Novell anticipates certain questions SCO is likely to ask two of its experts, and rather than having long sidebars, which the judge has already said he doesn't like, they have filed objections they figure they'll be raising, along with a new case that supports their position, TK-7 Corp. v. Estate of Barbouti. This way things can be hashed out in advance.
Novell has found this 10th Circuit case, TK-7, that indicates that Dr. Gary Pisano ought not to be allowed to use the Yankee Group study's numbers as the basis for his opinions, since he didn't look into the methodology. And yes, on the basis of this new case, Novell respectfully says that Judge Ted Stewart's denial of Novell's earlier Daubert motion was in error:
The Yankee Group survey is hearsay, and SCO should not be permitted to dress it up and introduce it as Dr. Pisano's unexamined and untestable opinion. They have, in short, painted the judge into a corner, and he will either have to follow case law, or he'll have to find a newer case that contradicts the one Novell has found. Judges are supposed to be bound by case law, with a bit of wiggle room. The judge denied the motion without the benefit of this case, which Novell says, "requires a different result." This case is dynamite. Whoever found it fell asleep grinning.
Here are the two Novell filings:
In the filing about Dr. Gary Pisano, Novell says that he relied upon the Yankee Group study but admitted he didn't independently evaluate its methodology, relying instead on its general reputation for doing studies. That would render his opinions "insofar as it adopts the survey's figures", hearsay, Novell argues, because of the newly found case:
03/16/2010 - 803 - Memorandum of Points and Authorities in Support of Likely Objections to Dr. Gary A. Pisano Testimony filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit A)(Brennan, Sterling) (Entered: 03/16/2010)
03/16/2010 - 804 - Memorandum of Points and Authorities in Support of Likely Objections to Dr. Christine A. Botosan Testimony filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(Brennan, Sterling) (Entered: 03/16/2010)
Under TK-7 Corp. v. Estate of Barbouti, 993 F.2d 722 (10th Cir. 1993), that renders Dr. Pisano's opinion, insofar as it adopts the survey's figures, inadmissible hearsay. And Novell goes on to quote from the case, and lo and behold, it's a case involving an expert relying on a study without analyzing the methodology or calling the study's author to testify, so relying on the study to calculate losses was deemed inappropriate.
The Court previously denied Novell's Daubert motion, seeking to disqualify Dr. Pisano on this ground. (See Order.) That prior ruling was made without the benefit of guidance from the Tenth Circuit's opinion in TK-7, which Novell respectfully submits requires a different result.
Here's what the court ruled in TK-7, in Novell's words:
In TK-7, Dr. Boswell "adopted the projections of Mr. Werber." 993 F.2d at 732. But "[n]either Mr. Werber nor any other individual involved in the preparation of the market study was called to testify." Id. at 730. Instead "Boswell testified that he was satisfied as to the credentials of the individuals preparing the study," id. at 732. The Tenth Circuit held: "The fact that Dr. Boswell relied upon the report in performing his calculation of lost profits did not relieve the plaintiffs from their burden of proving the underlying assumptions contained in the report," and "Dr. Boswell's use of the projections to form his opinion as to the amount of lost profits clearly failed to meet the requirements of [Federal Rule of Evidence ("Rule")] 703."Id. As for Christine Botosan, she did her calculations based on Dr. Pisano's opinion, so you can do that math. Novell says it expects to object on three grounds: 1)the Pisano reliance, which "adds another layer of hearsay"; 2) that she should not be permitted to testify beyond what she wrote about in her report (since her report says there was no bad effect on the stock on December 22, 2003, she has no basis for opining that it caused any harm); and 3) that she should not be permitted to testify to prejudgment interest at all, "because this is not a contract case and because SCO's alleged damages are not calculable with mathematical certitude". A footnote says that SCO "appears to be vacillating" about whether to call Pisano. Well, if it was me, I'd think twice. If I were Dr. Pisano, I'd do anything to get out of the humiliation, frankly. Excerpts of Botosan's deposition are attached as Exhibit C.
Dr. Pisano and SCO are in the same position as Dr. Boswell and his client. SCO will not be calling anyone who prepared the Yankee Group survey to testify, and Dr. Pisano is relying solely on Yankee Group's credentials to vouch for the survey. Thus Dr. Pisano's adoption of the survey's results "to form his opinion ... clearly fail[s] to meet the requirements of Rule 703."
The Tenth Circuit's reasoning in TK-7 is similarly apposite:
Hearsay is normally not permitted into evidence because the absence of an opportunity to cross-examine the source of the hearsay informaiton renders it unreliabl. Rule 703 permits experts to rely on hearsay, though, because the expert's "validation, expertly performed and subject to cross-examination ought to suffice for judicial purposes." Rule 703, Advisory Committee Notes. That rationale is certainly not satisfied ... where the expert failed to demonstrate any basis for concluding that another individual's opinion on a subjective financial prediction was reliable, other than the fact that it was the opinion of someone he believed to be an expert.... Dr. Boswell's lack of familiarity with the methods and the reasons underlying Werber's projections virtually precluded any assessment of the validity of the projections through cross-examination of Dr. Boswell. 993 F.2d at 732. This Court's prior Order was based, at least in part, on the assumption that Novell "does not challenge the underlying methodology of the Yankee Group Survey." (Order at 6.) But just as, in TK-7, "Dr. Boswell's lack of familiarity with the methods and the reasons underlying Werber's projections virtually precluded any assessment of the validity of the projections through cross-examination." id., so too in this case Dr. Pisano's ignorance deprived Novell of its opportunity to conduct the inquiry necessary to ascertain whether the methodology underlying the Yankee Group survey he adopted as his opinion was subject to challenge.
The Yankee Group survey is hearsay, and SCO should not be permitted to dress it up and introduce it as Dr. Pisano's unexamined and untestable opinion.
I gather Novell has noticed two things about Judge Ted Stewart: 1) his first instinctive response tends to be to favor SCO; and 2) if painted into a corner with case law, he is not too proud to reverse himself. We'll see what he does now, but without a doubt it will be hard for him now not to. This is a 10th Circuit case, the facts couldn't be more similar, and unless someone can find something newer that alters the landscape, he is supposed to be bound by it.