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Avaya, Inc. v. Telecom Labs, LLC

United States District Court, D. New Jersey

September 11, 2014

AVAYA, INC., Plaintiff,
TELECOM LABS, LLC., Defendant.

         Mitchell H. Cohen United States Courthouse One John F. Gerry Plaza Camden, New Jersey 08101 September 11, 2014







Court Exhibit C-1 was marked for identification


         THE DEPUTY CLERK: All rise.

         (OPEN COURT, September 11, 2014, 11:06 a.m.)

         THE COURT: Good morning, everybody.

         RESPONSE: Good morning, Your Honor.

         THE COURT: Everybody, please be seated.

         First, this is a continuation of the motion hearings we started on Tuesday. There were five -- at the time, there were five pending motions. Four -- the first four, which I decided. The fifth was -- well, to enter the treble damages and prejudgement interest. I decided the -- well, there was no opposition. I decided the treble damage issue and -- but left -- heard some argument on the prejudgement interest point, but decided I'd look into it a little further and we adjourned until today.

         So let me start first with appearances of counsel.

         MR. SCARBOROUGH: Good morning, Your Honor, Larry Scarborough from Bryan Cave for Avaya.

         MR. EGAN: Robert Egan, Archer and Greiner, for Avaya.

         MR. KRAMER: Jake Kramer, Bryan Cave, for Avaya.

         MR. LaROCCO: Anthony LaRocco, K & L Gates, for TLI/C.

         MS. HELMER: Kathy Dutton Helmer from K & L Gates for TLI/C.

         MR. PAWLOWSKI: Robert Pawlowski from K & L Gates for TLI/C.

         MR. KOBIL: Scott Kobil from K & L Gates, TLI/C.

         MR. RYSAVY: Good morning, Your Honor. Charles Rysavy from K & L Gates.

         THE COURT: Okay. The way we're going to proceed is I'm going to let Mr. LaRocco -- I don't want him to repeat his argument. Lord, I do not want him to repeat his argument, but the -- I don't know if I could take the tension and the emotional stress, but if there's anything he wants to add or focus on, you know, briefly, again, not repeating what you've already said. I'll give you that opportunity, then I'll certainly give Mr. Kramer the -- because you argued it, I think.

         MR. SCARBOROUGH: Mr. Egan.

         THE COURT: Oh, Mr. Egan, you argued it. I'll give you a chance to supplement or add what you want, and then I'm going to let Mr. Scarborough deal, however he wants to, with the issue we talked about, which was the reasoning behind dismissing certain claims at the time of trial. And we wanted to give Mr. Scarborough a chance to consult with counsel at Avaya and -- so I'll give you a chance to do whatever you want.

         And -- so we'll start with you.

         MR. LaROCCO: Thank you, Your Honor. Just very briefly, Your Honor. I have nothing additional to add except one caveat, and that is, if Mr. Scarborough intends to engage in a discussion with the Court regarding subjective intent, forewarn my position will be that he has fully waived the attorney/client privilege upon conferring with Mr. Carnavale, and in addition, as he seemingly admitted to or agreed to last time we were here, the work product privilege would also be waived with respect to his mental impressions. I will, therefore, ask the Court for permission to conduct discovery on the issue, which will include not only depositions, but also communications between counsel and communications with respect to counsel and the client, and that's all supported by the case law.

         THE COURT: And I'm going to say, sufficient unto the day is the evil thereof, as the Bible tells us. So I'm going to -- MR. LaROCCO: That's all I have to say.

         THE COURT: -- abide by the events before I get into that. Okay. Mr. Egan.

         MR. EGAN: Your Honor, I just have a couple --

         THE COURT: I'm not limiting you in any way. I mean, you can say what you want to say.

         MR. EGAN: I understand. I'm just kind of reflecting on our discussions on Tuesday. I thought a couple points were worth making.

         The certification that we filed and the attachments to it, go in great detail, point by point, to address the factors that Mr. LaRocco talked about as -- that affected the pace of the case, and I think that it's very detailed and I think that they demonstrate why things took so long, that are quite independent of any fault that could be attributed to Avaya, and certainly, any bad faith attributed to Avaya.

         The second point is -- that I think arose out of that discussion, as I reflected on it, is that Your Honor had concerns about the dismissed claims and the timing, et cetera. The bulk of the evidence that related to the dismissed claims was still useful at trial, which would mean that dismissing the claims didn't result in any wasteful discovery or delay. And, certainly, not an indication of any intention to waste anything, any time, any -- any time over the course of the case.

         And Your Honor recognized that in a argument on the --oddly enough, a year ago, on 9-11-2013, in an argument, in an opinion that denied TLI/C's motion to preclude our tortious interference with economic advantage claim, on the ground that it was based on the same evidence underlying our dismissed claims.

         And you said: To me, the issues and claims are not facts in evidence that supports one claim. Even a claim that's dismissed can support another claim that is not dismissed. And I think that happens all the time in litigation. Lawyers sit and they write pleadings that have 12 different theories on one set of facts, basically, and at the end of the day, the case gets down to a fewer number of theories. And the fact that the other claims were dismissed doesn't keep those facts from being used or an attempt to use them to support another claim.

         I just wanted to point those two things out for Your Honor.

         THE COURT: Before you go, what do you think it was that made this case last eight year? By the way, I -- we looked at the cases. There are a handful of District Court cases that dealt with the interest issue. They didn't award it.

         MR. EGAN: Yeah.

