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SCO's Memorandum in Response to IBM's Motion to Strike Affirmative Defenses |
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Wednesday, November 26 2003 @ 06:40 PM EST
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SCO has filed another document with the court in Utah. This time, it's SCO's Memorandum in Response to IBM's Motion to Strike Affirmative Defenses. I haven't read it yet myself, so we can do that together. It's available as a PDF here.
***********************************************
Brent O. Hatch (5715)
HATCH, JAMES & DODGE
[address, phone, etc.]
Stephen N. Zack (admitted pro hac vice)
Mark J. Heise (admitted pro hac vice)
David K. Markarian (admitted pro hac vice)
BOIES, SCHILLER & FLEXNER LLP
[address, phone, etc.]
Attorneys for Plaintiff
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
THE SCO GROUP,
Plaintiff,
v.
INTERNATIONAL BUSINESS
MACHINES CORPORATION,
Defendant
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PLAINTIFF SCO'S MEMORANDUM
IN RESPONSE TO IBM'S
MOTION TO STRIKE
AFFIRMATIVE DEFENSES
Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells
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Plaintiff, The SCO Group, Inc. (SCO"), respectfully this Memorandum in Opposition to Defendant International Business Machines Corporation's ("IBM") Motion to Strike Affirmative Defenses.
INTRODUCTION
Claiming only that the fraud and inequitable conduct allegations do not comply with Rule 9(b), IBM erroneously seeks to strike SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses in their entirety. IBM's argument, however, ignores that these affirmative defenses assert several independent grounds, in addition to fraud and inequitable conduct, which are not subject to Rule 9(b)'s heightened pleading standard. As a result, IBM's effort to strike the defenses in their entirety must be denied. Moreover, the affirmative defenses as pled satisfy the pleading requirements necessary to provide adequate notice of SCO's defenses.
SCO's Fifth Affirmative Defense states that IBM's claims are barred by fraud, as well as illegality, collusion, conspiracy and/or lack of clean hands. IBM itself has used nearly identical words in its own affirmative defenses, such as IBM's Seventh Affirmative Defense. SCO's Fifteenth Affirmative Defense states that one or more of the copyrights at issue is, or may be, unenforceable by reason of IBM's inequitable conduct, as well as other IBM acts or omissions before the United States Copyright Office1. Similarly, SCO's Nineteenth Affirmative Defense states that the '746 Patent or one or more of the other patents at issue is, or may be, unenforceable by reason of IBM's inequitable conduct, as well as other IBM acts or omissions before the United States Patent and Trademark Office.
1 IBM correctly notes that this affirmative defense contained a scrivener's error in referring to the United States Patent and Trademark Office, as opposed to the United States Copyright Office.
1
Notably, IBM does not argue that Rule 9(b) applies to the additional (non-fraud, non-inequitable conduct) grounds alleged in SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses; nor does IBM argue that SCO has failed to sufficiently plead these pursuant to Rule 8's notice pleading standard. Yet, without even addressing these additional grounds, IBM seeks to dismiss SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses completely. Because the striking of affirmative defenses is disfavored, and IBM has failed to show that there is no set of facts upon which these defenses may be sustained, IBM's motion to strike SCO's Fifth, Fifteenth and Nineteenth Affirmative Defenses must be denied.
DISCUSSION
I. THE STRIKING OF AFFIRMATIVE DEFENSES IS DISFAVORED.
Courts and commentators have widely recognized that motions to strike affirmative defenses are generally disfavored:
Motions to strike a defense as insufficient are not favored by the courts because of their dilatory character. Thus, even when technically appropriate and well-founded, they often are not granted in the absence of a showing of prejudice to the moving party.
U.S. v. Pretty Products, Inc., 780 F. Supp. 1488, 1498 (S.D. Ohio 1991) (quoting Wright & Miller, Federal Practice and Procedure 2d § 1381).
Courts have further stated that motions to strike affirmative defenses are not to be granted "unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense." Glenside West Corp. v. Exxon Co., 761 F. Supp. 1100, 1114 (D.N.J. 1991) (emphasis added) (quotations and citations omitted). Moreover, in evaluating
2
motions to strike affirmative defenses, courts generally follow a lenient procedural standard.2 Williams v. Jader Fuel Co., Inc., 944 F.2d 1388, 1400 (7th Cir. 1991). Therefore, motions to strike may be granted only "when a defense is legally insufficient under any set of facts which may be inferred from the allegations of the pleading." Glenside West Corp. at 1115.
