Rossi v. IH Case: Protective Order Issued, Judge Strikes, Upholds Affirmative Defenses

Quote from Paradigmnoia

@Abd Ul-Rahman Lomax,
The reason I supplied the image was to avoid typing the thing out.
The Leonardo et al documents are all images, rather than normal searchable documents. I don't know if his lawyers do this on purpose, to be a nuisance to the defense, or if they just don't know how to produce a PDF directly from the word processing document.
Or something else. But a nuisance it is.

Yes, the Exhibits attached to the Complaint are images, though there does seem to be some text in there for some. However, the Complaint itself is text and can easily be copied. At least the version I have is, that is where I copied it from. Yes. It's irritating.

Something is off here. There are lots of Rossi filings that are pdfs and that are text, not image.

Quote from Abd Ul-Rahman Lomax

Quote from Bob: “The thread is about non-disclosure being granted.”
Technically about the parties being able to label material they disclose as being confidential, i.e., not to be disclosed to the public, or for "attorney's eyes" only to attorneys,…

Thanks for your thoughts. I often find very good logic and views that I might not have thought of or been aware.

My main point, was that IH seems to have entered in a deal with Rossi to
1) have an "insurance" policy in case Rossi actually had something. I believe you called it a "hedge". This seems plausible.

2) To put "an end" to the uncertainty in LENR research caused by all the Rossi claims. Why move into other research if he was going
to soon market a product that was years ahead of others.

It is point #2 that I am somewhat curious that may or may not be successful. As you have stated, "the cat is already out of the bag" and one would think Rossi has fallen into complete irrelevance. (As many researchers already had him there, he seemed to be causing ripples in the investor mindset. After all IH paid him millions, which was much more than anyone else was getting) So if he comes out with a settlement and "NDA's" in place, hiding the settlement, he may very well continue as he has. Hydrofusion seems to still be interested in him for example. So my thought was unless IH continues the counter suit and really puts the "kabosh" on him, I am concerned that after all this drama, we could be back to square one.

I have no animosity towards Rossi, other than frustration of this drama he has caused. As with any individual, if he has done harm or illegal actions, I would hope justice be served. I would much rather he come clean and change his ways. A truly repentant heart is always better than an imprisoned one!

Quote from Bob

Abd Ul-Rahman Lomax wrote:

Thanks for your thoughts. I often find very good logic and views that I might not have thought of or been aware.

Thanks.

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My main point, was that IH seems to have entered in a deal with Rossi to
1) have an "insurance" policy in case Rossi actually had something. I believe you called it a "hedge". This seems plausible.

2) To put "an end" to the uncertainty in LENR research caused by all the Rossi claims. Why move into other research if he was going
to soon market a product that was years ahead of others.

Yes. This was in addition to a hope that the Rossi technology actually worked and Rossi would be willing to show them how to make it work. The value of that hope, however, would depend on an assessment of the probability of this being the case. Skepticism was rational here, the clear Rossi avoidance of independent confirmation was an obvious red flag. There were, in the other direction, various indications that the effect might be real. Lugano looked reasonable good at first, in spite of obvious defects. Look at the McKubre review! I saw Lugano and was very suspicious: using a complex and uncalibrated method to make an important determination? With complex methods there are many opportunities to make some mistake. McKubre also pointed to the serious problem of no real calibration. Was Rossi responsible for that fiasco? Maybe. Maybe it was Levi, or maybe it was the phase of the moon. I surely don't know.

The point is that Industrial Heat looked at all the possibilities and made a choice, and the result of that choice is that we now know far more about the history and any future would-be investors would be on guard, one would think. This is regardless of whatever happens in a possible settlement. That is the "cat that is out of the bag."

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It is point #2 that I am somewhat curious that may or may not be successful. As you have stated, "the cat is already out of the bag" and one would think Rossi has fallen into complete irrelevance. (As many researchers already had him there, he seemed to be causing ripples in the investor mindset. After all IH paid him millions, which was much more than anyone else was getting) So if he comes out with a settlement and "NDA's" in place, hiding the settlement, he may very well continue as he has. Hydrofusion seems to still be interested in him for example. So my thought was unless IH continues the counter suit and really puts the "kabosh" on him, I am concerned that after all this drama, we could be back to square one.

Only those who refuse to look at history. This has nothing to do with the Protective Order. The possible concern here is that IH and Rossi and the other parties come to an agreement and the agreement provides that the details are private. That does happen. There is no way to stop it, in fact.

