United States District Court, E.D. Washington
ORDER ON DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT
AND TO EXCLUDE EXPERT TESTIMONY
O. RICE, CHIEF UNITED STATES DISTRICT JUDGE.
THE COURT are Defendant's Motion for Final Summary
Judgment (ECF No. 218), Motion for Final Summary Judgment on
Additional Grounds (ECF No. 233), and Motions to Exclude
Expert Testimony (ECF Nos. 231; 232; 236; 237; 239). A
telephonic hearing was held on July 29, 2015. ECF No. 270.
The Court has reviewed the completed briefing and the record
and files herein, heard from counsel, and is fully informed.
filed a complaint on August 24, 2012, alleging causes of
action against Defendant and certain unidentified parties.
ECF No. 1. These claims arose from the sale of allegedly
faulty switching equipment necessary for the operation of
cellular phone networks. In January 2013, the Court
temporarily stayed these proceedings to allow for the
completion of an arbitration process in Florida. ECF No. 55.
That stay was extended in July 2013 as the arbitration
proceedings had not yet concluded. ECF No. 71.
filed an amended complaint on December 10, 2013, alleging
causes of action against Defendant only. ECF No. 93.
Defendant filed a motion to dismiss the amended complaint on
January 6, 2014, which the Court denied on February 27, 2014.
ECF Nos. 103; 124.
Court granted Plaintiff leave to file a second amended
complaint on October 23, 2014. ECF No. 198. Plaintiff filed
its Second Amended Complaint on November 10, 2014. ECF No.
203. In its Second Amended Complaint, Plaintiff alleges six
causes of action: breach of contract, tortious interference
with contract, fraudulent misrepresentation, negligent
misrepresentation, promissory estoppel, and unjust
enrichment. Id. at ¶¶ 68-117.
arbitration award was issued on February 11, 2014. ECF No.
207-1. On December 18, 2014, Defendant provided the Court
with notice that NTCH-WA had been joined in a case before the
United States District Court for the Middle District of
Florida, PTA-FLA, Inc. v. ZTE USA, Inc., No. 3:1
l-CV-0510. ECF No. 205. The Florida District Court order
indicated that the court was exercising jurisdiction over
confirmation of the final arbitration award under the Federal
Arbitration Act ("FAA"). ECF No. 205-1. The Florida
District Court undertook to "determine in one action
whether the arbitration award should be confirmed vis-avis
all arbitration participants." Id. at 11-12.
Briefing was scheduled to be completed by February 2015.
Id. at 13.
meantime, the Court ordered the parties to brief the
preclusive effect the final arbitration award may have upon
the matter before this Court. ECF No. 212. The Court further
ordered the parties to prepare all other dispositive and
Daubert motions by the deadline established in the
amended scheduling order (ECF No. 173). Id. at 6.
filed a Motion for Final Summary Judgment on June 12, 2015,
arguing the Florida arbitration proceedings precluded
Plaintiffs claims in this matter. ECF No. 218. Defendant
filed a subsequent Motion for Final Summary Judgment on
Additional Grounds on June 29, 2015, arguing for judgment on
the underlying claims regardless of the preclusive effect of
the arbitration proceedings. ECF No. 233. Defendant also
filed motions to exclude the expert testimony of five
proffered expert witnesses. ECF Nos. 231 (Adilia Aguilar);
232 (Anthony Sabatino); 236 (Keven Beierschmitt); 237 (John
A. Goocher); and 239 (Glenn Ishihara). Plaintiff opposed each
motion. The parties completed their briefing on these matters
and a telephonic hearing was held on July 29, 2015. ECF No.
to this hearing, the Court was informed that resolution of
the Florida District Court litigation would be delayed until
October 2015 at the earliest. ECF Nos. 274; 274-1. In light
of the dispositive effect confirmation of the arbitration
award bears upon this matter and the delayed resolution of
that issue, the Court ordered on August 11, 2015, that the
scheduled trial and all remaining deadlines be vacated and
the case stayed pending resolution of the Florida litigation.
ECF No. 275.
