Oracle Corporation et al v. SAP AG et al

Filing 737

MOTION in Limine Plaintiffs' Motions In Limine [REDACTED VERSION] filed by Oracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, Inc.. Motion Hearing set for 9/30/2010 02:30 PM in Courtroom 3, 3rd Floor, Oakland. (Attachments: # 1 Proposed Order)(Howard, Geoffrey) (Filed on 8/5/2010) Modified on 8/6/2010 (vlk, COURT STAFF).

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Oracle Corporation et al v. SAP AG et al Doc. 737 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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: (415) 393-2000 Facsimile: (415) 393-2286 donn.pickett@bingham.com geoff.howard@bingham.com holly.house@bingham.com zachary.alinder@bingham.com bree.hann@bingham.com BOIES, SCHILLER & FLEXNER LLP DAVID BOIES (Admitted Pro Hac Vice) 333 Main Street Armonk, NY 10504 Telephone: (914) 749-8200 dboies@bsfllp.com STEVEN C. HOLTZMAN (SBN 144177) 1999 Harrison St., Suite 900 Oakland, CA 94612 Telephone: (510) 874-1000 sholtzman@bsfllp.com DORIAN DALEY (SBN 129049) JENNIFER GLOSS (SBN 154227) 500 Oracle Parkway, M/S 5op7 Redwood City, CA 94070 Telephone: 650.506.4846 Facsimile: 650.506.7114 dorian.daley@oracle.com jennifer.gloss@oracle.com 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) v. Plaintiffs, PLAINTIFFS' MOTIONS IN LIMINE REDACTED VERSION Date: Time: Place: Judge: September 30, 2010 2:30 pm Courtroom 3, 3rd Floor Hon. Phyllis J. Hamilton SAP AG, et al., Defendants. PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VI. VII. VIII. B. IV. V. III. II. I. TABLE OF CONTENTS Page MOTION NO. 1: IMPLIED BUT UNPLED ADVICE OF COUNSEL DEFENSE........ 3 A. B. Legal Standard ....................................................................................................... 4 The Court Should Exclude Advice of Counsel Evidence Because It Is Irrelevant and Barred by the Sword-and-Shield Rule ............................................ 5 MOTION NO. 2: SELECTIVE ATTORNEY/CLIENT COMMUNICATIONS............. 9 A. B. Background: The Alleged "Directive"................................................................ 10 The Court Should Exclude Faye's Testimony and Related Evidence ................. 11 MOTION NO. 3: CUSTOMER STATEMENTS IN AT RISK REPORTS................... 13 A. B. The At Risk Reports............................................................................................. 14 The Court Should Exclude the Hearsay Customer Comments ............................ 16 MOTION NO. 4: EVIDENCE OF SETTLEMENT DISCUSSIONS ............................ 17 MOTION NO. 5: EVIDENCE NOT IN INTERROGATORY RESPONSES ............... 18 A. Defendants Do Not Identify Specific Agreements Relating to Actual Copies................................................................................................................... 19 The Court Should Exclude Evidence Not in the Interrogatory Responses .......... 20 MOTION NO. 6: HEARSAY CONCERNING LOCKHEED MARTIN ...................... 21 MOTION NO. 7: EVIDENCE OF OTHER LITIGATION............................................ 23 MOTION NO. 8: UNTIMELY DEPOSITION DESIGNATIONS ................................ 24 i PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASES TABLE OF AUTHORITIES Page Affiliated Manufs., Inc. v. Aluminum Co. of Am., 56 F.3d 521 (3rd Cir. 1995) .................................................................................................... 18 Alexander v. CIT Tech. Financing Servs., Inc., 217 F. Supp. 2d 867 (N.D. Ill. 2002) ...................................................................................... 16 Bittaker v. Woodford, 331 F.3d 715 (9th Cir. 2003)..................................................................................................... 4 Bourne v. Walt Disney Co., 68 F.3d 621 (2d Cir. 1995)...................................................................................................... 18 Cambridge Elecs. Corp. v. MGA Elecs., Inc., 227 F.R.D. 313 (C.D. Cal. 2004) ............................................................................................ 20 Chevron Corp. v. Pennzoil Co., 974 F.2d 1156 (9th Cir. 1992)................................................................................................... 4 Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186 (9th Cir. 2001)........................................................................................... 4, 8, 9 Cox v. Adm'r U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir. 1994)................................................................................................... 9 Giese v. Pierce Chem. Co., 43 F. Supp. 2d 98 (D. Mass. 1999) ........................................................................................... 4 In re Oracle Corp. Secs. Litig., No. C 01-00988, 2009 U.S. Dist. LEXIS 50995 (N.D. Cal. June 16, 2009) .......................... 22 Knauff v. Dorel Juvenile Grp., No. SA:08-CV-336XR, 2010 U.S. Dist. LEXIS 1041 (W.D. Tex. Jan. 6, 2010)................... 16 Lemos v. Alderwoods Grp., Inc., No. 1:06-cv-01152, 2007 WL 2254363 (E.D. Cal. Aug. 3, 2007).......................................... 22 Licciardi v. TIG Ins. Grp., 140 F.3d 357 (1st Cir. 1998) ................................................................................................... 21 Michaels v. Internet Entm't Grp., Inc., 5 F. Supp. 2d 823 (C.D. Cal. 1998)......................................................................................... 18 Richards v. City of Topeka, 173 F.3d 1247 (10th Cir. 1999)............................................................................................... 18 ii PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page Rowland v. Am. Gen. Fin., 340 F.3d 187 (4th Cir. 2003)................................................................................................... 17 United States v. Arteaga, 117 F.3d 388 (9th Cir. 1997)................................................................................................... 16 United States v. Pazsint, 703 F.2d 420 (9th Cir. 1983)................................................................................................... 16 Yeti by Molly Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001)................................................................................................. 20 RULES Fed. R. Civ. P. 26 .......................................................................................................................... 20 Fed. R. Civ. P. 30 .......................................................................................................................... 11 Fed. R. Civ. P. 37 .......................................................................................................... 2, 18, 20, 21 Fed. R. Evid. 402 ...................................................................................................................... 2, 24 Fed. R. Evid. 403 .......................................................................................................... 2, 21, 23, 24 Fed. R. Evid. 404 ...................................................................................................................... 2, 24 Fed. R. Evid. 408 ................................................................................................................ 2, 17, 18 Fed. R. Evid. 801 ................................................................................................................ 2, 14, 22 Fed. R. Evid. 802 ........................................................................................................................ 1, 2 Fed. R. Evid. 803 .......................................................................................................................... 16 Fed. R. Evid. 805 .......................................................................................................................... 