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TiVo Research and Analytics, Inc. v. TNS Media Research LLC

United States District Court, S.D. New York

January 18, 2017

TIVO RESEARCH AND ANALYTICS, INC. d/b/a TRA, INC., Plaintiff,
v.
TNS MEDIA RESEARCH LLC d/b/a KANTAR MEDIA AUDIENCES and CAVENDISH SQUARE HOLDINGS, B.V.; WPP PLC; WPP GROUP USA, INC.; KANTAR GROUP LTD; KANTAR RETAIL AMERICA, INC., Defendants.

          OPINION & ORDER

          KATHERINE B. FORREST, District Judge

         Before the Court is a motion by TNS Media Research LLC (“Kantar”) for summary judgment on non-patent damages claims of TiVo Research and Analytics, Inc. (“TRA”). (ECF No. 282.) Defendants' argument is principally that the form in which this damages theory is offered-through the testimony of TiVo's CEO Naveen Chopra-is inadmissible.[1] In the absence of admissible evidence to support this theory, defendants argue, summary judgment is warranted.

         The Court sets forth the background to the motion below. Support for non-patent damages (or the lack thereof) has been raised in prior motion practice. Most notably, the Court previously precluded plaintiff's proposed damages expert supporting this theory; that ruling was affirmed by the Federal Circuit. Plaintiff has argued that it can support such damages through other evidence, and specifically the lay testimony from TiVo's CEO, Chopra. Following orders by this Court to present such evidence, plaintiff provided a calculation of damages and, eventually, Chopra was deposed on it. As it turns out, however, Chopra lacks the most basic qualifications to support TRA's non-patent damages theory. He certainly believes there are such damages, but he lacks requisite first-hand knowledge of the alleged damages (including knowledge he could have obtained with careful preparation).

         Plaintiffs' time to support this theory is up. The history on this issue is too long and tortured. They cannot now seek to fix that which was repairable but left broken.

         For the following reasons, Kantar's motion for summary judgment is GRANTED.

         I. BACKGROUND

         The question raised by this motion-whether there are any admissible facts to support non-patent damages-has a complicated procedural history. It is necessary to walk through this history in some detail to understand the parties' positions on the current motion, as well as the Court's conclusion.

         TRA asserts entitlement to significant damages (between $60 million and $196 million) due to Kantar's alleged misconduct diminishing the value of TRA's business. It uses certain valuations associated with financing offerings to support its ex ante valuation, and the acquisition price paid by TiVo to support the ex post.

         TRA's assumed valuation occurred in connection with the following rounds of financing: In 2007 TRA raised $5 million, in 2009 it raised $13 million, and in 2010 it raised $18 million. (See TRA Rule 56.1 Counterstatement (“TRA 56.1”) ¶ 21, ECF No. 287.) Kantar itself participated in each of these rounds through its investment arm, Cavendish Square Holding B.V.[2] In May 2010, Montgomery & Co. (the financial institution retained by TRA to assist it with obtaining financing) prepared a valuation of TRA of $54 million. (See id. ¶ 41.) Notably, no investor was prepared to invest in this round. Two years later TiVo acquired TRA for $20 million. (Id. ¶ 44.)

         TRA alleges that the successful financings between 2007 and 2010, along with its bankers' proposed valuation in 2010, support the proposition that the value of its business was on an upward trajectory; according to TRA's argument, but for the intervention of Kantar's acts, this higher valuation would have been realized. Instead, TRA asserts, Kantar used TRA's propriety information and trade secrets to release an infringing product (“RaPidView”). As a result, customers who would have used TRA's product turned instead to this infringing product. This resulted in diminished expectations for TRA, and eliminated-or “froze”-additional access to financing. TRA was unable to raise sufficient capital in its fourth financing round and therefore sold itself to TiVo at a significantly diminished value. TRA further asserts that this lawsuit also contributed to a decrease in its value.

