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Status Conference in SCO v. Novell - Nov. 23rd at 10 AM - Updated 2Xs
Tuesday, November 03 2009 @ 12:07 PM EST

Isn't it amazing how fast courts can move when SCO isn't dragging its feet?

11/02/2009 - 598 - NOTICE OF HEARING: (Notice generated by Chambers/slm) Status Conference set for 11/23/2009 10:00 AM in Room 142 before Judge Ted Stewart. (slm) (Entered: 11/02/2009)

At this pace, the IBM case would have been over in 2004.

I do hope there are some of you out there who will be able to attend. Even though it's a status hearing, there likely will be discussion of Novell's plans going forward, and I'd hate to miss that. Wouldn't you? It will also be our first opportunity to see The Honorable Ted Stewart in action.

Update: The date has been changed to December 1 at 1:30 PM:

11/03/2009 - 599 - AMENDED NOTICE OF HEARING: (Notice generated by Chambers/slm) Status Conference RESET for 12/1/2009 01:30 PM in Room 142 before Judge Ted Stewart. (slm) (Entered: 11/03/2009)

I've been looking at some of the decisions he's made in various court cases over the years, and I found something that I think will interest you, although not in a good way. It might explain, though, in part why Utah is the scam magnet that it is. In the case of Skull Valley Band of Goshute Indians and Private Fuel Storage, LLC v. Dianne R. Nielson et al, the US Court of Appeals for the Tenth Circuit upheld a decision by Judge Stewart, but in the ruling, I found this nugget of information:
Under Utah law, stockholders are generally not personally liable for the debts of a corporation. See Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979) ("[I]n order to disregard the corporate entity, there must be a concurrence of two circumstances: (1) there must be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, viz., the corporation is, in fact, the alter ego of one or a few individuals; and (2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitable result would follow."). The Supreme Court has noted that "[l]imited liability [of stockholders] is the rule not the exception; and on that assumption large undertakings are rested, vast enterprises are launched, and huge sums of capital attracted." Anderson v. Abbott, 321 U.S. 349, 362 (1944).
That's a very high bar, if you think about it. It's much easier to pierce the corporate veil in New York; if a corporation fails to pay sales tax, that alone will do it. Making shareholders sue-proof surely doesn't help. On Utah being called the scam state, just go to Google and search for 'Utah scam' and you'll see what I mean.

Lots of hearings coming up, actually. Erwan has updated our Timelines summary page, specifically the upcoming motions schedule. There are five or six hearings scheduled in four litigations until Christmas:

12-Nov-2009 Apple vs Psystar (same day both in California)
20-Nov-2009 SCO Bankruptcy
23-Nov-2009 SCO vs Novell
07-Dec-2009 SCO vs Autozone
22-Dec-2009 SCO Bankruptcy
And Wayne Gray is baaaack at it, asking for the bankruptcy stay to be lifted:

11/02/2009 - 942 - Motion for Relief from Stay to Permit the Debtor, The SCO Group, Inc., to Participate in Florida Federal Court Action and Pending Eleventh Circuit Court of Appeals Proceeding. Fee Amount $150. Filed by Wayne R. Gray. Hearing scheduled for 11/20/2009 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 11/13/2009. (Attachments: # 1 Notice # 2 Attachments 1-6) (Duhig, Peter) (Entered: 11/02/2009)

Update 2: Here's his lawyer, I presume:

11/04/2009 - 946 - Motion to Appear pro hac vice Thomas T. Steele. Receipt Number DEX001363, Filed by Wayne R. Gray. (Duhig, Peter) (Entered: 11/04/2009)


Status Conference in SCO v. Novell - Nov. 23rd at 10 AM - Updated 2Xs | 252 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please
Authored by: tiger99 on Tuesday, November 03 2009 @ 12:31 PM EST
If any are needed, to assist PJ.

[ Reply to This | # ]

Off topic here please
Authored by: tiger99 on Tuesday, November 03 2009 @ 12:33 PM EST
Please remember those clickies, and pay attention to PJ's posting policy.

If you post something in this thread which does relate to the main article, expect to be mercilessly flamed....

[ Reply to This | # ]

Newspick discussion here please
Authored by: tiger99 on Tuesday, November 03 2009 @ 12:35 PM EST
Please quote the title of the Groklaw newspick you are commenting on in the
title of your post.

