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Autozone Files Emergency Motion to Stay - PDF and text
Thursday, September 02 2004 @ 11:39 PM EDT

AutoZone has filed an Emergency Motion to Stay, asking the judge "to stay all proceedings related to the issue of preliminary injunctive relief". Why? They remind the judge that his Order indicated and his words at the hearing clearly stated that SCO was entitled to do discovery only if it was entitled to apply for a preliminary injunction. [Groklaw's complete transcript of the hearing is here. SCO's Exhibit is a relevant section only. Note it may take a while for all the links to resolve properly.]

Instead, SCO filed a Statement of Basis for Claim for Preliminary Injunctive Relief and Nature of Relief in which they say that they aren't sure if they are entitled to such relief, and they'd like to do discovery to find out. That, AutoZone points out, is what you call a fishing expedition, so they ask the judge for a stay of all action in the case until after the IBM, Novell and Red Hat cases are resolved.

SCO told this judge in their complaint that AutoZone was damaging them by its internal use, distribution, and copying of the Linux operating system, which SCO alleged infringes SCO's copyrights that SCO purports to own in the UNIX operating system:

"24. . . . Defendantís conduct has caused, and if not enjoined, will continue to cause, irreparable harm to SCO."

"Irreparable harm", they claimed, and on that basis, the judge gave them an opportunity to do discovery, predicate to a motion for a preliminary injunction to prevent that "harm", but he added this:

"If you don't have the right to a preliminary injunction, you shouldn't proceed with discovery at all."

There are elements you must satisfy to get a preliminary injunction, which AutoZone calls, in footnote 2, "the onerous elements necessary to be entitled to such relief." The judge in the Napster case explained what those elements are:

"To prevail on a motion for preliminary injunction--and this is going to take a while because I'm going to go through the elements and the claims and defenses--but to prevail on a motion for a preliminary injunction, plaintiffs must demonstrate a combination of probable success on the merits--and possibility of irreparable harm or on the continuum scale of serious legal questions that are raised--and a balance of hardships tipping in the plaintiffs' favor."

SCO claims that the judge gave it the right to do discovery in order to determine whether or not it can file for a preliminary injunction. "SCO is informed and believes that AutoZone may have infringed SCO's copyrights. . . " SCO's statement says.

*May* have? Now, that's a very different song from the aria they sang in their complaint. Their basis for belief is that based on some employees' "knowledge of the AutoZone System, SCO is informed and believes that AutoZone 'copied' certain copyrighted material . . . including . . . SCO's static shared libraries during its transition to Linux." They say that to run legacy UNIX applications from one version of OpenServer on Linux, you'd probably use those libraries. "SCO believes it is reasonably likely that AutoZone copied SCO's copyrighted material during the migration process. . . "

*Reasonably likely*? That's saying you suspect but have no real knowledge. So, they brought another lawsuit with no apparent facts? And what relief can they possibly ask for that a preliminary injunction could provide? AutoZone is enjoined not to migrate to Linux ever again? Not to use Linux for the duration of the trial? Hand over their computers? Be forbidden to boot up their computers? Where is the ongoing, daily damage that SCO needs to be protected from? How can they demonstrate a likelihood of success on the merits, for that matter? No wonder they aren't so sure they will file a motion for a prelim. This is about as silly as DaimlerChrysler being sued when it hadn't used SCO's software for nearly a decade.

SCO is in an odd spot now, if the judge takes a moment from his busy schedule to compare what SCO says here with what it said in its complaint. Their statement is saying that when they wrote in their complaint that they were being damaged, they didn't actually know if they were or not. They had no idea if they were entitled to a preliminary injunction, and they still don't know. AutoZone's lawyer tried to tell this judge that SCO had no proof:

Stewart: Your honor, could I be heard on the point about discovery and a preliminary injunction?

Judge Jones: Please.

Stewart: Couple of points. First, SCO's never *asked* for a preliminary injunction in any case.

Judge Jones: Ah.

Stewart: Until today, they had never identified in this case anything that they allege that AutoZone has done that somebody else didn't do. And they don't even know if in fact AutoZone did it. They don't have any evidence to point to to that. From what I've heard they don't even have good-faith information and belief on which to base that claim. We're about ready to engage on a fishing expedition. And it is hard to say how broad that's going to be. It presumably could end up encompassing everything that's also at issue in Red Hat and IBM and Novell.

