Weather Underground, Incorporated v. Navigation Catalyst Systems, Incorporated et al

Filing 298

TRANSCRIPT of Settlement held on May 30, 2012. (Court Reporter: Robert L. Smith - 313.964.3303) (Number of Pages: 16) The parties have 21 days to file with the court and Court Reporter a Redaction Request of this transcript. If no request is filed, the transcript may be made remotely electronically available to the public without redaction after 90 days. Redaction Request due 7/5/2012. Redacted Transcript Deadline set for 7/16/2012. Release of Transcript Restriction set for 9/11/2012. Transcript may be viewed at the court public terminal or purchased through the Court Reporter before the deadline for Release of Transcript Restriction. After that date, the transcript is publicly available. (Smith, R.)

Settlement • May 30, 2012

1

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
_
_
_

2
3
4

THE WEATHER UNDERGROUND, INC.,
a Michigan corporation,

5
6
7
8
9
10
11
12
13
14
15
16

Plaintiff,

Case No. 09-10756

vs.
NAVIGATION CATALYST SYSTEMS,
INC., a Delaware corporation;
BASIC FUSION, INC., a Delaware
corporation; CONNEXUS CORP., a
Delaware corporation; and
FIRSTLOOK, INC., a Delaware
corporation,

Hon. Marianne O. Battani

Defendants.
_______________________________/
SETTLEMENT
BEFORE THE HONORABLE MARIANNE O. BATTANI
United States District Judge
Theodore Levin United States Courthouse
231 West Lafayette Boulevard
Detroit, Michigan
Wednesday, May 30, 2012

17

APPEARANCES:

18

For the Plaintiff:

19
20
21
22
23
24
25

ANTHONY P. PATTI (P43729)
Hooper Hathaway, P.C.
126 South Main Street
Ann Arbor, MI 48104
[phone]
C. ENRICO SCHAEFER (P43506)
BRIAN A. HALL (P70865)
Traverse Legal, P.L.C.
810 Cottage View Drive, Ste. G20
Traverse City, MI 49684
[phone]

To obtain a copy of this official transcript, contact:
Robert L. Smith, Official Court Reporter
[phone] • [e-mail]
Weather Underground vs. Navigation Catalyst Systems - 09-10756

1

Settlement - May 30, 2012

1
2
3

APPEARANCES:

For the Defendants:

4
5
6
7
8
9

(Continued)

Also present:

WILLIAM A. DELGADO
Willenken, Wilson, Loh, Lieb &
Delgado, L.L.P.
707 Wilshire Boulevard, Suite 3850
Los Angeles, CA 90017
[phone]

Al Steremberg
Chris Swizzler
Jeff Ferguson
David Graft

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Weather Underground vs. Navigation Catalyst Systems - 09-10756

2

Settlement - May 30, 2012

1

TABLE OF CONTENTS

2

Page

3
4

3

Settlement placed on the record...................... 5

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

Detroit, Michigan

2

Wednesday, May 30, 2012

3

4

at about 12:45 p.m.

4

_

_

_

5

(Court, Counsel and parties present.)

6

THE CASE MANAGER:

7

The United States District Court for the Eastern

All rise.

8

District of Michigan is now in session, the Honorable

9

Marianne O. Battani presiding.

10

You may be seated.

11

THE COURT:

Okay.

All right.

Counsel, I

12

understand that you have reached a resolution; is that

13

correct?

14

MR. DELGADO:

15

MR. SCHAEFER:

16

THE COURT:

17

Yes, Your Honor.
That's correct, Your Honor.

Okay.

I'm going to ask, Mr. Schaefer

and Mr. Delgado, are you both putting it on the record?

18

MR. SCHAEFER:

I will let Mr. Delgado go ahead and

19

read, and to the extent that I have any comments I will make

20

them when he's done.

21
22

THE COURT:

Why don't you approach the

podium?

23

MR. DELGADO:

24

THE COURT:

25

All right.

Okay.
Before you put that on the record, you

have your client representative here by way of Mr. Graft?

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

MR. DELGADO:

2

THE COURT:

3

MR. SCHAEFER:

4

5

I do, yes, David Graft is here.
And plaintiffs -Yes, we have three board members,

Al Steremberg, Chris Swizzler and Jeff Ferguson.

5

THE COURT:

You want to pick one?

6

MR. SCHAEFER:

7

THE COURT:

Jeff Ferguson, Your Honor.

