United States District Court, N.D. California
ORDER REGARDING MOTION FOR RECONSIDERATION, MOTION TO
PRECLUDE TESTIMONY, AND MOTION FOR RELIEF FROM SCHEDULING
ORDER RE: DKT. NOS. 373, 381, 384
C. SPERO CHIEF MAGISTRATE JUDGE
antitrust and malicious prosecution action arising from
patent infringement claims asserted in previous litigation,
Plaintiff Cave Consulting Group, Inc. (“CCGroup”)
now moves for reconsideration of a previous order on summary
judgment limiting its damages, and for relief from a
scheduling order to allow CCGroup to present a new expert
report on damages. Defendant OptumInsight, Inc. moves to
preclude CCGroup from calling OptumInsight's lead counsel
as a witness at trial. In addition to the parties'
motions, the Court provided notice of its intent to consider
entering summary judgment sua sponte under Rule 56(f) of the
Federal Rules of Civil Procedure. The Court held a hearing on
January 10, 2020. For the reasons discussed below,
CCGroup's motion for reconsideration is GRANTED, but the
Court now grants summary judgment imposing a substantially
similar limitation on damages sua sponte under Rule 56(f).
The remaining motions are DENIED.
August 28, 2019, the Court issued an order resolving the
parties' motions for summary judgment and
Daubert motions to exclude expert testimony.
See Order re Mots. for Summ. J. & Mots. to
Exclude Expert Testimony (“MSJ Order, ” dkts. 354
(sealed), 363 (public)). This order assumes the parties'
familiarity with the facts and history of the case, which are
addressed in greater detail in that summary judgment order.
had moved to exclude the opinions of CCGroup's expert
witness Dr. Ryan Sullivan, including opinions regarding
damages arising from CCGroup's exclusion from the market
for standalone medical claim grouper software. Dr. Sullivan
had offered a convoluted analysis that first estimated, based
on very little underlying data, the performance of certain
companies that he identified as comparable to CCGroup in the
separate market for physician efficiency software, and used a
formula based on the estimated performance of those companies
to project CCGroup's performance in the standalone
grouper market. Among other rulings, the Court excluded Dr.
Sullivan's opinions on the measure of CCGroup's
damages, although it allowed opinions addressing more
generally the fact of CCGroup's purported injury. MSJ
Order at 11-21. Based on the exclusion of those opinions, the
Court also granted summary judgment for OptumInsight on the
issue of whether CCGroup could show damages caused by its
exclusion from the grouper market. The Court allowed CCGroup
to pursue antitrust damages based only on expenses incurred
in earlier litigation in which OptumInsight accused CCGroup
of infringing OptumInsight's patents.
sought leave to file a motion for reconsideration on the
basis that the Court improperly granted judgment sua sponte
on an issue not raised in OptumInsight's motion for
summary judgment, and the Court granted CCGroup leave to do
so. In granting leave, the Court also provided notice of its
intent to consider granting judgment on the issue of damages
sua sponte under Rule 56(f) of the Federal Rules of Civil
Procedure if CCGroup prevailed in showing error in the
earlier ruling. See Oct. 4, 2019 Order (dkt. 366).
CCGroup has now filed its motion for reconsideration, as well
as a motion seeking relief from the expert discovery
deadlines imposed by the Court's scheduling order, to
allow CCGroup to offer a new report from Dr. Sullivan
presenting a different theory of damages.
OptumInsight has filed a motion seeking to preclude CCGroup
from calling OptumInsight's lead trial counsel, Peter
Lancaster, as a witness at trial.
AND SUA SPONTE SUMMARY JUDGMENT
CCGroup's Motion for Reconsideration
asks the Court to vacate the portion of its previous order on
summary judgment holding that CCGroup cannot recover damages
based on its exclusion from the market for grouper software.
