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Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Sunday, August 26 2007 @ 08:19 PM EDT

Do you remember that in Judge Dale Kimball's ruling on August 10, he declined to order a constructive trust or an accounting because he assumed Novell already had gotten the necessary information during discovery? In this filing, Novell breaks the wondrous news that his assumption is mistaken.

SCO has not provided the information Novell sought, we learn. It relied instead upon its theory that the information was not required to be provided, because the Sun and Microsoft licenses were not SVRX licenses. The judge ruled they are. So now what?

Novell's position is that SCO's only theory of apportionment throughout discovery has been nothing to Novell and all the money to SCO, and therefore, Novell argues, it should be precluded from presenting any new argument or evidence regarding any new theory of apportionment, as that would reward their breach of fiduciary duty. I know. I thought Novell must have the information by now too.

Here is Novell's Motion in Limine No. 3 to Preclude SCO From Introducing New Evidence or Argument Regarding Apportionment of SCOsource Revenue [PDF]. And here is the Opening Brief in Support of Novell's Motion in Limine No. 3 to Preclude SCO From Introducing New Evidence or Argument Regarding Apportionment of SCOsource Revenue [PDF], as text, in which you can read all about it.

Here's what the judge said:

Although the court finds that Novell meets the requirements for the imposition of a constructive trust, the question of fact as to the SVRX portion of the 2003 Sun and Microsoft Agreements precludes the court from imposing a trust for the appropriate amount. Furthermore, despite Novell's fears regarding its ability to collect its royalties, the appropriate amount of SVRX Royalties can be determined at trial. Because of the question of fact, the court denies both Novell's and SCO's motions for summary judgment on Novell's Sixth Claim for Relief for constructive trust.

Novell also seeks the equitable remedy of accounting under its Ninth Claim for Relief. The APA obligates SCO to give detailed monthly reports and to comply with audits. APA 1.2(b), (f). To the extent that SCO has failed to comply with these requirements with respect to the 2003 Sun and Microsoft Agreements, the court notes that it has a continuing duty to fulfill its contractual obligations. Novell also has continuing rights under the APA to conduct audits as to SVRX Royalties.

The court assumes that, through discovery in this action, Novell has actually obtained the information it needs to demonstrate its damages with respect to the SVRX Royalties it is due under the 2003 Sun and Microsoft Agreements. The imposition of an accounting usually arises where "the facts are peculiarly within the knowledge of one of the parties." Van de Kamp, 204 Cal. App. 3d 819, 864 (1988). In this case, Novell acknowledges that it received copies of the 2003 Sun and Microsoft Agreement during discovery. It is also apparent that Novell has received relevant financial records and documentation from SCO because it is aware of how SCO accounted for the payments under the 2003 Sun and Microsoft Agreements. Because Novell has the information that it would otherwise obtain through an accounting, the court denies Novell's Ninth Claim for Relief for an accounting.

In the previous article, we saw that SCO has filed a motion in limine asking that Novell be precluded from introducing evidence it recently added to its pretrial disclosure lists, which Novell told the court it was only going to use if SCO offered a new theory of apportionment. Now we learn in more detail what it's all about.

It seems that prior to Judge Dale Kimball's August 10 ruling, SCO's only theory of apportionment was 100% to SCO, 0% to Novell. Novell wishes to hold them to that theory now that the court has told SCO it indeed has a continuing fiduciary duty to provide Novell with an allocation of the Sun and Microsoft SCOsource royalties.

Novell tells the court that it has tried for years to get SCO to provide that information, and SCO wouldn't:

For years, Novell has requested such information -- in audits, letters, and, most recently, explicit interrogatory requests. Throughout, SCO has provided only one "allocation" of SCOsource revenues: Novell 0%, SCO 100%. SCO's experts, moreover, never opined as to any allocation model at all. SCO should thus not be permitted now to vary from its singular disclosure. To allow SCO to surprise Novell with a new, undisclosed allocation whether through fact witnesses or its one designated expert would reward SCO for its years of stonewalling and its breach of fiduciary duties.

To be clear, Novell does not seek to preclude, by this motion, SCO from advancing again its stark "Novell 0%, SCO 100%" allocation -- Novell agrees that SCO has provided fair notice of its intent to advance such an argument through, for example, its interrogatory responses. Instead, this in limine motion seeks to prevent SCO from surprising Novell at trial with evidence or argument supporting any other division of the SCOsource revenues.

SCO never gave Novell any figure but zero. That's what Novell got in discovery. And now that SCO lost that argument, it should be too late, Novell argues, for it to suddenly introduce a new and unknown apportionment theory that it failed to present in discovery:

Because SCO refused to disclose any apportionment of SCOsource revenue in response to Novell's interrogatories, it is precluded from introducing it now. Federal Rule of Civil Procedure 37(c)(1) states, "A party that without substantial justification fails to disclose information required by Rule 26(a) [written interrogatories] or 26(e)(1) [supplemental responses] shall not, unless such failure is harmless, be permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed." See also Orjias v. Stevenson, 31 F.3d 995 (10th Cir. 1994) (upholding trial court's preclusion of testimony that was not disclosed in party's response to interrogatory on same subject). The failure here is anything but harmless -- without preclusion, SCO will be able to surprise Novell with a new and undisclosed apportionment.

