Judge: Mark H. Epstein, Case: SC1223657, Date: 2024-05-20 Tentative Ruling
Case Number: SC1223657 Hearing Date: May 20, 2024 Dept: I
The court very much appreciates the joint statement of
remaining issues. The court believes
that all or many of them need to be resolved before a jury venire is called.
One theme that goes through a number of items is the parol
evidence issue. The court probably is
responsible for some of the confusion by uttering the words “402 hearing.” Upon reflection, the court’s thinking is
this. With regard to parol evidence, the
court would suggest that plaintiff make an offer of proof as to what the parol
evidence, if admitted, would show the words of a contract or contracts to
mean. If the words are reasonably
susceptible to the meaning ascribed, the court would be inclined to allow the
parol evidence to be admitted (assuming it is otherwise admissible). It could be that doing it that way is too
generic, and if so, then it could be that more granularity is required. If that is the case, plaintiff might need to
group the parol evidence—such as parol evidence of communications during
negotiation over the original license and non-compete agreements, or
communications after the original agreements were executed, or whatever. It could be that even more granularity is
required, such as going witness by witness.
But the court’s rubric is this.
The contracts on their face are written agreements. The court did not see an integration clause
in either of the original contracts. The
general rule is that a written contract will be deemed integrated to the extent
of nullifying any prior oral or written contracts inconsistent with the writing. But that does not necessarily mean that
evidence of additional terms would be improper.
A written contract without an integration clause might well not nullify
a prior or contemporaneous agreement that is not inconsistent with the written
document even if it adds terms; what is barred are inconsistent
terms. Even a fully integrated contract,
though, can have ambiguities. The parol
evidence doctrine will only bar the use of parol evidence from changing or
modifying the terms of a written contract or from adding to the
terms of a fully integrated written contract.
Parol evidence can also be used to establish the existence of a latent
or patent ambiguity and to resolve that ambiguity so long as the contract’s
actual words are “reasonably susceptible” to that interpretation. “Tuesday” cannot mean “Wednesday,” but
“dollar” can mean Canadian dollar or US dollar.
Thus, the structure is that the parol evidence is provisionally admitted
and, once admitted, it must be determined whether that evidence would lead to
an interpretation of the contract to which the words are reasonably
susceptible. If so, then the evidence is
admitted; if not, then the evidence is excluded. Because it is not a good idea to allow lots
of evidence to be heard by the jury if it is only provisionally admitted but is
later excluded, the court had suggested hearing the evidence outside the jury’s
presence, perhaps at a separate hearing.
As set forth above, on reflection, the real question that needs to be
decided is whether the parol evidence would give rise to an interpretation to
which the contracts are reasonably susceptible.
That can be done via an offer of proof at this stage. That should address issue 1, 16,and 17. The court has, however, already indicated
that it believed that there was enough ambiguity in the contracts to allow
evidence as to the scope of who is and is not bound by them.
The court will discuss the measure of damages theories with
the parties. Generally speaking, breach
of a licensing agreement by a party using the license improperly can be
addressed in a number of ways. One is
lost revenue to the licensor, meaning that the licensor’s receipts from the
license were reduced because third parties did not feel the need to enter into
licenses given that they could have access to the licensed goods through
another. Another is a reasonable license
fee through a hypothetical negotiation—what would the licensor have demanded
for a license of the type actually used and would a reasonable licensee have
been willing to pay that amount. A third
possibility is a disgorgement theory, in which the licensee must disgorge the
specific profits it made from the improper use of the license. As to the latter, though, the court would
want some additional analysis. It would
seem that disgorgement is less of a contract remedy and more of a tort
remedy. Again, the court would want
additional thoughts on this. For fraud,
the general rule is out of pocket damages, the court believes, although it is
open to persuasion. The court’s
understanding of the general rule for a fraud recovery is not the benefit that
the plaintiff would have received had the fraudulent statement been true, but
rather how much was the plaintiff harmed by virtue of the fact that the false
statement was false. That goes to issues
2 and 3. The court is surprised that
this was not properly raised by way of in limine motion.
Rescission is another issue.
