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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTESGENERAL

Case No. CV-13-04253-MWF (AJWx) Date: May 21, 2014
Title: Eunice Huthart -v- News Corporation, et al.

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CIVIL MINUTESGENERAL 1

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Present: The Honorable MICHAEL W. FITZGERALD, U.S. District J udge

Deputy Clerk: Court Reporter:
Rita Sanchez Not Reported

Attorneys Present for Plaintiff: Attorneys Present for Defendant:
None Present None Present

Proceedings (In Chambers): ORDER GRANTING DEFENDANTS MOTION TO
DISMISS FOR FORUM NON CONVENIENS [41],
DENYING MOTION TO INTERVENE AS MOOT
[61], AND DENYING EX PARTE APPLICATION
TO CONTINUE MOTION TO INTERVENE AS
MOOT [65]

This matter is before the Court on the Motion to Dismiss Under FRCP Rules
12(b)(2), 12(b)(6), and for Forum Non Conveniens (the Motion), filed by Defendants
News Corporation (News Corp.), NI Group Limited f/k/a News International
Limited (NI), and News Group Newspapers Limited (NGN). (Docket No. 41).
The Court read and considered the papers filed on this Motion, and held a hearing on
February 24, 2014. Following additional briefing, the Court GRANTS the Motion.
The underlying facts here do not seem to be in dispute, at least by these parties.
It appears, and certainly is alleged, that Plaintiff Eunice Huthart has suffered a
grotesque invasion of her privacy. This harm arose for no reasons other than Hutharts
successfully pursuing a demanding career associated with Los Angeles and having a
friend who likewise is at the summit of success in an industry associated with Los
Angeles. Nonetheless, for the reasons explained in this Order, the Court concludes that
Huthart must obtain her relief from the courts of England and Wales.
Background
Case 2:13-cv-04253-MWF-AJW Document 66 Filed 05/21/14 Page 1 of 22 Page ID #:2069
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On J une 13, 2013, Huthart initiated this action by filing a Complaint in this
Court. (Docket No. 1). The Complaint alleges that Huthart is a citizen of the United
Kingdom and resides in Liverpool, England. (Compl. 4). But between early J anuary
2004 to mid-J une 2004, and from mid-March 2005 to mid-May 2005, Huthart lived
and worked in Los Angeles, California as a professional stunt double for actress
Angelina J olie. (Compl. 4). The Complaint alleges that during this time period,
various British media companies, primarily agents working for two British
newspapers, The Sun and News of the World, unlawfully intercepted her voice-mail
messages on cellular telephone systems to obtain information about J olie. (Compl.
11, 12, 16-21, 45-68). The Complaint alleges that these actions were part of a large-
scale hacking scheme (Compl. 11-44), which have received much media attention
and will be referred to in this Order as the Hacking Scheme.
The Complaint alleges six claims: (1) violation of the Stored Communications
Act, 18 U.S.C. 2701, 2707; (2) violation of the Wiretap Act, 18 U.S.C. 2510,
2511, 2520; (3) violation of the California Constitution, art. I, 1; (4) violation of
California Penal Code 630, 631, 632, 632.7, 637(2)(a); (5) violation of California
Civil Code 1708.8(b), 1708.8(d), 1708.8(e); and (6) a common law claim for
intrusion into private affairs.
On September 20, 2013, Defendants filed this Motion. On December 10, 2013,
Huthart filed an Opposition to Defendants Motion to Dismiss (the Opposition).
(Docket No. 49). On J anuary 22, 2014, Defendants filed a Reply in Support of
Defendants Motion to Dismiss (the Reply). (Docket No. 54). The briefs complied
with the deadlines and page limits set by this Court. (See Docket Nos. 40, 47).
After the hearing on February 24, 2014, the Court ordered supplemental briefing
on two issues: (1) whether Englands managed litigation system set up to deal with
claims arising from the Hacking Scheme, the Mobile Telephone Voicemail
Interception Litigation (MTVIL), would accept Hutharts claim; and (2) whether
Huthart would otherwise be able to bring a lawsuit in the regular civil litigation system
in England. (Docket No. 56).
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On March 17, 2014, Defendants filed a Supplemental Briefing Pursuant to the
Courts February 25, 2014 Order (Defendants Brief). (Docket No. 57). That same
day, Huthart also filed a Supplemental Memorandum of Position and Authorities in
Opposition to Defendants Motion to Dismiss (Hutharts Brief). (Docket No. 58).
Both briefs were timely filed.
Evidentiary Objections
Both sides have submitted numerous evidentiary objections. (See Docket Nos.
50-1, 50-2, 50-3, 50-4, 50-5, 50-6, 54-9, 54-10, 54-11, 54-12). Most of these
objections are not aimed at the evidence relevant to the forum non conveniens analysis,
on which this Order turns. To the extent that the objections are relevant to the forum
non conveniens analysis, they challenge very specific details for lack of foundation.
However, the Hacking Scheme and the investigations and legal proceedings related to
it are set forth in sufficient detail in the Complaint itself. Moreover, these events have
been the subject of significant media attention worldwide. Furthermore, it does not
appear that the parties dispute Hutharts access to the regular civil litigation system of
England, as opposed to the specialized venues established to address the Hacking
Scheme. Accordingly, the Courts analysis and conclusion would have not differed,
regardless of whether the objections were sustained are overruled.
Therefore, both parties objections are OVERRULED as moot.
Requests for Judicial Notice
Pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of
a fact that is not subject to reasonable dispute because it: (1) is generally known
within the trial courts territorial jurisdiction; or (2) can be accurately and readily
determined from sources whose accuracy cannot reasonably be questioned. Fed. R.
Evid. 201(b).
Defendants filed two requests for judicial notices: (1) Request for J udicial
Notice in Support of Motion to Dismiss (Defendants First Request) (Docket No. 41-
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8), and (2) Request for J udicial Notice in Support of Defendants Reply in Support of
Motion to Dismiss (Defendants Second Request). (Docket No. 54-1). Of the
documents for which Defendants seek judicial notice, only two are relevant to the
forum non conveniens analysis.
First, Exhibit 1 of the Declaration of Christa J ane Band (the Band
Declaration) (Docket No. 41-2) is a court order in the consolidated litigation in
England relating to the Hacking Scheme. (Band Decl., Ex. 1). Because that litigation
is related to this one, the Court order is appropriate for judicial notice. See United
States v. Howard, 381 F.3d 873, 876 n.1 (9th Cir. 2004) (citing United States v.
Wilson, 631 F.2d 118, 119 (9th Cir. 1980)) (stating that a court may take judicial notice
of court records in another case).
Second, Exhibit 2 of the Band Declaration is the Terms of Reference of the
Leveson Inquiry, which investigated the Hacking Scheme. (Band Decl., Ex. 2).
Exhibit 2 was taken from the Leveson Inquirys website, and is appropriate for judicial
notice. See Matthews v. Natl Football Council, 688 F.3d 1107, 1113 & n.5 (9th Cir.
2012) (taking judicial notice of relevant statistics available on the NFLs website);
OToole v. Northrop Grumman Corp., 499 F.3d 1218, 1225 (10th Cir. 2007) (It is not
uncommon for courts to take judicial notice of factual information found on the world
wide web.).
Therefore, Defendants First Request is GRANTED as to these two Exhibits.
The remainder of Defendants First Request and Defendants Second Request is
DENIED as irrelevant.
On December 10, 2013, Huthart filed a Request for J udicial Notice in
Opposition to Motion to Dismiss (Hutharts Request). (Docket No. 49-1). Of the
documents for which Huthart seeks judicial notice, items 1-7, 13, and 15 are relevant to
the forum non conveniens analysis. These documents consist of relevant public
documents found online and documents filed in relevant litigation. For the reasons
stated above, both of these categories of documents are appropriate for judicial notice.
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Therefore, Hutharts Request is GRANTED as to items 1-7, 13, and 14. The
remainder of Hutharts Request is DENIED as irrelevant.
Motion to Dismiss
The Motion seeks dismissal of this action on four grounds: (1) forum non
conveniens; (2) lack of personal jurisdiction, under Federal Rule of Civil Procedure
12(b)(2), as to NI and NGN, which are citizens of the United Kingdom; (3) failure to
state a claim, under Rule 12(b)(6), as to News Corp., on the ground that the Complaint
fails to establish a basis to pierce the corporate veil; and (4) failure to state a claim,
under Rule 12(b)(6), on the grounds that two of the statutes governing Hutharts claims
do not apply to extraterritorial conduct, three of her claims lack sufficient factual
allegations, and all claims are time-barred. (Mot. at 6-7).
This Court can examine the merits of the forum non conveniens argument before
addressing the jurisdictional issues. The Supreme Court has stated:
We hold that a district court has discretion to respond at once to a defendants
forum non conveniens plea, and need not take up first any other threshold
objection. In particular, a court need not resolve whether it has authority to
adjudicate the cause (subject-matter jurisdiction) or personal jurisdiction over
the defendant if it determines that, in any event, a foreign tribunal is plainly the
more suitable arbiter of the merits of the case.
Sinochem Intl Co. Ltd. v. Malaysia Intl Shipping Corp., 549 U.S. 422, 425, 127 S. Ct.
1184, 167 L. Ed. 2d 15 (2007).

Because the proposed alternative forum in this action is England, the appropriate
analysis is the forum non conveniens doctrine, as opposed to a motion to transfer
pursuant to 28 U.S.C. 1404. See Atl. Marine Constr. Co., Inc. v. U.S. Dist. Court for
W. Dist. of Tex., 571 U.S. __, 134 S. Ct. 568, 580 (2013) (stating that 1404 is the
appropriate mechanism when the transferee forum is within the federal court system,
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but that courts should apply the doctrine of forum non conveniens in cases seeking
transfer to a nonfederal forum); Sinochem Intl, 549 U.S. at 430 (same).

Under the forum non conveniens doctrine, the party moving to dismiss bears the
burden of showing that (1) there is an adequate alternative forum for this action, and
(2) the balance of private and public interest factors favors dismissal. See Sinochem
Intl, 549 U.S. at 429 (summarizing the legal standard for forum non conveniens).
Adequate Alternative Forum
The first requirement for a forum non conveniens dismissal is that an adequate
alternative forum is available to the plaintiff. Lueck v. Sundstrand Corp., 236 F.3d
1137, 1143 (9th Cir. 2001). The Supreme Court has held that an alternative forum
ordinarily exists when the defendant is amenable to service of process in the foreign
forum. Id. Moreover, [t]he foreign forum must provide the plaintiff with some
remedy for [her] wrong in order for the alternative forum to be adequate. Id.
Here, England provides an adequate alternative forum.
With regard to jurisdiction and service of process, England would have
jurisdiction over NI and NGN because they are incorporated, registered, and
headquartered in England. (Declaration of Craig Wyndham Orr QC 22-24 (the Orr
Declaration) (Docket No. 41-4)). England would also have jurisdiction over News
Corp., the only non-English Defendant, because it has agreed to waive any challenge to
personal jurisdiction in the English courts. (Orr Decl. 25; see also Mot. at 8).
Moreover, it appears that England may have jurisdiction over News Corp., even if it
did not submit to personal jurisdiction there. (Orr Decl. 26-27).
With regard to the entity consenting to personal jurisdiction, Defendants explain
that on J une 28, 2013, News Corp. separated into two independent publicly traded
companies. (Declaration of Gerson A. Zweifach 2 (the Zweifach Declaration)
(Docket No. 41-7)). The entity named in the Complaint, News Corp., changed its
name to 21st Century Fox, Inc. (21st Century) and continued to be the parent
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company of most of News Corp.s entertainment-related entities. (Zweifach Decl. 2).
A new company was also created bearing the name News Corporation (New News
Corp.) and became the parent company of most of News Corp.s news media-related
entities. (Zweifach Decl. 2). News Corp.s successor, 21st Century, agrees to waive
any challenge to personal jurisdiction. (Zweifach Decl. 3).
In the supplemental briefing, Huthart argues for the first time that she cannot
bring her claims against all Defendants in England because the real party in interest is
not 21st Century, but New News Corp., which did not consent to jurisdiction.
(Hutharts Brief at 2-4). Huthart argues that the print media entities involved in the
Hacking Scheme are now attributed to New News Corp., that it can be inferred that the
bulk of relevant documentary evidence is maintained by New News Corp., and that
Securities and Exchange Commission filings confirm that New News Corp. is liable
for civil claims arising out of the hacking scheme. (Hutharts Brief at 3).
In response, Defendants filed an Objection to Plaintiffs Supplemental
Memorandum and Request to File Supplemental Declaration (Defendants
Objection) on March 21, 2014, after the deadline for supplemental briefing. (Docket
No. 59). Defendants object to Hutharts insinuation that Defendants misled the Court
when they asserted that 21st Century would consent to personal jurisdiction.
(Defendants Objection at 1). Defendants explain that 21st Century was the entity that
consented to personal jurisdiction because News Corp., the defendant named in the
Complaint, essentially became 21st Century. (Id.). Defendants also request leave to
file the Second Declaration of Gerson A. Zweifach (the Second Zweifach
Declaration) (Docket No. 59-1), attesting that if Huthart also sues New News Corp. in
England, New News Corp. would consent to personal jurisdiction. (Second Zweifach
Decl. 3; see also Defendants Objection at 2).
Huthart, in turn, objects to the Defendants Objection and the Second Zweifach
Declaration because they were filed after the deadline for supplemental briefing. (See
Plaintiffs Objection to Defendants March 21, 2014 Filing and Request That It Be
Stricken from the Record at 2 (Docket No. 60)).
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While Huthart is correct that these documents were filed late, the Court refrains
from striking them and permits the filing of the Second Zweifach Declaration.
Defendants Objection responded to a new argument in Hutharts Brief, which was
arguably outside the scope of the supplemental briefing. Moreover, the Court would
have likely asked for a response from Defendants to clarify which is the correct entity
to consent to personal jurisdiction. The Court also notes that this issue could have
been raised in the Opposition because the first Zweifach Declaration was filed with the
Motion. However, the Court does not treat the issue as waived. Rather, it is resolved
for the reasons stated.
In any event, there appears to be no dispute at this point that both 21st Century
and New News Corp. would be willing to submit to personal jurisdiction in England.
Therefore, Huthart would be able to sue all Defendants in England. Contrary to
Hutharts contention (see Opp. at 6), the adequate alternative forum requirement will
be satisfied when the defendant is amenable to process in the other jurisdiction.
Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, n. 22, 102 S. Ct. 252, 70 L. Ed. 2d 419
(1981) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507, 67 S. Ct. 839, 91 L. Ed.
1055 (1947), superseded by statute on other grounds).
It further appears that England can provide some remedy to Huthart. Defendants
described two avenues in England specifically created to handle claims related to the
Hacking Scheme: (1) a voluntary compensation scheme, and (2) the MTVIL system in
the English High Court. (Mot. at 4).
Huthart has submitted the Declaration of Mark Lewis (the Lewis Declaration)
(Docket No. 49-3), which establishes that the first avenue is now closed. (Lewis Decl.
7). Therefore, the Court does not consider the voluntary compensation scheme as an
available venue.
Huthart also argues that the second avenue, the MTVIL, is unavailable to her.
(Hutharts Brief at 5). The MTVIL is a managed litigation system that was instituted
in the English courts to deal with claims arising from the Hacking Scheme.
(Declaration of Hugh Tomlinson 7 (the Tomlinson Declaration) (Docket No. 58-3);
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see also Band Decl. 4-8; Third Declaration of Craig Wyndham Orr QC 4-5 (the
Third Orr Declaration) (Docket No. 57-2)). The MTVIL provides consolidated case
management, expedited discovery from the London Metropolitan Police Service and
NGN, mechanisms to obtain discovery from third parties, early assessment of claims,
and procedures for managing litigation costs. (Band Decl. 7). All cases filed in the
English civil courts that fall within the scope of the MTVIL are automatically referred
to the MTVIL. (Id.). Based on the criteria for MTVIL claims (Third Orr Decl. 5),
Hutharts claims likely fall within the scope of the MTVIL.
The litigation of claims in the MTVIL has proceeded in tranches. The current
tranche of claims, Tranche 2, closed on J anuary 31, 2014. (Tomlinson Decl. 10-11).
Huthart also asserts that the managing judge for the MTVIL is disinclined to further
extend the cut-off date for Tranche 2, and no new claims can join Tranche 2.
(Hutharts Brief at 5 (citing Tomlinson Decl. 11-12)). Moreover, the MTVIL has
not yet created a Tranche 3. (Tomlinson Decl. 16). If Huthart were to file claims in
the English courts that fell within the scope of the MTVIL, her claims would be stayed
pending the resolution of the Tranche 2 claims. (Tomlinson Decl. 13-15; see also
Third Orr Decl. 8-9). Defendants assert that Huthart would nonetheless be able to
apply to the court to lift the stay and to have her claim included with the Tranche 2
claims set for trial on October 1, 2014. (Third Orr Decl. 9).
The above facts do not demonstrate that the MTVIL is unavailable to Huthart.
They simply indicate that if Hutharts claims were referred to the MTVIL, their
resolution may be delayed because they were filed after Tranche 2 closed. Huthart has
cited no legal authority establishing that such a stay or delay of resolution renders a
forum inadequate.
Even if the MTVIL is no longer open to Huthart, Defendants have established
that the regular civil litigation processes of the courts of England and Wales remain
open to Huthart. (Reply at 4). Defendants expert attests that [i]f a claim does not
qualify for inclusion in the MTVIL, it will be able to be brought in any division of the
High Court in the normal way. (Third Orr Decl. 7). In fact, Huthart acknowledges
that it is technically correct that if no MTVIL Tranche 3 is established, then [she] can
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file suit in the English Civil Court Proceedings. (Hutharts Brief at 6). However,
Huthart objects that proceeding in the regular civil court would be the litigation
equivalent of purgatory because her claims would be stayed pending the resolution of
MTVIL claims. (Hutharts Brief at 7 & n.4). As noted above, the fact or possibility
that Hutharts claims might be stayed does not render England an unavailable or
otherwise inadequate forum. In our court system, for example, claims are routinely
stayed to facilitate efficient administration, to avoid duplicative actions, and for other
docket management reasons. Such stays do not mean that our courts are closed to
those claims.
Therefore, Defendants have established that both the English court system and
the MTVIL are available to Huthart to bring her claims. Moreover, England would
provide some remedy for Hutharts claims, as discussed below.
English law recognizes claims for breach of confidence and misuse of private
information. (Orr Decl. 11-16). Under English law, remedies for these claims
include compensatory damages, account of profits, and injunctive relief. (Orr Decl.
17). Moreover, England has enacted a number of statutes, which prohibit the
interception of communications over telecommunication systems, the unauthorized
disclosure of personal data, and the unauthorized accessing of data held on a computer.
(Orr Decl. 18). Therefore, English law provides some remedy for Hutharts injuries.
Huthart argues that the MTVIL is an inadequate forum because it is structured to
address claims against NGN and Glenn Mulcaire (who is the main NGN investigator
implicated in the Hacking Scheme), whereas she has also alleged claims against NI and
News Corp. (Hutharts Brief at 8). However, Defendants have established that claims
against NI and News Corp. would not be barred from the MTVIL, so long as Hutharts
claims meet the basic criteria. (Third Orr Decl. 6; see also Third Declaration of
Christa J ane Band 6 (Docket No. 57-3) (noting that other claimants in the MTVIL
have named defendants in addition to NGN and Mulcaire)).
Huthart also argues that the MTVIL is inadequate because its system of paired
settlement offers is designed to favor early settlement and creates a disincentive for
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claimants to go to trial. (Opp. at 5; Lewis Decl. 16-24). However, the fact that the
MTVIL incentivizes early settlement demonstrates that some remedy is available to
Huthart, and nothing indicates that this remedy would be so inadequate as to constitute
no remedy at all. Moreover, Huthart could simply choose to proceed in the general
civil court system, which does not appear to operate under the paired settlement
system.
Huthart also argues that English law offers no remedy for a significant portion of
her claims. (Hutharts Brief at 7-8). In particular, she argues that England provides no
cause of action to hold NI and News Corp. directly liable because they knew or should
have known about NGNs hacking activity, failed to stop NGNs hacking, and
participated in the cover-up of the hacking. (Hutharts Brief at 8; Tomlinson Decl.
20). Again, this argument could have been raised in the Opposition, but was not.
On the merits, this argument appears to be more artful, than substantive. Huthart
has not explained what she means, or what claim for relief under American law would
hold NI and News Corp. directly liable for such actions. The Complaint does not
allege a separate claim for relief specifically asserting that NI and News Corp. are
liable for activities that they knew or should have known about, failed to stop, or
participated in covering up. Rather, it seems the gravamen of the Complaint is that all
Defendants participated in the Hacking Scheme. Each claim is alleged against all
Defendants, and many of the claims turn on intentional or willful conduct. (See, e.g.,
Compl. 75, 76, 78, 81, 83, 100-104, 120). Therefore, based on the allegations in the
Complaint, it appears that there would be liability against all Defendants for their
actions. Hutharts expert, Hugh Tomlinson, is certainly well credentialed. (See
Tomlinson Decl. 3-4). But he has not opined, nor would the Court find it credible if
he did, that if all the allegations in the Complaint were true, NI and News Corp. would
escape liability under English law. In light of the Complaints allegations that all
Defendants committed the alleged acts, it is immaterial that there is no cause of action
in England to hold NI and News Corp. liable for activities they knew or should have
known about, failed to stop, or participated in covering up.
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Huthart also argues that England is an inadequate forum for her claims under the
Stored Communications Act and the Wiretap Act. (Opp. at 4). In the supplemental
briefing, Huthart further explains that the Stored Communications Act permits a claim
for unauthorized accessing, obtaining, interfering with, or preventing access to a stored
wired communication, without requiring that the person committing such acts actually
obtain or listen to the content of the wire communication. (Hutharts Brief at 9). In
contrast, [n]o cause of action independent of actually listening to the communication
or otherwise obtaining the content of the communication exists in England and Wales.
(Tomlinson Decl. 22). Therefore, Huthart argues that she cannot litigate the subject
matter of her claim in England. (Hutharts Brief at 9).
The Court is likewise not persuaded that Huthart would be unable to litigate the
subject matter of her claims in England. The Complaint alleges that Mulcaire and
other unidentified investigators working for Defendants reset the pin number and
password on the voicemails of their targets, and then used and exploited the
unlawfully-obtained information to note, record and/or transcribe voice-mail
messages. (Compl. 19). Mulcaire and other unidentified investigators then
provided the direct mobile numbers, passwords, and pin numbers to NGN journalists
to enable them to hack and/or listen to, or to read transcripts of voice-mail messages
of targets. (Compl. 20). Mulcaire and others used the information in these voice-
mail messages in the preparation of articles or stories to be published by the Sun and
News of the World. (Compl. 19, 20). The Complaint then alleges that Mulcaire
and other investigators and journalists engaged in the above activities with regard to
Hutharts cellphone, intercepting her voice-mail messages in order to obtain the
private and confidential information on them. (Compl. 54).
In other words, the subject matter of Hutharts claim is not limited to the
allegation that Defendants and their agents simply accessed or interfered with her
voicemails. Rather, those allegations are part and parcel of a scheme, in which
Defendants and their agents are alleged to have intercepted and obtained the
information in Hutharts voicemails to use such information in tabloid stories.
Tellingly, the Ninth Circuit has described the offense of accessing a communication
under the Stored Communications Act as a lesser included offense of the offense of
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intercepting a communication under the Wiretap Act. United States v. Smith, 155 F.3d
1051, 1058 (9th Cir. 1998). Defendants have established that English law provides a
cause of action for the unauthorized interception of communications under the
Regulation of Investigatory Powers Act of 2000. (Orr Decl. 18).
Huthart analogizes this case to Phoenix Canada Oil Co. Limited v. Texaco, Inc.,
78 F.R.D. 445, 456 (D. Del. 1978), in which the court found Ecuador to be an
inadequate forum, in part, because no remedy existed under Ecuadorian law for two of
three legal theories advanced by the complaint. (See Hutharts Brief at 7-8). However,
the Court does not find Phoenix analogous. Here, it appears that England does not
recognize only one of six claims for relief in the Complaint. Even so, that one claim is
intertwined with and could be considered a lesser included offense of another claim,
interception of communications, which is recognized under English law.
Therefore, the fact that Huthart may not have an additional claim against
Defendants for accessing her voicemails does not render England inadequate. See
Gemini Capital Group, Inc. v. Yap Fishing Corp., 150 F.3d 1088, 1092 (9th Cir. 1998)
([T]he fact that Plaintiffs could not assert a RICO cause of action under Yap or FSM
[Federated States of Micronesia] law does not preclude a forum non conveniens
dismissal.). It is generally irrelevant that the courts in the other jurisdiction may
apply substantive law that is less favorable to Huthart. Piper Aircraft, 454 U.S. at 249
(stating that dismissal may not be barred solely because of the possibility of an
unfavorable change in law). The district court [i]s not required to ask whether
Plaintif[f] could bring this lawsuit in [the alternate forum], but rather, whether [the
alternate forum] offers a remedy for their losses. Lueck, 236 F.3d at 1143 (finding
that New Zealand was an adequate alternative foreign, where New Zealand law did not
permit Plaintiffs to maintain the exact suit as in the United States, but New Zealand
nonetheless provided a remedy for Plaintiffs loses). There is simply no evidence that
the remedy available in England would be so clearly inadequate or unsatisfactory, that
it is no remedy at all. Lueck, 236 F.3d at 1143 (quoting Lockman Found. v.
Evangelical Alliance Mission, 930 F.2d 764, 768 (9th Cir. 1991)).
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Accordingly, Defendants have established that England is an adequate
alternative forum for Hutharts claims.
Private Interest Factors
Given the existence of an adequate alternative forum, a district court must
consider the balance of private and public interest factors to determine whether to
dismiss on grounds of forum non conveniens. Lockman Found., 930 F.2d at 769.
[U]nless the balance [of private and public interest factors] is strongly in favor
of the defendant, the plaintiffs choice of forum should rarely be disturbed. Gulf Oil,
330 U.S. at 508. However, a foreign plaintiffs choice of forum merits less deference
than that of a plaintiff who resides in the selected forum, and the showing required for
dismissal is reduced. Lueck, 236 F.3d at 1145; see also Piper Aircraft, 454 U.S. at
255 (stating that the presumption in favor of the plaintiffs choice of forum . . . applies
with less force when the plaintiff or real parties in interest are foreign); Gemini
Capital, 150 F.3d at 1091-92 (holding that the plaintiffs decision to sue in Hawaii was
properly accorded less deference than if Hawaii had been his true home forum).
Moreover, a truly foreign plaintiff (i.e., someone who is not a United States citizen
or resident) is accorded less deference than an American citizen suing in a state other
than his state of residence. Boston Telecommcns Group, Inc. v. Wood, 588 F.3d
1201, 1207 (9th Cir. 2009). But even as to such quintessentially foreign plaintiffs, it
is clear that less deference is not the same thing as no deference. Id.
Huthart is a citizen and resident of the United Kingdom. (Compl. 4;
Declaration of Eunice Huthart 2 (the Huthart Declaration) (Docket No. 49-2)).
She, however, has worked in Los Angeles, California on numerous occasions and is
the sole owner of a California corporation. (Huthart Decl. 3, 4). Accordingly, the
Court accords some deference to Hutharts choice of forum, but it is less deference
than would be accorded if Huthart were a United States citizen or a California resident.
Courts consider the following private interest factors: (1) the residence of the
parties and the witnesses; (2) the forums convenience to the litigants; (3) access to
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physical evidence and other sources of proof; (4) whether unwilling witnesses can be
compelled to testify; (5) the cost of bringing witnesses to trial; (6) the
enforceability of the judgment; and (7) all other practical problems that make trial
of a case easy, expeditious and inexpensive. Lueck, 236 F.3d at 1145 (quoting Gulf
Oil, 330 U.S. at 508).

First, with regard to the residence of the parties and witnesses, this factor weighs
in favor of England. Huthart herself, her husband, her daughter, and current and
former NGN employees involved in the alleged hacking are located in England.
(Compl. 45, 50-51; Band Decl. 18; Mot. at 12). Huthart argues that other potential
witnesses, such as J olie and employees of her California company, are located in
California. (Opp. at 8; Huthart Decl. 14).
[A] courts focus should not rest on the number of witnesses or quantity of
evidence in each locale. Rather, a court should evaluate the materiality and
importance of the anticipated [evidence and] witnesses testimony and then
determine[] their accessibility and convenience to the forum. Lueck, 236 F.3d at
1146.
It appears that the most important witnesses are NGNs current and former
employees who were allegedly involved in and/or knew about the hacking because
they would be crucial to establishing Defendants liability. Similarly, the most
important evidence is that collected by the London Metropolitan Police Service since it
connects Defendants agents to the Hacking Scheme. For example, the Complaint
alleges that Hutharts name, cellular telephone number, her account number, and/or
her PIN number appear on four separate pages of notes recovered by the London
Metropolitan Police Service from the home of an investigator who was working for
NGN. (Compl. 16, 17, 52).
While Huthart argues that J olie and employees of her California company are
relevant to establishing how the intercepted voice messages harmed her business
relationships (Opp. at 8), it would appear that Huthart could also testify about the harm
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to her business relationships. Therefore, these witnesses appear to be less important
than the NGN employees.
Even according some deference to Hutharts choice of forum, it appears that the
first factor weighs in favor of England.
Second, with regard to the forums convenience to the litigants, this factor is
neutral. While it appears that the two United Kingdom Defendants would be
inconvenienced to some degree if forced to litigate here, as opposed to England,
Defendants have not addressed this factor head-on. (See Mot. at 12 (stating only that
the UK is clearly the most convenient forum for this litigation)). Moreover, given
Hutharts residence in England, the Court cannot assume that litigation in this forum
would be convenient for her. When the [plaintiffs] home forum has been chosen, it
is reasonable to assume that this choice is convenient. When the plaintiff is foreign,
however, this assumption is much less reasonable. Piper Aircraft, 454 U.S. at 255-56.
Given the lack of information regarding the forums convenience to either party,
the second factor provides little help in the analysis.
Third, with regard to access to sources of proof, this factor weighs in favor of
England. It appears that most of the relevant documents and physical evidence are
located in England, including files recovered by the London Metropolitan Police
Service, contracts between private investigators and NGN, and documents relating to
British news stories that allegedly published information taken from Hutharts
cellphone. (Compl. 16, 17, 31, 60-65; Band Decl. 15-17).
It is true that the Ninth Circuit has deemphasized the inconvenience of
transporting witnesses and documents overseas, due to advances in technology. See
Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1336 (9th Cir. 1984) ([A] district court
should keep in mind that the increased speed and ease of travel and communication . .
. makes, especially when a key issue is the location of witnesses, no forum as
inconvenient [today] as it was in 1947, when the Supreme Court decided Gilbert.).
However, Defendants have established that they cannot simply scan and upload to a
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database the documents relevant to this action. (Reply at 10). Instead, a number of the
documents relevant to this litigation are being held by the London Metropolitan Police
Service, and obtaining those documents would require applications to English courts.
(Id.). Accordingly, it would appear more burdensome and difficult to obtain these
documents for litigation in this forum, when some of those documents are already
being used in litigation in England. Moreover, Huthart has not shown that any
documents or other key pieces of evidence are located in California. (See Opp. at 9 n.6
(stating only vaguely that [e]vidence may also exist in the U.S.)).
Accordingly, this factor weighs in favor of England.
Fourth, with regard to the ability to compel unwilling witnesses, this factor
weighs in favor of England. As indicated above, most of the witnesses relevant to this
action are located in United Kingdom and appear to be citizens of the United Kingdom.
Accordingly, they are outside of this Courts subpoena power. See Fed. R. Civ. P.
45(b)(2) & (3) (providing for service of a subpoena in the United States, or service of a
subpoena on a United States national or resident who is in a foreign country).
Additionally, a party can carry its burden in showing that unwilling witnesses
exist by providing circumstantial evidence . . . that an ongoing criminal investigation
provid[es] a major disincentive to voluntary testimony. Duha v. Agrium, Inc., 448
F.3d 867, 877 (6th Cir. 2006) (quoting First Union Natl Bank v. Banque Paribas, 135
F. Supp. 2d 443, 450 (S.D.N.Y. 2001)). Here, it appears that potential witnesses in this
action are being criminally prosecuted in England for their involvement in the Hacking
Scheme, as alleged in the Complaint and as established by Defendants. (Compl. 16,
27, 29, 37; Second Declaration of J onathan B. Pitt, Exs. 9 & 10 (Docket No. 54-6)).
Conversely, the parties have not identified any unwilling witnesses who are not subject
to the compulsory process in England.
Fifth, with regard to the cost of bringing witnesses to trial, this factor weighs in
favor of England. As indicated above, the majority of the witnesses and virtually all of
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the most important witnesses in this action are located in the United Kingdom. While
it seems likely that some of those witnesses, including Huthart, her family, and J olie,
can access this forum with relative ease, this forum appears to be less accessible to
NGNs former and current employees, especially those facing criminal charges.
Sixth, with regard to the enforceability of judgment, this factor appears neutral.
Neither side has raised arguments that a judgment in this forum would be more or less
enforceable than one in England.
Seventh, with regard to other practical problems that make trial easy,
expeditious, and inexpensive, this factor weighs in favor of England. Each case is
unique, and thus, the details of Hutharts specific claims likely differ to some degree
from other claims related to the Hacking Scheme. Nonetheless, because the courts in
England are experienced in handling other claims related to the Hacking Scheme, and
the English courts have the authority to subpoena documents from the London
Metropolitan Police Service and to compel unwilling witnesses located there to testify,
it appears likely that litigation in England would be more efficient. See Lueck, 236
F.3d at 1147 (Given the existence of the related proceedings [in New Zealand], it is
all the more clear that the private interest factors weigh in favor of dismissal.);
Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696, 703 (9th Cir. 1995)
(affirming the district courts finding that all other factors that render trial of the case
expeditious and inexpensive weighed in favor of dismissal because a parallel action
in the High Court of Singapore was further advanced than the United States action).
Therefore, five factors weigh in favor of England, two factors are neutral, and no
factors weigh in favor of this forum. The private factors thus strongly favor of
England.
Public Interest Factors
Courts also consider the following public interest factors: (1) local interest of
lawsuit, (2) the courts familiarity with governing law, (3) burden on local courts
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and juries, (4) congestion in the court, and (5) the costs of resolving a dispute
unrelated to this forum. Lueck, 236 F.3d at 1147. The only factor truly at issue is the
local interest factor.

First, with regard to local interest, California has some identifiable interest in
this action, but that interest is outweighed by the other factors pointing to England as
the appropriate site for litigation.

