ClearOne, Inc. v. PathPartner Tech.
| Decision Date | 31 March 2022 |
| Docket Number | 2:18-cv-00427-JNP-JCB |
| Parties | CLEARONE, INC., Plaintiff, v. PATHPARTNER TECHNOLOGY, INC. and PATHPARTNER TECHNOLOGY PVT. LTD., Defendants. |
| Court | U.S. District Court — District of Utah |
ClearOne Inc. (“ClearOne”) sued PathPartner Technology Pvt. Ltd. (“PathPartner”) for breach of contract breach of the covenant of good faith and fair dealing, and unjust enrichment. ECF No. 3. In response, PathPartner brought counterclaims against ClearOne for breach of contract, quantum meruit, unjust enrichment, and breach of the duty of good faith and fair dealing. ECF No. 22.
Before the court are three motions: (1) ClearOne's Motion to Determine Daubert Issues (ECF No. 130), (2) ClearOne's Motion for Summary Judgment on PathPartner's Counterclaims (ECF No. 133), and (3) PathPartner's Motion to Bar Expert Testimony and Motion for Summary Judgment on ClearOne's Claims (ECF No. 138). PathPartner's motion can more accurately be described as three motions-one to bar the testimony of ClearOne's expert witness, Stephen Gray (“PathPartner's Motion to Exclude the Expert Testimony of Stephen Gray”); one for summary judgment on ClearOne's claims (“PathPartner's Motion for Summary Judgment on ClearOne's Claims”); and one to bar the testimony of ClearOne's non-retained expert witnesses Derek Graham and Ketan Merchant (“PathPartner's Motion to Exclude the Testimony of Derek Graham and Ketan Merchant”). Thus, the court addresses PathPartner's filing as three separate motions.
For the reasons presented herein, the court GRANTS IN PART and DENIES IN PART PathPartner's Motion for Summary Judgment on ClearOne's Claims (ECF No. 138), GRANTS PathPartner's Motion to Exclude the Expert Testimony of Stephen Gray (ECF No. 138), GRANTS WITHOUT PREJUDICE PathPartner's Motion to Exclude the Testimony of Derek Graham and Ketan Merchant (ECF No. 138), GRANTS IN PART and DENIES IN PART ClearOne's Motion to Determine Daubert Issues (ECF No. 130), and GRANTS IN PART and DENIES IN PART ClearOne's Motion for Summary Judgment on PathPartner's Counterclaims (ECF No. 133).
BACKGROUND[1]
On November 18, 2014, ClearOne, a Utah corporation, and PathPartner, an Indian private limited company, entered into a contract “whereby PathPartner was to develop software that ClearOne could incorporate into its products for the purpose of enabling wireless presentation and video-conferencing.” ECF No. 138 at 3. Although the parties originally agreed that ClearOne would pay $120, 000 for the software solution, the parties renegotiated in 2016 and the price was increased to $240, 000 (the original and renegotiated contracts are collectively referred to as the “Agreement”). Even at this increased price, Raman Narayanan, PathPartner's Senior Vice President and Country Manager for North America, believed that the project would still be a loss for PathPartner.
Over the following two years, PathPartner completed various phases of the software project pursuant to the Agreement. In addition, following requests from ClearOne, PathPartner completed work that was not prescribed in the Agreement, such as by rendering the software compatible with Windows 10 and “incorporat[ing] internalization into the software.” See ECF No. 157-9 ¶¶ 4-9. PathPartner was not compensated by ClearOne for the work that it performed beyond the scope of the Agreement.
On March 30, 2018, before PathPartner completed the software project, the project was terminated by PathPartner. The circumstances under which the project was terminated-as well as who is at fault for the termination-is the subject of the instant lawsuit. ClearOne filed suit against PathPartner on May 31, 2018, alleging that PathPartner's failure to complete the project amounted to breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment. PathPartner subsequently brought four counterclaims, alleging that ClearOne's failure to compensate it for the work that it performed that was beyond the scope of the Agreement resulted in breach of contract, quantum meruit, unjust enrichment, and breach of the covenant of good faith and fair dealing.