I ask that you all listen but I will be

8

asking if you agree with the settlement and have you come to

9

the podium and put that on, so please listen to what's being

10
11
12
13

said.
MR. DELGADO:

The parties in this matter hereby

reach an agreement on the following bases.
Number one:

The parties, Plaintiff Weather

14

Underground, Inc. and Defendants Connexus Corporation,

15

Firstlook, Incorporated, Navigation Catalyst Systems,

16

Incorporated, agree to the entry of final judgment in the

17

amount of $3.5 million within ten days of today's date in

18

favor of plaintiff and against all existing defendants

19

jointly and severally.

20
21
22
23
24
25

Number two:

Entry of judgment in favor of the

Epic Media Group on Epic's motion for summary judgment.
Number three:

All parties waive their right to

appeal and waive any stay of enforcement.
Number four:

Plaintiff agrees to forego collection

of the judgement subject to defendants' strict compliance

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

6

1

with the agreed-upon payment schedule.

2

right to immediate execution enforcement and collection upon

3

the judgment should defendants fail to timely meet the

4

payment obligations, breach the agreement or in the event of

5

any defendant's bankruptcy.

6

Number five:

Plaintiff retains the

The parties agree that the judgment

7

shall be satisfied by the defendants' payment in the amount

8

of $2 million to be paid in accordance with the following

9

schedule:

A, $200,000 within five business days of

10

July 30th, 2012; B, $150,000 or 50 percent of payment

11

received on the note dated August 8th, 2011, hereinafter

12

referred to as the note, whichever is greater, within five

13

business days of October 30th, 2012; C, $150,000 or

14

50 percent of payment received on the note, whichever is

15

greater, within five business days of January 30th, 2013;

16

D, $300,000 or 50 percent of payment received on the note,

17

whichever is greater, within five business days of

18

April 30th, 2013; E, $200,000 or 50 percent of payment

19

received on the note, whichever is greater, within five

20

business days of July 30th, 2013; F, $150,000 or 50 percent

21

of payment received on the note, whichever is greater, within

22

five business days of October 30, 2013; G, $150,000 or

23

50 percent of payment received on the note, whichever is

24

greater, within five business days of January 30th, 2014;

25

H, the remaining payment owed within five business days of

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

April 30th, 2014.

2

Point 6:

7

In the event that defendants pay

3

$1.2 million by April 30th, 2013, the total amount of payment

4

required to satisfy the judgment shall be $1.8 million.

5

Seven:

In the event that plaintiff collects on the

6

$3.5 million judgment defendants shall be entitled to credit

7

for any amount paid.

8
9
10

Eight:

Defendants shall transfer any domain name

at issue to plaintiff that is in their possession, custody or
control.

11

Nine:

Plaintiff shall be entitled to request and

12

receive the same information that defendants receive from the

13

payor on the note dated August 8th, 2011.

14

Ten:

Defendants represents that there are no

15

current threats of nonpayment on the note dated August 8th,

16

2011.

17

Eleven:

Defendants shall provide to plaintiff a

18

signed copy of the asset purchase agreement dated August 8th,

19

2011 and the schedules thereto by close of business Eastern

20

Standard Time on June 4th, 2012.

21

Point 12:

The parties to negotiate a mechanism by

22

which plaintiff can pursue a breach by payor of the note or

23

create an obligation by which defendants would pursue such a

24

breach.

25

Thirteen:

Plaintiff's rights under this agreement

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1
2

8

and/or the judgment are assignable.
Fourteen:

The parties shall formalize this

3

agreement and submit a final judgment for entry to the Court

4

within ten days.

5

the finalizing of the settlement agreement language to the

6

extent that the parties cannot agree on final drafting and to

7

resolve any disputes thereunder.

8
9
10
11

The Court shall retain jurisdiction over

Fifteen:

Each party to bear its own attorney fees

and costs.
THE COURT:

I want to go back on Number 11.

defendant shall provide to plaintiff a signed copy?

12

MR. DELGADO:

13

THE COURT:

14

MR. DELGADO:

15

Signed.
A signed, not assigned?
Right, signed as with somebody's

signature on it.

16

THE COURT:

17

MR. DELGADO:

18

THE COURT:

19

MR. DELGADO:

20
21
22
23

The

Okay.

Number 13?

Yes.
What is that again, the agreement -Plaintiff's rights under the

agreement and/or the judgment are assignable.
THE COURT:

Okay.

All right.

Let me ask

Mr. Schaefer, any corrections to that or additions?
MR. SCHAEFER:

No.

Just by way of context, the one

24

provision here that is a little bit open-ended is Number 12,

25

which says the parties to negotiate a mechanism by which

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

9

1

plaintiff can pursue a breach by payor of the note or create

2

an obligation which defendants would pursue such a breach.