Wow. Morrison & Foerster are playing hardball. SCO tried to play that way and they lost. Now they are being shown no mercy by Novell. Novell calmly points out that they asked repeatedly for the information and SCO didn't fork it over and didn't even provide an accounting, which the court has now ruled was a breach of SCO's fiduciary duty. When Novell asked for an audit, "SCO refused to provide any information, under the blanket claim -- now rejected as a matter of law -- that the Sun and Microsoft SCOsource contracts were not SVRX Licenses". The judge says they are SVRX licenses. So SCO may now be stuck in the failed stance it held to. Novell says SCO should be precluded from offering a new theory. Why should SCO be allowed to benefit from a breach of its duty and thus ambush Novell with a brand new apportionment theory that Novell can't possibly be ready for? That would be to reward SCO for its multiple breaches of its fiduciary duty.

Worse for SCO, SCO has listed as a possible witness its expert Thomas Cargill, but while Novell says it doesn't know what his testimony will be about, it points out that in his expert report, he never spoke about any apportionment at all:

Dr. Cargill never once opines on any aspect of the Microsoft, Sun, or other SCOsource licenses, on the relative values that SVRX or UnixWare contribute to those licenses, on how one would apportion between SVRX and UnixWare in those licenses, or on any damage-related issue whatsoever. Given Dr. Cargill's failure to discuss any apportionment issues in his expert report, the Court should not allow him to testify on apportionment at trial.

And footnote 2 tells us that somehow SCO never offered any expert to rebut Novell's expert, Terry Musika, who has offered an expert report in support of Novell's damages claim. Perhaps they elected not to do so because it would clash with their then-theory of zero apportionment. Now there is no expert to rebut but Cargill, who never previously opined on that subject, and Novell presents cases that experts can't testify to subject matter not in their expert report.

In short, it looks like maybe SCO is messed up a bit, and now it's trying to fix it, by motions in limine, the one in the previous article, and its sealed motion, number 384, asking the court to exclude Musika's testimony, along with a motion "Regarding Apportionment of 2003 Microsoft and Sun Agreements". Eventually, we are likely to have a redacted copy of the currently sealed SCO motions.

But think what it would mean for SCO if Novell succeeds in this motion. It means that SCO can only offer an argument that can't possibly prevail. Novell presents its expert and evidence that it is owed whatever it thinks it is owed. And SCO can only answer that SCO should get 100 percent, which the judge has already ruled out.

Here's what I know. If ever I am in any litigation that Morrison & Foerster is involved in, please God, don't let them be on the other side.

*********************************

Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice
[address]
[phone]
[fax]

ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
John P. Mullen, #4097
Heather M. Sneddon, #9520
[address]
[phone]
[fax]

Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff and Counterclaim-
Defendant,

v.

NOVELL, INC., a Delaware corporation,

Defendant and Counterclaim-
Plaintiff.
NOVELL'S MOTION IN LIMINE No. 3
TO PRECLUDE SCO FROM
INTRODUCING NEW EVIDENCE OR
ARGUMENT REGARDING
APPORTIONMENT OF SCOSOURCE
REVENUE


Case No. 2:04CV00139

Judge Dale A. Kimball

MOTION IN LIMINE

Defendant and Counterclaim-Plaintiff Novell, Inc. ("Novell") hereby moves this Court, in limine, to bar SCO from introducing new evidence or argument regarding an apportionment of SCOsource revenue. For the reasons set forth in Novell's opening brief, filed herewith, Novell requests that this Court grant this motion.

DATED: August 24, 2007

ANDERSON & KARRENBERG

By: /s/ Heather M. Sneddon
Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon

-and-

MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice

Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.

1

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 24th day of August, 2007, I caused a true and correct copy of the foregoing NOVELL'S MOTION IN LIMINE NO. 3 TO PRECLUDE SCO FROM INTRODUCING NEW EVIDENCE OR ARGUMENT REGARDING APPORTIONMENT OF SCOSOURCE REVENUE to be served to the following:

Via CM/ECF:

Brent O. Hatch
Mark F. James
HATCH JAMES & DODGE, P.C.
[address]

Stuart H. Singer
William T. Dzurilla
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
[address]

David Boies
Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

Devan V. Padmanabhan
John J. Brogan
DORSEY & WHITNEY, LLP
[address] 50 South Sixth Street, Suite 1500 Minneapolis, Minnesota 55401

Via U.S. Mail, postage prepaid:

Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Heather M. Sneddon

2

******************************

Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice
[address]
[phone]
[fax]

ANDERSON & KARRENBERG
Thomas R. Karrenberg, #3726
John P. Mullen, #4097
Heather M. Sneddon, #9520
[address]
[phone]
[fax]

Attorneys for Defendant and Counterclaim-Plaintiff Novell, Inc.

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., a Delaware
corporation,

Plaintiff and Counterclaim-
Defendant,

v.

NOVELL, INC., a Delaware corporation,

Defendant and Counterclaim-
Plaintiff.
OPENING BRIEF IN SUPPORT OF
NOVELL'S MOTION IN LIMINE NO. 3
TO PRECLUDE SCO FROM
INTRODUCING NEW EVIDENCE OR
ARGUMENT REGARDING APPORTIONMENT OF SCOSOURCE
REVENUE


[REDACTED pursuant to the August 2, 2006
Stipulated Protective Order]

Case No. 2:04CV00139
Judge Dale A. Kimball

RELIEF REQUESTED

Novell requests that this Court bar SCO from introducing new evidence or argument including through expert testimony regarding an apportionment of SCOsource revenue.

