Case 1:20-cv-00393-LO-TCB Document 1171 Filed 03/31/22 Page 1 of 25 PageID# 31239
`
`
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY
`
`
`Plaintiffs and
`Counterclaim Defendants,
`
`
`v.
`
`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
`
`
`ORAL ARGUMENT REQUESTED
`
`
`
`
`
`REPLY IN SUPPORT OF PLAINTIFF PMI/ALTRIA’S MOTION TO
`SHOW CAUSE WHY SANCTIONS SHOULD NOT BE IMPOSED
`
`
`
`
`
`

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`Case 1:20-cv-00393-LO-TCB Document 1171 Filed 03/31/22 Page 2 of 25 PageID# 31240
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`
`
`I.
`
`II.
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION ...............................................................................................................1
`
`ARGUMENT .......................................................................................................................4
`
`A.
`
`B.
`
`RJR Should Be Sanctioned For Its Material Misrepresentations .............................4
`
`The Court Should Order RJR To Show Cause And Issue Sanctions For
`Violating Rule 26(e)(1)(A) ......................................................................................9
`
`1.
`
`2.
`
`RJR Violated Rule 26 By Failing To Produce Responsive
`Documents Highly Probative Of Damages ..................................................9
`
`RJR’s Rule 26 Violation Is Not Substantially Justified Or
`Harmless ....................................................................................................15
`
`C.
`
`PMI/Altria’s Proposed Sanctions Are Appropriate ...............................................17
`
`III.
`
`CONCLUSION ..................................................................................................................19
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`
`
`i
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`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`Bartlett v. Mut. Pharm. Co.,
`No. 08-cv-358, 2009 WL 3614987 (D.N.H. Nov. 2, 2009 ........................................................ 17
`
`Beach Mart, Inc. v. L&L Wings, Inc.,
`302 F.R.D. 396 (E.D.N.C. Oct. 3, 2014) ............................................................................ passim
`
`Chambers v. NASCO, Inc.,
`501 U.S. 32 (1991) ...................................................................................................................... 4
`
`Clear with Computers, LLC v. Bergdorf Goodman, Inc.,
`753 F. Supp. 2d 662 (E.D. Tex. 2010) ............................................................................ 7, 10, 13
`
`DietGoal Innovations LLC v. Wegmans Food Markets, Inc.,
`993 F. Supp. 2d 594 (E.D. Va. 2013) ........................................................................................ 12
`
`Fresenius Medical Care Holding Inc. v. Baxter Int'l, Inc.,
`224 F.R.D. 644 (N.D. Cal. 2004) .............................................................................................. 15
`
`Genentech, Inc. v. Trustees of Univ. of Penn.,
`No. 10-cv-02037, 2011 WL 7074208 (N.D. Cal. June 10, 2011) ............................................. 15
`
`Goodwin v. Cockrell,
`No. 13-cv-199, 2015 WL 575861 (E.D.N.C. Feb. 11, 2015) .................................................... 18
`
`Hickman v. Taylor,
`329 U.S. 495 (1947) .................................................................................................................. 10
`
`In re MI Windows & Doors, Inc., Prod. Liab. Litig.,
`No. 12-MN-00001, 2013 WL 7801732 (D.S.C. June 21, 2013) ............................................... 13
`
`In re MSTG, Inc.,
`675 F.3d 1337 (Fed. Cir. 2012) ........................................................................................... 12, 13
`
`Kajeet v. Qustodio, LLC,
`No. 18-cv-1519, 2019 WL 8060078 (C.D. Cal. Oct. 22, 2019) ............................................ 5, 12
`
`Rivera v. Volvo Cars of North Am., LLC,
`No. 13-cv-37, 2015 WL 11089501 (D.N.M. July 20, 2015) ..................................................... 18
`
`Russell v. Absolute Collection Servs., Inc.,
`763 F.3d 385 (4th Cir. 2014) ................................................................................................. 9, 16
`
`Samsung Elecs. Co. v. NVIDIA Corp.,
`314 F.R.D. 190 (E.D. Va. Feb. 29, 2016) .................................................................................. 14
`
`ii
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`
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`Swimways Corp. v. Zuru, Inc.,
`No. 13-cv-334, 2014 WL 12603189 (E.D. Va. July 1, 2014) ............................................... 6, 13
`
`Thomas v. FTS USA, LLC,
`No. 13-cv-825, 2016 WL 3566657 (E.D. Va. June 24, 2016) ................................................... 17
