Oracle Corporation et al v. SAP AG et al

Filing 1196

ORDER by Judge Hamilton re 1182 Joint Motion Regarding Exhibit Objections; Order granting in part and denying in part 1184 Administrative Motion to File Under Seal. (pjhlc1, COURT STAFF) (Filed on 7/31/2012)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 8 9 ORACLE U.S.A., Plaintiff, 11 For the Northern District of California United States District Court 10 v. 12 SAP AG, et al., 13 No. C 07-1658 PJH Defendants. _______________________________/ ORDER RE OBJECTIONS TO TRIAL EXHIBITS; ORDER RE MOTION TO SEAL 14 15 Before the court is the parties’ pre-trial Joint Statement Regarding Exhibit 16 Objections, requesting that the court rule on certain evidentiary objections to trial exhibits. 17 Each side has designated objections in three categories, and has provided a proposed 18 order. Having reviewed the parties’ papers and carefully considered their arguments and 19 the relevant legal authority, the court now rules as follows. 20 1. SAP’s Category One – Hearsay Exceptions/Exemptions 21 In the Joint Statement, SAP discusses 12 exemplar exhibits, divided into four sub- 22 categories, each of which SAP asserts is either non-hearsay or admissible under various 23 hearsay exceptions, as indicated below. 24 As an initial matter, the court notes that it had hoped to emerge from this process 25 with a set of guidelines or standards that could be applied to other exhibits to which the 26 parties have hearsay objections. The court has been unable to do so, however, because 27 so many of the highlighted statements within the exhibits fall within a gray area and are not 28 easily categorized. 1 At this point, the only generalized ruling that the court can provide is (a) that direct being asserted – e.g., Customer A states that it is leaving Oracle and going to SAP for a 4 particular reason – are inadmissible hearsay; (b) that statements by Oracle employees that 5 constitute analysis of a particular Oracle-Customer relationship, which may or may not be 6 based on information that an Oracle employee obtained from the customer’s 7 representative, are not inadmissible hearsay, because they constitute employee party 8 admissions or present-sense impressions; and (c) that statements that fall into the gray 9 area in between – e.g., that a particular customer “has communicated to us their intent to 10 have TomorrowNow support them in the interim as they migrate . . . to SAP” – will have to 11 For the Northern District of California quoted statements from customers that are being used to prove the truth of the matter 3 United States District Court 2 be decided on a statement-by-statement basis. 12 With regard to the statements that fall into the gray area, most are included as part 13 of emails or email strings and are relatively complex statements that include a good deal of 14 information. Such information is not clearly derived from a single customer statement, but 15 rather arises from an ongoing relationship between the Oracle representative and that 16 customer. It is partly for this reason that the court is unable to determine in advance how 17 objections to admitting such statements will be resolved at trial. 18 a. 19 In this sub-category, SAP seeks to have certain statements by Oracle senior 20 21 Statements by Oracle’s senior executives executives admitted as party admissions. Federal Rule of Evidence 801 lists types of statements that are “not hearsay.” Fed. 22 R. Evid. 801(d). These include party admissions and employee party admissions. Id. 23 801(d)(2). Admissions by a party-opponent are excluded from the category of hearsay, 24 and no guarantee of trustworthiness is required in the case of an admission. Rule 25 801(d)(2) specifies certain categories of statements for which the responsibility of a party is 26 considered sufficient to justify the reception in evidence against him. See 1972 Advisory 27 Committee Notes to Rule 801(d)(2). 28 A party admission is a statement offered against the opposing party, which was 2 1 made by the party in an individual or representative capacity. FRE 801(d)(2)(A). An 2 employee party admission is a statement offered against an opposing party, made by a 3 declarant who was an employee of the party at the time the statement was made, and 4 which concerns a matter “within the scope of the agency or employment.” See Sea-Land 5 Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808, 821 (9th Cir. 2002). “[W]ithin the scope of the 6 agency or employment” is generally interpreted as meaning that the statement is “related to 7 the declarant’s duties.” 5 Weinstein’s Federal Evidence § 801.33[2][c]. 8 9 i. Defendants’ Trial Exhibit A-6329-1 Defendants’ Exhibit A-6329-1 is an email chain that includes a November 2, 2004 email from Jeff Henley (Oracle’s Chairman of the Board) to Keith Block (Oracle’s Executive 11 For the Northern District of California United States District Court 10 VP of North American Sales), in which Henley states, based on his conversation with 12 someone from Computer Associates (“CA”), that “SAP is leading in functionality pretty 13 much across the board in [CA]’s mind . . . I think we’ll lose because of the functionality.” 14 SAP asserts that this is evidence that SAP won CA’s business in 2004 based on 15 SAP’s superior software, not based on any infringement by TomorrowNow. SAP also 16 contends that both Henley and Block were speaking within the scope of their employment, 17 and such statements are employee party admissions. 18 Oracle argues that this document does not qualify as an employee party admission 19 in its entirety, because it includes five separate assertions about the customer that are 20 paraphrased customer statements, and thus, inadmissible hearsay. 