T.N. Inc. v. Fid. Nat'l Info. Servs.

OPINION

WENDY BEETLESTONE, J.

This dispute concerns contracts between, on the one hand, Plaintiff T.N. Incorporation Ltd. (“TNI”) and, on the other, Defendants Fidelity Information Services, LLC, Fidelity Information Services (Netherlands) B.V., and Fidelity Information Services (Thailand) Ltd. (collectively, “FIS”), regarding the implementation and distribution of core banking software to banks in Thailand. The parties have exchanged numerous expert reports, most of which are the subject of a motion to exclude. TNI seeks to exclude: the report of FIS's foreign law expert, Somchai Ratanachueskul; FIS's licensing expert, Michael Lasinski; its software expert, Jeffrey Walton; as well as its damages expert, Michele Riley. Meanwhile, FIS seeks to exclude the report and declaration of Rachod Intraha, one of TNI's software experts; as well as TNI's other software (and licensing) expert, Monty Myers.

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I. BACKGROUND

In September of 2001, FIS's predecessor, Sanchez Computer Associates, LLC (“Sanchez”) and TNI entered into three contracts pursuant to which TNI agreed to implement and distribute Sanchez's Profile Software to government banks in Thailand: the Systems Integration and Distribution Agreement (“SIDA”), the Software License Agreement (“SLA”), and the Master Agreement for Consulting Services (“MACS”) (collectively, “the Agreements”). The Profile Software is a core banking software used by global financial institutions worldwide. FIS acquired Sanchez in 2004; as a result, it obtained all of Sanchez's rights to the Profile Software, and its affiliates became the successors to the Agreements with TNI.

To implement the Profile Software in Thai banks, TNI developed a software which it calls the “TNI Business Solutions” (“the TBS Software”). After the parties were unable to agree on renewal of the Agreements in 2017, TNI returned to FIS the source code for the Profile Software. But TNI refused to return the source code underlying the TBS Software, which it now claims it owns pursuant to a provision in the Agreements that disclaims FIS's ownership of software that is, inter alia, “capable of running independently of the Licensed Software.”

TNI filed this lawsuit against FIS seeking, among other things, a declaratory judgment that it owns the TBS Software, and is authorized to continue servicing the Profile Software for its current bank customers. By way of counterclaims, FIS asserts, inter alia, that it is the rightful owner of the TBS Software under the Agreements because the TBS Software is a “derivative work” of the Profile Software.

On February 27, 2020, the parties jointly moved, and the Court agreed, to bifurcate the

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proceedings such that claims relating to breach of contract, to technology ownership, and to TNI's right to provide consulting services be decided first (Phase 1), before taking any action on the remaining claims (Phase 2). Phase 1 consists of: (1) TNI's request for a declaratory judgment that it is authorized to provide consulting services to its bank customers regarding the Profile Software and the TBS Software; (2) TNI's request for a declaratory judgment that it owns the TBS Software; (3) TNI's breach of contract claim; (4) FIS's request for a declaratory judgment that it owns the Profile Software and the TBS Software; (5) FIS's request for a declaratory judgment that TNI has no right to use the Profile Software or the TBS Software; (6) FIS's request for a declaratory judgment that FIS has not breached any agreements; and, (7) four of FIS's breach of contract claims.

II. STANDARD OF REVIEW

Many of the motions at issue here are propounded pursuant to Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993). The Daubert standard is codified in Federal Rule of Evidence 702, which provides:

A witness who is qualified as an expert by knowledge, skill experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case

Fed. R. Evid. 702. This rule “embodies a trilogy of restrictions on expert testimony: qualification, reliability, and fit.” Schneider ex rel. Estate of Schneider v. Fried, 320 F.3d 396, 404 (3d Cir. 2003).