`
`Westchester Surplus Lines Ins. Co. v. Clancy & Theys Constr. Co.,
`No. 12-cv-636, 2013 WL 6058203 (E.D.N.C. Nov. 15, 2013) ................................................. 14
`
`Zornes v. Specialty Indus., Inc.,
`No. 97-2337, 1998 WL 886997 (4th Cir. 1998) .......................................................................... 8
`
`RULES
`
`FED. R. CIV. P. 26(b) ............................................................................................................... 10, 18
`
`FED. R. CIV. P. 26(e)(1)(A) ............................................................................................................. 9
`
`FED. R. CIV. P. 37(a)(4) ................................................................................................................. 11
`
`iii
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`
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`I.
`
`INTRODUCTION
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`RJR admits that a damages issue central to this case is whether PMI/Altria’s expert, Paul
`
`Meyer, properly relied on third-party Fontem’s
`
`admits that whether that
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` supports Mr. Meyer’s reliance on the
`
`
`
`. RJR
`
` in
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`the Fontem-Nu Mark Agreement is also central in this case. Yet RJR fails to offer any justification
`
`for the affirmative misrepresentations that it made to Judge O’Grady when seeking to exclude Mr.
`
`Meyer’s reliance on that
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`. RJR’s silence effectively concedes its litigation misconduct.
`
`After successfully blocking discovery on this issue by (mis)representing that the subject
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`evidence was “not relevant” (Dkt. 555 at 1), RJR moved to exclude Mr. Meyer’s opinions as
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`“fictional,” telling Judge O’Grady “there is no evidence that any party ever
`
`
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`.”1 Dkt. 892 at 18. RJR represented to Judge O’Grady that, while “Mr. Meyer speculates that
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`evidence available” because it is unknown “
`
`
`
` his opinions are allegedly “contradicted by the limited
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`. Dkt. 1090 at 4, 8. RJR doubled down on this argument
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`at the hearing, unequivocally representing to Judge O’Grady that: “
`
`
`
` Dkt. 1163-1 at 43:8-14. Those statements were false.
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`Documents produced by third-party Fontem in another litigation between Altria and RJR—
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`obtained by Altria in this case on the evening before the hearing on the Daubert motions (and
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`during the week after the hearing)—prove, beyond any doubt, that RJR knew there was evidence
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`showing
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`
`
`
`1 All emphasis added, and internal citations and quotation marks omitted, unless otherwise noted.
`Cites to “Mtn.” and “Opp.” are to Dkts. 1163 and 1167, respectively.
`
`1
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`ee. Those documents were in the possession of the same RJR counsel
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`appearing live at the March 18 Daubert hearing and appearing pursuant to a pro hac admission in
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`this case. See Mot. at 15 (identifying 11 Jones Day attorneys appearing in both cases).
`
`In fact, documents produced by Fontem—which RJR does not disputePo
`ES30.0:2:
`
`at -409; see also Ex. 2 at -220. These documents were undisputedly withheld and squarely refute
`
`RJR’s representations to Judge O’Grady in signed pleadings and open court:
`
`RJR’s Representations to Judge O’Grady
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`Documents Produced by Fontem ——
`
`RJR fails to meaningfully address its misrepresentations. Indeed, in its 30-page opposition,
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`RJR never mentions its affirmative representation to Judge O’Grady in open court thata
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`I DKt. 1163-1 at 43:8-14. Not once. While
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`telling, that is unsurprising becausethere is no excuseor justification because RJR was knowingly
`
`withholding the documents that refuted its assertions.
