Walsh v. Apple, Inc. et al

Filing 176

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Walsh v. Apple, Inc. et al Doc. 176 PAGES 1 - 76 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE ELIZABETH D. LAPORTE, MAGISTRATE JUDGE ORACLE CORPORATION, ET AL., ) ) ) PLAINTIFFS, ) ) VS. ) ) SAP AG, ET AL., ) ) ) DEFENDANTS. ) ) ___________________________________) NO. C07-1658 PJH (EDL) SAN FRANCISCO, CALIFORNIA THURSDAY AUGUST 28, 2008 9:00 O'CLOCK A.M. TRANSCRIPT OF PROCEEDINGS APPEARANCES: FOR PLAINTIFFS: BINGHAM MCCUTCHEN LLP THREE EMBARCADERO CENTER SAN FRANCISCO, CALIFORNIA 94111-4067 BY: GEOFFREY M. HOWARD, ESQUIRE AND DONN PICKETT, ESQUIRE AND HOLLY HOUSE, ATTORNEY AT LAW 262-9212 AND JENNIFER GLOSS, SENIOR CORPORATE COUNSEL ORACLE 500 ORACLE PARKWAY REDWOOD SHORES, CALIFORNIA 940656 650-506-7114 FURTHER APPEARANCES ON NEXT PAGE REPORTED BY: KATHERINE WYATT, CSR #9866, RMR OFFICIAL REPORTER - U.S. DISTRICT COURT KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 Dockets.Justia.com FURTHER APPEARANCES: FOR DEFENDANTS: JONES DAY 555 CALIFORNIA STREET 26TH FLOOR SAN FRANCISCO, CALIFORNIA 94104-1500 BY: JASON MCDONELL, ESQUIRE AND ELAINE WALLACE, ATTORNEY AT LAW AND JONES DAY 717 TEXAS SUITE 3300 HOUSTON, TEXAS 77002-2712 BY: SCOTT W. COWAN, ESQUIRE AND JONES DAY 1755 EMBARCADERO ROAD PALO ALTO, CALIFORNIA 94303 BY: JANE FROYD, ATTORNEY AT LAW KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AUGUST 28, 2008, THE CLERK: VERSUS SAP AG, ET AL. COUNSEL PLEASE STATE YOUR APPEARANCES FOR THE RECORD. MR. HOWARD: FOR ORACLE. GOOD MORNING, YOUR HONOR. GEOFF HOWARD 9:00 O'CLOCK AM CALLING CIVIL O7-1658, ORACLE CORPORATION PROCEEDINGS WITH ME JENNIFER GLOSS FROM ORACLE, AND MY PARTNERS HOLLY HOUSE AND DONN PICKETT. THE COURT: GOOD MORNING. GOOD MORNING, YOUR HONOR. JASON MR. MCDONELL: MCDONELL FROM JONES DAY FOR DEFENDANTS. ALSO HERE FROM JONES DAY IS SCOTT COWAN, ELAINE WALLACE AND JANE FROYD. AND FROM THE SAP LEGAL DEPARTMENT ARE KEVIN HAMEL AND JOHN HICKEY, BOTH OF WHOM HAVE BEEN HERE BEFORE. THE COURT: ALL RIGHT. ALL RIGHT. GOOD MORNING. SO LET'S GO THROUGH THE UPDATE, AND THEN WE WILL ALSO ADDRESS THE MOTION ON THE CLAWED BACK. SO WHERE ARE THINGS ON SAMPLING AND EXTRAPOLATION? MR. HOWARD: THANK YOU, YOUR HONOR. WE HAVE HAD EXTENSIVE DISCUSSIONS, AS REPORTED. THERE IS, I WOULD SAY, BAD NEWS AND GOOD NEWS. THE BAD NEWS IS THAT IN THE EFFORT TO FIND A STATISTICALLY-VALID METHODOLOGY TO SAMPLE THE VAST AMOUNT OF DATA, WE, AT LEAST, CAME TO THE CONCLUSION -- AND I'LL LET MR. COWAN SPEAK FOR HIMSELF, BUT I THINK HE MAY AGREE -- THAT JUST KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 4 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 THAT, JUST A STATISTICALLY-VALID SAMPLE AND TO FIND THE FACTS FROM THAT SAMPLE THAT ARE RELEVANT AND THAT WE WOULD WANT TO GET WOULD EFFECTIVELY CONSUME ALL OR MORE OF THE DISCOVERY LIMITS THAT YOUR HONOR HAS SET JUST IN THAT PART OF THE CASE. THE COURT: MR. HOWARD: HOURS, POTENTIALLY. THE COURT: HOURS IN DEPOSITIONS? MR. HOWARD: DEPOSITIONS. THE COURT: MR. HOWARD: RIGHT. NOBODY WANTS TO GO DOWN THAT ROAD JUDGE HAMILTON SET AN HOUR LIMIT FOR DID I SET AN HOUR LIMIT? YOU MEAN THE NOW, WHICH LIMITS WE TALKING ABOUT? WE'RE TALKING ABOUT CUSTODIANS AND BECAUSE THERE OTHER AREAS OF THE CASE. AND WE'VE BEEN TRYING HARD TO FIND A WORKAROUND FOR THAT. BUT ONCE YOU STEP BACK FROM WHAT WOULD OTHERWISE BE A QUOTE/UNQUOTE "STATISTICALLY-VALID METHODOLOGY," IT DOES CREATE SOME OTHER ISSUES. SO THE DISCUSSIONS OF LATE HAVE FOCUSED ON STILL IDENTIFYING A SET OF FIXES THAT WE'RE GOING TO -- AND DIVIDE THEM UP INTO THE PROPER POPULATIONS, BECAUSE THEY DIFFER BY WHAT RELEASE OF SOFTWARE IT IS; WHAT TIME PERIOD THE FIX WAS BEING DEVELOPED IN, POTENTIALLY. AND THOSE ARE POTENTIAL FILTERS. AND THEN, TO TAKE TESTIMONY THAT APPLIES TO THE PROCESS BY WHICH THOSE FIXES WERE DEVELOPED AND AGREE THAT THAT TESTIMONY IS GENERALLY APPLICABLE KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 5 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 TO THAT ENTIRE POPULATION OF FIXES. THE COURT: SO THAT GOES TO THE KIND OF QUALITATIVE SIDE OF THINGS, BUT NOT THE QUANTIFICATION OF IT. MR. HOWARD: CORRECT. BUT THE QUALITATIVE SIDE OF IT, AT LEAST IN OUR VIEW, IS AMONG THE MOST IMPORTANT BECAUSE IT GETS TO TWO -- THE TWO MOST IMPORTANT ISSUES ARE: HOW MANY ENVIRONMENTS -- HOW MANY COPIES OF ENVIRONMENTS WERE USED IN THE PROCESS OF CREATING A PARTICULAR FIX. AND THERE ISN'T YOU NEED SOMEBODY NECESSARILY A DOCUMENT WHICH TELLS YOU THAT. TO SAY: "THIS IS HOW WE DID IT FOR THAT FIX." AND THEN, THE SECOND ONE IS WHAT THEY DID WITH THOSE ENVIRONMENTS. THEY TOOK OBJECTS, AND THEY MODIFIED THEM OR WROTE THEM FRESH, AND TO KNOW THAT THAT WAS DONE WITH THESE OBJECTS IN THE PROCESS OF CREATING THAT FIX. WE CAN COUNT THE OBJECTS. WE CAN COUNT SORT OF THE ENVIRONMENTS THAT ARE ON THE SYSTEMS NOW, BUT IT'S HARD TO CONNECT THOSE DOTS WITHOUT THAT MISSING PROCESS TESTIMONY PIECE. AND THAT'S WHAT WOULD REQUIRE IF YOU HAD EVEN JUST A SAMPLE OF THE POPULATION. YOU WOULD HAVE TO KIND OF DRILL DOWN WITH WITNESSES, POTENTIALLY, TO SAY: "THIS IS HOW IT WAS DONE WITH EACH OF THOSE FIXES; WITH EACH OF THOSE OBJECTS WITHIN THOSE FIXES." JUST WITHIN THAT SIMPLE IT'S A HUGE AMOUNT OF KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 6 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 TESTIMONY. IT'S A HUGE NUMBER OF DEPOSITIONS, AND IT'S A HUGE NUMBER OF WITNESSES, POTENTIALLY. THE COURT: SO WHAT ARE YOU SAYING? THAT THE - YOU WOULD BE WILLING TO LIVE WITHOUT A STATISTICALLY-VALID METHOD OF QUANTIFYING IT BECAUSE THAT WOULD JUST CONSUME TOO MANY RESOURCES? BUT DO YOU THINK YOU CAN WITHIN THE LIMITS THAT ARE HERE ALLOCATE A REASONABLE AMOUNT TO ACHIEVE THAT QUALITATIVE ANALYSIS? MR. HOWARD: OF DETERMINING. THAT'S WHAT WE'RE STILL IN THE PROCESS AND WHEN I REFERRED TO SOME WRINKLES THAT HAVE ARISEN OUT OF THESE DISCUSSIONS, ONE OF THEM IS WE HAVE SAID FROM THE BEGINNING THAT WE TO NOT REQUIRE -- WE DON'T THINK IT'S NECESSARY TO HAVE A STATISTICALLY-VALID SAMPLE. AND WE'RE PARTICULARLY CONVINCED OF THAT NOW THAT WE'VE SEEN WHAT THAT WOULD ENTAIL. BUT THERE ARE SOME SIGNIFICANT HURDLES BETWEEN THE PARTIES IF WE WERE TO AGREE ON THIS ALTERNATIVE METHODOLOGY. ONE OF THEM IS -- AND, YOU KNOW, THERE HAVE BEEN GOOD, CANDID DISCUSSIONS ABOUT THIS -- BUT ONE OF THEM IS IF WE ARE TO TAKE THIS TESTIMONY AND DEVELOP THESE FACTS AND APPLY THEM TO THIS POPULATION, THE DEFENDANTS WOULD LIKE THAT -- ARE OPEN TO THAT BEING APPLICABLE TO LIABILITY, BUT THEY ARE MORE RESISTANT, I WOULD SAY, TO HAVING IT APPLY TO DAMAGES. ON OUR SIDE IT'S AN ISSUE FOR US, FIRST OF ALL, NOT KNOWING HOW THAT'S GOING TO COME OUT, BUT WE CAN'T FORECLOSE KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 7 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 OURSELVES FROM HAVING FACTS THAT WE DEVELOP IN DISCOVERY -- AND THESE ARE JUST FACTS THAT WE'RE DEVELOPING IN DISCOVERY IN A PARTICULAR WAY -- NOT AVAILABLE TO US FOR A DAMAGES ANALYSIS. SO WHAT WE'RE TRYING TO DO IS AVOID COMING BACK TO YOU OR TO JUDGE HAMILTON TO SAY EVEN FOR THE SAMPLING TECHNIQUE, WHICH WE'RE ONLY TALKING ABOUT BECAUSE OF THE DISCOVERY LIMITS THAT WE HAVE PUT INTO PLACE, THAT EVEN FOR THAT WE NEED MORE DISCOVERY. WE DON'T WANT TO DO THAT. ON THE OTHER HAND, WE MAY GET TO A POINT WHERE WE'VE AGREED ON A METHODOLOGY, BUT WE CAN ONLY GET IT SO FAR AS BETWEEN LIABILITY AND DAMAGES. AND WE MAY BE AT A POINT WHERE WE WOULD NEED SOME FURTHER GUIDANCE FROM THE COURT IN ORDER TO SOLVE THAT PROBLEM. THE COURT: BECAUSE DAMAGES, ESSENTIALLY, EVEN IF YOU JUST GO WITH THE STATUTORY NUMBERS, YOU KNOW, NUMBER OF INCIDENTS TIMES THE STATUTORY PENALTY, YOU NEED THE NUMBER. MR. HOWARD: THE COURT: MR. HOWARD: YOU NEED A NUMBER. RIGHT. AND THAT'S ONE OF THE POINTS OF THE EXERCISE. BUT IT MAY -- IT MAY BE THIS QUANTIFICATION OR SORT OF UNDERSTANDING REALLY WHAT HAPPENED ACROSS THE POPULATION OF MATERIAL THAT WAS SENT TO CUSTOMERS COULD BE RELEVANT IN A NUMBER OF DIFFERENT