Both parties agree that England has a strong interest in this action. (Mot. at 15-
16; Opp. at 12). Huthart is a United Kingdom citizen, and two Defendants are United
Kingdom entities. (Compl. 4, 6, 7). A number of the potential witnesses are in the
United Kingdom. The information obtained through the alleged hacking was
published in British newspapers. Accordingly, England has devoted substantial efforts
to addressing the Hacking Scheme: the London Metropolitan Police Service has
conducted multiple criminal investigations; numerous individuals have been arrested
and charged in England; England established the voluntary compensation scheme and
the MTVIL system specifically for claims arising from the Hacking Scheme; and the
Parliament of the United Kingdom has conducted numerous hearings on the phone
hacking. (See Mot. at 15-16).

Although Huthart objects to the manner in which Defendants introduced
evidence regarding the events described above, Huthart does not dispute that the
underlying events occurred. In fact, Huthart references the above events in her
Complaint. (Compl. 11, 16, 23, 25, 27, 30-32, 36-37, 40, 60, 61).

It is clear from the resources and activity devoted to addressing the Hacking
Scheme that England has a very high interest in this action. See, e.g., Lueck, 236 F.3d
at 1141, 1147 (finding that the interest in New Zealand regarding this suit is
extremely high, where the action related to a crash involving a New Zealand airline
carrying New Zealand passengers in New Zealand, and a New Zealand commission
investigated the causes and circumstances of the accident).

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Huthart argues that California also has an interest in this litigation because her
voicemail messages were hacked not only when she was in England, but also when she
was in Los Angeles. (Opp. at 12-13; Compl. 49). Huthart also argues that while she
was in Los Angeles, her voicemails were stored temporarily on facilities in the United
States and then transmitted on United States-based networks to the United Kingdom.
(Opp. at 37). Defendants dispute that any United States networks or facilities were
used in the alleged hacking. (Reply at 12, n. 18). Defendants argue that even while
Huthart was in Los Angeles, her voicemails were stored in servers owned and
maintained in the UK by the UK provider Vodafone, and that her voicemails were
accessed from the UK, by UK citizens working for a UK publication owned by NGN.
(Mot. at 15).

The Court need not resolve this factual dispute to determine this Motion. Even
assuming that Hutharts messages were stored temporarily in the United States and
transmitted using United States-based networks, this activity does not create a
sufficiently strong interest to outweigh the private interest factors and Englands strong
interest in this action. See Vivendi SA v. T-Mobile USA Inc., 586 F.3d 689, 694 (9th
Cir. 2009) (holding that the local interest in the case was tenuous where the only
asserted connection to the United States was the use of U.S. wires in various
communications between the parties); see also Piper Aircraft, 454 U.S. at 261 (finding
that [t]he American interest in this accident [was] simply not sufficient to justify the
enormous commitment of judicial time and resources that would inevitably be required
if the case were to be tried here, where the action related to an airplane accident in
Scotland, the pilot and all decedents heirs were Scottish citizens, and British
authorities had investigated the accident, even though Defendants were American
manufacturers); In re Air Crash Over Mid-Atl. on June 1, 2009, 760 F. Supp. 2d 832,
846 (N.D. Cal. 2010) (finding that [t]he American interest . . . ensuring the quality of
component parts on aircraft and protecting the rights of two American citizens, is real
and legitimate but less significant than the French interest, where an Air France
flight left Brazil for France carrying a plurality of French citizens and just two
Americans living abroad at the time of the crash).

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Accordingly, while California has some minimal interest in this action, that
interest does not justify the burden that litigation in this action would impose on this
court system and the local jury.

Second, with regard to the courts familiarity with the governing law, this factor
is neutral at best. Huthart argues that she has brought claims under federal and
California state law, and that this Court is more familiar with those laws, than an
English court. (See Opp. at 16). However, Huthart relies on case law that interprets a
choice-of-law clause. (See Opp. at 15 (citing Wash. Mutual Bank v. Superior Court, 24
Cal. 4th 906, 919, 103 Cal. Rptr. 2d 320 (2001)). No such choice-of-law agreement is
present here. If this action were dismissed and brought in England, it appears that
English courts would most likely apply English law under Englands choice-of-law
rules. (Second Declaration of Craig Wyndham Orr QC 29-34 (the Second Orr
Declaration) (Docket No. 54-5)). However, even if the English courts were to find
that federal or California state law applied, it appears that the English Courts are
accustomed to applying foreign laws, including those of the United States. (Second
Orr Decl. 35).

Third, with regard to court congestion, this factor also does not aid the Courts
analysis. Defendants have provided some data as to the congestion of the Central
District of California. (See Mot. at 16). While the MTVIL system in England would
appear to provide a more efficient mechanism for resolving Hutharts claims, her
claims could possibly be stayed for some time if filed in the MTVIL. (Tomlinson
Decl. 13-15; see also Third Orr Decl. 8-9). The parties have provided no
information about the congestion of the general civil litigation system in England.
Accordingly, the Court cannot determine the real issue, which is not whether a
dismissal will reduce a courts congestion but whether a trial may be speedier in
another court because of its less crowded docket. Gates Learjet, 743 F.2d at 1337.
Moreover, administrative considerations such as docket congestion are given little
weight in this Circuit in assessing dismissal under forum non conveniens. See id.
(The forum non conveniens doctrine should not be used as a solution to court
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congestion; other remedies, such as placing reasonable limitations on the amount of
time each side may have to present evidence, are more appropriate.).
Even giving some deference to Hutharts choice of forum and acknowledging
that California has a minimal interest in this action, the private interest factors and
Englands interest in this action weigh strongly in favor of dismissal.
The Motion is GRANTED.
The Motion to Intervene (Docket No. 61) filed by Brad Greenspan, and
Defendants Ex Parte Application to Continue Motion for Intervention of Brad
Greenspan Pending the Courts Determination on Defendants Motion to Dismiss
(Docket No. 65) are both DENIED as moot.
This Order shall constitute notice of entry of judgment pursuant to Federal Rule
of Civil Procedure 58. Pursuant to Local Rule 58-6, the Court ORDERS the Clerk to
treat this Order, and its entry on the docket, as an entry of judgment.
IT IS SO ORDERED.
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EX PARTE APPLICATION
LEGAL02/34840112v1

Louis A. Karasik (Cal. Bar # 100672)
Alston & Bird LLP
333 South Hope Street, 16th Floor
Los Angeles, CA 90071-3004
Telephone: (213) 576-1148
Facsimile: (213) 576-1100
Email: lou.karasik@alston.com

Brendan V. Sullivan (Pro Hac Vice)
Tobin J. Romero (Pro Hac Vice)
Joseph M. Terry (Pro Hac Vice)
Jonathan B. Pitt (Pro Hac Vice)
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, DC 20005
Telephone: (202) 434-5000
Facsimile: (202) 434-5029
Email: jpitt@wc.com

Counsel for Defendants News
Corporation, NI Group Limited f/k/a
News International Limited, News Group
Newspapers Limited


EUNICE HUTHART,

Plaintiff,

v.

NEWS CORPORATION, NI GROUP
LIMITED f/k/a NEWS
INTERNATIONAL LIMITED, NEWS
GROUP NEWSPAPERS LIMITED,
and JOHN and JANE DOES 1-10,

Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. CV 13-4253 MWF (AJWx)

Honorable Michael W. Fitzgerald

DEFENDANTS EX PARTE
APPLICATION TO CONTINUE
MOTION FOR INTERVENTION
OF BRAD GREENSPAN
PENDING THE COURTS
DETERMINATION ON
DEFENDANTS MOTION TO
DISMISS

[Filed concurrently with Declaration
of Louis A. Karasik and [Proposed]
Order]
Date: TBD
Time: TBD
Courtroom: 1600
Complaint Filed: June 13, 2013
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LEGAL02/34840112v1
TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively Defendants) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (Greenspan), pending the
Courts determination on Defendants Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspans intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspans pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspans rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.s acquisition of MySpace nearly ten
years ago. If Defendants pending Motion to Dismiss is granted, Greenspans
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
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LEGAL02/34840112v1
required to oppose Greenspans motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene
1
costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
///
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///
This Application is being made pursuant Local Rule 7-19 and this Courts
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiffs counsel by telephone call on May 15, 2014, and Plaintiffs counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (Karasik Decl.), 7.) The only
contact information provided in Greenspans papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl.,

1
Among other things, Greenspans intervention pleadings violate Federal Rule of
Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for
relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling
allegations of conspiracy untethered to any facts or legal theories and are barred by
the statute of limitations and the existence of a pending action in Delaware where
Greenspan has filed substantially the same disjointed allegations.
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.

Dated: May 19, 2014

ALSTON & BIRD LLP

By: /s/Louis A. Karasik
Louis A. Karasik (Bar # 100672)

Counsel for Defendants News Corporation, NI
Group Limited f/k/a News International Limited,
News Group Newspapers Limited

WILLIAMS & CONNOLLY LLP

By: /s/Brendan V. Sullivan
Brendan V. Sullivan (pro hac vice)
Tobin J. Romero (pro hac vice)
Joseph M. Terry (pro hac vice)
Jonathan B. Pitt (pro hac vice)

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LEGAL02/34840112v1
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively Defendants) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspans motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspans meritless
and unintelligible motion.
Plaintiff Eunice Huthart (Huthart or Plaintiff) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Hutharts complaint on
September 20, 2013.
2
(See Declaration of Louis A. Karasik (Karasik Decl.), 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniensand specifically
whether Huthart could bring her claims in Englandwas ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.
3
His pleadings were served on counsel for Defendants in

2
Defendants Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting
papers filed by Defendants on September 20, 2013. See Huthart v. News
Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3
Greenspans motion papers consist of a Notice of Motion to Intervene (Dkt.
No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in
Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May
2, 2014. Greenspan additionally served on Defendants local counsel a proposed
(cont'd)
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LEGAL02/34840112v1
Los Angeles, but not on Defendants lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., 3.) The matter has been set for hearing on June
30, 2014.
Greenspans motion to intervene has nothing to do with Hutharts complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspans
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspans challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________
(cont'd from previous page)
Complaint in Intervention, attached to the Karasik Declaration, that has not been
filed with the Court.
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspans motion to intervene in that matter. (Karasik Decl., 5; Exhibits B and
C.) Though Greenspans involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspans
views that hacking incidents in the UK show that News Corp. has engaged in bad
actsalbeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants pending Motion to Dismiss is granted,
Greenspans intervention will be moot. Ex parte relief to postpone Greenspans
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPANS MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
Good cause is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). [R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party. Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspans intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspans motion to intervene
because it would promote the most efficient use of the Courts and the parties
resources. A postponement of the matter would give the court time to rule on
Defendants pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspans convoluted motion. If Defendants Motion to Dismiss
is granted, Greenspans intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (A pending suit within federal
jurisdiction is by definition prerequisite to intervention.); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
legitimate ex parte applications . . . may be necessary when a party seeks a routine
order such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspans motion,
especially if Defendants substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspans Motion to
Intervene may be properly addressed at that time.
4

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4
As noted in the ex parte application, Plaintiffs intend to oppose Greenspans
purported motion, and if opposition is required, Defendants will show that
Greenspans motion fails to state any grounds to intervene, fails to state a cognizable
claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to
re-litigate Greenspans oft rejected challenges to News Corp.s acquisition of
MySpace almost a decade ago, and is barred by the statute of limitations and by the
existence of a pending action in Delaware where Greenspan is advancing the same
claims that are the subject of the proposed intervention.
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III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspans motion in order to promote
judicial economy and minimize prejudice to Defendants.

Dated: May 19, 2014

ALSTON & BIRD LLP






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CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Courts CM/ECF system,
pursuant to the Courts local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

/s/ Louis A. Karasik
Attorney for Defendant
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PROOF OF SERVICE

I, Louis A. Karasik, declare:

I am employed in the County of Los Angeles, State of California. My business
address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA
90071. I am over the age of eighteen years and not a party to the action in which this
service is made.

On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a
sealed envelope addressed to the parties as listed as follows:

Brad D. Greenspan
264 South La Cienega Blvd.
Unit 1216
Beverly Hills, CA 90211

BY MAIL: I am "readily familiar" with this firm's practice for the collection and the
processing of correspondence for mailing with the United States Postal Service. In the
ordinary course of business, the correspondence would be deposited with the United
States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with
postage thereon fully prepaid the same day on which the correspondence was placed
for collection and mailing at the firm. Following ordinary business practices, I placed
for collection and mailing with the United States Postal Service such envelope at
ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.

[Federal] I declare under penalty of perjury that the foregoing is true and correct.

Executed on May 19, 2014, at Los Angeles, California.


Louis A. Karasik

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Louis A. Karasik (Cal. Bar # 100672)
Alston & Bird LLP
333 South Hope Street, 16th Floor
Los Angeles, CA 90071-3004
Telephone: (213) 576-1148
Facsimile: (213) 576-1100
Email: lou.karasik@alston.com

Brendan V. Sullivan (Pro Hac Vice)
Tobin J. Romero (Pro Hac Vice)
Joseph M. Terry (Pro Hac Vice)
Jonathan B. Pitt (Pro Hac Vice)
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, DC 20005
Telephone: (202) 434-5000
Facsimile: (202) 434-5029
Email: jpitt@wc.com

Counsel for Defendants News
Corporation, NI Group Limited f/k/a
News International Limited, News Group
Newspapers Limited


EUNICE HUTHART,

Plaintiff,

v.

LIMITED f/k/a NEWS
INTERNATIONAL LIMITED, NEWS
GROUP NEWSPAPERS LIMITED,
and JOHN and JANE DOES 1-10,

Defendants.
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Case No. CV 13-4253 MWF (AJWx)


DEFENDANTS EX PARTE
APPLICATION TO CONTINUE
MOTION FOR INTERVENTION
OF BRAD GREENSPAN
PENDING THE COURTS
DETERMINATION ON
DEFENDANTS MOTION TO
DISMISS

[Filed concurrently with Declaration
of Louis A. Karasik and [Proposed]
Order]
Date: TBD
Time: TBD
Courtroom: 1600
Complaint Filed: June 13, 2013
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TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that Defendants News Corporation, NI Group
Limited, and News Group Newspapers Limited (collectively Defendants) hereby
apply ex parte to continue the June 30, 2014 hearing on the pro se motion to
intervene filed on May 2, 2014 by Brad Greenspan (Greenspan), pending the
Courts determination on Defendants Motion to Dismiss the underlying action. If
the Motion to Dismiss, which presently is under submission after supplemental
briefing filed by the parties on March 17, 2014, is granted, Greenspans intervention
motion will be moot.
As set forth more fully in the accompanying Memorandum of Points and
Authorities and the Declaration of Louis A. Karasik filed concurrently herewith, a
continuance of the hearing and the time for filing any opposition papers by
Defendants regarding Greenspans pro se motion will promote judicial economy and
avoid potentially unnecessary proceedings to address the many defects apparent on
the face of Greenspans rambling and incoherent pleadings. Greenspan seeks to
intervene to air accusations against California State Senators and United States
Congressman for allegedly participating in vague, undefined conspiracies with
companies such as Google, Yahoo, AOL, JP Morgan and many others, including
News Corp., related in some way to News Corp.s acquisition of MySpace nearly ten
years ago. If Defendants pending Motion to Dismiss is granted, Greenspans
motion to intervene will be moot because there will be no underlying action, and thus
no proceeding in which Greenspan might seek to intervene. A postponement may
thus avoid the Court having to hear an unnecessary motion and avoid the necessity of
Defendants responding to the pleadings submitted by Greenspan, promoting judicial
economy for all parties and the Court. A continuance of this matter would not
prejudice Greenspan, particularly since he is pursuing substantially similar claims in
a lawsuit filed in the Delaware Court of Chancery. In contrast, if Defendants were
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required to oppose Greenspans motion prior to a decision on the Motion to Dismiss,
they would be forced to incur fees and costs to detail the many reasons the pro se
motion fails to state grounds to intervene
1
costs that would be unnecessary in the
event that this Court rules that this case should be dismissed under the doctrine of
forum non conveniens.
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This Application is being made pursuant Local Rule 7-19 and this Courts
courtroom procedures and standing order. Notice of this Application was provided
to Plaintiffs counsel by telephone call on May 15, 2014, and Plaintiffs counsel
advises that Plaintiff does not joint the ex parte and intends to oppose the motion to
intervene. (Declaration of Louis A. Karasik (Karasik Decl.), 7.) The only
contact information provided in Greenspans papers are a mailing address, so
Defendants attempted to provide notice of this Application to Greenspan by
attempting to hand deliver a letter to that address on May 16, 2014. (Karasik Decl.,

1
Among other things, Greenspans intervention pleadings violate Federal Rule of
Civil Procedure Rule 8, fail to state any coherent much less cognizable claim for
relief, lack any nexus to the claims pursued by plaintiff Huthart, consist of rambling
allegations of conspiracy untethered to any facts or legal theories and are barred by
the statute of limitations and the existence of a pending action in Delaware where
Greenspan has filed substantially the same disjointed allegations.
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8.) The address provided by Greenspan was a rented mailbox, and we were advised
by the proprietor that it was canceled over a year ago for nonpayment.

Dated: May 19, 2014

ALSTON & BIRD LLP





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I. INTRODUCTION
Defendants News Corporation, NI Group Limited, and News Group
Newspapers Limited (collectively Defendants) make this Ex Parte Application in
order to avoid the premature and potentially unnecessary briefing and consideration
of a frivolous pro se motion to intervene filed by Brad Greenspan. Specifically,
Defendants seek a continuance of the motion to intervene until such time as the
Court rules on Defendants Motion to Dismiss the underlying action, which, if
granted, would render moot Greenspans motion to intervene and spare the Court
and the parties from the burden of considering and briefing Greenspans meritless
and unintelligible motion.
Plaintiff Eunice Huthart (Huthart or Plaintiff) filed her complaint on June
13, 2013. The suit concerns allegations of voicemail hacking that occurred in the
United Kingdom. Defendants filed a Motion to Dismiss Hutharts complaint on
September 20, 2013.
2
(See Declaration of Louis A. Karasik (Karasik Decl.), 2.)
The Motion to Dismiss came on for hearing on February 24, 2014. (Id.)
Supplemental briefing related to the issue of forum non conveniensand specifically
whether Huthart could bring her claims in Englandwas ordered on February 25,
2014 and was concluded in March 2014. (Id.) The matter remains under
submission.
Pro se litigant Greenspan filed a purported motion to intervene and related
papers on May 2, 2014.
3
His pleadings were served on counsel for Defendants in

2
Defendants Motion to Dismiss refers to the Motion to Dismiss Case Under
FRCP Rules 12(b)(2), 12(b)(6) and for Forum Non Conveniens and supporting
papers filed by Defendants on September 20, 2013. See Huthart v. News
Corporation et al., Case No. CV 13-4253 MWF (AJWx), Dkt. No. 41.
3
Greenspans motion papers consist of a Notice of Motion to Intervene (Dkt.
No. 61), a Memorandum in Support (Dkt. No. 62), Declaration of Brad Greenspan in
Support (Dkt. No. 63), and a Proof of Service by Mail (Dkt. No. 64), all filed on May
2, 2014. Greenspan additionally served on Defendants local counsel a proposed
(cont'd)
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Los Angeles, but not on Defendants lead counsel, the Williams & Connolly firm in
Washington, D.C. (Karasik Decl., 3.) The matter has been set for hearing on June
30, 2014.
Greenspans motion to intervene has nothing to do with Hutharts complaint.
Greenspan does not allege he is the victim of any voicemail hacking or any allegedly
wrongful conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., 4.) Rather, Greenspan appears to allege, though the incoherent nature of his
allegations makes it difficult to discern, that he has been harmed by a vast conspiracy
involving everything from allegedly wrongful employment practices by technology
companies like Google, Intel and Yahoo to the bribery of and misconduct by
California State Senators and United States Congressmen. The intervention papers
advance convoluted claims that all of this misconduct is related in some fashion to
News Corp.s acquisition in 2005 of Intermix Media Inc., which owned and operated
several websites including MySpace. (See Exh. A to Karasik Decl., Greenspans
Complaint in Intervention at 3:20-67:24.) This is not the first time Greenspan has
filed claims on that subject: Greenspan was the founder of E-Universe, the
predecessor of Intermix; his claims challenging News Corp.s acquisition of
MySpace and several other attempts to raise challenges to that transaction have been
dismissed over the years by both state and federal courts. The first dismissal of
Greenspans challenges to the MySpace transaction was in 2006. See Greenspan v.
Intermix Media, Inc., Case No. B196434, 2008 WL 4837565 (Cal. App. Nov. 10,
2008)) (affirming 2006 dismissal of individual and shareholder actions brought by
Greenspan challenging the MySpace transaction). The next attempt to challenge the
transaction was rejected in Brown v. Brewer, Case No. 2:06-cv-3731 (C.D. Cal.),
where the federal court in 2010 dismissed Greenspan as a putative class member
________________________
(cont'd from previous page)
Complaint in Intervention, attached to the Karasik Declaration, that has not been
filed with the Court.
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from a shareholder derivative action challenging the merger, and in 2011 denied
Greenspans motion to intervene in that matter. (Karasik Decl., 5; Exhibits B and
C.) Though Greenspans involvement in these matters has been concluded for
several years, Greenspan most recently filed a pro se complaint on April 22, 2014 in
the Delaware Court of Chancery, naming News Corp. and twenty other defendants in
a pleading that advances the same or similar conspiracy claims found in the
intervention papers, all tied to the acquisition of Intermix in 2005. See Greenspan v.
News Corp. et al., Case No. 9567 (Del. Ch. April 22, 2014). (Karasik Decl., 5;
Exh. D.) The apparent purpose of the proposed intervention is to air Greenspans
views that hacking incidents in the UK show that News Corp. has engaged in bad
actsalbeit wholly unrelated to those of which he complains. See Dkt. No. 62,
Greenspan Memorandum in Support of Motion to Intervene at 5:1-18.
As detailed below, if Defendants pending Motion to Dismiss is granted,
Greenspans intervention will be moot. Ex parte relief to postpone Greenspans
further pursuit of his incoherent intervention proceeding will promote the interests of
judicial economy and avoid potentially unnecessary proceedings.
II. JUDICIAL ECONOMY IS ACHIEVED BY CONTINUING THE
INTERVENTION MOTION BECAUSE GREENSPANS MOTION
WILL BE MOOT IF THE UNDERLYING ACTION IS DISMISSED
The Court may issue ex parte relief extending the time within which an act is
required or allowed to be done upon a showing of good cause. Fed. R. Civ. P. 6(b).
Good cause is broadly construed in a manner that affords the Court broad
discretion to manage its calendar. Ahanchian v. Xenon Pictures, Inc., 624 F.3d 1253,
1259 (9th Cir. 2010); Danjaq LLC v. Sony Corp., 263 F.3d 942, 961 (9th Cir. 2001)
(noting that a court has broad discretion in granting continuances). [R]equests for
extensions of time made before the applicable deadline has passed should normally .
. . be granted in the absence of bad faith on the part of the party seeking relief or
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prejudice to the adverse party. Ahanchian, 624 F.3d at 1259. (internal citations
omitted.) Here, the deadline to oppose Greenspans intervention has not passed, the
applying Defendants have not acted in bad faith, and there is no prejudice to
Greenspan. Good cause exists for a continuance of Greenspans motion to intervene
because it would promote the most efficient use of the Courts and the parties
resources. A postponement of the matter would give the court time to rule on
Defendants pending motion to dismiss before the parties are forced to incur the cost
of responding to Greenspans convoluted motion. If Defendants Motion to Dismiss
is granted, Greenspans intervention would be moot because a prerequisite for
intervention is the existence of an underlying action. See Hartley Pen Co. v. Lindy
Pen Co., 16 F.R.D. 141, 146 (S.D. Cal. 1954) (A pending suit within federal
jurisdiction is by definition prerequisite to intervention.); see also Arakaki v.
Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003) (intervention inappropriate where
underlying claim dismissed).
An application for a continuance of a hearing is the type of routine
administrative relief that is particularly appropriate on an ex parte basis. See In re
Intermagnetics Am., Inc., 101 B.R. 191, 193-94 (C.D. Cal. 1989) (noting that
legitimate ex parte applications . . . may be necessary when a party seeks a routine
order such as adjusting the hearing date of a motion). This Motion simply seeks to
ensure the proper sequencing of motions. There is no prejudice to Greenspan from a
continuance. See Fuller v. Amerigas Propane, Inc., C 09-2493TEH, 2009 WL
2390358 at*1 (N.D. Cal. Aug. 3, 2009) (no prejudice in connection with a short
delay). Indeed, there is no possible prejudice to Greenspan, because he does not
need to intervene in this matter to raise his assertions: he has already filed a lawsuit
in Delaware advancing these very claims. Defendants, by contrast, would be
significantly prejudiced if forced to respond at this time to Greenspans motion,
especially if Defendants substantive opposition is mooted by the subsequent
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dismissal of the case on Defendants pending Motion to Dismiss. See In re Apple
iPhone 3G Products Liab. Litig., C 09-02045 JW, 2010 WL 9517400 at *2 (N.D.
Cal. Dec. 9, 2010) (holding that prejudice to defendants and to the court of moving
forward with proceedings that could be mooted by other proceedings supported a
stay). And in the event that the Motion to Dismiss is denied, Greenspans Motion to
Intervene may be properly addressed at that time.
4

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4
As noted in the ex parte application, Plaintiffs intend to oppose Greenspans
purported motion, and if opposition is required, Defendants will show that
Greenspans motion fails to state any grounds to intervene, fails to state a cognizable
claim, is rife with rambling and frivolous allegations of vast conspiracies, seeks to
re-litigate Greenspans oft rejected challenges to News Corp.s acquisition of
MySpace almost a decade ago, and is barred by the statute of limitations and by the
existence of a pending action in Delaware where Greenspan is advancing the same
claims that are the subject of the proposed intervention.
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III. CONCLUSION
Good cause exists for a continuance because a postponement of the
intervention motion would allow the Court to rule on Defendants pending Motion to
Dismiss without requiring the parties or the Court to expend time and effort to
respond to a motion that could be rendered moot. Defendants respectfully request
that this Court postpone any hearing on Greenspans motion in order to promote
judicial economy and minimize prejudice to Defendants.

Dated: May 19, 2014

ALSTON & BIRD LLP






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CERTIFICATE OF SERVICE
I declare that I am over the age of eighteen (18) and not a party to this action.
My business address is 333 South Hope Street, 16th Floor, Los Angeles, CA 90071-
1410.
On May 19, 2014, I served the following document(s): EX PARTE
APPLICATION on the following parties in case CV 13-4253 MWF (AJWx) via
either Notice of Electronic Filing generated by the Courts CM/ECF system,
pursuant to the Courts local rules.
I declare under penalty of perjury under the laws of the United States of
America that the foregoing is true and correct.

Attorney for Defendant
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PROOF OF SERVICE

I, Louis A. Karasik, declare:

I am employed in the County of Los Angeles, State of California. My business
address is Alston + Bird LLP, 333 South Hope Street, Sixteenth Floor, Los Angeles, CA
90071. I am over the age of eighteen years and not a party to the action in which this
service is made.

On May 19, 2014, I served the document(s) described as EX PARTE
APPLICATION on the interested parties in this action by enclosing the document(s) in a
sealed envelope addressed to the parties as listed as follows:

Brad D. Greenspan
Unit 1216

BY MAIL: I am "readily familiar" with this firm's practice for the collection and the
processing of correspondence for mailing with the United States Postal Service. In the
ordinary course of business, the correspondence would be deposited with the United
States Postal Service at 333 South Hope Street, Los Angeles, California 90071 with
postage thereon fully prepaid the same day on which the correspondence was placed
for collection and mailing at the firm. Following ordinary business practices, I placed
for collection and mailing with the United States Postal Service such envelope at
ALSTON + BIRD LLP, 333 South Hope Street, Los Angeles, California 90071.

[Federal] I declare under penalty of perjury that the foregoing is true and correct.

Executed on May 19, 2014, at Los Angeles, California.


Louis A. Karasik

FtLED
Brad Greenspan, Pro Se
264 South La Cienega
Suite 1216
I
u
EUNICE HUTHART,
)
)
Plaintiff,
)
V.
)
)
)
)
)
NEWS CORPORATION, NI GROUP )
LIMITED f/k/a NEWS
)
INTERNATIONAL LIMITED,
)
NEWS GROUP NEWSPAPERS
),
LIMITED, and JOHN and JANE
)
DOES 1-10
)
)
Defendants.
)
)
)
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Case No. CV 13-4253 MWF
MEMORANDUM IN SUPPORT
AND MOTION FOR
INTERVENTION
PLAINTIFFS MOTION TO INTERVENE
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3
INDEX
4
0- CASE LAW CITED pg. 3
6 I- INTRODUCTION
pg. 4
7
11-BACKGROUND ph. 4
8
9
III CONCLUSION
p. 22
1 0
1 1
1 2
1 3
1 4
1 5
1 6
1 7
1 8
1 9
20
21
22
23
24
25
26
27
28
2
j
I
CASE LAW CITED
See Luther v. Countrywide Homes Loans Servicing LP, 533 F. 3d 1031, 1033-34 pg. 7(9th
2
Cir. 2008)
Arakaki v. Cayetano, 324 F.3d 1078, 1083 (9th Cir. 2003)
pg. 10
3 Donnelly v. Glickman, 159 F. 3d 405, 409 (9th Cir. 1998) pg.] 0
Northwest Forest Res. Council v. Glickman, 82 F. 3d 825, 836 (9th Cir. 1996) pg.]]
4
United States v. Washington, 86 F. 3d 1499 (9th Cir. 1996)
pg.]]
Engra, Inc. v. Gabel, 958 F.2d 643, 644 (5th Cir. 1992).
Pg. 12
Northwest Forest Resource Council, 82 F. 3d at 837.
Pg. 12
6
Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993)
pg. 12
Donnelly, 159 F. 3d at 409;
pg. 12
7 U.S. v Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004)
pg. 12
California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir. 2006). Pg. 13
8
Forest Conserv. Council v. U.S. Forest Service, 66 F. 3d 1489, 1494 (9th Cir. 1995)
pg. 13
9
Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998). Pg.13
Yniguez v. Arizona, 939 F.2d 727, 735 (9th Cir. 1991).
Pg.13
10
Southwest Ctr. for Biological Diversity, 268 F. 3d at 822
pg. 13
Sierra Club, 995 F. 2d at 1486
pg. 14
11
California v. Tahoe Regl Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)). Pg. 14
12
Crawford v.
Equfax Payment Services, 201 F. 3d 877 (7th Cir. 2000). Pg. 15
M & I. Corp. v Von Clemm, and Atlantic Refining Co. v Standard Oil Co.,
pg. 15
13
both supra; Wolpe v Poretsky, 144 F2d 505 (DC Cir 1944), cert den 323 US 777, 85
L Ed 22, 61 S Ct 115, 132 ALR 741 (1944);
pg. 15
14
Ford Motor Co. v Bisanz Bros., 249 F2d 22 (8th Cir 195 7)
pg. 15
15
16
Annot 84 ALR2d]4]2 (1962)
pg. 15
17
Defenders of Wildlife v. Johanns, No. C 04-4512 PJH, 2005 WL 3260986, at
pg. 21
*8 (ND. Cal. Dec. 1, 2005))
18
19
20
21
22
23
24
25
26
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
27
28
- p
1
MOTION TO INTERVENE
2
INTRODUCTION
3
4
1 . Pursuant to Federal Rule of Civil Procedure 24(a), Plaintiffs

5
("Intervenor") move to intervene. In the alternative, Plaintiffs moves to intervene
6 permissively as defendants pursuant to Rule 24(b).
7
BACKGROUND
8
9
2. Plaintiff seeks permission to join the litigation to protect interests,

1 0 which may not be adequately protected without involvement of Plaintiff.
1 1
1 2
New evidence disclosed for the first time to public May 201 3 in the
1 3 Hitech Class Action Case 5:1 1 02509: specifically document
1 4 confirms for first time and proves Google had additional undisclosed illegal bilateral
1 5
1 6 agreements in place with AskJeeves,Tim/Wamer AOL, and other potential corporate
1 7 entities as of March 6, 2005. Such partners and agreements that existed including
1 8 between AskJeeves, Inc, its surviving acquiror IAC Corp. , and TimeWarner/AOL, and
1 9
20 Google are uncontested to have existed 6ut were not previously identified by
21 Defendants and HiTech Federal Class Action Plaintiffs had not previously
22 alleged or known to have existed and which violated Federal antitrust statues. All three
I
23
24 companies fraudulently concealed the agreements and failed to disclose them in their
25
SEC filings, violating security law and breaching their fiduciary obligations Directors
26 and officersall companies had.
27
28
4
I
3.
Plaintiff was injured in their business or property by reason of
A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial

3
4 gain Facilitated by the conduct of Google, and Intel, Objective unlawful scheme was
5
to obtain billions of dollars in proceeds and profits from i. rigging the sales of
6 competing internet assets at below fair market prices ii) benefitting from profits
7
8 generated from illegal phone hacking iii) benefitting and trading confidential
9 information received from the illegal phone hacking iv) covering up the illegal activity
1 0 using their media properties iv) extorting silence from victims and/or government
1 1
1 2 regulators including bribing police, UK Government ministers, United States Senators,
1 3 California State Senators and California State Cdgressmen and Congresswomen
1 4 and United States Congressmen and Congress serving women, and several related and
1 5
1 6 affiliated lobby qualified law firms, and other agency iritermediators, v) offering ad
1 7 credits and ad promotion in kind without disclosing such transactions to the public or
1 8 accounting for them in their SEC GAAP Accounting, and government ministers.
1 9
20
4.
Without intervention, plaintiff will be further harmed. The intervention i
21
22 also necessary to raise additional matters, facts, and Claims while providing to the
23 supporting evidence. The claims were created from a behind the scenes series of
24 meetings and communications since late 2003 thru May 1 , 201 4 between: i)
25
26 Intermix/MySpace, Inc. ii) News Corp iii) Yahoo iv) Google v) MSN, vi) AskJeeves
27 vii) JP Morgan viii) lac Corp ix) Time Warner, Inc.,x) Aol Inc. xi) Fox Interactive xii)
28
5
1
I
Fox xiii) Washington Post
2
3 I VICTIM OF SAME "BROAD CONSPIRACY"
4
5. Submitted herein and by reference and thus such facts and findings
5
6 will not be re-litigated in these pleadings unless Defendants disputes the accuracy
7
of the rulings and court orders and estoppel created by such settlements entered into by
8 Defendants. This conspiracy included: (1 ) agreements allowing AskJeeves Director
9
1 0 Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below fair market
1 1 value using His RedPoint fund where he is managing Director; (2) agreements allowing
1 2 Google, TimeWarner/AOL, News Corporation, AskJeeves, IAC, and other defendants
1 3
1 4 to collude to gain economic benefits by i) fabricating prior sale of MySpace stock
1 5 backdated agreement in November 2004 and ii) delaying closing of a competitive
1 6 MySpace search engine auction for a new commercial search engine agreement in the
1 7
1 8 months leading up to News Corporation acquiring 1 00% of eUniverse in September
1 9 2005; (3) agreements allowing Google to ensure its $4.4 Billion dollar August 2005
20 secondary is completed by tying up the fast growing online audience of MySpace,
21
22 significantly growing its share of online search engine advertising while shrinking
23 share of main rival #2 Yahoo; (4) agreements allowing News Corporation to purchase
24 MySpace.com at below fair market value, growing its market valuation and generating
25
26 billions in incremental profits and a massive online audience to seed new online assets
27 for years to come, while preventing a competitive auction with main rival Viacom.
28
6
S
ii. The intended and actual effect of these agreements was to fix and
2 suppress competition. Defendants conspiracy and agreements restrained trade and are
3 per se unlawful under federal law.
4 Plaintiffs seek injunctive relief and damages for
5
6. Pursuant to private right of action under antitrust Federal law, more

