Judge: Mark H. Epstein, Case: SC123657, Date: 2023-09-28 Tentative Ruling
Case Number: SC123657 Hearing Date: April 19, 2024 Dept: I
This is a motion to re-open discovery and a trial readiness
conference. The motion, brought by
plaintiff, is to re-open discovery because plaintiff asserts that it just
learned that the individual defendants have sold the product at issue (which
the court will refer to as Prosta-Q for convenience only) through other
entities they or their affiliates or relatives control. According to plaintiff, all that is requested
is to enforce the court’s prior order.
Defendants oppose.
Earlier on, plaintiff served discovery aimed at learning
what entities were manufacturing products that Farr was selling using
Prosta-Q. Farr opposed providing that
information, but the court compelled the disclosure. Names were eventually disclosed, but when
plaintiff took the deposition of those entities, they contended that they had
stopped providing such product well before the deposition. The court ordered that not only must Farr
disclose who had been providing the product, but if there was a new provider in
the future, Farr had to disclose that as well—it was an unusual affirmative
obligation to inform the other side of changed circumstances. Usually there is no such obligation;
discovery responses are current only up to the date they are provided and there
is no duty to update them to reflect events that later come to
pass. Thus, the court imposed upon Farr
an unusual affirmative obligation to do that which otherwise would not be
required.
The problem is that according to plaintiff, Farr was
not selling this material. In other
words, the entities that plaintiff discovered were not providing the material to
Farr for Farr to sell (which could potentially trigger a royalty
obligation). Rather, they were selling
the material themselves either to other retailers or to the public
directly. However, as the defense points
out, the court’s prior order did not go that far. The court is especially reluctant to read its
order as expansively as plaintiff would like precisely because it imposed an
unusual obligation. The court is aware
of plaintiff’s implied theory: the reason that Farr was no longer selling
product with Prosta-Q is because Farr’s owners had simply off-loaded the sales
to other entities that they also controlled.
Plaintiff contends that this is just another way of saying “breach of
contract” (or maybe interference) because the individuals in question were under
contract not to do that sort of thing.
The problem with plaintiff’s position is that this comes too
late. The information relating to the
new entities suggests that they were formed in or about 2021—years ago. The court is not faulting plaintiff for not
discovering the conduct until recently, but it is not like it started happening
last month. More important, though, it
is not clear that this would even be within the four corners of the
complaint. As the court reads the
operative complaint, it alleges misconduct by Farr, not by other unnamed
entities even if controlled by the same principals who control Farr. The operative cross-complaint by Triurol
seems to be similar. Thus, the court is
inclined to DENY the motion on the theory that whatever these third parties
did, or defendants for that matter, is not within the complaint. Given that the case is very, very old (over 9
years old), the court is quite disinclined to re-open discovery now. Further, the time to bring the case to trial
may expire on August 1, 2024. Any delay
to open a new avenue of liability will very probably result in the case being
dismissed outright for failure to prosecute.
But if the court is correct, all is not lost for
plaintiff. Because this is outside the
pleadings, it will not be barred by res judicata, and the court expressly
orders that this trial will not operate as res judicata on a claim against the
new entities or their owners if appropriate. To be clear, though, this limits res judicata
only, which means claim preclusion in this context. Collateral estoppel—or issue preclusion—may
well remain a bar. (The court is aware
that “res judicata” often means both, but the court’s order goes only to claim
preclusion.) If an issue is resolved
against Triurol, then issue preclusion may be asserted. (The court is not saying such an assertion will
succeed; only that this order will not bar the assertion.) The court also believes that a separate
lawsuit would not constitute improper claim splitting and to the extent the
court can do so, it is expressly giving plaintiff leave to split its claim if
such leave is needed (although the court does not believe leave is required).
Because the court’s order does not depend on who really owns
these entities, the court need not address that issue or plaintiff’s theory
that defendants have not stated ownership affirmatively because they know that
it will show them to be behind the entities.
Plaintiff may be right, and that might lead to a later suit. But it will not be dealt with here.
