Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 1 of 39 PageID# 31089
`
` IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`
`v.
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY,
`
`Plaintiffs and Counterclaim Defendants,
`
`
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.,
`
`Defendants and Counterclaim Plaintiffs.
`
`Case No. 1:20-cv-00393-LO-TCB
`REDACTED
`
`
`REYNOLDS’S OPPOSITION TO PM/ALTRIA’S MOTION TO
`SHOW CAUSE WHY SANCTIONS SHOULD NOT BE IMPOSED
`
`
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 2 of 39 PageID# 31090
`
`TABLE OF CONTENTS
`
`Page
`
`I.
`II.
`
`III.
`IV.
`
`C.
`
`D.
`E.
`
`INTRODUCTION ............................................................................................................. 1
`BACKGROUND ............................................................................................................... 4
`A.
`Neither Side’s Damages Expert Relied Upon Any Fontem Negotiations ............. 4
`B.
`PM/Altria Requested Fontem-RJRV Negotiations Only After It Served Its
`Damages Expert Report ......................................................................................... 6
`Judge Buchanan Correctly Denied PM/Altria’s Prior Motion To Compel
`Discovery Regarding The Fontem-RJRV Negotiations ........................................ 6
`PM/Altria Attempted To Backfill The Holes In Mr. Meyer’s Opinions ............... 7
`Altria Subpoenaed Fontem In The Middle District Of North Carolina
`Action ..................................................................................................................... 7
`PM/Altria Sought To Save Mr. Meyer’s Inadmissible Opinions .......................... 8
`F.
`LEGAL STANDARD ........................................................................................................ 9
`ARGUMENT ................................................................................................................... 10
`A.
`The Fontem-RJRV Negotiations Are Not Relevant Or Appropriate For
`Discovery, And PM/Altria Waived Its Arguments To The Contrary .................. 10
`1.
`PM/Altria Waived Any Challenge To Judge Buchanan’s Ruling By
`Failing To Timely Object......................................................................... 10
`The Court Correctly Rejected PM/Altria’s Prior Motion To
`Compel ..................................................................................................... 13
`Mr. Meyer Cannot Rely On The Fontem-RJRV Negotiations ................ 16
`3.
`PM/Altria’s Request To Reopen Discovery On The Eve Of Trial Should
`Be Denied............................................................................................................. 19
`1.
`PM/Altria’s Request Is Untimely............................................................. 19
`2.
`The Fontem-RJRV Negotiation Documents Are Not Relevant And
`PM/Altria Already Has Copies From Fontem ......................................... 22
`There Is No Basis To Sanction Reynolds ............................................................ 24
`1.
`Reynolds Did Not Violate Any Rule Or Make Any
`Misrepresentation To The Court .............................................................. 24
`Sanctions Under Rule 37 Are Not Warranted.......................................... 25
`Sanctions Under The Even Higher Standard For Sanctions Under
`The Court’s Inherent Authority Are Not Warranted................................ 28
`PM/Altria Should Be Ordered To Reimburse Reynolds’s Fees And Costs
`In Defending This Frivolous Motion ................................................................... 30
`
`2.
`
`2.
`3.
`
`B.
`
`C.
`
`D.
`
`-i-
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 3 of 39 PageID# 31091
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`
`
`V.
`
`CONCLUSION ................................................................................................................ 30
`
`
`
`
`
`-ii-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 4 of 39 PageID# 31092
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`CASES
`
`Advanced Cardiovascular Sys., Inc. v. Medtronic, Inc.,
`265 F.3d 1294 (Fed. Cir. 2001)................................................................................................13
`
`Alpex Computer Corp. v. Nintendo Co.,
`No. 86 CIV. 1749(KMW), 1994 WL 139423 (S.D.N.Y. Mar. 18, 1994) ..........................18-19
`
`Apple, Inc. v. Samsung Elecs. Co.,
`No. 12-CV-00630-LHK, 2014 WL 794328 (N.D. Cal. Feb. 25, 2014) ...................................19
`
`Asghari-Kamrani v. United Servs. Auto. Ass’n,
`No. 2:15CV478, 2017 WL 4418424 (E.D. Va. July 27, 2017), aff’d, 737 F.
