Case 1:20-cv-00393-LO-TCB Document 1215 Filed 05/04/22 Page 1 of 26 PageID# 32167
`
`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
`
`
`
`
`
`
`
`
`
`
`REPLY IN SUPPORT OF PMI/ALTRIA’S OBJECTIONS TO MAGISTRATE JUDGE
`BUCHANAN’S ORDER ON PMI/ALTRIA’S MOTION TO SHOW CAUSE
`
`
`
`
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1215 Filed 05/04/22 Page 2 of 26 PageID# 32168
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`TABLE OF CONTENTS
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`Page
`
`I.
`
`II.
`
`INTRODUCTION ...............................................................................................................1
`
`ARGUMENT .......................................................................................................................2
`
`A.
`
`Judge Buchanan’s Order Was Clearly Erroneous And Contrary To Law ...............2
`
`1.
`
`2.
`
`3.
`
`The Fontem-RJR Negotiations Are Highly Relevant To Damages .............2
`
`RJR’s Misrepresentations To This Court Are Sanctionable ........................6
`
`RJR’s Withholding Of Highly Probative Documents Is
`Sanctionable .................................................................................................8
`
`a.
`
`b.
`
`RJR Violated Rule 26(e)(1)(A) By Failing To Produce
`Documents Related To The Fontem-RJR Agreement .....................8
`
`RJR’s Rule 26(e) Violation Was Not Justified Or Harmless .........13
`
`B.
`
`The Court Should Modify Judge Buchanan’s Order In Two Narrow Ways .........16
`
`1.
`
`2.
`
`Dr. Sullivan’s Third Supplemental Report Should Be Struck ...................17
`
`The Court Should Deem The Five Subject Fontem Documents
`Authentic And Not Hearsay .......................................................................19
`
`III.
`
`CONCLUSION ..................................................................................................................20
`
`
`
`i
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`

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`TABLE OF AUTHORITIES
`
`CASES
`
`Beach Mart, Inc. v. L&L Wings, Inc.,
`302 F.R.D. 396 (E.D.N.C. 2004) ........................................................................................ passim
`
`Berkheimer v. Hewlett-Packard Co.,
`No. 12-cv-9023, 2016 WL 3030170 (N.D. Ill. May 25, 2016) ................................................. 18
`
`DE Techs., Inc. v. Dell, Inc.,
`No. 04-cv-00628, 2007 WL 128966 (W.D. Va. Jan. 12, 2007) ................................................ 17
`
`DietGoal Innovations LLC v. Wegmans Food Markets, Inc.,
`993 F. Supp. 2d 594 (E.D. Va. 2013) ........................................................................................ 10
`
`E.W., LLC v. Rahman,
`No. 11-cv-1380, 2012 WL 4105129 (E.D. Va. Sept. 17, 2012) ................................................ 18
`
`Enzo Biochem, Inc. v. Gen-Probe Inc.,
`424 F.3d 1276 (Fed. Cir. 2005) ................................................................................................... 5
`
`Genentech, Inc. v. Trustees of Univ. of Penn.,
`No. 10-cv-02037, 2011 WL 7074208 (N.D. Cal. June 10, 2011) ............................................. 13
`
`Gomez v. Haystax Tech., Inc.,
`761 F. App’x 220 (4th Cir. 2019) .............................................................................................. 14
`
`In re MSTG, Inc.,
`675 F.3d 1337 (Fed. Cir. 2012) ............................................................................................. 3, 11
`
`Kajeet v. Qustodio, LLC,
`No. 18-cv-1519, 2019 WL 8060078 (C.D. Cal. Oct. 22, 2019) ............................................ 4, 11
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012) ....................................................................................................... 5
`
`Montanile v. Botticelli,
`No. 08-cv-716, 2009 WL 2378684 (E.D. Va. July 28, 2009) ................................................... 17
`
`Rothschild Mobile Imaging Innovations, LLC v. Mitek Sys., Inc.,
`No. 14-617, 2018 WL 3599359 (D. Del. July 27, 2018) ........................................................... 11
`
`Russell v. Absolute Collection Servs., Inc.,
`763 F.3d 385 (4th Cir. 2014) ................................................................................................. 8, 15
`
`Samsung Elecs. Co. v. Nvidia Corp.,
`314 F.R.D. 190 (E.D. Va. 2016) ................................................................................................ 16
`
`ii
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`Thomas v. FTS USA, LLC,
