SCO Grp v. Novell Inc

Filing 366

RESPONSE re 362 Sealed Document,, (SCO's Opposition to Novell's Evidentiary Objections to SCO's Exhibits Submitted in Connection with Summary Judgment Motions) filed by Defendant Novell, Inc.. (Attachments: # 1 Appendix A# 2 Appendix B)(Sneddon, Heather)

SCO Grp v. Novell Inc

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APPENDIX A

Dockets.Justia.com

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

THE SCO GROUP, INC., Plaintiff, vs. NOVELL, INC., Defendant, __________________________

) ) ) ) ) ) ) ) ) ) ) )

Case No:

2:04CV00139

BEFORE THE HONORABLE DALE A. KIMBALL May 31, 2007 MOTION HEARING VOLUME I

KELLY BROWN HICKEN, RPR, CSR, RMR Court Reporter 350 South Main Street, 209 Salt Lake City, Utah 84101 (801)-521-7238

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think.

One is to patrol the evidence.

We have submitted

evidence through objections, and there are huge evidentiary issues with SCO's damage claim. The other thing is to make

the ruling as a matter of law that certain contentions even after you get through the evidentiary issues survive the requisite filter. THE COURT: to evidence. There are motions to strike objections

I assume you would not really spend a lot of

time arguing those. MR. JACOBS: THE COURT: That's correct. But I should decide those on the briefs

as part of the decision with respect to the motions. MR. JACOBS: THE COURT: I'm sorry, Your Honor? I would decide them on the briefs as

I'm deciding the motion. MR. JACOBS: That is our intent, Your Honor;

although Mr. Brakebill is here to answer any questions on the evidentiary objections, if you'd like. So let's focus on HP for a minute. And I'm going

to set aside the evidentiary objections because it illustrates the problem SCO has. ends of the HP story. beginning. It's the lack of concreteness on both It's the lack of concreteness at the

What exactly was the value of the transaction that And how much of it

they were contemplating doing with HP?

turned on -- how much of the value of the transaction was 12

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different or independent test. In short, SCO does not have to prove let alone show on summary judgment that Novell's conduct was the only or exclusive factor causing the special damages that we've suffered. Now, as you've heard Novell say, they argue that our evidence is inadmissible or insufficient. We think Novell

is wrong for several reasons on this issue of causation. First, causation isn't an issue of expert analysis. And we

summarize some of that expert analysis at Tabs 26 and 27. Tab 26, Professor Pisano testifies that he has: Concluded that Novell's conduct had a substantial impact on SCO's ability to sell the SCOSource Intellectual Property License for Linux. And at Tab 27, University of Utah accounting Professor Christine Botosan testifies that she has concluded: Novell's statements reduced SCO's profits from its SCOSource licensing program. These opinions are well supported, non-conclusory, and they're supported by the record evidence. The cases make

clear that such analysis is appropriate to assess damages on claims for slander of title, and the precedent also shows that it would not be appropriate for the Court to exclude that testimony on summary judgment. The admissibility of the

testimony has to be decided after a Daubert examination, and 25

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Novell's objections are premature and don't even begin to cite or acknowledge all the relevant Daubert factors. And in the reports, SCO's experts do account for other potential causes for the losses and they reconcile those. It's important to note also that objecting to these It was Novell who

reports Novell takes these out of context.

recently requested the enlargement of time to exchange the initial expert reports. That brought the exchange reports And that's what resulted in And in any

after the time before briefing.

reports being submitted to the Court yesterday.

event, you don't hear Novell to argue that they suffered any prejudice by virtue of the submission of the reports this week. Now, in addition to this expert analysis, the other evidence goes to show, and again, easily permits the inference that Novell's statements were a substantial factor in causing SCO's special damages. SCO submits, for example, letters from

customers specifically called out the issue of copyright ownership as a reason for declining to enter into the SCOSource licenses. We summarize those letters at Tab 35, and

I believe we have a board on that, as well. As Your Honor can see, letters from big players such alleges Merrill Lynch, Sherman Williams, Ford, Morgan Stanley, Google and the like. Novell argues that these

letters are inadmissible as hearsay, but we submit that 26

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they're wrong.