[ Reply to This | # ]

status of BK stay?
Authored by: nola on Tuesday, November 03 2009 @ 12:36 PM EST
What is the status of this case with regard to the automatic stay under
bankruptcy law?

Is this proceeding because the stay was lifted for the "damages"
issue? Or is this
still stayed?

[ Reply to This | # ]

Authored by: rsteinmetz70112 on Tuesday, November 03 2009 @ 12:36 PM EST
Since SCO is Delaware corporation could shareholders be sued there and is it

Doesn't the Bankruptcy Court have some role in all of this?

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 | # ]

Suing the shareholders?
Authored by: mexaly on Tuesday, November 03 2009 @ 01:10 PM EST
I understand that there may be an exception if a corp is a false front, but in
the more general case, how would this work?

If I buy, say, 100 shares of NanoSoft, a company capitalized by a billion shares
of stock, and NanoSoft gets sued big-time, how could I be liable? Would I be on
the hook for ten millionths of the judgement, just because they're in my

What about holders of, say, an index fund?

This is making my brain spin.

IANAL, but I watch actors play lawyers on high-definition television.
My thanks go out to PJ and the legal experts that make Groklaw great.

[ Reply to This | # ]

Other Laws
Authored by: Anonymous on Tuesday, November 03 2009 @ 02:15 PM EST
P.J. (and others),

Wouldn't the Sarbanes–Oxley Act possibly also come into play in this case?

[ Reply to This | # ]

The question is: Can SCO sue its shareholders?
Authored by: Gringo on Tuesday, November 03 2009 @ 02:53 PM EST

Think about it. SCO is a very innovative company. They came up with the novel idea that instead of serving their customers, they would sue them. Perhaps they could continue this line of innovation and sue their shareholders - or maybe declare a reverse dividend or something?

[ Reply to This | # ]

Scam state
Authored by: mattflaschen on Tuesday, November 03 2009 @ 03:33 PM EST

SCO aside, I don't think it's fair to label an entire state as "the scam state." Yes, ["Utah scam"] gives 2,360 results. But, for the equivalent query, my home state of Pennsylvania has 4,400, and my adopted home, Georgia, has 3,440. Do I think any of these places is inherently scammy? No. Pennsylvania and Georgia both have larger populations.

Yes, you could argue about proportionality. But I think that's missing the real point: Scams are run by individual people making bad decisions, and it's unfair to defame others just because they live in the same region.

[ Reply to This | # ]

"Utah Scam" commentary on the patterns
Authored by: Anonymous on Tuesday, November 03 2009 @ 04:24 PM EST
I have devoted considerable attention to Utah-based scams. A typology of these shows most are quite different from the SCO-Yarro model.

The two most common financial scams in Utah are "affinity fraud" and a pyramid scheme.

Most recent affinty fraud cases have involved real estate loans. SCO's Utah attorney Brent Hatch got burned (several 100 thousand dollars BK claim in Hatch's name and that of his attorney partners) in a real estate hard money loan company called "Waterford Loan". This loaned to real estate developers secured with land titles. The dealmaker played fast and loose with the money stream, and went bust when the properties stopped selling.

The affinity portion of this fraud was the pious religious/political nature of the dealmaker-- he roped in numerous other pious church leaders-- and that veneer helped sell the legitimacy of the operation. Another recent Utah real-estate deal that went spectacularly bad is the "Rick Koerber" federal bust. Koerber ran a real-estate equity consultancy. He got little people to take home equity loans and invest these in his larger loan shops. His current defense is that he created multiple layers of companies, and he personally only was involved in the top layer. So his operation resembles a pyramid scheme-- intermediate players developed "downlines" of investors and pocketed a cut of the interest for the recruitment.

Koerber has a rabidly-right-wing radio show and a political base. One of skyline cowboy's pet peeve is that Utah AG Shurtleff and Senate candidate gave Koerber a pass when Utah consumer protection department sought an indictment. A favorite of Koerber is Cleon Skousen (uncle to the SCO Fred Skousen) who was a SLC chief of police and latter an extreme right wing ideologue.

The skyline cowboy anger is likely due to the cozy relationship Shurtleff had with the betes-noir of the cowboy: Mark Robbins and Marc S. Jensen. Hatch served as Jensen's attorney.

There have been a number of other investment pyramids that have collapse in Utah: the Val Southwick scam was one of the largest. The Yarro/McBride co-investor Ty Mattingly got burned in one that was based in Arizona real estate.

