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More filings in Novell - Allocation of Issues -- Updated |
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Saturday, March 06 2010 @ 11:28 AM EST
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It's been a busy week heading up to the Novell trial in Utah, and I had an accident, which is why I've been offline. I am recovering now, and we'll have the more detailed reports from the hearing shortly. There were some additional filings on Friday and this morning, including some more decisions from Judge Stewart (we have 762 as text), and some more pre-trial filings from both sides. So while we're waiting for the trial to commence, let's get caught up.
Here are all the filings:
03/05/2010 - 761 - MEMORANDUM DECISION and ORDER on Allocation of Issues for Bench and Jury Trial. Signed by Judge Ted Stewart on 3/5/2010. (ce) (Entered: 03/05/2010)
03/05/2010 - 762 - MEMORANDUM DECISION granting 748 Motion to Determine that First Amendment Defenses Apply to Slander of Title and Require Proof of Constitutional Malice. Defendant's Motions in Limine No. 2 to Determine that First Amendment Defenses Apply to Slander of Title filed by Defendant Novell, Inc. and Motion in Limine No. 3 to Determine that SCO is a Limited Purpose Public Figure filed by Defendant Novell, Inc. are granted. Signed by Judge Ted Stewart on 3/5/2010. (ce) (Entered: 03/05/2010)
03/05/2010 - 763 - MEMORANDUM DECISION Denying Defendant's 729 Request for Judicial Notice of Prior Factual Findings. Signed by Judge Ted Stewart on 3/5/2010. (ce) (Entered: 03/05/2010)
03/05/2010 - 764 - DOCUMENTS LODGED consisting of Letter from Brent O. Hatch to Judge Stewart re: videos and other demonstrative evidence to be used in opening statement. (ce) (Entered: 03/05/2010)
03/05/2010 - 765 - DOCUMENTS LODGED consisting of Letter from Brent O. Hatch re: trial matters. (ce) (Entered: 03/05/2010)
03/05/2010 - 766 - MEMORANDUM DECISION and ORDER Limiting Use of Deposition Testimony During Opening Statements. Signed by Judge Ted Stewart on 3/5/2010. (ce) (Entered: 03/05/2010)
03/05/2010 - 767 - TRIAL BRIEF (Amended) by Defendant Novell, Inc.. (Brennan, Sterling) (Entered: 03/05/2010)
03/05/2010 - 768 - Proposed Exhibit List by Defendant Novell, Inc... (Brennan, Sterling) (Entered: 03/05/2010)
03/05/2010 - 769 - Proposed Witness List (Will Call) by Novell, Inc.. (Brennan, Sterling) (Entered: 03/05/2010)
03/05/2010 - 770 - Proposed Witness List (May Call) by Novell, Inc.. (Brennan, Sterling) (Entered: 03/05/2010)
03/05/2010 - 771 - Proposed Witness List (Depositions) by Novell, Inc.. (Brennan, Sterling) (Entered: 03/05/2010)
03/05/2010 - 772 - OBJECTIONS to Novell's Proposed Jury Instructions and Verdict Form filed by Plaintiff SCO Group. (Attachments: # 1 Appendix of Unpublished Cases)(Hatch, Brent) (Entered: 03/05/2010)
03/06/2010 - 773 - OBJECTIONS to 741 Proposed Jury Verdict filed by Defendant Novell, Inc.. (Brennan, Sterling) (Entered: 03/06/2010)
03/06/2010 - 774 - OBJECTIONS to 739 Proposed Jury Instructions filed by Defendant Novell, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Brennan, Sterling) (Entered: 03/06/2010)
Here's the breakdown on what the jury will decide and what will be left to the judge, from #761: This matter is before the Court for a determination of which issues are to be decided by the Court and which are to be decided by the jury. In the Pretrial Order, the parties agreed that Plaintiff's claim for specific performance should be resolved by the Court and that the parties' claims for slander of title should be tried to the jury, but disagreed as to whether Plaintiff's remaining claim for breach of the implied covenant of good faith and fair dealing and Defendant's claim for declaratory judgment should be tried to the Court or the jury. The parties now agree that:
1. Plaintiff's slander of title claim against Defendant should be tried to the jury;
2. Defendant's slander of title claim against Plaintiff should be tried to the jury;
3. Plaintiff's remaining claim that Defendant breached the implied covenant of good faith and fair dealing should be tried to the Court;
4. The Court should declare Defendant's rights under Section 4.16 of the APA;
5. Plaintiff's claim for specific performance should be tried to the Court; and
6. If Defendant's unclean hands is tried, it should be tried to the Court.
There is a footnote on 6, which says that "Plaintiff argues that Defendant's affirmative defense of unclean hands should not be tried at all.
Update: To understand #762, you need the briefs, which I neglected to post:
The filings:
03/04/2010 - 758 - RESPONSE re 729 Request, 749 Brief, to Novell's Request for Judicial Notice filed by Plaintiff SCO Group. (Hatch, Brent) (Entered: 03/04/2010)
03/04/2010 - 759 - MEMORANDUM in Opposition re 748 MOTION to Determine that First Amendment Defenses Apply to Slander of Title and Require Proof of Constitutional Malice filed by Plaintiff SCO Group. (Attachments: # 1 Appendix of Unpublished Cases)(Hatch, Brent) (Entered: 03/04/2010)
I'll put them as text at the end.
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IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
THE SCO GROUP, INC., a Delaware corporation,
Plaintiff/Counterclaim Defendant,
vs.
NOVELL, INC., a Delaware corporation,
Defendant/Counterclaim Plaintiff.
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S
MOTION TO DETERMINE THAT FIRST AMENDMENT DEFENSES
APPLY TO SLANDER OF TITLE AND REQUIRE PROOF OF
CONSTITUTIONAL MALICE
Case No. 2:04-CV-139 TS
This matter is before the Court on Defendant's Motion to
Determine that First Amendment Defenses Apply to Slander of Title
and Require Proof of Constitutional Malice. In that Motion, as well
as two previous motions in limine, Defendant seeks a ruling that
the First Amendment applies to slander of title claims. Defendant
also seeks a ruling that Plaintiff is a limited-purpose public
figure for purposes of the First Amendment. If Defendant were to
prevail in both instances, Plaintiff would be required to prove, by
clear and convincing evidence, that Defendant acted with actual
malice. Plaintiff argues that First Amendment standards should not
apply to its slander of title claim. Plaintiff also suggests that
the Court could propound a
1
question to the jury to ask whether Defendant acted with actual
malice. Plaintiff does not argue that it is not a limited-purpose
public figure.
I. DISCUSSION
A. SLANDER OF TITLE
As both parties recognize, the impact of the First Amendment and
the Supreme Court's decision of New York Times Co. v.
Sullivan, 1 on slander of title actions is
unclear. The Supreme Court has not explored the issue. 2
As stated in Comment C to the Restatement (Second) of Torts §
623A:
In the absence of any indications from the Supreme
Court on the extent, if any, to which the elements of the tort of
injurious falsehood will be affected by the free-speech and
free-press provisions of the First Amendment, it is not presently
feasible to make predictions with assurance.3
In New York Times Co. v. Sullivan, the Supreme Court held
that the First Amendment requires a public official to prove that a
defamatory falsehood relating to his official conduct was made with
"actual malice," that is, with "knowledge that it was false or with
reckless disregard of whether it was false or not." 4
The Court has extended this rule to include claims by private
individuals who are "limited-purpose public figures." 5
The Supreme Court has also extended the
2
rule to claims for invasion of privacy and intentional
infliction of emotional distress.6 The Court has held
that "such a standard is necessary to give adequate 'breathing
space' to the freedoms protected by the First Amendment."7
Federal courts have relied on this principle in extending the
First Amendment to other claims directed against an allegedly
wrongful statement. In Jefferson County School District No. R-1
v. Moody's Investor's Services, Inc.,8 the Tenth
Circuit applied the First Amendment's protection of statements of
opinion to claims for publication of an injurious
falsehood.9 The Tenth Circuit also rejected
claims for intentional interference with contract and for
intentional interference with prospective business relations on
First Amendment grounds, noting that lower courts had rejected "a
variety of tort claims based on speech protected by the First
Amendment."10 The court specifically cited to
Unleko Corp. v. Rooney.11 In that case,
the Ninth Circuit stated that claims for product disparagement and
tortious interference were "subject to the same first amendment
requirements that govern actions for defamation."12
3
In Bose Corp. v. Consumers Union of United States,
Inc.,13 the district court addressed a
product disparagement case, a tort closely related to slander of
title.14 The court provided the following
thoughtful analysis:
An analysis of the Supreme Court's reasoning in New
York Times also leads to the conclusion that the actual malice
standard should not be limited to personal defamation actions. In
the New York Times line of cases the Supreme Court has
attempted to strike a balance between the need for a vigorous and
uninhibited press and the legitimate state interest in compensating
individuals for wrongful injury to reputation.