`
`To distract from its misconductand the relief sought, RJR attempts to recast PMI/Altria’s
`
`motion as seeking reconsideration of Judge Buchanan’s order denying PMI/Altria’s motion to
`
`compel. That is a strawman. The gravamenof this motion and RJR’s sanctionable misconductis
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`that RJR repeatedly told PMI/Altria it had no responsive documents, and then moved to exclude
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`Mr. Meyer’s opinions as supported by “no evidence,” when it was withholding the very evidence
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`that it argued was missing. Dkt. 1090 at 4. That Judge Buchanan denied PMI/Altria’s motion (on
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`the basis of RJR’s misrepresentation in open court and signed pleadings) does not give RJR carte
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`blanche to misrepresentthe evidence.”
`
`RJR’s remaining arguments are unavailing. RJR’s assertion that its negotiations with
`
`Fontem are “not relevant” to discovery is not credible, particularly given the broad scope of
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`discoverable information, Rule 26’s liberal standard of relevance, and, most importantly, RJR’s
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`recent, contradictory arguments to Judge O’Grady. And RJR’s attempts to blame PMI/Altria for
`
`RJR’s misconduct are meritless, relevant, and seek to turn the rules of discovery on their head.
`
`So, too, does RJR’s assertion that PMI/Altria hadee.
`which is simply fle, Moreover,
`P| (Opp.at 4) is unsurprising given that RJR foreclosed any such reliance by improperly
`
`withholding all such evidence. And, while RJR rehashes its Daubert motion, brazenly attacking
`
`Mr. Meyer’s opinions (again) as unsupported by evidence, those arguments are irrelevant to this
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`motion, contradicted by the new documents, and will be decided by Judge O’Grady.
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`RJR justifies its misconduct by relying on strained relevancy arguments, legally-improper
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`“tit-for-tat” assertions, and urelevant procedural “gotcha” arguments. Those arguments fail.
`
`PMI/Altria respectfully request that the Court grant this motion and enter an orderdirecting an
`
`evidentiary sanction that, as an establishedfact
`PY and the otherreliefsought in PMI/Altria’s motion. At
`
`. But
`? The documents show that
`Judge Buchanan’s denial of PMI/Altria’s motion to compelis not the basis for PMI/Altria’s motion
`
`evidence to Judge O’Grady and concealing the truth under the shroud of Judge Buchanan’s
`discovery
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`for evidentiary sanctions. The latter is premised on the concealed fact thaiNN2sznativelymisrepresentingthat
`order. This lack of candor with the Court should be deeply concerning. Knowing nowae
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`
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`the very least, RJR should be precluded from challenging such assertion at trial in light of its
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`misrepresentations, as well as its lack of candor in discovery and in the Daubert proceedings.
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`II.
`
`ARGUMENT
`A.
`
`RJR Should Be Sanctioned For Its Material Misrepresentations
`
`RJR’s motion offers silence in lieu of an explanation for its material misrepresentations to
`
`Judge O’Grady in its Daubert motion and at the hearing. Likewise, RJR offers no legitimate
`
`explanation for its repeated misrepresentations to Judge Buchanan that the negotiations are “not
`
`relevant.” Dkt. 555 at 1. The documents produced by Fontem directly refute RJR’s arguments to
`
`Judge O’Grady that (
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`
`
`
`
`
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` Dkt. 1163-1 at 43:8. Those representations are (and were always) false, regardless
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`of RJR’s reliance on the prior order (induced by RJR’s misrepresentations) denying PMI/Altria’s
`
`motion to compel. The Court should exercise its broad, inherent authority to protect against such
`
`litigant misconduct by issuing a show-cause order and sanctions. Chambers v. NASCO, Inc., 501
`
`U.S. 32, 50 (1991). None of RJR’s four arguments warrant a different result.
