Oracle Corporation et al v. SAP AG et al

Filing 876

Reply in Support of 774 Defendants' Motion to Exclude Expert Testimony of Paul C. Pinto filed by SAP AG, SAP America Inc, Tomorrownow Inc. (Froyd, Jane) (Filed on 9/16/2010) Modified on 9/17/2010 (vlk, COURT STAFF).

Download PDF
Oracle Corporation et al v. SAP AG et al Doc. 876 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 Robert A. Mittelstaedt (SBN 060359) Jason McDonell (SBN 115084) Elaine Wallace (SBN 197882) JONES DAY 555 California Street, 26th Floor San Francisco, CA 94104 Telephone: (415) 626-3939 Facsimile: (415) 875-5700 ramittelstaedt@jonesday.com jmcdonell@jonesday.com ewallace@jonesday.com Tharan Gregory Lanier (SBN 138784) Jane L. Froyd (SBN 220776) JONES DAY 1755 Embarcadero Road Palo Alto, CA 94303 Telephone: (650) 739-3939 Facsimile: (650) 739-3900 tglanier@jonesday.com jfroyd@jonesday.com Scott W. Cowan (Admitted Pro Hac Vice) Joshua L. Fuchs (Admitted Pro Hac Vice) JONES DAY 717 Texas, Suite 3300 Houston, TX 77002 Telephone: (832) 239-3939 Facsimile: (832) 239-3600 swcowan@jonesday.com jlfuchs@jonesday.com Attorneys for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION ORACLE USA, INC., et al., Plaintiffs, v. SAP AG, et al., Defendants. Case No. 07-CV-1658 PJH (EDL) DEFENDANTS' REPLY IN SUPPORT OF DEFENDANTS' MOTION TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Date: September 30, 2010 Time: 2:30 p.m. Courtroom: 3, 3rd Floor Judge: Hon. Phyllis J. Hamilton DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 PJH (EDL) SVI-84813v1 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 SVI-84813v1 TABLE OF CONTENTS Page I. II. PINTO'S OPINIONS ARE IRRELEVANT....................................................................... 1 EVEN IF PINTO IS NOT IRRELEVANT, HE IS NOT QUALIFIED AND HIS METHODOLOGY IS UNRELIABLE ............................................................................... 4 A. Pinto's "Real-World" Experience Does Not Qualify Him as an Expert................. 4 B. Pinto is Not Qualified to Opine on Function Point Analysis .................................. 6 C. Pinto is Not Qualified to Opine on COCOMO ....................................................... 7 D. Pinto's Use of Outdated COCOMO II.1997 Renders His Opinion Unreliable................................................................................................................ 8 E. Pinto's Use of Backfiring Is Unreliable .................................................................. 9 F. Pinto's Purported FPA Methodology Is Unreliable .............................................. 10 G. Pinto's Opinion Regarding Software He Failed to Analyze Is Unreliable ........... 12 H. Garmus and Reifer Are Irrelevant to the Question of Pinto's Lack of Qualifications and Unreliable Methodology......................................................... 13 CONCLUSION ................................................................................................................. 14 III. -i- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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(s) Competitive Techs., Inc. v. Fujitsu Ltd., 333 F. Supp. 2d 858 (N.D. Cal. 2004) ....................................................................... 8, 10, 12, 13 Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311 (9th Cir. 1995)............................................................................................... passim Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993)................................................................................................................... 10 Fechtig v. Sea Pac. Inc., No. C 03-4056 JL, 2006 WL 2982148 (N.D. Cal. Oct. 17, 2006)............................................... 5 Fresenius Med. Care Holdings, Inc. v. Baxter Int'l, Inc., No. C 03-01431 SBA(EDL), 2006 WL 1646113 (N.D. Cal. June 12, 2006) .............................. 4 Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir. 1983).................................................................................................... 4 Hynix Semiconductor Inc. v. Rambus Inc., Nos. CV-00-20905 RMW, C-05-00334 RMW, C-05-02298 RMW, C-06-00244 RMW, 2008 WL 73681 (N.D. Cal. Jan. 5, 2008) ................................................................................ 5, 7 IMA N. Am., Inc. v. Maryln Nutraceuticals, Inc., No. CV-06-344-PHX-LOA, 2008 U.S. Dist. LEXIS 109623 (D. Ariz. Oct. 17, 2008) .............. 8 In re Canvas Specialty, Inc. 261 B.R. 12 (Bankr. C.D. Cal. 2001)........................................................................................... 5 In re Guam Asbestos Litig., No. 92-00064A, 1993 WL 470426 (D. Guam Oct. 19, 1993) ..................................................... 6 In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 289 F. Supp. 2d 1230 (W.D. Wash. 2003)................................................................................. 13 Jaasma v. Shell Oil Co., 412 F.3d 501 (3d Cir. 2005)......................................................................................................... 3 Metabolife Int'l, Inc. v. Wornick, 264 F.3d 832 (9th Cir. 2001)...................................................................................................... 13 Morin v. McCulloch Corp., No. CV 01-6431 SVW (SHx), 2002 WL 34357202 (C.D. Cal. July 3, 2002)............................. 