HomeMy WebLinkAbout2021-cv-2063-CNS-MEH - City Of Fort Collins V. Open International, Et Al. - 018 - Proposed Scheduling Order By City
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 21-cv-02063-DDD
CITY OF FORT COLLINS,
Plaintiff,
v.
OPEN INTERNATIONAL, LLC and
OPEN INVESTMENTS, LLC,
Defendants.
[PROPOSED] SCHEDULING ORDER
1. DATE OF CONFERENCE
AND APPEARANCES OF COUNSEL AND PRO SE PARTIES
A Scheduling Conference is scheduled for September 16, 2021 at 9:30 a.m.
For Plaintiff City of Fort Collins:
Case Collard
Andrea Ahn Wechter
Maral J. Shoaei
DORSEY & WHITNEY LLP
1400 Wewatta Street, Ste. 400
Denver, Colorado 80202
Telephone: (303) 629-3400
Email: collard.case@dorsey.com
Email: wechter.andrea@dorsey.com
Email: shoaei.maral@dorsey.com
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 1 of 16
2
For Defendants Open International, LLC and Open Investments, LLC:
Paul D. Swanson
Chris D. Mack (admission pending)
Hannah E. Armentrout
HOLLAND & HART LLP
555 17th Street, Suite 3200
Denver, CO 80202
Ph: (303) 295-8000
pdswanson@hollandhart.com
cdmack@hollandhart.com
hearmentrout@hollandhart.com
2. STATEMENT OF JURISDICTION
As more fully set forth in Defendants’ Notice of Removal [Docket No. 1], this Court has
jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1332 (diversity
jurisdiction), as Plaintiff and Defendants are citizens of different states and the amount in
controversy exceeds $75,000. This Court also has supplemental jurisdiction pursuant to 28 U.S.C.
§ 1367(a) over claims under Colorado law.
3. STATEMENT OF CLAIMS AND DEFENSES
a. Plaintiff: Plaintiff City of Fort Collins (the “City”) seeks rescission of the
agreements with Defendants, return of all funds paid by the City, and a return of the parties to the
position they were each in before the City entered into the agreements. Alternatively, the City
seeks damages pursuant to the agreements with Defendants.
The City received voter approval in 2017 to launch its own utility business to provide
broadband and telecommunication services and facilities, which has been named Connexion. The
City then needed to provide customer care and billing services for its Connexion customers. The
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 2 of 16
3
City had a billing system in place for its other utility services: electric, water, wastewater and
stormwater. The City sought an experienced partner and a mature, well developed, real-world
tested product that would consolidate customer care and billing and handle both (1) its new
Connexion municipal broadband service and (2) its existing utilities.
On February 10, 2018, the City published a Request for Proposal 86 97 for “Vendor
Selection and Implementation of a Comprehensive Solution for Utilities/Broadband Billing
(CIS/OSS)” including a detailed response template and seeking submission of responses by March
12, 2018 (“RFP”). In the RFP, the City indicated that it was looking for a comprehensive and
integrated solution providing functionality to its utility customer information system (“CIS”), its
field services, and to serve the range of needs both for current City utilities and for Connexion.
On March 12, 2018, Defendant Open International, LLC (“Open International”) submitted
its proposal (“Response”) to the City’s RFP. The Response was a comprehensive document with
over 1,000 pages setting forth Open International’s purported “30 years of experience
implementing CIS solutions for utility service providers” and “over 100 CIS implementations
across the Americas.” Open International made a number of false or misleading assertions,
including, but not limited to:
- Its product, Open Smartflex, was currently in “its fifth product generation with a
flexible, rules based [Operational Support System (“OSS”)], a single product platform
to support utilities and telecommunication service providers;”
- Its product was off-the-shelf and only needed to be “fine-tuned” for implementation;
- That the product could implement customer-specific enhancements “without
customizing source code”; and
- The requested implementation would occur in two phases and that the “Project
Closure” would occur in January 2020.
