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Declaration of Todd Shaughnessy as text and Scope of Discovery
Friday, January 20 2006 @ 11:27 PM EST

Here's the latest Declaration of Todd M. Shaughnessy supporting IBM's Memorandum in Opposition to SCO's December 29, 2005 Motion to Compel Discovery, as text. Our thanks, this time, go to Henrik Grouleff for doing the text and html.

In this declaration, Shaughnessy explains to the court just what IBM has already produced in discovery in this case regarding SCO's current demands and provides some facts that they believe should convince her of the following, as the IBM memorandum puts it in the Preliminary Statement:

IBM has either already produced or agreed to produce most of the information sought by SCO, making moot those parts of SCO's motion. With respect to the remaining categories of information sought by SCO, IBM has conducted a reasonable search for responsive documents (and in some cases plans to produce additional documents), or SCO is not entitled to the discovery.

This declaration is designed to support the part about the search that has already been done, to tell the court all that was turned over already, and to explain exactly how burdensome it would be if the court orders all that SCO has asked for, so the court will understand fully all that is involved prior to issuing an order.

You'll remember that after Magistrate Judge Brooke Wells ordered IBM to produce documents from 3,000 developers, IBM pointed out in a request for reconsideration, how burdensome it would be to fulfill, and how unusual an order it was, and the judge revised her order way downward, saying she had not fully realized the extent of the burden involved. So with more information available, the court has the opportunity to make reasonable and reasoned orders that are not unduly burdensome.

The bottom line in discovery is that you can ask for anything nonprivileged that might turn up some relevant materials, not even necessarily admissible materials as long as the materials sought might lead to admissible evidence, but there is a balancing act involved too. You don't want to order so much discovery that you shut a company down, for example, particularly when you have a pretty good idea that they are innocent in the first place. Discovery is always somewhat of a burden, and document production is where the money starts to really add up, particularly in a digital age, when everything leaves a digital trail that can seem endless, but there are limits to what a court can reasonably order, and it shouldn't be a punishment in the sense that a company can't reasonably sustain the financial burden. As it happens, I notice Findlaw has an article up currently on this very subject, advising companies on how to reduce their e-discovery expenses by advance planning.

You can get a feel for what is allowed in discovery here. It has a California slant, which isn't relevant, but the parts that talk about the Federal Rules of Procedure do apply. FRCP 26, the rules regarding discovery, says this about the scope of discovery:

Unless otherwise limited by order of the court in accordance with these rules, the scope of discovery is as follows:
(1) In General.

Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including the existence, description, nature, custody, condition, and location of any books, documents, or other tangible things and the identity and location of persons having knowledge of any discoverable matter. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. All discovery is subject to the limitations imposed by Rule 26(b)(2)(i), (ii), and (iii).

(2) Limitations.

By order, the court may alter the limits in these rules on the number of depositions and interrogatories or the length of depositions under Rule 30. By order or local rule, the court may also limit the number of requests under Rule 36. The frequency or extent of use of the discovery methods otherwise permitted under these rules and by any local rule shall be limited by the court if it determines that: (i) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive; (ii) the party seeking discovery has had ample opportunity by discovery in the action to obtain the information sought; or (iii) the burden or expense of the proposed discovery outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. The court may act upon its own initiative after reasonable notice or pursuant to a motion under Rule 26(c).

Here are the Utah Rules on discovery, which are very similar. Of course, there is plenty more information in Federal Rule 26, but this is enough to make the point I want you to understand: When you read IBM's memorandum in opposition and this declaration, hold them up against the above words, and you'll find that they match. That's deliberate. IBM and Shaughnessy are not just talking about what would be fair or not fair, as we laypersons might speak of fairness. They are talking about what the rules say they are supposed to have to do, and what is too much under the rules.