3

Just for the record, Your Honor, the issue there is the

4

promissory note with Seth Jacoby's companies includes a

5

provision which allows it to be assigned if those companies

6

breach their obligations, but -- and so we had talked about

7

whether or not we would take an assignment of the rights

8

under the contract subject to that breach or contingent on

9

that breach, but we are potentially worried about potential

10

consequences upstream and so we are trying to see if we can

11

find another way to ensure that if Mr. Jacoby's companies

12

don't pay that Connexus either has an obligation to pursue

13

that breach and that if they don't do that that we can step

14

in and pursue that breach because otherwise no one might be

15

seeking to collect, so we are going to work on that, Your

16

Honor, but that's the context of that provision.

17

THE COURT:

18

MR. DELGADO:

Do you agree with that, Mr. Delgado?
I agree that's the context.

One of

19

the issues is that assigning that note is problematic so we

20

are going to try to figure out some other mechanism by which

21

we can do that.

22

solution so I'm not concerned about.

23

I think we are pretty close to a different

THE COURT:

It was, I believe, your representation

24

that your client is wanting to get the monies from that note

25

and needs -- more than wants --

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

MR. DELGADO:

2

THE COURT:

10

My client very much --- needs the money from the note in

3

order to pay other debts in addition to what you are just

4

agreeing to?

5

MR. DELGADO:

6

THE COURT:

7

All right.

Let me ask plaintiff first,

Mr. Schaefer, if you want to come up here with your client.

8
9

That is very much true.

MR. SCHAEFER:

Yes, Your Honor, and

Jeff Ferguson --

10

THE COURT:

11

MR. SCHAEFER:

12

THE COURT:

-- approach the podium with your

All right.

I want to just be very clear that you

13

Okay.

Mr. Ferguson --

-- the representative.

attorney.

14
15

understand today is -- well, I guess yesterday really was the

16

date to start trial and we are ready to start trial, and

17

obviously your attorneys are ready, which in this case is

18

quite visible by the boxes in the courtroom.

19

been a lot of discussion and there has been a lot of time put

20

into this resolution but there's also been a lot of time in

21

Court and expense with juries and time set aside for this

22

trial so I need to make sure you understand that this is a

23

final and binding settlement on you.

24

sir?

25

MR. FERGUSON:

So there has

Do you understand that,

Yes, I understand that.

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

THE COURT:

All right.

11

So I know you have been

2

doing this for two days and you probably don't want to think

3

about it any more, but even if you should go home and think

4

about this settlement you would not be able to come back

5

tomorrow and say, oh, you know, I thought about that and I

6

don't think I should have taken it.

7

MR. FERGUSON:

8

THE COURT:

9

Do you understand that?

Yes, I understand.

Okay.

Do you understand that this case

is prepared to go to a jury trial and when it goes to a jury

10

nobody knows what a jury might do?

11

well, I think this is what we can do or the chances are

12

whatever, but I don't think there is any attorney in here,

13

myself included, who has not been surprised at one time or

14

another with what a jury does, so a jury may give you more

15

than this, less than this or nothing.

16

that?

17

MR. FERGUSON:

18

THE COURT:

Your counsel may say,

Do you understand

Yes, I understand that.

Do you further understand, of course,

19

that if this were to go to a jury trial the jury could in no

20

way work out this kind of a settlement, that you would then

21

have -- if you got a judgment in a jury trial then you would

22

have your own collection proceedings to figure out; do you

23

understand that?

24

MR. FERGUSON:

25

THE COURT:

Yes.

Okay.

But you're waiving your right to

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

12

a trial and you are accepting this settlement, correct?

2

MR. FERGUSON:

3

THE COURT:

Correct.

Okay.

The Court is familiar with what

4

has gone on in this case through these last couple years, and

5

I do find that the settlement is a fair and reasonable

6

settlement of this litigation.

7

fair and reasonable settlement?

8

MR. FERGUSON:

9

THE COURT:

Do you believe that it is a

Yes.

No settlement is whatever one party

10

wants in total or the other party, that's just the nature of

11

what a settlement is.

You understand that?

12

MR. FERGUSON:

13

THE COURT:

Yes, I do.

Okay.

Do you have any questions at all

14

either of your attorney or of me regarding this settlement

15

that has just been placed on the record?

16

MR. FERGUSON:

17

THE COURT:

18

No, I do not.

Do you have any questions,

Mr. Schaefer, for your client?

19

MR. SCHAEFER:

20

THE COURT:

21

Mr. Graft, if you would come up with Mr. Delgado.

22

I do not, Your Honor.

Okay.

You may be seated.

Thank you.

Mr. Graft, you are in-house counsel; is that correct?

23

MR. GRAFT:

That's correct, Your Honor.

24

THE COURT:

Okay.

25

So you understand everything

that is going on here, I'm not going to go through the same

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

13

1

litany of questions.

