Oracle Corporation et al v. SAP AG et al

Filing 1183

Proposed Order re 1182 Statement [Defendants' Proposed] Order Regarding Exhibit Admissibility by SAP AG, SAP America Inc, Tomorrownow Inc. (Froyd, Jane) (Filed on 6/6/2012)

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Robert A. Mittelstaedt (SBN 060359)
Jason McDonell (SBN 115084)
Elaine Wallace (SBN 197882)
JONES DAY
555 California Street, 26th Floor
San Francisco, CA 94104
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
[e-mail]
Tharan Gregory Lanier (SBN 138784)
Jane L. Froyd (SBN 220776)
JONES DAY
1755 Embarcadero Road
Palo Alto, CA 94303
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
Scott W. Cowan (Admitted Pro Hac Vice)
Joshua L. Fuchs (Admitted Pro Hac Vice)
JONES DAY
717 Texas, Suite 3300
Houston, TX 77002
Telephone:
[phone]
Facsimile:
[phone]
[e-mail]
[e-mail]
Attorneys for Defendants
SAP AG, SAP AMERICA, INC., and
TOMORROWNOW, INC.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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OAKLAND DIVISION

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ORACLE USA, INC., et al.,

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Plaintiffs,

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v.

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Case No. 07-CV-1658 PJH (EDL)
[DEFENDANTS’ PROPOSED]
ORDER REGARDING EXHIBIT
ADMISSIBILITY

SAP AG, et al.,
Defendants.

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[DEFS.’ PROPOSED]
ORDER RE: EXHIBIT ADMISSIBILITY
Case No. 07-CV-1658 PJH (EDL)

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Having considered the papers filed and lodged in connection with the parties’ Joint
Statement Regarding Exhibit Objections:

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IT IS HEREBY ORDERED THAT:

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Defendants’ Category 1 – Hearsay Exceptions/Exclusions

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Statements by Oracle’s senior executives, including Larry Ellison (CEO), Safra Catz (co-

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President and former CFO), Charles Phillips (then-co-President), Jeff Henley (Chairman of the

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Board), Juergen Rottler (Executive Vice President of Oracle Customer Services), and Keith Block

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(Executive Vice President of North American Sales), about software and support sales of Oracle

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products, tracking of customers, customer relations, and the impact of the third party support

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market qualify as party admissions and are admissible as non-hearsay under Rule 801(d)(2)(D) of

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the Federal Rules of Evidence. Fed. R. Evid. 801(d)(2)(D); Sea-Land Serv., Inc. v. Lozen Int’l,

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LLC, 285 F.3d 808, 821 (9th Cir. 2002) (holding that, for statement to be exempted from hearsay

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exclusion as party admission under Rule 801(d)(2)(D), courts require only that: (1) declarant was

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employee of party at time statement was made; and (2) statement “concern[s] a matter within the

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scope of the agency or employment”); Harris v. Itzhaki, 183 F.3d 1043, 1054 (9th Cir. 1999);

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United States v. Kirk, 844 F.2d 660, 663 (9th Cir. 1988).

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Statements by Oracle sales and support employees, including Juan Jones (Senior Vice

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President Customer Services North America Support), Richard Cummins (Senior Direct Support

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Renewals), Robert Lachs (Senior Regional Manager Support Sales), James McLeod (Regional

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Support Sales Manager), as to specific customers and business activities relating to selling of

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Oracle software and support also qualify as party admissions and are admissible as non-hearsay

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under Rule 801(d)(2)(D). Id. Further, to the extent that Oracle sales and support employees

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incorporate customer statements in internal email communications and manifest an adoption of

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the content of the customer statements, such statements constitute adoptive party admissions and

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are admissible as non-hearsay under Rule 801(d)(2)(B). Fed. R. Evid. 801(d)(2)(B); Sea-Land,

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285 F.3d at 821 (holding that where party “uses the statement or takes action in compliance with

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the statement” it constitutes adoptive party admission); MGM Studios, Inc. v. Grokster, Ltd., 454