21 Defendants’ Exhibit A-6329-1 will be admitted. The statements in this email 22 constitute party admissions with regard to Oracle’s understanding that CA was at that point 23 trying to decide between Oracle and SAP, based upon various considerations. The email 24 indicates that Henley’s evaluation of the situation at the time was that Oracle was at risk of 25 losing the CA account because of some advantage that SAP had over Oracle. 26 27 28 b. Statements by Oracle sales and support employees (employee party admissions or adoptive admissions) In this sub-category, SAP seeks to have six exhibits admitted as either employee 3 1 party admissions or adoptive admissions. The standard for employee party admissions is 2 set forth above. Adoptive admissions are another of the categories of admissions set forth 3 in Rule 801(d)(2), and are not considered hearsay. An adoptive admission is a statement 4 that is “offered against an opposing party” and is “one the party manifested that it adopted 5 or believed to be true.” Fed. R. Evid. 801(d)(2)(B). 6 Most of the cases that apply Rule 801(d)(2)(B) are criminal cases, where the court 7 finds that a criminal defendant has “admitted” a fact by remaining silent in the face of an 8 accusation. See, e.g., U.S. v. Moore, 522 F.2d 1068, 1075 (9th Cir. 1975). However, in 9 theory, adoption of another’s statement can be manifested by any appropriate means – language, conduct, or silence. 5 Weinstein’s Federal Evidence § 801.31[3][a]. For 11 For the Northern District of California United States District Court 10 example, a party may adopt a written statement of another if the party uses the statement 12 or takes action in compliance with the statement. See Sea-Land Serv., 285 F.3d at 821-22 13 (in action on shipping contract, one employee of carrier adopted another employee’s email 14 explaining a delay in shipment by copying it and sending it to the shipper). On the other 15 hand, if the party makes its disagreement with the statement clear, there is no adoption of 16 the statement. 5 Weinstein’s Federal Evidence § 801.31[3][b]. 17 The court finds that none of the statements presented here is admissible as an 18 adoptive admission, and thus considers whether any is admissible as an employee party 19 admission. 20 21 i. Defendants Trial Exhibit A-0367 Defendants’ Exhibit A-0367 is an email from Juan Jones (Oracle’s Senior VP of 22 Customer Services North America Support), regarding support renewals. The subject is 23 “Home Depot Executive Summary.” This email was admitted into evidence at the last trial. 24 SAP asserts that Jones’ responsibilities relate to support. 25 In the email, Jones states, that Home Depo has “communicated to us their intent to 26 have TomorrowNow support them in the interim as they migrate HCM to SAP.” He adds 27 that he is “not supportive of the proposal to halve our support to Home Depot . . . for the 28 following reasons,” and then lists those reasons, including that “[t]hey’ve gone to SAP hook, 4 1 2 3 4 line, and sinker so there is no turnaround opportunity to even try to salvage.” SAP asserts that Exhibit A-0367 is admissible as a party admission, and that there are no customer statements in the email. Oracle’s position is that the email contains inadmissible customer hearsay because 5 it contains “relayed statements” that a Home Depot employee made to Oracle. Oracle 6 contends Rule 801(d)(2)(D) does not extend to paraphrased, unverified out-of-court 7 statements by “unidentified customer personnel,” which Oracle would not be able to 8 challenge in court. are no direct customer statements in the email, and it is a statement that is being offered to 11 For the Northern District of California Defendants’ Exhibit A-0367 will be admitted as an employee party admission. There 10 United States District Court 9 show Oracle’s belief regarding Home Depot’s support renewals. 12 13 ii. Defendants Trial Exhibit A-5042 Defendants’ Exhibit A-5042 is an email chain which includes a June 19, 2006 email 14 from Barbara Allario (a senior support sales manager at Oracle) to Robert Lachs (a support 15 sales regional manager at Oracle), regarding Oracle customer Stora Enso’s reasons for 16 cancelling support. SAP contends that this subject falls within the scope of Ms. Allario’s job 17 responsibilities. 18 Ms. Allario states, “I’ve been in contact with [Oracle employee] ASM (Derek Zeman) 19 for Stora Enso. He has known for at least 6 months that the customer would more than 20 likely be dropping support. The parent is an SAP shop in Finland and has been pushing 21 SAP . . . They have told us they will be going to SAP over the next 2 years.” 22 SAP contends that this email is evidence that Stora Enso’s purchase of SAP 23 software was caused by its parent company’s decision to switch to SAP, not by any action 24 of TomorrowNow. SAP seeks to have this exhibit admitted as a party admission, and 25 disputes Oracle’ assertion that the document contains multiple levels of hearsay. SAP 26 asserts that the email reflects the understanding of Zeman (the Oracle employee) that a 27 customer had been instructed by its parent company to migrate. 28 For its part, Oracle argues that Exhibit A-5042 contains multiple levels of hearsay – 5 1 in particular, the statement that Stora Enso’s parent shop spoke to Stora Enso, the 2 statement that the parent shop will be going with SAP, the statement that Stora Enso then 3 passed along those statements to Zeman. 4 Exhibit A-5042 will be admitted, with the exception of one sentence, which is 5 inadmissible hearsay – “They have told us that they will be going to SAP over the next 2 6 years.” 7 8 9 iii. Defendants’ Trial Exhibit A-5997 Defendants’ Exhibit A-5997 is an Oracle email dated May 4, 2006, and sent by Craig Tate (Group VP, North Central Applications, Oracle) to Jeff Henley (Oracle’s Chairman of the Board), regarding Oracle customer Haworth. In the email, Tate stated that Haworth 11 For the Northern District of California United States District Court 10 “has implemented SAP in Europe . . . and senior leadership views it as more successful 12 than the Orcl project in North America – broader footprint, less time, less money.” He 13 added, “They are facing a major directional decision on standardizing on one platform or 14 the other going forward.” SAP asserts that this shows that Haworth was standardizing its 15 ERP systems and chose SAP because of previous good experience with SAP, not because 16 of anything done by TomorrowNow. 