`
`First, RJR contends the Fontem-RJR negotiations are “irrelevant,” as shown by the
`
`
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`3 Opp. at 3,
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`16. As an initial matter, that fails to address RJR’s misrepresentations to Judge O’Grady.
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`Regardless, it is nonsensical. Neither expert could rely on evidence about the negotiations because
`
`
`3 Mr. Meyer did not “disclaim” the relevance of the litigation context,” as RJR asserts. Opp. at 16.
`Instead, he explained why the evidence shows that th
`
`, and so is reliable to use as the basis for determining a reasonable
`royalty. That has nothing to do with the relevance of the negotiations.
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`4
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`
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`RJR withheld them. RJR cannot fault Mr. Meyer for not considering the very evidence that RJR
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`concealed, much less justify its knowingly false argument to Judge O’Grady that there is
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`
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` Dkt. 1090 at 11. It is no surprise that
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`RJR’s expert, Dr. Sullivan, did not rely on such evidence: had RJR produced this evidence, it
`
`would have refuted his unreliable methodology. See Mot. at 9-11; infra at 7. And Mr. Meyer did
`
`not
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` as RJR asserts. Opp. at 16. Instead, he
`
`explained why the evidence shows that the
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`
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` and so is a reliable basis for determining a reasonable royalty. Even if RJR’s
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`argument were somehow relevant, courts have expressly rejected it. See, e.g., Kajeet v. Qustodio,
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`LLC, No. 18-cv-1519, 2019 WL 8060078, at *6, *8 (C.D. Cal. Oct. 22, 2019) (rejecting argument
`
`that “documents regarding plaintiff’s underlying licensing/settlement negotiations” need not be
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`produced because “plaintiff will rely on the settlement and license agreements and not on the
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`underlying negotiations,” and ordering production because they “could aid defendant in its
`
`calculations”). At bottom, it cannot plausibly be the case that documents that flatly contradict later
`
`material misrepresentations to the Court are irrelevant.
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`Second, RJR’s argument that PMI/Altria only requested documents regarding the Fontem
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`negotiations “after” serving its damages report is incorrect, irrelevant, and, again, fails to confront
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`RJR’s affirmative misrepresentations to Judge O’Grady. Opp. at 16. It is incorrect because
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`PMI/Altria served at least five requests to which such documents were responsive, four of which
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`PMI/Altria served before Mr. Meyer’s opening report. Mot. at 5-6 (identifying RFPs 102, 139,
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`146, 158). RJR ignores those four requests, focusing only on RFP No. 224. But, while PMI/Altria
`
`served RFP No. 224 on March 12, 2021 (after serving Mr. Meyer’s report), that also is irrelevant
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`because fact discovery was still open and the request was timely. RJR does not contend otherwise.
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`5
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`
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`Opp. at 6 (“Fact discovery closed on April 19, 2021.”); Dkts. 534, 535. RJR’s argument that Mr.
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`Meyer could not rely on any documents produced in response to RFP No. 224 is incorrect. Fact
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`and expert discovery ran concurrently in this case and both parties’ damages experts supplemented
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`their reports based on new documents and fact depositions.
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`Third, RJR contends the
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` are “irrelevant” and cannot support Mr. Meyer’s
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`opinions because they
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`
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` Opp. at 18. Both arguments readily fail.
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`For one, these documents are facially relevant, particularly under “the liberal standard of
`
`relevance set forth in Rule 26(b)(1).” Swimways Corp. v. Zuru, Inc., No. 13-cv-334, 2014 WL
`
`12603189, at *1 (E.D. Va. July 1, 2014). The documents speak directly to
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` (Opp. at 18) and are consistent with Mr. Meyer’s opinions, confirming that
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`
`
`
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`They also refute Dr. Sullivan’s unreliable opinion that
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`, as they show that
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`Moreover, that the
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` is unsurprising (given that
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`inconsequential. These documents still show that
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` Ex. 1 at -409.4
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`. See Mot. at 9-11; infra at 7.
