Oracle Corporation et al v. SAP AG et al

Filing 767

MOTION No. 3: to Exclude Testimony of Defendants' Expert David Garmus filed by Oracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, Inc.. Motion Hearing set for 9/30/2010 09:00 AM in Courtroom 3, 3rd Floor, Oakland. (Attachments: # 1 Proposed Order)(Alinder, Zachary) (Filed on 8/19/2010)

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Oracle Corporation et al v. SAP AG et al Doc. 767 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., v. Plaintiffs, No. 07-CV-01658 PJH (EDL) NOTICE OF MOTION AND MOTION NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS Date: Time: Place: Judge: September 30, 2010 9:00 a.m. Courtroom 3 Hon. Phyllis J. Hamilton No. 07-CV-01658 PJH (EDL) SAP AG, et al., Defendants. NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 V. IV. I. II. III. TABLE OF CONTENTS Page INTRODUCTION AND RELIEF REQUESTED ............................................................. 1 WHAT DEFENDANTS MUST SHOW TO DEMONSTRATE THE ADMISSIBILITY OF GARMUS' OPINIONS ................................................................. 4 LEGAL STANDARDS MANDATING EXCLUSION OF GARMUS' OPINIONS ......................................................................................................................... 6 A. Inadequate Factual Support.................................................................................... 6 B. No Expert Analysis or No Methodology ............................................................... 7 C. No Relevant Expertise............................................................................................ 7 D. Improper Legal Opinion......................................................................................... 8 E. Irrelevant or Improper Rebuttal ............................................................................. 8 STATEMENT OF FACTS ................................................................................................ 9 A. Paul C. Pinto's Expert Opinion on the Amounts of SAP Would Have Spent to Develop Similar Software........................................................................ 9 B. Garmus' "Rebuttal" Expert Report to Pinto......................................................... 10 ARGUMENT ................................................................................................................... 10 A. Garmus' Opinions and Testimony Regarding the Scope of Oracle Software Used by SAP TN Must be Excluded .................................................... 10 1. Garmus is Not Even Remotely an Expert, on the Scope of Oracle Software Used by SAP TN ...................................................................... 10 2. Garmus Failed to Consider the Undisputed Wider Use by SAP TN of Oracle IP .............................................................................................. 13 3. Garmus Failed to Consider Evidence of Downloaded Support Materials on SAP TN's Systems.............................................................. 15 4. Garmus Failed to Consider Support Documentation Libraries Built By SAP TN .............................................................................................. 16 5. Garmus Failed to Consider Concessions of SAP TN Employees............ 17 6. Garmus' Unsupported and Erroneous Opinion and Conjecture About the Scope of SAP TN's Actual Use Are Inadmissible.................. 18 7. Garmus' Improper Opinions Also Cannot be Used By Defendants' Damages Expert, Stephen Clarke............................................................. 19 B. Garmus' New Function Point Counts Should be Excluded as an Irrelevant "Academic Exercise" Or An Undisclosed Affirmative Opinion ......................... 19 1. Garmus' Function Point Counts Are Not Relevant and Would Not Assist the Trier of Fact............................................................................. 20 2. Garmus' Function Point Counts Are Also Improper Affirmative Opinions ................................................................................................... 20 C. Garmus' Claimed Opinions on Behalf of IFPUG And Its Membership Should be Excluded ............................................................................................. 22 i No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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. D. TABLE OF CONTENTS (continued) Page Garmus' Improper Legal Conclusions on Cost of Development Damages Should be Excluded ............................................................................................. 23 CONCLUSION ................................................................................................................ 24 ii No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 Burnham v. U.S., 2009 WL 2169191 (D. Ariz.)................................................................................................. 21 Cabrera v. Cordis Corp., 134 F.3d 1418 (9th Cir. 1998).................................................................................................. 6 Carnegie Mellon Univ. v. Hoffman-Laroche, Inc., 55 F. Supp. 2d 1024 (N.D. Cal. 1999) ..................................................................................... 5 Claar v. Burlington R.R., 29 F.3d 499 (9th Cir. 1994)...................................................................................................... 5 Crow Tribe of Indians v. Racicot, 87 F.3d 1039 (9th Cir. 1996).................................................................................................... 8 Crowley v. Chait, 322 F. Supp. 2d 530 (D. N.J. 2004) ....................................................................................... 12 Daubert v. Merrell Dow Pharm., 43 F.3d 1320 (9th Cir. 1995).................................................................................................. 20 Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) ........................................................................................................ passim Diviero v. Uniroyal Goodrich Tire Co., 114 F.3d 851 (9th Cir. 1997).................................................................................................... 7 General Electric Co. v. Joiner, 522 U.S. 136 (1997) ............................................................................................................. 6, 7 Goomar v. Centennial Life Ins. Co., 855 F. Supp. 319 (S.D. Cal. 1994) ......................................................................................... 22 Guidroz-Brault v. Mo. Pac. R.R. Co., 254 F.3d 825 (9th Cir. 2001).............................................................................................. 6, 18 Hebert v. Lisle Corp., 99 F.3d 1109 (Fed. Cir. 1996)................................................................................................ 23 Heller v. Shaw, 167 F.3d 146 (3d Cir. 1999)..................................................................................................... 6 IBM Corp. v. Fasco Industries, Inc., 1995 WL 115421 (N.D. Cal.)................................................................................................. 21 iii No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 In re Ready-Mix Concrete Antitrust Litig., 261 F.R.D. 154 (S.D. Ill. 2009).............................................................................................. 21 Kilgore v. Carson Pirie Holdings, Inc., 205 Fed. Appx. 367 (6th Cir. 2006) ................................................................................... 