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Yarro-Canopy Cases Settle On the Eve of Scheduled Hearings
Tuesday, March 08 2005 @ 08:37 AM EST

There is a docket notation in the Yarro v. Kreidel case that says that the case has settled. Bob Mims got confirmation from the Yarro camp, who say there will be a statement released at some point, and that the mirror lawsuit, the Canopy v. Yarro case has also settled. We don't yet know the terms of the settlement, which will have to be presented to the judge. The fact that it is taking so long for a statement, though, indicates that the Yarro camp may not have gotten all they hoped for.

I can't say I am surprised. Marbux told me from day one that this case would likely settle fast. There are vulnerabilities on both sides, on the Noordas' side due to health issues leading to questions about fiduciary duties, and it's obvious what the vulnerabilities were on the other side, and it's embarrassing all around. Also, when a case is mainly about money, it's much, much easier to settle. Both sides throw their best shot, and if it looks like neither has a clear path to victory, or more typically if one side sees it is likely to lose, a settlement is worked out. Most cases settle, by the way, and if your lawyer is any good, he will normally try for one, because the parties can usually do a deal that suits them better than an outsider, a judge, might fashion.

There are situations where you simply never settle. You'd be a dope to settle a frivolous lawsuit, for example, if one were brought against you. Or if it is a litigation hustle, you fight to the death, so to speak, so other opportunists don't see you as an easy mark. But if there is no principle involved, and it's just about money, usually you can work things out realistically based on what the two sides' lawyers see as the most likely outcome.

Lawyers in such a situation are a bit like doctors. Doctors do know most of the time if a patient will die soon. The family may force them to take "heroic" steps anyway (although I view the heroism as more on the part of the patient, frankly, and if you've ever watched such a process, you know what I mean), but they do it knowing it's not going to affect the outcome much.

Lawsuits are like that too. At a certain point, in most lawsuits, you know what the end result is likely to be. At that point, settling is the sensible course, if it can preserve your client's assets. In this case, there was more than just money tilting the case toward settlement, judging by the McBride interview in Business Week.

Meanwhile, here is a press release from vSpring Capital, announcing the "Top Entrepreneurs in the Region," the region meaning Utah, those "individuals deemed most likely to lead a successful tech/biotech venture in the next 5-7 years," dated March 2, almost three months after he was terminated as President and CEO of Canopy Group, and yet there he is, Ralph Yarro, on the list, as "Ralph Yarro, Canopy Group, http://www.canopy.com, President & CEO". Somebody didn't get the memo.

You might be interested in how the selection was made, according to the vspring.com website:

Selection Methodology

Organization of the v|100 began in November of 2003, when top members of the Utah business community were asked by a vSpring team to nominate the top 100 venture entrepreneurs in Utah. Sources contacted include entrepreneurs, accountants, attorneys, investment banks, and business associations and publications. University technology transfer offices and alumni networks, as well as regional research facilities were also contacted. These nominators were asked to nominate those entrepreneurs who best met the following criteria:

  • Individuals who would be most likely to lead a successful venture in the next 5-7 years in IT or Biotech industries.
  • Individuals both with or without current involvement in a startup
  • Individuals with ties to the region (but not required to be Utah residents)
  • Individuals who would be the CEO/CTO of a new venture.

In total, more than 200 professionals were petitioned for nominations, yielding the names of more than 300 successful entrepreneurs. Those 300 nominees were then contacted and invited to vote for their peers through a confidential online survey. They were asked to base their selections on the criteria listed above.

To say that I will be fascinated to see the terms of the settlement of this case is an understatement.