17 SAP contends that as Group VP for North Central Operations, Tate and his team 18 were responsible for the Haworth account, and that reporting to his superiors regarding a 19 customer for whom he was responsible is within his job duties and thus admissible against 20 Oracle. As such, SAP seeks to have the exhibit admitted as a party admission. SAP notes 21 that the email does not contain any customer statements, but rather simply reflects the 22 understanding of Oracle employees regarding the status of the customer account. 23 In response, Oracle asserts that this exhibit contains inadmissible customer 24 statements, in that Tate is describing what a Haworth employee told him about Haworth’s 25 relationships with Oracle and SAP. Oracle contends that the content of the email 26 necessarily comes from out-of-court statements by Haworth. Oracle argues that these are 27 not party admissions – they are customer statements relayed by Oracle personnel. 28 Defendants’ Trial Exhibit A-5997 will be admitted, with the exception of one sentence 6 1 that is inadmissible hearsay – “They are asking (strongly demanding actually) that we ‘park’ 2 the support on the balance of the 2400 licenses they have on the shelf for now (up to 3 yrs, 3 with a portion of them re-deployed each yr) and be allowed to bring them back without 4 reinstatement fees/back support.” 5 iv. Defendants’ Trial Exhibit A-6042-1 describes the timeline on which Computer Associates (“CA”) cancelled support. Betsy 8 Steelman, an Oracle Services Support Manager, submitted the document for approval 9 through Oracle’s OSSINFO group (part of Oracle’s administrative approval process that 10 reports to Juergen Rottler, Executive VP, Oracle Customer Services). OSSINFO is an 11 For the Northern District of California Defendants’ Exhibit A-6042-1, page 2, is a PeopleSoft Executive Summary that 7 United States District Court 6 internal group that decides whether to approve special terms or deviations from the 12 standard pricing for Oracle support services. 13 In a section headed “Justification,” the document states, “Per discussions with AE 14 (Brian Flynn) and the customer, Computer Associates is converting to an all SAP shop. In 15 the future, they would cancel all support. . . . On 3/2/05, customer notified us via phone and 16 certified letter that they were cancelling support on all products. Both the AE and the SSM 17 unsuccessfully tried to continually contact the customer to understand why they would 18 commit to annual support on 2/9/05 and then cancel on 3/2/05. To date, we have had no 19 response from the customer.” 20 SAP asserts that any materials sent through this OSSINFO approval process by 21 support managers such as Steelman are done within the scope of their employment, and in 22 this case, are directly related to a then-Oracle customer, CA, for which approval was 23 needed to terminate support. 24 SAP contends that Oracle has failed to identify any customer “statements” in the 25 Executive Summary, and that all that Steelman is reporting is her understanding of the 26 reason why CA was converting to an all-SAP shop. Again, SAP asserts, just because a 27 fact originates from the customer does not mean that the fact is a customer “statement.” 28 In response, Oracle argues that this document contains customer hearsay. Oracle 7 1 contends that to the extent that the OSSINFO email constitutes a party admission, it merely 2 indicates that the contract has been cancelled, nothing more. Thus, Oracle argues, SAP 3 has articulated no exception to justify admitting the customer statements in the Executive 4 Summary (as distinct from the email). 5 Defendants’ Trial Exhibit A-6042-1 will be admitted as an employee party admission. 6 The document reflects Oracle employees’ understanding that CA was “converting to an all- 7 SAP shop.” v. 8 Defendants’ Trial Exhibit A-6205-1 “Maintenance At Risk Analysis,” which was a PowerPoint presentation containing Oracle’s 11 For the Northern District of California Defendants’ Exhibit A-6205-1 is an email with an attached document entitled 10 United States District Court 9 internal analysis of customer concerns with Oracle products. Richard Cummins, Senior 12 Director of Support Renewals, authored the presentation, and emailed it to his boss Chris 13 Madsen, VP of North America Support Sale. From the email, it appears that Madsen 14 forwarded it to Juan Jones, or that Cummins forwarded it to both Madsen and Jones. 15 The email from Madsen states, “[H]ere is a thorough analysis that Rick [Cummins] 16 and Team prepared and sent to me on Friday. This will be the data behind a strategy that 17 will involve agressively [sic] contacting these customers solving their issues and bringing in 18 any past due maintenance business and making sure all business is brought in on time at 19 full value.” 20 SAP asserts that providing this presentation to senior support group members was 21 clearly within the scope of Cummins’ employment, and that the document is admissible as 22 an employee party admission. 23 In response, Oracle asserts that SAP is offering this document in an attempt to 24 circumvent the court’s exclusion of the customer hearsay in the At Risk Report “notes” 25 column. Oracle claims that the document summarizes inadmissible hearsay that is 26 contained in the At Risk report notes column. 