7 then 5000 shareholders of MySpace parent company, former publicly traded e
8 Inc. "EIJNI" are entitled to a private cause of action for damages suffered as a result of
9
1 0 an Antitrust conspiracy among Defendants.
1 1
7. According to SEC documents, Brad D. Greenspan incorporated

1 2 Entertainment Universe, Inc. ("EUNI"). On April 1 4, 1 999, eUniverse completed 3 w
1 3
1 4 reverse merger arranged by first CEO, main operator and principal control officer
1 5 under SEC Sarbanes Oxley federal laws, serving as Chairman and CEO thru October
1 6 30, 2003 when as victim of fraud set in motion by Google, refused to participate in
1 7
1 8 Defendants further fraud against and including public shareholders and petitioner
1 9 Resigned as Officer, and in December from the Board of Directors, which is publicly
20 Stated forth in the eUniverse see SEC Filings including 8k, acquired along with its
21
22 1 00% owned and controlled Myspace.com website assets that News Corporation
23 acquired after misleading shareholders to vote to approve such transaction at the end
24 of September 2005.
25
8. The credibility of News Corps Board including Kleiner Perkins Partner

26 Perkins and Intel Director Thornton has greatly diminished between 2005 and 201 2
27
28
1
t
)
1 fueled by its involvement in illegal phone hacking in the UK and the incredible effort
2 made to cover up and deny the deeds for years before finally in 2012, admitting indeed
3 the company had misled the public. Most recently CEO Rupert Murdoch personally
4 donated over $1 million dollars to charity as part of a $6 million dollar single settlemeni
5
with the family of a UK 13 year old girl who had gone missing and was murdered whil
6 also falling victim to one of News Corps operatives hacking her phone and erasing
7
voice mail evidence in the process of trying to find fresh angles for new stories.
8 Its been widely reported that the UK MET has over 5000 suspected victims of
9 phone hacking from News Corp and while only approximately 200 of the suspected
10 victims have been contacted by police to date, already there are 60 lawsuits in the UK
11 from News Corp phone hacking victims.
12
i. The credibility of Google largest shareholder Doerr Director of Defendant

13 is very poor historically and he was forced to abandon a Director seat at Apple, Inc. in
14
15 2010 after he was threatened with a complaint by the FTC. Doerr employee Reported
16 the following acts he is a current defendant in a Sexual harassment lawsuit pending
17 in San Francisco State Court.,
18
19
9. News Corporation, struck an undisclosed bilateral agreement with at

20 least Google, on or around September 30, 2005 before the Myspace and parent
21 corporation eUniverse operating in California (later thru name change operated as
22
23 Intermix, Inc) were acquired and ceased to be publicly traded.
24
10. News Corporation which operates Fox and Fox Interactive among other
25
subsidiaries is also alleged and believed to have struck related arrangements or
26
27 agreements with Ask Jeeves, Inc., IAC Corp, or TimeWarner/AOL, Inc. during
28
j
1 such time.
2
11. At least one Officer and/or Director of News Corporation and Go ogle
4 have admitted to a second bilateral agreement existing as of late 2006,which
5
Therefore defendants agreements already in place
6
for not poaching each others employees which included Google, AskJeeves, and
7
8 TimeWarner/AOL formed around existing commercial online advertising
9 agreements to provide and promote Googles online search product. News Corporatio
10
11 was merely telling a fabricated story of its 2005 agreement with Google in
12 the 2006 published story by its own employee it got
3 rd
party publisher to distribute
13 globally, "Stealing MySpace", which it recounted its deal with Google, Kleiner Perkins
14
15 Partner Doerr on Google Board with Perkins working or representing News
16
12. During this period, Google was in need of new commercial partners
17 to help it grow. Googles main focus was finding or securing new partner companies
18
19 that had significant number of unique visitors coming to their owned website properties
20
i. Deal #1: Commercial Ad Sense Pilot Partner Ad Buy and Endorsement
permission as part of commercial $20,000 purchase made by Google on or around
21 January 2003 , became aware that Greenspan was Chairman and CEO or the
22
principal executive officer by or before February 2003 . Google negotiated and
23 consummated its first direct agreement with eUniverse February 2003 . Google had grea
24 success after target of Deal#1 profits emerged shortly after eUniverse and Greenspan
25
agreed to deal and endorsement.
26
ii. Deal #2: Commercial Search:
27
28
.9
1
at least two of Googles top business development executives thru 2009,
Gerber, Morris, worked or contacted petitioner directly via email in
2
attempting to consummate a direct commercial search engine online
3
advertising agreement.
Petitioner opted to terminate Google discussions after announcing
4
execution of a Commercial Search agreement with Yahoo in late October
5
2003 , and launch of its SirSearch.com consumer facing brand by and for
benefit of eUniverse and its 1 00% owned MySpace division, launched
6
August 2003 but not announced to public until February 2004.
7
8
9 I.
Leal Standard for a Motion to Intervene
1 0
1 4. Petitioner is entitled to intervention as a matter of right under
1 1
1 2 Federal Rule of Civil Procedure 24(a)(2). Rule 24(a)(2) provides that:
1 3
"Upon timely application anyone shall be permitted to
intervene in an action, when the applicant claims an interest relating to
1 4
the property or transaction which is the subject of the action and the
1 5
applicant is so situated that the disposition of the action may as a
practical matter impair, or impede the applicants ability to protect that
1 6
interest, unless the applicants interest is adequately represented by
1 7
existing parties. Fed R. Civ. P.24(a)"
1 8 The Ninth Circuit construes Rule 24 liberally in favor of movants for
1 9
20 intervention. See Arakaki v. Cayetano, 3 24 F.3 d 1 078 , 1 08 3 (9th Cir. 2003 ) (citing
21 Donnelly v. Glickman, 15 9 F.3 d 405, 409 (9th Cir. 1 998 )). "Courts are guided primaril)
22 by practical and- equitable considerations." Id.
23
1
When considering a motion to intervene, the court "must accept as true the non-conclusory
24 allegations in the motion." Reich v. ABC/York-Estes Corp., "A motion to intervene as a matte
25 of right, moreover, should not be dismissed unless it appears to a certainty that the
26 intervener is not entitled to relief under any set of facts which could be proved under the
27 complaint." Id. (citing Lake Investors Dcv. Group v. Egidi Dcv. Group,).
28
1 0
1
1 5. For reasons set forth herein, Intervenor satisfies requirements of
2
F.R.C.P 24(a)(2) to intervene as a matter of right in present action.
4 Intervenors Motion to Intervene is Timely.
5
1 6. In considering the timeliness issue, courts consider three factors: (i) the
6
7
stage of the proceeding at time the applicant seeks to intervene; (ii) prejudice to
8 the existing parties from applicants delay in seeking leave to intervene; and (iii) any
9
1 0 reason for the length of delay in seeking intervention (how long the prospective
intervenor knew or reasonably should have known of her interest in the litigation). See
1 2 United States v. Washington, 86 F.3d 1 499 (9th Cir.1 996); Engra, Inc. v. Gabel, 958
1 3
1 4
F.2d 643, 644 (5th Cir. 1 992).
1 5
1 7. Intervention is timely because other Plaintiffs or those who
1 6 believe they are or should be have recently filed briefs as
1 7
1 8 allowed by the court. After these pleadings were reviewed Intervenor came to realize
1 9 certain facts and discovery exist that allow certain new claims that would greatly
20 benefit all other Plaintiffs. There are also new issues and matters which the
21
22 court has not engaged in yet.
23
1 8. Defendants will not be prejudiced by the intervention, as they already are
24 on notice as to the claims alleged against them and furthermore, defendants have
25
26 intentionally concealed discovery, documents, and emails from both existing Plaintiff
27
28
1 1
I
and Plaintiff seeking to intervene. Further, Intervenor shares same claims as the currei
2
Federal Plaintiff EH for Intervening Plaintiff to be consolidated to share its recovered
4 pieces of information lost for Existing Plaintiff from result of Defendants Fraudulent
5
concealment And newly discovered evidence and facts from the UK criminal trials
6
of 10 News Corporation executives including the CEOs "surrogate" daughter and
8 Ex-Editor and President of Defendants #1 and #2 news publications for CEO
9
To interface with and retain control of such editor run divisions of the GAAP
10
11 Aggregating public issuer, News Corporation, makes this motion to intervene timely.
12
For example, defendants have obstructed justice by eliminating Mr. Greenspan as
13
14 a fact/expert witness after defendants struck an arrangement with class counsel in May
15 2009 to destroy the value of Classs federal case and upside in Brown V. Brewer.
16
However, by simply toggling in the previously lost Rule 701 Damage Report,
17
18 There is now produced evidence of $32+ billion in earnings and credits that
19 News Corporation received benefit of thru a September 2005 acquisition of 100%
20 Of Intermix, inc. (formerly eUniverse, Inc.) holder of 100% of Myspace.com and its
21
data and user future value.
22
23
Defendant would seek to limit damages to Plaintiff EH and other
24 Victims based on its published and formerly disclosed to be accurate financials.
25
26 This evidence would be sought or required to be seen by future Jury that Plaintiff EH
27 Requested or that Plaintiff would receive benefit of if filing this claim as independent
28
12
1
action in Federal Court.
2
3
News Corporation informing Victims and litigants like EH, that is actually earned
4 an additional $3 2 billion or more from a transaction News Corporation engineered
5
In 2005 at the same time as entering into and facilitating the criminal acts that 3
6
7 employees have admitted were criminal against EH and thousands of other
8 entertainment former employees, consultants, or agents during 2005.
9
1 0 And that News Corporation had taken special accounting and unlawful accounting
services on and paid for such services to the same service providor, Ernst and Young
1 2 and Hogan Hartson Law LLC and Hogan Lovell Law 1 LC, and such earnings
1 3
1 4 previously hidden, could thru Court accepting Intervention of new Plaintiff
1 5 and allowing (Exhibit #1 : Rule 701 Damage Report) represents the fact
1 6 that News Corporation benefited more then most companies thru digital sales of its
1 7
1 8 products between 2005-201 4. Its digital products could only be sold by being created
1 9 with the payments to, hiring, and participation of Actors like Brad Pitt and
20 his wife actress who hired and retained Plaintiff EH during 2005 and 2006 at the very
21 least its uncontested. Because News Corporation sought to maximize profits
22 by creating schemes to bypass the economic limits of the cards he was dealt
23
24 as CEO of News Corporation by late 2004, Rupert Murdoch was scared
25
of losing control and of being ousted by Directors including Perkins and
26 Dinh, later Hurd helped further bully and control the growth of bribery
27
28
1 3
1
2
3
4
5
6
7
8
9
1 0
1 1
1 2
1 3
1 4
15
1 6
1 7
1 8
1 9
20
21
22
23
24
25
26
27
28
And hacking as Murdoch began to try to fade out of scene with Acquisition
Of Dow Jones and letting his right hand Les Hinton, the Halderman to Nixon
I FRAUDULENT CONCEALMENT & EMAIL & DISCOVERY SPOILATION
1 9. Defendants have omitted key discovery previously that caused key
I
evidence and facts to be fraudulently concealed. The fraudulent concealment includes
affirmative acts. Therefore, tolling would not take place until the fraudulent
concealment is fully disclosed. 7th Circuit Baker v. F&F Investment, 420 F.2d 1 1 91
(7th Cir. 1 970), cert. den., 400 U.S. 8 21 (1 970) (self-concealing conspiracy
demonstrates fraudulent
concealment) (dictum) United National Records, Inc. v. MCA, Inc., 609 F.Supp. 3 3
(N.D. Ill. 1 98 4) (denial of wrongdoing and false statements regarding price increase
sufficient to establish fraudulent concealment).
Therefore, when comparing the impact of fraudulent concealment by Defendants
And the late period even at the time of Settlement being rejected, the Court has allowed
Intervention for Class Action interventions.
2
Intervenor has a significantly protectable interest in subject matter of the action.
20. Intervenor absolutely can claim "an interest relating to the property or
transaction that is the subject of the action." Fed. R. Civ. Proc. 24(a)(2). Intervenor was
2
(quoting Agretti, 98 2 F.2d at 247); see also Almax Mill Prods.v.Congress Fin. Corp.,
(allowing nonsettling defendant to challenge a partial settlement that dismissed with
prejudice its cross-claims and stripped it of Indemnity contribution rights).
1 4
1 the largest common stock shareholder and an officer and Director thru December 10,
2 2003. "It is generally enough that the interest [asserted] is protectable under some law,
3
and that there is a relationship between the legally protected interest and the claims at
4
issue." Sierra Club v. United States EPA, 995 F.2d 1478, 1484 (9th Cir. 1993);
6
The Ninth Circuit has "taken the view that a party has a sufficient interest for
7
8 intervention purposes if it will suffer a practical impairment of its interests as a result of
the pending litigation." California ex rel. Lockyer v. U.S., 450 F.3d 436, 441 (9th Cir.
10 2006).
11
12
21. Intervenor will lose his chance to prove he was harmed by defendants
13 newly disclosed illegal bilateral agreements struck with AskJeeves, Inc. in 2005 and/or
14 Google in 2006 that was part of HiTech illegal antitrust conspiracy network of co-
15
16 conspirators and defendants including Intel and Google.
17
22. Plaintiff-Intervenor has a special interest in presenting evidence that will help
18
19 Court and existing Plaintiff. Defendants have also made a significant effort to
20 defame intervenor and continue to this day. Includes lying and misleading the public
21 about the origins of MySpace.com and passing off credit to employees of MySpace.corr
22
23 instead of the management at the time MySpace.com was created in August 2003 which
24 was led by Intervenor. Defendants have and will continue to cause massive damage to
25 intervenor thru Defendants false claims spread thru News Corp
26
27 properties and efforts to defame Intervenor. Therefore Intervenor will continue to be
28
15
1 damaged unless the new claims, evidence and matters presented in these pleadings are
2
equitably disposed of See Forest Conserv. Council v. U.S. Forest Service, 66 F.3d
4 1489, 1494 (9thCir. 1995)
5
Intervenors Interests Would Be Substantially Prejudiced
6
23. To intervene, a movant must show the disposition of the action may "as a
8 practical matter impair or impede" the ability to protect movants interest, unless the
9
interest is adequately represented by existing parties. Fed. R. Civ. Proc. 24(a)(2);
10
11 Cunningham v. David Special Commitment Ctr., 158 F.3d 1035, 1038 (9th Cir. 1998).
12
24. Intervenor Brad Greenspan will lose the ability to protect movants interest
13
14 as victim of California Privacy laws and State Constitution.
15
25. Intervention is appropriate where existing parties do not adequately
16 represent the Intervenors interests. Donnelly, 159 F.3d at 409 (citation omitted). The
17
18 Ninth Circuit considers three factors in determining the adequacy of representation:
19 "(1) whether the interest of a present party is such that it will undoubtedly make all of a
20 proposed intervenors arguments; (2) whether the present party is capable and willing to
21
22 make such arguments; and (3) whether a proposed intervenor would offer any necessary
23 elements to the proceeding that other parties would neglect." Arakaki, 324 F.3d at 1086
24 (citing California v. Tahoe Regl Planning Agency, 792 F.2d 775, 778 (9th Cir. 1986)).
25
26
EVIDENCE OF DEFENDANTS $32 PLUS BILLION IN BURIED PHONE
27 HACKING PROFITS historical context as Rule 701 lay witness to benefit Class
28
16
I]
I
Members
2
26. I ntervenors will offer perspectives and knowledge that the existing Plaintiff
3
and Defendants are likely to lack, overlook, or undervalue. "The court also may find th
4
a proposed intervenors interests are not adequately represented where the intervenor
6 would bring a perspective none of the other parties to the litigation have." Defenders o
7
Wildlife v. Johanns, No. C 04-45 12 PJH, 2005 WL 3 260986, at
*8
(N.D. Cal. Dec. 1,
8
2005)) (citation omitted); 1994)
3 .
10
The Court should grant intervention because "the magnitude of this case is such
11
that intervention will contribute to the equitable resolution of this case." See Kootenai
12
13 Tribe. The early presence of interveners may serve to prevent errors from creeping into
14 the proceedings, clarify some issues, and perhaps contribute to an amicable settlement.
15
16 Postponing intervention in the name of efficiency until after the original parties have
17 forged an agreement or have litigated some issues may, in fact, encourage collateral
18 attack and foster inefficiency. See Kleissler v. U.S. Forest Serv. & also Forest
19
Even if the Court finds Intervenor is not entitled to intervene as a matter of
20
right, the Court should exercise its discretion and permit intervention
21
22
27. A court may grant permissive intervention whenever the movant "has a
23 claim or defense that shares with the main action a common question of law or fact,"
24 and when the intervention would not "unduly delay or prejudice the adjudication of the
25
See Spangler v. Pasadena Board of Education, (the court may consider whether interveners "will
26
significantly contribute to the full development of the underlying factual issues in the Suit and the just
27
and equitable adjudication of the legal questions presented.")
28
17
PLAI NTI FFS MOTI ON TO I NTERVENE
1
original parties rights." Fed. R. Civ. P. 24(b). As explained above, Intervenor meets all
2
of these requirements. Intervenor is in an analogous posture, and like appellants in
4 Smoke v. Norton, has satisfied the requirements for intervention as of Right under Rule
5
24(a)(2) and for permission intervention under Rule 24(b)(2).
6
28. When considering a motion to intervene, the court "must accept as true
8 the non-conclusory allegations in the motion." Reich v. AB6/York-.Estes Corp., 64 F.3d
9
31 6,321 (7thCir. 1 995).
1 0
29. Permissive intervention is also justified because Intervenors participation
1 2 will facilitate an equitable result. See Spangler v. Pasadena Board of Education, 28 5 5 2
1 3
1 4 F.2d 1 326, 1 329 (9th Cir. 1 977) (the court may consider whether intervenors "will
1 5 significantly contribute to the full development of the underlying factual issues in the
1 6 suit and the just and equitable adjudication of the legal questions presented.").
1 7
1 8 Intervenor is needed to provide the full facts which do not exist in the current pleadings
1 9 The Court should grant intervention because "the magnitude of this case is such
20 that intervention will contribute to the equitable resolution of this case." Kootenai Tribe
21
22 31 3 F.3d at 1 1 1 1 . The early presence of intervenors may serve:
23
i) to prevent errors from creeping into the proceedings, clarify some issues, and
24
ii) perhaps contribute to an amicable settlement.
25
26 Postponing intervention, encourages collateral attack and foster inefficiency.
27 (see Kleissler v. U.S. Forest Serv. ,1 57 F.3d 964, 974 (3d Cir. 1 998);
28
1 8
1
30. Motion for Leadership
2
Motion for Leadership Memorandum and Memorandum in Support Class Certificate
4 will be submitted to the Court by June 30, 201 4.
5
III. 24(b) LEGAL ARGUMENT
6
7
The Court should allow the proposed Intervenor to join as a Co-Plaintiff
in the action. Federal Rule of Civil Procedure 24(b) provides that:
8
31 . Rule 24(b) allows permissive intervention if three grounds are met: (i) the
1 0 intervenor shows an independent ground for jurisdiction; (ii) the motion is timely; and
1 1
(iii) there exists a common question of law and fact between the intervenors claim an(
1 2
1 3 the main action. See Corner v. Cisneros, 37 F.3d 775 , 8 01 (2d Cir. 1 994). See German
1 4 v. Federal Home Loan Mortgage Corp., 8 96 F. Supp. 1385 , 1 391 (S.D.N.Y. 1995 ) ("Tb
1 5
1 6 Rule is to be construed liberally");
17 (1) There Is An Independent Ground For Jurisdiction
1 8
32. The Proposed Intervenor has claims against one or more same defendants
1 9
that arise under the federal antitrust laws, these claims are identical in all material
20
21 respects to those alleged in the current Complaint in those actions in which intervention
22 is sought. Claims happen also during same 2003-2006 timeline
23
24 Therefore, pursuant to 28 U.S.C. 1 33 1 (a), the Court has subject-matter
25 jurisdiction over the claims of the Proposed Intervenor.
26
27 (2) There Exist Common Questions Of Law And Fact Between The Intervenors
28
1 9
1
Claims And The Underlying Actions
2
33. The Proposed Intervenor claims are based upon same
4 violations of federal law as the underlying action. Thus, it is
5
indisputable that the intervenors claims and the claims asserted in the underlying
6
actions have many common -- indeed identical -- questions of law and fact.
8 Diduck v. Kaszycki & Sons Contractors, Inc., 1 49 F.R.D. 5 5 , 5 9 (S.D.N.Y. 1 993)
9
1 0 (intervention granted where "the intervenor s claims raise identical questions of law
and fact to those currently before the Court");
1 2
34. A court may grant permissive intervention whenever the movant "has a clam
1 3
or defense that shares with the main action a common question of law or fact," and
1 4
1 5 when the intervention would not "unduly delay or prejudice the adjudication
1 6
1 7 of the original parties rights." Fed. R. Civ. P. 24(b). As explained above, Intervener
1 8 meets all of these requirements. Intervener is in an analogous posture, and like
1 9
20 appellants in Smoke v. Norton, has satisfied the requirements for intervention
21 as of Right under Rule 24(a)(2) and for permission intervention under Rule 24(b)(2).
22 Indeed, as Mayfield makes clear, one may challenge a settlement agreement to which h
23
24 is not a party if the agreement will cause him" plain legal prejudice, as
25 when the settlement strips the party of a legal claim or cause of action. "Mayfield, 985
26 F.2d at 1 0933 Under the discretionary standard, Interveners burden is far lower than tha
27
28
20
V
1 required for intervention as a matter of right. See Defenders of Wildlife, see also
2 I Northwest Forest Res. Council.
3
4
(3) Policy Considerations In Class Actions Strongly Favor Granting Intervention
5
I Motions
6
7
35 . In class actions, intervention is "highly desirable" "to ensure adequate class

8 representation." Triefv. Dun & Bradstreet Corp., 144 F.R.D. 193 , 202 (S.D.N.Y. 1992)
9
(rejecting defendants argument that intervention was untimely).
10
11
The decision in Shields v. Washington Bancorporation, Civ. A. No. 90-110 1,

12 1992 WL 88004 (D.D.C. Apr. 7, 1992), is instructive. In Shields, the court denied a
13
motion for class certification because the plaintiff was not an adequate class
14
15 representative. Id. at
*1.
Subsequently, a new plaintiff moved to intervene as the class
16
plaintiff. Id.
17
18
3 6. In this case, failing to pursue immediate intervention and insertion of new

19 evidence and matters and testimony would harm existing Plaintiff and thousands of
20 other Absentee Class members substantially.
21
22
It also prevent Intervenor from taking advantage of Federal anti-

23 retaliatory whistleblower statues and protections petitioner is due. The impairment to
24 Intervenors interest from the Courts ruling if intervention is not granted is sufficient
25
26 to qualify for intervention as of right.
27
3 7. The Intervenor is willing to be represented by counsel f so "undue delay,