7, 23 Lyman v. St. Jude Medical S.C., Inc., 580 F. Supp. 2d 719 (E.D. Wis. 2008)................................................................................... 11 Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha, 290 F. Supp. 2d 1083 (C.D. Cal. 2003) ................................................................................... 7 McNamara v. Kmart Corp., 2010 WL 1936268 (3d Cir.)................................................................................................... 19 Mukhtar v. California State University, 299 F.3d 1053 (9th Cir. 2002), as amended, 319 F.3rd (9th Cir. 2003) .................................. 5 Nebraska Plastics, Inc. v. Holland Colors Americas, Inc., 408 F.3d 410 (8th Cir. 2005).................................................................................................. 15 Nuveen Quality Income Mun. Fund Inc. v. Prudential Equity Group, LLC, 262 Fed. Appx. 822 (9th Cir. 2008) ......................................................................................... 6 Perry v. Schwarzenegger, 2010 WL 3025614 (N.D. Cal.)............................................................................................. 5, 7 QR Spex, Inc. v. Motorola, 2004 WL 5642907 (C.D. Cal.)........................................................................................... 6, 18 Redfoot v. B. F. Ascher & Co., 2007 WL 1593239 (N.D. Cal.) (Hamilton, J.,) ........................................................................ 8 Regents of Univ. of California v. Montsanto Co., 2006 WL 5359055 (N.D. Cal.)................................................................................................. 8 Robinson v. G.D. Searle & Co., 286 F. Supp. 2d 1216 (N.D. Cal. 2003) ................................................................................... 7 Salinas v. Amteck of Kentucky, Inc., 682 F. Supp. 2d 1022 (N.D. Cal. 2010) ............................................................................... 5, 8 Sommerfield v. City of Chicago, 254 F.R.D. 317 (N.D. Ill. 2008) ............................................................................................. 12 iv No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 U.S. v. Grey Bear., 883 F.2d 1382 (8th Cir. 1989)................................................................................................ 22 United States v. Chang, 207 F.3d 1169 (9th Cir. 2000).................................................................................................. 7 United States v. Cook, 261 Fed. Appx. 52 (9th Cir. 2007) ........................................................................................... 8 United States v. Jawara, 474 F.3d 565 (9th Cir. 2007).................................................................................................... 5 RULES Fed. R. Civ. P. 26 ..................................................................................................................... 8, 21 Fed. R. Civ. P. 37 ........................................................................................................... 3, 8, 20, 22 Fed. R. Civ. P. 104 ......................................................................................................................... 5 Fed. R. Evid. 401-403 ........................................................................................................... passim Fed. R. Evid. 702 .................................................................................................................. passim Fed. R. Evid. 703 .................................................................................................................. passim v No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 PLEASE TAKE NOTICE that on September 30, 2010, at 9:00 a.m., in the courtroom of the Honorable Phyllis J. Hamilton, of the above-entitled Court, Plaintiffs Oracle USA, Inc., Oracle International Corporation, Oracle EMEA Limited, and Siebel Systems, Inc. (collectively, "Oracle") shall and hereby do move for an order excluding opinions and testimony of David P. Garmus, ("Garmus") designated by Defendants SAP AG, SAP America, Inc., and TomorrowNow, Inc. ("SAP TN") (collectively "Defendants") as an expert witness in this matter, on the grounds that Garmus' proposed expert opinion testimony is inadmissible on the basis of the authorities and evidence set forth herein and in the accompanying declaration. I. INTRODUCTION AND RELIEF REQUESTED Oracle's expert, Paul C. Pinto, has estimated the amount that SAP would have spent to develop software of similar functionality to what it infringed here. Pinto's estimation of what SAP would have spent to avoid infringement, along with his opinions about the considerations of avoided time delay and avoided risk, are part of the "build" analysis portion of the classic "buy vs. build" decision that companies consider every day to determine whether to license software or whether to develop a non-infringing solution themselves. As the evidence will show, any reasonable party in a license negotiation, hypothetical or not, would consider this trade-off.1 To estimate what SAP would have spent, Mr. Pinto uses standard principles and methodologies from two different cost estimation fields function point and Constructive Cost Modeling ("COCOMO") but tempers both with his own real-world experience. That real-world software cost estimating experience stands in stark contrast to Defendants' expert, David Garmus, whose opinions and testimony Defendants offer in rebuttal. Mr. Garmus is an expert in counting by hand "function points" described in software documentation to arrive at an estimated size for the software, which must then be further analyzed to reach an estimated software cost. Consistent with the Court's 8/17/2010 Order, none of Pinto's opinions, or Oracle's damages, seek to "recoup" Oracle's research and development costs as actual damages for Defendants' infringement. Dkt. 762 at 22-23. Instead, one of Pinto's opinions estimates what SAP would have spent to create a non-infringing alternative and add further expert input into the reasonable expectations of Parties for the hypothetical license negotiation. 1 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 The opinions he expressed, however, were not bounded by that expertise. While Garmus' opinions for the most part take pot-shots at Pinto's use of function point principles and methodologies, at least four of Garmus' opinions are improper under Federal Rules of Evidence 401-403 and 702-703, as well as Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and its progeny, and should be excluded. SAP TN's Use of Oracle Software. First, Garmus purports to testify about "facts" concerning the extent of SAP TN's "use" of Oracle software. Garmus claims that Pinto counted "applications and components within applications that were not utilized by TN in the course of TN's business," which Garmus claims Pinto should have excluded for the purpose of estimating the cost of developing the software at issue. Alinder Decl., Ex. A (Garmus Report) at 9. This opinion by Garmus is central to the conclusions reached by Defendants' damages expert, Stephen Clarke, who claims that the fair market value measure of damages for copyright infringement must be adjusted to exclude use of applications and components that Garmus claimed were not used by SAP TN. See Alinder Decl., Ex. H (Clarke Report) at 2 n.10, 33-34, 58-59, 116; Ex. I (Clarke Depo.) at 144:13-21. This opinion by Garmus and the opinion by Clarke that relies upon it is offered without any expertise, personal knowledge or foundation, and is flatly contradicted by undisputed