`No. 3:13-cv-825, 2016 WL 3566657 (E.D. Va. June 24, 2016) ............................................... 16
`
`United States ex rel. Carter v. Halliburton,
`266 F.R.D. 130 (E.D. Va. 2010) .................................................................................................. 3
`
`Walker v. W. Pub. Corp.,
`No. 09-cv-00723, 2011 WL 3667613 (S.D.W. Va. Aug. 22, 2011)............................................ 3
`
`Westchester Surplus Lines Ins. Co. v. Clancy & Theys Constr. Co.,
`No. 12-cv-636, 2013 WL 6058203 (E.D.N.C. Nov. 15, 2013) ................................................. 13
`
`Zornes v. Specialty Indus., Inc.,
`No. 97-2337, 1998 WL 886997 (4th Cir. 1998) .......................................................................... 8
`
`RULES
`
`FED. R. EVID. 408 .......................................................................................................................... 11
`
`FED. R. EVID. 607 .......................................................................................................................... 15
`
`FED. R. EVID. 801(d)(2)(D) ........................................................................................................... 19
`
`
`
`
`
`iii
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`I.
`
`INTRODUCTION
`
`RJR’s opposition “triples down” on its misrepresentations to this Court, repeating some,
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`ignoring most, and dissembling as to those it selectively (self-servingly) addresses. And, it once
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`again attempts to distract the Court from the misrepresentations made at the Daubert stage, the
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`truth of which refute the very foundation of RJR’s attacks on Mr. Meyer’s damages analyses. RJR
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`(once again) mischaracterizes PMI/Altria’s motion as “rehash[ing] year-old discovery rulings” and
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`“[f]undamentally … premised on the contention that [RJR] violated its discovery obligations.”
`
`Opp. at 1, 10. That is wrong. PMI/Altria’s motion is about the serial misrepresentations that RJR
`
`made at the Daubert stage about factual issues it knew were central to PMI/Altria’s damages claim.
`
`That RJR (wrongly) persuaded Judge Buchanan over a year ago that information regarding
`
`the Fontem negotiations need not be produced did not give RJR a license to advance knowingly
`
`false assertions—belied by the very information it withheld from discovery—in its expert’s report
`
`and Daubert motion. And the narrow relief sought is more than justified by RJR’s withholding of
`
`the very facts and information it concealed in discovery and misrepresented at the Daubert stage.
`
`The withheld documents show that
`
`
`
`
`
` Those facts squarely refute RJR’s attack on Mr. Meyer’s damages analysis.
`
`RJR’s opposition never reconciles this admission from RJR’s counsel with RJR’s representations
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`to the Court. RJR cannot. It undisputedly had these documents well before the start of this case
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`and knew about them when misrepresenting the facts—while baselessly alleging a lack of evidence
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`underlying Mr. Meyer’s opinions—at the Daubert stage (and in its own damages expert’s report).
`
`RJR provides no basis for upholding Judge Buchanan’s order denying PMI/Altria’s motion
`
`to show cause. The sole basis on which that order rests—that the
`
`
`
`are irrelevant to interpreting the final agreement—is clearly erroneous and contrary to law at least
`
`1
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`

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`because it ignores that the
`
`
`
`. To be sure, despite RJR’s strained relevancy
`
`arguments and excuses, RJR indisputably had an obligation not to withhold relevant evidence or
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`affirmatively misrepresent the basic facts surrounding that evidence. And the Court indisputably
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`has the inherent authority to correct such misconduct. At a bare minimum, RJR’s damages expert
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`should not now have an opportunity to address the evidence that RJR withheld as “irrelevant,”
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`much less inject new opinions that could (and should) have been disclosed in his prior reports.
