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SCO's Opposition to IBM's Motion for Reconsideration/Clarification of Wells' Discovery Order
Saturday, February 05 2005 @ 04:04 PM EST

Here's SCO's Opposition to IBM's Ex Parte Motion objecting to IBM's getting to file a motion for reconsideration/clarification of Judge Brooke Wells' order on discovery. Judge Kimball already granted IBM's motion, on February 1. This objection is dated February 2. So, now what happens?

It's up to Judge Kimball what he wishes to do. I asked marbux to please give me his opinion on what is going on, not only the choices, but the underlying strategies the two sides are pursuing. To understand it, we need to understand the appeals process. I found his answers so fascinating, I asked him if I could share them with you, and he agreed. It's complex, but if I had to put it in one sentence, it would be IBM is politely signalling to the judge that they believe a serious error has been made, and they are prepared to appeal the decision immediately, but they would like to give Judge Wells an opportunity to reconsider the ruling herself first. But there is so much more.

I asked him three questions:

1. I see SCO objects to IBM getting to go back to Magistrate Judge Wells for reconsideration/clarification. Judge Kimball already granted the ex parte motion on Feb. 1. Now, on Feb. 2, SCO files an objection. What happens now?

2. Why do you think IBM wants to go back to Magistrate Judge Wells?

3. And why is SCO opposed? They obviously know IBM was going to fight on some level. Why then not on this level?

Here are his answers:

1. I see SCO objects to IBM getting to go back to Magistrate Judge Wells for reconsideration/clarification. Judge Kimball already granted the ex parte motion on Feb. 1. Now, on Feb. 2, SCO files an objection. What happens now?

On your first question, the answer is that it's unlikely that any action will be taken on SCO's objection. Judge Kimball could withdraw his order, of course, and have IBM reply, then decide. But Judge Kimball is acting well within the limits of his discretion. Simple courtesy suggests the magistrate judge should have the opportunity to decide whether she wishes to reconsider or clarify her ruling. Also, she is the judge most familiar with the relevant part of the record and her ruling. It's efficient for her to decide whether she will reconsider or clarify. Judge Kimball can still review the discovery ruling or a later modified version of it after the magistrate judge indicates whether she wishes to take a another look at the situation and if so, issues a modified order.

On the reasons IBM might want to do so. See the above reasons. Notice as well that by doing this, IBM gains an opportunity for a second shot at persuading Magistrate Judge Wells addressed to the specific grounds for her decision she expressed in her discovery order.

However, there is also a very important signal conveyed by IBM's request to Judge Kimball, that IBM is prepared to take an immediate appeal of the discovery ruling to the Tenth Circuit if the order is not withdrawn or substantially modified. To recognize that signal and its importance, and to explain an answer to your question about SCO's reasons for objecting, I'll need to expound a bit on how the U.S. judicial system works.

To maximize respect for and consideration of their words, lawyers have to be perceived as competent and able to exercise any right bestowed by the entire system of government, in court and outside it. Corporate management in the U.S. know this for the most part, and realize that the perception of their legal teams as being ready, willing, and able to appeal any erroneous ruling is important not only to deter frivolous lawsuits but also to persuade judges to treat their cases seriously.

Both parties to SCO v. IBM have retained competent counsel with reputations of willingness to vigorously oppose erroneous rulings at all levels of the court system. Major funding for the litigation is obvious on both sides. That has been the situation in the case from the beginning, however, so the Nazgul understandably felt the need to signal the judges that the time for an appeal to the Tenth Circuit may have come if the present discovery order stands.

Most judges don't like to be reversed. It creates extra work to do a case over and reversals bruise egos that take pride in the quality of their work, which includes the task of predicting how appellate courts will rule if a case is appealed. So most judges try to avoid being reversed on appeal. We can't know yet whether the Nazgul are just posturing. However, posturing rapidly spends the large denomination coin of a lawyer's credibility; it is unlikely that is what the Nazgul are doing. But they are definitely behaving as though this is an issue IBM is prepared to appeal immediately. Whether IBM actually appeals or not, its attorneys behaving as though an immediate appeal is lurking applies pressure to the judges to take a much closer look at the discovery ruling.

Standards of Review

To understand the implicit signal being passed, first you must understand some fundamental concepts of the U.S. judicial dispute resolution system, particularly "standards of review." The many federal judges in the U.S. have to maintain a complex hierarchical court system and that system has to be perceived by the parties who use the process as being fair. So the bedrock of what passes for the Rule of Law in the American judicial system includes: (i) an adversarial system of dispute resolution; (ii) universally applicable rules providing predictable procedures and equal protection of the laws; (iii) a process of respect for higher and prior court legal rulings (stare decisis) that creates predictability; and (iv) the application of "standards of review" designed to accommodate or discourage particular types of appeals so that the case load is reduced at each successively higher level of judicial review.