And then there are leaks....

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I have no animosity towards Rossi, other than frustration of this drama he has caused. As with any individual, if he has done harm or illegal actions, I would hope justice be served. I would much rather he come clean and change his ways. A truly repentant heart is always better than an imprisoned one!

I am far more concerned about the general welfare of humanity than I am about "justice." Justice is a means, not an end.

Industrial Heat may make some of its decisions considering the public welfare. They are, however, not obligated to do so at high cost to themselves. It's a choice they can make, if they have the opportunity. They appear to be clear thinkers, so that's what I expect. Meanwhile, they have firmly established themselves in the CMNS community, they are basically trusted. LENR research is about to expand rapidly, practically explosively, I give it no more than two years for that to become obvious.

Bob,

I tend to agree with your first point. Although there may or may not have been any formal agreement about the GPT, the fact IH let Rossi's test in Doral (which he referred to as a test repeatedly on the JONP) knowing that he would expect payment at the end indicates some level of a "hedge." Legally, IH may or may not owe Rossi one red cent even if his plant worked marvelously producing high COP. That is for the court to decide. But personally I wish Industrial Heat wouldn't have allowed for such an ambiguous hedge. They should have never let the plant be transported to Doral and the "test" (whatever it was for) begin unless they knew both sides had a clear understanding IN WRITING about what was being tested and what would be expected afterwards under various outcomes. It would have saved everyone involved a massive headache if they would have forced Rossi to sit down for a full meeting before the plant shipped to Doral and demanded this information from him. I'm NOT saying they owe Rossi anything because they didn't have such a meeting. I'm just saying it would have been a wise thing to do.

Of course, if I were IH, I would have probably never agreed to a year long test anyway. I would have asked for a replication of the very early system that Dr. Levi tested for 18 hours that allegedly self sustained for almost the entire time. If this had been successful -- with multiple third parties witnessing the test and a control in use -- I'd allow him to continue with his megawatt level tests. If he demanded a test of the "hot cat", I'd say, "before we pay good money for you're IP we're starting from scratch with your earliest systems."

Hello Shane,

I do need to read the Term Sheet again. Do you have a quick link to it?

Regardless if I thought Rossi's technology worked or not, I would have demanded him be completely straightforward about everything or no deal whatsoever. I understand that I.H. may have been trying to be diplomatic towards someone who can be quirky and moody and overly suspicious (although sometimes I think his paranoia has been fully warranted). But I don't think that a demand and build for one of his earliest systems would have been out of the question. The simple flow calorimetry would have been far less ambiguous than the IR measurements involved with the "hot cats."

Quote from MrSelfSustain

Bob,

I tend to agree with your first point. Although there may or may not have been any formal agreement about the GPT, the fact IH let Rossi's test in Doral (which he referred to as a test repeatedly on the JONP) knowing that he would expect payment at the end indicates some level of a "hedge."

Rossi did not present the Doral installation as a "test." I have not seen evidence as to when Rossi first called that installation a "test." It certainly was not called that in the proposal email, nor in the Terms Sheet. It was a sale of power from which, also, some operational information might be obtained. We do not know when IH became aware of a possible expectation of payment at the "end." There was no "end" specified in the Terms Sheet, it was a lease for two years.

Rossi believed he had created a "masterpiece." A GPT required written agreement of all parties and a set of conditions. It appears that he set up what could later be claimed to be the conditions, all except for one detail: the written agreement of the parties. Someone may have advised him that estoppel could handle that. If IH accepted the "test," even if there were no written agreement, it might fly. I'd say that any attorney that advised him that could be sued for malpractice, but it's not impossible that his thinking went this way. Estoppel was a reasonable argument as to the matter of delay in the test, because the behavior of the parties was consistent with the Second Amendment, as far as we can tell, so the argument that the Second Amendment was not valid because the signatures were incomplete was not strong, at all. The problem of the "Six Cylinder Unit" was a bit more serious, but, again, if the test was allowed to be of something else, estoppel could still apply. But the requirement for explicit consent was fundamental to the agreement to postpone, it allowed that to be done without prejudice, and it was safe for IH to agree to it. Rossi was more or less forced to agree, because it was obvious: the GPT was not happening on time. The design of the agreement was badly defective. Who did that?

