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Zykronix Inc. v. Conexant Systems, Inc.

United States District Court, D. Colorado

April 27, 2018

ZYKRONIX, INC., a Colorado corporation, Plaintiff,
CONEXANT SYSTEMS, INC., a Delaware corporation, Defendant


          Kristen L. Mix, United States Magistrate Judge

         This matter is before the Court on Defendant's Renewed Motion in Limine to Exclude Testimony and Evidence Related to Damages Claims [#130][1] (the “Motion”). Plaintiff filed a Response [#136], and Defendant filed a Reply [#138]. The Court has reviewed the briefing, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#130] is DENIED.

         I. Background

         Defendant previously filed a Motion in Limine to Exclude Testimony and Evidence Related to Untimely Disclosed Damages [#94] on November 22, 2017. Defendant argued that Plaintiff newly disclosed nearly $9 million worth of damages on the day before the discovery cut-off. The Court found that it lacked sufficient information to rule on the merits of Plaintiff's damages, and that resetting the trial and allowing additional discovery was the only way to cure potential prejudice to Defendant. Order [#110] at 6-7. The Court first ordered Plaintiff to provide a finalized computation of damages pursuant to Rule 26, and then permitted Defendant to tender to Plaintiff five interrogatories and five requests for admission, as well as the opportunity to take three depositions, and to endorse an additional expert regarding damages. Minute Order [#119] at 1-2. The Court also ordered Defendant to file any renewed motion to exclude testimony and/or evidence related to damages on or before February 1, 2018. Id. at 2.

         On February 1, 2018, Defendant filed the present Motion [#130] requesting that the Court preclude Plaintiff from presenting testimony and evidence related to two categories of damages at trial. Motion [#130]. Defendant seeks to exclude Plaintiff's Category 3 (“Cost of Redesign of the Sole 4”) and Category 6 (“Lost Profits”) damages. Id.

         II. Legal Standard

         “The purpose of a motion in limine is to aid the trial process by enabling the Court to rule in advance of trial on the relevance of certain forecasted evidence, as to issues that are definitely set for trial, without lengthy argument at, or interruption of, the trial.” Martensen v. Koch, No. 13-CV-02411-REB-CBS, 2015 WL 514913, at *2 (D. Colo. Feb. 6, 2015) (quoting Mendelsohn v. Sprint/United Management Co., 587 F.Supp.2d 1201, 1208 (D. Kan. 2008), aff'd, 402 Fed.Appx. 337 (10th Cir. 2010)). Although motions in limine can save time when ruled on prior to trial, “a court is almost always better situated during actual trial to assess the value and utility of evidence.” Id.

         III. Analysis

         A. Damage Categories Are “Outside the Scope” of the Complaint

         Defendant first argues that the “Lost Profits” and “Redesign Costs” categories of damages should be excluded because they are outside the scope of the allegations in the Complaint. Motion [#130] at 6-10. Defendant contends that the Complaint [#2] solely pertains to the OmniTouch 7 (also referred to as the “Sole 7”) device, yet Plaintiff's new “Lost Profits” category relates to lost sales of the Sole 3 and Sole 4, in addition to the OmniTouch 7. Id. at 7. Similarly, Plaintiff's new “Redesign of the Sole 4” category also pertains to a device not named in the Complaint [#2]. Lastly, Defendant contends that the Complaint [#2] only alleges one relevant customer, Leviton, whereas the basis of the “Lost Profits” damages category is contracts lost with other potential customers. Id. Defendant argues that these damages, which it contends are outside the scope of the Complaint [#2], constitute new legal theories and that Plaintiff should have sought leave to amend its pleadings to seek these categories of damages. Id. at 9.

         In support of Defendant's argument regarding the scope of the Complaint [#2], Defendant cites to Zokari v. Gates, 561 F.3d 1076 (10th Cir. 2009). Defendant relies in particular on the following language from Zokari:

In this circuit when a plaintiff attempts to add a new theory - a new cause of action - late in the game, the issue has not been whether the legal theory should be read into the complaint, but whether an amendment to the complaint should be permitted.

