Jackson, R. Brooke, United States District Judge
The court granted plaintiffs’ motion for sanctions when defendant lost an iPhone containing text messages that he had a duty to preserve for trial. However, an adverse jury instruction was too harsh because there was no evidence that the loss of the iPhone was anything other than accidental or that spoliation resulted from anything more than mere negligence. As a limited sanction, plaintiffs could introduce evidence of defendant’s failure to preserve the text messages at trial and hope the jury would draw an inference against defendant of its own accord.
Plaintiffs’ claims against defendants arose out of plaintiff Christou’s assertion that defendant Roulier had been threatening A-List disc jockeys to prevent them from performing in Christou’s nightclubs. With Christou’s initial financial backing, Roulier conceived the idea for Beatport, an online marketplace for Electronic Dance Music (EDM), the type of music that Christou hired A-List DJs to perform at his clubs. Beatport quickly grew into the Internet’s largest site tailored exclusively for producers and consumers of EDM. Roulier allegedly threatened A-List DJs that he would no longer promote their tracks on Beatport if they performed in Christou's clubs, thereby allowing Roulier’s own club to take over the Denver market for live EDM.
Spoliation sanctions are proper when (1) a party has a duty to preserve because it knew or should have known of imminent litigation; and (2) the adverse party was prejudiced by spoliated evidence. Roulier lost his iPhone after plaintiffs had served him with a “litigation hold letter” directing him to preserve several categories of documents, including text messages. Roulier accordingly had notice of imminent litigation and his concomitant duty to preserve. Roulier argued that it was “sheer speculation” that the lost phone and messages contained relevant evidence because he claimed not to book DJs with text messages. The court rejected this argument; the fact that Roulier did not book his DJs via text was hardly proof that the evidence his phone contained was not relevant. The spoliated evidence therefore may have prejudiced plaintiffs, and limited sanctions were appropriate.
The court also dealt with numerous other issues, among them defendants’ motions to exclude the testimony of two expert witnesses, defendants’ summary judgment motion, and defendants’ motion for sanctions under Rule 11.
First, the court denied defendants’ motion to exclude the expert testimony of antitrust economist Owen Phillips because his opinions on the digital download and A-List DJ markets were both reliable and relevant within the meaning of Federal Rule of Evidence 702. Defendants’ criticisms went to the weight of testimony, not to its admissibility. The court also denied defendants’ motion to exclude the expert testimony of plaintiffs’ damage expert with respect to his lost profits opinions. Calculating lost profits is a relatively straightforward undertaking, and plaintiffs’ expert was a qualified accountant. However, the court withheld judgment on the admissibility of the damage expert’s lost enterprise value opinions unless and until their relevancy became more apparent at trial.
Second, the court denied defendants’ motion for summary judgment. Plaintiffs’ antitrust claim in particular was “riddled with fact disputes”—the scope of the relevant markets, whether a “dangerous probability” of monopolization existed, etc.—and therefore not susceptible to summary judgment. The court did question plaintiffs’ wisdom in “clogging down this case” with a state claim for civil conspiracy, but it nevertheless found unresolved issues of fact that made summary judgment inappropriate. Summary judgment for lack of subject matter jurisdiction was likewise inappropriate. The court allowed plaintiffs’ state claims to “tag along” so long as plaintiffs’ antitrust claims continued in order to avoid the costly risk of a new case in state court. Summary judgment for defendants’ interference with prospective business advantage was denied despite a two-year statute of limitations. Because plaintiffs brought forth evidence from 2008, barely over two years before filing, it was not clear that plaintiffs knew of all their claim’s essential material facts early enough to time bar the claim.
Finally, the court held that the conduct about which defendants complained was not sanctionable under Rule 11. Christou’s recorded phone conversation with a Las Vegas promoter about bringing Roulier “to his knees” with a lawsuit did indeed reflect poorly on him. Christou probably should have sent Roulier a cease and desist letter before filing a lawsuit. Alleging a RICO claim also was probably too drastic. However, “the fact remain[ed] that Mr. Christou retained excellent counsel,” and the court refused to assume these lawyers “did not believe that there was a good faith basis in fact and law to sign the Complaint containing the claims asserted in it.”
v.
BEATPORT, LLC, BRADLEY ROULIER, and BMJ&J, LLC d/b/a Beta Nightclub and Beatport Lounge, Defendants
Counsel
Dale R. Harris, John Allen Francis, Kenzo Sunao Kawanabe, Davis Graham & Stubbs, Llp, Denver, Co, Jeffrey S. Vail, The Law Office Of Jeff Vail Llc, Englewood, CO, for Plaintiffs.Kenzo Sunao Kawanabe Davis Graham & Stubbs, LLP, Denver, CO, Judy Bradshaw Snyder, Katherine M.L. Pratt, Patrick Michael Haines, Berg Hill Greenleaf & Ruscitti, LLP, Joe L. Silver, Martin Dean Beier, Silver & Deboskey, P.C., George Vernon Berg, Jr., Boulder, CO, for Defendants.
ORDER
A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.