In Securities and Exchange Commission v. Toomey, 866 F. Supp. 719, 722 (S.D. N.Y. 1992), the court, addressing motions to strike affirmative defenses, observed that, "Motions to strike are generally not favored and will be denied unless it is clear that under no circumstances could the defenses succeed." The court outlined three prerequisites must be satisfied before a court grants any motion to strike defenses:
• First, there may be no question of fact which might allow the defenses to succeed.
• Second, there may be no substantial question of law, a resolution of which could allow the defense to succeed.
• Third, plaintiff must show that it is prejudiced by the inclusion of the defense. Securities and Exchange Commission v. Toomey, 866 F. Supp. at 722. Here, IBM has failed to satisfy any of these three prerequisites.
II. IBM'S MOTION TO STRIKE SCO'S FIFTH AFFIRMATIVE DEFENSE MUST BE DENIED.
IBM's motion to strike SCO's Fifth Affirmative Defense should be denied. Focusing only on the heightened 9(b) pleading requirement regarding fraud, IBM seeks to strike SCO's
2 The courts' overinclusive treatment of affirmative defenses ensures that litigants will not be prevented from asserting all available defenses, which would otherwise be waived. To be sure, if SCO had not raised allegations of fraud and inequitable conduct in its defenses, IBM later would argue that SCO was barred from asserting those defenses.
3
Fifth Affirmative Defense in its entirety, including SCO's unchallenged allegations of illegality, collusion, conspiracy and/or lack of clean hands.
SCO's Fifth Affirmative Defense reads: "IBM's claims are barred by fraud, illegality, collusion, conspiracy and/or lack of clean hands." IBM's motion to strike ignores the additional bases of the defense. These additional grounds are neither fraud nor mistake, and are not subject to Rule 9(b); rather, notice pleading pursuant to Rule 8 is sufficient. They give IBM as much notice as the rules require; and certainly, they provide no less notice than, for example, IBM's own Seventh Defense that SCO's "claims are barred by the doctrines of waiver, estoppel and unclean hands."
Still, IBM claims that, since the fraud allegation in SCO's Fifth Affirmative Defense was improperly pled under Rule 9(b), the entire affirmative defense should be stricken. See IBM Memorandum in Support of Motion to Strike Affirmative Defenses, 2-3. Rule 9(b), however, does not operate to devour an entire affirmative defense simply because fraud may appear along with other bases in the defense. Even assuming SCO's allegation of fraud were insufficient under Rule 9(b), which it is not, IBM's motion must still fail because the remaining bases alleged in SCO's Fifth Affirmative Defense remain intact. To hold otherwise, this Court would have to necessarily find that there can be no set of facts that could sustain SCO's allegations of illegality, collusion, conspiracy, and unclean hands. See. e.g., Securities and Exchange Commission v. Toomey, supra. Moreover, in light of the requirement that affirmative defenses be asserted or waived, and given the fact that SCO's Fifth Affirmative Defense provides notice to IBM of the nature of the defense it asserts (as opposed to an affirmative claim for relief), the defense certainly is stated with sufficient particularity to satisfy any pleading requirement.
4
III. IBM'S MOTION TO STRIKE SCO'S FIFTEENTH AND NINETEENTH AFFIRMATIVE DEFENSES IN THEIR ENTIRETY MUST BE DENIED.
IBM argues that the heightened pleading requirements of Rule 9(b) apply to allegations of inequitable conduct. This issue has not been squarely decided in this District3 nor in the Tenth Circuit. In Quantum Corp. v. Western Digital Corp., 10 U.S.P.Q.2d 1712, 1713 (N.D. Cal. 1988), the court ruled that "[i]nequitable conduct before the Patent Office does not give rise to the level of common law fraud which is the subject of Rule 9(b)." Although the minority view, the conclusion in Quantum Corp. remains viable and persuasive here: absent an allegation of fraud in SCO's Fifteenth and Nineteenth Affirmative Defenses, Rule 9(b) is simply inapposite.
Even if Rule 9(b) applied to inequitable conduct,4 IBM's motion to strike SCO's Fifteenth and Nineteenth Affirmative Defenses still would fail. In the first instance, those defenses are pled with adequate particularity, particularly given the fact that they are asserted as defenses (that must be pled or are waived) as opposed to affirmative claims for relief. Moreover, IBM ignores that SCO's Fifteenth and Nineteenth Affirmative Defenses are premised not only on inequitable conduct, but also on additional grounds (i.e., other acts or omissions by IBM), which are not subject to Rule 9(b).
3 See Ultradent Products, Inc. v. Life-Like Cosmetics, Inc., 924 F.Supp.1101, 1115 (D. Utah 1996) (the court's passing treatment of the issue did not analyze or specify what level of particularity is required when alleging inequitable conduct as an affirmative defense; the court found that inequitable conduct was adequately alleged).