5 R.A. Mackie & Co. v. PetroCorp Inc., 329 F. Supp. 2d 477 (S.D.N.Y. 2004).......................................................................................... 3 Salinas v. Amteck of Ky., Inc., 682 F. Supp. 2d 1022 (N.D. Cal. 2010) ................................................................................. 8, 12 Sega Enters. Ltd. v. MAPHIA, 948 F. Supp. 923 (N.D. Cal. 1996) .............................................................................................. 5 Semerdjian v. McDougal Littell, 641 F. Supp. 2d 233 (S.D.N.Y. 2009).......................................................................................... 3 Smith v. Ingersoll-Rand Co., 214 F.3d 1235 (10th Cir. 2000).................................................................................................... 3 SVI-84813v1 DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 PJH (EDL) - ii - 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 SVI-84813v1 TABLE OF AUTHORITIES (continued) Page(s) U.S. ex rel. Suter v. National Rehab Partners Inc., Nos. CV-03-015-S-BLW, CV-03-128-S-BLW, 2009 WL 3151099 (D. Idaho Sept. 24, 2009)............................................................................................................ 5 Walsh v. City of Richland, No. CV-02-5067 EFS, 2005 WL 6201455 (E.D. Wash. Feb. 24, 2005) ..................................... 5 Rules Fed. R. Evid. 702 ................................................................................................................... 5, 8, 13 Other Authorities Software Cost Estimation With COCOMO II (Prentice Hall, July 2000) ........................................ 9 - iii - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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. PINTO'S OPINIONS ARE IRRELEVANT Pinto's opinions and testimony are completely irrelevant and should be excluded in their entirety as a result of this Court's August 17, 2010 Order granting Defendants' motion to preclude Plaintiffs from "recover[ing] damages based on `saved development costs' for any of their claims," including copyright infringement. ECF No. 762 (8/17/10 Order) at 18-23. Specifically, citing a lack of "case law supporting a theory of copyright damages based on `saved development costs,'" the Court "decline[d] to permit plaintiffs to seek such damages" as actual damages for copyright infringement. ECF No. 762 (8/17/10 Order) at 22-23 (emphasis added). Moreover, the Court specifically noted "that no court in this Circuit has considered `saved costs' when calculating a fair market value license, and the Ninth Circuit's `value of use' analysis says nothing about `saved costs.'" ECF No. 762 (8/17/10 Order) at 22. This Court granted the order after considering both Parties' arguments. Defendants specifically requested that this Court hold that "`[s]aved development costs' are an improper measure of copyright damages, and as a matter of law, may not be used to calculate a `fair market value' license form of actual damages." ECF No. 640 (MSJ) at 19 (emphasis added). Plaintiffs understood that Defendants sought to exclude saved development costs as a matter of law, and argued in opposition that "[t]he R&D costs SAP saved by using Oracle's software and support materials are directly relevant to the FMV of Oracle's hypothetical license damages," and that these costs were "among the many factors relevant to FMV of the hypothetical license" ECF No. 677 (Pls.' Opp. to MSJ) at 17-18, 19 (emphasis added). Moreover, Plaintiffs' counsel argued at the May 5, 2010 hearing that saved development costs are, as a matter of law, relevant to a fair market value license calculation. See, e.g., Declaration of Tharan Gregory Lanier in Support of Defendants' Reply ("Lanier Decl.") 1, Ex. 1 (5/5/2010 Hearing Tr.) at 45-47 (stating, inter alia, that "and of course, value of use would be, well, I'm going to save, you know, hundreds and hundreds of millions, if not more, in not developing the software" and that therefore, "we think it's a legitimate question for the jury to decide, whether a hypothet [sic] in that hypothetical negotiation, avoided cost would be relevant"). Defendants addressed these arguments in reply, stating "[i]n an apparent attempt to circumvent this problem, Plaintiffs argue that a defendant's SVI-84813v1 -1- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 saved costs `are directly relevant to the FMV of Oracle's hypothetical license damages' . . . But Plaintiffs cannot use a fair market value license as a vehicle to recover otherwise impermissible costs." ECF No. 691 (MSJ Reply) at 4. The Court need go no further. Because Plaintiffs designated Pinto exclusively to "analyze, calculate, and testify to the costs associated with software product development," excluded saved development costs, Pinto's opinions should be precluded in their entirety as irrelevant. See ECF No. 775-1 (Pls.' Supp. Expert Disclosures) at 3. Plaintiffs' attempts to salvage Pinto's testimony and keep their damages numbers inflated all fail. First, Plaintiffs erroneously argue that, although the Court precluded Plaintiffs from asserting saved development costs as a measure of damages, the Court did not address whether Plaintiffs' damages expert could use such purported saved costs as a component in one of the four methods to calculate a fair market value license. However, the Court's order