Oracle Corporation et al v. SAP AG et al

Filing 1060

Declaration of Zachary J. Alinder in Support of 1059 Opposition/Response to Motion, For Stay of Judgment and Approval of Proposed Security filed byOracle International Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Related document(s) 1059 ) (Alinder, Zachary) (Filed on 4/13/2011)

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BINGHAM MCCUTCHEN LLP
DONN P. PICKETT (SBN 72257)
GEOFFREY M. HOWARD (SBN 157468)
HOLLY A. HOUSE (SBN 136045)
ZACHARY J. ALINDER (SBN 209009)
BREE HANN (SBN 215695)
Three Embarcadero Center
San Francisco, CA 94111-4067
Telephone: [phone]
Facsimile: 415.393.2286
[e-mail]
[e-mail]
[e-mail]
[e-mail]
[e-mail]
BOIES, SCHILLER & FLEXNER LLP
DAVID BOIES (Admitted Pro Hac Vice)
333 Main Street
Armonk, NY 10504
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
STEVEN C. HOLTZMAN (SBN 144177)
FRED NORTON (SBN 224725)
1999 Harrison St., Suite 900
Oakland, CA 94612
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
DORIAN DALEY (SBN 129049)
JENNIFER GLOSS (SBN 154227)
500 Oracle Parkway, M/S 5op7
Redwood City, CA 94070
Telephone: [phone]
Facsimile: 650.506.7144
[e-mail]
[e-mail]
Attorneys for Plaintiffs Oracle USA, Inc., et al.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION
ORACLE USA, INC., et al.,
No. 07-CV-01658 PJH (EDL)
DECLARATION OF ZACHARY J. ALINDER
Plaintiffs,
IN SUPPORT OF ORACLE’S OPPOSITION
v.
TO MOTION FOR STAY OF JUDGMENT
AND APPROVAL OF PROPOSED SECURITY
SAP AG, et al.,
Date: May 4, 2011
Defendants.
Time: 9:00 a.m.
Place: 3rd Floor, Courtroom 3
Judge: Hon. Phyllis J. Hamilton
Case No. 07-CV-01658 PJH (EDL)

DECLARATION OF ZACHARY J. ALINDER IN SUPPORT OF ORACLE’S OPPOSITION
TO MOTION FOR STAY AND APPROVAL OF SECURITY

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I, Zachary J. Alinder, declare as follows:

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1.

I am an attorney licensed to practice law in the State of California and am

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a partner at Bingham McCutchen LLP, counsel of record for plaintiffs Oracle USA, Inc., Oracle

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International Corporation, and Siebel Systems, Inc. (collectively, “Oracle”). I have personal

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knowledge of the facts stated within this Declaration and could testify competently to them if

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required. Unless otherwise noted below, Oracle has provided all highlighting in these Exhibits

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to further assist in identifying the information relevant to Oracle’s Opposition to SAP’s Motion

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for Stay of Judgment and Approval of Proposed Security.

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2.

Attached as Exhibit A is a true and correct copy of a December 17, 2010

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email from counsel for Defendants, Jane Froyd, to counsel for Oracle, including me, stating that

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Defendants “prefer” an escrow agreement to secure the judgment. In response, Oracle agreed to,

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and did, meet and confer with counsel for Defendants on December 22, 2010, including

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discussing SAP’s proposed escrow.

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3.

By the time the Court entered judgment on February 3, 2011, the Parties

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had devoted considerable time to the negotiations and would devote more. This included at least

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two telephonic meet and confers in December and January, exchange of multiple drafts of the

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proposed escrow term sheet and exchange of many related emails. To facilitate discussions,

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Oracle agreed to extend the stay on execution of the judgment three times (and offered a fourth,

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unaccepted extension before SAP filed this Motion). Based on my review of the time records for

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attorneys working on the escrow agreement and negotiations with SAP, Oracle has devoted over

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100 attorney hours working on the proposed escrow agreement. This does not include Oracle’s in-

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house counsel or Oracle’s tax department, both of which also have been involved in the negotiations

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related to the proposed escrow agreement.

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4.