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F. Supp. 2d 966, 973 (C.D. Cal. 2006).
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[DEFS.’ PROPOSED]
ORDER RE: EXHIBIT ADMISSIBILITY
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Contemporaneous statements by relevant Oracle customers about their then-existing state

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of mind (including their motive and/or intent behind dropping Oracle support or purchasing SAP

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software) are admissible: (1) as non-hearsay if the statement supports an inference about a

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customer’s state of mind, see CytoSport, Inc. v. Vital Pharms., Inc., 617 F. Supp. 2d 1051, 1074

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(E.D. Cal. 2009) (finding consumers’ and dealers’ statements admissible evidence of their “then-

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existing state of mind” and not hearsay) or (2) as an exception to the hearsay rule if the statement

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is a direct “statement of the declarant’s then-existing state of mind . . . such as motive, intent, or

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plan.” Fed. R. Evid. 803(3). To qualify as an exception under Rule 803(3) of the Federal Rules

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of Evidence, the statement must be contemporaneous with the state of mind described, the

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declarant had no time or motive to mis-represent his or her thoughts, and the declarant’s state of

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mind is relevant. United States v. Ponticelli, 622 F.2d 985, 991 (9th Cir. 1980); Lahoti v.

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Vericheck, 636 F.3d 501, 509 (9th Cir. 2011); CytoSport, 617 F. Supp. 2d at 1074.

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The Court pre-admits the following exhibits:

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Defendants’ Trial Exhibit A-6329-1, which qualifies as a party admission because it

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features statements by Jeff Henley, Oracle’s Chairman of the Board, and Keith Block, Oracle’s

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Executive Vice President of North America Sales, regarding the status of a potential deal for

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Oracle software.

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Defendants’ Trial Exhibit A-0367, which qualifies as a party admission because it

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features statements by Juan Jones, Oracle’s Senior Vice President of Customer Services, North

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America Support, regarding support renewals, a subject related to the scope of Mr. Jones’

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responsibilities.

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Defendants’ Trial Exhibit A-5042, which qualifies as a party admission because it

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features statements by Barbara Allario, an Oracle senior support sales manager, regarding Oracle

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customer Stora Enso’s reasons for cancelling support, a subject related to the scope of Ms.

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Allario’s responsibilities.

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Defendants’ Trial Exhibit A-5997, which qualifies as a party admission because it

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features statements by Craig Tate, an Oracle Group Vice President, North Central Applications,

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to his superiors, about Oracle customer Haworth’s reasons for selecting SAP software, a subject
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related to the scope of Mr. Tate’s responsibilities.
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Defendants’ Trial Exhibit A-6042-1, which qualifies as a party admission because it is

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a document prepared by Betsy Steelman, an Oracle Services Support Manager, that describes the

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timeline on which Oracle customer Computer Associates cancelled support, a subject related to

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the scope of Ms. Steelman’s responsibilities. A-6042-1 also qualifies as an adoptive admission,

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as it was received and approved by Allison Adams as part of her responsibilities as an Oracle

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Business Planning Manager.

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Defendants’ Trial Exhibit A-6205-1, which qualifies as a party admission because it is

a document prepared by Richard Cummins, Oracle Senior Director of Support Renewals, that

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contains an analysis of customer concerns with Oracle products, a subject related to the scope of

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Mr. Cummins’ responsibilities.

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Defendants’ Trial Exhibit A-5193, which qualifies as a party admission because it

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features statements by James McLeod, regional manager for Oracle’s support sales group, and

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Richard Cummins, Oracle’s Senior Director of Support Renewals, regarding the status of certain

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Oracle customers, a subject related to the scope of their responsibilities. A-5193 also qualifies as

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an adoptive admission because it includes Cummins’ response to McLeod’s statements, in which

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Cummins manifests a belief in the truth of those statements.

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Defendants’ Trial Exhibit A-5995, which qualifies under Rule 803(3)’s state-of-mind

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exception to the hearsay rule because it features an Oracle customer Haworth’s contemporaneous

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statements of its then-existing state of mind regarding its choice of SAP software over Oracle

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software. A-5995 also qualifies as an adoptive admission because it reflects that Oracle Senior

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Vice President of Customer Services, North America Support Juan Jones took action based on

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Haworth’s statements, thereby manifesting an adoption of them.