In 2006-7, Utah experienced a wave of "click-farming" and "foreign exchange [forex]" training scams. These are targeted at poor/student/marginal folks and offer a "work-at-home" training course in exchange for money. Many have a pyramid component-- you get a cut of recruitment downline. For unexplained reasons Yarro's Think Atomic servers briefly and covertly hosted some forex sites. I think this may have been strictly a commercial deal, as I don't see Yarro actively believing the forex pyramid training scam.

Utah has been the residence of a couple of major pump-and-dump stock players. The players came from out-of-town (NYC/London mostly) and set up in SLC. They sold worldwide, FBI has busted these. SLC likely attracted because of its reverse-merger industry. There are several specialists in buying bankrupt, but publicly listed shells and reselling the stock listing. There is value (about 300K) in a registered stock.

Utah has garden variety insider land deals. Geneva Steel went bankrupt, it had a big landholding near Lindon. A number of well placed entrepeneurs benefited from the asset sales. That sort of clubby dishonesty seems broadly distributed.

The SCO scam involves securing investment money to launch a legal harrassment campaign. The "evidence" supporting the legal case was made up of the declarations accumulated from friends and supporters of Yarro and McBride. The unspoken allegation is that these declarations are not entirely truthful and a conspiracy exists to present an inaccurate account of the Novell/Santa Cruz negotiation.

Some of the Utah financial scammers have been treated with deference because of religious and political connections (viz. Waterford and Koerber). It appears that in Utah political and ethical assessment often occurs along a single metric: that is to say once businessmen reach a certain level of influence in their community, no further vetting occurs.

The lack of oversight would serve to explain why the SCO declarants believed they could "rewrite" the documentary history of the Novell transfer unchallenged. I am thinking Novell will mount an effective challenge to their credibility.

[ Reply to This | # ]

Status Conference in SCO v. Novell - Time Change
Authored by: Steve Martin on Tuesday, November 03 2009 @ 10:29 PM EST
It's on PACER now, the status conference mentioned in PJ's article has been
moved to December 1st, at 1:30 PM.

"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

High speed courts
Authored by: ailuromancy on Tuesday, November 03 2009 @ 11:47 PM EST

If the courts are now moving suspiciously fast should we be crediting SCO or the trustee mysterious influence?

While we are at it, SCO was found guilty of conversion. Now that the trustee is following SCO's tried, tested (and found guilty) business plan does that make him liable in any way?

[ Reply to This | # ]

Wayne Gray
Authored by: tiger99 on Wednesday, November 04 2009 @ 08:09 AM EST
I understand that he is trying to prove that SCO own the UNIX trademark, ostensibly as some part of his efforts to register some similar trademarks himself. But I can't help but wonder whether he is actually working indirectly for SCO, by trying to show that the trademark was worth $15M in 1993, and likely more now. Right now SCO could use $15M of assets!

He also seems to be alleging misconduct by the trustee, insofar as he has ignored this particular legal case in his evaluation of SCO.

The legal complexities are well beyond me, but I can't help but wonder what is really going on here, and if Mr. Gray is a heavily obfuscated proxy for Yarro, or McBride, or perhaps someone else?

He may of course only be an irritant. We have seen another of those pop up in court, usually via the telephone, probably just because he is entitled to, being a very minor shareholder, so such irritants do exist.

However this does want watching, as PJ obviously is doing, as something interesting may emerge in due course.....

[ Reply to This | # ]

Too soon PJ?
Authored by: golding on Wednesday, November 04 2009 @ 08:23 AM EST
To think that not long ago you nearly "retired" from active duty as
the case seemed to be going nowhere, indeed SCO was all but dead in the water at
the time ... ha!

Regards, Robert

..... Some people can tell what time it is by looking at the sun, but I have
never been able to make out the numbers.

[ Reply to This | # ]

PJ: "Here's his lawyer, I presume: "
Authored by: Steve Martin on Wednesday, November 04 2009 @ 05:37 PM EST

Yes, it appears that Mr. Steele is Wayne Gray's lawyer. He is listed at the top of the Motion to Lift the Stay that is listed in this article, and Mr. Steele was also the attorney who filed Wayne Gray's Motion to file Amicus Brief in the Novell Appeal proceedings. He is a Florida attorney, which is why he has to file for permission to appear pro hac vice in a (Delaware) bankruptcy court.

"When I say something, I put my name next to it." -- Isaac Jaffe, "Sports Night"

[ Reply to This | # ]

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