clearly states that Plaintiffs may not recover damages based on saved development costs "as actual damages for infringement" (ECF No. 762 (8/17/10 Order) at 22-23); there is no doubt that, under this Court's Order, Plaintiffs may no more rely on saved development costs as a component in calculating a fair market value license using a particular method than as a stand-alone measure of actual damages. Indeed, Plaintiffs' argument that Defendants' motion did not seek to preclude use of saved development costs as a component of a fair market value license calculation is disingenuous in light of the plain language of Defendants' motion and reply, as well as Plaintiffs' own arguments to this Court. See infra. Second, relying on the language in an explanatory footnote, Plaintiffs incorrectly assert that this Court's Order precluded recovery of what Oracle spent on R&D (which has never been sought and was not at issue in Defendants' motion), but not what Plaintiffs estimate SAP would have spent on R&D (which is what Pinto purports to estimate). Plaintiffs mischaracterize the Court's footnote, which, in full, states: Even were there some authority for calculating actual damages under the Copyright Act using a "saved development costs" calculation, the court finds plaintiffs' calculations to be highly speculative, as they are based on the amounts that Oracle allegedly spent to develop and/or acquire the intellectual property at issue, not on what it would have cost SAP for research and development. As noted above, actual damages based on "value of use" are SVI-84813v1 -2- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 derived from "the value of an infringer's use," and plaintiffs have provided no evidence of what SAP would have spent. ECF No. 762 (8/17/10 Order) at 23 n.5. Contrary to Plaintiffs' suggestion, this footnote is fully consistent with the Court's holding, which grants Defendants' motion to preclude Plaintiffs from seeking what SAP allegedly would have spent to develop the asserted registered works; indeed, the footnote acknowledges that there is no authority for calculating actual damages under the Copyright Act using a "saved development costs" calculation. See id. at 23 n.5. That the Court also raises concerns about the "highly speculative" nature of Plaintiffs' saved development costs calculations does not impact the Court's holding. 1 Id. Third, Plaintiffs seek to save Pinto's testimony by implausibly asserting that he not only provides an estimate of such prohibited saved costs, but that he also opines on the "other factors" used to evaluate a fair market value license, "including the risks involved in building an alternative product and the added time to market." ECF No. 843 (Pinto Opp.) at 11. But the socalled "risks involved in building an alternative product and the added time to market" simply amount to the estimated cost savings of not having to build an alternative product--i.e., a defendant's saved development costs. Indeed, Plaintiffs' own arguments in summary judgment briefing make this point, when Plaintiffs stated in opposition that Pinto, "explains the relevance" of using saved development costs in a hypothetical license calculation by opining that: the time and technical and litigation risks associated with such development would, in my opinion, and based on my experience, significantly factor into a decision by a potential licensee whether to license a product . . . In negotiating the price of licenses, I would regularly consider the avoided costs, including saved time and avoided risks . . . associated with licensing productized software, as opposed to independently developing software. Time and cost, are indeed, the most important considerations to potential licensees in my experience. Additionally, Plaintiffs' authority regarding admissibility of damages-related expert testimony is inapposite to the issues at hand, because the experts involved in each case opined about live damages issues. See, e.g., Jaasma v. Shell Oil Co., 412 F.3d 501, 513-14 (3d Cir. 2005); Smith v. Ingersoll-Rand Co., 214 F.3d 1235, 1246 (10th Cir. 2000); Semerdjian v. McDougal Littell, 641 F. Supp. 2d 233, 242 (S.D.N.Y. 2009); R.A. Mackie & Co. v. PetroCorp Inc., 329 F. Supp. 2d 477, 512-14 (S.D.N.Y. 2004). In contrast, Pinto opines on saved development costs, an issue that is no longer live in this matter. SVI-84813v1 1 -3- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 ECF No. 677 (Opp. to MSJ) at 18. Plaintiffs also stated that their damages expert had concluded "that the costs, risks and delays SAP avoided are relevant to the value of the materials it infringed." Id. Just as Plaintiffs cannot recover saved development costs for copyright infringement by calling them a "component" in a fair market value license, neither can Plaintiffs do so by re-naming Pinto's saved development cost calculations as "risks" and "time to market." Pinto's opinions regarding, inter alia, these purported risks and delays, which Plaintiffs propose will be used as factors in a fair market value license calculation, do not "logically advance[] a material aspect of the proposing party's case" and must also be excluded. See Daubert v. Merrell Dow Pharms., Inc., 43 F.3d 1311, 1315 (9th Cir. 1995). Finally, Plaintiffs' cases purporting to demonstrate that saved costs are appropriate and may be considered in calculating