However, if Rossi had presented the Doral installation as a "GPT," IH would never have agreed to the terms. It would be entirely too risky to have Rossi in total control, while that was harmless for a sale of power.

So when did IH know or suspect that Rossi was trying to create a GPT? I certainly don't know, but I would expect their response might have been "He wants rope to hang himself with, and this "customer" will be paying us $30,000 per month, probably Rossi money, so why should we object to getting some of our money back? And if the power is real, so much the better. Maybe we can sue him for specific performance on the technology issue."

By this time they knew that the Rossi technology wasn't working or the transfer had failed. Those plants were useless to them. Their attorneys would have advised them that Rossi could not create a GPT without consent -- or at least a court order. (I.e, if IH unreasonably refused to allow a GPT, Rossi would have had a basis for suit. A requirement for consent does not allow unreasonably withholding it.) So they considered it safe.

And it was safe. It is highly unlikely that Rossi will prevail, and the legal fees here, shared with Cherokee, I assume, because of Rossi's generosity to them of including that $2.5 billion corporation as a defendant, are a mere speed bump, if that. Meanwhile, they were essentially forced to countersue and they might get their money back, plus legal expenses and maybe even penalties. Johnson may be on the hook for that, as well as Rossi. Fabiani played a minor role, and Penon ... we don't know how much Penon was paid, but it was, I assume, considerable. Bass is a minor player, again, and may not have realized what was involved. (Even Johnson may not have realized what he was doing.) Still, if one participates in a fraudulent scheme, one can become liable for the entire damage.

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Legally, IH may or may not owe Rossi one red cent even if his plant worked marvelously producing high COP.

Right. That drives Planet Rossi crazy. UNFAIR! THE SNAKES! HE WORKED HIMSELF TO THE BONE!

Let's put it this way: if you are working on an agreement to pay you $89 million if you satisfy certain contractual provisions, maybe you should satisfy them to the letter, precisely, and maybe you should act with advice of counsel. Maybe an ad-hoc seat-of-the-pants engineering approach (where approximately right can be good enough) isn't appropriate. It appears that Rossi did not consult counsel about the IH Agreement, his complaint makes him out to be totally naive and gullible. The Snakes Deceived Me! But any attorney, reading the Agreement, would have told him the truth. And he had a year before that Agreement became irrevocable to back out with little or no loss. His travel time, that's about it. He could have kept the interest on $1.5 million, my guess. That would surely have covered his expenses. But, no, he wanted the $10 million.... obviously. And the shot at $89 million.

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That is for the court to decide. But personally I wish Industrial Heat wouldn't have allowed for such an ambiguous hedge. They should have never let the plant be transported to Doral and the "test" (whatever it was for) begin unless they knew both sides had a clear understanding IN WRITING about what was being tested and what would be expected afterwards under various outcomes

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We don't know what communications existed, we have only seen a glimpse. There were two motives for the Agreement. The hedge -- what is described here is not exactly the hedge -- is one, but it is important to understand the other motive, and the basis for it. Rossi was obviously paranoid. There was a high possibility of fraud. They had decided to find out, and that required buying the technology from Rossi (I don't know any other way they could have accomplished their goals). They could later worry about getting the money back and they were in no hurry. They wanted to give Rossi every opportunity to show them how to make devices, or at least to demonstrate the technology, and possibly, with Fabiani on contract, they could figure out what was missing. In other words, they were playing all sides of the game. Those who think in black and white terms have difficulty understanding that. They were setting up conditions where they win, no matter what, or at least they don't lose what they have not already chosen to commit. And, by the way, fairly. Nothing about their plan, as I have inferred it, cheats Rossi.

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It would have saved everyone involved a massive headache if they would have forced Rossi to sit down for a full meeting before the plant shipped to Doral and demanded this information from him. I'm NOT saying they owe Rossi anything because they didn't have such a meeting. I'm just saying it would have been a wise thing to do.

From a certain point of view, yes, of course. Except they had already decided, certainly by 2013, to play this the Rossi way to the bitter end. In 2013, they wanted independent experts at the Validation Test. Rossi refused to allow it. They did not formally object; they could have. They could have refused to put the money in escrow. And all this would have convinced paranoid Rossi that they were snakes, out to cheat him. (Or smart, out to expose his fraud, perhaps.). Nothing would have been accomplished, but "saving" some money that they had already decided to commit. As it is, they have successfully cleared the decks. It is, of course, disappointing for many, and maybe even for them, but sanity is trusting reality, not trusting this or that idea of what should happen.