27 Defendants’ Trial Exhibit A-6205-1 will be admitted as a party admission. This 28 analysis was prepared as part of an initiation of a strategy to resolve certain customer 8 1 complaints and ensure that the customers remained with Oracle. It is not hearsay because 2 it does not contain any customer statements, but rather is presented as a “thorough 3 analysis” of the factors indicating that customers might be “at risk” of leaving Oracle 4 support. vi. 5 Defendants’ Trial Exhibit A-5193 was admitted into evidence at the prior trial. It summarizes the status of certain customers, 8 reporting, for example that “Customer believes they are unable to upgrade . . . due to 9 functionality that was removed . . . ;” “Customer also has grave concerns [regarding] . . . ;” 10 “Client informed us as of 3/27 that they want to renew and have offered to pay flat fee . . . if 11 For the Northern District of California Defendants’ Exhibit A-5193 is an email from James McLeod to Rick Cummins, which 7 United States District Court 6 we allow them to pay quarterly . . . ;” “Client has stated that they want us to come back in 12 with the team to present roadmap and technology update . . . ;” and “Executives don’t like 13 PeopleSoft apps . . . [and] are looking to go with TomorrowNow so they can save 14 approximately 50% on the support bill. . . .” 15 SAP contends that Cummins was Senior Director of Support Renewals at the time, 16 and was McLeod’s boss, and that this document and Cummins’ statements directly relate 17 to his job responsibilities, and that the statements in the email are recitations of facts and 18 beliefs about the customers – i.e., the reasons he believed the identified customers 19 cancelled Oracle support. SAP seeks to have this document admitted as a party admission 20 and contends that Oracle’s understanding is evidence of why those customers cancelled. 21 In response, Oracle contends that this reflects another attempt by SAP to 22 circumvent the court’s exclusion of the customer hearsay in the At Risk Report “notes” 23 column. 24 Defendants’ Trial Exhibit A-5193 will be admitted as a party admission that a number 25 of customers had complaints regarding Oracle support, and/or were considering moving to 26 TomorrowNow to save money. The court will exclude two sentences that appear to be 27 direct quotations from customers, and are therefore inadmissible hearsay – (a) “Client 28 informed us as of 3/27 that they want to renew and have offered to pay flat fee for 2 years 9 1 [sic] if we allow them to pay quarterly in advance[;]” and (b) “Client has stated that they 2 want us to come back in with the team to present roadmap and technology update.” 3 c. evidence of state of mind) 4 5 Statements by Oracle customers (adoptive admissions, and/or non-hearsay In this sub-category, SAP seeks to have documents admitted as either adoptive 6 admissions or as non-hearsay evidence of state of mind. The court finds that none of the 7 statements is admissible as an adoptive admission, and thus considers whether any is 8 admissible as state-of-mind evidence. 9 Federal Rule of Evidence 803(3) excepts from the hearsay rule “statement[s] of the declarant's then-existing state of mind (such as motive, intent, or plan) or emotional, 11 For the Northern District of California United States District Court 10 sensory, or physical condition (such as mental feeling, pain, or bodily health), but not 12 including a statement of memory or belief to prove the fact remembered or believed[.]” 13 Such testimony is admissible not to prove “the fact remembered or believed” but the 14 “mental feeling” of the declarant. Wagner v. County of Maricopa, 673 F.3d 977, 980 (9th 15 Cir. 2012). 16 If a statement supports an inference about the declarant’s state of mind, and is not 17 being used to prove the truth of the matter being asserted, it may be admitted for that non- 18 hearsay purpose. See CytoSport, Inc. v. Vital Pharms, Inc., 617 F.Supp. 2d 1051, 1074 19 (E.D. Cal. 2009). The limiting language of Rule 803(3) – “not including a statement of 20 memory or belief to prove the fact remembered or believed” – bars statements as to why 21 the declarant held the particular state of mind, or what he/she might have believed that 22 would have induced the state of mind. Wagner, 673 F.3d at 981 (citing United States v. 23 Emmert, 829 F.2d 805, 810 (9th Cir. 1987)). However, the bar applies only when the 24 statements are offered to prove the truth of the fact underlying the memory or belief. Id. 25 To qualify under Rule 803(3), an out-of-court statement must be “nearly 26 contemporaneous with the incident described and made with little chance for reflection;” 27 and must be describing or referring to an event, with little opportunity for after-the-fact 28 reflection or deliberation. U.S. v. Orm Hieng, 679 F.3d 1131, 1147-48 (9th Cir. 2012) 10 1 (citing cases, quotations omitted). The Ninth Circuit has applied the state-of-mind 2 exception in Lanham Act cases, to admit out-of- court statements made by customers as 3 part of the analysis of the “likelihood of confusion” factor under Sleekcraft. See, e.g., Lahoti 4 v. Vericheck, Inc., 636 F.3d 501, 509 (9th Cir. 2011). 5 6 i. Defendants’ Trial Exhibit A-5995 Defendants’ Exhibit A-5995 is an email chain that includes a May 10, 2006 email Oracle, entitled “Haworth response to Oracle proposal.” In the email Harten expressed 9 disappointment with Oracle, and concerns as to whether Oracle will be a “good long-term 10 partner for Haworth.” This email was forwarded up the Oracle chain to Juan Jones, who 11 For the Northern District of California from Ann Harten (employee of Oracle customer Haworth) to Craig Tate and others at 8 United States District Court 7 forwarded it to Yamilet Torres on May 12, 2006, stating, “As per our conversation, please 12 work with Ian/Saleen to assign temporary coverage for Haworth. We need to turn this 13 account around and we need to do it fast.” 14 As noted above, Jones was at that time a Senior VP of Customer Services, North 15 America Support, and SAP contends that his job responsibilities related to support. 