`App’x 540 (Fed. Cir. 2018)................................................................................................10, 29
`
`Avocent Redmond Corp. v. Rose Elecs.,
`No. C06-1711RSL, 2012 WL 4903272 (W.D. Wash. May 29, 2012) ....................................15
`
`Beach Mart, Inc. v. L & L Wings, Inc.,
`302 F.R.D. 396 (E.D.N.C. 2014) .............................................................................................25
`
`Boryan v. United States,
`884 F.2d 767 (4th Cir. 1989) ...................................................................................................12
`
`Dimino v. N.Y.C. Transit Auth.,
`64 F. Supp. 2d 136 (E.D.N.Y. 1999) .......................................................................................14
`
`Fiberglass Insulators, Inc. v. Dupuy,
`856 F.2d 652 (4th Cir. 1988) ...................................................................................................14
`
`Flame S.A. v. Indus. Carriers, Inc.,
`No. 2:13-cv-658, 2014 WL 12547260 (E.D. Va. July 31, 2014).............................................20
`
`Gallagher v. S. Source Packaging, LLC,
`568 F. Supp. 2d 624 (E.D.N.C. 2008)......................................................................................22
`
`Giganti v. Gen-X Strategies, Inc.,
`222 F.R.D. 299 (E.D. Va. 2004) ..............................................................................................12
`
`-iii-
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 5 of 39 PageID# 31093
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Hamed v. Saul,
`432 F. Supp. 3d 610 (E.D. Va. 2020) ......................................................................................12
`
`Hare v. Comcast Cable Commc’ns Mgmt., LLC,
`564 F. App’x 23 (4th Cir. 2014) ..............................................................................................20
`
`Homer J. Olsen, Inc. v. U.S. Dep’t of Transp. Fed. Transit Admin.,
`No. C 02-00673 WHA, 2002 WL 31738794 (N.D. Cal. Dec. 2, 2002) ..................................14
`
`In re MSTG, Inc.,
`675 F.3d 1337 (Fed. Cir. 2012)..........................................................................................13, 15
`
`Inline Connection Corp. v. AOL Time Warner Inc.,
`470 F. Supp. 2d 435 (D. Del. 2007) .........................................................................................14
`
`Johnson Matthey, Inc. v. Rsch. Corp.,
`No. 01-CV-8115 MBM FM, 2003 WL 24136087 (S.D.N.Y. June 16, 2003) .........................14
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012)....................................................................................................17
`
`McLean v. Branch Banking & Tr. Co.,
`No. 1:19-CV-1413, 2020 WL 8361911 (E.D. Va. June 24, 2020) ..........................................20
`
`MLC Intell. Prop., LLC v. Micron Tech., Inc.,
`10 F.4th 1358 (Fed. Cir. 2021) ................................................................................................17
`
`Mulugeta v. Ademachew,
`No. 1:17-CV-649, 2019 WL 7945712 (E.D. Va. Nov. 6, 2019) .............................................29
`
`PharmaStem Therapeutics, Inc. v. Viacell Inc.,
`No. C.A. 02-148 GMS, 2003 WL 22387038 (D. Del. Oct. 7, 2003) .......................................14
`
`Quillin v. C.B. Fleet Holding Co.,
`328 F. App’x 195 (4th Cir. 2009) ............................................................................................12
`
`Russell v. Absolute Collection Servs., Inc.,
`763 F.3d 385 (4th Cir. 2014) ...................................................................................................25
`
`S. States Rack & Fixture, Inc. v. Sherwin-Williams Co.,
`318 F.3d 592 (4th Cir. 2003) .............................................................................................10, 26
`
`-iv-
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 6 of 39 PageID# 31094
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Samsung Elecs. Co. v. Nvidia Corp.,
`314 F.R.D. 190 (E.D. Va. 2016) ..............................................................................................16
`
`Sanofi-Aventis U.S. v. Genentech, Inc.,
`No. CV 15-5685-GW, 2016 WL 7444676 (C.D. Cal. Mar. 30, 2016) ....................................15
`
`Stradtman v. Republic Servs., Inc.,
`121 F. Supp. 3d 578 (E.D. Va. 2015) ......................................................................................29
`
`Stretchline Intell. Props. Ltd. v. H & M Hennes & Mauritz LP,
`No. 2:10-CV-371, 2015 WL 789185 (E.D. Va. Feb. 24, 2015) ........................................28, 29