a fair market value license are irrelevant in light of this Court's Order. Saved development costs have been precluded by this Court for use as a damages measure, including in a hypothetical license calculation, and it is not appropriate to attempt to re-litigate the merits of this issue on Daubert.2 II. EVEN IF PINTO IS NOT IRRELEVANT, HE IS NOT QUALIFIED AND HIS METHODOLOGY IS UNRELIABLE Pinto lacks the requisite "knowledge, skill, experience, training, or education" to be sufficiently qualified as an expert in either Function Point Analysis ("FPA") or the Constructive Cost Model ("COCOMO"), and this lack of expertise results in Pinto's using outdated models and improper techniques, rendering his ultimate opinions unreliable. A. Pinto's "Real-World" Experience Does Not Qualify Him as an Expert. Pinto's background is in consultancy, not software valuation, he has no special training in FPA or COCOMO, he has not published articles on either methodology, and he only recently joined the International Function Point Users Group ("IFPUG") after Defendants challenged his Plaintiffs' authority, all patent cases, are inapposite. In Fresenius, the non-infringing alternative was not a product that could hypothetically have been developed but a product that already existed; its existence was used to lower proposed royalty rate. Fresenius Med. Care Holdings, Inc. v. Baxter Int'l, Inc., No. C 03-01431 SBA(EDL), 2006 WL 1646113, at *1 (N.D. Cal. June 12, 2006). In Hanson, the "saved costs" were the energy costs saved by using a more energy-efficient product, not any kind of saved development costs. Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075, 1077, 1081 (Fed. Cir. 1983). SVI-84813v1 2 -4- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 qualifications. See ECF No. 774 (Pinto Mot.) at 4-5. Plaintiffs attempt to overcome Pinto's lack of technical training and expertise by relying heavily on his purported "real world" qualifications. However, whether or not an expert uses particular methods in his or her "real" work, he or she must meet the specific legal requirements to qualify as an expert. See Fed. R. Evid. 702 (must be "qualified by knowledge, skill, experience, training, or education"); Sega Enters. Ltd. v. MAPHIA, 948 F. Supp. 923, 929 (N.D. Cal. 1996) (holding exclusion of expert justified where foundational facts demonstrating qualification not shown); In re Canvas Specialty, Inc., 261 B.R. 12, 17-19 (Bankr. C.D. Cal. 2001) (holding that proponent of testimony must present evidence to "show that the expert witness possesses the appropriate expertise"). A witness is not qualified as an expert merely by his or her practical experience. See Hynix Semiconductor Inc. v. Rambus Inc., Nos. CV-00-20905 RMW, C-0500334 RMW, C-05-02298 RMW, C-06-00244 RMW, 2008 WL 73681, at *1 (N.D. Cal. Jan. 5, 2008) ("An expert who relies on experience, however, must `explain how that experience leads to the conclusion reached, why the experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.' The court may not `simply tak[e] the expert's word for it.'") (quoting Fed. R. Evid. 702, 2000 Advisory Committee Note); Walsh v. City of Richland, No. CV-02-5067 EFS, 2005 WL 6201455, at *2 (E.D. Wash. Feb. 24, 2005) (finding expert unqualified to opine on value of economic losses, despite his assertion that calculating salary damages was type of opinion he regularly reached in his work as a vocational consultant); Morin v. McCulloch Corp., No. CV 01-6431 SVW (SHx), 2002 WL 34357202, at *3-4 (C.D. Cal. July 3, 2002) (holding that purported expert's experience designing warning labels for various products at different points in his career did not qualify him as an expert in the design and evaluation of warning labels); Fechtig v. Sea Pac. Inc., No. C 03-4056 JL, 2006 WL 2982148, at *11 (N.D. Cal. Oct. 17, 2006). Cases in which courts find that an expert is qualified based on practical experience are limited to situations in which the expertise at issue specifically derives from practical experience and does not involve the type of complicated methodologies at issue here. See, e.g., U.S. ex rel. Suter v. National Rehab Partners Inc., Nos. CV-03-015-S-BLW, CV-03128-S-BLW, 2009 WL 3151099, at *5-6 (D. Idaho Sept. 24, 2009) (allowing expert to opine on SVI-84813v1 -5- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 manner in which hospital delivered services); In re Guam Asbestos Litig., No. 92-00064A, 1993 WL 470426, at *4 (D. Guam Oct. 19, 1993) (allowing expert opinion on hazards of asbestos). Pinto's alleged "real world" experience, which Plaintiffs say "tempers" his analysis, is unscientific (neither FPA nor COCOMO calls for any tempering), and is a cover for his lack of sound, scientific understanding of the models. B. Pinto is Not Qualified to Opine on Function Point Analysis. Pinto claims to apply FPA, but he was unable to answer numerous, basic questions regarding FPA at his deposition, and Plaintiffs fail to mention or explain this defect. See ECF No. 775-4 (Pinto Tr.) at 66:17-67:3 (unable to explain IFPUG rules for distinguishing between output and inquiry), 213:24-217:7 (unable to identify which of the major components used in FPA would be assigned to particular data), 231:11-236:7 (unable to answer basic questions about FPA steps), 237:20-239:4 (admitting that his responses may be interpreted as his not knowing