16 iii ORACLE'S MOTION TO COMPEL 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1. NOTICE OF MOTIONS AND MOTIONS PLEASE TAKE NOTICE THAT on September 30, 2010 at 2:30 pm, or as soon thereafter as the matter maybe heard, in the United States District Court, Northern District of California, located at 1301 Clay St., Oakland, CA, Courtroom 3, 3rd Floor, before the Hon. Phyllis J. Hamilton, Plaintiffs Oracle USA, Inc., Oracle International Corporation, Oracle EMEA Limited, and Siebel Systems, Inc. (collectively, "Oracle" or "Plaintiffs") will move in limine to exclude from trial the items listed below and described more fully in the attached memorandum of points and authorities. This motion is based on this notice of motion and motion, the accompanying memorandum of points and authorities, the accompanying declaration of Thomas S. Hixson ("Hixson Decl."), and such other matters as may be presented to the Court at the time of the hearing. RELIEF SOUGHT Oracle moves to exclude statements by Defendants that their attorneys analyzed SAP TN's business model or determined it was legal. Specific documents with such statements are listed in part I, below. Oracle also moves to exclude similar testimony by witnesses at trial. This evidence is inadmissible because Defendants have not pled an advice of counsel defense and have used the attorney-client privilege as both a sword and a shield. 2. Oracle moves to exclude testimony by SAP in-house attorneys characterizing a claimed SAP executive board directive to remove Oracle software from SAP TN's computers as "urgent" and "mandatory" or contending that SAP believed SAP TN was making progress toward complying with the directive. The specific pages and lines of testimony to be excluded are listed in part II, below. Oracle also moves to exclude similar testimony by other witnesses at trial and in related documents. This testimony is inadmissible because Defendants have used the attorney-client privilege as a sword and a shield. 3. Oracle maintained extensive spreadsheets of customers who were "At Risk" of discontinuing support with Oracle for their Oracle software products. These spreadsheets contained customer statements about why they were considering or did leave Oracle. Pursuant to Fed. R. Evid. 802, Oracle moves to exclude these hearsay customer PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 statements in Oracle's At Risk reports, described in part III, below. 4. Pursuant to Fed. R. Evid. 408, Oracle moves to exclude evidence of settlement discussions initiated by Defendants, described in part IV, below. 5. Defendants have pled, but have equivocated on whether they will assert at trial, a license defense for any of SAP TN's conduct. In any event, Defendants have failed to provide discovery as to any license defense. In their interrogatory responses, Defendants refused to identify any specific license that allowed any particular copy. Pursuant to Fed. R. Civ. P. 37(c)(1), Oracle moves to exclude evidence of licenses that supposedly authorized any of SAP TN's infringing conduct, as well as evidence tying specific downloads by SAP TN to one or more of Oracle's licensed products. See part V, below. 6. Pursuant to Fed. R. Evid. 403, 801 and 802, Oracle moves to exclude three statements by former SAP TN executives concerning statements purportedly made by former PeopleSoft employees, listed in part VI, below. 7. Pursuant to Fed. R. Evid. 402, 403 and 404, Oracle moves to exclude allegations against Oracle made in two other lawsuits: a. Oracle has sued another third party support provider, Rimini Street, which was founded by a former SAP TN executive. Rimini Street has alleged counterclaims that Oracle acted maliciously and anti-competitively toward it. Oracle moves to exclude references to Rimini Street's allegations in its counterclaims because they are irrelevant to this case, in which Defendants assert no counterclaims, and are also prejudicial and confusing. b. Oracle also moves to exclude references to a federal False Claims Act lawsuit against Oracle now pending in Virginia, in which the United States government recently intervened. There is no connection at all between that case and this one. 8. Oracle moves to exclude 229 deposition transcript designations for 68 witnesses that Defendants improperly served after the deadlines agreed to by the parties to designate and counter-designate deposition testimony for use at trial. In the alternative, Oracle moves for leave to submit supplemental counter-designations for more than 2,000 designations by Defendants which Oracle did not "counter-counter" per the parties' agreement. 2 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. MEMORANDUM OF POINTS AND AUTHORITIES MOTION NO. 1: IMPLIED BUT UNPLED ADVICE OF COUNSEL DEFENSE Defendants have selectively waived the attorney-client privilege in two ways through documents and testimony that imply favorable legal advice that will result in a fundamental unfairness at trial. These selective waivers have allowed Defendants to take advantage of certain alleged statements and actions of their attorneys, or impute favorable conclusions to their attorneys, without allowing Oracle to explore those statements through discovery. Motions 1 and 2 seek to remedy this unfairness by holding Defendants to the defenses they have pled. A critical issue in this case is the SAP AG board of directors' choice to buy SAP TN even though the board knew that SAP TN's operations were improper and "very likely to be challenged by Oracle" and "may be a serious liability." Plfs' Depo. Ex. 513 at SAP-OR00186998 (Hixson Decl., Ex. A). The board decided to acquire SAP TN at a January 7, 2005 meeting. The "business case" presented to the board at that meeting called out SAP TN's "likely" illegality, outlined ways to create a "liability shield" to protect the parent company, and identified "legal due diligence" as a future task. Id. at SAP-OR0018698-99. Whether the board actually sought legal advice regarding the identified illegalities in SAP TN's operations remains unknown, because Defendants have blocked substantially all inquiry by asserting the attorney-client privilege. However, in both documents and testimony, Defendants state or imply that SAP's attorneys somehow did approve SAP TN's business model and that such approval was imperative. Defendants allow a few admittedly "legal" conversations between in-house counsel and business people to tell this story. At the same time, by asserting the privilege on the basis that they have plead no advice of counsel defense, Defendants have blocked Oracle from testing those same statements. The result is a one-sided story in Defendants' favor and untested by cross-examination. The Court should remedy that unfairness by granting Motions 1 and 2. Magistrate Laporte has already suggested a similar remedy in connection with prior discovery motion practice related to a different document. 3 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 A. Legal Standard "Generally speaking, failure to plead an affirmative defense results in a waiver of the defense and the exclusion of all evidence relevant to it." Giese v. Pierce Chem. Co., 43 F. Supp. 2d 98, 113 (D. Mass. 1999) (citation omitted, emphasis supplied by court). Defendants have not pled an advice of counsel defense. See Defendants' Answer and Affirmative Defenses to Fourth Amended Complaint, Dkt. No. 448 (Aug. 27, 2009). Moreover, if a party does not assert an advice of counsel defense, and blocks discovery into attorney advice, "[t]he privilege which protects attorney-client communications may not be used both as a sword and a shield." Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1162 (9th Cir. 1992); see also Bittaker v. Woodford, 331 F.3d 715, 719 (9th Cir. 2003) ("the fairness principle . . . is often expressed in terms of preventing a party from using the privilege as both a shield and a sword.") (citations omitted). Here, Defendants' invocation of the attorney-client privilege in discovery means that the Court should exclude any testimony or documents where Defendants invoked the privilege to bar Oracle from testing the veracity of the testimony or document through cross-examination. See Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259 F.3d 1186, 1996 (9th Cir. 2001) (affirming exclusion of evidence related to advice of counsel defense because party invoked the attorney-client privilege during the discovery on the subject at issue). Magistrate Judge Laporte followed this sword-and-shield rule previously in this case. Oracle moved to compel production of certain documents related to the "Rules of Engagement" (or "Rules"). The Rules purport to be a board-approved policy directed at, among other things, keeping SAP TN's infringing copies of Oracle software confined to SAP TN's systems. The Rules were drafted in part and distributed by Christopher Faye, a senior SAP inhouse intellectual property attorney. Defendants asserted attorney-client privilege over documents related to the Rules. Oracle contended that Defendants had engaged in a selective waiver of the attorney-client privilege as to the Rules by producing some documents and allowing witnesses to testify on some legal issues when doing so was helpful to them, but then invoking the privilege when it was not. See Plaintiffs' Motion to Compel Production of Clawed Back Documents, Dkt. No. 136 4 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 (Aug. 1, 2008) at 8-11. Defendants denied that, but represented that "Defendants have not and will not use as a defense in this case the fact or substance of their lawyers' contemporaneous legal analysis or legal advice relating to the creation, content, implementation, or application of the ROE." Defendants' Opposition to Plaintiffs' Motion to Compel Production of Clawed Back Documents, Dkt. No. 151 (Aug. 13, 2008) at pg. 2, lines 8-10 (Hixson Decl., Ex. B); see also id. at pg. 9, lines 12-14. Relying in part on Defendants' representation, Judge Laporte denied portions of Oracle's motion to compel and agreed that a motion in limine may be appropriate "[l]ike if they say . . . `well, but we adopted it [the Rules] in good faith because our lawyers told us it would work,' you can't say that. You're not going to be able to say anything like that." Aug. 28, 2008 Disc. Conf. Tr. at 72:4-9 (Hixson Decl., Ex. C); id. at 71:22-23; see also Order Granting in Part Plaintiffs' Motion to Compel Production of Clawed Back Documents, Dkt. No. 170 (Aug. 29, 2008) at pg. 2, lines 19-23 ("[T]his ruling is premised on Defendants' assurances that they will not use the Rules and attorney advice about them as both a sword and a shield in the future, e.g., by arguing that even if the Rules turned out not to be effective in preventing intellectual property violations, they relied in good faith on the advice of counsel that the Rules would do so."). B. The Court Should Exclude Advice of Counsel Evidence Because It Is Irrelevant and Barred by the Sword-and-Shield Rule The Court should preclude Defendants from presenting any evidence that SAP attorneys believed SAP TN's conduct was legal or that implies they did. This motion does not seek to exclude statements by non-attorneys identifying the need to consult with attorneys or to obtain guidance about potential legal risk.1 Rather, it is limited to statements that say or imply For example, the January 7, 2005 business case presented to the SAP AG board of directors predicts legal risk and potential litigation by Oracle. Oracle believes this document reflects the board's understanding and acceptance of SAP TN's illegal conduct at the time they decided to acquire the company. But while the business case lists legal due diligence as a future task (with twelve days before the deal closed), no witness has asserted (or could assert) that it reflects the lawyers' conclusions about the legality of SAP TN's business model. Plfs' Depo. Ex. 513 (Hixson Decl., Ex. A). 5 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 what conclusion the attorneys may have reached. For example, Oracle moves to exclude statements from an SAP risk assessment document that was created approximately one month after SAP acquired SAP TN. The risk assessment analyzed, among other things, the risk of "[l]itigation by Oracle." Plfs' Depo. Ex. 430 at SAP-OR00002184 (Hixson Decl., Ex. D). It contained an assertion by SAP's Arlen Shenkman, then-director of corporate finance, stating: "SAP has carefully analyzed TomorrowNow's support model and is convinced that it does not interfere[] with third party intellectual property rights and thus the likelihood of a successful claim is considered remote at this time." Id. (emphasis supplied). The risk assessment went on to state that "SAP has carefully evaluated TomorrowNow's support model as part of the Due Diligence process. Adherence to appropriate support practices ensuring that TomorrowNow is continuing to honor all applicable third party intellectual property rights will need to be monitored also going forward." Id. at SAP-OR00002185 (emphasis supplied). These statements, if admitted in evidence, imply that Defendants acted on the advice of counsel. They create the impression that lawyers approved TN's operations. At the same time, Defendants have blocked all related inquiry into that implied conclusion by invoking the attorney-client privilege. For instance, when Oracle's counsel asked SAP's CFO: "Could you explain to me what was the careful analysis that [Mr. Shenkman] references?" (Brandt 11/13/08 Depo. at 232:7-9 (Hixson Decl., Ex. E)), SAP's counsel then instructed the witness: "Mr. Brandt, I just caution you, Ms. House's question asks for the analysis of Mr. Shenkman or the analysis he referenced. You may disclose that, but don't disclose the analysis of the lawyers." Id. at 232:10-15 (emphasis supplied). Brandt did not answer further. Id. Oracle deposed Shenkman himself about his assertion in the risk assessment: "Did SAP determine in connection with the acquisition whether TomorrowNow was using software outside the contractual use rights?" Shenkman 6/4/08 Depo. at 56:13-15 (emphasis supplied) (Hixson Decl., Ex. F). In response, Defendants invoked the privilege and, as instructed, Mr. Shenkman did not respond. Id. at 56:16-17. Oracle also deposed SAP's CEO Henning Kagermann, asking him if SAP 6 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 obtained legal advice about whether SAP TN's access to Oracle's software was legal, in connection with making the decision to acquire SAP TN. Defendants gave multiple instructions for him not to answer, blocking this line of questioning. Kagermann 9/26/08 Depo. at 263:19265:6 (Hixson Decl., Ex. G). Defendants did the same for multiple other witnesses, broadly instructing them not to testify about any legal advice SAP obtained in connection with acquiring SAP TN concerning whether SAP TN's business model was legal. Agassi 1/5/09 Depo. at 255:6-19 (Hixson Decl., Ex. H); Crean 2/19/09 Depo. at 106:20-108:24 (Hixson Decl., Ex. I); Faye 10/22/08 Depo. at 103:13-104:3 (Hixson Decl., Ex. J); Ziemen 9/30/08 Depo. at 171:19178:14 (Hixson Decl., Ex. K). SAP cannot have it both ways. Because it does not rely on an advice of counsel defense but has blocked examination directed at any legal advice SAP received or gave, related to SAP TN's business model and due diligence results, it impermissibly has used the privilege as both a sword and shield. Other documents and testimony create the same one-sided unfairness that results from selective waiver. An email from SAP TN Senior Account Executive Spencer Phillips on October 17, 2005 to Raytheon, an SAP TN customer, told Raytheon that