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IBM's Motion Granted - 1st Report from the Courthouse -UPDATED 5X
Tuesday, December 20 2005 @ 02:49 PM EST

Frank Sorenson made it to the hearing, thank heaven. IBM's Motion to Compel Documents on SCO's Privilege Log was granted. Frank's full report will be arriving soon, but in the meantime, here is the brief message he sent right after the hearing:
Hearing over. IBM's Mot. to Compel Prod of Docs on SCO's Priv Log GRANTED. SCO's Mot. to Compel Docs from Execs GRANTED/DENIED in PART.

As soon as I have more, I'll share it with you.

I hope any readers in the Utah area will give serious thought to attending hearings for us. It's quite a lot on Frank, for one thing, but it's also beneficial to have more than one. If there is a dispute over what happened, it is very good to have multiple eyewitnesses. That has happened, actually, and because we had 5 witnesses, three of them Groklaw's, it was very helpful indeed.

Don't imagine for a minute that this show is over. I've no doubt SCO will file something on the 22nd, the drop-dead deadline for listing any allegedly infringing code. If they've been holding anything in an inner vest pocket, or if they have some theory they think they can prove, or they stumbled on to some "evidence" -- remember the 2003 claimed "mountain of evidence"? -- it pretty much has to be now that they show it, at least to the court and to IBM. I expect claims as flamboyant as in the beginning. So there will be plenty of more hearings, I think, and we'll be needing coverage of those hearings, and to the extent that the hearings involve specific code, we'll need specificity if we are going to do research.

It's going to be fun. We're finally getting into the real meat of this case, now that a lot of the nonsense has been stripped away.

Frank has now filed more, so read on...


Here's Frank's more detailed report:

Judge Wells heard arguments on two motions, and ruled on both.

IBM's Motion to Compel Production of Documents on SCO's Privilege Log: Wells found that the Novell->Santa Cruz sale did not transfer everything, and neither did the Santa Cruz->Caldera sale. The Broderick Affidavit is insufficient to establish the transfer of privilege. IBM's Motion is GRANTED.

SCO's Motion to Compel Production from IBM's Execs: Wells took a short recess to read up on a few things before making a finding that IBM has acted in good faith with respect to the production of documents from Palmisano & Wladawsky-Berger. In light of wording used in the February 2004 hearing, the March 2004 order was meant to include Paul Horn & Nick Bowen. IBM has stated that they have produced documents from their files, and should provide affidavits stating that IBM has performed a reasonable search of their files and produced responsive, non-privileged documents. If SCO believes the production is insufficient, they should ask the individuals during depositions (which, if taken, won't count against the 50 allowed). SCO's Motion is therefore GRANTED in part, and DENIED in part.

Wells stated that SCO's pending Motion to Compel Discovery was mooted by Kimball's order.

Wells asked about SCO's Motion for the Protective Order, and the parties stated that they had resolved the issue. She then signed an order prepared by the parties regarding it. Details are still unclear.

IBM's affidavits that they have produced responsive documents from Horn and Bowen will be due January 6th. SCO's production of documents from their privilege logs are also due January 6th. Both parties indicated that they would complete their responsibilities much earlier than that date.

So Wells will not be bothering with SCO's redundant request for relief to both judges, since Kimball's order makes the motion filed with her moot.

And IBM gets all the documents they asked for. SCO's protective order motion is resolved too, by agreement. Agreements are easier to achieve when one side starts losing right and left, which is what we are beginning to observe. It's also significant that Wells has ruled that IBM showed good faith in discovery regarding its executives. Think of all the pejorative hints at IBM wrongdoing that we have witnessed, not only in SCO filings but in "reporting" by some of SCO's press buddies. That thread is over now.

But here's the part that I can't wait to hear more about: "Wells found that the Novell->Santa Cruz sale did not transfer everything, and neither did the Santa Cruz->Caldera sale."

2nd Update:

Aaron also attended the hearing. Thank you, Aaron, so much, and he amplifies Frank's account, and then Frank comments in a couple of places:

I attended the hearing. Did not take notes but will give the highlights.

Judge Wells started by saying she had read everything and was up to speed, told the attorneys to specifically talk about why Judge Boyce's decision applies/does not apply. (Said that in legal, my translation) [Frank adds: "Yes, one of her specific requests was that they address that decision."]

When SCO replied they argued that Boyce's decision had been superceded by later cases.

