UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

Ford Motor Company,

Plaintiff/

Counter-Defendant,

v.

Versata Software, Inc., f/k/a Trilogy 

Software, Inc., Trilogy Development 

Group, Inc. and Trilogy, Inc., 

Defendants/

Counter-Plaintiffs.

Case No. 15-10628-MFL-EAS 

(consolidated with Case No. 15-cv-11624)

Hon. Matthew F. Leitman

JURY TRIAL DEMANDED

FORD MOTOR COMPANY’S 

MOTION IN LIMINE AND SUPPORTING BRIEF TO 

PRECLUDE DEFENDANTS FROM RELYING ON 

CONTRACT DAMAGES THEORIES AND 

CALCULATIONS NOT DISCLOSED IN DISCOVERY

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56456 Filed 02/11/22 Page 1 of 30
i

CONCISE STATEMENT OF ISSUES PRESENTED

Should the Court prohibit defendants from offering argument, testimony, or 

other evidence of contract damages, which Versata did not disclose during

discovery?

Ford answers: Yes.

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56457 Filed 02/11/22 Page 2 of 30
ii

CONTROLLING AUTHORITY

• MLC Intellectual Prop., LLC v. Micron Tech., Inc., 10 F.4th 1358 

(Fed. Cir. 2021);

• Gorman v. Am. Honda Motor Co., 302 Mich. App. 113, 839 N.W.2d 

223 (2013);

• Chelsea Inv. Grp. v. City of Chelsea, 288 Mich. App. 239, 792 

N.W.2d 781 (2010).

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TABLE OF CONTENTS

CONCISE STATEMENT OF ISSUES PRESENTED............................................ i

CONTROLLING AUTHORITY ........................................................................... ii

TABLE OF AUTHORITIES ................................................................................ iv

MOTION............................................................................................................... 1

BRIEF IN SUPPORT ............................................................................................ 1

I. BACKGROUND ......................................................................................... 1

A. Versata’s initial disclosures and discovery responses relied on 

experts for contract damages.............................................................. 1

B. Versata’s belated supplemental interrogatory answer continued 

to rely on experts for contract damages and added a new theory........ 9

C. Ford attempted to resolve this matter without Court intervention......12

II. ARGUMENT .............................................................................................16

A. Michigan law requires a party seeking breach of contract 

damages to show a causal link between the damages and the 

alleged breach ...................................................................................16

B. Versata repeatedly Ford told during discovery that only 

Versata’s experts would quantify and supply evidentiary 

support for contract damages ............................................................17

C. Versata’s Rule 26(a) and discovery disclosures do not permit 

Versata to seek “at least” $17 million/year for belatedly alleged 

“use” of confidential information......................................................19

III. CONCLUSION ..........................................................................................23

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56459 Filed 02/11/22 Page 4 of 30
iv

TABLE OF AUTHORITIES

Cases

Chelsea Inv. Grp. v. City of Chelsea, 

288 Mich. App. 239, 792 N.W.2d 781 (2010).............................................16

Erskine v. Consol. Rail Corp., 

814 F.2d 266 (6th Cir. 1987).......................................................................19

Gorman v. Am. Honda Motor Co., 

302 Mich. App. 113, 839 N.W.2d 223 (2013).......................................16, 20

Kaminski v. Grand Trunk W. R. Co., 

347 Mich. 417, 79 N.W.2d 899 (1956) .......................................................16

MLC Intellectual Prop., LLC v. Micron Tech., Inc., 

No. 14-cv-03657-SI, 2019 U.S. Dist. LEXIS 110882, 

2019 WL 2847285 (N.D. Cal. July 2, 2019), 

aff’d, 10 F.4th 1358 (Fed. Cir. 2021)...........................................................20

Rochlani v. Aaron, 

2016 Mich. Cir. LEXIS 1147 (2016)...........................................................16

Woods v. DeAngelo Marine Exhaust, Inc., 

692 F.3d 1272 (Fed. Cir. 2012)...................................................................22

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56460 Filed 02/11/22 Page 5 of 30
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MOTION

Ford Motor Company (“Ford”) moves in limine to prohibit Versata from 

offering argument, testimony, or other evidence of contract damages, which Versata 

did not disclose during discovery.

Pursuant to L.R. 7.1, Ford conferred with Defendants’ counsel on January 18, 

2022 and explained the nature of the motion. Versata does not concur with the relief

sought.

BRIEF IN SUPPORT

I. BACKGROUND

A. Versata’s initial disclosures and discovery responses 

relied on experts for contract damages

Throughout discovery, Ford asked Versata for its damages theories and 

calculations. Versata repeatedly and consistently replied that such theories and 

calculations were the domain of its experts and Versata’s expert reports would 

supply the requested information. Versata’s initial disclosures, which it 

supplemented four times during discovery, said the same.