The judge will be guided by the rules as well, including the parts that require some amount of reasoning and weighing things out. As this page explains, "To be sure, an appraisal of 'undue' burden inevitably entails consideration of the needs of the party seeking discovery." The court has to consider what SCO actually needs in the way of discovery and also balance that by what IBM would suffer in burden and expense. Now, the court also can decide, if the discovery is really needed but it will also mean extraordinary expense, that the requesting party foot the bill or part of it:

The burden thus placed on respondent will vary from case to case, and the courts have ample power under Rule 26(c) to protect respondent against undue burden or expense, either by restricting discovery or requiring that the discovering party pay costs.

Say, that last is a tempting option. I wish the court would order SCO to pay for their discovery requests which are as broad as the sky. Nah. Poor SCO is running out of money, unless some clueless PIPE Fairy flies over Utah again and drops another bag of gold on its head. Maybe you noted, as I did, that in the transcript of the last hearing [PDF], SCO defended its failure to depose some Linux developers -- it had demanded documents from them apparently in preparation for depositions, only to cancel some of the depositions -- in part by saying SCO felt it couldn't afford to do all of the depositions.

Cost shifting isn't so easy to obtain, because usually the rule is that each party has to pay its own way. If you'd like to see some of the factors the courts weigh in determining whether or not to shift the cost to the requesting party, here's a paper that explains the 7 factors courts consider, "Shifting the Costs of E-Discovery to Your Opponent in Litigation" [PDF]. It's talking about e-discovery in particular, but the same basic principles apply.

One factor is "the total cost of production, compared to the amount in controversy." In other words, if the plaintiff is asking for $50,000 in damages, let's say, no court will order discovery that will cost the defendant a cool million to produce. Now, IBM suffers in any court from the perception that they are made of money, and of course SCO is asking for a very high -- one might even say laughable -- amount of damages. This means they can ask for plenty of discovery, and IBM is likely to have to fork over quite a lot. They already have. But not even IBM is infinite in resources.

The paper discusses a case, Zubulake v. UBS Warburg LLC where a woman had filed a gender discrimination suit and she wanted older, stored emails of USB employees beyond the 100 pages of emails already turned over. What the court did was look at a small sample from backup tapes turned over before it decided the issue of cost shifting. Then, based on the fact that only some circumstantial evidence in plaintiff's favor showed up, but no direct evidence, which is what you need to prove a gender discrimination case, the court ordered [PDF] the plaintiff (requesting party) to pay 25% of the cost and USB to pay 75%. Had a smoking gun showed up indicating USB was guilty, it's unlikely, the paper points out, that the plaintiff would have been asked to pay a dime. In the SCO v. IBM case, IBM says it has already turned over a great deal, so SCO has a sample for the court to consider, should this even go that far.

No one in the courtroom is just winging it. That is what I'm trying to explain here. Everyone is thinking about what the rules say you can and can't do.

Well. They are supposed to be anyway. Why SCO didn't meet with IBM first before filing a motion to compel, as IBM alleges, is a real puzzlement to me, and it will be interesting to see what they say about it when they reply to this memorandum. They certainly have to say something about it. "We didn't think IBM would rat us out?" No, that probably won't work. I simply can't imagine how they will explain it.


Alan L. Sullivan (3152)
Todd M. Shaughnessy (6651)
Amy F. Sorenson (8947)
[address, phone, fax]

Evan R. Chesler (admitted pro hac vice)
David R. Marriott (7572)
[address, phone]

Attorneys for Defendant/Counterclaim-Plaintiff
International Business Machines Corporation








Civil No. 2:03CV-0294 DAK

Honorable Dale A. Kimball

Magistrate Judge Brooke C. Wells

I, Todd M. Shaughnessy, declare as follows:

1. I represent International Business Machines Corporation ("IBM") in the above-entitled action brought by The SCO Group. Inc. ("SCO"). This declaration is submitted in support of IBM's Opposition to SCO's December 29, 2005 Motion to Compel.

2. At the direction of counsel for IBM, IBM employees and consultants have spent substantial time and effort searching for documents and data responsive to SCO's requests for IBM's actual and projected Linux-related revenues (such and insofar as IBM can and does track it), IBM's actual and projected AIX- and Dynix-related revenues, IBM's profits and expenses associated with its Linux-related revenues, and IBM's profits and expenses associated with its AIX- and Dynix-related revenues.