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Defendants’ Trial Exhibit A-5058, which qualifies under Rule 803(3)’s state-of-mind

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exception to the hearsay rule because it features Oracle customer Vanguard’s statements

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regarding its then-existing motives behind cancelling Oracle support.

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Defendants’ Trial Exhibit A-5002-1, which qualifies (a) as non-hearsay evidence of

Oracle customer Amgen’s state of mind because it supports an inference about Amgen’s thenSVI-109429v1

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existing state of mind, and/or (b) under Rule 803(3)’s state-of-mind exception to the hearsay rule

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because the statements by Amgen employees reflect Amgen’s then-existing state of mind. A-

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5002-1 is also authentic, as it was produced pursuant to a subpoena, and its authenticity is

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confirmed by a Declaration of Custodian of Records.

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The Oracle At-Risk Report (Defendants’ Trial Exhibit A-0059), including the lists of

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customers, contract revenue amounts, and win/loss statistics in the report contained therein, is

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admissible as a business record under Rule 803(6) of the Federal Rules of Evidence. The Court

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pre-admits the excerpts from the “notes” field identified by Defendants regarding Oracle

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customers Merck and Stora Enso. The Merck entry qualifies as a party admission because it

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reflects Oracle support sales manager Barbara Sharp-Moore’s recitation of facts regarding

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Merck’s support renewal, a subject relating to the scope of her responsibilities. Likewise, the

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Stora Enso entry qualifies as a party admission because it reflects Oracle support sales manager

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Robert Lachs’ comments regarding Stora Enso’s reasons for selecting SAP software, a subject

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related to the scope of his responsibilities. The Stora Enso entry further qualifies as an adoptive

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admission because it was incorporated in the At-Risk Report, on which Oracle relied in managing

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its relationships with “at-risk” customers.

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Defendants’ Category 2 – Evidence of Alleged Willful Infringement

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Consistent with the Court’s May 29, 2012 Order, Oracle may not offer evidence of alleged

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willful infringement, including but not limited to evidence of so-called “Risk Acceptance” that

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Oracle previously offered solely to support its “hypothetical” license theory. Evidence of willful

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infringement is irrelevant to the new trial, which is limited to determining lost and infringer’s

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profits, and would serve only to confuse, mislead, and inflame the jury and incite it to punish

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through an increased damages award. Accordingly, per Rules 402 and 403 of the Federal Rules

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of Evidence, Oracle will not be permitted to present evidence or argument, including by offering

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exhibits or eliciting testimony, about SAP purportedly accepting risk of legal liability, using

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TomorrowNow as a “liability shield,” employee “whistle-blowing” efforts, employee discipline,

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and/or remorse for infringement. The Court excludes the following exhibits on these bases:

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Plaintiffs’ Trial Exhibit 0008

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Plaintiffs’ Trial Exhibit 0014

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Plaintiffs’ Trial Exhibit 0161

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Defendants’ Category 3 – Evidence Relating to Excluded Damages Theories

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Consistent with the Court’s previous orders, see, e.g., ECF No. 1164 (5/18/12 Order)

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(stating that “no evidence relating to the hypothetical license measure of damages will be

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permitted at the upcoming trial”), Oracle may not offer evidence relating to precluded damages

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theories, including but not limited to the “hypothetical” license theory. Such evidence is

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irrelevant, confusing, misleading, and unfairly prejudicial under Rules 402 and 403 of the Federal

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Rules of Evidence.

