Albritton v. Cisco Systems, Inc. et al

Filing 15

TRANSCRIPT of Proceedings held on June 5, 2008 before Judge Michael H. Schneider. Court Reporter/Transcriber: Jan Mason,Telephone number: 903-590-1096. NOTICE RE REDACTION OF TRANSCRIPTS: The parties have seven (7) business days to file with the Court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript will be made remotely electronically available to the public without redaction after 90 calendar days. The policy is located on our website at Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER.. Redaction Request due 7/3/2008. Redacted Transcript Deadline set for 7/14/2008. Release of Transcript Restriction set for 9/10/2008. (rem, )

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Albritton v. Cisco Systems, Inc. et al Doc. 15 1 1 2 3 ERIC ALBRITTON 4 VS. 5 CISCO, ET AL 6 7 8 9 10 11 12 13 FOR DEFENDANT CISCO: 14 15 16 17 18 19 20 21 COURT REPORTER: 22 23 24 25 PROCEEDINGS REPORTED BY MECHANICAL STENOGRAPHY, TRANSCRIPT PRODUCED BY COMPUTER-AIDED TRANSCRIPTION. MS. JAN MASON CERTIFIED SHORTHAND REPORTER 221 W. FERGUSON #100 TYLER, TEXAS 75702 FOR DEFENDANT FRENKEL: MR. GEORGE L. MCWILLIAMS ATTORNEY AT LAW P.O. BOX 58 TEXARKANA, TEXAS 75504 MR. CHARLES L. BABCOCK MS. CRYSTAL J. PARKER JACKSON WALKER 1401 MCKINNEY STREET, SUITE 1900 HOUSTON, TEXAS 77010 SCHEDULING CONFERENCE BEFORE THE HONORABLE MICHAEL H. SCHNEIDER, UNITED STATES DISTRICT JUDGE APPEARANCES: FOR THE PLAINTIFF: MR. JAMES ANDREW HOLMES ATTORNEY AT LAW 605 S. MAIN SUITE 203 HENDERSON, TEXAS 75654 : : : : : DOCKET NO. 6:08CV89 TYLER, TEXAS JUNE 5, 2008 1:35 P.M. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS TYLER DIVISION 2 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 Cisco. THE COURT: All right. Your Honor, George McWilliams for THE COURT: All right. We have a Scheduling The Conference scheduled next. This is Case Number 6:08cv89. matter is styled Eric Albritton versus Cisco Systems, Inc. and Richard -- it looks like Frenkel. I'm going to ask that we get started here by having the parties make an announcement as to your being prepared for this hearing, and we'll begin with the Plaintiff. MR. HOLMES: Good morning, Your Honor. James Holmes for the Plaintiff Eric Albritton. THE COURT: MR. HOLMES: MR. BABCOCK: We're ready to proceed. How are you doing? Good afternoon. Thank you, sir. Your Honor, Charles Babcock with Crystal Parker, my colleague, and we're prepared to go forward. THE COURT: MR. BABCOCK: Nice to see you again, sir. Nice to see you, Judge. Here for MR. MCWILLIAMS: Richard Frenkel and we're ready to proceed. THE COURT: Good afternoon, Mr. McWilliams. Mr. That's a It McWilliams, I like the way you draw up your answer. nice way. I wish everybody would do that in federal court. would sure make it easier to compare what -- who's answered. MR. MCWILLIAMS: Your Honor, I have to give Mr. Babcock credit for that because I followed his example on 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 that. THE COURT: All right. And, Ms. Parker, you're going That way we just spread that. THE COURT: MR. BABCOCK: I see. And I'll have to defer to Ms. Parker on to defer to Mr. Holmes, is that right? it all the way around. MR. HOLMES: I hope I get some credit somewhere as the guy that started all this. THE COURT: Yeah. Okay. I have received your proposed Scheduling Order and I'll talk about that in just a minute, but I want to talk about a few things, mainly get you to talk about a few things to help me get oriented on the case and so forth. Let me just check here. First of all, as far as procedure goes in here or etiquette or whatever, this is an informal conference, although we want it to be productive. You're not required to stand at all, and in fact, it doesn't make me any difference here in this proceeding. If I tell you don't stand, some lawyers get real uncomfortable, so you can stand if you want to but you don't have to. But the main thing we have to kind of keep in mind, since we have more people than the normal two that we have here, is that when we do talk sitting down, there's a tendency sometimes to talk over some way or else at the same 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 time. So if we can -- as long as we can keep the And if conversation separate, we'll go ahead and try that. you want to stand, you can stand. Now, the first thing I want to get clear here procedurally is the operative pleadings. My information is, and you can correct me on this, but the operative pleading for the Plaintiff is your first -- is your petition, is that correct, that you filed? MR. HOLMES: THE COURT: MR. HOLMES: It is, Your Honor. All right, sir. I anticipate us filing a federal complaint since we have now been removed. THE COURT: All right. I was going to ask you to do that but we'll get to that in just a second. All right. Then I see we have the answer by Cisco but I that was the answer that was filed in the state court. don't have, I don't think, a federal answer, right? MR. BABCOCK: THE COURT: That's correct, Your Honor. All right. Then, of course, I've already So acknowledged Mr. McWilliams' answer in the federal suit. what I would like to request, if you would be so courteous to do, is to go ahead and file another one, Mr. Holmes. time is a reasonable time to do that for you? o'clock or -MR. HOLMES: Today is Thursday, Your Honor? How much I mean, five 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 Honor. MR. MCWILLIAMS: THE COURT: Yes, sir. The 5th? THE COURT: MR. HOLMES: THE COURT: Yeah. Until the end of next week. Let's say -- what is today in numbers? Can you get it in by the 15th? MR. HOLMES: THE COURT: Yes, sir. All right. Then will the Defendants waive service on that and he can just send it through normal courses? MR. BABCOCK: Just send it to me would be fine, Your And to you, Mr. McWilliams? Yes, sir. Then we'll do that and ask that MR. MCWILLIAMS: THE COURT: Okay. you respond to that, and how much time do you need to get back with him? MR. BABCOCK: THE COURT: I think a week would be sufficient. Okay. We'll round that off and