Breach of contract has always been one of Versata’s claims against Ford. In 

early 2017, Ford asked Versata to “identify each category of damages Versata is 

seeking” and to “state the theories of recovery, factual support for those theories, 

and computations of damages within each category, and identify the evidence 

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56461 Filed 02/11/22 Page 6 of 30
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Versata will rely upon in support.” (Ex. A, Versata’s Second [sic-First] Suppl. Resp.

to Int. No. 23, pdf p. 5, served April 18, 2017.)

1

Versata identified only two sources of alleged contract damages: “[D]amages 

suffered by Versata due to Ford’s failure to [1] abide by provisions prohibiting the 

disclosure of Versata’s confidential information and [2] Ford’s reverse engineering 

of Versata’s software.” (Id., p. 8, bracketed numbers added.)2 Versata also described, 

qualitatively, the damages it suffered: “Versata was damaged by not being allowed 

to negotiate the fee that it would have charged to give Ford a right to [1] reverse

engineer Versata’s software or [2] to disclose Versata’s software to unauthorized 

employees and contractors, including companies specifically identified as 

competitors in the relevant agreements.” (Id., bracketed numbers added.)3

Versata refused to quantify or supply evidence of its damages, saying, 

“Damages calculations and evidence material to those calculations are the domain 

1 Versata did not number the pages of its supplemental interrogatory response, so 

Ford cites the pdf page.

2 Versata delineated the “reverse engineering” breach in its 2018 summary judgment 

motion (ECF No. 379, PageID.22789-91): “[Versata] argues that Ford ‘reverse 

engineered’ the Versata Software in violation of Section 1.7 when Ford inputted 

identical data into both ACM and PDO and then ‘studied’ the ‘outputs’ from 

Versata’s software ‘for the purpose of ensuring that [PDO] produced identical 

outputs.’ ” (ECF No. 534, PageID.40833.)

3 All emphasis added unless otherwise noted.

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of expert testimony, and Versata will supplement its response in accordance with 

the court’s deadline for the submission of expert reports.” (Id.) 

Ford served a Rule 30(b)(6) deposition notice on Versata, which included a 

topic on “[a]ll harm and damages Versata claims to have incurred due to Ford’s ... 

alleged breach of contract ... and all factual bases for that assertion.” Versata refused 

to produce a witness, objecting “this topic seeks expert testimony and is therefore 

not a proper topic for a rule 30(b)(6) deposition.” (Ex. B, p. 23.)

The following table catalogs Versata’s repeated representations throughout 

discovery that experts would supply evidence of alleged contract damages:

Table 1

Year Document Location Text

Initial Disclosures

2015

Versata 

Initial 

Disclosures 

(Ex. C)

p. 9

“Versata asserts claims of breach of contract, 

patent infringement, trade secret 

misappropriation, and conversion. . . . Versata 

intends to introduce expert testimony in support 

of its damages calculations. Versata reserves all 

rights to amend and supplement these disclosures 

as discovery is ongoing.”

2017

Versata’s 

Amended 

Initial 

Disclosures 

(Ex. D)

p. 7

“Versata asserts claims of breach of contract, 

patent infringement, trade secret 

misappropriation, and copyright infringement. . . 

. Versata intends to introduce expert testimony 

in support of its damages calculations. Versata 

reserves all rights to amend and supplement these 

disclosures as discovery is ongoing.”

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Year Document Location Text

2018

Versata’s 2nd

Amended 

Initial 

Disclosures 

(Ex. E)

P. 7

“Versata asserts claims of breach of contract, 

patent infringement, trade secret 

misappropriation, and copyright infringement. . . 

. Versata intends to introduce expert 

testimony in support of its damages 

calculations. Versata reserves all rights to amend 

and supplement these disclosures as discovery is 

ongoing.”

2018

Versata’s 3rd

Amended 

Initial 

Disclosures 

(Ex. F)

p. 8

“Versata asserts claims of breach of contract, 

patent infringement, trade secret 

misappropriation, and copyright infringement. . . 

. Versata intends to introduce expert testimony 

in support of its damages calculations. Versata 

reserves all rights to amend and supplement these 

disclosures as discovery is ongoing.”

2018

Versata’s 4th

Amended 

Initial 

Disclosures 

(Ex. G)

p. 8

“Versata asserts claims of breach of contract, 

patent infringement, trade secret 

misappropriation, and copyright infringement. . . 

. Versata intends to introduce expert testimony 

in support of its damages calculations. Versata 

reserves all rights to amend and supplement these 

disclosures as discovery is ongoing.”