That model can fairly be said to encompass the entire U.S. federal court system, although there are exceptions. Standards of review are critical to the process. If there were none, then every level of appeal would simply recreate the same situation that existed in the district court. Any party could appeal any court decision all the way to the Supreme Court. That is not a scalable model for a hierarchical, top-down system. We are long past the day when the Supreme Court could decide all federal lawsuits (although that's the way it used to work; for many years the justices were the only federal judges). There has to be a winnowing process at each level that discourages further appeals except where there are good grounds.

There are oodles and oodles of standards of review. Standards of review generally apply only to factual issues. The default is that lower courts are entitled to no deference on their interpretation and application of the law to the facts. (There is a more wiggly classification called "mixed questions of fact and law," but that is a topic for another day.) Just remember, if the court of appeals or Supreme Court disagree with a lower court's rulings on what the applicable law is, they just overrule the lower court without any deference whatsoever. At the end of the process, the law is what the Supreme Court says it is. Cf., Brown v. Allen, 344 U.S. 443, 538 (1953) ("[w]e are not final because we are infallible, but we are infallible only because we are final").

Standards of review are what ensures reasonable top-down uniformity in the U.S. judicial system. Standards of review encompass issues like when it is fair to deny a party's constitutional right to a jury trial. The default rule is that a jury verdict in civil cases is entitled to deference if there is any factual basis in the record that might reasonably sustain it, unless the jury received without proper objection an erroneous legal instructions by the court that might have led to an erroneous judgment. If there was evidence in the record that might reasonably support all necessary elements of a jury's ultimate decision, if the court's legal instructions were not erroneous, and even if there were an erroneous legal instruction but you did not timely object, forget about asking a judge at any level to overrule the jury's decision. So another class of cases are discouraged from being appealed, because lawyers know they need not bother asking a judge to rule on issues excluded by that standard of review.

There are also standards of review that allow short-cutting of the legal process, as a further way of winnowing cases. For example, a standard of review you are more familiar with avoids a party's right to a jury trial, the district court's power to enter a summary judgment when there is no genuine dispute over any material fact and based on those facts the party requesting summary judgment is entitled to judgment as a matter of law. The corresponding rule on appeal is that the court of appeals is as well situated to rule on summary judgment issues as the district court was, since the district court accepted no testimony that would require consideration of a witness's demeanor, so the appellate standard of review for summary judgments is confined to the record made before the district court, but is de novo, i.e., the district court gets no deference on its ruling.

But on a district judge's own factual determinations, such as in cases where a district judge sits as both judge and Finder of Fact, the general default rule is that a district judge's findings of fact will not be reversed except where he has committed an "abuse of discretion" or was "clearly erroneous." Again, entire classes of cases are discouraged from appeal by the predictable degree of deference afforded the lower court's rulings. Lawyers know that they can't successfully appeal relevant cases unless they can show abuse of discretion or clear error (those are "magic words" with tons of case law to explain what they mean in what context).

There are also standards of review involved in the relationship between a district judge and a magistrate judge. For example, because parties have a constitutional right to have a district judge decide any matter going to the merits of their civil cases, a magistrate judge can not grant a summary judgment unless the parties have so stipulated. But a district judge can appoint a magistrate judge as a "special master," have the magistrate judge review the briefs and evidence, then make a recommended ruling for the district judge. The parties are granted 10 days to comment on the recommended ruling. The district judge then reviews the magistrate judge's recommendation and is always careful to make the magic statement that he has reviewed and considered the entire record developed before the magistrate judge (as though the district judge really did), and then decides whether to adopt the magistrate judge's proposed ruling. The district judge may also decide to convene a hearing for oral argument. But because the parties have a right to have the district judge make the decision, the district judge's standard of review of the magistrate judge's recommended ruling is de novo, i.e., the magistrate judge's recommendation at least in theory gets no deference. (Of course lawyers know that the major reason for having the magistrate judge make the recommendation was so the district judge wouldn't have to review the record and develop the rulings. Still, the procedure generally gets the parties a quicker decision and gives them a shot at persuading the district judge that the magistrate judge goofed.)