The nature of the balancing process changes significantly in
product disparagement cases because different interests are being
weighed. In a personal defamation action one of the competing
interests being balanced is an individual's interest in the
protection of his reputation, which, according to Mr. Justice
Stewart reflects no more than our basic concept of the essential
dignity and worth of every human being a concept at the root of any
decent system of ordered liberty. On the other hand, in this
product disparagement action we are concerned with a manufacturer's
interest in the reputation of its product, an interest not nearly
as significant as an individual's interest in his personal
reputation and hardly at the root of any decent system of ordered
liberty. Damage to a product's reputation, unlike damage to the
reputation of an individual, can always be measured in terms of
monetary loss. Moreover, a manufacturer almost always has access to
the channels of communication that can be used to refute
disparaging comments about its product.
On the other side of the scale in this balancing process is the
consumer's interest in obtaining information about the quality and
characteristics of consumer products. The public's interest in
obtaining information of this type is perhaps even greater than the
corresponding interest in personal defamation actions, the interest
in obtaining information about other people. Information obtained
from product commentators often relates to health or safety
problems in consumer products. It would be unfortunate indeed if
the threat of product disparagement actions stifled the free flow
of such information.
4
On balance, the Court concludes that the factors
underlying the New York Times privilege militate perhaps even more
strongly in favor of the application of the actual malice standard
in product disparagement cases than they do in personal defamation
actions. Accordingly, the Court rules that the New York Times
actual malice standard is applicable in this product disparagement
case, provided, of course, that the plaintiff is a public figure
for First Amendment purposes.15
This case was later appealed to the Supreme Court, but the
applicability of the malice standard in a product disparagement
case was not before the Court and, therefore, not
addressed. 16
The California Supreme Court has held that First Amendment
defenses apply to "all claims whose gravamen is the alleged
injurious falsehood of a statement" because "constitutional
protection does not depend on the label given the stated cause of
action."17 The Utah Supreme Court has held
that actual malice is required in a product disparagement action
against a media defendant.18 The Colorado
Court of Appeals has stated that "[t]he constitutional protections
afforded a defendant in a defamation action are applicable to a
defendant in a product disparagement action."19
Plaintiff asserts that federal courts have never applied First
Amendment defenses to a slander of title action. In support,
Plaintiff cites to Mueller v. Abdnor.20 One of the
issues on
5
appeal in that case is whether the trial court was correct in
using a preponderance standard, rather than the higher clear and
convincing standard.21 The court noted that "[t]he higher
standard . . . does not apply in the ordinary defamation case, but
in an action brought by an individual, specifically a public
official or a public figure."22 The court
further noted that, under Missouri law, the "clear and convincing
standard applies only in cases involving a public figure or public
official."23 While acknowledging that the
defendant in that case, the Small Business Administration, may be a
public figure, because the case involved defamation to land, not
defamation to an individual's reputation, the court found that the
trial court applied the appropriate standard.24 The Court finds Mueller
unhelpful because it does not involve a matter of public interest.
Further, the Mueller court seemed to recognize that the
clear and convincing standard could be applicable in some
circumstances not present in that case.
Plaintiff also relies on Zacchani v. Scripps-Howard
Broadcasting Co.25 In that case, the Supreme Court
declined to apply a First Amendment defense to a claim for
misappropriation of property. Importantly, that case did not
involve an allegedly wrongful statement. Further, the Court
emphasized the distinction between the tort of misappropriation of
property and the other
6
torts to which First Amendment protections had been
extended.26 Based on these considerations, the
Court finds Zacchani to be inapplicable here.
Having reviewed the relevant authority, the Court finds that
slander of title claims are subject to the First Amendment. As one
commentator aptly stated:
There is no reason to accord lessened protection
because the plaintiff's claim is denominated "disparagement,"
"trade libel," or "injurious falsehood" rather than "libel" or
"slander" or because the injury is to economic interests rather
than to personal reputation. Since only economic injury and not
injury to reputation and psyche is at issue, perhaps the balance
should tip even further to the side of free expression.27
B. COMMERCIAL SPEECH
Plaintiff further argues that Defendant's statements are
entitled to lesser protection because they constitute commercial
speech. Plaintiff, however, does not argue that all of Defendant's
statements can be considered commercial speech. Plaintiff only
points to two statements that it contends are commercial speech:
press releases from May 28, 2003 and June 6, 2003.28
"The Supreme Court has not held whether the actual malice standard
applies to commercial speech . . . ." 29 Various courts,
however, have held that the actual malice standard
7
does not apply to commercial speech. 3030 The Court need
not reach this issue because it finds that Defendant's May 28, 2003
and June 6, 2003 press releases do not constitute commercial
speech.
The Supreme Court defines commercial speech as "expression
related solely to the economic interests of the speaker and its
audience."31 The Court has stated that the
"core notion of commercial speech" is "speech which does no more
than propose a commercial transaction."32 "According
to the Court, speech may properly be characterized as commercial
speech where, among other things, (1) it is concededly an
advertisement, (2) it refers to a specific product, or (3) it is
motivated by an economic interest in selling the product."33 If all three factors are present,
there is strong support for the conclusion that the speech is
commercial.34
With these principles in mind, the Court considers the two press
releases which Plaintiff argues are commercial speech. Defendant's
May 28, 2003 press release states:
Defending its interests in developing services to
operate on the Linux platform, Novell today issued a dual challenge
to The SCO Group over its recent statements regarding its UNIX
ownership and potential intellectual property rights claims over
Linux.
First, Novell challenged SCO's assertion that it owns the
copyrights and patents to UNIX System V, pointing out that the
asset purchase agreement entered
8
into between Novell and SCO in 1995 did not transfer
these rights to SCO. Second, Novell sought from SCO facts to back
up its assertion that certain UNIX System V code has been copied
into Linux. Novell communicated these concerns to SCO via a letter
(text below) from Novell® Chairman and CEO Jack Messman in
response to SCO making these claims.
"To Novell's knowledge, the 1995 agreement governing SCO's purchase
of UNIX from Novell does not convey to SCO the associated
copyrights," Messman said in the letter. "We believe it unlikely
that SCO can demonstrate that it has any ownership interest
whatsoever in those copyrights. Apparently you share this view,
since over the last few months you have repeatedly asked Novell to
transfer the copyrights to SCO, requests that Novell has
rejected."
"SCO claims it has specific evidence supporting its allegations
against the Linux community," Messman added. "It is time to
substantiate that claim, or recant the sweeping and unsupported
allegation made in your letter. Absent such action, it will be
apparent to all that SCO's true intent is to sow fear, uncertainty,
and doubt about Linux in order to extort payments from Linux
distributors and users."
"Novell has answered the call of the open source community," said
Bruce Perens, a leading proponent of open source. "We admire what
they are doing. Based on recent announcements to support Linux with
NetWare services and now this revelation ... Novell has just won
the hearts and minds of developers and corporations alike."35
The text of the letter from Mr. Messman to SCO President and CEO
Darl McBride is reprinted in the press release. 36 The press release then provides a
short statement about Novell, stating that it is "a leading
provider of information solutions." 37 The letter
identifies certain Novell products and provides contact
information. 38
Defendant's June 6, 2003 press release states:
In a May 28th letter to SCO, Novell challenged SCO's
claims to UNIX patent and copyright ownership and demanded that SCO
substantiate its allegations that Linux infringes SCO's
intellectual property rights. Amendment
9
#2 to the 1995 SCO-Novell Asset Purchase Agreement was
sent to Novell last night by SCO. To Novell's knowledge, this
amendment is not present in Novell's files. The amendment appears
to support SCO's claim that ownership of certain copyrights for
UNIX did transfer to SCO in 1996. The amendment does not address
ownership of patents, however, which clearly remain with
Novell.
Novell reiterates its request to SCO to address the fundamental
issue Novell raised in its May 28 letter: SCO's still
unsubstantiated claims against the Linux community.39
That press similarly provides a brief statement about
Defendant. 40
The Court finds that these press releases do not constitute
commercial speech as they do not propose a commercial transaction.
Turning to the first factor set out in Bolger, the Court
agrees with Plaintiff that, in some circumstances, a press release
may constitute an advertisement. This is not such a circumstance.
While, as discussed below, the press releases do mention certain of
Defendant's products, they do not attempt to market those products
in anyway. Rather, these press releases merely challenge
Plaintiff's claims of ownership to the UNIX and UnixWare copyrights
and their claims of infringement of such copyrights by Linux.