Versata’s Responses to ROGs and RFPs 

2015

Versata’s 

Responses to 

Ford’s 1st

RFPs (Nos. 

1-63) (Ex. H)

RFP 2,

p. 5

Request: “All documents and things Versata 

intends to rely upon to support its claim for 

damages in this case.”

Response: “This request is premature for the 

additional reason that Versata intends to rely on 

expert testimony to support its damages claims.”

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56464 Filed 02/11/22 Page 9 of 30
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Year Document Location Text

2017

Versata’s 

Responses to 

Ford’s 3rd

ROGs (Nos. 

22-23) (Ex. 

I)

ROG 23,

pp. 7-8

Interrogatory: “Separately for each cause of 

action asserted by Versata, identify each 

category of damages Versata is seeking (i.e., 

actual or compensatory damages, unjust 

enrichment, entitlement to a reasonable royalty, 

and/or any other form of damages), and further 

state the theories of recovery, factual support 

for those theories, and computations of damages 

within each category, and identify the evidence 

Versata will rely upon in support.”

Response: “Versata objects on the grounds that 

this interrogatory is unduly burdensome and calls 

for information outside the scope of discovery 

and is premature in that it calls for expert 

testimony before the Court-imposed deadline for 

the exchange of such information.”

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56465 Filed 02/11/22 Page 10 of 30
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Year Document Location Text

2017

Versata’s 2nd

[sic-1

st] 

Supplemental 

Response to 

Ford’s ROGs 

(Nos. 23, 24, 

26, & 27) 

(Ex. A)

ROG 23,

pp. 7-8

Supplemental Response: “Breach of Contract: 

Versata states that Ford has breached its contract 

with Versata by, at a minimum, continuing to use 

Versata’s software beyond the term of the 

relevant licenses and by using Versata’s software 

beyond the scope of Ford’s licenses. In 

connection with its breach of contract cause of 

action, Versata seeks actual damages, including 

damages suffered by Versata due to Ford’s 

failure to abide by provisions prohibiting the 

disclosure of Versata’s confidential information 

and Ford’s reverse engineering of Versata’s 

software. Versata was damaged by not being 

allowed to negotiate the fee that it would have 

charged to give Ford a right to reverse engineer 

Versata’s software or to disclose Versata’s 

software to unauthorized employees and 

contractors, including companies specifically 

identified as competitors in the relevant 

agreements. Damages calculations and evidence 

material to those calculations are the domain of 

expert testimony, and Versata will supplement its 

response in accordance with the court’s deadline 

for the submission of expert reports.

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56466 Filed 02/11/22 Page 11 of 30
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Year Document Location Text

Expert Reports

2017

Elson 

Damages 

Report (Ex. 

J)

¶ 1.1,

Page 1

“I was asked to assess Versata’s damages 

associated with certain claims asserted by 

Versata in the Counterclaim. More specifically, 

I quantified Versata’s damages as measured by 

the economic benefits enjoyed (and reasonably 

expected to be enjoyed prospectively) by Ford 

Motor Company (“Ford”) as a result of Ford’s 

alleged trade secret misappropriation, as well as

the economic losses experienced by Versata 

resulting from Ford’s alleged copyright 

infringement and breach of contract, under an 

assumption that Ford will be adjudicated liable as 

alleged in the Counterclaim.”

Fn. 4,

Page 3

"I also note that Versata has asserted breach of 

contract claims against Ford. . . . Quantitatively, 

the damages associated with certain of Versata's 

breach of contract claims (assuming liability) 

are subsumed in the trade secret 

misappropriation damages quantified herein. I 

have not otherwise addressed damages 

associated with Ford's breach of contract."

2018

Elson & 

Bokhart Joint 

Damages 

Report (Ex. 

K)

p. 7, 

fn. 11

“We have been advised that this unauthorized use 

constitutes misappropriation. Economically, if 

such unauthorized use is alternatively (or 

additionally) considered a breach of existing 

license agreements, reasonable royalty damages 

as calculated herein would also be reflective of 

damages under that construct.”

Expert/30(b)(6) Depositions

2017

Elson 

Deposition 

(Ex. L)

pp. 9-11

Q. Versata has asserted claims of breach

of contract in addition to trade secrets and patent 

infringement. You're not offering an opinion on 

the amount of Versata's damages for its 

alleged breach of contract – well, for the 

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56467 Filed 02/11/22 Page 12 of 30
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Year Document Location Text

breach of contract claims it's asserted, 

correct?

A. Discretely, that's correct. As I think I 

indicated in my report, any quantifications 

associated there with would be subsumed in 

the quantifications that I prepared in connection

with my assessment of the trade secret 

misappropriation damages in this case.

