February 2014: Quinn Emanuel Overturns $70 Million Fraud Verdict
On November 20, 2013, Judge Richard G. Andrews of the U.S. District Court for the District of Delaware granted judgment as a matter of law to the firm’s client Cisco, erasing almost the entirety of a federal jury’s award of $70 million to plaintiff XpertUniverse, Inc.—without the expense of a new trial.
XpertUniverse, which developed technology to connect customers with experts in various fields, joined Cisco’s Technology Development Program in 2005. It later sought entry into the next tier of Cisco’s partnership programs (SolutionsPlus) but was not admitted. XpertUniverse thereafter sued Cisco, alleging that Cisco had denied the SolutionsPlus application and then fraudulently concealed the denial—even though XpertUniverse knew all along that its application had not been accepted. It sought $70 million in damages, which was its expert’s speculative estimate of the company’s total value before the purported concealment. XpertUniverse also alleged that Cisco had infringed its patents. The case went to trial, and the jury found for XpertUniverse—awarding the demanded $70 million on the fraud claim and $34,000 on the patent infringement claim.
After the trial loss, Cisco brought in Quinn Emanuel. Retaining Kathleen M. Sullivan and Quinn Emanuel’s appellate group to lead the post-trial briefing, Cisco moved for judgment as a matter of law on the fraud claim, which Judge Andrews granted. He held that the purported misrepresentation was not material because XpertUniverse knew that its application had not been accepted, and a reasonable person would not have acted differently knowing that the application was “denied” as opposed to “not accepted.” Without a material misrepresentation, the court concluded, Cisco could not be held liable for fraud. The court held that Cisco was also entitled to judgment on the alternative ground of lack of causation, concluding that there was insufficient proof that XpertUniverse would have had $70 million in lost value if only the “denial” had been revealed at an earlier date.
On the patent infringement claim, the court affirmed the jury’s award of $34,000 in patent damages but denied XpertUniverse’s request for injunctive relief or an ongoing royalty. The net result was to reduce a $70 million fraud verdict to a $34,000 patent judgment. XpertUniverse is expected to appeal, and Quinn Emanuel will serve as lead appellate counsel to defend Cisco’s post-trial victory.