See generally Pl.'s Mot. for Reconsideration
(“Reconsideration Mot., ” dkts. 373-5 (public),
373-6 (sealed)). CCGroup first argues that the Court erred in
granting judgment on that issue because OptumInsight did not
assert a deficiency in proof of damages (as opposed to the
separate issue of antitrust injury) in its motion, but
acknowledges that the Court has since provided notice of
intent to grant partial summary judgment sua sponte under
Rule 56(f). See Id. at 1-3.
cites cases recognizing wide latitude in antitrust
plaintiffs' permissible means of proving damages,
including one district court decision from the Western
District of Oklahoma holding that the exclusion of expert
testimony did not necessarily preclude the plaintiff from
recovering some form of damages. Id. at 4-5 (citing,
e.g., Champagne Metals v. Ken-Mac Metals,
Inc., No. CIV-02-0528-HE, 2008 WL 5205204, at *14 (W.D.
Okla. Dec. 11, 2008)). CCGroup concedes that “a jury
may not award purely speculative damages, ” but
contends that even without Dr. Sullivan's excluded
opinions, it can offer sufficient evidence to present some
reasonable basis for an estimate of damages. Id. at
6. According to CCGroup, its showing of antitrust injury,
which the Court held sufficient, is enough for the jury to
consider the question of damages, particularly given the
availability of nominal damages. Id. at 15-16.
identifies the following categories of evidence as capable of
supporting an award of market damages: (1) evidence regarding
the nature and scope of the standalone grouper market, which
shows that the market is nationwide and includes few actual
competitors, id. at 7; (2) evidence of
OptumInsight's revenue and profit from the sale of its
grouper product, id. at 7-8; (3) evidence of
OptumInsight's pricing of its grouper product, including
OptumInsight's purported ability to maintain a higher
profit margin on that product than on other products,
id. at 8; (4) evidence that CCGroup would have been
capable of licensing its grouper product to customers as
early as 2003, establishing a temporal span for potential
damages, id. at 8-9; (5) evidence that
OptumInsight's conduct enforcing and threatening to
enforce its patents limited CCGroup's participation in
the market, id. at 9; (6) testimony from Dr.
Sullivan-which the Court's previous order permitted-that
OptumInsight's patents enabled it to dominate the
standalone grouper market, among other evidence supporting
the same conclusion, id. at 10-11; (7) testimony
from Dr. Sullivan and evidence from market participants that
CCGroup's grouper product was on its merits a viable
competitor to OptumInsight's product, id. at
11-12; (8) the actual costs, pricing, and profit margins of
CCGroup's product during the time period at issue,
id. at 12-13; (9) evidence of barriers to entry and
limited participation in the market for standalone groupers,
id. at 13-14; and (10) the opinions of
OptumInsight's own damages expert Richard Bero,
id. at 14- 15.
noted at the time it filed its motion for reconsideration
that it also intended to seek leave to file an amended expert
report, but did not argue that the potential amended report
is itself a basis for reconsideration of the Court's
summary judgment order. See Id. at 16.
OptumInsight's Opposition to Reconsideration
argues that the Court was correct to grant summary judgment
on the issue of market damages and should not reconsider that
decision. See generally Def.'s Opp'n to
Pl.'s Mot. for Reconsideration (“Reconsideration
Opp'n, ” dkts. 387-10 (public), 387-11 (sealed)).
As a procedural matter, OptumInsight argues that CCGroup has
not shown circumstances warranting reconsideration beyond
mere disagreement with the Court's previous decision,
which is not sufficient under this Court's local rules
and past practice. Id. at 2-3.
OptumInsight disputes CCGroup's characterization that the
Court granted judgment on the issue of damages “sua
sponte, ” see Id. at 5, OptumInsight does not
actually argue that it moved for summary judgment on that
issue or identify any such argument in its motion for summary
judgment. Instead, OptumInsight argues that CCGroup addressed
the issue of damages in both its summary judgment briefing
and in its opposition to OptumInsight's Daubert
motion. Id. at 3. According to OptumInsight, the
parties' arguments regarding potential exclusion of Dr.
Sullivan's opinions and the Court's reasoning in
excluding those opinions put CCGroup on sufficient notice of
its purported lack of evidence of market damages.