`
`The Court should sustain PMI/Altria’s objections and modify Judge Buchanan’s order to
`
`(1) strike Dr. Sullivan’s third supplemental report (or, at a minimum, paragraph 13 of that report)
`
`and (2) find that five documents
`
` are authentic and not hearsay.
`
`II.
`
`ARGUMENT
`A.
`
`Judge Buchanan’s Order Was Clearly Erroneous And Contrary To Law
`
`RJR does not dispute that Judge Buchanan denied PMI/Altria’s show cause motion based
`
`on the premise that the Fontem-RJR settlement negotiations are categorically irrelevant. Once this
`
`Court reverses that clearly erroneous finding, there is no credible dispute that RJR’s withholding
`
`of the Fontem-RJR negotiation documents and misrepresentations to the Court warrant sanctions.
`
`1.
`
`The Fontem-RJR Negotiations Are Highly Relevant To Damages
`
`RJR never addresses PMI/Altria’s argument that
`
`
`
`
`
`
`
`. See Mot. at 9; Ex.
`
`2 (Meyer 3rd Am. And Supp. Rpt.) ¶¶ 202-06. RJR’s failure to address these arguments confirms
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`that the negotiations are relevant and Judge Buchanan’s order should be vacated. See United States
`
`2
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`

`

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`ex rel. Carter v. Halliburton, 266 F.R.D. 130, 134 (E.D. Va. 2010); Walker v. W. Pub. Corp., No.
`
`09-cv-00723, 2011 WL 3667613, at *4 (S.D.W. Va. Aug. 22, 2011).
`
`In addition, as PMI/Altria explained, the Fontem-RJR negotiations are highly probative of
`
`the correct measure of damages because, consistent with Mr. Meyer’s opinions, they
`
`
`
`
`
`
`
`
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`. See Ex. 2 ¶¶ 202-06, 274-75. None of RJR’s three arguments show otherwise.
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`First, Judge Buchanan’s finding (and RJR’s argument) that the negotiations are irrelevant
`
`merely because the experts relied only on the final agreements is clearly erroneous. Opp. at 12.
`
`As an initial matter, the damages experts relied only on the final agreements because RJR withheld
`
`all the evidence regarding the negotiations during discovery. Had RJR complied with its
`
`discovery obligations and produced such evidence, Mr. Meyer would have relied on that evidence,
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`just as he does in his recently-served third supplemental report. See Ex. 2 ¶¶ 202-06, 274-75.
`
`When denying PMI/Altria’s show cause motion, Judge Buchanan wrongly assumed that
`
`drafts are per se irrelevant when a final agreement is available. Dkt. 1189 at 12:25-13:5. That is
`
`legal error. Courts routinely order production of evidence related to settlement negotiations, and
`
`the Federal Circuit has affirmed such orders. See, e.g., In re MSTG, Inc., 675 F.3d 1337, 1346-47
`
`(Fed. Cir. 2012) (affirming order compelling production of settlement negotiation documents that
`
`“might contain information showing that the grounds [MSTG’s damages expert] relied on to reach
`
`his conclusion are erroneous,” and the patentee should have “the ability to test the accuracy of [the
`
`expert’s] opinions and assumption”); Barnes & Noble, Inc. v. LSI Corp., No. 11-cv-2709, 2013
`
`WL 841334, at *1-3 (N.D. Cal. Mar. 6, 2013) (upholding magistrate judge’s order “ruling that
`
`3
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`

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`draft licenses regarding the patents-in-suit and related technologies were discoverable”); Builders
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`Flooring Connection, LLC v. Brown Chambless Architects, No. 11-cv-373, 2014 WL 5307489, at
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`*1 (M.D. Ala. Oct. 16, 2014) (same); Kajeet v. Qustodio, LLC, No. 18-cv-1519, 2019 WL
`
`8060078, at *6, *8 (C.D. Cal. Oct. 22, 2019) (same). Judge Buchanan failed to consider that
`
`
`
`
`
`
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` Nor were they available through an RJR Rule 30(b)(6) witness, as RJR
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`blocked such discovery. See Mot. at 4; Dkt. 1163 at 6-8. And they could also lead to the discovery
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`of further evidence not otherwise in the final agreement.
