Oracle Corporation et al v. SAP AG et al

Filing 882

Objections to re 854 Declaration of Stephen K. Clarke in Support of Defendants' Opposition to Oracle's Motion No.1: To Exclude Testimony of Defendants' Expert Clarke filed by Oracle EMEA Limited, Oracle International Corporation, Oracle USA Inc., Siebel Systems, Inc.. Motion Hearing set for 9/30/2010 02:30 PM in Courtroom 3, 3rd Floor, Oakland. (House, Holly) (Filed on 9/16/2010) Modified on 9/17/2010 (vlk, COURT STAFF).

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Oracle Corporation et al v. SAP AG et al Doc. 882 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 Facsimile: (914) 749-8300 dboies@bsfllp.com STEVEN C. HOLTZMAN (SBN 144177) FRED NORTON (SBN 224725) 1999 Harrison St., Suite 900 Oakland, CA 94612 Telephone: (510) 874-1000 Facsimile: (510) 874-1460 sholtzman@bsfllp.com fnorton@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., CASE NO. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECL. OF STEPHEN K. Plaintiffs, CLARKE IN SUPPORT OF DEFENDANTS' v. OPPOSITION TO ORACLE'S MO. NO. 1: TO EXCLUDE TESTIMONY OF DEFENDANTS' SAP AG, et al., EXPERT CLARKE Date: September 30, 2010 Defendants. Time: 2:30 p.m. Place: Courtroom 3 Judge: Hon. Phyllis J. Hamilton Case No. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE 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 I. INTRODUCTION Plaintiffs Oracle USA, Inc. (predecessor to Oracle America, Inc.), Oracle International Corporation, Oracle EMEA Limited and Siebel Systems, Inc. (collectively "Oracle" or "Plaintiffs") hereby object and move to strike from the record and from reference at trial the statements set forth below from the Declaration of Stephen K. Clarke In Support of Defendants' Opposition to Oracle's Motion to Exclude the Testimony of Stephen K. Clarke (Dkt 851). II. BACKGROUND AND LEGAL STANDARD On March 26, 2010, Defendants' damages expert, Stephen Clarke ("Clarke"), provided his first purported "rebuttal" report to Oracle's damages expert's report. See Dkt 781 (Oracle's Mot. No. 1 to Exclude Clarke Testimony) at 1:14-18. Clarke later revised or supplemented his "rebuttal" report on May 7, June 4, and August 4, 2010. Id.. Oracle examined Clarke regarding the May 7, 2010 version of his report on June 8-10, 2010. Id. Clarke thereafter had the opportunity after reviewing his deposition transcript to make any changes or clarifications to his testimony. While Clarke did take the opportunity to review his transcript and submit 10 pages of errata, he did not change any testimony that he is now contradicting through his Declaration and did not clarify his testimony to include the new opinions and data he is now disclosing through his Declaration. See 9/16/2010 Declaration Of Holly House In Support of Reply Regarding Oracle's Motion No. 1 To Exclude Clarke, Objections To Decls. Of Clarke And Sommer, And Opposition To Defendants' Objection To Levy Decl. ("House Reply Decl."), Ex. A. Expert declarations should be stricken when they present new opinions not contained in or in contradiction with the expert report or prior deposition testimony. See Poulis-Minott v. Smith, 388 F.3d 354, 358-59 (1st Cir. 2004) (motion to strike portions of an expert affidavit granted for new information not previously included in the expert report); Cargill Inc. v. Progressive Dairy Solutions, Inc. 2008 WL 2235354, 10 (E.D. Cal.) (motion to strike declarations granted for failure to disclose or to supplement in violation of discovery obligations); Sitrick v. Dreamworks, LLC, 2006 WL 6116641, 23 (C.D. Cal.) (motion to strike expert declaration granted when new analysis concept was introduced for the first time and contradicted prior testimony); Palmer v. Asarco Inc., 2007 WL 2254343 at *3 (N.D. Okla.) 1 Case No. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE 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 (excluding expert's affidavit containing new facts submitted with opposition to Daubert motion, two months before trial, noting that an affidavit that states additional opinions or rationales or seeks to "strengthen" or "deepen" opinions expressed in the original expert report exceeds the bounds of permissible supplementation and is subject to exclusion) (citations omitted). Federal Rule of Civil Procedure 26(a)(2)(B) requires that an expert report "contain a complete statement of all opinions the witness will express and the basis and reasons for them" and "the data or other information considered by the witness in forming them." Where additional relevant information becomes available so that the initial expert report is rendered "incomplete or incorrect," a party is obligated to supplement or correct the initial disclosure by filing a supplemental report before the deadline for pretrial disclosures. Fed. R. Civ. P. 26(e). Federal Rule of Civil Procedure 37(c)(1) gives teeth to these requirements by forbidding the use on a motion, at a hearing or at trial of any information that is not properly disclosed under Rule 26, unless the party failing to disclose proves the failure substantially justified or harmless. See Wong v. Regents of University of California, 410 F.3d 1052, 1062 (9th Cir. 2005); Yetti by Molly Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1106 (9th Cir. 2001). Moreover, Clarke's after-the fact enhancement of his opinions further renders his opinion unreliable. Compare Daubert v. Merrell Dow Pharm., Inc., 43 F.3d 1311, 1319 (9th Cir. 1995) ("Any such tailoring of the experts' conclusions would, at this stage of the proceedings, fatally undermine any attempt to show that these findings were `derived by the scientific method.' Plaintiffs' experts must, therefore, stand by the conclusions they originally proffered, rendering their testimony inadmissible under the second prong of Fed. R. Evid. 702."). III. ARGUMENT AND OBJECTIONS The statements below present new opinions not contained in or in contradiction with Clarke's report or prior deposition testimony. Rule 26(a)(2)(B)(i) requires the expert report to be a "complete statement of all opinions the witness will express and the basis and reasons for them." Oracle objects and move to strike from consideration on Oracle's pending Motion to Exclude Clarke's testimony and at trial the following statements by Clarke in his Declaration under Rule 37(c)(1) because they were not properly disclosed under Rule 26 and SAP bears the 2 Case No. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE 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 burden of proving the failure of the disclosure to be substantially justified or harmless. SAP cannot carry its burden even if it had tried because Oracle was not on notice to and able to crossexamine Clarke on these new disclosures. Clarke Decl. 7:22-9:22 - Clarke's explanation of his use of the zero intercept method should be stricken as an impermissible new opinion. Clarke did not include any of this discussion of the Fixed, Variable, and Total Cost curves in his report. See Dkt. 783 (House Opening Decl.), Ex. A (Clarke Report) at 276-281. He also did not provide this explanation at his deposition. See House Reply Decl., Ex. A (Clarke Depo.) at 931:12933:7; 953:6-14. Clarke Decl. 11:6-20 - Clarke's discussion of his inability to compute incremental costs should be stricken as an impermissible new opinion. Never before has Clarke claimed, either in his report or at his deposition, that he was unable to compute incremental cost because of a lack of production of accounting data by Oracle. Clarke explained in his report and deposition that he was measuring Oracle's variable costs within a range of revenue, but never before did he claim that it is impossible to compute Oracle's incremental revenue due to the range of revenue at issue. See Dkt. 783 (House Opening Decl.), Ex. A (Clarke Report) at 243, 277, Ex. B (Clarke Depo.) at 960:5-962:7; House Reply Decl., Ex. A (Clarke Depo.) at 931:12-932:18; 964:17-966:15. Clarke Decl. 12:6-11 - Clarke's discussion of his inability to analyze Oracle's costs due to a deficiency in the Oracle production should be stricken as an impermissible new opinion. Never before has Clarke claimed, either in his report or at his deposition, that he was unable to analyze such costs due to a deficiency in the Oracle production. Clarke 12:12-22 and Figures 3 & 4 - Clarke's analysis of Oracle and SAP 10-K data should stricken as impermissible new opinions and data. This is entirely new analysis and nothing prevented Clarke from presenting this opinion earlier, through his report or at his deposition. Clarke claims that his regression methodology was "based on the foregoing accounting analysis" (see Clarke Decl. 14:1). If this is true, then Mr. Clarke failed to disclose the basis of his opinions when he filed his report and testified at his deposition. 