At SAP’s request, counsel first negotiated an escrow term sheet. The

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Parties exchanged approximately five drafts of this term sheet. That was followed by exchanges

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of at least ten drafts related to the Proposed Escrow Agreement itself. The Parties held at least

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five telephonic meet and confers and exchanged dozens of emails related to these draft escrow

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documents. During these negotiations, when Oracle asked why SAP preferred the escrow, SAP
Case No. 07-CV-01658 PJH (EDL)
1
DECLARATION OF ZACHARY J. ALINDER IN SUPPORT OF ORACLE’S OPPOSITION
TO MOTION FOR STAY AND APPROVAL OF SECURITY

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cited “convenience,” “cost” and “internal administrative reasons.” Attached as Exhibit B is a

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true and correct copy of a February 7, 2011 email from counsel for Defendants, Jane Froyd, to

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me, stating that Defendants prefer the structure of their proposed form of security for “a variety

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of internal administrative reasons.”

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5.

As far as I am aware, I was involved in all of the meet and confer

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discussions and emails between the Parties related to the proposed escrow agreement. SAP

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never explained or stated that it had entered into the third party agreements (in one case two days

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before initially proposing an escrow) which it now says “might” make the bond inconvenient or

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expensive. Prior to filing this Motion, SAP never stated that it would take only 14 days to obtain

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the bond.
6.

On March 24, 2011, both sides needed to obtain final client approval on the

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overall escrow agreement and one principal item remained in dispute between counsel: Oracle did

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not agree to indemnify SAP’s Escrow Agent. The proposed tax reporting and tax indemnity

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language also was subject to client approval. That same morning, SAP informed Oracle that it had

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decided to change the tax reporting section in the proposed escrow agreement back to language

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that the Parties had abandoned a week earlier, purporting to treat the escrow as a “qualified

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settlement fund” (“QSF”) under U.S. Treasury Regulations. In the weeks of meet and confer on

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the tax section of the escrow agreement leading up to that morning, Oracle had proposed that

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SAP either (a) indemnify Oracle against any adverse tax consequences that would arise from

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SAP’s escrow proposal, or (b) draft the escrow agreement in a manner that would not create

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these tax risks for Oracle (nor the corresponding tax benefit to SAP). Attached as Exhibit C is a

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true and correct copy of a March 16, 2011 email from counsel for Defendants, Rachel Rawson,

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to me (excluding attachments), stating that SAP had agreed to “give up” their proposed QSF tax

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language to “alleviate Oracle’s concern regarding the tax implications of a QSF and its request

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for a tax indemnity.”

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7.

Attached as Exhibit D is a true and correct copy of a March 24, 2011

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email from counsel for Defendants, Rachel Rawson, to me (excluding the attachments), stating

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that SAP intended to file a proposed escrow agreement “providing for the tax treatment of the
Case No. 07-CV-01658 PJH (EDL)
2
DECLARATION OF ZACHARY J. ALINDER IN SUPPORT OF ORACLE’S OPPOSITION
TO MOTION FOR STAY AND APPROVAL OF SECURITY

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escrow fund as a QSF, with no grantor trust election and no tax indemnity,” and that SAP

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“believe[d] this is the most appropriate form of security for both parties under all of the

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circumstances….” Attached as Exhibit E is a true and correct copy of a March 24, 2011 email

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string from counsel for Defendants, Jacqueline K.S. Lee, to me, explaining that SAP did not

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consider this to be a “reversal” of position, because “the proposals discussed have been and are

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subject to client approval - a point that both parties emphasized in light of the complexity of

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these issues.” In the same email string at 10:31 a.m., I offered to extend the temporary stay and

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filing deadline to allow time to resolve the outstanding issues. SAP rejected the proposed

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extension and filed its Motion to Stay and for Approval of Security pursuant to Federal Rule of

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Civil Procedure 62.
I declare under penalty of perjury under the laws of the United States that the

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foregoing facts are true and correct, and that this Declaration was executed on April 13, 2011, in

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San Francisco, CA.

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/s/ Zachary J. Alinder

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Zachary J. Alinder

.

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Case No. 07-CV-01658 PJH (EDL)

DECLARATION OF ZACHARY J. ALINDER IN SUPPORT OF ORACLE’S OPPOSITION
TO MOTION FOR STAY AND APPROVAL OF SECURITY