give that another ten days, so that would be what, the 25th? MR. BABCOCK: THE COURT: Yes, Your Honor. Okay. That would help me and I think we can make some progress there. Okay. What I want to do is to go over and just go down You've obviously had some type of some questions here. conference or you wouldn't have been able to put together 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 gentlemen. MR. BABCOCK: I have worked with Mr. McWilliams this Proposed Scheduling Order. Tell me, if there's anyone who would volunteer the information, who had a meeting or discussion and when was that and where? MR. HOLMES: Your Honor, James Holmes. It was more a series of meetings and discussions. THE COURT: MR. HOLMES: All right. Mr. Babcock and I particularly have been on the phone I know six, eight times perhaps discussing everything from the schedule to scope of discovery and privilege and logistics. Mr. McWilliams and I have not had as extensive discussions because he's been detained in a three week trial. THE COURT: MR. HOLMES: I see. And he has leaned I think largely on Mr. Babcock, so we have done the very best we could to accommodate his schedule, but we have had extensive meet and confers. THE COURT: Okay. Well, that's encouraging. Let me ask you this, have any of you ever worked together on a lawsuit? And that can be Defendants and Defendants. MR. HOLMES: I have never worked with either of these before but not Mr. Holmes. THE COURT: All right. Mr. McWilliams, you say that you haven't worked with Mr. Babcock, right? 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 MR. MCWILLIAMS: Your Honor, Mr. Babcock and I have worked together for many years, and I have not with Mr. Holmes. And I apologize for being tied up in trial the last three weeks, but we do have a joint defense agreement so Mr. Babcock carried the water for me very well. THE COURT: Where were you in trial? In Bowie County. MR. MCWILLIAMS: THE COURT: Are you in trial right now? We're done. All right. Thank you. MR. MCWILLIAMS: THE COURT: I see. Well, hopefully, since it's the first time that each of you have worked with Mr. Holmes, that can develop into a foxhole friendship or whatever you call it when you're under the same pressures sometimes, and what's better than that, though, I think is some type of a good professional experience in working together. And from your reputations and my personal knowledge of some of you here, I don't think that's going to be an issue, that you will work hard to make sure that we keep our eye on the ball, and that is to get around to the issues that will decide the lawsuit. Now, are each of you -- I'm going to go ahead and show you here, your presence. Are you going to be the lead counsel in this as best you can see? MR. HOLMES: MR. BABCOCK: Yes, Your Honor. And I will be for Cisco, Your Honor, 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 Honor. Babcock. THE COURT: All right. Good. MR. MCWILLIAMS: THE COURT: And I will for Mr. Frenkel. Good. Now, do we have any I say pending cases, All right. pending cases pending in this matter? similar cases or related cases pending? MR. HOLMES: Your Honor, there is -- I don't know if I would call it a related case, but Johnny Ward has a suit pending against these same Defendants. THE COURT: MR. HOLMES: MR. BABCOCK: THE COURT: Where is that case? I think that case is still in Arkansas. Arkansas, right. How did it get in Arkansas? I'm sorry. For some reason I was thinking it was filed in your -- in Gregg County. MR. HOLMES: I'm not involved in that case, Your My understanding is there was an initial pleading filed somewhere in Texas that was dismissed and the case was refiled in Arkansas. I really don't know much about it beyond that. I see, but there is a -- does it grow out THE COURT: of the same incident? MR. HOLMES: THE COURT: It does. All right. Then there's an underlying lawsuit from which the subject of the -MR. HOLMES: Exactly. 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 THE COURT: -- liable or whatever, the conversation or the publication in issue. MR. HOLMES: THE COURT: MR. HOLMES: court in Texarkana. THE COURT: MR. HOLMES: THE COURT: Okay. That is in Texarkana? Yes, sir. There is another lawsuit on that. And that suit is pending in federal Yes, sir. Okay. Who will volunteer to get me the information on those suits, the numbers and so forth? MR. BABCOCK: about the Arkansas case. THE COURT: MR. BABCOCK: All right. Because I am counsel in that one. What Your Honor, I know a little bit more happened was John Ward filed a lawsuit in Gregg County substantially similar, if not identical, to the case that Mr. Albritton filed also in Gregg County. The day before we removed this case to this court, Mr. Ward, through his counsel, non-suited the Gregg County case and obtained an order from the Court granting non-suit. And that same day of the non-suit, Mr. Ward filed a lawsuit in the Western District of Arkansas, Texarkana Division. The Defendants were the same and the publication was the same publication that has been complained about here, or one of the two publications that has been complained about 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 here. The Defendant Frenkel, also represented by Mr. McWilliams, filed a motion to dismiss for lack of personal jurisdiction. The Defendant Cisco filed a motion to dismiss for improper venue, and alternatively, for discretionary transfer of venue to this court. Then Mr. Ward non-suited or has attempted to non-suit Mr. Frenkel from the case. Mr. Frenkel, who had answered, filed an objection to that and said that I've been sued twice now and non-suited apparently twice, and either the dismissal should be with prejudice so I don't have to keep hiring lawyers to defend me, or my attorney's fees should be compensated by Mr. Ward. The Judge -- Judge Barnes was originally assigned to the case and he recused himself and the new judge has scheduled oral argument on the objection to the non-suit, and that's scheduled for August 4th in Texarkana. Once that's out of the way, then I presume that Judge Hendren will rule on the motion to transfer. And our intent would be, if it's transferred to this court, would be to seek to consolidate that case into this one since it involves the same fact witnesses, same discovery and the same publication, or one of the same publications. THE COURT: Okay. Well, I guess that kind of gives Anything you would me enough information to get started on. 