BACKGROUND

The Court's August 10, 2007 Memorandum Decision and Order ("Order") holds that SCO has a continuing fiduciary duty to provide Novell with an allocation of the Sun and Microsoft SCOsource royalties. For years, Novell has requested such information -- in audits, letters, and, most recently, explicit interrogatory requests. Throughout, SCO has provided only one "allocation" of SCOsource revenues: Novell 0%, SCO 100%. SCO's experts, moreover, never opined as to any allocation model at all. SCO should thus not be permitted now to vary from its singular disclosure. To allow SCO to surprise Novell with a new, undisclosed allocation whether through fact witnesses or its one designated expert would reward SCO for its years of stonewalling and its breach of fiduciary duties.

To be clear, Novell does not seek to preclude, by this motion, SCO from advancing again its stark "Novell 0%, SCO 100%" allocation -- Novell agrees that SCO has provided fair notice of its intent to advance such an argument through, for example, its interrogatory responses. Instead, this in limine motion seeks to prevent SCO from surprising Novell at trial with evidence or argument supporting any other division of the SCOsource revenues.

I. NOVELL'S INTERROGATORIES ASKED SCO TO APPORTION SCOSOURCE REVENUE; SCO SAID IT COULD NOT DO SO.

Novell repeatedly asked SCO to apportion its SCOsource revenue. At each opportunity, SCO answered that it was not possible to do so. In Interrogatory No. 7, Novell directed SCO to identify licenses of UNIX or UnixWare from which SCO retained revenues. (Declaration of David E. Melaugh in Support of Novell's Motions In Limine, filed herewith ("Melaugh Decl.") at Ex. 5 (Novell, Inc.'s Second Set of Interrogatories to the SCO Group, Inc.) at 4.) SCO identified, inter alia, the SCOsource licenses. (Id at Exs. 6 (SCO's Supplemental Responses and Objections to Novell's Second and Third Sets of Interrogatories) at 14 & 7 (Exs. C & C-1

1

thereto).) Novell also directed SCO to identify, on a license by license basis, the amount of revenue attributable to each of the rights conveyed under the responsive licenses -- i.e., to apportion the revenue. SCO responded that "SCO does not maintain, and it would be unduly burdensome for SCO to produce, that information." (Id at 13.)

In addition, in Interrogatory No. 11, Novell asked a similar question -- Novell directed SCO to identify (i) any amendment to an SVRX License SCO entered into that was incidentally involved in an effort to license UnixWare, and (ii) any license to SVRX source code. SCO again identified the SCOsource licenses. Novell directed SCO to apportion revenue from the licenses between the rights conveyed in the licenses, and SCO again said that it could not do so. (Id at 27.)

Because SCO refused to disclose any apportionment of SCOsource revenue in response to Novell's interrogatories, it is precluded from introducing it now. Federal Rule of Civil Procedure 37(c)(1) states, "A party that without substantial justification fails to disclose information required by Rule 26(a) [written interrogatories] or 26(e)(1) [supplemental responses] shall not, unless such failure is harmless, be permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed." See also Orjias v. Stevenson, 31 F.3d 995 (10th Cir. 1994) (upholding trial court's preclusion of testimony that was not disclosed in party's response to interrogatory on same subject). The failure here is anything but harmless -- without preclusion, SCO will be able to surprise Novell with a new and undisclosed apportionment.

II. SCO WAS UNDER A FIDUCIARY OBLIGATION TO PROVIDE THIS APPORTIONMENT IN A TIMELY MANNER.

In the August 10 Order, the Court held that the Sun and Microsoft SCOsource licenses are SVRX Licenses as to which SCO has a fiduciary duty to account for and report SVRX Royalties. (Order at 95-96.) Where any allocation or accounting needs to be made, the Court held that this, too, is part of SCO's fiduciary duties to Novell. (Id at 96; see also Rosenfeld,

2

Meyer & Susman v. Cohen, 191 Cal. App. 3d 1035, 1051 (1987) (placing burden on fiduciary to show commingled funds were fiduciary's, not principal's.)

The Court held that SCO's failure to provide such an allocation was a continuing breach of its fiduciary duties. (Order at 95-96, 98, 101.) SCO should be prevented from taking advantage of this continuing breach by surprising Novell at trial with an undisclosed allocation of SCOsource revenues.

A. Despite a Fiduciary Duty to Do So, SCO Consistently Refused to Provide
Information Concerning the SCOsource Licenses.

SCO entered into the Sun and Microsoft licenses in early 2003. SCO did not disclose the licenses to Novell. On July 11, 2003, pursuant to its rights under the APA, Novell initiated an audit of SCO's compliance with its SVRX Royalty obligations. (Melaugh Decl. at Ex. 8.) During the course of this audit, Novell requested information concerning SCO's SCOsource licenses, but SCO refused. Novell requested such information again by letters dated November 21, 2003, December 29, 2003, and February 4, 2004. (Id at Exs. 9, 10 & 11.) On February 5, 2004, SCO refused to provide any information, under the blanket claim -- now rejected as a matter of law -- that the Sun and Microsoft SCOsource contracts were not SVRX Licenses. (Id at Ex. 12.) On March 1, 2004, Novell again requested SCOsource licensing information, pointing out that a blank, publicly available SCOsource license explicitly licensed Unix System V, making it by definition an SVRX License. (Id at Ex. 13.) When no response came, Novell wrote again, on April 2, then again on November 17. (Id at Exs. 14 & 15.) SCO never responded.

B. SCO Should Not Be Permitted To Profit From Its Continuing Breach of
Fiduciary Duty By Surprising Novell With An Apportionment Now.

