States v. Reed, 227 F.3d 763, 768 (7th Cir. 2000). According to plaintiffs, “[t]his case, first and
foremost, involves infringement and misappropriation of SUREF!ND's recovery audit functionality,
including, but not limited to, its confidential and proprietary recovery audit modules and the
proprietary business logic underlying the modules.” PRG-Schultz, 2003 WL 22232771, at *4.
Although plaintiffs claim the Evert case involved the “alleged misappropriation of client-specific
auditing techniques not at issue here — namely techniques PRG-Schultz’s predecessor in interest
(HS&A) had developed for Target,” the record does not support this contention. Pl. Motion at 4,
citing Pl. Ex. 1. Rather, the Evert complaint reveals similar allegations regarding the
misappropriation of confidential and trade secret information, including:

accounting and audit recovery business methodologies, audit principles and

procedures contained in HS&A’s Strategic Audit Processes guide; auditing routines,

algorithms and programs constituting and/or incorporated in HS&A software,

including, but not limited to HS&A’s SUREF!ND and DIRECTF!IND programs;

sales strategies and polices; product development information; financial and usage

reports; and customer lists.
PI. Ex. 1 at 23. Indeed, plaintiffs have not objected to defendants proffered deposition testimony,
either in a motion in limine or in the pretrial order, as irrelevant. Based on this record, plaintiffs’
motion must be denied.
B. Undisclosed Witnesses

Plaintiffs next move to bar Melissa Norton, Guy VanHolsbeeck and Will Yancy from
testifying because defendants failed to disclose them in their supplemental disclosures pursuant to
Fed. R. Civ. P. 26(e)(2). In response, defendants removed Yancy from their witness list.

Rule 26 requires a party to provide:

the name and, if known, the address and telephone number of each individual likely

to have discoverable information that the disclosing party may use to support its
claims or defenses . . . , identifying the subjects of the information.

4


As an initial matter, the court will not revisit defendants’ argument that plaintiffs’ damages
claim should be barred for their alleged failure to produce documents, See Minute Order dated July
31, 2003. Moreover, defendants have not established that plaintiffs’ claim for injunctive relief
renders their claim for lost profits moot. An award of lost profits may eliminate the need for
injunctive relief. See Minnesota Mining & Mfg. Co. v. Pribyl, 259 F.3d 587, 608-09 (7th Cir.
2001)(“plaintiff who has been compensated for lost future damages should not receive an injunction
against permanent use”). Permanent injunctive relief may be inappropriate if defendants establish
they would have been able to independently develop plaintiffs’ trade secret. Jd. at 609. See also
765 ILCS 1065/3 (“the injunction may be continued for an additional reasonable period of time in
appropriate circumstances for reasons including, but not limited to an elimination of the commercial
advantage that otherwise would be derived from the misappropriation”) Accordingly, defendants’
motion must be denied.

CONCLUSION

The parties’ motions in limine are denied.

October 20, 2003 ENTER:

Suzanngp. Conlon
United States District Judge



whom the testimony is now offered, or, in a civil action or proceeding, a
predecessor in interest, had an opportunity and similar motive to develop the
testimony by direct, cross, or redirect examination.
Although Rule 804(a) defines unavailability for purposes of the Rule 804(b), Fed. R. Civ. P.
32(a)(3){B) provides “a freestanding exception to the hearsay rule.” Ueland v. United States, 291
F.3d 993, 996 (7th Cir. 2002). Specifically, “[e]vidence authorized by Rule 32(a) cannot be
excluded as hearsay, unless it would be inadmissible even if delivered in court.” Jd

Under Rule 32(a)(3)(B):

The deposition of a witness, whether or not a party, may be used by any party for

any purpose if the court finds: that the witness is a greater distance than 100 miles

from the place of trial or hearing, or is out of the United States, unless it appears that

the absence of the witness was procured by the party offering the deposition.

Plaintiff's do not dispute that the deponents are located more than 100 miles from the courthouse.
Nor do plaintiffs contend that their absence (or distance) was procured by defendants. Therefore,
defendants satisfy the unavailability requirement of Rule 804(b)(1).

Defendants further demonstrate plaintiffs’ predecessor in interest, Howard Schultz &
Associates (“HS&A”), had an opportunity and similar motive to develop relevant testimony in
Evert. Asan initial matter, plaintiffs argue they were not parties to the Evert litigation. However,
Rule 804(b)(1) applies to matters involving a “predecessor at interest.” Plaintiffs admit they are a
predecessor in interest to HS&A. See, e.g., Pl. Motion at 2 (“These depositions were taken some
two years ago, however, in an unrelated case (Evert Litigation) involving PRG-Schultz’s
predecessor in interest, Howard Schultz & Associates International, Inc.”). Therefore, plaintiffs are
deemed to have had an opportunity to develop relevant testimony.