`
`SunTrust Banks, Inc. v. Robertson,
`No. 2:09CV197, 2010 WL 11569432 (E.D. Va. July 1, 2010) ...............................................12
`
`Tafas v. Dudas,
`530 F. Supp. 2d 786 (E.D. Va. 2008) ......................................................................................13
`
`Telecomm. Sys., Inc. v. Mobile 365, Inc.,
`No. 3:06CV485, 2009 WL 5943235 (E.D. Va. Mar. 31, 2009) ..............................................10
`
`Thomas v. FTS USA, LLC,
`No. 3:13cv825, 2016 WL 3566657 (E.D. Va. June 24, 2016).................................................25
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F. Supp. 2d 147 (D.R.I. 2009)...........................................................................................19
`
`United States ex rel. Carter v. Halliburton,
`266 F.R.D. 130 (E.D. Va. 2010) ..............................................................................................12
`
`United States v. 1.604 Acres of Land,
`No. 2:10-cv-00320, 2011 WL 1810594 (E.D. Va. May 11, 2011) ..........................................20
`
`Vir2us, Inc. v. Invincea, Inc.,
`235 F. Supp. 3d 766 (E.D. Va. 2017) ......................................................................................25
`
`Wells v. Shriner’s Hosp.,
`109 F.3d 198 (4th Cir. 1997) ...................................................................................................12
`
`Wootten v. Commonwealth,
`No. 6:14-CV-13, 2015 WL 13658068 (W.D. Va. June 9, 2015) ........................................19-20
`
`-v-
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 7 of 39 PageID# 31095
`
`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`
`STATUTES
`
`28 U.S.C. § 1927 ............................................................................................................................29
`
`OTHER AUTHORITIES
`
`Fed. R. Civ. P. 16 .............................................................................................................................9
`
`Fed. R. Civ. P. 26 ................................................................................................................... passim
`
`Fed. R. Civ. P. 30 .................................................................................................................5, 10, 11
`
`Fed. R. Civ. P. 37 ................................................................................................................... passim
`
`Fed. R. Civ. P. 59 ...........................................................................................................................12
`
`Fed. R. Civ. P. 72 ................................................................................................................... passim
`
`Fed. R. Evid. 403 ...........................................................................................................................19
`
`Fed. R. Evid. 408 ................................................................................................................... passim
`
`Fed. R. Evid. 702 ...........................................................................................................................17
`
`Fed. R. Evid. 703 ...........................................................................................................................18
`
`Local Civil Rule 37 ........................................................................................................................30
`
`Local Civil Rule 72 ........................................................................................................................13
`
`
`
`
`
`
`
`-vi-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 8 of 39 PageID# 31096
`
`
`I.
`
`INTRODUCTION
`
`PM/Altria’s motion for an evidentiary sanction and an order to show cause is baseless.
`
`Magistrate Judge Buchanan already denied PM/Altria’s prior motion for a deposition regarding
`
`the negotiation of the settlement agreement between Fontem and Reynolds. Judge Buchanan held
`
`“that it’s not appropriate to get into negotiations or the considerations that they made internally as
`
`to this” because “the document”—i.e., the final license agreement—“speaks for itself.” Dkt. 586,
`
`7. That ruling came after Judge Buchanan specifically asked PM/Altria’s counsel whether he had
`
`“request[ed] documents related to” this issue (see id. at 4 (the answer: “I’m sure we did, Your
`
`Honor.”)) and the substance of the Court’s ruling applied to document requests as well.