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`Even if the experts chose not to rely on such evidence, that does not make it irrelevant.
`
`RJR does not dispute that both experts could not rely on this evidence because RJR withheld it.
`
`For one, Mr. Meyer does rely on this evidence to
`
`
`
`. Ex. 2 (Meyer 3rd Am. and Supp. Rpt.) ¶¶ 202-06, 274-75. That Dr. Sullivan categorically
`
`disclaimed this evidence as
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` (Ex. 1 ¶ 13) is unsurprising because it refutes his
`
`opinions. See Mot. at 9. His self-serving advocate’s decision to ignore this evidence does not
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`render it irrelevant. Such a broad rule would invite gamesmanship and hinder trial on the merits.
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`That is why courts have expressly rejected it. See, e.g., Kajeet, 2019 WL 8060078, at *6, *8
`
`(rejecting argument that “documents regarding plaintiff’s underlying licensing/settlement
`
`negotiations” need not be produced because “plaintiff will rely on the settlement and license
`
`agreements and not on the underlying negotiations” and ordering production of documents).
`
`
`1 That the Daubert issues were handled by Your Honor, not Judge Buchanan, no doubt contributed
`to the error here. Judge Buchanan understandably was not steeped in the Daubert issues and would
`not have fully appreciated the depth of RJR’s deception. This resulted in her viewing these issues
`from the lens of her prior discovery ruling, rather than from the perspective of the fundamental
`contradiction between the concealed evidence and RJR’s misrepresentations to Your Honor.
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`4
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`

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`Second, that
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`, not irrelevant as RJR claims. Opp. at 13.
`
`
`
`
`
`
`
`
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`. LaserDynamics, Inc. v. Quanta
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`Computer, Inc., 694 F.3d 51, 79 (Fed. Cir. 2012) (“Actual licenses to the patented technology are
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`highly probative as to what constitutes a reasonable royalty for those patent rights because such
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`actual licenses most clearly reflect the economic value of the patented technology.”). While RJR
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`disclaims
`
`
`
` (Opp. at 12), that is just “attorney argument,” which “is no substitute for evidence.” Enzo
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`Biochem, Inc. v. Gen-Probe Inc., 424 F.3d 1276, 1284 (Fed. Cir. 2005). This argument only
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`reinforces that discovery on these issues should have been allowed. On the current record, it is
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`unknown
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` and
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`failed to produce a knowledgeable Rule 30(b)(6) witness on the topic. If anything, RJR’s argument
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`confirms how RJR’s misconduct unfairly prejudiced PMI/Altria; any inference about
`
`
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` should thus be decided in PMI/Altria’s favor, not RJR’s. And, at most, it goes
`
`to weight, not the discoverability of the underlying evidence or veracity of RJR’s representations.
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`Third, RJR contends that
`
`
`
`
`
`
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`. Opp. at 13. But the
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` need not be the “best evidence” to be
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`relevant and admissible. RJR ignores
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`5
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` Dkt. 1174-1 § 5.1. That evidence is not
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`cumulative, much less “nearly identical,” to
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`. Indeed, it is this very point that RJR denied during the Daubert proceedings.
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`At bottom, RJR has not plausibly explained why
`
`
`
`
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`is irrelevant. That admission is highly probative of damages and, at a minimum, meets Rule 26’s
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`liberal standard of relevance. The Court should vacate Judge Buchanan’s contrary finding.
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`2.
