Preview
MARCIE ISOM FITZSIMMONS (SBN: 226906)
HIEU T. WILLIAMS (SBN: 280585)
GORDON REES SCULLY MANSUKHANI. LLP
275 Battery Street, Suite 2000
San Francisco, CA 941 1 1
Telephone: (415) 986-5900
Facsimile: (415) 986-8054
Mlsomfi grsmcom
HWillianisQflyrsmcom
Attorneys for Defendant
PALO ALTO FOUNDATION MEDICAL GROUP, INC.
LINDBERGH PORTER (SBN: 100091)
LITTLER MENDELSON, PC.
333 Bush Street, 34'“ Floor
San Francisco, CA 94104
Telephone: (415) 433-1940
Facsimile: (415) 399-8490
LPorter‘rFliItlercom
11
MAIKO NAKARAl-KANIVAS (SBN: 271710)
12 LITTLER MENDELSON, PC.
ll
2000
1255 Treat Blvd, Suite 600
LLP 94]
Suite 13 Walnut Creek, CA 94597
CA
Telephone: (925) 932-2468
Rees
Street,
14 Facsimile: (925) 946-9809
& MNakaraikanivasQPlittler.c0m
Francisco,
15
Gordon
Battery Attorneys for Defendants
San
16 SUTTER HEALTII and PALO ALTO MEDICAL FOUNDATION
275
17 SUPERIOR COURT OF CALIFORNIA
18 COUNTY OF SANTA CLARA
19 DIANA P. BLUM,M1D., CASE NO. 115CV277582
20 Plaintiff. DECLARATION OF
HIEU T. WILLIAMS
21 VS. IN SUPPORT OF DEFENDANTS’
JOINT OPPOSITION T0 PLAINTIFF’S
22 SUTTER HEALTH, a California corporation: MOTION IN LIMINE TO EXCLUDE
PALO ALTO FOUNDATION MEDICAL EVIDENCE AND REFERENCES TO
23 GROUP, INC, 21California corporation; PLAINTIFF’S
VVVVVVVVVVVVVVVV
RECEIPT OF
PALO ALTO MEDICAL FOUNDATION. a INVESTMENT INCOME
24 California corporation; and DOES 1through
20, Trial Date: January 8, 2018
25 Time: 8:45 am.
Defendants. Dept: 16
26
27
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DECLARATION OF HIEU T, WILLIAMS IN SUPPORT OF DEFENDANTS‘
JOINT OPPOSITION TO PLAINTIFF'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND REFERENCES
TO PLAINTIFF'S RECEIPT OF INVESTMENT INCOME
1. I am an attorney at law licensed to practice before allcourts ofthe State of
California and am an attomey in the law firm ol‘Gordon Rees Scully Mansukhani LLP, attorneys
for the defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC. (“the Physician
Group”). I have personal knowledge ofthe matters contained in this declaration and if called to
testify to them could and would do so competently.
2. During fact discovery, my colleague and counsel of Record for the Physician
Group, Marcie I.Fitzsimmons, took Plaintiffs deposition over the course of several days.
Attached as Exhibit A are true and correct copies of the relevant excerpts from the Transcript of
Plaintiffs Deposition, in the above-entitled matter.
10 3. During discovery, on November 30. 2017, the Physician Group took the
11 deposition of third party Stephanie M. Recob, the bookkeeper for Plaintiff s private medical
2000
12 practice. Ms. Recob produced Profit and Loss Statements and General Ledgers for Plaintiffs
94111
LLP
Suite 13 private medical practice from 2013 to 2016, some of which contained redactions. Attached as
CA
Rees
Street,
14 Exhibit B is a true and correct copy of the Confidential 2015 General Ledger for Plaintiff‘s
& Francisco,
15 private medical practice, Peninsula Private Neurology, produced in discovery by Plaintiff and/0r
Gordon
Battery
San
16 Ms. Recob. Attached as Exhibit C is a true and correct copy ofthe Confidential 2016 General
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17 Ledger for Plaintiff's private medical practice, Peninsula Private Neurology, produced in
18 discovery by Plaintiff and/or Ms. Recob.
19 4. Attached hereto is Exhibit D is a true and correct copy ofthe Declaration of
20 Charles Mahla in Support of Opposition to Motion to Quash.
21
22 I declare, under penalty of perjury under the laws of the State of California, the foregoing
23 is true and correct.
24 Executed on this 8th day of January 2018 at San Francisco, California.
25
WWW/mm
26
I-Iieu T. Williams
27
28
I10<330116223023i
1
-2-
DECLARATION OF HlEU T. WILLIAMS IN SUPPORT OF DEFENDANTS’
JOINT OPPOSITION TO PLAINTIFF‘S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND REFERENCES
TO PLAINTIFF‘S RECEIPT OF INVESTMENT INCOME
CONFIDENTIAL
EXHIBIT A
CONFIDENTIAL
EXHIBIT B
CONFIDENTIAL
EXHIBIT C
EXHIBIT D
MARCIE I. FITZSIMMONS (SBN: 226906)
I-IIEU T. WILLIAMS (SBN: 280585)
GORDON REES SCULLY MANSUKHANI, LLP
275 Battery Street, Suite 2000
San Francisco, CA 94111
Telephone: (415) 986-5900
Facsimile: (415) 986-8054
Misom@gordomees.c0m
Hwilliams@gordomees.com
\IOLIIJR
Attorneys for Defendant
PALO ALTO FOUNDATION MEDICAL GROUP, INC.
00 SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
10
11 DIANA P. BLUM, M.D., ) CASE NO. 115CV277582
)
2000
12 )
94111
Plaintiff, ) DECLARATION OF
LLP
Suite 13
) CHARLES R. MAHLA, PHD
Rees
CA
) IN SUPPORT OF DEFENDANT
14 VS.
Street,
) PALO ALTO MEDICAL
8L
Francisco,
15 ) FOUNDATION GROUP, INC’S
Gordon
Battery SUTTER HEALTH, 3 California corporation; ) OPPOSITION T0 PLAINTIFF’S
16 PALO ALTO FOUNDATION MEDICAL MOTION TO QUASH
San
GROUP, INC., a California corporation; %
275
17 PALO ALTO MEDICAL FOUNDATION,a Date: April 11,2017
California corporation; and DOES 1 through ; Time: 9:00 am.