3. In response to SCO's requests, IBM will be producing documents within the next ten (10) days showing (a) revenue and cost detail by year, month, geography, and product for divisions that include Dynix and AIX, (b) Linux-related revenue as collected by IBM by Brand and geography, and (c) detail supporting the Linux-related revenue data as available.

4. As described in more detail below, IBM employees und consultants have, at the direction of IBM counsel, spoken with more than 50 different IBM employees and searched the databases maintained by IBM in the regular course of business reflecting revenues related to Linux, AIX, and Dynix.


Organization of IBM

5. IBM is organized by Group and Division, also sometimes referred to as Brand. The Groups include the IBM Systems and Technology Group ("STG"), which consists of zSeries, iSeries, pSeries, xSeries, and Storage Products Brands; Software Group ("SWG"); and the IBM Global Services Group ("IGS'').

6. IBM is also divided into and managed as three worldwide geographic regions: the Americas ("AG"), Europe/Middle East/Africa ("EMEA"), and Asia Pacific ("AP").

IBM Revenues Databases

7. IBM has collected revenue data from two general sources: the accounting system and the customer opportunity database (OMSYS).

8. IBM's financial information is contained within databases of varying levels of detail. The CHQ Apex (Advanced Planning and Exchange) is the primary database accessed by IBM personnel in the normal course of business and is the primary day-to-day database used by IBM managers. Various levels of access to the CHQ Apex database are granted to IBM employees, depending on their responsibilities.

9. The CHQ Apex database is populated with actual data from the accounting ledger for all IBM Groups and/or Brands and is used by IBM personnel across Groups to collect and report financial data. The data in the CHQ Apex database is updated from the accounting systems.

10. In response to SCO's requests, IBM has collected data from the CHQ Apex database relating to Dynix revenue and cost summaries, AIX revenue and cost summaries, income and expense statements for IBM Brands, and Brand-specific revenue and costs summaries.


11. The CHQ Apex database, and the accounting systems of IBM in general, does not uniquely identify Linux-related financial data.

12. The CHQ Apex database does not contain transaction-level detail. Obtaining transaction level detail requires access to different accounting system databases that are not used in the normal course of IBM's day-to-day reporting and analysis.

13. The next level database in IBM, which contains more granular level detail than the CHQ Apex database, is the FIW-C database. Behind the FIW-C database are five accounting megacenters located around the world; 2 in Asia Pacific, one in EMEA and two in the Americas. Neither the FIW-C database nor the accounting megacenters contain transaction level detail, but rather contain summarized data that is provided by the accounting ledger systems that reside in each individual country. In order to obtain transaction level detail, therefore, IBM would have to access the accounting ledger systems of each individual country in which IBM does business. IBM operates in more than 160 countries worldwide.

14. In addition, the sheer quantity of transaction-level detail would be overwhelming. Even if (contrary to fact) the data could be obtained without great burden, the resulting production would likely be millions of pages of documents.

15. IBM maintains a Siebel customer opportunity database referred to as OMSYS or OMS. The OMSYS database tracks customer opportunities that the sales teams within IBM are pursuing.

16. The data collected in OMSYS includes attributes of sales opportunities. Based on these attributes, IBM personnel endeavor to identify sales opportunities, and the related revenue, that involves or may involve the customer's planned use of the IBM-offered products or services with Linux. The results are then summarized to provide data on IBM's total Linux-related


revenue, though the data is necessarily imprecise and serves the limited function of allowing IBM to track Linux enablement rather than measuring revenue in the traditional sense.

17. Data from the customer opportunity database was collected for Linux-related revenue (subject to the limitations and for the purposes described) from all IBM Groups and/or Brands.

18. I declare under penalty of perjury that the foregoing is true and correct.

Executed: January 17th 2006

Salt Lake City, Utah

Todd M. Shaughnessy



I hereby certify that on the 17th day of January, 2006, 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

Robert Silver
Edward Normand

Stephen N. Zack
Mark J. Heise

Nathan E. Wheatley


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