The Court has held that SCO's concerted and continuing effort to withhold any allocation of the SCOsource revenue is a breach of fiduciary duty. To prevent SCO from profiting from its malfeasance, SCO should be precluded from surprising Novell at trial with such an allocation.1

3

III. THE COURT SHOULD PRECLUDE SCO FROM PROVIDING ANY EXPERT
TESTIMONY ON APPORTIONMENT.

In its Second Amended Rule 26(a)(3) disclosures, SCO listed Dr. Thomas Cargill as a witness whom SCO "may call" at trial. (Docket No. 381.) Novell does not know the subject matter on which SCO contemplates that Dr. Cargill might testify. But, to the extent SCO seeks to offer Dr. Cargill's testimony on any apportionment issue in the upcoming trial, the Court should preclude such testimony.

In his report in this case, Dr. Cargill

REDACTED

But Dr. Cargill never once opines on any aspect of the Microsoft, Sun, or other SCOsource licenses, on the relative values that SVRX or UnixWare contribute to those licenses, on how one would apportion between SVRX and UnixWare in those licenses, or on any damage-

4

related issue whatsoever. Given Dr. Cargill's failure to discuss any apportionment issues in his expert report, the Court should not allow him to testify on apportionment at trial. See Fed. R. Civ. P. 26(a)(2)(B); B.H. v. Gold Fields Mining Corp., No. 04-CV-0564-CVE-PJC, 2007 U.S. Dist. LEXIS 4612, at *17-*20 (N.D. Okla. January 22, 2007) (excluding expert testimony under Tenth Circuit precedent; "Plaintiffs should have sought to supplement Cravens' report if he intended to offer a more specific opinion on causation"); Osterhouse v. Grover, No. 3:04-CV-93 MJR, 2006 U.S. Dist. LEXIS 50282, at *6-*9 (S.D. Ill. July 20, 2006) ("any opinion that any of the plaintiffs' experts would express at trial is limited to only those opinions found in their respective expert report"); Paradigm Sales, Inc. v. Weber Marking Systems, Inc., 880 F. Supp. 1247, 1255-56 (N.D. Ind. 1995) ("If Mr. Harmon was meant to state an opinion on hypothetical claim analysis or any opinion based on hypothetical claim analysis, it should have been included in his Rule 26(a)(2) report. It was not.").2

CONCLUSION

For the reasons stated above, Novell requests that this Court bar SCO from introducing evidence or testimony regarding an apportionment of SCOsource revenue.

(signature page follows)

5

DATED: August 24, 2007

ANDERSON & KARRENBERG

By: /s/ Heather M. Sneddon

Thomas R. Karrenberg
John P. Mullen
Heather M. Sneddon

-and-

MORRISON & FOERSTER LLP
Michael A. Jacobs, pro hac vice
Eric M. Acker, pro hac vice
Kenneth W. Brakebill, pro hac vice
Marc J. Pernick, pro hac vice
David E. Melaugh, pro hac vice

Attorneys for Defendant and
Counterclaim-Plaintiff Novell, Inc.

6

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on this 24th day of August, 2007, I caused a true and correct copy of the OPENING BRIEF IN SUPPORT OF NOVELL'S MOTION IN LIMINE NO. 3 TO PRECLUDE SCO FROM INTRODUCING NEW EVIDENCE OR ARGUMENT REGARDING APPORTIONMENT OF SCOSOURCE REVENUE [REDACTED pursuant to the August 2, 2006 Stipulated Protective Order] to be served to the following:

Via CM/ECF:

Brent O. Hatch
Mark F. James
HATCH JAMES & DODGE, P.C.
[address]

David Boies
Edward J. Normand
BOIES, SCHILLER & FLEXNER LLP
[address]

Devan V. Padmanbhan
John J. Brogan
DORSEY & WHITNEY, LLP
[address]

Via U.S. Mail, postage prepaid:

Stephen Neal Zack
BOIES, SCHILLER & FLEXNER LLP
[address]

/s/ Heather M. Sneddon


1 In addition, Novell will argue that, as a legal matter, any doubts as to the proper apportionment should be resolved against SCO. See, e.g., Rosenfeld, 191 Cal. App. 3d at 1051-52 ("where a fiduciary has a legal duty to allocate receipts between those in which its beneficiary has some interest and those in which the beneficiary has none, and is fully and singularly capable of making that allocation but fails to do so, a court is justified in calling upon the fiduciary to bear the burden of differentiation at trial"); Kennard v. Glick, 183 Cal. App. 2d 246, 250-51 (1960) ("an agent who fails to keep an account raises thereby a suspicion of infidelity or neglect, creates a presumption against himself, and brings upon himself the burden of accounting to the utmost for all that has come into his hands; and in such case every doubt will be resolved against the agent, and in favor of the principal"); see also Leigh v. Engle, 727 F.2d 113, 138-39 (7th Cir. 1984) ("the burden is on the defendants who are found to have breached their fiduciary duties to show which profits are attributable to their own investments apart from their control of the Reliable Trust assets . . . . [W]hile the district court may be able to make only a rough approximation, it should resolve doubts in favor of the plaintiffs").

2 SCO had every opportunity to provide expert testimony on apportionment. SCO elected not to submit any expert report in rebuttal to Mr. Terry Musika's opening report in support of Novell's damages claims.


  


Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment | 217 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Good Grief
Authored by: Anonymous on Sunday, August 26 2007 @ 08:33 PM EDT
money monry money

[ Reply to This | # ]

Here there be corrections.
Authored by: Griffin3 on Sunday, August 26 2007 @ 08:42 PM EDT
As specific as possible, but, please, no tygres.