Id. at 3-5.
the merits of whether CCGroup can show market damages,
OptumInsight contends that most of the evidence cited in
CCGroup's motion-for example, OptumInsight's
purported market dominance, the purported viability of
CCGroup's product, and barriers to entry in the grouper
market-goes only to the qualitative fact of antitrust injury,
without providing any basis for the jury to award a
non-speculative quantitative amount of damages. Id.
at 1, 10-13. OptumInsight argues that its own performance
sheds no light on how CCGroup would have performed but for
OptumInsight's patents, and that CCGroup has not actually
identified evidence showing the size of the grouper market as
a whole. Id. at 10-11. OptumInsight distinguishes
cases that CCGroup cites as recognizing a liberal standard
for antitrust damages on the grounds that each of those cases
presented a relatively straightforward comparison for the
jury to calculate damages-before and after the
anticompetitive conduct at issue affected the market, or in
one case, performance in an noncompetitive geographic market
versus a competitive geographic market-that is not found in
this case. Id. at 5-6. OptumInsight asserts that a
before-and-after comparison similar to those cases,
demarcated here by CCGroup's successful defense against
infringement claims in Cave I, would yield no
damages, and that CCGroup may not base its damages on
OptumInsight's performance in the grouper market rather
than CCGroup's own performance. Id. at 7-8 &
OptumInsight does not dispute that its own expert Richard
Bero offered opinions relating to damages, it argues that
CCGroup is not entitled to call an opponent's expert in
its case in chief, citing cases excluding such evidence as a
matter of adversarial fairness. Id. at 13-14, 16-
17. OptumInsight also contends that Bero opined only on a
maximum amount of damages, “an amount
above which any damages claim would be obviously
overstated” rather than an opinion as to the damages
actually supported, and that he testified at his deposition
that further work would be necessary to reach a reliable
opinion on actual damages. Id. at 14-16.
CCGroup's Reply Regarding Reconsideration
argues in its reply that the mere fact that arguments
“touched on evidence relevant to the damages
inquiry” did not allow the Court to grant judgment with
respect to an issue on which OptumInsight did not move, and
that CCGroup's previous arguments regarding antitrust
injury and the admissibility of Dr. Sullivan's opinions
did not, and had no reason to, constitute a full presentation
of CCGroup's evidence on the issue of damages. Pl.'s
Reply in Support of Mot. for Reconsideration (dkts. 396-2
(sealed), 396-3 (public)) at 1-3 (citing Hoard v.
Hartman, 904 F.3d 780, 792-93 (9th Cir. 2018) (reversing
summary judgment granted sua sponte as to an issue not raised
in the defendant's motion)).
respect to the Court's more recent notice of intent to
consider granting partial summary judgment sua sponte under
Rule 56(f), CCGroup again argues that its evidence of
antitrust injury-which the Court previously recognized as
sufficient to proceed to trial on that issue-is also relevant
to damages. Id. at 3-5 (“Evidence
demonstrating that a party suffered some harm is
plainly relevant to quantifying the amount of that
harm.”). CCGroup also once again argues that the Court
should not grant summary judgment on this issue because a
jury could award nominal damages if it determines that
CCGroup has not presented sufficient evidence of a particular
amount of damages. Id. at 5. CCGroup further
contends that a jury could determine its damages by
“‘projecting the market share which the plaintiff
would have attained absent the anticompetitive activity, and
then projecting the [sic plaintiff's profits
accordingly, '” among other permissible methods,
and suggests for the first time that the forthcoming
supplemental report it seeks to present from Dr. Sullivan
supports denying summary judgment as to damages. Id.
at 6- 7, 10 (quoting Dolphin Tours, Inc. v. Pacifico
Creative Serv., Inc., 773 F.2d 1506, 1511 (9th Cir.
argues that Bero not only responded to Dr. Sullivan's
opinions, but offered his own affirmative opinions as to
CCGroup's lost profits if a jury were to determine that
anticompetitive conduct was the cause of OptumInsight
increasing its market share during the period at issue.