18 20, ) Dept; 8
) Judge: The Honorable Maureen Folan
19 )
Defendants.
)
20
) Accompanying Papers:
) 1. Opposition Brief;
21
) 2. Declaration of Hieu T. Williams;
) 3. Response to Separate Statement;
22
) 4. [Proposed] Order
23 ///
24 ///
25 ///
26 ///
27 //
28 ///
.1.
DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL
FOUNDATION GROUP, INC‘S OPPOSITION TO PLAINTIFF’S MOTION TO QUASH
I, CHARLES R. MAI—ILA, PhD, declare:
I am an Economist and Managing Director at Econ One Research, Inc. I have been retained
La) by defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC, (“PAFMG”) in
connection with this lawsuit. I have personal knowledge of the matters contained in this
declaration and if called to testify to them could and would do so competently.
\IQKII
I received my PhD in Economics in 1991 and have been providing economic analysis and
consulting for more than 24 years. I have testified as an expert at arbitration, trial (federal
and state courts), or deposition more than 400 times. Attached hereto as Exhibit 1 is a true
and correct copy of my CV.
I have reviewed many documents related toDr. Blum’s alleged economic loss, including the
10 .
11 general ledgers, balance sheets, and the Profit and Loss Reports for her private practice. I
12 have also reviewed the relevant testimony regarding Menlo Park Medical Suites. In my
2000
94111
opinion, as explained below, the Menlo Park Medical Suites documents are important to
LLP
Suite 13
Rees
CA
14 assessing Dr. Blum’s actual economic loss stemming from her separation from PAP MG.
Street,
& I reviewed, Dr. Blum started her Peninsula Private Neurology
Francisco,
15 . As indicated in the documents
Gordon
began paying $2,500 in monthly
Battery
16 (“PPN”) practice in November 2013. at which time she
San
275
17 rent, which continued through May 2015. As Dr. Blum was a tenant in a building in which
she had no ownership position, it can be assumed that this was a typical arms-length tenant-
l8
19 landlord transaction.
As reflected in the documents I reviewed, beginning in June 2015, Dr. Blum started paying
20 .
$3,500 per month ($42,000 annually) to Menlo Park Medical Suites (“MPMS”) (of which
21
22 she isa part owner). Unlike the $2,500 per month rent that she paid previously, Dr. Blum
presumably had some input (as a part owner of MPMS) into the amount that would be
23
24 charged. She could have charged “herself” $5,000 or even $10,000 per month, and without
25 knowing more about both sides of the transaction (i.e. the MPMS profit and loss statements),
26 or the ownership of MPMS (i.e. whether it is partially owned by anyone outside of her
27 immediate family), we have no way of determining if this is a market appropriate rate, or
28 simply a way of transferring revenue from PPN to MPMS.
.2.
DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL
FOUNDATION GROUP, INC‘S OPPOSITION TO PLAINTIFF’S MOTION TO QUASH
Although Dr. Blum would be subject to rent for the location of her private practice in any
circumstance, the amount of that rent could be different if she has an ownership interest in
LA)
the renting entity. The purchase of the building was not simply an investment, but is an
integral part of the operation of her new private practice. If she had not left PAFMG, there
is nothing that I have reviewed to suggest that she would have had any need to purchase an
office building, for which she now receives rental income from the tenants e including her
\DOO\IO\UIJ>
own business, PPN. As such, in my opinion the purchase has a direct connection to her
mitigating efforts.
. Dr, Blum claims in her motion that “even though Dr. Blum has an ownership interest in the
10 LLC, the finances of the LLC are completely irrelevant to the issues in the lawsuit.” In my
11 opinion, this is simply not true. The profitability of Dr. Blum’s private practice depends on
12 the amount she pays in rent and costs which are passed on by MPMS, amounts over which
2000
941]]
LLP
Suite 13 Dr. Blum has at least some control as part owner of MPMS.
CA
Rees
14 Setting aside the income aspect of the equation for now, the expense portion of Dr. Blum’s
Street,
& Francisco,
15 private practice directly impacts the amount of mitigation she has alleged in this case. Rent
Gordon
Battery
16 and other payments from PPN to MPMS (or costs, such as utilities, that are paid by PPN and
San
not MPMS) result in an increase in revenue to MPMS, but they also result in a decrease in
275
17
18 the overall profitability of PPN. As such, even if it is assumed that the revenue received by
19 MPMS is not relevant, the fact that the amounts are not determined based on an arms-length
20 negotiation, and have a very direct impact on the profitability of MPMS, of which Dr. Blum
21 is an owner, is in fact quite relevant to the determination of potential losses.
22 . The General Ledgers for PPN seem to include certain costs that would typically be paid by a
23 landlord, if a direct relationship between the tenant/landlord did not exist. For example, the
24 2015 General Ledger for PPN includes a section entitled “New Building Expenses" and
25 reflects payment to an architect more than 4 months prior to when Dr. Blum started paying
26 rent to MPMS, It also includes a section entitled “Due from Menlo Park Medical Suites” in
27 which PPN is due money in reimbursements for costs that she incurred on behalf of MPMS,
28 including money to GCA Law Partners LLC related to the rental agreements for the LLC
-3.
DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL
FOUNDATION GROUP, INC’S OPPOSITION T0 PLAINTIFF’S MOTION To QUASH
of another example, there is a section in the 2015 General Ledgers entitled
tenants. By way
“Utilities” in which PPN makes total payments from 7/14/2015 through 12/30/2015 to
several utilities companies. No utilities costs were present at PPN’s old office location, and
only begin after she began renting from MPMS. By way of another example, the 2016
ask/1.x;
General Ledger for PPN includes a section entitled “Office Expenses” for a
“Backyard/yoga” studio. It is unclear without exploring the MPMS records whether that is
\l an expense exclusive to PPN/Dr. Blunt. If it isa studio that is also for the benefit/use of the
—
other tenants in the building, we would expect that the cost would be paid for by MPMS
not PPN exclusively.