Defendants' lawyers had concluded that SAP TN's conduct was legal: SAP AG attorneys (some of the best Intellectual Property legal minds in the software industry) concluded that TomorrowNow's operating procedures, which include the use of client software for the purposes of supporting these specific clients, is not in violation of the Software License Agreements written on PeopleSoft or Oracle paper. Had they determined otherwise, they would not have put their $12 billion company at risk by acquiring TomorrowNow. Depo. Ex. 1177 at TN-OR01778422 (emphasis supplied) (Hixson Decl., Ex. L). At his deposition, Phillips reiterated that he told customers that Defendants' attorneys had approved SAP TN's business model. Phillips 7/22/09 Depo. at 125:14-127:3 (Hixson Decl., Ex. M). SAP TN salesman Eric Osterloh similarly told customers that SAP TN's business model was "fully vetted by SAP attorneys." Plfs' Depo. Ex. 1876 (Hixson Decl., Ex. N). A January 26, 2005 article posted on www.eweek.com quotes a consultant saying, "the TomorrowNow guys said that, technically, because they[']re working as independent contractors and lack a formal 7 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 relationship with PeopleSoft or JDE, they said they can go in and make these fixes on behalf of the customer, who has the right to do these modifications. They said their lawyers checked it out and it[']s in the license agreement and it[']s above-board." Plfs' Depo. Ex. 1315 at pg. 2 (emphasis supplied) (Hixson Decl., Ex. O). See also Plfs' Depo. Ex. 429 at SAP-OR00187201 (January 17, 2005 email claiming that "TN is confident of its previous analysis and the legality of the services performed") (Hixson Decl., Ex. P). When Oracle deposed Defendants' in-house attorneys on the advice they provided concerning the legality of SAP TN's business practices repeated and/or implied in all of these documents and testimony Defendants invoked the privilege. For example, Oracle asked SAP's in-house counsel Christopher Faye if he gave an SAP TN executive "advice about whether a true downloading practice was legal or not." Faye 10/22/08 Depo. at 149:5-7 (Hixson Decl., Ex. J). Defendants objected and instructed him not to answer. Id. at 149:8-9. Defendants also instructed Faye not to answer when asked if SAP TN complied with his advice on operating procedures. Id. at 138:7-13. Thus, unless precluded, Defendants will have the benefit of the imprimatur these statements confer (that SAP TN operated legally and that SAP tested that and administered legal advice), but Oracle will have had no opportunity to examine that legal conclusion or present contrary evidence at trial. The Ninth Circuit's decision in Columbia Pictures Television, Inc. demonstrates the fundamental unfairness of Defendants' selective waiver. In that case, Columbia pictures sued Defendant C. Elvin Feltner Jr. and his company, Krypton International, for copyright infringement due to Krypton's broadcasting several Columbia television shows after the Defendants' licensing agreements had been terminated due to nonpayment. 259 F.3d at 1189-90. During his deposition, "Feltner refused to answer questions regarding his interactions with counsel." Id. at 1196. At trial, however, "Feltner sought to rely on advice of counsel to demonstrate that his infringement was not willful." Id. The district court granted the plaintiff's motion in limine to bar Feltner from invoking his advice of counsel defense, and the Ninth Circuit unanimously affirmed. Id. at 1196. The Court of Appeals held "the district court was within its discretion in precluding Feltner from relying on advice of counsel in this case" because 8 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 he had sought to use the privilege as a sword and shield. Id. (citing William A. Schwarzer, et al., Federal Civil Procedure Before Trial, 11:37 at 11-29 (2000) ("where the party claiming privilege during discovery wants to testify at the time of trial, the court may ban that party from testifying on the matters claimed to be privileged")). Here, too, Defendants invoked the attorney-client privilege to block discovery concerning the advice of counsel and therefore the sword-and-shield doctrine should bar them from relying on such a defense at trial. Statements stating or implying that Defendants believed in the legality of SAP TN's conduct also triggers the sword-and-shield problem. In Cox v. Adm'r U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir. 1994), Defendant USX was sued for a change in its pension fund policy. USX "denied any intent to assert a defense of advice of counsel." Id. at 1418. Nonetheless, "[i]n the proceedings before the district court, USX ha[d] consistently taken the position that `[a]t the time the revised leave-of-absence policy was implemented in October, 1984 . . . USX believed the policy to be lawful.'" Id. at 1418 (emphasis supplied). The district court and the Court of Appeals held that was an implicit assertion of the advice of counsel defense. Id. at 1418-19. "USX could have denied criminal intent without affirmatively asserting that it believed that its change in pension fund policy was legal." Id. at 1419. "Having gone beyond mere denial, affirmatively to assert good faith, USX injected the issue of its knowledge of the law into the case . . . ." Id. (emphasis supplied). The consequence for USX was that the Court of Appeals found a waiver of the attorney-client privilege. Id. Here, where Defendants successfully have blocked Oracle from testing the statements about what the lawyers concluded, the Court should exclude those statements. See Columbia Pictures Television, 259 F.3d at 1196. II. MOTION NO. 2: SELECTIVE ATTORNEY/CLIENT COMMUNICATIONS For the same reasons, Oracle moves in limine to exclude certain testimony of SAP's in-house intellectual property counsel, Christopher Faye and Tim Crean. Their testimony, which admittedly reveals attorney-client communications, characterizes an SAP board directive as "urgent" and "mandatory" and contends that SAP believed SAP TN was making progress toward complying with the board directive. When Oracle attempted to cross-examine Faye and 9 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Crean on these subjects beyond their self-serving disclosures, Defendants instructed them not to answer based on the attorney-client privilege. Accordingly, the Court should exclude their testimony under the sword-shield rule. A. Background: The Alleged "Directive" Defendants assert by interrogatory response that either before or after SAP acquired SAP TN, "[b]y March 2005, the SAP AG executive board issued a directive to TomorrowNow's management to remove customer local environments from TomorrowNow computers." Defendant TomorrowNow, Inc.'s First Amended Responses to Plaintiff Oracle Corp.'s Third Set of Interrogatories and SAP America, Inc.'s, and SAP AG's First Amended Responses to Plaintiff Oracle Corp.'s Second Set of Interrogatories, dated Oct. 7, 2008, at 17 (Hixson Decl., Ex. Q). Some SAP AG board members corroborate this response (although others contradict it). All witnesses agree no one ever implemented the supposed directive. The directive was supposedly recommunicated to SAP TN periodically, including in June and August 2007, after Oracle filed this lawsuit. Faye 3/18/09 Depo. at 167:13-168:6, 175:10-16 (Hixson Decl., Ex. R). SAP TN only achieved compliance with the directive more than three years after it was allegedly issued on October 31, 2008, when SAP TN shut down all business operations. Id. at 198:13-21. SAP claims that SAP's in-house attorney Faye communicated the directive to SAP TN. Faye claims he conveyed it to SAP TN's CEO, Andrew Nelson, at some point within two months after the board allegedly "issued" it. Id. at 33:9-17, 72:7-12; see also Faye 10/22/08 Depo. at 18:20-20:4 (Faye testifying that he was SAP's in-house counsel) (Hixson Decl., Ex. J). Faye testified that there was "only one" reason the board issued the directive: "Legal." Faye 10/22/08 Depo. at 95:18-24 (Hixson Decl., Ex. J); see also Faye 3/18/09 Depo. at 113:18-114:16 (Hixson Decl., Ex. R). Indeed, according to Faye, all of his communications with SAP TN executives concerning the directive were legal, in his capacity as counsel. Id. at 227:3-15; see also Faye 10/22/08 Depo. at 52:2-7 (Hixson Decl., Ex. J). But SAP blocked any discovery beyond the assertions themselves based on attorney-client privilege. 