16 According to SAP, the Harten email signaled Haworth’s concerns about its future with 17 Oracle; and that the statement “We need to turn this account around and we need to do it 18 fast” shows that Jones accepted that Oracle’s product offering might not be quite what 19 Haworth needed at the time. Thus, SAP argues, the entire document (particularly the 20 Harten email) is admissible against Oracle. 21 In response, Oracle argues that this exhibit cannot be admitted as a adoptive 22 admission, but does not address SAP’s argument that the exhibit is admissible under the 23 state-of-mind exception. 24 Defendants’ Trial Exhibit A-5995 will be admitted. The Oracle statements are not 25 hearsay, and reflect that Oracle was aware that Haworth was considering leaving Oracle, 26 and that Oracle was evaluating various solutions for this problem. So long as the Harten 27 email is not being admitted to show that Haworth in fact cancelled its contract with Oracle 28 for a particular reason, it is admissible under the state-of-mind exception. 11 ii. 1 2 Defendants’ Trial Exhibit A-5058 Defendants’ Exhibit A-5058 is an email chain that includes a January 29, 2007 3 email, sent from Oracle customer Vanguard Managed Solutions to Oracle employee Lori 4 Sanabria, entitled “Re: VanguardMS – Oracle JDE Renewal.” The email states that 5 Vanguard is cancelling Oracle support because “we did not need support last year, except 6 one time that was minor. Our company is shrinking and splitting into 2, and we are not 7 likely to continue forward with JDE upgrades in the future.” Sanabria initially forwarded the 8 email to another Oracle employee, John Russnock, asking whether it was his account. In 9 his response, Russnock referred to what might happen “if the company does in fact split.” SAP asserts that the Vanguard email is evidence that Vanguard had a motive to 11 For the Northern District of California United States District Court 10 leave Oracle support that had nothing to do with TomorrowNow. SAP claims that such 12 statements are admissible under the state-of-mind exception to demonstrate Vanguard’s 13 motive. 14 In response, Oracle does not contest that the email might be admissible under the 15 state-of-mind exception, but instead appears to be arguing that the email should not be 16 admitted because it is “unrealiable.” Specifically, Oracle asserts that, based on Oracle 17 representative John Russock’s “skepticism” about whether Vanguard would “in fact split,” it 18 is clear that Oracle personnel considered the statement to be an unreliable indication of the 19 customer’s motivations. 20 Defendants’ Trial Exhibit A-5058 will be admitted under the state-of-mind exception. 21 So long as the out-of-court Vanguard statements are not being offered for the truth of the 22 matter being asserted – that Vanguard in fact cancelled its support contract with Oracle for 23 a particular reason – but rather is being offered to show either Vanguard’s state of mind at 24 the time, or that Oracle was aware of the fact that Vanguard was considering cancelling its 25 contract, it is admissible. 26 27 28 iii. Defendants’ Trial Exhibit A-5002-1 According to SAP, defendants’ Exhibit A-5002-1 is a document that was produced pursuant to a subpoena, and contains internal Amgen communications and 12 1 communications with TomorrowNow regarding support service negotiations. The email 2 string (which includes emails dated over a two-month period) includes statements 3 indicating that Amgen was attempting to get Oracle to lower its price for support services, 4 and was considering looking at TomorrowNow because it was cheaper. 5 SAP seeks to introduce this document for the purpose of demonstrating the date on 6 which Amgen decided to contract with TomorrowNow – not for the purpose of proving the 7 truth of any statement. SAP asserts that the email string demonstrates that as of late 8 October 2005, Amgen was still choosing between Oracle and TomorrowNow for support. 9 SAP claims that because Amgen had purchased the SAP software some time before, Amgen could not have gone with SAP because of anything done by TomorrowNow. Thus, 11 For the Northern District of California United States District Court 10 SAP argues, the document is not hearsay, and is relevant to the non-hearsay purpose of 12 showing a date on which a decision was pending (to show that the decision to go with SAP 13 came first). SAP also contends that this email chain is also relevant to why customers 14 “such as Amgen” should be excluded from the damages calculations. 15 Finally, SAP asserts that the statements by the Amgen representatives are 16 admissible under the then-existing-state-of-mind exception to the hearsay rule, to show that 17 Amgen was “undecided” about whether to remain with Oracle. SAP contends that these 18 are internal Amgen statements, so there would be no motive for fabrication, and the 19 information is directly relevant to the issue of when Amgen selected TomorrowNow. 20 In response, Oracle argues that because Amgen was excluded from Oracle’s 21 damages figures at the last trial, the question of when or why Amgen purchased services 22 from TomorrowNow is irrelevant. Moreover, Oracle asserts, to the extent that SAP offers 23 the emails for any other purpose, they are purely inadmissible hearsay, including the 24 statements regarding pricing, proposed service terms, and status of negotiations with 25 Oracle and TomorrowNow. 26 Defendants’ Trial Exhibit A-5002-1 will be admitted under the state-of-mind 27 exception. So long as the out-of-court Amgen statements are not being offered to show 28 that Amgen cancelled its support contract with Oracle for a particular reason, but rather are 13 1 being offered to show either Amgen’s state of mind at the time or that Oracle was aware of 2 the fact that Amgen was considering whether to go with SAP or Oracle for support, the 3 statements are not hearsay. 