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Of course, if I were IH, I would have probably never agreed to a year long test anyway.
I would have asked for a replication of the very early system that Dr. Levi tested for 18 hours that allegedly self sustained for almost the entire time. If this had been successful -- with multiple third parties witnessing the test and a control in use -- I'd allow him to continue with his megawatt level tests. If he demanded a test of the "hot cat", I'd say, "before we pay good money for you're IP we're starting from scratch with your earliest systems."

Read the history of the Agreement. Rossi kicked Darden out of his office, then called him back. Rossi would simply have refused to deal with them. The strategy you outline is what everyone else would have done, and had been tried, I think.

What may not be visible to many is the situation within the CMNS community by 2012. Who wants to fund scientific projects that might show a watt of heat (which is generally enough for scientific purposes), when Rossi is claiming kilowatts, and there are some scientists going for it? My sense is that IH concluded that this issue needed to be definitively resolved. They needed to do what was mentioned in that 2015 Darden interview, "crush the tests."

While Rossi might pull a rabbit out of a hat -- Rossi has not yet responded to IH allegations, but, so far, the preponderance of the evidence is clear -- they demonstrated that an investor who was fully willing to cooperate with Rossi to a degree that most would consider foolish, nevertheless ended up with nothing, "no measurable heat," they have stated. That does not mean that there was no heat in the Doral affair, it means from their own testing, and what was crucial for them was replicable and reliable technology; otherwise they could not possibly raise the $89 million. This does not prove that there is no "Rossi Effect," but it becomes very unlikely that there is anything like what has been claimed. And IH still has the hedge, the License, in case, say, Rossi has hit a home run with the QuarkX, they own it for their territory, with a right of first refusal for the rest of the planet.

They crushed the tests, they created a situation where they can move forward freely, and their reputation in the CMNS world could not be better. That is a spectacular result.

Quote from MrSelfSustain

someone who can be quirky and moody and overly suspicious (although sometimes I think his paranoia has been fully warranted)

Just because you are paranoid doesn't mean that they are not out to get you.

Actually, what it means is that you probably can't tell. Paranoia is fear, and fear damages how we read the world, badly.

Read An Impossible Invention! Rossi is, indeed, paranoid. When I say that, it is not to attack him, it is to describe his behavior, which is reasonably well-known. And it is quite likely that his paranoia resulted in a situation in Italy that led him to be imprisoned. He didn't trust the corporations that wanted to invest, so he did it on his own. If he really was facing Mafia action, he needed all the support he could get. Here, if he failed to communicate his technology to IH out of fear that they would cheat him, he obviously shot himself in the foot. If scientific error is underneath his own claims -- i.e, if there is artifact that he refuses to recognize -- instead thinking of it as attack and attempt to defeat him, then his paranoia would keep him from finding the truth and acting to resolve the situation.

Consider: suppose there was an artifact, and, oops! -- all of his claims, were worthless or not nearly strong as he claimed. If he discovered that, and disclosed this promptly to IH, what would have happened? The Agreement does not contemplate this kind of failure. If he had been sincere in his claims, I would suspect that he could keep the $11.5 million. When scientists make mistakes, they do not have to refund the research funding; they are only in trouble if there has been fraud, which, by definition, must be deliberate.

However, Rossi does not trust reality. He must be in control, in charge. It's a fatal attachment that takes many people down. He would think of admitting error as a defeat, intolerable.

Actually admitting "error" isn't necessary, what is necessary is simply admitting the truth, the whole truth, as known. "Error" is a judgment. If, in fact, he did make deliberately deceptive statements, yes, it would involve admitting that. Yet the value to the world of full honesty on all this would be great enough that I'd strongly support forgiveness, with whatever restitution was acceptable to those harmed, or judged as equitable.

Rossi, the Movie, could be worth millions, even many millions. The full story, as told by Rossi, with full honesty, would be priceless.

Of course, he could also go for Quark-X development, and I wrote this in 2011: that Rossi will not allow independent testing proves nothing, and we cannot demand that he disclose anything. People were claiming that he was a fraud, but fraud requires someone defrauded. As long as he did not lie to investors, he would be safe from fraud charges, and we did not know what he was telling investors. Perhaps he got ... a bit ... carried away.