Discovery Rulings

So finally we come to the issue of a magistrate judge's discovery rulings. Under the statutes governing the relationship between judges and magistrate judges (somewhere in 28 U.S.C.), it says that judges don't have to review magistrate judges' "procedural" rulings under a de novo review standard. They can instead apply an abuse of discretion or clearly erroneous standard. (Because district judges have supervisory authority over magistrate judges, district judges can also decide that they want to review such rulings under a de novo standard; but don't bother holding your breath until that happens.) As you can imagine, the line between "procedural" rulings and rulings going to the merits of cases is not uniformly clear and sometimes there are clashes on that issue. But discovery rulings are by precedent clearly regarded as procedural for such purposes.

So the default rule is that district judges give magistrate judges' discovery rulings the kind of deference that discourages most appeals to the district judge. The discovery rules are intended to encourage parties to resolve discovery issues among themselves, without involving the court. From a judge's viewpoint, something has already gone awry if they receive a discovery motion. The magistrate judge will try to resolve the discovery issues as efficiently as possible, but lawyers risk punishment when they force the court to resolve discovery issues.

When the district judge considers an appeal from a magistrate judge's discovery order, he is sitting in a capacity much like that of a court of appeals. If the magistrate judge hears testimony on a discovery issue, his factual determinations will not be overruled absent an abuse of discretion or clear error. Again, the predictability provided by the standard of review (not to mention discovery sanction fee awards) serves to reduce the number of appeals from magistrate judges' discovery rulings that the district judge must decide.

One repercussion of the deferential standard of review for discovery orders is that the district court's discretion to consider information that was not before the magistrate judge is arguably limited and review should normally be confined to the record developed before the magistrate judge. Such niceties are normally ignored on procedural issues, but a careful lawyer is aware that such issues can be raised.

Review Now or After Final Judgment?

There is another relevant set of standards affecting the present situation that needs discussion. The default rule is that parties can not ask a court of appeals to review a district court's decision before a final judgment is entered in the lower court. The system discourages piecemeal appellate consideration of cases. Appellate judges want to deal with cases only once. But there are exceptions, for example, for district court orders granting or denying preliminary injunctions. The harm a party seeks to avoid by seeking an preliminary injunction can not be avoided if the district court denies the injunction and an immediate appeal were not possible. Likewise, a party can not escape complying with an injunction unless an immediate appeal is available.

Let's try a couple of extreme situations to illustrate the principles. First, consider the position of parents seeking a preliminary injunction prohibiting a hospital from removing life support for a comatose patient who are denied the requested preliminary injunction by the district court. Awaiting a final judgment allows the destruction of the lawsuit's subject matter, the life of the parent's child, so an immediate appeal is allowed. Now let's look at an example of an extreme situation where a preliminary injunction is granted. Consider the position of a hospital ordered to end life support for a comatose patient, but doctors believe the patient still has prospects of recovery. If they obey the preliminary injunction, again the subject matter of the lawsuit is destroyed, and any appeal after compliance with the preliminary injunction would present only a moot issue.

Now we come to standards of review for determining whether a party can seek immediate reversal of discovery orders in the court of appeals, without awaiting final judgment. There are two types of discovery orders for our purposes, orders compelling discovery and orders denying discovery. The availability of appeals for such orders is analyzed under the court of appeals' jurisdiction to hear "interlocutory appeals." The resulting default rule is that discovery orders compelling discovery can be immediately appealed, but orders denying discovery are not ordinarily appealable until a final judgment is entered. Again, the effect is to discourage certain types of appeals. There are exceptions to the default rule, but they aren't relevant to the present SCO-IBM discovery dispute.

The logic for the distinction between orders granting and denying discovery goes like this: An order compelling discovery requires a party to disclose what it believes it should not have to disclose. If, for example, a party's objection to discovery is that the ordered discovery is privileged or unduly burdensome, then compliance with the discovery order is the proverbial genie who can not be put back in the bottle. If the party resisting discovery complied with the discovery order and were to await final judgment before appealing, the very harm sought to be avoided would occur. The allegedly privileged information would be disclosed. The undue burden or expense of producing discovery would have to be suffered.

Waiting for a final judgment to be entered would allow the very harm a party injured by the compelled disclosure sought to avoid by resisting discovery, and later appeal would therefore be futile, presenting only a moot issue. On the other hand, a party denied discovery ordinarily faces no such immediate harm. The denial of discovery may be erroneous, and lead to an incorrect judgment, but that is a harm that can be corrected by an appeal following judgment. Then, the court of appeals can decide whether it was a "harmless error," i.e., might have affected the final judgment.