WAYS TO DAMAGES. THAT'S SOMETHING THAT WE'RE ONLY IN THE BEGINNING STAGES OF STARTING TO THINK ABOUT AS WE UNDERSTAND WHAT HAPPENED KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 8 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 AND HOW IT MIGHT ADD UP AS WE GO THROUGH THIS PROCESS. THE COURT: MR. COWAN: OKAY. YOUR HONOR, THERE'S A NUMBER OF THINGS THAT MR. HOWARD SAID THAT I AGREE WITH, A NUMBER THAT I TAKE ISSUE WITH. BUT I THINK TO CUT TO THE CHASE IN TERMS OF WHAT I THINK YOUR INQUIRY IS, GENERALLY SPEAKING, THE CONCEPT OF TAKING EXISTING TESTIMONY AND HAVING THEM IDENTIFY THAT TESTIMONY AND HAVING THEM TELL US HOW THEY WOULD LIKE TO APPLY THAT TESTIMONY THAT MAY BE RELATED TO SPECIFIC PRODUCT IN A SPECIFIC VERSION ACROSS MULTIPLE PRODUCTS AND MULTIPLE VERSIONS, WE'RE FINE WITH THAT CONCEPT AS LONG AS WE KNOW WHAT THAT IS AND CAN GO BACK TO THE WITNESSES AND SAY: "IF YOU WERE TO GO THROUGH THE PROCESS OF GETTING A DEPOSITION ON THESE OTHER PRODUCTS, WOULD YOUR ANSWER BE THE SAME?" AND IF IT IS, WE DON'T WANT TO GO THROUGH THAT EXPENSE, AND THEY DON'T, AND CERTAINLY THE COURT WOULDN'T WANT US TO DO THAT. SAME WOULD HOLD TRUE ON OTHER TYPES OF QUALITATIVE ISSUES WITH RESPECT TO THAT. SO TO THE EXTENT ON THOSE ISSUES THAT MR. HOWARD RAISED I TEND TO AGREE THAT WE SHOULD BE ABLE TO, HOPEFULLY AGAIN, TO GET TO SOME AGREEMENT ON THAT. THE BIGGER STUMBLING BLOCK FOR US REMAINS -- AND I AGREE WITH MR. HOWARD'S CHARACTERIZATION THAT THERE HAVE BEEN KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 9 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 VERY CANDID, OPEN DISCUSSIONS ABOUT THIS -- IS ULTIMATELY HOW ARE THOSE, WHETHER THEY ARE EXTRAPOLATED FACTS OR STIPULATED FACTS, HOW ARE THEY GOING TO BE USED AND WHAT ARE THE IMPLICATIONS, BOTH IN TERMS OF LIABILITY AND DAMAGES. WE HAVE EXPLAINED THAT AT SOME POINT, YOU KNOW, LIABILITY IS LIABILITY NO MATTER HOW MANY INSTANCES OF EVIDENCE YOU HAVE TO PROVE OR DISAPPROVE A SPECIFIC POINT. SO THE QUANTITATIVE ISSUES ASSOCIATED WITH LIABILITY WITHOUT DAMAGE CONSIDERATIONS MAY NOT BE AS CRITICAL OF AN ISSUE. BUT TO THE EXTENT THAT THEY ARE FOCUSED ON DAMAGES ONLY OR THOSE ASPECTS OF LIABILITY THAT ARE KIND OF A MERGER OF LIABILITY AND DAMAGE ANALYSIS, THAT'S WHERE WE TEND TO GET MUCH MORE CRITICAL IN TERMS OF NEEDING TO UNDERSTAND THE METHODOLOGY AND NEEDING TO UNDERSTAND THE IMPLICATIONS OF ANYTHING WE WOULD AGREE TO TO SHORT CIRCUIT THE PROCESS. SO THE ONE ISSUE THAT I THINK IS IMPORTANT TO TAKE ISSUE WITH, WE HAVEN'T THROWN OUT THE POSSIBILITY OF SOME STATISTICALLY-VALID SAMPLING. I AGREE WITH MR. HOWARD IF YOU TRY TO DO THAT FROM A TESTIMONY-BASED STANDPOINT AND TAKE SOME TESTIMONY AND EXTRAPOLATE THAT IN SOME STATISTICALLY-VALID WAY, THE COMPLEXITIES GET UNWORKABLE, I THINK. BUT ON THE NUMERIC SIDE, THINGS THAT CAN BE QUANTIFIED, WE'RE NOT RULING THAT OUT. SO OUR POSITION REMAINS THAT AS LONG AS WE GET A REASONABLY ACCURATE DEPICTION OF WHAT REALITY IS -- AND WE RECALL THE DISCUSSION FROM THE PREVIOUS KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 10 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 HEARING THAT MAY NOT BE KNOWABLE BY EITHER SIDE. BUT TO THE EXTENT WE HAVE A COMFORT LEVEL THAT IS A METHODOLOGY THAT GETS US TO WHERE WE THINK WE'RE REPRESENTING REALITY, WE'RE OKAY WITH THAT, EVEN IF THAT INVOLVES SOMETHING OTHER THAN A STATISTICALLY-VALID METHOD. BUT IT'S THAT ASSURANCE THAT WE'RE NOT CREATING A NEW REALITY IS WHAT WE'RE CONCERNED ABOUT. THE OTHER COMPONENT OF THAT IS WHATEVER WE DO IN A SHORTHAND WAY WE WANT TO BE ABLE TO HAVE A CORRESPONDING -- IN HELPING THEM ESTABLISH FACTS -- A CORRESPONDING WAY TO DEAL WITH THAT ON THE DEFENSE'S SIDE. THE COURT: MR. COWAN: IT'S GOT TO BE SYMMETRICAL. EXACTLY. SO IT REALLY COMES BACK TO IN OUR ISSUE WHERE WE'RE LIKELY, IF WE'RE NOT GOING TO REACH AN AGREEMENT AND BRING THINGS TO YOU, IT'S GOING TO BE TRYING TO UNDERSTAND HOW THIS SUMMARIZED EVIDENCE, IF YOU WILL, OR SUMMARIZED FACTS ARE GOING TO BE USED AND WHAT THOSE IMPLICATIONS ARE. WE ARE WORKING IN EARNEST TO DO THAT. WE'VE HAD -- THE PAST TWO MEET AND CONFERS WE'VE HAD ON THIS WE'VE HAD THE EXPERTS INVOLVED. AND I THINK -- AND I'M HOPEFUL MR. HOWARD AND WE'RE WOULD AGREE -- HAVE BEEN EXTREMELY PRODUCTIVE. CONTINUING, BECAUSE IT'S IN BOTH PARTIES' BEST INTEREST TO DO THAT. THE COURT: YEAH. I MEAN, I THINK JUDGE HAMILTON, KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 11 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 YOU KNOW, IS GOING TO BE VERY MUCH IN FAVOR OF LIMITS. I FEEL THAT, YOU KNOW, THE NEED FOR THAT KIND OF OUTWEIGHS EVERYTHING ELSE. I MEAN, YOU KNOW, I DON'T THINK -- I MEAN, THE STANDARD, DEPENDING ON WHAT IT IS YOU'RE TRYING TO PROVE, IS NOT NECESSARILY STATISTICAL VALIDLY. YOU KNOW, IT'S NONSPECULATIVE. IT'S MORE PROBABLE THAN NOT. SO THERE ARE A LOT OF WAYS TO DO IT. SO AS LONG AS IT PASSES THAT TEST, THAT'S GOOD ENOUGH, I THINK. MR. COWAN: AND, AGAIN, IT DEPENDS. AND WHERE WE -- WHERE WE DEPARTED FROM THE LAST DISCUSSIONS WE HAD AT THE HEARING, WHICH I THINK HELPED TREMENDOUSLY, WE GOT OUT OF THE THEORETICAL REALM AND INTO THE ACTUAL REALM. WE HAD SOME WEBEX SESSIONS WHERE WE'RE POINTING TO DOCUMENTS WE'VE PRODUCED, POINTING TO THE SAP'S DATABASE, POINTING TO FIXES THAT HAVE BEEN DELIVERED AND SAYING: "WHICH FACTUAL ATTRIBUTES OF THESE THINGS CAN WE SUMMARIZE IN A MEANINGFUL WAY?" SO ONCE YOU GET INTO THAT LEVEL OF DETAIL, I THINK THE ANSWER IS: IT DEPENDS. AND IN SOME INSTANCES I WOULD AGREE WITH YOUR STATEMENT. IN SOME INSTANCES IT REALLY DEPENDS ON HOW IT'S GOING TO BE USED AS TO WHAT COMFORT LEVEL WE WOULD HAVE NOT ONLY IN AGREEING TO IT, BUT WHAT WE BELIEVE WOULD BE ACCEPTABLE UNDER KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 12 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 THE LAW. THE COURT: MR. HOWARD: UM-HUM. I WOULD SAY TWO THINGS, YOUR HONOR. THE FIRST IS AS TO HOW IT WOULD BE USED. YOU KNOW, I DON'T THINK THAT -- THE EXERCISE SHOULD NOT REQUIRE US IN THE COURSE OF GETTING WHAT IS CONCEDEDLY RELEVANT IMPORTANT DISCOVERY ON A LIMITED BASIS, GIVEN WHAT'S OUT THERE, TO GIVE A PROOF CHART OR A CLOSING ARGUMENT OR IDENTIFY, YOU KNOW, HOW THOSE FACTS GET USED AT TRIAL. THAT'S NOT SOMETHING THAT WE SHOULD BE ENGAGED IN WHEN WE'RE JUST IN THE FACT-GATHERING, FACT-TOTALLING STAGE. AND IT WOULD BE -- IT WOULD BE A SERIOUS PROBLEM IF WE WERE TO AGREE TO A PROCESS FOR GETTING FACTS FOR THE SAKE OF EFFICIENCY AND DOING IT IN A WAY THAT WASN'T SPECULATIVE, BUT WHERE THERE WAS STILL SUMMARIES AND GENERALLY-APPLICABLE PRINCIPLES, AND THEN NOT BE ABLE TO USE THOSE FACTS, YOU KNOW, FOR SOME REASON, OR IN SOME MANNER OR FOR SOME PURPOSE AT TRIAL, INCLUDING FOR DAMAGES. WHAT WOULD WE HAVE ACCOMPLISHED THEN? I MEAN, WE DO NEED TO BE ABLE TO USE THE FACTS THAT WE GATHER AS WE GO THROUGH DISCOVERY. AND IF STATISTICAL VALIDITY IS THE STUMBLING BLOCK TO THAT, THEN I GUESS WE WILL NEED TO DO IT IN A STATISTICALLY-VALID WAY, AND WHATEVER OTHER WAY THE COURT, YOU KNOW, HELPS US GET TO WHERE THOSE FACTS, LIKE ANY OTHER FACTS THAT YOU GET IN DISCOVERY, ARE AVAILABLE FOR USE. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 13 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 THE COURT: WELL, I GUESS -- I MEAN, AS THIS IS COMING TO ME IT'S TOO ABSTRACT WHAT YOUR DIFFERENCES ARE FOR ME TO REALLY GIVE ANY GUIDANCE, I THINK. I MEAN, I DON'T KNOW WHAT I COULD SAY. I MEAN, YOU COULD -- YOU KNOW, AT SOME POINT IF WE HAVE TO HAVE YOU BRING IN YOUR EXPERTS AND TALK TO ME, YOU COULD. AT SOME POINT MAYBE I WOULD HAVE TO THINK ABOUT GETTING MY OWN EXPERT, WHICH IS NOT SOMETHING I WOULD LIKE TO DO, AT YOUR EXPENSE. BUT I'D RATHER AVOID THAT. BUT -- SO I DON'T KNOW WHAT I CAN SAY OTHER THAN I THINK IT'S IMPORTANT AND ESSENTIAL. AND THERE'S BOTH THE ISSUE OF THE LIMITS THAT HAVE TO BE IMPOSED THAT HAVE ALREADY BEEN IMPOSED BY JUDGE HAMILTON. AND THAT ALSO, YOU KNOW, POSSIBLY THERE COULD BE SOME REASON TO TINKER AT THE EDGES. BUT IF THEY ARE TINKERED WITH IN ANY SIGNIFICANT EFFECT, I MEAN, IT'S JUST NEVER GOING TO GO TO TRIAL. AND IT SHOULDN'T BE IN ORACLE'S INTEREST FOR THAT. AND IF THE EXPENSES GET OUT OF HAND I'M ALSO GOING TO HAVE TO THINK ABOUT AT WHAT POINT WHAT IT COSTS YOU, TOO. I'M ALREADY APPALLED BY THE AMOUNT OF MONEY THIS IS ALL COSTING. AND, YOU KNOW, SO THOSE ARE THINGS THAT ALL GO THROUGH MY MIND. BUT, YOU KNOW, WHATEVER IS DECIDED HAS TO BE FAIR TO BOTH SIDES. BUT I DON'T KNOW WHAT ELSE I CAN SAY THAN THAT ABOUT THIS ISSUE. MR. HOWARD: I THINK THAT THERE ARE A COUPLE OF KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 14 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 THINGS THAT WILL HAPPEN IN THE NEXT WEEK OR SO THAT WILL, I THINK, GET US VERY CLOSE. ONE IS WE'VE BEEN ON A PARALLEL TRACK ENGAGED IN WHAT HAS BEEN CALLED THIS "DATA WAREHOUSE PROJECT," WHERE WE LOOK AT THEIR SERVERS AND IDENTIFY THINGS TO PRODUCE. AND AS I UNDERSTAND IT, THAT DATA NEEDS TO BE PRODUCED BECAUSE THAT'S THE UNDERLYING DATA THAT WE'RE USING FOR THE BASIS FOR THE EXERCISE. AND AS I UNDERSTAND IT, THAT WILL AT LEAST START TWO WEEKS FROM THE 25TH. AND WE NEED TO GET THOSE PRODUCTIONS DONE SO THAT OUR EXPERTS CAN SIT DOWN WITH THE UNDERLYING DATA, NOW HAVING SEEN THEM REMOTELY, AND BE ABLE TO COME UP WITH THE TOTALS IN THESE VARIOUS POPULATIONS. THE SECOND IS THAT WE ARE, BETWEEN OURSELVES, I THINK, MORE CONCRETE THAN WE ARE MAYBE RIGHT NOW WITH YOU. BUT WE'RE TALKING ABOUT SPECIFIC POPULATIONS, SPECIFIC TESTIMONY, HOW WE WOULD DO THAT. I THINK THAT WILL SOLVE THAT ONE WAY OR THE OTHER VERY SHORTLY, AND THAT, YOU KNOW, THEN WE MAY NEED TO COME BACK. MR. COWAN: I AGREE, YOUR HONOR, BECAUSE I THINK THE ISSUE YOU'RE STRUGGLING WITH IS THE SAME ISSUE THAT WE, AS LAWYERS FOR THE PARTIES, AND THE PARTIES HAVE BEEN STRUGGLING WITH AT THE THEORETICAL LEVEL. AND YOU CANNOT RESOLVE THESE ISSUES UNTIL YOU GET TO APPLY A SPECIFIC FACT AND HOW YOU'RE GOING TO DO IT. AND WE'RE DOING THAT SO -THE COURT: OKAY. ALL RIGHT. SO I THINK THAT COVERS THE FIRST TWO TOPICS, REALLY. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 15 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 DAMAGES, CAUSATION, AND DOES IT -MS. HOUSE: THE DAMAGES CAUSATION PIECE IS THE SORT OF FOLLOW-ON TO THE TWO LAST DISCOVERY CONFERENCES WHERE YOU GAVE TWO ORDERS, SEQUENTIAL ORDERS ABOUT WHEN WE WERE TALKING ABOUT OUR CONCERN ABOUT THE INEQUITY AND THE TYPE OF CAUSAL EVIDENCE THAT WE'VE RECEIVED, AND THE FACT THAT WE STILL HADN'T RECEIVED EVEN THE NAMES OF THE SAP CUSTOMERS, LET ALONE THEIR UNDERLYING DATA. THE COURT: DOES THAT STAND? MS. HOUSE: WE'VE GOTTEN AN INITIAL CHART, AND WE'RE SO YOU HAVE GOT SOME OF THAT NOW. WHERE DUE SOMETHING ELSE, I THINK, TODAY. IT'S DEFINITELY A START. WHAT WE DON'T HAVE AT THIS POINT, WE JUST LEARNED, WAS THE SERVICE-RELATED REVENUES THAT WOULD BE FOLDED INTO THE MONETARY VALUES. WHAT APPEARS TO HAVE BEEN DONE BY THE DEFENDANTS IS TO PROVIDE US WITH SORT OF THE APPLICATIONS CONTRACTS, WHICH ARE, YOU KNOW, THE SALES OF THE PRODUCTS. BUT, OBVIOUSLY, A BIG PART OF THE REVENUE STREAM ASSOCIATED WITH A CUSTOMER IS THE ONGOING SERVICE REVENUES. AND THAT, AS BEST I CAN UNDERSTAND FROM AN E-MAIL THAT WE GOT YESTERDAY OR THE DAY BEFORE, IS NOT INCLUDED IN THE MATERIAL. AND SO WE HAVE ASKED FOR THAT TO ALSO BE INCLUDED. AND WE HAVE NOT YET RECEIVED A RESPONSE WHETHER THAT WILL OR WILL NOT BE INCLUDED. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 16 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 MR. MCDONELL: STEP BACK A LITTLE BIT. MCDONELL -- IS: OKAY, YOUR HONOR. I WOULD LIKE TO SO THE ISSUE HERE -- BY THE WAY, JASON WHAT DISCOVERY WILL THERE BE OF SAP CONTRACTS? SO WE HAVE TOMORROWNOW, ON THE ONE HAND, THE SERVICE ENTITY BASED IN TEXAS THAT WAS PROVIDING SERVICE AND ONLY SERVICE TO FORMER ORACLE CUSTOMERS. AND THEN SAP, THE SOFTWARE COMPANY BASED IN GERMANY THAT HAD -- WAS A DIRECT COMPETITOR OF ORACLE. SO WE KNOW THAT ORACLE IS MAKING ISSUE OF THE TOMORROWNOW CUSTOMERS, FOR WHICH TOMORROWNOW IS PROVIDING SERVICE. THEN, THE QUESTION BECAME: TO WHAT EXTENT WOULD THEY BE ALLOWED TO HAVE SOME DISCOVERY OF SAP CUSTOMERS? THE COURT: TOMORROWNOW IS DOING. MR. MCDONELL: THEIR ALLEGATION. SO WE HAD ALWAYS TAKEN THE POSITION THAT WE WOULD NOT BLOCK ALL THE DISCOVERY INTO SAP. BUT THERE HAD TO BE THAT THAT IS ONE WAY OF CHARACTERIZING WHO ALLEGEDLY DERIVE FROM WHAT NEXUS, THAT CONNECTION WITH TOMORROWNOW. SO IN THE LAST TWO HEARINGS, AND GOING BACK TO THE CONFERENCE STATEMENT WE FILED WAY BACK IN JUNE, WE WERE VERY CLEAR THAT WHAT WE WERE WILLING TO DO, AS LONG AS IT WAS REASONABLE AND BALANCED AND NARROW, IS WE'D ALLOW FOR DISCOVERY OF SAP CUSTOMER TO THE EXTENT THAT THEY HAD ALSO BEEN A KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 17 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 TOMORROWNOW CUSTOMER. IF THE CUSTOMER HAD NEVER BEEN A TOMORROWNOW CUSTOMER, IT WAS OUT-OF-BOUNDS, CLEAR BRIGHT LINE. AND THAT'S WHAT WE'VE BEEN TALKING ABOUT IN THE LAST TWO HEARINGS. THE COURT: RIGHT. AND I DIDN'T HEAR ANY I HEARD AS TO THE ONES THAT DISAGREEMENT ABOUT THAT RIGHT NOW. WERE BOTH TOMORROWNOW, AND THEN SUBSEQUENTLY SAP, WHICH IS A RELATIVELY LIMITED UNIVERSE WELL UNDER A HUNDRED, THAT THEY WANT NOT JUST THE SALES OF APPLICATIONS, BUT THE ONGOING SUPPORT FEES. MR. MCDONELL: AND THAT'S WHAT WE HAD UNDERSTOOD THROUGH TWO HEARINGS AND MANY DISCUSSIONS WITH COUNSEL, AS WELL. AND WE HAVE PRODUCED -- YOU KNOW, WE MADE A GOOD FAITH EFFORT TO FIND THE CUSTOMERS THAT OVERLAPPED WITH TOMORROWNOW AND SAP. YOUR HONOR ORDERED THAT WE PRODUCE THOSE CONTRACTS. WE PRODUCED THEM IN A TIMELY FASHION, AND ANOTHER BATCH IS GOING OUT TODAY. YOUR HONOR SAID THAT -- ORDERED THAT WE USE OUR BEST EFFORTS TO ASSIGN MONETARY VALUES TO THEM. WE THOUGHT THE BEST -- AND THE CONCEPT THERE WAS: OF THESE CUSTOMER RELATIONSHIPS? WHAT'S THE GENERAL MAGNITUDE ARE THEY ARE THEY BIG? LITTLE, CONSEQUENTIAL, INCONSEQUENTIAL? SO WE THOUGHT THE BEST PROCESS FOR THAT IS WE JUST PULL OUT THE BASIC ORIGINAL LICENSE FEE, AND THAT WOULD BE A METRIC OF WHAT THE MAGNITUDE OF THE CUSTOMER RELATIONSHIP WAS. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 18 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 REMEMBER. MR. MCDONELL: SAFE PASSAGE IS A MARKING PROGRAM. IT THESE END UP BEING LONG SPREADSHEETS THAT WE PRODUCED TO THEM, BECAUSE THESE ARE CONTRACTS THAT CAN HAVE MANY, MANY APPENDICES AS ADDITIONAL LICENSES GET ADDED ON. BIG DEAL, AND WE WORKED HARD, AND WE'VE DONE IT. SO ALL OF THAT IS PROGRESSING FINE. IT IS OUR AND IT WAS A POSITION THAT AMONG THOSE 61 CUSTOMERS, WE ARE GOING TO WHITTLE IT DOWN TO NOTHING. IT'S GOING TO BE OUR GOAL AND ESTABLISH THAT NONE OF THESE ARE THE SOURCE OF LIABILITY. BUT THAT IS WHAT THE DISCOVERY IS GOING TO BE ALL ABOUT GOING FORWARD. THERE WILL BE A TUG OF WAR ABOUT ALL OF THAT. I'M LAYING ALL THAT BACKGROUND BECAUSE WHAT'S HAPPENED IN THE INTERIM, IS IT APPEARS THAT ORACLE IS NOW SHIFTING THE UNIVERSE ALTOGETHER, BECAUSE RIGHT AFTER THE LAST HEARING WHEN WE TALKED ABOUT ALL THESE THINGS THEY SERVED DISCOVERY SAYING THEY WANT DISCOVERY OF ALL OF THE SO-CALLED "SAFE PASSAGE CUSTOMERS" OF SAP. AND I KNOW WE SIT HERE AND THROW TERMS AT YOU. THE COURT: I KNOW I'VE HEARD IT BEFORE, BUT I CAN'T AND I'M SURE IS A MARKETING PROGRAM UNDERTAKEN BY SAP TO TRY TO MARKET ITS GOODS TO ORACLE CUSTOMERS. TO TRY TO GET ORACLE CUSTOMERS TO COME BUY SAP PRODUCTS. AND IT WAS -- YOU KNOW, IT WAS A WORLDWIDE MARKETING PROGRAM. THE COURT: AND -- DIDN'T NECESSARILY INVOLVE TN. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 19 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 DISCOVERY. MR. MCDONELL: IT DIDN'T NECESSARILY. NOW, TN WAS AN OFFER THAT WENT ALONG WITH SAFE PASSAGE, SO THERE WOULD BE -- IT WOULD BE POSSIBLE THAT A CUSTOMER WOULD TAKE A TOMORROWNOW OFFERING. BUT THE VAST, VAST MAJORITY OF THE SAFE PASSAGE CUSTOMERS NEVER TOOK A TOMORROWNOW CONTRACT AT ALL. AND DEPENDING ON WHAT LIST YOU LOOK AT AND HOW YOU DO THE MATH THERE MAY HAVE BEEN 800 SAFE PASSAGE CUSTOMERS. AND BASED ON WORK THAT WE HAVE DONE SO FAR WE THINK THE GREAT, GREAT MAJORITY OF THOSE HAD NOTHING TO DO WITH TOMORROWNOW. AND THAT IS WHY WE COME BACK TO THE PLACE WE'VE STARTED, WHICH IS WE'RE NOT GOING INTO THAT ENORMOUSLY BURDENSOME DISCOVERY INTO ALL OF THOSE CUSTOMERS. WE'RE DRAWING THAT LINE AT CUSTOMERS WHO ACTUALLY HAD A TOMORROWNOW SERVICE CONTRACT, AS WELL. THE COURT: OKAY. WELL, WHAT IS SURPRISING ME IS -THE ONLY I READ THIS STATEMENT CAREFULLY ON PAGES TWO TO THREE. THING I SAW IN DISPUTE WAS THE ONGOING -- WHAT YOU JUST BROUGHT UP, WHICH IS THE ONGOING SUPPORT MAINTENANCE FEES FROM THE 41, I THOUGHT IT WAS, BUT MAYBE IT'S ALSO THE 20 NON-US -- THE 41 US BASED AND THE 20 NON. SO IT'S BETWEEN 41 AND 61, THAT WERE BOTH TOMORROWNOW AND SAP CUSTOMERS. MR. MCDONELL: AND WE -- BUT THEY HAVE SERVED THIS ON AND WE'VE JUST LAST NIGHT OBJECTED TO IT ON THIS VERY GROUND THAT WE DRAW THAT LINE. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 20 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 THE COURT: WELL, LET'S START WITH THE ONES THAT THE 41 US BASED -- AND YOU'RE NOT OBJECTING TO ON THAT GROUND. I'M NOT TOO CLEAR ABOUT THE NON-US BASED, ARE YOU WILLING TO PROVIDE THE ONGOING SUPPORT MAINTENANCE FEES FOR THOSE? MR. MCDONELL: AS TO THOSE, WE BELIEVE IF THAT IS OUR LIMITED UNIVERSE, AND IF WE'RE GOING TO GET MUTUALITY OF DISCOVERY ON THAT POINT, SO IF WE'RE GOING TO GO INTO DISCOVERY AS TO THOSE APPROXIMATELY 60 CUSTOMERS, THE ODDS ARE, YES, WE WOULD PRODUCE, YOU KNOW, REVENUE INFORMATION ABOUT THAT. THE COURT: IT SEEMS TO ME YOU SHOULD. WITHOUT ANY ADMISSION ABOUT THE MR. MCDONELL: RELEVANCE OR ADMISSION. THE COURT: RIGHT. YOU'RE GOING TO FIGHT ABOUT WHETHER THEY REALLY WERE CONVERTED BECAUSE OF ANYTHING TO DO WITH THE ALLEGED WRONGDOING IN THIS CASE OR NOT. BUT AT LEAST IT'S A NARROW UNIVERSE, AND IT IS BETTER TO FIGHT ABOUT THAT LATER, I THINK, AND JUST PRODUCE THE MONEY NUMBERS. MR. MCDONELL: BUT WE'RE GOING TO WANT TO GET ALL THAT FINANCIAL INFORMATION FROM ORACLE FOR THOSE SAME CUSTOMERS. THE COURT: YOU'RE TALKING ABOUT: THAT WOULD SEEM PROBABLY RIGHT, BECAUSE DID THEY GET CONVERTED, AND HOW MUCH DAMAGE IT DID, AND SO FORTH. MR. MCDONELL: BUT THAT SHOULD BE DONE -- SEE, WE KIND OF GOT OFF ON A FUNNY TRACK HERE. THAT DISCOVERY ABOUT THE REVENUE, IT SEEMS TO ME, KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 21 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 CORRECT. BUT I HAVE IN MIND THAT THIS -- AND I'VE MADE THIS CLEAR OVER AND OVER -- THIS CASE IS TOO BIG TO CHASE DOWN EVERY POSSIBLE THING. AND IT WILL NEVER GO TO TRIAL IF THAT HAPPENS. SHOULD BE PART OF NORMAL DISCOVERY. THEY NOW HAVE A DOCUMENT REQUEST AND AN INTERROGATORY THAT GENERALLY GO TO THESE TYPES OF ISSUES THAT HAVE JUST BEEN SERVED SINCE THE LAST HEARING. THIS WHOLE OTHER BUSINESS ABOUT WHETHER WE WOULD PROVIDE INFORMATION ABOUT THE MONETARY VALUE OF THESE CUSTOMERS AT ALL WAS JUST DONE HERE WITH YOUR HONOR. IT WASN'T A MOTION TO COMPEL ANY PARTICULAR DISCOVERY OR ANYTHING LIKE THAT. IT'S SOMETHING YOUR HONOR WANTED US TO DO, WE AGREED TO DO, ALL WITH A VIEW OF SEEING IF BY DOING THAT WE COULD NARROW DOWN THE 61. THE COURT: RIGHT. I MEAN, I THINK -- MR. MCDONELL: THE COURT: IT'S GOT TO BE LESS THAN 61 IN THERE. I MEAN, I GUESS WHAT I'M TRYING TO DO IS THERE NEEDS TO BE A DISCOVERY PLAN THAT RATHER THAN A PIECEMEAL THING WHERE EACH SIDE JUST STARTS LOBBING IN ADDITIONAL INTERROGATORIES AND DOCUMENT REQUESTS, AND SO ON, ON WHOLE NEW SUBJECTS. THAT'S NOT WHAT I HAD IN MIND. I HAD IN MIND THAT WE'RE AGREEING ON A DISCOVERY PLAN. I DON'T KNOW. I MEAN, I MIGHT WELL BE INCLINED TO SAY "NO" TO A BROADER EVERYBODY-WHO-WAS-INVOLVED-IN-SAFE-PASSAGE. I MAY NEED TO KNOW MORE ABOUT THAT. MAYBE THAT'S NOT KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 22 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 YOU HAVE TO FOCUS ON THE MOST EGREGIOUS AND THE HIGHEST BUCKS PART OF IT. I MEAN, AND THAT IS IN EVERYBODY'S INTEREST. YOU KNOW, IT DOESN'T MAKE SENSE. I MEAN -MR. MCDONELL: THE COURT: SO -- SO IT SEEMS TO ME AT FIRST BLUSH THE MOST -- THAT IT'S LITTLE UNLIKELY THAT MARKETING PEOPLE WHO WERE SWITCHED THAT HAD NOTHING TO DO WITH TOMORROWNOW IS REALLY RELEVANT TO THIS CASE. MAYBE I'M WRONG. CERTAINLY AT THE HEART OF THE CASE WOULD BE THE ONES WHO WERE SWITCHED. AND THOSE ARE THE ONES THAT YOU I WANTED YOU TO GET THAT INFO OUT ABOUT. MR. MCDONELL: SO I THINK WHERE WE STAND RIGHT NOW IS WE'VE BEEN AS CLEAR AS WE SERVED THESE OBJECTIONS LAST NIGHT. WE CAN BE ABOUT WHERE WE THINK THE LINE SHOULD BE DRAWN HERE. I THINK WE HAVE A RESPONSIBILITY TO MEET WITH COUNSEL, CONFER, SEE IF WE CAN'T GET THIS LINE DRAWN IN THE RIGHT PLACE. IF WE DON'T SETTLE ON IT, CONCEIVABLY THERE WILL BE A MOTION EITHER TO COMPEL OR FOR PROTECTIVE ORDER. BUT I WANTED TO ALERT YOUR HONOR TO THE ISSUE BECAUSE IT DID SEEM LIKE THERE WAS -- THE EARTH WAS SHIFTING BENEATH OUR FEET A LITTLE BIT ON THIS ISSUE WE SPENT A FAIR AMOUNT OF TIME ON. THE COURT: AND ALSO JUST -- I MEAN, AS I MADE CLEAR, TO THE EXTENT I CAN AVOID MOTION PRACTICE AND RESOLVE THINGS MORE QUICKLY AND EXPEDITIOUSLY, THAT'S WHAT I WANT TO DO. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 23 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 FROM TN. MS. HOUSE: THE COURT: MS. HOUSE: WE DON'T -- WE SAY: "IT MIGHT BE. YOU HAVE AN ORDER. THE COURT: NO. I'M ORDERING THAT. WELL, NOW, WE THE ODDS ARE." EXACTLY. HE'S JUST SAID HE WILL DO THAT. WELL, BUT HE HASN'T. WE ARE TOO INTO IT. MR. MCDONELL: HELPFUL HERE, YOUR HONOR. MS. HOUSE: IN FACT, THE WHOLE POINT OF THIS IS WE'RE I THINK YOUR GUIDANCE HAS BEEN VERY NOW INTO OUR THIRD DISCOVERY CONFERENCE THREE MONTHS LATER ON AN INITIAL ORDER THAT YOU MADE ON A VERY BASIC REQUEST, WHICH IS: GIVE US THE UNDERLYING DATA ON THE SAFE PASSAGE CUSTOMERS. UNDERSTAND THE WHOLE POINT -THE COURT: THE SAFE PASSAGE CUSTOMERS WHO ARE ALSO YOU DON'T NEED TO FIGHT. I VIEW THAT AS SAYING: "YES, WE WILL." AND I'M ORDERING THAT. MR. MCDONELL: AND IT WILL BE MUTUAL. THEY WILL PROVIDE COMPARABLE REVENUE AND FINANCIAL INFORMATION FOR THOSE SAME APPROXIMATELY 60 CUSTOMERS. THE COURT: REASON NOT? MS. HOUSE: IF THEY WERE AN ORACLE CUSTOMER AND THEY SEEMS LIKE YOU SHOULD. IS THERE ANY FIT WITHIN, WE WILL LOOK. WE ACTUALLY HAVE PRODUCED THE CONTRACT KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 24 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 THAT. THE COURT: OKAY. OKAY. THANK YOU. SO TARGETED SEARCHES, WHAT'S AND UNDERLYING DATA. WE'RE SO MUCH FARTHER AHEAD THAN WHAT THEY HAVE DONE. BUT WE WILL LOOK FOR IT. WE WILL PRODUCE IT. MR. MCDONELL: BUT SHE'S NOT SAYING SHE WILL -- WE'VE IF THERE'S ANY IN THOSE 60, GIVEN HER A SPREADSHEET THAT LAYS OUT THE FINANCIALS. THE COURT: INFORMATION. BATES NUMBER. YEAH. YOU NEED TO PRODUCE THE COMPARABLE AND IF YOU'VE ALREADY DONE IT, IDENTIFY IT BY IF YOU HAVEN'T DONE IT, PRODUCE A COMPARABLE. I DON'T WANT TO BE HAVING SOME MOTION IN HERE WHERE I HAVE TO COMPARE SPREADSHEETS. BUT I EXPECT YOU TO IN GOOD FAITH PRODUCE AN EQUAL, SIMILAR, VERY LIKE, EQUALLY USEFUL, EQUALLY DETAILED INFORMATION ABOUT THAT SAME UNIVERSE OF 61 CUSTOMERS. MR. MCDONELL: THANK YOU, YOUR HONOR. WE WILL DO MR. MCDONELL: THE COURT: HAPPENING WITH THAT? MS. HOUSE: ALL RIGHT. AFTER LISTENING TO YOUR HONOR THE LAST IT'S TIME WE HAVE ACTUALLY COME UP WITH AGREED-UPON LANGUAGE. CONTAINED IN THE CONFERENCE STATEMENT. WE'VE ALSO AGREED THAT AS OF TOMORROW WE CAN SERVE, BASED ON THESE NOW AGREED-UPON PROCEDURES, THE FIRST THREE TARGETED SEARCHES. