Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00201/USCOURTS-cand-3_07-cv-00201-5/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1961 Racketeering (RICO) Act

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JEFF POKORNY and LARRY BLENN on

behalf of themselves and those

similarly situated,

Plaintiffs,

 v.

QUIXTAR INC., et al.,

Defendants.

 

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No. 07-00201 SC

ORDER GRANTING

DEFENDANTS' MOTION TO

STRIKE DECLARATIONS

OF ROBERT FITZPATRICK

AND STEPHEN HAYFORD

I. INTRODUCTION

Defendant Quixtar, Inc. ("Defendant" or "Quixtar") moved this

Court to dismiss or stay the present litigation and compel

compliance with a dispute resolution agreement. See Docket No.

28. Plaintiffs Jeff Pokorny and Larry Blenn ("Plaintiffs")

opposed that motion. See Docket No. 59. In support of their

Opposition, Plaintiffs offered declarations from two purported

experts, Stephen Hayford and Robert Fitzpatrick. See Docket Nos.

65 and 66. Quixtar objected to these declarations and moved to

strike. See Docket No. 72. 

For the reasons set forth below, after considering the

declarations and the parties' arguments, the Court hereby GRANTS

Quixtar's motion and STRIKES the Hayford and Fitzpatrick

Declarations.

Case 3:07-cv-00201-SC Document 90 Filed 06/29/07 Page 1 of 7
United States District Court

For the Northern District of California

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1

The Court will resolve the dispute over whether California or

Michigan law governs when it rules on the Motion to Stay or

Dismiss, as it is not necessary to decide that issue for this

Order.

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II. UNCONSCIONABILITY

Under California law, the unconscionability of a contract

provision is a question of law to be decided by the Court. See,

e.g., Am. Software, Inc. v. Ali, 46 Cal. App. 4th 1386, 1391 (Ct.

App. 1996). The same is true under Michigan law. See Andersons,

Inc. v. Horton Farms, Inc., 166 F.3d 308, 323 (6th Cir. 1993)

(applying Michigan law).1 Therefore, the Court will ultimately

decide whether or not the Quixtar ADR Agreement is enforceable, as

a matter of law. 

III. ANALYSIS

A. Fitzpatrick Declaration

The Fitzpatrick Declaration is not relevant to the question

of whether the Quixtar ADR Agreement is unconscionable. The

parties appear to agree that Mr. Fitzpatrick's testimony focuses

on Quixtar's business model and the merits of Plaintiffs' case. 

D's Mot. to Strike, 5; P's Opp'n to Mot. to Strike, 3, 9. The

merits of the case are not yet before the Court, and an opinion on

that subject is of no use to the Court in deciding whether or not

to enforce the ADR provisions. See Fed. R. Ev. 402. 

Plaintiffs assert that Quixtar "opened the door" to a

discussion of the merits by including a discussion of its business

practices in its Motion to Dismiss or Stay. See P's Opp'n to Mot.

to Strike, 9. This argument has no merit. It is common practice

Case 3:07-cv-00201-SC Document 90 Filed 06/29/07 Page 2 of 7
United States District Court

For the Northern District of California

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It is possible that Mr. Fitzpatrick's testimony would be

relevant and admissible if this case were to proceed on the merits. 

If that scenario arises, Plaintiffs may offer his testimony at that

time, Quixtar may object, and the Court will consider the issue

again in that context. Until the Court rules on the Motion to

Dismiss or Stay, however, that issue is moot.

3Both parties spend a good portion of their briefing on the

issue of whether discovery is appropriate or necessary to determine

unconscionability. See P's Opp'n to Mot. to Strike, 4-6; D's Reply

in Support of Mot. to Strike, 1-3. The issue before the Court,

however, is not whether to allow discovery, or even whether to

3

to include background facts about the parties and issues in every

motion filed over the course of a litigation. That Quixtar filled

space in its brief with "self-laudatory remarks" and puffery

having no bearing on unconscionability is not a good reason for

Plaintiffs to respond in kind, and does not make the Fitzpatrick

Declaration any more relevant to the matter before the Court. 

Plaintiffs cite United States v. Perry, 857 F.2d 146, 1352 (9th

Cir. 1988), to support their "opened the door" argument. That

case is of no help to Plaintiffs. In Perry, the prosecutor asked

the defendant detailed questions about prior convictions during

cross examination. Id. The Ninth Circuit upheld the admission of

this line of questioning because Perry had previously testified

about the facts underlying those convictions. Id. The only

question the Perry court addressed was the propriety of the

questioning, not the relevance of the testimony. Regardless of

whether Quixtar opened the door, discussion of the merits by

either party is unnecessary and irrelevant at this juncture.2 

B. Hayford Declaration

Professor Hayford's opinion regarding the legal question of

unconscionability is not admissible.3

 The Court need not address

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consider expert testimony in general; rather, it is whether to

admit the Fitzpatrick and Hayford Declarations. 

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Quixtar's concerns about Professor Hayford's qualifications or his

purported failure to disclose his affiliation with JAMS, because

his declaration offers an opinion on the exact legal question that

the Court itself will decide. For that reason alone, the Court

will strike the Hayford Declaration.