28
21
complication, or procedural difficulty remain unlikely."
2
McNeill, 719 F. Supp. at 250; see also German v. Federal Home Loan Mortgage Corp.,
4 899 F. Supp. 1155, 1166-67(S.D.N.Y. 1995)
5
IV. CONCLUSION
6
38. For the reasons described above, Intervenor respectfully requests the Court
7
8 grant The motion to intervene as a matter of right pursuant to Rule 24(a), or, in the
9 alternative, permissively pursuant to Rule 24(b) and approve the order attached herein.
10
39. The Intervenor further respectfully requests the Court grant in such
12 motion, the right to serve the Complaint in Intervention (Exhibit #2) , Motion for
13 Partial Summary Judgment (Exhibit #3) , ,and Motion for Preliminary 17200 Injunction
14
15 and/or Motion of Contempt for Violation 2006 California State Attorney 17200
16 Permanent Injunction entered into consent decree on behalf of Defendant News
17 Corporation with State Attorney (Exhibit #4) related and precedential rulings and
18
19 briefings attached as herein.
20 DATED: May 2, 2014
21 Respectfully submitted,
Brad D. Greenspan, Pro Se
25 264 South La Cienega Blvd.
26 Suite 1216
27 Beverly Hills, CA 90211
28
22
1
2 EXHIBIT #1
3 Rule 701 Damage Report
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I N T H E C O U R T O F C H A N C E R Y O F T H E S T A T E O F D E L A W A R E
G R E E N S P A N ,
) C . A . N o . 9 5 6 7 - M E
Plaintiff, )
V . )
N E W S C O R P O R A T I O N , et at
Defendants
R U L E 7 0 1 D A M A G E R E P O R T
1
Cases Cited
pg.3
I I NTRODUCTI ON
pg. 4
I I OVERVI EW OF ASSI GNMENT
pg. 6
SUMMARY: $32.453 Billion in damages suffered by Class Members
I I I TRANSACTI ON BACKGROUND pg. 6
I V COMPANY BACKGROUND
12g.6
V I NDUSTRY ENVI RONMENT I N 2005 pg. 6
VI PROBLEMS WI TH THE MANAGEMENT FORECAST AND
pg. 7
DR. WI LLI AM KENNEDYS DAMAGES REPORT
VI I TRANSACTI ON BACKGROUND AND ASSUMPTI ONS 129 - 11
VI I I DAMAGES ANALYSI S
pg. 12
I X- CONCLUSI ON: 129 - 15
EXHI BI T 1 - BACKGROUND / WORK EXPERI ENCE pg. 16
EXHI BI T 2Chart - Monthly unique visitors MySpace pg. 18
2
CASES CITED
Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993
pg. 4
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246
(9th Cir. 1997)
pg. 5
Asplundh Mfg. Div. v. Benton Harbor Engg, 57 F.3d 1190, 1196
(3dCir. 1995)
pg. 6
In Doft & Co. V. Travelocity
pg. 8
Marcel v. See, Inc
pg. 10
Henry v. Hess Oil Virgin Islands Corp pg. 10
Rowe v. State Farm Mut. Auto. Ins. Co., pg. 10
United States v. Bighead, 128F.3d 1329, 1335 (9th Cir. 1997)
pg. 10
3
DECLARATION OF LAY OPINION UNDER RULE 701 BY BRAD D.
GREENSPAN: CEO, DIRECTOR, FOUNDER PAID SEARCH
DIVISION, HEAD OF M&A THRU OCTOBER 30, 2003. ONLY
EXECUTIVE TO HAVE COMPLETED A GOOGLE VS. YAHOO
SEARCH AUCTION
I INTRODUCTION
I, Brad Greenspan, declare:
1. I submit this declaration in support of the Plaintiff Class
Members.
The following is based on upon my personal knowledge and if called as a
Witness I could and would testify competently thereto.
2. This declaration is made under Rule 701 based on my experience.
3. Rule 701 allows lay witness declarations limited to those
opinions or inferences, which are (a) rationally based on the perception of the
witness, and (b) helpful to a clear understanding of the witness testimony or
the determination of a fact in issue, and (D not based on scientific, technical,
or other specialized knowledge within the scope of Rule 701.
4. I am also in a unique position to provide a valuation amount
Under Rule 701. Most courts have permitted the owner or officer of a
business to testify to the value or projected profits of the business, without
the necessity of qualifying the witness as an accountant, appraiser, or similar
expert. See, e.g., Lightning Lube, Inc. v, Witco Corp. 4F.3d 11433d Cir. 1993)
4
(no abuse of discretion in permitting the plaintiffs owner to give lay opinion
testimony as to damages, as it was based on his knowledge and participation
in the day-to-day affairs of the business). Such opinion testimony is admitted
not because of experience, training or specialized knowledge within the
realm of an expert, but because of the particularized knowledge that the
witness has by virtue of his or her position in the business.
5. The amendment does not distinguish between expert and lay
witnesses, but rather between expert and lay testimony. Certainly it is possible for
the same witness to provide both lay and expert testimony in a single case. See, e.g.,
United States v. Figueroa-Lopez, 125 F.3d 1241, 1246 (9th Cir. 1997) (law
enforcement agents could testify that the defendant was acting suspiciously,
without being qualified as experts; however, the rules on experts were applicable
where the agents testified on the basis of extensive experience that the defendant
was using code words to refer to drug quantities and prices). The amendment
makes clear that any part of a witness testimony that is based upon scientific,
technical, or other specialized knowledge within the scope of Rule 702 is governed
by the standards of Rule 702 and the corresponding disclosure requirements of the
Civil and Criminal Rules.
The amendment is not intended to affect the "prototypical example(s) of the
type of evidence contemplated by the adoption of Rule 701 relat(ing) to the
appearance of persons or things, identity, the manner of conduct, competency of a
person, degrees of light or darkness, sound, size, weight, distance, and an endless
number of items that cannot be described factually in words apart from
inferences." Asplundh Mfg. Div. V. Benton Harbor Engg, 57 F.3d 1190, 1196 (3d Cir.
1995).
II OVERVIEW OF ASSIGNMENT
-Updated/revised damages assessment for benefit of Plaintiff Class Members.
SUMMARY: $32453 Billion in damages suffered by Class Members
III TRANSACTION BACKGROUND
i) $12.00 cash out merger with two investment banks providing fairness
valuation reports created
ii) after the $12.00 price was chosen by CEO and accepted by Board of Issuer.
IV COMPANY BACKGROUND
Company was online entertainment and social networking website creator and also
for purposes of report owned 100% of MySpace, Inc. At the time of its sale in 2005
for approximately $649 million dollars, the purchase of the public shareholders
equity was reported to be $580 million and there existed a $69 million dollar
obligation to pay the minority shareholders of MySpace, Inc. according to
agreements signed in February 2005 by and between Redpoint, Inc. and Intermix,
Inc, and MSV LLC.
V INDUSTRY ENVIRONMENT IN 2005
i) Unique in that the pace of online advertising was growing much faster
then other industries in the United States.
6.
ii) Google had just successfully raised $4.4 billion dollars and announced the
sale in August 2005.
iii) According to company documents and testimony of former head of online
search and CEO and founder of MySpace.com and Issuer, Issuer had opportunity to
run a search auction as of at least August 2005 between at least Google, Yahoo,
Microsoft, AskJeeves, and AOL.
iv) Go ogle and AOL set market price for value of search assets on or around
the
3 rd
and
4th
quarters of calander 2005, closing a new Search Partnership in
December 2005.
v) In this transaction, Google invests $1 Billion into AOL, valuing AOL to be
worth $20 billion by virtue of the 5% stake Google takes for its investment.
VI PROBLEMS WITH THE MANAGEMENT FORECAST AND DR. WILLIAM
KENNEDYS DAMAGES REPORT
0
The damage report by Anders Minkler & Piehi LLP is helpful to
confirm the problem areas with management forecasts and the banker fairness
opinions. The expert also cites certain evidence that is useful in triangulating the
valuations we calculate and conclude in this report are more accurate and sound.
ii) Because of both unreliable forecasting historically proven by
management for MySpace, Inc. and because MySpace was an early stage company
experiencing significantly greater then average growth rates, Kennedy should not
have opted to follow bankers fairness opinion method to use the 2009/20010 DCF
method for a company like Intermix and merely hoped to gain accurate methods for
(
7
an accurate valuation of MySpace merely by adjusting the underlying financials.
iii) In Doft & Co. V. Travelocity, the Delaware Court made several
precedential determinations when faced with the task of weighing using
management forecasts for a new fast growing company in a fast changing market
environment, stating:
a)
The court may consider "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court."
b)
"Both parties used a DCF approach and a comparable company approach to
value the shares.
c)
"A DCF analysis is a useful tool for valuing shares and is frequently relied on
by this court in appraisal actions."
d)
"The utility of a DCF analysis, however, depends on the validity and
reasonableness of the data relied upon. As this court has recognized,
"methods of valuation, including a discounted cash flow analysis, are only as
good as the inputs to the model."
e)
"The problem in this case is that the most fundamental input used by the
expertsthe projections offuture revenues, expenses and cash flowswere
not shown to be reasonably reliable."
D
"Delaware law clearly prefers valuations based on contemporaneously
prepared management projections because management ordinarily has the
best first-hand knowledge of a companys operations."
g)
"Here, management prepared the 5-year projections for the period 2002-
2005 and gave them to Sabre for use in its routine planning processes."
h)
"Often, projections of this sort are shown to be reasonably reliable and are
useful in later performing a DCF analysis. In this case, however, the court is
persuaded from a review of all the evidence that the Travelocity 5-year plan
does not provide a reliable basisfo rfo recasting future cash flows."
i)
"Travelocitys management held the strong view that these projections
should not be relied upon because the industry was so new and volatile that
iJ
reliable projections were impossible."
D
"Punwanifurther testified that because of the limited financial history of
Travelocity, together with a rapidly evolving marketplace, it was difficult "to
forecast the next quarter, let alone five years out."
k) "Id. "We were really not in a position to be able to put any credence on the
numbers, both on the revenue and on the cost side. And the only way to get
credibility in our numbers would have been to take those models and put
them through reasonability checks ... [that] were never done because, when
we built these frameworks, Ill call them, in the year 2000, we were in a
period of explosive growth. We were growing at 150 percent per year.... No
one really knew what the right number was." Id. at 381-82.
1) "Id. at 383. "It was bad enough before when we did the data, and we had
this new variable that got thrown into our lap, which totally destroyed our
ability to have any confidence in projections beyond one quarter out." Id.
m) "Although it was aware of the 5-year forecasts, Salomon did not conduct a
DCF analysis of Travelocity as part of its work in connection with the
merger. The testimony ofAnwarZakkour, Salomons managing director, is
especially relevant on this issue:
n)
"Q. Did Salomon Smith Barney prepare a discounted cash flow analysis of
Travelocity in connection with this transaction? A. Absolutely not."
o)
"Q. Why was no discounted cash flow, analysis prepared in connection with
this transaction?"
"A. Because this was an industry that was influx. And the management team
itself, which should have been the team that was most able to put together a set
of projections, would have told you it was virtually impossible to predict the
performance of this company into any sort of reasonable future term. And they
in fact had very little confidence with even, their 2002 forecast numbers because
of that."
p) "Q.
Is a discounted cash flow methodology a methodology that is
commonly used by Salomon Smith Barney in valuing companies?
A. Valuing mature companies, yes."
q)
"The court reluctantly concludes that it cannot properly rely on either partys
DCF valuation. The goal of the DCF method of valuation is to value future cash
flows. Here, the record clearly shows that, in the absence of reasonably reliable
contemporaneous projections, the degree of speculation and uncertainty
characterizing the future prospects of Travelo city and the industry in which it
operates make a DCF analysis of marginal utility as a valuation technique in this
case. If no other method of analysis were available, the court would, reluctantly,
undertake a DCF analysis and subject the outcome to an appropriately high level
of skepticism. The court, however, now turns to the other method of valuation
offered by the parties."
iv) The application of the Daubert standard rests on the level of generality of
the experts study. The more removed the experts data is from the facts of the
particular case the more unreliable and speculative his testimony becomes. For
example, in both Marcel v. See, Inc., and Henry v. Hess Oil Virgin Islands
Corp., the court excluded the experts testimony because the projections of
future earnings were based on general industry studies that failed to take into
consideration the specific circumstances of the plaintiff. In Rowe v. State Farm Mut.
Auto. Ins. Co., by contrast, the court allowed the projections because they were
based on the past billing history of the plaintiff, who as a result of his injuries could
not longer practice Law.
v) Rule 702s analysis is ordinarily prospective. Expert testimony is helpful
if it "will assist the trier of fact." Fed.R.Evid. 702 (emphasis added). Thus a
District court may not exclude expert testimony simply because the court can,
at the time of summary judgment, determine that the testimony does not result
in a triable issue of fact. Rather the court must determine whether there is "a
link between the experts testimony and the matter to be proved." United
States v. Bighead, 128 F.3d 1329, 1335 (9th Cir. 1997)
10
VII TRANSACTION BACKGROUND AND ASSUMPTIONS
iJ Based on the evidence reviewed, the Intermix Board avoided
using the experienced valuation M&A technology banker, JP Morgans Zakkour.
News Corp received the benefit of keeping this banker from representing Issuer.
Namely that News Corp did not have to overcome or pay the up to $1.3+ Billion that
Zakkour estimated MySpace was worth prior to the July 18, 2005 merger
Agreement being signed.
a) Zakkour leads Citibanks valuation/fairness report and is engaged by Ask
Jeeves Board of Directors along with Allen & Co. in February 2005 and values
AskJeeves worth at least $1.85 million at the time it signs a merger agreement with
IAC Corp. in March 2005.
b)
AskJeeves lead director David Carlick engaged Zakkour and Allen & co. to
work for and represent Ask Jeeves in February 2005, while he was at the same time
Director and Chairman of Intermix. In addition Andrew Sheehan, his partner in his
venture capital fund VantagePoint, a control shareholder in Intermix was a director
of both Intermix and MySpace, Inc. Geoff Yang a long time director of AskJeeves was
also a director of MySpace, Inc.
c)
The AskJeeves/IAC a stock for stock merger does not close until July 19,
2005.
d)
In April 2005, Zakkour joins JPMorgan. JPMorgan served as the investment
bank for IAC in the March 2005 announced merger with Ask Jeeves.
e)
One Board member of IAC Corp during this period is also the Chairman of
11
Investment bank Allen & Co. IAC also discloses it retains and works with Allen & Co.
as their banker in ongoing basis.
f] News Corp Director Stan Schuman in 2005 was and is one of most senior
bankers at Allen & Co. of senior bankers at Allen & Co.
gJ As of July 13, 2005 or earlier, Zakkour and JPMorgan have been retained to
value Intermix, Inc. and on July 16, 2005, Zakkours team leading the efforts for JP
Morgan and News Corp, provides a valuation for MySpace, Inc. of $1,040 - $1,367.
Zakkour according to Kennedy, uses "2006 EBITDA Multiples"
h) Defendants further determined they would not allow Deutsche Bank to
write a fairness opinion or be one of the two bankers it ultimately retained.
i) On or around July 13, 2005, Issuer retained both Thomas Weisel and
Montgomery. Both banks had not completed the valuation work or provided a full
valuation report prior to being retained. Unlike Montgomery and Thomas Weisel,
Deutsche Bank had already created and provided to at least Rosenblatt and
Sheehan, a Valuation report as of May 2005.
VIII DAMAGES ANALYSIS
1) Financial Projections for MySpace. Inc. using actual 2005 results known:
a) The most accurate way to ascertain the valuation for MySpace, Inc. is to
build a new set of financial projections more reliable then the management forecast
and then combine this data with the most unconflicted comparable valuation report
that existed at the time.
12
b)
We take the last actual quarter to quarter financial results for MySpace,
Inc. and use these as the base information which we know is accurate and build a
multi year forecast, initially we continue the actual growth rate and over time
reduce such growth rate to be conservative.
c)
Last Actual results for MySpace, Inc.: $3.74 million in revenue for the
March 2005 ending quarter which grew to $6.15 million in revenue for June 2005
quarter - 64% growth quarter to quarter.
d) Last actual results for MySpace, Inc: $463,000 in EBITDA for the March
2005 quarter which grew to $1.58 million in EBITDA for the June 2005 quarter.
e)
Using these growth rates, we then use Kennedys 55% EBITDA margin and
being conservative we reduce this to 45% for 2006. In 2007, we reduce growth rate
from 64% to 32%. In 2008, we reduce the quarterly growth rate to 22%.
Below we summarize the annual forecast.
fJ (CY2 006) Our MySpace, Inc. forecast using most recent actual results
shows $264.21 million in annual revenue for 2006 and EBITDA of $118.89 million
g) (CY2007) Our MySpace Inc. forecast shows $999 million in revenue
and EBITDA of $449.55 million.
h) (CY2008) Our MySpace, Inc. forecast shows $2.43 billion & EBITDA
of $1.09 billion.
2) ITS APPROPRIATE TO CONSIDER AND USE A COMPARABLE COMPANY
VALUATION ON A STAND-ALONE BASIS
a) We then determine that the May 2005 Deutsche Bank valuation report
13
which uses comparable company EBITDA valuations is reasonable and the prudent
work of unconflicted investment bankers trying to demonstrate their good faith and
knowledge of the Internet sector to Intermix in their efforts to be retained by
Intermix to contact potential buyers.
b) Our decision is further confirmed thru review of the recent Delaware case
in Doft & Co. V. Travelocity where the court states as part of its decision to reject
managements forecast and a valuation using DCF in favor of singularly using
comparable company valuation method.
c) "A comparable company analysis is often used in connection with a DCF
analysis. The court, however, may usea corn parable company valuation on
a stand-alone basis in an appraisal action when it is the only reliable
method of valuation offered by the parties. In Borruso v. Communications
Telesystems Intl, the court relied on a comparable company analysis
because neither expert was comfortable using a DCF analysis to value the
companys shares due to the limited financial data of the company available
as of the merger date. 753 A.2d 451, 455 n.5 (Del. Ch. 1999)."
d) We use the Deutsche report 2008 multiple for MySpace, Inc. of 22.5X
which is the top end of the "Estimated multiple range" as we believe this is
appropriate since based on the Kennedy report, Google stood out as the most
similar growth and profitability rates to MySpace, Inc.
e) Next we plug in the MySpaces new forecast EBITDA for 2008 which is
multiplied by the 22.5X comparable company EBITDA, resulting in a Valuation of
$24.52 Billion for 100% of MySpace, Inc.
fJ We agree with Kennedys takeover premium analysis and the need to
adjust valuation based on this analysis. In addition, we again take heed of the recent
14
Delaware court decision in Doft & Co. V. Travelocity where the court affirms this
analysis and recommends adding a premium to the buyout value as final step,
stating,
"Delaware law recognizes that there is an inherent minority
trading discount in a comparable company analysis because "the
[valuation] method depends on comparisons to market multiples
derived from trading information for minority blocks of the comparable
companies. The equity valuation produced in a comparable company
analysis does not accurately reflect the intrinsic worth of a corporation
on a going concern basis. Therefore, the court, in appraising the fair
value of the equity, "must correct this minority trading discount by
adding back a premium designed to correct it."
gJ
Therefore, we use Kennedys 35% takeover premium and summarize:
control Controlling value Option Value
premium Indication Exercise MySpace
2008 EBITDA MULTIPLE 35% $33.10213 ($69M) $33.033 Billion
Indication $32.453B
Based on the alternative guideline public company analysis provided above.
MySpace was undervalued by $31453 billion ($33.033B - $580M).
IX- CONCLUSION:
I declare on penalty of perjury under the laws of the United States of America that
the foregoing is true and correct. Executed this April 28, 2014 in Los
Angeles
15
Brad D. Greenspan (SEAL)
15
EXHIBIT 1 - BACKGROUND / WORK EXPERIENCE
QUALIFICATIONS OF EXPERT
-I have approximately 12 years of industry experience.
-I was CEO and founder of ellniverse, Inc. from its inception in 1998 as my idea thru
October 30, 2003.
-I was the founder of MySpace.com while Chairman and CEO of eUniverse in 2003.
PROFESSIONAL QUALIFICATIONS
-Educational & Professional Certification
i) Two years of Law Society Undergraduate at University of Santa Barbara
ii) Bachelors of Political Science, 1996 University of Los Angeles
PROFESSIONAL RECOGNITIONS AND AFFILIATIONS
i) Morgan Stanleys Internet analyst announced in November 2003 that
Issuer eUniverse as of October 2003s 6 month ending data, was the #1
fastest growing portal on the Internet eclipsing AOL and Yahoo.
ii) Founder of Myspace.com.
iii) Founder of eUniverse
PRESENTATIONS AND PUBLICATIONS
i) Between 1999-October 2003 I co-created and presented Issuers financial
forecasts and was sole decision maker on all internet strategy and determined
allocation of funds if any for any new project.
PROFESSIONAL EXPERIENCE
1996-19980 President of Palisades Capital a merchant investment bank
where I raised over $60 million dollars for 4 public companies.
1999- October 30, 2003 - Chairman and CEO of eUniverse, Inc.
16
-I was initial and first head of Search for ellniverse, Inc., the issuer and signed
first search partnership with Overture acquired and operated as Yahoo in
2003.
2004-2005- Palisades Technology - I was partners with Yahoo and operated
a search toolbar division for game companies including leading casual games
company Big Fish Games and Browser companies like AvantFind.com
2006-president, President LiveUniverse, Inc. - a network of entertainment
websites
2008-present, President of LiveVideo, Inc. - a Los Angeles based network of
entertainment websites
2006-present, Chairman of BroadWebAsia, Inc., - operates HupoTV.CN a
Chinese video entertainment website
2006-2009, Co-Founder and Board Member, Michigan based Draths
Corporation, clean technology leader in renewable green chemistry.
Management led by Michigan State University professors and green
chemistry award winners Dr. Karen Draths and Dr. John Frost.
2006-present, Board Member, Borba Corporation
2010-present- Managing Director of Social Slingshot Pte Ltd, a Singapore
based incubator fund partnered with the Singapore Governments National
Research Foundation (NRF). I was awarded this $5 million dollar fund to
encourage me to work with Singapore entrepreneurs and their universities
entrepreneur programs.
TESTIMONY IN TRIAL OR DEPOSITION
i) Greenspan V. eUniverse, 2004, Delaware Judge Strine. (See summary of trial
where I provided Delaware counsel evidence to uncover backdating fraud against
defendants)
ii) Delagado V. Intermix. I was expert witness for LA City and provided fact
information and background for the city of Los Angeles prosecutors in their adware
consumer case against Intermix that was settled after Intermixs listing expired.
17
EXHIBIT 2- Monthly unique visitors as reported by Comscore for Myspace.com
Compared to certain key months where Microsoft and Google offered MySpace or
its parent company certain economic offers which provide a value per month these
companies are willing to pay or value MySpace search at for the latest
traffic/audience statistics that are available during the month a deal is offered up
for MySpace.
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May2006
June 2006
July 2006
August 2006
September 2006
21.21M uniques
21.81M uniques
21.6M uniques
24.25M uniques
24.68M uniques
32.2M uniques
35.5M uniques
37.34M uniques
41.88M uniques
48.03M uniques
51.44M uniques
52.34M uniques
54.52M uniques
55.78M
$14.807
$22.1 Million
Value
MSFT$800M
OFFER
$25.0 Million
Value
GOOGLE $900
OFFER
jul

1
Case No.: 11-CV-02509-LHK
ORDER DENYING DEFENDANTS INDIVIDUAL MOTIONS FOR SUMMARY J UDGMENT
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NORTHERN DISTRICT OF CALIFORNIA

SAN J OSE DIVISION

IN RE: HIGH-TECH EMPLOYEE
ANTITRUST LITIGATION

)
)
)
)
)
)
)

ORDER DENYING DEFENDANTS
INDIVIDUAL MOTIONS FOR
SUMMARY J UDGMENT

THIS DOCUMENT RELATES TO:
ALL ACTIONS
)
)
)
)
)

Summary judgment is appropriate if, viewing the evidence and drawing all reasonable
inferences in the light most favorable to the nonmoving party, there are no genuine disputed issues
of material fact, and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material if it might affect the
outcome of the suit under the governing law, and a dispute as to a material fact is genuine if
there is sufficient evidence for a reasonable trier of fact to decide in favor of the nonmoving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). At the summary judgment stage, the
Court does not assess credibility or weigh the evidence, but simply determines whether there is a
genuine factual issue for trial. House v. Bell, 547 U.S. 518, 559-60 (2006). The moving party has
the burden of demonstrating the absence of a genuine issue of fact for trial. Celotex, 477 U.S. at
Case5:11-cv-02509-LHK Document771 Filed03/28/14 Page1 of 8

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323. To meet its burden, the moving party must either produce evidence negating an essential
element of the nonmoving partys claim or defense or show that the nonmoving party does not
have enough evidence of an essential element to carry its ultimate burden of persuasion at trial.
Nissan Fire & Marine Ins. Co. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir. 2000)
(citation omitted). Once the moving party has satisfied its initial burden of production, the burden
shifts to the nonmoving party to show that there is a genuine issue of material fact. Id. at 1103.
Importantly, at the summary judgment stage, the Court must view the record in the light most
favorable to the non-moving party. Brown v. City of Los Angeles, 521 F.3d 1238, 1240 (9th Cir.
2008).
The critical case for the legal standard to be applied to motions for summary judgment in
antitrust cases is Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986),
a case that challenged J apanese manufacturers lowering of prices as anti-competitive. In
Matsushita, the Supreme Court held that a plaintiff seeking damages for a violation of 1 [of the
Sherman Act] must present evidence that tends to exclude the possibility that the alleged
conspirators acted independently. Id. at 588. Under Matsushita, if Defendants can show a
plausible and justifiable reason for their conduct that is consistent with proper business practice,
Plaintiffs must show that the inference of conspiracy is reasonable in light of the competing
inferences of independent action or collusive action that could not have harmed [plaintiffs]. Id.
The Ninth Circuit has interpreted Matsushita to mean that where a defendant has demonstrated a
plausible business reason for its conduct, a plaintiff who relies solely on circumstantial evidence
of conspiracy . . . must produce evidence tending to exclude the possibility that defendants acted
independently. In re Citric Acid Litig., 191 F.3d 1090, 1096 (9th Cir. 1999). The Second Circuit,
in 2012, interpreted Matsushita and Citric Acid as follows: [Matsushita] further holds that the
range of inferences that may be drawn . . . depends on the plausibility of the plaintiffs theory.
Thus, where a plaintiffs theory of recovery is implausible, it takes strong direct or circumstantial
evidence to satisfy Matsushitas tends to exclude standard. By contrast, broader inferences are
permitted, and the tends to exclude standard is more easily satisfied, when the conspiracy is
economically sensible for the alleged conspirators to undertake and the challenged activities could

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not reasonably be perceived as procompetitive. In re Publn Paper Antitrust Litig., 690 F.3d 51,
63 (2d Cir. 2012) cert. denied, 133 S. Ct. 940 (2013).
The Court finds that in light of the summary judgment standard as viewed through the lens
of Matsushita and its progeny, Plaintiffs have presented sufficient evidence that tends to exclude
the possibility that Defendants acted independently even if Defendants satisfied the first prong of
Matsushita by showing a plausible and justifiable reason for their conduct that is consistent with
proper business practices.

The Court need not determine whether Defendants have met their burden
with respect to Matsushitas first prong, because the Court finds that Plaintiffs have satisfied their
burden of providing specific evidence tending to show that [Defendants were] not engaging in
permissible competitive behavior. Citric Acid Litig., 191 F.3d at 1094.
Here, as Edward Catmull (Pixar President) noted, it was economically sensible for the
alleged conspirators to undertake the alleged conspiracy, because solicitation messes up the pay
structure. Catmull Depo. at 179. As George Lucas (former Lucasfilm Chairman of the Board and
CEO) stated, we cannot get into a bidding war with other companies because we dont have the
margins for that sort of thing. Lucas Depo. at 44. Further, as Meg Whitman (former CEO of eBay)
said to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and former
CEO), Google is the talk of the Valley because [Google is] driving up salaries across the board.
Cisneros Decl., Ex. 872.
In light of this backdrop, the Court will now review some of the evidence that tends to
exclude the possibility that Defendants acted independently. Defendants have conceded that there
were a series of six bilateral agreements for the purpose of these motions: Pixar-Lucasfilm, Apple-
Adobe, Apple-Google, Apple-Pixar, Google-Intuit, and Google-Intel. All six of these agreements
contained nearly identical terms, precluding each pair from affirmatively soliciting any of each
others employees. ECF No. 531, October 24, 2013 Order Granting Plaintiffs Supplemental
Motion for Class Cert. (October Class Cert. Order) at 30. Defendants experts concede that they
are unaware of these types of long-term, all-employee agreements ever occurring between other
firms. See, e.g., Talley Depo. at 35.

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In addition, there is evidence that Defendants themselves recognized the similarities
between the agreements. For example, in an email, Lori McAdams (Pixar Vice President of Human
Resources and Administration), stated that effective now, well follow a gentlemans agreement
with Apple that is similar to our Lucasfilm agreement. October Class Cert. Order at 26. Moreover,
Google maintained an explicit do-not-cold-call list that grouped Apple, Intel, and Intuit together.
ECF No. 187, Ex. 29. Defendants also recognized that these agreements were not designed for
circulation, and tried to ensure that the agreements were known only to recruiters and executives
who had to enforce them. For example, Eric Schmidt (Google Executive Chairman, Member of the
Board of Directors, and former CEO) instructed one of his executives that Mr. Schmidt preferred
that the do-not-cold-call list be shared verbally, since I dont want to create a paper trail over
which we can be sued later. Id. at 27. Similarly, in response to a question from an Intel recruiter,
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) stated regarding the
Intel-Google agreement we have a handshake no recruit between eric [Schmidt] and myself. I
would not like this broadly known. Id. at 28.
Furthermore, there is evidence that many of the Defendants knew about each others anti-
solicitation agreements. For example, according to Edward Catmull (Pixar President), Steve J obs
(Co-Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) knew and
understood the Lucasfilm-Pixar agreement. Catmull Depo. at 61. Similarly, Eric Schmidt of
Google testified that it would be fair to extrapolate, based on Mr. Schmidts knowledge of Mr.
J obs, that Mr. J obs would have extended [anti-solicitation agreements] to others. Schmidt Depo.
at 169. Google recruiters were familiar that Apple and Adobe had an agreement. Flynn Depo. at 65.
Paul Otellini (CEO of Intel and Member of the Google Board of Directors) was told by Eric
Schmidt (Google Executive Chairman, Member of the Board of Directors, and former CEO) and
Sergey Brin (Google Co-Founder) about the Apple-Google agreement. Brin Depo. at 74; Schmidt
Depo. at 126. Intels own expert testified that Mr. Otellini was likely aware of Googles other
bilateral agreements by virtue of Mr. Otellinis membership on Googles board. Snyder Depo. at
258. In fact, in its Motion, Intel concedes for the purposes of the instant motions that Mr. Otellini
knew the contents of Googles do-not-cold-call list, which included Apple and Intel. Intel MSJ at 4.

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Next, these agreements were negotiated by a small group of intertwining high-level
executives at the Defendant firms. For example, Steve J obs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) was personally involved in Apples anti-solicitation
agreements with Adobe, Google, and Pixar. With regard to Apples agreement with Google, Mr.
J obs contacted Sergey Brin (Google Co-Founder) directly, which led Mr. Brin to recognize that
[b]asically, [Mr. J obs] said if you hire a single one of these people that means war. Cisneros
Decl., Ex. 1871. The next day, Bill Campbell (Chairman of Intuit Board of Directors, Co-Lead
Director of Apple, and advisor to Google), a friend of Mr. J obs, informed Mr. J obs that Eric
Schmidt told me that he got directly involved and firmly stopped all efforts to recruit anyone from
Apple. Cisneros Decl., Ex. 199. Moreover, it was upon Mr. Campbells suggestion that Google
agreed to enter into its anti-solicitation agreement with Intuit, of which Mr. Campbell was Board
Chairman. Cisneros Decl., Ex. 597.
As discussed in some detail in this Courts October Class Certification Order, the same
small group of intertwining high-level executives were involved in strictly enforcing the
agreements. For example, when a Google recruiter contacted an Apple engineer, Steve J obs (Co-
Founder, Former Chairman, and Former CEO of Apple, Former CEO of Pixar) forwarded the
message to Eric Schmidt (Google Executive Chairman, Member of the Board of Directors, and
former CEO), who had the recruiter terminated within the hour. Id. at 36. Bill Campbell (Chairman
of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) similarly emailed
Sergey Brin (Google Co-Founder), stating that Steve J obs called me again and is pissed that we
are still recruiting his browser guy. Id. at 36. Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) similarly forwarded an email regarding recruitment of an Intel
employee by a Google recruiter to Mr. Schmidt, Googles CEO, who responded by saying that, If
we find that a recruiter called into Intel, we will terminate the recruiter. Id. at 37.
1
Edward
Catmull (Pixar President) similarly had direct discussions with Steve J obs regarding whether Pixar
could communicate with specific individual Apple employees. Id. at 37-38. Bill Campbell

1
In an email to Mr. Campbell, Mr. Schmidt indicated that he directed a for-cause termination of
another Google recruiter, who had attempted to recruit an executive of eBay, which was on
Googles do-not-cold-call list. Cisneros Decl., Ex. 872.

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(Chairman of Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google) was
also part of enforcing the Google-Intel agreement, because Mr. Campbell in communication with
Googles executives agreed that Google should call Paul Otellini (CEO of Intel and Member of the
Google Board of Directors) before making an offer to an Intel employee. October Class Cert. Order
at 28. That the agreements were entered into and enforced by a small group of intertwining high-
level executives bolsters the inference that the agreements were not independent.
Moreover, there is evidence that the Defendants shared confidential compensation
information with each other despite the fact that they considered each other competitors for talent.
For example, Adobe saw itself as in a talent war with Google and Apple and that Adobe was in a
six-horse compensation race against Google, Apple, Intuit, and three others. Id. at 47. Apple also
viewed Google and Intel as peer companies in terms of competition for talent. Id. at 48. Adobe
benchmarked its compensation against Google, Apple, and Intel, while Google compared its
compensation to Apple, Intel, Adobe, and Intuit; and Intel benchmarked against Apple and Google.
Id. at 47-48. The evidence shows that HR personnel at Intuit and at Adobe were communicating
about confidential information regarding how much compensation each firm would give and to
which employees that year. Cisneros Decl., Ex. 2812 (emphasis in original). Adobe and Intuit
shared confidential compensation information even though the two companies had no bilateral anti-
solicitation agreement, and Adobe viewed Intuit as a competitor in a six-horse compensation race.
Meanwhile, Google circulated an email that expressly discussed how its budget is comparable to
other tech companies and compared the precise percentage of Googles merit budget increases to
that of Adobe, Apple, and Intel. Cisernos Decl., Ex. 621. Google had Adobes precise percentage
of merit budget increases even though Google and Adobe had no bilateral anti-solicitation
agreement. Paul Otellini (CEO of Intel and Member of the Google Board of Directors) similarly
circulated information regarding peer companies bonus plans that he lifted from Google.
Cisneros Decl., Ex. 463. This Google document discusses bonuses at Apple and Intel. A reasonable
jury could infer that this confidential information could be shared safely by competitors only
because the anti-solicitation agreements squelched true competition.

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Finally, there is evidence that Defendants, through many of the same executives who
negotiated and enforced the agreements at issue in this case, expanded and attempted to expand the
anti-solicitation agreements to non-Defendants, which undermines Defendants claim of
independent bilateral agreements. For example, Steve J obs (Co-Founder, Former Chairman, and
Former CEO of Apple, Former CEO of Pixar) called Edward Colligan (former President and CEO
of Palm) to ask Mr. Colligan to enter into an anti-solicitation agreement and threatened patent
litigation against Palm if Palm refused to do so. Colligan Decl. 6-8. This was similar to Mr.
J obs negotiation of the agreement with Adobe, which resulted from Mr. J obs threat to start
aggressively recruiting Adobes employees absent such an agreement. Bill Campbell (Chairman of
Intuit Board of Directors, Co-Lead Director of Apple, and advisor to Google), in his capacity as an
advisor to Google, unsuccessfully sought to expand Googles anti-solicitation agreements to
Facebook by responding to an email about Facebooks solicitation of Googles employees with
Who should contact Sheryl [Sandberg] (or Mark [Zuckerberg]) to get a cease fire? We have to get
a truce. Mr. Chizen of Adobe, in response to discovering that Apple was recruiting employees of
Macromedia (a separate entity that Adobe would later acquire), helped ensure, through an email to
Mr. J obs, that Apple would honor Apples pre-existing anti-solicitation agreements with both
Adobe and Macromedia after Adobes acquisition of Macromedia. Cisneros Decl., Exs. 1808,
1812. These expansions and attempted expansions of the anti-solicitation agreements suggest that
the agreements were not isolated, independent bilateral agreements, but rather were part of a
broader conspiracy.
In sum, the Court does not determine at the summary judgment stage which side should
prevail. Rather, the Courts task is only to determine whether the Plaintiffs have presented
sufficient evidence to warrant adjudication by a jury. For the reasons stated, the Court answers this
question in the affirmative. The similarities in the various agreements, the small number of
intertwining high-level executives who entered into and enforced the agreements, Defendants
knowledge about the other agreements, the sharing and benchmarking of confidential
compensation information among Defendants and even between firms that did not have bilateral
anti-solicitation agreements, along with Defendants expansion and attempted expansion of the

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anti-solicitation agreements constitutes evidence, viewed in the light most favorable to Plaintiffs,
that tends to exclude the possibility that defendants acted independently, such that the question of
whether there was an overarching conspiracy must be resolved by a jury. Accordingly, each of the
Defendants individual motions for summary judgment is DENIED.

IT IS SO ORDERED.
Dated: March 28, 2014 ________________________________
LUCY H. KOH
United States District J udge

4/27/14 12:46 AM Abigail LeGrow 04 appointed to Master in Chancery for Delaware Judiciary | Penn State Law
Page 1 of 2 https://law.psu.edu/news/legrow
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Abigail LeGrow 04 appointed to Master in
Chancery for Delaware Judiciary
February 22, 2012
Abigail LeGrow 04 was recently appointed Master in Chancery for the Delaware Judiciary, a court which has been
ranked first in the nation since 2002.
To me, working on this court, and for the Delaware Judiciary in general, is a tremendous honor, said LeGrow. The
Court of Chancery is held in high esteem nationwide, both because of the qualifications and dedication of the
chancellor and vice chancellors (past and present), and because of the courts willingness to consider and decide
expedited cases in a very prompt fashion.
The Court of Chancerys jurisdiction is primarily limited to cases based in equity. Historically speaking, the Masters
in Chancery have handled the traditional equity jurisdiction of the Court, particularly trusts and estates,
guardianship, and disputes involving real property.
Ive only been here a few months, but so far the thing I most enjoy is
being in a position to help people and make decisions that (hopefully)
resolve stressful problems that have arisen in their lives, said LeGrow.
There is a human, real-life element to the cases on my docket that
was sometimes missing in private practice.
Prior to joining the Delaware Judiciary, LeGrow was an associate in the
Corporate Group of Potter Anderson & Corroon LLP. During my time
in private practice, I was able to represent different corporations which
gave me the chance to learn about a variety of fields, said LeGrow.
Each corporation is different and in order to represent them
effectively I usually had to learn about their business. I became intimately familiar with orphan drugs, the New York
real estate market, differentiated chemicals, residential mortgage-backed securities, and high speed lasers for
cardiac imaging, to name a few. It helped keep each case interesting when I was engaged in some of the more
mundane aspects of litigation. Among the many reasons LeGrow chose to practice in corporate law is its dynamic
nature. It is always changing and evolving as businesses grow and change, said LeGrow.
Her switch from advocacy to impartiality has been challenging for LeGrow, but in a good way, she said. I think
advocacy comes easier to most lawyers (myself included), because we are usually arguers by nature, and it is fun to
be told here is your side, here is where you want to end up, now go do it. But so far Ive enjoyed the role of
impartial decision-maker. It is nice to consider a case from all sides and all angles, and then try to reach the right
result. In that sense, it is similar to a law school exam, only there is a lot more riding on the outcome.
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LeGrow enjoys living and working in Delaware. When I was in practice, I worked in a sophisticated, challenging,
high-profile field while enjoying the advantages of life in a relatively small city. As a corporate litigator, I represented
multinational corporations, yet my job was a ten-minute commute from my home in the suburbs. Very few people
can have the best of both worlds, in that sense. Now, the commute is the same and Im part of a court that Ive
admired since my summer associate year. It doesnt get much better than this.
Her husband, Brian LeGrow 04 is an associate with the Law Offices of Vincent B. Mancini & Associates, and focuses
his practice on business litigation, commercial litigation, real estate, civil rights section 1983, property law, federal
civil practice, and landlord-tenant law. They met during law school and are the parents of two children.