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 25 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 IT -MS. HOUSE: THE COURT: ORDER OF THIS. MS. HOUSE: THE COURT: MR. COWAN: OKAY. OKAY. DISCOVERY. YOUR HONOR, ONE THING ON THE TARGETED OKAY. -- BECAUSE I'M JUST MARCHING THROUGH THE THE REASON THAT THAT'S GOING TO BE RELEVANT TO YOU, PERHAPS, IS THAT AT THIS POINT IN TIME THERE HASN'T BEEN THAT EXCHANGE. AND SOME OF THE UNDERLYING MATERIALS THAT THE DEFENDANTS WANT TO TALK ABOUT IN TERMS OF MOTIONS TO COMPEL ARE GOING TO BE THE SUBJECT OF TARGETED SEARCHES THAT HAVE YET TO BE SERVED. SO IN THE NOTION OF AS WE GET TO THEIR DISCUSSION OF MOTIONS TO COMPEL, I JUST WANT YOU TO UNDERSTAND THAT ONE OF OUR MAIN OBJECTIONS IS THAT IT SEEMS INCREDIBLY PREMATURE WHEN WE HAVEN'T EVEN SERVED THE TARGETED SEARCHES ON EACH OTHER THAT ARE RELEVANT TO THOSE MOTIONS. THE COURT: WELL, LET'S GET TO THAT WHEN WE GET TO SEARCHES, WE AGREE THAT WE HAVE AGREED. AND THE ONLY THING WE WANTED TO NOTE IS THE TENSION ON THAT IN THE LAST HEARING WAS WHETHER THE TARGETED SEARCHES OUGHT TO SPECIFICALLY IDENTIFY THE UNDERLYING DOCUMENT REQUEST TO WHICH THEY RELATED. THE COURT: AND I SAID NO. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 26 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 MR. COWAN: AND YOU IDENTIFIED THE LOGISTICAL PROBLEMS ASSOCIATED THAT. WE HAVE GONE BACK AND RELENTED ON THAT POINT. WE STILL THINK THERE'S IMPORTANCE TO UNDERSTAND AT SOME POINT IN THE PROCESS WHERE THOSE TWO ISSUES DOVETAIL. WE AGREE FOR THE PURPOSES OF THE PROCEDURE IN THE TARGETED SEARCH PROTOCOL THAT WE'RE NOT TYING THOSE IN THE FORM OF MAKING THE REQUEST, BECAUSE I DIDN'T WANT TO STAND HERE AND SAY WE HAVE AN AGREEMENT, AND HAVE THAT BE SOME OVERARCHING AGREEMENT THAT THE UNDERLYING DOCUMENT REQUESTS ARE NOT IN ANY WAY RELEVANT TO THE TARGETED SEARCHES. WE THINK THEY ARE. BUT WE'VE AGREED TO BUT THE PROTOCOL UNDER WHICH WE'RE GOING TO DO THAT. THE COURT: TIME RANGES? MR. HOWARD: YES, YOUR HONOR. ALL RIGHT. SO THEN WE GET TO DISCOVERY I THINK SINCE THE LAST TIME WE'VE BEEN IN HERE WE HAVE FILED THE SECOND-AMENDED COMPLAINT. ALLEGATIONS IN THERE. IMPLICATIONS. AND SO THERE ARE NEW AND THOSE ALLEGATIONS HAVE DIFFERENT BUT ONE OF THEM IS THEY REACH BACK BEFORE WHAT HAD BEEN THE PRELIMINARILY AGREED JANUARY, 2004, DISCOVERY CUTOFF, WHICH WAS ALWAYS WITH A MUTUAL RESERVATION OF RIGHTS ON THE TOMORROWNOW SIDE, BECAUSE THERE'S ACTIVITY GOING BACK TO THE VERY BEGINNING OF THE WHAT WAS THE MODEL THAT SAP ENDED UP BUYING. AND IT GOES FORWARD IN TIME BECAUSE IT APPEARS, TWO KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 27 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 ACCURATE. CUTOFF. THINGS. THAT AFTER THE LITIGATION WAS FILED, TOMORROWNOW KEPT DOING IT WITH SAP'S KNOWLEDGE. AND THAT GOES TO WILLFULNESS AND MANY OTHER IMPORTANT ELEMENTS OF OUR CASE. AND SO WE'VE SAID THAT -- THE PARTIES HAVE SERVED MUTUAL CATEGORIES OF INFORMATION THAT THEY WOULD WANT IN THE PRE-2004 TIME FRAME AND IN THE POST-FILING-OF-LITIGATION TIME FRAME. AND WE'VE NOT YET MET AND CONFERRED ABOUT THOSE. WE HAVE AGREED THAT THOSE SHOULD BE NARROWLY-TAILORED, NARROWLY-FOCUSSED, AND THAT THEY SHOULD NOT BE A REDOING OF FULL SCALE DISCOVERY THAT HAS ALREADY BEEN DONE. AND I THINK THAT'S ABOUT AS FAR AS WE ARE RIGHT NOW. MR. COWAN: YOUR HONOR, I THINK THAT'S GENERALLY THE ISSUE, AGAIN, STARTING BEFORE THE JANUARY 1, 2004 TO THE EXTENT WE GO EARLIER THAN THAT IS RELATED SOLELY TO TOMORROWNOW, BECAUSE SAP DIDN'T PURCHASE TOMORROWNOW UNTIL EARLY 2005. AND WE ARE WILLING TO CONTINUE TO WORK WITH THEM TO FIGURE OUT WHAT SEGMENTS OF THAT PRE-JANUARY 1, '04 TIME FRAME RELATIVE TO TOMORROWNOW THAT WE WILL PRODUCE. PROGRESS ON THAT. POST-LITIGATION, POST-MARCH 22, 2007, WE, LIKEWISE, ARE LOOKING AT WHAT MAKES SENSE TO PRODUCE. AND SO I THINK AND WE'RE MAKING WE'RE MAKING PROGRESS ON THAT AND HOPEFULLY CAN COME UP WITH AN AGREED PLAN ON THAT. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 JUST -MR. COWAN: YES, WHAT WE DID IS WE SENT THEM AN THE COURT: OKAY. ALL RIGHT. AND THEN, THE WHOLLY WE'RE TALKING -- THERE'S ABOUT A IRRELEVANT WITHHELD DOCUMENTS. HUNDRED THAT ARE AT ISSUE? MS. HOUSE: LOOKING THROUGH THE NINE THOUSAND ON THE LOG, THOSE ARE THE ONES THAT SEEMED THE MOST OBVIOUS TO US THAT WOULD NOT BE WHOLLY IRRELEVANT. MR. COWAN: MS. HOUSE: MR. COWAN: THE COURT: MR. COWAN: THE COURT: MS. HOUSE: THE COURT: WE'VE BEEN PROMISED AN UPDATE. YOU WERE PROVIDED IT. SORRY? WE PROVIDED THE LOG -OKAY. -- IS MY UNDERSTANDING. OKAY. AND THE DOCUMENTS? DID YOU TAKE ANY OF THEM OFF OR ARE YOU E-MAIL SAYING WHILE THERE'S A HUNDRED THINGS THAT THEY HAVE NOTED THAT ARE AT ISSUE, WE DON'T THINK THEY ARE AN ISSUE, BUT IT'S NOT ENOUGH. WE'VE GOT OTHER THINGS TO FIGHT ABOUT. WE WILL AMEND THE LOG. AND TO MY -- AND I HOPE I'M NOT MISTAKEN. WILL MAKE SURE THAT IT GETS DONE POSTHASTE. IF I AM I BUT I BELIEVE WE PROVIDED THEM WITH AN AMENDED LOG ON THAT, SO I DON'T SEE -THE COURT: MR. COWAN: THAT DOESN'T WITHHOLD AS MANY DOCUMENTS? THAT GIVES THEM THE DOCUMENTS THAT WERE KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 29 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 WITHHELD AND REVISES -THE COURT: MR. COWAN: THE COURT: MR. COWAN: THE COURT: MR. COWAN: OKAY. -- OR PROVIDES ADDITIONAL DESCRIPTION -ALL RIGHT. -- AS APPROPRIATE. OKAY. AND THEN, THE DEDESIGNATION ISSUE? YOUR HONOR, ON THAT POINT, THIS IS THE 27,000 DOCUMENTS THAT YOU ASKED US TO GO BACK AND HAVE A PROCESS ON. WE HAVE GONE BACK AND HAVE A PROCESS ON THAT. WE, ACCORDING TO THE ORDER, CAME BACK WITHIN THE TIME LIMIT, WHICH I THINK THE FIRST REPORTING REQUIREMENT WAS ON AUGUST 1ST. WE PROVIDED THEM WITH A PLAN. WE ALSO PROVIDED THEM WITH AN INITIAL SEVERAL THOUSANDS OF ADDRESSING THE DEDESIGNATION. NOT IN ALL INSTANCES ARE WE MOVING OFF OF HIGHLY CONFIDENTIAL DOWN TO EITHER CONFIDENTIAL OR NOT CONFIDENTIAL. BUT THERE ARE NUMEROUS INSTANCES WHERE WE ARE, IN FACT, REDESIGNATING FROM HIGHLY CONFIDENTIAL TO CONFIDENTIAL. AND IN NUMEROUS INSTANCES WE'RE GOING FROM HIGHLY CONFIDENTIAL ALL THE WAY DOWN TO NOT CONFIDENTIAL AT ALL. AND WE'RE PROVIDING THAT. WE EXPECT TO BE COMPLETE BY SEPTEMBER 19TH. WE ARE DILIGENTLY WORKING ON THAT. I HAVE A SEPARATE TEAM DEVOTED SOLELY TO THAT AND ARE GIVING THEM WEEKLY UPDATES ON THAT, AND HAVE BEEN DOING SO SINCE AUGUST 1ST. MR. HOWARD: WHICH IS TRUE. THE FIRST SET WE GOT KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 30 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 DOCUMENTS. CAUSED US GREAT CONCERN BECAUSE 99 PERCENT OF THE DOCUMENTS IN THAT SET REMAINED HIGHLY CONFIDENTIAL. THERE'S BEEN, BY MY COUNT, FOUR DELIVERIES ALL TOLD, AND THE TOTALS NOW STAND AT 54 PERCENT OF THE REVIEWED POPULATION REMAIN HIGHLY CONFIDENTIAL BY OUR COUNT; ABOUT 35 PERCENT OF THEM ARE NOW CONFIDENTIAL INSTEAD OF HIGHLY CONFIDENTIAL; ABOUT TEN PERCENT ARE DOWN TO NOT CONFIDENTIAL. SO THAT IS CERTAINLY SUBSTANTIAL PROGRESS. WE, I THINK, CERTAINLY DON'T AGREE THAT ALL 54 PERCENT OF THOSE ARE STILL HIGHLY CONFIDENTIAL, BUT WE'VE MADE PROGRESS. RAISE WITH THEM, IF WE HAVE OTHER CONCERNS. THERE IS ONE OTHER CATEGORY WHICH ARE THE TOMORROWNOW AND WE HAVE HAD A DISCUSSION BASED ON OUR CONTENTION AND WE WILL THAT THE WINDING DOWN OF TOMORROWNOW, WHICH WE UNDERSTAND WILL OCCUR BY THE END OF OCTOBER, SHOULD MEAN THAT THE TOMORROWNOW DOCUMENTS DO NOT ANY LONGER FIT WITHIN ANY CATEGORY UNDER THE PROTECTIVE ORDER, BECAUSE IT'S NOT A GOING CONCERN. NO CURRENT MARKETING PLANS. THERE ARE THERE ARE NO CURRENT STRATEGIES. IT'S ALL HISTORY. IT'S ALL LEGACY INFORMATION AT THAT POINT. AND GIVEN THE LOGISTICAL TROUBLES THAT CONFIDENTIALITY DESIGNATIONS CAUSE US, WE THINK THAT THOSE DOCUMENTS SHOULD BE NOT CONFIDENTIAL AT ALL. THEY HAVE SAID, AND I THINK WITH JUSTIFICATION, THAT THERE SOME SAP DOCUMENTS IN THAT SET OF TOMORROWNOW DOCUMENTS. SO WE'VE MADE A PROPOSAL TO THEM FOR HOW WE CAN ON A KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 31 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 CATEGORICAL BASIS DEDESIGNATE THE TOMORROWNOW POPULATION KEEPING THOSE CONCERNS IN MIND. AND I THINK WE'RE WAITING FOR A RESPONSE. MR. COWAN: THEY ARE, YOUR HONOR. AND I WANTED TO AND I USE -- BECAUSE THE BALL IS IN OUR COURT ON THAT POINT. WANTED TO USE THE OPPORTUNITY TO TALK WITH YOU ABOUT THIS AT THIS HEARING BEFORE WE DO RESPOND. WE AGREE WITH THEM THAT THE WINDING DOWN OF TOMORROWNOW'S OPERATIONS -- AND THE PLAN, THE CURRENT PLAN IS TO DO THAT BY OCTOBER 