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 3 of 16
4
In reliance on Open International statements and representations, the City was induced to
move forward with Open International instead of the seven other firms that submitted responses
to the RFP. The City and Open International ultimately entered into a Master Professional Services
Agreement (the “MPSA”) and Software License Agreement, both executed August 9, 2018, as
well as a “Scope of Work” (”SOW”). The total maximum cost for completion of the work outlined
in the SOW, MPSA, and Software License Agreement (collectively, “Agreements”) was
approximately $7.3 million. Defendant Open Investments LLC (“Open Investments”) provided
the City with a guarantee of Open International’s performance under the Agreements.
However, in May 2020, it became clear that Open International would miss its deadlines
as set forth in the Agreements and in turn, entered into the First Amendment to the MPSA, which
created new deadlines. But, Open International also missed the new deadlines in the First
Amendment. Total changes to the original budgeted cost amount to approximately $4.7 million.
As of May 2021, the City has paid Open International approximately $8.6 million and retained
approximately $1.1 million pursuant to the Agreements. However, as of date, Open International
has failed to deliver a fully functioning product for any of the five utility services, despite agreeing
to deliver the product by June 2019 for Connexion and by October 2019 for the other four utilities.
As a result of Open International’s actions and the City’s numerous attempts for months to
resolve the issues internally with Open International’s representatives and project managers, the
City brought this action for fraudulent inducement, breach of contract, breach of the implied
covenant of good faith and fair dealing, and declaratory judgment.
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 4 of 16
5
b. Open International: Open International brings three counterclaims: for (1) breach
of contract, and (2) breach of the implied covenant of good faith and fair dealing, and
(3) declaratory judgment.
Under the MPSA and SOW, the City agreed to provide robust staffing, leadership, and
other resources to ensure the successful and timely implementation of the project. The City
admittedly failed to do so.
The City also was primarily responsible for configuration (i.e., providing parameters and
business rules for the software’s operations), data migration and conversion from the City’s legacy
utility software, and integration of the new software with existing systems. The City, however,
failed to comply with its obligations related to its configuration, conversion, and integration
obligations.
Due to the complexity of the project, the parties contemplated the need for project changes
and provided a process to be followed in such instances. Many such changes occurred, and the
parties agreed to extend various deadlines to complete various portions of the project, including
the launch date for utilities product. One such change was Project Change Request 29. Under this
agreed upon change request, the City agreed to pay Open International for services performed after
the planned launch date for the utilities product, which the City had postponed. The City also
committed to deliver a list of broadband issues with deliverable milestones to Open International
by January 15, 2021. The City also committed to deliver by February 5, 2021, an updated project
plan to finish the utilities implementation, which was essential for Open to perform and quote the
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 5 of 16
6
remaining work to be completed. But the City failed to timely deliver a list of broadband issues
and an updated project plan by their respective deadlines.
The City agreed to pay all invoices within thirty days of the invoice date and a late fee of
the lesser of: (i) one percent (1%) per month; or (ii) the maximum legal rate allowed by the State
of Colorado. The parties further agreed that the City could retain 10% of each invoice and that
such retainage would be released after the Acceptance Date, as defined in the MPSA. However,
the City has refused to pay invoices, retainage fees, and for other work performed.
In short, the City’s failures amount to breaches of the MPSA and SOW as well as breaches
of the implied covenant of good faith and fair dealing, for which Open International has been
damaged as more fully outlined below. Open International also seeks a judicial declaration that it
performed its contractual obligations or was prevented from performing such obligations by virtue
of the City’s preceding breaches of the MPSA and other conduct and that Open International (along
with Open Investments) therefore is not liable to the City for breach of any contractual obligation
under the MPSA or SOW.
c. Other Parties: N/A
4. UNDISPUTED FACTS
The following facts are undisputed:
1. On February 10, 2018, the City published a Request for Proposal 8697 for “Vendor
Selection and Implementation of a Comprehensive Solution for Utilities/Broadband Billing
(CIS/OSS)” including a detailed response template and seeking submission of responses by March
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 6 of 16
7
12, 2018.
2. On March 12, 2018, Open International submitted its proposal (“Response”) to the
City’s RFP.