`
`Undoubtedly, that is why PM/Altria did not move to compel Reynolds to produce Fontem-RJRV
`
`negotiation documents after Reynolds objected to that request. It is not sanctionable for a party to
`
`object to discovery, particularly when the Court agreed the discovery was not relevant. This is
`
`especially true here where PM/Altria similarly declined to produce its negotiations with Fontem.
`
`If PM/Altria disagreed with Judge Buchanan’s ruling, its recourse was to file an objection
`
`within 14 days. It did not, and so it has waived the right to seek further review. See Fed. R. Civ.
`
`P. 72(a). PM/Altria tries to excuse its procedural default by claiming that Altria’s own expert
`
`report in the Middle District of North Carolina containing excerpts of draft Fontem-Reynolds
`
`agreements is “new evidence.” It is not. It is the same evidence that Judge Buchanan ruled would
`
`not be “appropriate to get into.” It is not even “new.” Altria’s August 2021 expert report contained
`
`reference to documents Fontem produced to Altria in June 2021—nearly a year ago—in response
`
`to an Altria subpoena. This is not a matter of formalism. The established procedures for resolving
`
`discovery disputes exist for a reason. If PM/Atria were truly confused by Reynolds’s Request for
`
`Production (“RFP”) response indicating that it did not intend to produce any further documents
`
`(because Reynolds had already produced the agreement itself), PM/Altria could have asked for
`
`
`
`
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 9 of 39 PageID# 31097
`
`
`clarification. If PM/Altria somehow believed that Judge Buchanan’s ruling did not apply to
`
`negotiation documents, it could have moved to compel production. Or better yet, it could have
`
`raised the issue with Reynolds after seeing Reynolds’s objection and response to the request.
`
`PM/Altria cannot blame Reynolds for PM/Altria’s own failures.
`
`PM/Altria’s request for sanctions should be seen for what it is: an admission of grave
`
`weakness in Mr. Meyer’s damages opinions, which are the subject of Reynolds’s pending Daubert
`
`motion. See Dkts. 892, 1090. Mr. Meyer opines on reasonable royalties for a hypothetical license
`
`between PM/Altria and Reynolds for U.S. sales of the VUSE products. He uses a market
`
`comparable approach, looking to licenses to the Fontem patents. There are two, and only two,
`
`Fontem patent licenses in the record: one with Nu Mark (Altria’s subsidiary) and one with
`
`Reynolds. Both Nu Mark and Reynolds
`
`.
`
`But Mr. Meyer does not use either of those
`
` licenses to set a rate here. Instead, Mr.
`
`Meyer uses a
`
` royalty rate from a different
`
`
`
`That was a grievous error for several reasons, as explained more fully in Reynolds’s
`
`pending Daubert motion, including because: the
`
` rate was not for a license comparable to
`
`the hypothetical PM/Altria-Reynolds license here
`
`
`
`; Mr. Meyer does not even opine that the
`
` rate is comparable to the
`
`hypothetical negotiation here;
`
`and because Mr. Meyer ignores that the
`
`
`
`To try and save his unsupported opinion, Mr. Meyer later opined that
`
`;
`
`
`
`
`
`
`
` (Dkt. 892-5, § 6.10.9). But Mr.
`
`
`
`
`-2-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 10 of 39 PageID# 31098
`
`
`Meyer has not seen any prior Fontem license agreements and instead relies solely upon press
`
`releases announcing settlements. PM/Altria, for whatever reason, chose not to seek the prior
`
`licenses from Fontem. And with respect to the press releases, seven of those eight press releases
`
`indicate global licenses—not U.S. only licenses, meaning that
`
`
`
`. Mr. Meyer cannot reasonably rely on agreements he has not seen and therefore cannot
`
`evaluate. And PM/Altria can’t save Mr. Meyer’s opinion now by relying on statements in Fontem-
`
`RJRV negotiation documents about the
`
`. For one thing,
`
`. Moreover,
`
`courts consistently prohibit discovery into “conduct or a statement made during compromise
`
`negotiations.” Fed. R. Evid. 408(a)(2). PM/Altria seeks yet another substitute for the prior license
`
`agreements themselves, without which Mr. Meyer cannot reasonably opine on their terms.