`
`
`
`
`
`) and
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`
`
`
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`any of these facts in its opposition. They all support PMI/Altria’s damages theory, refute RJR’s
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` Ex. 1 at -409. RJR does not contest
`
`
`4 On March 25, Fontem consented to use of its production from the North Carolina Litigation in
`this case; full copies of the relevant documents (rather than the excerpts) are attached to this brief.
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`6
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`

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`
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`position, and disprove RJR’s representations to Judge O’Grady about those licenses—that
`
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`
`
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`
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` Dkt. 1163-1 at 43:8-14. And, despite RJR’s attorney argument, PMI/Altria cannot
`
`know whether
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`, as RJR refused to provide an educated
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`corporate witness to provide this information and then falsely told this Court that such testimony
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`was
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` when PMI/Altria moved to compel. Dkt. 555 at 1.
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`Now that Fontem has consented to use of its entire production of over
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` in
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`this case and PMI/Altria has had an opportunity to review them (see Mot. at 9 n.7), PMI/Altria has
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`unearthed additional responsive documents that RJR should have produced early on in discovery,
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`but did not. These documents suggest that
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`. See Ex. 3 at -098
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`
`
`
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` That squarely
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`refutes Dr. Sullivan’s opinion, and confirms his methodology is unreliable, because
`
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`
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`PMI/Altria should have received these undisputedly responsive documents and had a chance to
`
`examine RJR’s witnesses on them. Cf. Clear with Computers, LLC v. Bergdorf Goodman, Inc.,
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`753 F. Supp. 2d 662, 664 (E.D. Tex. 2010) (ordering production of “settlement communications”
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`that “will likely explain [] inconsistencies” in other evidence). RJR’s argument that they are “not
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`relevant” is false.
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`7
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`
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`Fourth, RJR spends pages of its opposition rehashing its Daubert arguments that
`
`
`
` do not support Mr. Meyer’s opinions. For one, that does not address the accuracy (or
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`lack thereof) of RJR’s representations to Judge O’Grady about the lack of evidence regarding
`
`
`
`. Moreover, putting aside whether Mr. Meyer may
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`ultimately be able to rely on the evidence or whether his opinions are admissible (issues that Judge
`
`O’Grady will decide), that is irrelevant to (i) the discoverability of the underlying evidence and
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`(ii) the issue before the Court, namely whether RJR violated its discovery obligations by failing to
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`produce these documents (it did) and making false misrepresentations to Judge O’Grady about the
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`alleged lack of evidence (it did). As the court in Beach Mart, Inc. v. L&L Wings, Inc. explained
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`when rejecting this same argument: “[t]hese arguments are legal conclusions, the merits of which
`
`have yet to be determined, and the court will not look to the ultimate outcome of this dispute,” as
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`a determination regarding the merits “is not necessary” to resolve this motion. 302 F.R.D. 396,
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`410 (E.D.N.C. Oct. 3, 2014). The Court should not credit RJR’s arguments about the ultimate
`
`admissibility of Mr. Meyer’s opinions (Opp. at 16-18), because they are incorrect for the reasons
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`in PMI/Altria’s opposition to RJR’s Daubert motion and, in any event, irrelevant to this motion.
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`Instead, the key points are that
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` was undisputedly central to the
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`damages issues in this case, evidence showing the reliability of that
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`is undeniably relevant to
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`those issues, and RJR concealed that evidence while seeking to exclude Mr. Meyer’s opinions
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`based on arguments refuted by the very evidence it concealed. That misconduct should not be
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`tolerated, and the Court should exercise its inherent power to impose sanctions in order to protect
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`against abuse of the judicial process. Beach Mart, 302 F.R.D. at 405, 414-15; Zornes v. Specialty
`
`Indus., Inc., No. 97-2337, 1998 WL 886997, at *8 (4th Cir. Dec. 21, 1998) (“[I]t is the court’s duty
`
`8
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`
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`to protect the interests not only of the parties directly prejudiced by discovery abuse, but also those
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`litigants indirectly prejudiced when the court’s resources are squandered due to … misconduct.”).
