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SCO v. IBM December 20, 2005 Hearing Transcript - as text |
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Sunday, February 12 2006 @ 05:33 PM EST
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This is perfect for a weekend. A nice long transcript of the December 20th hearing [PDF] in which, if you look carefully, you will find out something that really matters. Our thanks go to Frank Sorenson for picking it up for us and scanning it in for us to enjoy. Do you recall Aaron, one of our witnesses, reported live immediately after the hearing that there had been discussion about some emails found between Darl McBride and Microsoft? Today we find out what they were talking about. They were talking about Linux. Yes. Linux.
Surprise, Microsoft. The spotlight begins to shine. What a dumb thing you did when you went in with this lot to whatever degree you did. I seem to recall Darl McBride told Dan Farber a couple of years ago that Microsoft wasn't involved when Farber brought up the matter of Sun and Microsoft funding SCO: DF: That was prior to Linux and obviously they have a vested interest in Solaris, and they have actually given you money for a licence, as has Microsoft, so you have the two people who really aren't big fans of Linux paying a huge portion of your revenues right now. In fact, Microsoft paid, like, 12 million dollars so far out of a 25 million dollar quarter. And some people would even say that Microsoft is behind SCO, but I find that very hard to believe, because with David Boies on your side and Bill Gates on the other side, that seems impossible. Those two could never get together after the skewering that he got.McBride: Yeah, so it is an interesting setting that you're looking at, and obviously I hear the same conspiracy rumors that are out there that you're hearing. But I can tell you from a personal standpoint, being in the the driver's seat on these deals, you know, that there is none of that going on. "None of that going on." Except he chatted with someone at Microsoft in emails about Linux. No doubt in connection with the weather. And Farber may not recall it, but right after the trial, didn't Boies make a comment that if Microsoft had asked him first, he would have represented them instead? That should have been a clue. If you were Microsoft, wouldn't you have been impressed with Boies and wished you could have him on your side somehow? I've been wondering about something I don't know the answer to in that context. Maybe someone out there will know. Here's my question: I thought that a lawyer can't represent one party and then later represent the other side in the dispute in a later litigation, particularly if it impacts his first client's position negatively. Boies represented the US in the US v. Microsoft antitrust trial, did he not? So, my assumption is that he can't represent Microsoft in some later antitrust matter. Is that correct? So is it OK to represent a puppet for Microsoft, if that is what SCO is, in a matter that could be viewed as antitrust behavior? If it eventually were to come out that Microsoft has been not only the PIPE Fairy but has been involved in directing SCO matters trying to derail its main competition, Linux, in the marketplace with this stupid lawsuit (and maybe all the lone ranger litigants who have shown up, coincidentally I'm sure, asking for exactly what SCO/Microsoft would want?), would that not put Boies in an awkward position? Would he have to stop representing SCO? Jump, David, jump. Grab Ted's arm and leap to safety. : ) Joke. Joke. Please keep right on representing SCO at the same exact level you guys have been. Love the work. But the question is a serious one, so if anyone is qualified to answer, I'd like to know the answer to my theoretical question, since I can't help but wonder if this litigation could be viewed in an antitrust context. Some of you have asked over the months and years of this case why SCO gets away with so much. I think when you read this transcript, you'll see that SCO's behavior has cost them. Although Judge Wells is very pleasant and bends over backward to be fair to SCO in their requests for discovery in the second motion heard that day, so much so that I would have been worrying if I didn't know the outcome already (IBM won the first motion, forcing SCO to disgorge all the documents it had claimed were privileged), after she hears both sides, she takes a break. During the break, she reads transcripts from earlier hearings and earlier orders that IBM thoughtfully -- and cleverly -- has attached to their motion papers, and when she returns, she announces that IBM is absolutely correct, they didn't do a thing wrong, which puts an end to SCO's persistent attempts to get the court to view IBM as foot-dragging regarding discovery. Well. This is SCO. It puts it to an end for that day. Then Wells rules against SCO in significant part, in that instead of asking IBM to do another search as SCO requested, she just asks them to provide affidavits on some additional executives whose files IBM told her they already searched. I've been telling you from the beginning not to worry and that being truthful and straightforward in court is the way to win in long, complex litigation, quite aside from it being ethically the right way to be. This transcript is, to me, evidence that Judge Wells knows now who she is dealing with. Wait until she reads the Intel and Oracle filings. I seriously wonder if she will continue to attribute good faith to both sides, as she has chosen to do up to this point. But, that aside, she already knows to go check what SCO tells her, and that doesn't help SCO's cause one bit. Judge Wells attributes good faith to all parties. That is her way, and she treats SCO respectfully too. She's a nice person, obviously, and that is why she thinks others are too. But notice that when SCO's attorney Ted Normand starts to imply negative things about IBM, she doesn't like it one bit, and he backs off, saying he didn't mean to imply bad faith. Ha ha. Their motion papers, to my reading, do nothing but. An example where you can see the judge listening with critical ears is when SCO is trying to get IBM to have to search for all documents in the executives' files that mention the word Linux. SCO presents its own method of looking for keywords and suggests IBM do the same, since SCO has found a Palmisano email, evidently on the Internet, that wasn't produced in discovery by IBM. Now, we're talking about email from 1999-2000, pre-Sarbanes-Oxley. If you are executive in any major corporation, and I know some of you are, do you still have email that old? If you do, talk to your lawyer about why he didn't counsel you on best practices. The judge herself interrupts and points out that despite using that keyword search method SCO is suggesting, at Darl McBride's deposition it developed that there were many, many emails that he had sent or received from Microsoft that SCO didn't turn over in discovery, despite their good faith efforts, as she characterizes them. Here's part of the exchange, and it's the part where we find out that Darl and Microsoft have been communicating about Linux: MR. NORMAND: In contrast, Your Honor, as an aside, we've produced over 3,000 e-mails in which Mr. McBride, SCO's CEO, is the recipient or sender. So we infer from the fact that we did find an e-mail linked to Linux in Mr. Palmisano's e-mail files that there must be more. Mr. Wladawsky-Berger said in his deposition, yes, I have sent and received e-mails regarding Linux, and I believe he said regarding Mr. Palmisano, in particular. And Steven Mills, another IBM senior executive and vice-president, also said, I sent and received e-mails regarding Linux, and I received e-mails from Mr. Palmisano. And so for all of those reasons and just as a practical business matter, given that Linux is a multi-million dollar business and IBM's investment business is multi-million dollar, we infer that there must be more responsive documents.... MR. SHAUGHNESSY:Your Honor, very briefly, the shortest, simplest response to this motion is that we can't produce something that we can't find. Now, when Your Honor talked about your March 2004 order, what I understood you to be saying, what we have always understood you to be saying in that order is that we are to include in our search for the documents that SCO requested from us IBM's executives. We've done that. That's exactly what we've done. We did that long ago. We understood that's what the order required, and that's the reason that we did it..... We have been asked by SCO to update that search. We have likewise asked SCO to update that search. We expect that that process will yield additional documents which will be produced, and those will be produced consistent with when SCO is required to produce. But the bottom line is, Your Honor, we have undertaken a reasonable search. We have endeavored to locate those documents.... The examples that Mr. Normand mentioned earlier and the examples that are cited in the briefs are examples of the e-mails that would have been sent in the 1999-2000 time frame. Those are the examples of the e-mails they've given to you, which they can't understand why they are not in Mr. Wladawsky-Berger's or Mr. Palmisano's files. That was three years before this lawsuit was filed. Those individuals have changed jobs within the company, sometimes multiple times. It is hardly surprising that Mr. Palmisano and Mr. Wladawsky-Berger would not have e-mailsor certainly a large volume of e-mails going back to this period.... This, of course, should come to absolutely no surprise to SCO. We have found in SCO's production literally dozens and dozens of e-mails that were either to or from Mr. McBride that do not appear in his files. Other employees have copies of e-mails either to or from Mr. McBride. They're not in Mr. McBride's files. .... Test the strength of my representations that we produced these documents. If you find that something hasn't been produced, write a letter about it. The best example of this, Your Honor, is again this very case. We had some doubts and reservations about whether SCO had produced all of the documents from Mr. McBride's files. We communicated those to SCO. They assured us that they had produced the documents. We took them at their word, and we took Mr. McBride's deposition. During Mr. McBride's deposition, we find that there are potentially dozens of e-mails between Mr. McBride and Microsoft that have not been produced despite having been specifically requested. So after his deposition, we write a letter to counsel and we say, we want those documents. And I'm not accusing counsel of being -- of bad faith or engaging in bad faith in connection to not producing those documents, but that's the way it normally works.... THE COURT: Then why wouldn't the alternative suggested by Mr. Shaughnessy be an effective one, where you go and you depose Mr. Palmisano and you make a determination as to whether or not there are or exist documents that have not been produced to you? Isn't it ultimately or potentially easier to set another deposition date for him than for us to continue on in the kind of ever turning wheel that we've got ourselves on here? MR. NORMAND: I don't think that's unreasonable. But I think I have two main points that I would like to make in that regard, Your Honor. First is with respect to e-mails, I think Mr. Shaughnessy is overstating the difficulty of the search. He challenged, I suppose, myself to come up and explain how we've done searches. One thing we've done with e-mails, which is electronically searchable, is use keywords. So Unix, Linux, those are keywords that we put in. If an e-mail came up including the word "Linux" or "Unix," we looked at the e-mail. THE COURT:But do you dispute what was stated during Mr. McBride's deposition that there were identified a number of e-mails that referred to Linux, but didn't exist in his file? MR. NORMAND: I don't dispute that.... THE COURT:But, Mr. Normand, I think I said at thebeginning of this litigation that I take what counsel says at face value, and I assume good faith. Now -- MR. NORMAND: I agree. THE COURT: -- it's been stated once again that the reasonable search has been conducted, and they produced what is there. There's also indication that you have undertaken a reasonable search that may have come up a little short in some respects that wasn't discovered until Mr. McBride was deposed. So I guess I'm asking you, tell me why I shouldn't adopt the approach as suggested to take this matter under advisement until such time as you have conducted the depositions to determine if an additional deposition day is necessary and there exist documents that have not been provided despite the good faith statements on both sides that they have. MR. NORMAND: Very good, Your Honor. Of course, it doesn't end there, and he asks to depose one executive again, Mr. Wladawsky-Berger, and gets it, and for all I know, that was what he wanted from the beginning. He is effective in that sense if that is what happened that day, and that would explain the inexplicable. It's certainly difficult to understand otherwise why SCO asks for something, gets turned down by the court, and then asks for it again in one motion to compel after another. So I have to assume they are asking for what they don't want in hopes of getting what they do want. Ask for the moon and the stars when you really only want one star. I don't think Wells has caught on to that yet. But she's getting there. It's hard for honest, open people to see others in any way but like themselves. I went through something like that when I started Groklaw and then folks showed up trying to overturn our work and destroy my reputation. It was an education in a field I'd no prior experience in, never having met people like that, but I get it now, unfortunately. I'd rather be the person I used to be, but there it is. But my point is, despite the fact that Wells obviously likes Normand, and he does seem to be a charmer, what I see is that Wells nonetheless now compares what SCO tells her with facts in the record to see if they match. I don't see her doing that with IBM. Why should she? They've given her, so far, no reason for skepticism. If she ever catches them stretching the truth, she'll do the same thing to IBM she's doing to SCO, which is to ask herself if what she is hearing is actually so. Isn't that what you do when you hear SCO assert something? Check? So, bottom line, it's costing SCO now, and Wells hadn't even read the Intel and Oracle filings back in December. I do believe those filings will prove to be pivotal events in this litigation. How it costs a party once they lose their reputation is whenever a matter is disputed, and there is no obvious black and white answer, if the judge doubts you, the decisions in those gray areas will tend to go against you. That's one way to lose a case. Toward the end, there is a discussion about requests for admissions. I thought you might like to know what that is. My legal dictionary says, "In civil procedure, a request for admission is a pretrial discovery device by which one party asks another for a positive affirmation or denial of a material fact or allegation at issue. Federal Rules of Civil Procedure 36." Here's Federal Rule 36: Rule 36. Requests for Admission(a) Request for Admission. A party may serve upon any other party a written request for the admission, for purposes of the pending action only, of the truth of any matters within the scope of Rule 26(b)(1) set forth in the request that relate to statements or opinions of fact or of the application of law to fact, including the genuineness of any documents described in the request. Copies of documents shall be served with the request unless they have been or are otherwise furnished or made available for inspection and copying. Without leave of court or written stipulation, requests for admission may not be served before the time specified in Rule 26(d). Each matter of which an admission is requested shall be separately set forth. The matter is admitted unless, within 30 days after service of the request, or within such shorter or longer time as the court may allow or as the parties may agree to in writing, subject to Rule 29, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party's attorney. If objection is made, the reasons therefor shall be stated. The answer shall specifically deny the matter or set forth in detail the reasons why the answering party cannot truthfully admit or deny the matter. A denial shall fairly meet the substance of the requested admission, and when good faith requires that a party qualify an answer or deny only a part of the matter of which an admission is requested, the party shall specify so much of it as is true and qualify or deny the remainder. An answering party may not give lack of information or knowledge as a reason for failure to admit or deny unless the party states that the party has made reasonable inquiry and that the information known or readily obtainable by the party is insufficient to enable the party to admit or deny. A party who considers that a matter of which an admission has been requested presents a genuine issue for trial may not, on that ground alone, object to the request; the party may, subject to the provisions of Rule 37(c), deny the matter or set forth reasons why the party cannot admit or deny it. The party who has requested the admissions may move to determine the sufficiency of the answers or objections. Unless the court determines that an objection is justified, it shall order that an answer be served. If the court determines that an answer does not comply with the requirements of this rule, it may order either that the matter is admitted or that an amended answer be served. The court may, in lieu of these orders, determine that final disposition of the request be made at a pre-trial conference or at a designated time prior to trial. The provisions of Rule 37(a)(4) apply to the award of expenses incurred in relation to the motion. (b) Effect of Admission. Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to the provision of Rule 16 governing amendment of a pre-trial order, the court may permit withdrawal or amendment when the presentation of the merits of the action will be subserved thereby and the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice that party in maintaining the action or defense on the merits. Any admission made by a party under this rule is for the purpose of the pending action only and is not an admission for any other purpose nor may it be used against the party in any other proceeding. So, as you can see, we can expect lots of fun and wrangling about this next phase of the litigation. The bottom line of trials is, everything has to be proven as being a fact. Everything. You can't just walk in with a contract and say, This is the contract that is involved in this case. You have to prove it is the right contract and that you have a copy that is accurate, that it was signed on such and such a date, etc. That can get downright silly, if you have to take time at trial for each and every document or even every fact. Litigation is long enough. If it's not in dispute, you ask the other side to admit, Yes, that is the contract and it's the wording in the contract and it was executed on such and such a date. Here's an example. Of course, lawyers find a way to fight about everything and look for ways to maximize their effectiveness even with something as simple as this. So you see the parties angling with regard to RFAs in this hearing. SCO, if I've understood it, didn't want to have to submit RFAs until the same date IBM did, despite IBM having a time period of discovery after SCO's ended. IBM points out that there is a Kimball order, stipulated to by the parties, on when discovery should end, in effect letting the judge know that SCO is angling again over a matter already established and are trying to extend their discovery after the first cutoff into the second period of IBM's discovery. SCO'd rather wait until they see what IBM's discovery turns out to be, I guess, before they hand in their RFAs, and who can blame them for wanting that? But the order by Kimball does give IBM time after SCO's is done. SCO tries to argue that RFAs aren't part of discovery. I notice, for what it's worth, that Federal Rule 36 is located inside the larger category of "Depositions and Discovery." Wells asks them for cases. Normand says, I don't have any. That surprised me. It seems odd to ask a judge for something and not have researched it first. But Marriott steps in and says this: Your Honor I think as to the timing of RFAs is within Your Honor's discretion, and I think practices vary. We would be agreeable to talking with counsel about a scenario under which the RFAs were served prior to the close of each of the fact discovery periods, so long as the RFAs relate to the permissable discovery in that period. And that is what happens, with the court saying to work it out between themselves on that basis. You see what I mean? It's subtle, but it's real. Your good name and a good reputation will win a disputed point every time. Why shouldn't it? You trust those who have proven themselves to be trustworthy. So do judges. *********************************** IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION _______________________________________________________ THE SCO GROUP, Plaintiff, vs. Case 2:03-CV-294 INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant/Counterclaim-Plaintiff ________________________________________________ Case 2:03-CV-294 BEFORE THE MAGISTRATE BROOK WELLS DECEMBER 20, 2005 REPORTER'S TRANSCRIPT OF PROCEEDINGS MOTION HEARING Reported by: KELLY BROWN, HICKEN CSR, RPR, RMR1 A P P E A RAN C E S FOR THE PLAINTIFFS: HATCH, JAMES & DODGE, P.C. BY: BRENT O. HATCH Attorney at Law [address] FOR THE DEFENDANT: CRAVATH, SWAINE & MOORE, LLP BY: DAVID R. MARRIOTT Attorney at Law [address] SNELL & WILMER, LLP BY: TODD M. SHAUGHNESSY Attorney at Law [address] 2 1 SALT LAKE CITY, UTAH, DECEMBER 20, 2005 2 * * * * * 3 THE COURT: Good morning, ladies and gentlemen. 4 We're here this morning to address two outstanding motions. 5 The first one would be SCO's renewed motion -- well, that 6 would be the second one -- SCO's renewed motion to compel 7 discovery. The first one we'll address is IBM's motion to 8 compel production of documents from SCO's privileged log. 9 Counsel, if I could ask you to make appearances for 10 the record, please. 11 MR. MARRIOTT: Good morning, Your Honor. 12 David Marriott for IBM. 13 MR. SHAUGHNESSY: Todd Shaughnessy for IBM. 14 MR. NORMAND: Good morning, Your Honor. 15 Ted Normand for SCO. 16 MR. HATCH: Brent Hatch for SCO. 17 THE COURT: All right. We will begin with IBM's 18 motion to compel production of documents. I have reviewed all 19 of the submissions including the transcript of the case that 20 was presented by Judge Boyce some years ago and would 21 specifically ask that that be addressed. 22 All right. Mr. Marriott? 23 MR. MARRIOTT: Thank you, Your Honor. 24 Good morning, Your Honor. SCO has withheld from 25 production in this litigation somewhere in the order of 1,000 3 1 documents from the files of AT&T, Novell and the Santa Cruz 2 Operation, Inc. The documents are, so far as we can tell, 3 Your Honor, plainly relevant to the issues in the case based 4 on descriptions of them in SCO's privileged log. And, indeed, 5 I would submit that SCO has acknowledged the relevance by even 6 listing them on the log. 7 To properly withhold the documents as privileged, 8 SCO bears the burden to show the documents are, in fact, 9 privileged. It contends that the documents here are 10 privileged because SCO and it contends its predecessors 11 acquired certain Unix assets from one another with which the 12 documents in question were apparently associated. And 13 according to SCO, the transfers of assets from one of these 14 entities to another represented the transfer of an entire line 15 of business. In SCO's view, that justifies the privilege 16 passing from one entity to the next. 17 Respectfully, Your Honor, we think that is 18 incorrect, that the privilege did not pass in each of the two 19 transactions that matter here, and that for that reason, that 20 any privilege that may have existed with respect to those 21 documents, which, of course, we haven't seen and can't 22 evaluate the privilege of, would in any event have been 23 waived. And for that reason, we would ask Your Honor to 24 compel the production of the documents. 25 I would like to, if I may, in the few minutes that 4 1 I have to make just a couple of points. First point, Your 2 Honor, addresses the issue that Your Honor flags the one which 3 you would like us to address, and that is Judge Boyce's 4 decision. In our view, Your Honor, the rule here is that the 5 privilege passes where there is a sale of assets from one 6 entity to another where control passes with the assets. And 7 if it is a mere asset sale even if those assets represented a 8 line of business, as SCO contends is the case here, the 9 privilege doesn't pass. 10 Now, in its papers, SCO criticizes the cases cited 11 by IBM as not standing for the proposition that the privilege 12 does not pass in an asset sale. What SCO omits, however, Your 13 Honor, is reference to the decision by Magistrate Judge Boyce 14 which squarely addressed the issue presented here. 15 In that case, Caldera, which was the predecessor in 16 interest here of -- the predecessor, rather, of SCO asserted 17 that it was entitled to claim privilege with respect to a 18 collection of documents which apparently transferred from 19 Novell to Caldera in an asset sale. And SCO argued that the 20 documents in that case were entitled to the protections of the 21 privilege because they argue, quote, there was a fully 22 operational business division, close quote, that passed from 23 Novell to Caldera. 24 In fact, Your Honor, Caldera in that case made a 25 much stronger presentation as to why the privilege should5 1 attach than does the SCO Group here, because in the case in 2 front of Judge Boyce, it was argued that Novell and Caldera 3 had a continuing joint interest in defense of the IP that was 4 apparently involved in that transaction. 5 Notwithstanding that additional fact, which is not 6 present here, and notwithstanding the argument that the asset 7 that transferred in the Novell-Caldera situation were an 8 independent line of business, Magistrate Judge Boyce rejected 9 precisely the argument that is made here. And he did so at 10 Pages 18 and 19 of the transcript, which we provided to the 11 Court as Exhibit 1 to the Shaughnessy declaration. And I 12 think, though I understand Your Honor's looked at it, that it 13 bears examination. Magistrate Judge Boyce says: 14 I do not think I really need argument on the 15 attorney-client privilege matter. I've done a lot 16 of work on that, and I'm satisfied that the claim 17 of attorney-client privilege is not valid. When 18 Novell documents were turned over to Caldera, that 19 destroyed the privilege. Caldera is not the 20 alter-ego or successor in interest in the legal 21 context of those materials. The analogies to the 22 Supreme Court's decision with regard to its 23 successor in interest such as a trustee in 24 bankruptcy are an imperfect analogy. That case 25 simply does not apply. It's a simple waiver 6 1 situation. You have separate entities, and one 2 entity hands over to the other all the technology 3 and information and materials covered by 4 attorney-client privilege. Without some type of 5 additional protection, that privilege is gone. So 6 the motion to compel will be granted with regard 7 to those documents. 8 Now, when Judge Boyce finishes ruling, counsel for 9 Caldera then acknowledges, Your Honor, that, in fact, they 10 made the determination that they were going to concede the 11 issue in that case. Subsequently, Novell attempted to 12 intervene in the case and assert a privilege of its own, and 13 Judge Boyce there re-affirmed his decision here. He said that 14 the only interest that Caldera had with respect to the 15 documents at issue in that subsequent matter was to preclude 16 discovery. 17 And that frankly, we submit, Your Honor, is the 18 only interest that SCO had here. As I think we indicate in 19 our reply papers, SCO offered to produce the documents to us 20 in this litigation so long as we did not -- we agreed not to 21 argue that there was a subject matter waiver, which, of 22 course, we can't do without actually seeing the document and 23 know what we might be talking about. 24 None of the cases that are cited by SCO as 25 authority for a rule different from the rule adopted by 7 1 Magistrate Judge Boyce are applicable here. Three of them 2 were attorney disqualification basis in which there was no 3 issue about whether certain documents should be produced 4 because there had been a waiver. Two of the cases are cases 5 in which the assertion of privilege was rejected, and at least 6 two of the other cases are cases in which -- that arose in the 7 context of bankruptcy and turned in significant part on 8 bankruptcy consideration, which, of course, Judge Boyce in his 9 decision expressly distinguishes from the case here. 10 So we think, Your Honor, for that reason alone, 11 that is to say, that the rule is simply not as SCO suggests, 12 Your Honor ought to grant IBM's motion and require the 13 production of these documents. 14 Now, even if the rule were as SCO suggests, we 15 think also that Your Honor should require the production of 16 the documents. SCO contends that the document privilege 17 passes because an entire business, the Unix business, as they 18 call it, passed from AT&T to Novell, from Novell to Santa 19 Cruz, from Santa Cruz to Caldera. And that, Your Honor, is 20 not a proposition as to which we think they can sustain their 21 burden of proof. 22 Let me, if I may, focus just on two of the 23 transactions that I think matter here. First is the Novell 24 transaction, that is, the transaction in which Novell 25 transferred certain Unix assets to the Santa Cruz Operation, 8 1 Inc. That transaction, Judge, was governed by an asset 2 purchase agreement dated September 19th, 1995. That agreement 3 had two schedules. One of the schedules listed the exhibits 4 which were included in the transaction, that is, that was 5 passed from Novell to Santa Cruz; and the other schedule 6 listed those assets which did not pass. 7 And I refer Your Honor in particular to Exhibit 4 8 to the Sorenson declaration which was submitted in connection 9 with our motion. That is Schedule 1.1B of the asset purchase 10 agreement between Novell and Santa Cruz. The assets listed 11 here are those which were excluded from the transaction. And 12 listed here, Your Honor, are Novell code contained in 13 UnixWare 2.01. Netware Unix Client. UnixWare TSA. All 14 copyrights and trademarks except for the trademarks in 15 UnixWare. And we dropped the footnote and come back to the 16 copyright question. All patents, all accounts receivable to 17 rights or payments concerning the assets arising prior to the 18 closing date. And then finally, all rights, title and 19 interest in the SVR-X or System V royalties less a 5-percent 20 administration fee. 21 Let me just say two things further about this, Your 22 Honor, one with respect to copyrights and the other with 23 respect to the licensing distributing. There's a dispute as 24 to whether or not Caldera or SCO here or Novell owns the Unix 25 copyrights which are at issue both in this case and in SCO's 9 1 litigation with Novell. What I think is undisputed, Your 2 Honor, is that Schedule 1.1B of the asset purchase agreement 3 excluded from the transaction copyrights. 4 Now, as I understand SCO's argument, they contend 5 that a subsequent amendment to this agreement, an Amendment 2, 6 transferred the copyrights to them. We don't think that's 7 right, Your Honor. But assuming for the sake of this 8 discussion that it is, that transfer occurred a year or so 9 after this transaction. So whatever privilege that was 10 associated with the documents at the time waived and can't be 11 resuscitated or resurrected by the execution of an amendment a 12 year down the line relating to copyrights. 13 But you can put the copyright question completely 14 aside, Your Honor, because entirely independent of that 15 question, and this is undisputed, Schedule 1.1B makes 16 perfectly clearly that Novell did not transfer the portion of 17 its business that concerned revenues from SVR-X royalties. In 18 other words, Novell retained 95 percent of the royalties -- 19 actually retained 100, and it remitted back a 5-percent 20 administration fee to SCO. It simply cannot be that one can 21 say that Novell transferred its entire Unix business to 22 Santa Cruz when Novell retained 95 percent of the royalty 23 stream related to that business. 24 Now, let me say this just briefly with respect to 25 the other transaction, which is the Santa Cruz-Caldera 10 1 transaction. Similarly there, Your Honor, the agreement that 2 governs that relationship makes clear and SCO's securities 3 filings make clear that it did not acquire from the Santa Cruz 4 Operation, Inc., all of the assets or control of Santa Cruz. 5 Santa Cruz continued to exist subsequent to the transaction. 6 It renamed itself Tarantella and had subsequently been bought 7 by Sun, but it continued to exist. 8 Moreover, Santa Cruz did not sell anything other 9 than assets from two divisions, so far as we can tell, to 10 Caldera. It sold some but not all of the assets of its 11 professional services division, and it sold some but not all 12 of the assets of its server software division. It appears, 13 Your Honor, from the documents which have been produced to us 14 that Santa Cruz did not transfer even all of its Unix assets 15 or at least assets related to the Unix assets. 16 Now, let me endeavor to correct what I think may be 17 an error in IBM's reply papers. In our reply papers, we 18 indicated that it appeared from the documents which had been 19 produced to us that Santa Cruz had not transferred to Caldera 20 the open server products, which was the Santa Cruz Unix 21 product. That's what the documents that were provided to the 22 Court, which were provided to us indicate. 23 Last evening when preparing for this argument, we 24 came upon, Your Honor, a securities filing of Santa Cruz 25 and/or SCO which seems to indicate that the open server 11 1 product itself was, in fact, transferred in and around about 2 the same time period. That notwithstanding an error for which 3 if it is, in fact, an error, we apologize, is nevertheless 4 immaterial to the resolution of this motion because the 5 important point is that even if SCO's own rule is right, 6 what's clear is that not all of these assets of the two 7 divisions of Santa Cruz that transferred, transferred just 8 some. Even if it's substantially all, not all of the assets 9 transferred. That the documents make clear, and that's where 10 the subsequent amendment changes, even if the open server 11 transferred to SCO as it contends that they did. 12 But the truth is, Your Honor, there is really no 13 such thing to outline as the Unix business as SCO describes in 14 its papers. AT&T had a different Unix business from Novell. 