facts and even Defendants' concessions. Garmus admitted during his deposition that he ignored virtually all of the relevant evidence concerning the actual scope of Oracle intellectual property that SAP TN used to support its customers: Q. So you ignored what TomorrowNow could have told you about their support; you ignored the documentation that was on TomorrowNow's system; ignored the software that was on TomorrowNow's system; you ignored the support materials that were on TomorrowNow's system; and you ignored the admissions that they have made in the case, including their answer; is that right? [Objection Omitted] A: I think it was beyond the scope of what I was assigned to do. Alinder Decl., Ex. B (Garmus Depo.) at 281:17-282:5. The facts and admissions that Garmus ignored indisputably establish that SAP TN 2 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 accessed, copied, downloaded, and used Oracle software and related support materials across all of Oracle's suites of software, including the software applications that Garmus opined "were in fact not being used by TN...." Alinder Decl., Ex. A (Garmus Report) at 10. Thus, Garmus' opinions and testimony regarding the scope of SAP TN's use of Oracle intellectual property are not accurate, based on sufficient facts or data, or based on reliable methods or principles under Rules 702 and 703. Nor do these opinions meet the standard under Rules 401-403, as they would, at best, confuse and mislead the jury. These improper opinions are particularly prejudicial, because Clarke uses Garmus' unfounded opinions to argue that the value of the infringed intellectual property is significantly lower than Oracle's damages expert, Paul Meyer, estimates. Garmus' opinions about the scope of use of Oracle intellectual property at SAP TN, and Clarke's opinions to the extent he relies on this, must be excluded. "Academic" Function Point Counts. Second, Garmus offers an opinion concerning the size of two Oracle software modules, not analyzed by Pinto, which Garmus purports to derive by performing his own independent function point count. See Alinder Decl., Ex. A (Garmus Report) at 27-28. These opinions should also be excluded for two reasons. First, Garmus admitted at deposition that this opinion relates to software that Pinto did not analyze. See id., Ex. B (Garmus Depo.) at 39:8-10 ("Q. You weren't intending to find a size for the same applications as Mr. Pinto, correct? A. No, I was not."). Had Garmus truly wanted to rebut Pinto, he would have analyzed the same software analyzed by Pinto. Instead, Garmus intentionally analyzed different software, and conceded the lack of relevance of his analysis, dubbing the entire opinion an "academic exercise." Id. at 37:12-18. Second, Garmus' function point count alone is irrelevant, because a function point count only provides an estimate of size. Garmus never did the additional work needed to estimate a cost associated with developing a software application of that size. The simple, bare assertion of function point size for software that Pinto did not analyze cannot help the trier of fact and would only confuse or mislead the jury. Garmus' opinions about his function point counts should be excluded under Federal Rules of Evidence 401-403 and 702. They should also be excluded under Federal Rule of Civil Procedure 37 as improper and untimely affirmative expert opinions, as they do not rebut any part of Pinto's 3 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 opinions or testimony. The Opinions of IFPUG and IFPUG Membership. Third, Garmus attempts to offer testimony that neither the International Function Point User's Group ("IFPUG") nor its membership "agree with Mr. Pinto's approach." Alinder Decl., Ex. A (Garmus Report) at 1721. These statements are not based on scientific principles, sufficient facts, or sufficient foundation. Garmus admitted during his deposition that no one from IFPUG approved his report or assertions. See Alinder Decl., Ex. B (Garmus Depo.) at 242:1-14. Instead, Garmus simply claimed authority to speak for the entire User's Group as a past president and committee member. Further, he offered 8 self-selected bulletin board messages, which he claims show that the IFPUG membership does not support Pinto's approach. These posts do not reflect Garmus' purported expertise and Garmus did not provide the identities of and cannot vouch for the expertise of the posters. Moreover, with these eight self-selected posts, Garmus cannot and does not show that all or even most IFPUG members disagree with Pinto; indeed, Pinto is an IFPUG member and certainly does not agree with Garmus. Garmus' assertions about what IFPUG would think about Pinto are not reliable, and should be excluded Federal Rules of Evidence 401403 and 702. Legal Conclusions About Saved Development Costs. Fourth, throughout his Report, Garmus opines that "determining the cost for independently developing the four underlying application suites is not appropriate for the case in question." See, e.g., Alinder Decl., Ex. A (Garmus Report) at 1. Garmus conceded at deposition that he is neither a copyright nor a damages expert, so he does not have sufficient expertise to provide such an opinion. See Alinder Decl., Ex. B (Garmus Depo.) at 60:4-12 & 213:19-214:24. In any event, Garmus cannot offer a legal opinion concerning whether cost of development of software is an appropriate or available measure of damages. Those opinions would usurp the roles of the jury and the Court, and should be excluded as well under Federal Rules of Evidence 401-403 and 702-703. II. WHAT DEFENDANTS MUST SHOW TO DEMONSTRATE THE ADMISSIBILITY OF GARMUS' OPINIONS Fed. R. Evid. 702 requires exclusion of expert testimony unless: 4 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and method reliably to the facts of the case. The party proffering an expert opinion must demonstrate it meets the Rule 702 admissibility standards by a "preponderance of proof." Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579, 593 (1993); Salinas v. Amteck of Kentucky, Inc., 682 F. Supp. 2d 1022, 1029 (N.D. Cal. 2010) (Hamilton, J.,); Perry v. Schwarzenegger, 2010 WL 3025614, at *21 (N.D. Cal.) ("The party proffering the evidence `must explain the expert's methodology and demonstrate in some objectively verifiable way that the expert has both chosen a reliable . . .method and followed it faithfully.'") (quoting Daubert v. Merrell Dow Pharm., 43 F3d 1311, 1319 n11 (9th Cir 1995) ("Daubert II")). As the court made clear in Carnegie Mellon Univ. v. Hoffman-Laroche, Inc., 55 F. Supp. 2d 1024, 1035 (N.D. Cal. 1999): The Ninth Circuit has repeatedly stated that where evidence of prelitigation research or peer review is not available, the experts must (1) "explain precisely how they went about reaching their conclusion" and (2) "point to some objective source a learned treatise, the policy statement of a professional association, a published article in a reputable science journal or the like to show that they have followed the scientific method as practiced by (at least) a recognized minority of the scientists in their field." [quoting Daubert II, 43 F.3d at 1319]. Absent an explicit finding by the court of admissibility of a challenged opinion, the opinion may not properly be offered at trial. Fed. R. Civ. P. 104(a) (Preliminary questions concerning the qualifications of a person to be a witness. . .shall be determined by the court."); United States v. Jawara, 474 F.3d 565, 583 (9th Cir. 2007) ("failure to make explicit reliability finding was an error"); Mukhtar v. California State