`
`In sum, PM/Altria’s motion should be denied because: (i) the Fontem-RJRV negotiation
`
`documents are irrelevant and inadmissible—neither side’s expert relies on them and they should
`
`not be permitted to do so now; (ii) Judge Buchanan already correctly denied discovery into the
`
`Fontem-RJRV negotiations; (iii) PM/Altria waived its ability to object to the prior ruling; (iv)
`
`Altria has the ability itself to produce the Fontem-RJRV negotiation documents here (although,
`
`they are irrelevant an inadmissible in any event); and (v) PM/Altria has not shown good cause to
`
`re-open fact and expert discovery on the eve of trial. Indeed, the information PM/Altria really
`
`would have needed to even try to support Mr. Meyer’s opinion is not from Reynolds at all—it
`
`needed copies of the other Fontem licenses agreements in the hands of Fontem. PM/Altria made
`
`the strategic choice not to seek those other Fontem licenses by the Court’s deadline. Thus,
`
`Reynolds should be granted its expenses, including its attorneys’ fees, under Federal Rule of Civil
`
`Procedure 37(a)(5)(B) for having to oppose this baseless motion.
`
`
`
`
`-3-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 11 of 39 PageID# 31099
`
`
`II.
`
`BACKGROUND
`
`A.
`
`Neither Side’s Damages Expert Relied Upon Any Fontem Negotiations.
`
`PM/Altria served the Opening Expert Report of Paul K. Meyer on February 24, 2021 (Dkt.
`
`892-1, 5; Dkt. 960, 2), the deadline for opening expert reports for the party with the burden of
`
`proof on an issue (Dkt. 461). Mr. Meyer based his reasonable royalties for three of the five
`
`PM/Altria asserted patents (the ’545, ’265, and ’911 patents) on a
`
` rate that appeared in a
`
`December 2016 settlement agreement between Fontem (a third party) and Nu Mark (a subsidiary
`
`of Altria Group).1 See Dkt. 892, 5-6. Reynolds challenges his use of that rate to
`
` because (among other errors): (a) the rate
`
`; (b) the rate
`
`; and (c) in the
`
`
`
`
`
`
`
`
`
`
`
` Mr.
`
`Meyer ignored. See, id. at 4-6, 19-20. Mr. Meyer also contended that his
`
` rate is supported
`
`by the
`
`. Dkt. 892-1, ¶ 27. In doing so, he applied the
`
`
`
`
`
`rate to Reynolds actual sales through 2020—i.e., using information post-dating the Fontem-RJRV
`
`agreement.2 Mr. Meyer did not rely upon or otherwise opine that any draft agreements or
`
`
`1 The parties agree the hypothetical negotiation for the ’545 patent occurs in March 2013, but Mr.
`Meyer relies on the “book of wisdom” to use the December 2016 Fontem-Nu Mark agreement.
`Dkt. 892-1, ¶ 130 (Mr. Meyer explaining that “[r]elying on the … ‘book of wisdom,’ [he] assumed
`that the parties to the Hypothetical Negotiations would consider all available information, data and
`documents, whether dated before or after the Hypothetical Negotiation dates.”).
`2 Mr. Meyer’s opinion on this is unreliable because it fails to account for at least a decade of
`covered sales under the license agreement. Dkt. 892, 14. Mr. Meyer conceded in his deposition
`that, if he accounted for additional years of covered sales (an error Dr. Sullivan accounts for in his
`rebuttal), the calculated effective rate paid by Reynolds would be much lower. Id. at 14-15.
`
`
`
`
`-4-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 12 of 39 PageID# 31100
`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 12 of 39 PagelD# 31100
`
`negotiations between Fontem and Reynolds or between Fontem and Nu Mark wererelevantto his
`
`analysis? Instead, heclaimed
`
`On March 24, 2021, Reynolds served the Rebuttal Expert Report of Dr. Sullivan. See Dkt.