  


Yarro-Canopy Cases Settle On the Eve of Scheduled Hearings | 136 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here, please
Authored by: josmith42 on Tuesday, March 08 2005 @ 08:45 AM EST
Because the automatic posting of this thread hasn't been implemented yet. :-)

---
This comment was typed using the Dvorak keyboard layout. :-)

[ Reply to This | # ]

    Off topic posts here please
    Authored by: josmith42 on Tuesday, March 08 2005 @ 08:48 AM EST
    If you want to do clickable links, change the Post Mode to "HTML
    Formatted" and use this:
    <a href="http://www.example.com">Click here</a>

    ---
    This comment was typed using the Dvorak keyboard layout. :-)

    [ Reply to This | # ]

    One relieved judge
    Authored by: Anonymous on Tuesday, March 08 2005 @ 08:49 AM EST

    That gale coming from Utah is the judge's sigh of relief. Kimball
    must be jealous.



    [ Reply to This | # ]

    Yarro-Canopy Cases Settle On the Eve of Scheduled Hearings
    Authored by: tredman on Tuesday, March 08 2005 @ 08:51 AM EST
    Well, it's only Tuesday, and it's already been a busy news week. I dare take a guess as to what is next...

    ---
    Tim
    "I drank what?" - Socrates, 399 BCE

    [ Reply to This | # ]

    Yarro-Canopy Cases Settle On the Eve of Scheduled Hearings
    Authored by: Anonymous on Tuesday, March 08 2005 @ 08:56 AM EST

    Early confirmation when the words aren't signed?

    Brian S.

    [ Reply to This | # ]

    Selection process going out on a limb!
    Authored by: cmc on Tuesday, March 08 2005 @ 08:58 AM EST
    Wow, that selection process is really going out on a limb with this statement:

    "Individuals both with or without current involvement in a startup"

    So, umm... Who does that leave out? Seems to me like they could have left that
    criterion out of the list.

    cmc

    [ Reply to This | # ]

    Yarro-Canopy Cases Settle
    Authored by: the_flatlander on Tuesday, March 08 2005 @ 09:01 AM EST
    "To say that I will be fascinated to see the terms of the settlement of
    this case is an understatement."

    I wonder... this is a civil case, so it is possbile that the terms will be
    sealed, certainly the amounts involved will likely never be disclosed.

    Pity, I was so looking forward to getting to look at all the dirty laundry.

    The Flatlander

    [ Reply to This | # ]

    The SCO group may have doged a bullet here.
    Authored by: seanlynch on Tuesday, March 08 2005 @ 09:39 AM EST
    The SCO group may have doged a bullet here, but there are several more still in
    the barrel. The Canopy Yarro affair could spawn a few more lawsuits that might
    rock the boat for SCO.

    Even though this case has settled, I expect that non-Canopy shareholders in
    portfolio companies to start lawsuits over these events, and over the Canopy
    financial restatements. This would be pretty standard procedure when events like
    this happen. These could peel back the corporate veil, but will more likely
    settle outside of Court.

    Other Canopy funded companies, that are not portfolio companies, and not
    majority controlled by Canopy may join the portfolio shareholders in some class
    action issues. This would probably be done to force clarification on future
    positions taken by Canopy. Again, this would not be unusual, but would be more
    to gain leverage while talking with Canopy about the future.

    Lawsuits are how a lot of business gets done in the US. It gives the parties
    involved another weapon to bring to the negotiating table. Any follow up
    lawsuits will probably be settled before trial for many of the reasons PJ has
    already mentioned, and also because these kinds of lawsuits are just used to
    pressure others, and not used to actually decide a matter of law.

    Non-portfolio companies that are partially funded by Canopy may want to use this
    as an opportunity to create an exit strategy from the Canopy fold. Troll Tech
    comes to mind. Do you think Novell or Mandrake may be interested in buying out
    the Canopy shares?

    Both Mandrake and SuSE make heavy use of KDE. KDE makes use of the Troll Tech QT
    software toolset. Red hat is not very KDE-centric, and already supports a lot of
    Gnome development anyway, so they are a much less likely candidate. I don't
    think IBM would have an interest, but you never know.