University, 299 F.3d 1053, 1066-68 (9th Cir. 2002) (district court prejudicially erred by admitting expert testimony without explicit reliability determination), as amended, 319 F.3rd 1073 (9th Cir. 2003); Claar v. Burlington R.R., 29 F.3d 499, 501 (9th Cir. 1994) (courts are both "authorized and obligated to scrutinize carefully the reasoning and methodology underlying" expert testimony). As the Supreme Court has made clear, "the trial judge must ensure that any and all [expert] testimony . . .is not only relevant but reliable." Daubert, 509 U.S. at 595. This "gatekeeper" role "entails a preliminary assessment of 5 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 whether the reasoning or methodology underlying the testimony is . . .valid and of whether the reasoning or methodology properly can be applied to the facts in issue." Id. at 592-93. While the Daubert reliability analysis focuses on an expert's methodology, the Supreme Court has also noted that "conclusions and methodology are not entirely different from one another." General Electric Co. v. Joiner, 522 U.S. 136, 146 (1997). Trained experts commonly extrapolate from existing data. But nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion offered. Id.; accord Heller v. Shaw, 167 F.3d 146, 153 (3d Cir. 1999) ("district court must examine the expert's conclusions in order to determine whether they could reliably follow from the facts known to the expert and the methodology used"). III. LEGAL STANDARDS MANDATING EXCLUSION OF GARMUS' OPINIONS A. Inadequate Factual Support The proffering party cannot carry its burden under the Daubert standard where the expert opinion has no factual basis or ignores undisputed contrary facts (e.g., Garmus' conclusions about the scope of SAP TN's use of Oracle's intellectual property, SAP TN's business model, and the opinions of the International Function Point User's Group and its membership). "An opinion based on unsubstantiated and undocumented information is the antithesis of the scientifically reliable expert opinion admissible under Daubert and Rule 702." Cabrera v. Cordis Corp., 134 F.3d 1418, 1423 (9th Cir. 1998); accord, Guidroz-Brault v. Mo. Pac. R.R. Co., 254 F.3d 825, 830-31 (9th Cir. 2001) (affirming exclusion of multiple experts because conclusions based on factually unsupported assumptions); Nuveen Quality Income Mun. Fund Inc. v. Prudential Equity Group, LLC, 262 Fed. Appx. 822, 824 (9th Cir. 2008) ("An expert opinion is properly excluded where it relies on an assumption that is unsupported by the evidence in the record and is not sufficiently founded upon the facts"); QR Spex, Inc. v. Motorola, 2004 WL 5642907, at *9 (C.D. Cal.) (excluding expert report and opinion where 6 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 expert didn't review relevant underlying evidence); Robinson v. G.D. Searle & Co., 286 F. Supp. 2d 1216, 1221 (N.D. Cal. 2003) (expert's testimony inadmissible when based on factual premise directly contradicted by evidence on the record); accord General Electric v. Joiner, 522 U.S. 136, 146 (1997). B. No Expert Analysis or No Methodology As a corollary, where a purported expert's opinions are premised on nothing more than reading (e.g., Garmus' conclusions about the scope of SAP TN's use of Oracle's intellectual property, SAP TN's business model, and the opinions of the International Function Point User's Group and its membership) they do not assist the trier of fact because they are not premised on any expertise, or reliable methodology, and thus are inadmissible. See, e.g., Perry, 2010 WL 3025614, at *22 ("mere recitation of text in evidence does not assist the court in understanding the evidence because reading, as much as hearing, `is within the ability and experience of the trier of fact.'") (quoting Beech Aircraft Corp v. United States, 51 F.3d 834, 842 (9th Cir. 1995)); Kilgore v. Carson Pirie Holdings, Inc., 205 Fed. Appx. 367, 372 (6th Cir. 2006) (finding internet article an unreliable basis for methodology where expert did not know what research methodology the article was based on and conducted no independent research); Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha, 290 F. Supp. 2d 1083, 1086 (C.D. Cal. 2003) (expert reports "irrelevant" where they "merely recite hearsay statements, often verbatim, culled from a variety of Internet websites"); Diviero v. Uniroyal Goodrich Tire Co., 114 F.3d 851, 853 (9th Cir. 1997) ("Rule 702 demands that expert testimony relate to scientific, technical, or other specialized knowledge, which does not include unsubstantiated speculation and subjective beliefs"). C. No Relevant Expertise Where an expert offers opinions regarding a field as to which he or she is not an expert, (e.g., Garmus' conclusions about damages or copyright infringement, as well as his conclusions about the scope of SAP TN's use of Oracle's intellectual property and about SAP TN's business model), those opinions are not admissible under Rule 702. See, e.g., United States v. Chang, 207 F.3d 1169, 1172-73 (9th Cir. 2000) (expert "qualified" in one topic properly excluded from 7 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 testifying on topic where didn't have expertise); United States v. Cook, 261 Fed. Appx. 52, 54 (9th Cir. 2007) (same); Salinas, 682 F.Supp.2d at 1030 (rejecting opinions on warnings by proffered expert who had no "professional training or expert qualifications to opine on the formulation or design of warning or safety labels" and had never "investigated a case with similar facts" and never "testified as a warnings expert"); Redfoot v. B. F. Ascher & Co., 2007 WL 1593239, at *10-11 (N.D. Cal.) (Hamilton, J.,) (rejecting testimony on medical subjects and conclusions of what caused victim's autism for which expert had neither training nor qualifications to opine). D. Improper Legal Opinion Where the expert seeks to testify to legal issues, particularly where his opinions contradict the law (e.g. Garmus' opinions about whether saved development costs are an "appropriate" measure of damages here), those opinions cannot aid the trial of fact and are not admissible. See, e.g., Crow Tribe of Indians v. Racicot, 87 F.3d 1039, 1045 (9th Cir. 1996) (role of experts is to interpret and analyze factual evidence and not to testify about legal holdings); see also Regents of Univ. of California v. Montsanto Co., 2006 WL 5359055, at *1 (N.D. Cal.) ("Where an expert proposes to testify, however, to legal issues that may contradict the law to be presented to the trier of fact, such testimony cannot purport to aid the trier of fact"). E. Irrelevant or Improper Rebuttal Where the expert seeks to opine on issues that are not relevant or to add affirmative opinions in the guise of rebuttal (e.g. Garmus' purported analysis of software modules that Pinto did not analyze), those opinions cannot assist the trier of fact and should also be excluded as untimely and improper rebuttal. See, e.g., Daubert, 509 U.S. at 589, ("the trial judge must ensure that any and all [expert] testimony . . .is not only relevant but reliable"); see also Fed. R. Civ. P. 26(a)(2)(C)(ii) (Rebuttal must be "intended solely to contradict or rebut evidence on the same subject matter identified by another party under Rule 26(a)(2)(B)); see also Fed. R. Civ. P. 37(c). 