Did AutoZone's attorney call it right or not? Next time there is a dispute, which side do you think the judge will now be more likely to believe? And is there any way the judge can miss the point now? (Heaven only knows we need more judges with a technical clue. I understand now why IBM's attorney, David Marriott, begins almost every argument by explaining what an operating system is.) Anything is possible, I suppose. But the whole world is watching.

And that, I now believe, is exactly what SCO planned and wanted. They wanted to be public bullies, to terrify companies into taking a license. I guess they thought after a few examples of terrorizing their victims by dragging them through a court process that was so ridiculous no one could feel their chances were any better than the victim's, everyone would line up like docile little lambs.

They have a problem, though. They are like the Assyrians in Bible times. They were known for vicious and sadistic treatment of their vanquished enemies. Archeologists have found drawings depicting blinded captured unfortunates with hooks through their lips or noses or jaws, being led around like tortured dogs, while the Assyrians partied and celebrated their victory. They made one miscalculation however, and so has SCO. Because of their reputation, no one would ever voluntarily surrender to the Assyrians, knowing how they would be treated. I think SCO made a similar mistake in seeking "the most hated company" status. The whole world eventually decided they'd be better off fighting to the death, so to speak. No white flags are waving now, which is why the SCOsource program is light-headed and nearly fainting dead away, like a delicate Southern damsel in a too-tight corset.

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

James J. Pisanelli, Esq.
Nevada Bar No. 4027
SCHRECK BRIGNONE
[address, phone]

Michael P. Kenny, Esq.
James A. Harvey, Esq.
David J. Stewart, Esq.
Christopher A. Riley, Esq.
Douglas L. Bridges, Esq.
ALSTON & BIRD LLP
[address, phone]

Attorneys for Defendant AutoZone, Inc.

_________________________

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

_________________________

THE SCO GROUP, INC.,
a Delaware Corporation,

Plaintiff,††††

† v.††††

† AUTOZONE, INC., ††††††††††††††††††††
a Nevada Corporation,

Defendant.

________________________________________

Civil Action File No.
† CV-S-04-0237-RCJ-LRL

____________________________________

DEFENDANT AUTOZONE, INC.'S EMERGENCY MOTION TO STAY

Defendant AutoZone, Inc. ("AutoZone") moves the Court for an order staying all remaining proceedings related to the issue of preliminary injunctive relief.

The grounds in support of AutoZone's Motion are set forth in detail in AutoZone's Memorandum of Law filed concurrently herewith.

Respectfully submitted, this 1st day of September, 2004.

____[signature]____
James J. Pisanelli, Esq.
SCHRECK BRIGNONE
[address]

Michael P. Kenny, Esq.
James A. Harvey, Esq.
David J. Stewart, Esq.
Christopher A. Riley, Esq.
Douglas L. Bridges, Esq.
ALSTON & BIRD LLP
[address, phone]

Attorneys for Defendant AutoZone, Inc.


DEFENDANT AUTOZONE, INC.'S MEMORANDUM OF LAW IN SUPPORT OF ITS EMERGENCY MOTION TO STAY

Defendant AutoZone, Inc. ("AutoZone") moves the Court for an order staying all remaining proceedings related to the issue of preliminary injunctive relief.

INTRODUCTION

The Court has stayed all all action in this case with the exception that the Court has authorized Plaintiff The SCO Group, Inc. ("SCO") to conduct limited expedited discovery in advance of the filing of a motion for preliminary injunction on SCO's claims that AutoZone infringed SCO's copyrights when AutoZone migrated from UNIX to Linux. Nevertheless, the Court has made clear to SCO that it can only pursue such discovery if it has a right to preliminary injunctive relief and if it intends to file a motion to pursue such relief.

SCO has recently stated in writing that it does not know whether it is entitled to a preliminary injunction but that it intends to pursue expedited discovery nonetheless in order to determine whether it has grounds to file such a motion. SCO's intent to pursue discovery at this time is therefore nothing more than a fishing expedition that is directly contrary to the Court's ruling, and AutoZone requests that all further action in this case be stayed pending resolution of the previously filed IBM, Novell and Red Hat cases.