4 In the event that this Court concludes that Rule 9(b) applies to inequitable conduct, it should grant SCO leave to replead that portion of its Fifteenth and Nineteenth Affirmative Defenses. Leave to replead is generally granted freely. See, e.g., Koehler v. Bank of Bermuda (New York) Ltd., 209 F.3d 130 (2d Cir. 2000), amended, 229 F.3d 424 (2d Cir. 2000).
5
IBM does not challenge that SCO has sufficiently alleged that IBM committed acts or omissions (other than inequitable conduct) that render unenforceable that patents and copyrights at issue in this case. Therefore, even assuming SCO's allegation of inequitable conduct were insufficient under Rule 9(b), IBM's motion must still fail because the remaining bases alleged in SCO's Fifteenth and Nineteenth Affirmative Defenses endure.
CONCLUSION
The Court should deny IBM's motion to strike SCO's Fifth, Fifteenth, and Nineteenth Affirmative Defenses. Alternatively, to the extent that this Court concludes that SCO was required and failed to meet applicable pleading requirements regarding fraud or inequitable conduct in asserting its affirmative defenses, SCO respectfully submits that the Court should at most strike only the fraud and "inequitable conduct" portions of the Affirmative Defenses at issue. Even then, in such event, to the extent any portion of SCO's affirmative defenses is stricken, it should be without prejudice to replead those defenses when additional facts become available.5
Dated this 24th day of November, 2003.
Respectfully submitted,
By: ________ [ signatures illegible ] ________
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James
BOIES SCHILLER & FLEXNER, LLP
Stephen N. Zack
Mark J. Heise
David K. Markarian
Counsel for Plaintiff/Counterclaim Defendant
5 On September 29, 2003, this Court granted SCO's motion to enlarge the time to amend its pleadings until February 4, 2004. Therefore, pursuant to this Court's order, SCO would have at least until February 4, 2004 to replead.
6
CERTIFICATE OF SERVICE
Plaintiff, The SCO Group, hereby certifies that a true and correct copy of Plaintiff's Memorandum in Opposition to IBM's Motion to Strike Affirmative Defenses was served on Defendant International Business Machines Corporation on this 25th day of November, 2003, by U.S. mail to:
Evan R. Chesler, Esq. Cravath,
Swaine & Moore LLP
[address]
Donald J. Rosenberg, Esq.
[address]
Alan L. Sullivan, Esq.
Snell & Wilmer L.L.P.
[address]
________ [ signature illegible ] ________
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Authored by: AdamBaker on Wednesday, November 26 2003 @ 06:54 PM EST |
Nice quote from SCO new boy Gregory Blepp on ZDNet
a>
Blepp said it would be folly of companies to wait for the
outcome of its lawsuit against IBM. "A typical reaction is 'let's see what
happens when the IBM case is over, and then we will consider a licence'," he
said. "But those two issues have nothing to do with each other. The IBM is about
breach of contract, and any case against Linux users is completely
different."
I'm sure RedHat lawyers will be able to use it if
there is any further opportunity to oppose the motion to dismiss.[ Reply to This | # ]
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Authored by: Anonymous on Wednesday, November 26 2003 @ 07:09 PM EST |
Just started to read the memorandum, and noticed the
beginning:
Plaintiff, the SCO Group, Inc. ("SCO") respectfully this
Memorandum in Opposition . . .
Shouldn't this be "respectfully
submit this Memorandum"?[ Reply to This | # ]
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Authored by: Hygrocybe on Wednesday, November 26 2003 @ 07:16 PM EST |
I am not at ease with these convoluted arguments, however if I am reading the
conclusion paragraph correctly it would seem that SCO's legal team is not as
happy with their previous submissions as they might be because they are now
arguing that even if the court does find against SCO, it should be without
prejudice. If they were as certain as Darl McBride appears to be, there should
be no other option than a win. Perhaps I am reading more into it than I should
as I have no concepts of American law and this may be a standard 'hedge your
two-way bets' legal practice and mean absolutely nothing - it simply looked
curious. I cannot recall having seen this sort of statement in any of IBM's
submissions, but perhaps I missed it.
---
Lamington Nat Park[ Reply to This | # ]
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Authored by: Anonymous on Wednesday, November 26 2003 @ 07:17 PM EST |
Hi PJ,
I am typing this PDF up into text, and will e-mail it to you as soon as it is
done.