8 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 IV. STATEMENT OF FACTS A. Paul C. Pinto's Expert Opinion on the Amounts of SAP Would Have Spent to Develop Similar Software On November 16, 2009, Oracle served the expert report of Paul C. Pinto, which contained his affirmative expert opinions and analysis, including estimates of the amounts that it would have cost Defendants to independently develop software similar to the Oracle software that they instead accessed, took, and used. See generally Alinder Decl., Ex. C (Pinto Report). Pinto has worked in the field of software development for 24 years. Id. at 3 & Attachment A. He has been a senior executive at software companies that compete directly with Oracle and SAP. Id. He has also worked at software firms to develop software development cost estimates, bid on those projects, and then delivered on those bids by building the actual software. Id., Ex. D (Pinto Depo.) at 112:24-113:16. Over the course of his career, Pinto has personally been involved with conducting at least 100 software estimating efforts, applying a variety of estimating models and techniques, including at least 50 using function point analysis. Id., Ex. E. (Pinto Rebuttal Notes) at 1; id., Ex. D (Pinto Depo.) at 100:4-22. Pinto was very conservative in his estimate of the amount that Defendants would have spent on a non-infringing alternative in at least three ways: (1) Pinto only estimated the cost to develop software with functionality similar to the most current versions of PeopleSoft, J.D. Edwards and Siebel software, rather than every version of software that Defendants infringed; id., Ex. C (Pinto Report) at 10-11; id., Ex. D (Pinto Depo.) at 27:9-29:20 & 125:10-126:18; see also Dkt. 745 ( Joint Pretrial Statement) at 24-25, Undisputed Facts 68-91; (2) Pinto did not include the value of the millions of Oracle support materials that Defendants infringed, rather than develop themselves; see id.; and, (3) Pinto did not quantify what Defendants would have spent to develop a product of similar functionality to the Oracle Database software, rather than infringing it. Alinder Decl., Ex. C (Pinto Report) at 5; id., Ex. D (Pinto Depo.) at 27:9-29:20 & 9 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 28 125:10-126:18.2 B. Garmus' "Rebuttal" Expert Report to Pinto Defendants chose not to serve affirmative expert reports, but on March 26, 2010, served Garmus' report in purported rebuttal to Paul Pinto. See Alinder Decl., Ex. A (Garmus Report) at 1. Four of Garmus' opinions are inadmissible under Rule 702 because they are unreliable and not based on sufficient or accurate facts or data, improperly offer legal conclusions in the guise of expert opinion, and are beyond the scope of expert rebuttal. At his deposition on June 4, 2010, Garmus confirmed the inadmissibility of these four opinions. V. ARGUMENT A. Garmus' Opinions and Testimony Regarding the Scope of Oracle Software Used by SAP TN Must be Excluded Garmus devotes more than four pages of his Report listing the Oracle software that he claims Pinto should have excluded from Defendants' cost of development, because according to Garmus, those software applications "were in fact not being used by TN...." Alinder Decl., Ex. A (Garmus Report) at 10-14. The Oracle software applications on the "not being used" list include many portions of Oracle's PeopleSoft and EnterpriseOne software applications. Id. Despite this detailed listing of Oracle software applications and claimed expert opinion about what SAP TN "in fact" used, Garmus' opinions are inaccurate at best. He admitted at deposition that he does not have a sufficient basis to testify regarding these opinions, expert or otherwise, and that he ignored virtually all of the relevant evidence. 1. Garmus is Not Even Remotely an Expert, on the Scope of Oracle Software Used by SAP TN Garmus admitted at deposition that that he had "no idea" what Oracle intellectual property SAP TN actually used. See id., Ex. B (Garmus Depo.) at 92:2-4 ("I have no idea what Defendants conceded their liability for copying the Oracle Database software in their opposition to Oracle's summary judgment motion, and the Court granted summary judgment in Oracle's favor on those claims. See Dkt. 762 (MSJ Order) at 24. 10 No. 07-CV-01658 PJH (EDL) 2 NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 TomorrowNow was using, or I have no -- I didn't talk to anybody from TomorrowNow."). Rather than "talk to anybody from TomorrowNow," Garmus derived a listing of Oracle software products that he claimed SAP TN did not "in fact" use by looking at five customer contract spreadsheets that were provided to him by defense counsel. See id. at 73:21-75:12 & 64:7-15 ("Q. Did you talk with any employees of SAP or TomorrowNow before issuing your report? A. None. Q. You didn't ask them to confirm your understanding of facts as you've stated in your report? A. No, the only people that I've dealt with have been people that work for Jones Day."). Garmus received these spreadsheets after asking defense counsel for information about "what work was being done by TomorrowNow, and what modules they were providing support for." Id. at 74:13-15. Not surprisingly, at his deposition, Garmus conceded that he personally had "no idea what TomorrowNow was using," Id. at 91:25-93:6 ("Q. Right. So your knowledge is limited to the spreadsheets that [defense counsel] provided to you? A. That's correct."). He further conceded he did nothing to test the spreadsheets' accuracy: Q. Right. You assumed that they were factual and that they constitute everything that TomorrowNow did, and there wasn't anything else, correct? [Objection Omitted] A: It was my belief that that was the work that TomorrowNow did, yes. Q. And you didn't do any checking or question anyone to make sure that was a well-founded belief? [Objection Omitted] A: I doubt that Mr. Pinto did, either. Id. at 200:1-17. Instead, Garmus simply "relied upon Jones Day." Id. at 284:8-286:4; see Lyman v. St. Jude Medical S.C., Inc., 580 F. Supp. 2d 719, 726 (E.D. Wis. 2008) ("[Expert] should have independently verified the reliability of the data before opining on plaintiffs' future sales, as opposed to accepting it at the word of [counsel]. Therefore, the Court must exclude [the expert's] testimony with regard to his projections.") Nor is there any dispute that Garmus ignored virtually all of the available evidence that he could have analyzed in an attempt to understand the true scope of use of Oracle software by 11 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 TomorrowNow in support its customers: Q. So you ignored what TomorrowNow could have told you about their support; you ignored the documentation that was on TomorrowNow's system; ignored the software that was on TomorrowNow's system; you ignored the support materials that were on TomorrowNow's system; and you ignored the admissions that they have made in the case, including their answer; is that right? [Objection Omitted] A: I think it was beyond the scope of what I was assigned to do. Alinder Decl., Ex. B (Garmus Depo.) at 281:17-282:5.3 This type of straight insertion of a lawyer's untested and selective view of the "facts" through an expert mouthpiece is precisely why the courts serve as gate-keepers of purported expert opinion. See Section II. above; see also Crowley v. Chait, 322 F. Supp. 2d 530, 542 (D. N.J. 2004) ("The information upon which an expert bases his testimony must be reliable, and the selective furnishing of information by counsel to an expert runs afoul of Fed. R. Evid. 703, which, in addition to Rule 702, must be considered by a court for Daubert purposes."); see also Sommerfield v. City of Chicago, 254 F.R.D. 317, 324 (N.D. Ill. 2008) ("Those courts that have considered the issue raised in this case have concluded that summaries of depositions or data prepared by a party's lawyer are not sufficiently reliable that they may form the basis of an expert's opinion."). Moreover, as detailed below, the evidence that Garmus ignored establishes that SAP TN accessed, copied, downloaded, and used Oracle software and related support materials across all of Oracle's suites of software, specifically including the applications that Garmus claimed "were in fact not being used by TN" based on the spreadsheets provided to him by counsel. Alinder Decl., Ex. A (Garmus Report) at 10. Nor did Mr. Garmus review the actual contracts with TN's customers. See, e.g., Alinder Decl., Ex. B (Garmus Depo.) at 75:6-12. 