Alifax Holding Spa v. Alcor Scientific Inc. et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
ALIFAX HOLDING SPA, 	)
)
Plaintiff, 	)
)
v. 	) 	C.A. No. WES 14-440
)
ALCOR SCIENTIFIC INC.; and 	)
FRANCESCO A. FRAPPA, 	)
)
Defendants. 	)
___________________________________)
MEMORANDUM AND ORDER
After 	Defendants 	filed 	a 	Request 	for 	Case 	Management 	Order,
ECF 	No. 	354, 	the 	Court 	ruled, 	inter 	alia, 	that 	the 	parties 	would
not 	be 	allowed 	to 	introduce 	any 	new 	evidence 	at 	retrial 	and 	that
the Court’s evidentiary rulings made prior to the first trial would
apply to the second. 	See July 16, 2021 Mem. & Order 5, 8, ECF No.
357.1 	However, the Court did not reach a decision on Defendants’
argument 	that 	Alifax 	should 	be 	limited 	to 	nominal 	damages, 	as
Alifax 	had 	not 	substantively 	responded 	to 	that 	contention. 	See
id. 	at 	8-9. 	Having 	solicited 	further 	briefing 	on 	the 	issue, 	the
Court 	now 	concludes 	that 	Alifax 	will 	be 	precluded 	from 	seeking
compensatory damages at the second trial.
Alifax’s theory of damages is as follows. 	At some point prior
to 	the 	June 	2012 	trade 	show 	for 	the 	American 	Association 	for
1 This Order assumes familiarity with those that precede it.
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Clinical 	Chemistry, 	Alcor 	and 	Francesco 	Frappa 	misappropriated
Alifax’s 	conversion 	algorithm 	and 	used 	it 	in 	an 	iSED 	prototype.
Alifax 	Holding 	Spa 	v. 	Alcor 	Sci. 	Inc., 	404 	F. 	Supp. 	3d 	552, 	576-
77 	(D.R.I. 	2019). 	Thanks 	in 	part 	to 	the 	illicitly 	borrowed
algorithm, 	Alcor’s 	trade 	show 	presentation, 	which 	was 	buoyed 	by
its 	bullish 	claims 	regarding 	the 	iSED’s 	capabilities, 	was 	a 	hit.
Id. at 572, 576-77. 	Without Alifax’s algorithm, Alcor would have
been 	forced 	to 	spending 	months 	developing 	its 	own, 	and 	it 	could
not have made such a successful showing. 	Id. at 576. 	Because the
June 	2012 	exposition 	generated 	sales 	of 	the 	iSED 	and 	related
products, Alcor’s misdeeds led to its unjust enrichment. 	Id.
For 	this 	theory 	to 	hold 	up, 	Alifax 	needs 	evidence 	(1) that
the alleged misappropriation gave Alcor a head start and (2) that
the 	head 	start 	helped 	to 	bring 	about 	certain 	earnings 	over 	the
following 	months 	or 	years. 	While 	Alifax 	has 	(marginal) 	evidence
of 	a 	head 	start, 	there 	is 	no 	admissible 	evidence 	tying 	that 	head
start to a measure of unjust enrichment.
1. 	Evidence of a Head Start
At the first trial, Dr. Bergeron testified that it would have
taken 	Alcor 	months 	to 	produce 	an 	original 	conversion 	algorithm.
Trial Tr. vol. 3, 115:23-116:1, ECF No. 333. 	Although this opinion
was not contained in his expert report, Defendants did not object.
See Alifax Holding Spa, 404 F. Supp. 3d at 576 n.30 (citing Trial
Tr. 	vol. 	3, 	115:23-116:9, 	119:10-120:6); 	April 	30, 	2019 	Mem. 	&
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Order 	10 	& 	n.8, 	12-13 	& 	n.11, 	ECF 	No. 	288; 	Expert 	Report 	of 	Dr.
Brian 	Bergeron 	¶¶ 	44-46, 	ECF 	No. 	144-11. 	However, 	on 	retrial,
Defendants 	presumably 	would 	object 	on 	the 	basis 	that 	the 	opinion
was 	not 	disclosed, 	and 	their 	objection 	would 	be 	sustained. 	See
Fed. R. Civ. P. 26(a)(2)(D), 37(c)(1).