3 Case No. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE 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 statements below cite treatise materials referenced for the first time by Clarke in his Declaration. Rule 26(a)(2)(B)(i) requires the expert report to be a "complete statement of all opinions the witness will express and the basis and reasons for them." Furthermore, Rule 26(a)(2)(B)(ii) requires the report contain "the data or other information considered by the witness in forming them." The following materials were never referenced in Clarke's report or Appendix C-1 (documents considered). In fact, Clarke stated at his deposition that "I don't need to go to a book to do this regression analysis." Dkt. 865 (Wallace Decl.), Ex. 8 (Clarke Depo.) at 929:13-930:12. Furthermore, Defendants' counsel sought and received from Oracle last week expedited opportunity to show the Declaration of Dr. Daniel S. Levy in Support of Oracle's Motion to Exclude the Testimony of Stephen K. Clarke to two previously undisclosed statisticians, Bernard Siskin and Robert Gibbons. See House Reply Decl. at 9-10 and Exs. F & G thereto. Clarke's Declaration does not indicate whether and if so, how much of the analysis came from either of these statisticians or whether these statisticians provided the new treatise materials Clarke cites in his Declaration. Given Clarke's testimony that confirmed he knew of no statistics authorities and had consulted none (see Dkt. 781 (Oracle's Mo. to Exclude Clarke) at 22 :13-16 & n.37)1, it seems likely these new consultant statisticians contributed and possibly created Clarke's Declaration. Clarke, through his Declaration, cannot be a mouthpiece for another expert. See, e.g., Brace v. U.S., 72 Fed.Cl. 337, 352 (Fed. Cl. 2006) ("Rule 703 was not intended to abolish the hearsay rule and to allow a witness, under the guise of giving expert testimony, to in effect become the mouthpiece of the witnesses on whose statements or opinions the expert purports to base his opinion.") (citations omitted). This is another independent reason for striking Clarke's regression statements in his Declaration. Oracle thus objects and moves to strike from consideration on Oracle's pending Motion to Exclude Clarke's testimony and at trial the following statements by Clarke in his Declaration under Rule 37(c)(1) and bars Clarke's reference to them at trial because the references to these Dkt. 783 House Opening Decl., Ex. B (Clarke Depo.) at 808:13-809:7; 935:3-7; 943:23-944:7; 955:20-956:7. 4 Case No. 07-CV-01658 PJH (EDL) 1 OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE 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 texts were not properly disclosed under Rule 26 and SAP bears the burden of proving the failure of the disclosure to be substantially justified or harmless. SAP cannot carry its burden even if it had tried because Oracle was not on notice to and able to cross-examine Clarke on them. Clarke Decl. 7:3-5 - Parsons and Schultz, Marketing Models and Economic Research Clarke Decl. 7:5-7 - Pappas & Brigham, Managerial Economics (3d Ed.)and Hirschey, Managerial Economics (3d Ed.) Clarke Decl. n8, n11 - Macfie and Nufrio, Applied Statistics for Public Policy - While this text is included on Appendix C-1 (documents considered), the pages cited in Clarke's Declaration were not previously disclosed. Clarke Decl. 9:18-10:1 - Gujarti, Basic Econometrics Clarke Decl. n11, n16 - Pindyck and Rubinfeld, Econometric Models and Economic Forecasts (2d Ed.) IV. Clarke Decl. 15:7-9 - Samuelson and Marks, Managerial Economics CONCLUSION Because the cited portions of Clarke's Declaration contain matter both not timely disclosed and/or contradicted by Clarke's testimony, they should be stricken as requested. DATED: September 16, 2010 Bingham McCutchen LLP By: /s/ Holly A. House Holly A. House Attorneys for Plaintiffs Oracle USA, Inc., et al. 5 Case No. 07-CV-01658 PJH (EDL) OBJECTIONS TO DECLARATION OF STEPHEN K. CLARKE

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