10 10. I declare under penalty of perjury under the laws of the State of California that the foregoing
11 is true and correct. Executed this flay of March, 2017 in Sacramento, California.
LLP
2000
94111
12
13
CLLC
EHARLES R.
RAM
MAI-ILA, PHD
Suite
CA
Rees
Street,
14
& Francisco,
Gordon
Battery
16
San
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-4. <
PALO ALTO MEDICAL
DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT
PLAINTIFF’S MOTION TO QUASH
FOUNDATION GROUP, l'NC’S OPPOSITION TO
EXHIBIT 1
(D O C :3
l—l-I
UN
CHARLES R. MAHLA, PH.D.
Managing Director
Sacramento Office Head
Senior Economist
555 University Avenue, Suite 294
Sacramento, California 95825
Tel: 916 S76 0366
E-mail: cmahla@econone.com
CHARLES R. MAHLA has been engaged in economic analysis and
consulting for more than 24 years. He has consulted with companies In the chemical,
biotechnology, medical equipment, defense, aerospace, computer, plastics,
telecommunications, insurance, sporting goods, corrugated container and food
distribution industries. He has extensive experience with the calculation of damages in
antitrust, contract dispute and intellectual property matters. in addition, he has spent
significant time on employment matters dealing with wrongful termination and
employment discrimination. Over the last ten years, Dr. Mahla has performed dozens of
analyses of economic loss stemming from personal injury, wrongful death, and medical
malpractice.
Dr. Mahla has extensive experience in the calculation of damages arising
from patent infringement and the misappropriation of trade secrets and trade dress.
Dr. Mahla has been engaged to calculate damages (both lost profits and reasonable
royalties) by both plaintiffs and defendants across a wide array of industries and
products, including percutaneous transluminal coronary angioplasty ("PTCA") catheters
and stents, hemodialysis needle guards, agricultural GPS navigation equipment, COX-2
inhibitors, digital jukeboxes, motorized scooters, and online, automated automobile
credit aggregation systems.
Dr. Mahla also has extensive experience with issues relating to the
provision of cellular telephone service. Prior efforts include in—depth research regarding
industry structure, conduct and performance. Among other things, Dr. Mahla has
studied the regulatory history of cellular service, the nature and extent of industry
competition and a number of related conduct issues. He also has examined the current
regulatory environment, particularly in California, written about cellular issues, and
participated in a round-table discussion panel conducted on behalf of the Office of
Planning and Research for Governor Wilson. Dr. Mahla has testified in Superior Court of
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California on matters relating to conduct in the Los Angeles cellular market. He also has
testified in U.S. Bankruptcy Court on the impact of changes in California's regulatory
oversight on the provision of cellular equipment.
In addition to Dr. Mahla’s wireless telecom experience, he has analyzed
the market structure and firm conduct in both the Iandline telco and cable industries.
This work includes an analysis of competitive issues surrounding the access to data
transmission services for the provision of broadband Internet services.
Dr. Mahla is a member of the American Economic Association and is an
Associate Member of the American Bar Association.
EDUCATION
Ph.D.——-Economics, University of North Carolina - Chapel Hill, Chapel Hill,North
Carolina, December 1991 (Dissertation Title: "State Takeover Statutes and Shareholder
Wealth")
B.A.——-Economics, Lafayette College, Easton, Pennsylvania—cum laude, May 1982
PROFESSIONAL EXPERIENCE
Econ One Research Inc. Sacramento, CA
Managing Director,
Sacramento Office Head, August 2009—Present
Econ One Research Inc. Sacramento, CA
Senior Economistiuly 1997—Iuly 2009
Micronomics, Inc. Sacramento, CA
Senior Economist April 1994—July 1997
Micronomics Inc. Los Angeles, CA
Economistlune 1992—March 1994
University of North Carolina Greensboro, NC
Lecturer September 1989—May 1992
Arthur Andersen & Co. New York, NY
StaffConsultant June 1982—December 1984
Senior Consultant January 1985—Iune 1985
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PROFESSIONAL AFFILIATIONS
American Economic Association
Associate Member, American Bar Association
HONORS AND AWARDS
Omicron Delta Epsilon, Economics Honor Society, 1981
Phi Beta Kappa, Lafayette College, 1982
Economics St Business Award, Lafayette College, 1982
University Teaching Fellow, UNC-Chapel Hill, 1987
Lurcy Fellowship, UNC-Chapel Hill, 1988
BOOKS/MANUSCRIPTS
"Economic Damages—Primer for Attorneys; The Building Blocks for Valuing
Economic Damages in Personal Injury, Wrongful Death, Medical Malpractice, and
Products Liability Cases,” edited with Dwight Steward, Ph.D., Econ One Research,
Inc., 2007.
PAPERS/PRESENTATIONS
"Prejudgment Interest, Taxation and Patent Damages: How Courts Can Reduce
" unpublished manuscript, August 1993.
the Bias,
" for the
"Personal Communications Services: A Golden Opportunity for California,
Roundtable on Cellular Regulatory Policy, Governor's Office of Planning and
Research, July 1994.
”Big Deals: The Capital Region Turned A Lot of Heads in 1998,” Comstock's
Magazine March 1999.
”Can You Protect Yourself from Y2K Killer BeeSP,” Comstock’s Magazine, May
1999.
”Dissecting the Millennium Bug?,” Comstock's Magazine, May 1999.
”e-Taxes: The Growth of E-Commerce -- is ita Taxing DilemmoP”, Comstock’s
Business October 1999.
30f8
”Digital Convergence: Surfing the Net on The Wireless Wave”, Comstock's
Business Forthcoming,January 2000.
”Lost Profits and Royalties in Intellectual Property Disputes: The Need to Avoid
Double Dipping”, The Metropolitan Corgorate Counsel with Lynette Hilton,
February 2000.
”Wireless Performance/Pricing Trends 2000,” Panelist: Emerging Wireless and
Satellite Broadband Technologies, Telecon 2000 Conference, Anaheim, CA,
December 7, 2000.