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 something. add, Mr. Holmes? MR. HOLMES: All I would add, Your Honor, is that obviously, because of Mr. Ward's relationship with -- family relationships, we're going to have some real concerns -- I have real concerns for my client about those two cases being consolidated and eventually perhaps tried together. We will flesh all those out for the Court at the appropriate time, but just as a heads-up, we are not going to be amenable to having those cases consolidated and tried together. THE COURT: MR. BABCOCK: All right. And I might add, Your Honor, that I have not talked to Mr. Holmes about it and he may convince me that he's right about that, so -- but if you talk about present intention, that is our present intent. But we haven't filed anything yet and maybe we won't, as eloquent as he sounded. THE COURT: All right. Well, let's do talk about That brings up something that, frankly, I guess I One of the allegations or part haven't really thought about. of the fact pattern here talks about the Eastern District of Texas itself as an identifiable -- I guess we'll call it an entity, for lack of a better word. And the allegation in there is that the clerk of the District Court here conspired with the -- with the Plaintiff or Plaintiffs, I guess the Plaintiff in this case. I'll leave it limited to my case. Now, in one way the clerk is -- I don't employ him but 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 I certainly could vote on his retention or hiring him. believe me, I'm not -- this suit has tremendous interest just academically, if I can be academic, to me and it is something that I would enjoy, but I'm just -- I want people to be real honest about how you feel about all that. And it And, doesn't -- it doesn't -- I wouldn't take it as flattery if you said well, I'm going to leave it here, and I wouldn't take it the other way either. with on these issues. look at it myself. You have your clients to deal Then I guess I just have to take a But I think we ought to not dodge it and talk about it a little bit. MR. HOLMES: have done exactly that. And, Your Honor, if I may, the parties Mr. Babcock and I discussed this very early on after the removal and we were still in the throws of discussions on my side about potential motions for remand. And I don't want to speak too much for Mr. Babcock, but I believe we reached a consensus that both parties were comfortable having this case proceed in this court and in Your Honor's court. There's certainly no concern on our part. MR. BABCOCK: Yes, Your Honor, that is consistent. We did talk about it early on, and from Cisco's standpoint we are delighted to be in the Eastern District of Texas and specifically in your court. There is no thought of recusal, and in fact, I think I said in writing that we are not going to move to recuse. 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: And I wouldn't take it -- I mean, I hope I can y'all know that I would not be insulted by that at all. understand. You have your clients to worry about and -- but I can tell you right now from my point of view, it's just a very interesting case, you know, so we can go from there. If I get to the point where I see that it is not or something, I'll be -- I'm going to do my best to make sure that I bring that up in a timely manner, but right now it's not a problem with me. MR. BABCOCK: THE COURT: Thank you, Your Honor. Go ahead, Mr. McWilliams. Your Honor, I just wanted to We have a consensus among all MR. MCWILLIAMS: underscore that for Mr. Frenkel. counsel that we are all very comfortable here. THE COURT: Okay. We're past step one then. Now, the second of 97 questions I have here -- I don't have that many, but we've got a fence around those cases that are related and so far -- is that case in Judge Folsom's court with Cisco, is that progressing toward trial? MR. HOLMES: THE COURT: MR. HOLMES: Anybody know that? I think that it is, Your Honor. All right. My client could probably -I'm probably the person who knows the It has MR. ALBRITTON: most about that, Your Honor, and it is progressing. been set for -- it has a Markman Hearing set and a trial date 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 right. set. THE COURT: Is that Mr. Albritton? Yes, sir. All MR. ALBRITTON: THE COURT: I didn't recognize you out there. That's Eric Albritton. MR. ALBRITTON: THE COURT: Thank you, Your Honor. So we're not getting in each All right. other's way on that so far. So I think I have a pretty good idea of the facts in the case just from reading the petition, but I'll let you go ahead and make any kind of opening statements you would like to make here and then we'll move along right after that. make from the start? MR. HOLMES: think -- no, sir. THE COURT: MR. BABCOCK: Anything generally? The only thing I wanted to point out, I don't think so, Your Honor. I Any observations you would like to and again, this is something Mr. Holmes and I -- you would think we talk to each other every day but not quite that often. But there was an issue or a concern, in any event, early on about whether or not Cisco was going to claim that Mr. Frenkel's postings were outside the course and scope of his employment, and there is no issue on that. federal answer, that will be clearer. That does not mean, however, that Cisco was happy about When we file the 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 Honor. THE COURT: Okay. Now, let's see here, we have -- we the statement that the Court brought up about how the -that the Eastern District of Texas, either wittingly or unwittingly, may have assisted counsel for a non-practicing entity in manufacturing subject matter