         TRA initially attempted to support was is now referred to as its “frozen-market” damages theory (also known as its “non-patent damages”) with proposed expert testimony of Melissa Bennis. Bennis opined that approximately 70% of TRA's reduction in value between its 2010 financing round and its 2012 sale to TiVo was attributable to the alleged wrongful acts of Kantar. (Bennis Rpt., Ex. 20-9, ECF No. 141-20.) She referred to investors declining to participate in the fourth round due to a “[lack of] revenue traction, ” “[in]ability to hit projections, ” and “lack of profitability.” (Id.) Bennis concluded that “[t]o the extent that TRA's inability to meet revenue and profit expectations were exacerbated at the time of the Series D round, it is reasonable to believe it was caused by [Kantar's] alleged actions, which disrupted the market with a new product and froze the market with respect to overall sales[.]” (Id.) Bennis relied, in part, on testimony from TRA's co-founder Mark Lieberman. Lieberman testified at his deposition that Kantar's actions “led to confusion in the marketplace, [Kantar] misappropriating our trade secrets, infringing our patents, signaling to the marketplace that an investor of ours was now copying what we were doing, affected our ability to raise capital, affected valuation conversations around the value of the company[.]” (Strand Dec. Ex. E, Lieberman Dep. at 168:23-169:6, ECF No. 285-5.)

         On June 5, 2013, Kantar moved for summary judgment on all TRA counterclaims, arguing, inter alia, that TRA failed to show causation for non-patent damages. (ECF Nos. 122, 123.) Kantar argued that TRA's proposed expert relied on “speculation” to support a causal relationship between Kantar's alleged wrongful acts and the amount of damages claimed, and that her opinion failed to meet the requirements of Federal Rule of Evidence 702. (ECF No. 123 at 2, 11.) Kantar also argued that TRA's proposed expert ignored alternative explanations for TRA's inability to raise funds on its fourth financing round, such as investors' concerns about TRA's lack of revenue despite three successful financing rounds. (Id. at 17-18.)

         On November 25, 2013, the Honorable Shira A. Scheindlin, then presiding over this action, granted Kantar's motion as to non-patent damages. TNS Media Research, LLC v. TRA Global, 984 F.Supp.2d 205, 240-42 (S.D.N.Y. 2013). Judge Scheindlin held that Bennis's testimony failed to “satisfy the requirements of Rule 702.” Id. at 241. In addition, Judge Scheindlin excluded the testimony Lieberman's testimony as “rest[ing] on speculation.” Id. at 242.[3]

         The Federal Circuit affirmed the exclusion of TRA's proposed expert. TNS Media Research LLC v. TiVo Research Analytics, Inc., 629 F. App'x 916, 934-35 (Fed. Cir. 2015). However, the Federal Circuit reversed Judge Scheindlin's holding that TRA was precluded from supporting its frozen-market theory with other evidence, including admissible lay testimony. Id. at 933-35. The appeals court observed that “TRA had lay witness testimony from its own CEO, Mark Lieberman, and TiVo's CEO, Naveen Chopra, to support its claim for damages.” Id. at 935. “Because TRA was able to cite to other evidence in the record indicating that Kantar's actions led to confusion in the marketplace and affected TRA's market position and ability to raise capital, it was inappropriate for the district court to prohibit TRA from pursuing a claim for damages premised on its contention that Kantar's actions had a deleterious effect on its market value.” Id. It was therefore possible for TRA to “pursue a theory for compensatory damages” relying upon lay witnesses or, if permitted, supplemental expert testimony. Id. at 935 nn.3 & 4. The Federal Circuit did not address Judge Scheindlin's evidentiary ruling regarding Lieberman: that his testimony was based on speculation.

         At a status conference following remand, Judge Scheindlin stated that although “[t]here's a strong argument [TRA] waived damages years ago, ” she would be “very generous” and “allow[] [TRA] to” submit a damages computation “several years late.” (Mar. 15, 2016 Status Conf. Tr. at 8-9, ECF No. 233.) She required TRA to submit its non-patent damage calculations “based on the lay testimony of its CEO [Lieberman] or any other lay witness” by March 29, 2016, and required that the deposition of any lay witness supporting that calculation be completed by April 12, 2016. (ECF No. 227 at 2.)