         THE COURT: But they dealt with it. But it looked to us like, in all of -- there was not one of those cases that took more than three years to get to trial. And again, I know we talked -- the case is, in some sense, complex, but in another sense, this case isn't that complex. As I said, I can tell, talk to somebody at a cocktail party, and in three minutes, I could tell them what the case was about, and get them to understand, I think, a relatively intelligent person, even a nonlawyer, I could get them to understand what the issue is -- what the issues are in the case. Why did it take eight years?

         MR. EGAN: So I think the fact that the case might be neatly summarized in a short period of time, the essence of the case, the basic themes of the parties and the basic bones of contention, so to speak, doesn't mean that it's not complex in its facts or complex in its legalities.

         I think if you look back at what happened, there were a number of things. One is the parties took some fairly extensive discovery. Two, the -- the defendants at the time refused to answer some Interrogatories in the beginning of the case. We had conferences with the judge, there was extensive motion practice relating to motions to dismiss, motions to amend, et cetera, et cetera.

         And then we had this lengthy period of delay in getting discovery completed because of the problems with TLI/C, the defendants producing the information I was discussing before and violating the court orders that Judge Goodman had entered.

         Ultimately, there was this process that I described the other day of -- and it worked for both sides, making, making requests, meets and confers, objections, et cetera, and there were many. And it took awhile to crystallize the issues, it took awhile to work out what we could work out, and then we couldn't work out some, so we had to go to Magistrate Judge Goodman. There were very lengthy proceedings before her. The back and forth and the joint presentations we made to Judge Goodman are in the papers that we filed here. There were many issues and they were complex, and she made her rulings.

         Often, we had to go to the Court to then sort of prompt an agreement on the scope of the discovery that we were seeking. And, you know, I haven't counted up all the issues, but I am fairly confident that the significant majority of them involved our efforts to get discovery out of the defendants.

         Then Your Honor was assigned to the case, and I don't quite recall the year that that happened.

         THE COURT: I think it was 2011.

         MR. LaROCCO: 2011.

         MR. EGAN: And we had -- you know, we had some pending motions for summary judgement that Judge Brown didn't rule on for a while. Now, that didn't, you know, put anything to a halt, but that --

         THE COURT: They went over to me then.

         MR. EGAN: Well, he did rule on some --

         THE COURT: Oh, yeah.

         MR. EGAN: I think it was another Judge Lifland situation, where I think it was on his way to -- or on the day of retirement, I think he may have decided those motions. I'm hopeful it didn't hold up his retirement but it may have.

         THE COURT: I think Judge Lifland, on the day of his retirement, had to issue a 150-page patent opinion. I mean that, seriously.

         MR. EGAN: So -- so then Your Honor got the case, and there were things to be done. As you well know, there were expert discovery that had to be done. Of course, the expert reports and everything couldn't be finished until we had completed a vast majority of the fact discovery, and Your Honor was there. You know that there were expert reports, there were rebuttals, et cetera, iterations of them. Then there were Daubert motions that took awhile, then there were the post-trial -- THE COURT: I remember vividly, there were seven Daubert motions, I believe, and they occupied four trans files. The trans files being like a double-sized carton, with probably 20, 30, 000 pages of materials. And I called you all into my chambers and I showed you where the cartons were, and I said, Did you actually expect me to read 30, 40, 000 pages of this?

         MR. EGAN: I remember that. And you know what I remember? You looking at me. And I'm wondering, why is the judge looking at me on that?

         So, you know, it was a complex case.

         Now, can we say that it couldn't have been done sooner? No. And I think that there could have been things done, in hindsight, that moved the case along better, but -- but the Court was involved in the decisions to extend discovery. There were decisions to extend discovery that we jointly applied for. There were decisions to extend discovery that one applied for, the other agreed for.

         But I guess where I'm trying to go with this is, it's a given that it took a long time, and I don't think anybody disputes that, of course you couldn't. It doesn't mean it was because of Avaya's fault or, if it was in some sense Avaya's fault, that it was bad faith in an intention to delay.

         THE COURT: Well, by the way, I know -- I know some of the cases suggest it takes, you know, extreme bad faith to thing. But when you read the statute itself, Section 15(a), it says you make -- you may only consider, and they give you three points. It doesn't say that you have to find all three. It says only those -- those are the limits of what you're allowed to consider.

         Bad faith is used in one of the three, but it's -- for instance, the third, 15(a)(3), says: Whether such person of the opposing party or either parties represented engaged in conduct primarily for the purpose of delaying litigation or increasing the cost thereof. It doesn't use the word "bad faith."

         MR. EGAN: I agree, but I think if somebody engaged in litigation primarily for that purpose, it would probably be bad faith, No. 1. No. 2, every --

         THE COURT: I'm glad you say that because --

         MR. EGAN: Every case, every case that we have, that we have cited to the Court, every case that we have cited to the Court has required bad faith. In its recitation. Of course, no court's ever granted it, but the judicial gloss on statute has --

         THE COURT: The judicial gloss.

         MR. EGAN: Has required it. But -- I hope I've answered the Court's question.

         THE COURT: I mean, for instance, in the automotive products case, which I think you did cite.

         MR. EGAN: Sounds familiar.

         THE COURT: Yeah. There were three things that were, I think, identified as causing delay. But the Court said that the first one, which was a possible Rule 11 motion to delay the trial only for a few weeks, then there was a question of seeking leave to add other parties, and it said, did not affect the trial date. And then the third point was that the -- there was a recusal motion that the judge thought lacked merit, but he said, it caused little delay in the proceedings.

         I mean, there is an example of where they pointed to, you know, what might be considered bad faith conduct, you know. The judge didn't use the word "bad faith, " but considered conduct. But he said it didn't delay ...

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