jurisdiction and then made the comment about the Banana Republic. Cisco didn't know about that ahead of time, and if they had, they wouldn't have allowed it. happy about it. It is true that that particular unfortunate phrase was only up on the Internet for 24 hours and then it was modified and taken away. But nevertheless, it is what it is But in any event, they weren't and it's there and it's attached to their pleading and that's what it is. make clear. THE COURT: All right. Mr. McWilliams? So that's the only thing I wanted to MR. MCWILLIAMS: I would have nothing further, Your don't have any anticipated -- well, we've talked about the possibility of some other people coming in here. Okay. What kind of disclosures have you made or do you How are you plan to make, starting out with the Plaintiff? in that regard? MR. HOLMES: Your Honor, this is another one of those issues that we've conferred about extensively, because as you 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 can imagine, we not only have lawyer clients in all three corners but we have underlying litigation and then ongoing litigation here. THE COURT: MR. HOLMES: Right. And relationships between our lawyer So the biggest issue we've been clients and other lawyers. working through is how to deal with attorney-client privilege and work product privileges on the underlying documents. We have come a long way, at least in the initial stage, of preparing our respective disclosures. It will be another week before Mr. Albritton has clearance from his client for a limited waiver of privilege so that we can produce the documents that we know are relevant, and I understand on Cisco and Mr. Frenkel's side, they're in the process of resolving the same issues. We have not actually exchanged much documentation at this point, although I have a few documents from Cisco, but we do anticipate by this time next week or early the following week exchanging most everything that we at this time can identify as being relevant and discoverable. THE COURT: Okay. I guess under the rules you have technically 14 days after this hearing or something like that. Do we need to set a time or do you have any feelings on that? MR. HOLMES: I'm comfortable -- Mr. Babcock told me this morning we'll have them next week and Mr. Albritton is 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 working with his client. I would feel more comfortable, Your Honor, if we didn't, just in case his client sees a problem that we have not foreseen. the Court. It might avoid us coming back to But I think we'll have it done pretty quickly. THE COURT: All right. And will there be -- have you talked about any electronic -- any ESI problems, as they call them? MR. HOLMES: this time, Your Honor. coming in. THE COURT: All right. Well, we probably need to -I don't think we're going to have any at We discussed that and we don't see it well, I didn't have a place for a privilege log on this Scheduling Order, but that's easy for me to put it in there. didn't put it in because most of the time it's not an issue. MR. HOLMES: THE COURT: MR. BABCOCK: It will be in this case, Your Honor. Okay. If I could -- if I could elaborate on I what Mr. Holmes has said about the privilege issue, the problem is that this posting related or these two postings that are at issue in this lawsuit related to the filing of the ESN lawsuit against Cisco. At least from Cisco's side and Mr. Frenkel's side, there were communications with Baker Botts, which was the law firm that was retained to represent Cisco in that matter. And as you might imagine, there was -- there was 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 some back and forth about the issue of subject matter jurisdiction, whether the case had been filed on October 15th before the patent issued on the 16th, and that's clearly privileged. I mean, Frenkel, the client, a lawyer for the client in-house communicating with Baker Botts, but it's also relevant to this lawsuit as to what Mr. Frenkel knew at the time he made the posting on October 17th and October 18th. And I understand from Mr. Holmes that there's similar documentation on the other side where Mr. Albritton and Mr. Ward, who is not a party, were talking to their client ESN and their lead counsel, which was from Chicago, about these things. So both sides have got things that are relevant, and I think it's going to be important for us to come up with a -kind of a fence around what the limited scope of the waiver is going to be, because Cisco is willing to have a limited waiver along the lines of communications regarding the circumstances of the filing of the ESN versus Cisco case and the communications with the clerk. And Mr. Holmes and I have been working on language and it may be something slightly different than that, but it would be something like that. But we would like Your Honor's approval so that there's no dispute later on about oh, the waiver is broader than that because there's this 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 other litigation going on, and we don't want -- and other counsel other than Mr. Albritton are involved. involved for Cisco in that case. THE COURT: Why don't we do it this way, let's take a I'm not shot at -- or you two take a shot at the language you like and I'll approve it and we'll just see how that works and hope and try our best to make that work. back and retool. MR. HOLMES: I think that's going to be what we need If it doesn't work, we'll come to do, Your Honor, because there are simply some of these documents that we're not going to know until we lay hands on them if they're inside the fence, so to speak, or outside. My guess is there are going to be a number sitting right on top of it, and I'm just not going to be comfortable without guidance from the Court on how to handle this. THE COURT: You may not be comfortable with the You guys are closer to it and guidance you get from the Court. you're going to know it, but we'll work it out. All right. What I didn't -- I said I didn't need to I would like to know what you Do we have -- is there get