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`RJR’s Misrepresentations To This Court Are Sanctionable
`
`Irrespective of Judge Buchanan’s relevance finding, RJR’s misrepresentations to this Court
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`at the Daubert stage are sanctionable. Judge Buchanan’s finding was not a license for RJR to
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`misrepresent facts or to deny facts established by the very information it withheld and concealed.
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`RJR concedes that this Court has the inherent authority to sanction false representations.
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`Nor does RJR dispute that the Court can issue such sanctions without finding that an order was
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`violated or that the violation was substantially justified or harmless.2 And RJR does not dispute
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`that it had the subject documents from the start of this case and at least since Fontem produced
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`them in the North Carolina case—to the same law firm and 11 of the same lawyers representing
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`RJR here. Yet, with knowledge of those documents, RJR sought to exclude Mr. Meyer’s opinions
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`by misrepresenting that same evidence and the supposed lack of evidence underlying his opinions
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`based on
`
`. That is dishonest and sanctionable.
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`RJR asserts that PMI/Altria’s motion only “identified three alleged misstatements,” failing
`
`to address RJR’s other false statements to the Court.3 Opp. at 17. For example, as PMI/Altria
`
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`2 RJR’s argument that PMI/Altria “nominally invoked” the Court’s inherent authority and did not
`object to Judge Buchanan’s order under this standard is plainly incorrect. See Mot. at 7, 13.
`3 All emphasis added, and internal citations and quotation marks omitted, unless otherwise noted.
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`6
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`

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`argued, RJR falsely told the Court in its Daubert briefs that there isPO
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`Mot.at 4, 6, 10 (quoting Dkt. 892 at 18-19); see also, e.g., Dkt. 1163 at 9, 11. RJR ignores these
`
`misrepresentations, which are squarely refuted by the withheld documents showing that
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`ee. RJR’s failure to address these misstatements should be dispositive.
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`RJR brazenly “triples down”on its deception in its opposition, asserting that each of the
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`three representations it cherry-picked to address were “true.” Opp. at 2. RJR is wrong and Judge
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`Buchanan’s findings to the contrary are unsupported and clearly erroneous.
`
`First, RJR defends its statementat the Daubert hearing thatit is supposedly unknownfi
`3:
`RR
`Pe Opp. at 18. That is misdirection. RJR’s
`statement is demonstrably false when compared toPO
`
`RJR’s Representation to the Court a
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`RJR neverreconciles these two statements. Norcan it.
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`Second, RJR defends its representation thatPe
`BEES 0. 1165.15.10) oying
`Po Opp. at 14. This argumentstrains credulity. Theiii
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`a. Dkt. 1174 § 5.1. As RJR’s counsel conceded at the April 1, 2022 hearing, when
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`RJR filed its Daubert motion,
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`(“
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`. Dkt. 1191-1 at 8:20-9:13
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`
`
` RJR’s failure to
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`address this admission confirms that sanctions are appropriate under the Court’s broad inherent
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`authority.4 Zornes v. Specialty Indus., Inc., No. 97-2337, 1998 WL 886997, at *7 (4th Cir. 1998).
`
`3.
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`RJR’s Withholding Of Highly Probative Documents Is Sanctionable
`a.
`
`RJR Violated Rule 26(e)(1)(A) By Failing To Produce
`Documents Related To The Fontem-RJR Agreement
`
`The Court should reverse Judge Buchanan’s finding that RJR did not violate Rule
`
`26(e)(1)(A) by withholding documents responsive to RFP 224, including the Fontem-RJR
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`negotiation documents. Here, too, Judge Buchanan’s finding rests solely on the clearly erroneous
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`premise that the negotiations are not relevant. Once that finding is set aside, there can be no
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`credible dispute that RJR violated Rule 26(e)(1)(A). RJR does not dispute that it had the
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`documents, that they are responsive to PMI/Altria’s requests, and that RJR withheld them—even
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`after Fontem produced them in the North Carolina case to the same law firm representing RJR
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`here. Such misconduct violates Rule 26 and is neither substantially justified nor harmless. See,
`
`e.g., Russell v. Absolute Collection Servs., Inc., 763 F.3d 385, 396-97 (4th Cir. 2014); Beach Mart,
`
`Inc. v. L&L Wings, Inc., 302 F.R.D. 396, 408-09 (E.D.N.C. 2004).