Second, the press releases do mention some of Defendant's specific
products. However, the mention of specific products is only in
passing and in connection with boilerplate language describing
Defendant. Third, there is at least some evidence to suggest that
Defendant made these statements because they were motivated by an
economic interest. By challenging Plaintiff on its claims of
ownership and infringement Defendant could be seen as appealing to
the Linux community, which may have been out of an economic
interest. However, considering each of the Bolger factors
and these press releases as a whole, the Court finds that
Defendant's possible economic interest in making these statements
alone does not convert these press releases into
10
commercial speech. Therefore, they are not entitled to lesser
protection under the First Amendment as argued by Plaintiff.
C. LIMITED-PURPOSE PUBLIC FIGURE
Defendant next argues that, if the First Amendment applies to
claims for slander of title, Plaintiff is a limited-purpose public
figure. Plaintiff does not argue that it is not a limited-purpose
public figure. Rather, Plaintiff argues that if the First Amendment
does apply to a slander of title claim and Defendant's statements
qualify for heightened protection, the appropriate course would be
to provide a special question on the verdict form.41 As a result of Plaintiff's failure
to respond to Defendant's argument, the Court finds that Plaintiff
is a limited- purpose public figure. Even without Plaintiff's
apparent concession of this point, the Court would find Plaintiff
to be a limited-purpose public figure.
"[A] limited-purpose public figure is only a public figure with
respect to a specific issue."42 The Supreme
Court has defined a limited-purpose public figure as one who
"voluntarily injects himself or is drawn into a particular public
controversy and thereby becomes a public figure for a limited range
of issues."43
Utah employs a two-part test to determine whether the
plaintiff is a limited-purpose public figure. First, the court must
isolate the specific public controversy related to the defamatory
remarks. Next, the court should examine the type and extent of the
plaintiff's participation in that public controversy
to
11
determine whether, under Gertz, he has "thrust
[himself] to the forefront of [the] controvers[y] in order to
influence the resolution of the issues involved."44
First, the Court finds that there is a public controversy
concerning the ownership of the UNIX and UnixWare copyrights and
Plaintiff's contention that Linux users infringed those copyrights.
In support of its Motion in Limine No. 3, Defendant has submitted a
number of news accounts of this controversy.45 Further,
thousands of companies and individuals have a direct interest in
the controversy because of the impact it may have on them. Second,
the Court finds that Plaintiff thrust itself to the forefront of
the controversy in order to influence the resolution of those
issues. Specifically, Plaintiff made a number of public statements,
through press releases and other means, and actively sought media
coverage to air its position on these issues. Therefore, the Court
finds that Plaintiff is a limited-purpose public figure concerning
its alleged UNIX rights.
II. CONCLUSION
Based on the above, the Court finds that the First Amendment
applies to slander of title claims, that Defendant's press releases
are not commercial speech, and that Plaintiff is a limited- purpose
public figure. As a result, Plaintiff must prove, by clear and
convincing evidence, that Defendant acted with actual malice. The
above reasoning is equally applicable to Defendant's slander of
title claim.
12
It is therefore
ORDERED that Defendant's Motion to Determine that First Amendment
Defenses Apply to Slander of Title and Require Proof of
Constitutional Malice (Docket No. 748) is GRANTED.
It is further
ORDERED that Defendant's Motions in Limine No. 2 and 3 (Docket Nos.
629 and 630) are GRANTED.
DATED March 5, 2010.
BY THE COURT:
(signature)
TED STEWART
United States District Judge
13
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376 U.S. 254 (1964). |
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Robert D. Sack, Sack on Defamation, § 13.1.8
(Practicing Law Institute 2008). |
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Restatement (Second) of Torts § 623A, cmt. c (1977). |
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Sullivan, 376 U.S. at 279-80. |
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Gertz v. Robert Welch, Inc., 418 U.S. 323, 351 (1974)
(defining limited purpose public figure as "an individual [who]
voluntarily injects himself or is drawn into a particular public
controversy and thereby becomes a public figure for a limited range
of issues"). |
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See Time, Inc. v. Hill, 385 U.S. 374, 390-91 (1967);
Hustler Magazine v. Falwell, 485 U.S. 46, 56 (1988). |
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Hustler Magazine, 485 U.S. at 56. |
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175 F.3d 848 (10th Cir. 1999). |
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Id. at 856. The Court recognizes, as Plaintiff argues,
that Jefferson addressed First Amendment protection of
opinions. Despite this difference in the case before the Court, the
Court finds it significant that Jefferson extended First
Amendment protections to a claim for an injurious falsehood. |
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Id. at 857. |
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912 F.2d 1049, 1057 (9th Cir. 1990). |
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Id. at 1058. |
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Bose Corp. v. Consumers Union of United States, Inc.,
508 F.Supp. 1249, rev'd on other grounds, 692 F.2d 189 (1st
Cir. 1982), aff'd, 466 U.S. 485 (1984). |
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See Robert D. Sack, Sack on Defamation, §
13.1.1 (Practicing Law Institute 2007) (explaining that injurious
falsehood describes two common law torts: slander of title and
disparagement of quality); Jack B. Parson Co. v. Nield, 751
P.2d 1131, 1134 (Utah 1988) (stating that slander of title is also
known as injurious falsehood). |
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Bose Corp., 508 F.Supp. at 1270-71 (internal quotation
marks and citations omitted). |
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Bose Corp. v. Consumers Union of United States, Inc.,
466 U.S. 485, 513 (1984). |
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Blatty v. New York Times, Co., 728 P.2d 1177, 1182 (Cal.
1987). |
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Direct Import Buyer's Ass'n v. K.S.L., Inc., 572 P.2d 692, 696
(Utah 1977) (stating that "this case involves, not defamation of
character, but defamation of a product of a business and the
correct standard to be applies is that of actual malice."). |
|
Teilhaber Mfg. Co. v. Unarco Materials Storage, 791 P.2d
1164, 1167 (Colo. Ct. App. 1989). |
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972 F.2d 931 (8th Cir. 1992). |
|
Id. at 936. |
|
Id. |
|
Id. |
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Id. at 937. |
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433 U.S. 562 (1977). |
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Id. at 573-75. |
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Robert D. Sack, Sack on Defamation, § 13.1.8. |
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Plaintiff has previously stated that it does not assert that
the June 6, 2003 press release constitutes slander of title.
See Docket No. 682 at 2-3. |
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Dial One of the Mid-South, Inc. v. BellSouth Telecomms.,
Inc., 269 F.3d 523, 526-27 (5th Cir. 2001). |
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See Procter & Gamble Co. v. Amway Corp., 242 P.3d
539, 556 (5th Cir. 2001) ("Supreme Court precedent prevents us from
importing the actual-malice standard into cases involving false
commercial speech."); U.S. Healthcare, Inc. v. Blue Cross of
Greater Philadelphia, 898 F.2d 914, 937 (3d Cir. 1990)
(concluding that commercial speech "does not warrant heightened
constitutional protection"). |
|
Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm'n,
447 U.S. 557, 561 (1980). |
|
Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66
(1983) (quotation marks and citations omitted). |
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United States v. Wenger, 427 F.3d 840, 847 (10th Cir.
2005) (citing Bolger, 463 U.S. at 66-67). |
|
Bolger, 463 U.S. at 67. |
|
Docket No. 748, Ex. 2. |
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Id. |
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Id. |
|
Id. |
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Id., Ex. 3. |
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Id. |
|
Docket No. 683 at 2. |
|
World Wide Ass'n of Specialty Programs v. Pure, Inc.,
450 F.3d 1132, 1136 (10th Cir. 2006). |
|
Gertz, 418 U.S. at 351. |
|
World Wide Ass'n of Specialty Programs, 450 F.3d at
1136-37 (quoting Wayment v. Clear Channel Broad., Inc., 116
P.3d 271, 283 (Utah 2005)). |
|
See Docket No. 630. |
************************************************
********************************************
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
THE SCO GROUP, INC., by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,
Plaintiff/Counterclaim-Defendant,
vs.
NOVELL, INC., a Delaware corporation,
Defendant/Counterclaim-Plaintiff.
SCO'S OPPOSITION TO NOVELL'S
MOTION FOR JUDICIAL NOTICE OF
PRIOR FACTUAL FINDINGS
Civil No. 2:04 CV-00139
Judge Ted Stewart
(1)
Plaintiff/counterclaim-defendant, The SCO Group, Inc. ("SCO"),
by and through the Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn, respectfully submits this brief in opposition to Novell's
Request for Judicial Notice of Prior Factual Findings dated
February 24, 2010 (the "Request for Judicial Notice").
INTRODUCTION
Novell's Request for Judicial Notice is the latest effort by
Novell to transform this into a trial about the language Judge
Kimball used in making certain rulings in 2007 rather than a trial
about the underlying facts concerning Novell's actions and
intentions. Juries determine facts, including the issues of malice
and intent that underlie SCO's claim for slander of title.
