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SCO Considering an Appeal?
Thursday, July 07 2005 @ 05:35 AM EDT

Believe this if you wish. SCO is telling the media that they are considering whether or not to appeal Judge Dale Kimball's Order denying their Motion for Leave to File a Third Amended Complaint. Bob Mims reports it this way:

Kimball's decision, filed late Friday as the holiday weekend began, caught SCO unprepared. Spokesman Blake Stowell indicated Tuesday that company lawyers were studying the ruling; whether SCO will appeal was undetermined. . . . "We look forward to having our claims heard before a jury," Stowell said.

Ah, yes, the jury. As opposed to the judge, who has their number. They are so looking forward to having their claims heard by a jury they have dragged out discovery with all their might, like a kid who has been refused candy having a temper tantrum on the floor of a supermarket whose poor mom ends up carrying it out, kicking and screaming, because it refuses to budge from the candy aisle.

What SCO apparently didn't tell Mr. Mims is that they don't get to decide if they can appeal. All they can do is ask for permission. Then there is the expense, including the bond. SCO's so rich these days, you know, and lawyers are world-renowned for loving to work for nothing. Hasn't that been your experience, that lawyers work best for you when your money runs out? Let's take a look at their appeal options.

Here is Title 28, Section 1292 of the US Code, the one that applies to them, appeals from interlocutory orders, meaning it's not the final order, the one that determines the outcome:

(b) When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order: Provided, however, That application for an appeal hereunder shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order.

So, what I see is they have to get permission to appeal. It's discretionary. And no stay of proceedings while you wait for the appeal, unless the Court of Appeals of a judge so orders. Here's an explanation of Section 1292:

Interlocutory Appeals Under 28 U.S.C. 1292(b)

28 U.S.C. 1292(b) grants discretion to the courts of appeals to review any interlocutory order in a civil case if the trial judge, in making the order, has stated in writing that the order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.

1292(b) review is inappropriate for challenges to a judge's discretion in granting or denying transfers.  The Congressional policy against piecemeal appeals, as expressed in the final judgment rule, to which 1292(b) is a narrow exception is eroded by permitting review of exercise of the judge's discretion under the transfer statute as a "controlling question of law."  The issue is not one of convenience to the litigants, or to the court, but of appellate jurisdiction.  1292(b) allows discretionary appeals from interlocutory orders when both the trial & appellate courts agree that an appeal is appropriate.

For 1292(b) to apply there must be (1) a "controlling question of law."  Many cases have held a 1292(b) appeal not proper on matters that lie within the discretion of the district court.  (2) There must be a "difference of opinion" about the controlling question of law.  i.e., it must not be a question which is controlled by clear precedent. (3)  It must be thought that immediate appeal "may materially advance the ultimate termination of the litigation."  Hence, the appeal must carry the potential of avoiding litigation altogether.  (Wright § 102)

So, they need permission. "1292(b) allows discretionary appeals from interlocutory orders when both the trial & appellate courts agree that an appeal is appropriate." And they will only agree if it "may materially advance" the litigation. Here is a Practioner's Guide [PDF] for the Tenth Circuit. And here are the Rules. Here's the process they'd have to follow, beginning with bringing a motion to get Kimball to agree to an appeal, and note IBM would get to oppose:

Fed. R. App. P. Rule 5.  Appeal by Permission

(a) Petition for Permission to Appeal.

(1) To request permission to appeal when an appeal is within the court of appeals’ discretion, a party must file a petition for permission to appeal. The petition must be filed with the circuit clerk with proof of service on all other parties to the district-court action.

(2) The petition must be filed within the time specified by the statute or rule authorizing the appeal or, if no such time is specified, within the time provided by Rule 4(a) for filing a notice of appeal.

(3) If a party cannot petition for appeal unless the district court first enters an order granting permission to do so or stating that the necessary conditions are met, the district court may amend its order, either on its own or in response to a party’s motion, to include the required permission or statement. In that event, the time to petition runs from entry of the amended order.

(b) Contents of the Petition; Answer or Cross-Petition; Oral Argument.