* * *

Q. You didn't do a separate analysis of how 

much of the trade secret damages pertains to the 

alleged reverse engineering, correct?

A. As a discrete consideration as related to the 

breach of contract allegation in that regard, 

no.

Q. Okay. And you didn't quantify the damages 

that might arise from Versata's claim that it 

was denied its audit rights, correct? 

A. Correct.

Q. And the same is true with respect to Ford's 

alleged continued use of Versata's trade 

secrets without a license, correct?

A. As we just talked about a moment ago, I 

would envision that claim to be subsumed in 

the quantifications that I prepared in 

connection with my assessment of the trade 

secret misappropriation damages.

Q. You haven't separately determined for each 

of those sections the monetary value or the 

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56468 Filed 02/11/22 Page 13 of 30
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Year Document Location Text

monetary damages for each of those claims in 

respect to the breach of contract claims? 

A. In isolation, that's correct.

2018

Versata’s 

Objections to 

Ford’s 

30(b)(6) 

Deposition 

Notice (Ex. 

B)

Topic 

92, p. 13; 

p. 23 

“All harm and damages Versata claims to have 

incurred due to Ford’s alleged patent 

infringement, alleged trade secret 

misappropriation, alleged copyright infringement, 

alleged breach of contract, and alleged 

conversion, and all factual bases for that 

assertion.”

“OBJECTION: Versata objects that this topic 

seeks expert testimony and is therefore not a 

proper topic for a rule 30(b)(6) deposition.”

B. Versata’s belated supplemental interrogatory answer 

continued to rely on experts for contract damages and 

added a new theory

Discovery closed on March 12, 2019. At 7:22 p.m. that evening, Versata 

served another supplemental response to interrogatory 23. In that response, Versata 

incorporated the “expert reports and deposition testimony of Craig Elson.” (Ex. N, 

Versata’s Third Suppl. Resp. to Int. No. 23, pp. 42, served March 12, 2019.)

In his 2018 report, Elson (Versata’s trade secret damages expert) mentions

contract damages only in footnote 11, where he says his trade secret reasonable 

royalty “reflect[s]” contract damages:

We have been advised that this unauthorized use constitutes 

misappropriation. Economically, if such unauthorized use is 

alternatively (or additionally) considered a breach of existing license 

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agreements, reasonable royalty damages as calculated herein would 

also be reflective of damages under that construct.

(Ex. K, p. 7.)4 Elson never explains how or why the trade secret damages “reflect[]” 

the contract damages. Elson did not link his trade secret damage calculation, which 

is based on Ford’s alleged use of the trade secrets in PDO R1, to Versata’s two 

alleged sources of contract damage, “reverse engineering” and “disclosure of 

Versata’s confidential information.” Nor did Elson discuss damages based on “the 

fee that [Versata] would have charged” Ford.

Besides incorporating Elson’s 2018 report, Versata’s belated supplemental 

interrogatory answer asserted:

Regarding Versata’s breach of contract claim, Versata further states 

that the evidence shows that Ford was willing to pay $17 million for a 

one-year extension of its license to ACM and MCA under the MSSA 

and Versata is entitled to recover at least this amount for every year or 

part of a year that Ford continued to use Versata confidential 

information in violation of its license. In addition, Versata is entitled to 

the reasonable royalty damages calculated by Mr. Elson and Mr. 

Bokhart for continued use of Versata’s trade secrets and patented 

technologies in violation of the license.

(Ex. N, Versata’s Second Suppl. Resp. to Int. No. 23, pp. 42-43.)

This untimely supplemental response adds two new ways of computing 

contract damages that Versata had never disclosed before: (1) some (unstated) 

4 This statement echoes footnote 4 of Elson’s (now excluded) 2017 expert report:

“[T]he damages associated with certain of Versata's breach of contract claims 

(assuming liability) are subsumed in the trade secret misappropriation damages 

quantified herein.” (Ex. J, p. 3, fn. 4.)

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amount at or above $17 million/year and (2) the reasonable royalty damages 

calculated by Mr. Elson and Mr. Bokhart. Versata still did not quantify its total 

contract damages, nor did it causally link the two alleged breaches (reverse 

engineering and disclosure) to the new ways of computing damages. Versata also 

supplied no evidence to support its claim that “Ford was willing to pay $17 million 

for a one-year extension of its license.”

In July 2019, the Court excluded Versata’s 2018 damages expert reports.