In ruling on motions in limine, the Court made clear that this
trial should be about facts — not judicial statements about
facts, especially where Novell seeks to cherry-pick such statements
from a judicial opinion and attempt to deliver them to the jury as
axiomatic truths that preclude consideration of the evidence. The
Court thus already concluded that such "findings" are irrelevant,
pose a danger of unfair prejudice, could mislead and confuse the
jury, and therefore should not be admitted under Federal Rules of
Evidence 402 and 403. (See, e.g., Order Granting SCO's
Motion in Limine No. 2 at 2 ("While Defendant argues that the
Court's prior rulings are relevant to support its defense, the real
evidence on these issues is that which was presented to the court
on summary judgment not the summary judgment ruling itself.").)
ARGUMENT
I. JUDICIAL NOTICE OF "FACTS" WITHIN PRIOR JUDICIAL RULINGS
IS INAPPROPRIATE.
Courts considering requests to take judicial notice of prior
findings have recognized that the mere fact that a court made
certain findings does not render them "not subject to reasonable
dispute" or appropriate for judicial notice. As such, courts have
limited judicial notice to the fact
(2)
of a judicial record's existence, rather than to any facts found
or alleged within a court decision. Novell's own cases support the
point. In Randy's Studebaker Sales, Inc. v. Nissan Motor Corp.
in U.S.A., 533 F.2d 510, 521 (10th Cir. 1976), the Tenth
Circuit noted that the trial court should have made clear to the
jury that taking judicial notice of a prior judicial finding (a
preliminary injunction) did not mean that the prior finding
was properly decreed. The Tenth Circuit confirmed that the jury was
to decide the claims presented to it on the evidence in the record
and not on the basis of prior findings. Id. That is
precisely what this Court has held in denying Novell's motions in
limine.
The Tenth Circuit's holding in Studebaker Sales is
consistent with the holdings of courts in other jurisdictions that
judicial notice of prior judicial records should be limited to a
record's existence, rather than to facts found or set forth within
a decision. See Holloway v. Lockhart, 813 F.2d 874, 878-79
(8th Cir. 1987); Sosinky v. Grant, 6 Cal. App. 4th 1548
(Cal. Ct. App. 1992). Like Novell, the plaintiffs in Sosinky
asked the court to take judicial notice of findings it had made in
a related case. Denying plaintiffs' request, the court held that
"we do not see why 'facts' which were in actuality the subject of a
reasonable dispute would become, after the dispute has been
decided, 'facts' which could not reasonably be subject to dispute."
Id. at 1566 (emphasis in original).
Novell also relies extensively on Ag Services of America,
Inc. v. Nielsen, 231 F.3d 726 (10th Cir. 2000), but that case
does not even mention judicial notice, let alone hold that a
court can take judicial notice of a court's statements in a prior
summary judgment ruling. Instead that case concerns the claim that
the Seventh Amendment "protects a party's right to a jury trial by
ensuring that factual determinations made by a jury are not
thereafter set aside by the court, except as permitted under common
law." Id. at 730. The court held that "under the Seventh
2 (3)
Amendment, the court may not substitute its judgment of the
facts for that of the jury; it may only grant a new trial if it
concludes that the jury's verdict was so against the weight of the
evidence as to be unsupportable." Id. Novell actually seeks
to do the exact opposite: Deny SCO the right to have a jury decide
the factual issues underlying the remanded claims by judicially
noticing comments and collateral findings made on other claims as
axiomatic, dispositive conclusions on factual issues that should be
for the jury.
II. THE REQUESTED "FINDINGS" ARE NOT APPROPRIATE FACTS FOR
JUDICIAL NOTICE.
Judicial notice provides a mechanism for consideration of facts
that are "not subject to reasonable dispute" and that are relevant.
Fed. R. Evid. 201(b), 402. Because the effect of judicial notice is
to deprive a party of the opportunity to use rebuttal evidence,
cross- examination, and argument to attack contrary evidence,
caution must be used in noticing facts as beyond controversy under
Rule 201(b). See Fed. R. Evid. 201(b) advisory committee
notes; Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger
U.S.A., Inc., 146 F.3d 66, 70 (2d Cir. 1998). None of Novell's
proposed series of facts meets this test.
- Request No. 1. "[A]greements that postdate the APA may
constitute SVRX Licenses."
This Court has already ruled that "the determination that
agreements that postdate the APA may constitute SVRX Licenses is
the law of the case and Plaintiff will be precluded from presenting
evidence or arguing otherwise." (Order on Novell Motion in Limine
No. 9 at 2.) That, of course, does not mean that the statement is
relevant to any issue in the case. SCO submits that the proposed
statement for judicial notice is not relevant because just as it
has been determined that agreements that postdate the APA may
constitute SVRX licenses, it also has been determined that
SCOsource licenses are not SVRX royalty-bearing licenses. (Docket
No. 542 at 28-35.) Indeed, this is precisely the point which Novell
unsuccessfully sought to reopen
3 (4)
in its recent Rule 60(b) motion.1 Because the only
purported purpose of telling the jury that SVRX Licenses may
postdate the APA would be to facilitate and even advance Novell's
argument that SCOsource licenses are such agreements, and that
argument is foreclosed, Novell's request for judicial notice should
be denied.
- Request No. 2. "Although Novell may have initially
intended to sell the complete UNIX business, both parties agree
that Santa Cruz was either unwilling or unable to commit sufficient
financial resources to purchase the entire UNIX business
outright."
This passing comment is not a "factual finding." Not every
statement in the Court's 50-plus page opinion should be viewed as a
finding. While some testimony suggests that the parties structured
the deal to allow for the purchase price to be paid in part through
royalties because Santa Cruz could not pay the entire purchase
price in cash, other witnesses, including Santa Cruz Chief
Technology Officer Douglas Michels, testified that the deal was
structured as such because of the parties' uncertainty regarding
the amount of the revenue stream the royalties would generate.
(Deposition of Douglas Michels dated 3/28/07 at 14-15.) The jury
should be permitted to decide the facts and consequences of such
testimony. The reference in the Court of Appeals opinion was not
necessary to any judgment by the Court and thus does not preclude
litigation of any identical issue in this case. Moss v.
Kopp, 559 F.3d 1155, 1161 (10th Cir. 2009).
- Request No. 3. "If [one] were to interpret the contract
based initially only on the APA itself — without regard to
Amendment No. 2 — . . . its language unambiguously excludes
the transfer of copyrights."
This Request is flatly in the face of the Tenth Circuit's
decision in the case that "Amendment No. 2 must be considered
together with the APA as a unified document" and
4 (5)
"California law . . . dictates that we construe them together,
following Amendment No. 2 wherever the language contradicts the
APA." The SCO Group, Inc. v. Novell, Inc., 578 F.3d 1201,
1211 (10th Cir. 2009). It is hard to envision a statement to the
jury in the context of this case that would be more misleading than
Novell's proposed request number 3.
- Requests No. 4 & 5. "[T]here is no evidence that
Novell's public statements [regarding copyright ownership] were
based on anything but its good faith interpretation of the
contracts"; and "there is no evidence to demonstrate that Novell's
position [regarding copyright ownership] was contrary to its own
understanding of the contractual language or objectively
unreasonable given the history of the dispute between the
parties."
Judge Kimball did not make either of these statements in the
context of SCO's slander of title claim. Indeed, Novell elected not
to move for summary judgment on SCO's slander of title claim on
these grounds. These statements concern only the unfair competition
and breach of contract claims, which will not be tried, and are not
relevant to the claims that are going to trial.
Moreover, these statements do not relate to the question of
Novell's subjective malice for purposes of slander of title. "A
publisher's knowledge of the falsity of a statement is inherently
subjective." Ferguson v. Williams & Hunt, Inc., 221 P.3d
205, 215 (Utah 2009).2 There is an abundance of admissible
evidence from which the jury may find that Novell intentionally or
recklessly made false claim to the copyrights, and that Novell
acted maliciously to harm SCO. That evidence includes (i) testimony
that Novell intentionally and maliciously timed its announcement on
the day of SCO's earnings report to "confound SCO's stock position"
and "upset the stock price" and that Novell's Vice Chairman leaked
this information "with laughter" and "chortling"; (ii) evidence
that Novell made its ownership announcement without considering
Amendment No. 2 and without consulting the people who negotiated
the amended APA; (iii)
5 (6)
evidence that Novell's claim that Amendment No. 2 was "not
present in Novell's files" proved to be false, as Novell CEO Jack
Messman later admitted that a signed copy of Amendment No. 2 had
been present in Novell's files all along, and that Novell had
recklessly published its initial ownership claims knowing that it
had, at least, an unsigned copy of the Amendment; and (iv) evidence
that Novell's repeated statements that SCO contacted Novell in 2002
or 2003 "seeking a transfer of copyrights" were false, as Novell's
own in-house counsel admitted that SCO never sought such a
transfer, and the testimony of three SCO witnesses showed that SCO
did not ever make such request.