3. The parties entered into a Master Professional Services Agreement (the “MPSA”)
and Software License Agreement, both executed August 9, 2018, as well as a “Scope of Work”
(“SOW”) incorporated by the MPSA.
4. On May 19, 2021, Open International sent a letter titled “Notice of Default pursuant
to Section 13.2 of the Master Professional Services Agreement.”
5. On May 28, 2021, the City sent a Notice of Default and Notice of Dispute to Open
International.
6. On June 17, 2021, representatives of Open International and the City met in person
to discuss a potential resolution.
5. COMPUTATION OF
DAMAGES
Plaintiff: The City seeks to rescind the Agreements and First Amendment between the City and
Defendants due to Open International’s fraudulent inducement. Rescission would require Open
International to return the amounts the City has previously paid, approximately $8.6 million. The City
alternatively seeks monetary damages in amounts to be determined. The City also seeks pre- and post-
judgment interest on all amounts to the extent permitted by law and statute. The City further seeks an
award of reasonable attorneys' fees, expenses, and costs incurred in connection with this lawsuit.
Open International: Open International seeks damages in an amount to be proven at trial, but not
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 7 of 16
8
less than $6.3 million. Open International’s damages can be broken down into the following categories:
(1) approximately $1.1 million in retained fees from invoices the City has otherwise paid, (2) more than
$2.3 million for other completed work that the City had already approved, (3) $1.8 million in other work
that Open International has performed but that has not yet been invoiced, and (4) $1.4 million in additional
costs that Open International incurred in agreeing to complete the project with the City despite the delays
and other problems the City caused, but (5) less approximately $300,000 in credits to the City. Open
International further seeks an award of its reasonable attorneys’ fees, expenses, interest, and costs incurred
in connection with this matter. Open International also seeks pre- and post-judgment interest on all
amounts to the full extent permitted by applicable law.
6. REPORT OF PRECONFERENCE DISCOVERY
AND MEETING UNDER FED. R. CIV. P. 26(f)
a. Date of Rule 26(f) meeting. August 26, 2021
b. Names of each participant and party he/she represented.
Case Collard, Maral Shoaei, and John Duval for Plaintiff.
Paul Swanson and Chris Mack for Defendants.
c. Statement as to when Rule 26(a)(1) disclosures were made or will be made.
The parties will exchange their respective Fed. R. Civ. P. 26(a)(1) Initial Disclosures on
September 9, 2021. The parties agree that they will identify categories of relevant documents and
begin production of documents on a rolling basis.
d. Proposed changes, if any, in timing or requirement of disclosures under Fed. R. Civ. P.
26(a)(1).
None.
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 8 of 16
9
e. Statement concerning any agreements to conduct informal discovery:
None.
f. Statement concerning any other agreements or procedures to reduce discovery and other
litigation costs, including the use of a unified exhibit numbering sys tem.
The parties agree to meet and confer to pursue opportunities to reduce discovery and other
litigation costs (including the use of a unified exhibit numbering system). The parties further agree
to streamline discovery as appropriate, including attempting to resolve discovery disputes by
phone before exchanging conferral letters. The parties also agree to electronic service of discovery
requests and responses.
g. Statement as to whether the parties anticipate that their claims or defenses will involve
extensive electronically stored information, or that a substantial amount of disclosure or
discovery will involve information or records maintained in electronic form.
The Parties agree that the case will involve an extensive amount of discovery and that most
records are maintained electronically. The parties will meet and confer to develop a joint protocol
for the exchange and production of electronically stored information. The parties shall, whenever
practical, produce electronic copies of documents rather than paper copies.
Further, the parties agree to be governed by Federal Rule of Civil Procedure 26(b)(5)(B)
with respect to claims of privilege and Federal Rule of Evidence 502(b) with respect to inadvertent
production of privileged materials. By this proposed order, the parties request that the Court
hereby order protection against waiver of privilege by inadvertent production to the fullest extent
consistent with Federal Rule of Evidence 502(d).
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 9 of 16
10
The parties will abide by the following procedure in connection with any inadvertent
production of privileged materials:
A. If a producing party has a good faith belief that a privileged document has been
inadvertently produced, it shall notify the receiving party o f the producing party’s claim of
privilege within ten (10) days after the producing party actually discovers that such inadvertent
production was made.