Dr. 	Bergeron’s 	surprise 	statement 	was 	not 	the 	only 	evidence
to 	support 	the 	head 	start 	theory. 	According 	to 	some 	evidence,
when 	Alcor 	ultimately 	set 	out 	to 	develop 	its 	own 	algorithm, 	the
effort spanned from January to June 2013. 	See Alifax Holding Spa,
404 F. Supp. 3d at 570, and documents cited; id. at 576. 	For the
sake of this Order, the Court will assume that this evidence would
be 	sufficient 	for 	a 	jury 	to 	infer 	that 	Alcor 	could 	not 	have
developed an original algorithm in time for the trade show.
2. 	Evidence Linking the Head Start to Unjust Enrichment
To 	show 	unjust 	enrichment, 	a 	plaintiff 	“has 	the 	burden 	of
producing evidence permitting at least a reasonable approximation
of 	the 	amount 	of 	the 	wrongful 	gain.” 	Restatement 	(Third) 	of
Restitution 	and 	Unjust 	Enrichment 	§ 	51(5)(d). 	And 	of 	course, 	a
plaintiff must provide timely disclosures regarding the witnesses
and evidence through which the plaintiff will attempt to establish
damages. 	See Fed. R. Civ. P. 26(a)(2)(D), 26(e), 37(c)(1).
Prior to the first trial, the only damages witness disclosed
by Alifax was Christopher Bokhart. 	See Alifax Holding Spa, 404 F.
Supp. 	3d 	at 	580; 	see 	also 	Pls.’ 	Initial 	Disclosures 	5, 	ECF 	No.
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284-1; 	Plaintiff’s 	First 	Am. 	Answers 	to 	Defs.’ 	First 	Set 	of
Interrogatories 29, ECF No. 284-2. 	Although the Court ruled that
Bokhart’s 	expert 	opinions 	regarding 	damages 	stemming 	from
conversion 	algorithm 	misappropriation 	were 	“unreliable 	and
inadmissible[,]” 	April 	30, 	2019 	Mem. 	& 	Order 	13, 	the 	Court
permitted Bokhart to testify as a summary witness pursuant to Rule
1006 of the Federal Rules of Evidence, Alifax Holding Spa, 404 F.
Supp. 3d at 580 (citing Trial Tr. vol. 11, at 20:11-22, 33:10-25).
As the Court noted in its prior Order granting in part the motions
for 	new 	trial, 	that 	decision 	was 	made 	in 	error. 	Id. 	at 	581-82.
Nonetheless, Alifax contends that it should once again be permitted
to 	introduce 	Bokhart’s 	testimony, 	this 	time 	through 	an
“appropriately 	limited 	summary 	examination.” 	Alifax’s 	Mem.
Regarding Damages 4, ECF No. 358.
“[T]o 	prove 	the 	content 	of 	voluminous 	writings, 	recordings,
or 	photographs 	that 	cannot 	be 	conveniently 	examined 	in 	court[,]”
a 	party 	may 	use 	summary 	evidence, 	either 	documentary 	or
testimonial. 	Fed. R. Evid. 1006. 	Bokhart’s summary testimony was
impermissible, 	among 	other 	reasons,2 	because 	it 	was 	“too 	closely
entwined with his excluded expert opinion to be cleanly dissected
2 	For 	example, 	Bokhart 	did 	not 	summarize 	already 	admitted
evidence. 	Alifax Holding Spa, 404 F. Supp. 3d at 581 (“[T]he key
to 	admissibility 	is 	that 	the 	summary 	witness’s 	testimony 	does 	no
more than analyze facts already introduced into evidence . . . .”
(quoting 	United 	States 	v. 	Stierhoff, 	549 	F.3d 	19, 	28 	(1st 	Cir.
2008))).
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and presented under Rule 1006.” 	Alifax Holding Spa, 404 F. Supp.
3d 	at 	581; 	cf. 	Colon-Fontanez 	v. 	Municipality 	of 	San 	Juan, 	660
F.3d 	17, 	31 	(1st 	Cir. 	2011) 	(affirming 	admittance 	of 	summary
testimony, in part because the witness’s testimony regarding “her
method 	of 	preparing 	and 	summarizing 	the 	exhibits 	d[id] 	not 	an
instant expert of her make”); SEC v. Franklin, 265 Fed. Appx. 644,
646 (9th Cir. 2008) (unpublished) (“There was no error in allowing
the preparer of the [summary] exhibits to testify because no expert
opinions or conclusions were offered.”(citation omitted)).
On retrial, this obstacle would prove impassable for Alifax.
Any testimony from Bokhart would necessarily be based on his expert
knowledge 	and 	opinions 	of 	the 	case. 	Moreover, 	the 	materials
Bokhart would presumably summarize are not sufficiently voluminous
to justify a summary witness, let alone one who has intertwined –
and inadmissible – opinions he seeks to share. 	Therefore, Bokhart
will not be permitted to testify in any capacity, on any topic.
