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SCO Files Notice of Appeal in Novell Litigation - Updated 2Xs
Tuesday, November 25 2008 @ 06:57 PM EST

SCO has filed a notice of appeal in the SCO v. Novell litigation, as they said they would:
567 - Filed & Entered: 11/25/2008
Notice of Appeal
Docket Text: NOTICE OF APPEAL as to [377] Order on Motion for Partial Summary Judgment,, Order on Motion for Summary Judgment,,,,,,,,,,,,,,,,,,,,,,,, [565] Judgment filed by SCO Group. Appeals to the USCA for the 10th Circuit. Filing fee $ 455, receipt number 10880000000000796676. (Hatch, Brent)
Here's the website for the US Court of Appeals for the 10th Circuit, which is where we are headed. You'll see at the bottom of the page a link to download some of the initial paperwork that SCO's attorneys are filling in these days, along with instructions. If you read the instructions, you'll get a taste of what appeals are like. It's below the notices about the resignation of one of the judges after allegations of judicial misconduct. There is also a link for a PDF of instructions for filing a petition for review. Here are the Rules and Forms and 2008 Federal Rules of Appellate Procedure and Tenth Circuit Rules (F.R.A.P. effective Dec. 1, 2007; 10th Cir. Rules effective Jan. 1, 2008). The answers to many of your questions about process and what happens in an appeal are in there.

Also on the docket is the Report on the Filing or Determination of an Action or Appeal [PDF], in this case a notice of final judgment, sent to the Register of Copyrights. Attached is the Final Judgment being appealed.

But you'll notice that the appeal will be of the Final Judgment but also specifically the decision by the Hon. Dale Kimball dated August 10, 2007:

Plaintiff, The SCO Group, Inc., hereby appeals to the United States Court of Appeals from the Final Judgment entered in this action on November 20, 2008, including the underlying Order dated August 10, 2007.
This is likely pointing to SCO's main issue, judging from media statements and court filings, that it wanted a jury trial and felt the court made an error hearing the case in Utah before a judge only. Here's the judge's Order when he decided to hear the matter himself without a jury. The August order was the one where the court ruled that Novell did not transfer copyrights to SCO under the 1995 APA.

To get an idea of some of the issues SCO had with the August 10th order, you can read SCO's Reply Memorandum in Further Support of Its Motion for Reconsideration or Clarification of the Court's August 10, 2007 Order, as well as Novell's Opposition Memorandum. SCO's motion was denied. But we can probably expect some of the same arguments to show up in the appeal.

Update: We've reached the conclusion some years ago that you can discern what SCO is planning by reading what Maureen O'Gara writes, and indeed we have many clues in her latest: http://linux.sys-con.com/node/760745

As usual, it's hilarious. It reads like the lawyers or executives explained it to her, but she didn't quite catch all the balls in the air:

SCO of course contends that Kimball utterly ignored the basic rules of civil procedure in issuing that summary judgment against it - and truth to tell Judge Kimball has an impressive string of overturned summary judgments to his name.

A summary judgment's not supposed to weight evidence, champion one side's interpretation of facts over the other's, or decide that one set of witnesses is more credible than another.

As any first-year law student ought to know, when there are two sides to a story, as in SCO v Novell, a judge isn't supposed to pick one and issue a summary judgment.

That's the business of juries.

As you see, she declares herself smarter about the law than the judge, who must be tired of such disrespectful and inaccurate media silliness, misspellings and all. I'll just point out that summary judgment is for questions of law, which is what juries are *not* supposed to decide. Just read the Hon. Dale Kimball's Order, linked above, because it addresses her regurgitated "talking points", which is why she ought to know better. The reason he decided no jury was necessary was because the issues to be decided at trial had been narrowed by the August 10th summary judgment order to only equitable relief:
"[N]ot all money claims are triable to a jury. A historic equitable remedy was the grant of restitution by which defendant is made to disgorge ill-gotten gains or to restore the status quo, or to accomplish both objectives. And when restitution is sought in the form and in the situations allowed in equity prior to the rules or authorized by valid statutes there is no right to a jury trial." SEC v. Commonwealth Chem. Sec., Inc., 574 F.2d 90, 95 (2d Cir. 1978).

Many of the cases cited by SCO are also distinguishable on the grounds that the plaintiff sought traditional legal damages. For example, in Robine v. Ryan, 310 F.2d 797, 798 (2d Cir. 1962), the plaintiffs sought damages caused by the defendant's misappropriation of plaintiffs' invention, not a return of a res unjustly held. And, in Pereira v. Farace, 413 F.3d 330, 341 (2d Cir. 2005), the trustee sought funds attributable to the company's loss, "not the director's unjust gain." The court in In re Lands End Leasing, Inc., 193 B.R. 426, 429-30 (D. N.J. 1996), granted summary judgment on the equitable claims and allowed the claims for compensatory and punitive damages based on alleged fraudulent conduct to proceed.