15 Novell had different Unix businesses from Santa Cruz, and 16 Santa Cruz has a different Unix business than does SCO. In 17 fact, so far as we can tell from SCO's public filings, SCO 18 does not maintain the two separate divisions that Santa Cruz 19 did with respect to Unix. It doesn't appear to have a server 20 software division, and it doesn't appear to have a 21 professional server division, at least by those names. 22 In any event, Your Honor, I think it's fair to say 23 that the Unix business that SCO runs today is nothing like the 24 Unix businesses that its predecessors ran. 25 Now, the final point I'd like to make in this 12 1 connection, Your Honor, is that the declaration on which SCO 2 relies in support of its position in this case, that of 3 Mr. Broderick, is simply not sufficient to carry its burden of 4 proof, and that's true for at least two reasons. The first 5 reason is that it fails to dispute the facts critical to the 6 motion. It does not establish, Mr. Broderick does not purport 7 to say that control transferred from Novell to Santa Cruz or 8 from Santa Cruz to Caldera. Mr. Broderick does nothing other 9 than assets, although he considers them to be entirely 10 business assets transferred. 11 He does not dispute, also, Your Honor, that not all 12 of the assets of Novell transferred to Santa Cruz or that all 13 the assets of Santa Cruz transferred to Caldera. He 14 acknowledges in his deposition that Novell retained a piece of 15 that business. 16 And second, Mr. Broderick's declaration falls short 17 in any event because it is in critical respect lacking in 18 foundation full of testimony as to which Mr. Broderick is not 19 a competent witness, and it's contradicted by SCO's SEC 20 filings and Mr. Broderick's deposition. For example, 21 Mr. Broderick speaks in his declaration about the transaction 22 involved here, but acknowledged in his deposition that he 23 wasn't personally involved in the transactions. He speaks for 24 other state of minds, employees of AT&T and USL and Novell to 25 what they understood, and, of course, can't state for the mind 13 1 of others. He is not a lawyer, does not pretend to be a 2 lawyer, and yet in his declaration he speaks about what 3 transferred, a legal question; what didn't transfer, a legal 4 question; and speaks to the form of these various 5 transactions. For those reasons, Your Honor, we respectfully 6 submit that Mr. Broderick's declaration doesn't carry the day 7 In summary, IBM's motion should be granted. At 8 issue are 1,000 documents which should have been produced some 9 time ago. Whatever privilege may attach to those documents no 10 longer attaches today. It was waived. It was waived under 11 the rule articulated by Magistrate Judge Boyce, which we think 12 flows out of other precedent. And for that reason, Your Honor 13 should follow Magistrate Judge Boyce and grant IBM's motion. 14 THE COURT: Mr. Marriott, let me ask you one thing. 15 MR. MARRIOTT: Sure. 16 THE COURT: And this would be a question posed to 17 both sides. 18 How does my ruling today affect the required 19 infringement disclosures due on the 22nd? 20 MR. MARRIOTT: Well, that's a very difficult 21 question for me to answer, Your Honor, because I haven't seen 22 the documents. That said, I don't imagine that it should 23 impact it much. It shouldn't impact SCO's disclosures at all 24 because, of course, SCO has the documents. And without seeing 25 them, I can't say for certain whether it affects IBM's 14 1 disclosures as to the material, which we contend was misused. 2 But I don't have any reason as I stand here to think it 3 necessarily would without seeing the documents, as I said. 4 THE COURT: All right. Thank you. 5 MR. MARRIOTT: Thank you, Your Honor. 6 MR. NORMAND: Good morning, Your Honor. 7 THE COURT: Good morning. 8 MR. NORMAND: May it please the Court, on the issue 9 of the relevance or not of the documents over which we claim 10 privilege to the December 22nd submission, I don't have the 11 documents committed to memory, but I don't think it bears on 12 that submission in any way. 13 THE COURT: Thank you. 14 MR. NORMAND: And I'll address Your Honor's 15 particular focus on Judge Boyce's oral ruling in context of my 16 larger efforts to respond to Mr. Marriott's points. The two 17 themes are, one, the particular facts at issue before Judge 18 Boyce including the very important fact that Novell retained 19 contingent interest, i.e., was cooperating in the continued 20 operation of the business essentially. That is not the fact 21 that supports IBM's argument. That is a fact that hurts IBM's 22 argument. It suggests that Novell had not really committed 23 the transfer of the business where it retained that interest. 24 Second, I think Your Honor would concede it is a little risky 25 to put too much weight on an oral ruling. I don't think it's 15 1 entirely fair what Judge -- 2 THE COURT: You didn't know Judge Boyce. 3 MR. NORMAND: I've been told by our local counsel 4 that he was prone to do that. But he did mention specifically 5 in the ruling the legal context. And I think it's important 6 that he himself acknowledged that he was making this ruling in a 7 particular legal context. And in addition to the difference 8 in facts, we think the law has evolved to some extent in the 9 last seven or eight years since that ruling. And that's where 10 I would like to start with my arguments, Your Honor. 11 The most recent decisions under the relevant case 12 law show that the question is whether the practical 13 consequences of the transactions at issue are that SCO is a 14 successor to the Unix business. The question is one of 15 control, not a question of the percentages of assets 16 transferred, as Mr. Marriott has sought to frame the question 17 And second, as I mentioned, Your Honor, both the transaction 18 documents here and the facts that we've submitted in support 19 of our opposition show that SCO maintains control over the 20 relevant part of the Unix business. 21 So the first point is the most recent case law, 22 Your Honor. And I won't go into this too much detail because 23 I know you've said you've seen the briefs. But let me 24 highlight the two cases in particular, if I could. 25 First case from last year, 2004, the most recent 16 1 case to address this issue is the Soverain case, in which 2 Soverain retained three patents, and the business appended to 3 those patents and continued to operate the business with the 4 same personnel and with the same engineering support, very 5 similar to what SCO has done. The Court in that case rejected 6 the bright-line rule that: 7 The mere transfer of assets does not transfer the 8 privilege and found that the rule does not apply equally 9 to the myriad ways to control of the corporation that 10 changed hands. If the practical consequences of the 11 transaction results in the transfer of control of the 12 business in continuation of the business under new 13 management, I'm reading from the opinion, of course, 14 then the authority or privilege will follow. And the 15 relevant facts include whether the successor continued 16 to operate the business at issue and whether the same 17 personnel continued to support the business. 18 And I think the evidence supports that, as I will 19 get into a little bit more detail. 20 The second case, the Eastern District of 21 Pennsylvania in 1999, the Graco case. In that case, Graco 22 acquired a play yard business from a company called Century 23 Products. And Graco argued that the attorneys who had 24 represented Century Products could not be averse to Graco in 25 litigation at issue relating to the patents for the play yard 17 1 business. 2 Mr. Marriott suggests that a case like this is 3 irrelevant because it doesn't involve the production of 4 documents. But at issue in that case as here is whether the 5 privilege applies to the successor or the predecessor company 6 It's the very same issue necessarily decided in litigation. 7 The Court in Graco held that: 8 The relevant question is whether the assets 9 purchased while not all of the predecessor's assets were 10 those pertaining to the subject matter of the claimed 11 privilege. 12 Which is what we're claiming, privilege over that 13 Unix business that we control. 14 It does not matter -- and this is from the 15 Court's language -- how much or what percentage of the 16 assets were transferred. 17 In addition, Your Honor, we don't believe that any 18 court has actually reached a different holding than the ones 19 in Soverain and Graco, and that includes Judge Boyce's oral 20 ruling, given the context in which he made that ruling. IBM 21 cites cases holding that upon a change in management of a 22 corporation, privilege transfers, but those cases don't say 23 that's the only way the privilege can transfer. 24 In the Grand Jury that IBM cites, for example, from 25 the Eastern District of Virginia, this is 1990, prior to the18 1 two opinions in which we place most of the weight of our 2 argument, the Court said: 3 A transfer of assets without more is not 4 sufficient to effect a transfer of the privilege. 5 IBM omits the "without more" language from its 6 brief. I think the subsequent cases make clear what the 7 "more" is; i.e., if there is a transfer of assets in a 8 concomitant transfer of control over the business and assets 9 at issue, then the privilege travels with the assets in the 10 business -- 11 THE COURT: But it doesn't say that. None of the 12 opinions say that. 13 MR. NORMAND: No. I agree that the opinions don't 14 say. We're citing to the Eastern District case, and this is 15 what we think "more" is. Our position is that the case law 16 has evolved, though, to reflect that the case as last year 17 myriad ways in which the transfer can occur. 18 THE COURT: So are you suggesting, then, that given 19 the fact that these are somewhat the same parties, that had 20 Judge Boyce had the benefit of these newer rulings, his ruling 21 would have been different? 22 MR. NORMAND: Well, I think my first position, Your 23 Honor, would be it's not entirely clear what law Judge Boyce 24 is relying on in his oral ruling and what the interpretation 25 of that law was. I think the short answer to your question 19 1 is, I think Judge Boyce would have found these relevant, and I 2 think Judge Boyce would also recognize the difference in facts 3 between the case before him in which Novell had retained a 4 contingent interest in which there was no reasonable argument 5 in his view that Novell had disassociated itself from the 6 business transfer; whereas here, there is a disassociation, 7 and there is -- you know, SCO and its predecessors have been 8 the ones with control of the assets in the business at issue. 9 So my second main point, Your Honor, is that the 10 transaction documents and the evidence we have submitted 11 support our argument about SCO being the entity that controls 12 the Unix business related to the privilege that we claim. 13 I'll go through this briefly because we summarized the 14 highlights of the transactions in our brief that you've read. 15 But let me re-visit them very quickly. 16 With respect to the APA, which Mr. Marriott 17 mentioned, Recital A of the APA describes the transfer of 18 business as follows: 19 The business of developing a line of software 20 products currently known as Unix and UnixWare, the 21 sale of binary and source code licenses to various 22 versions of Unix and UnixWare, the support of such 23 products, and the sale of other products which are 24 directly related to Unix and UnixWare. 25 And then the APA says right at the beginning: 20 1 All of the Novell's right, title and interest 2 in and to the assets and properties of seller 3 relating to the business as transferred. 4 And the document actually says, I think in the 5 preamble, it is the intent of the parties to transfer all of 6 the business. 7 With respect to Santa Cruz' divestment of its Unix 8 business, its divestment was so complete that it actually 9 changed its name to the name of the only division that it 10 retained following the transfer of assets. That is 11 Tarantella. 12 Under the agreement issue between Santa Cruz and 13 Caldera, the transfer of the following assets: 14 All rights and ownership of Unix and UnixWare 15 including all intellectual property rights appurtenant 16 thereto. 17 As Mr. Marriott conceded, IBM was incorrect about 18 open server. Open server was transferred. And I submit, You 19 Honor, that the fact that IBM has interpreted the document 20 doesn't point out how detailed the documents are, in that in 21 places focus on the question as framed in the most recent 22 cases that the question as a practical consequence of the 23 transfer. 24 And let me re-emphasize because Your Honor has 25 asked about Judge Boyce's ruling the difference of facts. 21 1 Whereas, Santa Cruz transferred to Caldera in 2001 over 2 90 percent of Santa Cruz' business and all of Unix business 3 with some exceptions, Caldera acquired from Novell about 4 $400,000 worth of Novell's multi-million dollar business. 5 We're talking about a much different transaction. And again, 6 Your Honor, Novell never retained any interest. 7 THE COURT: But there was a 10 percent that wasn't 8 transferred. 9 MR. NORMAND: That's correct, Your Honor. And to 10 be clear, our position is that we are asserting privilege over 11 that portion of the Unix business, which is virtually all of 12 the Unix business that has been transferred. Our position is 13 that Unix business that we control and our predecessors have 14 controlled through the line of succession, any documents 15 relating to that aspect of the Unix business that virtually 16 all of the Unix business, that is privileged. That is our 17 position, and that is what we think the most recent case law 18 supports. 19 Let me turn briefly to Judge Boyce's actual ruling, 20 oral ruling. The main language in his ruling is this: 21 When the Novell documents were turned over to 22 Caldera, that destroyed the privilege. Caldera is 23 not the alter-ego or successor in interest in the 24 legal context of those materials. 25 And I think there is ambiguity in that language. I 22 1 think if nothing else, it reflects Judge Boyce's decision is 2 based on the particular context and the particular documents 3 in front of him, and those facts are different than the facts 4 here. 5 In short, Your Honor, under those cases we believe 6 that it is undisputed that as a practical matter, SCO owns and 7 operates the Unix business as predecessors in interest. IBM 8 has taken issue with Mr. Broderick's affidavit, which I will 9 highlight for Your Honor. Mr. Broderick said in relevant 10 part: 11 In each instance -- that is, in the instance 12 of each transfer -- the company selling the Unix 13 technology also transferred control of the 14 commercial enterprise that developed, marketed 15 and licensed that technology. In each instance, 16 the makeup and operation of the Unix business 17 continued as constituted through and after each 18 transition. 19 IBM does not take issue with that portion of his 20 testimony, nor do they take issue with the following portions 21 of his testimony: 22 In each instance, the transfer of the Unix 23 business included office space, leaseholds, 24 furniture and equipment. In each instance, the 25 transfer of the Unix business also included all or 23 1 many of the people who managed and operated the 2 business, including senior-level managers, 3 engineers, sales people, support staff and other 4 employees. It also included customer, supplier 5 and vendor relationships. 6 These facts are all different than the Novell 7 action that Judge Boyce addressed. 8 Through and after each transaction -- this is 9 Mr. Broderick -- my colleagues and I almost 10 universally kept doing the same work with the same 11 people from the same offices and buildings, 12 developing and delivering the same Unix products 13 and services to the same customers. 14 THE COURT: But he later admits in his deposition 15 that he himself didn't remain an employee for the entirety of 16 the period. 17 MR. NORMAND: That's correct, Your Honor, he 18 didn't. But he did remain an employee through the asset 19 transactions at issue. 20 THE COURT: And he also uses, doesn't he, I just 21 want to make sure that I have your opinion on this, he uses 22 modifiers when he makes those statements. He says, we all 23 know its universe. He doesn't make fully declarative 24 propositions or statements there. He reserves something. 25 MR. NORMAND: I think that's right, Your Honor. 24 1 And our position, again to be clear with Your Honor, is both 2 with respect to the formal transaction documents and with 3 respect to the operation of the business, there clearly are in 4 the transaction documents some assets reserved. There are 5 excluded asset sections. We can't take issue with that. We 6 do take issue on the APA front, that the copyrights weren't 7 transferred. As Mr. Marriott has said, that is actually an 8 issue and is subject of another litigation and actually an 9 issue which Judge Kimball has already denied IBM's motion for 10 summary judgment. That is an issue of fact. 11 But there's no question that some assets were 12 reserved, and there is no question that, as Mr. Broderick 13 concedes, he can't say that absolutely every person remained, 14 because when there's a transaction or a transfer of assets, 15 some people leave. Not everyone stays. 16 I don't think we have to meet that standard, 17 though, Your Honor, because if that were the standard, I think 18 you'd see in the cases some attribution of that being - 19 particularly relevant that says unless everybody remained from 20 the successor corporation, the privilege can't possibly 21 transfer. And I think the Graco case and the Soverain case 22 don't set forth that kind of standard. 