the answers). Nor do Plaintiffs address Pinto's admission that he is not a function point specialist, nor a Certified Function Point Specialist. See Lanier Decl. 2, Ex. 2 (Pinto Tr.) at 217:13-17, 217:2324; ECF No. 775-4 (Pinto Tr.) at 53:2-4. This unrefuted testimony, demonstrates Pinto's lack of FPA qualifications. Although Plaintiffs assert that Pinto does not need these qualifications because he did not use IFPUG-approved FPA, instead using his own, tailor-made 10-Step process as well as the known-inaccurate technique called backfiring (see ECF No. 843 (Pinto Opp.) at 11-12), this attempt to excuse Pinto's lack of qualifications fails. In addition to the fact that backfiring is an unreliable methodology, Pinto himself identifies FPA as promulgated by IFPUG as his chosen methodology. See ECF No. 775-2 (Pinto Report) at 8 (stating that "[t]he method of Function Point Analysis . . . is actively maintained by the International Function Point Users Group ("IFPUG") . . . I chose to use Function Point Analysis for this assessment because it is recognized by the International Standards Organization ("ISO") as a valid method for assessing the size of a software product and for deriving the associated cost of product development."). Pinto cannot seek to bolster his credibility by claiming to use IFPUG-approved FPA, only to later argue that he does not need the requisite FPA qualifications, because he actually uses his own made-up method. SVI-84813v1 -6- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 Either Pinto must be qualified to use FPA as approved by IFPUG--a fact that Plaintiffs cannot prove--or Pinto's report is misleading as to what methodology he uses, and therefore unreliable.3 Further, Plaintiffs incorrectly argue that Defendants rely on rebuttal expert David Garmus' opinion that IFPUG-approved FPA is the "better way[]," and that a dispute between IFPUGapproved FPA and backfiring merely "presents a credibility fight between experts." See ECF No. 843 (Pinto Opp.) at 13. Defendants do not rely on Garmus' opinions when moving to exclude Pinto. Because Pinto claims to use IFPUG-approved FPA (ECF No. 775-2 (Pinto Report) at 8, 11), Plaintiffs must demonstrate that he was qualified to do so. C. Pinto is Not Qualified to Opine on COCOMO. Just as Pinto is unqualified in FPA, so too is he unqualified in COCOMO, as evidenced by his inability to answer basic questions about COCOMO equations. See ECF No. 843 (Pinto Opp.) at 13-14. Pinto's bald assertions to the contrary do not save him. See Hynix Semiconductor, 2008 WL 73681, at *1. Such evidence of Pinto's inability to answer questions about equations and variables used in a COCOMO analysis is not misleading; in fact, it demonstrates his lack of facility and expertise with the methodology. See ECF No. 775-4 (Pinto Tr.) at 302:15-304:7 (unable to identify variables or answer multiple questions about COCOMO equations).4 Moreover, after failing to identify the equations and variables, Pinto later admitted that these equations were used in his own COCOMO spreadsheet. See Lanier Decl. 2, Ex. 2 (Pinto Tr.) at 305:13-306:16 (discussing a manual cited in his report which also includes the equations). Thus, the formulas discussed during Pinto's deposition were not "arcane" and do not "only appear in textbooks" as Plaintiffs assert (ECF No. 843 (Pinto Opp.) at 13-14), they were used (but not understood) by Pinto himself. Moreover, Pinto's inability to recognize and answer questions about these equations is not excused because they are generally "not visible to the user of Plaintiffs' characterization of IFPUG as a group that only Defendants' expert, David Garmus, endorses implies that Pinto does not need to conform to IFPUG's requirements. See ECF No. 843 (Pinto Opp.) at 12. It is Pinto's own assertion that he used FPA as "actively maintained by IFPUG" that requires him to conform with its rules and requirements, not the assertions of Defendants' expert. See ECF No. 775-2 (Pinto Report) at 8. 4 Plaintiffs misleadingly argue that Pinto "recognized a number of these variables." See ECF No. 843 (Pinto Opp.) at 13; ECF No. 775-4 (Pinto Tr.) at 302:15-304:7 (recognizing only one of the variables in one of the three equations presented). SVI-84813v1 3 -7- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 COCOMO" (see ECF No. 843 (Pinto Opp.) at 14), because Plaintiffs are offering Pinto, not as a lay witness who uses COCOMO, but as an expert witness, and Plaintiffs must qualify him as such. Plaintiffs' argument that failure to answer basic questions about COCOMO is acceptable requires the Court to take Pinto's word that he knows what he is doing, despite the evidence to the contrary; the Court is under no such obligation. A purported expert who has been proved unqualified cannot be allowed to testify simply because of he can be cross-examined at trial. Though Defendants certainly would question Pinto's "competence to estimate software development costs . . . before the jury" (see id.), admitting such an unqualified expert on such a basis would render the Court's gate-keeping role meaningless. Plaintiffs fail to meet their burden to demonstrate that Pinto is a qualified expert. Accordingly, Pinto should be excluded. D. Pinto's Use of Outdated COCOMO II.1997 Renders His Opinion Unreliable. Pinto's opinions are unreliable because he uses an outdated model for his