If the Court were inclined to resolve these

issues on summary judgment at all, there's no reason to doubt the reliability or authenticity of these letters. And the

evidence is the best evidence that SCO could obtain about the state of mind with such potential customers. The letters

satisfy the residual hearsay exception under Rule 807. Indeed, in a recent copyright case, the Federal District Court applied Rule 807 and admitted evidence of unsworn complaints from customers about their confusion between the plaintiff's work and the allegedly infringing work. I think decisions like that, Your Honor, reflect the

fact that there really is no other highly probative source on these customers' state of minds. And we summarize that case

and a similar case, Your Honor, in Tab 46. Novell's new evidentiary objections are also a basis for summary judgment if the Court were inclined to consider that issue. Novell stated in its opening brief

actually that it was not objecting on any hearsay grounds. They decided that they wanted to object to SCO's hearsay evidence. Novell itself relied on hearsay evidence in their On that basis alone, we submit the objections

opening brief.

are no basis for summary judgment. It's also undisputed with respect to the facts that the SCOSource was part of SCO's business as of May 2003, and that after Novell made its initial statement, SCO stock price 27

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undisputed facts such as the drop in SCO's stock price since that time, an undisputed fact, and questions raised about SCO's viability in the recent past, an undisputed fact, and, in fact, the subject of Novell's pending motion for preliminary injunction. It is undisputed, for example, with respect to HP that Mr. Jacobs brought up that since Novell began making these statements, HP launched its own indemnification loan. That fact alone shows that the clock can't be unwound. SCO

could not now enter into a deal with HP whereby HP would sell SCOSource with HP hardware to customers who have since taken the HP indemnification. That opportunity is lost. And on

that basis alone, the jury could conclude the market conditions are not as favorable. Novell's evidentiary objections, and this one also is a basis for summary judgment, Mr. McBride's testimony, for example, is based on his personal knowledge. And finally, Novell cites no relevant precedent for the proposition that the Court can resolve on summary judgment the question of whether SCO's losses are realized. In closing, Your Honor, the undisputed facts, the well-established precedent will show that SCO is entitled to bring this claim to the jury. We think that Novell cites no

cases to support its argument to resolve these issues on summary judgment. And we also think that Novell is wrong on 33

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happen once the cloud on title were removed.

Had they

litigated it differently, had they sought to remove the cloud on title and then go back and relaunch SCOSource, then at least we would have the after condition. I think we would

still have a lot of uncertainty about the before condition. But we would have the after condition clearly teed up before the Court. But that's not Novell's problem. That's SCO's

problem for the way they sought to tee up the issues for adjudication. And importantly, direct and immediate does not allow the unique SCO circumstances, drop in stock price, lack of resources, maybe no motivation to pursue SCOSource anymore, those factors are irrelevant to the special damages equation. And that is very clear from the direct and immediate cases. In sum, Your Honor, we actually think the issue is a legal one here. There are some evidentiary issues.

Mr. Normand's recitation about the back and forth is not quite right between us. summary judgment. And in any case, we had it scheduled for All the evidence in opposition should have But at the end of the day, I

been in with their oppositions.

think what we're asking you to do is take a look at the cases and decide what the legal standard is for proving slander of title and special damages. THE COURT: Thank you.

Thank you, Mr. Jacobs.

Do you want to take a short break between each 37

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cases.

But from a cursory glance at them -- therefore, we But a cursory glance at them indicates From

object to them.

they're really kind of product disparagement type cases. their brief description I can't tell. They say it's

procedurally different than what is involved in the discovery dispute. They don't seem -- there's nothing in there that

suggests that the words in this case, a statement about a legal position on the interpretation of a contract would trigger a claim of any sort. The Unfair Practices Act, just to be clear, we have two positions. One, we're not clear that it was on notice,

but even if it were, the Unfair Practices Act has a list of probative practices, such as price discrimination and tie-ins, and we're not close to any of those. them, anyway. So I think I'd just like to begin where -- end where I began, I'm sorry, it's the end of the day, which is this is a claim that no court has ever recognized, this kind of claim. There are strong policy arguments why the parties So it just wouldn't help

should be able in this kind of dispute to say what their position is. everything. that. Slander of title could apply if they can prove But there is absolutely no reason to go beyond

Thank you, Your Honor. THE COURT: Thank you, Mr. Kim. I'll take these motions under 115

Thank you all.

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advisement.

We'll be in recess.

I look forward to seeing you

all on Monday. (Whereupon, the court proceedings were concluded.) * * * * *

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STATE OF UTAH

) ) ss.

COUNTY OF SALT LAKE

)

I, KELLY BROWN HICKEN, do hereby certify that I am a certified court reporter for the State of Utah; That as such reporter, I attended the hearing of the foregoing matter on May 31, 2007, and thereat reported in Stenotype all of the testimony and proceedings had, and caused said notes to be transcribed into typewriting; and the foregoing pages number from 3 through 116 constitute a full, true and correct report of the same. That I am not of kin to any of the parties and have no interest in the outcome of the matter; And hereby set my hand and seal, this ____ day of _________ 2007.

______________________________________ KELLY BROWN HICKEN, CSR, RPR, RMR

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