into the facts too much. see as the main legal issue in here. a unique issue on the degree to which a blogger has -- a blogger has a First Amendment privilege or what's -- what do you see as being the big issue? MR. HOLMES: Again, we have discussed this pretty 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 extensively, Your Honor. I think from my perspective we see the case as a private entity with a claim against a nonmedia defendant. I think there will be some question about it, to the extent he may wish to be characterized as a media defendant, that the Court is going to have to deal with. I think there will also be legal issues regarding the standard of proof for our case, will it be actual malice, strict liability or negligence, and I think beyond that there will be some issues of actual malice that relate to punitive damages and the calculation of damages. I don't think the facts are going to be much in dispute and I suspect we will ferret out who said what and why they said it pretty thoroughly, but I think the thornier issues will be sort of categorizing the parties and determining what legal standard is applicable. THE COURT: Well, let me ask you and get your input. When I say yours, I'm talking to anybody here, about how that might influence the scheduling. Is there -- you know, the traditional way you do a lawsuit is kind of like we're doing now, have a Scheduling Conference, set down your discovery map, where you're going with that. Then you move for your summary judgment when your discovery is closed and at some point in time you have some type of comprehensive settlement conference or ADR method. But on this is there -- what is the value, if any, of determining some basic legal issues before we get 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 your own. MR. BABCOCK: It would be nice if we could resolve started on it, or would you rather develop the discovery and then get some rulings from the Court on that? MR. HOLMES: From the Plaintiff's perspective, Your Honor, I prefer the traditional approach, develop some discovery, frame those issues. our own. THE COURT: Okay. I like it when you resolve them on We might even resolve some on all the issues, but I anticipate what I'm about to say won't be resolved because it's fundamental to the case. One of the things that the Court can and is instructed to do in the first instance is to determine whether the publication is defamatory in the first instance. The Texas Supreme Court case of Musser versus Smith sets out the rules. I think that the October 17th blog, in our view, is susceptible to a motion that is not dependent upon discovery that raises the issue of whether or not that first blog is defamatory at all, so that would be something. There may be other aspects of that that would be susceptible to motion with respect to the October 18th posting, which again raises the issues of is it defamatory in the first instance. that's one issue that wouldn't -- that wouldn't require discovery. So 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 The other issue, which probably would require a little discovery but not much, and which is an issue of law, is the status of the Plaintiff. Are they public figures, limited purpose public figures, or are they private plaintiffs under the law? And in Miller versus TransAmerica Press 621 Fed 2d 721, and modified on rehearing, I think 623 Fed 2d something -- I know that only because I argued that case. That's how old I am. And the Court -- the Fifth Circuit there said the status of the plaintiff is pervasive and should be decided as soon as possible. that would be an early matter. As for the status of the Defendants, the Defendants will contend for sure that they are media Defendants and whatever the First Amendment gives them by way of special dispensation, they are entitled to it. I will tell the Court that one of the things that makes this case interesting is that there is little to no law in Texas on that issue, although there is law favorable to the Defendants in California on that issue. It may not be as important as it would be in other states because in our state, under the Texas Supreme Court decision in Casso versus Bran the status of the Defendant as a media or nonmedia Defendant is unimportant, because in that case the Texas Supreme Court said that the New York Times versus Sullivan actual malice standard applies, So that would be -- 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 whether or not the Defendant is a media Defendant. So it may not be as important as it would be in other states, although one of the defenses that Mr. Frenkel has asserted is a statutory privilege under Texas law, which is restricted to media. periodicals. So it is restricted to other So the question is whether he's a periodical within the meaning of the statute, so those issues are there. I don't know that that would be as susceptible to summary judgment without discovery. I think there will have to be a little bit of discovery on that. Finally, on the scope of discovery, there will be a huge issue I think on damages, but on liability I think there's limited discovery necessary, probably Mr. Albritton and Mr. Ward and then one or two clerks, whoever were involved in the docket entry switching from October 15 to October 16. So that's everything I have to say, probably too much. THE COURT: wants to add on that? That's fine. Thanks. Anything anyone Mr. McWilliams? Your Honor, I would just underscore MR. MCWILLIAMS: what Mr. Babcock said. As the Court can see, there are huge differences between the parties on the law here, and I think as Mr. Babcock has pointed out, there's some very critical issues that do not require extensive discovery for the Court to 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 him. decide. THE COURT: MR. BABCOCK: very important. All right. Judge, I forgot one thing but it is I should have mentioned it first, and that is this Banana Republic issue, because Mr. Holmes and I have talked about it and it is going to implicate the breadth of discovery and it will implicate