None of this evidence was the subject of Novell's motion for
summary judgment on the claims for breach of the implied duty of
good faith and fair dealing and unfair competition. As reflected in
the briefing on that motion (Docket No. 272 at 9; Docket No. 332 at
12-16), Novell made a legal argument with respect to what
California law required for violation of the implied duty. While
the Court's ruling that there is no claim for breach of the implied
duty disposes of that claim, there is no basis for expanding its
reach to other claims, an expansion not found in either Novell's
motion to the Court nor the Court's ruling.
In addition, Novell's position on why it should not be found to
have acted with malice regarding the May 28, 2003, slander is
directly tied to what the Tenth Circuit did reverse —
Novell's asserted belief in the effect of the unamended APA.
"Novell's interpretation at that time was based on its reading of
the copyright exclusion language in the original APA . . . Novell's
subsequent press releases must also be understood by reference to
the original language of the APA." (Novell Response to SCO's Motion
in Limine No. 1 at 2.) Novell is permitted to advance this
explanation, but it would be improper to admit a district court's
statement regarding Novell's intent, made at the time when the
district court was under the erroneous belief that it
6 (7)
was proper to interpret the APA independently from Amendment No.
2 — a position subsequently rejected by the Tenth
Circuit.
- Requests No. 6 & 7. "SCO breached its fiduciary
duties to Novell by failing to account for and remit the
appropriate SVRX Royalty payments to Novell for the SVRX portions
of the 2003 Sun . . . Agreement[]."; and "SCO was not authorized
under the APA to amend, in the 2003 Sun Agreement, Sun's 1994 SVRX
buyout agreement with Novell, and SCO needed to obtain Novell's
approval before entering into the amendment."
These statements are not relevant to the trial. They relate only
to Novell's prior argument regarding "substantial performance,"
which the Court rejected in denying Novell's Motion in Limine No.
11 and granting SCO's Motion in Limine No. 3 on multiple bases:
"[E]vidence of Defendant's monetary judgment is
irrelevant to the issues before the jury. Further, any relevance is
substantially outweighed by the danger of unfair prejudice and
confusion of the issues. The Court finds that Plaintiff would be
prejudiced if the jury was informed that a substantial judgment has
been entered against it and would likely be confused by such
evidence."
(Order on SCO's Motion in Limine No. 3 and Novell's Motion in
Limine No. 11 at 3.) The Court further held that to the extent
Novell argued that the 2008 trial findings were relevant to
Novell's "substantial performance" defense, that issue was never
addressed by the prior courts and "[t]herefore, the law of the case
doctrine is not applicable here." Similarly, the breach of
fiduciary duty finding constituted the basis for the award on
Novell's claim, and is no more relevant to the issues in this trial
than the existence of that money judgment. Finally, the issue of
whether part of the Sun Agreement exceeded the scope of the APA was
litigated in the prior trial and is not relevant to any issues in
this trial.
III. ANY RELEVANCE OF THE PROPOSED MATTERS FOR JUDICIAL
NOTICE IS OUTWEIGHED BY THEIR PREJUDICIAL EFFECT
Rule 403 allows this Court to exclude even relevant evidence if
"any relevance is substantially outweighed by the danger of unfair
prejudice and confusion of the issues." (Order Granting SCO's
Motion in Limine No. 2 at 2.) Pulling sentences out of a lengthy
judicial
7 (8)
opinion without the surrounding context elevates those snippets
above other evidence the jury will hear, guarantees confusion, and
creates prejudice. As this Court stated at the pretrial conference:
"As a general matter, I want both of you to avoid reference to the
prior decision by Judge Kimball or the Tenth Circuit. . . . I'm
going to be very hesitant to allow reference to those things
because I believe that it would be confusing to the jury and also
very prejudicial." (Transcript of 2/25/10 Pretrial Conference at
53.) For this same additional reason, the proposed requests for
judicial notice should be denied, and this trial should proceed as
a trial of the evidence, not a trial about what previously has been
said about the evidence.
CONCLUSION
SCO respectfully submits, for the reasons set forth above, that
the Court should deny Novell's Request for Judicial Notice of Prior
Factual Findings.
DATED this 4th day of March, 2010.
By: /s/ Brent O. Hatch
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James
BOIES, SCHILLER & FLEXNER LLP
David Boies
Robert Silver
Stuart H. Singer
Edward Normand
Sashi Bach Boruchow
Counsel for The SCO Group, Inc.
8 (9)
(Certificate of Service not transcribed, see PDF)
(10)
|
In deciding Motion in Limine No. 9, the Court observed that it
would have been appropriate for SCO to file its own motion in
limine to preclude Novell from arguing that it is entitled to any
SCOsource revenues. Although SCO did not file a motion in limine on
the issue, it may now object to the relevancy of any evidence on
this point — whether through requests for judicial notice or
otherwise. McCormick on Evidence § 52 (6th ed. 2009). |
|
"Likewise, acting with reckless disregard as to the statement's
falsity involves a showing of subjective intent or state of mind.
The Restatement explains that reckless disregard as to falsity
'exists when there is a high degree of awareness of probable
falsity or serious doubt as to the truth of the statement.'"
Ferguson, 221 P.3d at 215 (citing Restatement (Second) of Torts
§ 600 cmt. b (1977)). |
**********************************************
**********************************************
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
THE SCO GROUP, INC., by and through the
Chapter 11 Trustee in Bankruptcy, Edward N.
Cahn,
Plaintiff/Counterclaim-Defendant,
vs.
NOVELL, INC., a Delaware corporation,
Defendant/Counterclaim-Plaintiff.
SCO'S OPPOSITION TO NOVELL'S
MOTION TO DETERMINE THAT
FIRST AMENDMENT DEFENSES
APPLY TO SLANDER OF TITLE AND
REQUIRE PROOF OF
CONSTITUTIONAL MALICE
Civil No. 2:04 CV-00139
Judge Ted Stewart
(1)
TABLE OF CONTENTS
TABLE OF AUTHORITIES |
iii |
INTRODUCTION |
1 |
ARGUMENT |
1 |
I. |
THE NATURE OF SCO'S CLAIM DOES NOT WARRANT THE
FIRST
AMENDMENT PROTECTION NOVELL SEEKS |
1 |
|
A. |
The Relevant Rationales and Balance of Interests |
2 |
|
B. |
SCO's Claim Implicates Unprotected Interests of the
Defendant |
2 |
|
C. |
Novell's Line of Argument, and Citations, Are Misplaced |
6 |
II. |
THE NATURE OF NOVELL'S SPEECH DOES NOT WARRANT THE
FIRST
AMENDMENT PROTECTION NOVELL SEEKS |
8 |
III. |
SCO'S PROPOSED VERDICT FORM IS APPROPRIATE TO DEAL
WITH FIRST
AMENDMENT CONCERNS NOVELL HAS RAISED |
11 |
CONCLUSION |
11 |
ii (2)
TABLE OF AUTHORITIES
Cases |
Bd. of Trustees of the State Univ. of N.Y. v. Fox,
492 U.S. 469 (1989) |
9 |
Blatty v. New York Times Co.,
42 Cal. 3d 1033 (1986) |
6 |
Bolger v. Youngs Drug Prods. Corp.,
463 U.S. 60 (1983) |
9 |
Bose Corp. v. Consumers Union of U.S., Inc.,
466 U.S. 485 (1984) |
6 |
Bose Corp. v. Consumers Union,
508 F. Supp. 1249 (D. Mass. 1981) |
6 |
Eddy's Toyota of Wichita, Inc. v. Kmart Corp.,
945 F. Supp. 220 (D. Kan. 1996) |
8 |
Henderson v. Times Mirror Co.,
669 F. Supp. 356 (D. Colo. 1987) |
7 |
Hustler Magazine v. Falwell,
485 U.S. 46 (1988) |
3, 7 |
Jefferson County School District No. R-1 v. Moody's
Investor's Services, Inc.,
175 F.3d 848 (10th Cir. 1999) |
1, 2 |
Mast v. Overson,
971 P.2d 928 (Utah Ct. App. 1998) |
5 |
Milkovich v. Lorain Journal Co.,
497 U.S. 1 (1990) |
2, 7 |
Mueller v. Abdnor,
972 F.2d 931 (8th Cir. 1992) |
5 |
Neuralstem, Inc. v. StemCells, Inc.,
2009 WL 2412126 (D. Md. Aug. 4, 2009) |
9 |
New York Times Co. v. Sullivan,
376 U.S. 254 (1964) |
2 |
iii (3)
Ohralik v. Ohio State Bar Ass'n,
436 U.S. 447 (1978) |
8 |
Paterson v. Little, Brown & Co.,
502 F. Supp. 2d 1124 (W.D. Wash. 2007) |
5 |
Procter & Gamble Co. v. Amway Corp.,
242 F.3d 539 (5th Cir. 2001) |
9 |
Proctor & Gamble Co. v. Haugen,
222 F.3d 1262 (10th Cir. 2000) |
9 |
South Dakota v. Kansas City Southern Industries,
880 F.2d 40 (8th Cir. 1989) |
7 |
Time, Inc. v. Hill,
385 U.S. 374 (1967) |
4, 5 |
Toyota of Wichita, Inc. v. Kmart Corp.,
945 F. Supp. 220 (D. Kan. 1996) |
8 |
U.S. Healthcare, Inc. v. Blue Cross,
898 F.2d 914 (3d Cir. 1990) |
9 |
Unelko Corp. v. Rooney,
912 F.2d 1049 (9th Cir. 1990) |
7 |
Zacchani v. Scripps-Howard Broadcasting Co.,
433 U.S. 562 (1977) |
3, 4, 5 |
iv (4)
Plaintiff/counterclaim-defendant, The SCO Group, Inc. ("SCO"),
respectfully submits this Memorandum in Opposition to Novell's
Motion to Determine That First Amendment Defenses Apply to Slander
of Title and Require Proof of Constitutional Malice.
