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Itron, Inc. v. Consert Inc.

Court of Chancery of Delaware

January 15, 2015

ITRON, INC., as successor-in-interest to SMARTSYNCH, INC., Plaintiff,
v.
CONSERT INC., Defendant

Submitted: January 14, 2015.

Raymond J. DiCamillo; Kevin M. Gallagher, RICHARDS LAYTON & FINGER P.A., Wilmington, Delaware; Adam H. Offenhartz, Nancy Hart, Laura K. O'Boyle, Lindsey D. Schmit, GIBSON, DUNN & CRUTCHER, LLP, New York, New York; Attorneys for Plaintiff Itron, Inc.

Stephen C. Norman, T. Brad Davey, John A. Sensing, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; Joel D. Bush, II, Stephen E. Hudson, Jason M. Wenker, KILPATRICK TOWNSEND & STOCKTON LLP, Atlanta, Georgia; Attorneys for Defendant Consert Inc.

OPINION

Page 584

LASTER, Vice Chancellor.

Plaintiff Itron, Inc. and defendant Consert, Inc. are parties to a Development

Page 585

Agreement dated April 25, 2012 (the " Development Agreement" ). Consert claims Itron owes it approximately $60 million under the Development Agreement. Itron seeks a declaration that it does not owe Consert anything. To the extent the Development Agreement calls for a payment, Consert seeks reformation to eliminate it.

A five-day trial is approaching. On December 11, 2014, pursuant to an agreed-upon schedule, the parties filed a Joint Pretrial Stipulation and [Proposed] Order (the " Proposed Order" ). It identified fifteen facts as admitted and not requiring proof at trial (" Admitted Facts" ).

Itron believes that Consert should have agreed to additional Admitted Facts, including (i) facts Consert admitted in its answer, (ii) facts Consert admitted in response to requests for admissions, and (iii) facts drawn from Consert's sworn interrogatory responses. Itron also believes that Consert did not engage in good faith negotiations over additional Admitted Facts. Itron has moved to have the court declare that certain facts are Admitted Facts and to require Consert to meet and confer in good faith about additional Admitted Facts. The motion is granted.

I. FACTUAL BACKGROUND

The record in this case is large. Discovery lasted approximately two years. The parties exchanged over 55,000 pages of documents, responded to more than 300 interrogatories and requests for admission, and deposed twenty-eight fact witnesses and four expert witnesses. Each side will have fifteen hours of trial time. To present this matter efficiently and effectively requires that counsel cooperate as officers of the court and not waste time on issues not legitimately in dispute.

On November 21, 2014, Itron provided Consert with an initial draft of the Proposed Order that included one hundred sixty-four Admitted Facts. Itron anticipated that Consert would strike some of the proposed Admitted Facts, edit others, and add Admitted Facts of its own. Instead, when Consert returned a redlined draft of the Proposed Order on December 4, 2014, Consert had deleted, entirely or in substantial part, approximately 90% of the proposed Admitted Facts, including many facts that Consert had admitted in its answer and responses to requests for admission, or which came from Consert's verified interrogatory responses. Consert struck even benign and undisputed facts such as the dates on which drafts of documents were exchanged.

Itron invited Consert to meet and confer about the proposed Admitted Facts, and the parties held three sessions supplemented by written correspondence. During the sessions, Consert explained that it had deleted many of the proposed Admitted Facts not because they were disputed, but rather because Consert regarded them as irrelevant, or because Consert believed that other facts or evidence should be presented along with the proposed Admitted Facts. Despite striking many of Itron's proposed Admitted Facts as purportedly irrelevant, Consert addressed the same or similar issues in its statement of the case or in proposed Admitted Facts of its own.

On December 11, 2014, Itron provided Consert with a revised draft of the Proposed Order that removed more than seventy of the Admitted Facts that Itron originally proposed. Rather than responding to this constructive effort, Consert refused to engage in any discussions. Consert identified just sixteen rudimentary background facts to which it would agree, claiming an " advocacy interest" in forcing everything else to be addressed at trial.

Itron filed the Proposed Order. Then Itron filed its motion.

Page 586

II. LEGAL ANALYSIS

" Rule 16 governs pretrial procedure and management . . . . [and] provides authority for the pretrial conference. The pretrial conference and order [are] designed to familiarize the litigants with the issues in the case[,] reduce surprises at trial[,] and facilitate the overall litigation process." Cebenka v. Upjohn Co., 559 A.2d 1219, 1222 (Del. 1989). Rule 16 provides, in pertinent part, as follows:

(b) In any action that is to be tried, unless the Court otherwise directs, a pretrial conference shall be held . . . . [B]efore the pretrial conference, counsel shall submit to the Court . . . a pretrial order which shall meet the requirements of paragraph (c) of this Rule. Counsel shall confer in good faith effort to stipulate to the contents of the pretrial order. To the extent that counsel are unable to agree upon the contents of the pretrial order, each attorney (or party not represented by an attorney) shall submit to the Court a proposed pretrial order that shall indicate the areas of disagreement.
(c) Except to the extent that the Court orders otherwise, all pretrial orders shall include the following information:
. . .
(2) A statement of the facts which are admitted and required[1] no proof.

Ch. Ct. R. 16 (emphasis and footnote added).

Consert correctly observes that the court cannot order Consert to stipulate to facts that are not actually " admitted and required no proof." Id. " [A] stipulation is voluntary." [2] " On its face, Rule 16 . . . does not authorize a court to force parties to stipulate facts to which they will not voluntarily agree." J.F. Edwards Const. Co. v. Anderson Safeway Guard Rail Corp., 542 F.2d 1318, 1322 (7th Cir. 1976). Parties may decide to stipulate to facts that are not otherwise admitted or beyond dispute, or they may concede otherwise contested legal issues such as liability, but those are matters of legal strategy for the parties.

[T]he court is not to substitute its judgment for the parties on strategy . . . . [A]lthough the court has the power to request the parties to consider whether to stipulate as to the undisputed facts, it cannot order them to stipulate as to certain facts. That decision should be within the parties' control.

6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1525.1 (2008). Because a stipulation is voluntary, the concept of a compelled stipulation is inherently contradictory.

Page 587

What a court can do is determine that particular facts have been admitted or are otherwise beyond legitimate dispute. A court can base such a determination on the discovery record or on statements made by counsel during the pretrial conference.

The pretrial conference should not be viewed as merely an informal meeting at which those involved can act without concern for future consequences. If the conference is to be a useful tool, all participants must be fully aware of the possible effects the pretrial hearing may have on the trial. When the final conference is held after the discovery process is completed, shortly before trial, counsel presumably have identified virtually all of the evidence relating to their cases. Thus, it would not be unreasonable to hold them to the statements they make and the agreements they enter into at the conference or restrict their proof at trial to the issues set forth in the pretrial order.

Id. § 1527. " Courts generally hold stipulations, agreements, or statements of counsel made at the pretrial conference binding for purposes of the trial." Id. (citations omitted). " [A] court also may relieve counsel from any statement or stipulation made during a conference in order to prevent injustice." Id.

There is nothing unique or unprecedented about the ability of a court to make a pretrial determination that a particular fact has been admitted or is not legitimately subject to dispute. Courts make such determinations when evaluating whether " there is no genuine issue" as to a particular fact for purposes of summary judgment. S ...


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