10 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. The Court Should Exclude Faye's Testimony and Related Evidence In this motion in limine, Oracle does not seek to exclude SAP's contention that the board issued the directive. However, Oracle does move to exclude Faye's testimony, and related evidence, that the directive was urgent and mandatory or that at any time SAP believed SAP TN was making progress toward complying with it.2 During discovery, Defendants engaged in a classic sword-and-shield use of the privilege on those issues. They designated Faye as their Rule 30(b)(6) witness on the directive. Faye 3/18/09 Depo. at 5:20-6:6 (Hixson Decl., Ex. R). Defendants selectively allowed Faye to testify about the allegedly mandatory and urgent nature of the directive, and SAP's alleged belief that SAP TN was complying with it. But they then invoked Faye's status as an attorney to block questioning about why nobody at SAP did anything to enforce the directive and why SAP TN took more than three years to comply (by going out of business). Similar questions to Crean met with the same instruction not to answer. The Sword. Faye testified that "it was a Board directive," "they had to comply with it," "it was urgent," and "Greg Nelson and Andrew and I certainly had conversations about the urgency of the Board directive." Faye 3/18/09 Depo. at 49:14-22 (Hixson Decl., Ex. R). He testified that "I was . . . making sure that he [Andrew Nelson] understood the directive and his urgency -- its urgency, rather." Id. at 92:19-93:1; see also id. at 85:24-86:6. Faye claimed that compliance was "mandatory." Id. at 55:5-10; 112:16-18, 124:10-23. He testified that "SAP's Board insisted on compliance with its January 2005 directive." Id. at 33:5-8. Specifically, Oracle moves to exclude pages/lines 28:25-29:2 from Faye's October 22, 2008 deposition (Hixson Decl., Ex. J); pages/lines 42:20-43:1, 48:20-23; 49:5-11, 49:14-50:13, 51:1214; 51:20-25, 112:23-113:9, 119:23-24, 120:1-5, 120:22-121:5, 124:10-11; 124:19-125:3, 128:710, 128:13-25, 129:3-4, 129:9-131:9, 132:5-14, 132:15-21; 132:24-133:11, and 134:13-135:8 from his March 18, 2009 deposition (Hixson Decl., Ex. R); pages/lines 114:4-7, 116:11-119:3 from Crean's February 19, 2009 deposition (Hixson Decl., Ex. I); pages/lines 343:5-344:5 from Nelson's April 29, 2009 deposition (Hixson Decl., Ex. S); and page 10, lines 12-26 from Defendant SAP AG and SAP America, Inc.'s Written Response in Lieu of Siebel Rule 30(b)(6) Testimony in Response to Topics 1-4 and 9 of Plaintiff's August 14, 2009 Notice of Deposition, Topic 2 of Plaintiff's April 16, 2008 Notice of Deposition, and August 21, 2009 E-mail Questions from B. Hann (Hixson Decl., Ex. T). 11 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Faye claims that before this lawsuit was filed, SAP thought SAP TN was trying to comply with the directive. "From our perspective, from what they told us, we felt that there actually was some compliance. That although it certainly wasn't complete, that steps were being made . . . ." Id. at 51:20-23 (emphasis supplied); see also id. at 129:23-130:18; see also id. at 134:13-135:8 (disclaiming knowledge of SAP TN's noncompliance with the directive as to Oracle's Siebel-brand software). The Shield. Defendants allowed the conclusory testimony from their attorney to support their contributory copyright liability defense, but then repeatedly invoked the attorneyclient privilege to bar Oracle's cross-examination. They blocked such questions as: "[W]hy was it the corporation decided not to put any incentives in place to comply with the Board's directives?" Id. at 23:5-8 & 23:22-24 ("I don't know of any reason other than possible privilege reasons . . ."). Why did SAP not "ask for any written reports about progress" in complying with the directive? Id. at 225:21-226:7. "Why did it take TomorrowNow over 3 years to comply with the Board's directive?" Id. at 26:21-27:8 ("[O]ther than privileged information . . . I don't have any information beyond that."). "[E]ach time you checked" about compliance with the directive, "you learned that it had not happened. Correct?" Faye 10/22/08 Depo. at 87:17-24 (Hixson Decl., Ex. J). "Why weren't Board members informed of the failure to comply with their directive until 2007?" Faye 3/18/09 Depo. at 19:2-20:15 (Hixson Decl., Ex. R). "What prompted Mr. Nelson to send" a restatement of the Board's directive in June 2007 for new SAP TN customers? Id. at 168:7-16. "Why is this [June 2007 restatement of the directive] limited to new customers, contrary to the terms of the directive?" Id. at 169:11-23 (emphasis supplied). Id. at 173:7-16. 12 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) "What prompted the recommunication of the directive in August 2007?" 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "What do you know about the discussions, analyses documents or communications leading up to the decision to issue the August 2007 Board directive?" Id. at 174:24-175:9. Efforts to test the truth of this testimony with Faye's direct supervisor, Crean, met with similar results. Crean testified that Faye's only role in continuing to discuss the directive with SAP TN was to provide "legal advice," and refused to answer questions such as whether SAP ever concluded SAP TN could comply with the directive. Crean 2/19/2009 Depo. at 125:820, 128:10-14 (Hixson Decl., Ex. I); see id. at 123:1-7 (invoking the privilege in response to the question "So you don't have any recollection of whether TomorrowNow had complied with the directive by the time the litigation started?"). The Court should exclude Faye's and Crean's testimony that the directive was urgent and mandatory or that SAP thought SAP TN was complying with it. As Magistrate Judge Laporte stated with respect to the Rules of Engagement, a motion in limine is proper to exclude this attorney testimony, and Defendants have conceded they may not rely on an advice of counsel defense at trial. See part I.A., above. With the Rules, SAP attempted to create an imaginary "firewall" between it and SAP TN in order to claim ignorance about SAP TN's operations. With the directive, SAP attempts to shift the blame to SAP TN for failing to remove the software from its systems, absolving itself of contributory liability in the process. SAP uses its attorneys' testimony to create the impression that SAP intended for the directive to be mandatory and urgent, and that although its wholly owned subsidiary failed to comply with it for more than three years, SAP at least believed its subsidiary was trying to comply. But, at the same time, Defendants have invoked the attorney-client privilege to bar meaningful crossexamination into basic facts that could undermine the attorney testimony that the directive was urgent and mandatory or that SAP believed SAP TN was complying with it. Defendants' use of the attorney-client privilege as both a sword and a shield is improper. Accordingly, the Court should grant motion in limine No. 2. III. MOTION NO. 3: CUSTOMER STATEMENTS IN AT RISK REPORTS Oracle moves in limine to exclude customer statements referred to in its At Risk 13 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 reports o n the ground that they are o u t o f court statements from third parties and thus inadmissible hearsay. Fed. R. Evid. 801, 802. 