`
`960, 2. Dr. Sullivan explained that Mr. Meyererred in using the Fontem-Nu Mark agreement(as
`
`opposed to the more comparable Fontem-RJRV agreement), in using aP| that was not
`for an economically comparable U.S.license, and in ignoringhii See id.
`
`at 4-5; see also Ex. B [Excerpts of March 24, 2021 Report of Ryan Sullivan, Ph.D] § 8.3. Dr.
`
`Sullivan also opined on the reasonable royalties for four of the asserted patents using the more
`
`appropriate actual effective rate paid by Reynolds to Fontem under the Fontem-RJRV agreement,
`
`partially correcting for Mr. Meyer’s failure to considera decade ofcovered sales.* Dr. Sullivan’s
`
`opinions regarding the economic and technical comparability of the Fontem-RJRV agreement to
`
`3 Andrightfully so. Neither party had produceddraft licenses or negotiations for their respective
`Fontem licenses. In response to a request for“[a]ll Documents and things concerning any license
`... including,but not limited to, settlement agreements. .
`. relating to any Altria Asserted Patents
`or any subject matter that [PM/Altria] contend|s] is comparable,” PM/Altria objected and agreed
`
`only to provide “executed licenses.” Ex. A [Altria’s Response to RFP 243] at 6-7.
`
`
`Ex. I [Altria’s Response to Rule 30(b)(6) Deposition
`
`Notice Topic 47] at 43-45.
`4 In particular, while Mr. Meyer considered the effective rate paid by Reynolds under the
`September 2018 Fontem-RJRV agreement using the actual covered Reynolds sales through 2020
`(see Dkt. 892, 14), Dr. Sullivan partially corrected for Mr. Meyer’s error in omitting covered sales
`beyond that time by considering the same actual sales through 2020 that Mr. Meyer used, as well
`as the most recent forecast for sales in the undisputed covered time period from 2021-2025 (see
`id. at 14-15; see also Dkt. 960, 5-6 & n.5). For clarification, the date of the Fontem-RJRV
`agreement (September 2018) is not the date of any hypothetical negotiation. The dates of the
`relevant hypothetical negotiations used by Dr. Sullivan are: March 2013 for the ’545 patent,
`August 2018 for the ’265 patent, October 2018 for the °911 patent, and September 2019 for the
`°374 patent. Dkt. 960, 3 (citing Dkt. 960-1, §§f 183-188).
`
`-5-
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 13 of 39 PageID# 31101
`
`
`the hypothetical negotiations relied upon the terms of the executed agreement, and he did not rely
`
`on any negotiations between Fontem and Reynolds. See Dkt. 553, 4-5, 7-8.
`
`B.
`
`PM/Altria Requested Fontem-RJRV Negotiations Only After It Served Its
`Damages Expert Report.
`
`On March 12, 2021, the month after PM/Altria served Mr. Meyer’s report (on February
`
`24, 2021), PM/Altria served RFP 224 seeking materials relating to the Fontem-RJRV settlement
`
`and negotiations. See Dkt. 1159-1, 8. Reynolds had already produced the responsive Fontem-
`
`RJRV settlement agreement. On March 29, 2021, Reynolds specifically objected to further
`
`production in response to RFP 224, citing both the lack of relevance and the overly broad and
`
`unduly burdensome nature of the request. Dkt. 1159-6, 4. On April 12, 2021, Reynolds informed
`
`PM/Altria that “Reynolds does not expect to produce Documents in response to this request
`
`beyond those already being produced in response to other requests.” Id.5
`
`C.
`
`Judge Buchanan Correctly Denied PM/Altria’s Prior Motion To Compel
`Discovery Regarding The Fontem-RJRV Negotiations.
`
`Meanwhile, on April 9, 2021, PM/Altria moved to compel a deposition regarding the
`
`negotiations of the Fontem-RJRV settlement agreement (deposition topic 28). See Dkts. 542, 547.