”Public Forum For the 7"1Annual CMRS Competition Report,” Panelist, Federal
Communications Commission, Washington, D.C., February 28, 2002.
”Patent Disputes: Bridging the Gap Between ln-House Counsel and Law Firms,”
Panelist, West LegalEdcenter Conference, San Jose, CA, March 15, 2010.
”Negotiating the Royalty Damages Minefield--From Patent Reform to Recent
Case Law Precedent,” Presenter, Law.com Webinar with PhillipJohnson, Ph.D.,
September 15, 2010.
”Expert Witness Cross-Exam Workshop: Plaintifi’s and Defendant’s Expert,” Co—
lecturer with Michael Schwartz, The State Bar of California 2012 Annual Meeting,
Monterey, CA, October 11-14, 2012.
”Patent Disputes 2012: Uncover the Changing Patent Landscape
From Patent Portfolio to Litigation-Transitioning in a Post AIA World,” Damages
Section Panelist, West LegalEdcenter Conference, Santa Clara, CA, November 14,
2012.
”Patent Disputes 2013: How the AIA, USPTO and Patent Aggregation Have
Changed the Landscape,” Damages Section Panelist, West LegaiEdcenter
Conference, Santa Clara, CA, November 5, 2013.
"Patent Disputes Forum 2014,” Damages Section Panelist, West LegalEdcenter
Conference, Santa Clara, CA, November 4, 2014.
”Damage Issues in Employment Discrimination Litigation," Seminar provided to
the Employment Group, Gordon & Rees, San Francisco, CA, May 3, 2016.
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Analyzed claims of damages allegedly suffered from trade dress
infringement in the market for continuing medical education. Conducted
statistical analysis of likely effects.
Conducted market valuation of an Internet retall firm; analyzed claims of
price discrimination and breach of contract.
Analyzed effects of the refusal to grant interconnection to a prepaid
service reseller by a large wireless carrier in connection with an alleged
breach of contract. Quantified financial impact of alleged breach.
Conducted market study of the Home Uterine Activity Monitor (“HUAM")
market, including complete review of FDA regulatory oversight of Level II
and Level III medical devices. Analysis aided in the estimation of
damages from an alleged breach of contract between a developer and
manufacturer of HUAM devices.
Analyzed the effects of wireless subscriber churn inconnection with the
estimation of damages suffered by a large wireless carrier from
fraudulent agent churn.
Conducted valuation of a potential royalty due to a large research
university arising from the issuance of a patent on a new form of Non-
Steroidal Anti-inflammatory Drug ("NSAlD").
Conducted analysis of the development and maturation of the digital
imaging Industry as itrelated to potential damages arising from a breach
of contract between a manufacturer and a distributor.
Conducted a study on the effects of changes In California's regulatory
oversight on the provision of cellular equipment.
Analyzed sales and pricing practices of a major soy polymer manufacturer
in connection with charges of patent infringement and misappropriation
of trade secrets.
Analyzed economic aspects of a PBX switch termination agreement in
connection with charges of breach of contract.
Conducted market analysis of the cellular equipment market with a
particular focus on the Los Angeles market. Study led to the estimation
of financial damages resulting from below-cost pricing of such
equipment.
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Lead firm's participation in Roundtab/e on Cellular Regulatory Policy,
Governor's Office of Planning and Research.
Conducted analysis of cellular service pricing behavior in Los Angeles, San
Diego, and San Francisco relating to allegations of price fixing by service
providers.
Analyzed pricing practices of major pharmaceutical companies in
connection with charges of discriminatory pricing and price fixing brought
by numerous retail customers.
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SUMMARY OF REPRESENTATIVE PRIOR ENGAGEMENTS
- Estimated damages to a professional fundraiser resulting from an alleged
legal malpractice and breach of contract.
'
0 Estimated damages arising from the misappropriation of trade secrets
relating to the method of producing zero~fold PTCA balloons.
I Estimated lost earnings to an NFL assistant coach resulting from a breach
of contract.
. Estimated losses to the estate of a commercial fisherman resulting from
his death on the high seas.
0 Reviewed and assessed the appropriateness of royalty claims made by a
patent holder against a large software company. Claims involved
methods of authentication for communication between computers in a
virtual private network ("VPN”).
- Estimated the economic impact resulting from an Inability to work due to
injuries sustained in a motor vehicle accident.
- Analyzed the economic harm arising from disability discrimination on the
part of an assisted living facility.
- Analyzed alleged underperformance on the part of a County Authority
with respect to booking entertainment events at a Northern California
arena.
- Analyzed royalty damages suffered from patent infringement in the
market for scrolling-wheel computer mice.
- Analyzed economic losses to a family resulting from the mis-diagnosis of
cancer.
- Analyzed lost share value to a telecom executive resulting from a breach
of an employment contract.
0 Assessed the appropriateness of royalty claims made by a patent holder
against a large, international software company. Claims involved
methods of use of a compression algorithm by end users in both the U.S.
and abroad.
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Analyzed lost profits of a winery resulting from a breach of 3
requirements contract by a large,national importer.
Analyzed lost sponsorship earnings to a professional fisherman resulting
from an alleged contract interference.
Performed a liquidation value analysis of a law firm partnership.
Analyzed claims of lost profits and royalty damages allegedly suffered
from patent infringement in the market for digital jukeboxes.
Analyzed claims of lost profits and royalty damages allegedly suffered
from patent infringement in the market for GPS-based guidance systems
used in precision farming applications.
Analyzed damages resulting from the alleged misappropriation of trade
secrets relating to proprietary customer, price, and margin data of a large
waterworks supplier.
Analyzed employment discrimination claims relating to hiring practices in
a Northern California school district. Determined degree to which
plaintiff suffered economic losses resulting from the alleged
discrimination.
Reviewed and analyzed claims of damages allegedly suffered from
wrongful termination of an electrical parts distribution contract.
Reviewed and analyzed claims of damages allegedly suffered from fraud
and wrongful termination by an insurance carrier.
Conducted market-wide study of firm conduct in the corrugated
cardboard industry. Study analyzed the conduct of integrated firm
behavior with respect to pricing of inputs to downstream competitors.