(ECF No. 678.) Ford then moved for summary judgment on Versata’s contract 

damages claims “because Versata failed to disclose a timely or proper damages 

theory.” (ECF No. 707, PageID.53017.) Versata answered, first by asserting that it 

is entitled to “nominal damages” (ECF No. 712, PageID.53515), then by making 

never-before-disclosed arguments for actual damages without linking the arguments 

to (or even mentioning) the alleged improper “disclosure” and “reverse engineering” 

that Versata claimed caused damage. (ECF No. 712, PageID.53518-21). Without 

even identifying the alleged breach, Versata argued the Ford-Versata contracts are

“important evidence of whether and to what extent Versata was (and continues to 

be) damaged by Ford's breach.” (Id. at PageID.53518.) Versata vaguely referred to

specific amounts (including “‘8-1/2 million,’ which Ford agreed to pay” and “at least 

$17 million”) but it did not say how much Versata was seeking as contract damages.

(Id. at PageID.53519.) And at the hearing on the motion, Versata said Ford would 

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first learn the amount during closing argument: “[T]he amount of the damages ..., 

in the absence of expert testimony, is an issue for jury argument. A lawyer is going 

to have to get up, summarize the facts, summarize the amounts that were paid over 

time and ask the jury for a number based on those facts.” (ECF No. 723, 

PagelD.53917.)

The Court heard Ford’s summary judgment motion with Versata’s motion for 

reconsideration of the Court’s Order excluding Messrs. Elson and Bokhart. (ECF 

No. 723.) Ultimately, the Court concluded Ford’s motion was moot because the 

Court reinstated “Scenario 1” of the Elson/Bokhart 2018 expert report. (ECF 

No. 724.)

C. Ford attempted to resolve this matter without Court 

intervention

During a December 2021 status call, Ford raised Versata’s nondisclosure of 

contract damages. The Court instructed Ford to identify for Versata what Ford 

believed was not disclosed and for Versata to identify where it believed the 

information was disclosed. (ECF No. 800, PageID.56439.) The parties engaged in 

that dialogue. Versata claimed it had “disclose[d] breach of contract damages in Mr. 

Elson’s most recent expert report.” (Ex. O, Mitby 1/7/22 Ltr., p. 1.) Specifically, 

according to Versata, Elson said, “ ‘reasonable royalty damages’ are the appropriate 

measure of damages for ‘breach of existing license agreements,’ ” citing “Report, p.

7.” (Id.) but that statement appears nowhere in Elson’s report. The only mention of 

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“breach” on page 7 appears in footnote 11, where Elson (and Bokhart—it is a joint 

report) say the report’s “reasonable royalty damages” calculation for trade secret and 

patent damages is “reflective of” breach of contract damages. (Ex. K, p. 7, n. 11.) 

The experts do not explain the phrase “reflective of,” never mention “breach” again, 

and never quantify breach of contract damages.

In the letter, Versata also claimed that Elson said, on page 71, that “the 

‘royalty rate’ is ... ‘equal to $17 million annually.’ ” (Ex. O, Mitby 1/7/22 Ltr., p. 1.) 

That statement is incorrect. Elson’s only discussion of a “royalty rate” on page 71 is 

for historical payments Ford made: “[T]he royalty rate for the period 2011 through 

2014 is set equal to the actual license rates / payments from Ford to Versata over 

that period for the ACM and MCA software[.]” (Ex. K.) The “actual license rates” 

paid by Ford for “the ACM and MCA software” in 2011–2014 ranged from $8.95 

million to $10.95 million. (See id., Ex. 6.1 to Report.) Elson mentions Versata’s $17 

million figure in the next paragraph of the report, but he does not call that figure a 

“royalty rate.” Instead, he says, “The $17 million annual payment is based on the 

annual amount at which Versata offered to license ACM and MCA to Ford (on a 

restricted basis) in connection with actual negotiations that took place in 2014.” (Ex. 

K, p. 71.) As Michael Richards, Versata’s president, admitted, Ford refused 

Versata’s $17 million offer:

Q. ... Versata wanted to charge Ford more money; is that accurate?

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A. Yes.

Q. And Ford wasn’t willing to pay more money and was not willing to 

go to the cloud, as we talked about before, so Versata terminated?

A. Well, they were not willing to negotiate new terms, that's correct. 

Which would have been a price increase, yes.

* * *

Q. That's why I asked that general – in general, Versata wanted more 

money for what Ford was currently using, and Ford wasn’t ultimately 

willing to pay more. We can go back and figure out exactly what the –

A. Here's what – no. I would say it this way. Okay? Versata made a 

proposal to Ford of what they wanted – we wanted in terms of 

compensation for our product. Ford never countered. They insisted 

on the 8-1/2 million. So –

Q. Plus 3?

A. To my – I don’t have anything in – I don’t have anything in writing 

that says that; but, regardless, we wouldn't have accepted that.