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4/7/14 3:14 PM Dilbert (TV series) - Wikipedia, the free encyclopedia
Page 1 of 10 http://en.wikipedia.org/wiki/Dilbert_(TV_series)
Dilbert
Genre Comedy
Format Animation
Created by Scott Adams
Developed by Scott Adams
Larry Charles
Directed by Rick Del Carmen
James Hull
Voices of Daniel Stern
Chris Elliott
Larry Miller
Gordon Hunt
Kathy Griffin
Jackie Hoffman
Theme music
composer
Danny Elfman
Opening theme "The Dilbert Zone"
Composer(s) Adam Cohen
Ian Dye
Country of origin United States
Original
language(s)
English
No. of seasons 2
Dilbert (TV series)
From Wikipedia, the free encyclopedia
Dilbert is an animated television series adaptation of
the comic strip of the same name, produced by
Adelaide Productions, Idbox, and United Media and
distributed by Columbia TriStar Television. The first
episode was broadcast on January 25, 1999, and was
UPN's highest-rated comedy series premiere at that
point in the network's history; it lasted two seasons on
UPN and won a Primetime Emmy before its
cancellation.
[1]
Contents
1 Synopsis
2 History
2.1 Conception
2.2 Cancellation
3 Cast
3.1 Guest stars
4 Episodes
4.1 Season 1 (1999)
4.2 Season 2 (19992000)
5 Reception
5.1 Ratings
5.2 Awards
6 Home releases
7 See also
8 References
9 External links
Synopsis
The series follows the adventures of a middle-aged
white collar office worker, named Dilbert who is
extremely intelligent in regards to all things that fall
within the boundaries of electrical engineering.
Although Dilberts intelligence greatly surpasses that of
his incompetent colleagues at work, he is unable to
question certain processes that he believes to be
inefficient, due to his lack of power within the
No. of episodes 30 (List of episodes)
Production
Executive
producer(s)
Scott Adams
Larry Charles
Producer(s) Jeffrey L. Goldstein
Ron Nelson
Kara Vallow
Editor(s) Mark Scheib
Running time 22 minutes
Production
company(s)
Idbox
United Media
Columbia TriStar
Television
Distributor Sony Pictures Television
Broadcast
Original channel UPN
Picture format 4:3 SDTV
Audio format Dolby Surround
Original run January 25, 1999 July
25, 2000
organization. Thus, he is consistently found to be
unsatisfied with the decisions that are made in his
workplace, because of the fact that many times he has
many suggestions to improve the decision, yet is
incapable of expressing them. Consequently, he is
often found to show a pessimistic and frustrated
attitude, which ultimately lands him in various comedic
situations that revolve around concepts like leadership,
teamwork, communication and corporate culture.
History
The first season centers on the creation of a new
product, the "Gruntmaster 6000". The first three
episodes involve the idea process ("The Name", "The
Competition", and "The Prototype" respectively); the
fifth ("Testing") involves having it survive a malevolent
company tester named "Bob Bastard" (who is
somewhat like Dilbert before being humiliated and
disfigured), and the sixth ("Elbonian Trip") is about
production in the famine-stricken fourth-world country
of Elbonia. The prototype is delivered to an incredibly
stupid family in Squiddler's Patch, Texas, during the
thirteenth and final episode of the season,
"Infomercial", even though it was not tested in a lab
beforehand. The family's misuse of the prototype
creates a black hole that sucks Dilbert in; he instantly wakes up in the meeting seen at the start of
the episode, then locks his design lab to keep the prototype from being shipped out.
[2]
The second season features seventeen episodes, bringing the total number of episodes to thirty.
Unlike the first season, the episodes are not part of a larger story arc and have a different storyline
for each of the episodes (with the exception of episodes 26 and 27, "Pregnancy" and "The
Delivery"). Elbonia is revisited once more in "Hunger"; Dogbert still manages to scam people in
"Art"; Dilbert is accused of mass murder in "The Trial"; and Wally gets his own disciples (the result of
a complicated misunderstanding, the company launching a rocket for NASA, and a brainwashing
seminar) in episode 16, "The Shroud of Wally".
[3]
The theme music, "The Dilbert Zone", was written by Danny Elfman, and is a slight rewrite from the
theme of the film Forbidden Zone, originally performed by Elfman's band, The Mystic Knights of the
Oingo Boingo.
Conception
Scott Adams, the creator of Dilbert, decided to create the series for UPN because the network
promised 13 episodes on air, while other networks would only consider the series against other
programming options. Adams added to that "If we had gone with NBC, they would have given
Dilbert a love interest with sexual tension." UPN was the sixth-ranked network at the time and
picked up the show in hopes of broadening their appeal and to prove they were committed to riskier
alternative shows. Adams stated about turning Dilbert into a series "It's a very freeing experience
because doing the comic strip limits me to three (picture) panels with four lines or less of dialogue
per issue, in the TV series, I have 21 minutes per episode to be funny. I can follow a theme from
beginning to end, which will add lots of richness to the characters." Adams wanted the series to be
animated because the live action version shot previously for FOX didn't translate well. Adams added
to that "If Dilbert's going to be at the top of the Alps, you just draw it that way and you don't have to
build an Alps scene. You can also violate some laws of physics, and cause and effect. People
forgive it very easily. So it's much more freeing creatively."
[4][5][6][7]
Cancellation
On November 22, 2006, when Adams was asked why the show was canceled, he stated "It was on
UPN, a network that few people watch. And because of some management screw-ups between the
first and second seasons the time slot kept changing and we lost our viewers. We were also
scheduled to follow the worst TV show ever made: Shasta McNasty. On TV, your viewership is 75%
determined by how many people watched the show before yours. That killed us."
[8]
Cast
Daniel Stern Dilbert
[9]
Chris Elliott Dogbert
Larry Miller The Pointy-Haired Boss
Gordon Hunt Wally
Kathy Griffin Alice (uncredited)
Jackie Hoffman Dilmom
Jim Wise Loud Howard
Tom Kenny Ratbert, Asok, additional Voices
Gary Kroeger Additional voices
Maurice LaMarche The World's Smartest Garbageman, Bob the Dinosaur, additional voices
Tress MacNeille Carol, Lena, additional voices
Jason Alexander Catbert
Guest stars
Stone Cold Steve Austin Himself
Jennifer Bransford Ashley
Andy Dick Dilbert's Assistant Alfonso
Jon Favreau Holden Callfielder
Gilbert Gottfried Accounting Troll
Tom Green Jerrold
Christopher Guest The Dupey
Buck Henry Dadbert
Harry Kalas Baseball Announcer
Wayne Knight Path-E-Tech Security Guard
Jay Leno Himself
Eugene Levy Comp-U-Comp's Plug Guard
Camryn Manheim Juliet
Mr. Moviefone Himself
Chazz Palminteri Leonardo da Vinci
Jeri Ryan Seven of Nine Alarm Clock
Jerry Seinfeld Comp-U-Comp
Billy West Vibrating Chair Salesman, Rioting Engineer (Pilot episode only)
Episodes
Season 1 (1999)
# Title Directed by Written by Original air date
Production
code
1 "The Name" Seth Kearsley
Larry Charles & Scott
Adams
January 25, 1999 101
Dilbert is tasked with naming a product that hasn't even been designed yet, and the stress (brought
on by a recurring nightmare) makes Dilbert think he's turning into a chicken.
2
"The
Competition"
Seth Kearsley Ned Goldreyer February 1, 1999 103
Dilbert is fired from his job when he is suspected of being a spy for a rival company (which was a
rumor cooked up by Dogbert's online newsletter) and gets hired at a company that actually treats
their workers like people.
3
"The
Prototype"
Alfred Gimeno Jeff Kahn February 8, 1999 102
Dilbert and Alice must work together to stop a rival team led by the legendary "Lena" from stealing
their ideas and presenting them to the Boss as her own.
4
"The
Takeover"
Andi Klein
Larry Charles, Scott
Adams & Ned
Goldreyer
February 15, 1999 106
Dilbert and Wally become majority shareholders of their company after Dogbert manipulates the
stock market.
5 "Testing" Chris Dozois
David Silverman &
Stephen Sustrastic
February 22, 1999 104
The Gruntmaster 6000 prototype is put to the test by an evil masked test engineer named Bob
Bastard (Tom Kenny).
6
"Elbonian
Trip"
Mike Kim
David Silverman &
Stephen Sustrastic
March 1, 1999 105
Dilbert, Alice, Wally, Dogbert, and the Pointy-Haired Boss take a business trip to Elbonia. Alice and
Dilbert attempt to free the Elbonian people (Alice adopts an Elbonian baby while Dilbert introduces
the workers to human rights) while Wally becomes a prophet.
7
"Tower of
Babel"
Gloria Jenkins
David Silverman &
tephen Sustrastic
March 22, 1999 108
The repetitive passing-on of the same cold strain in Dilbert's office causes it to mutate and turns
the coworkers into monsters. Rather than eliminate the virus, the company decides to start fresh by
moving everyone to a new office, which Dilbert is tasked with designing.
8
"Little
People"
Barry Vodos
David Silverman,
Stephen Sustrastic,
Scott Adams & Larry
Charles
April 5, 1999 107
Dilbert discovers that the office is inhabited by a race of former employees who have been
"downsized" (literally shrunken down to size after they've been laid off) after finding all of his
belongings used, the dry-erase markers disappearing, and X-rated websites on his computer.
9 "The Knack" Michael Goguen
Adams, Andrew
Borakove & Rachel
Powell
April 26, 1999 110
Dilbert loses "the knack" for technology when he gets management DNA from accidentally drinking
from the Boss's cup. His resulting mis-steps send the world back to the Dark Ages.
10 "Y2K"
Jennifer Graves, Bob
Hathcock & Andi Tom
Adams, Andrew
Borakove & Rachel
Powell
May 3, 1999 109
On the eve of the new millennium, everyone except Dilbert is making New Year's plans. While
assuring everyone that the company is prepared for Y2K, Dilbert discovers that the computer
mainframe's main processor isn't Y2K-compatible and all the company's systems will crash if it
isn't fixed. Dilbert is rewarded for discovering this by being assigned to fix it, and he discovers that
the system's original programmer was Wally. But have years of drudgework dulled his brain too
much to be able to tackle this crucial task?
11 "Charity" Chris Dozois
Adams, David
Silverman & Stephen
Sustrastic
May 10, 1999 111
Dilbert is forced to be a charity coordinator for the "Associated Way" charity drive.
Adams, David
12 "Holiday" Andi Klein Silverman, Stephen
Sustrastic & Ned
Goldreyer
May 17, 1999 112
Dilbert thinks there are too many time-wasting holidays; Dogbert concurrently convinces Congress
to abandon all holidays in favor of a National Dogbert Day.
13
"The
Infomercial"
Todd Frederiksen,
Joe Vaux
Adams & Ned
Goldreyer
May 24, 1999 113
The pre-productionnon-lab-testedGruntmaster 6000 is scheduled to be tested by a Texan
family.
Season 2 (19992000)
Production
code
14 "The Gift" Gloria Jenkins Ned Goldreyer November 2, 1999 201
Dilbert's mother's birthday is coming up, and in search of the perfect gift, he returns to the mall
where he was abandoned by his father (voiced by Buck Henry) years ago.
15
"The Shroud
of Wally"
Andi Klein Scott Adams November 9, 1999 203
Dilbert has a near-death experience at a gas station, and finds that the afterlife is exactly like the
office. Meanwhile, a group listening to a multi-level marketing speech become hypnotized, and
through a bizarre accident create a religion based on Wally.
16 "Art" Linda Miller
Adams & Ned
Goldreyer
November 16, 1999 205
Dilbert is assigned to create a digital work of art. The result, the "Blue Duck," ends up appealing to
the lowest common denominator of society and destroys the value and popularity of classic
artworks.
17 "The Trial" Chris Dozois
Joe Port & Joe
Wiseman
November 23, 1999 202
Dilbert is sent to prison after the boss frames him for a fatal traffic accident. Once inside, he applies
his knowledge of mathematics and engineering to prison life and takes over his cell block.
18
"The
Dupey"
Michael Goguen
Adams
December 7, 1999 204
Dilbert's attempts to design a Furby-style children's toy go horribly awry when the toys gain
sentience and mutate into hideous but benevolent creatures that want independence.
19
"The
Security
Guard"
Rick Del Carmen Scott Adams January 18, 2000 207
After a heated debate, Dilbert and the building's security guard (voiced by Wayne Knight) trade
jobs to see who can do the other's job better. Dilbert quickly finds himself in over his head when he
discovers an illegal casino being run underneath the building.
20
"The
Merger"
Jim Hull
Adams, David
Silverman & Stephen
Sustrastic
January 25, 2000 208
The Boss decides that the company needs to merge with another, and chooses a company of
brain-sucking extraterrestrials.
21 "Hunger" Craig R. Maras
Adams
February 1, 2000 206
Dilbert tries to end world hunger by creating a new, safe, artificial food, but it tastes so bad that
even people dying of starvation refuse to eat it until his mother gets involved.
22
"The Off-
Site
Meeting"
Seth Kearsley
Mark Steen, Ron
Nelson & Scott Adams
Dilbert's home is chosen as the location for an off-site meeting when a dendrophile sues his
company because of their deforestation policies.
23
"The
Assistant"
Gloria Jenkins &
Declan M. Moran
Adams, Ron Nelson &
Mark Steen
February 15, 2000 210
Dilbert is unwillingly promoted to management and given an assistant (Andy Dick), sparking a
showdown with the other engineers.
24
"The
Return"
Mike Kuntel
Adams & Ned
Goldreyer
February 22, 2000 213
Dilbert tries to buy a computer online but gets the wrong model, leading to an unpleasant surprise
when he tries to return it to the company warehouse. Jerry Seinfeld and Eugene Levy guest-star as
Comp-U-Comp and the plug guard, respectively; Jon Favreau guest-stars as Holden Callfielder.
25
"The Virtual
Employee"
Perry Zombalas
Adams & Ned
Goldreyer
May 30, 2000 212
Dilbert and his co-workers find an empty cubicle and start dumping their obsolete computer
equipment into it. To keep the marketing department from claiming the cubicle, they hack into the
human resources database and create a profile for a fake engineer named Todd. The plan backfires
when Todd is named project leader and develops a messianic reputation.
26 "Pregnancy" Andi Klein
Adams
June 6, 2000 216
Ratbert accidentally sends Dilbert's model rocket into space. When it returns with samples of DNA
from aliens, cows, hillbillies, engineers, and robots, it rectally impales Dilbert, impregnating him.
27
"The
Delivery"
Craig R. Maras
Adams
June 13, 2000 217
Dilbert fights to keep his baby, a human-alien-cow-robot hybrid whose various "parents" sue for
joint custody. Stone Cold Steve Austin guest-stars as himself.
28
"Company
Picnic"
Chris Dozios
Scott Adams, David
Silverman & Stephen
Sustrastic
July 11, 2000 211
The annual company picnic comes around and so does the softball game between Marketing and
Engineering. This episode is based on Romeo and Juliet.
29 "The Fact" Linda Miller
Adams, Ron Nelson &
Mark Steen
July 18, 2000 215
Dogbert is catapulted into fame and fortune when he posts false information on the Internet about
his imaginary disease, "Chronic Cubicle Syndrome," and releases a best-selling book about it.
Ironically, Dilbert is forced to come up with the cure.
30 "Ethics" Michael Goguen
Adams
July 25, 2000 214
The company employees are forced to take ethical training classes, then Dilbert is made project
lead for the National Internet Voting Network. An attractive female employee of a special-interest
group attempts to seduce Dilbert, putting his ethical limitations to the test.
Reception
Ray Richmond of Variety.com liked the show stating "its surely the wittiest thing the netlet has ever
had the good fortune to schedule, and based on the opening two installments, it has the potential to
score with the same upscale auds that flocked to The Simpsons and transformed Fox from a
wannabe to a player a decade ago."
[10]
David Zurawik of The Baltimore Sun gave the show a
postivie review stating "sit down tonight in front of the tube with more reasonable expectations, and
you will find yourself smiling, if not laughing out loud at least once or twice."
[11]
Terry Kelleher of
People Magazine picked Dilbert for "Show of the week" and said the show featured "smart, pointed
humor aimed at corporate bureaucracy, mendacity and absurdity."
[12]
Ratings
Dilbert's premiere episode received a 7.3 rating, the highest of the 1998-1999 season for UPN.
[13]
Awards
Primetime Emmy: Outstanding Main Title Design - 1999
[14]
Home releases
Sony Pictures Home Entertainment released the complete series on DVD in Region 1 for the very
first time on January 27, 2004. The set included some special features including trailers and clip
compilations with commentary by Scott Adams, executive producer Larry Charles, and voice actors
Chris Elliott, Larry Miller, Kathy Griffin, and Gordon Hunt.
[15]
The DVDs can be played on some PCs
and DVD players with Region 2. This release has been discontinued and is now out of print. The
complete series is available for free on Hulu and Crackle.
[16][17]
On November 8, 2013, it was announced that Mill Creek Entertainment had acquired the rights to
the series. They will be re-releasing the complete series on January 21, 2014.
[18]
See also
New Dilbert Animation
References
1. ^ "Dilbert Debut Sets Record For Upn" (http://articles.chicagotribune.com/1999-02-
02/features/9902020332_1_pointy-haired-boss-upn-dilbert). Chicago Tribune. February 2, 1999. Retrieved
2010-09-09.
2. ^ "Dilbert: The Complete Series : DVD Talk Review of the DVD Video"
(http://www.dvdtalk.com/reviews/9457/dilbert-the-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
3. ^ "Dilbert: Complete Series : DVD Talk Review of the DVD Video"
(http://www.dvdtalk.com/reviews/9494/dilbert-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
4. ^ Knutzen, Eirik. "An Animated Cartoon `Dilbert' Comes To The Tube On Upn"
(http://articles.mcall.com/1999-01-24/entertainment/3241748_1_dilbert-scott-adams-bank-teller/2). The
Morning Call. Retrieved 10 February 2014.
5. ^ Rubin, Sylvia. "Meeting of the Minds / `Dilbert' creators slogged through corporate mire to bring lovable
office dweeb to TV" (http://www.sfgate.com/entertainment/article/Meeting-of-the-Minds-Dilbert-creators-
slogged-2952018.php#page-1). SFGate. Retrieved 10 February 2014.
6. ^ Rozansky, Michael. "`Dilbert' Is Serious Business From The Cubicle To . . . Practically Everywhere."
(http://articles.philly.com/1999-01-03/news/25492959_1_dilbert-fans-4s700r-cubicle). philly.com. Retrieved
10 February 2014.
7. ^ Jicha, Tom. "Dilbert To Get A New Cubicle -- On Upn" (http://articles.sun-sentinel.com/1999-01-
25/lifestyle/9901250155_1_dilbert-scott-adams-upn). SunSentinel. Retrieved 10 February 2014.
8. ^ Foster, Darren. "Scott Adams Interview creator of Dilbert" (http://groundreport.com/Scott-Adams-
Interview-creator-of-Dilbert/). ground report. Retrieved 9 February 2014.
9. ^ "Upn hopes ride on dilbert's white shirttails new animated series just doesn't do the job"
(https://web.archive.org/web/20140209010821/http://www.nydailynews.com/archives/entertainment/upn-
hopes-ride-dilbert-white-shirttails-new-animated-series-doesn-job-article-1.829135). The New York Daily
News. Retrieved 2010-10-26.
10. ^ Richmond, Ray. "Review: Dilbert" (http://variety.com/1999/tv/reviews/dilbert-1200456408/). Variety.
Retrieved 9 February 2014.
11. ^ Zurawik, David. "UPN is counting on `Dilbert' " (http://articles.baltimoresun.com/1999-01-
25/features/9901250183_1_dilbert-dogbert-omen). The Baltimore Sun. Retrieved 9 February 2014.
12. ^ Kelleher, Terry. "Picks and Pans Main: Tub"
(http://www.people.com/people/archive/article/0,,20127492,00.html). People Magazine. Retrieved 9
February 2014.
13. ^ Carter, Bill. "TV NOTES" (http://www.nytimes.com/1999/01/27/arts/tv-notes.html). The New York Times.
14. ^ "Dilbert" (http://www.emmys.com/shows/dilbert). The Academy of Television Arts & Sciences. Retrieved 9
February 2014.
15. ^ "Dilbert - The Complete Series Review" (http://www.tvshowsondvd.com/reviews/Dilbert-Complete-
Series/3283). TVShowsOnDVD.com. Retrieved 2013-09-08.
16. ^ "Dilbert" (http://www.hulu.com/dilbert). Hulu. Retrieved 10 February 2014.
17. ^ "Dilbert" (http://www.crackle.com/c/dilbert). Crackle.com. Retrieved 10 February 2014.
18. ^ Mill Creek to Re-Release 'The Complete Series' on DVD (http://www.tvshowsondvd.com/news/Dilbert-
The-Complete-Series/19158)
External links
Dilbert (http://www.imdb.com/title/tt0118984/) at the Internet Movie Database
Dilbert (http://www.tv.com/shows/dilbert/) at TV.com
Retrieved from "http://en.wikipedia.org/w/index.php?title=Dilbert_(TV_series)&oldid=601831869"
Categories: Dilbert 1990s American animated television series
2000s American animated television series Television programs based on comic strips
UPN network shows 1999 American television series debuts
2000 American television series endings Comedy Central shows
Television series by Sony Pictures Television Animated sitcoms
Television programs featuring anthropomorphic characters Satirical television programmes
English-language television programming Lists of television series episodes
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organization.

BRAD D. GREENSPAN, Plaintiff Case No: 9567-ML

V.

NEWS CORPORATION NEWS CORPORATION, 21ST CENTURY FOX
CORPORATION, NEWS AMERICA CORPORATION,WASHINGTON POST
CORPORATION, SONY CORPORATION, SONY CORPORATION AMERICA, SONY
MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY
BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC NEWS CORPORATION, 21ST
CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE
PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC., JP MORGAN CHASE
CORPORATION, REDPOINT PARTNERS CORPORATION ARENT FOX LAW LLC INC.
Defendants

PRAECIPE

To: Register In Chancery

PLEASE ISSUE Summons and a copy of the Complaint and Motion to Expedite through the
Sheriff of New Castle County, 800 N French Street, 5
th
Floor, Wilmington, Delaware 19801; To
be served on the following Defendants in the above listed caption

Name: News Corporation & 21
st
Century Fox Corporation
Address: c/o The Corporation Trust Company Corporation Trust Center, 1209 Orange St.
Wilmington, Delaware, 19801
Service pursuant to 10 Del. C. 3111

/s/ Brad Greenspan
Signature for Pro Se
Suite 1216
Dated: 4/25/2014

1
I N THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Suite 1216

Plaintiff,
v.

NEWS CORPORATION, 21
ST
CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION,
WASHINGTON POST CORPORATION,
SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC.,
550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC
ST
CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC,
VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC.,
ASKJEEVES, INC.,
JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION,
ARENT FOX LAW LLC INC.

)
)
)
)
)
)
)
)
)
)
)

C.A. No. ________

1503 & INDEMNIFICATION COMPLAINT

2

Plaintiff, for his Complaint against the Defendants, alleging as follows:

I- PRELIMINARY STATEMENT & SYNOPSIS

1. Plaintiff Brad D. Greenspan (Plaintiff), a former Director an Officer of

eUniverse, Inc. a Delaware Corporation hereby files this complaint. Petitioner is

entitleu to a piivate cause of action foi uamages suffeieu as a iesult of Befenuant

acts , omissions, uamages, violations, anu othei losses causeu by the long iunning

1SuS(u) conspiiacy among Befenuants. Petitionei also has contiactual iights foi

Inuemnification anu Auvancement.

II - PARTIES

PLAINTIFF

2. Brad Greenspan, former Director, Officer, Shareholder of eUniverse, Inc

DEFENDANTS

3. News Corporation, a Delaware Corporation

4. 21
st
Century Fox Corporation, a Delaware Corporation

5. News America Corporation, Delaware corporations

6. Sony Corporation, incorporated in Japan (herein Sony Corporation

and its subsidiaries listed below will be referred to as Sony)

7. Sony Corporation America, a Delaware corporation

8. Sony Music Entertainment Inc., a Delaware Corporation

9. 550 Digital Media Ventures, Inc. (550 DMV), a Delaware Corporation

1u. Sony Bioaubanu Enteitainment, Inc., a Belawaie coipoiation
S

11. e0niveise Inc. , (name latei changeu to Inteimix) a Belawaie

Coipoiation (News Coip acquiieu in 2uuS)

12. Nyspace, Inc., a Belawaie Coipoiation (News Coip acquiieu in 2uuS)

1S. RuRB Law LLC, a Califoinia LLC

14. vantagePoint ventuie Paitneis, a Califoinia LLC

1S. 0iiick Beiiington Law LLC, a Califoinia LLC

16. ENI Nusic, a Belawaie Coipoiation

17. Wainei Nusic uioup, a Belawaie Coipoiation

18. Ask}eeves Inc., a Belawaie coipoiation (IAC Coip acquiieu in 2uuS)

19. IAC Coipoiation, a Belawaie coipoiation

2u. }P Noigan Chase, a Belawaie coipoiation

21. ReuPoint Paitneis, a Califoinia LLC

22. Washington Post Coipoiation, a Belawaie Coipoiation

2S. Aient Fox Law, a Belawaie LLC

III - JURISDICTION AND VENUE

24. The jurisdiction of this Court is conferred and invoked pursuant to

eUniverse, Inc., and its buyer, News Corporation being Delaware incorporated

IV- FACT HISTORY

The 1503 & 1505 Claims

25. 1503 & 1505 according to Delaware statute 1501 have a purpose:
4
to guard against and prevent the infiltration and illegal acquisition of legitimate
economic enterprises by racketeering practices, and the use and exploitation of both legal
and illegal enterprises to further criminal activities.

to apply to conduct beyond what is traditionally regarded as "organized crime" or
"racketeering."

26. Enterprise under 1502 is defined:
(3) "Enterprise" shall include any individual, sole proprietorship, partnership,
corporation, trust or other legal entity; and any union, association or group of persons
associated in fact, although not a legal entity. The word "enterprise" shall include illicit
as well as licit enterprises, and governmental as well as other entities.

27. Members of the SearchBriberyHacking (SBH) Enterprise are an

association-in-fact enterprise that are known as of the date of filing this

complaint to include: IAC, AskJeeves, News Corporation, Orrick Herrington,

VantagePoint Partners, RedPoint Partners, JPMorgan, Washington Post Corporation,

RGRD Law LLC, Sony Corporation, Sony Music Entertainment, Arent Fox, EMI,

Warner Brothers Music, MySpace Inc., Intermix Inc., Sony Corporation America, 550

DMV, Sony Bioaubanu Enteitainment Inc., as well as certain of their Officers,

Directors, and employees (Enterprise).

28. This Enterprise possessed and continues to possess a common

purpose and goal, a membership, organizational structure, and ongoing

relationships with sufficient longevity to permit and enable pursuit of the

Enterprises purpose and long-term objective through a continuous course of

conduct that affected and continues to affect interstate and foreign commerce.

Most or all of the members of the Enterprise are also Principals, defined under

Delaware statue,

S
(8) "Principal" shall mean a person who engages in conduct
constituting a violation, or one who is legally accountable for the
unlawful conduct of another person or entity.
29. The SBH Enterprise, members, and/or Principals engaged, attempted to

engage in, or conspired to engage in or to solicit, coerce or intimidate other person

to engage in Racketeering violations which under Delaware state law is defined as:

(9) "Racketeering" shall mean to engage in, to attempt to engage in, to conspire to
engage in or to solicit, coerce or intimidate another person to engage in:
a. Any activity defined as "racketeering activity" under 18 U.S.C. 1961(1)(A),
(1)(B), (1)(C) or (1)(D); or
b. Any activity constituting any felony which is chargeable under the Delaware
Code or any activity constituting a misdemeanor under the following provisions of
the Delaware Code:
Chapter 73 of Title 6 relating to the sale of securities; Chapter 5 of Title 11 & Title
6 relating to forgery and counterfeiting; Chapter 5 of Title 11 relating to perjury;
Chapter 5 of Title 11 and Title 28 relating to bribery and misuse of public office
and improper influence; Chapter 5 of Title 11 relating to tampering with jurors,
evidence and witnesses;
30. SBH Enterprise, members, and Principals that make up the SBH

Enterprise initiated a Pattern of racketeering activity between 2003 thru 2013,

defined as:

(5) "Pattern of racketeering activity" shall mean 2 or more incidents of conduct:
a. That:
1. Constitute racketeering activity;
2. Are related to the affairs of the enterprise;
3. Are not so closely related to each other and connected in point of time and
place that they constitute a single event; and
b. Where:
1. At least 1 of the incidents of conduct occurred after July 9, 1986;
6
2. The last incident of conduct occurred within 10 years after a prior
occasion of conduct; and
3. As to criminal charges, but not as to civil proceedings, at least 1 of the
incidents of conduct constituted a felony under the Delaware Criminal
Code, or if committed subject to the jurisdiction of the United States or
any state of the United States, would constitute a felony under the
Delaware Criminal Code if committed in the State.
31. SBH Enterprise racketeering activity included: 18 U.S.C. 1341
(relating to mail fraud), 18 U.S.C. 1512 (relating to tampering with a witness,
victim, or an informant) 18 U.S.C. 1513 (relating to retaliating against a witness,
victim, or an informant) and 18 U.S.C. 1519 (relating to destruction, alteration, or
falsification of records in Federal investigation and bankruptcy).
32. The pattern of racketeering activity is based on the following facts:

33. Principals and members of the SBH enterprise desired and wanted

to fraudulently take control of a publicly traded company that was the #1 fastest

growing Top 10 Property in the world as of October 2003.

34. Defendants launch series of schemes and frauds to take control of publicly

traded MySpace and its parent corporation eUniverse (later renamed Intermix) and oust

founder/CEO Brad Greenspan.

35. Defendants also initiate schemes to defame and harass Petitioner, and

additionally obstruct justice.

36. Not satisfied with their existing economic gains, defendants embarked on an

ever growing series of schemes and misdeeds to loot the public company.

37. Petitioner on January 23, 2004 published press release titled:

Substantial Conflicts of Interest with Respect to Verisign
Nasdaq:VRSN And Ask Jeeves NASDAQ: ASKJ
7
stating:
i.eUniverses Future Success in Lucrative Paid Search Space Is
Threatened By Existing Director Conflicts

ii.certain of eUniverses incumbent Directors have substantial conflicts of interest
that could threaten the Companys success in the paid search industry.

iii.Daniel Mosher has conflicts of interest arising from his middle management role
at Verisign, Inc. (NASDAQ: VRSN) which introduced the sitefinder redirect
service in direct competition with eUniverses PerfectNav application.

iv.David Carlick has a conflict of interest arising from his membership on the Board
of Ask Jeeves (Nasdaq: ASKJ), which is a pure play in the paid search space.

V.Carlick has the ability to influence management decisions which may adversely
affect eUniverses Paid Search division.

DEFENDANTS ENTRENCHMENT SCHEME SHIFTS CONTROL

38. Petitioner incorporates by reference Exhibit #1 which includes:

i. January 2, 2014 letter to Chancellor Strine

ii. NOTICE MOTION IN CONTEMPT

iii. MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)

iii. DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT

iv. JUDGMENT ENTRY SETTING HEARING

(Note: All above unsigned documents were signed and submitted by courier
January 2, 2014 to Brenda at intake with copy of December 2013 proof of
service to Defendants )

DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DI SCLOSURE VI OLATI ON TO
ACQUI ROR NEWS CORPORATI ON

39. July 17, 2005 News Corporation Corporate counsel Lang emailed at 4:13AM
to Defendant eUniverse Director Sheehan and states, by interstate wire or interstate
carrier an email furthering the fraudulent concealment scheme to fabricate and
8
fraudulently conceal unlawful acts including contempt of Court to acquiror News
Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal
security fraud class action. Subject: 'Purchase Agreement, stating,

"On the issues, let's close on the remaining ones in a fair and reasonable
way-- so we can build out relationship. And

3. We feel like we have given indemnification on the shares and the
purchase agreement itself to do so on any issue we have had no
involvement in whatsoever (i.e. Greenspan) - that seems like
too much. Andy, I know we are very eager to get this done. Let do it
so both sides can feel good and move forward on our longer-term
relationship."

Langs communication is in violation of 18 U.S.C. 1341, 18 U.S.C. 1343, and 18
U.S.C. 1519 (relating to destruction, alteration, or falsification of records in Federal
investigation and bankruptcy).

2013 HITECH FEDERAL CLASS ACTION EVIDENCE
40. Evidence disclosed for the first time May 2013 in the Hitech Class Action

Case 5:1102509, specifically document 198-3, page 37 and 38, proves Google had

undisclosed illegal agreements in place with AskJeeves, AOL, Intel, Intuit, IAC Corp.

and Apple as of March 6, 2005 or earlier violating Federal antitrust statues. The

companies fraudulently concealed the agreements and failed to disclose them in

their annual 10K SEC or Proxy filings, violating security law and Director fiduciary

duties.

41. The evidence confirms Petitioner and shareholders were victims in

2005 of an bid rigging conspiracy led by Google and enacted in coordination with

AskJeevess Directors who used their positions on the Boards of both MySpace,

Inc. and Parent eUniverse to mislead the other Directors and shareholders while
9

facilitating and enjoying the economic benefits of an illegal bid rigging scheme.

42. This conspiracy included: (i) fabricating prior sale of MySpace stock

with backdated agreement in November 2004 (ii) agreements allowing AskJeeves

Director Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below

fair market value using his RedPoint fund where he is managing Director;

a. September 27, 2004 Vantagepoint internal report proves SBH Enterprise,
Carlick, and AskJeeves manipulated Intermix Directors to forgo using less dilutive debt
financing available, instead facilitating sweetheart equity sale to Yang and RedPoint
Partners.
Myspace wi l l r equi r e appr oxi mat el y $1. 5 - 2 mi l l i on i n t he next 2
mont hs f or st or age ar r ays, dat abase ser ver s, swi t ches and
r out er s.
And
The company i s i n di scussi ons wi t h Si l i con Val l ey Bank r egar di ng
a $4m l i ne of cr edi t , whi ch i s l i kel y t o be appr oved.

b. October 1, 2004, 3:05PM Rosenblatt contacts Sheehan using interstate wire

or interstate carrier to send and deliver the email:

J ust had a t ough t al k wi t h Chr i s DeWol f . Hi s l awyer i d def i ni t el y gi vi ng
hi m concer ns about our of f er . Hear t ache about us t aki ng t he t ech, val ue
i f we sel l , et c. He r eal l y t hi nks he i s wor t h mor e i ndependent l yI am
t ol d hi m t hat i s not goi ng t o happen.

the disclosed order of events described in the November 2004 10Q is fabricated and this
email is in violation of both 18 U.S.C. 1341 & 18 U.S.C. 1343, and is a Key
component and predicate act in fraudulently concealing the false facts in the November
eUniverse 2004 10Q filing related to hiding backdated MySpace stock purchase
agreement by defendants.
c. October 7, 2004 3:45PM Sheehan contacts Rosenblatt & Carlick by interstate
wire or interstate carrier using an email in violation of 18 U.S.C. 1341 &/or 1343
1u
furthering the fraudulent concealment scheme to fabricate and fraudulently conceal the
MySpace Stock purchase documents published in the November 2004 10Q were
fabricated and backdated with Subject: MS t hought s of t he day,
My cur r ent t hought s on t he MS si t uat i on:

We need t o get i n pl ace t he r evi sed agr eement bef or e any meani ngf ul
negot i at i ons wi t h any ot her t hi r d par t y.

* I bel i eve I under st and Chr i s concer ns about bei ng l ocked i nt o an i l l i qui d
subsi di ar y, but t hat i t s t hei r choi ce t hey coul d have MI X st ock i f t hey
want l i qui di t y.

* They ar e mi nor i t y shar ehol der s and need t o accept t hi s f act .

* We, I nt er Mi x, need t he r i ght t o be abl e t o sel l al l of MS. I ncl udi ng
f ounder s shar es.

We, I nt er Mi x, need t he r i ght t o buy out t he f ounder s at a pr i ce or a
f or mul a

On Redpoi nt :
* Why not cont i nue t al ki ng t o t hem, i t i s t oo har d t o f i gur e out i f t hey
coul d pr esent t he most at t r act i ve deal or not at t hi s t i me

d. November 4, 2004 11:43PM Carlick emails Sheehan, by interstate wire or
interstate carrier an email in violation 18 U.S.C. 1341 &/or 1343 furthering the
fraudulent concealment scheme to fabricate and fraudulently conceal the MySpace Stock
purchase documents published in the November 2004 10Q were fabricated and
backdated Subject: My t al k wi t h Yang stating,

Andr ew, Spoke wi t h Geof f , who hol ds you i n t he hi ghest r egar d. I
am not i n t he l oop on t hei r of f er , whi ch he descr i bed as 23%
Redpoi nt , 25% Founder s and pool and 52% I nt er mi x.

Hi s case f or t he of f er was i nt er est i ng and compel l i ng, as I nt er mi x
coul d st i l l f ol d i n t he ear ni ngs, t r af f i c, et c. I want t o di scuss wi t h
you my t hought s on t he subj ect t omor r ow, God know when, as we
11
have no br eaks I can count on. I n any case, I suggest ed t hat Geof f
speak wi t h you di r ect l y.

e. November 5, 2004 11:58AM Sheehan contacts Carlick and states, by
interstate wire or interstate carrier an email in violation 18 U.S.C. 1341 &/or 1343
fabricated and backdated
what i t comes down t o i s do we sel l ms now or keep i t . Doi ng a
deal wher e mi x keeps 52% doesn t make any sense f or anyone
except Yang. Al l t he banks and i nvest or s t hi nk we woul d be f ool i sh
t o sel l some or al l of ms now. We wi l l get much l ess benef i t t o mi x
i f we own 52% and have gi ve al l sor t s of r i ght s t o an i nvest or .
Ri char d want s t o keep i t i n mi x.

f. November 18, 2004, 3:56PM Orricks Richard Harroch contacted Sheehan,
Redpoint & AskJeeves Director Yang and RedPoints Beasly, by interstate wire or
backdated
Subject: MySpace Ter m Sheet and states,
Gent l eman: As a f ol l ow up t o our conver sat i on t oday, at t ached i a a
cl ean and r edl i ned mar kup of t he l ast ver si on of t he t er m sheet t hat was
gi ve t o us i n connect i on wi t h t he Myspace t r ansact i on. Let us di scuss t he
i ssues at your conveni ence. Ri char d Har r och <<MySpace Sal e of Ser i es
A Pr ef er r ed St ock. doc>>

g. Rosenblatt by interstate wire or interstate carrier uses email in violation 18
U.S.C. 1341 &/or 1343 to further the fraudulent concealment scheme forwards an
incoming Orrick email to Chris Lipp and Tom Flahie at 4:28PM to fabricate and
fraudulently conceal the MySpace Stock purchase documents published in the November
2004 10Q, to hide the fact the documents were fabricated and backdated.
The email states: I have not seen yet
12
Rosenblatt professes to not know the terms that the company has already agreed to sell a
portion of MySpace.com to VantagePoints fellow board member on Ask Jeeves, Geoff
Yang and his fund company he is a principal in, Redpoint.

h. November 18, 2004 CFO Flahie emails Rosenblatt, Subject: RE: MySpace
Term Sheet and states,
t hi s si t uat i on r eal l y goes beyond anyt hi ng I want t o be a par t
of . I communi cat ed my f eel i ngs i n wr i t i ng t wi ce now about t he
l awyer f or a l ar ge pr ef er r ed st ockhol der and one di r ect or
negot i at i ng a maj or busi ness t r ansact i on on behal f of t he company
wi t hout aut hor i zat i on of our boar d and al l I r ecei ved was an
admoni shment f r om Har r och about my emai l and t ol d t o shut up i n
a conf er ence cal l .