4 d. Statements in Oracle’s At-Risk Report 5 Defendants’ Trial Exhibit A-0059 is Oracle’s At-Risk Report, which contains several contract revenue amounts, the win/loss statistics, and a “notes” field that includes Oracle 8 employee statements and customer statements, all relating to various customers’ reasons 9 for leaving Oracle. The parties dispute the admissibility of information in the “notes” field. 10 SAP contends that portions of the “notes” filed are admissible, including portions on which 11 For the Northern District of California categories of information, such as the number of customers at risk of leaving Oracle, the 7 United States District Court 6 Meyer relied in forming his opinions (which the court previously found admissible); and 12 select excerpts which it claims are adoptive admissions or are admissible as “state of mind” 13 evidence. 14 Prior to the first trial, Oracle moved in limine to exclude those portions of the Report 15 that contained “transcribed comments from customers” – or “customer statements referred 16 to in its At Risk reports on the ground that they are out of court statements from third 17 parties and thus inadmissible hearsay.” See Doc. 737 at 13-17. At that point, while Oracle 18 did not specifically seek to exclude those portions that constituted statements by Oracle 19 employees, the argument suggests that Oracle was also seeking to exclude its employees’ 20 paraphrases of those customer comments, claiming that the Oracle reps were simply 21 recording what the customers had said to them, and thus it was pretty much as though the 22 customers were being quoted directly. 23 In the final pretrial order, the court granted Oracle’s motion, on the basis that “[t]he 24 customer statements are hearsay and SAP had not articulated any applicable exception to 25 the hearsay rule.” Doc. 914 at 1-2. The order did not distinguish between quoted 26 statements from customers, and statements by Oracle employees that may or may not 27 have been paraphrases of customer statements. In addition, the court’s general ruling did 28 not address the admissibility of any specific transcribed customer statements or Oracle 14 1 employee comments. 2 SAP now seeks a ruling as to two excerpts from the “notes” field – an excerpt 3 relating to Merck, which it claims is admissible as a party admission, and an excerpt 4 relating to Stora Enso, which it claims is admissible as an adoptive admission. 5 i. Defendants’ Trial Exhibit A-0059 (Merck Excerpt) 6 This excerpt states, in part, 7 A little over a year ago, Merck signed a deal with SAP for 27M. This is a multi-year migration over the next several years to one instance . . . The SAP deal was about relationships and Oracle did not even bid on the deal. Merck did not provide information in the discovery stage to allow our involvement. 8 9 SAP contends that this excerpt is admissible as a party admission because it reflects the Oracle representative’s understanding of the account’s status. SAP also asserts that 11 For the Northern District of California United States District Court 10 the excerpt does not record a “transcribed customer statement,” but rather is an Oracle 12 employee’s recitation of her understanding of facts regarding Merck’s support renewal. 13 In response, Oracle argues that these are inadmissible notes reflecting a sales 14 representative’s conversations with customers and information received directly from a 15 particular customer. Oracle claims that this particular excerpt describes a scheduled 16 upcoming conference call and details how an Oracle representative visited and spoke with 17 Merck regarding the renewal. Oracle asserts that written notes that paraphrase customer 18 hearsay are just as unreliable as direct quotations by out-of-court declarants. 19 Defendants’ Trial Exhibit A-0059 will be admitted as a party admission. The excerpt 20 consists of notes made by the Oracle representative, and does not contain hearsay. 21 ii. Defendants’ Trial Exhibit A-0059 (Stora Enso Excerpt) 22 The copy of this exhibit that is included in the binder labeled “Oracle’s Documents in 23 Support of the Joint Statement,” shows portions of the excerpt highlighted, as follows 24 25 26 27 28 6-15-06. Have talked with customer again and he feels there is no way we can match the $180K that TN is offereing [sic]. . . . No one at Stora Enso is fighting back although my contact, Tom Davis, likes JDE and would like to continue with this product. He just can’t fight the parent or the fact that there was such a disparity in price. . . . 6-4-08: Have talked with customer. . . . They were considering going to 8.11 but have not heard good references from other customers. They think applications unlimited is nice but hasn’t effected [sic] their decision. They say they don’t need our training or consulting. I told 15 1 them I couldn’t meet TN price head to head. . . . 5-26-06: . . . . I reached out to them to discuss. . . . I have a call scheduled on 5/30 to discuss. 2 Because of the minuscule size of the font used in this exhibit, the court can only 3 hazard a guess as to what the excerpt says. In its portion of the Joint Statement, SAP 4 reproduced a portion of this exhibit, with some sentences or phrases bolded, though not the 5 same portions that are highlighted in the copy of the exhibit that was provided to the court 6 with “Oracle’s Documents in Support of the Joint Statement.” 7 SAP’s excerpt reads as follows: 8 16 Not our usual positioning but with a Parent company mandating conversion to SAP in the next two years the best we can hope for is some revenue for the next two years. 