TO BE FILED UNDER SEAL 

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IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

T-NETIX, INC., 

 Plaintiff/Counter-Defendant, 

v. 

VALUE-ADDED 

COMMUNICATIONS, INC. 

 Defendant/Counter-Plaintiff, 

v. 

SECURUS TECHNOLOGIES, INC. 

 Counter-Defendant. 

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 Case No. 3:05-CV-0654-D 

ECF 

 

GRUBER HURST’S RESPONSE AND MEMORANDUM OF LAW IN OPPOSITION TO 

VALUE-ADDED COMMUNICATIONS, INC.’S OBJECTIONS TO THE UNITED STATES 

MAGISTRATE JUDGE’S NOVEMBER 5, 2013 AMENDED FINDINGS, CONCLUSIONS AND 

RECOMMENDATIONS 

Gruber Hurst Johansen Hail Shank, LLP (“Gruber Hurst”) files this Response and 

Memorandum of Law in Opposition to Value-Added Communications, Inc.’s Objections to the 

United States Magistrate Judge’s November 5, 2013 Amended Findings, Conclusions and 

Recommendations [Doc. #358]. 

I. 

SUMMARY OF GRUBER HURST’S POSITION 

In her Amended Findings, Conclusions and Recommendations [Doc. #356] (“Amended 

Findings”), United States Magistrate Judge Toliver correctly made three critical determinations 

that defeat Defendant’s Application for Order to Show Cause [Doc. #202] (“Contempt Motion”): 

(1) that Value-Added Communications, Inc. (“VAC”) is judicially estopped from arguing 

that Gruber Hurst is bound by the March 3, 2006 Protective Order (“Protective Order); 

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(2) that Gruber Hurst substantially complied in good faith with United States Magistrate 

Judge Sanderson’s April 16, 2008 directive to return documents, including the McAlexander 

Report, to Bell, Nunnally and Martin, LLP (“Bell Nunnally”); and 

(3) that Gruber Hurst acted in good faith at all times in this matter, with the result that no 

basis exists for holding Gruber Hurst in contempt under the Court’s inherent power. 

In summary, Judge Toliver correctly found that Gruber Hurst’s unknowing retention in 

2008 and inadvertent production in 2010 of the McAlexander Report1 were honest mistakes that 

fall far short of contempt of court. Accordingly, this Court should adopt the Amended Findings, 

deny Defendant’s Contempt Motion, and grant Gruber Hurst’s Motion Seeking Leave to Purge 

McAlexander Rebuttal Report [Doc. #263] (“Motion for Leave”). 

II. 

ARGUMENT AND AUTHORITIES 

A. Magistrate Judge Toliver Correctly Found Judicial Estoppel 

Judge Toliver correctly found that VAC is judicially estopped from arguing that Gruber 

Hurst is subject to the Protective Order or should be held in contempt for violating it. VAC 

intentionally argued in 2008 that Gruber Hurst is not a party to the Protective Order and that, 

therefore, Gruber Hurst should not have the McAlexander Report. Judge Toliver correctly found 

that “VAC’s current position is plainly inconsistent with its earlier position that Gruber Hurst 

was not T-Netix/Securus’s counsel and not entitled to receive confidential documents under the 

Agreed Protective Order.” Am. Findings at 15-16 (VAC-App. 645-46). Judge Toliver also 

correctly found that Judge Sanderson accepted VAC’s earlier position and that VAC did not take 

that earlier position inadvertently. Id. Consequently, the three necessary elements of judicial 

estoppel are met. See, In re Oparaji, 698 F.3d 231, 235-36 (5th Cir. 2012). 

 

1 In this Response, Gruber Hurst adopts the definitions of capitalized terms contained in VAC’s 

Memorandum (Doc. #358).

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VAC’s tortured explanation of why its current position is not inconsistent with its prior 

position is untenable. VAC’s prior argument rested squarely on the assumption that Gruber Hurst 

was not entitled to retain a copy of the McAlexander Report because Gruber Hurst “was not 

within the scope of the Agreed Protective Order.” Am. Findings at 15 (VAC-App. 645). As 

Judge Toliver rightly held, if Gruber Hurst is not within the scope of the Protective Order, it 

cannot be subject to contempt for violating it. Am. Findings at 16 (VAC-App. 646).2

B. Judge Toliver’s Recommendation that Gruber Hurst Not Be Held in Contempt 

Should be Accepted

1. Gruber Hurst Should Not Be Held In Contempt as a Non-Party 

A non-party to the Protective Order, such as Gruber Hurst, cannot be held liable for its 

violation absent a finding that the non-party “knowingly aids, abets, or conspires with another to 

evade an injunction or order of a court . . . .” Waffenschmidt v. MacKay, 763 F.2d 711, 726 (5th 

Cir.1985). 