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To satisfy the qualification requirement, an expert must possess “specialized knowledge regarding the area of testimony.” Betterbox Comm'ns Ltd. v. BB Techs., Inc., 300 F.3d 325, 327 (3d Cir. 2002) (quotation marks and citation omitted). “The basis of this specialized knowledge can be practical experience as well as academic training and credentials.” Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir. 1998) (quotation marks and citations omitted). The qualification requirement is interpreted “liberally, ” Pineda v. Ford Motor Co., 520 F.3d 237, 244 (3d Cir. 2008), and “a broad range of knowledge, skills, and training qualify an expert as such.” In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741 (3d Cir. 1994) (citation omitted).

To satisfy the reliability requirement, “the expert must have good grounds for his or her belief, ” not “subjective belief or unsupported speculation.” Id. at 742 (quotation marks and citation omitted). “The reliability analysis applies to all aspects of an expert's testimony: the methodology, the facts underlying the expert's opinion, the link between the facts and the conclusion.” Heller v. Shaw Indus., Inc., 167 F.3d 146, 155 (3d Cir. 1999). When assessing reliability, a court “must examine the expert's conclusions in order to determine whether they could reliably flow from the facts known to the expert and the methodology used.” Oddi v. Ford Motor Co., 234 F.3d 136, 146 (3d Cir. 2000). “A court may conclude that there is simply too great a gap between the data and the opinion proffered.” Id.

Daubert offers multiple factors to evaluate reliability, including, inter alia, “whether the method is generally accepted” and “whether a method consists of a testable hypothesis.” Paoli, 35 F.3d at 742 n.8 (citations omitted). However, “[t]he evidentiary requirement of reliability is lower than the merits standard of correctness, ” and parties seeking introduction of expert evidence do not “have to prove their case twice-they do not have to demonstrate to the judge by

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a preponderance of the evidence that the assessments of their experts are correct, they only have to demonstrate by a preponderance of evidence that their opinions are reliable.” Id. at 744. Moreover, there is “considerable leeway in deciding in a particular case how to go about determining whether particular expert testimony is reliable, ” and the “reasonable measures of reliability in a particular case is a matter that the law grants the trial judge broad latitude to determine.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152 (1999) (citation omitted).

The last requirement of Rule 702 demands that “expert testimony . . . fit the issues in the case.” Schneider, 320 F.3d at 404. “In assessing whether an expert's proposed testimony fits, [courts assess] whether the expert testimony proffered is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute.” Schiff, 602 F.3d at 173 (quotation marks, ellipses, and citation omitted). “Expert testimony which does not relate to any issue in the case is not relevant and, ergo, non-helpful.” Daubert, 509 U.S. at 591 (quotation marks and citations omitted).

Finally, although trial courts must act as gatekeepers to ensure the relevance and reliability of all expert testimony, Kumho, 526 U.S. at 147, this gatekeeping obligation “is not intended to serve as a replacement for the adversary system.” Fed.R.Evid. 702, advisory committee's note to 2000 amendment. “Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.” Daubert, 509 U.S. at 596.

When a party challenges an expert's opinions pursuant to Rule 702, the proffering party bears the burden of demonstrating by a preponderance of the evidence that the opinions of its proposed expert are admissible. Padillas v. Stork-Gamco, Inc., 186 F.3d 412, 417-18 (3d Cir. 1999).^[1]

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II. DISCUSSION

A. The Ratanachueskul Report

FIS offers the expert report of Somchai Ratanachueskul to “provide certain analysis and opinions related to Thai law and custom.” Principally, Ratanachueskul opines that under Thai law, TNI is no longer authorized to service the Profile Software to its Thai bank customers. TNI moves to strike Ratanachueskul's report as an improper rebuttal under Federal Rule of Civil Procedure 26. It also seeks to strike the report on grounds that FIS did not properly notify “by a pleading or other writing” that it intended to raise an issue of foreign law as required by Federal Rule of Civil Procedure 44.1, which provides in relevant part: “[a] party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing.”

This is not the first time that the question of whether Thai law has any application to this matter has arisen. When the parties filed their Joint Partially Agreed Motion to Bifurcate in February 2020, they provided a series of reasons for the need to bifurcate,...