23 Mr. Broderick concludes that: 24 In each instance, after each transaction, 25 neither the seller nor its employees remained 25 1 involved in managing or operating the business. 2 That's in stark contrast -- IBM does not dispute 3 that statement, and that fact is in stark contrast with what 4 happened with the facts before Judge Boyce when Novell had 5 maintained its contingent interest and as a functional matter 6 was continuing to help prosecute the litigation involving the 7 assets transfer. 8 I'll have to take a look at the note that's been 9 handed to me, Your Honor, but that's all I have now. Thank 10 you. 11 MR. MARRIOTT: Just very briefly, Your Honor. 12 Mr. Normand suggests the fact that Caldera argued in the case 13 in front of Judge Boyce that Novell had some continuing 14 interest cuts against the finding that Judge Boyce's decision 15 somehow applies here, and I would submit just the opposite is 16 true. 17 The law here, Your Honor, also has not evolved in 18 our view in the way that Mr. Normand suggests. He refers Your 19 Honor to three decisions, two cited by SCO and one cited by 20 IBM, Mr. Normand takes to distinguish. The Soverain case, the 21 first of the cases that Mr. Normand mentions, was a 22 bankruptcy-related case. Judge Boyce expressly dealt with the 23 bankruptcy context. It is also not a case from the district. 24 And neither is the Graco case, which Mr. Normand cites, which 25 is an attorney disqualification case. And, yes, there was 26 1 privilege issues involved in the case. What was not at issue 2 in the case were questions whether the passage of certain 3 documents constituted a waiver of privileges to those 4 documents. 5 Moreover, the Graco case, which SCO cites, is 6 distinguished by one of their other cases, the Pilates case, 7 case cited by SCO which rejects the finding of privilege in 8 that case. 9 Mr. Normand refers to the Grand Jury case cited by 10 IBM and suggests that we mis-cite that case, Your Honor, 11 because we omitted words "without more" from the footnote and 12 suggests that somehow that language support SCO's position. 13 I would refer Your Honor to that portion of the 14 Grand Jury case and to the immediately proceeding sentence, 15 which is omitted form the SCO cite. The footnote says: 16 A transfer of assets without more is not 17 sufficient to effect a transfer of the privileges. 18 Control of the entity possessing the privileges 19 must also pass for the privilege to pass. 20 The "without more," Your Honor, if it has any 21 meaning is that meaning which is informed by the immediate 22 preceding sentence where reference is made to the Supreme 23 Court's decision in Weintraub. And there the Court of the 24 Grand Jury says, quote: 25 The principal in Weintraub, therefore, is that27 1 emotional waiving a corporation's privileges is an 2 incident of control of the corporation, close 3 quote. 4 So the "without more" reference as we read that 5 language is the reference to the issue of there being a 6 passage about this plus control. And that, therefore, we - 7 think doesn't support the distinction that SCO seeks there to 8 make. 9 Mr. Normand makes reference as a factual matter to 10 Exhibit 1.1A of the Novell asset purchase agreement. 11 Exhibit 1.1A is subject to 1.1B, which is that exhibit which 12 expressly carves out what things which do not pass. And 13 again, 95 percent of the revenue stream from Novell did not 14 pass in that transaction. 15 The SCO position here, Your Honor, is the 16 equivalent of saying that the privilege necessarily attaches 17 to assets. And that whenever an asset is passed, the 18 privilege attaches to that. And if you look at their 19 opposition papers at Page 8, you'll see where they make 20 reference to the privilege that passes to what they call legal 21 and economic interests. The Supreme Court decision in 22 Weintraub, in cases repeatedly, Your Honor, have held that the 23 privilege attaches to, in a corporate context, to the 24 corporation, not to the corporation's economic interests or 25 assets. 28 1 And for that reason we think also, Your Honor, 2 based solely on Judge Boyce's decision and solely on the 3 simple legal question on whether the privilege passes, Your 4 Honor can and should find for IBM. Thank you. 5 THE COURT: Thank you, Mr. Marriott. 6 Anything further, Mr. Normand? 7 MR. NORMAND: Just to clarify one point, Your 8 Honor. In the interest of time, we've set forth both of our 9 arguments in our briefs and my initial presentation. If I 10 wasn't clear as to the Tarantella transaction, I wanted to 11 clarify that. 12 The Tarantella division was a completely different 13 division from the Unix division that was transferred. And the 14 name Tarantella was retained to reflect the fact that that 15 different business was now the focus of the newly named 16 Tarantella business. That was the 90 percent of the assets 17 transferred in that transaction were the Unix assets. The 18 approximately 10 percent that were retained had nothing to do 19 with Unix, and I don't think IBM argues otherwise. And I'm 20 sorry if I was unclear on that point. 21 Thank you, Your Honor. 22 THE COURT: Thank you. 23 I'm prepared to rule on this matter at this time. 24 First, I find that the Novell to Santa Cruz 25 transaction did not transfer the entirety of the business, nor 29 1 did the Santa Cruz to Caldera transaction. I further find 2 that the Broderick affidavit is insufficient in and of itself 3 as well as is contrary to statements made during the course of 4 Mr. Broderick's deposition; and that, therefore, SCO does not 5 carry its burden, then adopt the reasoning that was stated by 6 Judge Boyce at the time of the Caldera matter and would 7 deny -- or grant IBM's motion to produce those documents. I 8 believe that the privilege was waived. 9 All right. Is there any question about that? 10 Anybody have any questions or clarifications as to that 11 portion of the ruling? 12 MR. MARRIOTT: I do not, Your Honor. 13 MR. NORMAND: I do not, Your Honor. 14 THE COURT: All right. Let's go on to the second 15 motion, and that relates to SCO's renewed motion to compel 16 discovery. 17 Now, let me indicate something at the beginning 18 that I think may serve or I hope will serve to focus your 19 arguments. SCO's interpretation of my previous order in this 20 matter was correct, and I think that IBM has read perhaps that 21 order too narrowly. And it was my intention that SCO be 22 allowed to withdraw the motion that was pending at the time 23 related to the documents that were requested from IBM's upper 24 management and to refile that motion or renew it based upon 25 what had been delivered to them in the interim. 30 1 So I don't think we need to argue about the meaning 2 of the order. What we need to talk about now is what it is 3 that is requested and what is allowable. All right? 4 MR. NORMAND: Thank you, Your Honor. For my own 5 purposes, you were clarifying your October order from this 6 year; is that right? 7 THE COURT: That's correct. 8 MR. NORMAND: In which case, Your Honor, I'm going 9 to focus on the March 2004 order. 10 Frankly, Your Honor, we've walked through the 11 precise chronology that was relevant in our reply brief, and 12 that reply brief sets forth our efforts to take a step back to 13 walk the Court through how we think we got to where we are, 14 and it sets forth our principal arguments. And to the extent 15 that the argument carries any weight with Your Honor, I want 16 to go quickly through the highlights. 17 Our motion concerns what we interpret to be what 18 Your Honor intended in the March 2004 order. Because Your 19 Honor knows what it intended better than either of the parties 20 do, I won't focus on that. Let me describe this. 21 In February of 2004, it is SCO's position that 22 counsel for SCO raised the argument that included within the 23 scope of SCO's document requests ought to be IBM's senior 24 executives. We interpret the Court's March 2004 order to - 25 agree with that proposition, to state that IBM is to include 31 1 among the documents responsive to SCO's document requests, 2 which IBM itself has described as broad relating to Linux, 3 that IBM ought to include in the files that are responsive to 4 those document requests the files of the senior executives. 5 We interpret the Court's March 2004 order to set forth as an 6 example documents that would bear on IBM's decision to embrace 7 Linux as set forth in a particular New York Times article. 8 And I think that's the point of departure between IBM and 9 ourselves. 10 We understand IBM to interpret the March 2004 to 11 say, senior executives like Paul Palmisano and 12 Mr. Wladawsky-Berger should produce any documents from their 13 file that specifically relate to that decision in time to 14 embrace Linux or specifically relate to that decision as set 15 forth in the article that Your Honor cited in the March 2004 16 order. 17 Again, we think Your Honor meant something a little 18 bit broader, which is, any document requests that SCO has 19 served as to which documents in the files of Palmisano, 20 Wladawsky-Berger or any other senior executive that are 21 responsive, those are to be produced, as well. 22 THE COURT: Let me end this concern now. SCO's 23 interpretation of that is correct. 24 MR. NORMAND: In which case, Your Honor, the only 25 question is a bit of a metaphysical one, which is, we can't 32 1 know, we don't know and don't claim to know whether 2 Mr. Palmisano has X-number of e-mails or X-number of documents 3 that are in his files that are responsive. But we draw what 4 we think are reasonable inferences from the following pieces 5 of information. One, we have found an e-mail publicly 6 available from Mr. Palmisano in which he described to IBM's 7 employees IBM's decision to move towards Linux. And that 8 e-mail was not in the production and from what we can tell is 9 not listed as part of the six or seven Palmisano documents 10 over which IBM claims a privilege. In contrast, Your Honor, 11 as an aside, we've produced over 3,000 e-mails in which 12 Mr. McBride, SCO's CEO, is the recipient or sender. So we 13 infer from the fact that we did find an e-mail linked to Linux 14 in Mr. Palmisano's e-mail files that there must be more. 15 Mr. Wladawsky-Berger said in his deposition, yes, I 16 have sent and received e-mails regarding Linux, and I believe 17 he said regarding Mr. Palmisano, in particular. And 18 Steven Mills, another IBM senior executive and vice-president, 19 also said, I sent and received e-mails regarding Linux, and I 20 received e-mails from Mr. Palmisano. 21 And so for all of those reasons and just as a 22 practical business matter, given that Linux is a multi-million 23 dollar business and IBM's investment business is 24 multi-million dollar, we infer that there must be more 25 responsive documents. 33 1 As a last thought, Your Honor, Your Honor addressed 2 this issue last year. We interpreted Your Honor's order last 3 year to require senior executives at issue and IBM's board of 4 directors to offer us an explanation for why there was an 5 absence of documents in the production. That's how we 6 interpreted Your Honor's order. 7 THE COURT: Weren't there affidavits provided? 8 MR. NORMAND: They were. And I don't want to focus 9 on the issue at length, but they were fairly cursory, and they 10 said essentially, we've opened our files to the attorneys, 11 which is not an improper practice. That is how production 12 occurs. But my only point is those affidavits provided us no 13 more basis for arguing that there must be or must not be 14 responsive documents. So in the absence of any discussion to 15 that effect in those documents, I can see that all we can say 16 is we infer that there must be more responsive documents. 17 THE COURT: But based upon my clarification, 18 doesn't that change the posture? And we'll ask Mr. Marriott 19 to address that. 20 MR. NORMAND: I agree, Your Honor. It does change. 21 And perhaps I was unclear. Perhaps I also assumed something I 22 shouldn't. But I think what Mr. Marriott should be asked to 23 address is whether there are more responsive documents, given 24 Your Honor's clarification. 25 THE COURT: We're saying the same thing. 34 1 MR. NORMAND: Thank you, Your Honor. 2 MR. SHAUGHNESSY: Actually I'll be addressing this 3 motion. 4 THE COURT: Mr. Shaughnessy? 5 MR. SHAUGHNESSY: Your Honor, very briefly, the 6 shortest, simplest response to this motion is that we can't 7 produce something that we can't find. Now, when Your Honor 8 talked about your March 2004 order, what I understood you to 9 be saying, what we have always understood you to be saying in 10 that order is that we are to include in our search for the 11 documents that SCO requested from us IBM's executives. 12 We've done that. That's exactly what we've done. 13 We did that long ago. We understood that's what the order 14 required, and that's the reason that we did it. 15 Now, what I understand SCO to be arguing today is 16 actually different than that. What I understand SCO to be 17 arguing today is that the March 4th order required something 18 beyond that, that the March 4th order required us to produce 19 documents that SCO had never requested. We did not read the 20 March 4th order as requiring us to produce something that SCO 21 had never asked for. And yet, I think at the end of the day, 22 that's what SCO's position is. 23 We have, Your Honor, undertaken a reasonable search 24 for documents. We have produced all of the documents that we 25 were able to identify based on that reasonable search. We 35 1 have been asked by SCO to update that search. We have 2 likewise asked SCO to update that search. We expect that that 3 process will yield additional documents which will be 4 produced, and those will be produced consistent with when SCO 5 is required to produce. But the bottom line is, Your Honor, 6 we have undertaken a reasonable search. We have endeavored to 7 locate those documents. 8 THE COURT: Did you attempt to locate the entirety 9 of the documents or the documents that SCO believes you 10 limited your search to? 11 MR. SHAUGHNESSY: Let me -- maybe I can address it 12 this way, Your Honor. May I approach? 13 THE COURT: Sure. 14 MR. SHAUGHNESSY: This is a notebook I think along 15 the lines of what we handed out at the last hearing. And the 16 easiest thing to do I think is kind of walk through what we're 17 talking about. Maybe before I do that, I ought to just make 18 clear exactly what it is before the Court. We are talking 19 about documents from three custodians: Sam Palmisano, Irving 20 Wladawsky-Berger, IBM's board of directors. 21 THE COURT: Correct. 22 MR. SHAUGHNESSY: There are various suggestions in 23 the briefs about senior executives and executives involved in 24 the Linux. But as we understand the motion before the Court, 25 it's limited to documents from those three custodians. And 36 1 just a word about each of them. 2 Mr. Wladawsky-Berger is an executive of IBM in the 3 1999-2000 time frame. He had some responsibility for Linux 4 activities. He has since moved on to a new position in the 5 company in which he does not have Linux responsibilities. 6 We submitted a declaration in response to the 7 Court's request regarding Mr. Wladawsky-Berger's efforts to 8 locate documents responsive to the document request. 9 Mr. Wladawsky-Berger was deposed at length about documents 10 that have been produced. He was deposed at length about 11 e-mails and other documents in which he was copied. And there 12 was no discussion by SCO at that time that the production from 13 him was inadequate. At least there was no follow-up after 14 that deposition to suggest the production was inadequate. 15 The second individual is Sam Palmisano. He is 16 currently the chief executive officer and chairman of the 17 board of IBM. In the 1999-2000 time frame, he was ahead of 18 IBM Software Group. He has changed positions, as I understand 19 it, two times since that occurred. 20 And the last group that we're talking about is 21 IBM's board, and just a word about IBM's board. As I'm sure 22 the Court is aware, IBM's board is composed of individuals 23 largely with the exception of one who don't work for IBM. 24 These are people who are, for example, the chairman and CEO of 25 American Express and the chairman and CEO of United Parcel37 1 Service. These people have day jobs. They don't full-time 2 sit on IBM's board and do nothing else. 3 IBM has a file or has a series of files in which we 4 maintain copies of the materials that are provided to the 5 board. Those are the sets of files that we searched. We did 6 not search the files of American Express, and we did not 7 search the files of UPS, and we did not go to these individual 8 board members' homes and search their computers, nor do we 9 believe that we should in any event be required to do that. 10 Mr. Bonzani in his declaration outlined the efforts 11 to search those files and locate documents. And, you know, 12 one other word I ought to mention on the board, SCO keeps 13 talking about how implausible it is to them that there would 14 be so few documents from IBM's board. And I simply don't 15 understand that position. I mean, SCO has not identified any 16 transactions relating to IBM's Unix business that would have 17 required board approval or any particular issue that would 18 have out of necessity have gone to IBM's board. So, 19 therefore, it is not the least bit surprising that IBM's board 20 would not have tremendous volume of information relating to 21 Linux activities. 