Apple v. Psystar: Why Psystar Was Ordered to Pay $5,000.00 (USD) in Sanctions
I have obtained the transcript of the hearing that took place on August 20, 2009 resulting in the following Minute Entry in the Court docket:
08/24/2009 – 96 – Minute Entry: Discovery Hearing held on 8/20/2009 before William Alsup (Date Filed: 8/24/2009). Supplemental briefs due by 8/27/09. Deft shall pay pltf $5,000 in attys fees. (Court Reporter Sahar McVickar.) (dt, COURT STAFF) (Date Filed: 8/24/2009) (Entered: 08/24/2009)
However, before reporting on what transpired, a brief review of the filings that led to this hearing is in order. Rather than delaying the publication of this information so that I might digest this information down, I refer the reader to Groklaw’s excellent articles on the subject:
I have some additional thoughts that I would like to add to what Groklaw has reported, but I shall do so in subsequent articles during the “downtime” until the deadline for additional filings which is August 27, 2009 with another ruling no sooner than the end of August.
So What Happened at the Hearing?
In this article, I am going to boil the proceedings down to the most basic facts so that the World of Apple readers can understand why Psystar was sanctioned and additional briefs were ordered to be filed. However, this transcript is dense with additional items of interest and areas in which I have some pretty strong editorial opinion. I will reserve that additional analysis for the coming days so that the information can be teased out in reasonable-sized portions. While I might derive some sick enjoyment from reading hundreds of pages of legalese, I realize that most peoples’ eyes will become Krispy-Kremeified long before mine.
I must once again remind the readers that I am not a lawyer and legal opinion would have to be obtained from a properly licensed and qualified attorney. Also, the reader may wonder why I don’t provide a copy of the transcript but rather only excerpts. There are two reasons. First, typically the court docket will indicate that transcripts are not full public record until after a certain date at which point they may be assessed through the PACER database. This particular docket entry does not contain such a restriction though I believe that is an oversight. However, the second reason is one of professional courtesy to the Court Reporter who makes the majority of her income through the purchases of her transcripts, and I will not unfairly deprive her of any potential income.
Although there were more than two issues raised in the various filings, only two were the subject of substantive discussion leading to rulings. Mr. Camara and three colleagues appeared on behalf of Psystar; and Ms. Smith and two colleagues appeared on behalf of Apple with Mr. Camara and Ms. Smith making the oral arguments.
Issue: Did Psystar improperly dispose of relevant evidence?
Ms. Smith informed the Judge that the parties agreed that Psystar had destroyed relevant evidence consisting of two kernel extensions and a bootloader prior to September 2008. The only issue before the Court therefore was one of damages since the parties agreed that the evidence should have been preserved. Explanations of the significance (or lack thereof) of the lost evidence were given to the Judge. Additionally Mr. Camara argued that Psystar’s prior counsel failed to properly advise their client on evidence preservation and that the destruction was therefore innocent and not willful.
However, things got much more interesting in this portion of the transcript:
THE COURT: What is the relief that you are getting
3 that is — warrants attorney’s fees?
4 MS. BOROUMAND SMITH: Well, it’s the fact that had
5 they not lied to us in their 30(b)(6) deposition, Your Honor,
6 and told us that they did — we basically went down this whole
7 path trying to find all of this information. We have spent
8 time meeting and conferring with them, writing briefs, only to
9 find out today what we should have known back in May –
10 THE COURT: Go back over all that. That sounds
11 plausible. Go back through that chronology of how you got
12 misled on this.
13 MS. BOROUMAND SMITH: Sure.
14 So back in March, we had a 30(b)(6) deposition of
15 Psystar’s CEO, Rudy Pedraza. At that deposition, we asked him
16 whether he knew what the dsmos kernel extension was, whether
17 Psystar used the dsmos kernal extension –
18 THE COURT REPORTER: Slow down just a little for me.
19 MS. BOROUMAND SMITH: I’m sorry.
20 And similarly, we asked him about the Apple decrypt
21 kernel extension and whether or not Psystar used that kernel
22 extension: The answers to all of those questions were “no.”
23 We then –
24 THE COURT: Stop just a second.
25 MS. BOROUMAND SMITH: Yes.
1 THE COURT: That’s totally false, isn’t it?
2 MR. CAMARA: Well –
3 THE COURT: I mean, sounds totally false based on
4 what I’m hearing today that that testimony was just false.
5 MR. CAMARA: Well, here’s what happened. They –
6 the people at Psystar — well, I won’t defend that, Your Honor,
7 I think those answers were false.
8 THE COURT: All right.
9 MR. CAMARA: Coming from a 30(b)(6) deponent.
10 THE COURT: All right.
11 MR. CAMARA: Robert Pedraza at the business was in
12 charge of this, but, certainly, Rudy Pedraza should have had
13 that information at the 30(b)(6) deposition.