B. Upon receipt of any notice claiming privilege with respect to a produced document, all
other parties (regardless of whether they agree with the producing party’s claim of privilege) shall
promptly:
1) Use reasonable efforts to destroy or sequester all copies of the inadvertently
produced documents or material in such parties’ possession, custody, or control,
and notify the disclosing party that they have done so; and
2) Notify the producing party that they have taken reasonable steps to retrieve and
destroy or sequester the inadvertently produced documents or material from other
persons, if any, to whom such documents or material have been provided, consistent
with Rule 26(b)(5)(B).
C. To the extent a receiving party disputes the producing party’s claim of privilege, the
receiving party shall notify the producing party of its position within ten (10) business days of
receiving the producing party’s notice. Within ten (10) business days of receiving the notice, the
parties shall meet and confer in an effort to resolve their disagreement. If the parties are unable to
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 10 of 16
11
resolve their disagreement, the parties may submit the issue to the Court for a determination,
submitting any document(s) in dispute under seal in compliance with Rule 26(b)(5)(B), and any
relevant agreements or Court orders. See Fed. R. Evid. 502(d)-(e).
h. Statement summarizing the parties’ discussions regarding the possibilities for
promptly settling or resolving the case.
Although the parties have had discussions regarding early resolution of this action, no
agreement has been reached. The parties agree to engage in continued discussions regarding the
possibility of early settlement.
7. CONSENT
All parties □ [have] X [have not] consented to the exercise of jurisdiction of a
magistrate judge.
8. DISCOVERY
LIMITATIONS
a. Modifications which any party proposes to the presumptive numbers of
depositions or interrogatories contained in the Federal Rules.
The parties anticipate taking the depositions of the parties, along with any endorsed experts.
The parties anticipate taking no more than 10 depositions, per side, of lay witnesses and 2
depositions, per side, of expert witnesses. The parties agree to the presumptive limit of 25 written
interrogatories per side, including all discrete subparts, per Fed. R. Civ. P. 33(a)(1).
b. Limitations which any party proposes on the length of depositions.
The parties will follow the limits of one day of 7 hours as set forth in Fed. R. Civ. P.
30(d)(1) and will attempt to shorten the length where possible.
c. Limitations which any party proposes on the number of requests for production and/or
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 11 of 16
12
requests for admission.
The parties agree to a limit of 25 requests for production and 25 requests for admission per
side. Additional requests may be authorized by the Court upon a showing of good cause.
d. Deadline for service of Interrogatories, Requests for Production of Documents and/or
Admissions:
April 11, 2022
e. Other Planning or Discovery Orders
1. The parties agree that the present litigation necessitates a protective order and
plan to jointly file a motion for entry of protective order as well as a proposed
stipulated protective order with the Court.
2. The parties recognize that discovery procedures and timeline may require
special flexibility in light of COVID 19 and agree to work together to use
technology where appropriate and necessary (such as video depositions) and/or
allow flexibility in deadlines that account for the parties’ and counsel’s remote
work situations and the rapidly changing guidance on in-person work and
gatherings.
9. CASE PLAN AND SCHEDULE
a. Deadline for Joinder of Parties and Amendment of Pleadings: November 1, 2021
b. Discovery Cut-off: May 26, 2022
c. Dispositive Motion Deadline: June 27, 2022
d. Expert Witness Disclosure
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 12 of 16
13
1. The parties shall identify anticipated fields of expert testimony, if any.
While the parties have not made their final determination as to the need and
anticipated fields for expert testimony, and each reserves the right to supplement
their respective lists, each party currently anticipates relying on expert
testimony in the areas of economic damages and software. The parties further
reserve the right to endorse any necessary rebuttal experts.
2. Limitations which the parties propose on the use or number of expert witnesses.
Each side may designate up to two (2) expert witnesses.
3. The parties shall designate all experts and provide opposing counsel with all
information specified in Fed. R. Civ. P. 26(a)(2) as to any subject on which the
party has the burden of proof, on or before March 25, 2022.