[ Reply to This | # ]

[OT] The Off Topic thread
Authored by: Aladdin Sane on Sunday, August 26 2007 @ 08:45 PM EDT
Place off topic comments under this one.

Limited HTML is allowed.

Thanks.

---
Free minds, Free software

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: Anonymous on Sunday, August 26 2007 @ 08:55 PM EDT
PJ, you wrote: "Here's what I know. If ever I am in any litigation that
Morrison & Foerster is involved in, please God, don't let them be on the
other side."

You reminded me of a meeting I attended with IBM's General Counsel, who was
telling some war-stories about earlier IBM litigation.

He said that, after IBM had squashed an opponent in a lawsuit, that the opposing
counsel came up to him and gave him a gift. He opened it, and inside was a
knife.

Opposing counsel said, "I want you to have this, and if I ever am stupid
enough to sue IBM again, I want you to use it to cut my throat."

[ Reply to This | # ]

Good engineers are pessimists
Authored by: Aladdin Sane on Sunday, August 26 2007 @ 08:56 PM EDT
It sounds like SCO and their lawyers are (were being) optimists.

---
Free minds, Free software

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: Anonymous on Sunday, August 26 2007 @ 09:11 PM EDT
"Novell presents its expert and evidence that it is owed whatever it thinks
it is owed."

And presumably that would be the 95% to Novell the contract calls for? And if
they do, since there is no rebuttal, could the judge rule that way? Is it
likely? Any educated guesses?

[ Reply to This | # ]

Reputations at stake
Authored by: overshoot on Sunday, August 26 2007 @ 09:29 PM EDT
Well, we have here what may well be the canonical Western confrontation: who is the "baddest [1]" hard case in town?

On the one hand, we have the justly-famed "Nazgul." However, I'm sure that MoFo what their name means at least since Vietnam and frankly, I wouldn't want to bet on how the Witch King of Angmar would like a Willie Pete appetizer.

Whoever wins, one thing is becoming clear: with the contest being "who can inflict the most damage on Boies, Schiller?" it's pretty safe to bet on who will lose.

[1] Long before the term took on its present ghetto meaning, Westerners used it the same way: a "bad man" was someone you did not want to coss. John Slaughter, for instance.

[ Reply to This | # ]

Morrison and Forrester - another joke making the rounds
Authored by: skidrash on Sunday, August 26 2007 @ 09:44 PM EDT
lawyers with frickin lasers on their heads, eh?

[ Reply to This | # ]

Please Mr. Judge Kimball
Authored by: mexaly on Sunday, August 26 2007 @ 10:13 PM EDT
SCO> [whining]
SCO> Don't make us eat our words again

---
My thanks go out to PJ and the legal experts that make Groklaw great.

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: webster on Sunday, August 26 2007 @ 10:15 PM EDT
..
1. Well now it seems like the trial will not even take fifteen minutes after
the Motions in limine are decided. SCO has already been severely sanctioned for
not specifying code. This motion sets them up for a shutout, no admissible
evidence on the only remaining issue. If the court is consistent, we are going
to have an ex parte trial, almost like a default. Indeed, SCO stonewalled on
discovery, so now they can't present that which they refused to disclose.

2. The lawsuits were just a small part of the FUD Campaign which is part of the
Monopoly's wrap-up campaign for Universal Lock-In and Domination. The lawsuits
were not supposed to multiply and last so long. The FUD was supposed to destroy
IBM and Linux as a viable alternative by mid 2004. The lawsuits have turned
into anti-FUD. They have exposed the PIPE Fairy.

3. What was the purpose of the SUN and Monopoly SVRX licenses? Strike
that.....! What were the purposes of the SUN and Monopoly SVRX licenses? One
was the lead a stampede of other corporations, that may have been contacted by
SCO for using SCO's alleged IP, to be good citizens and buy licenses themselves.
The Second purpose was to bankroll SCO's Monetizing and litigation campaigns.
They weren't making money otherwise. Remember BSF jumped on for a contingency
fee. Then when settlement didn't materialize, they adjusted their fee funding.

4. SCO is so confounded by these licenses. They had the SVRX business and
Linux. The Linux aspect of any license couldn't be worth that much. The rest
could only be what they added to SVRX (and certainly not to Linux too).... If
they use their own derivative theory... mind-boggling. Certainly the Courts
have been trifled with before, but this case will be a monument for the
century.

5. What a fizzle! There is no evidence now. There was no evidence when it
began. I guess SCO just couldn't "Get the Facts" if there were no
facts to be got.

6. The Monopoly very much wants to be the Thought Police. Is there anything
left to stand up to them? Souls are now sold wholesale to them. Kimball,
Novell and IBM still carry some hopes.


---
webster


2007 Monopoly Corporation. ALL rights reserved. Yours included.

[ Reply to This | # ]

Question about accounting
Authored by: Anonymous on Sunday, August 26 2007 @ 10:39 PM EDT
Can SCO now be forced to account to the Court and Novell for for the money
involved?

[ Reply to This | # ]

My probably incorrect Analysis
Authored by: rsteinmetz70112 on Sunday, August 26 2007 @ 11:03 PM EDT
When I read the original opinion, I understood the judge to mean that SCO had
given Novell the underlying information (the agreements, the actual terms and
receipts) necessary for Novell to do it's own analysis, which would be
admissible now that that issue was before the court. I didn't understand him to
mean that SCO had to have already provided some theoretical apportionment. I
recall that the Sun agreement in particular included some other features, like
stock warrants I seem to recall which had some value. We still have no idea what
the details of the agreements are.