3 4 5 6 7 8 9 10 A. The At Risk Reports From May 2005 to January 2008, Oracle maintained A t Risk reports containing i n f o r m a t i o n a b o u t c u s t o m e r s who t o l d O r a c l e t h e y w e r e c o n s i d e r i n g d r o p p i n g O r a c l e s u p p o r t i n favor o f support from a third party, such as SAP TN. Cummins 9/16/08 30(b)(6) Depo. at 89:71 1 , 9 0 : 1 - 4 , 2 0 5 : 8 - 1 0 , 2 0 7 : 1 2 - 1 7 , 2 1 1 : 8 - 1 3 (Hixson Decl., Ex. U); Cummins 9/23/08 30(b)(6) Depo. at 320:23-321: 17 (Hixson Decl., Ex. U); Shippy 3/5/09 Depo. at 49:6-11 (Hixson Decl., Ex. V). Oracle began keeping the At Risk reports because " w e were seeing losses to TomorrowNow, and so we wanted to make sure that we tracked those losses very specifically." Cummins 9/16/08 30(b)(6) Depo. at 90:8-10 (Hixson Decl., Ex. U). O r a c l e ' s Richard Cummins designed the report and manag~d the team that created and maintained it. !d. at 89: 1 - 6 , 2 0 5 : 2 4 25. The report was in the form o f a spreadsheet that was updated and modified over time, id. at 2 0 6 : 1 6 - 2 0 7 : 4 , 2 1 5 : 1 6 - 1 9 , a n d d i s t r i b u t e d i n t e r n a l l y w i t h i n O r a c l e . l d . at 2 0 4 : 1 3 - 1 5 ; C u m m i n s 9/23/08 30(b)(6) Depo. at 317:2-3,320:10-16 (Hixson Decl., Ex. U). O r a c l e d i d n o t a f f i r m a t i v e l y s e e k o u t and s y s t e m a t i c a l l y i d e n t i f y p o t e n t i a l l y a t risk customers. Cummins 9/16/08 30(b)(6) Depo. at 190:21-191: 1 , 2 1 6 : 16-23 (Hixson Decl., Ex. U); Cummins 9/23/08 30(b)(6) Depo. at 303:24-304:3, 304: 17-22 (Hixson Decl., Ex. U). Rather, "[t]he A t Risk report is only listing customers who tell us they are evaluating other 3rd party s u p p o r t p r o v i d e r s . " O R C L 0 0 1 3 2 4 4 4 (internal O r a c l e e m a i l f r o m E l i z a b e t h Shippy) ( e m p h a s i s supplied) (Hixson Decl., Ex. W). There are several categories o f information in the reports, such as the n u m b e r o f customers at risk, the contract revenue amounts, and win/loss statistics. This motion in limine is directed only to the customer comments in the reports. These are contained in the "notes" fields, which recite the reasons the customer gave for possibly dropping Oracle support. Using Defendants' Deposition Exhibit 55 as an example, the notes field for Hitachi Global Storage Technologies states: 14 P L A I N T I F F S ' M O T I O N S I N L I M I N E , C A S E NO. 0 7 - C V - 0 1 6 5 8 P J H (EDL) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 H i x s o n Decl., Ex. X a t pg. 4; see also H i x s o n Decl., ~ 28 (explaining the l a y o u t o f the A t R i s k reports a n d t h e excerpts p r e s e n t e d w i t h this m o t i o n ) . S i m i l a r l y , t h e n o t e s f i e l d f o r C o m p u C o m i n t h a t e x h i b i t states: 3 4 5 Hixson Decl., Ex. X a t pg. 5. T h e p r o c e s s f o r r e c o r d i n g c u s t o m e r c o m m e n t s i n the A t R i s k r e p o r t s w a s n o t m a n d a t o r y n o r w e r e t h e r e a n y s t r i c t p r o t o c o l o r audits; r a t h e r , i f a c u s t o m e r t o l d t h e O r a c l e s u p p o r t sales r e p r e s e n t a t i v e a n y reasons for d r o p p i n g o r c o n s i d e r i n g d r o p p i n g support, t h e rep w a s s u p p o s e d to p a r a p h r a s e a n d email that i n f o r m a t i o n to E l i z a b e t h S h i p p y , w h o t h e n p a s t e d the e x p l a n a t i o n into the n o t e s c o l u m n i n the report. C u m m i n s 9 / 1 6 / 0 8 3 0 ( b ) ( 6 ) D e p o . a t 2 1 6 : 1 6 - 2 3 (Hixson Decl., Ex. U); C u m m i n s 4/21/09 Depo. a t 235: 18-25 (Hixson Decl., Ex. V); C u m m i n s 9 / 2 3 / 0 8 3 0 ( b ) ( 6 ) D e p o . a t 2 6 9 : 5 - 1 0 , 2 6 9 : 1 6 - 1 8 ( " T h e i n f o r m a t i o n c a m e in, B e t h t o l d m e t h a t s h e c u t a n d p a s t e d i t d i r e c t l y f r o m t h e e - m a i l i n t o t h e d a t a b a s e . " ) ( H i x s o n D e c l . , Ex. U ) ; S h i p p y 3 / 5 / 0 9 Depo. a t 4 9 : 3 - 5 , 5 4 : 1 9 - 2 2 , 5 6 : 2 - 1 1 ( H i x s o n D e c l . , Ex. V). T h e c u s t o m e r c o m m e n t s i n t h e n o t e s field w e r e s i m p l y a r e c o r d o f w h a t t h e r e p i n d i c a t e d t h a t t h e c u s t o m e r said. O r a c l e d i d n o t v e r i f y w h e t h e r t h e c o m m e n t s w e r e a c c u r a t e , a n d t h e y w e r e n o t p a r t i c u l a r l y o r u n i f o r m l y r e l i a b l e . " [ T ] h e i n f o r m a t i o n c a m e f r o m c u s t o m e r s as b e s t w e could g e t it. Customers w e r e not, y o u know, customers give y o u w h a t t h e y w a n t -- w a n t y o u to h a v e . S o t h e r e ' s c e r t a i n l y l i m i t a t i o n s w i t h t h a t . " C u m m i n s 9 / 2 3 / 0 8 3 0 ( b ) ( 6 ) D e p o . a t 269:22-25 (Hixson Decl., Ex. U). T h e "[s]ales reps reported this as p a r t o f t h e i r overall j o b , " id. a t 2 7 0 : 1 - 2 , b u t t h e " i n f o r m a t i o n w a s o n l y as g o o d a s w h a t t h e y " - t h e c u s t o m e r s - " g a v e h e r . " 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Id. at 270:7-8; see also id. at 270: 11-15; S h i p p y 3/5/09 Depo. a t 92: 15-17 ("[T]his r e p o r t w a s as g o o d a s t h e i n f o r m a t i o n t h a t w e r e c e i v e d f r o m t h e rep, w h i c h t h e n r e c e i v e d t h e i n f o r m a t i o n directly from the customer.") ( H i x s o n Decl., Ex. V). Sometimes customers gave inaccurate information to Oracle concerning t h e i r at r i s k status. E.g., O R C L 0 0 1 2 7 3 5 4 (internal O r a c l e email from R obe r t L a c h s to R i c k Cu m m in s stating, " I t turns o u t [customer] w a s p u r p o s e f u l l y d i s h o n e s t ( o r ' v a g u e ' a s t h e y e l e c t t o p h r a s e i t ) k e e p i n g u s a t b a y w h i l e a ) n o t t e l l i n g us t h e r e n e w a l w a s a t r i s k . . . " ) ( H i x s o n D e c l . , Ex. Z ) . 15 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CY-01658 PJH (EDL) 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 B. The Court Should Exclude the Hearsay Customer Comments The Court should grant Oracle's motion in limine to exclude the customer comments in the At Risk reports from evidence because they are inadmissible hearsay. See, e.g., Knauff v. Dorel Juvenile Grp., No. SA:08-CV-336XR, 2010 U.S. Dist. LEXIS 1041, at *12-15 (W.D. Tex. Jan. 6, 2010) (granting motion in limine to exclude incident reports summarizing claims or complaints from consumers because they were inadmissible second level hearsay). Assuming for the purposes of this motion only that the At Risk reports themselves come within the business records exception to the hearsay rule in Fed. R. Evid. 803(6), the customer comments contained within the reports are an inadmissible second level of hearsay: "The problem of customer-supplied information can be analyzed as `hearsay within hearsay.' In such `double hearsay' situations, each statement must qualify under some exemption or exception to the hearsay rule." United States v. Arteaga, 117 F.3d 388, 396 n.12 (9th Cir. 1997); Fed. R. Evid. 805. Thus, "[c]ourts that have applied this principle to [business] records have generally held that customer-supplied information on [the recorded forms], which is not verified, should be excluded . . . ." Arteaga, 117 F.3d at 395. Here, the customer-supplied information in the At Risk reports does not come within any exception to the hearsay rule. The customer comments are not business records because "[t]hat exception applies only if the person furnishing the information to be recorded is `acting routinely, under a duty of accuracy, with employer reliance on the result, or in short in the regular course of business.'" United States v. Pazsint, 703 F.2d 420, 424 (9th Cir. 1983) (holding that witness statements in a police report