`
`B.
`
`The Court Should Order RJR To Show Cause And Issue Sanctions For
`Violating Rule 26(e)(1)(A)
`1.
`
`RJR Violated Rule 26 By Failing To Produce Responsive Documents
`Highly Probative Of Damages
`
`RJR does not dispute PMI/Altria timely served multiple requests seeking documents about
`
`RJR’s negotiations and communications with Fontem. See Mot. at 5-6 (identifying RFP Nos. 102,
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`139, 146, 158, 224). RJR does not dispute that it had documents—including
`
`
`
`—responsive to those requests. Nor does RJR dispute that it failed to produce any of
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`those documents in this case—even after Fontem produced them in the North Carolina Litigation
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`to the same law firm (and 11 of the same lawyers) representing RJR in this case. Id. at 15. That
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`should be dispositive. RJR’s undisputed failure to produce responsive documents that are highly
`
`probative of damages and directly refute RJR’s representations to Judge O’Grady violates Rule
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`26(e)(1)(A). Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 396-97 (4th Cir. 2014);
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`Beach Mart, 302 F.R.D. at 408-09 (finding defendant “violated Rules 26 and 37 by … failing to
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`find, identify, and disclose” documents it “had in its possession from the beginning of discovery”).
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`None of RJR’s excuses show that RJR complied with Rule 26. RJR’s contention that the
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`subject information and documents are irrelevant is wrong for the reasons discussed above and, to
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`the extent its remaining excuses are relevant, they confirm RJR’s improper gamesmanship was
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`designed to leverage the discovery record and gain a tactical advantage at the Daubert stage. Cf.
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`Beach Mart, 302 F.R.D. at 411 (“[T]he court notes that L & L’s legal arguments (Rule 26’s
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`requirements; Beach Mart’s failure to move to compel; and L & L’s objections) in many ways
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`amount to the gamesmanship discouraged by the rules. L & L uses these arguments to excuse its
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`violations, but the Rules do not permit such abuse.”).
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`9
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`
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`First, RJR’s contends that it did not violate Rule 26 because it objected to RFP No. 224 as
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`irrelevant, overly broad, and unduly burdensome. Opp. at 24. That argument should be rejected.5
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`For one, it ignores the other document requests to which the subject documents are undisputedly
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`responsive. See Mot. at 5-6. As discussed, the documents that RJR withheld are highly probative
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`of damages and, at a minimum, relevant for discovery. Mot. at 4, 8-11; supra at 6-8. It strains
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`credulity to suggest otherwise, particularly because “[t]he purpose of discovery is to allow a broad
`
`search for facts” (FED. R. CIV. P. 26(b), committee notes) and “[m]utual knowledge of all the
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`relevant facts … is essential to proper litigation.” Hickman v. Taylor, 329 U.S. 495, 507 (1947).
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`Nor is it credible to suggest it would be “unduly burdensome” or “not proportional to the
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`needs of the case” (Opp. at 24) to search for and produce responsive, non-privileged documents
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`relating to a single agreement, particularly when (1) the parties served over
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`
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`sophisticated companies; (2) the Fontem-RJR Agreement is at the center of the damages issues, as
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` in this complex multi-jurisdictional case between large,
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`RJR’s own expert
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`Fontem
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`, and (3)
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` and the same law
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`firm (as well as 11 overlapping lawyers, including the lead counsel at the Daubert hearing) in the
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`North Carolina Litigation. See Mot. at 15; Clear with Computers, 753 F. Supp. 2d at 664 (rejecting
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`argument that producing settlement communications “will be overly burdensome”).