INTRODUCTION
The Court has asked for more authority, not more argument.
Novell's brief does not present any significant new cases. The fact
remains that the only federal court squarely to confront the issue
has concluded that a defendant is not entitled to the First
Amendment standard of proof in defending a claim for slander of
title. Novell also fails in its effort to distinguish the Supreme
Court precedent providing the analysis that controls here. The
Court should properly deny Novell's motion, but recognizing the
uncertainty on the issue, SCO asks the Court to structure the
verdict form and jury instructions to avoid the need for a retrial,
regardless of how the Court of Appeals may resolve the issue.
ARGUMENT
I. THE NATURE OF SCO'S CLAIM DOES NOT WARRANT THE FIRST
AMENDMENT PROTECTION NOVELL SEEKS
Novell concedes that no federal court has applied to a claim for
slander of title the First Amendment protection that Novell seeks.
Novell tries to argue (at 2-5) from a sort of "transitive property"
that in Jefferson County School District No. R-1 v. Moody's
Investor's Services, Inc., 175 F.3d 848 (10th Cir. 1999), the
Tenth Circuit applied the protection to a claim for "injurious
falsehood," and that it has generally been stated that a claim for
slander of title is a type of claim for "injurious falsehood," but
Novell concedes that none of the actual claims the Tenth Circuit
resolved was a claim for slander of title. Indeed, Novell's
citation (at 4) to Sack on Defamation confirms that claims
for "injurious falsehood" do not concern a claim that a plaintiff
has personally been defamed.
(5)
The Supreme Court has long held in the First Amendment context
that "we are compelled by neither precedent nor policy to give any
more weight to the epithet 'libel' than we have to other 'mere
labels' of state law." New York Times Co. v. Sullivan, 376
U.S. 254, 269 (1964). The mere label given to a state claim, in
short, does not determine whether it does or does not implicate
First Amendment concerns. Id. SCO addresses below the even
more fundamental problems with Novell's reliance on Jefferson.
A. The Relevant Rationales and Balance of Interests.
First Amendment protection applies to claims for defamation in
cases against public figures, or limited-purpose public figures,
because (i) there is an important state interest in permitting
criticism of public officials in their conduct of governmental
affairs; (ii) there is an important state interest in permitting
criticism of individuals who are intimately involved in the
resolution of important public questions or who shape events in
areas of concern to society at large; and (iii) public figures have
voluntarily exposed themselves to increased risk of injury from
defamatory falsehood concerning themselves. Milkovich v. Lorain
Journal Co., 497 U.S. 1, 10-18 (1990) (citing authority). The
precedent thus reflects the Court's balance of the state's
relatively weak interest in protecting individuals from defamatory
falsehoods about themselves, where they have exposed themselves to
public commentary and on public issues, against the First
Amendment's protection of "uninhibited, robust, and wide-open"
debate about such public figures. New York Times Co. v.
Sullivan, 376 U.S. 254, 270 (1964).
B. SCO's Claim Implicates Unprotected Interests of the
Defendant.
The threshold question here is the following: Does SCO's claim
implicate the rationales and balance of interests at issue in the
Supreme Court's relevant precedent? If yes, the state interest in
protecting such statements is implicated, and the First Amendment
applies. If no, that
2 (6)
state interest is no implicated, and there is no basis for
affording Novell any First Amendment protection. The answer to that
threshold question is "no."
In particular, Novell misapprehends the significance of the
Supreme Court's decision in Zacchani v. Scripps-Howard
Broadcasting Co., 433 U.S. 562 (1977). Zacchani speaks directly
to a critical question in this case: How does the Supreme Court
analyze the First Amendment issue when the plaintiff has not
brought a claim implicating the plaintiff himself, and where in
fact there is a strong state interest in protecting the
plaintiff's right to pursue his claim? The relevant question is
whether the Supreme Court's analysis of the claim for
misappropriation of property in that case, rather than the analysis
of a defamation-type claim about an individual that Novell
proposes, is the relevant one here. The answer is "yes."
The Court explained that whereas the "interest protected" in a
defamation claim is "permitting recovery for placing the plaintiff
in a false light," the interest in permitting a right to the fruits
of one's property, concerning the plaintiff's circus act, "is in
protecting the proprietary interest of the individual in his act in
part to encourage such entertainment." Id. at 572-73. The
interest is thus "closely analogous to the goals of patent and
copyright law, focusing on the right of the individual to
reap the reward of his endeavors and having little to do with
protecting feelings or reputation." Id. at 573 (emphasis
added). Where the Constitution empowered Congress to enact laws
"intended definitely to grant valuable, enforceable rights in order
to afford greater encouragement to the production of works of
benefit to the public," the Constitution does not prevent the full
use of state law similarly "to protect the entertainer's incentive
in order to encourage the production of this type of work."
Id. at 576-77; see also Hustler Magazine v. Falwell,
485 U.S. 46, 53 (1988) (reaffirming the ruling in Zaccahani
"that the 'actual malice' standard does not apply to the tort of
appropriation of a right of publicity").
3 (7)
It bears emphasis moreover, that the Supreme Court's analysis in
Time, Inc. v. Hill, 385 U.S. 374 (1967), presaged the
holding in Zacchani. In Time, which Novell (at 2-3)
concedes to be relevant, the Court considered whether the defendant
could invoke a First Amendment defense against the plaintiff's
claim under a New York right of privacy statute. The Court noted
that the particular grounds on which plaintiff invoked the statute
was the right of action that exists where the defendant's "name,
picture, or portrait is the subject of a 'fictitious' report or
article." Id. at 384-85. The Court described the plaintiff's
claim as one for "calculated falsehood." Id. at 390. In
addition, critical to the analysis here, the Court initially
observed that the text of the New York statute appeared to
proscribe only "the appropriation and use in advertising or to
promote the sale of goods, of another's name, portrait or picture
without his consent." Id. at 381. The Court stated: "An
application of that limited scope would present different
questions of violation of the constitutional protections for speech
and press." Id. (emphasis added). The Court's analysis
thus underscores the need for a court to analyze and understand the
particular scope of the plaintiff's claims, in order to consider
the appropriate "questions" and "constitutional protections" at
issue.
Considering its decision in Time, the Zacchani
Court then took care to emphasize the very particular scope of the
claim at issue in that case. The Zacchani Court thus
emphasized that the Time Court "was aware that it was
adjudicating a 'false light' privacy case involving a matter of
public interest, not a case involving 'intrusion,'" or
"'appropriation' of a name or likeness for the purposes of trade."
Zacchani, 433 U.S. at 571-72. The Court further emphasized:
"It is also abundantly clear that Time, Inc. v. Hill did not
involve a performer, a person with a name having commercial value,
or any claim to a 'right of publicity.' This discrete kind of
'appropriation' case was plainly identified in the literature cited
by the Court and had been adjudicated in the
4 (8)
reported cases." Id. at 572 (citing Time, 385 U.S.
at 383-85). The Zacchani Court then compared (i) the
Time Court's assessment of the "false light" claim (the
claim that the Time Court called a "calculated falsehood"
claim, such as for defamation) with (ii) the plaintiff's claim for
misappropriation of the fruit's of his property, and explained:
"The differences between these two torts are important." Id.
at 573.