Id. at 8. CCGroup concedes that Bero based his
opinions on an assumption that CCGroup actually could have
produced a competing product and that he characterized his
damages figure as a maximum, but CCGroup contends that the
Court has already recognized that there is evidence CCGroup
could have competed in the standalone grouper market, and
that a maximum damages figure is relevant to the jury's
analysis. Id. According to CCGroup, the
circumstances here are not analogous to cases cited by
OptumInsight where courts have declined to allow a party to
call an opponent's expert, such as a case where the
defense expert's opinions were based on the
plaintiff's expert's methodology, which the defense
expert had made clear he did not believe was reliable.
Id. at 9-10 (discussing, e.g., In re
Taco Bell Wage & Hour Actions, No.
1:07-cv-01314-SAB, 2016 WL 815634, at *4-5 (E.D. Cal. Mar. 2,
contends that there is sufficient evidence for the jury to
estimate damages based on the revenue and profit that CCGroup
would have obtained from lost sales, and that such an
approach “is not a benchmark model” and does not
require evidence showing the size of the market or
participants' relative market shares. Id. at
12-13. Even if such data were required, CCGroup argues that
the record contains more robust evidence of the nature of the
standalone grouper market than of the physician efficiency
market on which Dr. Sullivan's initial analysis relied.
Id. at 13-14. CCGroup argues that under the
circumstances of this case, where CCGroup claims that it was
deterred from competing in the grouper market at all, it
should not be required to identify specific sales to specific
customers that it would have made but for OptumInsight's
conduct. See Id. at 14-15.
Reconsideration Is Warranted
requests reconsideration under the Court's inherent
authority and Civil Local Rule 7-9(b)(3). Reconsideration
Mot. at 1. That rule provides for reconsideration of an
interlocutory order to remedy a “manifest failure by
the Court to consider material facts or dispositive legal
arguments which were presented to the Court before such
interlocutory order.” Civ. L.R. 7-9(b)(3). The rule
does not fit the circumstances of this motion-CCGroup's
argument for reconsideration is not that the Court
disregarded arguments presented by the parties, but rather
that the Court acted sua sponte on an issue not
raised by the parties. Nevertheless, although not squarely
addressed by Local Rule 7-9, the Court concludes that
reconsideration is warranted if the Court acted sua sponte
without authority to do so and without notice to the parties
that would have allowed for a timely objection before such
action was taken.
56(f) of the Federal Rules of Civil Procedure governs sua
sponte action to grant summary judgment:
(f) Judgment Independent of the Motion. After giving notice
and a reasonable time to respond, the court may:
(1) grant summary judgment for a nonmovant;
(2) grant the motion on grounds not raised by a party; or
(3) consider summary judgment on its own after identifying
for the parties material facts that may not be genuinely in
Fed. R. Civ. P. 56(f). “Sua sponte grants of
summary judgment are only appropriate if the losing party has
‘reasonable notice that the sufficiency of his or her
claim will be in issue.'” Greene v. Solano Cty.
Jail, 513 F.3d 982, 990 (9th Cir. 2008) (quoting
Buckingham v. United States, 998 F.2d 735, 742 (9th
did not move-and does not argue now that it moved-for summary
judgment on the issue of whether CCGroup could show a
non-speculative amount of damages as a result of being
dissuaded from competing in the market for grouper software.
See Reconsideration Opp'n at 3-5 (failing to
identify any part of OptumInsight's motion for summary
judgment seeking a determination that CCGroup could not show
damages). Although the Court expressed skepticism at the
summary judgment hearing as to whether Dr. Sullivan's
market damages opinions rested on a sufficient factual
foundation, the Court neither raised the issue of whether
CCGroup could show such damages without Dr. Sullivan's
testimony nor invited a response from CCGroup on that issue.
See generally Aug. 12, 2019 Hr'g Tr. (dkt. 371).
The Court's order before the hearing identifying “a
non-exhaustive list of topics that the parties should be
prepared to address” also did not raise this issue.