it in this way. Our view is that when Mr. Frenkel, however ill-advisedly, talks about the Banana Republic of -- what does he say? The Banana Republic of East Texas, that is classic opinion, rhetoric or hyperbole, and therefore, not actionable. There's a second reason, of course, why these Plaintiffs -- this Plaintiff cannot prevail on that claim, because it doesn't have anything to do with them. If the Eastern District of Texas is being operated in an improper manner, that's something else, not -THE COURT: MR. BABCOCK: It's just about me, reflects on me. It might be about you, but not about And the reason why that's going to impact discovery is that Mr. Holmes is going to send me a list of things that he wants, but one of the things that we talked about is he wants everything where anybody at Cisco was ever talking about the Eastern District of Texas. And I think what he's hoping is there will be a bunch of critical stuff that says Judge 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 recuse. MR. BABCOCK: I know. We're beyond that. But if Schneider is a bum and we don't like Judge Ward and Judge Folsom is an idiot, which there isn't any of, I don't think. But still, that's what they would like to see. We don't think that's part of the case, but if we've got to prove that -THE COURT: Just remember, it's too late for me to that's an issue in the case, in other words, if we're going to have to, on the defense side, try to show that the practices and procedures in the Eastern District of Texas are outside the norm or there are things that certain courts do that are not appropriate or at least other parts of the country might deem inappropriate, then that will impact a lot of discovery that we're going to have to do. To us, that's a nonissue, and if Mr. Holmes and I can't work it out, we may -- I may, on Cisco's behalf, very well may come to you with a limited motion for summary judgment and say, Judge, we don't think that this statement is actionable for these reasons. It's either opinion, rhetoric or hyperbole, or not of and concerning the Plaintiff, which is an essential element. So as I said, that is an issue that will affect a lot of things, so I'm glad I didn't totally forget it. THE COURT: MR. HOLMES: All right. Your Honor, it's sort of like the old 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 joke where the punch line was they have lab rats because there are just some things lawyers won't do. Well, Mr. Frenkel did not accuse Mr. Albritton of, in isolation, committing some egregious act. the court. He accused us of conspiring with the clerk of In our mind, that makes a tremendous difference in the scope of the discovery because if he's not only accused me of an affirmative wrong act but he's also accused me of being in cahoots with a known bad actor, which he is characterizing our clerk's office in the Eastern District to be, then that does reflect on me. We have had discussions about this. find some way to work through it. I'm hopeful we'll But Mr. Babcock is correct, it may be a thorny issue because we have a very different view. We were accused of being a participant in a conspiracy with what they're casting to be a known bad actor, and that all sort of splashes over on my client and we feel like we will have to have some discovery on it. THE COURT: I think -- okay. All right. Let's try to move along here. So you mentioned that you have -- you're in What the process of exchanging or making your disclosures. would you -- how many depositions are you going to need and how many can you be firm about here today? MR. HOLMES: In addition to the parties, Your Honor, I think we propose 40 -- 30 hours of deposition per side. that's more effective than selecting an arbitrary number of 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 parties? MR. HOLMES: Yes, sir. And we also agreed between witnesses, because many of these depositions may be very, very brief. THE COURT: You say that's in addition to the ourselves that no individual deposition would exceed seven hours. THE COURT: All right. Any other limitations you can Unlimited think of that you think in this case is appropriate? interrogatories or written discovery, I'll say, on authenticating documents. limits on those. I mean, there's no need to put any We won't count those against you is my point on those, any authentication issues. MR. HOLMES: Your Honor, on those interrogatories, we had proposed on substantive interrogatories that neither side was particularly interested in more than I think 20, 20 interrogatories, 20 requests for admissions. THE COURT: I'll give you 25 each, okay? Just to keep it consistent with all my other cases. And that's a good way to say it, your substantive interrogatories or written requests for admissions, so forth. MR. MCWILLIAMS: Your Honor, just so we're clear, would that be 25 for Cisco and 25 for Defendant Frenkel? THE COURT: I pretty much limit that to the side, but How do you -- you can tell me what the differences would be. 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 how do you see it? MR. MCWILLIAMS: to the side. Court. THE COURT: Okay. Why don't we shoot for that, try And you pretty much have the I think we can probably live with 25 If we have a problem, we can come back to the to put a fence there on that. same interests right now. We'll wait and see, though, especially if you have a consensus on whether or not he was within the course and scope of his employment, so forth. Okay. Now, have you done anything to talk about resolving this matter? MR. HOLMES: We have discussed it, Your Honor. We have We have made a couple of proposals to the Defendants. not, obviously, had any particular success, but maybe we've got the ball rolling, I hope, in a productive direction. THE COURT: Well, when I saw this thing filed, I almost called you on the phone and said come on, let's -- let's get together and see what we can do on the case. got busy and it slipped my mind. don't get me wrong. around to it. But is there any value in expanding the scope of that to include maybe a comprehensive discussion? If you want to But I frankly You're very important to me, It's just that I just haven't gotten keep it separate, that's fine with me, but I just -- just seeking out opportunities here. 