12 No. 07-CV-01658 PJH (EDL) 3 NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 4 2. Garmus Failed to Consider the Undisputed Wider Use by SAP TN of Oracle IP Even if the proffered scope of SAP TN's use were Garmus' opinion (and not SAP's counsel's), it would have to be excluded because it is contradicted by the undisputed facts, none of which Garmus knew. See Section III. A.-C. above. In contrast to Garmus' limited scope of use opinion, Defendants have conceded that SAP TN copied and used Oracle software, related support materials and documentation across all product families.4 Compare Dkt. 745 (Joint Pretrial Statement) at 23, Undisputed Facts 51-55 (identifying PeopleSoft HRMS, CRM, Financials, Enterprise Performance Management and Student Administration software copies at SAP TN), with Alinder Decl., Ex. A (Garmus Report) at 10-11 (claiming that TN did not use portions of these same applications); see also Dkt. 748-1 (Defs.' Press Release) (SAP taking "decisive step" and "would not contest the liability of TomorrowNow for copyright infringement and downloading conduct alleged in Oracle's complaint"). These specifically include the applications that Garmus claimed " were in fact not being used by TN" based on the spreadsheets provided to him by counsel. Alinder Decl., Ex. A (Garmus Report) at 10. Garmus did not know about or consider either these concessions or the underlying facts showing the reasons for them, e.g., that SAP TN had thousands of copies of Oracle software sitting on its computer systems: Q. You're not aware of the fact that TomorrowNow had thousands of copies of Oracle software in its systems? A. No, I am not. See id., Ex. B (Garmus Depo.) at 96:10-13. Q. Your understanding isn't that these copies of software were on Garmus' claimed scope of "use" by SAP TN is far less than Oracle alleged, but also is far less than (and contradicts) Defendants concessions at summary judgment and more recently in a press release coordinated with the Parties' pretrial filings. Compare Dkt. 418 (Pls.' 4th Am. Compl.) filed on August 18, 2009, with Dkt. 670 (Defs.' Opp. to Pls.' MSJ.) at 4:28-5:7 (conceding infringement of six of Oracle's registrations, related to hundreds of copies on Defendants' systems of Oracle's PeopleSoft HRMS application and Oracle's Database Software); see also Dkt. 727 (Defs.' Tr. Br.) at 1:27-2:8 (same, but purporting to preserve various defenses). 13 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 TomorrowNow's systems? A. I have no idea of that, whether they were or they weren't. Q. So your opinion doesn't take into account copies that TomorrowNow made of Oracle software sitting on their systems? A. That wasn't -- the purpose of my report was to determine Mr. Pinto's use of a ten step method that he claimed used Function Point Analysis. See id. at 101:25-102:9. Garmus also did not know the details of the laborious analysis of SAP TN's computer systems by Oracle's liability expert, Kevin Mandia, who identified thousands of copies of Oracle's PeopleSoft software, including the PeopleSoft software applications identified by Garmus as not having been used by SAP TN. See Alinder Decl., Ex. F (Mandia Report) at Section VII, 227, 233, 234, including Table 22, & 263 including Table M; see also id., Ex. B (Garmus Depo.) at 96:10-13 & 101:25-102:9. In addition, in the months leading up to Garmus' deposition, Defendants turned over thousands of instant messages ("IMs") that reveal that SAP TN employees kept and used copies of EnterpriseOne software. See Alinder Decl., 8. These IMs also contradicted Garmus' opinion about the scope of Oracle intellectual property that SAP TN did not "in fact" use. For instance, Garmus lists Oracle's EnterpriseOne 8.12 software applications as being outside SAP TN's scope of use. See Alinder Decl., Ex. A (Garmus Report) at 11-14. But, an IM between two SAP TN employees (Pete Surette and Ashis Ghosh) makes it clear Garmus is wrong: petsur (06:51:08 PM): do you have one running in a shed behind the house? ashis5228 (06:52:53 PM): :) yeah I have XE, ERP8, 8.10, 8.12 and 8.11 running with all ESUs applied to them, except for XE I think every single instance has all ESUs till last month applied to them. petsur (06:53:13 PM): sweet ! petsur (06:53:24 PM): how many computers are they running on/ petsur (06:53:26 PM): ? ashis5228 (06:53:54 PM): a couple of servers... I have the deployment and the databases on one server and the other one is 14 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 5 the enterprise server.. Alinder Decl., 9 & Ex. G (Ghosh IM October 24, 2006).5 That Garmus was not even aware that any of these software copies existed on SAP TN's computers, let alone that they included the same software applications that he opined that SAP TN didn't use, shows that his opinions and testimony are not supported by sufficient or accurate facts and data to be admissible. See Sections II. and III.A.-C. above; see also Nebraska Plastics, Inc. v. Holland Colors Americas, Inc., 408 F.3d 410, 416 (8th Cir. 2005) (affirming trial court's preclusion of expert's opinions because "an expert opinion that fails to consider the relevant facts of the case is fundamentally unsupported" and "should not be admitted if it does not apply to the specific facts of the case."). 3. Garmus Failed to Consider Evidence of Downloaded Support Materials on SAP TN's Systems Garmus also impermissibly ignores the fact that SAP TN's business model required it to download millions of Oracle support materials, including software updates, across all of Oracle's software families. See, e.g., Dkt. 745 ( Joint Pretrial Statement) at 24-25, Undisputed Facts 68, 70, 71, & 80-81 (acknowledging TN's mass downloading of Oracle IP for customer support). Despite Defendants' admissions that SAP TN used these Oracle downloads to support customers, Garmus again had no knowledge of, and did not consider, SAP TN's downloads of software and support materials from Oracle's customer support websites at all in his analysis: Q. So you didn't take into account any of those downloads in the opinions that you've put into your report, correct? [Objection Omitted] A: Can you testify that they downloaded? I mean, I certainly can't. I have no evidence that they did -- in fact, did. Alinder Decl., Ex. B (Garmus Depo.) at 109:24-110:6; see also id. at 275:16-278:16. Due to the late production of these IMs by Defendants, Oracle was unable to question SAP TN about these additional EnterpriseOne copies. In any event, they stand unrebutted as evidence of software copies that Garmus opines that SAP TN didn't use for customer support. 