VAC has presented no any evidence that establishes aiding and abetting or conspiracy 

following the hearing before Judge Sanderson. For example, VAC presented no evidence that: 

(1) the Securus Parties knew Gruber Hurst had retained the McAlexander Report after the April 

2008 hearing; (2) the Securus Parties knew that Gruber Hurst intended to and did produce the 

McAlexander Report in the Combined/Pinnacle litigation; and (3) there was any collaboration 

between Gruber Hurst and the Securus Parties after April 2008 regarding the retention or 

production of the McAlexander Report. Indeed, Judge Toliver correctly found that: 

VAC did not present any evidence that Gruber Hurst “acted with” or “actively 

aided or abetted” T-Netix/Securus, Reinhold, Smith, or anyone at the Pittman or 

Bell Nunnally law firms to violate the Agreed Protective Order by disseminating 

 

2 Judge Toliver also correctly found that VAC is judicially estopped from contending that Gruber Hurst is 

bound by the Protective Order by reason of Mr. Tautfest’s execution of Exhibit A. Am. Findings at 16 

(VAC-App. 646); see also, Gruber Hurst’s Response to VAC’s Closing Argument [Doc. #349] at 2-3.

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the McAlexander Report to opposing counsel in the Combined and Pinnacle 

Action or in continuing to retain the Report in electronic form thereafter. 

Am. Findings at 19 (VAC-App. 649). On this critical issue, Judge Toliver found the testimony of 

Gruber Hurst partner, Tony Magee, “credible in all material respects.” Id. 

2. Gruber Hurst Is Not Subject to Contempt By Reason of Being “Legally Identified” 

With the Securus Respondents 

Judge Toliver correctly rejected VAC’s “legally identified” argument for two reasons. 

First, Additive Controls & Measurement Systems, Inc. v. Flowdata, Inc., 154 F.3d 1345 (Fed. 

Cir. 1998), does not stand for the principle that a “non-party can be found in contempt without a 

finding that he actively participated with the party to violate the order.” VAC Mem. at 9 (citing

154 F.3d 1345, 1353 (Fed Cir. 1998). Rather, the opinion states that “in the Fifth Circuit” finding 

a non-party in contempt requires “active concert and participation [with an enjoined party].” 154 

F.3d at 1353. Additive Controls also noted that good faith is a defense in the Fifth Circuit and 

ultimately found no contempt because the facts did “not suggest knowing complicity with [an 

enjoined party].” Id. at 1353-54. 

Second, the Quinter decision relied on by VAC is not binding on this Court and is 

distinguishable from the present case. That decision applied a protective order against an expert 

witness in the case because the witness was “legally identified” with the enjoined party. Quinter 

v. Volkswagen of Am., 676 F.2d 969, 972 (3rd Cir. 1982). However, a party is “legally identified” 

with another party expressly named in a court decree and, therefore, bound by the decree only if 

that party is “so identified in interest with those named in the decree that it would be reasonable 

to conclude that [his] rights and interests have been represented and adjudicated in the original 

injunction proceedings.” Additive Controls, 154 F.3d at 1532. VAC has not proved that Gruber 

Hurst was “legally identified” with the Securus Respondents, in this sense, when it inadvertently 

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retained and disseminated the McAlexander Report. In fact, Judge Toliver found that the relevant 

actions of Gruber Hurst and the Securus Respondents were not concerted at all. See, Am. 

Findings at 19-20 (VAC-App. 649-50). 

Putting aside the fact that VAC offers no reason why its “legally identified” theory 

should supplant controlling Fifth Circuit case law, VAC’s argument is another instance of VAC 

attempting to take inconsistent positions. As Judge Toliver noted, VAC has consistently argued 

that Gruber Hurst should not be considered counsel for Securus/T-Netix for purposes of the 

Protective Order and is not entitled to have access to confidential documents. Am. Findings at 16 

(VAC-App. 646). So, VAC is judicially estopped from now arguing that Gruber Hurst is, as 

counsel, “legally identified” with Securus/T-Netix for purposes of the Protective Order. Gruber 

Hurst either is or is not “counsel” for purposes of the Protective Order. If Gruber Hurst is 

“counsel,” then it is entitled to possess the McAlexander Report under the Protective Order. 