Si nce you have not seen t hi s yet and I have cer t ai nl y not , t hi s
makes a br oader st at ement about our Seni or Management . As an
of f i cer I woul d be der el i ct i n my dut i es t o our company t o al l ow
t hi s t o cont i nue out si de of t he vi ew of t he Boar d wi t hout doi ng
somet hi ng about i t

Flahie uses interstate wire or interstate carrier in violation 18 U.S.C. 1341 &/or 1343
to deliver email to further the fraudulent concealment scheme to fabricate and

i. November 18, 7:20PM Rosenblatt emails Flahie Subject: Re:Myspace Term
Sheet, stating:
Tom, I know how t hi s coul d l ook but i t i s NOT at - al l how i t may
appear .
and
Andy NEVER l ooked at i t as a vant age shar ehol der , but as a
Boar d member l ooki ng out f or I nt er mi x as a whol e.
and
I bel i eved (and was r i ght ) t hat he was bet t er posi t i oned t han I
was t o ext ract t er ms t hat woul d be accept abl e t o t he Boar d at
l ar ge. Over t he past week he was, t o my sur pr i se, abl e t o get t he
1S
t er ms we al l t hi nk ar e BETTER f or t he company and make t he
Redpoi nt deal a gr eat deal .
and
I n hi ndsi ght , I shoul d have asked hi m t o gi ve t hose new t er ms t o
Chr i s and we shoul d have sent t he t er m sheet t o Redpoi nt . I pl an
on cl ar i f yi ng wi t h Redpoi nt t omor r ow t hat Andy was si mpl y hel pi ng us
get a deal done and t he Company wi l l t ake i t f r om her e.
i

Rosenblatt uses interstate wire or interstate carrier in violation 18 U.S.C. 1341 &/or
1343 to deliver email to further the fraudulent concealment scheme to fabricate and
j. November 18, 2004 at 7:51PM, Sheehan forwards the email thread and
CFOs effective whistleblower notification to Orricks Harroch who is directly
involved in the incident. Sheehan uses interstate wire or interstate carrier to deliver
email to further the fraudulent concealment scheme to fabricate and fraudulently conceal
the MySpace Stock purchase documents published in the November 2004 10Q, to hide
the fact the documents were fabricated and backdated, to conceal scheme to sell 25% of
Myspace.com to conflicted Interlocking Director violating Clayton Act fellow
AskJeeves Director, Geoff Yang in violation of 18 0.S.C. 1S41, 18 U.S.C. 1343,
anu violation of 18 0.S.C. 1S19 (ielating to uestiuction, alteiation, oi falsification
of iecoius in Feueial investigation anu bankiuptcy).

(iii) agreements allowing Google, TimeWarner/AOL, News Corporation, AskJeeves,

IAC, and other defendants to collude to gain economic benefits by delaying

closing of a competitive EUNI MySpace search engine auction for a new

commercial search engine agreement in the months leading up to News Corporation

acquiring 100% of eUniverse in September 2005. This arrangement ensured

Googles $4.4 Billion dollar August 2005 secondary by tying up the fast growing

14
online audience of MySpace, significantly growing its share of online

search engine advertising while shrinking share of main rival #2 Yahoo; (iv)

An arrangement allowing News Corporation to purchase MySpace.com at below

fair market value, growing its market valuation and generating billions in

incremental profits and a massive online audience to seed new online assets for

years to come, while preventing a competitive auction with main rival Viacom.

k. MySpace and eUniverses failure to elect 5
th
MySpace Director was key

part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to

disclose Intermixs majority owned MySpace, Inc. was in breach of this covenant in the

August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such

breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C.

1341 thru publishing,distributing and mailing the August 2005 Proxy omitting the

disclosure of such breach.

l. euniverses failure to cure breach of Merger Agreement Sections

6.3 & 6.4 & 6.5. was a key part of scheme to rig bidding in Search Auction and

sale of eUniverse. Failure to disclose the breach in the August 2005 Proxy was a

14A violation. Defendants breach and non disclosure of such breach are used to

effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. 1341

thru publishing, distributing and mailing the August 2005 Proxy omitting the

disclosure of such breach

m. eUniverse and CEO Rosenblatt by end of June has earmarked $25-30
million in monies the executives are not owed or entitled to which helps float his own
1S
requests for consideration higher. June 23, 2005 Email from Rosenblatt to
Montgomery on with subject presentation and attachment foxmeeting.ppt states,
This deal would need to be a win-win for everybody. I think we could motivate and
energize the Myspace team if we took $25-30mm and put in escrow for 12-24 months.
They would receive that money if they continued to build Myspace and remained at the
Company. Right now, they own 20% and would receive about $20MM (due to the
preference from Redpoint) if we exercised our option. If they could sell for $250mm they
would receive $50mm. While they think Myspace is worth far more than $250mm, the
escrow would clearly be enough incentive to keep them very motivated and want to stay
on board.

eUniverse and Rosenblatt thru use of such email violate 18 0.S.C. 1S41 &oi 1343,
anu 18 0.S.C. 1S19 (ielating to uestiuction, alteiation, oi falsification of iecoius in
Feueial investigation anu bankiuptcy). Scheme is designed to bribe certain members
of management to support the below fair market sale of MySpace to News Corporation
while not disclosing such additional payments in the Proxy as required by Federal law.

n. On July 18, 2005 at 8:19PM, eUniverses Rosenblatt uses interstate wire to

email News Corporation executive, Levinsohn in violation 18 U.S.C. 1341 &/or

1343 to further the fraudulent scheme to sell eUniverse and Myspace below fair market

value. The email indicates Rosenblatt is aware the $12.00 per share price he negotiated

with News Corporation days earlier is below fair market value and is aware of the

correct valuation level for internet assets including the future value Google will use to

value AOL in the months ahead,

Snippet of the press playa. You will be famousnow 20B

BROWN v. BREWER FEDERAL SECURITY FRAUD CLASS ACTION

42. Petitioner was originally part of a Federal Class Action filed in
16

Federal Court as a securities class action, titled Brown v. Brewer. However,

the defendants led by News Corporation and Hogan Lovell , engaged in a

series of coverups and struck a deal with Class Counsel to remove key

evidence and claims including initiating a scheme to blatently obstruct justice

by eliminating petitioner before he could submit evidence into the Federal

court in 2009 which would have led to adding claims

43. June 17, 2010 Federal Judge King Summary Judgement states:

Though Brewers failure to recall what everyone had specifically
asked back in 2005 would be understandable, a reasonable jury
might draw a negative inference from his representation that he
could not recall any discussion as to the investment banks analyses.

Construing all of the above testimony in the light most favorable to
Plaintiff as we must on Defendants motion for summary judgment,
we conclude that it is at least triable as to whether the remaining six
board members consciously disregarded their duties and acted in bad
faith. There is evidence in the record suggesting that no one on the
board asked any questions about the requested per share price, the
treatment of the competing bidders, the fairness valuations, or the
relative likelihood of a Viacom bid.

A reasonable jury could infer that this evidence demonstrates the
other six directors consciously abdicated their roles as corporate
fiduciaries required by law to do their utmost to maximize
shareholder wealth.

Nevertheless, we think a reasonable jury could find that the other
six directors exceeded the bounds of negligent conduct, willfully
proceeded to their decisions knowing they lacked material
information, Gesoff, 902 A.2d at 1165, and thereby consciously
disregarded their fiduciary duties. Disney, 906 A.2d at 66

2. Self-Interested Transaction

In the alternative, Defendants move for summary judgment on the
second theory supporting the breach of fiduciary duty claim, arguing
that five of the eight Defendants (a majority) were not self interested
or controlled by someone who was.

17
Plaintiff argues that Rosenblatt deliberately misled the other board
members regarding the viability of the Viacom bid, steering them
into approving the merger without waiting even a couple more days
to see if Viacom would top News Corp.s offer. (Joint Br. 26-27).

This evidence is sufficient to raise an inference that Rosenblatts
presentation to the board may have been misleading as to Viacoms
seriousness.

According to Moshers description of the board meetings, from the
management team estimation standpoint [sic], they were not
inclined to make an offer for the company on the time line that we
were looking at. (Id. at 25:18-21).

there are at least triable issues of fact as to whether Mosher was
manipulated by a self interested director, Rosenblatt. Moreover,
based on Moshers description of the content of Rosenblatts
presentations to the board, the issue of manipulation is triable with
respect to all of the other board members.

Accordingly, as a reasonable jury could potentially conclude that a
majority of the directors was interested or manipulated by someone
who was, we hereby DENY Defendants Motion for Summary
Judgment on this second basis for Plaintiffs claim of breach of the
duty of loyalty.

A. Alleged Material Omissions

current revenue and profits omission, which was so clearly
identified in the CSAC (if not so clearly in the interrogatory
responses). Accordingly, as this argument was not waived, and
Defendants have not made any threshold showing entitling them
to summary judgment on this basis, we DENY the Motion for
Summary Judgment as to this alleged material omission under
Count I

Here, we conclude that there is at least a triable issue as to the
materiality of the omission of Intermixs internal financial
projections. Accordingly, Defendants Motion for Summary
Judgment is DENIED as to this alleged material omission.

Outstanding Derivative Lawsuits

Plaintiff also argues that Defendants failed to disclose one pending
18
derivative lawsuit, LeBoyer v. Greenspan, et al., No. CV 03-5603-
GHK (JTLx), and the fact that shareholder derivative standing would
be extinguished as to both LeBoyer and Greenspan v. Salzman, the
two derivative lawsuits pending at the time the Proxy was issued.

Defendants concede that they did not disclose the existence of the
pending LeBoyer action. (Joint Br. 56 n.67).

With respect to the disclosed Greenspan v. Salzman action,
Defendants argue they had no obligation to further announce the
extinguishment of derivative standing.

Here too, the disclosure above is arguably misleading as well, as it
did not affirmatively disclose that the Greenspan v. Salzman
plaintiffs derivative standing would be extinguished under Delaware
law. (J.A., Ex. 4, at 332). Instead, it only stated that Fox Interactive
Media would seek the dismissal of the action and would do so only if
it was not required to pay the plaintiffs or their counsel. (Id.).
Accordingly, it is at least triable whether the above language was
misleading as to the extinguishment of derivative standing, which
was material information.

Accordingly, we also hereby DENY Defendants Motion for Summary
Judgment as to this alleged material omission.

44. Edell & Defendants in mid-2009 launch another prong of fraudulent

concealment. includes i) publication of a book by employee loyal to

News Corp to fabricate the background of Jeff Edell a former Director ii) Using

fabricated Edell character to conceal truth that MySpace asset sale documents were

not executed until 2004. These schemes create a fraud upon the court and keep

petitioner and Class members from getting benefit of fair judicial process.

45. Defendants leverage their relationship with acquiror to create

defamatory and fabricated lies thru acquiror News Corporation employee Angwins

published in late 2009 book, Stealing MySpace which fraudulently conceals the

true background of former Director and Chairman Jeff Edell and his scheme with
19

Brewer to forward a fabricated false resume.

46. This creates further ongoing defamatory damages to Plaintiff and

Shareholders because Class Counsel accepts and uses false Edell facts in book

instead of Plaintiffs facts offered to Class Counsel in 2012 Federal Class Action in

Los Angeles Central District. Edells false facts allow the fraudulent conveyance

Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004.

Further, Edells false facts which become Acquiror News Corporation false facts,

obstruct Plaintiffs true facts from entering the record for the benefit of the Federal

Court learning the true damages and claims rightfully owed to shareholders. Plaintiff

and shareholders will continue to suffer until the defective disclosure is cured by

Defendants. (70B Declaration, pg. 24-27, paragraphs 114-131)

47. Additional act of fraudulent concealment is part of scheme by defendants tied

to 2009 Angwin published book that uses fabricated documents to support critical

contentions. altering, destroying, mutilating, or concealing a document with the intent to

obstruct justice in violation of 18 U.S.C. 1512(c)(1);

48. Petitioner a fact witness with testimony that was adverse to Defendants was

excluded and obstructed from entering evidence into the Brown Brewer case,

immediately before Defendants plugged in Angwins false facts and testimony while

using Stealing MySpace as an uncontested source of facts to corrupt the

Classs case And damage/expert reports.

49. News Corporation destroyed Petitioner testimony from appearing which

damages Petitioner and violates Section 1512(d) which criminalizes the actions of

2u
[w]hoever intentionally harasses another person and thereby hinders, delays, prevents,
or dissuades any person from appearing before an official proceeding, law enforcement
officer, or United States judge.

50. Angwin fraudulently conceals evidence of Edells true work experience and

back ground and his violation of SEC rules in 2003 and 2004. Defendants conceal their

knowledge of this scheme thru the March 19, 2012 Approval of the Federal Brown

Brewer settlement that Petitioner and 4 other Class members attempted to object to or

intervene to remove RGRD and Jim Brown from representing the Federal

Class and agreeing to An Inadequate consideration for the settlement and failure to assert

more valuable claims and evidence into the Court prior to approving settlement.

51. Angwin, Hinton, News Corporation, Hogan Lovell, RGRD, and eUniverse

Defendants violate 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519 by hiding evidence of

Edells two resignations on his bio that were really his last two jobs instead of submitting

an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and

increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both

omits to accomplish his end goal of making detection and disclosure of his true track

record and financial history as difficult as possible.

i. Angwin, News Corporation, Hinton, Murdoch, RGRD, eUniverse

and Orrick Conceal the false revised BIO of Edell filed in July 2004 SEC filings:

"Mr. Edell was the Chief Executive Officer of Showorks Entertainment
Group. Inc., a Delaware corporation that later changed its name to Media
Technology Source of Delaware, Inc. Within two years of the time that Mr.
Edell resigned from that company, it filed a petition for relief under the
United States Bankruptcy Code."

52. Defendants scheme entailed Creating a fictitious Glowing work experience

21
for Edell using a fabricated Resume in 2003 that News Corporation, Hinton, Angwin,

and Murdoch determined would be used to harm Petitioner In a book that was published

called Stealing MySpace and was sent in US Mail to bookstores Across the United

States beginning in March 2009, and overseas with the fabricated false facts related to

Edells true work Experience and his SEC violations in 2003, 2004, 2005 in violation of

Rule 401, this violated section 18 U.S.C. 1341.

53. After the Class won summary judgement in June 2010, petitioner in

2011 tried to bring new evidence to the attention of Class Counsel indicating the

true damages were related to the value of MySpaces search value, the claims and

facts which had never been put before the Federal Court. Petitioners Rule 701

damage report providing for damages of over $96 billion dollars was ignored by

Class Counsel who instead joined with defendants in a brazen scheme to: i)

mislead and initiate a fraud upon the Court by changing the definition of the

certified class to eliminate upwards of 60% of the eligible shares and shareholders

and ii) enter into a sham settlement for pennies on the dollar which was accepted

by the Federal Court in March 2012.

S4. In Septembei 2u1u, by RuRB, Baion, Bogan Lovell, Stone, News

Coipoiation, 0iiick anu othei Befenuants filea }oint Notion to ban fact witness anu

Petitionei fiom the Feueial Class to uelay anu haiass Petitionei fiom appeaiing

befoie Feueial }uuge. Befenuants knew the motion to ban the petitionei coulu not

be tiue unless 0iiick coulu continue to suppiess new eviuence anu uiscoveiy fiom

enteiing the Feueial Biown v. Biewei ongoing case.
22

SS. 0thei Eviuence uestioyeu by 0iiick incluueu theii ties anu business

with NySpace Paient Company executive Chiis BeWolfe. 0iiick anu BeWolfe woik

togethei in 2uu4 anu 2uuS to uocument a fabiicateu sale of equity of NySpace at

iock bottom piices foi BeWolfe.

S6. In 2u1u, Baion anu News Coipoiation anu Bogan & Lovell, anu Stone, anu

RuRB anu 0iiick violateu 18 0.S.C. 1S41 (ielating to mail fiauu) by senuing notice

of the }oint Notion to Biief the "Notion to Ban Biau uieenspan" foi puipoiteu "ies

juuicata" they intenueu to file in Feueial Couit via email to Petitionei's then lawyei

Ni. Lawience.

i. Above Befenuants violateu fuithei 18 0.S.C. 1S12 (ielating to

tampeiing with a witness, victim, oi an infoimant) 18 0.S.C. 1S1S (ielating to

ietaliating against a witness, victim, oi an infoimant) anu 18 0.S.C. 1S19 (ielating

to uestiuction, alteiation, oi falsification of iecoius in Feueial investigation anu

bankiuptcy) by omitting anu uestioying the eviuence they possesseu at the time

the above actions weie taken that woulu have pioviueu new facts anu infoimation

anu claims not iaiseu oi in State pioceeuing anu that woulu have the effect of

voiuing the uefenuant's motion.

ii. RuRB, Baion, Wissbioeckei violateu theii fiuuciaiy uuty to Petitionei as

well as aiuing anu abetting above violations of othei Befenuants.

iii. Baion & RuRB lieu anu fabiicateu biiefings, pleauings, anu affiuavits in 2u11
anu 2u12 to fiauuulently conceal the piioi ciiminal acts in Feueial Couit.

S7. In Becembei 2u1u, RuRB was again uisloyal by changing the Class
2S

Ceitification to ieuuce the # of eligible shaies.

i. 6/8/09 Judge King approved Certified Class with definition:

Most clear is position of RGRD Law at the time:

Plaintiff responds herein to both questions raised by the Court in its Order re:
Plaintiffs Motion for Class Certification: (1) should the class definition be
modified to include only holders of Intermix Media, Inc. common stock who
held continuously from July 18, 2005 (the date the merger with News
Corporation was announced) through the consummation of the merger on
September 30, 2005; and (2) should the plaintiffs in the state court actions be
carved out of the class definition? As set forth below, the answer to both
questions is no.

ii. 12/23/10 Certified Class is victim of definitional change by RGRD

Law, inserting ulawfully, word continuously. This cuts approximately 60% of total

shares that were eligible under Certified Class definition.

iii. December 2011 RGRD challenged by Shareholders objecting
1
to

Settlement denied the Class Certificate had been switched.

58. Sony Music Corp and Seligmann using its control position on the Board of

the RIAA and its relationship with EMI and Warner Music Group, induced Arent Fox to

falsify his affidavit and the fact contained which were used to conceal the fact that EMI

and Petitioners startup LiveUniverse, Inc. had entered into a music text lyric license

prior to Warner Music, EMI, RIAA, Sony Music, and PeerMusic filing a federal

1
*Included:
-Largest shareholder of original Certified Class defined in 2009, Trafelet & Co., a multi billion dollar
NY Hedge Fund which retains law firm referred by Brad Greenspan, another injured shareholder and
fact witness. Brad was one of named plaintiffs in State Class action which was dismissed in 2006.
-Similar to Cut/lost shares, RGRD switched its position unlawfully, allowing
Defendants to file uncontested Motion to Ban state court plaintiffs, un defended, default judgment
carved out Brads 2,900,000 shares. (Brad was the largest single shareholder, owning about 10%
commons stock at time of sale.

24

copyright infringement complaint that claimed LiveUniverse had never entered into such

an agreement in 2009.

59. It was part of the Defendants scheme to conspire to interfere with Plaintiffs

livelihood by filing a lawsuit against Plaintiff in 2009 in retaliation for providing

truthful information to the SEC, DOJ, and FTC relating to the Defendants scheme, in

violation of 18 U.S.C. 1513(e) and (f).

60. It was part of the Defendants scheme to interfere with Plaintiffs

livelihood by disseminating defamatory statements about Plaintiff to the public through

various media outlets in retaliation for providing truthful information to the SEC, DOJ,

FTC, and Federal and State court relating to the RICO Defendants scheme, in violation

of 18 U.S.C. 1513(e) and 1513(f),

NEWS CORPORATION: CRIMINAL HACKING & BRIBERY

61. In 2012, News Corporation, who indemnified director defendants in

Brown v. Brewer and was operating the cases U.S. legal strategy, was exposed as

a criminal enterprise that had hacked the phones of over 1000 UK citizens and

employed a massive campaign of bribing police and public officials.

62. News Corporations general counsel resigned in 2011 and its

CEO appearing under oath at the Leveson Inquiry admitted he was the victim

of a coverup and all criminal acts exposed had gone on without his knowledge.

63. News Corporation conceded its internal controls were

defective as a result of the exposure of years of bribes its UK subsidiaries had

paid out and hidden by falsifying its financials.

64. At the current time, the CEOs most trusted lieutenants and top

2S
employees are on criminal trial for obstruction of justice, bribery of government

and police officials, and criminal phone hacking in the UK.

65. Four employees of News Corporation have already pled guilty.

66. News Corporation, has already conceded it has no defense for the

illegal acts charged and admits its internal controls were defective and the CEO

didnt know what was going on and the same coverup News Corp claims to be a

victim of was operating and responsible for the acts petitioner claims herein.

V - CONCLUSION:

67. Chancery Courts failure to force Defendants to honor their promise to

fix the defective Disclosure in 2003 is directly responsible for allowing Defendants

to steal upwards of $32 Billion in damages (Rule 701 Damage Report) from thousands

of shareholders in 2005 including Petitioner.

68. Defendants have failed to respond to a Motion 70(b) filed with Judge Strine

January 2, 2014 seeking relief from the contempt of then Vice Chancellor Strines order

and ruling January 14, 2004 and the included agreed relief for any technical violation.

VI. CLAIM COUNTS

COUNT # 1 - 1503 (a) Violation

69. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein.

70. All Defendants have violated Count #1

COUNT # 2 - 1503. (b) Violation


COUNT #3 - 1503 (c) Violation
26


74. All Defendants have violated 1503 (c)
COUNT # 4 - 1503(d) Violations.



COUNT # 5 1504 TRIGGERED PETITIONER
RIGHT TO CIVIL REMEDY UNDER 1505(f)

78. News Corporation 2013 UK CRIMINAL GUILTY PLEAS UNLAWFUL

UNDER 1504 and 1505(f)

COUNT # 6 - (BREACH OF AGREEMENT)


80. Sony has breached The }uly 2uuS 0ption agieement which stateu,

iv. Pursuant to the debt financing agreements, eUniverse and VPVP
agreed that in the event that VPVP does not exercise the Option within 120
days of its grant, that VPVP may, within 10 days after the expiration of such
120-day period, transfer the Option to eUniverse in exchange for a warrant
(the Warrant) to purchase 200,000 shares of the Companys Series C
Convertible Preferred Stock.

81. Sony and VantagePoint Venture Partners have further breached
OPTION AGREEMENT, dated as of July 15, 2003, among 550 Digital Media
Ventures, Inc. (Seller), an affiliate of Sony Broadband Entertainment, Inc.,
eUniverse, Inc., a Delaware corporation (the Company), and VP Alpha
Holdings IV, L.L.C. (Buyer).
Sections 6 & 7 & 10 & 14 which state:

6. Representations and Warranties of Seller. Seller represents, warrants and
covenants to Buyer, as of the date hereof and as of the Closing Date, that:
27
(e) No Price Stabilization or Manipulation. Seller has not taken and will not
take, directly or indirectly, any action designed cause or result in stabilization
or manipulation of the price of any of the Shares.

7. Representations and Warranties of Buyer. Buyer represents, warrants and
covenants to Seller, as of the date hereof and as of the Closing Date, that:

(c) No Price Stabilization or Manipulation. Buyer has not taken and will not
take, directly or indirectly, any action designed to cause or result in
stabilization or manipulation of the price of any of the Shares.
14. Buyer May Exercise Option For Less Than All Shares. Notwithstanding any
other provision herein to the contrary, Buyer may exercise the Option with respect to
less than all of the Shares, but in no event less than 50% of the Shares.
10. Certain Transactions. Seller shall vote as a stockholder in favor of an investment
and loan transaction between the Company and Buyer resulting in an additional
investment in the Company by Buyer of no less than $5 million at a price of at least
$1 per share (if an equity transaction), as approved by the Board of Directors of the
Company (the Transaction).

16. Miscellaneous.
This Agreement may not be modified or amended, except by an instrument in
writing signed by duly authorized officers of both of the parties hereto.

82. Proxy notes on page 17. that on October 31, 2003, the option term

was extended to April 16, 2004 and VantagePoint partially exercised the option and

purchased 454,545 shares of our Series B preferred stock from 550 Digital Media

Ventures. The note an exhibit had an original term of 120 days or November 16,

2003 for VantagePoint to purchase the Sony Corp shares under the option.

83. In Intermix 3/31/04 - 10K section 'Certain Relationships

"On October 31, 2003, the option term was extended to April 16, 2004 and
VantagePoint partially exercised the option and purchased 454,545 shares
of our Series B preferred stock from 550 Digital Media Ventures. On April
16, 2004, VantagePoint exercised the remainder of the option.

84. However, The October 31, 2003 extended option agreement between

28
Sony and VantagePoint was improper and what was not disclosed to shareholders

was that thru Orrick and defendants actions, shareholders i) were losing the bargain

of the deal which called for Issuer to have the right to purchase 100% of the Sony

Option Shares after January 16, 2004 as part of an agreement that would transfer

200,000 Series B Warrants of Issuer to VantagePoint and ii) The October 31, 2003

extended option actually acted as a way that Orrick and defendants sought to avail

themselves of the 19.9% nasdaq and other exchange limits that required Issuer to

have a shareholder vote prior to approving any issuance of stock of Issuer including

an issuance of stock as part of an integrated deal that shifted more then 19.9% of

Issuers stock to new party.

COUNT # 7 - (inseparable fraud) VIOLATION



COUNT #8 PAREXEL TYPE FRAUD VIOLATION
THRU FAILURE TO DISCLOSE COMPLIANCE
FAILURES


COUNT #9 RULING BASED ON DELAWARE STATUE
AND CODE 1304 THAT 2004 MYSPACE TRANSFER
AND 2005 TRANSACTIONS FRAUDULENT
90. 1304. Transfers fraudulent as to present and future creditors.
COUNT #10 VIOLATION OF DODD-FRANK
WHISTLEBLOWER STATUTE SECTION 922) &18
U.S.C. 1513(e))
29

92. Petitioner is entitled to a private cause of action for damages suffered Pursuant to

the Dodd Frank Whistleblower Statute. Mr. Greenspan is entitled to a private cause of

action for whistleblowers alleging retaliatory discharge or other discrimination. Id.

78u-6(h)(1)(B)(i). Relief includes Right to Jury Trial, reinstatement, double the back

pay owed, and costs and fees. Id. 78u-6(h)(1)(C).

i. Damages including loss of employment and Chairman Director

position from Myspace Parent company in 2003 under 15 U.S.C. 78u-6 ("Section

922") and loss of Director employment under the same statues. Petitioner reported

information concerning Defendants breach of fiduciary duty, disloyalty, and violation

of Section 10(b) of the Exchange Act when he resigned as CEO on October 30, 2003.

Petitioner reported information concerning Defendants breach of fiduciary duty,

disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as

Director in December 2003.

Mr. Greenspan was terminated for two reasons: (i) in retaliation for reporting

misconduct of Brewer, Edell, Lipp, and other Defendants; and (ii) to stop the CEO from

terminating,demoting or decreasing the compensation of Brewer, Edell, Lipp, Moreau.

iii) The CEOs refusal to sign a Board created settlement agreement during the week of

October 30, 2003 which would have prevented Greenspan from contacting other

shareholders or regulators and disclosing the breach of fiduciary duty or other security

violations the Board and certain executives had committed in the process of

consummating the VantagePoint Series C

Financing in October 2003. The acts had been committed by Defendants
Su

while blocking the superior rate Common Stock financing sitting in Issuer

outside law firms bank account. Endangering the entire Public Corporation
PETITIONER ALSO HAS CLAIMS AGAINST SONY
ix. Sony Corp executives, Defendants in this Complaint, abused their

fiduciary duty to Issuer by misleading the Public and shareholders as part of

assisting Defendants scheme to take control of eUniverse, Inc. in 2003 and get

approval and entrench Defendants as a result of the January 2004 Annual Meeting

and Proxy Battle against Petitioner.

x. Sony Corp Defendants possessed a critical Board Seat Nomination

legal right the Series B Stock possessed. Sony Corp nominated Edell as the Series B

Stockholder in 2004 even after evidence in Delaware Court showed Edell and

Defendants had mislead shareholders by Filing multiple defective and false proxy

statements to Issuers shareholders in 2003 and 2004.

xi. As a Result of the applicable Defendants involvement in the above-

described conspiracy and conspiratorial scheme, the Plaintiff has suffered severe

emotional, financial, mental, and physical harm and other deleterious effects; been

unfairly disadvantaged in multiple civil lawsuits initiated against him by several of

the Defendants and other parties; had his freedom of speech severely impinged;

been forced to spend hundreds of thousands of dollars on legal fees; been forced to;

And had his personal and professional reputation severely and permanently

damaged. Based upon information and belief, some of the Defendants are

continuing to engage in the above-described conspiracy and conspiratorial scheme

S1
even though they are well aware of the devastating toll that their prior conspiratorial

actions have already taken on Petitioner and Petitioners business assets.

COUNT # 11 - Blasisus violation

93. Plaintiff incorporates by reference and realleges each allegation set forth above.

94. All Defendants are charged with Count #11

COUNT # 12 - Contempt Violation


96. Defendants lied to Court regarding Defendants Proxy disclosure related to

Edell. Defendants Failure to make this right as claimed by Defendant

Delaware counsel is worthy of Contempt violation.

COUNT # 13 - Ruling certain transactions
after October 17, 2003 are Void.


98. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October

17,2003. Defendants fraudulently concealed such properly noticed slate.

Defendants have also not legally effected a valid closing or vote on the Series C stock

sale or transfer from Sony of their Series B shares, blocking public issuers option

received in three way agreement between Sony, VantagePoint, and public issuer in 2003.

The crooked dealings expand when Orrick uses its insider knowledge to produce a

commercial benefit for VantagePoint while having Issuer pay 100% of the cost by

paying off Sony debt earlier then due.

S2
COUNT # 14 - VOID Defendants right to
exculpation under 102(b)(7)


100. Defendant Directors right to Exculpation because of Judge King ruling finding

bad faith and disloyalty must be void.

COUNT #15 - Ruling certain transactions


102. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17,

Defendants fraudulently concealed such properly noticed slate. Therefore, Defendants

have also not legally effected a valid closing or vote on the Series C stock sale or transfer

from Sony of their Series B shares, blocking public issuers option right to rebuy the

shares for benefit of common stock shareholders received

in three way agreement between Sony, VantagePoint, and public issuer in 2003.

103. voids Blasius Directors compensation post Blasius event

104.voids VantagePoint financing tranche I on October 31, 2003

105.voids VantagePoint financing tranche 2 on January 24, 2003 which was subject to

shareholder vote of items in Blasius Proxy created by Blasius Directors.

106.Plaintiff awarded damages to stock owned equal to the dilution caused by Blasius

Directors and Blasius Proxy.

107. Plaintiff awarded Expectency damages as Proxy Slate backer damaged by Blasius


108. Award to competing Proxy slate compensation as if Slate Directors had not been
SS

victim of Blasius violation by defendants.

COUNT #16 INDEMNIFICATION AND ADVANCEMENT CLAIMS

109. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein

110. PLAINTIFF RIGHT TO INDEMNIFICATION AND ALSO RIGHT TO
IDEMNIFICATION FOR ADVANCEMENT LEGAL FEES. INCLUDING ALL
MATTERS OR EVENTS OR FACTS CITED

111. Plaintiff was Director and Officer at Issuer that owes Plaintiff benefit of contract

rights defined in Section 7 of Issuer Bylaws for Indemnification and Advancement:

The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights
and such rights shall continue as to an indemnitee who has ceased to be a director,
officer or trustee and shall inure to the benefit of the indemnitees heirs, executors and
administrators. (Exhibit 1,Article VIII Section 7. Nature of Rights )

112. Plaintiff s Right to Indemnification is entitled to: i) indemnification to

fullest extent authorized by the Delaware General Corporation Law or broader

indemnification rights
2
:

113. Plaintiff is also beneficiary broader protection compared to Del 145 statue limits
3

114.Indemnitee in addition to being an Officer, was Director and due benefit of Issuers

Eighth Bylaw broadening scope of Indemnification and Advancement rights:

EIGHTH: Directors of the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which involve

2
"shall be inuemnifieu anu helu haimless by the Coipoiation to the fullest extent authoiizeu by the
Belawaie ueneial Coipoiation Law, as the same exists oi may heieaftei be amenueu (but, in the case of
any such amenument, only to the extent that such amenument peimits the Coipoiation to pioviue bioauei
inuemnification iights than such law peimitteu the Coipoiation to pioviue piioi to such amenument),"
(Aiticle vIII Section 1;Exhibit 1)

S
"any action, suit oi pioceeuing, whethei civil, ciiminal, auministiative oi investigative (heieinaftei a
"pioceeuing")" (Exhibit 1 e0niveise Aiticle vIII Section 1. "Right to Inuemnification")

S4
intentional misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. (Exhibit 2)
INDEMNIFIED FOR ALL EXPENSE, LIABILITY, AND LOSS SUFFERED

115. Indemnittee contract right is Mandatory advancement. Plaintiff is not

limited by standard Delaware 145 Permissive advancement limitations such as allowing

terms and conditions to be set that a corporation deems appropriate.

116. Petitioner seeks to be indemnified for following:

(a1) Damages and impact on Indemnitee from fabricated dividend or fraudulent
conveyance of 33% of Myspace.com to insiders initiated in November 2004.

(a2) Damages and impact on Indemnitee from void October 31, 2003 Certificate
of Designation of Series C Preferred Stock, void Series C Preferred Stock sale,
void Series C Directors, void January 2004 Annual Shareholder meeting, void sale
of Skilljam.com,

(a3) Damages and impact on Indemnitee from void February 2005 sale to
RedPoint Capital of 25% of Myspace, Inc. stock.

(a4) Damages and impact on Indemnitee from void name change by eUniverse,
Inc. to Intermix, Inc., and sale of eUniverse, Inc. aka Intermix, Inc. to Defendant
in September 2005.

(a5) Damages and impact on Indemnitee from void issuances of stock and
options to certain Officers and Directors after October 30, 2003.