STATEMENT OF FACTS

On March 3, 2004, SCO filed its Complaint alleging one cause of action for copyright infringement and broadly asserting that AutoZone's internal use, distribution, and copying of the Linux operating system infringes copyrights that SCO purports to own in the UNIX operating system. See generally Complaint. SCO did not state in its Complaint that it is entitled to, or that it intends to move for, preliminary injunctive relief on any of its claims.

On April 23, 2004, AutoZone filed two motions: (a) a Motion to Stay or, in the Alternative, for More Definite Statement, and (b) a Motion to Transfer Venue. The Court heard oral argument on AutoZone's motions on July 12, 2004.

At the July 12 hearing, the Court granted AutoZone's Motion to Stay as it relates to the code within Linux itself, but the Court noted SCO's allegations that AutoZone had independently infringed code in UNIX when AutoZone migrated from UNIX to Linux. 1 Accordingly, the Court ruled that SCO could conduct limited discovery on "facts predicate to [a motion for] preliminary injunction" on the alleged migration infringements. See July 12, 2004 Hearing Transcript ("Hearing Transcript"), attached hereto as Exhibit A, 25:10. Importantly, however, the Court admonished SCO: "[i]f you don't have the right to a preliminary injunction, you shouldn't proceed with discovery at all." Hearing Transcript, 24:22-23 (emphasis added). The Court further instructed SCO: "you shouldn't go on a free-ranging discovery course preparatory to a trial." Hearing Transcript, 25:10-12. Therefore, the Court authorized SCO to conduct limited discovery only if SCO had a right to preliminary injunctive relief and it intended to pursue such relief.

The Court instructed AutoZone to confer with SCO and submit a proposed order on the motions. The parties conferred in good faith but were unable to reach agreement on several important issues. As a result, the parties agreed to submit separate orders to the Court. AutoZone submitted its proposed order on July 30, 2004. See Letter from David J. Stewart to Hon. Robert C. Jones, dated July 30, 2004. SCO did not submit an order. On August 6, 2004, the Court entered an order on AutoZone's motions in substantially the same form as AutoZone had proposed. See Order, attached hereto as Exhibit B.

The Order required SCO to "serve on AutoZone a statement of the basis for its claim for preliminary injunctive relief and the nature of the relief it seeks on those claims" within fifteen (15) days from the date of the Order, or Monday, August 23, 2004. See Order, ∂2. On August 23rd, counsel for SCO contacted counsel for AutoZone and requested an extension until Friday, August 27th to serve the required statement. AutoZone agreed to the requested extension. On Friday, August 27th, counsel for SCO again contacted counsel for AutoZone and requested a second extension until Monday, August 30th to file the required statement. Again, AutoZone agreed to the requested extension.

On August 30th, SCO served AutoZone with SCO's Statement of Basis for Claim for Preliminary Injunctive Relief and Nature of Relief ("Injunctive Relief Statement"), a copy of which is attached hereto as Exhibit C. In its Injunctive Relief Statement, SCO states that "[t]he Court has permitted SCO to conduct limited expedited discovery on [AutoZone's migration from a Unix Operating System to a Linux Operating System] in order to determine whether or not to file a motion for preliminary injunctive relief." See SCO's Injunctive Relief Statement, pp. 1-2 (emphasis added). SCO's Injunctive Relief Statement further states that SCO "intends to conduct limited discovery into the above issues in order to determine whether or not, under the circumstances, an application for a Preliminary Injunction is warranted." See SCO's Injunctive Relief Statement, p. 4 (emphasis added). SCO therefore seeks to conduct discovery to determine whether or not it has a right to a preliminary injunction, notwithstanding the Court's ruling that the right to a preliminary injunction is prerequisite to conducting discovery. See Hearing Transcript, 24:22-23. 2

ARGUMENT AND CITATION OF AUTHORITIES

This Court possesses the inherent discretion to stay these proceedings. Clinton v. Jones, 520 U.S. 681, 706 (1997) ("The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket.") As this Court has previously explained, "[e]very court has the inherent power to stay causes on its docket with a view to avoiding [the] . . . waste of time and effort by itself, the litigants and counsel." Stern v. United States, 563 F. Supp. 484, 489 (D. Nev. 1983).