`
`That RJR included these boilerplate objections is irrelevant because it undisputedly did not
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`refuse to produce documents in response to RFP No. 224, or any other requests to which these
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`documents were responsive to. Instead, as RJR admits, it agreed to produce documents in response
`
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`5 That RJR “already produced” the Fontem-RJR Agreement (Opp. at 6) is irrelevant, as RFP No.
`224 seeks “all non-privileged documents related to” that agreement. Dkt. 1163-1 at 8.
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`10
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`to RFP No.224, butstated that it “did not expect” to produce documents beyond whathadalready
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`been produced.® Dkt. 1159-6 at 4. RJR argues PMI/Altria should“haveasked for clarification”if
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`it were “confused” by RJR’s response. (Opp. at 1-2). But no clarification was necessary because
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`RJR’s response made clear that there were no further responsive documents to produced. Dkt.
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`1159-6 at 4. That was false. If anything, RJR’s “objections exhibit exactly the type of technical
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`objection-crafting the Rules seek to deter and for which Rule 37 sanctions were created.” Beach
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`Mart, 302 F.R.D. at 407; see also id. at 412-13 (rejecting argument that sanctions should not be
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`imposed because party never moved to compel as “untenable”). RJR’s “actions were improper
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`and entitle it to no protection from sanctions based on its objections.” Jd. at 405.
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`RJR’s argument runs contrary to the Rules and purpose of discovery. The Rules make
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`plain that RJR should not be allowed to “craft objections to requests for production of documents
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`... so as to avoid disclosure.” Beach Mart, 302 F.R.D. at 405; id. at n.5 (explaining that Rule
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`37(a)(4) “treats an evasive or incomplete disclosure, answer, or response... as a failure to disclose,
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`answer, or respond”).
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`Indeed, the Rules “do not offer any rule that permits a party to withhold
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`plainly relevant information that directly contradicts its assertions in the hopes that the Court will
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`be duped by the misleading arguments.” Jd. And, under Fourth Circuit law, “[a] party who acts
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`otherwise,” as RJR did here, “may be appropriately sanctioned under Rule 37.” Jd. That is because
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`“t]he rules of discovery were not designed to encourage procedural gamesmanship... in order to
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`gain some advantage.” Jd. Yet that is exactly what RJR did here. Cf, e.g., id. at 414 (finding
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`party’s “gamesmanship”to be “unacceptable” because,“[i]nstead ofusing discovery to expose the
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`facts and illuminate the issues,” it sought to “use the rules to shield its violations”).
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`agreementnot to produce emails.
`© RJR referencesin a footnote the parties’ discovery
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`But RJR cannot withhold
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`(Exs. 1-2). RJR does not argue otherwise.
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`11
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`
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`Second, RJR contends it had no obligation to produce the subject documents because Judge
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`Buchanan’s order denying PMI/Altria’s motion to compel a fully-educated 30(b)(6) witness on
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`Topic 28 allegedly “plainly encompasses” PMI/Altria’s document requests. Opp. at 11. But as
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`RJR admits, PMI/Altria’s “prior motion [was] for a deposition,” not to compel the production of
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`responsive documents. Id. at 1. To be sure, there were no document requests at issue or attached
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`to any of the briefing. See generally Dkts. 547, 555. Thus, unsurprisingly, no document requests
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`formed the basis for Judge Buchanan’s order. Dkt. 1159-9 at 5-7. Regardless, RJR’s reliance on
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`Judge Buchanan’s order is misplaced because it was induced by RJR’s repeated misrepresentations
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`that the Fontem-RJR negotiations are
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`Dkt. 555 at 1, 4, 5, 8, 10.7 And it certainly
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`does not give RJR a license to subsequently misrepresent the evidence to Judge O’Grady; these
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`arguments have no bearing on PMI/Altria’s request for evidentiary sanctions. See Mot. at 9-11.