Judge Wells ruled from the bench granting IBM's request, they get to write it up. Due Jan 6th or earlier.

The argument on the "renewed renewed renewed" motion to compel started. Judge Wells told the court she believed SCO's interpretation of her orders was correct and that IBM had construed it too narrowly. [Frank adds: "I believe she said IBM _may_have_ construed it too narrowly. I think IBM addressed it in their arguments, and explained how they understood it."] Was not looking good at this point. SCO's attorney was pretty quick in the first round. Just went over some areas he believed IBM was deficient in. [Frank adds: "They believed IBM was deficient because there _must_ be more to produce, and it's "hard to believe" there isn't more. He didn't identify any particular deficiencies, though.]

Mr. Shaughnnesy spoke for IBM. His main point was that in actuality they had complied with the order, and SCO was trying to broaden it. Ended by saying deny this motion or expect the 4th renewed, 5th renewed and 6th renewed motions.

SCO's attorney found this to be quite discourteous, talk of strafing. Judge Wells said she didn't find it so. SCO wants IBM to at least search all email for the words Linux and Unix and turn them over.

At some point mixed in there, I believe it was the 2nd time Mr. Shaughnnesy spoke he said they should ask the folks in their depositions if they aren't happy with the affidavits; that's the usual course of how discovery works. IBM deposed Mr. McBride and found more than 2 dozen emails that had not been turned over by SCO (emails to and from Microsoft). They sent a letter after the deposition and got the emails. That's normal discovery.

SCO's attorney spoke and said they would rather have the information before deposing them. Judge Wells recessed and left for about 10 minutes.

Denied SCO's motion in part and granted in part. Everything was denied except IBM is to provide affidavits from two more IBM execs that they complied with discovery. They also get free depositions on those two execs. SCO writes this one and also due Jan. 6th or earlier.

They jointly presented an order for Judge Wells to sign on the emergency motion on the accountants. She signed it so we should see it shortly.

Do you see how valuable it is to have multiple eyewitnesses? It's the same reason why Groklaw has such a good record for accuracy. When you have more than one person working on something, it works out well, because each person notices different things and knows different things. The detail about Darl McBride-Microsoft emails tells us two things I didn't know: Darl has been deposed. And 2) he sends more email than we thought. hahahaha. Maybe that is why SCO was stuck like a broken record on the idea that IBM executives *must* have more documents and email than were turned over?

In case you want to refer to the motions, here are the documents filed for today's hearing:

For IBM's Motion to Compel Document Production:

For SCO's Motion:

Also, if you've forgotten what privilege logs are, here's an explanation.

3rd Update:

And while I was compiling that list, Frank sent me his more detailed account, from notes taken during the hearing, and there will be a second half coming in a bit:

The hearing was held before Judge Wells, but in Judge Kimball's Courtroom, which is much larger.

SCO was represented by Ted Normand and Brent Hatch. IBM was represented by David Marriott and Todd Shaughnessy.

The Court began with IBM's Motion to Compel Production of Documents from SCO's Privilege Log. Wells first stated that she had reviewed all the documents, exhibits, etc., including the ruling from Judge Boyce.

Marriott starts by stating that SCO claims privilege due to transfers of all lines of business, and IBM asks the Court to compel production of the documents. According to Judge Boyce's decision, an asset sale doesn't mean that privilege passes as well. Caldera had asserted privilege over documents transferred from Novell to Caldera with a business unit -- and had a stronger argument than SCO now has.

Marriott says that Boyce's decision was that privilege does not pass, and counsel for Caldera conceded the point. SCO's cases are not applicable, and involve bankruptcy issues, attorney disqualification, etc.

Marriott mentions that SCO contends "the UNIX Business" passed from AT&T->Novell->Santa Cruz->Caldera. IBM believes there is no single "UNIX business". Marriott reads from the Novell->Santa Cruz APA, and the exhibits which detail what did and did not pass to Santa Cruz, particularly exhibit 1.1b, which details assets excluded from the transfer. He reads about copyrights, trademarks, patents, etc. He mentioned questions over the copyrights.

Marriott points out the the APA excluded large portions of "the UNIX business", and that Novell retains 95% of the proceeds from SVRx licenses, so SCO's contention that everything (including privilege) transferred isn't valid. Executing Amendment 2 a year later cannot restore privilege already lost.

