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LLC v. Marks

United States District Court, D. New Jersey

September 23, 2019

HIGH 5 GAMES, LLC, a Delaware Limited Liability Company, f/k/a PTT, LLC, Plaintiff/Counterclaim Defendant,
v.
DANIEL MARKS, an individual; JOSEPH MASCI, an individual; BRIAN KAVANAGH, an individual; MARKS STUDIOS, LLC, an entity d/b/a GIMME GAMES; ARISTOCRAT TECHNOLOGIES, INC., an entity; ARISTOCRAT TECHNOLOGIES AUSTRALIA PTY LIMITED, an entity; ARISTOCRAT LEISURE LIMITED, an entity; PRODUCT MADNESS, INC., an entity; GRANT BOLLING, an individual; JOHN SMITH(s) 1-7; and XYZ COMPANIES 1-7, Defendants/Counterclaim Plaintiffs.

          ORDER & OPINION OF THE SPECIAL MASTER

          DENNIS M. CAVANAUGH, U.S.D.J.

         This matter comes before the Special Master upon a motion by defendants Daniel Marks, Joseph Masci, Brian Kavanagh, Grant Boiling, Marks Studios, LLC ("Marks Studios")i Aristocrat Technologies, Inc. ("ATI"), Aristocrat Technologies Australia Pty Ltd. ("ATA"), Aristocrat Leisure Limited ("ALL"), and Product Madness, Inc. ("Product Madness")(collectively, "Defendants") for reconsideration of portions the Special Master's May 15, 2019 Order & Opinion. After considering the submissions of Defendants and Plaintiff High 5 Games, LLC ("H5G"), Defendants' motion is Denied in part and Granted in part.

         DISCUSSION

         I. Background

         During a February 21, 2018 status conference, the Special Master discussed the issue of H5G's backup tapes with the parties. The Special Master made clear that if Defendants wanted the tapes to be repaired, Defendants would be required to pay for it. Thereafter, the Special Master issued his March 16, 2018 Order, which states:

By March 9, 2018, H5G shall furnish its damaged back-up tapes that it has located to eMag Solutions LLC to perform an analysis as to the cost to repair and restore the back-up tapes in a readable and searchable form. Defendants shall have the right to repair, at their sole expense, the back-up tapes but will not review any portion of such back-up tapes until Defendants notify H5G's attorney's in writing, that such back-up tapes have been restored and until the further Order of die Special Master or Court. The parties shall work in good faith to choose and retain, by March 1, 2018, a neutral third party forensic consultant to repair and restore the damaged back-up tapes of H5G. If the parties can agree upon such a consultant, that consultant shall, by March 15, 2018 produce a quotation for the work of repairing and restoring the damaged back-up tapes of H5G to a condition wherein they can be further processed as if such tapes were never damaged.

         Following another disagreement between the parties related to the backup tapes, the Special Master issued an Order on May 15, 2019, which held that if Defendants wanted the tapes restored they would bear the cost associated with any repair. The Special Master further ordered that Defendants are responsible for all costs and fees associated with obtaining estimates for the repair of restoring the back-up tapes, including any storage fees charged.

         In the May 15, 2019 Order the Special Master also denied Defendants' request to compel H5G to provide a 30(b)(6) witness to sit with Defendants and go through the documents H5G produced and identify whether each of the 13, 000 documents identified by H5G concerns development of the game Golden Goddess or Aphrodite. The Special Master did not believe this would serve any purpose in the furtherance of discovery in this matter. At that time, the parties were arguing over the relevancy of the 13, 000 documents H5G produced and the Special Master did not believe that the question of relevancy could be resolved by the production of a corporate witness who would merely be able to opine on his or her own thoughts as to the relevancy of a particular document. Accordingly, Defendants' request that H5G produce a 30(b)(6) witness to go through the 13, 000 documents was denied. Defendants now seek reconsideration of those rulings.

         II. Arguments of the Parties

         Defendants' Arguments

         Defendants seek reconsideration of the Special Master's May 15, 2019 Order & Opinion with respect to (1) Defendants' motion to compel H5G to produce a limited 30(b)(6) witness to testify regarding H5G's possible spoliation of evidence and (2) the proper party to pay certain storage fees of H5G's back-up tapes currently owed to eMag Solutions LLC (eMag). Defendants also request that H5G be ordered to restore the damaged back-up tapes.

         Defendants argue that H5G has admitted that it failed to collect, review, and produce all documents relevant to this litigation and responsive to Defendants' discovery requests. Defendants continue to believe that H5G has not produced all of the relevant documents concerning its knowledge of Konami's Rawhide game. Defendants argue that the individual defendants are all former H5G employees and are thus aware that the Super Stacks concept was derived from the Rawhide game and that as such the '852 patent and Super Stacks trade secrets are likely either invalid or unenforceable. Defendants allege that H5G obtained the PAR sheet for the Rawhide game, which it referred to as "salmon recipe" and used this to make the Super Stacks game. Defendants assert that despite their best efforts, H5G has not produced all of the documents relating to Konami's Rawhide game or "salmon recipe".

         Defendants also argue that H5G had a duty to preserve emails relevant to this litigation that predate 2011 because it was involved in unrelated threatened litigation and had already threatened Defendant Daniel Marks with litigation related to possible violation of his separation agreement. Defendants argue that the Special Master's March 2018 Order was based on incorrect unsworn representations by H5G that (1) Mr. Marks and others had somehow caused the destruction of their emails; (2) certain documents were lost when H5G was under no obligation to preserve them; and (3) H5G had already performed certain analyses of the back-up tapes and received an estimate of $1 million to recover the data. Defendants argue that it is clear that H5G failed to preserve relevant documents while it was responding to threatened litigation (concerning Witches Riches) and in the process of threatening litigation against Mr. Marks. Defendants argue they should not have to pay for H5G's negligence or deliberate misconduct and subsequent concealment.

         Second, Defendants argue that had H5G properly searched and produced relevant documents, including the five emails produced by Defendants, there would be no reason for Defendants to seek restoration of the damaged backup tapes. Defendants argue that they only sought restoration of the backup tapes because they had reason to believe that H5G's production was incomplete with respect to conception and reduction to practice documents. Defendants maintain that since H5G has conceded that all relevant documents have not been produced, settled law requires that H5G should be ordered to pay ...


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