22 Getting back to Your Honor's question, what did we 23 look for? In the very first brief that was filed on this 24 motion, SCO identified four document requests, and only four 25 document requests, that it contends that IBM should have 38 1 searched for in producing these documents. And on the first 2 page of the handout I've just given to you, those are the 3 requests that SCO identified. Requests 35 and 42 from their 4 June 24th, 2003, document requests, and 56 and 53 from their 5 December 4, 2003, document requests. These according to SCO 6 are the operating document requests which we should have 7 reviewed and looked at in collecting documents from these 8 three custodians. 9 Now, request Numbers 35 to 42 asks for documents 10 concerning contributions for Linux or open source made by IBM 11 or Sequent, and documents concerning IBM's contribution to 12 development of the 2.4 and 2.5 Linux Kernel. 13 None of the custodians, Your Honor, that we were 14 talking about here are computer programmers. None of the 15 custodians we're talking about here supervised or even 16 supervised supervisors of people who make Linux contributions 17 It should come as no surprise to the Court or to SCO that 18 Mr. Palmisano's files don't have postings to source force 19 which contain Linux contributions. Having said that, if there 20 were Linux contributions or documents relating to Linux 21 contributions that were in the filings that we collected, we 22 produced them. 23 The second document request they point to, all 24 business plans for Linux. IBM has business plans for Linux. 25 Those are not documents that any of these three custodians 39 1 maintain. They were maintained by someone else within the 2 company. We went to that person. We made a reasonable search 3 for IBM's Linux business plans, and we produced those 4 documents. To the extent there were Linux business plans in 5 any of these three custodian files, we produced them. We 6 collected them, and we produced them. 7 And finally, Your Honor, they're left with request 8 Number 53, and this really is the only request that 9 specifically targeted any of these three custodians. And it 10 asks for documents concerning IBM's decision to adopt, embrace 11 or otherwise promote Linux, including but not limited to the 12 following, and then it identifies documents in the possession 13 of Mr. Palmisano, Mr. Wladawsky-Berger and others, 14 presentations made to the board and documents from the board 15 of directors meetings. 16 Those are the document requests, the documents that 17 SCO asked us to look for. Those are the documents, Your 18 Honor, that we looked for. And to the extent we found 19 documents that were responsive to those requests, we produced 20 those documents. 21 Now, it's important to note that request Number 53 22 pertains to IBM's decision to adopt, embrace or otherwise 23 promote Linux. As has been widely reported, including in the 24 New York Times article that Your Honor is familiar with, that 25 decision was made in the 1999-2000 time frame. Documents 40 1 relating to that would be in the 1999-2000 time frame. Those 2 are the documents in specific that we looked for. If there 3 happen to be documents later than that that were responsive to 4 this topic, we searched for them and we endeavored to produce 5 them. 6 Now, I don't think that there is a disagreement, 7 and I apologize if the Court misunderstood our brief. We 8 understood that SCO was to do what it has done, which is that 9 it was to withdraw its motion and it was to refile its motion 10 if it determined that it was necessary. And I don't mean to 11 suggest that SCO has done anything improper in that regard. 12 Likewise, we assumed that the Court's March 3, 13 2004, order, which is Page 3 of the document that you've got 14 in front of us, was intended, as I said earlier, to make sure 15 that IBM was not excluding from its search senior executives, 16 including Mr. Palmisano and Mr. Wladawsky-Berger, which we 17 were not doing, but which the Court made clear we should not 18 be doing. We did not understand that the Court's March 3, 19 2004, order was an effort by the Court to write a discovery 20 request for SCO. We did not mean -- in litigation normally, 21 the parties send their discovery requests to one and another. 22 And when there is a fight about them, the judge decides how to 23 rule. Normally the judge doesn't endeavor to write a document 24 request for one of the parties. 25 We did not understand Your Honor to have done that 41 1 here. We don't believe the Court did that here, and yet 2 that's really what SCO's argument is. I mean, it's telling 3 Your Honor that there's a reference in the very, very first 4 brief filed in connection, we're now on our third motion to 5 compel on this issue. But the opening brief that they filed 6 on the first renewed motion to compel way back in July of 7 2004, that's where we have an articulation by SCO, here are 8 the documents, here are the document requests that we served 9 and the ones you should have responded to. 10 Since that time and through the two successive 11 motions that have followed, we have heard nothing about those 12 document requests and what it was they said we should have 13 responded to. Instead, all we've heard about is the Court's 14 various orders, efforts by SCO to suggest that this Court was 15 endeavoring somehow to require IBM to produce documents that 16 the Court -- that SCO never requested that we provide. 17 Now, to ensure that there was no doubt about what 18 it was that we were required to do with respect to the 19 March 3, 2004, order, and so that it was perfectly clear to 20 SCO what we were doing with respect to that order, we sent 21 them letters. And copies of those letters are included in the 22 binder I've just given you at Tab B. And I won't read through 23 them, except to say this. We made it perfectly clear that 24 what we were doing and what we understood we were required to 25 do was to do a reasonable search of these executives' files 42 1 for documents concerning the projects to develop IBM's Linux 2 strategy as reported in the New York Times, consistent with 3 the Court's order, consistent with document request Number 53 4 which we just talked about. 5 We also made it perfectly clear to them that we 6 were not limiting our search to just that, that we were also 7 looking for and would produce documents that were responsive 8 to SCO's other document requests. We never, Your Honor, said 9 that we would look for every single document that may 10 contained the word "Linux." We never agreed that we would 11 look for every single document in the files that contains the 12 word "Linux" for at least three basic reasons. Number one, 13 SCO's never made that request and never even came close to 14 making that request; number two, the Court, as we understood 15 the Court's order, did not require us to do that; and number 16 three, it would be a ridiculous undertaking. 17 What SCO is suggesting we are obligated to do is 18 sit down and with Mr. Palmisano's files, presumably starting 19 in his file cabinet at A, and read the entire content of ever 20 single piece of paper in every single file looking for the 21 word "Linux." And if the word "Linux" appears, we have to 22 produce the document. That, Your Honor, is absurd. That is 23 not a reasonable search for documents. 24 THE COURT: Mr. Shaughnessy, going back, though, to 25 your statement that they never have requested this or that 43 1 extensive of search, looking at 53: 2 All documents concerning IBM's decision to 3 adopt, embrace or otherwise promote Linux including 4 but not limited to the following, all such documents 5 in the possession of the three entities. 6 MR. SHAUGHNESSY: That's correct. And let me make 7 clear what I'm saying, Your Honor. What we understood we were 8 required to do was to search for and produce, make a 9 reasonable search and produce, documents concerning IBM's 10 decision to adopt, embrace or otherwise promote Linux, 11 including but not limited to reading that entire paragraph. 12 That's the search that we undertook. That's the 13 very search that we undertook. What they're asking this Court 14 to do now in connection with this current motion is something 15 very different than this. What they're asking the Court to do 16 now in connection with this current motion is to go back to 17 these files and to read every single one and to produce every 18 single document that may have the word "Linux" in it. 19 THE COURT: All right. But what you're saying is 20 that is their request. Now, that is a fairly broad request. 21 MR. SHAUGHNESSY: It's an enormously broad request, 22 I think. 23 THE COURT: Yes, it is a broad request. And it 24 was, as I want to make clear, my intention that the order was 25 meant to encompass that request. I thought that that was 44 1 clear. And I believe that their interpretation, and yours is 2 not that far off, is what I'm getting at. If, in fact, you 3 are saying and your affidavits support a search of the broad 4 nature that you have just described it, then I'm going to hear 5 more from SCO as to what they think was not produced. 6 MR. SHAUGHNESSY: And that, Your Honor, is the 7 search we undertook. That's precisely the search we 8 undertook. A reasonable search. We did not, Your Honor, sit 9 down, nor I submit did SCO, I mean, if Mr. Normand stands up 10 and tells you otherwise, I'll be shocked. But I can't imagine 11 that SCO sat down in Mr. McBride's files and sat down with A 12 and read every single piece of paper in every single file that 13 Mr. McBride has to produce documents. That's not the way it's 14 done. I'm absolutely confident that's not the way that SCO 15 did it. That's not the way we do it, and that's not what the 16 rules require. What the rules require you to do is make a 17 reasonable search. 18 You may recall Mr. Singer at the last hearing we 19 had before Your Honor, Mr. Singer's view was that a reasonable 20 search for documents means send somebody an e-mail and tell 21 them to send the documents. That's not what we did. We don't 22 think that's a reasonable search. Certainly that's a far 23 extreme of a reasonable search. That's not what we did. We 24 detailed in these affidavits that IBM attorneys met with the 25 people involved, they explained to them what documents were 45 1 required to be produced, anything that might remotely fall 2 within those categories was copied. And then IBM's lawyers 3 sat down and reviewed all of the documents that were copied to 4 determine if they were responsive to these requests within the 5 scope of what Your Honor just said. 6 THE COURT: Let me ask what may appear to be a 7 simplistic question. But the 10-page report, that has been 8 produced. 9 MR. SHAUGHNESSY: Absolutely. I'm actually told 10 it's not a 10-page report. I'm told it's something other than 11 10 pages. The report has been produced. The documents 12 concerning that report has been produced. The e-mails that 13 were exchanged between the various parties relating to that 14 report has been produced. Anything that we have been able to 15 locate after a reasonable search relating to that 10-page 16 report have been produced. 17 Now, SCO filed its first renewed motion in July of 18 2004, as Your Honor will recall. And in its reply brief filed 19 on August 26th of 2004, SCO asked for two alternative reliefs. 20 They said, number one, the Court should order IBM to, quote, 21 produce the entire files of Sam Palmisano, Irving 22 Wladawsky-Berger and the board, close quote; or alternative, 23 two, require IBM to provide affidavits from Mr. Palmisano, 24 Mr. Wladawsky-Berger and the board. So they served up to Your 25 Honor an alternative, require them to produce their entire 46 1 files, or alternatively require IBM to provide affidavits. 2 Your Honor's October 20th, 2004, order, which I've 3 included in the notebook at Tab F, I've cited it all on 4 page 5, declined to require IBM to produce the entire files of 5 Mr. Palmisano, Mr. Wladawsky-Berger and the board and instead 6 require IBM to submit declarations. 7 We submitted declarations. From our point of view, 8 we thought that the issue was resolved. We thought the issue 9 was over. SCO, however, filed its second renewed motion to 10 compel in December of 2004. And in that motion, Your Honor, 11 they make the exact same arguments they made in the first 12 motion. They say they just simply can't believe that there 13 aren't more documents and that IBM's counsel must not be 14 candid with the Court or with counsel. The arguments are the 15 same. And, Your Honor, effectively the relief they seek is 16 exactly the same as the first motion. 17 In the prior motion, they asked the Court to order 18 the production of the entire files of these individuals, and 19 in the current motion they effectively ask for the same thing 20 They style it a little differently, but they say, we want all 21 documents with the word "Linux." Of course, to get to all 22 documents that contain the word "Linux" you have to look under 23 the entire files. Under SCO's interpretation, someone has to 24 sit down and read every single document and every single file 25 and search for the word "Linux." And if it appears, produce 47 1 it. So the relief they're requesting in connection with the 2 second renewed motion, which was withdrawn and is now the 3 third renewed motion that you have before you, is exactly the 4 same as the relief that they sought before. 5 It is notable, Your Honor, that they did not pick 6 up on what the Court said in the first order, which is, I'm 7 not going to require IBM to produce the entire files. I'm 8 going to require IBM to submit declarations. 9 I could perhaps understand this motion if this 10 motion were, we don't like the declarations that IBM 11 submitted. The declarations that IBM submitted are in some 12 fashion inadequate. 13 THE COURT: I thought they said that. 14 MR. SHAUGHNESSY: They have. But that's not the 15 relief they're asking. They're not asking you to require us 16 to submit new or different affidavits or declarations. I 17 submit that would be a useless exercise because they've 18 already deposed Wladawsky-Berger. There's no need to submit 19 another declaration from him. They've had an opportunity to 20 ask their questions under oath about his declaration and 21 about the documents that were produced. They're going to 22 depose Mr. Palmisano. They can do the same thing with 23 Mr. Palmisano. And we've agreed to make a 30(b)6 witness 24 available to testify with respect to the collections of the 25 documents from the board. 48 1 So there's -- I mean, there's a reason they haven't 2 asked for additional affidavits, because they know there's no 3 point in that. But what they've done instead, Your Honor, is 4 they have basically asked for the same thing they had asked 5 before which Your Honor in the October 20th, 2004, order 6 declined to give them. It's the same issue. We submit -- and 7 according to SCO, nothing has changed. According to the 8 papers that SCO has filed, nothing has changed since that 9 point in time. There's nothing new that's happened. 10 So effectively, what they're asking Your Honor to 11 do is to reconsider your October 20th, 2004, order and to 12 require us to do something that the Court declined to require 13 us to do in that order. We don't think that's proper. They 14 have not shown there's been a change in circumstances. They 15 have not shown that the Court's prior order was clearly 16 erroneous, and the Court should deny this motion on that basis. 18 Now, I have to say a brief word, Your Honor, about 19 e-mails because they occupy so much of the briefing. We made 20 a reasonable search for e-mails. To the extent that we've 21 been able to locate them, we've produced them. The examples 22 that Mr. Normand mentioned earlier and the examples that are 23 cited in the briefs are examples of the e-mails that would 24 have been sent in the 1999-2000 time frame. Those are the 25 examples of the e-mails they've given to you, which they can't 49 1 understand why they are not in Mr. Wladawsky-Berger's or 2 Mr. Palmisano's files. 3 That was three years before this lawsuit was filed. 4 Those individuals have changed jobs within the company, 5 sometimes multiple times. It is hardly surprising that 6 Mr. Palmisano and Mr. Wladawsky-Berger would not have e-mails 7 or certainly a large volume of e-mails going back to this 8 period. 9 More important, Your Honor, we have produced 10 numerous e-mails either to or from Mr. Palmisano or 11 Mr. Wladawsky-Berger. In the case of Mr. Palmisano, we 12 produced over 100 e-mails that were either to Mr. Palmisano or 13 from Mr. Palmisano. Now, those are e-mails that were produced 14 from someone's files, but they show Mr. Palmisano of someone 15 who either sent the e-mail or received the e-mail, and there 16 are well over 100 of those. 17 So the question is, why would this person have the 18 e-mail in his files but Mr. Palmisano not? And there are any 19 number of reasonable explanations for that, the most basic of 20 which is this person kept it and Mr. Palmisano didn't, or 21 Mr. Palmisano sent the e-mail, therefore, it left his computer 22 and it went to this person's e-mail box, and therefore, they 23 kept it. 24 This, of course, should come to absolutely no 25 surprise to SCO. We have found in SCO's production literally 50 1 dozens and dozens of e-mails that were either to or from 2 Mr. McBride that do not appear in his files. Other employees 3 have copies of e-mails either to or from Mr. McBride. They're 4 not in Mr. McBride's files. Presumably, if the shoe were on 5 the other foot, SCO would be standing up here making the exact 6 same argument I'm making to you, which is it is hardly 7 surprising that one person would have an e-mail in their file 8 and the other would not. 9 Now, I'd like to suggest to the Court that the 10 solution to this problem that SCO has presented, which really 11 isn't a problem, is that SCO should do what lawyers in these 12 circumstances normally do, and that is you take a deposition. 