See dkt. 352.
absence of such notice either from the Court or from
OptumInsight's motion, CCGroup had no occasion to address
the standard for a sufficient showing of damages in antitrust
cases, or whether the evidence available could meet that
standard if Dr. Sullivan's damages opinions were
excluded. Granting summary judgment on that issue without
prior notice to CCGroup was error, and would likely be
reversible. See Hoard, 904 F.3d at 792-93;
Greene, 513 F.3d at 990 (“[B]ecause Greene did
not have notice and an opportunity to oppose summary judgment
on those claims, summary judgment on them was
inappropriate.”). The Court VACATES the portion of its
August 28, 2019 holding that “CCGroup cannot recover
damages based on projections of its performance but for
OptumInsight's conduct in . . . the standalone grouper
market.” MSJ Order at 102; see also Id. at
Sua Sponte Summary Judgment Under Rule 56(f)
granting CCGroup's motion for leave to files its motion
for reconsideration, the Court also gave notice that if the
motion for reconsideration were granted, the Court would
consider under Rule 56(f) whether to grant summary judgment
sua sponte that CCGroup lacks sufficient evidence to support
an award of damages in the grouper market. See Oct.
4, 2019 Order. The Court allowed CCGroup to revise its
proposed motion for reconsideration to include arguments and
evidence opposing sua sponte judgment on that issue.
Id. The Court now considers whether, in light of the
parties' briefs and evidence filed after appropriate
notice, the same outcome is warranted. See Fed. R.
Civ. P. 56(f) (“After giving notice and a reasonable
time to respond, the court may . . . consider summary
judgment on its own after identifying for the parties
material facts that may not be genuinely in dispute.”).
Legal Standard for Summary Judgment
opposing summary judgment must identify
“‘specific facts showing there is a genuine issue
for trial.'” Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986) (citation omitted); see also
Fed. R. Civ. P. 56(c)(1) (“A party asserting that a
fact . . . is genuinely disputed must support the assertion
by . . . citing to particular parts of materials in the
record . . . .”). “[T]he inquiry involved in a
ruling on a motion for summary judgment . . . implicates the
substantive evidentiary standard of proof that would apply at
the trial on the merits.” Anderson v. Liberty Lobby
Inc., 477 U.S. 242, 252 (1986). The party opposing
summary judgment has the burden of identifying, with
reasonable particularity, the evidence that precludes summary
judgment. Keenan v. Allan, 91 F.3d 1275, 1279 (9th
need not present evidence to support or oppose summary
judgment in a form that would be admissible at
trial, but the contents of the parties' evidence
must be amenable to presentation in an admissible form.
See Fraser v. Goodale, 342 F.3d 1032, 1036-37 (9th
Cir. 2003). Neither conclusory, speculative testimony in
affidavits nor arguments in moving papers are sufficient to
raise genuine issues of fact and defeat summary judgment.
Thornhill Publ'g Co., Inc. v. GTE Corp., 594
F.2d 730, 738 (9th Cir. 1979). The court draws all reasonable
factual inferences in favor of the party opposing summary
judgment, Scott v. Harris, 550 U.S. 372, 378 (2007),
but where a rational trier of fact could not find for that
party based on the record as a whole, there is no
“genuine issue for trial” and summary judgment is
appropriate. Matsushita Elec. Indus. Co. v. Zenith
Radio, 475 U.S. 574, 587 (1986).
Evidence of Damages
have long recognized a relatively lenient standard for
proving damages in antitrust cases, under which a “jury
is allowed to act on probable and inferential proof in
determining the amount of damages even though such an award
may be an approximation.” Dolphin Tours, Inc. v.
Pacifico Creative Serv., Inc., 773 F.2d 1506, 1511 (9th
Cir. 1985); see also, e.g., Knutson v. Daily
Review, Inc., 548 F.2d 795, 811-12 (9th Cir. 1976)
(“‘A study of the adjudicated cases in this area
readily dispels any impression that this question of damages
is governed by an application of the common law rule of
reasonable certainty. The cases have long since departed from
this rule in antitrust litigation.'” (quoting
Flintkote Co. v. Lysfjord, 246 F.2d 368, 391 (9th
Cir. 1957))). That is particularly true where a
defendant's “wrongful conduct has rendered
difficult the ascertainment of the precise damages suffered
by the plaintiff.” Eastman Kodak Co. of N.Y. v. S.