(1) The petition must include the following:

(A) the facts necessary to understand the question presented;

(B) the question itself;

(C) the relief sought;

(D) the reasons why the appeal should be allowed and is authorized by a statute or rule; and

(E) an attached copy of:

(i) the order, decree, or judgment complained of and any related opinion or memorandum, and

(ii) any order stating the district court’s permission to appeal or finding that the necessary conditions are met.

(2) A party may file an answer in opposition or a cross-petition within 7 days after the petition is served.

(3) The petition and answer will be submitted without oral argument unless the court of appeals orders otherwise.

(c) Form of Papers; Number of Copies.  All papers must conform to Rule 32(c)(2). Except by the court’s permission, a paper must not exceed 20 pages, exclusive of the disclosure statement, the proof of service, and the accompanying documents required by Rule 5(b)(1)(E). An original and 3 copies must be filed unless the court requires a different number by local rule or by order in a particular case.

(d) Grant of Permission; Fees; Cost Bond; Filing the Record.

(1) Within 10 days after the entry of the order granting permission to appeal, the appellant must:

(A) pay the district clerk all required fees; and

(B) file a cost bond if required under Rule 7.

(2) A notice of appeal need not be filed. The date when the order granting permission to appeal is entered serves as the date of the notice of appeal for calculating time under these rules.

(3) The district clerk must notify the circuit clerk once the petitioner has paid the fees. Upon receiving this notice, the circuit clerk must enter the appeal on the docket. The record must be forwarded and filed in accordance with Rules 11 and 12(c).

(As amended Apr. 29, 2002, eff. Dec. 1, 2002)

To see how it looks in real life, you can look at Microsoft's Motion Pursuant to 28 U.S.C. Section 1292(b) For Certification of the Court's June 10 Ruling to the Extent it Denied Microsoft's Motion to Dismiss [PDF] and its Memorandum in Support [PDF]. If you recall, in Novell v. Microsoft, Novell was recently given the right to proceed with two of its claims in its antitrust suit and Microsoft then filed those documents to appeal on those two claims. Notice on the Motion that they filed it with the same judge that denied Microsoft's Motion to Dismiss with respects to the two claims. SCO would have to do something similar, ask Judge Kimball to see things SCO's way within the confines of the elements required under 1292(b).

There is one exception to an interlocutory decision not being appealable as of right, called the collateral orders doctrine, which grants a right of appeal--without the district court's certification--from orders "which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated." Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949):

This decision appears to fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. The Court has long given this provision of the statute this practical rather than a technical construction. . . .

We hold this order appealable because it is a final disposition of a claimed right which is not an ingredient . . . of the cause of action and does not require consideration with it.

Richardson-Merrell v. Koller, 472 U.S. 424 (1985), explains further:

"The collateral order doctrine is a 'narrow exception,' . . . whose reach is limited to trial court orders affecting rights that will be irretrievably lost in the absence of an immediate appeal. . . . To fall within the exception, an order must at a minimum satisfy three conditions: It must 'conclusively determine the disputed question,' 'resolve an important issue completely separate from the merits of the action,' and 'be effectively unreviewable on appeal from a final judgment.'"

But unless they can squeeze into that language somehow, what's to appeal? What's the controlling question of law? The evidence was overwhelming that they or their predecessor apparently knew years ago, or should have known, coulda shoulda, about the activities they wanted to add to the complaint. I can't imagine how they will get past that part of the order. But their attorneys will be studying the Code, comparing it with each detail of their denied motion and Judge Kimball's Order, and looking up cases, trying to find a way. That's assuming they told the media the truth and they really are studying the order and considering an appeal.

If they or oldSCO knew all about AIX on Power years ago and did nothing, it makes it hard, if not impossible, to bring it up now. That's what Judge Kimball meant, that they were too late. There is something called waiver and laches.