COCOMO analysis. See Fed. R. Evid. 702; Salinas v. Amteck of Ky., Inc., 682 F. Supp. 2d 1022, 1029-30 (N.D. Cal. 2010); IMA N. Am., Inc. v. Maryln Nutraceuticals, Inc., No. CV-06-344-PHX-LOA, 2008 U.S. Dist. LEXIS 109623, at *10 (D. Ariz. Oct. 17, 2008) (finding experts must apply method "as it is practiced by (at least) a recognized minority of scientists in their field") (citation omitted). The COCOMO method is updated and maintained by the USC Center for Systems and Software Engineering (See ECF No. 775-2 (Pinto Report) at 9 n.5), but Pinto does not use the current model, COCOMO II.2000, which includes the most up-to-date data set and cost and scale drivers, and instead erroneously employes an outdated version of COCOMO (known as COCOMO II.1997). See ECF No. 775-4 (Pinto Tr.) at 16:5-13, 111:1-3. Plaintiffs do not (and cannot) argue that COCOMO II.1997 is not outdated; the only evidence they offer to show that the use of COCOMO II.1997 is reliable is Pinto's own selfserving testimony which carries no weight given his lack of expertise. See ECF No. 843 (Pinto Opp.) at 15; see also Competitive Techs., Inc. v. Fujitsu Ltd., 333 F. Supp. 2d 858, 880 (N.D. Cal. 2004) ("the expert's bald assurance of validity is not enough. Rather, the party presenting the expert must show that the expert's findings are based on sound science, and this will require some SVI-84813v1 -8- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 objective, independent validation of the expert's methodology.") (quoting Daubert, 43 F.3d at 1316). Moreover, Pinto's testimony demonstrates that use of this version of COCOMO is highly questionable; he admitted that he is not aware of any publications supporting his departure from the published, up-to-date COCOMO II.2000 model. See ECF No. 775-4 (Pinto Tr.) at 114:9-14. And relying on Pinto's assertions is especially inappropriate where, as here, evidence has been presented that the model is outdated and unreliable. See, e.g., ECF No. 775-11 (Software Cost Estimation With COCOMO II (Prentice Hall, July 2000)) at 141-42. Finally, Plaintiffs' argument that Defendants' expert Donald Reifer cannot "question" Pinto's use of the COCOMO model is both a distraction and nonsensical. See ECF No. 843 (Pinto Opp.) at 16. Defendants do not rely on Reifer's testimony to support the exclusion of Pinto, so this point is irrelevant. Moreover, Reifer was a member of the core team that helped to calibrate COCOMO II and one of the authors of the official release of COCOMO II; certainly he can "question" use of an outdated version. See Lanier Decl. 3, Ex. 3 (Reifer Report) at 8. Reifer has never used COCOMO II.1997 to develop an estimate for a customer precisely because it is superseded and known to be inaccurate. See Lanier Decl. 4, Ex. 4 (Reifer Tr.) at 110:13-20 (stating that COCOMO II.1997 is an antiquated model none of the 43 USC affiliate firms use), 192:19-25 (explaining that COCOMO II.1997 is unreliable because it inflates costs upward). E. Pinto's Use of Backfiring Is Unreliable. The "backfiring" methodology Pinto uses in his purported FPA estimates is unreliable; Plaintiffs' assertions to the contrary are but more self-serving statements from Pinto and denigrating comments about IFPUG. Plaintiffs cannot satisfactorily explain why Pinto's own source for backfiring states that backfiring "is (on average) significantly less accurate than normal function point counting" and varies as much as plus or minus 25%. ECF No. 775-12 (ORCLX-PIN-000019) at 3. Instead, they attempt to explain away these reliability concerns through Pinto's self-serving statements that "as I applied it here, [backfiring] is much more accurate, and thus has a considerably tighter accuracy range." ECF No. 845 (Pinto Decl.) at 11. However, Pinto must provide more than his word that backfiring is reliable (particularly when there is unrefuted evidence indicating that it is SVI-84813v1 -9- DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 unreliable). See Daubert, 43 F.3d at 1315-16 ("[S]omething doesn't become `scientific knowledge' just because it's uttered by a scientist; nor can an expert's self-serving assertion that his conclusions were `derived by the scientific method' be deemed conclusive") (quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 590 (1993)); Competitive Techs., 333 F. Supp. 2d at 880. Plaintiffs do not provide any objective evidence to support backfiring. Additionally, Plaintiffs try to bolster the reliability of backfiring by pointing to statements made by or about Defendants' experts, Garmus and Reifer, but both attempts fail. See ECF No. 843 (Pinto Opp.) at 17. The fact that Garmus' consulting group sometimes supplies backfiring tables to customers who request them does not render backfiring reliable; Garmus specifically testified that his company only provides backfiring tables for limited situations, tells customers that backfiring has a "huge range," and includes warnings to customers. See ECF No. 844-8 (Garmus Tr.) at 246:21-247:25. And Plaintiffs incorrectly imply that Reifer, who is not an FPA expert, endorsed backfiring in a previous case. The exact opposite is true.5 When asked whether it would be appropriate use SLOC and backfire to function points, Reifer stated, "I believe it would be inappropriate because one is a spec base measure of size, and the other is a physical measure of size." See