3. The Protective Order Allows Gruber Hurst to Retain the McAlexander Report 

Even if Gruber Hurst is subject to the Protective Order, Gruber Hurst was always 

permitted to retain the McAlexander Report. In fact, Gruber Hurst has always asserted that it is a 

party to the Protective Order and, as such, is entitled to the McAlexander Report and other 

documents under Section 26 of the Protective Order (providing that counsel shall be entitled to 

maintain copies of all written discovery requests and responses).3

C. Gruber Hurst Substantially Complied With Judge Sanderson’s Directive 

Judge Toliver correctly found that “Gruber Hurst made ‘in good faith’ all reasonable 

efforts to comply’ with Judge Sanderson’s directive to return the outstanding confidential 

documents.” Am. Findings at 26 (VAC-App. 656). Judge Toliver considered the live testimony 

 

3 Gruber Hurst respectfully adopts and incorporates into this Response the arguments made on this point 

at pages 4-6 of Gruber Hurst’s Response to VAC’s Closing Argument [Doc. 349]. 

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of Eric Tautfest and Lisa Miller regarding their efforts to locate and delete the documents and 

stated: “[t]he Court believes these efforts to be reasonable.” Am. Findings at 27 (VAC-App. 

657). Judge Toliver concluded: “Gruber Hurst was in substantial compliance with Judge 

Sanderson’s directive and should not be subject to sanctions in that regard.” Id. VAC has offered 

no sound reason why this Court should not adopt Judge Toliver’s finding in this regard. 

D. A Contempt Sanction Under the Court’s Inherent Authority Is Not Appropriate 

Judge Toliver correctly found that Gruber Hurst acted in good faith throughout. 

Therefore, a contempt sanction under the Court’s inherent authority is not appropriate. VAC 

diverts attention away from Gruber Hurst’s substantial compliance with Judge Sanderson’s 

directive in 2008 to the events in 2010 when the McAlexander Report was inadvertently 

produced and clawed back in the Combined and Pinnacle lawsuits.4

 Those events in 2010 do not 

constitute violation of Judge Sanderson’s directive, which was simply to return the documents to 

Bell Nunnally in 2008. In any event, Judge Toliver thoroughly analyzed the testimony of Mr. 

Magee and Ms. Clouston concerning those events, found Mr. Magee’s testimony to be credible, 

and concluded correctly that those events did not permit the Court to exercise its inherent power 

to impose sanctions because Gruber Hurst did not act “in bad faith, vexatiously, wantonly, or for 

oppressive reasons.” See, Am. Findings at 28-30 (VAC-App. 658-60) and the cases cited at 28. 

Specifically, Judge Toliver determined, after hearing live testimony from the people 

involved, that Gruber Hurst did not make any misrepresentation to Judge Sanderson about its 

intent to return the documents and made reasonable efforts to do so. Am. Findings at 29 (VACApp. 659). Judge Toliver also found that Mr. Magee acted inadvertently in producing the 

McAlexander Report and acted in good faith in immediately snapping it back. Id. Furthermore, 

 

4 Judge Toliver correctly determined that VAC’s request for sanctions based on the Court’s inherent 

power based on Gruber Hurst’s alleged bad acts in 2010 is untimely. See, Am. Findings at 28 (VAC-App. 

at 658).

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Judge Toliver doubted whether Mr. Magee had a clear-cut obligation to inform VAC of the 

inadvertent production and found that his inaction did not constitute bad faith. Id. Judge Toliver 

also accepted as credible Mr. Magee’s explanation for holding on to the McAlexander Report 

after having snapped it back – id. at 30 (VAC-App. at 660) – and noted that “Gruber Hurst and 

Magee arguably would have been unwise to delete the McAlexander report during the pendency 

of the Combined and Pinnacle cases.” Id. 

Most significantly, after hearing live testimony from both Mr. Magee and Ms. Clouston 

on two occasions, Judge Toliver concluded that “the undersigned does not find that Magee 

affirmatively misled Clouston regarding the McAlexander Report.” Id. Thus, VAC’s persistent 

efforts to discredit Mr. Magee have been twice rejected by Judge Toliver. As Judge Toliver 

found, “VAC does not carry the high burden of proof necessary to sustain its request for sanction 

under the Court’s inherent authority.” Id. VAC has shown no sound reason why this Court 

should disturb this finding. 

Thus, for the reasons stated above, VAC has failed to prove by clear and convincing 

evidence that Gruber Hurst should be held in contempt for violating the Protective Order, 

whether as an allegedly aiding and abetting or conspiring non-party to the Protective Order or 

under the inherent authority of the Court. 

E. VAC Has Failed To Meet the Requirements For A Civil Contempt Order 

VAC has consistently failed, throughout these proceedings, to establish two fundamental 

requirements of a civil contempt order. A civil contempt order is inappropriate in this case 

because VAC has failed to establish that such an order is required either (a) to enforce Gruber 

Hurst’s compliance with the Protective Order through coercion, or (b) to compensate VAC for 

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unnecessary injuries or costs suffered because of contemptuous conduct. See, Travelhost, Inc. v. 