15 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 The testimony and opinions of Garmus also ignore and contradict the undisputed facts about TN's use of Oracle software updates and support materials to support its customers. Compare Dkt. 745 ( Joint Pretrial Statement) at 24-25, Undisputed Facts 68-79, 80 ("TN used information downloaded from the Oracle Websites to help support customers in competition with Oracle.") & 81-91, with Alinder Decl., Ex. A (Garmus Report) at 10-14. Indeed, Garmus testified that he had never seen, had not considered, and would not even agree with, Defendants' Answer conceding SAP TN's use of downloaded materials for customer support: Q. Right. Under the answer -- this whole document is the answer and affirmative defenses, so we number the paragraphs consecutively. On Page 2, you'll see Paragraph Number 16. It starts on Line 23. Can you read into the record the first sentence of Paragraph 16? [Objection Omitted] A: I certainly can read any paragraph, not that I would agree with what the paragraph says. But Paragraph 16 of the report that I was just handed and haven't read before says, "Defendants admit that TN, on behalf of its customers, downloaded and stored a large quantity of Software and Support Materials, and further admit that TN used those materials for customer support." Q. You've never seen this document before, though, correct? A. Not to the best of my knowledge, right. Alinder Decl., Ex. B (Garmus Depo.) at 111:11-112:5; see also Dkt. 448 (Defs.' Answer) 16. 4. Garmus Failed to Consider Support Documentation Libraries Built By SAP TN Garmus' list of materials considered includes copies of two massive libraries of Oracle software support documentation sitting on SAP TN's computers. Alinder Decl., Ex. A (Garmus Report) at 4 (identifying "PeopleBooks located on TomorrowNow's BU01 Servers"). But despite having them in his possession, Garmus did not consider them in reaching his opinions about the scope of Oracle intellectual property SAP TN "used": Q. And you don't know how TomorrowNow used the documentation that was on its systems, correct? [Objection Omitted] 16 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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: No, I do not know how TomorrowNow used any of the documentation it had. That's correct. Q. And you weren't aware when you wrote this report that TomorrowNow had these large documentation libraries on its systems? A. No -[Objection Omitted] A. -- I was not. Alinder Decl., Ex. B (Garmus Depo.) at 26:3-16. When faced with support documentation from the same Oracle software applications that he excluded, Garmus then conceded that he "had no idea what TomorrowNow had": Q. Well, we were just looking at the PeopleSoft HRMS 8.8 PeopleBooks. Do you recall? A. Yeah, but we didn't look and see if it had Global Payroll for U.S. on it, right. Q. No, we found Global Payroll for Brazil on it, which is one of your modules on Page 10. You remember that? A. Yes, I remember it's in my Page 10 that TomorrowNow was not using -- not providing support for Global Payroll for Brazil. Q. And you didn't take into account the fact that TomorrowNow had copies of the PeopleBooks for Global Payroll for Brazil in doing your analysis? [Objection Omitted] A. I had no idea what TomorrowNow had. Alinder Decl., Ex. B (Garmus Depo.) at 161:16-162:8. 5. Garmus Failed to Consider Concessions of SAP TN Employees Garmus also was unaware of, and did not consider, the representations made by SAP TN's CEO in documents about the scope of Oracle software that SAP TN supported. See, e.g., id. at 135:9-139:2. If Garmus had reviewed the evidence produced and attested to by SAP TN, including its former CEO, he would have learned that SAP TN represented that they supported all of the software applications that Garmus claimed SAP TN did not "in fact" use. See id.; see also id. at 138:20-139:1 ("Q. You understand it's TomorrowNow's CEO and president, and this 17 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 states the software he claims they can support, correct? [Objection Omitted] A: I see that that's what that page says, yes...."). 6. Garmus' Unsupported and Erroneous Opinion and Conjecture About the Scope of SAP TN's Actual Use Are Inadmissible An expert cannot testify in disregard of the facts. See, e.g., Guidroz-Brault, 254 F.3d at 830-31. Garmus' failure to consider the thousands of copies of Oracle software and millions of downloads on SAP TN's systems, his failure to consider the massive support documentation libraries that SAP TN used for Oracle software support, and his failure to review the evidence and testimony and concessions by Defendants, make any testimony he could provide regarding SAP TN's infringing use unreliable, and hence inadmissible, under Rule 702. See Sections II. and III. A.-C. above. Among the many cases that mandate preclusion of Garmus' opinion, the Court's decision in QR Spex, Inc. v. Motorola, 2004 WL 5642907 (C.D. Cal.) illustrates why Garmus' ignorance of the underlying facts of SAP TN's actual use must bar his opinion testimony on that topic. In QR Spex, the Court excluded an expert report and opinion where the expert failed to review key relevant underlying evidence. See id. In ruling that the testimony did not meet the standard for reliability under Rule 702, the Court found that "the crucial predicate `fact' upon which [the expert's] opinion is based is not only inaccurate, it is contradicted by the direct evidence submitted by Frog Design in support of its Motions. In the absence of this `fact,' Dr. Goodman's opinion lacks foundation." Id. at *9. The Court further found that the expert ignored evidence that would have been "useful" in formulating his opinions, and found that opinion was therefore "founded upon nothing more than Dr. Goodman's own conjecture and speculation, [and] simply fails to meet the test for reliability set forth in Rule 702." Id. at *9-10. For these same reasons, the Court should exclude Garmus' opinions and testimony about the scope of Oracle intellectual property used by SAP TN. The crucial predicate "facts" underlying Garmus' opinion and testimony are contradicted by undisputed facts that Garmus ignored, and Garmus readily concedes he does not have the foundation or expertise to support such testimony. Like the expert in QR Spex, Garmus' testimony fails to meet the tests for 18 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 reliability and admissibility under Rule 702. 7. Garmus' Improper Opinions Also Cannot be Used By Defendants' Damages Expert, Stephen Clarke Defendants' damages expert, Stephen Clarke, relies on Garmus' erroneous and unreliable opinions on the scope of SAP TN's infringing use to reduce Oracle's damages by excluding customers from damages who Garmus (or, more accurately, Jones Day) identified as having no infringing use. See Alinder Decl., Ex. H (Clarke Report) at 2 n.10, 33-34, 58-59, 116; see id., Ex. I (Clarke Depo.) at 144:13-21 ("And so this becomes very important if the subject IP doesn't include any of the rights and ownership benefits that Oracle acquired in the transaction. They should be analyzed out of his calculations. And this is just one of them that I think is an appropriate subtraction to start making the adjustment from the acquisition metric to a metric that's more appropriate to the subject IP that we're talking about.").6 With the exclusion of Garmus' opinions, Clarke's reliance on them, and opinions based on them, must also be precluded. See, e.g., McNamara v. Kmart Corp., 2010 WL 1936268, at *4 (3d Cir.) ("Because McKenzie [the first expert] was not permitted to testify about these expenses, Johnson's testimony [the second expert], which was dependent on McKenzie's, was also properly excluded."); see also Fed. R. Evid. 401-403 & 702. B. Garmus' New Function Point Counts Should be Excluded as an Irrelevant "Academic Exercise" Or An Undisclosed Affirmative Opinion On pages 27-28 of Garmus' expert report, Garmus purports to perform a function point count of two modules of Oracle software, as "an exercise." Alinder Decl., Ex. A (Garmus Report) at 27-28. Garmus' testimony and opinions on these two function point counts should be excluded for two reasons. First, they are irrelevant and would not help the trier of fact, so should be excluded under Fed. R. Evid. 401-403 and 702. Second, even if they were relevant, they 6 Despite the importance of Garmus' scope of use opinion to Clarke's reduction of Oracle's damages, Garmus testified that he was not aware that Clarke was relying at all on his opinions, had not provided Clarke with any information, and had never even met Clarke. See Alinder Decl., Ex. B (Garmus Depo.) at 213:3-18. 