were inadmissible hearsay) (internal citation omitted). "The fact that statements made by strangers to the business become part of its records, such as the complaints which were placed in the . . . files, does not make them business records unless they are verified by the business and thus adopted and become the business's own statements." Alexander v. CIT Tech. Financing Servs., Inc., 217 F. Supp. 2d 867, 880 (N.D. Ill. 2002) (citation omitted). Here, Oracle did not verify the accuracy of the customers' comments but simply pasted them into the notes field of the At Risk reports. As Oracle recognized, the customer's 16 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 comments might or might not be truthful. The comments are hearsay and thus inadmissible to prove the truth of the matter asserted, i.e., that the customers really did cancel support or consider canceling support for the stated reasons.3 See Rowland v. Am. Gen. Fin., 340 F.3d 187, 194-95 (4th Cir. 2003) (customer complaint inadmissible as double hearsay, even when contained within official records that came within a hearsay exception). IV. MOTION NO. 4: EVIDENCE OF SETTLEMENT DISCUSSIONS Pursuant to Fed. R. Evid. 408, Oracle moves in limine to exclude any evidence of settlement discussions between the parties. In November 2007, Defendants requested a meeting that included Oracle's General Counsel, Dorian Daley, SAP AG's General Counsel, Michael Junge, and outside counsel. During that meeting, Junge and SAP's attorneys initiated settlement discussions. The meeting ended with no settlement and no agreement to continue the discussions. Declaration of Dorian Daley In Support of Defendants' Administrative Motion to Seal, Dkt. No. 457 (Aug. 31, 2009) at 2. The parties did agree, however, that the discussions were confidential settlement discussions governed by Federal Rule of Evidence 408, id. 3, and the parties have so stipulated to this Court. Stipulation Regarding Defendants' Administrative Motion to Seal, Dkt. No. 439 (Aug. 26, 2009), pg. 2. Accordingly, evidence of these settlement discussions should be excluded. Despite the protected nature of these discussions, Defendants used them to support an allegation in their Answer to the Fourth Amended Complaint. The argument appears to be that when Oracle rejected Defendants' proposal to buy or take back customers from Defendants, Oracle failed to mitigate its damages. If that were true, then all rejected settlement In the voluminous Oracle production, there are several versions of the At Risk report, numerous emails with portions of the At Risk Report excerpted or which likewise forward customer hearsay, and other spreadsheets similar to the At Risk Report to track potentially returning customers which also contain a comparably inadmissible customer comments field. Hixson Decl., 31; e.g., ORCL00485843 (Losses_with_back_maintenace_-_Master.xls spreadsheet). For the reasons set forth in the text above, Oracle moves to exclude these other occurrences of customer comments being recorded in internal Oracle documents. 17 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 proposals would come into evidence for the same reason. Oracle believes the language in the Answer is improper because it violates Rule 408, and is inadmissible for the same reason. At Oracle's insistence, Defendants filed a motion to seal that portion of the Answer and the Court granted that motion. Order Granting Defendants' Administrative Motion to Seal, Dkt. No. 529 (Nov. 2, 2009). The Court should likewise grant this motion in limine No. 4 to exclude evidence of settlement discussions between the parties. Rule 408 bars the admission of evidence of compromise negotiations if offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction. Fed. R. Evid. 408(a)(1)-(2). The Rule applies here, the parties have agreed it applies, and the Court has previously so held. Accordingly, this motion in limine should be granted. See, e.g., Richards v. City of Topeka, 173 F.3d 1247, 1253 (10th Cir. 1999); Affiliated Manufs., Inc. v. Aluminum Co. of Am., 56 F.3d 521, 526-30 (3rd Cir. 1995). V. MOTION NO. 5: EVIDENCE NOT IN INTERROGATORY RESPONSES The next issue involves Defendants' undefined license defense to the more than 5,000 copies of Oracle's software applications on SAP TN's computers, and the more than 9 million downloads of support materials SAP TN took from Oracle's website and stored on its systems (millions more were destroyed). Defendants made each copy from software licensed by Oracle to a particular customer, or downloaded the support materials using the credentials of a particular customer. Defendants admit they made and kept these copies. They also assert a "license" defense to these copies. License is an affirmative defense. That means Defendants have the burden to identify a specific license allegedly applicable to each copy they made. See Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir. 1995); Michaels v. Internet Entm't Grp., Inc., 5 F. Supp. 2d 823, 831, 834 (C.D. Cal. 1998). Defendants refused to provide this information in their discovery responses (and again in pre-trial meet and confer discussions). Accordingly, pursuant to Fed. R. Civ. P. 37(c)(1), Oracle now moves to exclude from trial (1) any defense evidence of agreements, whether express or implied, that supposedly authorized some or all of SAP TN's conduct (this includes the "exemplars" listed in their Interrogatory 18 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 response because Defendants never link those to any specific copies); and (2) any defense evidence that purports to tie specific downloads by SAP TN to particular license agreements. A. Defendants Do Not Identify Specific Agreements Relating to Actual Copies In their Answer, Defendants pled that their use of Oracle's copyrighted material was lawful or consented to under "agreements between Plaintiffs and their customers and/or former customers." Defendants' Answer and Affirmative Defenses to Fourth Amended Complaint, Dkt. No. 448 (Aug. 27, 2009) at pg. 24 (second and third affirmative defenses). Oracle propounded Interrogatory No. 4, asking Defendants to "[i]dentify all `agreements between Plaintiffs and their customers and/or former customers' on which you base the contentions made in Your Answer's Affirmative Defenses, including but not limited to Identifying which terms of those agreements form the basis of Your contentions." Defendant TomorrowNow, Inc.'s Third Amended and Supplemental Response to Plaintiff Oracle USA, Inc.'s First Set of Interrogatories, April 15, 2009 at 7 (Hixson Decl., Ex. AA). Defendants refused to identify specific licenses or specific copies in their response. Instead, they identified four "illustrative agreements" and "do[] not address each and every customer contract, of which there are many." Id. at 8. Defendants' response then enumerated "exemplar agreements" on which they "currently" based their contentions at least as of April 2009, when they last supplemented their response. Id. They did not link these exemplars to any specific copy of Oracle software made and kept on Defendants computers. In the pretrial meet and confer process, Oracle again asked Defendants to identify what license agreements they relied on for their second and third affirmative defenses, and identified the specific copies for which it sought that information. Defendants responded in only general terms that "Plaintiffs have publicly acknowledged that third party support can be conducted consistent with Plaintiffs' and predecessors' customer licenses. Defendants have consistently stated that they will rely on those licenses (see, e.g., Defendants' opposition to Plaintiffs' motion for summary judgment)." Hixson Decl., 33. But which licenses? Relating to what copies? Defendants never say, even now on the eve of trial. One reason that