(a6) Damages and impact on Indemnitee from fraudulent concealment by
Defendants of valid October 17, 2003 Annual Slate of Directors being validly
nominated for Annual Shareholder meeting with a shareholder record date of
October 23, 2003.

(a7) Damages and impact on Indemnitee from void News Corporation 2005
purchase of eUniverse, Inc. since indemnitee owned 30% of eUniverse, Inc.

(a8) Damages and impact on Indemnitee from lost $900 million Google Search
Commerciial agreement.

(b1) Damages and impact on Indemnitees January 2004 conflicted search
SS
engine conflict and warning notice filed with SEC.

(b2) Damages and impact on Indemnitees May 2005 Whistleblower notice to
Intermix, Inc. and Intermixs june 2005 reply and actions.

(b3) Damages and impact to Indemnitee thru Carlick June 2005 fraudulent
concealment while Carlick controlled Manatt Law firm misled & manipulated
NYAG to investigate Indemnitee

(b4) Damages and impact to Indemnitee and Expectancy Damages from
Indemnitees $13.50 Counter Offer to Purchase Intermix, Inc. and Myspace Inc

(b5) Damages and impact to indemnitee and Expectancy Damages from
Indemnitees failed online music lyric text community website venture after and
as part of Sony facilitated November 30, 2012 Warner Music Group PeerMusic
lawsuit against Indemnitee.

Indemnitees failed buyout of publicly traded Delaware Incorporated
Answers.com in 2011.

Indemnitees failed buyout of subsidiary of publicly traded Delaware
Corporation, Washington Post Corporation in 2013.

(c1) Damages and impact to Indemitee and Expectancy Damages from
preventing Indemnitee from entering Rule 701 Damage Report into Federal
Court in Los Angeles in 2011 and 2012.

(c2) Plaintiff did not receive $2.75 per share despite having qualifying stock
Held of over 2,900,000 shares.

Plaintiff as shareholder was damaged by reason that Plaintiff was Director
and Officer of eUniverse, Inc. Plaintiff was obstructed from puttingRule
701 Damage Report into Federal Court before the December 31, 2012 final
Disposition.

COMPLAINT FOR DAMAGES

Requiring disgorgement and/or imposing a constructive trust upon Defendants ill-

gotten gains, freezing Defendants assets, and/or requiring Defendants to pay restitution

to Plaintiff and to all members of the class of all funds acquired by means of any act or
S6

practice declared by this Court to be an unlawful, unfair, or fraudulent.

VIII - RELIEF REQUESTED

A. WHERFORE, Plaintiff demands judgment and preliminary and permanent relief,
including injunctive relief, in its favor and in favor of the Class and against the
Defendants as follows:

B. Awarding Plaintiff appropriate damages including compensatory damages,
together with pre- and post-judgment interest;

C. Awarding Plaintiff the costs, expenses and disbursements of this action, including
any attorneys and experts fees and, if applicable, pre-judgment and post-
judgment interest; and

D. Awarding Plaintiff such other relief as this Court deems just,equitable and proper.

Dated: April 16, 2014

_________________________________

S7

EXHIBIT #1

January 2, 2014

Brad D. Greenspan
Suite 1236

Case C.A. No. 106-VCS
Greenspan v. Brewer, et. Al.

Dear Honorable Chief Chancellor Strine

Attached for your consideration under Exhibit A herein is a Motion 60(B)(6) requesting the case be re-
opened to allow for the merits of a Motion for Contempt 70(B) to be considered, along with the other
relief your ruling explicitly allowed for under the ruling and statements you made during the hearing in
January 2004 (A transcript of the hearing is attached as Exhibit #9 of Declaration in support of Motion
70(B) , specifically a Motion to Conform the Evidence, and a Motion for Judgment on the Pleadings.

While several years have gone by since the case was closed in 2004, I believe it is meritious for
The Chancery Court to accept the Motion 60(B)(6) that attaches as exhibit Motion (70)(B) for filing
along with the other documents.

First, procedurally, I followed the precedent and sequence for such an action from your decision in
C.A. No. 4780-VCS (WIMBLEDON FUND LP ABSOLUTE ) RETURN FUND SERIES v. SV SPECIAL
SITUATIONS FUND, February 2011), in which you stated in the ruling,

the way for a party to obtain relief from a final judgment is for it to file a motion in this court
under Court of Chancery Rule 60(b).

Second, because the underlying facts of the Motion for Contempt 70(B) involve fraudulent concealment
by the defendants of the scheme that the motion seeks relief from, the amount of time that has passed
should not bar this Motion from being accepted by the Court to consider.

Specifically, the evidence discovered to pierce the fraudulent concealment scheme only became
available after: i) defendants as part of the scheme published a book in 2009 calling Stealing
MySpace with false facts in an attempt to further the fraudulent concealment which began in Chancery
Court after your ruling and findings in 2004.

The defendants then induced the Plaintiff Class Counsel RGRD Law to substitute the false facts from
the defendants published book in place of my evidence I was seeking to submit into the Los Angeles
Central District Federal Class Action Security Fraud case (Brown v. Brewer, which consolidated 2005
events and claims surrounding the September 30, 2005 Cash sale of eUniverse, Inc which had changed
its name to Intermix to acquiror News Corporation, and certain 2003 claims related to the restatement
eUniverse had suffered ). Therefore, I was a member of the Class of Plaintiff shareholders in regards to
the 2005 claims, but a potential defendant Director in regards to the 2003 claims from the restatement.

A fight broke out as I sought to alert other shareholders of the Class to the fact that Plaintiff Class
Counsel had turned into a renegade suddenly sprinting to settle the claims for .07 cents on the dollar
after Federal Judge Kings June 2010 Summary Judgment finding in favor of the Plaintiff Class (of
which I was a member of such class because of my shareholdings in the underlying public company).
Judge Kings Summary Judgment focuses only on the 2005 matters.

Both myself and the second largest member of the certified class, an institutional stockholder Trafelet
& Co, a NY hedge fund, then attempted to object to the inequitable Settlement fashioned by RGRD
Law. Further, I tried to intervene to stop the settlement and get the Federal Court in Los Angeles to
review the new evidence covered up by defendants fraudulent concealment and fraud on the Chancery
Court evidence and matters that I had discovered by March 2012.

While I was forced because of monetary constraints (and the breach of a 2007 Common Interests
Agreement I signed with RGRD Law) to file pro se, I was not allowed to intervene to inject the newly
discovered facts, and the Federal Class Action Security Fraud class action had its final disposition with
the December 31, 2012 distribution of $45,000,000 in settlement proceeds to the Class

However, my alerting the other Class members led to Trafelet & Cos retained lawyer being allowed
to intervene at which time we discovered that RGRD Law had initiated a scheme to change the
definition of the certified class in the settlement documents which effectively removed 60% of the
eligible shares for participation in the settlement (RGRDLAW changed the legal definition of the Class
in the 2012 settlement documents from the previous May 2009 definition which the federal court
certified allowing anyone holding shares as of July 18, 2005 thru September 30, 2005 (date of
consummation of the merger) to receive a share of settlement proceeds, to instead a new different legal
definition which RGRD Law printed in the 2012 settlement documents which injected the word
Continuously as a qualifier. RGRD Law had a copy of the 13-F SEC list of institutional holders
which they had sent me in 2007, and realized by simply adding this one qualifying word, 60%+ of the
eligible shares would be cut out because 80%+ of the institutional shareholders holding shares on July
18, 2005 when the merger was announced, sold their shares before September 30, 2005 when the
company announced they would not entertain the competing $13.50 bid I had publicly announced (and
in which I was fronting for Viacom, Inc. a rival bidder, who was not given a chance to bid and such
scheme discussed by Judge King in his 2010 summary Judgement ruling. Thus the Federal Judge could
not consider the facts and evidence including my emails with Viacom, their desire for me to keep their
involvement in my bid anonymous unless the Company agreed to delay the September 30, 2005
shareholder meeting to approve the sale to News Corporation).

My alerting the other class members resulted in Trafelet & Co. first discovering that they were in fact
not eligible to receive any of the award because they had sold all 3 million of their shares before
consummation of the merger before September 30, 2005, and working with a boutique law firm in Los
Angeles such effort caused the Federal Judge to reject the first Settlement terms. While Judge King
noted in his ruling rejecting the first Settlement terms, that it was odd that RGRD Law in 2009 had
fought to create a certified class that included the type of shares held by Trafelet & Co and that in 2012
RGRD Law was now fighting jointly with the Defendants to claim continuous holding of the shares
thru the date of the September 30, 2005 consumation was necessary to be a member of the newly
defined certified class that RGRD printed in the settlement documents.

Judge King appeared exhausted by the proceedings and not desirous to take action on RGRDs breach
of its duty of loyalty, fiduciary duty to the Class members, fraudulent concealment of new evidence,
and fraud upon the Court (all of which I sought to be reviewed and considered by the Court in my
intervention filings and 60b3 motions which the Court rejected to be heard because more then 12
months since the default judgement banning me as a member of the Class that I sought to vacate had
passed) and approved a March 2012 2
nd
Settlement structure in which RGRD admitted Trafelet & Co.
was a member of the certified class but had shares which were not as valuable as the Continuous
shareholder, and a smaller portion per share of the award was given to Non-Continuous shares held that
were also members of the 2009 certified class

During this time, I became aware of one of the underlying reasons for RGRD Laws misdeeds. RGRD
was sanctioned in 2008 in Chancery Court as part of the findings and rulings of (SS&C
TECHNOLOGIES, INC. C.A. No. 1525-VCL). However, RGRD fraudulently concealed this sanction
from me and never disclosed it to the Federal Court in Los Angeles. This was because the defendant in
the Brown v. Brewer case was represented by Latham Watkins (although Latham directly represented
the defendants in the California State Class Action which was dismissed at demurrer stage in 2006
before discovery was reviewed by myself and new findings and claims were created from such
discovery that I subsequently shared with RGRD in 2006 which was then filed as part of the Federal
Class Action Security fraud claims, Latham wisely allowed Hogan Hartson to sub in for Latham during
the Federal Class action), the law firm that was opposite RGRD In SS&C.

Thus, RGRD was induced to turn renegade against the interests of myself and the other Federal Class
members because Latham was willing to pass on launching a new set of claims against RGRD and
significant new liability for RGRD (using the findings the Vice Chancellor hints at in the SS&C
Sanction ruling) that may have terminated RGRDs ability to practice law. RGRD also wanted a piece
of the $45 million dollar settlement and Lathams silence on informing the Federal Court that RGRD
was fraudulently concealing notice and disclosure of its Sanction from Chancery Court, allowed RGRD
to remain as Class Counsel. Noting that I was unaware initially of the SS&C Sanction matter when I
began in 2009, sending emails to RGRD indicating I was seeking to have them removed as Class
Counsel after they did a joint motion to ban me as a Witness and not use my evidence (May 2009) after
I informed them I would submit new evidence into the record I had discovered and had agreed to be
subpoened by Defendants counsel Hogan Lovell and submit such new evidence imminently)

ii) The additional critical evidence that caused me to purchase and review the 2009 Stealing Myspace
book that RGRD used as the false facts injected into the Federal Court Summary Judgment, as well as
the impetus for a below fair market settlement of the case in 2012, was the ongoing Federal Class action
HiTech Employees v. Google, Apple, et. Al I discovered existed in 2012 (the class action had been filed
in San Jose Federal Court in late 2011). After purchase of the Stealing Myspace book I discovered
references to interviews with Jeff Edell at the back of the 300 page book (after seeing reference to use
of Stealing Myspace by RGRD Law in the post 2010 Summary Judgement underlying summary of
facts documents I reviewed after being forced to stop my internet business (my full time job at the time)
and become Active as a class member that became aware RGRD had gone renegade and the entire
Shareholder Classs rights and claims were exposed and likely to be lost or severly diminished unless I
personally became active.

Only after launching a new investigation of Jeff Edell because the Stealing Myspace book
underpinned its facts from the interviews with Edell, did I get access to an original D&O Questionaire
that Edell had filled out in 2003 and submitted to the Nominating Committee of the eUniverse Board
(of which I was not a member).

It was this evidence of fraud that is at the heart of the 70(B) motion and is part of the Exhibits that
proves clearly a new crime of Fraud Upon the Chancery Court (along with other equitable claims).

Additionally new evidence disclosed in discovery in Hitech Employees v. Google only became
available in May 2013 (when disclosed in that cases attempt to Certify its Class), and such new
evidence connects Director Carlick with being a party to secret bilateral agreements that Defendants in
that case admitted were formed in 2004 and 2005. As Carlick was a Director of AskJeeves Inc. which
was one of the co-bilateral agreement parties that entered the admitted unlawful and illegal agreements
With Google (and Google had signed a Settlement admitting as such with the Department of Justice in
late 2011). Carlick was simultaneously a Director of eUniverse and his firm was control shareholder
after using Edell to help take control and win the 2004 Proxy vs. my competing Proxy bid.). Thus
Edells continuation of the fraud started in Chancery Court, discovered by Chancery Court, and then
doubled up on by defendants, was also the key scheme of the fraudulent concealment that the 2009
Stealing Myspace book accelerated, and underpinned RGRD Laws claims to the Federal Court in
Their 2012 joint bid telling the Federal Court that my claims I sought to inject into the Court were
lacking in credibility.

Therefore, unless the Chancery Court provides the relief I am seeking, I can never recover my
credibility versus the fabricated Director Edell scheme that the Motion 70(B) seeks to lance.

Further, unless the Chancery Court re-opens the matter under its right to do so via 60(B)(6), then
The Chancery Court will be allowing Defendants including Delaware defense counsel to lie to the
Court and completely disregard the Courts rulings when they are made.

Therefore, I urge your consideration of the facts included in the attached Motions and appeal to your
sense of equitableness in allowing these Motions to be filed in the Chancery Court despite the time
since the matter was closed. I also note that because my Slate of Directors was nominated rightfully
October 17, 2003 before I resigned as Chairman and CEO, and the Defendants fraudulently concealed
this fact from the Chancery Court and the public, doesnt provide a cure for the VOID actions
defendants took after such date, nor does it provide a cure for the VOID actions the defendants took
after thumbing their nose at the Chancery Court ruling in January 2004 (and fraudulently concealing
from the Chancery Court in July 2004 at which time the Court entertained an award of legal fees but
only granted in part because defendants were fraudulently concealing the aforementioned matters which
are detailed fully in the underlying Motions).

Sincerely,

Brad D. Greenspan

EXHIBIT A

"
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BRAD D. GREENSPAN,

Plaintiff,

v.

BRETT BREWER, et al.

Defendants
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C.A. No. 106-VCS

MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)

#
I INTRODUCTION.pg.3

II SUMMARY OF ALLEGATIONS..pg. 4

III ARGUMENTpg. 5

A. DEFENDANTS WILLFULLY IGNORED
WARNINGS AND MULTIPLE NOTICES...pg. 6

B. COURT PROVIDES RECOMMENDATION
THAT DEFENDANTS OPTED TO IGNORE....pg. 6

C. BOTH DELAWARE COUNSEL AND
DEFENDANT BROKE PROMISE TO COURT.pg. 7

D. DEFENDANTS IGNORED FIDUCIARY DUTY
TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE.pg. 8

E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED
EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATIONpg. 8

F. SONY IS CONFLICTED AND HAS INFLICTED
MULTIPLE PREDICATE ACTS.pg. 9

G. FRAUDULENT CONCEALMENT USED TO DISCREDIT PLAINTIFF IN 2009
NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEMEpg. 9

H. DEFENDANTS BAD FAITH & DISLOYAL FINDINGS AND ACTS DAMAGING
SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED
BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004
DEFECTIVE DISCLOSUREpg. 10

IV CONCLUSION..pg. 10

I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION.pg. 10

$

COMES NOW the Plaintiff acting on his own behalf, hereby moves this Honorable Court to enter Judgment on

the Pleadings in Plaintiffs favor and offers in support the following:

I - INTRODUCTION

1. The Plaintiff moves the Court to find Defendants in contempt under 70(B),

42(B) and/or 60(B)(3). Additionally, Plaintiff requests Court to sanction Defendants $25,000 per day

since Chancery Court January 2004 hearing that corrective disclosure ordered by then Vice Chancellor

Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide

proof to the Chancery Court that corrective disclosure has been made to the public.
1

2. During January 2004 trial, then Vice Chancellor finds Defendants guilty of Proxy

Disclosure Violations.

i. clearly, Mr. Edell was not validly elected to a Series B slot on October 6th. He just wasn't
He could not have been appointed by the Board to a Series B slot.(70B Declaration,
Exhibit# 9, pg.63)

ii. It's even odder when it's supposed to be retroactive to October 6th, especially when as of
October 6th, as I understand it, Mr. Edell hasn't even agreed to be on the board.( 70B
Declaration, Exhibit# 9, pg.63)

iii. As of October 6th, I have got to say, I really -- I think Mr. Lipp basically said the board had
no idea that it was slotting him in a Series B. I think there is a great deal of record evidence--
it's not a big record, but what record evidence there is suggests that the board wasn't really
thinking about putting him in as a Series B director but thought Sony was simply waiving its
right.( 70B Declaration, Exhibit# 9, pg.63)

iv. It's a very strange -- I mean, I have got to say--I will say this on the record. I'm very
dubious about the validity of this election, and there is a certain formality that has to be
done around electing people. And I mean, is this a proxy? (70B Declaration, Exhibit# 9, pg.63)

v. It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very
competent Delaware counsel has been engaged to assist the company, I mean, it's pretty
common knowledge that the board of directors has to approve the actual certificate of

"
In Gallagher v. Long, the Delaware Supreme Court stated, [a] trial judge has broad discretion to impose sanctions for failure
to abide by its orders, so long as the sanctions are just and reasonable.
%
designation amendment that's being proposed. And you know-- and this isn't the first dot
come kind of company that's tried to be a bit innovative. (70B Declaration, Exhibit# 9, pg.63)

v. There is a certain elegant order in things. You have to -- the board has to approve it. And
they have to approve it in the form they are proposing. Then the stockholders have to do it.
(70B Declaration, Exhibit# 9, pg.63)

vi. The Court: I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)

II SUMMARY OF ALLEGATIONS

3. Defendants, VantagePoint, and Orrick are guilty of Fraud upon the Chancery Court thru first

trying to mislead then Vice Chancellor Strine that Proxy disclosure is factual. Next caught in multiple lies

before the court, defendants agree to fix defective disclosure and fail to do so.

4. Vice Chancellor Strine further discovered the certificate of designation amendment was

never approved by Board:

THE COURT: Has the board actually voted upon, Mr. Teklits, a final copy of the
certificate of designation amendment?

MR. TEKLITS: There was some confusion. We had done it with Mr. Lipp, Your Honor.
Sony would not consent to an amendment that didn't require Vantage to exercise over 50
percent. They didn't want Vantage to exercise one share and they would lose their right to
the seats. I'm not sure what was attached to what.

THE COURT: It's not really, I guess, my job to be Director of Hygiene for eUniverse, but
now that very competent Delaware counsel has been engaged to assist the company, I
mean, it's pretty common knowledge that the board of directors has to approve the actual
certificate of designation amendment that's being proposed. And you know-- and this isn't
the first dot com kind of company thats tried to be a bit innovative. (70B Declaration,
Exhibit# 9, pg.63)

5. Omission of Edells bankruptcy in Proxy statements is violation of: Rule S-K Item 401 and

Rule S-K Item 401 (f). (70B Declaration, pg.19-21, paragraph #s 94-103)

6. Defendants aware the January 2004 Proxy was defective, fraudulently concealing

Edells work experience, ignore then Vice Chancellor Strine ruling, dont cure the defects and make more

&
disclosure violations in order to mislead shareholders and shift control of publicly traded eUniverse, Inc.

7. Sony Corp is guilty of aiding & abetting Edell and defendants to violate Rule SK Item 401

and defame Plaintiff and Plaintiffs competing slate of Directors in January 2004 Proxy contest.

8. Defendants & their Counsel are guilty of Fraudulently concealing Edells background

in 2003, 2004, 2005, 2009, 2010, and 2012, resulting in damages to Plaintiff and shareholders, as well as

fraud upon the Chancery Court in Delaware and the Federal Court in Los Angeles Central District because

Defendants induce Shareholder Class Counsel to substitute fabricated facts from fabricated Director Edell

instead of Plaintiffs true facts.

III ARGUMENT

9. Under Court of Chancery Rule 70(b), this Court may find a party in contempt when it

fails to obey a Court order of which it had knowledge.
2

10. The moving party is not required to show that the violation was willful or intentional,

but the intentional or willful nature of a contemnors acts may be considered in determining the

appropriate sanction.
3

i. Scienter of Defendants is supported by (70B Declaration, pg.4-22, paragraph #s 20-103)

11. A party moving for a finding of contempt bears the burden of establishing by clear and

convincing evidence that a court order was violated. If the movant makes that showing, the burden then

shifts to the contemnor to show why it was impossible to comply with the order or why.
4

#
Court of Chancery Rule 70(b) supplies this court with the power and broad latitude to remedy violations of its orders.
$
27 Mother African Union First Colored Methodist Protestant Church v. The Conference of African Union First Colored
Methodist Protestant Church, 1998 WL 892642, at *6 (Dec. 11, 1998).

%
State ex rel. Oberly v. Atlas Sanitation Co. Inc., 1988 WL 88494, at *2 (Del. Ch. Aug. 17, 1988) ([O]nce the party with the
burden of proof has introduced evidence from which a fact finder could conclude that he has established a prima facie case, then
the burden of going forward with the evidence shifts to the alleged contemnor to . . . [show] it was impossible to comply with
the court order.); see Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996); F.T.C. v. Affordable Media, 179
F.3d 1228, 1239 (9th Cir. 1999); see also AM. JUR. 2D Injunctions 321.

'
12. Defendants based on precedential Delaware rulings, should be sanctioned and fined.
5

13. January, July 2004, & August 2005 Proxies omit key facts rendering them defective and void.

A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES

14. Warnings by then Vice Chancellor Strine included:

i. "But you can get this stuff fixed out or you put me in a position where I have got some sort
of -- this is low hanging fruit (70B Declaration, Exhibit# 9, pg.63)

ii. I don't have to say these words and you don't have to go fix them or call your client.

iii. the way the board purported to fill it was invalid.(70B Declaration, Exhibit# 9, pg.63)

iv. You may need to do corrective disclosure to begin with, because of this( 70B Declaration,
Exhibit# 9, pg.63)

v. Then I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)

vi. real problem that I may have to take some notice of (70B Declaration, Exhibit# 9, pg.64)

vii. "could I plead with the Delaware lawyers for the company that if we are going to get -- if
you are going to get a consent from Sony, craft it. I mean, it's one thing Mr. Shannon and
Mr. Walsh -- it's one thing if they want to do a Blasius thing. You know, you don't want to
walk in here again with some sort of technical problem," (70B Declaration, Exhibit# 9, pg.64)

viii. You know you probably have to amend your proxy statement, then. (70B Declaration,
Exhibit# 9, pg.64)

ix. make sure you get it done right (70B Declaration, Exhibit# 9, pg.64)

x. the company amends its proxy statement (70B Declaration, Exhibit# 9, pg.64)

xi. You clean that up (70B Declaration, Exhibit# 9, pg.64)

B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE

15. Then Vice Chancellor Strine tips to avoid Blasius and Disclosure violations ignored:

i. "I can't help but observe the other thing, which is if this -- if the company --if the

&
()*+,)* -.//*,0/ 12 3*456 0+748 .44+9:/.+40; .4<2; <2:2 4=2 >>??@A-;#?"$B Because First State and CAMI failed
to comply with paragraphs 3 and 5 of the PI Order, IDB is entitled to an order holding First State and CAMI in contempt and
imposing an appropriate sanction. This Court has broad discretion in formulating a remedy for violations of its orders.6 As part
of its broad remedial powers, the Court may impose a fine, for example, to coerce a non-complying party to cease improper conduct.

>
incumbent board is really fine with a fair fight and doesn't mind the common and the
preferred voting together to elect a majority even now, which I don't know to be the case --
but if it were and you said, "Let's have a showdown. We have a large stockholder. We
have a disagreement. Vantage is in here. Let's have the showdown in the OK Corral. We
want Mr. Edell to be on the board." Well, there is an obvious way to do that. Right? And
if you don't want to have a legal fight, then you know, you figure out who your four are.
You know who the Vantage two are If Edell is one of the fighting four, you make sure the
certificate of designation has been approved. You clean that up. You know you probably
have to amend your proxy statement, then. Then maybe you change your sale and put
Edell on it. And the four that is currently in there, make a decision as to being on the board
or not.. You have a fight about the majority. That is the judge trying to be practical in a
situation where I have seen both sides, "I'm saying if it's fair fight time and you are
ultimately going to have a majority up, that is a real clean way to do it. I don't know how
Blasius comes into that at all. (70B Declaration, Exhibit# 9, pg.64)

ii. "I'm saying if it's fair fight time and you are ultimately going to have a majority up,
that is a real clean way to do it. I don't know how Blasius comes into that at all.

iii. "So to the extent that Sony -- for example, if Mr. Edell were to resign today, to say,
"I am not longer on the board," one of his other colleagues would resign -- and you do it in
however elegant fashion to make sure you get it done right. Mr. Edell is immediately
reelected to the vacancy a common vacancy, and the company amends its proxy statement
and puts him as one of the four. (70B Declaration, Exhibit# 9, pg.64)

C. BOTH DELAWARE COUNSEL AND DEFENDANTS BROKE PROMISE TO COURT

16. Delaware Counsel Teklits and Defendants plus Sony break promise to Court:

MR. TEKLITS: We will make sure this is right, Your Honor. I think everybody wants this
amendment approved. (70B Declaration, Exhibit# 9, pg.63)

17. Defendants fail to make Court ordered corrective disclosure of:

i. False December 30, 2003 Proxy: (70B Declaration, pg.19-21, paragraph #s 94-103)

ii. False October 31, 2003 Press release (70B Declaration, Exhibit #4, pg. 38-39)

iii. False Defamatory December 11, 2003 8k: (70B Declaration, Exhibit #6, pg. 44)

18. Defendants opt instead to initiate multiple new Edell disclosure violations thumbing nose

at Chancery Court and promise made to then Vice Chancellor Strine:

i. Thru ISS Report Defamatory attack on Petitioner: (70B Declaration, pg.22, paragraph #s
104-108)

C
ii. Thru Los Angeles Times Defamatory attack on Petitioner: (70B Declaration, pg. 23,
paragraph # 109)

iii. Thru false and defective July 2004 Proxy (70B Declaration, pg. 24, paragraph #s 110-113 &
Exhibit #7, pg.48-49)

iv. False and defamatory January 26, 2004 Proxy Disclosure (70B Declaration, Exhibit #6,
pages 45-46)

iv. Misleading investment bankers in 2005 Bidding Contest by failing to correct
previous Proxy statements and disclosures, ensuring Plaintiff status would be Does
not have significant credibility so that Plaintiff would not have equitable
opportunity to participate with $13.50 counter bid announced in September 2005
before Defendants consummated $12.00 per share sale to News Corporation.
(70B Declaration, Exhibit #8, page 51)

D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY
ELECTED PROXY SLATE

19. After January 2004 Chancery Court hearing, it was unlawful for Defendants to fraudulently

conceal and to not honor Plaintiffs October 17, 2003 approved Director slate nominated at validly called

Board Meeting. (70B Declaration, pg.13, paragraph #48)

20. Voided Edell Director, voids Edell vote during Plaintiff and eUniverses October 16, 2003

Vote to Nominate Director slate proposed by Plaintiff before Plaintiff resigned as Chairman and CEO.

This effects 3-1-1 win by Plaintiff vs. previous No pass Defendants purport existed from 3-1-2 vote

before Chancery Court ruled Edell was never validly elected as Director in October 2003.

E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE
VIOLATION TO ACQUIROR NEWS CORPORATION

21. Defendants pass on fraudulently concealed unlawful acts including contempt of Court to

acquiror News Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal

security fraud class action. Such email on July 17, 2005 from Corporate counsel Lang emailed at 4:13AM

to Defendant Director Sheehan, Subject: 'Purchase Agreement, stating,

"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out
relationship. And

D
3. We feel like we have given indemnification on the shares and the purchase agreement itself to
do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like
too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good
and move forward on our longer-term relationship."

F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS:

22. Sony was an insider shareholder in eUniverse (Intermix, and Myspace by ownership level prior

to Sale of VantagePoint VC firm in July 2003;October30, 2003;April 2004 (SEC disclosure) and had a

Director and Series B Nominee Edell in January 2004 Proxy.

23. Sony Corps general counsel Seligman is married to Joel Klein who began working for

News Corp in 2009. Sony has fraudulently concealed the defective Edell background & both violations of

Rule SK Item 401 in January and July 2004 Proxy and Annual meetings respectively. Sony and/or

Seligman are aiding and abetting News Corp for the benefit of Joel Klein who is an executive and Director

earning $1m+ per year from News Corp.

NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME

24. Defendants leverage their relationship with acquiror to create defamatory and fabricated lies

thru acquiror News Corporation employee Angwins published in late 2009 book, Stealing MySpace

which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his

scheme with Brewer to forward a fabricated false resume, misleading CEO to get Edell onto the Board.

This creates further ongoing defamatory damages to Plaintiff and Shareholders because Class Counsel

accepts and uses false Edell facts in book instead of Plaintiffs facts offered to Class Counsel in 2012

Federal Class Action in Los Angeles Central District. Edells false facts allow the fraudulent conveyance

Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edells false

facts which become Acquiror News Corporation false facts, obstruct Plaintiffs true facts from entering

the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to

shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by
"?


25. Defendants use ongoing Edell defective disclosure scheme to defame Plaintiff and impugn

reputation in book Falsely claiming, violent mood swings were part of Greenspans character.
(70B Declaration, pg. 26, paragraphs 127)

SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY
FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE
DISCLOSURE

26. Chancery Courts failure to force Defendants to honor their promise to fix the defective

Disclosure in 2003 is directly responsible for allowing Defendants to steal a minimum of $670 million in

damages (Federal Judge King 2010 approved damage report) and upwards of $32 Billion in damages (Rule

701 Damage Report not used by Class Counsel because of ongoing Edell fraud) from thousands of

shareholders in 2005.

(Exhibit #1, page 12, June 2010 Federal Central District, Judge King, Summary Judgment Ruling)

IV- CONCLUSION

I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION

27. Rule S-K Item 401 (f) states the requirement for information disclosed in Intermixs

January 2004 & July 2004 Proxy filings for Directors Involvement in certain legal proceedings stating,

Describe any of the following events that occurred during the past ten years and that are
material an evaluation of the ability or integrity of any director, person nominated to become a
director or executive officer of the registrant:
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or
against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or
property of such person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such filing;

28. To make Proxy not defective under 14a or Delaware security laws, issuer would have to

disclose that,

""
Our former Chairman who resigned effective December 2003 was replaced by Jeffrey S. Edell.
Edell was most recently President and CEO of Showorks Entertainment Group, Inc. from January
2001 thru April 2002. Sometime in 2002, Showorks Entertainment Group, Inc. underwent a name
change to MTS, Inc. Sometime in September of 2002 Edell learned that MTS, Inc. had filed for
bankruptcy under Chapter 7. Edell was not there at the time of filing. Edell has informed the
company Edell was never personally named or contacted as part of the bankruptcy under Chapter 7
or subsequent proceedings. Edell was from 1995 thru December 31, 2000,President and CEO of
Soundelux Entertainment Group., Inc.

29. Defendants also fail to fix disclosure related to fraudulent Amended October 31, 2003

Note. Defendants cannot lawfully or validly backdate the October 31, 2003 $2.5 million dollar

note by simply creating a new Note disclosed in December 2003 with a date of October 31, 2003.
(70B Declaration, pg.19, paragraph #91)

30. Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court

January 2004 hearing that corrective disclosure ordered by then Vice Chancellor Strine was not

undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the

Chancery Court that corrective disclosure has been made to the public.

31. The interests of justice are properly served by the grant of this Motion.

Respectfully submitted


"#

EXHIBIT #1

June 2010 Federal Central District, Judge King, Summary Judgment Ruling

DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT

"

BRAD D. GREENSPAN,

Plaintiff,

v.

BRETT BREWER et al.

Defendants.
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C.A. No. 106-VCS



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1. I submit this declaration in order to provide the Court and the parties to the above captioned

litigation with information regarding this matter as.

2. I am over 21 years of age and I have personal knowledge of the facts set forth herein and, if called

as a witness, could and would testify competently thereto.

3. I was founder of Issuer eUniverse, Inc. (eUniverse) which later changed its named to Intermix,

Inc. and was the largest common stock holder from Issuers creation and public listing in April 1999, thru

the September 30, 2005 merger consummation at issue in this case.

4. On April 14, 1999, eUniverse began publicly trading under the symbol EUNI.

The initial Directors and executive officers of eUniverse were Brad D. Greenspan, age 26, Chairman

of the Board, Leland W. Silvas, age 44, President Chief Executive Officer and Director, Charles

Beilman, Age 39, Chief Operating Officer and Director, and William R. Wagner, age 52, Vice

President, Chief Financial Officer.

5. According to the SEC filing in 1999, Chairman and Director BG owned 57.2%.of the

company and was a control shareholder of the public corporation as it began public trading.

6. eUniverse closed its first day of trading at $12.50 per share on April 14. 1999, at this

time, eUniverse had less then 1 million unique users coming to its network of owned websites. None

of the defendants were officers or senior executives of eUniverse at the time of the public listing or

by the end of 1999.

7. In December of 1999, eUniverse launched its first social network platform,

LivePlace.com, with proprietary technology acquired thru the Big Network Acquisition.

Unfortunately, a year later, eUniverse exited the LivePlace business when it determined the

technology at the time was not sufficient to prevent websites from slowing down for users after

installing the LivePlace technology. However, LivePlaces launch by eUniverse cements the fact

that eUniverse was a pioneer in the social network space. LivePlace was described as:

a proprietary technology that turns a website into a public place where users can meet and interact

through chat, instant messaging, and co-browsing.


$
8. On July 31, 2001, eUniverse announces that for its March 31, 2001 quarter, it has

generated its first net profit and third consecutive ebitda positive quarter. Becoming profitable was

critical for eUniverse because as of its 7/31/2001 SEC filing the company only had $218,000 in cash

vs. $2.3 million in cash as of the year before.

9. By October 2001, eUniverse had 31.3 million unique U.S. users and had the 8th

largest online audience in United States for the period. By comparison, Ebay was ranked #9 with

31.29 million users and Google was ranked #14 with 26.9 million users.

10. On December 17, 2001, the NY Times features a story on eUniverse titled,

For Some Dot-Coms there Are Real Profits, stating

Meet Brad D. Greenspan and at first it seems like hes a visitor from another era-- the Internet bubble of 1999.
He's a 28-year-old chief executive of a public Internet company, eUniverse, with tens of millions of users and
big backers like Sony."