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`RJR contends it had “no obligation” to produce the negotiation documents for six reasons.
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`But Judge Buchanan’s ruling rests on just one of them: that the subject evidence is irrelevant
`
`
`4 Instead of addressing its misrepresentations and admissions, RJR spends pages rehashing its
`meritless arguments from its Daubert motion to exclude Mr. Meyer’s opinions. Opp. at 19-20.
`The Court properly denied that motion, and RJR’s arguments are irrelevant to the present motion.
`
`8
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`because only the final agreement is relevant. As discussed, this finding is both clearly erroneous
`
`and contrary to law. See supra at 2-6. RJR’s other five arguments are wrong.
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`First, RJR contends that its non-production is excused because it objected to RFP 224 as
`
`irrelevant, overly broad, and unduly burdensome. Opp. at 10-11. As an initial matter, that ignores
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`the at least four other requests to which the subject documents are responsive. Dkt. 1163 at 5-6.
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`Regardless, RJR’s boilerplate objections are irrelevant because RJR did not refuse to produce
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`documents in response to that (or any other relevant) request. See Dkt. 1159-6 at 4. Instead, RJR
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`agreed to produce documents, stating that it “did not expect” to produce documents beyond what
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`it had already produced. Id. RJR argues that PMI/Altria should have moved to compel production
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`of these documents. Opp. at 11. Nonsense. RJR never disclosed it was withholding responsive
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`documents based on “relevance.” See Dkt. 1159-6 at 4. Based on RJR’s response, there was
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`nothing to compel. See id.; see also Beach Mart, 302 F.R.D. at 412-13 (rejecting argument that
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`sanctions should not be imposed because opposing party never moved to compel as “untenable”).
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`In any event, RJR’s boilerplate objections are baseless. As discussed, RFP 224 seeks
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`documents relevant to damages. See supra at 2-6. It is not credible to suggest that RFP 224 is
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`“overly-broad,” or that it would be “unduly-burdensome” to search for and produce responsive
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`documents. Opp. at 5. RFP 224 relates to one agreement.
`
`
`
`. Having put the agreement at issue, RJR should not
`
`be allowed to block discovery into the underlying facts, particularly since the burden to do so is
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`minimal given: (1) the parties served
`
`
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` in this complex multi-jurisdictional case between large, sophisticated companies; and
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`(2) Fontem produced (at least some of) the same documents to RJR in the North Carolina case.
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`9
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`If anything, RJR’s hyper-technical objections and evasive responses “exhibit exactly the
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`type of technical objection-crafting the Rules seek to deter and for which Rule 37 sanctions were
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`created.” Beach Mart, 302 F.R.D. at 407. RJR cannot “craft objections to requests for production
`
`of documents … so as to avoid disclosure,” as the Rules do not “permit[] 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.” Id. at 405. Indeed, RJR’s conduct “may be appropriately
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`sanctioned under Rule 37” because “[t]he rules of discovery were not designed to encourage
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`procedural gamesmanship … in order to gain some advantage.” Id. at 405, 416; see also id. at 414
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`(finding party’s “gamesmanship” to be “unacceptable” where it sought to “use the rules to shield
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`its violations … [i]nstead of using discovery to expose the facts and illuminate the issues”).