2. Why do you think IBM is wanting to go back to Magistrate Judge Wells?

It is considered very bad form to bluntly tell a judge that you will appeal if he does not do what you want him to do. At the same time, it is even worse not to let a judge know that you believe such a serious error has been made that you are prepared to take an immediate appeal. The tension between those expectations is usually resolved by more subtle signals found only "between the lines."

The Nazgul are signaling both judges that they are prepared to appeal the discovery order to the Tenth Circuit, but believe such an appeal should not be necessary. Had the Nazgul not wanted to convey such a message, they would most likely have simply asked Judge Kimball to review the magistrate judge's discovery order. As discussed above, the normal practice is simply to supplement the record before the district judge rather than seeking a remand to the magistrate judge, ignoring the issue of whether the district court's review should be confined to the record that was considered by the magistrate judge.

Implicit in the request to be allowed to go back to the magistrate judge is the desire to supplement the record already developed before the magistrate judge. That in itself implies that the Nazgul are concerned with the state of the record for appeal in light of the magistrate judge's rulings, and are also concerned with eliminating any SCO ability to base its appellate opposition on an argument that IBM improperly introduced supplemental evidence only after the magistrate judge had ruled.

The Nazgul are strengthening that signal by seeking leave from Judge Kimball to request the magistrate judge to decide whether she wishes to reconsider or clarify her discovery order. In ordinary practice, such a request would be directed to the magistrate judge herself. However, motions for reconsideration are disfavored in federal court, and some courts have gone so far as holding that they are not permitted under the rules until the end of the case, when a party is expressly authorized by the rules to seek relief from an erroneous judgment under extremely limited circumstances.

The Nazgul, by seeking Judge Kimball's leave even to ask the magistrate judge whether she wishes to reconsider, are signaling that they believe their client has been placed in an extraordinary position by the magistrate judge's order. They are in effect telling both Judge Kimball and Magistrate Judge Wells that they don't want to call any names, they want to maintain a good relationship with the court, but they believe the magistrate judge has committed a major error and should be given an opportunity to decide whether to reconsider.

The Nazgul are also implicitly telling Judge Kimball that it is so likely Magistrate Judge Wells will reconsider or clarify her discovery ruling that the matter is not ripe for his consideration, and the effort required to come up to speed on a small mountain of briefs and evidence. By doing so, they actually compliment the magistrate judge, in effect signaling that she has overlooked dispositive factors on an important issue but they regard her as an honest, competent judge who will make the correct decision if she takes a fresh look at the issues in light of the brief that will accompany the motion for reconsideration or clarification. I can not adequately explain the situation without raising a somewhat delicate subject. The sad truth is that the overwhelming majority of lawsuits in the federal system are not adequately funded. The run of the mill discovery motions magistrate judges deal with day-in and day-out will not cite any rule or case law, nor be supported by any evidence. Because most lawyers never are retained by clients who can pay the bill for legal research on discovery issues, most lawyers in federal court are unaware of relevant procedures and magistrate judges are infrequently asked to do more than play referee in discovery disputes. The sorry truth is all too many magistrate judges grow so accustomed to deciding discovery issues without evidence, without briefs, without being educated by lawyers on the limits of their discretion, that their default way of resolving discovery issues is to try to come up with something that sounds fair. They are not aware of the limits on their discretion.

Because my practice was national in scope, it was a situation that I encountered repeatedly. Convincing a magistrate judge that there are limits to his or her discretion in resolving discovery disputes can too often be a tough sell even if they can be persuaded to read the briefs and the cited case authority. It's an alien concept outside the realm of their day-to-day experience. When an experienced major litigator encounters such a magistrate judge, persuading them that there may be relevant bounds on their discretion sometimes requires a a jolt to get their attention.

I could only speculate on whether that is the present situation. But the Nazgul are unquestionably signaling that they believe reversible error has been commited and an immediate appeal is justified.

The very least IBM is likely to gain from the motion to Magistrate Judge Wells is clarification of what she expects IBM to do, and Judge Kimball most likely agrees. A party under court order is always entitled to clarification of the court's expectations where there is any doubt about what is required. Judge Kimball knows this, and also realizes it is a better use of his time to review the situation after the magistrate judge has issued any modification or clarification of her order. The magistrate judge ordered very broad discovery, but details of her expectations are less than crystal clear.

