2014-00170784-CU-BC

Ca Fire Roasted, LLC vs. General Mills Operations, LLC

Nature of Proceeding: Motion for Award of Costs of Proof Pursuant to CCP 2033.420

Filed By: Thomas, Michael J.

Plaintiff California Fire-Roasted LLC’s (“Plaintiff”) motion for award of costs pursuant to CCP §2033.420 is GRANTED, in part, and DENIED, in part.

Plaintiff’s request for judicial notice is granted.

Overview

Plaintiff seeks its expert fees incurred to prove the truth of matters that Defendant Olam West Coast, Inc. as successor-in-interest to Olam Tomato Processors, Inc. (“Defendant”) failed to admit in response to request for admissions. Plaintiff requests $20,937.02 for Dr. Richard Klopp (“Klopp”) and $63,350 for Dennis Mandell (“Mandell”). Klopp was Plaintiff’s mechanical engineer expert who opined that “those who designed and built Roaster No. 2 copied the know-how embodied in the GM Roaster. Virtually every aspect and feature of Roaster No. 2 that handles and interacts with and roasts tomato products passing through the roaster is virtually identical to the GM Roaster.” (RJN, Ex. 1 – Klopp Decl., ¶ 24.) Mandell was Plaintiff’s damages expert that provided the amount of contractual damages for Defendant’s use of all or any part of the Licensed Technology from 2009-2016.

Plaintiff seeks expert fees for proving the truth of the following request for admissions:

· RFA No. 13: Admit that in 2013, YOU were obligated to pay license fees to CALIFORNIA FIRE-ROASTED, LLC pursuant to the terms set forth in the agreements attached hereto as Exhibit A and Exhibit B.

· RFA No. 22: Admit that in 2013, pursuant to the agreements attached hereto as Exhibit A and Exhibit B, CALIFORNIA FIRE-ROASTED, LLC, was owed more than the minimum performance standards set forth in Paragraph 10.3 of the Exhibit A agreement.

· RFA No. 47: Admit that the fire-roasting equipment in the photographs attached hereto collectively as Exhibit D includes at least some design features copied from the fire-roasting equipment depicted in the photographs attached hereto collectively Exhibit C.

· RFA No. 64: Admit that YOU are obligated, pursuant to the terms of the agreements attached hereto as Exhibits A and B, to pay “license fees” (as that term is defined in paragraph 4.2 of the agreement attached hereto as Exhibit A) for wet tomato products produced using the equipment depicted in the photographs attached hereto collectively as Exhibit C.

· RFA No. 67: Admit that YOU are obligated, pursuant to the terms of the agreements attached hereto as Exhibits A and B, to pay “license fees” (as that term is defined in paragraph 4.2 of the agreement attached hereto as Exhibit A) for wet tomato products produced using the equipment depicted in the photographs attached hereto collectively as Exhibit D.

· RFA No. 76: Admit that in 2010, YOU were obligated to pay “remanufacture use fees” as that term is defined in Paragraph 4.2 of the agreement attached hereto as Exhibit A.

Legal Standard

Code Civ. Proc. § 2033.420 provides: “(a) If a party fails to admit . . . the truth of any matter when requested to do so under this chapter, and if the party requesting that admission thereafter proves . . . the truth of that matter, the party requesting the admission may move the court for an order requiring the party to whom the request was

directed to pay the reasonable expenses incurred in making that proof, including reasonable attorney’s fees.”

The Court shall order the payment of reasonable expenses unless it finds any of the following: (1) an objection to the request was sustained or a response to it was waived under Section 2033.290, (2) the admission sought was of no substantial importance.

(3) the party failing to make the admission had reasonable ground to believe that that

party would prevail on the matter, or (4) there was other good reason for the failure to admit. (CCP §2033.420.)

Entitlement to Expert Fees

Defendant advances that Plaintiff is not entitled to expert fees pursuant to CCP §2033.420 because the statute does not expressly permit recovery expert fees. Defendant principally relies on the prevailing party costs statutes, CCP §1032 and §1033.5. The Court is not convinced by Defendant’s arguments. The prevailing party CCP §1032 and §1033.5 allow the prevailing party to recover fees only for an expert ordered by the court, “except when expressly authorized by law.” (CCP §1033.5(b)(1)).