Analyzed claims of lost profits and royalty damages allegedly suffered
from patent infringement in the market for hemodlalysis needle guards.
Conducted analysis of commercial success of an animal pharmaceutical in
support of a patent application. Also analyzed appropriate reasonable
royalty should patent be granted.
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Preview
MARCIE ISOM FITZSIMMONS (SBN: 226906) HIEU T. WILLIAMS (SBN: 280585) GORDON REES SCULLY MANSUKHANI. LLP 275 Battery Street, Suite 2000 San Francisco, CA 941 1 1 Telephone: (415) 986-5900 Facsimile: (415) 986-8054 Mlsomfi grsmcom HWillianisQflyrsmcom Attorneys for Defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC. LINDBERGH PORTER (SBN: 100091) LITTLER MENDELSON, PC. 333 Bush Street, 34'“ Floor San Francisco, CA 94104 Telephone: (415) 433-1940 Facsimile: (415) 399-8490 LPorter‘rFliItlercom 11 MAIKO NAKARAl-KANIVAS (SBN: 271710) 12 LITTLER MENDELSON, PC. ll 2000 1255 Treat Blvd, Suite 600 LLP 94] Suite 13 Walnut Creek, CA 94597 CA Telephone: (925) 932-2468 Rees Street, 14 Facsimile: (925) 946-9809 & MNakaraikanivasQPlittler.c0m Francisco, 15 Gordon Battery Attorneys for Defendants San 16 SUTTER HEALTII and PALO ALTO MEDICAL FOUNDATION 275 17 SUPERIOR COURT OF CALIFORNIA 18 COUNTY OF SANTA CLARA 19 DIANA P. BLUM,M1D., CASE NO. 115CV277582 20 Plaintiff. DECLARATION OF HIEU T. WILLIAMS 21 VS. IN SUPPORT OF DEFENDANTS’ JOINT OPPOSITION T0 PLAINTIFF’S 22 SUTTER HEALTH, a California corporation: MOTION IN LIMINE TO EXCLUDE PALO ALTO FOUNDATION MEDICAL EVIDENCE AND REFERENCES TO 23 GROUP, INC, 21California corporation; PLAINTIFF’S VVVVVVVVVVVVVVVV RECEIPT OF PALO ALTO MEDICAL FOUNDATION. a INVESTMENT INCOME 24 California corporation; and DOES 1through 20, Trial Date: January 8, 2018 25 Time: 8:45 am. Defendants. Dept: 16 26 27 28 DECLARATION OF HIEU T, WILLIAMS IN SUPPORT OF DEFENDANTS‘ JOINT OPPOSITION TO PLAINTIFF'S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND REFERENCES TO PLAINTIFF'S RECEIPT OF INVESTMENT INCOME 1. I am an attorney at law licensed to practice before allcourts ofthe State of California and am an attomey in the law firm ol‘Gordon Rees Scully Mansukhani LLP, attorneys for the defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC. (“the Physician Group”). I have personal knowledge ofthe matters contained in this declaration and if called to testify to them could and would do so competently. 2. During fact discovery, my colleague and counsel of Record for the Physician Group, Marcie I.Fitzsimmons, took Plaintiffs deposition over the course of several days. Attached as Exhibit A are true and correct copies of the relevant excerpts from the Transcript of Plaintiffs Deposition, in the above-entitled matter. 10 3. During discovery, on November 30. 2017, the Physician Group took the 11 deposition of third party Stephanie M. Recob, the bookkeeper for Plaintiff s private medical 2000 12 practice. Ms. Recob produced Profit and Loss Statements and General Ledgers for Plaintiffs 94111 LLP Suite 13 private medical practice from 2013 to 2016, some of which contained redactions. Attached as CA Rees Street, 14 Exhibit B is a true and correct copy of the Confidential 2015 General Ledger for Plaintiff‘s & Francisco, 15 private medical practice, Peninsula Private Neurology, produced in discovery by Plaintiff and/0r Gordon Battery San 16 Ms. Recob. Attached as Exhibit C is a true and correct copy ofthe Confidential 2016 General 275 17 Ledger for Plaintiff's private medical practice, Peninsula Private Neurology, produced in 18 discovery by Plaintiff and/or Ms. Recob. 19 4. Attached hereto is Exhibit D is a true and correct copy ofthe Declaration of 20 Charles Mahla in Support of Opposition to Motion to Quash. 21 22 I declare, under penalty of perjury under the laws of the State of California, the foregoing 23 is true and correct. 24 Executed on this 8th day of January 2018 at San Francisco, California. 25 WWW/mm 26 I-Iieu T. Williams 27 28 I10<330116223023i 1 -2- DECLARATION OF HlEU T. WILLIAMS IN SUPPORT OF DEFENDANTS’ JOINT OPPOSITION TO PLAINTIFF‘S MOTION IN LIMINE TO EXCLUDE EVIDENCE AND REFERENCES TO PLAINTIFF‘S RECEIPT OF INVESTMENT INCOME CONFIDENTIAL EXHIBIT A CONFIDENTIAL EXHIBIT B CONFIDENTIAL EXHIBIT C EXHIBIT D MARCIE I. FITZSIMMONS (SBN: 226906) I-IIEU T. WILLIAMS (SBN: 280585) GORDON REES SCULLY MANSUKHANI, LLP 275 Battery Street, Suite 2000 San Francisco, CA 94111 Telephone: (415) 986-5900 Facsimile: (415) 986-8054 Misom@gordomees.c0m Hwilliams@gordomees.com \IOLIIJR Attorneys for Defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC. 00 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA 10 11 DIANA P. BLUM, M.D., ) CASE NO. 115CV277582 ) 2000 12 ) 94111 Plaintiff, ) DECLARATION OF LLP Suite 13 ) CHARLES R. MAHLA, PHD Rees CA ) IN SUPPORT OF DEFENDANT 14 VS. Street, ) PALO ALTO MEDICAL 8L Francisco, 15 ) FOUNDATION GROUP, INC’S Gordon Battery SUTTER HEALTH, 3 California corporation; ) OPPOSITION T0 PLAINTIFF’S 16 PALO ALTO FOUNDATION MEDICAL MOTION TO QUASH San GROUP, INC., a California corporation; % 275 17 PALO ALTO MEDICAL FOUNDATION,a Date: April 11,2017 California corporation; and DOES 1 through ; Time: 9:00 am. 18 20, ) Dept; 8 ) Judge: The Honorable Maureen Folan 19 ) Defendants. ) 20 ) Accompanying Papers: ) 1. Opposition Brief; 21 ) 2. Declaration of Hieu T. Williams; ) 3. Response to Separate Statement; 22 ) 4. [Proposed] Order 23 /// 24 /// 25 /// 26 /// 27 // 28 /// .1. DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL FOUNDATION GROUP, INC‘S OPPOSITION TO PLAINTIFF’S MOTION TO QUASH I, CHARLES R. MAI—ILA, PhD, declare: I am an Economist and Managing Director at Econ One Research, Inc. I have been retained La) by defendant PALO ALTO FOUNDATION MEDICAL GROUP, INC, (“PAFMG”) in connection with this lawsuit. I have personal knowledge of the matters contained in this declaration and if called to testify to them could and would do so competently. \IQKII I received my PhD in Economics in 1991 and have been providing economic analysis and consulting for more than 24 years. I have testified as an expert at arbitration, trial (federal and state courts), or deposition more than 400 times. Attached hereto as Exhibit 1 is a true and correct copy of my CV. I have reviewed many documents related toDr. Blum’s alleged economic loss, including the 10 . 