13 You ask for documents. You try to get documents. If someone 14 is ordered to produce documents and they tell you they've 15 produced them and we've assured them that we've produced them 16 or we will produce them in connection with their request for 17 supplementing, what a lawyer normally does in those 18 circumstances is you go out and you take a deposition, and you 19 test, well, did you, in fact, produce all of this person's -- 20 all of these persons' e-mails or all of this person's 21 documents? 22 SCO has an opportunity to do that. That's what SCO 23 has done in the case of Mr. Wladawsky-Berger. They deposed 24 him. They asked him about his documents. They've asked him 25 about e-mails. Tellingly, Your Honor, we did not get a letter 51 1 from SCO after his deposition saying, you know, he's 2 identified a whole bunch of documents that you guys didn't 3 produce to us, and we'd like them. 4 They have leave to take Mr. Palmisano's deposition. 5 They're welcome to ask him these asks. As I indicated 6 earlier, we've agreed to put up a witness on the issue of the 7 collection of documents from IBM's board. I respectfully 8 submit, Your Honor, that what the Court should do is permit 9 those depositions to take place and then determine if there is 10 any issue regarding any deficiency in IBM's production of 11 documents from these individuals. 12 If the Court does anything other than that, I fear, 13 reasonably I believe that we will have a fourth renewed motion 14 to compel and a fifth renewed motion to compel and a sixth 15 renewed motion to compel and so on. The Court should simply 16 let SCO do what the rules contemplate SCO doing, and that is 17 take a deposition. Test the strength of my representations 18 that we produced these documents. If you find that something 19 hasn't been produced, write a letter about it. 20 The best example of this, Your Honor, is again this 21 very case. We had some doubts and reservations about whether 22 SCO had produced all of the documents from Mr. McBride's 23 files. We communicated those to SCO. They assured us that 24 they had produced the documents. We took them at their word, 25 and we took Mr. McBride's deposition. 52 1 During Mr. McBride's deposition, we find that there 2 are potentially dozens of e-mails between Mr. McBride and 3 Microsoft that have not been produced despite having been 4 specifically requested. So after his deposition, we write a 5 letter to counsel and we say, we want those documents. 6 And I'm not accusing counsel of being -- of bad 7 faith or engaging in bad faith in connection to not producing 8 those documents, but that's the way it normally works. 9 Normally if you don't think somebody has produced all of the 10 documents, you take a deposition, and during that deposition 11 you find out that, in fact, the documents haven't been 12 produced, you send a letter. 13 And if they send us a letter after these 14 depositions that indicates that we have not produced all the 15 documents or that there other places that we haven't searched 16 we'll do that. That's our obligation, Your Honor, and we'll 17 do that. 18 But as I say, if the Court does anything other than 19 stop this motion in its tracks now, I fear that it will never 20 end. Thank you, Your Honor. 21 THE COURT: Thank you, Mr. Shaughnessy. 22 Mr. Normand? 23 MR. NORMAND: Thank you, Your Honor. If we were at 24 war with IBM, I think you would call what Mr. Shaughnessy just 25 did is strafing, including taking issue with competence of 53 1 counsel and not having requested what he thinks is the obvious 2 solution of his problem. 3 THE COURT: I didn't take it that way. 4 MR. NORMAND: Let me take a step back and try to 5 simplify this, because I think it's simpler than what 6 Mr. Shaughnessy has presented it as. 7 We served document requests, including requests 8 that Mr. Shaughnessy has pointed to. In 2003, one was: 9 All documents concerning any contributions to 10 Linux. 11 No technological limitation. No technical 12 limitation. No limitation in terms of being limited to 13 programmers, it being limited to people who actually made 14 contributions. All documents concerning contributions to 15 Linux. IBM objected on the grounds that it was overly broad. 16 Now they come to the Court and say it's actually quite narrow 17 The second request is request Number 53, which by 18 the way not only mentioned Mr. Palmisano or 19 Mr. Wladawsky-Berger, but two other IBM senior executives. 20 Specifically: 21 All documents concerning IBM's decision to 22 adopt, embrace or otherwise promote Linux. 23 IBM objected on the grounds that it was overly 24 broad. Now they argue that it's much narrowly. 25 Let me step back further. This motion has been 54 1 pending in one form or another, as Mr. Shaughnessy concedes, 2 for I think over 20 months. The notion that we haven't 3 pursued these documents diligently or sought to get them is 4 not well taken. And during the course of the pending 5 20 months, we have taken depositions, and we have taken 6 discovery that we think deal directly on our request for 7 relief. Mr. Wladawsky-Berger conceded that there were e-mails 8 to himself and Mr. Palmisano relating to Linux. Mr. Mills 9 said the same thing. We have not yet deposed Mr. Palmisano, 10 but he's scheduled to be deposed on January 11th, and we would 11 like any responsive documents that exist for purposes of the 12 deposition rather than trying to identify the documents during 13 the deposition and then having to come back to the Court and 14 say, we need Mr. Palmisano for more time now that we have 15 responsive documents. 16 Your Honor has interpreted Mr. Shaughnessy to say 17 that, you know, we should have taken the deposition first. 18 Then I think we're all in agreement that it's reasonable for 19 us to try to get the documents first and then take the 20 deposition. We didn't do that with Mr. Wladawsky-Berger 21 because at the time we took his deposition, we thought we were 22 up against the discovery deadline. That's why we took his 23 deposition when we did. Of course, it would have been 24 preferable and I think reasonable to take his deposition with 25 relevant documents in hand. 55 1 During the course of the discovery during that 2 20 months what we learned is the public documents suggest 3 Mr. Palmisano and Mr. Wladawsky-Berger oversee and made the 4 decision to implement a multi-billion dollar Linux-related 5 business, a business that IBM has said publicly, we're making 6 billions. 7 Now, it's hard to believe that given the scope of 8 the business, whether a formal or informal level the board the 9 directors hasn't been exposed to the decision, hasn't had any 10 say in the decision, hasn't been exposed to the documents 11 relating to the decision. And it's hard to believe that given 12 what I think IBM concedes is its obligation if there are 13 e-mails relating to the litigation and relating to Linux 14 beginning at least in March 2003 that there are not more 15 responsive documents that exist. 16 THE COURT: Aren't you engaging in -- you've 17 indicated that they've questioned the competency of counsel, 18 for lack of a better term, for not doing something. Aren't 19 you doing the same thing by supposing or presuming that there 20 has to be more when they told you there isn't? 21 MR. NORMAND: Yeah. I understand Your Honor's 22 concern. One thing we've been very careful never to do in our 23 briefing, and if I've suggested it, I do not mean to suggest 24 it, is take issue with counsel's good faith execution of their 25 interpretation of the document process. Where we impart is 56 1 their interpretation of the document requests. I don't doubt 2 that they think they have found all of the responsive 3 documents as they interpret the request. But I think they 4 originally interpret the request to be very broad, and now 5 they interpret them to much narrower. 6 THE COURT: Then why wouldn't the alternative 7 suggested by Mr. Shaughnessy be an effective one, where you go 8 and you depose Mr. Palmisano and you make a determination as 9 to whether or not there are or exist documents that have not 10 been produced to you? Isn't it ultimately or potentially 11 easier to set another deposition date for him than for us to 12 continue on in the kind of ever turning wheel that we've got 13 ourselves on here? 14 MR. NORMAND: I don't think that's unreasonable. 15 But I think I have two main points that I would like to make 16 in that regard, Your Honor. First is with respect to e-mails, 17 I think Mr. Shaughnessy is overstating the difficulty of the 18 search. He challenged, I suppose, myself to come up and 19 explain how we've done searches. One thing we've done with 20 e-mails, which is electronically searchable, is use keywords. 21 So Unix, Linux, those are keywords that we put in. If an 22 e-mail came up including the word "Linux" or "Unix," we looked 23 at the e-mail. 24 THE COURT: But do you dispute what was stated 25 during Mr. McBride's deposition that there were identified a 57 1 number of e-mails that referred to Linux, but didn't exist in 2 his file? 3 MR. NORMAND: I don't dispute that. 4 THE COURT: All right. Then the keyword search 5 isn't necessarily the answer here, is it? 6 MR. NORMAND: Well, it may not be the complete 7 answer. It is the first of two points I wanted to make. But 8 what I understand Mr. Shaughnessy to say is even with respect 9 to e-mails, at least in the case of SCO that are 10 electronically searchable, they have not undertaken to look 11 for the word "Linux" in their e-mails, whether it's 12 Mr. Palmisano's files or anyone who received an e-mail from 13 Mr. Palmisano's files. They have not taken and looked for 14 that word and then looked at the e-mail and then decide 15 whether it was relevant, which actually is the way we did our 16 production. 17 The second point, Your Honor, if we can agree that 18 we would get Mr. Palmisano back, that there wouldn't be a 19 problem of getting him back technically after the end of our 20 fact discovery period. 21 THE COURT: I can help with that. 22 MR. NORMAND: I understand that, and I appreciate 23 that. And that the subsequent deposition wouldn't count as a 24 second day because we face a limit of 50 depositions, I don't 25 think that's an unreasonable approach. 58 1 But my main argument is I think there are ways to 2 execute the search that we propose. And to be clear, the 3 reason we propose a search involving the word "Linux," 4 because, one, we thought it was easily electronically 5 searchable. Typically what a corporation in the position of 6 IBM or SCO will do is load up a lot of documents so that they 7 can search for the responsive ones. 8 If it is truly a burden as Mr. Shaughnessy said 9 because apart from e-mails it can't be electronically 10 searched, then I agreement we have a different issue. And 11 maybe the Palmisano approach and the other senior executives 12 is the appropriate approach. But it is not just 13 Mr. Palmisano. We also mentioned in our request Mr. Paul 14 Horn, Mr. Bowen. We didn't intend to depose them. If we 15 could depose them to determine that there are relevant 16 documents and not have the depositions count against the 50, 17 that's the another thing. But we don't want to over reach. 18 Then we take three depositions and argue they don't even count 19 as depositions and we've done that in lieu of a document 20 production that we think could be done in a pretty 21 straight-forward fashion. 22 The relief that we requested was documents related 23 to Linux because, frankly, we don't understand exactly how IBM 24 has implemented its search of documents as it has interpreted 25 the Court's order and our request. We thought the simplest 59 1 thing was just if it's related to Linux, IBM ought to look at 2 it, and it is almost -- 3 THE COURT: But, Mr. Normand, I think I said at the 4 beginning of this litigation that I take what counsel says at 5 face value, and I assume good faith. Now -- 6 MR. NORMAND: I agree. 7 THE COURT: -- it's been stated once again that the 8 reasonable search has been conducted, and they produced what 9 is there. There's also indication that you have undertaken a 10 reasonable search that may have come up a little short in some 11 respects that wasn't discovered until Mr. McBride was deposed. 12 So I guess I'm asking you, tell me why I shouldn't 13 adopt the approach as suggested to take this matter under 14 advisement until such time as you have conducted the 15 depositions to determine if an additional deposition day is 16 necessary and there exist documents that have not been 17 provided despite the good faith statements on both sides that 18 they have. 19 MR. NORMAND: Very good, Your Honor. 20 Two points in response. One is, I think what you 21 proposed is reasonable, with the caveat that what we would 22 want to do is depose, not only Mr. Palmisano for the purpose 23 of trying to identify documents, but Mr. Wladawsky-Berger, 24 whom we've already deposed, also Mr. Horn, also Mr. Bowen. Do 25 we need to depose a number of the board of directors, or do 60 1 need to depose a custodian of the board of directors to talk 2 to him about responsive documents? 3 I'm concerned that as to Mr. Palmisano what Your 4 Honor proposes is very reasonable, but what we would want to 5 do, especially because I think Your Honor has established 6 today that IBM interpreted your March order more narrowly than 7 you intended, given my understanding that that is Your Honor's 8 conclusion, given that what we would want at least do is 9 depose all of those people that I just identified, and we 10 would not want them to count as depositions. And against all 11 of this, we've been concerned that we not be accused by IBM of 12 trying to move back the discovery deadline. We're trying 13 earnestly to meet this late January deadline. 14 With all of those caveats, if Your Honor would 15 agree that we can depose those individual in order to identify 16 responsive documents and that it wouldn't be problem to come 17 back to them after January 27th if necessary, then I don't 18 disagree with Your Honor's proposal. I think that would be 19 workable. 20 THE COURT: Mr. Normand, thank you. 21 MR. NORMAND: Thank you, Your Honor. 22 THE COURT: Mr. Shaughnessy? 23 MR. SHAUGHNESSY: May I speak just briefly to that 24 issue, Your Honor? 25 I told you at the outset that we were dealing on 61 1 this motion with Mr. Palmisano, Mr. Wladawsky-Berger and the 2 IBM board. That is all we've ever been talking about. Now 3 Mr. Normand would like you to expand that to other 4 individuals. If SCO wishes to depose those individuals, it 5 can certainly depose those individuals. And I don't think, 6 contrary to what Mr. Norman has said, that there is any 7 disagreement between what we understood the March order to 8 require and what the Court has said that it requires. I think 9 we're on the same -- we are on the same sheet, that the 10 standard that we've used in searching for documents. And I 11 believe, Your Honor, that the simplest solution to the problem 12 is to simply do what we on our side have done, and that is if 13 we have questions or doubts about some witnesses, documents or 14 whether they're complete, we asked them in their deposition, 15 and we send a follow-up letter. 16 And, Your Honor, if during Mr. Palmisano's 17 deposition or some other witness' deposition SCO identifies 18 for us documents that we missed that are not privileged and 19 are not responsive, they send us a letter and we produce them 20 It's just that simple. That's what we do in litigation. I 21 don't play games. If they send us a letter and they 22 legitimately identify something, then we produce it. 23 They took Mr. Wladawsky-Berger's deposition. They 24 asked him about this very issue, and we got no such letter, no 25 indication from them that Mr. Wladawsky-Berger was in any way 62 1 inadequate or the documents produced from him are in any way 2 inadequate. 3 So I think what the Court should do, respectfully, 4 is deny the motion, allow the deposition to proceed, allow the 5 parties to do what we always do, which is provide documents. 6 And if there is a dispute, if there is a dispute about whether 7 a document wasn't produced and should have been produced, if 8 there's a dispute about whether a witness needs to be brought 9 back because a document was produced after their deposition, 10 that we deal with those disputes when they arise. Hopefully 11 we resolve them among counsel. If we don't, we ask for your 12 assistance. 13 MR. NORMAND: Your Honor, could I speak briefly? 14 THE COURT: Certainly. 15 MR. NORMAND: The proposal as Mr. Shaughnessy has 16 just outlined it confirms that we still have a disagreement a 17 to the scope of what IBM thought for the last two years they 18 had to produce. 19 THE COURT: I'm looking at the March 3rd, 2004, 20 order. It says: 21 IBM is to include materials and documents 22 from executives including Sam Palmisano and 23 Irving Wladawsky-Berger. 24 MR. NORMAND: No one can pronounce it. 25 THE COURT: I certainly cannot. Those are the 63 1 named individuals, Mr. Normand. 