Moreover, plaintiffs had a similar motive. To determine whether similar motive exists,

“courts look to the similarity of issues and the purpose for which the testimony was given.” United

3



Fed. R. Civ. P. 26(a)(1)(A). A party must supplement or amend its disclosures if it learns that the
information previously disclosed or the response is “incomplete or incorrect and if the additional
corrective information has not otherwise been made known to the other parties during the discovery
ptocess or in writing.” Fed. R. Civ. P. 26(e)(1). To ensure compliance with these discovery
requirements, Rule 37 provides:

[a] party that without substantial justification fails to disclose information required

by Rule 26(a) or 26(c)(1) ... is not, unless such failure is harmless, permitted to use

as evidence at a trial .. . any witness or information not so disclosed.

Fed. R. Civ. P. 37(c)(1). “[T]Jhe sanction of exclusion is automatic and mandatory unless the
sanctioned party can show that its violation of Rule 26(a) was either justified or harmless.” Salgado
v. Gen. Motors Corp., 150 F.3d 735, 742 (7th Cir.1998).

Defendants claim they were justified in not disclosing Norton and VanHolsbeeck because
both were identified as possible witnesses during discovery. The advisory committee notes to Rule
26(e) provide in relevant part:

There is, however, no obligation to provide supplemental or corrective information

that has been otherwise made known to the parties in writing or during the discovery

process, as when a witness not previously disclosed is identified during the taking

of a deposition...

Contrary to defendants’ position, their inquiries about Norton and VanHolsbeeck during discovery
fall short of identifying them as possible witnesses.

Nevertheless, defendants’ tardy failure to identify Norton and VanHolsbeeck is not
prejudicial. Defendants intend to present Norton’s testimony through a summary of her deposition
in Evert. Plaintiffs had the opportunity to counterdesignate relevant portions of Norton’s testimony

in the summary of her deposition testimony. VanHolsbeeck, who resides in Spain, is on defendants’

may call witness list. If defendants actually decide to call VanHolsbeeck to testify, plaintiffs are

5


‘Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Suzanne B. Conlon than Assigned Judge
CASE NUMBER 03 C 1867 DATE 10/20/2003
CASE PRG-SCHULTZ INTL, et al. vs. KIRIX CORP., et al.
TITLE
[ln the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented,]
DOCKET ENTRY:
(1) a Filed motion of [ use listing in “Motion” box above,]
(2) Oo Brief in support of motion due _
QB) o Answer brief to motion due, . Reply to answer brief due.
(4) Oo Ruling/Hearing on set for at
(5) QO Status hearing[held/continued to] [set for/re-set for] on set for at.
(6) im) Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) o Trial[set for/re-set for] on at
(8) o [Bench/Jury trial] [Hearing] held/continued to at
(9) QO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) CLocal Rule 41.1 CFRCP41(a)\(1) OO FRCP41(a)(2).
ao) wf [Other docket entry] Plaintiffs’ motions in limine to bar defendants’ use of depositions taken in
unrelated litigation [115-1], the testimony of undisclosed witnesses [114-1], defendants’ expert from
testifying regarding misappropriation of plaintiffs’ trade secrets [118-1] are denied. Defendants’ motion
in limine to bar the testimony of plaintiffs’ damages expert, Neil N. Lapidus, [116-1] and to bar plaintiffs’
claim for damages [116-2] is denied. ENTER MEMORANDUM OPINION AND ORDER.
dal (For further detail see order attached to the original minute order.]
No notices required, advised in open court. “Document
. Number
No notices required. vummber ofratices
Notices mailed by judge’s staff. T94
Y_ | Notified counsel by telephone. y 2 ' 2003
Docketing to mail notices. qd
Mail AO 450 form. ogferins depty initials Wy
Copy to judge/magistrate judge /
date muted novice
courtroom
cB deputy’s
initials
central Gla conte nailing deputy initials



granted leave to depose him in Chicago prior to his testimony. Therefore, plaintiffs’ motion is
denied provided that defendants produce VanHolsbeeck for a deposition before he is called as a
witness.
Cc. Expert Testimony