Furthermore, as the Court has instructed, “no new evidence or
witnesses 	will 	be 	permitted.” 	July 	16, 	2021 	Mem. 	& 	Order 	5, 	ECF
No. 	357. 	In 	addition 	to 	the 	reasons 	already 	given, 	id., 	the
decision to bar new testimony on damages is also supported by the
standard 	considerations 	pertaining 	to 	preclusion 	under 	Rule
37(c)(1): 	“(1) the history of the litigation; (2) the sanctioned
party’s need for the precluded evidence; (3) the sanctioned party’s
justification 	(or 	lack 	of 	one) 	for 	its 	late 	disclosure; 	(4) 	the
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opponent-party’s ability to overcome the late disclosure’s adverse
effects 	— 	e.g., 	the 	surprise 	and 	prejudice 	associated 	with 	the
late 	disclosure; 	and 	(5) 	the 	late 	disclosure’s 	impact 	on 	the
district 	court’s 	docket.” 	Esposito 	v. 	Home 	Depot 	U.S.A., 	Inc.,
590 F.3d 72, 78 (1st Cir. 2009) (citing Macaulay v. Anas, 321 F.3d
45, 51 (1st Cir. 2003)).3 	Preclusion of new evidence is warranted
by 	the 	years-long 	slog 	of 	this 	litigation, 	the 	numerous 	failed
theories of liability and damages (concerning patent and copyright
claims that were asserted all the way to trial before crashing and
burning), 	the 	lack 	of 	justification 	for 	any 	late-breaking
evidence, the obvious prejudice that Defendants would suffer, and
the continued, outsized impact of this case on the Court’s docket.
Because Alifax did not disclose any damages witnesses besides
Bokhart, 	Alifax 	will 	be 	unable 	to 	meet 	its 	“burden 	of 	producing
evidence 	permitting 	at 	least 	a 	reasonable 	approximation 	of 	the
amount of the wrongful gain.” 	Restatement (Third) of Restitution
and 	Unjust 	Enrichment 	§ 	51(5)(d); 	see 	also 	Adv. 	Training 	Group
Worldwide, 	Inc. 	v. 	Proactive 	Techs. 	Inc., 	19-CV-505, 	2020 	WL
4574493, at *2, 4-9 (E.D. Va. Aug. 7, 2020) (barring the plaintiff
from 	presenting 	lay 	testimony 	on 	damages 	where 	the 	only 	properly
3 The Court’s discretion to exclude undisclosed witnesses is
arguably 	even 	greater 	on 	retrial 	than 	in 	the 	original-trial
scenario 	addressed 	in 	Esposito. 	See 	Fusco 	v. 	Gen. 	Motors 	Corp.,
11 	F.3d 	259, 	267 	(1st 	Cir. 	1993); 	Oriental 	Fin. 	Group, 	Inc. 	v.
Fed. Ins. Co., 483 F. Supp. 2d 161, 167 (D.P.R. 2007).
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disclosed 	damages 	witness 	was 	an 	expert 	whose 	testimony 	had 	been
excluded).4
The 	history 	of 	this 	case 	is 	replete 	with 	shifting 	theories
and dubious litigation practices. 	These are described in various
places 	throughout 	the 	record, 	in 	prior 	written 	orders, 	bench
rulings 	during 	trial, 	and 	the 	like. 	These 	practices 	led 	to 	the
error that resulted in the grant of a new trial, wasting the time
of the jury and the Court. 	All of this was preventable. 	The rules
are not that complicated, and they are designed to avoid situations
like 	this 	if 	they 	are 	followed. 	Alifax 	did 	not 	disclose 	an
admissible 	damages 	expert 	and 	therefore 	has 	no 	evidence 	at 	this
late date that could sustain the relief it seeks.
For these reasons, as sought by Defendants’ Request for Case
Management 	Order, 	ECF 	No. 	354, 	Alifax 	will 	be 	precluded 	from
seeking compensatory damages at the second trial.
IT IS SO ORDERED.
William E. Smith
District Judge
Date: 	September 1, 2021
4 	Alifax 	argues 	that 	certain 	fact 	witnesses 	could 	provide
additional 	foundation 	for 	damages 	testimony 	from 	Bokhart. 	See
Alifax’s 	Mem. 	Regarding 	Damages 	4-5, 	ECF 	No. 	358. 	But 	the
strongest foundation is little use without a structure (Bokhart’s
testimony) to go on top.
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