11 general ledgers, balance sheets, and the Profit and Loss Reports for her private practice. I 12 have also reviewed the relevant testimony regarding Menlo Park Medical Suites. In my 2000 94111 opinion, as explained below, the Menlo Park Medical Suites documents are important to LLP Suite 13 Rees CA 14 assessing Dr. Blum’s actual economic loss stemming from her separation from PAP MG. Street, & I reviewed, Dr. Blum started her Peninsula Private Neurology Francisco, 15 . As indicated in the documents Gordon began paying $2,500 in monthly Battery 16 (“PPN”) practice in November 2013. at which time she San 275 17 rent, which continued through May 2015. As Dr. Blum was a tenant in a building in which she had no ownership position, it can be assumed that this was a typical arms-length tenant- l8 19 landlord transaction. As reflected in the documents I reviewed, beginning in June 2015, Dr. Blum started paying 20 . $3,500 per month ($42,000 annually) to Menlo Park Medical Suites (“MPMS”) (of which 21 22 she isa part owner). Unlike the $2,500 per month rent that she paid previously, Dr. Blum presumably had some input (as a part owner of MPMS) into the amount that would be 23 24 charged. She could have charged “herself” $5,000 or even $10,000 per month, and without 25 knowing more about both sides of the transaction (i.e. the MPMS profit and loss statements), 26 or the ownership of MPMS (i.e. whether it is partially owned by anyone outside of her 27 immediate family), we have no way of determining if this is a market appropriate rate, or 28 simply a way of transferring revenue from PPN to MPMS. .2. DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL FOUNDATION GROUP, INC‘S OPPOSITION TO PLAINTIFF’S MOTION TO QUASH Although Dr. Blum would be subject to rent for the location of her private practice in any circumstance, the amount of that rent could be different if she has an ownership interest in LA) the renting entity. The purchase of the building was not simply an investment, but is an integral part of the operation of her new private practice. If she had not left PAFMG, there is nothing that I have reviewed to suggest that she would have had any need to purchase an office building, for which she now receives rental income from the tenants e including her \DOO\IO\UIJ> own business, PPN. As such, in my opinion the purchase has a direct connection to her mitigating efforts. . Dr, Blum claims in her motion that “even though Dr. Blum has an ownership interest in the 10 LLC, the finances of the LLC are completely irrelevant to the issues in the lawsuit.” In my 11 opinion, this is simply not true. The profitability of Dr. Blum’s private practice depends on 12 the amount she pays in rent and costs which are passed on by MPMS, amounts over which 2000 941]] LLP Suite 13 Dr. Blum has at least some control as part owner of MPMS. CA Rees 14 Setting aside the income aspect of the equation for now, the expense portion of Dr. Blum’s Street, & Francisco, 15 private practice directly impacts the amount of mitigation she has alleged in this case. Rent Gordon Battery 16 and other payments from PPN to MPMS (or costs, such as utilities, that are paid by PPN and San not MPMS) result in an increase in revenue to MPMS, but they also result in a decrease in 275 17 18 the overall profitability of PPN. As such, even if it is assumed that the revenue received by 19 MPMS is not relevant, the fact that the amounts are not determined based on an arms-length 20 negotiation, and have a very direct impact on the profitability of MPMS, of which Dr. Blum 21 is an owner, is in fact quite relevant to the determination of potential losses. 22 . The General Ledgers for PPN seem to include certain costs that would typically be paid by a 23 landlord, if a direct relationship between the tenant/landlord did not exist. For example, the 24 2015 General Ledger for PPN includes a section entitled “New Building Expenses" and 25 reflects payment to an architect more than 4 months prior to when Dr. Blum started paying 26 rent to MPMS, It also includes a section entitled “Due from Menlo Park Medical Suites” in 27 which PPN is due money in reimbursements for costs that she incurred on behalf of MPMS, 28 including money to GCA Law Partners LLC related to the rental agreements for the LLC -3. DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PALO ALTO MEDICAL FOUNDATION GROUP, INC’S OPPOSITION T0 PLAINTIFF’S MOTION To QUASH of another example, there is a section in the 2015 General Ledgers entitled tenants. By way “Utilities” in which PPN makes total payments from 7/14/2015 through 12/30/2015 to several utilities companies. No utilities costs were present at PPN’s old office location, and only begin after she began renting from MPMS. By way of another example, the 2016 ask/1.x; General Ledger for PPN includes a section entitled “Office Expenses” for a “Backyard/yoga” studio. It is unclear without exploring the MPMS records whether that is \l an expense exclusive to PPN/Dr. Blunt. If it isa studio that is also for the benefit/use of the — other tenants in the building, we would expect that the cost would be paid for by MPMS not PPN exclusively. 