Without citing a procedural basis for their motion, plaintiffs move to bar defendants’
proposed expert, David Beazley, from testifying as an expert on plaintiffs’ trade secret
misappropriation claim. According to plaintiffs, Beazley does not have an opinion on whether
defendants misappropriated a trade secret. However, an expert’s testimony need not relate to the
ultimate issue to be relevant under Rule 702. Smith v. Ford Motor Co.,215 F.3d 713, 721 (7th Cir.
2000). Plaintiffs do not challenge Beazley’s credentials, the reasoning or methodology underlying
his conclusions or whether his testimony will assist the jury in understanding the evidence or
determining a fact in issue. See Chapman v. Maytag Corp., 297 F.3d 682, 687 (7th Cir. 2002),
citing Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993)(outlining appropriate
challenges to admission of expert testimony). Absent a valid basis for excluding Beazley’s
testimony, plaintiffs’ motion must be denied.
UII. Defendants’ Motion in Limine

Without citing a procedural basis for their motion, defendants move to bar plaintiffs’
proposed expert, Neil M. Lapidus, from testifying as an expert on lost profits at trial. According
to defendants, Lapidus’ testimony is fundamentally flawed because lost profits will be rendered
moot by injunctive relief. In addition, defendants move to bar plaintiffs’ claim for damages based

on their alleged failure to produce relevant documents. Both arguments lack merit.



IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS y
EASTERN DIVISION Gp.
yb
2, @
PRG-SCHULTZ INTERNATIONAL, INC. v
and PRGRS, INC, <p
No. 03 C 1867
Plaintiffs,
Suzanne B. Conlon, Judge
Vv.

KIRIX CORPORATION, NATHANAEL B.
WILLIAMS, AARON L. WILLIAMS, DAVID Z.
WILLIAMS, and BENJAMIN I. WILLIAMS,

Defendants.

MEMORANDUM OPINION AND ORDER

PRG-Schultz International, Inc. and PRGRS, Inc. (collectively, “plaintiffs”) sue Kirix
Corporation (“Kirix”) and four former employees, Nathanael, Aaron, David and Benjamin Williams
(collectively, “the individual defendants”) for copyright infringement in violation of the Copyright
Act of 1976, 17 U.S.C. § 101 ef seq. (Count I) and trade secret misappropriation in violation of the
Illinois Trade Secrets Act (“ITSA”), 765 ILCS 1065/1 et seg. (Count II). Plaintiffs also bring claims
for common law breach of contract against Nathanael (Counts III and IV) and Aaron (Count V)
individually. The court granted defendants’ motion for summary judgment on plaintiffs’ copyright
infringement claim, but set the case for trial on their trade secret misappropriation and breach of
contract claims. See PRG-Schultz Int'l, Inc. v. Kirix Corp., 2003 WL 22232771 (N.D. Ill. Sept. 22,

2003). The parties move in limine to bar evidence at trial.

a



DISCUSSION

I. Standard of Review

The background of this case is discussed in the court’s order addressing defendants’
summary judgment motion. Evidence is excluded on a motion in limine only if the evidence is
clearly inadmissible for any purpose. See Hawthorne Partners v. AT&T Technologies, 831 F. Supp.
1398, 1400 (N.D. Ill. 1993). Motions in limine are disfavored; admissibility questions should be
ruled uponas they arise at trial. Jd. Accordingly, if evidence is not clearly inadmissible, evidentiary
rulings must be deferred until trial to allow questions of foundation, relevancy and prejudice to be
resolved in context. Jd. at 1401. Denial of a motion in limine does not indicate evidence
contemplated by the motion will be admitted at trial. Instead, denial of the motion means the court
cannot or should not determine whether the evidence in question should be excluded before trial.
United States v. Connelly, 874 F.2d 412, 416 (7th Cir. 1989).
Ii. Plaintiffs’ Motions in Limine
A. Depositions

Plaintiffs move to bar defendants’ use of summaries of 14 depositions taken in Howard
Schultz & Associates Int’l, Inc. v. Evert Software, Inc.,01 C 547 (D. Mn.) as inadmissible hearsay.
Defendants claim Fed. R. Evid. 804(b)(1), in conjunction with Fed. R. Civ. P. 32(a)(3)(B), permits
the use of these depositions at trial.

Rule 804(b)(1) provides:

(b) Hearsay exceptions. The following are not excluded by the hearsay rule if
the declarant is unavailable as a witness:

(1) Former testimony. Testimony given as a witness at another hearing of the
same or a different proceeding, or in a deposition taken in compliance with
law in the course of the same or another proceeding, if the party against

2