During discovery, ClearOne served an interrogatory on PathPartner that asked PathPartner to “[i]dentify any and all facts supporting [its] allegation in the Counterclaim that ‘ClearOne requested that PathPartner Technology perform services that were different than or in addition to those called for' in the 2014 and/or 2016 Contract.” ECF No. 133-3 at 19-20. PathPartner responded, in pertinent part, that:
ClearOne repeatedly changed its software requirements, added constraints to the software requirements, demanded functionality and added performance specifications exceeding those identified in the Parties' agreements, requested out of scope work from PathPartner Ltd. for which it did not pay, and unreasonably delayed in testing and product acceptance. ClearOne's demands required PathPartner Ltd. to commit man hours to the performance of research and other labor beyond the scope of the agreements. ClearOne has yet to compensate PathPartner Ltd. for these resources. ClearOne's behavior throughout the life of the Parties' Agreement caused substantial delay and made it impossible for PathPartner Ltd. to perform the Parties' agreements. Path Partner [sic] Ltd. refers to documents produced by this party in discovery, which documents tend to prove the foregoing facts.
Id. at 20. Over the course of discovery, PathPartner never supplemented this response, nor did it provide any greater specificity regarding which documents produced in discovery supported its response.
Both parties also disclosed expert damages witnesses. ClearOne's expert, Stephen Gray, calculated ClearOne's alleged damages by attempting to determine how much it would cost ClearOne to develop the software in-house in Austin, Texas. Gray's method involved multiplying “the work effort put forth by the PathPartner development team for the ClearOne project”-which he determined from a document that PathPartner produced during discovery-by the cost of such work if it were performed in Austin, Texas. See ECF No. 138 at Ex. F ¶¶ 13, 15. In his report, Gray stated that “[t]he facts and data on which [he] based the opinions reflected in [the] report are of a type reasonably relied upon by experts in [his] profession” and that he “utilized conventional methodologies in [his] analysis.” Id. ¶ 2. However, Gray did not cite any source to support these assertions. Moreover, Gray explained that it was his opinion that his damages estimate “substantially understates the actual cost for ClearOne to develop the project, as there are several aspects of cost that are not included in the analysis.” Id. ¶ 18. In addition to Gray's report, ClearOne also produced evidence of quotes that it received from third-parties to develop the software.
PathPartner's damages expert, Jeffrey Balyeat, produced a report in which he calculated PathPartner's alleged damages that resulted from ClearOne's failure to compensate PathPartner for the out-of-scope work that PathPartner performed. Balyeat also produced a supplemental report in which he critiqued Gray's analysis. In his initial report, Balyeat included a table-which was largely, if not entirely, prepared by someone else-in which all of the out-of-scope work that PathPartner allegedly performed was documented, along with how long it took PathPartner to complete that work. During Balyeat's deposition, he acknowledged that he initially had difficulty understanding the descriptions of the out-of-scope work provided in the table because of his lack of technical expertise. He also admitted that he never verified that the times documented in the table were accurate. Balyeat's report also included estimates regarding the amount of time that PathPartner was delayed by ClearOne's requests for out-of-scope work, as well as the amount of time that it would take a reasonable software development company to complete various tasks that PathPartner performed for ClearOne. Balyeat included no explanation for how he calculated these figures, and he could not explain the calculations at his deposition.
In addition to the damages experts, ClearOne also disclosed Derek Graham and Ketan Merchant, ClearOne employees, as nonretained expert witnesses. In pertinent part, ClearOne's disclosure stated that:
Derek Graham and Ketan Merchant, persons previously disclosed pursuant to Rule 26(sa)(2)(C) to offer expert opinions in response to the April 2, 2021, Expert Witness Report of Jeffrey L. Balyeat (the “Balyeat Report”), will more specifically address section three of the Balyeat Report and opine that the work in each row of the table set forth on pages 10 through 20 of the Balyeat Report is not in fact work beyond the scope of the parties' agreement, based upon the language in the parties' agreement and how the description of the work set forth in the table relates to the project requirements, and as generally informed by these experts' knowledge of the project, software development generally, and the technology described, among other things.
Based on the foregoing, ClearOne moved for summary judgment on PathPartner's counterclaims and to exclude the expert report and testimony of...
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