10 10. I declare under penalty of perjury under the laws of the State of California that the foregoing 11 is true and correct. Executed this flay of March, 2017 in Sacramento, California. LLP 2000 94111 12 13 CLLC EHARLES R. RAM MAI-ILA, PHD Suite CA Rees Street, 14 & Francisco, Gordon Battery 16 San 275 17 '18 19 20 21 22 23 24 25 26 27 28 Nassau/1mm”) -4. < PALO ALTO MEDICAL DECLARATION OF CHARLES MAHLA IN SUPPORT OF DEFENDANT PLAINTIFF’S MOTION TO QUASH FOUNDATION GROUP, l'NC’S OPPOSITION TO EXHIBIT 1 (D O C :3 l—l-I UN CHARLES R. MAHLA, PH.D. Managing Director Sacramento Office Head Senior Economist 555 University Avenue, Suite 294 Sacramento, California 95825 Tel: 916 S76 0366 E-mail: cmahla@econone.com CHARLES R. MAHLA has been engaged in economic analysis and consulting for more than 24 years. He has consulted with companies In the chemical, biotechnology, medical equipment, defense, aerospace, computer, plastics, telecommunications, insurance, sporting goods, corrugated container and food distribution industries. He has extensive experience with the calculation of damages in antitrust, contract dispute and intellectual property matters. in addition, he has spent significant time on employment matters dealing with wrongful termination and employment discrimination. Over the last ten years, Dr. Mahla has performed dozens of analyses of economic loss stemming from personal injury, wrongful death, and medical malpractice. Dr. Mahla has extensive experience in the calculation of damages arising from patent infringement and the misappropriation of trade secrets and trade dress. Dr. Mahla has been engaged to calculate damages (both lost profits and reasonable royalties) by both plaintiffs and defendants across a wide array of industries and products, including percutaneous transluminal coronary angioplasty ("PTCA") catheters and stents, hemodialysis needle guards, agricultural GPS navigation equipment, COX-2 inhibitors, digital jukeboxes, motorized scooters, and online, automated automobile credit aggregation systems. Dr. Mahla also has extensive experience with issues relating to the provision of cellular telephone service. Prior efforts include in—depth research regarding industry structure, conduct and performance. Among other things, Dr. Mahla has studied the regulatory history of cellular service, the nature and extent of industry competition and a number of related conduct issues. He also has examined the current regulatory environment, particularly in California, written about cellular issues, and participated in a round-table discussion panel conducted on behalf of the Office of Planning and Research for Governor Wilson. Dr. Mahla has testified in Superior Court of lof8 California on matters relating to conduct in the Los Angeles cellular market. He also has testified in U.S. Bankruptcy Court on the impact of changes in California's regulatory oversight on the provision of cellular equipment. In addition to Dr. Mahla’s wireless telecom experience, he has analyzed the market structure and firm conduct in both the Iandline telco and cable industries. This work includes an analysis of competitive issues surrounding the access to data transmission services for the provision of broadband Internet services. Dr. Mahla is a member of the American Economic Association and is an Associate Member of the American Bar Association. EDUCATION Ph.D.——-Economics, University of North Carolina - Chapel Hill, Chapel Hill,North Carolina, December 1991 (Dissertation Title: "State Takeover Statutes and Shareholder Wealth") B.A.——-Economics, Lafayette College, Easton, Pennsylvania—cum laude, May 1982 PROFESSIONAL EXPERIENCE Econ One Research Inc. Sacramento, CA Managing Director, Sacramento Office Head, August 2009—Present Econ One Research Inc. Sacramento, CA Senior Economistiuly 1997—Iuly 2009 Micronomics, Inc. Sacramento, CA Senior Economist April 1994—July 1997 Micronomics Inc. Los Angeles, CA Economistlune 1992—March 1994 University of North Carolina Greensboro, NC Lecturer September 1989—May 1992 Arthur Andersen & Co. New York, NY StaffConsultant June 1982—December 1984 Senior Consultant January 1985—Iune 1985 Zof8 PROFESSIONAL AFFILIATIONS American Economic Association Associate Member, American Bar Association HONORS AND AWARDS Omicron Delta Epsilon, Economics Honor Society, 1981 Phi Beta Kappa, Lafayette College, 1982 Economics St Business Award, Lafayette College, 1982 University Teaching Fellow, UNC-Chapel Hill, 1987 Lurcy Fellowship, UNC-Chapel Hill, 1988 BOOKS/MANUSCRIPTS "Economic Damages—Primer for Attorneys; The Building Blocks for Valuing Economic Damages in Personal Injury, Wrongful Death, Medical Malpractice, and Products Liability Cases,” edited with Dwight Steward, Ph.D., Econ One Research, Inc., 2007. PAPERS/PRESENTATIONS "Prejudgment Interest, Taxation and Patent Damages: How Courts Can Reduce " unpublished manuscript, August 1993. the Bias, " for the "Personal Communications Services: A Golden Opportunity for California, Roundtable on Cellular Regulatory Policy, Governor's Office of Planning and Research, July 1994. ”Big Deals: The Capital Region Turned A Lot of Heads in 1998,” Comstock's Magazine March 1999. ”Can You Protect Yourself from Y2K Killer BeeSP,” Comstock’s Magazine, May 1999. ”Dissecting the Millennium Bug?,” Comstock's Magazine, May 1999. ”e-Taxes: The Growth of E-Commerce -- is ita Taxing DilemmoP”, Comstock’s Business October 1999. 30f8 ”Digital Convergence: Surfing the Net on The Wireless Wave”, Comstock's Business Forthcoming,January 2000. ”Lost Profits and Royalties in Intellectual Property Disputes: The Need to Avoid Double Dipping”, The Metropolitan Corgorate Counsel with Lynette Hilton, February 2000. ”Wireless Performance/Pricing Trends 2000,” Panelist: Emerging Wireless and Satellite Broadband Technologies, Telecon 2000 Conference, Anaheim, CA, December 7, 2000. ”Public Forum For the 7"1Annual CMRS Competition Report,” Panelist, Federal Communications Commission, Washington, D.C., February 28, 2002. ”Patent Disputes: Bridging the Gap Between ln-House Counsel and Law Firms,” Panelist, West LegalEdcenter Conference, San Jose, CA, March 15, 2010. ”Negotiating the Royalty Damages Minefield--From Patent Reform to Recent Case Law Precedent,” Presenter, Law.com Webinar with PhillipJohnson, Ph.D., September 15, 2010. ”Expert Witness Cross-Exam Workshop: Plaintifi’s and Defendant’s Expert,” Co— lecturer with Michael Schwartz, The State Bar of California 2012 Annual Meeting, Monterey, CA, October 11-14, 2012. ”Patent Disputes 2012: Uncover the Changing Patent Landscape From Patent Portfolio to Litigation-Transitioning in a Post AIA World,” Damages Section Panelist, West LegalEdcenter Conference, Santa Clara, CA, November 14, 2012. ”Patent Disputes 2013: How the AIA, USPTO and Patent Aggregation Have Changed the Landscape,” Damages Section Panelist, West LegaiEdcenter Conference, Santa Clara, CA, November 5, 2013. "Patent Disputes Forum 2014,” Damages Section Panelist, West LegalEdcenter Conference, Santa Clara, CA, November 4, 2014. ”Damage Issues in Employment Discrimination Litigation," Seminar provided to the Employment Group, Gordon & Rees, San Francisco, CA, May 3, 2016. 