    Even if Yarro gets reinstated as head of Canopy, I think he will leave soon.
    This is probably part of the deal. He would be a complete fool not to leave. He
    has been put on alert, and the Noorda children will make his future a complete
    nightmare if he tries to stay at Canopy. They will question every decision and
    make as much of a fuss as possible. The SCO Group has had trouble operating
    under PJ's microscope, and I think Ralph's clever accounting work will not stand
    the close examination of the Noorda family.

    [ Reply to This | # ]

    Yarro-Canopy Cases Settle On the Eve of Scheduled Hearings
    Authored by: mhoyes on Tuesday, March 08 2005 @ 10:00 AM EST
    I have a question for all you legal eagles out there. How will this effect, or
    will it effect, the situation of MOG having stated that Noorda was already found
    incompetent (although I note that no other media source has reported this
    information, an i find it highly unlikely that they would have told just her).

    meh

    [ Reply to This | # ]

    On Settling Nuisance Suits
    Authored by: Carlo Graziani on Tuesday, March 08 2005 @ 10:21 AM EST
    There are situations where you simply never settle. You'd be a dope to settle a frivolous lawsuit, for example, if one were brought against you. Or if it is a litigation hustle, you fight to the death, so to speak, so other opportunists don't see you as an easy mark.

    This is a nice theory, and in the infinite-resource approximation is hard to argue against. But in the real world, where the legal resources of plaintiffs often dwarf those of defendants, the weaker side has a huge economic incentive to settle even frivolous cases, or even to fold at the first legal threat.

    A friend of mine once got a legal nastygram from Intel for posting a "Linux Inside" fake Intel logo on his own (wholly non-commercial and non-chip-related) website. At a minimum, I would have thought he had the sort of First Amendment protection that benefits parody. But testing this in court --- or even getting an initial legal consultation --- was an economically daunting prospect, and getting into a full-blown fight with Intel's pack of legal attack dogs was simply out of the question. An individual can blow out his home, job, and family that way. So Intel got a free pass, for the cost of some word-processing and a stamp.

    [ Reply to This | # ]

    Why not indeed?
    Authored by: Anonymous on Tuesday, March 08 2005 @ 10:58 AM EST
    Stranger things have happened; who would have ever dreamed we'd be rooting for
    the Nazgul? Is rooting for Maureen that far-fetched? Personally, I'd be looked
    for porcine aviation to take place first, but I will try to keep an open
    mind.....

    [ Reply to This | # ]

    Good advice, PJ
    Authored by: Anonymous on Tuesday, March 08 2005 @ 12:14 PM EST
    To settle a case is a good thing, it keeps the courts from being overworked, the
    lawyers from being overrich and the plaintiff/defender from being
    over-embarrassed by "dirty laundry".

    For that reason we - here in Germany - have a mandatory "GŁtetermin"
    (settleing session) before the case really gets going. Both sides are there with
    their lawyers, the judge tells you how he sees things at first sight, what laws
    may apply, how much you may expect at maximum if you win or you lose. That often
    cuts lawyers down a peg, especially the type of lawyer that promises five
    billion dollars...

    I have been there myself, about a bonus payment, with my employer, and within 10
    minutes we settled on 50/50 for both sides. You give a little, you take a
    little, its friendly all around. Insurance companies love it :-)

    Linux_Inside

    [ Reply to This | # ]

    Question for PJ
    Authored by: Anonymous on Tuesday, March 08 2005 @ 12:41 PM EST
    You said, "In this case, there was more than just money tilting the case
    toward settlement, judging by the McBride interview in Business Week."

    Well, I looked at the interview, and I don't see what you're referring to.
    Could you be a bit more explicit? Thanks.

    MSS

    [ Reply to This | # ]

    Top 100 Venture Entrepeneurs
    Authored by: RedBarchetta on Tuesday, March 08 2005 @ 04:09 PM EST
    Quoting PJ:
    You might be interested in how the selection was made, according to the vspring.com website: Selection Methodology
    Pardon my cynicism, but this was bound to be the outcome just because of the nature of Canopy and how far-reaching it has become in the SLC area (hence the 'regional' survey).