Marriott discusses the Santa Cruz->Caldera transaction, and points out that Santa Cruz continued to exist. He says that Santa Cruz sold some (but not all) assets of 2 divisions and changed name to Tarantella. He points out that SCO does not continue to maintain the two divisions, and SCO's "UNIX Business" is nothing like previous "UNIX businesses" of Santa Cruz, Novell, USL, and AT&T.

Marriott corrects an error in IBM's response papers regarding whether OpenServer transferred, saying that last night IBM discovered an SEC filing where SCO or Tarantella mentions that OpenServer had transferred.

Marriott says that the Broderick Declaration only refers to transfers of assets, and acknowleges that Novell retained some. He says that Broderick speaks to other peoples' states of mind, and he isn't a lawyer. IBM requests that the Court compel production of the 1000 documents where privilege has been waived.

Wells asks how her ruling today might affect the infringement disclosures of the 22nd.

Marriott states that IBM hasn't seen the documents in question (obviously), but that the ruling from Wells shouldn't affect those disclosures.

Normand states he also doesn't believe that Wells' ruling should affect the disclosures either. He says he doesn't think the Court should rely too heavily on an oral ruling from Judge Boyce.

Wells says "You didn't know Judge Boyce."

Normand argues that the law has evolved since the ruling from Boyce and that according to recent case law, SCO has maintained control. He says that recent case law states that if a successor continued to operate the business, privilege applies to the successor. He cites several cases that demonstrate how privilege could be transferred.

Wells asks whether SCO contends that Boyce would have found differently, given the cases SCO is using?

Normand says that Boyce would have found them relevant. Normand quotes from the preamble to the APA that the intent of the APA was to transfer the entire UNIX business to Caldera and therefore the privilege with the documents. He says that in the case Boyce was referring to, it was determined that Caldera was not the legal successor to the business, but that SCO contends it is undisputed that SCO owns and operates the UNIX business at issue.

Normand says that according to the Broderick Declaration, in each instance, the UNIX business continued to operate using the same office space, furniture, people, equipment, etc.

Wells points out that the Broderick Declaration uses modifiers such as "virtually all."

Normand reiterates that SCO bought the entire business, and privilege should still apply.

Marriott says that SCO is reading 1.1a of the APA and ignoring 1.1b, and that 1.1a is subject to the exclusions in 1.1b. He points out that 95% of the revenue stream returns to Novell, and that privilege attaches to the corporation, not to the assets.

Wells states that she is prepared to rule. Wells indicates that the Novell->Santa Cruz sale did not transfer everything and neither did the Santa Cruz->Caldera sale. The Broderick declaration is insufficient to establish the transfer of privilege. IBM's Motion is GRANTED. Wells asks if there are any questions or clarifications needed? [no]

=== Grabbing a peanut butter sandwich and diving into the second half...

4th Update:

Properly refreshed, Frank continues:

On SCO's New Renewed Motion to Compel:

Wells starts out by saying that she'd like to focus the discussion by stating that SCO's interpretation of her March 2004 ruling is correct, and that she's concerned IBM may have interpreted it too narrowly to not include production from IBM's other executives.

Normand says that SCO interprets the March 2004 order to mean that IBM is to search the files of senior execs (not limited to Palmisano and Wladawsky-Berger) for Linux-related materials, and produce responsive, non-privileged documents. He says that IBM interprets the order to relate just to documents relevant to IBM's decision to adopt and embrace Linux.

Wells states that SCO's interpretation would be the correct interpretation.

Normand says that SCO found a Palmisano email that IBM did not produce, but which they found publicly available on the internet. He says that in Wladawsky-Berger's deposition, he was questioned about both the production of documents from his files, and emails he sent and/or received regarding Linux. Wladawsky-Berger had stated "I have sent and received emails regarding Linux, including to and from Palmisano."

Normand says that SCO believes the affidavits supplied did not clarify things, and they infer that there _must_ be more documents which are responsive.

Shaughnessy argued for IBM, saying, "We can't produce something we can't find," and that IBM had undertaken a reasonable search and produced the responsive documents they had identified . He says that IBM understood the March 2004 order instructed IBM to include documents from the files of senior executives. He argues that SCO is trying to expand the order to include all documents that in any way mention Linux.

Shaughnessy hands out a notebook to the Court and the other side. He states that SCO has brought up issues relating to the documents held by three custodians: Palmisano, Wladawsky-Berger, and the Board of Directors, over a time period involving 1999.