Here, the Court should stay the remaining proceedings related to the issue of preliminary injunctive relief because, contrary to the Court's directive, SCO has no idea at this time whether it is entitled to a preliminary injunction or whether it even intends to move for such relief. Instead, SCO has announced through its Injunctive Relief Statement that it intends to use the expedited discovery period for what amounts to a fishing expedition to determine whether or not it has any legitimate basis to file a motion for preliminary injunction on any issue. Such a fishing expedition violates the Court's ruling, and will be a waste of time, effort and money by the Court, the litigants, and third party witnesses.

SCO's Injunctive Relief Statement and its plan to conduct discovery is based entirely on SCO's erroneous statement that:

The Court has permitted SCO to conduct limited discovery on [AutoZone's migration from a Unix Operating System to a Linux Operating System] in order to determine whether or not to file a motion for preliminary injunctive relief.

SCO's Injunctive Relief Statement, pp. 1-2 (emphasis added). The Hearing Transcript clearly demonstrates that the Court never authorized SCO to conduct discovery "to determine whether or not" to file a motion for preliminary injunction. To the contrary, the Court clearly stated: "[i]f you [SCO] don't have the right to a preliminary injunction, you shouldn't proceed with discovery at all." Hearing Transcript, 24:22-23 (emphasis added). 3 SCO's intent to pursue expedited discovery is therefore not authorized by this Court, and AutoZone respectfully requests that all further proceedings in this case be stayed pending resolution of the previously filed IBM, Red Hat and Novell cases.

This first day of September, 2004.

____[signature]______
James J. Pisanelli, Esq.
SCHRECK BRIGNONE
[address, phone]

and

Michael P. Kenny, Esq.
James A. Harvey, Esq.
David J. Stewart, Esq.
Christopher A. Riley, Esq.
Douglas L. Bridges, Esq.
ALSTON & BIRD LLP
[address, phone]

Attorneys for Defendant AutoZone, Inc.


1 The Court stated at the July 12 hearing: "The only reason for doing that is because [SCO] raised that issue in their responses that they would be harmed if the Court simply held off and did not let them proceed here one way or the other." Hearing Transcript, 24:11-14.

2 SCO states in its Injunctive Relief Statement that it "believes that it is reasonably likely that AutoZone copied SCO's copyrighted material during the migration process. . .;" however, this statement does not amount to a statement by SCO that it has the right to a preliminary injunction and can satisfy the onerous elements necessary to be entitled to such relief. See SCO's Injunctive Relief Statement, p. 2.

3 SCO's deliberate waffling "whether or not to" language in its Injunctive Relief Statement is not surprising. Given that SCO did not seek a preliminary injunction when it originally filed its Complaint, SCO now wants to cover itself in the event that SCO elects not to file a motion for preliminary injunction. SCO can then point to the language in its Injunctive Relief Statement after it subjects AutoZone to expedited discovery and does not file a motion, and explain to the Court that it subsequently learned that it did not have grounds for preliminary injunctive relief, notwithstanding that such grounds were a prerequisite to conducting discovery in the first place.


CERTIFICATE OF SERVICE

I hereby certify that I have this day served a copy of the within and foregoing DEFENDANT AUTOZONE, INC.'S MEMORANDUM OF LAW IN SUPPORT OF ITS EMERGENCY MOTION TO STAY upon all counsel of record addressed as follows:

Stanley W. Parry, Esq.
Glenn M. Machado, Esq.
CURRAN & PARRY
[address]
(Via Hand-Delivery)

David S. Stone, Esq.
Robert A. Magnanini, Esq.
BOIES, SCHILLER & FLEXNER LLP
[address]
(Via Facsimile and United States Mail )

Stephen N. Zack, Esq.
Mark J. Heise, Esq.
BOIES, SCHILLER & FLEXNER, LLP
[address]
(Via Facsimile and United States Mail )

This 1st day of September, 2004

_______[signature]_________
An employee of Schreck Brignone


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