The authorities Plaintiffs cite in support of consideration

of expert testimony are not applicable here. First, Plaintiffs

rely on Federal Rules of Evidence 702 and 704. Rule 702 allows

expert testimony that will "assist the trier of fact to understand

the evidence or to determine a fact in issue. . . ." Fed. R. Ev.

702. Thus, if the Hayford Declaration would help the Court

understand the underlying facts at issue here, it would be

admissible under Rule 702. Rule 704 permits expert testimony on

ultimate issues of fact. See Fed. R. Ev. 704. Because

unconscionability is a question of law, however, Rule 704 does not

support the admission of expert testimony on that issue. 

The prohibition against experts offering legal conclusions is

clear in United States v. Moran, 482 F.3d 1101 (9th Cir. 2007), a

case Plaintiffs cite. Plaintiffs assert that Moran stands for the

proposition that expert testimony on legal conclusions is

permissible. P's Opp'n to Mot. to Strike, 7. In fact, the court

reached the opposite conclusion, noting that "'an expert witness

cannot give an opinion as to her legal conclusion, i.e., an

opinion on the ultimate issue of law.'" Id. (quoting Hangarter v.

Provident Life & Accident Ins. Co., 373 F.3d 998, 1016 (9th Cir.

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The Fiataruolo court also quoted this illustrative example

from the Advisory Committee Notes to Rule 704: "[T]he question 'Did

T have the capacity to make a will?' would be excluded, while the

question 'Did T have sufficient mental capacity to know the nature

and extent of his property and the natural objects off his bounty

to formulate a rational scheme of distribution?' would be allowed." 

9 F.3d at 941.

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2004)). In that case, the Ninth Circuit affirmed admission of an

expert's testimony on "sham" transactions only after concluding

that the expert was not addressing a legal conclusion. Id. at

1106. The court held that the testimony was permissible because

the trier of fact in that case would still have to draw its own

inferences from the expert's testimony before it could rule on the

ultimate issue. Id. Here, if the Court accepts Professor

Hayford's testimony that the Quixtar ADR Agreement is

unconscionable, there is no need for inference or further

analysis, as the ultimate question of law will be resolved. 

Many of the remaining cases Plaintiffs cite actually support

the exclusion of the Hayford Declaration. For example, in United

States v. Dazey, 403 F.3d 1147, 1172 (10th Cir. 2005), the expert

"did not directly testify that any particular defendant actually

violated the law. Even if his testimony arguably embraced the

ultimate issue, such testimony is permissible as long as the

expert's testimony assists, rather than supplants, the jury's

judgment." In Fiataruolo v United States, 8 F.3d 930, 941-42 (2d

Cir. 1993), the court ruled that Rule 704 "was not intended to

allow experts to offer opinions embodying legal conclusions."

(internal quotations omitted).4

 In Hangarter, the expert "never

testified that he had reached a legal conclusion that Defendants

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actually acted in bad faith (i.e., an ultimate issue of law)." 373

F.3d at 1016. 

The determinative question, then, is whether Professor

Hayford crossed the line from describing the underlying facts to

expressing a legal opinion. "The best resolution to this type of

problem is to determine whether the terms used by the witness have

a separate, distinct and specialized meaning in the law different

from that present in the vernacular. If they do, exclusion is

appropriate." Torres v County of Oakland, 758 F.2d 147, 151 (6th

Cir. 1985). After examining the Hayford Declaration, it is clear

that he expressed a legal opinion. Professor Hayford asserts that

the Quixtar ADR Agreement is "unconscionable." See, e.g., Hayford

Decl. ¶¶ 11 ("it is my opinion that the Quixtar DRP [Dispute

Resolution Procedures] is procedurally unconscionable. . . ."), 38

("The Formal Conciliation step of the DRP, which is not imposed on

Quixtar but only on IBO's is not only unconscionable but is

futile. . . ."), 52 ("the Quixtar DRP is so inherently and

pervasively flawed and clearly unconscionable. . . ."). The cited

examples are not the only legal conclusions, simply the most

glaring.

Perhaps recognizing that Professor Hayford's legal

conclusions are inadmissible, Plaintiffs invite the Court to

strike only the offending portions of the Declaration, rather than

the entire thing. See P's Opp'n to Mot. to Strike, 7 n.5. Were

it a matter of one errant paragraph, the Court might do this. 

However, legal conclusions are pervasive in the Hayford

Declaration, and the Court will not endeavor to rewrite the entire

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declaration, striking or allowing testimony on a sentence-bysentence basis. Professor Hayford could have submitted an

appropriately limited declaration offering his potentially

relevant knowledge about standard arbitration procedures. 

Instead, he submitted a legal opinion, which the Court finds

inadmissible. 

IV. CONCLUSION

For the foregoing reasons, the Court hereby GRANTS Quixtar's

motion and STRIKES the Declaration of Robert Fitzpatrick and the

Declaration of Stephen Hayford.

IT IS SO ORDERED.

Dated: June 29, 2007.

 UNITED STATES DISTRICT JUDGE

Case 3:07-cv-00201-SC Document 90 Filed 06/29/07 Page 7 of 7