We don't know if Novell has even analyzed the agreements to attribute different
parts to Sys V and other SCO IP, including Unixware and device drivers, which
has been suggested here as a major part of the Sun agreement.

I'm not sure how SCO might have provided a breakdown between Unixware and Unix
Sys V within these agreements without undermining their original theory. They
might have broken out non-licensing revenue (support and development) and
device drivers in these agreements. In fact in hindsight it would have been
smart to do so, had they anticipated Novell's actions.

I notice the Judge carefully used the word "assumed" inviting, I
thought, the parties to weigh in on this very issue.

It seems to me he might allow both Novell to introduce limited new materials and
additional expert testimony on this point.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

[ Reply to This | # ]

hee haw priceless
Authored by: groklawdranem on Sunday, August 26 2007 @ 11:14 PM EDT
<quote> Here's what I know. If ever I am in any litigation that Morrison
& Foerster is involved in, please God, don't let them be on the other side.
</quote>

*******
*****
****redacted *******
*****
********

Priceless


that's my redacted comment ;=)

[ Reply to This | # ]

If ever I am in any litigation that Morrison & Foerster is involved in...
Authored by: The Mad Hatter r on Sunday, August 26 2007 @ 11:45 PM EDT

"please God, don't let them be on the other side."

Amen to that. I compare them and the Nazgul to the hayseed that my dad hired to
handle his estate, and well, it's like comparing Michael Jordan's sporting
ability to mine. You wouldn't believe that we are the same species!

Once again the I am reminded that pinning TSCOG and it's legal team down about
something is like trying to nail jello to the wall. Difficult and frustrating.


---
Wayne

http://sourceforge.net/projects/twgs-toolkit/

[ Reply to This | # ]

Will Novell prevail?
Authored by: Filias Cupio on Sunday, August 26 2007 @ 11:59 PM EDT
In some questions, as a non-lawyer I can predict the result. (E.g. SCO clearly
did distribute Linux under the GPL.) However in this case I have no feeling for
how strong each side's argument is.

I know that almost all of us want to see every legal manouver SCO attempts to
blow up in their face, but that doesn't mean it should or will. Do Novell have a
strong argument here? Will the judge accept it?

[ Reply to This | # ]

Boies Schifty gets out-shifted!
Authored by: kawabago on Monday, August 27 2007 @ 12:01 AM EDT
It's so nice to see all the lies SCO told come back to haunt them. It looks
like everyone is well aware of Boies' reputation for dirty tricks. I guess he
won't be winning nearly so many cases from now on.

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: mram on Monday, August 27 2007 @ 12:30 AM EDT
"SCO never gave Novell any figure but zero. That's what Novell got in
discovery. And now that SCO lost that argument, it should be too late, Novell
argues, for it to suddenly introduce a new and unknown apportionment theory that
it failed to present in discovery"

We should not forget that SCO's original apportionment theory (0% for Novell
and 100% to SCO) was based on SCO's belief that they "owned UNIX."
Now that that theory has been laid to rest I think it is only fair to let them
come up with a new apportionment theory (and whatever evidence to back it up).

I do not care if Novell gets only (say) 80% - or even 50%. After all, what
Novell does not get will go to IBM or Redhat.

[ Reply to This | # ]

Reminds me of a poker game.
Authored by: Anonymous on Monday, August 27 2007 @ 01:02 AM EDT
SCO is holding a single card and its a deuce.

Novel is holding four full hands and each one is a Royal flush.

You gotta know when to hold em and know when to fold em and when to walk away.
In this case maybe run away.

SCO should have folded long ago.

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: Anonymous on Monday, August 27 2007 @ 01:54 AM EDT
I'm a bit confused - help me out here. There seem to be at least four distinct
sets of "apportionments" that are (or could be) at issue here. Which
one is Novell's motion talking about, and which one is SCOX trying in theory to
redefine?

1) The 95% / 5% split (Novell / SCOX) that all (?) licensing revenue is in
theory subject to, by virtue of the contract between them; or

2) The issue, to be determined, of what percentage (apportionment) of the
Microsoft and Sun licenses were for SVrX (Novell's) and what percentage was for
Unixware (SCOX's).

3) The apportionment between Novell and SCOX of the SVrX piece of what's in (2),
in other words, how they share the non-Unixware piece.

4) Or, the apportionment of all other SCOSource revenue beside the two licenses
in (2) - EV1 and the rest?

Some clarification about what's not in dispute and what is would be so very much
appreciated.

/thatseattleguy/

[ Reply to This | # ]

M and F on other side?
Authored by: jmc on Monday, August 27 2007 @ 02:37 AM EDT

Here's what I know. If ever I am in any litigation that Morrison & Foerster is involved in, please God, don't let them be on the other side.

If you were in the wrong maybe. But being reputable lawyers, if you were in the right, they would be telling their client that and pushing for them to settle in your favour.

I'd be more worried about being in the right and having BS&F on the other side (or indeed on my side) playing all their stupid discovery games and trying out their absurd legal theories.

[ Reply to This | # ]

SCO seek delay (yawn)
Authored by: Anonymous on Monday, August 27 2007 @ 02:56 AM EDT
The size of these deals was so large by comparison with the present value of SCO
that almost any apportionment at this point is likely to send SCO instantly to
the liquidators. A pretended belief that an apportionment that is pretty much
100% SCO is still possible is now the only thing standing between SCOs directors
and the wrath of the SEC. It is the fig leaf behind which they can hide from the
consequences of knowingly trading while insolvent. SCO will seek to delay
resolution of the apportionment issue by every means possible in order to keep
alive this pretense.