Novell's heavy reliance on labels such as "injurious falsehood"
thus seeks to obscure the appropriate analysis. The
substance of SCO's claim for slander of title, under the
facts of this case, plainly implicates the same state interest at
issue in Zacchani. SCO's claim seeks to enforce not just any
proprietary interest, and not only its proprietary interest in the
UNIX and UnixWare businesses, but also its particular proprietary
interest in the UNIX and UnixWare copyrights. SCO's claim is
not one to redress injury to its "feelings or reputation." The
Eighth Circuit's decision in Mueller v. Abdnor, 972 F.2d
931, 937 (8th Cir. 1992), in cogent fashion, reflects the same
fundamental distinction between defamation of "land" and defamation
of "an individual's reputation."1 SCO's claim
directly concerns the "valuable, enforceable rights" that the
Constitution empowered Congress to afford copyright owners. SCO is
entitled to the full use of state law to protect all of SCO's
interests in the rights and benefits of copyright ownership.
5 (9)
C. Novell's Line of Argument, and Citations, Are
Misplaced.
The authority Novell cites does not, at least not in any
controlling or even persuasive fashion, favor the relief that
Novell seeks with respect to the particular claim that SCO
has brought here, with respect to the UNIX and UnixWare copyrights.
The decisions arising from Bose Corp. v. Consumers Union,
508 F. Supp. 1249 (D. Mass. 1981), contrary to Novell's
characterization, do not support Novell. Novell suggests(at 3), for
example, that the district court held that "First Amendment applies
to product disparagement claim," and that the Supreme Court
affirmed that holding "in relevant part." Not so. The Supreme Court
specifically declined to take any position on whether First
Amendment protection "should be applied to a claim of product
disparagement," because the Court did not need to reach the issue.
Bose Corp. v. Consumers Union of U.S., Inc., 466 U.S. 485,
513 (1984).2
Novell's heavy reliance on the Tenth Circuit's decision in
Jefferson is similarly misplaced. The Tenth Circuit there
addressed the separate question — not implicated in Novell's
motion — of whether a defendant should have full First
Amendment protection (that is, immunity) where the plaintiff has
brought suit on the basis of a statement of opinion, rather than a
statement of fact. The court reasoned that where the defendant had
not made a statement of fact, it was entitled to full First
Amendment protection with respect to all of the plaintiff's claims
that were based solely on the defendant's statements.
Jefferson, 175 F.3d at 56-61. The court reasoned, in short,
that it would not make sense to afford a defendant First Amendment
immunity with respect to only certain of the plaintiff's claims
based on the statements at issue,
6 (10)
because however the plaintiff recovered against the defendant,
the prospect of such recoveries would impose a chilling effect on
the prospect of a market-place of opinions. Id. at 857.
The rationales and interests in that analysis are significantly
distinct from the rationales and interests here. The relevant
authority in that discrete area of First Amendment jurisprudence
start from the premise that the First Amendment affords important
protection for statements of opinion. Milkovich, 497 U.S. at
21 (citing authority). The rationale is that robust and even
competing statements of opinion are important to the free
discussion of public issues and public figures. Id.; see
also Hustler Magazine v. Falwell, 485 U.S. 46, 50 (1988). It
follows that when a plaintiff brings a claim based on the claim
that is not verifiably true or false, the First Amendment affords
the defendant maximum protection. Milkovich, 497 U.S. at 21.
The Supreme Court has thus distinguished between statements of
opinion and statements of fact, or between statements that cannot
be proven false and those that can. Id. at 21-22. That is
because the state has very little (if any) interest in having
people publicly making false factual statements. Id. at 18
(citing authority).
Accordingly, in the key cases on which Novell relies, in
assessing whether the defendant is entitled to First Amendment
protection, the courts ask this, different, threshold
question: Is the plaintiff bringing a claim based solely on the
defendant's statements of opinion? If so, regardless of the
particular tort under which the plaintiff has brought his claim,
the claim implicates the foregoing rationale for applying First
Amendment protections. That is not at issue here.3
7 (11)
This Court's prior decision in this case, in contrast, reflects
that the various claims of ownership here are objectively
verifiable ones that can be disproven. (Order Denying Defendant's
Motions in Limine No. 5 and 6 (Feb. 25, 2010).) Considering all of
the foregoing, the Court will recognize how the fundamental
analysis in Jefferson is inapplicable here. This case does
not present the crucial consideration in that case that led
the court to conclude that where the plaintiff has made "protected
speech" the subject of his claims, it would not make sense —
at least not with respect to the causes of action at issue in that
case — to permit the plaintiffs to recover on any of them.
The linchpin of the court's analysis was the need to avoid "the
chilling effect on protected speech that might ensue if damages
could be recovered on emotional distress claims for publications
that were not provably false." Id. at 857 (emphasis
added). On the plaintiff's antitrust claim, in turn, the court's
concern was that the plaintiff's contention was that the
publication at issue "itself constituted a violation of the
antitrust laws," id. at 860, and the court saw no reason for
federal antitrust law interests to trump First Amendment
protections. These considerations and balancing of interests, at
the risk of redundancy, are simply not at issue here.
II. THE NATURE OF NOVELL'S SPEECH DOES NOT WARRANT THE FIRST
AMENDMENT PROTECTION NOVELL SEEKS
Commercial speech occupies a "subordinate position in the scale
of First Amendment values." Ohralik v. Ohio State Bar Ass'n,
436 U.S. 447, 456 (1978). Accordingly, as Novell appears to
concede, where a defendant's defamatory statements constitute
"commercial speech," they are not entitled to the First Amendment
protection necessary to require proof that the defendant acted with
"actual malice." New York Times, 376 U.S. at 265-66 (making
threshold determination that speech at issue was "editorial" rather
than "commercial"); Procter & Gamble
8 (12)
Co. v. Amway Corp., 242 F.3d 539, 547-59 (5th Cir. 2001)
(declining to apply "actual malice" standard concerning commercial
speech); U.S. Healthcare, Inc. v. Blue Cross, 898 F.2d 914,
928-39 (3d Cir. 1990) (same).
The main factors are whether the speech was contained in an
advertisement, referred to a product, and was made with an economic
motive. Bolger v. Youngs Drug Prods. Corp., 463 U.S. 60, 66
(1983); accord Proctor & Gamble Co. v. Haugen,
222 F.3d 1262, 1274 (10th Cir. 2000). A statement containing those
elements, even if it also contains "discussions of important public
issues," is commercial speech. Bolger, 463 U.S. at 67-68;
accord Haugen, 222 F.3d at 1275. There is no general
rule, in other words, that the "pure speech" and "commercial
speech" in a single publication are "inextricably intertwined" such
that they constitute only protected speech. Bd. of Trustees of
the State Univ. of N.Y. v. Fox, 492 U.S. 469, 473-74 (1989). A
press release may constitute an "advertisement." Neuralstem,
Inc. v. StemCells, Inc., 2009 WL 2412126, at *5 (D. Md. Aug. 4,
2009).
Novell is in the Linux business and everything it has said
regarding the ownership of these copyrights must be viewed as part
and parcel of its economic interest in Linux. Novell's press
releases on May 28 and June 6, 2006, were it issued the press
releases to "gain credibility with the OpenSource community" and
the press releases say that Novell is an "ardent supporter of
Linux." Novell begins the first press release by explaining that it
is "[d]efending its interests in developing services to operate on
the Linux platform," and has a "leading proponent of open source"
state that Novell had made "recent announcements to support Linux
with NetWare services," a Novell product. Both press releases state
that Novell "is a leading provider of information services" and
specifically identify Novell's "Nsure™", "exteNd™",
"Nterprise™", and "Ngage™" products. They address other
subjects as well, but they were indisputably made
9 (13)
with an economic motive, they refer to multiple products, and
they seek to advertise their value and relevance to the subject
matter otherwise addressed.
Novell's arguments against these facts (at 8-11) are that Novell
was not proposing any commercial transaction; that any commercial
aspects of its statements were "incidental" to protected speech;
and that any corporation has an "economic motive" when it makes
statements, and it cannot be that any time a corporation speaks it
will be afforded the lesser protection for "commercial speech." SCO
submits that these arguments are unavailing.
First, Novell included the multiple references to its
multiple products in an effort to advertise and sell them. There is
no other logical explanation for their presence. Among the
particular products that Novell sought to sell, moreover, were ones
directly related to the subject matter of what Novell
contends was protected speech — namely, the question of
whether SCO had the right even to claim that Linux infringes on the
UNIX and UnixWare copyrights. Novell took care to state that it had
made "recent announcements to support Linux with NetWare services,"
a Novell product.
Second, Novell obviously was not required to
convey such information, and it ignores the distinct and prominent
nature of the commercial components. To borrow the Supreme Court's
language, "[n]o law of man or of nature makes it impossible" for a
company to claim to own particular property without at the same
time advertising its products. Fox, 492 U.S. at 475.