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`Third, RJR contends it need not produce
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`
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`because they are “inadmissible” under Rule 408. Opp. at 12. That argument invites legal error
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`and is incorrect. It is legally erroneous because “[d]iscovery need not be admissible in evidence
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`to be discoverable.” Kajeet, 2019 WL 8060078, at *8 (overruling Rule 408 objection to producing
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`documents “underlying licensing/settlement negotiations” because “information need not be
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`admissible in evidence to be discoverable”). It is incorrect because, as RJR’s own cited Federal
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`Circuit case explains (see Opp. at 12), “settlement negotiations related to reasonable royalties and
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`damage calculations are not protected by a settlement negotiation privilege.” In re MSTG, Inc.,
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`7 Despite RJR’s attempts to recast PMI/Altria’s motion as one seeking reconsideration, RJR’s
`“waiver” argument should be rejected because a party’s failure to object to a magistrate judge’s
`discovery order “does not mean that the matter is at an end.” DietGoal Innovations LLC v.
`Wegmans Food Markets, Inc., 993 F. Supp. 2d 594, 599-600 (E.D. Va. 2013). Indeed, any such
`alleged waiver “does not mean that the Court is without power to reconsider the issue and to set it
`aside to the extent it is clearly erroneous.” Id. If reconsideration is necessary, and it is not, this
`new evidence warrants reconsideration. See Mot. at n.1.
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`12
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`
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`675 F.3d 1337, 1346-47 (Fed. Cir. 2012) (affirming order compelling production of documents
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`underlying a settlement agreement because it “might contain information showing that the grounds
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`[MSTG’s damages expert] relied on to reach his conclusion are erroneous,” and the patentee
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`should have “the ability to test the accuracy of [the expert’s] opinions and assumption”). That is
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`consistent with controlling law, as “[t]he Fourth Circuit has never recognized a settlement
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`privilege.” In re MI Windows & Doors, Inc., Prod. Liab. Litig., No. 12-MN-00001, 2013 WL
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`7801732, at *1-2 (D.S.C. June 21, 2013); see also, e.g., Clear with Computers, 753 F. Supp. 2d at
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`664 (ordering production of settlement-related communications that may “be key in determining
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`whether the settlement agreements accurately reflect the inventions’ value or were strongly
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`influenced by a desire to avoid or end full litigation”). Instead, when determining whether
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`documents related to settlements are “producible in discovery, courts in this circuit have found
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`that relevance not admissibility, is the appropriate inquiry.” Swimways, 2014 WL 12603189, at
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`*1. Here, the subject documents are plainly relevant. See supra at 6-8.
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`Fourth, RJR attempts to blame PMI/Altria for its misconduct and misrepresentations,
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`falsely arguing that
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`. Opp. at 17. That argument should be rejected
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`for several reasons. For one,
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`
`
`
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`. See Dkt. 1159-12; see also, e.g., Ex. 1. Counsel for PMI/Altria in this case (Latham &
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`Watkins, LLP) never had access to any of these documents until March 17 (the night before the
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`Daubert hearing) and did not have access to Fontem’s full production until March 25. Mot. at 11
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`& n.7; Dkt. 1159-12. And, while counsel for Altria in the North Carolina Litigation (Weil, Gotshal
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`& Manges LLP) received these documents in that case, Weil did not appear in this case until this
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`13
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`month and, even then, could not use the documents in this case unless and until Fontem consented.®
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`Fontem provided that consent the night before the March 18 hearing, and PMI/Altria promptly
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`raised the issue with the Court. See Mot. at 11-12.
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`Indeed, the only lawyers who were on both
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`cases before March 2022 were the 11 overlapping Jones Day lawyers—the very same lawyers who
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`made the false representations to Judge O’Grady and Judge Buchannan while withholding the
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`documents and information that squarely refutes the damagespositions they advancein this case.
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`If anything, RJR’s argument reinforces the egregious nature of its conduct, confirmingits tactical
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`gamesmanship warrants sanctions. And, even if certain Jones Day lawyers did n