Blandford, 68 F.3d 958, 961-62 (5thCir. 1995). 

First, VAC does not seek to enforce compliance through coercion because there is no 

need for coercion. The McAlexander Report was clawed back and Gruber Hurst has been more 

than willing to hire an outside computer expert to permanently remove the McAlexander Report 

from its computer server. However, VAC has steadfastly opposed Gruber Hurst in this regard.5

Second, VAC may not recover compensation because it has offered no evidence at either 

of the contempt hearings establishing actual damage or costs subject to compensation. VAC 

unsuccessfully attempted to prove, through the testimony of Mr. Hodge and Ms. Clouston, that 

the McAlexander Report contains private, highly competitive information about VAC’s products 

disclosed during Mr. Hodge’s deposition, dissemination of which would cause harm to VAC. 

Mr. Hodge’s testimony does not prove that any damage actually occurred, however, because he 

admitted that has never read the McAlexander Report, so he does not know what, if any, of his 

deposition testimony is included in the report. Oct. Hrg. Tr. at 46-47 (VAC-App. 602-03). His 

deposition testimony also included non-confidential information about VAC’s publicly available 

products in addition to confidential information. Id. at 46 (VAC-App. at 602). Ms. Clouston 

presented no evidence that the report actually contained any of Mr. Hodge’s deposition 

testimony or other information whose disclosure would cause competitive harm to VAC. Id. at 

23-24 (VAC-App. at 579-80). Therefore, the Court should not infer that the McAlexander Report 

contains information whose public disclosure would actually harm VAC. Finally, VAC did not 

prove that the McAlexander Report, whatever it contained, was disclosed to any competitor of 

 

5 VAC’s steadfast opposition to Gruber Hurst’s efforts to purge the McAlexander Report from its 

computer server are documented in Gruber Hurst’s brief in support of the Motion for Leave and the 

exhibits thereto, which are incorporated in full herein. See, Doc. ##263, 263-1, 263-2, and 263-3. 

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VAC. Thus, VAC has failed to prove by clear and convincing evidence that Gruber Hurst’s 

alleged contempt has caused actual harm to VAC. 

Moreover, VAC’s dilatory approach to the filing of its Contempt Motion belies the 

existence of any actual harm. Ms. Clouston testified that she became aware in July 2011 of the 

August 2010 production of the McAlexander Report and that her firm informed VAC of this fact 

in October 2011. Clouston Decl. ¶¶ 16-17 (VAC-App. at 516). Thus, at the very least, VAC 

waited ten months before filing its Contempt Motion, which it filed on August 24, 2012, two 

years after its inadvertent production. [Doc #202.] VAC’s utter lack of diligence in filing its 

Contempt Motion after it became aware that the McAlexander Report had been inadvertently 

produced in August 2010 strongly supports an inference that the acts it complains about have not 

caused any actual damage to VAC and do not raise any significant risk of potential damage in 

the future. 

F. Gruber Hurst’s Motion for Leave Should Be Granted 

If, as Gruber Hurst respectfully urges, the Court rejects VAC’s objections to the 

Amended Findings and denies the relief sought in the Contempt Motion, there exists no basis for 

VAC’s continued opposition to Gruber Hurst’s Motion for Leave. 

III. 

CONCLUSION

For the foregoing reasons, VAC’s Objections to the Amended Findings should be, in all 

respects, overruled. In addition, Gruber Hurst respectfully requests that the Court accept the 

Amended Findings in all respects, deny the Contempt Motion, and grant Gruber Hurst’s Motion 

for Leave. 

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GRUBER HURST JOHANSEN HAIL SHANK, 

LLP 

By: s/ Mark A. Shank 

 G. Michael Gruber

 Texas Bar No. 08555400 

mgruber@ghjhlaw.com

 Mark A. Shank 

 Texas Bar No. 18090800 

mshank@ghjhlaw.com

 Anthony J. Magee

 Texas Bar No. 00786081 

amagee@ghjhlaw.com

 A. Shonn Brown 

Texas Bar No. 24007164 

sbrown@ghjhlaw.com

1445 Ross Avenue, Suite 2500

Dallas, Texas 75202

(214) 855-6800 – Telephone

(214) 855-6808 – Facsimile 

COUNSEL FOR GRUBER HURST 

JOHANSEN HAIL SHANK, LLP 

CERTIFICATE OF SERVICE 

On this 3rd day of December, 2013, I caused the foregoing document to be electronically 

filed with the Clerk of the Court for the Northern District of Texas, Dallas Division, using the 

case filing system of the Court.

I hereby certify that I have served all counsel of record electronically or by another 

manner by FED. R. CIV. P. 5(b)(2). 

s/ Anthony J. Magee 

Anthony J. Magee

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