P.S. thanks for all your great work on Groklaw![ Reply to This | # ]
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Authored by: stanmuffin on Wednesday, November 26 2003 @ 07:18 PM EST |
SCO's trying to get IBM's Motion to Strike overrulled on technicalities. This
quote made me laugh:
Claiming only that the fraud and inequitable
conduct allegations do not comply with Rule 9(b), IBM erroneously seeks to
strike SCO's Fifth, Fifteenth, and Nineteenth Affirmative Defenses in their
entirety.
...
SCO's Fifth Affirmative Defense states that IBM's
claims are barred by fraud, as well as illegality, collusion, conspiracy
and/or lack of clean hands.
(emphasis in original)
I'm
glad that clears things up.
But wait. Does Rule 9(b) also apply to other
allegations besides "fraud"? In other words, is SCO safe making unsubstantiated
claims of "collusion, conspiracy, and/or lack of clean hands", but not "fraud"? [ Reply to This | # ]
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Authored by: ChrisP on Wednesday, November 26 2003 @ 07:23 PM EST |
IANAL :)
A four stage plea:
1. Motions to strike are usually denied, so deny this one
2. The three affirmative defences include valid arguable points so they should
not be striken as IBM has only complained about part of the defences
3. Ok, delete the fraud and inequitable conduct words and leave the rest
4. Ok, delete the three defences *without prejudice* so that amended pleadings
can be submitted by the pre-existing date of Feb 4th 2004.
I find it notable that the response does not try to justify the fraud and
inequitable conduct parts of the defences, so I guess that are implicitly
admitting that they were wrong in trying to use them. However with options 3 and
4 they would like to be able to resubmit them (the 'without prejudice' bit)
presumably in accordance with rule 9b next time (with new evidence).
So far as I can see, the USPTO is quite capable of granting invalid patents
without improper behaviour on the part of the applicant.
---
SCO^WM$^WIBM^W dammit, no-one paid me to say this.[ Reply to This | # ]
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Authored by: Anonymous on Wednesday, November 26 2003 @ 07:27 PM EST |
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caused!)
[ Reply to This | # ]
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Authored by: Anonymous on Wednesday, November 26 2003 @ 07:33 PM EST |
It's not much of a read; just more weasling.
They claim that fraud isn't the ONLY ground on which they assert those
defenses, but also the rest of them, they claim that if they hadn't, IBM
would've asserted that they were barred from doing so if they wanted to later,
and they claim that even if these are stricken, they want to rewrite and refile
them.
Doesn't seem particularly interesting, but I wasn't investigating what they
said that carefully, so I probably missed a lot of the weasling.
Anyhow, one tiny, interesting thing: they actually admit in one of the
footnotes that they did mean the US Copyright Office instead of the US P&TO.[ Reply to This | # ]
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Authored by: sam on Wednesday, November 26 2003 @ 07:34 PM EST |
"SCO respectfully submits that the court should at most
strike...."
"...to the extent that any portion of SCO's affirmative defenses
is stricken, it should be without prejudice..."
They don't even have a
"dog ate my homework" excuse here.
[ Reply to This | # ]
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Authored by: talamacus on Wednesday, November 26 2003 @ 07:36 PM EST |
1. SCO state that rule 9(b) cannot be applied to anything other than an
allegation of fraud or mistake, and as such their affirmative defence must
stand.
2. If their affirmative defence doesn't stand up to the scrutiny required of
rule 9(b), well then they'll just use the bits that are okay.
3. But if that doesn't happen, well, IBM didn't deny any of the other
allegations. (Am I right in thinking you don't deny allegations in a motion to
strike a defense on a point of procedure? If so, this looks like Boies playing
to the gallery.)
4. Well, okay, if the judge does decide to scrap those defences, well then SCO
say 'no harm, no foul', and ask for another shot, after they've had a chance
to try and dig up some real dirt.
5. "Scrivener's error"... whoever wrote up the last memorandum for
SCO got a bit confused, apparently, and muddled up the Copyright Office and the
USPTO into a single organisation. Ugh, what a nightmare that would be!
[ Reply to This | # ]
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Authored by: SkArcher on Wednesday, November 26 2003 @ 07:51 PM EST |
What is rule 9(b)? [ Reply to This | # ]
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Authored by: Grim Reaper on Wednesday, November 26 2003 @ 08:05 PM EST |
Here's someone's comment in response to the ZDNet UK story,"SCO
Linux lawsuits could hit users this year"
--- For the love
of money is a root of all kinds of evil (1 Timothy 6:10); R.I.P. - SCO Group,
2005/08/29 [ Reply to This | # ]
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Authored by: kberrien on Wednesday, November 26 2003 @ 08:24 PM EST |
How many days until December 5th? Or at least the 6th until we hear the
details.