2 MR. NORMAND: I have two responses. One, Your 3 Honor knows better than anyone your interpretation. But you 4 did say, including, meaning that it was a broad request, but 5 it ought to include the senior executives. The other one is 6 Mr. Marriott said in October that he interpreted the 7 March 2004 order to mean that IBM was to include senior 8 executives in its search for documents responsive to our 9 requests. And one of our requests, request Number 53, clearly 10 identifies more than just Mr. Wladawsky-Berger and 11 Mr. Palmisano. Your Honor knows better than I do. I think 12 Your Honor mentioned Mr. Palmisano and Mr. Wladawsky-Berger 13 because they were specifically mentioned during the February 14 hearing. 15 But my point is, I fear that in his request that 16 you deny our motion, Mr. Shaughnessy is glossing over the fact 17 that as I understood it, they have interpreted Your Honor's 18 order in our document requests more narrowly than Your Honor 19 interprets them, and that the plain language we request makes 20 clear that we intended them. 21 So I would be surprised if the net result of the 22 discussion we've had today is that our motion should be 23 denied, because I think that there's been an interpretation of 24 the order and an interpretation of the request, and it's more 25 narrow than what they intended to be. 64 1 But with those caveats, Your Honor, I fall back to 2 the position about being willing to take these the 3 depositions. We think we are entitled to more than just 4 Mr. Palmisano and Mr. Wladawsky-Berger. And we would like 5 them not to count against the depositions again, the 50 that 6 we face. 7 THE COURT: I'm going to take a short recess on 8 this matter. And if you will all just wait. 9 MR. NORMAND: Thank you, Your Honor. 10 (Recess.) 11 THE COURT: Going back on the record now. 12 I first want to make a finding, and the finding 13 that I want to make is that IBM has acted in good faith in 14 terms of its reasonable search for documents as they relate to 15 Mr. Palmisano and Mr. Wladawsky-Berger. I have looked back 16 over the notation from the February 6, 2004, hearing 17 transcript, wherein SCO's counsel said: 18 We have had specific conversations with 19 Christine Arena at Cravath asking specifically for 20 Mr. Palmisano stuff, for Mr. Wladawsky-Berger, 21 Paul Horn, Nick Bowen, those people's information. 22 That is followed by the March 3rd order in which I 23 say as follows: 24 IBM is to provide documents and materials 25 generated by and in possession of the employees 65 1 that have been and that are currently involved in 2 the Linux project. IBM is to include materials 3 and documents from executives including, inter 4 alia, Sam Palmisano and Irving Wladawsky-Berger. 5 Such materials and documents are to include any 6 reports, materials or documents from IBM's 7 ambitious Linux strategy. 8 Looking at those two, or the notation from the 9 transcript and the order, I believe that the order should more 10 have explicitly indicated that IBM undertake the search as to 11 Paul Horn and Nick Bowen. And to the extent that those are 12 still requested by SCO, they will be required. 13 Mr. Shaughnessy? 14 MR. SHAUGHNESSY: Maybe I can help, Your Honor. We 15 produced documents from both of those individuals. 16 THE COURT: All right. Have affidavits been 17 provided? 18 MR. SHAUGHNESSY: We have not provided affidavits. 19 THE COURT: All right. Then if they have been 20 provided, then you will be required to produce affidavits 21 indicating the nature of the reasonable search that has been 22 conducted with regard to those two. 23 With that having been said, I suppose that the 24 conclusion is that SCO's motion is granted in part and denied 25 in part in the respect that there will not be further 66 1 requirements beyond those individuals that are listed in the 2 February 4th request. 3 Now, we need to discuss dates here and also the 4 status of other motions. Let's first look with regard to the 5 other motions. There is a SCO motion to compel discovery 6 which was filed on October the 27th. It appears to me that 7 based upon Judge Kimball's ruling in that matter that that is 8 moot now, Judge Kimball having upheld my initial ruling on 9 that matter. 10 So does anyone disagree with that? 11 MR. NORMAND: No, Your Honor. 12 MR. MARRIOTT: No, Your Honor. 13 THE COURT: All right. And there is also a new 14 motion for protective order that was filed by SCO on 15 December the 14th, and we haven't received the response for 16 that yet. 17 MR. SHAUGHNESSY: You haven't, Your Honor; although 18 we have resolved, I believe, the issue. I prepared an order, 19 which I've given to Mr. Normand. I can provide the order. I 20 guess if he has a problem, he can advise The Court. I don't 21 believe he does. 22 MR. NORMAND: Your Honor, we don't object to the 23 order, with the caveat that I don't think the order suggests 24 otherwise, with the caveat that we're not waiving any claims 25 to work product being privileged with respect to the 67 1 responsive documents here. 2 THE COURT: All right. 3 MR. SHAUGHNESSY: May I approach, Your Honor? 4 THE COURT: Sure. 5 With regard to the motion to compel production of 6 the documents in the privileged log, how long will it take SCO 7 to respond to that? 8 MR. NORMAND: Well, there are four subpoenas 9 outstanding, Your Honor, one with respect to KB&G. We can 10 produce the documents today or tomorrow. 11 MR. SHAUGHNESSY: She's talking about the -- she's 12 not talking about the subpoenas. She's talking about the 13 production of the privilege log. 14 MR. NORMAND: I'm sorry. I jumped ahead. 15 THE COURT: That's okay. 16 MR. NORMAND: I think there are 1,000 documents. I 17 would think within six or eight business days we can do that. 18 THE COURT: I don't have a calendar here. Why 19 don't we make that -- I don't have a calendar, and with the 20 holidays -- 21 MR. MARRIOTT: Would you like my calendar? 22 THE COURT: We have a made-up calendar, a hand-done 23 calendar. 24 I'm going to require that those be produced by the 25 2nd of January -- or the 3rd of January, which is Friday 68 1 (sic). 2 MR. MARRIOTT: Can I just ask one thing, Your 3 Honor? 4 THE COURT: Sure. 5 MR. MARRIOTT: Mr. Normand has just suggested that 6 he believes the documents are on a disk and could be provide 7 much more quickly. We just ask that if they can be provided 8 more quickly that they do so. 9 THE COURT: Sure. But the outside date would be 10 January 3rd -- wait. The 6th of January, Friday. And if you 11 can do it sooner than that -- 12 MR. NORMAND: We will do it sooner than that. 13 THE COURT: -- on disk. All right. Thank you. 14 When, Mr. Shaughnessy, do you anticipate being able 15 to provide the affidavits? 16 MR. SHAUGHNESSY: We can do it by the same time, 17 same date, Your Honor. 18 THE COURT: All right. That will be fine. 19 MR. MARRIOTT: And again there, we would do it 20 sooner if we can. 21 THE COURT: Sure. All right. 22 I have signed the order that's been presented to 23 me. It takes care of the other matter. 24 Is there anything else we need to address this 25 morning? 69 1 MR. NORMAND: I guess I just want clarification, 2 Your Honor. On the issue we discussed, both counsel and I, at 3 some length, further depositions and using depositions to 4 identify documents, is that a procedure that Your Honor wanted 5 us to explore? 6 THE COURT: That is up to. That's up to counsel 7 how you handle that. And I should have made that part of the 8 order. And I'm going to have Mr. Shaughnessy and Mr. Marriott 9 prepare the order with regard to the privileged log issue and 10 Mr. Normand with regard to the other one, that the 11 depositions, should they be taken, the two additional people 12 that remain for whom the affidavits will be submitted, those 13 two, you may take those depositions, and they would not be 14 counted towards your 50; all right? 16 MR. SHAUGHNESSY: I'm happy, Your Honor, if the 17 Court would prefer, to put it altogether in one order, that we 18 take a stab at it and provide it to Mr. Normand. 19 THE COURT: That's fine. 20 MR. NORMAND: Your Honor, could I take your time 21 with one additional issue that I think is ripe to resolve? 22 THE COURT: Sure. 23 MR. NORMAND: Both parties, of course, are going to 24 be serving requests for admission, as you know, at the end of 25 discovery, March in this case. But we have a bifurcated 70 1 discovery period in which SCO's discovery for purposes of its 2 affirmative claims would end in late January. SCO has been 3 operating under the belief that if it serves requests for 4 admissions with respect to not only its own claims but its 5 counterclaims in the period up to the end of fact discovery, 6 which I think counsel would agree is typical, near the end of 7 the fact discovery to do our request of admissions. 8 We didn't finish the discussion when Your Honor was 9 in chambers, but I think, and they'll correct me if I'm wrong 10 I think IBM's position is that SCO would have to serve its 11 requests for admissions relating to it affirmative claims 12 essentially by the end of December because they need to be 13 filed 30 days before the end of our discovery period. 14 That's not my experience with respect to any 15 discovery period, and here where we have the bifurcated 16 discovery period, it's SCO's position that it would be a lot 17 simpler to serve all of its request for admissions at once 18 with respect to both its claims and IBM's counterclaims toward 19 the end of the fact discovery period. 20 THE COURT: So by the end of January? 21 MR. NORMAND: No. The end of fact discovery for 22 all of the claims and counterclaims. 23 THE COURT: Which is when? 24 MR. NORMAND: Mid March, I think. 25 MR. MARRIOTT: March 17th. 71 1 MR. NORMAND: We would serve them -- if this is 2 IBM's position, we could serve them 30 days before the end of 3 that period. I mean, in my experience, request for admissions 4 aren't even part of discovery. They're often served after 5 discovery. But if IBM wants to see them all 30 days before 6 the end of their discovery period, we'll serve them all by 7 then. 8 MR. MARRIOTT: Your Honor, there are two discovery 9 periods, one that closes on the 27th of January, and what 10 exactly that discovery -- what exactly discovery after that 11 the parties are allowed to take are subject to a separate 12 order by stipulation that Judge Kimball signed. 13 So there are two discovery periods. And our 14 position is to the extent that parties want to serve requests 15 for admission, they should serve their requests for admission 16 so that they could be responded to before the end of each 17 discovery period. And discovery would be allowed and 18 permissible during those periods. So if SCO, for example, 19 wished to serve us related to discovery permissible during the 20 period ending on January 27th, then they should serve RFAs 30 21 days before January 27th for responses by the end of the 22 period. If SCO wants to serve discovery to serve our RFA's 23 relating to the discovery permissible during the period 24 between January 27th and March 17th, then it should serve RFA 25 30 days before March 17th for responses by March 17th. 72 1 Otherwise, that will allow discovery that is supposed to be 2 limited to period A and allow that to go into period B. And, 3 therefore, we think the parties ought to do it 30 days before. 4 MR. NORMAND: Two points, Your Honor. One, I don't 5 think it's true that you have to serve the requests for 6 admission within the periods of discovery so that will be 7 responded to before the formal discovery ends. So the very 8 least we would have the end of January to do our requests for 9 admissions with respect to our claims. 10 But more importantly and second, Your Honor, IBM is 11 entitled to take discovery, as Mr. Marriott says, to some 12 scope as set forth in the stipulation, IBM is entitled to take 13 discover through mid March. If we served our RFAs even in 14 late January, we don't need to respond to them before late 15 January. And IBM will receive them at the end of January and 16 can take discovery on them if they'd like in that two-month 17 period. But even that isn't fair because parties don't 19 either deny or they admit that the document is as it 20 appears or as a legal issue as it appears or factual issues a 21 it appears. 22 THE COURT: Are either of you relying on any 23 particular rule? 24 MR. NORMAND: It's bad for me, Your Honor. I don't 25 have cases with me. I know there are cases that say RFAs are 73 1 not part of discovery. There are other cases that say they 2 are part of discovery. I don't have anything to cite. 3 THE COURT: Is there any rule or procedure that 4 you're relying on? 5 MR. MARRIOTT: Your Honor, I think as to the timing 6 of RFAs is within Your Honor's discretion, and I think 7 practices vary. We would be agreeable to talking with counsel 8 about a scenario under which the RFAs were served prior to the 9 close of each of the fact discovery periods, so long as the 10 RFAs relate to the permissible discovery in that period. 11 Mr. Normand's concern is it does come after his 12 time to respond 30 days before. We're agreeable to that -- 13 THE COURT: I'm going to leave that to counsel to 14 work out and submit in a stipulation. 15 MR. NORMAND: Thank you, Your Honor. Just by way 16 of example, I would not expect IBM to have to serve its RFAs 17 on its counterclaims on us by mid February. 18 THE COURT: I understand. 19 MR. NORMAND: I understand it's the end of its 20 discovery period. 21 THE COURT: I understand. You can all work that 22 out and submit it. 23 MR. NORMAND: Thank you. 24 THE COURT: All right. Anything further? 25 MR. MARRIOTT: No, Your Honor. 74 1 THE COURT: We're in recess. Thank you. 2 MR. NORMAND: Thank you, Your Honor. 3 (Whereupon, the court proceedings were concluded.) 75 1 STATE OF UTAH ) 2 ) ss. 3 COUNTY OF SALT LAKE ) 4 I, KELLY BROWN HICKEN, do hereby certify that I am 5 a certified court reporter for the State of Utah 6 That as such reporter, I attended the hearing of 7 the foregoing matter on December 20, 2005, and thereat 8 reported in Stenotype all of the testimony and proceedings 9 had, and caused said notes to be transcribed into typewriting 10 and the foregoing pages number from 3 through 75 constitute a 11 full, true and correct report of the same. 12 That I am not of kin to any of the parties and have 13 no interest in the outcome of the matter; 14 And hereby set my hand and seal, this day of 15 February, 2006. 16 17 18 19 ___[signature} 21 Kelly Brown Hicken, CSR, RDR, RMR 76
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Authored by: entre on Sunday, February 12 2006 @ 05:45 PM EST |
Absolutely outstanding work
[ Reply to This | # ]
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Authored by: Anonymous on Sunday, February 12 2006 @ 05:54 PM EST |
s/it what what/it was what/ [ Reply to This | # ]
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Authored by: alisonken1 on Sunday, February 12 2006 @ 05:54 PM EST |
Right after the first MR. SHAUGHNESSY, MR. NORMAND, and THE COURT quote:
and for all I know, that what what he
wanted from the beginning
should probably
read:
and for all I know, that is what he
wanted from the beginning
--- - Ken -
Registered Linux user #296561
Slackin' since 1994 -
import std_disclaimer.py
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Authored by: WhiteFang on Sunday, February 12 2006 @ 06:09 PM EST |
I forgot to check if I was logged in.
Remember to make clickies as appropriate. Directions below the comment dialog
box in red.
:-)
---
DRM - Degrading, Repulsive, Meanspirited
'Nuff Said[ Reply to This | # ]
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Authored by: Anonymous on Sunday, February 12 2006 @ 06:24 PM EST |
I was wondering if it was possible for Groklaw to make a link of every post. By
that i mean, have a downloadable text format for ipod users and pda users. I
understand that i can grab this entire webpage for consumption but it's a lot
faster and I you know how stupid Internet Explorer is on things like Windows CE
and MObile. [ Reply to This | # ]
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Authored by: The Mad Hatter r on Sunday, February 12 2006 @ 07:41 PM EST |
Thanks to Frank for picking up this interesting tome, and PJ for explaining it.
I've blamed PJ several times for giving me an interest in the law - and I'm
going to do it once again. There was a time when I would have skimmed the
document. Instead I read it straight through, totally fascinated by what I was
reading. In addition to being a computer geek, now I'm becoming a law geek, and
it's lucky I'm already married as I'd probably end up like the guys that are
being sung about in today's User Friendly.
It's too bad though that we don't get to read those emails between Darl and
Microsoft, I'm sure they would have been interesting (note that this is a hint
to Todd Shaughnessy to bring them up in court if at all possible - if he or one
of this staff reads Groklaw).
---
Wayne
http://urbanterrorist.blogspot.com/
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Authored by: joeblakesley on Sunday, February 12 2006 @ 08:54 PM EST |
IANAL &c, but, regarding a possible conflict of interest, where I am
(UK), I believe there is only a problem if the cases are concurrent. A
lawyer obviously cannot do any work for someone who is linked to someoene they
are fighting, but, as long as it was in the past, it is OK. This seem slightly
wierd to me as you may have some inside knowledge (esp. if the cases are in a
similar area), but I guess the point is that lawyers are hired hands who must
work for anyone and keep their cases seperate. Also, there aren't that many
lawyers in a given geographical area, so local lawyers would be finding
themselves in conflict all the time otherwise.
Boies does seem to have a had
a complex relationship with the parties to this case. Correct me if I'm
wrong, but I believe he's worked for:
- IBM in DOJ v IBM (or did I just
imagine that?)
- DOJ (on behalf of Caldera (i.e.: TSG)?) in Caldera v.