Therefore, the court concludes that Novell's breach of contract, breach of fiduciary duty, constructive trust/restitution/unjust enrichment, and conversion claims are equitable in nature given the nature of the relief sought under these claims and the limited issues remaining for trial. Accordingly, none of these claims provide a right to a jury trial.

Next, read the August 10th Order which found SCO guilty of conversion, speaking of ill-gotten gains, where he explains he didn't need to consider SCO's witnesses, because the contract wording itself was clear, making it unnecessary to step outside the wording of the document itself, but if he had considered them, he'd discount what they said because they were not directly involved in the actual contract writing and they contradicted each other:
SCO's extrinsic evidence regarding Santa Cruz's inability to proceed with a cash deal appears to conflict. Many of SCO's witnesses refer to the value of the stock Santa Cruz provided as consideration as evidence that such a sum would purchase Novell's whole UNIX-related business. Such testimony, however, is at odds with other witness testimony stating that the deal would not have proceeded without the creation of a future revenue stream for Novell....

The correspondence between Novell and Santa Cruz prior to the date the APA was signed shows that significant revisions were made to the agreement. A September 8, 1995 draft of Schedule 1.1(a), which listed the assets to be transferred, included "all patents, patent applications, copyrights . . . and all other intellectual property . . . that pertain to Unix or UnixWare." Decl. Tor Braham at 15, Ex. 6.

Novell's outside counsel drafted a new schedule of assets to be included in the asset transfer as well as a schedule of assets to be excluded from the transfer. Id. 15. The new Schedule 1.1(a) deleted copyrights, patents, and all other intellectual property from the assets to be transferred. The revised Schedule 1.1(a) included only the UNIX and UnixWare trademarks as the "Intellectual Property" included in the transaction. The new Schedule 1.1(b), which listed the assets excluded from the transfer, listed all copyrights, all patents, and all trademarks except for the UNIX and UnixWare trademarks.

Novell submitted evidence demonstrating that during the negotiations, David Bradford, Tor Braham, Aaron Alter, and Burt Levine all reviewed and approved the language in the Excluded Assets Schedule 1.1(b). Id. 16. SCO has not provided evidence from witnesses on the Santa Cruz side of the transaction with respect to their review of the asset schedules. In fact, there is no evidence from any of Santa Cruz's outside counsel and very little evidence from Santa Cruz's in-house legal department regarding the drafting of the APA....

Both parties have also submitted in support of their respective interpretations of the APA extrinsic evidence of the parties' conduct in relation to the APA.

The day before the APA was signed, David Bradford, Novell's Senior Vice President and General Counsel, presented the agreement to the Novell Board of Directors for approval and reviewed its terms with them. The minutes from that board meeting state: "RESOLVED . . . Pursuant to the Asset Purchase Agreement . . . Novell will retain all of its patents, copyrights, and trademarks (except for the trademarks UNIX and UnixWare) . . . ."

There is extrinsic evidence from several individuals who were involved at different stages of the negotiations of the APA and from business people involved in the transition of the business to Santa Cruz. Interestingly, many of the witnesses who were on the Novell side of the APA transaction went to work for Santa Cruz as a result of the deal. The relevance of much of the testimony is questionable because few have a recollection of actual discussions regarding the transfer or retention of copyrights. Many witnesses give an opinion as to whether they think the copyrights should have transferred, but they fail to establish an adequate foundation to support their opinion.

Novell, in contrast, as you see presented not just eyewitness reports by the authors, but the original drafts and redrafts of the contract, saved by the attorneys all these years. As for the reference she makes to California law, note this section of the judge's August order:
Thus, the language of the APA and Amendment No. 1 at the time of the Bill of Sale is clear: all copyrights were excluded from the transfer.

Apart from the language of the agreements, SCO maintains that it has provided the court with extrinsic evidence that the parties intended the APA to transfer the UNIX and UnixWare copyrights to Santa Cruz. Under California law, extrinsic evidence is admissible both to support interpretations of contracts to which the language at issue is reasonably susceptible and to demonstrate the parties' intent under contractual provisions that the court deems to be ambiguous. Universal Sales Corp. v. Call Press Mfg. Co., 128 P.2d 665, 671-72 (Cal. 1942). Therefore, oral testimony and other extrinsic evidence are not admissible to support an interpretation of a contract that is contrary to the plain language. The critical issue is "whether the offered evidence is relevant to prove a meaning which the language of the instrument is reasonably susceptible." Dore v. Arnold Worldwide, Inc., 39 Cal. 4th 384, 391 (2006). If the contract is not reasonably susceptible to the proposed interpretation, extrinsic evidence is inadmissible and does not create a triable issue of fact that would defeat summary judgment. Id. at 388, 391-93.