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 that. MR. HOLMES: We would be happy to sit down with the I think at this Court, Your Honor, and discuss resolution. point I would prefer if we did it separate from the other case. THE COURT: MR. HOLMES: All right. But I'll visit with Mr. Albritton about As far as our case, we're happy to sit down any time. THE COURT: Well, of course, that's -- and I appreciate your answer and that's what I would say too, but I'm trying to advance the ball a little bit. say about that? What's the other side Do you have any specifics on that? Yes, Your Honor. First of all, in MR. BABCOCK: terms of prior efforts, there was a mediation, sort of an informal one, maybe right after the lawsuit was filed before the answers were even filed and before it was removed to your court, presided over by the gentleman back on the wall there, by Judge Parker. THE COURT: MR. BABCOCK: Oh, is that right? And it was not successful. I was, unfortunately, unable to be there because I was on vacation with my family, so that's why it had a chance of success. had been there, it definitely would have fallen apart. If I Then Mr. Holmes and I have had some talks but they haven't gone anywhere. From Cisco's standpoint, if there's going to be resolution, it makes total sense to us to resolve both cases 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 and we -- I don't know if we all have to be in the same room hugging each other, but in terms of temporal sequence and getting it all resolved at one time, Cisco doesn't see much advantage in getting this one resolved and still having to fight the Ward case, particularly if it's coming, as we expect, down here anyway. So from our view, we would like Maybe if we get four rooms to connect them in some way. instead of three rooms, but we would like to link them up somehow. THE COURT: I see. Yes, sir. MR. MCWILLIAMS: Your Honor, I might add, I had sort I've practiced law in the Eastern of the same thought you had. District for nearly 42 years and my first inclination was to pick up the phone and say isn't there some way to resolve this. These guys are my friends and I hope they'll be friends after this. And I really underscore what the Court said that if there is any way possible that we could resolve this, I think my client and I think Cisco would make every effort possible. And I agree with Mr. Babcock, I would hate to try to resolve this and then have the same litigation and the same parties and the same issues have to be fully developed, and that's why I would like, if at all possible, to get us all under the same roof. 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 THE COURT: Well, let me ask you this, if I were to take just a few minutes -- how is everybody's time here? Anybody have to be home before midnight tonight? MR. HOLMES: THE COURT: Not me, Your Honor. I would like permission just to talk with each of you separately, not about the case itself, about the settlement here. I mean about the terms of the -- not even the terms of the settlement, about the possibility of meeting for settlement. How does that grab you? Does that grab anybody? MR. HOLMES: MR. BABCOCK: I think that's a good idea, Your Honor. It's fine with us, Your Honor. Yes, sir. MR. MCWILLIAMS: THE COURT: MR. HOLMES: Your Honor. THE COURT: Who wants to go first? Since it's usually our burden, we will, Why don't you meet me around at the It's office around there and the staff here can take a break. about time to take a break. And we'll, over a bottle of water or something, sit down and talk just a few minutes about what some of your concerns are, not about the -- again, I represent that I am not going to get into the facts of the case. I just basically want to see what your ideas are about how we move this forward to talk, okay? MR. HOLMES: THE COURT: Yes, sir. All right. Thanks. 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 here. right. parties. Okay. THE COURT: (Recess. All right. Let's see, this was a 30 minute hearing, is that right? MR. BABCOCK: THE COURT: That's what you told us, Judge. That's great. I'm keeping my schedule. We had Let's get back to your schedule here. talked about -- I had mentioned a privilege log, and do you have a date that you would like to have each side present their privilege log? too far or too close? MR. BABCOCK: THE COURT: I think that's fine, Judge. All right. September 1, 2008. All Let me throw out September 1. Is that And then the next thing is the deadline to join I'm going to leave that, okay? Look at your list there and see if there's anything else I need to change down here. MR. BABCOCK: with the parties. Judge, all these dates I think are fine I think we -- Mr. Holmes and I went through them fairly -- in a fair amount of detail. THE COURT: Let me add one or two here then. On your last page over there where you have motions in limine due -MR. BABCOCK: THE COURT: Yes, Your Honor. Okay. Well, I've got a confusing note Let's move that up a week to I can't read my own notes. the 16th and then have your objections to the motions in limine 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 Faulkner. THE COURT: Can the Defendants live with that? Your Honor, I think that's fine. I filed on the 23rd. Then down here where it says mediation date, I'm going to leave that blank right now because I want to talk to you about that. From my talks with you, it's my opinion that I think that you need to talk and I think you need to talk right now, and I would be remiss if I -- if we miss this opportunity. I'm going to say that I would like for you to mediate within the next two weeks, and I would like for you to -- I have a mediator in mind that has helped me a lot, especially on the very few patent cases I have. nonsense, understands the courtroom. out of Dallas. I mean, he's no It's Judge Faulkner Anybody have a problem with