Assuming it is properly pled, it is in the case. However, rescission generally requires the
plaintiff returning that which it received from defendant and defendant
returning that which it received from plaintiff. The court is, frankly, not sure whether it is
possible to put the parties back where they were in 1999—a quarter century ago. The court will hear argument, but at some
point rescission just becomes too far distant to be a realistic
possibility. Rescission is equitable in
nature as a general rule, but here it might be so tied up with the other issues
in the case that it is best left to the jury, even if only in an advisory
capacity. For example, rescission is
often a remedy for fraud, but the fraud aspect is generally a jury question,
not a court question, at least where damages are also sought. The court’s preference would be to have a
jury try it if possible given how interwoven the issues are with those that
will and must go to the jury. That
addresses issues 4 and 5. It could be
that at present, it is too late in the day to address this point and we will
just have to see how the evidence comes in.
The court needs to know more about the “Wayback
Machine.” The court is far from clear
that the “Wayback Machine” will be sufficiently concrete to allow admission to
the jury, but the court will hear argument on it. That is issue 6.
The court might well determine that the Kamen Declarations
are party admissions if they were made by Kamen while he was employed by one or
more of the defendants and were made in the course of his employment. He seems to the court to have been
sufficiently senior such that if those criteria are met, it would count as a
party admission. That is issue 7. It (like almost all of the issues that Farr
raises) should have been raised in limine rather than now. The likely answer is that there should be an
objection at trial and pocket briefs ought to be at the ready.
The court prefers live testimony. If a party wants to have a party testify by
Zoom, the court will ask whether there is a stipulation. If there is, the court will allow it. If not, the court will need to know the
reasons for the Zoom testimony. The
party seeking to use Zoom will be responsible for ensuring that the witness is
able to see all documents and exhibits in the case, including those that might
be used for impeachment. That could be
by giving the witness the documents or it could be through some technological
means. However, the witness must not be
obscured by the document; the jury must be able to see the witness clearly at
all times. That is issue 9.
The court generally requires each party to disclose its
order of witnesses to be called 2 court days before calling the witness. The disclosure must be in good faith, but
that does not preclude a change in order if there is a good showing as to
why. The court strongly recommends being
overly inclusive rather than under inclusive in the list. As to duration, the court assumes that the
witness list remains accurate—that was the point. The court notes, though, that it has stated,
and the parties have agreed, to time limits.
The court will hold the parties to their agreements unless something
truly unforeseen occurs during trial.
The court also notes that it will make a representation to the jury
prior while asking about hardship as to the length of the case. The court gives an outside estimate, but the
court expects its promises to the jury to be kept. Many jurors will elect not to claim hardship
because they are told when the trial will end; it is not fair to those jurors
to have the trial go longer than promised.
This addresses issue 10.
The court will need to review the objections to the updated
joint witness list. The court assumes
that the objections are to witnesses 21-26.
The court does not know the basis of the objections, though, and so
cannot rule on them at present. That is
issue 11. Again, it might well be that
this should have been raised in limine and that for present purposes an
objection at trial will need to be made with pocket briefs prepared.
The court will need to hear from the parties on the new
exhibits in issue 12.
The court does not understand issue 13. If Espina is not available but has been
deposed, the deposition testimony might be used. If the issue is authentication and business
records, the wourt could be inclined to allow a substitute witness to testify,
although it will hear argument. If it is
more substantive than laying a foundation, then the court will need to better
understand the issue.
As to issues 14 and 18, the court will need to hear
argument. Generally, if David Reinstein
is in fact a managing agent, then the notice to appear is sufficient assuming
that there are no other problems. (For
example, if he does not reside in California, he cannot be compelled to
testify.)
The court will need to address the jury instructions
separately. The instructions to be read
might be informed by the answer to these other issues.
The parties should further discuss the costs of the court
reporter (and the court notes that this is a recoverable cost to the prevailing
party). The court’s general inclination
would be 50/50, though.
The court anticipates starting to work through this list
today. We will continue to work through
it until we are done, and a jury will be called as soon as we reach the point
that we are far enough along that it makes sense to begin voir dire. The court is, at least for now, available for
trial.
The court will address at least some of these issues with
the parties. Depending on the outcome,
we might or might not be in a position to call a venire tomorrow.