19 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 would constitute improper affirmative opinions, and would be properly excluded as untimely under Fed. R. Civ. P. 37. See Section III. E. above. 1. Garmus' Function Point Counts Are Not Relevant and Would Not Assist the Trier of Fact In his expert report, Garmus performs function point counts of one module of J.D. Edwards 8.0 Accounts Payable software and one module of PeopleSoft Enterprise version 8.9 software for Global Payroll for U.S. See Alinder Decl., Ex. A (Garmus Report) at 27-28. Both of these function point counts are irrelevant to any issue in the case, and were conceived of as purely academic exercises: Q. For both of these function point counts, you say, "As an exercise, to demonstrate how to properly perform an FPA." Do you see that? A. Yes. Q. So these are exercises for you, sort of academic exercises? A. They were. See id., Ex. B (Garmus Depo.) at 37:12-18. Indeed, Garmus admitted that he did not intend to count any of the applications relevant to the Pinto Report. See id. at 39:8-10 ("Q. You weren't intending to find a size for the same applications as Mr. Pinto, correct? A. No, I was not."). Further, Garmus' function point counts only provide the claimed size of the irrelevant software modules they do not go the additional step of determining the cost of development as Pinto does. See id. at 55:13-22. These academic exercises are irrelevant to the issues in the case and could not possibly help any trier of fact. See, e.g., Daubert II, 43 F.3d at 1320 ("Rule 702's `helpfulness' standard requires a valid scientific connection to the pertinent inquiry as a precondition to admissibility."). Garmus' irrelevant function point counts should be excluded under Fed. R. Evid. 401-403 and 702. 2. Garmus' Function Point Counts Are Also Improper Affirmative Opinions Defendants produced Garmus' 29-page "Expert Rebuttal Report" on March 26, 2010, 20 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 four months after the Parties agreed to exchange affirmative expert reports. Alinder Decl., Ex. A (Garmus Report) at 1. On that same day, Defendants produced Donald Reifer's 91-page report. See Alinder Decl., 2. Both of these reports purport to respond to opinions or analyses of Oracle expert, Paul Pinto. Both contain portions that do not. See, e.g., Alinder Decl., Ex. A (Garmus Report) at 27-28. As relates to Garmus, Pinto never attempted to analyze or develop a cost of development estimate for either of the software modules, for which Garmus provided hand counts. Compare Alinder Decl., Ex. C (Pinto Report) at 10, with Alinder Decl., Ex. A. (Garmus Report) at 27-28; see also id., Ex. B (Garmus Depo.) at 39:8-10 ("Q. You weren't intending to find a size for the same applications as Mr. Pinto, correct? A. No, I was not."). Garmus' opinions and testimony on those analyses thus do not rebut any part of Pinto's opinion. Faced with this new analysis and without the provision of additional time in the case schedule for Pinto to provide a sur-rebuttal report, Pinto scrambled to digest and provide detailed responses to both the Garmus and Reifer Rebuttal Reports in the limited time he had prior to his deposition. See Plaintiffs' Opposition to Defendants' Motions in Limine, No. 5, filed concurrently with this motion, at Section C. Though Defendants should have presented their affirmative opinions when affirmative reports were due, and despite Defendants having the opportunity to examine Pinto on his responses to Garmus during Pinto's deposition, Defendants are now trying to silence Pinto's responses to Garmus' rebuttal, including Garmus' new function point counts, through an in limine motion. Id. Defendants have it backwards. It is Garmus whose testimony should be excluded, not Pinto. Fed. R. Civ. P. 26(a)(2)(C)(ii) allows the admission of rebuttal expert testimony only if it is "intended solely to contradict or rebut evidence on the same subject matter identified by another party. . . ." A rebuttal expert "must restrict [his] testimony to attacking theories offered by the adversary's experts." IBM Corp. v. Fasco Industries, Inc., 1995 WL 115421, at *3 (N.D. Cal.); accord In re Ready-Mix Concrete Antitrust Litig., 261 F.R.D. 154, 159 (S.D. Ill. 2009) (rebuttal report must rebut, not offer affirmative opinions); see also Burnham v. U.S., 2009 WL 2169191, at *5 (D. Ariz.) ("[R]ebuttal experts shall be limited to responding to opinions stated by initial experts."). Where, as here, a party mislabels affirmative opinions as "rebuttal" 21 No. 07-CV-01658 PJH (EDL) NOTICE AND MOT. NO. 3: TO EXCLUDE TESTIMONY OF DEFENDANTS' EXPERT DAVID GARMUS 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 opinions and the opposing party has no meaningful opportunity to respond, the courts can and do preclude those non-rebuttal opinions under Rule 37. The courts in all the above-cited cases did just that. Because Garmus' function point analyses do not rebut anything Pinto did, and were not disclosed until four months after the affirmative expert report deadline, they should also be excluded under Rule 37 as improper and untimely affirmative expert opinions. See Fed. R. Civ. P. 37(c). C. Garmus' Claimed Opinions on Behalf of IFPUG And Its Membership Should be Excluded In his expert report, Garmus also attributes his own opinions to the International Function Point User's Group ("IFPUG") and the IFPUG membership in general, stating "IFPUG does not agree..." and "IFPUG membership does not agree...." Alinder Decl., Ex. A (Garmus Report) at 17-21. Garmus' opinions and testimony about what IFPUG and its membership purportedly agree about should be excluded, because they are not reliable, are without foundation, and would likely confuse and mislead the jury. See Section III. A.-B.; Fed. R. Evid. 401-403 & 702-703. Garmus claimed at his deposition that, as a past president and committee member, he could speak for IFPUG, but later admitted that no one from IFPUG had reviewed his report to confirm the accuracy of his assertions. See Alinder Decl., Ex. B (Garmus Depo.) at 242:1-14. Claiming that other experts not present or identified would offer or support an opinion is not proper expert testimony. See, e.g., U.S. v. Grey Bear, 883 F.2d 1382, 1392-1393 (8th Cir. 1989) ("We are persuaded that Fed. R. Evid. 703 does not permit an expert witness to circumvent the rules of hearsay by testifying that other experts, not present in the courtroom, corroborate his views."); see also Goomar v. Centennial Life Ins. Co., 855 F. Supp. 319, 326 (S.D. Cal. 1994) ("If proffered expert testimony is no more than unsupported speculation, the trial judge should exclude it."). Even if the purported opinion of IFPUG as a whole were probative, which it is not, Garmus' hearsay testimony about it would more than li

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