Q. That was a question mark.

A. Okay. No, I don’t – there was – 8-1/2 million is the only number 

that I remember being suggested to me. I have some written 

communications I can give you from Baxter, 8-1/2 million.

* * *

Where we might have ended up, I don’t know. We might have –

we might have gone up, we might have stayed the same. We might have 

come down. We didn’t get to that point.

(Ex. P, Richards Dep. at 131:4-12, 132:4-22; 133:4-9.)

Elson did not say, on page 71 or elsewhere, $17 million/year is the “reasonable 

royalty damages” that are “reflective of” breach damages. Instead, on page 72 of his 

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report, Elson computes “reasonable royalty damages” (for trade secrets only) of

$11.9 million/year. (Ex. K, Table 3.)

In a return letter, Ford pointed out these flaws in Versata’s arguments (Ex. Q, 

1/14/22 Lewry Ltr.). Versata never answered. 

Ford now brings this motion in limine to prevent Versata from relying on 

undisclosed contract damages theories and calculations. Neither Versata nor its 

experts have ever disclosed a contract damages theory that causally links damages 

to the two breaches it alleged resulted in damage: “reverse engineering” and 

“disclosure” of confidential information. And neither Versata nor its experts have 

ever quantified the “the fee that [Versata] would have charged” Ford for these rights. 

Even today, despite repeated requests, Ford does not know what damages Versata 

will seek for the alleged breach of contract, which, according to Versata, Ford will 

learn during closing argument.

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II. ARGUMENT

A. Michigan law requires a party seeking breach of 

contract damages to show a causal link between the 

damages and the alleged breach

“In a breach of contract case, the plaintiff must establish a causal link between 

the asserted breach of contract and the claimed damages.” Gorman v. Am. Honda 

Motor Co., 302 Mich. App. 113, 118–19, 839 N.W.2d 223, 227 (2013); Chelsea Inv.

Grp. v. City of Chelsea, 288 Mich. App. 239, 254, 792 N.W.2d 781, 792 (2010) (“To 

recover in a breach of contract action, a plaintiff must prove that the defendant's 

breach was the proximate cause of the harm the plaintiff suffered.”). As the Sixth 

Judicial Circuit Court of Michigan explained:

[T]o establish a causal link between an asserted breach of contract 

and the claimed damages, the Plaintiff must prove that the actions or 

omissions of the Defendants were both a proximate cause (i.e., legal 

causation) and cause in fact (i.e., "but for" cause) of her claimed 

damages. Chelsea Inv Group v Chelsea, 288 Mich App 239, 254 (2010) 

(“To recover in a breach of contract action, a plaintiff must prove that 

the defendant's breach was the proximate cause of the harm the plaintiff 

suffered”); [additional citation omitted].

Rochlani v. Aaron, 2016 Mich. Cir. LEXIS 1147, *6 (2016).

“There may be 2 or more plausible explanations as to how an event happened 

or what produced it; yet, if the evidence is without selective application to any 1 of 

them, they remain conjectures only.” Gorman, 302 Mich. App. at 119, quoting 

Kaminski v. Grand Trunk W. R. Co., 347 Mich. 417, 422, 79 N.W.2d 899 (1956).

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B. Versata repeatedly Ford told during discovery that only 

Versata’s experts would quantify and supply evidentiary 

support for contract damages 

From the day Versata served its initial disclosures in 2015 until discovery 

closed in 2019, Versata consistently and repeatedly told Ford that Ford would learn 

Versata’s contract damages calculations in Versata’s expert reports. (See Table 1, 

above.) Versata only disclosed two causes of contract damages, “reverse 

engineering” and improper “disclosure” of confidential information. (Ex. A, 

Versata’s Second [sic-First] Suppl. Resp. to Int. No. 23, pdf p. 8.) Versata said the 

damage would be measured by “the fee that it would have charged to give Ford a 

right to [1] reverse engineer Versata’s software or [2] to disclose Versata’s software 

to unauthorized employees and contractors[.]” (Id., bracketed numbers added.)

Versata refused to quantify or supply evidence of its damages, saying, “Damages 

calculations and evidence material to those calculations are the domain of expert 

testimony[.]” (Id.)

Ford awaited Versata’s damages expert reports, which Versata initially served 

in 2017. But the only statement about contract damages appeared in Elson’s report, 

where he said the contract damages “are subsumed in the trade secret 

misappropriation damages.” (Ex. J, Elson 2017 Report, p. 3, fn. 4.) When deposed, 

Elson confirmed that contract damages are subsumed in the trade secret damages 

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and that he did not separately compute any contract damages. (Ex. L, 2017 Elson 

Dep., pp. 9-11.) 