When a contract is integrated, "extrinsic evidence is admissible only to supplement or explain the terms of the agreement--and even then, only where such evidence is consistent with the terms of the integrated document." EPA Real Estate Partnership v. Kang, 12 Cal. App. 4th 171, 175-77 (1992). The APA includes an express integration clause stating that the "Agreement, and the Schedules and Exhibits" "constitute the entire agreement among the parties with respect to the subject matter . . . and supersede all prior agreements and understanding, both written and oral." APA 9.5. Novell and Santa Cruz further agreed, in connection with the Bill of Sale, that the APA is an integrated agreement not to be altered by any other understandings: "It is acknowledged and agreed . . . that the Agreement is the exclusive source of the agreement and understanding between the Seller and Buyer respecting the Assets." Bill of Sale 5.

The parol evidence rule precludes SCO from relying on extrinsic evidence to try to rewrite the exclusion of "all copyrights" from APA because the language is unambiguous and not reasonably susceptible to SCO's interpretation. Moreover, even if the court considered the extrinsic evidence, there is significant evidence that the exclusion "all copyrights" was deliberate and consistent with the basic objectives of the APA. While there is no specific evidence that business executives negotiated the issue of copyrights, the changes to the drafts of the agreement show that a significant change occurred. Novell has provided extrinsic evidence supporting the change in the language and the fact that it was relayed to SCO, whereas SCO has failed to present any evidence from witnesses on its side of the transaction who had any involvement with the actual drafting or negotiation of the language in the contract.

SCO's argument was, essentially, that despite the obvious wording, the parties *meant* something else. Under California law, cited by the judge, you can't offer evidence that contradicts plain wording in a contract. So there you are.

I've provided only a taste of all the details, which she doesn't seem to fully grasp, but SCO's lawyers likely do.

And yet the saga continues. And it never gets any less smarmy, does it? Which reminds me. Here's the Hon. Dale A. Kimball's bio, which lists his many honors and accomplishments:

Honors and Activities

Law School:

Finished second in class, Order of the Coif, Case Note Editor of the Utah Law Review, Phi Kappa Phi

Present:

Fellow of the American Bar Foundation
Master of the Bench, American Inn of Court I
Member, Judicial Conference Committee on the Administration of the Bankruptcy System
Board Member, Salt Lake Chapter Federal Bar Association

Former:

Utah State Bar Distinguished Lawyer of the Year 1996
Chairman, Judicial Performance Evaluation Committee
Counselor to the Inn, American Inn of Court I
Member, Utah Federal District Court, Mediation/Arbitration Panels
Member and Chairman, Pioneer Theatre Board
Member, Board of Directors, Deseret News Publishing Company and Member Executive Committee
Professor of Law, J. Reuben Clark School of Law, Brigham Young University
Chairman, Utah State Bar Ethics and Discipline Committee
Chairman, Utah State Bar Committee on the Unauthorized Practice of Law
Member, Alta View Hospital Board of Governors
Member, Jordan Education Foundation Board
Trustee of the University of Utah College of Law Alumni Board
Board Member, Salt Lake Chapter, J. Reuben Clark Law Society

Experience

1967-1974: Associate, then Partner, VanCott, Bagley, Cornwall & McCarthy, Salt Lake City, Utah
1974-1976: Professor of Law, J. Reuben Clark School of Law at Brigham Young University
1975-Nov. 24, 1997: Founding Member, Kimball, Parr, Waddoups, Brown & Gee, Salt Lake City, Utah
November 24, 1997 - Federal Judge in the United States District Court for the District of Utah

Here's his judicial profile as originally published in the May 2002 Edition of the Federal Bar Association's Utah Chapter Newsletter. Justia has a list of cases filed before Judge Kimball, if you wish to do the heavy lifting of tracking it all. Speaking for myself, and I believe most of you here, he established his reputation by our watching his work.

And if you still have any lingering doubt, note this decision, written by Judge Kimball, sitting by designation on the case with two appellate judges on the 10th Circuit Court of Appeals. The two heard the case with him, and he was asked to write the decision. What does that tell a reasonable person? That they think very highly of him. Case closed.

I was trying to think of a single person involved in any way in this litigation, even peripherally, who hasn't ended up with his or her reputation slimed by SCO or their supporters. How glad I will be when there is nothing left of SCO but an old blues song!

Update 2: If you will turn with me please to page 31 of the Practitioner's Guide to the United States Court of Appeals for the Tenth Circuit [PDF], you'll find the percentage of cases that are successfully appealed to that particular appeals court:

B. Chances of Success. The reversal rate in this circuit for the 12-month period ending June 30, 2006 was 10.2% overall, broken down as follows:
Criminal - 6.3%
U.S. Prisoner Petitions - 6.1%
U.S. Civil - 20.2%
Private Prisoner Petitions - 13.5%
Other Private Civil - 11.9%
Bankruptcy - 18.8%
Administrative Appeals - 2.1%
Even if we imagine that Judge Kimball was the judge overturned on each and every successful appeal on that list, which he obviously was not, the number of decisions overturned on appeal is statistically very, very low. Therefore, when SCO and/or its minions claim that Judge Kimball is often overruled, I think it's obvious that it isn't so. It can't be, if the overall statistic is a mere 10.2%.

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