         On March 29, 2016, TRA submitted a supplemental damages calculation but did not name a supporting witness-including Lieberman-at that time. (Strand Dec. Ex. A; ECF No. 271 at 26.) TRA's submission stated that the “first part of the calculation [is] the amount TRA would have been worth had Kantar complied with its legal obligation, ” which TRA estimates to have been “approximately $110 million as of July 2012” because “TRA believes its valuation would have continued on a similar trajectory [as the first three financing rounds] but for the bad acts.” (Id. at 3.) It continued, the “second part of the calculation-TRA's dramatically reduced valuation as a result of Kantar's misconduct-is established by the sale of TRA for $20 million in July 2012.” (Id. at 4.) Although TRA estimated the appropriate damages level at $90 million based on “TRA[‘s] belie[f], ” id. at 3, it stated that a jury could find a slower growth rate (e.g., half the rate of the prior rate) to result in damages of $60 million or a faster growth rate (e.g., the “same exponential growth rate that TRA experienced between Series B and Series C”) to result in damages of $196 million. (Id. at 4.) This calculation exceeded the damage amounts discussed in Bennis' report by tens of millions of dollars.

         By letter dated March 30, 2016, Kantar objected to the failure of TRA to offer a lay witness in support of its damages calculation and asked that Judge Scheindlin preclude TRA from seeking damages under Federal Rule of Civil Procedure 37. (ECF No. 271 at 20-23). On April 1, 2016, TRA proffered Chopra-TiVo's CEO-as its supporting witness. (TiVo acquired TRA in 2012-two years after Kantar's release of its allegedly infringing product and a year after TRA's failed fourth round of financing, (TRA 56.1 ¶¶ 34-44.)). The parties then sparred over Chopra's deposition, resulting in a ruling by Judge Scheindlin on April 4, 2017, that the deposition of Chopra would proceed but that “it [was] unclear whether TRA's computation of damages is in fact sufficient to satisfy Rule 26[.]” (ECF No. 235 at 2.)

         Chopra testified in support of this damages calculation on April 11, 2016. (Strand Dec. Ex. G. (“Chopra Dep.”), ECF No. 285-7.) Chopra acknowledged at his deposition that prior to the acquisition he “was not the guy responsible for, you know, every single thing that was going on at TRA, ” (Chopra Dep. at 50:6-13), that he had never held a management position at TRA, (id. at 34:13-19; 88:24-89:1), had never served on TRA's board, (id. at 25:5-7), had never participated in setting TRA's budget, had never participated in hiring TRA's employees, and had never signed agreements for TRA, (id. at 86:9-19.) (See also Pl. Responses to Def. Rule 56.1 Statement of Material Facts ¶¶ 1-6, ECF No. 287.) Chopra admitted that he could not recall ever having been to TRA's offices prior to its July 2012 acquisition by TiVo. (Chopra Dep. at 87:13-20.)

         Chopra admitted at his deposition that he had not even seen TRA's damages calculation until the day before the deposition. (Id. at 8:13-15.) He testified further that he had not been personally involved in developing Montgomery & Co.'s valuations of TRA in connection with actual and proposed financing rounds and that were being proffered by TRA as support for its valuations (including the $110 million in projected value for the fourth round), he had neither firsthand knowledge as to the basis for those valuations, nor had he investigated the assumptions underlying those valuations. (Id. at 57:15-61:14.) He also admitted that TiVo based its valuation of TiVo prior to the acquisition on projections that TRA provided. (See id. at 66:15-67:2.) In addition, Chopra conceded he lacked firsthand knowledge as to the reasons why potential investors chose not to participate in the fourth round, (id. at 74:23-79:5), and he was unaware of documents supporting TRA's assertions that Kantar's release of its RaPidView product played a role in those decisions, (id. at 85:13-86:2).

         This case was reassigned to the undersigned on May 10, 2016, following Judge Scheindlin's retirement from the bench. On June 24, 2016, certain claims were reinstated, reviving the possibility that TRA could support its theory of compensatory damages with admissible evidence.[4] (ECF No. 269.) This Court invited briefing on that issue, (ECF No. 270), and on August 30, 2016, Kantar filed the present motion for summary judgment on TRA's non-patent damages, (ECF No. 282).

         II. PRINCIPLES OF LAW

         A. Summary Judgment

         Summary judgment may not be granted unless a movant shows, based on admissible evidence in the record, “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden of demonstrating “the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party does not bear the ultimate burden on a particular claim or issue, it need only make a ...


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