the protective order already in place in this case would address any of Toyota's confidentiality concerns. Id. at 11 Paice and Toyota each direct the Court to Section 5.9 (Confidentiality) of the Agreement, which states as follows

(ECF No 177, 3; ECF No. 186, 8).

This Settlement Agreement is, of course, a contract and, as such, subject to contract principles in its construction. Loppert v. WindsorTech, Inc., 865 A.2d 1282, 1285 (Del. Ch. 2004) aff'd sub nom. Windsortech, Inc. v. Loppert, 867 A.2d 903 (Del. 2005) (citing Heiman Aber & Goldlust v. Ingram, 1998 WL442691, at *2 (Del.Super. May 14, 1998)). The Agreement provides that the law of the District Court for the District of Delaware shall govern, except for choice of law provisions. Settlement Agreement, 5.10. The parties agree that under this provision, Delaware state law controls the interpretation of the Agreement. (ECF Nos. 246 and 247).²

The primary consideration in interpreting a contract is to "attempt to fulfill, to the extent possible, the reasonable shared expectations of the parties at the time they contracted." See Comrie v. Enterasys Networks, Inc., 837 A.2d 1, 13 (Del.Ch. 2003). In ascertaining intent, Delaware courts adhere to the "objective" theory of contracts. See Haft v. Haft, 671 A.2d 413, 417 (Del.Ch.1995); Cordis Corp. v. Boston Scientific Corp.,868 F. Supp. 2d 342, 351-52 (D. Del. 2012) aff'd in part, vacated in part, 504 F. App'x 922 (Fed. Cir. 2013)

"When interpreting a contract, the court's ultimate goal is to determine the parties' shared intent. Because Delaware adheres to the objective theory of contract interpretation, the court looks to the most objective indicia of that intent: the words found in the written instrument. As part of this initial review, the court ascribes to the words their 'common or ordinary meaning,' and interprets them as would an 'objectively reasonable third-party observer.' When the plain, common, and ordinary meaning of the words lends itself to only one reasonable interpretation, that interpretation controls the litigation." Sassano v. CIBC World Markets Corp., 948 A.2d 453, 462 (Del. Ch. 2008). (footnotes omitted)

The "parties' intent [in contracting] is ascertained by a reasonable reading of the plain language," construing the document as a whole. Sussex Equipment Co. v. Burke Equipment Co., 860 A.2d 812 (Table), 2004 WL 2423841 (Del.2004). If the language is accessible in this manner, there is no need to go outside it searching for the parties' intent; the clear, simple and unambiguous language is given force and effect. Hibbert v. Hollywood Park, Inc., 457 A.2d 339, 342-43 (Del.1983); Chambers v. Genesee & Wyoming Inc., CIV.A. 354, 2005 WL 2000765 (Del. Ch. Aug. 11, 2005).

Neither side has claimed that this provision is ambiguous. Both claim the language clearly supports its position. Paice argues that "[t]he plain intent of the confidentiality clause is to (ECF No. 186, 13).

The Court cannot find that "plain intent" in the language of the confidentiality clause. Paice attempts to bring itself within unsuccessfully in the Court's view.

Paice interprets the provision However, Defendants have now unequivocally withdrawn their request for the Settlement Agreement and its terms. (ECF No. 177, Exh. B). Paice complains about Defendants' change of position on their entitlement to the Settlement Agreement and its terms, suggesting "collu[sion]" or some "kind of deal" between Toyota and the Defendants. (ECF No. 186, 12). While Paice thus intimates a sinister motive to Toyota in its change of position, Paice expressly declined in the hearing to assert a violation by Toyota of

Further, the Defendants are no longer pursuing financial documents from Paice and Abell which arguably would have revealed the settlement amount and related terms in the Agreement. (ECF No. 244, 3).But Defendants did not, and Paice has not provided any authority estopping Defendants from a change of their discovery position.

Nonetheless, Paice seeks to disclose the Settlement Agreement arguing that it is required to do so to specifically the mandates of Rule 26, the Local Rules and the Court's scheduling order (ECF No. 186, 9-10). In its briefing, Paice declares that:

Rule 26(a)(1) requires a party to provide initial disclosures without awaiting a discovery request, including documents that may be used to support its claims or defenses, as well as documents on which damages computation is based. See Fed. R. Civ. P. 26(a)(1)(A)(ii) & (iii). Rule 26(a)(2) requires a party to provide expert disclosures, including all opinions and the basis and reasons for them, as well as the facts or data considered by the witness. See Fed. R. Civ. P. 26(a)(2)(B)(i) & (ii). Finally, Rule 26(a)(3) requires a party to provide information regarding the evidence that it may present at trial. See Fed. R. Civ. P. 26(a)(3)(iii). Similarly, the Local Rules of this District set forth pretrial procedures where a party is required to provide details of the damages claimed and a listing of the exhibits it expects to offer at trial. See Md. Local Rule 106. Finally, the Court's scheduling order mandates the disclosures under Fed. R. Civ. P. 26(a) and Local Rules and sets forth the timing of these disclosures.

(ECF...