Florida Court issued an Order Confirming the Award on October
6, 2015. ECF No. 287 at 3. The Order was affirmed on appeal
to the Eleventh Circuit on December 15, 2016. ECF No. 287 at
3. The Court lifted the stay (ECF No. 285) on June 27, 2017
and now issues this order on the pending motions.
matter arises from a long, complicated, and ultimately
unproductive business relationship between affiliated
start-up cellular telephone network companies owned and
operated by Eric Steinmann, Defendant ZTE Corporation (a
cellular telephone equipment manufacturer in China), and
ZTE-USA, Inc. ("ZTE-USA")-Defendant's
wholly-owned subsidiary doing business in the United States.
See ECF Nos. 207-1 at 2, 203 at ¶¶ 2; 204
¶ 2. The companies owned and operated by Eric Steinmann
were Daredevil, Inc., a Missouri corporation; PTA-FLA, Inc.,
a Florida corporation; NTCH-WEST TENN, Inc., a Tennessee
corporation; and Plaintiff NTCH-WA, Inc., a Washington
corporation. ECF Nos. 207-1 at 2. These companies
collectively operated under the brand name
"ClearTalk" (the "ClearTalk entities").
ECF Nos. 207-1 at 2.
2006, PTA-FLA, Inc. entered into a master service agreement
with ZTE USA for the purchase of cellular telephone network
equipment (the "Florida MSA"). ECF Nos. 203 at
¶ 13; 204 at ¶ 13; 207-1 at 3; 219-5, 219-6, 219-7,
219-8, 219-9. For reasons not relevant to this proceeding,
PTA-FLA, Inc., ultimately sold its cellular network in 2008
and removed the equipment purchased from ZTE USA. ECF Nos.
203 at ¶ 18; 204 at ¶ 18; 207-1 at 12. Relevant to
this matter are the facts that (1) part of PTA-FLA,
Inc.'s purchase included a master switch through which
all voice and data traffic would be routed (the "core
switch"), and (2) there were a number of technical
issues with the core switch which precluded its full
functionality. See 207-1 at 9-11; 261-2 at ¶
intended to make use of the removed Florida equipment to
develop cellular networks in other markets. ECF No. 261-2 at
¶¶ 42-43. As such, in July 2008, PTA-FLA, Inc.,
ordered two remote switches to be used to establish markets
in Washington and Tennessee. ECF No. 261-2 at ¶¶
42, 87. These remote switches would allow those networks to
connect to the core switch in Florida which would provide
voice and data service. ECF No. 261-2 at ¶ 43.
Eventually, the core switch was moved from Florida to
Jackson, Tennessee. ECF No. 261-2 at ¶ 53. In the first
half of 2008, Plaintiff began acquiring and preparing
buildings and towers for installation of the planned
Washington cellular network. ECF No. 261-2 at ¶ 89. In
the summer of 2008, Plaintiff shipped the decommissioned base
stations from Florida to Washington. ECF No. 261-2 at ¶
September 25, 2008, Daredevil, Inc., entered a master supply
agreement ("Missouri MSA") for the purchase of
additional cellular telephone equipment for use in Missouri.
ECF Nos. 207-1 at 3; 203 at ¶ 20; 204 at ¶ 20; 235
at ¶ l. The Missouri MSA was executed after
individuals representing ZTE USA visited Steinmann at his
home and pleaded with him to purchase equipment manufactured
by Defendant rather than that manufactured by a competing
Chinese manufacturer. ECF Nos. 207-1 at 3-4, 13; 261-2 at
¶ 52. The MSA indicates it is entered into between ZTE
USA, Inc., and Daredevil, Inc., and is signed by Joey Jia as
"General Manager" for "ZTE USA, Inc." and
by Steinmann as "Development Manager" for
"Daredevil, Inc. dba ClearTalk." ECF No. 235-1 at
same day, September 25, 2008, Steinmann and Jia also executed
a second document simply entitled, "Agreement." ECF
Nos. 235 at ¶ 4; 261 at ¶ 1.2. The Agreement is
signed by Steinmann as "Development Manager" for
"Daredevil, Inc." and by Joey Jia as "General
Manager" for "ZTE Inc." ECF No. 235-2 at
The Agreement incorporated the terms of the Missouri MSA, but
also laid out other specific provisions, including that
"ZTE be the primary supplier of handsets to the
operation of Daredevil in Saint Louis and to the other
affiliated operations of Daredevil and NTCH .... In this
regard and for a period of 5 years from this date ZTE agrees
to these entities to match the cost of any other handsets
being sold and available to the parties based on comparable
features . . . ." Id. at 5. A separate, undated
page in the same exhibit is signed by Steinmann on behalf of
"PTA-Fla, Inc." and by Jia on behalf of "ZTE
USA, Inc." ECF No. 235-2 at 7.