Lanier Decl. 5, Ex. 5 (Evolution Tr.) at 96:15-97:8 (emphasis added). Finally, Pinto supports his supposed selection of FPA by citing to IFPUG and its promulgated standards (see ECF No. 775-2 (Pinto Report) at 8, 11), and he cannot now escape the fact that his use of backfiring is not a proper step in an IFPUG-approved FPA. See ECF No. 774 (Pinto Mot.) at 9. Plaintiffs, unable to counter the disapproval of "backfiring," instead denigrate IFPUG as an organization. ECF No. 843 (Pinto Opp.) at 16. This tactic, of course, completely ignores Plaintiffs' expert's own reliance on IFPUG in his report. F. Pinto's Purported FPA Methodology Is Unreliable. Pinto's 10-Step methodology is unreliable and is not, as Pinto asserts in his report, proper FPA; Plaintiffs do not present sufficient evidence otherwise. Specifically, Plaintiffs do not counter Defendants' arguments that Pinto's "Ten-Step Analysis to Determine the Cost of Reifer did not even purport to use FPA in the Evolution case cited by Plaintiffs; rather, he counted SLOC and used COCOMO to evaluate software costs. See Lanier Decl. 5, Ex. 5 (Evolution Tr.) at 95:13-96:3. SVI-84813v1 5 - 10 - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 Development Using Function Point" is unreliable because, inter alia, it was not a proper FPA methodology, it was "specifically written and tailored for this case," has not been published in a peer reviewed journal, and has never been approved by a Certified Function Point Specialist or any standards setting organizations, including ISO. See ECF No. 774 (Pinto Mot.) at 10. Rather, Plaintiffs seek to denigrate the importance of IFPUG to the field of FPA and to recast the dispute as an argument between the experts. See ECF No. 843 (Pinto Opp.) at 3, 18-19. However, it is Pinto who put IFPUG and its standards at issue, by specifically relying on those standards to bolster his report (see ECF No. 775-2 (Pinto Report) at 8, 11) and it is disingenuous for Plaintiffs to imply that Pinto's failure to conform to IFPUG standards is irrelevant. See ECF No. 843 (Pinto Opp.) at 18. Pinto admitted the faults in his 10-Step Process (see ECF No. 775-4 (Pinto Tr.) at 57:14-20, 61:2-9, 176:24-177:18, 177:25-178:1, 212:18-21); no "dispute between the experts" is involved. Plaintiffs' additional argument that Reifer "used the 10-step methodology in his report" (see ECF No. 843 (Pinto Opp.) at 19) grossly mischaracterizes Reifer's obligatory review of portions of Pinto's 10-Step process in order to rebut Pinto's COCOMO analysis. ECF No. 844-4 (Reifer Report) at 17 ("Because of its potential impact on the factors used in the COCOMO II model, I reviewed Mr. Pinto's ten-step estimating approach.") (emphasis added). Moreover, though Pinto admitted that his methodology was "specifically written and tailored for this case," (see Lanier Decl. 2, Ex. 2 (Pinto Tr.) at 173:6-17, 176:7-14) Plaintiffs erroneously argue that the 10-Step Process was not created for the litigation, and in fact is prelitigation research that should be admissible. However, Plaintiffs' authority regarding prelitigation research is inapposite, as there is no evidence, and Plaintiffs do not provide any, that Pinto sized the PeopleSoft, J.D. Edwards, and Siebel products using his 10-Step Process before he was hired in this case. See Daubert, 43 F.3d at 1317 (holding that reliable pre-litigation research existed when "an expert prepares reports and findings before being hired as a witness"). Further, none of the authorities Plaintiffs cite in their motions support the reliability of Pinto's methodology. While it is true that the three articles cited by Plaintiffs include methods with multiple, numbered steps, almost none of those actual steps are included in Pinto's own 10-Step Process. For example, ORCLX-PIN-000100, cited by Plaintiffs, lists seven steps for the SVI-84813v1 - 11 - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 developing a software estimate, but none of these seven steps are included in Pinto's 10-Step Process; the same is true for ORCLX-PIN-000102.6 And ORCLX-PIN-000101 contains ten steps, only four of which are similar, though not identical, to certain of Pinto's steps.7 Not only does Pinto not use the other six steps, meaning that this article does not endorse Pinto's 10 StepProcess, but also the article specifically endorses IFPUG as the authority on FPA. See ECF No. 844-12 (ORCLX-PIN-000102) at .002 (stating that "[i]n the [U.S.], the function point metric by IBM, and now maintained by [IFPUG], is most commonly used for software estimates."). Finally, Pinto's self-serving statements that he "use[d] a variant" of this method at other firms (see Lanier Decl. 2, Ex. 2 (Pinto Tr.) at 173:11-17) is insufficient to show reliability; Plaintiffs must point to some objective evidence of reliability. See Daubert, 43 F.3d at 1315-16; Competitive Techs., 333 F. Supp. 2d at 880. Because Plaintiffs' purported "objective" evidence does not support the reliability of Pinto's methodology, Plaintiffs fail to provide any evidence that Pinto's 10-Step Process is reliable other than Pinto's say-so. G. Pinto's Opinion Regarding Software He Failed to Analyze Is Unreliable. Pinto's improper extrapolation of SLOC counts for two of the four software suites he purports to estimate, J.D. Edwards World and Siebel, are not reliable, and Plaintiffs provide no evidence or