4. The parties shall designate all rebuttal experts and provide opposing counsel
with all information specified in Fed. R. Civ. P. 26(a)(2) by April 25, 2022.
e. Identification of Persons to Be Deposed:
At this time, Plaintiff anticipates deposing the following persons: Hernando Parrott;
William Corredor; representatives of Defendants pursuant to Rule 30(b)(6); employees and
contractors of Open International who worked on the project including subcontractors; any factual
witnesses identified by Defendant; and any expert witnesses identified by Defendant.
At this time, Defendants anticipate deposing the following persons: Mike Beckstead, Dr.
Michelle Frey, Darin Atteberry, Colman Keane, Travis Storin, Aaron McClune, City
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 13 of 16
14
representative(s) pursuant to Rule 30(b)(6), and other individuals associated with the project.
Defendants also may seek to depose members of the City Council as well as any f act or expert
witnesses identified by the City.
10. DATES FOR FURTHER CONFERENCES
a. Status conferences will be held in this case at the following dates and times:
.
b. A final pretrial conference will be held in this case on ____________at o’clock
_____m. A Final Pretrial Order shall be prepared by the parties and submitted to the
court no later than seven (7) days before the final pretrial conference.
11. OTHER SCHEDULING MATTERS
a. Identify those discovery or scheduling issues, if any, on which counsel after a good
faith effort, were unable to reach an agreement.
b. Anticipated length of trial and whether trial is to the court or jury.
The parties anticipate a 7-day jury trial.
c. Identify pretrial proceedings, if any, that the parties believe may be more efficiently or
economically conducted in the District Court’s facilities at 212 N. Wahsatch Street, Colorado
Springs, Colorado 80903-3476; Wayne Aspinall U.S. Courthouse/Federal Building, 402 Rood
Avenue, Grand Junction, Colorado 81501-2520; or the U.S. Courthouse/Federal Building,, La Plata
County Courthouse, 1060 E. 2nd Avenue, Suite 150, Durango, Colorado 81301.
At this time, there are no pretrial proceedings that the parties believe may be more
efficiently or economically conducted in the District Court’s facilities located in Colorado Springs
or Grand Junction.
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 14 of 16
15
12. NOTICE TO COUNSEL AND PRO SE PARTIES
The parties filing motions for extension of time or continuances must comply with
D.C.COLO.LCivR 6.1(c) by serving the motion contemporaneously upon the moving attorney's client.
Counsel will be expected to be familiar and to comply with the Pretrial and Trial Procedures or
Practice Standards established by the judicial officer presiding over the trial of this case.
With respect to discovery disputes, parties must comply with D.C.COLO.LCivR 7.1(a).
Counsel and unrepresented parties are reminded that any change of contact information
must be reported and filed with the Court pursuant to the applicable local rule.
13. AMENDMENTS TO SCHEDULING ORDER
The scheduling order may be altered or amended only upon a showing of good cause.
DATED at Denver, Colorado, this day of , 20 .
BY THE COURT:
United States District Court Judge
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 15 of 16
16
Approved By:
/s/ Case Collard
Case Collard
Andrea Ahn Wechter
Maral J. Shoaei
DORSEY & WHITNEY LLP
1400 Wewatta Street, Ste. 400
Denver, Colorado 80202
Telephone: (303) 629-3400
Email: collard.case@dorsey.com
Email: wechter.andrea@dorsey.com
Email: shoaei.maral@dorsey.com
Attorneys for Plaintiff
/s/ Paul D. Swanson
Paul D. Swanson
Chris D. Mack (admission pending)
Hannah E. Armentrout
HOLLAND & HART LLP
555 17th Street, Suite 3200
Denver, Colorado 80202
Telephone: (303) 295-8000
Email: pdswanson@hollandhart.com
Email: cdmack@hollandhart.com
Email: hearmentrout@hollandhart.com
Attorneys for Defendants
Case 1:21-cv-02063-DDD-NYW Document 18 Filed 09/09/21 USDC Colorado Page 16 of 16