The next issue is whether Michael Reinstein should be
substituted for Farr as the defendant.
Plaintiff’s theory is that Michael Reinstein bought Farr out of
bankruptcy and is now the owner. Michael
Reinstein opposes the motion. The court
is inclined to agree with the defense if, and only if, Michael Reinstein agrees
that he will not argue later that Farr’s legal successor-in-interest is not
bound by the judgment. To put it another
way, if he is going to contend that he is not the successor-in-interest, that
is fine, and he can resist any judgment collection efforts on that basis. But what he cannot do is to say that although
he is Farr’s successor-in-interest he is not bound by this judgment even in
that capacity because he was not personally named. He can’t have it both ways. If he is the successor-in-interest, then he
will be bound subject to whatever defenses a successor-in-interest might
have. He can oppose a
successor-in-interest finding and he can claim that a successor-in-interest is
not liable for what the predecessor-in-interest might have done. But he cannot raise the technical defense and
blame plaintiff for not having substituted him in or added him as a party
defendant. That said, the court notes
that plaintiff seeks to add him solely as a successor-in-interest; the
complaint does not allege that he is personally liable for anything. That remains the case.
The defense wanted to discuss their MJOP, which the court
denied with prejudice. A clarification
on the “with prejudice” tag. The court
meant that it would not consider another untimely MJOP; the court made no
ruling on the merits and defendants are free to raise those issues in a more
appropriate manner. However, the court
stands by its ruling that it will not decide things like that when brought a
week before the trial or less. Defense
counsel substituted in two months ago.
It does not get a do-over.
And that brings the court to the trial readiness
hearing. The court is not convinced that
the case is quite ready for trial. The
trial date is continued to Thursday, April 25, 2024, at 10:30 am, and this
conference is continued to Wednesday, April 24, 2024, at 10:30 am. No later than 4 pm today, the parties will
provide the court with the operative versions of the FSC materials (virtually
all of which should be joint) and deliver a courtesy copy of those materials in
court. The court believes that they have
already been filed and if so, they need not be filed again and the parties may
instead provide a list of those documents and the date each was filed. But the court is requesting hard copies of
them so that the court can make sure that the case is ready for trial. The court has recently received amended
exhibit lists. The court does not know
if they are joint or not, but if they are not joint, they come too late. There are apparently new jury instructions by
the defense to which plaintiff has objected.
They will need to be filed (they are not yet on the docket). The parties should be sure that the FSC
materials are complete and compliant.
That means that an exhibit that says “Emails between Triurol and Fred
Reinstein” is not appropriate. Each
email should be a separate exhibit and production numbers should be included
where possible. Dates should be included
in all cases. It is simply unwieldy to
have the 200 page exhibit with lots of emails or photos that then have to be
admitted page by page. The parties
should also submit trial briefs no later than noon on April 23, 2024 with a
courtesy hard copy to the court. The
briefs should not be more than 15 pages in length excluding exhibits. The parties should also set forth any
undecided, timely filed in limine motions. “Timely filed” means filed at least 16 court
days before the prior FSC. It is far too
late to start filing them now. If there
are any disagreements on anything, the parties are to meet and confer—that
means lead trial counsel in the same room—starting today to resolve as much as
possible. If there remain disputes, a
JOINT BRIEF of outstanding issues is to be filed with the trial briefs. It will be organized by dispute and set forth
plaintiff’s position and then defendant’s position. It is to be no longer than 1 page per side
per dispute. Defendants should be aware
that they are bound by the actions of prior counsel. It is far too late in the day for them to
attempt to re-do that which should have been done long ago.
Along those lines, a quick word on the untimely MIL 5 from
the defense, which seems to be forming a pattern of filing things late. If that is a disguised motion to bifurcate
punitive damages, the court would be inclined to GRANT the motion and preclude
any evidence going solely to the amount of punitive damages during Phase
I. If it is something else, then it is
untimely and will be DENIED on that basis.
The court doubts that the trial will begin on April 25,
2024. But if the case is ready for
trial, it will likely begin on April 29, 2024.