6-15-06: Have talked with customer again and he feels there is no way we can match the $180K that TN is offereing [sic]. They ABSOLUTELY will not be upgrading since their parent is an SAP shop and they will more than likely be moved to SAP within the next two years. Also spoke with [Oracle] ASM - Derek Zeman. He has known about this situation for at least 6 months and has addressed it on his end. Basically in the last year the parent company came into Stora Enso, cleaned house in the personnel area and essentially took over. Derek felt this was just a lost cause that he elected to move on to projects where he could achieve a positive result. No one at Stora Enso is fighting back although my contact, Tom Davis, likes JDE and would like to continue with the product. He just can’t fight the parent or the fact that there is such a disparity in price. I don’t give this much of a chance to be save [sic] but will discuss it once again with Rob. 17 Because the original is almost impossible to read, and because the highlighted portions in 18 each excerpt are not the same, the court is not entirely certain which portions the parties 19 dispute. 9 11 For the Northern District of California United States District Court 10 12 13 14 15 20 As best the court can make out, there are at least four separately-dated sections in 21 this Stora Enso entry. SAP contends that the 6-26-06 and 6-15-06 entries (quoted above) 22 are relevant because they tend to prove that the customer purchased SAP software 23 because of a parent company mandate, not because of TomorrowNow. SAP believes that 24 the comments (presumably the ones in the 6-15-06 portion) originated from a June 19, 25 2006 Oracle email from Barbara Allario to Robert Lachs, which is in Exh. A-5042 26 (discussed above), which SAP seeks to have admitted as a party admission (but not also 27 as an adoptive admission, as here). 28 SAP argues that these statements are employee party admissions, and are also 16 1 adoptive admissions. Lachs is identified as the support sales manager for this entry, and 2 Oracle stated in discovery that Lachs was involved with the Stora Enso account. Thus, 3 according to SAP, the statements are employee party admissions. May 22, 2006 email and a phone call with the customer as the information source. Oracle 6 contends that the later updates reference additional calls with the customer. Oracle 7 asserts that this entry “demonstrates the unreliability of treating statements by an individual 8 customer employee as an indication of a customer’s state of mind.” In addition, Oracle 9 asserts, this entry includes references to a parent company and to communications 10 between the parent company and Stora Enso, which implicates yet another layer of 11 For the Northern District of California In response, Oracle contends that contrary to SAP’s argument, the entry identifies a 5 United States District Court 4 hearsay. 12 The court finds that none of the statements is admissible as an adoptive admission, 13 and thus considers whether any is admissible as an employee party admission. Given the 14 problems outlined above, plus the fact that the exhibit includes so many subparts and both 15 customer statements and statements of opinion by Oracle representatives, the court cannot 16 issue a definitive ruling with regard to this exhibit. All the court can say at this point is that it 17 will not admit any purely “transcribed customer statements,” as those are hearsay. 2. 18 SAP’s Category Two – Evidence of Willful Infringement 19 SAP’s position is that the court has already ruled that willful infringement is not 20 relevant to the issue of lost profits/infringer’s profits, and that the court should therefore 21 exclude exhibits and trial testimony regarding willfulness. The exhibits that SAP seeks to 22 exclude are plaintiff’s Exhibits 0008, 0014, and 0161. The trial testimony that SAP seeks to 23 exclude is testimony similar to that which was elicited at the last trial regarding SAP 24 purportedly accepting risk of legal liability, using TomorrowNow as a “liability shield,” 25 employee “whistle-blowing” efforts, employee discipline, and/or remorse for infringement. 26 Oracle’s position is that the court has previously ruled only that evidence of willful 27 infringement cannot be introduced to support the theory that overhead expenses cannot be 28 deducted from gross revenues to arrive at infringer’s profits. Oracle claims, however, that 17 1 all revenues of TomorrowNow can be considered “infringer’s profits,” and that the evidence 2 of SAP’s intent will be used to support that theory. Oracle also asserts that evidence of 3 willfulness is also evidence of “causation” and “context.” 4 The court agrees with SAP. Plaintiff’s Trial Exhibits 0008, 0014, and 0161 will not be 5 admitted. Oracle will not be permitted to offer evidence of alleged willful infringement, 6 including evidence of so-called “Risk Acceptance” that it previously offered solely to support 7 its hypothetical license theory. Evidence of willful infringement is irrelevant to issues to be 8 determined in the new trial, which is limited to determining lost profits and infringer’s profits, 9 and would serve only to confuse and mislead the jury. As for the argument that Exhibit 0161 also provides a direct link between the 11 For the Northern District of California United States District Court 10 infringement and SAP’s gains, the court notes that this document was prepared at the time 12 that TomorrowNow was being integrated into SAP (January 2005). The estimates of how 13 many customers would move from Oracle to TN is just that – a projection, and is not 14 relevant to show that SAP/TN actually acquired those customers and made infringing 15 profits from a certain number of customers. Similarly, the trial testimony that SAP seeks to 16 have excluded appears to go only to the question of willfulness, and is therefore irrelevant. 17 3. 18 SAP’s Category Three – Evidence Relating to Excluded Damages Theories SAP seeks to exclude three sub-categories of exhibits and testimony – “Risk to 19 Oracle’s Investment” evidence; “Expected Financial Benefits/Impacts” Evidence; and 20 “Scope and Duration of the License” evidence. These are plaintiffs’ Trial Exhibits 4809, 21 4819, 0012, 0024, 0960, and 0728. SAP’s position is that none of this evidence – which 22 was previously presented at the first trial in support of Oracle’s theory of hypothetical 23 license damages – is relevant to lost profits and infringer’s profits, because it is not 24 probative of the key issue to be tried, which SAP asserts is why customers left Oracle to 25 purchase TomorrowNow support or SAP software. Thus, SAP argues, it cannot be viewed 26 as providing either “context” or “background” for the stipulated claims. 