You understand, of course, that this

2

settlement is final and binding on your clients?

3

MR. GRAFT:

Yes, Your Honor, I understand that.

4

THE COURT:

There is in the settlement the one

5

provision that the Court would resolve if there is any

6

problems, but that doesn't mean that the settlement itself,

7

the amounts of money, et cetera, aren't exactly what has been

8

put on the record.

Do you understand?

9

MR. GRAFT:

I do understand that.

10

THE COURT:

Okay.

11

And you have the approval of

your client to enter into this settlement, correct?

12

MR. GRAFT:

I do, Your Honor.

They will obviously

13

want to take a look at the final documentation that we put

14

together but, yes, I have the approval from them to do what

15

we have discussed and what we put forth on the record.

16
17

THE COURT:

Counsel, do you have any questions for

your counsel -- for your attorney?

18

MR. DELGADO:

I do not, Your Honor.

19

THE COURT:

Okay.

20

MR. GRAFT:

Thank you, Your Honor.

21

THE COURT:

All right.

Thank you.

You may be seated.

The Court, as indicated,

22

finds that this is a fair and reasonable settlement, and I

23

certainly believe that the parties to a fault know the ins

24

and outs of what the settlement involves and the various

25

terms.

Is there anything else that either side feels is

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

14

necessary to place on the record?

2

MR. SCHAEFER:

Yes, Your Honor.

On behalf of my

3

client, The Weather Underground, we would like to thank you,

4

the Court, and the staff, for your help, assistance and

5

patience in this matter and helping to bring this matter to

6

conclusion.

7

THE COURT:

8

MR. DELGADO:

9
10

Thank you.
I will echo Mr. Schaefer's comments

and just say I very much enjoyed my experience in this
District coming from California here, so thank you.

11

THE COURT:

I want you to know that I felt bad that

12

you had to come to Detroit under the circumstances you

13

expressed in your last motion.

14

try and have the time set aside for one case and don't stack

15

them up, so I can't do too much about it when it gets to be

16

exactly that time, but I appreciate all of the efforts that

17

you both have made.

18

I guess all I can say is I

I was just telling my staff what I regret is I

19

didn't force you to come in maybe the last couple conferences

20

so we could have done this before you put in all of the extra

21

effort that you have, but then again maybe that wouldn't be

22

enough.

23

the parties together and gets a resolution.

24
25

You know, sometimes the trial is what finally gets

So I thank you.

I thank plaintiffs who have been

here, I appreciate you coming in and working with your

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

15

1

attorneys in an effort to resolve this.

2

don't need to say this to defendant counsel because he knows

3

it, but assuming you don't -- you may not know this, you

4

know, litigation always is very difficult and it would be

5

very difficult to be here for three weeks and, as I said, we

6

don't know what the jury would do.

7

And as I said, I

In one way I was looking forward to this because

8

what you do to me is extremely interesting, and I would like

9

to know a little bit more about it, but in the sake of

10

economy I'm very happy that this case is resolved.

11

you all.

12
13

Thank you, Counsel.
Are you going to take all of your boxes out now or

come back?

14

MR. SCHAEFER:

15

MR. DELGADO:

16

THE COURT:

17

I thank

Yes, we are, Your Honor.
My courier won't be here until 2:00.

That's fine.

We do have an evidentiary

hearing in a criminal matter that starts at 2:00.

18

MR. DELGADO:

19

THE CASE MANAGER:

I'll take care of it.

20

THE COURT:

Thank you.

21

THE CASE MANAGER:

22

(At 1:02 p.m. Court recessed.)

23

I can move them somewhere else if --

Okay.

_

All rise.

_

Court is adjourned.

_

24
25

Weather Underground vs. Navigation Catalyst Systems - 09-10756

Settlement - May 30, 2012

1

16

CERTIFICATION

2
3

I, Robert L. Smith, Official Court Reporter of

4

the United States District Court, Eastern District of

5

Michigan, appointed pursuant to the provisions of Title 28,

6

United States Code, Section 753, do hereby certify that the

7

foregoing pages comprise a full, true and correct transcript

8

taken in the matter of THE WEATHER UNDERGROUND vs. NAVIGATION

9

CATALYST SYSTEMS, INC., et al., Case No. 09-10756, on

10

Wednesday, May 30, 2012.

11
12
13

s/Robert L. Smith
Robert L. Smith, RPR, CSR 5098
Federal Official Court Reporter
United States District Court
Eastern District of Michigan

14
15
16
17
18

Date:

06/13/2012

19

Detroit, Michigan

20
21
22
23
24
25

Weather Underground vs. Navigation Catalyst Systems - 09-10756