authority to the contrary. See ECF No. 774 (Pinto Mot.) at 11-12; Salinas, 682 F. Supp. 2d at 1030 (extrapolation improper if expert "unjustifiably extrapolated from an accepted premise to an unfounded conclusion"). First, the fact that Pinto "ran out of time" is irrelevant to the reliability of his extrapolation. See ECF No. 843 (Pinto Opp.) at 19. Whatever Pinto's time constraints, it was still incumbent on him to apply reliable methodologies.8 Moreover, the case Compare ECF No. 844-11 (ORCLX-PIN-000100) at .003 with ECF No. 775-2 (Pinto Report) at i (listing the 10 Steps Pinto used); compare ECF No. 844-13 (ORCLX-PIN-000102) at .002-.009 (listing several different methods of analysis) with ECF No. 775-2 (Pinto Report) at i. 7 Compare ECF No. 844-12 (ORCLX-PIN-000102) at .002-.005 with ECF No. 775-2 (Pinto Report) at i. 8 Plaintiffs cannot rely on the fact that Reifer operated under time constraints as proof that Pinto was justified in unreliably extrapolating source code counts. Pinto is required to perform a reliable analysis, regardless of time pressures. Reifer's time was limited by Plaintiffs' failure to produce Pinto's code counters until a month before Reifer's report was due and because Reifer spent half his remaining time trying to make these inoperable files work. See ECF No. 831 (Reifer Opp.) at 5. Conversely, Pinto's team had the source code for six months. See ECF No. 775-4 (Pinto Tr.) at 46:5-10 (NIIT had the source code from June 2009 to November 2009). SVI-84813v1 6 - 12 - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 law offered by Plaintiffs involves extrapolating the effects of a drug based on different populations or dosages to determine causation, and say nothing about extrapolating for damages. See In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 289 F. Supp. 2d 1230, 1246 (W.D. Wash. 2003); Metabolife Int'l, Inc. v. Wornick, 264 F.3d 832, 843 (9th Cir. 2001). Indeed, the question is not whether extrapolation is sometimes permitted in certain situations, but whether Pinto's extrapolation of SLOC counts was appropriate in this case. Similarly, general assertions within the articles cited in Plaintiffs motion that "estimation by analogy" is sometimes appropriate within organizations does not prove the reliability of extrapolating specific SLOC counts of millions of lines of code--SLOC counts that are then used as inputs in complex and precise mathematical equations. See ECF No. 845-1 (Ex. A to Pinto Decl.); 845-2 (Ex. B to Pinto Decl.). Indeed, none of the relevant sections appear to advocate estimation of SLOC counts by analogy. Further, even were extrapolation regarding SLOC counts appropriate in certain situations, something Plaintiffs have not shown, Plaintiffs do not demonstrate that it was reliable in a situation such as this where Pinto extrapolated between software that was written in different languages (J.D. Edwards World and J.D. Edwards EnterpriseOne)9 and between software that was written in different languages by different companies (PeopleSoft CRM and Siebel). See ECF No. 775-4 (Pinto Tr.) at 284:5-16, 286:11-23. Finally, Plaintiffs' assertion that Pinto's technique of extrapolating a SLOC count between PeopleSoft and Siebel based on the tables in each product is, again, supported only by Pinto's say-so. See ECF No. 843 (Pinto Opp.) at 20-21. Despite citing several articles throughout the brief, Plaintiffs are unable to provide one objective source demonstrating that this method is acceptable and reliable; this is insufficient. See Competitive Techs., Inc., 333 F. Supp. 2d at 880. H. Garmus and Reifer Are Irrelevant to the Question of Pinto's Lack of Qualifications and Unreliable Methodology. In an attempt to distract from Pinto's lack of qualifications and to manufacture a dispute Plaintiffs' extraneous argument that Pinto's extrapolation may undervalue the product lines fails to prove Pinto's reliability. Arguing that their expert's flawed methodology may actually benefit Defendants does nothing to satisfy Plaintiffs' burden to show that Pinto's methodology was reliable under Rule 702. SVI-84813v1 9 - 13 - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 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 "between the experts," Plaintiffs imply throughout their brief that Defendants "relied" on their rebuttal experts, Reifer and Garmus, to challenge Pinto's lack of qualifications and unreliable methodologies. See ECF No. 843 (Pinto Opp.) at 2, 12, 13, 16-19. However, Defendants make no mention of their own experts' preferences for particular methodologies in their motion to exclude Pinto, because such reliance is unnecessary. Rather, Defendants simply assert, based on the evidence presented in the motion, that Pinto is not qualified in COCOMO or FPA and did not apply reliable methodologies in his analysis. Plaintiffs' assertions regarding Defendants' experts are merely a ruse to distract from the real issue--Pinto. III. CONCLUSION For the foregoing reasons, Defendants' motion to exclude Pinto should be granted. Dated: September 16, 2010 JONES DAY By: /s/ Tharan Gregory Lanier Tharan Gregory Lanier Counsel for Defendants SAP AG, SAP AMERICA, INC., and TOMORROWNOW, INC. SVI-84813v1 - 14 - DEFS.' REPLY ISO DEFS.' MOT. TO EXCLUDE EXPERT TESTIMONY OF PAUL C. PINTO Case No. 07-CV-1658 PJH (EDL)

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?