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In particular, Oracle may not offer evidence of “Risk to Oracle’s Investment,” in the form

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of its research and development costs and the PeopleSoft and Siebel acquisition prices, which it

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used at the previous trial solely to support calculating hypothetical license fees. Evidence of

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Oracle’s billion-dollar expenditures is wholly unrelated and unhelpful to computing Oracle’s

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actual customer losses due to infringement; instead, it would serve only to distract and confuse

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the jury. The Court excludes the following evidence on these bases:

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Plaintiffs’ Trial Exhibit 4809

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Plaintiffs’ Trial Exhibit 4819

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Oracle also may not present at the new trial evidence or argument of “Expected Financial

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Benefits/Impacts” in the form of alleged projections of potential customer conversions, which

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Oracle argued at the first trial was relevant to the parties’ expected financial gains or losses in

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negotiating a hypothetical license. Even if such evidence actually reflected Defendants’ expected

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customer gains (as opposed to mere hopes or aspirations), Defendants’ expectations are irrelevant

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to prove Oracle’s actual customer losses. Evidence of hopes, aspirations, assumptions, or

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expectations could serve only to confuse and mislead the jury as to the proper method to calculate

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lost and infringer’s profits and to improperly inflate the damages award, and therefore is not

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permitted under Rules 402 and 403 of the Federal Rules of Evidence. The Court excludes the

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following evidence on these bases:

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Plaintiffs’ Trial Exhibit 0012

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Plaintiffs’ Trial Exhibit 0024

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Plaintiffs’ Trial Exhibit 0161

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Plaintiffs’ Trial Exhibit 0960

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Oracle also may not offer evidence of the “Scope and Duration of the License” at the new

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trial, which is limited to determining lost and infringer’s profits. This evidence, too, is irrelevant

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to determining lost and infringer’s profits, and any probative value is outweighed by the risk of

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confusion and misleading the jury. See Fed. R. Evid. 402; Fed. R. Evid. 403. The Court excludes

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the following evidence on these bases:

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Plaintiffs’ Trial Exhibit 7028

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Oracle’s Category 1 – Oracle Income Statements and Cancellation Reports

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Oracle’s income statements and renewal rate reports and SAP’s “trial balance” financial

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statements are admissible as business records under Rule 803(6)(d) of the Federal Rules of

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Evidence. The Court pre-admits the following documents on this basis:

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Plaintiffs’ Trial Exhibit 8040

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Plaintiffs’ Trial Exhibit 2582

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Defendants’ Trial Exhibit A-6623

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Defendants’ Trial Exhibit A-6643

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Oracle’s Category 2 – Post-Trial Statements by SAP Executives

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The post-trial statements by SAP executives identified by Oracle are inadmissible as

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irrelevant and unfairly prejudicial under Rules 402 and 403 of the Federal Rules of Evidence.

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Evidence of Defendants’ business and legal reasons for stipulating to liability, as reflected in

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post-trial statements made by SAP AG’s Supervisory Board Chairman Hasso Plattner and co-

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CEO Bill McDermott at a German shareholders’ meeting that took place in Germany pursuant to

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German law, is not probative of any issue relating to determining lost and infringer’s profits and

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would serve only to confuse the issues, mislead the jury, and unfairly prejudice Defendants. The

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Court excludes the following exhibits on these bases:

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Plaintiffs’ Trial Exhibit 8111

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Plaintiffs’ Trial Exhibit 8112

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Oracle’s Category 3 – Statements from the TomorrowNow Plea Agreement.

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Consistent with the Court’s May 29, 2012 Order, Oracle may not offer evidence or argument at

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the new trial regarding the TomorrowNow Plea Agreement in any form, for any purpose. As the

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Court noted at the Final Pretrial Conference, admitting evidence relating to the TomorrowNow

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guilty plea would be unduly prejudicial, including to SAP, which did not enter a plea of guilty.

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The admissions in the TomorrowNow guilty plea provide no further insight into the disputed

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issues at the new trial—namely, lost and infringer’s profits. Given the inextricable link between

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these statements and the guilty plea itself, the unfairly prejudicial effect of TomorrowNow’s

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statements to SAP, and their minimal probative value, the Court excludes such statements under

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Rule 403 of the Federal Rules of Evidence.

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IT IS SO ORDERED.

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DATED: ______________________

By:
Hon. Phyllis J. Hamilton
United States District Court Judge

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[DEFS.’ PROPOSED]
ORDER RE: EXHIBIT ADMISSIBILITY
Case No. 07-CV-1658 PJH (EDL)