27 Oracle’s position is that each of these three subcategories is relevant to lost 28 profits/infringer’s profits, and that none of the exemplars SAP has identified will be offered 18 1 solely to support excluded damages theories. In addition, Oracle asserts, each provides 2 “crucial causation evidence” as well as context and background. In particular, Oracle 3 claims that evidence of SAP’s motives in each of these exemplars is relevant to causation. 4 The court agrees with SAP. Plaintiff’s Trial Exhibits 4809 and 4819 (relating to 5 Oracle’s R&D costs and Siebel acquisition prices), plaintiff’s Trial Exhibits 0012, 0024, 6 0161, and 0960 (relating to projections of potential customer conversions, intended as 7 evidence of SAP’s hopes, aspirations, assumptions, and expectations), and plaintiff’s Trial 8 Exhibit 7028 (relating to scope and duration of the license) will not be admitted, as they are 9 not relevant to determining lost profits or infringer’s profits. 4. 12 Oracle’s Category One – Oracle Income Statements and Cancellation Reports Oracle’s position is that its income statements and renewal rate or cancellation 11 For the Northern District of California United States District Court 10 reports are business records that can be used to support the lost profits claim. SAP asserts that there is some question as to the foundational support for these 13 14 exhibits, but agrees to admission of these business records, so long as comparable SAP 15 business records are also admitted (SAP’s “trial balance” financial statements, used to 16 calculate SAP’s profit margin). The court agrees with SAP. Plaintiff’s Trial Exhibits 8040 and 2582 and defendants’ 17 18 Trial Exhibits A-6623 and A-6643 will be admitted. 19 5. Oracle’s Category Two – Post-Trial Statements by SAP Executives 20 Oracle’s position is that SAP claimed in the prior trial that it intended to take 21 responsibility for its misdeeds, but after trial, SAP executives stated (e.g., at shareholders’ 22 meeting) that the company stipulated to liability as a litigation tactic to minimize damages. 23 SAP’s position is that Oracle’s focus on these post-trial statements shows that it is 24 still trying to focus on punishment, not just on compensatory damages. The reasons that 25 defendants stipulated to liability are not relevant to the question of lost profits/infringer’s 26 profits, and under Federal Rule of Evidence 403, any insignificant probative value is greatly 27 outweighed by potential prejudice. The post-trial statements do not change the fact that 28 defendants did stipulate to liability, and the jury will be told that they did. 19 The court agrees with SAP. Plaintiff’s Trial Exhibits 8111 and 8112 will not be 1 2 admitted. 3 6. Oracle’s Category Three – Statements from TomorrowNow Plea Agreement Oracle’s position is that the court should allow Oracle to introduce the admission 4 5 relating to causation contained within the plea agreement without referencing that the 6 admissions came from the guilty plea. The statements can be presented to the jury simply 7 as “testimony from a previous proceeding.” SAP’s position is that this is a back-door attempt to introduce evidence of TN’s guilty 8 9 plea, which the court has already excluded. The same circumstances that warrant excluding evidence of the conviction warrant excluding admissions in the plea agreement. 11 For the Northern District of California United States District Court 10 Under Federal Rule of Evidence 403, the potential prejudice far outweighs any possible 12 probative value. The court agrees with SAP. The plea agreement will not be admitted. 13 14 7. Objections Posed at Trial Finally, the court has concluded, based on the number of designated exhibits and 15 16 the apparent number of potential objections, that it will be unable to resolve all such 17 disputes by meeting with the parties each morning for half an hour, as was done at the 18 prior trial. The court can conceive of only two alternatives to the prior procedure. These 19 are (a) the court can rule on each objection as it comes up at trial, with the clock running, or 20 (b) the court can appoint a special master to rule on as many objections as possible prior to 21 trial. The parties shall meet and confer to determine what disputes still remain regarding 22 23 trial exhibits, and shall thereafter advise the court of their preference for resolving these 24 disputes. 25 8. 26 Motion to Seal Oracle’s Information Contained in Joint Statement The parties seek an order allowing portions of the Joint Statement to be filed under 27 seal. Apart from quotations from the At-Risk Report (which was previously ordered sealed 28 in its entirety), the parties seek to seal those portions of the Joint Statement that quote 20 1 2 directly from the exhibits discussed above, and other of the designated exhibits. The motion to maintain the At-Risk Report under seal is GRANTED, but any portion 3 the court finds to be admissible at trial will be unsealed. This includes the excerpt from 4 Defendants’ Exhibit A-0059 (Merck Excerpt) discussed above. The remainder of the 5 motion is DENIED, as it relates to quotations from exhibits that have been designated as 6 trial exhibits. Oracle has not established “compelling reasons” to seal this information. See 7 Kamakana v. City of Honolulu, 447 F.3d 1172 (9th Cir. 2006). 8 IT IS SO ORDERED. 10 Dated: July 31, 2012 ______________________________ PHYLLIS J. HAMILTON United States District Judge 11 For the Northern District of California United States District Court 9 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21

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