[ Reply to This | # ]

What is Novell's theory?
Authored by: Anonymous on Monday, August 27 2007 @ 04:26 AM EDT
If Novell does not have the information that Judge K. thought they had, how do
they come up with their own theory of apportionment? Don't they need additional
information from SCO?

If SCO can't use their theory, is that replaced with 100 percent to Novell?
Please excuse me for being thick.

[ Reply to This | # ]

Another Theory
Authored by: sproggit on Monday, August 27 2007 @ 05:02 AM EDT
As PJ so rightly points out, this is an amazing filing from Novell. It helps us to understand those motions that have emerged since Judge Kimball's hammer-blow motion, too.

When I read this I saw much of the same potential that has been described in other posts to this article, but I saw something else, too. At least, something implied or hinted, perhaps.

Very simple, I came away with the impression that Novell havy just said to SCO/BSF:

"Now... we've asked you nicely to roll over, play dead and settle this case and you refused. Perhaps that was because you didn't understand what was going on. So we'll spell it out for you:

Roll over. Say sorry. Give us the money."


In a way, I think this might be a way for Morrison and Foerster to give BSF the ammunition that they need to go back to their PayMasters with the news that this case should be settled, pronto.

When you think about it, that makes perfect sense for Novell.

PJ has always told us: A good lawyer can get you out of trouble when you're in court. A great lawyer would keep you out of court in the first place.

Novell probably realise that they could get a "maximum potential" victory if they go to court. I think they would settle for 80% in return for not going to court at all.

When you think about it, that would work well for Darl and his fellow directors, too, since instead of having a case found against a company that he was running, it would just be that the company settled a case out of court.

Which of course leads us back to the thought that if Darl really is calling the shots he is likely to settle. Of course if a Pipe Fairy is paying the Piper and naming the tune, then we might well see Mr Boies in action yet...

[ Reply to This | # ]

This might be a defence in depth
Authored by: elderlycynic on Monday, August 27 2007 @ 05:39 AM EDT
This is a wild speculation, as I don't know the law, but it is
possible that Novell want this merely to stop SCO putting any such
theory to a jury, in the case that there is a jury trial. I.e.
all that a jury would be told to decide is whether SCO owed money,
and the judge would decide the amount.

Certainly, on a basis of ethics (NOT a good guide to the law), it
wouldn't be possible to both grant this motion and refuse a jury
trial on the grounds that only equitable relief was being sought.

[ Reply to This | # ]

Oh dear, I think I get it!
Authored by: Ian Al on Monday, August 27 2007 @ 06:54 AM EDT
I was surprised when Judge Kimball said he assumed that Novell had gotten the equivalent of an accounting as part of the discovery and that the fact of how much money was converted had to go to a jury trial because it was not answerable as a point of law. It was not the decision, which seems eminently sensible, but that a PSJ that had to clear a high hurdle to succeed would be settled by an assumption. I was also surprised when Novell rejected a jury trial. Who else, but a jury, could legally decide?

The judge has not necessarily seen the discovery materials unless the materials, or a summary of them, are included with a brief (something I learned from Groklaw). So, the assumption needs to be made. However, what I think the judge was telling both sides is that he has not seen any expert report from SCOG that claims that a percentage apportionment is appropriate. All he has seen is the SCOG theory of 100% to SCOG and 0% to Novell because it was not, as a matter of law, an SVRX contract.

So, if the SCOG theory fails as a point of law and the judge has said that Novell are owed money for any SVRX licence and that the SUN and Microsoft licences were SVRX what is he really saying about the amount of conversion?

I don't think either side have been surprised by this, only me. I think the judge shouted it at them as loudly as he could and they are both dealing with it to the best of their ability.

I think that SCOG may be making a rather large error even at this late stage. As PJ points out, SCOG are trying to get Musika's testimony thrown out. If the expert's report suggests anything less that 100% to Novell then SCOG need to hang on to that. The alternative is that the judge, as a point of law, only sees from the APA that Novell get 100% for an SVRX licence and only hand back 5% where SCOG observe their fiduciary duty in respect of the money which, in this case, they havn't. Neither side have proposed that the jury decide on a percentage apportionment no matter what the licence terms say. The judge can only decide on whether to allow the Novell expert report to determine the amount or to decide, in the absence of anything to the contrary from SCOG to go for 100% to Novell.

How did it go in the film? Something like 'The price of lame is pain and here's where you start paying'.

---
Regards
Ian Al

[ Reply to This | # ]

What is the legal definition of harmless ?
Authored by: Anonymous on Monday, August 27 2007 @ 07:05 AM EDT
In their motion, Novell argued that according to Federal Rule of Civil Procedure
37(c)(1) failing to disclose information in response to interrogatories
"unless such failure is harmless" precludes the information from use
as evidence at a trial.

IANAL, so I wondered what the legal definition of harmless mught be. The reason
for asking is that Novell receiving only the money properly due to them, but no
more, could reasonably be argued as a harmless act (at least to a non-lawyer
like me). Evidence which properly apportioned the appropriate amount would
therefore, under that interpretation of harmless, be admissible.

Would someone with more legal knowledge than me (which includes just about
everyone but Darl I guess) please enlighten me as to how the court is likely to
interpret that ? While I want justice to prevail, I admit I'm hoping that in
this instance the interpretation is one which nails SCO to a dead tree.