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`Second, RJR argues that Judge Buchanan’s order denying PMI/Altria’s motion to compel
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`a fully-educated 30(b)(6) witness removed RJR’s duty to produce responsive documents. Opp. at
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`11. RJR is wrong. RJR admits PMI/Altria’s “prior motion [was] for a deposition.” Dkt. 1169 at
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`1. Judge Buchanan’s order thus did not “encompass” PMI/Altria’s document requests.5 Opp. at
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`11. RJR argues: “Judge Buchanan specifically stated ‘I already ruled’ that the Fontem negotiation
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`documents were not discoverable.” Id. But RJR omits that Judge Buchanan subsequently made
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`plain that she never ruled on PMI/Altria’s document requests. Dkt. 1189 at 4:14-23 (“I know what
`
`
`5 RJR’s procedural Rule 72(a) argument (see Opp. at 11-12) is irrelevant because (i) PMI/Altria
`did not (and does not) seek to revisit Judge Buchanan’s April 2021 order and (ii) Judge Buchanan
`neither addressed nor relied on this argument when denying PMI/Altria’s motion to show cause.
`Even if relevant, a party’s failure to object to a magistrate judge’s discovery order “does not mean
`that the matter is at an end,” as the Court has the “power to reconsider the issue and to set it aside”
`where, as here, the ruling “is clearly erroneous.” DietGoal Innovations LLC v. Wegmans Food
`Markets, Inc., 993 F. Supp. 2d 594, 599-600 (E.D. Va. 2013).
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`10
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`you’re saying is they failed to produce it in response to your request, and that’s a separate issue
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`from my ruling.”). RJR’s attempt to distort Judge Buchanan’s ruling speaks volumes.6
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`Third, RJR contends that Rule 408 “supports Judge Buchanan’s denial of discovery into
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`the Fontem-RJR negotiations.” Opp. at 14-15. But RJR does not argue that Rule 408 formed the
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`basis for Judge Buchanan’s order. Nor could it. Judge Buchanan neither mentioned nor relied on
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`Rule 408 to deny PMI/Altria’s motion to show cause. Dkt. 1189. That disposes of this argument.
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`In any event, Judge Buchanan correctly discarded Rule 408 because “[d]iscovery need not
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`be admissible in evidence to be discoverable.” Kajeet, 2019 WL 8060078, at *8 (overruling Rule
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`408 objection to producing documents “underlying licensing/settlement negotiations”); Builders,
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`2014 WL 5307489, at *1 (“While [Rule 408] limits the admissibility of compromise offers and
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`negotiations, it does not limit the discoverability of that information.”). Moreover, “settlement
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`negotiations related to reasonable royalties and damage calculations are not protected by a
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`settlement negotiation privilege.” In re MSTG, Inc., 675 F.3d at 1346-47. Even if Rule 408
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`applied, “Rule 408 does not ban all evidence related to settlements.” Rothschild Mobile Imaging
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`Innovations, LLC v. Mitek Sys., Inc., No. 14-cv-617, 2018 WL 3599359, at *4 n.3 (D. Del. July
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`27, 2018). It only bars a party from using evidence of a compromise for two narrow purposes,
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`neither of which apply here. FED. R. EVID. 408. RJR does not argue otherwise.
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`Fourth, RJR’s argument that the negotiation documents are inadmissible under Rule 403
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`was not accepted by Judge Buchanan and should be rejected. Here, too, Rule 403 does not excuse
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`RJR’s misconduct because “[d]iscovery need not be admissible in evidence to be discoverable.”
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`Kajeet, 2019 WL 8060078, at *8. And RJR identifies no concrete risks that outweigh, much less
`
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`6 RJR’s also mischaracterizes the statement of PMI/Altria’s counsel. The Court and counsel both
`acknowledged that the Court had not previously ruled on document production.
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`11
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`“substantially outweigh,” the high probative value of this evidence. RJR’s objection is based only
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`its attorney’s conjecture that
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`
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` Opp. at 14. But, as discussed above, that is unsupported and RJR should not be allowed to
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`use the supposed lack of evidence as a sword after improperly blocking this discovery. The Court
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`should overrule RJR’s new Rule 403 objection or, alternatively, reserve ruling until trial.
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`Fifth, unable to justify its own conduct, RJR falsely argues that Altria knew about the
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`documents in the North Carolina Litigation since June 2021 and should have produced them.