Hopefully Christmas will be a letdown after this awaited
date.
btw: Information Week sends our office a free copy each month or
so, gee, thanks... Anyways, saw Darl's mug on the cover. Their 2 page story
is a bit more middle of the line compared to their earlier rehashes of SCO
threats.
Of note:
"Subscriptions for Red Hat Enterprise
Linux grew 10% in fiscal quarter ended Aug 31, compared with the previous
quarter."
Of McBride "He once had his administrative assistant
return the call of someone who challenged McBride to a fight-to get a time and
place."
"Hewlett-Packard says at least 10 companies, most of
them major corporations, have signed up for a plan ... that offers customers
indemnity from potential SCO legal action.."
Ok, who called McBride
and picked a fight? Perhaps this is what became "hitmen & bodyguards" in
the press.
What would happen if I called and said, meet me and I'll
show you my code, you show me yours? Would I get a call back asking for time
and place? ... probably not.
[ Reply to This | # ]
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Authored by: Anonymous on Wednesday, November 26 2003 @ 08:30 PM EST |
Stowell denies violating the GPL
http://www.newsfactor.com/perl/story/22768.html
I can not parse what he is trying to say, particularly in light of what is said
2 paragraphs previously (quoting Moglen)[ Reply to This | # ]
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Authored by: error27 on Thursday, November 27 2003 @ 12:27 AM EST |
As others have stated, SCO seems to concede that the allegations of fraud were
improper. I think they could have supplied the details that rule 9b calls for
in this document if they had them but they didn't. The only argument they have
in favor of keeping the allegations of fraud is that they are used as a defense
and not to collect damages from IBM. Rule 9b is designed to limit the cost of
discovery and to stop people from going "fishing". SCO doesn't
address either of these issues.
The rest of their arguments are that only part of the affirmative defenses
should be removed. They say it is unusual for an affirmative defense to be
stricken. They say that the affirmative defenses include other really good
stuff besides fraud and so at least the good parts should be allowed.
I'm not a lawyer or a judge. Is it unusual for a judge to strike only part of
a defense? SCO did not provide any examples where a judge had removed part of a
defense but kept the rest.
[ Reply to This | # ]
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Authored by: pjcm on Thursday, November 27 2003 @ 05:35 AM EST |
#include IANAL.h
No even better. What are the odds on him using OpenOffice?
Just a thought. IANAL Paddy[ Reply to This | # ]
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Authored by: Wesley_Parish on Thursday, November 27 2003 @ 06:17 AM EST |
Anyone notice the wording in the following:
I. THE STRIKING OF
AFFIRMATIVE DEFENSES IS DISFAVORED.
Courts and commentators have widely
recognized that
motions to strike affirmative defenses are generally
disfavored:
Motions to strike a defense as insufficient are not
favored by the courts because of their dilatory character.
Thus, even when
technically appropriate and well-founded,
they often are not granted in the
absence of a showing of
prejudice to the moving party.
U.S. v. Pretty
Products, Inc., 780 F. Supp. 1488, 1498
(S.D. Ohio 1991) (quoting Wright &
Miller, Federal
Practice and Procedure 2d § 1381). I saw it
and
started laughing. IBM dilatory? Who's been soaking
up the court's time
lately? Not IBM. --- finagement: The Vampire's veins and Pacific
torturers stretching back through his own season. Well, cutting like a child on
one of these states of view, I duck [ Reply to This | # ]
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Authored by: Tsu Dho Nimh on Thursday, November 27 2003 @ 11:40 AM EST |
"I have seen no discussion of the possibility that IBM might sue users of
SCO's software."
Because IBM's legal staff is fully aware that the only parties that can be sued
for patent infringement are the ones that did the infringing ... the ones who
actually created the product that infringes pay damages.
"the nature of SCO's threatened copyright litigation against one or more
persons who bought a copy of Linux is somewhat hard to understand. What is the
infringing act?"
There is none. It's only in their greed-deluded dreams that it is even
possible. [ Reply to This | # ]
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Authored by: Anonymous on Thursday, November 27 2003 @ 12:04 PM EST |
I've got a real bad headache.
This makes no sense at all.
I'm guessing this is the "dazzle them with b...s..." defense.
Isn't there supposed to be a penalty for people who abuse the courts in this
way?[ Reply to This | # ]
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- Not in Utah - Authored by: Anonymous on Friday, November 28 2003 @ 06:32 PM EST
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Authored by: Anonymous on Friday, November 28 2003 @ 01:44 AM EST |
Hate to say it, but
Hatch's stuff is about a million times more succinct, logical, and professional
than the BS coming from Boise, Heise and Co,
And more importantly, It's not as funny to read :(
Joshua A Clayton[ Reply to This | # ]
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