I believe that was the tipping point for the Judge to award sanctions. Both sides agree that evidence was destroyed though they disagree to an extent as to the reasons why that happened. However, Mr. Camara wisely decided to not even attempt to justify Rudy Pedraza’s completely false testimony. But for that false testimony, it is possible that no sanctions would have been ordered for reasons that I will outline in a follow-up piece.
So that is the bare bones of what happened to lead to the $5,000.00 sanction award with the really “juicy” part extracted.
Issue: Is Psystar entitled to the breadth of information it sought in Mr. Schiller’s deposition?
Judge Alsup at the beginning of the hearing stated that he was not going to decide any other issue that day other than that of the destruction of evidence. There was quite a bit of preparatory discussion on the issue of Mr. Schiller’s testimony, and it is to that issue that the Court ordered the parties to prepare briefs for his further and later consideration. This issue ended with the following discussion:
THE COURT: Well, you ought to go ahead and do the
11 depositions on what they are willing to provide. And then in
12 the meantime, I’m going to ask you to submit by Monday briefs
13 on the issue of whether or not Townsend is correct that the
14 profit margins for the plaintiff are irrelevant, irrevocably
16 MS. BOROUMAND SMITH: Your Honor, may we be
17 permitted to do the deposition on the topic that — on the
18 information that we are willing to provide next week?
19 THE COURT: Go ahead and do that, yes. Because, I
20 mean, I won’t rule on this, probably, next week. I won’t even
21 be here next week.
22 MS. BOROUMAND SMITH: Okay, Your Honor.
23 THE COURT: So I won’t be able to rule on it. But
24 you can get the briefing done — in fact, I’ll give you till
25 Thursday of next week. My law clerk can be looking at it. And
1 both sides simultaneously submit, and as soon as I get back,
2 I’ll try to rule on it around August 31.
3 MS. BOROUMAND SMITH: So submit by Thursday of next
5 THE COURT: You got all these problems: I may have
6 to undo the trial date if you continue to have all these
7 problems because, see, now you are putting me in a position
8 where you are going to come in and say, oh, we go to redo the
9 experts, oh, we got to do all this after-the-fact discovery.
10 I’m not going to undo the trial date yet, but this
11 is what — all these discovery motions put a lot of pressure on
12 the trial date and the schedule.
13 MS. BOROUMAND SMITH: We understand that, Your
15 MR. CAMARA: Your Honor, given that the witness
16 designated to testify on damages refused to do so, might we
17 request that that deposition take place in Houston, which would
18 be far more convenient for us and for our cash-strapped client?
19 MS. BOROUMAND SMITH: Your Honor, they are out here
20 next week for depositions for Rudy Pedraza, anyways, because
21 one point that Mr. Camera didn’t mention was the fact that all
22 of their financials documents were not provided to us until
23 last Friday.
24 THE COURT: All right, do all of that out here. I
25 don’t think it’s warranted to go to Houston yet.
1 Is there another dispute you have, or is that it?
2 MR. CAMARA: That is all on our side, Your Honor.
3 MS. BOROUMAND SMITH: I believe that’s it for us
4 right now, as well, Your Honor.
Remember, these are just the bare facts explaining the $5,000.00 sanction and the request for additional briefs, but I will state that although this development has been represented by some as Apple wiping the floor with Psystar, that is not at all what happened. In fact, it is my opinion that Apple’s counsel delivered a somewhat lackluster performance, and that it was not at all the case that Judge Alsup clearly favoured Apple and gave Psystar the smack-down. As much as I would like that to be the case, that is not how I view the transcript of the proceedings. I intend to support this assertion in the promised follow-up articles.
I think that got your attention. And it is my hope that this douse of cold water will bring the reporting of this development down to reality. While I have a disfavourable opinion of Psystar and the honesty of its representatives, the gratuitous dissing of their attorneys that has regularly occurred is uncalled for. These professional men and women are not stupid though reading some reports one might get the impression that they regularly run face-first into brick walls. In fact, Mr. Camara is the youngest person to matriculate at Harvard Law School. Here is a point of trivia: the “K” stands for Kiwi. Face it, any kid who had to grow up with the name “Kiwi” had to toughen up unless that is a common Filipino name, and I am showing cultural ignorance.
And yes, I do find it humourous that Kiwi is going against Apple and Mr. Papaya is the friendliest of fruits. (the two people on the planet who got that last part without having to click-through are now wiping liquid off of their monitors)
Be on the lookout for analysis of the finer details of the hearing in the upcoming days.