Shaughnessy says that Wladawsky-Berger has since moved on from his position at the time and is no longer involved with Linux. He points out that in Wladawsky-Berger's deposition, he was questioned at length about emails he sent regarding Linux, and the production of documents from his files. Shaughnessy states that Palmisano is IBM's CEO and Chairman and has changed positions two times since the time frame involved.

Shaughnessy points out that with the exception of Palmisano, none of IBM's board works for IBM (they work for American Express, UPS, etc.). He says that IBM maintains a set of files for the Board of Directors, and that those files were searched, but that IBM has not searched the personal files of the individual members of the Board of Directors, nor has IBM searched the files of American Express, UPS, etc.

Shaughnessy says that it's not unreasonable that there weren't documents to find from the Board of Directors. He says that there were no issues that required Board approval.

Shaughnessy discusses SCO's 4 relevant document requests. He says that IBM has undertaken a reasonable search of Mr. Palmisano's files, and to the extent they have found responsive documents, they have been produced, but that Palmisano's files don't include postings of code to SourceForge.

Shaughnessy says that to the extent IBM found responsive documents, IBM has produced them, including Linux business plans and others.

Shaughnessy clarifies that IBM understood that SCO was to withdraw their original motion and refile. He states that IBM understood the March 2004 order to mean that IBM should not exclude files from senior execs but that IBM didn't believe The Court intended to write SCO's document request for them.

Shaughnessy states that to the extent there were unclear issues, IBM sent SCO's counsel letters to clarify and make sure the parties understood the Court and each other.

Shaughnessy makes it clear that IBM has undertaken a reasonable search, and hasn't been limiting the search, but that SCO has never requested every file containing the word Linux. Doing so would be unreasonable, and would require them to sit down with Palmisano's files and "start with A".

Wells asks about document request 53 regarding documents relating to IBM's decision to embrace Linux.

Shaughnessy says that IBM has done so.

Wells asks again to make it clear if in fact IBM has performed a reasonable search.

Shaughnessy says that IBM has performed a reasonable search and produced everything relevant. He says that the October 2004 order declined to require IBM to produce the entire files from the executives, but rather submit declarations about the production. He says that IBM has offered a 30(b)(6) witness with respect to the production of documents.

Shaughnessy discusses the reasonable search of emails. He points out that the emails in question would have been 3 years prior to the litigation, the individuals had changed jobs, etc. He addresses SCO's contention that IBM produced Palmisano emails from the files of other people, but not from Palmisano himself and says that means the other employees kept the emails, but Palmisano himself hadn't. He says that SCO shouldn't find it so surprising, since the same could be said for Mr. McBride, SCO's CEO.

Shaughnessy suggests that if SCO has additional questions regarding production, they should ask the individuals during their depositions. SCO has leave to depose Palmisano (scheduled for January 11th), and has already deposed Wladawsky-Berger. SCO has still not identified deficiencies in the production, just contended it was insufficient and that there had to be more.

Shaughnessy mentions that IBM has followed this process, saying that during McBride's deposition, it was discovered that there were dozens of emails between McBride and Microsoft which had not been produced. After the deposition, IBM requested the additional documents in a letter to SCO's counsel.

Normand says that early in 2003, SCO requested all documents related to Linux, and IBM objected, saying it was a broad request. He contends that IBM now says they were too narrow [specifically relating to Palmisano and Wladawsky-Berger and about IBM's decision to embrace Linux].

Wells asks whether SCO isn't "presuming" there has to be more and asks why SCO doesn't follow Mr. Shaughnessy's suggestion for identifying deficiencies in the depositions?

Normand says that there are easier ways to execute the search, and that SCO would like to have the documents going into the depositions. He points out that email is electronically searchable, and that it shouldn't be too difficult to do the search.

Wells says that she takes IBM's counsel's argument at face value, and assumes good faith in complying. She asks why she shouldn't adopt Mr. Shaughnessy's suggestion?

Normand says it's a reasonable process to follow, with a few caveats. He mentions that he believes the scope of the production is still an issue.

Wells says that she'd like to take a short recess on the matter and disappears into chambers for about 10 minutes. When she returns, she says that she has reviewed several things, including the February 2004 hearing transcript and the March 2004 order.

Wells says that first, she'd like to make a finding that IBM has acted in good faith with respect to the production of documents from Palmisano and Wladawsky-Berger.