Thank you.

-----------------------------
Nigel Whitley

[ Reply to This | # ]

SCOG forgot the most important rule when going to a knife fight,
Authored by: Waterman on Monday, August 27 2007 @ 08:11 AM EDT
to bring a gun. And SCOG forgot the knife too. Although, as the SCOGun (AKA foot
gun ) has been used so many times already, SCOG doesn't even have a foot to
stand on and the gun is getting worn out. Its worn to the point where now it
will start taking off an arm and a leg. :-)




It boils down to, if you play
fast and loose with the rules, sooner our later it comes back to bite you. I
think the judge will limit what can be presented on SCOG's part and tell Novell
that, as they ( SCOG ) can't expand their thinking (? Bwa ha ha ha, ouch ),
there is no need for Novell to add the extra exhibits. Any attempt by SCOG to
put forth the theory will result in SCOG and BS&F being found in contempt of
court.

[ Reply to This | # ]

Novell's Motion in Limine No. 3 to Preclude SCO's New Theory of Apportionment
Authored by: Anonymous on Monday, August 27 2007 @ 10:28 AM EDT
PJ, I think there's a bit of confusion here between EVIDENCE of SCO's
"apportionment" of revenue, versus SCO's "theory" (or lack
of it) regarding apportionment, and the references to both that the Judge made
in his PSJ decision.

You wrote:

"Novell's position is that SCO's only theory of apportionment throughout
discovery has been nothing to Novell and all the money to SCO, and therefore,
Novell argues, it should be precluded from presenting any new argument or
evidence regarding any new theory of apportionment, as that would reward their
breach of fiduciary duty. I know. I thought Novell must have the information by
now too."

I presume that Novell DID get the most critical information regarding the
licenses, because they must have gotten copies of the actual licenses
themselves. The plain reading of the licenses would provide some direct evidence
of apportionment. Also, any financial and accounting records turned over by SCO
(and, presumably, by SUN and Microsoft) as a part of discovery would go to the
factual question of how SCO should have apportioned, in fact, the revenues.

So -- I think the Judge means that SCO has been forced, by discovery, to provide
the EVIDENCE. namely, that documents that SCO should have provided (but didn't)
in response to Novell's audit requests.

Now SCO's "theory of apportionment", including a detailed
justification, of how the revenue should be appointed, is another matter
entirely, and the focus of Novell's motion. SCO should be estopped from
advancing any new theory, since they have made their bed with "all mine,
and none is yours". At least that's the default interpretation of SCO's
responses, although SCO may have intended to mean only that "my theory is
my business, and I don't have to tell you what that is".

Clearly for SCO, that gambit didn't work.

LEXLAW

[ Reply to This | # ]

  • I wonder - Authored by: Anonymous on Monday, August 27 2007 @ 10:45 AM EDT
Assumption by the judge...
Authored by: Anonymous on Monday, August 27 2007 @ 10:51 AM EDT

PJ wrote:
Do you remember that in Judge Dale Kimball's ruling on August 10, he declined to order a constructive trust or an accounting because he assumed Novell already had gotten the necessary information during discovery?
The assumption by the judge was only used to moot Novell's request for an accounting. He did not use that assumption when declining to order the constructive trust. He stated that the amount that SCO owes Novell would have to be decided by a jury, and because of that he could not state an amount for the trust, and therefore he could not order a constructive trust, as the creation of such a trust would require the judge to determine an amount of money that SCO would have to put in that trust.

[ Reply to This | # ]

Could Novell be outsmarting themselves?
Authored by: Anonymous on Monday, August 27 2007 @ 11:46 AM EDT
I am concerned about one aspect of Novell's theory that the SCO legal team
should not be able to modify their "Novell 0% SCO 100%" theory.

I am worried that if the judge confirms Novell's view on this issue, it might
provide an opening that SCO could exploit during the appeals process.

SCO might be able to claim that their legal team should have anticipated several
possible outcomes to the pre-trial motions, and that any resulting restrictions
on what their expert witnesses can present during trial might be due to mistakes
by their lawyers.

At this point, Kimball's main concern HAS to be avoiding giving SCO ANY openings
during the appeals process. I am sure that he does not want SCO to be able to
say "We were denied our full day in court because our lawyers dropped the
ball."

Allowing SCO to modify their theory on the compensation issues now would ensure
that SCO could not later claim that they were never allowed to properly present
that theory.

Let them drag the process out a little further now. It may help avoid them
dragging it out more, later.

Sean

[ Reply to This | # ]

Question on the numbers
Authored by: LaurenceTux on Monday, August 27 2007 @ 01:31 PM EDT
Do we have enough info to fill in:
The deals are worth X million
TSCOG has Y million in CASH/other executable documents (not stock)

Therefore the deals would need to be considered W% SYSV (Novells money) for
TSCOG to survive

also if X*W is more than Y is it more or less physical assets on E-Bay time?

[ Reply to This | # ]

Audits
Authored by: Yossarian on Monday, August 27 2007 @ 01:57 PM EDT
>For years, Novell has requested such information -- in audits,

SCO is near the end of the rope and all that remained to do
is to delay the end. If Novell will hire third party auditors
to view SCO's books it can tell them to report any suspicious
data to the SEC or other federal agencies. If the auditors
will run into any evidence of "book cooking" or stock
manipulation, or creative accounting, or... they will have
no reason not to pass it to the Feds.

[ Reply to This | # ]

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