`
`Judge Buchanan heard that motion on April 16, 2019, confirmed that there were also outstanding
`
`document requests on the issue, and then denied PM/Altria’s request for discovery on the
`
`negotiations, ruling that “I believe that it’s not appropriate to get into negotiations or the
`
`considerations that they made internally as to this.” Dkt. 586, 4, 7. PM/Altria did not object to
`
`
`5 Further, per the parties’ express agreement, RFP 224 did not cover emails, as separate email
`requests were required and permitted only where a party could show good cause after a meet and
`confer. Dkt. 97, 11 (“[t]he parties agree that no electronic mail (including attachments) need be
`searched or produced unless good cause for the search and production can be shown after a meet-
`and-confer” and setting forth the requirements for separate email requests). PM/Altria
`undisputedly did not serve any email request for the Fontem-RJRV negotiations.
`
`
`
`
`-6-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 14 of 39 PageID# 31102
`
`
`that ruling under Rule 72(a). Fact discovery closed on April 19, 2021. See Dkt. 534, 1; Dkt. 535.
`
`As far as Reynolds was concerned, that was the end of the issue.
`
`D.
`
`PM/Altria Attempted To Backfill The Holes In Mr. Meyer’s Opinions.
`
`Mr. Meyer served an Amended and Supplemental Report on April 26, 2021 to try and
`
`bolster his opinion that
`
`upon
`
` based
`
` and eight
`
`press releases announcing Fontem settlements. See Dkt. 892, 18-19; Dkt. 1090, 7-8. Specifically,
`
`§ 6.10.9.
`
`
`
` Dkt. 892-5,
`
`
`
`. In fact, seven of the eight press releases that Mr. Meyer cites mention global
`
`licenses, and thus,
`
`. See
`
`Dkt. 1090, 8. And (curiously) PM/Altria never sought copies of any other Fontem license in
`
`discovery from Fontem. As a result, Mr. Meyer has not seen any such agreements and has no basis
`
`to opine on or rely on the terms of those unseen agreements. See id. at 4, 7-8.
`
`E.
`
`Altria Subpoenaed Fontem In The Middle District Of North Carolina Action.
`
`Meanwhile in the co-pending action between Altria and Reynolds in the Middle District of
`
`North Carolina (the “MDNC action”)6, on May 14, 2021, Altria subpoenaed Fontem for documents
`
`relating to negotiation of the Fontem-RJRV agreement. Ex. C [Altria Subpoena to Fontem
`
`Ventures B.V.]; Ex. D [Altria Subpoena to Fontem Holdings 1 B.V.]; Ex. E [Altria Subpoena to
`
`Fontem US LLC]. Fontem objected, including because the subpoenas sought documents that were
`
`
`6 The case is captioned Altria Client Services, LLC, et al. v. R.J. Reynolds Vapor Company, et al.,
`Case 1:20-cv-00472-NCT-JLW.
`
`
`
`
`-7-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 15 of 39 PageID# 31103
`
`
`“not relevant to any party’s claim of defense or proportional to the needs of the case,” but
`
`nonetheless provided Altria with the documents relating to the negotiations between Fontem and
`
`Reynolds in June 2021. Ex. F [Fontem Response to Subpoena] at 2. Those documents contained
`
`both Fontem and Reynolds’s Confidential Business Information (“CBI”) under the protective order
`
`in the MDNC action. See Ex. G [MDNC Dkt. 37]. Altria incorporated certain of those documents
`
`in its expert report on damages on August 4, 2021. See Dkt. 1163-3.7 Reynolds designated
`
`portions of the expert report that contained the confidential Fontem-RJRV negotiations, including
`
`those used by PM/Altria in this Court at the March 18, 2022 hearing, as Reynolds’s CBI. Compare
`
`Ex. H [Excerpts of August 4, 2021 Report of James E. Malackowski] at 88-91 with Dkt. 1163-3.
`
`Altria’s MDNC expert report (Dkt. 1163-3) contains two excerpts from Reynolds proposed
`
`drafts of the agreement. The first is
`
`. Compare Dkt. 1163-3, 88 & n.474 with Dkt. 1163-5, 1 & § 6.10.9. But
`
`See Dkt. 892-4. The second excerpt is
`
` Dkt. 1163-3, 88-89 & n.474.