Wells says that in light of the wording used in the February 2004 hearing, the March 2004 order was meant to refer to Palmisano, Wladawsky-Berger, and other execs, such as Paul Horn and Nick Bowen. She says that IBM has stated that they have produced responsive documents from their files and should now provide affidavits for those two new individuals stating that IBM has performed a reasonable search of their files, and produced responsive, non-privileged documents.

Wells says that if SCO believes the production is insufficient, they should depose the individuals and ask more questions. If such depositions need to be taken, the parties won't have to count them against the 50 allowed depositions. SCO's Motion is therefore GRANTED in part and DENIED in part.

Wells then states that SCO's pending motion to compel discovery was mooted by Kimball's order.

Wells asks about SCO's Motion for the Protective Order, and the parties state that they have resolved the issue. She then signed an order prepared by the parties regarding it. See the order [586] for more details.

Wells then asks the parties how long they will need to comply, and both indicate they can do so within 6-8 business days. Wells then finds a 2006 calendar and sets the deadline for both parties to be January 6th.

There is some discussion about the time frame for Requests for Admissions. We'll have to wait for the transcript to know more details of what was said.

Update 5:

Here's the Order [PDF] regarding the accountants, and here are the minutes of today's hearing, as per Pacer:

587 Filed & Entered: 12/20/2005
Order on Motion to Compel

Docket Text: Minute Entry for proceedings held before Judge Brooke C. Wells: Motion Hearing held on 12/20/2005. Counsel for both parties present. The Court hears oral argument and rules as follows: re [537] MOTION to Compel Discovery filed by SCO Group - GRANTED IN PART, DENIED IN PART - Affidavits to be provided by 1/6/06, re: [514] MOTION to Compel production of documents on SCO's privilege log filed by International Business Machines Corporation - GRANTED - log to be provided by 1/6/06; re: [534] MOTION to Compel Discovery filed by SCO Group - FINDING AS MOOT - based on Judge Kimball's ruling; [582] MOTION for Protective Order filed by SCO Group - FINDING AS MOOT - The parties have reached a resolution and an order is executed and filed in open court. Order to be prepared by defendant; See order for specifics. Court is adjourned. Attorney for Plaintiff: Edward Normand, Attorney for Defendant David Marriott, Todd Shaughnessy.(Court Reporter Kelly Hicken.) (alp, )

And here's the text of the Order on the accountants. You'll notice it was written by IBM, and was originally titled "Proposed" Order. What SCO's now-mooted motion asked for was a protective order, the exact terms of which would be left to the judge. What happens under the stipulated order instead is that SCO gets a circumscribed opportunity to review documents for privilege, and if it thinks it has any such, it has to provide a privilege log, and basically prove it, presumably. They are not allowed to unduly delay, and there are no blanket exclusions. The third parties are to turn over everything, including tax documents, and then SCO can review for privilege. Of course, after Judge Wells' order today, all the assertions that SCO has the AT&T-Novell-Santa Cruz privileges are so over.

FINAL UPDATE: Pacer has corrected the minutes thus:

Modification of Docket [SCO v. IBM 588]: The previous minute entry contains an error as to ruling on motions. Correction: Motion 534 is GRANTED IN PART AND DENIED IN PART with affidavits due on 1/6/06; Motion 537 is MOOT per Judge Kimball's ruling (2005-12-21)


Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Peter H. Donaldson (9642)

Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation







Defendant/Counterclaim Plaintiff.


Civil No. 2:03-CV-0294DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells


Based on the submissions of the parties and good cause appearing,

IT IS HEREBY ORDERED that those third party accounting and auditing firms in receipt of validly served subpoenas in this matter shall produce or make available for production to IBM all documents responsive to the respective subpoenas, including those documents that may contain tax information or advice;

IT IS HEREBY FURTHER ORDERED that SCO may review for privilege the document to be produced in response to third party subpoenas, provided that SCO does not unduly delay the production of these documents and makes all reasonable efforts to expedite any such review and to otherwise avoid delaying the production of responsive documents; and

IT IS FURTHER ORDERED that in the event SCO withholds documents from production, it must promptly provide IBM a privilege log.

DATED this 20th day of December, 2005.


United States Magistrate Judge
Brooke C. Wells



I hereby certify that on the __ day of December, 2005, a true and correct copy of the foregoing was sent by U.S. Mail, postage prepaid, to the following:

Brent O. Hatch
Mark F. James

Stephen N. Zack
Mark J. Heise

Robert Silver
Edward Normand
Sean Eskovitz

[signature line, no signature]


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