The Court excluded Elson’s 2017 report but allowed him to prepare a second 

report. In his 2018 report, Elson again mentioned contract damages only in a

footnote, saying the report’s “reasonable royalty calculation” is “reflective of” 

contract damages. (Ex. K, 2018 Elson Report, p. 7, fn. 11.) Elson did not explain 

what “reflective of” means and did not compute damages linked to the alleged 

“reverse engineering” and “disclosure” contract prohibitions.

Fact and expert discovery closed March 12, 2019. At 7:22 p.m. that day, 

Versata served a supplemental response to Interrogatory No. 23 where it 

incorporated the “expert reports and deposition testimony of Craig Elson.” (Ex. N, 

Versata’s Second Suppl. Resp. to Int. No. 23, p. 42.) Versata also asserted, contrary 

to its president’s testimony and without evidentiary support, that Ford was “willing 

to pay $17 million for a one-year extension of its license,” so Versata “is entitled to 

recover at least this amount for every year or part of a year that Ford continued to 

use Versata confidential information in violation of its license.” (Id.) Besides lack 

of evidence, Versata’s supplemental answer did not tell Ford how Versata expected 

to meet the “causal link” and “but for” requirements or even the dollar value of “at 

least this amount.” In addition, Versata, seemingly abandoned the “reverse 

engineering” and “disclosure” breaches it had asserted throughout discovery, 

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belatedly converting its contract theory to an undefined “use” of confidential 

information breach.

“One of the primary objectives of the discovery provisions embodied by the 

Federal Rules of Civil Procedure is elimination of surprise in civil trials.” Erskine v. 

Consol. Rail Corp., 814 F.2d 266, 272 (6th Cir. 1987). Versata’s refusal to quantify 

and supply evidence of actual contract damages during discovery violates this 

primary objective. As Versata told the Court at the December 15, 2019 hearing, it 

plans to ambush Ford at trial because Versata believes “the amount of the damages 

... is an issue for jury argument,” and Ford will learn the amount when Versata 

“ask[s] the jury for a number.” (ECF No. 723, PagelD.53917.) Versata’s conduct is 

improper. Erskine, 814 F.2d at 272 (“The aggregate of defendant's conduct 

throughout the course of pretrial proceedings resulted in precisely the sort of ‘trial 

by ambush’ that the Federal Rules were designed to prevent.”)

C. Versata’s Rule 26(a) and discovery disclosures do not 

permit Versata to seek “at least” $17 million/year for 

belatedly alleged “use” of confidential information

Nowhere in Versata’s Rule 26(a) initial disclosures or in its discovery 

responses did Versata disclose (1) the amount of damages it seeks for breach of 

contract, (2) the evidentiary support for that (undisclosed) amount, or (3) how it 

causally links damages to the only damages bases it disclosed before discovery 

ended, namely “reverse engineering” and “disclosure” of confidential information. 

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Ford expressly challenges Versata to identify where it made these three disclosures, 

which are essential to Versata’s contract damages claim.

Failure to link damages to the alleged breach results in exclusion of the 

contract claim. Gorman v. Am. Honda, 302 Mich. App. 113, 118-19 (2013) 

(affirming grant of summary judgment because there was no evidence of a causal 

link between the claimed damages and the breach of contract). A motion in limine is 

the proper vehicle for exclusion of claims not disclosed in discovery. See, e.g., MLC 

Intellectual Prop., LLC v. Micron Tech., Inc., No. 14-cv-03657-SI, 2019 U.S. Dist. 

LEXIS 110882, 2019 WL 2847285, *14 (N.D. Cal. July 2, 2019), aff’d, 10 F.4th 

1358 (Fed. Cir. 2021) (granting motion in limine to exclude undisclosed damages 

theory).

Affirming the district court’s grant of the motion in limine, the Federal Circuit 

explained, “Under Rule 37(c)(1), when ‘a party fails to provide information or 

identify a witness as required by Rule 26(a) or (e), the party is not allowed to use 

that information or witness to supply evidence on a motion, at a hearing, or at a trial, 

unless the failure was substantially justified or is harmless.’ ” MLC, 10 F.4th at 1369.

Like Ford, the defendant in MLC, served an interrogatory asking for “the 

factual and legal basis and supporting evidence for ... [MLC's] contention that [it is] 

entitled to damages[.]” Id. Like Versata, MLC asserted “it was not required to 

disclose these specific facts and documents supporting its damages theory during 

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fact discovery because it ultimately disclosed them during expert discovery.” Id. 