31ST OF THIS YEAR -- WE AGREE THAT THAT HAS AN IMPACT ON WHAT, GOING FORWARD, WHAT WE WOULD DESIGNATE AS CONFIDENTIAL OR HIGHLY CONFIDENTIAL. THERE'S TWO ISSUES HERE. ONE: WE CAN'T AGREE FOR SOME OF THE REASONS THAT MR. HOWARD STATED TO A WHOLESALE DEDESIGNATION. TWO: THE LOGISTICS OF GOING BACK THROUGH NOW WITH A NEW SET OF FACTS THAT DID NOT EXIST AT THE TIME THE ORIGINAL CONFIDENTIALITY DESIGNATIONS WERE MADE -THE COURT: COMPLAINT OR -MR. COWAN: THE COURT: MR. COWAN: WELL --- NO, BECAUSE OF THE WINDDOWN? -- THE DECISION TO WIND THE COMPANY DOWN YOU MEAN, BECAUSE OF THE AMENDED WASN'T MADE UNTIL RELATIVELY RECENTLY. THE COURT: OKAY. RIGHT. RIGHT. RIGHT. SO IT KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 32 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 REQUIRES A REREVIEW. MR. COWAN: THE COURT: MR. COWAN: RIGHT. RIGHT. AND WE ALREADY HAVE SHOWN SUBSTANTIAL -- THE TIME IT TAKES TO GO DO THAT FOR 27,000 DOCUMENTS TO DO THAT FOR THE LITERALLY MILLIONS OF PAGES OF DOCUMENTS THAT HAVE BEEN PRODUCED FOR TOMORROWNOW GETS INTO ALL KINDS OF LOGISTICAL ISSUES. ONE OF OUR FIRST PROPOSALS WAS: "TELL US CATEGORICALLY. YOU DON'T HAVE TO ONESIE-TWOSIE IT BECAUSE WE DON'T YOU REVEAL YOUR WORK PRODUCT IN YOUR OWN PROCESSES. BUT TELL US CATEGORICALLY WHAT YOU'RE REALLY WORRIED ABOUT, AND WE CAN FOCUS ON THAT." OR, ALTERNATIVELY, IF WE CAN SET UP SOME SORT OF CONSTRUCT WHERE A LITMUS TEST, IF YOU WILL, IF IT MEETS THESE CRITERIA, THEN IT WILL BE THIS THING. MAYBE A WAY TO DO IT THAT WAY. THE COURT: COULD YOU SCREEN THEM ALL BY WHETHER THEY AND WE'RE WORKING ON HAVE THE WORDS "S-A-P" IN THEM? MR. COWAN: THE COURT: THAT'S THE KIND OF PROPOSAL WE'RE MAKING. AND SOMETHING THAT HAS A ZERO, YOU TURN THAT SET OVER RIGHT AWAY -MR. COWAN: THE COURT: IT'S POSSIBLE --- WITH A CLAWED BACK, POSSIBLY, IF KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 33 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 THERE'S SOMETHING HIDDEN IN THERE. MR. COWAN: THERE MAY BE WAYS TO DO THAT WITH WHAT WE COULD CALL A KIND OF A SUPER ENHANCED CLAWED BACK PROVISION TO DO THAT. THE PROBLEM IS IS ONCE IT GOES ALL THE WAY DOWN TO NONCONFIDENTIAL THEIR USE OF THOSE DOCUMENTS IS MUCH LESS RESTRICTED AND SO -THE COURT: WELL, I MEAN, YEAH. YEAH. WELL, MAYBE AT AND FIRST YOU DEDESIGNATE THEM DOWN TO REGULAR CONFIDENTIAL. THEN, YOU KNOW, THEN WHEN YOU NEED -- WHEN THAT'S CAUSING A PROBLEM OR YOU COME UP WITH A SECOND TIER PROCESS TO GO FURTHER THAN THAT. MR. COWAN: AND I THINK THAT IS THE BIG POINT FOR US BECAUSE WE DON'T HAVE AS MUCH PROBLEM GOING FROM HC, HIGHLY CONFIDENTIAL, DOWN TO CONFIDENTIAL. THE WAY TO NONCONFIDENTIAL. AND WHERE WE TAKE ISSUE -- AND WE'RE STILL HOPEFULLY GOING TO RESOLVE THIS AND NOT HAVE TO COME TO YOU FOR A DECISION ON IT -- WE DON'T THINK THE DEFINITION OF "CONFIDENTIAL" IN PARAGRAPH THREE, I BELIEVE, OF THE PROTECTIVE ORDER REQUIRES THE INFORMATION TO RELATE TO A CURRENT OR FURTHER BUSINESS -THE COURT: MR. COWAN: THE COURT: WELL, I DON'T HAVE THE -RIGHT. RIGHT. BUT, OF COURSE, IN GENERAL, THE PROBLEM IS GOING ALL -- IN MIND. IF SOMETHING -- I MEAN, UNDER THE FEDERAL RULE YOU CAN'T KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 34 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 ET CETERA. THE COURT: MR. COWAN: RIGHT. BUT THE ISSUE NOT ONLY ON A PROTECT SOMETHING IF IT DOESN'T HAVE -- FIT WITHIN, YOU KNOW, A TRADE SECRET, ET CETERA, OR COMMERCIAL VALUE. AND SO, IN GENERAL, IF IT'S NOT AN ONGOING CONCERN IT WOULDN'T, BUT, OBVIOUSLY -MR. COWAN: RIGHT. FROM A SEALING ORDER PERSPECTIVE, DOCUMENT-BY-DOCUMENT BASIS OF HOW CONFIDENTIAL THEY ARE, AS A SET, REGARDLESS OF WHETHER THEY COULD MEET THE STANDARDS UNDER BOTH FEDERAL AND CALIFORNIA LAW TO BE SEALED, THERE STILL IS AN ELEMENT OF CONFIDENTIALITY THAT RELATES TO THAT THAT THE PARTIES HAVE AGREED TO AND THAT THE DISTRICT COURT HAS ORDERED ON THAT. AND SO, YOU KNOW, IT DOESN'T MEAN WE'RE NOT AGREEABLE TO RECONSIDERING THAT, BUT THAT MAY BE A FRICTION POINT. WE'RE TRYING TO BE REASONABLE, JUDGE. WE DON'T WANT -THE COURT: YEAH. I'M NOT SURE ABOUT THAT AS A LEGAL BUT MATTER, THAT IF IT'S NOT CONFIDENTIAL UNDER THE FEDERAL RULES THAT THAT'S STRICTLY A SEALING TEST. ARE SUPPOSED TO BE CONTIGUOUS. NOW, I DON'T NEED TO LOOK INTO THAT IF I DON'T NEED TO. I MEAN, LET SLEEPING DOGS LIE. THIS CASE. MR. COWAN: THE COURT: RIGHT. WE DON'T NEED TO TAKE ON ANYMORE THERE'S ENOUGH AWAKE ONES IN I THINK THOSE TWO THINGS KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 35 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 US. THE COURT: MR. HOWARD: AND I THINK YOU WOULD RECOGNIZE THAT. WE'D RECOGNIZE THAT. AND OUR PROPOSAL THEORETICAL DISPUTES SO -MR. COWAN: BUT THAT'S HELPFUL. I MEAN, JUST TO KNOW THAT IN TERMS OF WHAT YOUR -- IN THE ABSTRACT WHAT YOUR THOUGHTS ARE ON THAT. THIS. MR. HOWARD: IT'S NOT QUITE THEORETICAL, BECAUSE I THINK THAT WILL GUIDE SOME OF OUR DISCUSSIONS ON THAT, WHAT YOU JUST SAID, IS EXACTLY WHAT WE'VE SAID ABOUT THE POPULATION -THE COURT: THAT'S THE CASE. WELL, I'M PRETTY SURE -- I'M PRETTY SURE NOW, THAT DOESN'T MEAN THAT IT MIGHT, YOU KNOW -- THEORETICALLY, THERE COULD BE A DOCUMENT THAT BY ITSELF DOESN'T SEEM TO SHOW A SECRET, BUT IF YOU PUT A HUNDRED DOCUMENTS TOGETHER, YOU KNOW, MAYBE IN THEORY POSSIBLY THERE COULD BE SOMETHING LIKE THAT, THOUGH. NOT TERRIBLY LIKELY, BUT POSSIBLY. MR. COWAN: THE COURT: UNDERSTOOD. BUT, YOU KNOW. BUT, I MEAN, I CAN SEE THAT THERE WOULD BE -- OBVIOUSLY, WITH THE RELATIONSHIP BETWEEN THE TWO COMPANIES THERE COULD BE A LOT OF INFORMATION ABOUT SAP PLANS FOR THE FUTURE THAT IS STILL TRADE SECRET, COMMERCIAL VALUE -MR. COWAN: AND THAT'S THE BIGGEST TENSION POINT FOR KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 36 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 TRIES TO ACCOMMODATE THAT. THE COURT: OKAY. WELL, IT SOUNDS LIKE YOU CAN COME I HOPE SO. UP WITH SOMETHING OF THE GUIDANCE. MR. COWAN: THE COURT: THE MOMENT? MR. COWAN: WE HOPE SO. AND THE SEARCH TERMS ARE GOING OKAY AT YES, YOUR HONOR. WE STILL DO NOT BELIEVE WE NEED ANY COURT INTERVENTION ON THAT. THE COURT: MR. COWAN: THE COURT: MR. HOWARD: I DON'T SPEAK GERMAN. NOR DO I. FRENCH, I COULD TRY. WELL, THAT'S A PERFECT SEGUE INTO THE NEXT SECTION, WHICH IS THE CASE CALENDAR. THE COURT: MR. HOWARD: OKAY. WE DO HAVE A CONCERN, AND WE PUT SOME LANGUAGE IN THERE. THINGS ARE STARTING TO GET PUSHED OUT A BIT. AND THERE ARE SOME SERIOUS LOGISTICAL ISSUES IN HAVING TO GO TO GERMANY TO TAKE DEPOSITIONS, HAVING TO TRANSLATE A SUBSTANTIAL NUMBER OF FOREIGN LANGUAGE DOCUMENTS. WE WANTED TO PUT THIS IN HERE BECAUSE I THINK BY WAY OF REPORT TO YOU YOU SHOULD UNDERSTAND THAT THERE HAS BEEN MOVEMENT IN THE DEPOSITION SCHEDULE. THERE HAVE BEEN BACK AND FORTH ON WHEN DOCUMENTS WILL BE PRODUCED. TWO ILLUSTRATIVE ISSUES. ONE IS THAT WE HAVE HAD, I THINK, THREE ATTEMPTS NOW KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 AND THERE ARE SORT OF 37 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 ORDER. TO GET A WORKING SET OF GERMAN LANGUAGE DOCUMENTS FOR AN UPCOMING WITNESS, GERMAN WITNESS, WHO IS ACTUALLY GOING TO BE DEPOSED HERE. THREATENED. BUT AT SOME POINT, THE DEPOSITION SCHEDULE GETS AND, ULTIMATELY, THE CASE SCHEDULE GETS THREATENED IF WE DON'T HAVE TIME TO TRANSLATE AND PROCESS. AND THE SECOND ILLUSTRATION IS THAT, YOU KNOW, THERE'S AT LEAST ONE WITNESS, THE CEO, MR. KAGERMANN, WHO CONDUCTS ALL OF HIS BUSINESS IN ENGLISH, READS CRITICAL DOCUMENTS, INCLUDING THE ONE TO BUY TOMORROWNOW IN ENGLISH, HAS EARNING CALLS IN ENGLISH, BUT THERE'S AN INSISTENCE FOR REASONS WE DON'T KNOW THAT HE HAS TO TESTIFY IN GERMAN, WHICH OCCUPIES DOUBLE THE TIME. WE HAVE TO FLY INTERPRETERS OVER. IT'S BOGGING DOWN OUR ABILITY TO GET THROUGH THE DEPOSITIONS THAT WE HAVE AND THE HOURS THAT WE HAVE ALLOTTED AND MOVE ON TO THE OTHER PARTS OF THE CASE. AND WE HAVE ASKED THEM TO RECONSIDER THAT AND ALSO TO COMMIT TO SPECIFIC DATES BY WHICH DOCUMENTS WILL BE PRODUCED, PARTICULARLY FOREIGN LANGUAGE ONES. AND WE'VE GOT TO GET THROUGH