`
`. See Dkt. 892-4.
`
`.
`
`
`
`
`
`
`
`F.
`
`PM/Altria Sought To Save Mr. Meyer’s Inadmissible Opinions.
`
`Reynolds moved to exclude Mr. Meyer’s reasonable royalty opinions on four of the five
`
`asserted patents, including his reliance on the
`
` rate in the Fontem-Nu Mark
`
`agreement. See Dkts. 892, 1090. Because the only two Fontem licenses produced here are
`
`Fontem-Nu Mark and Fontem-RJRV, Reynolds’s motion also seeks to preclude Mr. Meyer’s
`
`
`7 Documents produced by Fontem bear Bates numbers beginning with “FON55_.”
`
`
`
`
`-8-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 16 of 39 PageID# 31104
`
`
`reliance upon or reference to the alleged rates that any other Fontem licensees paid as unsupported
`
`by evidence. See id. PM/Altria did not request or obtain any other license agreements from
`
`Fontem and there are no other actual Fontem licenses in the record. Exs. C-E [Altria’s Fontem
`
`Subpoenas] at Schedule B, 6. And the evidence available, eight press releases, indicates that the
`
` does not apply to seven of the eight Fontem licenses. Dkt.
`
`1090, 2, 8; Dkt. 960-6; Dkt. 892, 18-19. That fatal deficiency renders Mr. Meyer’s opinion
`
`regarding the rates paid by any other Fontem-licensees excludable. PM/Altria’s current motion is
`
`a thinly veiled attempt to have the Court save PM/Altria from its own failure to seek the discovery
`
`it actually would have needed for Mr. Meyer to give his opinions—i.e., the other Fontem licenses
`
`upon which Mr. Meyer seeks to rely.
`
`III. LEGAL STANDARD
`
`Federal Rule of Civil Procedure 26(b)(1) provides that “[p]arties may obtain discovery
`
`regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional
`
`to the needs of the case, considering,” among other things, “the importance of the discovery in
`
`resolving the issues, and whether the burden or expense of the proposed discovery outweighs its
`
`likely benefit.” Under Federal Rule of Civil Procedure 26(b)(2)(C),8 “the court must limit the
`
`frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines
`
`that: (i) the discovery sought is unreasonably cumulative or duplicative … (ii) the party seeking
`
`discovery has had ample opportunity to obtain the information by discovery in the action; or (iii)
`
`the proposed discovery is outside the scope permitted by Rule 26(b)(1).”
`
`A scheduling order may only be modified for good cause. Fed. R. Civ. P. 16(b)(4). In
`
`evaluating a motion to re-open discovery, the Court considers the “wide latitude in controlling
`
`
`8 Emphasis is added and internal citations and quotations omitted unless otherwise noted.
`
`
`
`
`-9-
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1169 Filed 03/30/22 Page 17 of 39 PageID# 31105
`
`
`discovery” as well as the relevance of “additional facts bearing on a decision before the court.”
`
`See Telecomm. Sys., Inc. v. Mobile 365, Inc., No. 3:06CV485, 2009 WL 5943235, at *17-18 (E.D.
`
`Va. Mar. 31, 2009).
`
`Motions for discovery sanctions are typically evaluated using a three-step analysis: “(1)
`
`whether a party violated a discovery order or Federal Rule of Civil Procedure; (2) whether the
`
`violation was ‘harmless’ or ‘substantially justified’; and (3) which sanction is appropriate for the
`
`violation.” Asghari-Kamrani v. United Servs. Auto. Ass’n, No. 2:15CV478, 2017 WL 4418424,
`
`at *14 (E.D. Va. July 27, 2017) (quoting Vir2us, Inc. v. Invincea, Inc., 235 F. Supp. 3d 766, 772
`
`(E.D. Va. 2017)), aff’d, 737 F. App’x 540 (Fed. Ci