There, MLC ultimately disclosed its damages theory and calculation in its expert 

report, but the district court excluded it nonetheless because “MLC did not properly 

disclose its claim that the Hynix and Toshiba licenses reflect a 0.25% rate, as well 

as the extrinsic documents relied on by Mr. Milani to show that the Hynix agreement 

reflects a 0.25% royalty rate.” Id. at 1370.

Here, Versata not only refused to disclose, in discovery, the facts and evidence 

supporting its contract damages (including the amount), Elson’s expert report has no 

such disclosure. The Federal Circuit found “unpersuasive” MLC’s argument that “it 

was outside of the district court's discretion to require MLC to identify which 

documents [its expert] would be using, how [its expert] would interpret those 

documents, and how [its expert] would use them to derive his reasonable royalty 

opinion.” Id. at 1371. The court noted, “Rule 26(a)(1)(A)(iii) requires parties 

seeking damages to provide in their initial disclosures ‘a computation of each 

category of damages’ and ‘the documents or other evidentiary material, unless 

privileged or protected from disclosure, on which each computation is based.’ ” Id.

Like Versata, MLC’s initial disclosures did not give the required information on 

damages.

The Federal Circuit also commended the use of contention interrogatories, 

like Ford’s Interrogatory No. 23, because they “serve an important purpose in 

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helping to discover facts supporting the theories of the parties. Answers to 

contention interrogatories also serve to narrow and sharpen the issues thereby 

confining discovery and simplifying trial preparation.” Id. at 1372, quoting Woods 

v. DeAngelo Marine Exhaust, Inc., 692 F.3d 1272, 1280 (Fed. Cir. 2012). It held 

MLC’s argument “undermines Rule 33 of the Federal Rules of Civil Procedure.” Id. 

Likewise, Versata’s answer to Interrogatory No. 23 did not “sharpen the issues,” nor 

did Versata’s belated final supplementation, which merely said Versata should get 

“at least that amount [$17 million/year]” in contract damages. Versata cited no 

documents, expert reports, or testimony to support its new theory.

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III. CONCLUSION

Versata has not enumerated its alleged contract damages. It has not causally 

linked damages to the two sources of damage it identified in discovery, “reverse 

engineering” and “disclosure” of confidential information or to any other alleged 

breach. Versata has not supplied evidence to support any contract damage claim at 

trial, including the belatedly asserted “at least this amount” theory served after the 

close of business the day discovery closed. The Court should prevent Versata from 

offering argument, testimony, or other evidence of contract damages, which Versata 

did not disclose during discovery.

Respectfully submitted, 

Dated: February 11, 2022 By: /s/ Thomas A. Lewry 

John S. LeRoy (P61964)

Thomas A. Lewry (P36399)

Christopher C. Smith (P73936)

Chelsea E. Pasquali (P77375)

Reza Roghani Esfahani (P83787)

1000 Town Center, 22nd Floor

Southfield, MI 48075

Tel.: 248-358-4400 / Fax: 248-358-3351

jleroy@brookskushman.com

tlewry@brookskushman.com

csmith@brookskushman.com

cpasquali@brookskushman.com

resfahani@brookskushman.com

James P. Feeney (P13335)

DYKEMA GOSSETT PLLC

39577 Woodward Ave, Suite 300

Bloomfield Hills, MI 48304

Case 2:15-cv-10628-MFL-EAS ECF No. 803, PageID.56483 Filed 02/11/22 Page 28 of 30
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Ph: 248-203-0841

jfeeney@dykema.com

Attorneys for Plaintiff, Ford Motor Co.

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CERTIFICATE OF ELECTRONIC SERVICE

I hereby certify that on February 11, 2022, I electronically filed FORD 

MOTOR COMPANY’S MOTION IN LIMINE AND SUPPORTING BRIEF 

TO PRECLUDE DEFENDANTS FROM RELYING ON CONTRACT 

DAMAGES THEORIES AND CALCULATIONS NOT DISCLOSED IN 

DISCOVERY along with Exhibits A-Q. 

Exhibits J and K were filed with the Clerk of the Court using the ECF 

System’s SEALED DOCUMENT EVENT which will send notification to all 

registered participants of the ECF System. I have also submitted copies of sealed 

Exhibits J and K via electronic means to counsel using the following information: 

Counsel for Defendants:

Versata Software, Inc., f/k/a Trilogy Software, Inc., 

Trilogy Development Group, Inc. and Trilogy, Inc.

AZA-Versata-Ford@AZALAW.COM

(which includes all the ECF Registered users)

 /s/ Thomas A. Lewry 

Thomas A. Lewry (P36399)

BROOKS KUSHMAN P.C.

Attorneys for Plaintiff

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