IT. THERE'S NOTHING WE'RE ASKING YOUR HONOR FOR AT THIS POINT, BUT I WANT TO REPORT THAT IT'S AN ISSUE OF GROWING CONCERN. MR. COWAN: LET ME ADDRESS THIS ISSUE IN THE REVERSE I'LL START WITH THE LAST POINT. THEY HAVE ASKED US WHEN THEY ASKED FOR THE DEPOSITIONS WHETHER ANY OF THE GERMAN -- THE GERMAN CITIZENS, KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 38 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 THEIR NATIVE LANGUAGE IS GERMAN, WOULD CHOOSE TO CONDUCT THEIR DEPOSITION IN GERMAN. SOME OF THOSE INDIVIDUALS HAVE ELECTED TO DO THAT AND SOME HAVE NOT. MR. KAGERMANN, THE CEO, WE ACKNOWLEDGE THAT HE SPEAKS ENGLISH AND HAS A CERTAIN FLUENCY IN ENGLISH. BUT THERE'S A DIFFERENT CONSIDERATION WHEN YOU LOOK AT A GENTLEMAN WHO IS A HIGH LEVEL EXECUTIVE, THE CEO, CO-CEO OF SAP AG, THE ULTIMATE PARENT COMPANY HERE, PROVIDING TESTIMONY UNDER OATH IN LIGHT OF THEIR ALLEGATIONS. AND HE HAS THE RIGHT, WE BELIEVE, TO ELECT WHATEVER LANGUAGE HE FEELS MOST COMFORTABLE IN. AND WE DO NOT THINK IT'S UNREASONABLE FOR HIM TO CHOOSE HIS NATIVE LANGUAGE TO DO THAT IN, GIVEN THE ALLEGATIONS IN THIS CASE AND -THE COURT: YEAH. WELL, I TELL YOU, I WOULD PROBABLY NOT OVERRULE THAT, BECAUSE, I MEAN, OTHERWISE -- I MEAN, FORCE HIM TO TESTIFY IN ENGLISH. I'D HAVE TO HAVE AN EVIDENTIARY HEARING, SEE HOW GOOD HIS ENGLISH IS. AND IT WOULD HAVE TO BE EXTREMELY GOOD FOR THIS KIND OF THING. BUT THAT BEING SAID, YOU KNOW, IT'S A LOT OF EXTRA TIME AND EXPENSE AND TROUBLE FOR ORACLE AND I MIGHT CUT THEM SOME SLACK IN SOME WAYS, MAYBE SOME EXTRA HOURS. MR. COWAN: AND THEY HAVE ASKED FOR THE POSSIBILITY OF THAT, AND WE HAVE NOT EVEN FORECLOSED THE FACT THAT WE WOULD AGREE TO THAT. AND WE -KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 39 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 DOUBLE. MR. COWAN: THE COURT: IT MAY BE. IT VERY LIKELY IS. I THINK THAT'S THE COURT: WELL, I THINK YOU PROBABLY SHOULD IF IT'S GOING TO TAKE A LOT MORE TIME, AND IF VERY ARGUABLY HE IS BILINGUAL. MR. HOWARD: WELL, I MEAN, IF EVERYTHING IS TRANSLATED IT'S DOUBLE TIME. THERE'S TWO DAYS SET ASIDE INSTEAD OF ONE. IT'S DOUBLE THE TIME. MR. COWAN: AND WE'VE TOLD THEM -- AND I THINK THE BEST WAY, AND HOPEFULLY YOUR HONOR AGREES -- LET'S SEE HOW THE FIRST GERMAN DEPOSITIONS GO AND SEE WHAT -- SEE IF WE CAN REACH AN AGREEMENT: DOUBLING. YEAH, IT IS, YOU KNOW, A ONE-TO-ONE INCREASE, A WE WILL FIND OUT. MAYBE IT'S A HALF AGAIN. THE COURT: WELL, I'LL SAY IT PROBABLY IS CLOSE TO PROBABLY A FAIR ASSUMPTION THAT IT WOULD BE DOUBLE. MR. COWAN: OKAY. AND THE OTHER POINT HE RAISED WITH RESPECT TO DEPOSITION SCHEDULING, WE TOLD THE COURT BACK APRIL OR MAY THAT WE INTENDED TO HAVE THESE DEPOSITIONS DONE BY THANKSGIVING. WE ARE STILL ON TRACK TO DO THAT. AND I RECALL TELLING THE COURT BACK THEN THAT WHILE THEY HAD PROPOSED A SCHEDULE OF LIKE ONE DEPOSITION EVERY TWO OR THREE WEEKS BACK THEN UP THROUGH, EVEN INCLUDING, DECEMBER THAT WE'D HOPED EVEN THOUGH SOME DEPOSITIONS MAY BE BUNCHED TOGETHER, WHICH MAKES SENSE NOW THAT WE'RE TRAVELING TO EUROPE TO DO SOME KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 40 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 GOAL. THE COURT: I MEAN, I DO THINK IT'S LEGITIMATE TO OF THOSE, THAT WE HOPE TO GET THEM COMPLETED BY THANKSGIVING. THAT IS STILL OUR GOAL. IT IS STILL A VERY REALISTIC HAVE AN ACTUAL DEADLINE FOR THE DOCUMENTS THAT IS AT SET INTERVAL IN ADVANCE OF THE DEPOSITION. MR. COWAN: AND SO FAR WE'VE BEEN WORKING WITH THEM AND GIVING THEM -- TELLING THEM WHEN WE EXPECT TO PRODUCE IT. WE HAVE BEEN FAIRLY CLOSE ON MOST OF THE DOCUMENT PRODUCTIONS OF WHICH WITNESSES THEY WERE GOING TO GET ON WHAT DAYS. AND WE'VE BEEN DELIVERING FOR THE MOST PART ACCORDING TO OUR PROMISES. THE ONE FOR INSTANCE THAT HE GAVE WAS A MAJOR THE FILE TECHNICAL PROBLEM WE HAD WITH ONE WITNESS' DOCUMENTS. THAT WAS ORIGINALLY TAKEN TO GET SOME OF HIS E-MAILS WAS CORRUPTED, AND IT DIDN'T PRINT OUT ALL THE E-MAILS. WE DISCOVERED IT. TIME WE PRODUCED IT. WE ACTUALLY DISCOVERED IT AT THE AND WE'VE BEEN WE NOTED THAT TO THEM. WORKING TO CORRECT THAT. WE CORRECTED ALL BUT -- I THINK WE'RE DOWN TO A HUNDRED DOCUMENTS THAT WE'RE TALKING ABOUT TRYING TO GET THOSE THINGS TO THEM. THE COURT: WELL, YOU'RE NOT ASKING ME TO ORDER BUT I DO AGREE THAT ANYTHING, SO I'M NOT ORDERING ANYTHING. THERE OUGHT TO BE A DROP-DEAD INTERVAL BEFORE A DEPOSITION. I DON'T KNOW WHETHER IT SHOULD BE TWO WEEKS OR WHETHER IT SHOULD KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 41 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 BE -- SHOULD BE LONGER IF IT INVOLVES GERMAN DOCUMENTS, AND THAT THAT HAS TO BE ADHERED TO. MR. COWAN: AND JUST SO YOU KNOW TO MAKE SURE YOU UNDERSTAND THE FLAVOR OF THIS, WE'RE NOT DUMPING HUGE CACHES OF DOCUMENTS ON THEM AT THE LAST MINUTE AND SAYING: "YOU HAVE A WEEK TO REVIEW IT. TIME WE'LL GIVE IT." THERE'S A LOT OF GIVE AND TAKE ON THAT. AND AS WE'VE THIS IS THE ONLY ALREADY TALKED ABOUT EXTENSIVELY, THE MACHINE WE HAVE IN PLACE TO PRODUCE DOCUMENTS. WE HAVE BOTH OUR FRANKFURT AND OUR MUNICH OFFICES INVOLVED IN DOCUMENT REVIEW. WE HAVE GERMAN LANGUAGE REVIEWERS HERE IN THE U.S., MANY THAT ARE INVOLVED BOTH AT JONES DAY AND CONTRACT LAWYERS. AND WE'RE PROCESSING THESE THINGS AS QUICKLY AS WE POSSIBLY CAN. THE COURT: OSWALD AND MR. WORD? MR. HOWARD: MR. COWAN: MR. HOWARD: JUST YESTERDAY. YES. WE HAVE DATES. AND ONE OF THEM, I BUT WE WILL OKAY. AND HAVE YOU GOT DATES FOR MR. THINK, REQUIRES SOMEBODY TO FLY ON THANKSGIVING. WORK WITH THEM ON THOSE DATES. AND I DON'T KNOW THAT THOSE WILL WORK PERFECTLY, BUT WE WILL TRY AND SORT IT OUT. YOU KNOW, AGAIN, I DO THINK IT TAKES A WEEK TO GO TO GERMANY, AND THEY ARE BORED. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 42 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 THE COURT: U.S. FOR ANY REASON? MR. COWAN: WE CURRENTLY HAVE ONE INDIVIDUAL WHO IS A ARE ANY OF THESE PEOPLE COMING TO THE GERMAN CITIZEN WHO HAS AGREED TO COME TO HOUSTON TO HAVE HIS DEPOSITION. WE'VE ALSO BROUGHT ON TOMORROWNOW SIDE LESLIE LOFTUS (PHONETIC), WHO WAS AN EXECUTIVE OF TOMORROWNOW WHO LIVES IN THE U.K. TO SAN FRANCISCO. WE'RE NOT BEING UNREASONABLE HERE. THEY HAVE ASKED FOR THE DEPOSITIONS OF THE HIGHEST LEVEL EXECUTIVES OF OUR PARENT COMPANY THAT THEY WORK IN GERMANY. THEY ARE GOING TO HAVE TO GO TO GERMANY TO DO MOST OF THOSE DEPOSITIONS TO KEEP FROM DISRUPTING THE BUSINESS. MR. HOWARD: MEETINGS IN PALO ALTO. THE COURT: MR. COWAN: MR. HOWARD: MEETINGS IN PALO ALTO. MR. COWAN: THE COURT: THEY HOLD SOME MEETINGS IN PALO ALTO. WELL, DO THEY HAVE ANY MEETINGS WHO, SAP? SURE. THE SAME SAP EXECUTIVES HOLD THEIR BOARD YOUR HONOR, THEY HOLD THEIR BOARD SCHEDULED IN PALO ALTO BETWEEN NOW AND THANKSGIVING? MR. COWAN: FIND THAT OUT. THE COURT: I THINK YOU SHOULD FIND THAT OUT. AND IF THE ANSWER IS: I DON'T KNOW, BUT WE CAN THEY DO, I THINK THE PRESUMPTION OUGHT TO BE THE DEPOSITION KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 43 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 THAT. ANYWAY. THE COURT: MR. COWAN: THE COURT: EXACTLY. OKAY. THAT'S WHAT I'M SAYING. YEAH. YEAH. IT OUGHT TO BE HERE. MR. COWAN: THE COURT: MR. COWAN: IF THEY ARE GOING TO BE HERE ANYWAY. YES. IF THEY ARE GOING TO BE IN THE U.S. JUST DOESN'T MAKE SENSE FOR EVERYBODY TO SPEND ALL THAT EXTRA TIME, IF THEY ARE HERE ANYWAY AND THEY WERE ALREADY PLANNING TO BE HERE. MR. COWAN: THE COURT: THE ONLY -I MEAN, THERE MIGHT BE AN EXCEPTION TO I'M NOT SAYING, YOU KNOW -- THE CEO OF THE WHOLE COMPANY, HIS EVERY MINUTE MAY BE ACCOUNTED FOR. MR. COWAN: THE COURT: MR. COWAN: THE COURT: THAT'S THE PROBLEM. I UNDERSTAND THAT. THAT'S THE PROBLEM. ON THE OTHER HAND, YOU SHOULD AT LEAST LOOK AT THAT, IF YOU'RE GOING TO BE HERE. MR. COWAN: WE UNDERSTAND IT'S A FACTOR, YOUR HONOR. I'M CONCERNED ABOUT -- YOU KNOW, WHATEVER YOUR HONOR ORDERS WE WILL DO OUR BEST TO HOPEFULLY COMPLY WITH. BUT YOU'RE TALKING ABOUT THE EXECUTIVE BOARD OF DIRECTORS OF SAP AG. THEY HAVE ASKED FOR FIVE OF THOSE PEOPLE, FOUR OF KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 44 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 NOW. MR. COWAN: THE COURT: OKAY. I AM JUST SAYING FIND OUT IF THEY ARE WHOM ARE ACTIVE. ONE GENTLEMAN LIVES HERE IN PALO ALTO, BUT HE'S NOT -- HE'S NO LONGER AN EMPLOYEE, SO THERE'S SOME LOGISTICAL ISSUES OF JUST GETTING THINGS COORDINATED WITH HIM. THE COURT: OKAY. WELL, I'M NOT MAKING ANY RULINGS GOING TO BE HERE AND WHETHER FOR ANY OF THEM, EVEN IF IT'S ONE OF THEM, IT'S PRACTICAL TO DO. MR. HOWARD: THE COURT: IT'S A LOT EASIER, I THINK. THANK YOU, YOUR HONOR. OKAY. NOW, ANTICIPATED MOTION TO COMPEL. YOU ARE THE ONE WHO IS I THINK IT'S YOU. ANTICIPATING. MR. MCDONELL: YOUR HONOR, WE HAVE THREE NARROWLY-DEFINED MOTIONS TO COMPEL ON THREE DIFFERENT ISSUES, ALL OF WHICH ARISE OUT OF DOCUMENT REQUESTS THAT WERE SERVED OVER A YEAR AGO. WE HAVE MET AND CONFERRED TILL WE'RE BLUE IN OUR COLLECTIVE FACES. WE HAVE REACHED IMPASSE ON THESE ISSUES BOTH BEFORE AND AFTER THE TERM "TARGETED SEARCHES" WAS EVERY COINED BY US IN THIS PROCEEDING. ORACLE HAS MADE IT VERY CLEAR THAT THE ANSWER IS: NO, THEY WILL NOT PRODUCE THESE PARTICULAR -(ALARM SOUNDS.) THE COURT: IT'S A TEST. KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 45 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 MR. HOWARD: MR. COWAN: I THINK THAT'S YOUR ANSWER. TIME'S UP. RED LIGHT. MR. MCDONELL: THEY HAVE BEEN CRYSTAL CLEAR THAT THEY WILL NOT PRODUCE TO US THESE PARTICULAR CLASSES OF INFORMATION. WE BELIEVE WE NEED THEM. WE'RE PREPARED TO MAKE A MOTION AND LET YOUR HONOR RULE ON IT. THEIR GENERAL RESPONSE TO THAT IS: "WELL, THEY ARE ROUGHLY WITHIN THE AMBIT OF SOMETHING THAT NOW COULD BE A TARGETED SEARCH, SO YOU SHOULD NOW START ANEW WITH THE TARGETED SEARCH PROCESS THAT IS EXPECTED TO KICK OFF AFTER THIS HEARING, AND WAIT FOR THAT PROCESS TO ROLL OUT." WELL, THESE ISSUES ARE JOINED IN RIGHT NOW. WE'RE NOT GOING TO PUT THESE SPECIFIC ISSUES IN OUR TARGETED SEARCHES. WE'RE DONE, AND WE'RE READY TO MOVE. THE COURT: WELL, YOU'RE SAYING THAT YOU DON'T BELIEVE THAT THE TARGETED SEARCHES ARE REQUESTING THOSE DOCUMENTS OR -MR. MCDONELL: THE DOCUMENT REQUESTS THEMSELVES REQUESTED THE DOCUMENTS -THE COURT: RIGHT. -- OVER A YEAR AGO. MR. MCDONELL: THE COURT: RIGHT. WE'VE MET AND CONFERRED, MET AND MR. MCDONELL: KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 46 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 CONFERRED -THE COURT: RIGHT. -- AND THEY REFUSED TO GIVE THEM TO MR. MCDONELL: US. IT'S RIPE FOR A MOTION TO COMPEL. WE SHOULD JUST MAKE THE MOTION. THE COURT: THESE MOTIONS. MR. MCDONELL: THE COURT: THERE ARE THREE ISSUES. IT'S THREE, APPARENTLY. ONE IS ON OKAY. AND WHAT IS -- TELL ME MORE ABOUT IT'S NOT ONE. MR. MCDONELL: THERE ARE THREE ISSUES. FINANCIAL INFORMATION THAT WILL BE USED BY EXPERTS FOR DAMAGES. AND IT'S FUNDAMENTAL, LOW LEVEL DETAILED FINANCIAL INFORMATION, INCLUDING THE CHART OF ACCOUNTS, WHICH IS SIMPLY A LISTING OF THE FORMAL ACCOUNTING ACCOUNTS OF ORACLE CORPORATION AND ITS SUBSIDIARIES THAT GIVE YOU THE BLUE PRINT OF WHAT THE ACCOUNTS ARE CALLED. AND THE OTHER CATEGORIES OF DOCUMENTS ARE ALL VARIATIONS ON A THEME OF GENERAL LEDGER INFORMATION, WHICH ACCOUNTANT WILL TELL YOU IS THE FUNDAMENTAL BUILDING BLOCK OF THE FINANCIAL REPORTING AND RECORDKEEPING OF THE COMPANY. THEY HAVE GIVEN US CERTAIN FINANCIAL INFORMATION. THEY HAVE PROMISED US OTHERS. BUT OUR EXPERT IS BOUND AND DETERMINED THAT HE'S GOING TO NEED THOSE FUNDAMENTAL BUILDING BLOCKS TO DEVELOP WHATEVER ANALYSIS HE'S GOING TO DEVELOP ON DAMAGES. SECONDLY IS ON THE SUBJECT OF THIRD-PARTY SUPPORT. SO KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 47 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 TOMORROWNOW WAS A THIRD-PARTY SUPPORT COMPANY. THIRD-PARTY SUPPORT COMPANIES. THERE ARE OTHER WE'VE MADE ANY NUMBER OF ARGUMENTS ABOUT WHY THAT IS RELEVANT, INCLUDING THE POSSIBILITY THAT THIRD-PARTY SUPPORT COULD BE RELEVANT TO THE ISSUE OF CAUSATION OF DAMAGES SO THAT IF A CUSTOMER WAS BOUND AND DETERMINED TO LEAVE ORACLE NO MATTER WHAT, THEY MIGHT NOT ONLY HAVE GONE TO TOMORROWNOW, BUT THEY MIGHT HAVE GONE TO SOME OTHER THIRD-PARTY SUPPORT PROVIDER. AND IF WE CAN ESTABLISH THAT THIS CUSTOMER WOULD HAVE LEFT ORACLE TO SOME THIRD-PARTY SUPPORT PROVIDER, NO MATTER WHAT, WE WILL ARGUE THERE'S A BREAK IN THE CAUSAL LINK. ORACLE, AFTER MUCH FIGHTING AND ARGUING, HAS NOW AGREED TO PRODUCE A 30 (B) (6) WITNESS ON A LIMITED ISSUE OF WHO ARE THE THIRD-PARTY SUPPORT PROVIDERS THAT ARE COMPLETELY INDEPENDENT FROM ORACLE, HAVE NO RELATIONSHIP WITH ORACLE? WE HAVE ASKED FOR OR WE'VE ASKED FOR AT LEAST A FOUNDATIONAL DEPOSITION SO WE CAN EXPLORE AND UNDERSTAND MORE ABOUT THE SO-CALLED ORACLE PARTNERS, WHICH ARE COMPANIES, AS WE UNDERSTAND IT, THAT DO HAVE SOME KIND OF RELATIONSHIP WITH ORACLE AND PROVIDE SUPPORT AND ALL KINDS OF OTHER SERVICES FOR ORACLE CUSTOMERS. THEY HAVE SAID ABSOLUTELY NO ON THE ORACLE PARTNER PROGRAM, NOT EVEN A FOUNDATIONAL DEPOSITION WHICH WE COULD USE AS A SPRINGBOARD TO THEN SAY: "OKAY. WE'VE ESTABLISHED MORE CLEARLY THAT THIS KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 48 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 IS AN APPROPRIATE FIELD FOR DISCOVERY. SO WE NEED NOW DOCUMENTS OR OTHER DEPOSITIONS ON THE PARTNERSHIP PROGRAM." THE ISSUE IS JOINED. AND THEN, LASTLY, IS THE SUBJECT OF -- A LITTLE MORE ESOTERIC -- ON COPYRIGHT LAW. BUT, GENERALLY SPEAKING, WE'RE SEEKING MORE DISCOVERY ON WHAT IS COVERED BY ORACLE'S COPYRIGHT REGISTRATIONS; WHAT IS THE OWNERSHIP EVIDENCE OF THE UNDERLYING COPYRIGHTED MATERIAL AND THE SUBJECT OF DERIVATIVE WORKS. THESE ARE RELATIVELY COMPLICATED ISSUES. WE COULD GO INTO THEM NOW, BUT THEY KNOW WHAT WE'RE TALKING ABOUT. THE COURT: MS. HOUSE: OKAY. GOING IN THE ORDER THAT HE RAISED THEM, ON THE FINANCIAL MATERIALS, WE HAVE ASKED AND WE HAVE YET TO HEAR ANYTHING OTHER THAN: "WE GENERALLY NEED THIS STUFF." THE UNDERLYING CHART OF ACCOUNTS TYPE OF DETAIL -- I DON'T KNOW HOW STEEPED YOU ARE IN THIS TYPE OF -THE COURT: MS. HOUSE: THE COURT: NOT LATELY. WELL, BE GLAD. I'VE OCCASIONALLY BEEN STEEPED IN IT, BUT I DO MY BEST TO DIG MY WAY OUT. MS. HOUSE: THERE ARE -- WITHIN ORACLE, THERE'S 80 DIFFERENT GENERAL LEDGERS, WHICH ARE LIKE DIFFERENT SETS OF BOOKS THAT ARE KEPT. SO WHEN YOU'RE ASKING FOR A GENERAL LEDGER KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 49 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 YOU'RE ASKING FOR AN ENORMOUS SET OF BOOKS. IT'S EVERY LITTLE LINE ITEM DETAIL FOR ALL THE COMPANIES, ALL THE SUBSIDIARIES, EVERYTHING ABOUT ORACLE AT A VERY MINUTE LEVEL. THEY ROLL UP INTO A CONSOLIDATED LEDGER. WE'VE PROVIDED ALL THE CONSOLIDATED SUMMARY RELATED DATA. WE HAVE EXHAUSTIVE DATA THAT WE HAVE PROVIDED THEM THAT IS WHAT WE USE TO, FOR INSTANCE, FIGURE OUT WHAT PROFIT MARGINS AND OTHER THINGS ARE. EACH OF THESE SET OF BOOKS HAS THEIR OWN UNIQUE CHART OF ACCOUNTS. SO IF YOU THINK ABOUT EACH OF THOSE GENERAL LEDGERS OF EIGHTY, THEY EACH HAVE THEIR OWN SEPARATE CHART OF ACCOUNTS WHICH ARE VOLUMINOUS. A SINGLE GENERAL LEDGER, FOR INSTANCE, HOLDS TRANSACTIONS FOR MULTIPLE MONTHS, QUARTERS, YEARS. AND I'VE BEEN TOLD THAT THE U.S. GENERAL LEDGER, FOR INSTANCE, HAS APPROXIMATELY 90,000 ACTIVE ACCOUNT COMBINATIONS WITH BALANCES. THE KIND OF DETAIL THAT THEY ARE ASKING FOR THAT WE'VE SAID: "TELL US WHY YOU NEED TO GET THIS MUCH IN THE WEEDS. YOU DON'T NEED IT. WE DON'T USE IT. YOU DON'T USE IT AT SAP. DETAIL. NOBODY USES THAT LEVEL OF IT WON'T TELL YOU ABOUT A PARTICULAR CUSTOMER." THE COURT: OKAY. THIS IS -- YOU'RE ARGUING THE KATHERINE WYATT, OFFICIAL REPORTER, CSR, RMR (415) 487-9834 50 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 SCHEDULE. MOTION. MS. HOUSE: THE COURT: RIGHT. I JUST WANTED TO GET A GENERAL IDEA OF WHAT WE'RE TALKING ABOUT IN NO MORE DETAIL THAN HE JUST GAVE ME, WHICH IS A LOT LESS DETAILED. AND, SECONDLY, WHY YOU'RE OPPOSED TO SETTING A THAT'S THE MORE IMPORTANT THING. MS. HOUSE:

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