Here, Plaintiff did not seek its expert fees as a prevailing party under CCP §1033.5. Plaintiff seeks its fees as a discovery sanction under CCP §2033.420, which does not limit its application to prevailing parties, and therefore does not implicate CCP §1033.5. Additionally, CCP §2033.420 allows for reimbursement of reasonable expenses to compensate for unnecessary expenses resulting from proving matters unreasonably denied. (Smith v. Circle P Ranch Co. (1978) 87 Cal.App.3d 267, 276.) Thus, the Court concludes that “reasonable expenses” includes expert fees incurred in making the proof.

Fees for Klopp

The motion for costs for Klopp is GRANTED. Klopp was Plaintiff’s mechanical engineer expert that opined that the Roaster No. 2 incorporated design features that had been copied from the GM Roaster. Plaintiff insists that Klopp’s fees were incurred to prove the matters at issue in RFA No. 47 (“Admit that the fire-roasting equipment in the photographs attached hereto collectively as Exhibit D includes at least some design features copied from the fire-roasting equipment depicted in the photographs attached hereto collectively Exhibit C.”) Here, Klopp’s opinion was central to the litigation. Indeed, the Court relied on Klopp’s opinion in granting Plaintiff’s motion for summary judgment.

Defendant claims that it had a reasonable basis to believe that it would prevail on the matter because the legal issue regarding whether non-proprietary information can be the subject of an intellectual property license agreement is unsettled. RFA No. 47, however, did not seek Defendant’s admission regarding Defendant’s liability. RFA No. 47 merely sought an admission that at least some design features from the GM Roaster were copied to Roaster No. 2. Whether the design features were proprietary or non-proprietary have no bearing on whether Roaster No. 2 incorporated some design features from the GM Roaster.

Defendant next argues that it had a good faith basis to deny that the GM Roaster and Roaster No. 2 shared design features because the term “design features” is ambiguous. According to Defendant, the term “design features” can be interpreted to

connote “unique” properties of the GM Roaster. Defendant bases this argument on its expert, Dr. Parnell who opined that the technology, methods, and apparatus in the GM Roaster were not unique. Thus, Defendant “could have reasonably interpreted ‘design features’ to connote the unique properties of the GM Roaster.” (Opposition, 19:18-20.)

Defendant, however, did not qualify its response with any explanation. (CCP §2033.220 [“Each answer shall: (1) ) Admit so much of the matter involved in the request as is true, either as expressed in the request itself or as reasonably and clearly qualified by the responding party.”].) Moreover, Defendant’s declaration provides no explanation as to what Defendant believed (or could have reasonably believed) at the time the responses were served. There is no indication whether Defendant even relied on Dr. Parnell’s opinion when it served its response in February 2015, and a supplemental response in November 2015. Indeed, Plaintiff indicates that Defendant retained Dr. Parnell in August 2016 – after the responses were served.

The Court also disagrees with Defendant’s argument that Plaintiff “still would have had to hire an expert witness to opine on the similarities between the two machines.” Defendant’s admission that Roaster No. 2 incorporated at least some design features copied from the GM Roaster would have eliminated the need for Klopp’s opinion because the License Agreement required the Licenses to pay license fees for products produced “using all or any part of the Licensed Technology.”

Fees for Mandell

The motion for costs for Mandell is DENIED. As noted above, Mandell calculated the amount of fees owed to Plaintiff based on Defendant’s breach of the contract. Plaintiff advances that Mandell’s fees were incurred to prove the matters at issue in RFA Nos. 13, 64, 67, 76. These RFAs sought admissions that Defendant was obligated to pay “license fees” or “remanufacture use fees.” According to Plaintiff, “to prove Olam was obligated to pay license fees to CFR, CFR necessarily had to prove the exact amount of license fees CFR was entitled to recover.” (Motion, 11: 28-12:1.)

The Court is not persuaded by Plaintiff’s argument. The RFAs at issue concern Defendant’s liability – not the amount of the liability. Mandell’s opinion has no import as to whether Defendant was obligated to pay the fees.

Disposition

The motion for costs for Klopp is GRANTED in the amount of $20,937.02. The motion for costs for Mandell is DENIED.