Defendants have not yet identified a single license authorizing 19 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 any of their more than 9 millions downloads is that they have consistently contended they cannot technically do so. For instance, SAP TN's Vice President of Global Support Services Shelly Nelson testified that "there is no way to actually verify [which] credential was used to download those particular items." Shelly Nelson 9/3/09 Depo. at 569:13-571:2 (Hixson Decl., Ex. BB); see also Defendants' Opposition to Plaintiffs' Motion to Compel, July 14, 2009, Dkt. 334, p. 7 n.9 ("Defendants have always acknowledged that there is no known technical way to specifically tie a downloaded item on TN's systems to a Customer Connection ID and password.") (Hixson Decl., Ex. CC). Thus, Defendants have not only abandoned their multiple opportunities to identify licenses relevant to their defenses, they have affirmatively asserted they cannot do so. B. The Court Should Exclude Evidence Not in the Interrogatory Responses Based on these discovery failures, the Court should exclude any evidence in support of Defendants' license defenses. Fed. R. Civ. P. 26(e)(1)(A) states in relevant part: "A party who . . . has responded to an interrogatory . . . must supplement or correct its disclosure or response . . . in a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing." Fed. R. Civ. P. 37(c)(1) states in turn that "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) or 26(e), the party is not allowed to use that information or witness to supply evidence . . . at a trial, unless the failure was substantially justified or is harmless." (emphasis supplied). Rule 37(c)(1) is "a `self-executing,' `automatic' sanction to `provide[] a strong inducement for disclosure of material . . . ." Yeti by Molly Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001) (quoting Advisory Committee notes). Courts exclude evidence from trial under Rule 37(c) where a party did not timely disclose it in response to an interrogatory. See e.g., Cambridge Elecs. Corp. v. MGA Elecs., Inc., 227 F.R.D. 313, 323-24 (C.D. Cal. 2004). If Defendants attempt to introduce any agreements in support of their affirmative license defense (or consent defense), or attempt to introduce evidence that ties specific downloads to particular license agreements, their failure to provide that information during 20 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 discovery was not substantially justified or harmless. Defendants downloaded millions of files from Oracle's websites. Indeed, they have conceded liability on Oracle's computer fraud claims for that conduct. They also made thousands of copies of Oracle software (though only have admitted copyright infringement liability for 295 of these copies). Defendants have the written license agreements between Oracle and its customers in their possession because Oracle produced them. Indeed, Oracle produced literally thousands of license agreements and related contract documents for the hundreds of customers at issue. None of those agreements authorized SAP TN's conduct. But Oracle should not be forced to guess which sentences in which agreements and for which customers, Defendants might attempt to rely on for a license defense. That was the purpose of the interrogatories Oracle served. Further, Defendants' Interrogatory response makes no mention at all of any implied agreements, which would clearly have necessitated follow up discovery had Defendants made such a contention. Allowing Defendants to introduce evidence at trial that they failed to identify in discovery violates Rule 37(c)(1) and undermines the Rule's purpose to assure fairness at trial and "eliminate[] surprise." Licciardi v. TIG Ins. Grp., 140 F.3d 357, 363 (1st Cir. 1998) (internal citation omitted). VI. MOTION NO. 6: HEARSAY CONCERNING LOCKHEED MARTIN Oracle moves in limine under Rules 403, 801, and 802 to exclude three statements of SAP TN executives concerning statements allegedly made by two former PeopleSoft employees about Lockheed Martin, an SAP TN customer: An email from SAP TN Vice President Seth Ravin in which he stated that Lockheed Martin sought permission from PeopleSoft to deliver a CD of PeopleSoft software to SAP TN and then wrote: "PeopleSoft's Greg Stevenson then wrote me and asked me if they need to provide authorization. Greg Stevenson at PeopleSoft followed up a few minutes later by phone and he said he was going to let Lockheed Martin know that there was no issue with them sending us the CD's [sic]." TN-OR00616959 (Hixson Decl., Ex. DD).4 4 The substance of this email was repeated by one of SAP TN's witnesses during her deposition. See Shelly Nelson 4/18/08 Depo. at 352:5-353:1 (Hixson Decl., Ex. BB). That merely adds (Footnote Continued on Next Page.) 21 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Deposition testimony by Ravin in which he was presented with the email identified above and repeated his claim that Mr. Stevenson told him that he would tell Lockheed Martin there was no issue with Lockheed Martin sending certain CDs to SAP TN. Ravin 5/21/09 Depo. at 239:4-7, 240:8-19 (Hixson Decl., Ex. EE). An email from SAP TN President and CEO Andrew Nelson in which he wrote: "a senior PeopleSoft representative recommended Lockheed Martin consider TomorrowNow Extended Support as a solution! Backed with internal staff recommendations and PeopleSoft's direct referral - Lockheed Martin executives, Lockheed Martin Purchasing, and Seth moved into serious discussions." TN-OR00497647 (Hixson Decl., Ex. FF). This evidence is inadmissible for four reasons. First, the two emails are hearsay by SAP TN employees, Ravin and Nelson, and fall within no exception to the hearsay rule. Irrespective of whether the underlying statements purportedly made by the two PeopleSoft employees would be admissible, the emails are not. See In re Oracle Corp. Secs. Litig., No. C 01-00988, 2009 U.S. Dist. LEXIS 50995, at *27-28 (N.D. Cal. June 16, 2009) (reports by third parties of statements purportedly made by Oracle officials were inadmissible hearsay). Second, Ravin's testimony and the two emails should be excluded because there is no basis to construe the statements attributable to Stevenson and the unidentified PeopleSoft employees as admissions under Fed. R. Evid. 801(d)(2). There is no evidence that Stevenson was authorized to make any statement regarding PeopleSoft's license terms and what Lockheed Martin could do with the CDs. There is no evidence as to whether the unidentified PeopleSoft had authorization to make the statement that Nelson attributes to him or her. See, e.g., Lemos v. Alderwoods Grp., Inc., No. 1:06-cv-01152, 2007 WL 2254363, at *7-8 (E.D. Cal. Aug. 3, 2007) (proponent "bears the burden of establishing a foundation from which to conclude that the statement was within a hearsay exclusion") (internal citation omitted). Third, excluding these statements is necessary because evidence produced by (Footnote Continued from Previous Page.) another level of hearsay, and Oracle moves to exclude this excerpt of Nelson's testimony as well. 22 PLAINTIFFS' MOTIONS IN LIMINE, CASE NO. 07-CV-01658 PJH (EDL) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendants long after the close of discovery now indicates that SAP TN intentionally sought to create false and self-serving emails, which further highlights why statements such as these should not be admitted. See TN-IM-20684 (TN employee wrote: "Please do not put in e-mail that you copied code or program from one environment to another . . . pull the file from [another source] and send me a note that you got the file from one of these two sources") (emphasis added) (Hixson Decl., Ex. GG). SAP TN also failed to preserve Ravin's emails, so there is no way for Oracle to deter

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