Third, SCO agrees that the courts must draw a line on
what corporate speech does and does not constitute "commercial
speech," but submits that in this case Novell seeks to draw that
line in the wrong place. Novell did not have merely a general
economic motive to do well as a company; it had a discrete and
particular interest in offering products and services that directly
related to the subject matter of the statements.
10 (14)
III. SCO'S PROPOSED VERDICT FORM IS APPROPRIATE TO DEAL WITH
FIRST AMENDMENT CONCERNS NOVELL HAS RAISED
SCO recognizes that there is no controlling Tenth Circuit
authority on the relationship of the First Amendment to a slander
of title claim in this context. In these circumstances, SCO
believes it is appropriate to structure the verdict form, and the
jury questions, so as to avoid the need for any retrial of the
case. This can be accomplished, as reflected in the verdict form
SCO has proposed, by having a separate question on the issue of
"constitutional malice," while requiring the jury (assuming it has
answered other questions in the affirmative) to proceed to
determine damages, regardless of how they answer the question on
"constitutional malice." Accordingly, while Novell's motion should
be denied, SCO does not oppose appropriate instructions and a
verdict form so as to avoid the need for a retrial of the case on
this ground.
CONCLUSION
SCO respectfully submits, for the reasons set forth above, that
the Court should deny Novell's Motion to Determine that First
Amendment Defenses Apply to Slander of Title and Require Proof of
Constitutional Malice.
DATED this 5th day of February, 2010.
By: /s/ Brent O. Hatch
HATCH, JAMES & DODGE, P.C.
Brent O. Hatch
Mark F. James
BOIES, SCHILLER & FLEXNER LLP
David Boies
Stuart H. Singer
Edward Normand
Sashi Bach Boruchow
Counsel for The SCO Group, Inc.
11(15)
(Certificate of Service not transcribed, see PDF)
(16)
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Novell's brief argument and citations (at 6-7) against the
relevance of Mueller are of little moment. Novell first
argues that Mueller acknowledges that First Amendment
protection is needed to avoid inhibiting public discussion of
public figures or public issues, but the court of course held that
the claim for slander of title did not implicate any such concerns.
If Novell means to argue that the Court must carefully examine the
particular claim at issue in assessing whether First Amendment
protection applies, rather than relying solely on labels, SCO
agrees. Novell then cites two cases that address only claims for
defamation. Paterson v. Little, Brown & Co., 502 F.
Supp. 2d 1124, 1140-42 (W.D. Wash. 2007); Mast v. Overson,
971 P.2d 928, 929-32 (Utah Ct. App. 1998). The analysis in those
cases, which are in any event subordinate to the Supreme Court's
controlling precedent with respect to defamation claims, does not
advance the argument on whether the First Amendment should apply to
a claim for slander of title. |
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Novell then (at 3) cites Blatty v. New York Times Co.,
42 Cal. 3d 1033, 1042-43 (1986), for the proposition that the First
Amendment applies to a claim concerning the plaintiff's property,
but Blatty relies on the district court's decision in
Bose. In sum, in the face of the indisputably relevant
Supreme Court precedent on the issues here, Novell asks this Court
to place dispositive weight on a California decision interpreting a
District of Massachusetts decision on which the Supreme Court
declined to opine. |
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The exact same problem inheres in the other cases Novell cites,
including the cases the court in Jefferson cited, which also
concern the application of First Amendment principles that are
entirely separate from the considerations at issue here. In
Unelko Corp. v. Rooney, 912 F.2d 1049, 1057-58 (9th Cir.
1990), the court held that the plaintiff could not prove that the
defendant had made false assertions of fact. In Henderson v.
Times Mirror Co., 669 F. Supp. 356, 362 (D. Colo. 1987), the
court held that the plaintiff could not prove that the defendant
had made false assertions of fact. In South Dakota v. Kansas
City Southern Industries, 880 F.2d 40, 50-54 (8th Cir. 1989),
the court held that the defendant was immune under the
Noerr-Pennington doctrine. In Eddy's Toyota of Wichita,
Inc. v. Kmart Corp., 945 F. Supp. 220, 224 (D. Kan. 1996), the
court held that the plaintiff could not prove that the defendant
had made false assertions of fact. |
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Authored by: DaveJakeman on Saturday, March 06 2010 @ 11:35 AM EST |
[ Reply to This | # ]
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Authored by: Erwan on Saturday, March 06 2010 @ 11:46 AM EST |
If any.
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Erwan[ Reply to This | # ]
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Authored by: ais523 on Saturday, March 06 2010 @ 12:06 PM EST |
As this post came so soon before the next, probably it's a better idea just to
leave Off Topic comments on the next post rather than this one.[ Reply to This | # ]
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Authored by: Yossarian on Saturday, March 06 2010 @ 12:09 PM EST |
>It's been a busy week heading up to the Novell trial in Utah, and I had an
accident
As I said before, this seems to be the week of the perfect storm.
I hope that you will recover soon.[ Reply to This | # ]
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Authored by: ais523 on Saturday, March 06 2010 @ 12:14 PM EST |
As with offtopic posts, these are probably better placed in the next post, to
avoid them being split over two posts that are so close to each other.[ Reply to This | # ]
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Authored by: Anonymous on Saturday, March 06 2010 @ 12:47 PM EST |
I notice on Novell's "may call" witness list there is a Patrick
McBride mentioned. I've not seen that name before, would he be any relation to
Darl ?
Also, it was noted that Darl said he was looking forward to attending the trial.
Since Darl is also listed as a potential witness, is it permitted for him to
observe a trial he may be called as a witness in ?[ Reply to This | # ]
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Authored by: Anonymous on Saturday, March 06 2010 @ 01:00 PM EST |
Did Judge Stewart just find for Novell? I get the impression that he is trying
to give the transfer of copyrights an exhaustive forum but He is still is trying
to keep the trial focused.[ Reply to This | # ]
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Authored by: Anonymous on Saturday, March 06 2010 @ 01:46 PM EST |
14. Michael Danaher (by deposition). Mr. Danaher is an attorney at Wilson
Sonsini Goodrich & Rosati who worked on the acquisition of Santa Cruz by
Caldera in 2001. He will testify regarding the transaction between Santa Cruz
and Caldera and what intellectual property rights, if any, were transferred
pursuant to that transaction.[ Reply to This | # ]
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Authored by: bastiaan on Saturday, March 06 2010 @ 01:50 PM EST |
I'm a bit confused now on what's actually going to happen at the trial. What
issues are going to be decided, and by whom?[ Reply to This | # ]
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Authored by: Anonymous on Saturday, March 06 2010 @ 02:15 PM EST |
I get the impression that Judge Stewart might finally be getting a feel for whom
he is dealing with here.
At any rate, it sounds like he's perhaps starting
to get a sense of the larger picture. One can only hope, anyway.
[ Reply to This | # ]
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- My my my - Authored by: Anonymous on Saturday, March 06 2010 @ 02:22 PM EST
- My my my - Authored by: Ed L. on Saturday, March 06 2010 @ 11:02 PM EST
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Authored by: Anonymous on Saturday, March 06 2010 @ 02:35 PM EST |
So SCO gets to expound on their peculiar version of 'facts', ignoring what has
already been decided. Novell will have to expend considerable time &
resources on rebutting nonsense. Nonsense that SCO gets to spend Novell's money
presenting.[ Reply to This | # ]
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Authored by: Anonymous on Saturday, March 06 2010 @ 02:47 PM EST |
Re: Boies' letterr to the judge.
Big grin reading this.
Picture this:
while Novel and IBM are living it up with their Brainshare exhibit, their
eye on the future, just around the corner
there is bankrupt shady little
SCO, desperately trying for a grand finale to their cheating
game.
Boy, how I wish I could travel to the US (I'm in Holland), visit
Brainshare and just for
giggles and to relax once in a while hop into the
courtroom.
Anyway, if the request is granted, Novell better make sure
SCO isn't allowed to mention the exhibit
either....
bjd
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Authored by: WWWombat on Saturday, March 06 2010 @ 06:11 PM EST |
I think PJ (quite understandably) missed some of the filings off the beginning
of her list, which include the motion & response that build up to 762, which
grants the first amendment status of the slander claims.
I thought I'd add
links here, so they can be seen:
03/02/2010 - 748 - Motion to Determine that
First Amendment Defenses Apply to Slander of Title and Require Proof of
Constitutional Malice filed by Defendant Novell, Inc..
03/04/2010 - 759 - Memorandum in Opposition
re [748] Motion to Determine that First Amendment Defenses Apply to Slander of
Title and Require Proof of Constitutional Malice filed by Plaintiff SCO
Group.
The denial of MiL 2 and 3 didn't give Novell a massive
suggestion about getting these issues handled during jury instructions, but I
think they handled it well.
Other docs are available - see the "Novell
Timeline" on the menu, if you want to find them. [ Reply to This | # ]
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