    In fact, I wouldn't be surprised if this vSpring outfit is funded by some Canopy tentacle, or if Ralph and it's principals are associated outside of business via the CLDS (Mormon congregation). Remember, the Mormons seem to be a highly nepotistic bunch, so it's not a bad idea to question results such as this.

    Canopy, from what I recall it has many, many business ventures under it's roof, including car dealerships, property ventures (the building where SCO, Vultus, and I believe Altiris + many more pay rent to Canopy), and of course software/computers.

    All in all, it can be said that Canopy is one of the top employers in the region and/or state. Many owe their livelihood to the folks at Canopy, so the sense of allegiance to Canopy probably runs very high. Their executives, just by their affiliation with the CLDS, are a shoe-in for these types of regional surveys.

    As compared to NYC, Chicago, Sand Hill Road (CA), LA, San Diego, Phoenix, Atlanta, and scores of other big cities... this 'regional' survey of entrepeneurs is utterly insignificant in the grand scheme of things.

    ---
    Collaborative efforts synergise.

    [ Reply to This | # ]

    Settlement
    Authored by: The Mad Hatter r on Tuesday, March 08 2005 @ 08:32 PM EST
    As has already been noted many cases are settled before trial. It's a
    cost-benefit issue - if it's going to cost you $1,000,000.00 for a possible
    return of $20,000,000.00, with a possibility of losing $20,000,000.00, you have
    to evaluate your position. Also there are the non-monetary issues to consider,
    I'm quite certain that neither Ralph Yarro III nor the Noorda's really wanted to
    spend the next 2-3 years as fixtures on the front pages of the Salt Lake Tribune
    and Groklaw.

    Without having seen the settlement we can make some assumptions.

    1) Ralph Yarro III will not be back at Canopy.

    2) He may be allowed to hang onto some of his directorships (though I think this
    is unlikely).

    3) Bill Mustard will continue to run Canopy.

    I can't see Canopy and the Noorda's settling for any less, and I suspect that
    Yarro may have been surprised by the amount of press coverage that the case has
    gotten. Being in the public eye often isn't pleasant.

    The big question now is will this impact the SCO-IBM case? We don't know. We do
    know that Darl was surprisingly non-committal in the Business Week interview. In
    fact I would rate this as the most interesting interview from him yet. He was
    upbeat about his companies future (any CEO who wants to keep his job will be).
    His response to the question about the SCO Source licenses was true (we won't be
    able to sell anything if we don't win in court). Oh, he deftly dodged some
    questions - note his answer as to whether he wanted Yarro to stay on the SCO
    board - a great non-answer. But no hyperbole at all. It almost makes you wonder
    which is the real Darl McBride - the outrageous fast talker who was so
    entertaining (and annoying), or the cool, rational CEO trying to sell us on his
    company and it's products. The most interesting thing about the interview was
    what was missing - no statement about winning in the IBM case.

    The big question as I see it is will one settlement begat another? If my earlier
    theory about the SCO-IBM suit being about forcing another "Triggering
    Event" then it will. How it would happen is anyone's guess - I strongly
    suspect that IBM will not settle for anything less than a full admission that
    there was nothing behind the suit. What this would do to the current management
    at SCOG is open to speculation.

    A contact in Utah once told me that Ray Noorda was a hero to Darl McBride and
    Ralph Yarro III. They sure have a strange way of showing it.



    ---
    Wayne

    telnet hatter.twgs.org

    [ Reply to This | # ]

    No settlement yet
    Authored by: ak on Wednesday, March 09 2005 @ 03:28 PM EST
    Bob Mims got confirmation from the Yarro camp ...
    There are no good reasons to trust the Yarro/McBride-gang. Maybe the "settlement" was just wishfull thinking.

    [ Reply to This | # ]

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