that? No, sir. In fact, that was our MR. HOLMES: recommendation. THE COURT: MR. HOLMES: All right. We're very comfortable with Judge MR. MCWILLIAMS: think Mr. Babcock might want to check with -MR. BABCOCK: THE COURT: I don't have any problem with it. Now, we'll need somebody there -- let me We need somebody just get this clear with the Defendants. there at a high level. I mean ready to walk in and call the 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 that. THE COURT: All right. Now, obviously it depends on I would say shots, not having to call back and get on the phone to somebody junior. And so I don't want -- Judge Faulkner can tell me I mean, whether or not somebody came there with authority. that's legal for him to tell me that and I will find out. Sometimes it doesn't do good to bring the top person in because they're not really the person that makes the decision. But, Mr. Babcock, I want you to bring somebody in that will and can make the decision. Can you represent that you can do that? Yes, Your Honor, we will for sure do MR. BABCOCK: Judge Faulkner's schedule. He's a very busy man. that -- who will take the rowing oar, the lead oar in going out and contacting him? MR. HOLMES: Your Honor, I would be glad to. I will actually see him on Monday at another mediation, a case I'm just tangentially involved in. THE COURT: MR. HOLMES: THE COURT: Can you try to reach him this afternoon? Yes, sir. All right. If you can reach him this afternoon and find out if he can do it within ten days, and if not, the closest he can do it to ten days, not in July though. It has to be before July. MR. MCWILLIAMS: the ring for August too. Your Honor, I might throw my hat in I've got a vacation scheduled, so if 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 we can do it before July or August, I would appreciate it. THE COURT: That's right. Mr. McWilliams and I are going on vacation together. at that time. June is. MR. HOLMES: We're going fishing up in Canada I mean But anyway, so July is really important. I'm sorry, Your Honor. In the event that Judge Faulkner can't see us in that time frame, is there someone else I should contact or do we need to report that to you? THE COURT: Why don't you report that to me and then we'll get on the phone with the two -- not two, the three parties, but do that right away. phone number here. Call me. And I'll leave you my cell And I'm not going to say that on the record here, but anyway, I'll give it to you and you can call me and we'll find somebody. Be thinking as a backup who you would want and I'll be thinking of somebody too. But I hope we can do that, and I'll call him this afternoon too but I won't follow up with a call to either of y'all on it. I'll just talk with him about it. All right. I will sign that order. Now, you did mention something about you were working on a Protective Order. I do have an order that's just a standard order but that's not -- that's just a suggestion. If you have your own separate order that you agree on, I'll sign that. 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 MR. BABCOCK: Yes, Your Honor, we have talked about it and I think it's your order with a couple of wrinkles that we have agreed to. that to the clerk. THE COURT: All right. Please. Thank you. So if I can approach the bench and tender I'll go ahead and sign this now and I'll What is it? get you a copy over the ECMF. THE CLERK: THE COURT: ECF. ECF, okay. June 5, 2008. Now, let's do this. Let's review what all we've Anybody accomplished today or what we've gone over today. make any notes on it so we can make sure we have a pretty clear understanding of where we are? MR. HOLMES: THE COURT: Yes, sir. I did not make any notes so -- I mean, I made some and once you say them -MR. HOLMES: I have my homework, Your Honor, to be Plaintiffs are to file an amended complaint by June the 15th. There will be no formal service. June 25th. I will contact Judge Faulkner this afternoon and report back to you on his availability for some date in the next ten days, but at a minimum, some date in June so we can meet before July 1st. The parties will exchange initial disclosures. We left Defendants will answer by 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 the deadline for that open, but under the rules it would be 14 days from today. I think we'll probably be able to meet that, barring some problem. We will continue to work together to submit to the Court a proposed order on the scope of the waiver of the attorney-client privilege that we agree is going to guide our production of documents in this case. Each side will receive 25 interrogatories, requests for admissions, 30 hours of deposition time in addition to depositions of the parties, and unlimited interrogatories and depositions on written questions to authenticate documents. We also discussed a number of issues, such as the involvement of the Court, parallel litigation, fundamental issues of the case and the Protective Order. MR. BABCOCK: MR. HOLMES: MR. BABCOCK: MR. HOLMES: January 16, 2009. Privilege log. And privilege log by September 1, yes. And motions in limine. Yes, motions in limine to be filed by Objections by January 23rd, 2009. Yes, the Court also inquired about the cause number and identifying information on the parallel litigation. That is included in the Defendants' filing, so it should be in the record. THE COURT: Fair enough. 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 ________________________ Jan Mason ________________________ Date I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter. MR. HOLMES: THE COURT: MR. BABCOCK: THE COURT: That's all I have, Your Honor. All right. Anything else to add? Nothing further, Your Honor. All right. We'll see you and good luck on your discovery and we will then -- I'll be in touch with Judge Faulkner as well. And if you'll check up here, I can -- as soon as we go off the record here, I'll give you my cell phone number, okay? MR. HOLMES: THE COURT: MR. BABCOCK: Yes, sir. Thank you. Thank you, Your Honor.

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