40f8 Analyzed claims of damages allegedly suffered from trade dress infringement in the market for continuing medical education. Conducted statistical analysis of likely effects. Conducted market valuation of an Internet retall firm; analyzed claims of price discrimination and breach of contract. Analyzed effects of the refusal to grant interconnection to a prepaid service reseller by a large wireless carrier in connection with an alleged breach of contract. Quantified financial impact of alleged breach. Conducted market study of the Home Uterine Activity Monitor (“HUAM") market, including complete review of FDA regulatory oversight of Level II and Level III medical devices. Analysis aided in the estimation of damages from an alleged breach of contract between a developer and manufacturer of HUAM devices. Analyzed the effects of wireless subscriber churn inconnection with the estimation of damages suffered by a large wireless carrier from fraudulent agent churn. Conducted valuation of a potential royalty due to a large research university arising from the issuance of a patent on a new form of Non- Steroidal Anti-inflammatory Drug ("NSAlD"). Conducted analysis of the development and maturation of the digital imaging Industry as itrelated to potential damages arising from a breach of contract between a manufacturer and a distributor. Conducted a study on the effects of changes In California's regulatory oversight on the provision of cellular equipment. Analyzed sales and pricing practices of a major soy polymer manufacturer in connection with charges of patent infringement and misappropriation of trade secrets. Analyzed economic aspects of a PBX switch termination agreement in connection with charges of breach of contract. Conducted market analysis of the cellular equipment market with a particular focus on the Los Angeles market. Study led to the estimation of financial damages resulting from below-cost pricing of such equipment. 7of8 Lead firm's participation in Roundtab/e on Cellular Regulatory Policy, Governor's Office of Planning and Research. Conducted analysis of cellular service pricing behavior in Los Angeles, San Diego, and San Francisco relating to allegations of price fixing by service providers. Analyzed pricing practices of major pharmaceutical companies in connection with charges of discriminatory pricing and price fixing brought by numerous retail customers. 80f8 SUMMARY OF REPRESENTATIVE PRIOR ENGAGEMENTS - Estimated damages to a professional fundraiser resulting from an alleged legal malpractice and breach of contract. ' 0 Estimated damages arising from the misappropriation of trade secrets relating to the method of producing zero~fold PTCA balloons. I Estimated lost earnings to an NFL assistant coach resulting from a breach of contract. . Estimated losses to the estate of a commercial fisherman resulting from his death on the high seas. 0 Reviewed and assessed the appropriateness of royalty claims made by a patent holder against a large software company. Claims involved methods of authentication for communication between computers in a virtual private network ("VPN”). - Estimated the economic impact resulting from an Inability to work due to injuries sustained in a motor vehicle accident. - Analyzed the economic harm arising from disability discrimination on the part of an assisted living facility. - Analyzed alleged underperformance on the part of a County Authority with respect to booking entertainment events at a Northern California arena. - Analyzed royalty damages suffered from patent infringement in the market for scrolling-wheel computer mice. - Analyzed economic losses to a family resulting from the mis-diagnosis of cancer. - Analyzed lost share value to a telecom executive resulting from a breach of an employment contract. 0 Assessed the appropriateness of royalty claims made by a patent holder against a large, international software company. Claims involved methods of use of a compression algorithm by end users in both the U.S. and abroad. Sof8 Analyzed lost profits of a winery resulting from a breach of 3 requirements contract by a large,national importer. Analyzed lost sponsorship earnings to a professional fisherman resulting from an alleged contract interference. Performed a liquidation value analysis of a law firm partnership. Analyzed claims of lost profits and royalty damages allegedly suffered from patent infringement in the market for digital jukeboxes. Analyzed claims of lost profits and royalty damages allegedly suffered from patent infringement in the market for GPS-based guidance systems used in precision farming applications. Analyzed damages resulting from the alleged misappropriation of trade secrets relating to proprietary customer, price, and margin data of a large waterworks supplier. Analyzed employment discrimination claims relating to hiring practices in a Northern California school district. Determined degree to which plaintiff suffered economic losses resulting from the alleged discrimination. Reviewed and analyzed claims of damages allegedly suffered from wrongful termination of an electrical parts distribution contract. Reviewed and analyzed claims of damages allegedly suffered from fraud and wrongful termination by an insurance carrier. Conducted market-wide study of firm conduct in the corrugated cardboard industry. Study analyzed the conduct of integrated firm behavior with respect to pricing of inputs to downstream competitors. Analyzed claims of lost profits and royalty damages allegedly suffered from patent infringement in the market for hemodlalysis needle guards. Conducted analysis of commercial success of an animal pharmaceutical in support of a patent application. Also analyzed appropriate reasonable royalty should patent be granted. 60f8