of the Missouri network was time-sensitive because a rival
company was also developing cellular infrastructure in the
same market. ECF No. 261-2 at ¶¶ 49-50. As such,
Steinmann agreed in the fall of 2008 that Daredevil would
take delivery of the remote switch destined for the
Washington network. ECF No. 261-2 at ¶¶ 58, 91.
Without a remote switch, the Washington network could not
operate and the base stations originally shipped from Florida
were again redeployed, this time to Tennessee. ECF No. 261-2
at ¶¶ 87-93.
Daredevil sold its Missouri network to the rival company. ECF
Nos. 207-1 at 13; 261-2 at ¶ 65. In April 2009,
Daredevil began to decommission and remove its equipment. ECF
No. 261-2 at ¶ 66.
2009, Steinman began to revive the deployment of a network in
Washington and expressed a willingness to redeploy certain
equipment from the Missouri network to other markets,
including Washington. ECF Nos. 207-1 at 14; 261-2 at ¶
94. On September 9, 2009, Plaintiff received a remote switch.
ECF No. 261-2 at ¶ 95. However, there were continued
technical problems with the core switch in Tennessee, upon
which the functionality of the remote switch depended. ECF
No. 261-2 at ¶ 97-98.
on December 17, 2009, Steinmann executed an "Addendum to
Existing Agreement Between Daredevil and ZTE." ECF Nos.
235 at ¶ 7; 235-3. The Addendum is signed by Steinmann
as "Business Development Manager" for
"ClearTalk" and by Neil Kushner as "VP Sales,
Division 1" for "ZTE USA, Inc." ECF No. 235-3
at 3. Under the addendum, forty base stations
originally ordered for the Missouri market would be
redeployed to Yakima, Washington. Id. at 2. A number
of base stations were sent to Washington, but the Washington
network was never opened. ECF Nos. 207-1 at 14; 261-2 at
¶¶ 96, 100.
2011, a series of lawsuits were filed by the various
ClearTalk entities. ECF No. 219 at ¶ 30. The ClearTalk
entities sued ZTE USA-but not Defendant-in Florida, Missouri,
South Carolina, and Tennessee. Id. Steinmann sued
both ZTE USA and Defendant in California. Id. at
¶ 31. The parties to these lawsuits agreed to
consolidated arbitration. Id. at 32. The ClearTalk
entities, including Plaintiff, submitted a demand for
arbitration against ZTE USA, Inc., in December 2011. ECF Nos.
219 at ¶ 33; 219-12 at 2.
ClearTalk entities' first amended statement of claim
filed with the arbitration demand asserted claims against
both ZTE USA and Defendant related to transactions in
Florida, Missouri, South Carolina, Tennessee, and Washington.
ECF Nos. 219 at ¶ 33; 219-12 at 5-39.
objected to the scope of arbitration, opposing any claims
asserted against it and contending that only ZTE USA-not
Defendant-was party to any agreements with the ClearTalk
entities. ECF Nos. 219 at ¶ 33; 219-13 at 3 ¶¶
1-2, 5. After considering Defendant's objection, the
arbitrator informed the parties by email that the scope of
the arbitration would be limited to "all the claims,
counterclaims, and defenses that exist or may arise between
and among the parties subject to the jurisdiction of the
courts in the lawsuits pending at the time of the agreement
to arbitrate." ECF Nos. 219-15 at 2; 246-8 at 2. As
such, the arbitrator concluded the only claims ...