         As Plaintiff argues, however, Zokari dealt with whether a party could add a new cause of action, as opposed to a new category of damages, without amending the pleadings.[2] See Response [#136] at 2-3. Defendant does not cite to any other legal authority supporting its argument that Plaintiff was required to amend its Complaint [#2] in order to seek new categories of damages. Furthermore, on considering whether to strike these categories previously, the Court determined that Fed.R.Civ.P. 26(a)(1)(A)(iii) applied, as it is the rule providing for “computation of each category of damages claimed by the disclosing party.” See Order [#110] at 2. Pursuant to Rule 26, the Court determined that Plaintiff's late disclosure of the computation of each category of damages would prejudice Defendant if trial went forward as planned. Id. at 4. To cure the prejudice, the Court reset the trial and gave Defendant the opportunity to conduct further discovery related to damages. Id. Given that Defendant has not provided on-point legal authority to support its position, and that the Court previously determined that Rule 26 applies to timeliness of disclosures related to damages, the Court declines to exclude Plaintiff's damages categories on these grounds.

         B. Lost Profits

         As an initial matter, Plaintiff argues that Defendant has already attempted the argument that Plaintiff's “lost profit” damages are speculative, and that the Court ruled that there was a material issue of fact precluding summary judgment. Response [#136] at 5. However, as Defendant contends, the Court's ruling issued before Plaintiff clarified the damages that it seeks, and also before Defendant engaged in discovery on those issues. Reply [#138] at 4. Defendant was permitted to file this Motion [#130] after conducting discovery. Minute Order [#119]. Thus, the Court will consider Defendant's substantive arguments.

         A plaintiff must provide the following evidence to the trier of fact in order to seek lost profits: “(1) proof of the fact that damages will accrue in the future, and (2) sufficient admissible evidence which would enable the trier of fact to compute a fair approximation of the loss.” Denny Const., Inc. v. City & Cty. of Denver ex rel. Bd. of Water Comm'rs, 199 P.3d 742, 746 (Colo. 2009) (quoting Pomeranz v. McDonald's Corp., 843 P.2d 1378, 1382 (Colo. 1993)). “A claim for future profits may not be sustained by evidence which is speculative, remote, imaginary, or impossible of ascertainment.” Roberts v. Holland & Hart, 857 P.2d 492, 496-97 (Colo.App. 1993) (citing Lee v. Durango Music, 355 P.2d 1083 (1960)). While documentary evidence of damages is preferred, “[d]amages can . . . be awarded based on undocumented testimony by the plaintiff or other witnesses.” Gibbons v. Ludlow, 304 P.3d 239, 246 (Colo. 2013). Lost profits damages can be precluded as a matter of law if they are based on mere speculation. Id. at 248-49 (entering summary judgment against party because speculative evidence was insufficient to support lost profits damages). Nonetheless, “[a] plaintiff is not barred from recovery because the amount of damages cannot be established with mathematical certainty once the fact of damage has been established.” Roberts, 857 P.2d at 496-97 (citations omitted).

         Defendant contends that Plaintiff's “lost profits” damages theory is based on the following assumptions: (1) the chips failed; (2) if the chips had not failed, Plaintiff would have sold additional Sole 3, Sole 4, and Sole 7 devices; and (3) Plaintiff would have made a profit on the Sole 3, Sole 4, and Sole 7 devices. Motion [#130] at 11. Defendant first argues that Plaintiff's theory is speculative and unsupported because it has not provided any evidence regarding the number of devices that would have been sold, or the net profits it would have earned on lost sales. Id. Specifically, Plaintiff's Rule 30(b)(6) designee, Wilfried Streicher (“Streicher”), testified that no Sole 3 or Sole 4 devices had ever been sold, and ...

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