I explained laches and waiver back when covering IBM's affirmative defenses all those many moons ago, in Groklaw article #125. This one is #1956, if you can imagine. Here's the info again, because it's related to why Judge Kimball mentioned that they, or their predecessor in interest, apparently knew or should have known:

Sixth Affirmative Defense: the claims are barred by the doctrine of laches and delay. Laches just means you waited too long to sue. It's kind of like the statutes of limitations defense, but laches is equitable. . . . Here's a legal explanation of laches, from Steven H. Gifis' Law Dictionary:

"LACHES a doctrine providing a party with an equitable defense where long-neglected rights are sought to be enforced against the party. Laches signifies an undue lapse of time in enforcing a right of action and negligence in failing to act more promptly. It recognizes that because of the delay, the defendant's ability to defend may be unfairly impaired because witnesses or evidence needed to defend against the stated claim may have become unavailable or lost. The doctrine also recognizes that if the delay has led the adverse party to change his or her position as to the property or right in question, it is inequitable to allow the negligent delaying party to be preferred in their legal right.... The consequent preclusion of the negligent party's action constitutes a species of equitable estoppel known as ESTOPPEL BY LACHES."

Seventh Affirmative Defense: that the claims are barred by the doctrines of waiver, estoppel and unclean hands. Waiver is "an intentional and voluntary giving up, relinquishment, or surrender of some known right. In general, a waiver may either result from an express agreement or be inferred by circumstances," as Gifis' dictionary explains. If you wait too long to assert your right, you may have waived it.

And of course in this case there was a statute of limitations to boot in the contract, which said they must bring any claims in a New York, not a Utah, court. The time limit to do so long ago came and went. SCO knew the contract had a statute of limitations that had already run. That, in my view, is why they tried to resurrect the claim by flashing those privileged emails around every chance they got, trying to leap over the turnstile that blocked their way by claiming it was newly discovered evidence. It failed. I'm not saying that they may not try to appeal, in a PR kind of way, if the lawyers can find some offbeat theory, which isn't impossible, given the lawyers in question, and if they can afford it. But I really can't see any serious hope for an appeal succeeding in the media, or from a PR point of view. Don't forget that they were reading those privileged emails while IBM's evidence was under seal and not available to us. Who'd take their claims seriously now, having read IBM's unsealed collection of evidence? Kimball didn't.

And since the lawyers won't be paid after a point, and appeals are about as expensive and time-consuming as any part of a lawsuit, I would suggest we not hold our breath for any serious appeal. Maybe one like the DaimlerChrysler one, whereby they keep their thumb on the page, without actually doing anything meaningful.

Here's my favorite part from the Practioner's Guide regarding appeals, page 10:

"Sanctions for Meritless Appeals. If the court finds that an appeal is frivolous, it may award damages and single or double costs. Fed. R. App. P. 38. These costs may be awarded against counsel personally if the court finds the fault is with the lawyer.

You can always tell when SCO has been contacting the media, because the same quotation shows up in more than one article, but this time I saw only two leading with SCO's spin that they had won a great victory in getting to depose Palmisano for four hours. Oooh. I'm sure he can't sleep for worry. Not. The best coverage I saw was Matthew Aslett's on Computer Business Review Online. eWeek tells the SCO story their way at first, but then there is a devastating quotation from Steven Fronk, an attorney who says this about the Order:

Stephen Fronk, an attorney with Howard Rice Nemerovski Canady Falk & Rabkin, a San Francisco-based law firm, said the order "suggests that the court has become frustrated with SCO's efforts to drag out the discovery process." . . .

To Fronk, it appears that "given the court's apparent frustration with SCO and the ongoing discovery and pleading battles in the case, it appears that the court will not tolerate a departure from the Feb. 26, 2007, trial date."

So, according to this attorney, it really has been SCO dragging out the discovery process. You heard it here first, but now you get it confirmed by an attorney.

Of course, he may not know SCO as well as we do when he says the court date is carved in stone. They are a creative lot, that seem not to care about the ultimate outcome at all, just so long as it takes forever to get there, so logic isn't a reliable predictive tool. We'll see. Kimball is a patient man, and you never know once the dispositive motions are allowed again just how much inventive SCO paperwork will descend on his desk like a Chinese torture dripping faucet until the poor man gives out and lets them delay some more. The difficulty in predicting SCO's next move is that so little that they've done already makes any sense to me. Nothing about this litigation has been quite normal, and so we'll just have to wait and see what SCO tries next. Heaven knows, it's never boring.

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