MS
- DOJ in DOJ v MS
- TSG (probably working on behalf of MS) in TSG v
IBM
--- Joe Llywelyn Griffith Blakesley
(This post is in the public domain wrt "copyright" unless otherwise stated.) [ Reply to This | # ]
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Authored by: jmart on Sunday, February 12 2006 @ 09:46 PM EST |
Why is Mr. Normand not mentioned in the list of those making appearances? [ Reply to This | # ]
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Authored by: Anonymous on Sunday, February 12 2006 @ 10:46 PM EST |
and have since proceeded to fall apart.
This case is no longer about IBM,
SCO code and Linux.
There are some seriously unanswered questions which will
be asked, even if not by this court.
It could explain, what may even be panic
causing the seemingly uncertain(what happened in the week between the 1st
and 2nd subpoena's?) yet obviously faulty attempts to deposition Oracle and
Intel.
The next few weeks could be quite entertaining and SCOG's illness
could even prove terminal. Come on Darl - show us the emails!! :) Brian
S. [ Reply to This | # ]
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Authored by: leonpmu on Monday, February 13 2006 @ 12:20 AM EST |
PJ, would it not be easier to ensure that all people are logged in and block
anonymous. Although there are quite a few of the local groklaw users who truly
forget to login, there are quite a number of trolls who use the anonymous login
to stir trouble and dissappear. Whereas, if they had to login, it might prove
to be less of a problem.
Just a thought.
Thanks for the great work. You make it much easier for computer geeks to
understand lawyer speak. ;D[ Reply to This | # ]
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- Suggestion for the site to PJ - Authored by: Anonymous on Monday, February 13 2006 @ 01:29 AM EST
- ... hold your enemies closer - Authored by: Anonymous on Monday, February 13 2006 @ 01:42 AM EST
- Suggestion for the site to PJ - Authored by: Anonymous on Monday, February 13 2006 @ 02:01 AM EST
- Suggestion for the site to PJ - Authored by: stevem on Monday, February 13 2006 @ 04:05 AM EST
- What is being said counts, not who says it - Authored by: Anonymous on Monday, February 13 2006 @ 05:28 AM EST
- Suggestion for the site to PJ - Authored by: Anonymous on Monday, February 13 2006 @ 06:38 AM EST
- Suggestion for the site to PJ - Authored by: ine on Monday, February 13 2006 @ 07:10 AM EST
- Suggestion for the site to PJ - Authored by: Anonymous on Monday, February 13 2006 @ 08:18 AM EST
- Suggestion for the site to PJ - Authored by: troll on Monday, February 13 2006 @ 09:13 AM EST
- Anonymous Communication has it's history and it's place (with referances)! - Authored by: Anonymous on Monday, February 13 2006 @ 09:25 AM EST
- Suggestion for the site to PJ - Authored by: PJ on Monday, February 13 2006 @ 09:30 AM EST
- Suggestion for the site to PJ - Authored by: Anonymous on Monday, February 13 2006 @ 02:05 PM EST
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Authored by: Anonymous on Monday, February 13 2006 @ 01:14 AM EST |
Somewhere I read this but now I can't recall where. Maybe it's true and maybe
it isn't. If anyone knows for sure one way or the other, please say so.
Apparently Microsoft put every major law firm in the US on retainer shortly
after their last anti-trust lawsuit. This probably only costs them a few
million dollars per year but it keeps the US government from hiring those firms
to represent its side in any future anti-trust lawsuits.
Please tell me I'm full of it.
JSL[ Reply to This | # ]
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Authored by: webster on Monday, February 13 2006 @ 02:19 AM EST |
. . . . . Bad Day for SCO . . .
1. The transcript is introduced by PJ. She makes sure to highlight the Darl-M$
emails. Certainly Darl can't remember them. We will just have to have fun
speculating as to what they said. We can just ask Darl to try and remember one
or another now and then throughout his testimony.
2. What a set up! Magistrate Wells serves Marriott a cream puff by asking him
about her Mentor, Judge Boyce's case which IBM used in their Motion. Before he
opened his mouth, Marriott knew he had a smooth downhill ride. So did Normand.
What a waste of time. He could have said "We believe that case applies
exactly here. We urge that you grant our motion accordingly." But they
both expected a performance.
3. Marriott provides a withering barrage of problems with SCO's affidavit of
Mr. Broderick: it does not dispute the facts; it does not say essential control
passed from A to B or from B to C; He says only that some of the assets passed;
he affirms that some assets did not pass; Broderick is not a competent witness;
he is contradicted by a SCO SEC filing; and contradicted by Broderick's own
deposition; he wasn't involved in the transaction; he purports to speak for
others' state of mind; and he is not a lawyer but spouts legal opinions.
4. Marriott didn't disappoint and kept on rolling with the Judge. The Judge
then asked the parties if they thought the disclosure of the documents in
question would delay discovery and they thought it wouldn't. Certainly a
refreshingly non-dilatory response from Normand of SCO.
5. Normand then takes on the delicate task of destroying the opinion of
Magistrate Brooke Welles' Patron Saint, Judge Boyce. He immediately
characterizes Boyce's ruling twice as "merely an oral" ruling and
cautions the judge that it would be risky to put too much weight on it. She
retorts, "You didn't know Judge Boyce." Unrecorded and under her
breath those in the first row heard "...like Dave and I do." Ted
(Normand) should have sat down at this point. There was nothing he could do.
He was never going to be teacher's pet. The day was lost. But he is chained to
the oars in the bottom of the good ship SCO trying to row out of the rising
water. He continues and Boyce be damned. Duds they may be, but he had some
torpedoes of his own to lose.
6. He then pounds the law, the Soverain and Graco cases. It inspires the Judge
to intrude "...None of the opinions say that" proving that things can
get worse.
7. And they do. Judge Welles then attacks Broderick with references clearly
garnered from her own reading of his deposition that was so kindly provided by
IBM. The Judge piles on with her own criticism that Broderick qualifies all his
statements. Normand forthrightly and wisely concedes her points but bravely
soldiers on until he lamely ends, "I'll have to take a look at the note
that's been handed to me, Your Honor, but that's all I have now. Thank
you." The note was a stunt by Hatch, "Your zipper's down!" p.
26.
8. Marriott then volunteers without audible judicial leave to correct SCO
misinterpretations of the cases SCO itself cites, citing cases cited in the
cases. All the detail of these cases distinguished and explained as if he had
argued them yesterday which maybe he did in practice. He must be a WestLaw
Robot. p. 26-29.
9. The Judge then rules on the spot and asks, looking at SCO, if any party has
any "questions or clarifications." SCO better not try and twist this
one. p. 30.
10. They then argue the Motion for documents from the senior IBM executives.
Normand calls this a "metaphysical" question since there were/are
evidence of such documents, but IBM does not disclose any saying they have
looked and not found any, but not saying that they never existed nor explaining
what happenned to them if they did. So go SCO motions, repetetive to a fault.
They start out trying to set what exactly they are arguing about. p. 32.
11. IBM says and the Court clearly accepts that Palmisano's emails are gone or
lost. Alas for SCO, "....there must be more responsive documents." p.
34, l. 16. The missing emails are years old and from former jobs. Normand and
the Judge plan on confronting Marriott when lo' and behold Shaughnessy pops up.
Marriott rests. Is this a break for SCO? p. 35, l. 2.
12. Shaughnessy is masterful also. Normand is strong. He says basically that
IBM is not looking hard enough, that IBM is interpreting the Court's order too
narrowly. The executives have admitted to documents, but IBM does not produce
them. Shaugnessy explains it all at length. He details the discovery. He,
like Marriott can think on his feet and can recall massive detail. This was not
so dramatic as the first motion and it didn't at all involve that caselaw
mumbo-jumbo. Normand is saying in so many words, "Why isn't IBM disclosing
more incriminating documents?" Shaughnessy explains it away thoroughly.
13. A Hollow Victory for SCO. The Court accepts SCO's interpretation of her
orders. So does IBM. The Court takes a recess to prepare a ruling and check
her notes. She comes back and begins to rule: She is going to order IBM to
expand by two the senior execs from whom documents should be presented. Score
one for SCO. She grants SCO's Motion and ORDERS IBM to produce documents from
Paul Horn and Nick Bowen. In the midst of her ruling Marriott spins in his
chair, Normand checks his zipper and Shaughnessy stands and interrupts:
------MR. SHAUGHNESSY: Maybe I can help, Your Honor. We produced documents
from both of these individuals."-------
P. 66, l. 14. The Magistrate adjusted her glasses so the parties wouldn't see
her roll her eyes. She thought to herself, "What a ------- waste of an
afternoon! I do hate civil litigation so!" So she ordered affidavits from
the losing party, IBM. SCO won affidavits saying "IBM looked and can't
find documents!" They will get the "boiler-plate" affidavit IBM
used for Parmigiano and Wallaby-burger. All they have to do is change the names
and dates! Usually the winning party gets to write the order. IBM, the losing
party, volunteered to write this order, combine it with their winning order on
the first motion. P. 70. The Cravath Swain cheeks were sore by the end of the
hearing. They were cramping from suppressed mirth. After the hearing the IBM
team retreated to the restroom to collect their composure, such as it was, and
exchange high fives.
14. Oh. The hearing went on and not insignificantly. There were scheduling
matters and then a discussion for Requests for admissions which is discussed
best in the article above.
15. This was a hard loss for SCO. The documents they must disclose probably
contradict their stated theories. They present another strong reason why this
will never go to trial. Normand suppressed fantasies of going out and shooting
boy scouts lest they grow up and practice law like Shaughnessy.
[Licensed in part under the OLL. {Open Literary License}]
---
webster
-----------Free China
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- LOL! - Authored by: DaveJakeman on Monday, February 13 2006 @ 04:33 AM EST
- Bad Day for SCO, December 20, 2005 Hearing - Authored by: Anonymous on Monday, February 13 2006 @ 06:32 AM EST
- SCO=Microsoft only want to make fake arguments to idiot PHB's - Authored by: Anonymous on Monday, February 13 2006 @ 08:29 AM EST
- Bad Day for SCO, December 20, 2005 Hearing - Authored by: IMANAL on Monday, February 13 2006 @ 09:45 AM EST
- Bad Day for SCO, December 20, 2005 Hearing - Authored by: Yossarian on Monday, February 13 2006 @ 04:48 PM EST
- Bad Day for SCO, December 20, 2005 Hearing - Authored by: Anonymous on Monday, February 13 2006 @ 05:31 PM EST
- You have gotten into trouble for this sort of satire, haven't you (nt) - Authored by: Anonymous on Tuesday, February 14 2006 @ 12:31 AM EST
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Authored by: eric76 on Monday, February 13 2006 @ 03:19 AM EST |
I'm not a lawyer so I may be all wrong about this, but it seems to me that on
the issue of the transfer of control, IBM is arguing the law as it is now and
SCO is either arguing that the court should extend the law into new area and
that the extension would be slight or that other courts have extended the law
slightly in the past year or so and SCO wishes the court to recognize that as
fact.
In particular,from page 19:
Our position is that the case
law has evolved, though, to reflect that the case as last year myriad ways in
which the transfer can occur.
Is that correct? [ Reply to This | # ]
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Authored by: DaveJakeman on Monday, February 13 2006 @ 05:02 AM EST |
This was posted shortly before the above article
appeared.
Interesting. If Boies really is in the driving seat, maybe
that's why DMcB has been muzzled of late. And should we be looking for a
connection between Boies/BSF and Microsoft? We know they are already connected
litigation-wise, but maybe there's more to it than that.
If such a
connection were found, what would the legal implications of that be? Or
anti-trust?
--- Should one hear an accusation, first look to see
how it might be levelled at the accuser. [ Reply to This | # ]
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Authored by: Anonymous on Monday, February 13 2006 @ 06:52 AM EST |
The court: 'First, I find that the Novell to Santa Cruz transaction did not
transfer the entirety of the business, nor did the Santa Cruz to Caldera
transaction.'
Interesting. The Novell to Santa Cruz transaction was fairly complete. I have
been over the documents so I can say this with a fair degree of certainty.
One noticable omission was the copyrights. Anyone else remember them? Thought
so.
Judge Welles did not say what was retained by Novell. But 1 will get to 10 that
at least one thing she was thinking about here was the copyrights. She did not
say this as this is rightly Judge Kimball's call. This precise point is before
Judge K at the minute.
Also note that Novell retained the rights to 95% of the revenue from Unix.
Whether SCO source is or is not Unix derived revenue remains to be seen.
What is now completely clear is that Novell and to some extent Santa Cruz
remained some rights to Unix and that the earlier blanket statement 'We own
Unix' is at best misleading and at worst fraudulent. It is likely that there
will be some clarification shortly as to exactly what SCO do or do not currently
own.
--
MadScientist[ Reply to This | # ]
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Authored by: gbl on Monday, February 13 2006 @ 07:30 AM EST |
If there truely is evidence in emails that TSG and Microsoft have discussed
Linux in the recent past then there is a huge can of worms that IBM could force
open.
If there is the slightest evidence that MS have encouraged TSG in
their case (the money is still questionable) then we get into anti-trust
territory and an awful lot of bovine waste material will violently contact the
rotary air movement device.
--- If you love some code, set it free. [ Reply to This | # ]
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Authored by: Anonymous on Monday, February 13 2006 @ 01:54 PM EST |
Hey, everybody!
Yikes! It looks like my theory that SCO was MicroSoft's lab rat in patent
litigation may have been closer to the mark than I realized.
The one bright side is how bad this is failing. If this was a test case, it
looks like we have less to fear from the Empire than we thought. Well, maybe.
Had they picked on smaller targets first, they could have gotten away with it
for a while. THAT'S scary.
Dobre utka,
The Blue Sky Ranger[ Reply to This | # ]
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Authored by: odysseus on Monday, February 13 2006 @ 06:59 PM EST |
I've only had time to read PJ's highlights, not the whole transcript, but I seem
to be missing the smoking gun here.
I see SCO mentioning finding 'Linux' e-mails in IBM's productions:
"So we infer from the fact that we did find an e-mail linked to Linux in
Mr. Palmisano's e-mail files that there must be more."
I see IBM mention non-production of e-mails from Darl's files, but no mention of
what they were related to:
"We have found in SCO's production literally dozens and dozens of e-mails
that were either to or from Mr. McBride that do not appear in his files. Other
employees have copies of e-mails either to or from Mr. McBride. They're not in
Mr. McBride's files."
I then see IBM mention non-production of e-mails from Darl to Microsoft, but no
mention of what those e-mails were about:
"During Mr. McBride's deposition, we find that there are potentially dozens
of e-mails between Mr. McBride and Microsoft that have not been produced despite
having been specifically requested."
I then see Judge Wells ask about e-mails referring to Linux in the Darl
deposition, but no specific mention they were to Microsoft (they could be the
employee e-mails already mentioned above):
"But do you dispute what was stated during Mr. McBride's deposition that
there were identified a number of e-mails that referred to Linux, but didn't
exist in his file?"
Can someone point me to the exact quote with the smoking gun, or are we drawing
a long bow here based on an inference Judeg Wells made? Perhaps it just needs
to be spelt out a little more clearly? Do we have the Darl deposition yet to
check back with? Or IBM's 'specific request' for e-mails?
Cheers!
John.[ Reply to This | # ]
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