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`RJR’s attempt to blame Altria (the client) is easy to reject. Altria had no access to the documents
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`because Fontem produced them pursuant to the North Carolina protective order as confidential-
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`attorneys’ eyes only. Counsel for PMI/Altria in this case (Latham & Watkins) never had access
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`to any of these documents until March 17th (the night before the Daubert hearing) and lacked
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`access to Fontem’s full production until March 25th. Dkt. 1188 at 53:14-56:17. And, while
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`Altria’s counsel in the North Carolina case (Weil, Gotshal & Manges) received these documents
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`in that case, Weil did not appear in this case until March 2022 and, even then, could not use them
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`until Fontem consented.7 Fontem provided that consent the night before the March 18th hearing,
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`and PMI/Altria promptly raised the issue with the Court. See id. Indeed, the only lawyers who
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`were on both cases before March 2022 were the 11 overlapping Jones Day lawyers—the very same
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`lawyers who made the false representations to this Court while withholding the evidence that
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`squarely refutes the damages positions they advance in this case. RJR’s argument reinforces the
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`egregious nature of its conduct, confirming that its tactical gamesmanship warrants sanctions.
`
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`7 RJR’s protective order violations are baseless. Opp. at n.8. Fontem (not RJR) designated the
`subject documents confidential and, before any disclosure occurred, Fontem consented to Altria
`producing them in this case. See Dkt. 1159-12. RJR also subsequently consented. Dkt. 1159-14.
`
`12
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`RJR’s argument also “improperly attempt[s] to shift the burden of discovery onto the
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`requesting party” (Altria) and violates “the spirit and purpose of the discovery rules.” Beach Mart,
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`302 F.R.D. at 411. Under Fourth Circuit law, Altria “should never have needed to work to discover
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`these documents” because RJR “should have done its duty under the rules by initially identifying
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`and disclosing the responsive [documents]” in this case. Id. at 409. Indeed, “the rule is that even
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`where a requesting party already has documents in its possession, or could otherwise access those
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`documents, the disclosing party may not withhold those documents.” Id.; see also Westchester
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`Surplus Lines Ins. Co. v. Clancy & Theys Constr. Co., No. 12-cv-636, 2013 WL 6058203, at *7
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`(E.D.N.C. Nov. 15, 2013) (“The happenstance that [the other party] already has such information,
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`even if true, is not a valid ground for withholding those portions of the claim file.”).
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`That PMI/Altria allegedly did not produce
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` is irrelevant.
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`The Court should “not look favorably upon a tit-for-tat approach to discovery,” as RJR “may not
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`withhold relevant discovery simply on the basis that the other side has not been forthcoming with
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`discovery.” Genentech, Inc. v. Trustees of Univ. of Penn., No. 10-cv-02037, 2011 WL 7074208,
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`at *1 (N.D. Cal. June 10, 2011). Unlike RJR, PMI/Altria unambiguously told RJR it would only
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`produce the executed agreement. Dkt. 1167-1 at 6-7. RJR never objected, followed-up, or moved
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`to compel, staying silent until levying this erroneous and improper argument in its opposition. Cf.
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`Beach Mart, 302 F.R.D. at 411 (finding argument about the other party’s alleged non-production
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`to “amount to the gamesmanship discouraged by the rules” and no “excuse” for “its violations”).
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`And most importantly, PMI/Altria did not move to exclude RJR expert testimony on the basis of
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`facts and information directly contradicted by its non-produced documents.
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`b.
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`RJR’s Rule 26(e) Violation Was Not Justified Or Harmless
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`RJR concedes that the Court need not assess the Southern States factors to issue sanctions
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`under its inherent authority. RJR concedes that Judge Buchanan “did not … reach the question”
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`13
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`of whether RJR’s Rule 26 violation were substantially justified or harmless. Opp. at 21.
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`Regardless, RJR has not shown that its Rule 26 violation was substantially justified or h