3. And why is SCO opposed? They obviously know IBM was going to fight on some level. Why then not on this level?

In brief, SCO opposes for the opposite of the reasons IBM wants to proceed at this level. The motion for reconsideration or clarification decreases the likelihood that SCO will ultimately get any or all of the discovery Magistrate Judge Wells ordered. To that extent, it may also result in the close of discovery date being curtailed, and reduce the likelihood that SCO might later be able to justify even further postponements of the discovery closing date.

The SCO legal team undoubtedly are also less than thrilled at the prospect of the Tenth Circuit addressing any issues of this case before a final judgment is entered. They succeeded in obtaining an extremely broad discovery order and have no relevant evidence in the record that has not been countered with a strong and unrebutted showing of inadmissibility. Their record is also insufficient to sustain the scope of discovery allowed.

For example, the magistrate judge's discovery order compels discovery that she specifically found was beyond the scope of what SCO had originally requested from IBM or sought through its motion to compel. But her stated reason for doing so is based entirely on judicial speculation that SCO might later delay the proceedings by seeking such discovery.

The magistrate judge's order also virtually ignores IBM's arguments and evidence of undue burden and expense. That lack of focus on the major grounds of the resistance to discovery also ignores numerous SCO admissions in the record that its legal team has been unable to cope with the volume of discovery already received, such as the admission that it would require 25,000 person-years for them to adequately study the code IBM has already produced and the admissions that code is of no practical use to their litigation efforts absent unfettered access to IBM's computerized library of relevant computer files, which the magistrate judge did not allow but instead encouraged SCO to seek a later order requiring such access.

There are other issues raised by the order, but those I identify should be sufficient to convey the flavor of what IBM has to work with. It is not a ruling or record I would wish to defend in the court of appeals.


Brent O. Hatch (5715)
Mark F. James (5295)

Stuart H. Singer (admitted pro hac vice)

Robert Silver (admitted pro hac vice)
Edward Normand (admitted pro hac vice)
Sean Eskovitz (admitted pro hac vice)

Stephen N. Zack (admitted pro hac vice)

Attorneys for The SCO Group, Inc.








Case No. 2:03CV0294DAK
Honorable Dale A. Kimball
Magistrate Judge Brooke C. Wells

On January 18, 2005, Magistrate Judge Wells entered an Order Regarding SCO's Renewed Motion to Compel Discovery. Pursuant to Federal Rule of Civil Procedure 72(a), IBM was obligated to file and serve any objections it had to that Order within ten days of its service (by February 2). Rather than submitting proper objections to the Court, and without ever consulting SCO, IBM submitted yesterday (February 1) an Ex Parte Motion asking the Court to suspend the Federal Rules in order (1) to permit IBM until February 11 to file with the Magistrate Judge a "Motion for Reconsideration/Clarification" of her Order and (2) to permit IBM to suspend its obligation to object to this Court "until 10 days after being served with a copy of the Magistrate Judge's order on that motion."

Nowhere do the Federal Rules provide any basis for the relief IBM seeks. IBM's Ex Parte Motion does not merely seek an extension of time to submit objections to this Court under Rule 72(a). Rather, IBM requests this Court's leave for additional time to file a motion for reconsideration/clarification in the Magistrate Court, which will necessitate further briefing and another Court Order, and then to follow that entire process by filing further objections to this Court.

There is no merit to IBM's request to suspend the Federal Rules in order to permit it to delay further its compliance with its basic discovery obligations and this Court's orders. Nor does IBM's Ex Parte Motion even attempt to provide any justification for its request. The discovery that is the subject of Magistrate Judge Wells's Order is basic, predicate discovery that SCO first requested from IBM over a year-and-a-half ago. Much of the discovery was ordered produced by Judge Wells on March 3, 2004, but IBM's non-compliance with that Order forced SCO to file its Renewed Motion to Compel last July. The Court received full briefing on the outstanding discovery issues before it (including over a dozen briefs) and heard extensive argument from counsel on October 19, 2004. Magistrate Judge Wells's eighteen-page written discovery Order fully delineates the Court's rationale for, and IBM's responsibilities under, that Order.

Judge Wells's Order requires IBM to comply by March 18. By attempting to add additional (and unprovided for) layers of review to this process, IBM seeks to delay further its compliance with the Court's orders and its discovery obligations. IBM's Ex Parte Motion should be denied.

DATED this 2nd day of February, 2005.

Respectfully submitted,

Brent O. Hatch
Mark F. James

Robert Silver
Stephen N. Zack
Stuart Singer
Edward Normand
Sean Eskovitz

By (Signature of Mark F. James)
Counsel for The SCO Group, Inc.

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