11. eUniverse has $33.19 million revenue for 12 months ended March 2002 & $6.64 million EBITDA.

12. eUniverse by the end of 2002 had over 250 employees working in Los Angeles amongst this

group, the company had developed highly skilled technology and internet Strategy executives. eUniverse

also developed significant technology resources and assets gathered over its many years of operations.

13. Mr. Greenspan resigned as CEO on October 30, 2003 and on November 21, 2003, Morgan Stanley

issued its annual internet report ranking eUniverse as the #1 fastest growing Portal based on data from the prior

90 days, ahead of AOL and Yahoo and Excite Network which AskJeeves acquired in 2003.

14. The eUniverse board during week ending October 31, 2003 reneged on a common stock financing

arranged by ThinkEquity and Greenspan which the same board had approved on October 16, 2003.

15. Instead the Board manipulated by defendants, changed course and determined to sell effective

control of eUniverse, Inc. to San Francisco based private equity fund VantagePoint Ventures LLC, issuing

below market price preferred stock and simultaneously breaching the 19.9% shareholder vote threshold

which the company had also specifically promised it would not do in any financing weeks earlier

to the Nasdaq listing panel.

16. VantagePoint had been told the week before by the Chairman and CEO of eUniverse that the


%
company had determined not to proceed with their highly dilutive $8 million preferred stock proposal

which offered to buy shares at below $1.35 and effect a change of control of the $80 million market

capitalized eUniverse without a shareholder vote, which violated the Nasdaq 19.9% threshold rule.

17. VantagePoint was informed that their proposed financing was economically inferior and that

because Vantagepoint was still negotiating both terms and documentation and had not finished their

diligence, the company had opted to close a $1.85 common stock financing from existing and new

institutional investors. However, Chairman and CEO Greenspan invited VantagePoints David Carlick

and their counsel, Orricks Richard Harroch to participate on the same terms as the institutional investors

which was a significant discount already to the then approximate $2.25 - $2.40 per share public trading

price range of eUniverse.

18. VantagePoint determined to not only reject the offer from eUniverses chairman and CEO to

invest at $1.85, but embarked on and facilitated a brazen scheme to manipulate and defraud eUniverses

Board and shareholders that put defendants Carlick, Sheehan, and Harroch in control of eUniverses board

by October 31, 2003 and allowed defendants to recognize an almost sure windfall on their below market

Series C preferred stock financing.

19. Not satisfied with their existing economic gains, defendants then Embarked between late 2003

thru September 30, 2005 on an ever growing series of schemes and misdeeds to loot the public company

and effect transactions that benefitted themselves and related parties at the expense of the common stock

shareholders who had held the majority of eUniverse.

DEFENDANTS SCHEME TO ENTRENCH THEMSELVES AND SHIFT CONTROL

20. Mr. Greenspan was on the verge of terminating the general counsel and Chris Lipp, and the

President of eUniverse, Inc. Brett Brewer, for their roles or poor performance in the restatement the

company had suffered between October 2002 and May 2003, and ultimately a new controller and CFO

were hired and eUniverse refiled via its 10k in August of 2003. Defendants General Counsel Chris Lipp was

told the company would transition to a new general counsel after closing the next round of financing and

President Brett Brewer was informed in the summer of 2003 he would be demoted.


&
21. Mr. Greenspan instead was faced with a scheme by Brewer to take control of the Board and shift control of
company over to VantagePoint and Defendants. The scheme is admitted in a letter from Edell to certain of the
defendants on the night of October 27, 2003, 3 days before Chairman, CEO, founder Brad Greenspan resigns:
Brett is always on the side of Brad's removal when not around Brad, but has no backbone when in
front of him. He is looking for us to do the dirty work but will not stand tall himself.

i. The first fraud was Brewer recommending and endorsing a friend of his Jeffrey Edell to

come onto the Board of Directors in mid-October 2003. Edell, Brewer, and the Chief Financial Officer

Flahie who had worked for Edell at a previous company all misled Mr. Greenspan and the other Directors

as to the qualifications of Mr. Edell. Brewer distributed a 3 page resume/background prior to Mr.

Greenspan determining to support Edell as a new board member, but such 3 pages did not disclose the

truth that Jeffrey Edell had just bankrupted the last company he worked for. Nor did Edells public filings

or Proxy background or press release made by Edell disclose this pertinent and critical information.

Instead, Edell, Brewer, and Flahie knowingly omitted this information in order to get Edell onto the Board

where Edell quickly damaged the franchise value of eUniverse, Inc. by several disloyal acts and breaches

of fiduciary duty. (EXHIBIT #1, pg. 29. & EXHIBIT #2, pg. 31)

ii. Defendants key strategy that enabled them to take control of the board of eUniverse was by
fabricating or aiding and abetting the fabrication of information to mislead independent directors and CEO about
background of Jeffrey Edell. Instead, defendants artificially branded Edell with false credentials and set him loose to
engage recklessly with the corporate assets and the important financing the CEO had closed with common
stockholders clearly on better terms the the lower priced preferred stock peddled by venture capital firm. Defendants
cover up a recent bankruptcy under his stewardship. Brewer, Flahie, Edell, Lipp, Moreau, Carlick, Harroch, and
Sheehan do not correct the defective proxy that they all approve multiple times between November 2003 and
September 2005. The defect is caused by the omission of Edells recent bankruptcy a violation Item 401 Rule-SK
related to Director & Officer work experience background.

iii. Defendants recognized the already locked in profits and upside that existed
for them if they could force eUniverse to accept VantagePoints inferior more costly financing.

iv. Defendants use the fabricated Edell resume in a series of Shareholder letters and press releases in an

attempt to cover the unexpected news that the CEO has been forced to resign as part of defendants scheme to

cause eUniverse shareholders to be diluted and pay for more expensive financing so that the Directors

'
led by Brewer could keep their jobs and receive significant upside from the incoming directors from

VantagePoint and Orricks Harrosh. (Exhibit #4,pg.38-39) is November 2003 press release omitting Edells CEO role

in the MTS 2002 Chapter 7 bankruptcy and also another turnaround company he ran in 2003 more recently that

also failed according to Edells accurate D&O submitted to the Nominating Committee. However, Edell

continues his sleight of hand and now promotes only the Soundelux CEO role without disclosing end of tenure

in 2000 when it was sold and creates Impression he was most recently working as CEO of eLabor, Inc., stating

Additionally, Edell served as Founder, Director and CEO of eLabor, Inc., which was sold to ADP in February

of 2003. In fact, Edell was only a director of eLabor since at least 1995.

HIDING ONE BANKRUPTCY AND ONE FAILED TURNAROUND IN PUBLIC DISCLOSURES

22. Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio,

defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2

years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and

disclosure of his true track record. (EXHIBIT #1, pg. 29, EXHIBIT #2, pg. 31, EXHIBIT #3 pg. 33-36, EXHIBIT #5,
pg.41-42)

FLAHIE THE NEW CFO

23. Brewer, also a Director, took advantage of his position leading the interviews and recruitment of the

companys new CFO during the summer of 2003 to recommend final candidate, Tom Flahie,

i. Flahie had previously worked as CFO at eLabor, America, Inc. under Brewers close friend and

fellow YPO member Jeffrey Edell s brother. Edell was Director of eLabor where Edells brother served as

CEO Based on Brewers recommendation, the CEO met with the candidate, and in August 2003, Tom Flahie

was approved and offered a position as the new Chief Financial Officer of eUniverse.

EDELL THE NEW DIRECTOR CANDIDATE

24. After current board member Thomas Gewecke, a senior business development executive of Sony

Music, informed the board in the summer of 2003 of his desire not to serve as director for another annual term,

Chairman/CEO Brad Greenspan agrees to review resume of candidate Jeffrey Edell.

25. In or around August 2003, eUniverse had need to recruit a new independent Board Member who was

also qualified to sit on the audit committee. Brewer and Flahie initiated a scheme to promote their associate

(

Jeffrey Edell as a candidate for the board slot so that they could be assured job security and benefit in the clear

upside that existed to be a senior officer or top employee of Issuer as of October 2003.

i. Based on information and belief, Brewer had been in a Southern California Chapter of the Young

Presidents Organization (YPO) with Edell and they would meet regularly to discuss each others business

challenges and prospects for three years prior to Edell joining the eUniverse board.

ii. New CFO Flahie had pre existing business relationship with Edell, working for a company

where Jeff Edell served as Director and Edells brother served as CEO managing Flahie immediately prior to

coming to work for eUniverse in August 2003.

ii. Brewer and Flahie were challenged to get the Chairman/CEO to nominate Edell to the board

based on Edells actual work experience which would call into question his fitness to serve on the board of a

publicly traded company.

iii. The plan to nominate Edell to the eUniverse board based on his real work experience became

more challenging when the most recently nominated Director, Lawrence Moreau, who had joined eUniverses

board in May of 2003, admitted to being less then candid About his track record after a Los Angeles Business

Journal article in August of 2003 brought such facts to the attention of the other eUniverse directors.

iv. Based on Information and belief, Brewer, Flahie, and Edell realized that to get the support of the

Chairman/CEO to back nomination of Edell to the Board, they would have to inflate and falsify Edells track

record to make it appear flawless.

26. Defendants thru this fraudulent scheme and omissions of Edells true work experience, created a fake

Director candidate misleading shareholders and Petitioner with what appeared to be a perfect track record with

no negative recent work experience disclosed.

i. Defendants determine to accomplish the deed by omitting Edells two most recent work

experiences which were both failures and falsifying the time frame he worked as CEO of an, earlier successful

venture, Soundelux.

ii. Defendants accomplished this thru falsifying the Soundelux timeframe Edell worked as CEO by

two years while omitting the actual prior two jobs, both negative tenures where Edell had failed to improve the

)

Companys where he was principal executive officer.

iii. Defendants fraudulent concealment of Edells true work experience allowed Edell to apply to be

on eUniverse Board in 2003 and become supported by fellow Board Member, founder, and largest shareholder,

CEO Brad Greenspan.

27. Defendants fraudulently conceal the true background of former Director and Chairman Jeff Edell and

forward a fabricated false resume, misleading CEO to get Edell onto the Board.

i. Edell benefitted from fraud of fabricating his work experience by gaining access to the public

issuers board.

28. Edell had not come off a successful business endeavor as his fabricated resume stated but really

had failed in his last two ventures including one of two failures resulting in a Chapter 7 Bankruptcy filing.

29. Brewer moved scheme forward with aid of new CFO Flahie whose disloyalty in not reporting to the

CEO or public that Edell resume was fabricated demonstrates Scienter intent to defraud & mislead shareholders.

30. Jeff Edells omission to trick CEO of Issuer via omission of his immediate two prior employment jobs. A
Directors last two jobs and such director candidates performance or the companys performance being the most
critical bit of information for Issuer or CEO to parse or review to do his duty.
31. Edell scheme results in eUniverse shareholders being diluted via more expensive VantagePoint financing.
32. On August 26, 2003 at 5:39PM Brewer forwards via email a fabricated three page (EXHIBIT #1. Pg. 29)

resume for Jeffrey S. Edell to the CEO with CFO Flahie ccd and states,

looks strong again jeff will be here tomorrow to have lunch with tom and i. brad, Ill set
something up for you later this week or next depending on your schedule.

i. Brewer lies, misleading the CEO further, asserting Edells resume looks strong, even as

Brewer and Flahie are aware that Edells prior two actual jobs are being intentionally omitted from the

document sent to Greenspan. Edell, Brewer, and Flahie have destroyed the actual true work experience

information prior to sending the fabricated Edell resume, this is a violation of 18 U.S.C. 1512(c)(1), which

prohibits the destruction of records.

ii. Defendants omitted a portion of the true documents and information in the Resume sent to

Petitioner, with the intent to obstruct justice in violation of 18 U.S.C. 1512(c)(1) and also since the false


*
document was sent via email, Edell, Brewer, Flahie, and Lipp violate 18 U.S.C. 1341 (relating to mail fraud),

33. On August 27, 2003, the CEO is deceived by the fabricated resume of Edell and responds to Brewer

and Flahie after being misled and reviewing the fabricated resume of Edell, Great resume!. Since the CEO

is misled via email, this is a violation of 18 U.S.C. 1341 (relating to mail fraud).

34. On the first page of the fabricated Edell resume Brewer forwards, in the section labeled Professional

Experience. Edell lists first: Soundelux Entertainment Group, Inc. Hollywood, CA, from 1995-2002 and

the next line purports that during this period, Edell was President/CEO/Director. Edell & Defendants

violate 18 U.S.C. 1519 (relating to destruction, alteration, or falsification of records in Federal investigation

and bankruptcy) and defendants are destroying Edells true work experience and put in its place the fake

Fabricated work experience purporting that 2000-2002 Edell worked still for Soundelux.

i. Edells resume forwarded by Brewer, falsely creates the appearance and assumption that

Soundelux Entertainment Group has been the sole Professional Experience of Edells as a full time

Executive since 2002.

ii. Edells fabricated Professional Experience section creates the appearance that

Edell, Successfully initiated, negotiated and closed sale of the Hollywood postproduction

division of SEG (Soundelux) to the Liberty Media Group and Edell lists he was President/CEO/Director of

Soundelux Entertainment Group from 1995-2002, then the reader of the fabricated document would assume

Edell departed as CEO after Soundelux was sold in 2002. Brewer, Edell, Orrick, VantagePoint, Harroch,

Carlick, Rosenblatt, Sheehan, DeWolfe, Latham, and Sony Corp violate 18 U.S.C. 1519 because they have

altered records of a Board candidate during the SEC restatement inquiry that ended October 2004.

iii. Defendants specifically violated Section 1512 and U.S.C. 1519 by destroying and altering

Edells true background and work experience which should have truthfully disclosed:

i) ShoWorks, where Edell was CEO starting April 2001 thru 2002 (name changed
immediately prior to bankruptcy in September 2002)
and
ii) Enterprise Entertainment Group LLP at which Edell was President/CEO/Director for less
then a year before he resigned from company citing his resignation came after working on
severe turnaround situation in May of 2003. (EXHIBIT #3,. Pg. 33-36)

35. Director Lawrence Moreau on September 30, 2003 at 10:15AM emails Brewer, Mosher, and Lipp,

"+

Subject: RE: Potential EUNI Board Member, stating ,

Also we need to have both he and Jeff Edell complete the companys D&O questionnaire
so we can review it for any problems prior to the Board vote.
The false and defective October 3, 2003 Nominating Committee Recommendation

36. Larry Moreau, Director and Nominating Committee member tasked with review of Edell, Sends email

stating, Jeff Edell Completed D&O Questionnaire to Director Brewer, Director Greenspan, Director

Mosher, General Counsel Lipp, and Sonys sole series B Director Gewecke and states,

i. Moreau and Defendants lie in his email about what is contained in the D&O questionnaire,

failing to disclose Edells disclosed recent bankruptcy and declaring:

Based on my review, there are no negatives for the Nominating Committee to report to
the Board.

ii. This false statement is distributed thru email to Petitioner and other Directors misleading them

and causing them to be unaware that Edells Proxy disclosure is false. This is a violation of 18 U.S.C. 1341

(relating to mail fraud). Moreau, heading the nominating committee, concealed his knowledge that Edell does

have negatives that should be brought to the Boards attention like fact that Edell has a mandatory disclosable

SEC event under Rule S-K Item 401 (f), requiring specific disclosure on Edells recent federal bankruptcy.

iii. Furthermore the destruction or altering of the true information by omission which Edell, Brewer,

and Moreau are guilty of in violation of of 18 U.S.C. 1512(c)(1) and violation of 18 U.S.C. 1519.

iv. Moreau and Defendants further misleads the board by stating:

the Nominating Committees previous legal and financial background checks did not disclose
any negatives.

Based on the results of the Nominating Committees due diligence procedures including meeting
and various discussions with Jeff, I think he is an outstanding candidate and hereby recommend
that the Board approval his appointment.

37. An attached D&O questionnaire is distributed in October 3, 2003 email with false claims used to

coverup underlying facts, in violation of of 18 U.S.C. 1341 (relating to mail fraud).

38. In late 2011, Petitioner discovered a D&O questionnaire Edell submitted to eUniverses Nominating

Committee headed by Director Larry Moreau. Edells true work experiences consists of:


""
i. On the first page, in the first paragraph, there is information to read for the

questionnaire submission. The third line from the bottom states,

Accordingly, great care should be exercised in completing this questionnaire. You should be aware that
if the Proxy Statement contains any false or misleading statements, the Company and those in control of
the Company could be subject to liability under federal securities laws.

ii. The factual D&O Questionnaire of Edell from Exhibit XX reveals:

a. On the second page of the document titled,

EUNIVERSE, INC. QUESTIONNAIRE FOR DIRECTORS AND OFFICERS,

the first section is labeled: I. Employment, Occupation, and Business Experience.

And it lists information submitted by Jeffrey S. Edell, 11/10/57.

b. Under section , document states,

Please Indicate all positions and offices which you hold or have held during the past five(5)years

c. Edells Questionnaire For Directors And Officers lists 3 submissions under Positions/Office:

President/CEO & Director Showorks Entertainment Group, Inc.

from January 2001- April 2002 and notes he resigned April 2002.

President/CEO/Director, Soundelux Entertainment Grp., Inc.

from November 1995- 12/31/2000.

President/CEO/Director, Enterprise Entertainment Grp, LLC.

From November 2002-May2003

and the next line in parenthesis immediately below states,

resigned May 2003, after working on severe turnaround situation.

d. On page 14 of Edells Questionnaire For Directors And Officers, Edell checks YES for

section (a) when asked if any of the following events has occurred since April 1, 1998, please

provide a brief description of the event.

e. Section (a) states:

A petition under the Federal bankruptcy laws or any states insolvency law was filed by or against you,
or any corporation or business association of which you were an executive officer at or within two years
before the time of such filing.


"#
f. Edell discloses under Description::

Showorks Entertainment Group, Inc. underwent a name change in 2002 to MTS, Inc. I resigned as
President and CEO of this company in April of 2002. Subsequent to my leaving, sometime in September
of 2002, I learned that they had filed bankruptcy under Chapter 7.

39. Therefore, Edells scheme to defraud the eUniverse Directors is effected by changing the time frame and

term of his Soundelux employment from the factual end of 12/31/2000, to the fabricated and false claim that

Edells end of his work tenure being thru 2002. This allows Edell to effectively cover up or disguise his true

historical work performance and mislead Petitioner & shareholders that need accurate and true professional

experience to determine if someone is qualified to be a Director of a public company.

i. As part of scheme, Edell omits his January 2001-April 2002 true employment where he was

President/CEO & Director Showorks Entertainment Group, Inc. that he had disclosed in a prior D&O

Questionaire.

ii. Edell also omits his November 2002-May 2003 professional experience as

President/CEO/Director, Enterprise Entertainment Grp, LLC,

resigning after just five months, blaming a severe turnaround. (EXHIBIT #3, pg. 33-36)

Predicate Acts related to 2003 press release announcing Edell

40. On October 9, 2003, Brewer furthers the fraudulent concealment scheme by forwarding eUniverses PR

firm the fabricated resume which incorrectly shows Edell worked at Soundelux Entertainment until 2002 and

omits both the Showorks/MTS bankruptcy and working most recently at troubled Enterprise Entertainment Grp,

LLC. Brewer also misleads PR firm by sending fabricated work experience and bankruptcy omission from their

PR firm.Laurie Eisner,

laurie-we need a very basic- Thomas Gewecke has resigned from the euniverse board. And
jeff edell (bio attached) has been appointed-

41. October 10, 2003 at 2:05PM, PR firm emails Brewer and Greenspan draft of Edell press release stating,

Prior to his Board appointment at eUniverse, Edell served as President and CEO of Soundelux
Entertainment Group, Inc., a provider of entertainment content technologies, with revenues
exceeding $110 million

"$
42. October 11, 2003 at 2:43PM, Edell emails Greenspan requesting puffery to be added to the draft press release
about his background, stating,

Brad, Comments on Release- It says nothing of the record sale to Liberty Media and John
Malone for apprx. $100m, the sale of the software company elabor, Inc. that I served as CEO
and founder for 10 years, and sold to ADP, the sitting on the Public board of IVC industries and
sale of it to Inverness Medical. Also the winner of Entertainment Entrepreneur of the YEAR
by NASDAQ and Ernst and Young in 2000, and member of both TV and Film
Academies..member of Young Presidents Organization.. Get some bang out of it!! That should
all be somewhere in it..please have them take another shot
43. October 11, 2003 at 4:43PM Edell emails Greenspan and Brewer:
Subject: RE: Press Release: Jeffrey Edell and states,

Your PR dept can do a better job extracting what I have on my bio related to the subjects that are
pertinent to eUNI,,, but please do not ease this until we finalize our deal

44. October 11, 2003, at 6:15PM Greenspan emails Lipp and Brewer forwarding above Edell

Email and states, call me to discuss So we can finalize.

45. The October 11, 2003 draft PR submission Defendants Edell and Brewer are hiding and have destroyed

the evidence of Edells True work experience in the press release draft being distributed as well as the final

release in violation of of 18 U.S.C. 1512(c)(1) and violation of 18 U.S.C. 1519.

46. Also Defendants violate Section 1341 by using email to send false fact draft press release to PR firm
47. Brewer enlists Highland Partners and Jim Quandt to provide background checks for the eUniverse nominating
committee for Director candidate Edell and Ward. As evidence of this scheme, Brewer emails Mosher on October 16,
at 3:56PM and states,
dan- have you received the background check from highland partners for bradley ward?

48. BOARD MEETING- October 17, 2003 there is Board meeting where Brad Greenspan attempt to elect the

annual board slate and his slate leaves off Lawrence Moreau and Dan Mosher. General counsel Chris Lipp

deems Greenspan's slate did not pass even though 3 Directors approved the new slate, 1 disapproved, and 2

Directors Abstained. Lipps Board minutes indicate, "The motion failed with a vote of 3 for, 1 against and 2

abstentions, constituting less then the requisite majority of directors present."

49. On October 30, 2003 at 4:57PM, Flahies emails Lipp, Subject: Bio for New Directors For proxy Draft


"%
and provides a bio for Edell which states

Jeffrey S. Edell has served as a Director since October 14, 2003. Mr. Edell was employed as
President and Chief Executive Officer and a director of Showorks Entertainment Group, Inc.
(previously known as Soundelux Entertainment Group, Inc.) a provider or entertainment content and
technologies, from 1995 until 2002.

50. On Friday, October 31, 2003 Defendants cause the company to put out a press release with false information:

"eUniverse announces eUniverse Announce CEO Departure and Board of Director Changes Brad Greenspan
Steps Down as Chief Executive Officer Jeffrey Edell eLabor Founder and Former CEO/President of
Soundelux Entertainment Group, and Bradley Ward, CEO of The Game Tree, Join eUniverse Board.
51. Significant puffery created by Edell and put into press release but omits mention of his true work experience
such as his recent fraudulently concealed MTS Bankruptcy and other employment information provided in the original
D&O Questionnaire Edell provided to eUniverse. Defendants also violate Section 1343 as the defendants cause the
false information to be distributed via news wire to the public. (EXHIBIT #4, pg. 38-39)
52. Sony in fact specifically made it known that it would not allow VantagePoint to take over or transfer the
rights to vote Series B until VantagePoint bought all the stock held by Sony Corp of public issuer.
53. November 7, 2003 at 3:59M- Intermix CFO Tom Flahie sends a draft Proxy to Chris Lipp, Subject: Proxy
which states,
54. On November 17, 2003, Chris Lipp sends Consents to Sony Corp to sign.
LIPP KNEW SONY DID NOT SIGN THE CONSENT ON NOVEMBER 17
th

55. Sonys Mark Eisenberg only signs the consent to change the Certificate of Designation of the Series B
provided by Lipp.
56. Sonys Eisenberg executes the consent on November 18, 2003 according to his testimony read in court.
i

57. On November 18, 2003 at 12:50PM, Lipp emails Vantagepoints Carlick and Sheehan a new draft Series C
consent that appears to have some backdated element of optimizing the prior Notes to the detriment of the
shareholders.
58. Orricks Harroch active in the planning of the Proxy and Edell frauds emails Lipp stating,
I dont understand the background of this, and it will take some time to review. Chris
are you working on the proxy statement language to implement the things required by
the Option Agreement?

59. On November 18, 2003, at 4:09PM, Lipp asks PR company run by Jonathan Heit to put out Annual Meeting
Release. The release falsely states Issuers

annual meeting of stockholders has been rescheduled for January 21, 2004 so that certain
aspects of the Companys recently announced financing transaction with VantagePoint Venture

"&
Partners, among other items, may be submitted to the Companys stockholders for approval. A
new record date for the meeting of December 1, 2003 has also been set.

60. November 20, 2003- Flahie emails Board Members including Edell, Subject 'Director Bios for Proxy' and
states,
"In preparation for filing of the proxy, I have updated the director bio information from the
Form 10-K. David, Andy, Jeff and Bradley, I took a first pass to put a bio together for you.
Since this information is personal, please make edits to your bio and return the word doc to me.
I will make your edits in the actual proxy. Thanks, Tom"
ii

DEFENDANTS FALSIFY PROXY HOPING SONY WILL SIGN OFF ON NOMINATING EDELL AS
SERIES B DIRECTOR
61. November 21, 2003- Intermix CFO Tom Flahie sends an email, Subject: 'Proxy', stating,
i. "I completed the first draft of the 2003 proxy."
ii. Given the major changes to the Board,
iii. the proxy needs a close look this year,
iv. We intend to file with the SEC on Wednesday.",

62. Flahie attaches a draft of proxy which falsely states, "550 DMV notified the Company that Lawrence Moreau
and Jeffrey Edell have been nominated by the Series B preferred stockholders.
iii

63. Issuer announces on November 21, 2003 that it has raised $2.5 million in Common stock financing selling
1,643,000 shares at $1.50 instead of the $1.85 previously agreed price with the same investors, or a loss of $575,050
for shareholders in the bargain made by management to mitigate one of the agreived parties from defendants actions
around the 2004 proxy.
64. At 5:46PM on Saturday November 22, 2003, eUniverse Sr. VP Legal, Chris Lipp emails Orricks Harroch and
VantagePoints Harroch and internal general counsel Guidero with Subject: Series C Consent re Bylaw Amendment
and attached, Series C Written Consent to Amend Bylaws and states,
Rich, Please find attached the Series C consent with the changes we discussed. Thanks, -Chris
iv

65. On November 24, 2003 at 12:05PM, Flahie emails outside general counsel Cartmell, Subject RE: Proxy and
states, I need to file on Wednesday. I hope that your comments do not impact the schedule

66. Defendants in November 2003 press release omit Edells CEO role in the MTS 2002 Chapter 7 bankruptcy and
failure of another turnaround company he ran in 2003. Edell continues his sleight of hand and promotes only the
Soundelux CEO role without disclosing end of tenure in 2000 when it was sold, creating impression he was most
recently working as CEO of eLabor, Inc., stating, Additionally, Edell served as Founder, Director and CEO of

"'
eLabor, Inc., which was sold to ADP in February of 2003. In fact, Edell was only a director of eLabor since at least
1995.
v

NOVEMBER 2003- SONY SERIES B SHAM CONSENT SCHEME
67. November 25, 2003 at 5:33AM, Moreau emails Flahie, Carlick, Mosher, Subject: RE: Nomating Committee-
Dropped nominations, and states, Tom, Did you mean to drop David Carlick, Andy Sheehan, Jeff Edell and I from
the Board? Also, when is the proxy deadline?
vi

68. Flahie responds at 8:27AM on November 25
th
, falsly stating:
Only three directors are up from election at the January 24 stockholders meeting. The
Series B stockholders (Sony) have elected Larry Moreau and Jeff Edell. The Series C
stockholders have selected Andry Sheehan and David Carlick. The only directors that up for
election are Dan Mosher, Brett Brewer and Bradley Ward. And

The proxy deadline is driven by the timing of Chris Liupps vacation. Chris has put off
a European vacation several times due to the issues we are working through. He will be out all
next week. I will prepare the proxy in his absence.

69. On November 25, 2003, at 10:11PM, Lipp emails Flahie, Subject Proxy Excerpt with attached files including
one called By-Laws and states,

Attached is the language I would suggest for Proposal 2 and the Other Business
sections. Also attached is the newly added Section 10 of the Article I of the Bylaws.

70. On November 25, 2003, Chris Lipp emails Sony's Melissa Cole and Mark Eisenberg, Subject: 'One More
Series B Consent' and attaches a draft of Series B consent form re: election of directors, and states,
Melissa- Please find attached what should be the final Series B consent we will need in
connection with getting the director issues sorted out"

71. Director Ward is puzzled at the Flahie claim that a new Board slate has been elected which includes Edell and
Moreau as Series B Directors Ward who had just voted with the rest of the Directors to elect the slate on November
20, 2003, states in a November 26, 2003 9:28AM

Quick question.The role of the Nominating and Corporate Governance Committee
(NCGC) shall be to determine the slate of director nominees for election to the Companys
Board of Directors (the Board) to be included in the Companys annual proxy statement,
And

Will this committee solely determine the nominees on the slate and no longer require a
full Board vote like we just had last week? In the absence of any specification for a full Board
vote, thats how I read that.

72. November 26, 2003 at 11:26AM, Outside eUniverse counsel Nate Cartmell emails Chris Lipp, Subject:
'Series B Written Consent re Election of Directors 11-26-03.DOC' and states,

"(
"Chris, I have modified the consent slightly to deal with the fact that the right belongs to
the Series B but that Sony can exercise that right as majority holder. Redline to follow in PDF
format'

attaching a document titled:
'ACTION BY WRITTEN CONSENT OF MAJORITY SERIES B STOCKHOLDER OF EUNIVERSE, INC.'

NOVEMBER 26, 2003 - CFO FLAHIE INSTRUCTS STAFF TO FILE PROXY
73. November 26, 2003, 1:41PM, Flahie emails Samina Merchant, Subject: 'Proxy', and states,
"Please send the proxy over to Donnelley for Edgar formatting".
74. As of November 26, Sony had not given its consent to nominate Moreau or Edell as Series B nominees.
DECEMBER 1. 2003 PROXY IS FILED
75. The December 1, 2003 Proxy lists Edell & Moreau as Series B Preferred Nominated Directors stating:

"the majority holder of our Series B preferred stock, has the exclusive right, voting separately
as a single class, to elect two directors" and "550 DMV has notified the Company that it intends to
elect Lawrence Moreau and Jeffrey Edell to the Board.

PROXY CONTEST DECEMBER 2003- JANUARY 2004
76. According to former Director Greenspan, his email sent on December 5, 2003, at 3:17PM, to Lipp, Brewer,
Edell, Fojut, Subject: Need immediate documents and states, Chris/Matt- As both a director and shareholders, I
demand to see the following documents. did not result in the company sending him the Myspace Asset Sale
agreement that was purported to have been signed on December 17, 2003. This is further key evidence that supports
such agreement not having really existed at such time and prior to November 2004 when defendants first publicly
disclose the claim that the MySpace Asset Agreement selling 33% to DeWolfes MSV LLC really occurred on
December 17, 2003.
77. Email evidence shows the chilling effect of defendants fabricating proxy to make it appear Sony had
nominated Edell and originally also, Moreau as Series B Directors. Showing initial response from an informed
investor can be seen thru email on December 4, 2003, at 3:30pm, current board member, former CEO and 20%
stockholder of Issuer emails proxy information to his outside counsel, Subject: Darn and states,
Tougher Road to fight. It looks like these guys got Sony to PURPOSELY elect directors so
there are only 3 slots open and 4 forced seats. Only three directors are up for nomination.
And
Sony owns the Series B which VantagePoint has a right to purchase and the Series B has rights
to elect 2 Board Members, but Vantagepoint had specifically agreed to cancel such rights as part of
their acquisition of Sonys Series B just for the reason of not doubling up on forced directors. And
Sneaky sneakyThey got Sony to nominate 2 of the existing directors to BulletProof these guys.
78. Edell emails Flahie and states on December 4, 2003,
Only comment, is please make sure from Nate that this info is clearly necessary of a
press releaseI am sure you checked already but let me know? Thanks jeff
vii


")
79. CFO Flahie a few minutes later replies via email and states,
Yes, all three lawyers agreed. They also want me to Form 8-k the press release.
viii

80. Lipp emails Harroch on December 8, 2003 at 4:01PM and states,
Richard, Last time we discussed this, I thought we agreed that it was neither partys intent to
have the shares purchased under the option be anything other than the Series C shares

81. Ultimately, Lipp capitulates to the dominant Orrick firm and agrees to issue C-1 shares which are worth $2.00
in extra preferred liquidation vs. $1.50. A loss of .50 cents per share for shareholders and additional corporate waste
by defendants, using shareholder money to effect a change of control.
82. December 8, 2003- 2:16PM, from Harroch of Vantage/Orrick to Chris Lipp and other Carlick and Sheehan and
Rodi Guidero;, Subject: Option.
"Chris, we still need to deal with the Sony option, Series B issue. As I see it, the proxy
statement should also seek approval for amending the Series B Certificate of Designation to
encompass the matters set forth in Exhibit B of the Option Agreement (PIK/dividend for VPVP
Shares elimination of company Election concepts, authorized # of shares, etc :) " and,

"If we had a chance to review the proxy statement before you filed it, I would have
pointed this out to you. So let us figure out how we implement this now. Thanks!"

83. December 9, 2003, at 11:29AM, Edell emails Chris Lipp, Sheehan, Carlick, Moreau, Brewer, and states,
Chris, The meeting took place this morning and the board is in the dark about its
results. and
Please see to it that Nate reports on the Nasdaq meeting ASAP. I heard that there were
some problematic issues, such as dilution that we should have known about with the VP deal,
that I would love to sort out.

84. Lipp sends a revised Note to VantagePoint and the January Proxy confirms that indeed, the Accelerator was
part of the January 2004 proxy material and shareholders were forced to vote or be victims the accelerated Note
scheme.
85. On December 17, 2003 at 10:46PM, Brewer emails Edell. Lipp, Sheehan, Flahie, Carlick, Moreau, Ward,
Mosher and states,
Gentlemen- We will be having our board call tomorrow as scheduled at 4 PM sharp.
And
Also, after speaking with some of the board and management, we think it would be
useful to have an in person board meeting next Tuesday in LA.
The meeting will be from 10-4pm and will include Mike Kennedy from WS as well as
other lawyers if needed. We have several ratifications of chartes, reports on litigation, proxy
contest issues, and other house keeping matters to take care of.
ix

86. December 18, 2003- Greeenspan emails Carlick, Edell, Mosher, Subject: 'Info-' and states,

"Guys- I have lots of additional information on the performance of Brett Brewer, Chris
Lipp, and Adam Goldenberg before, during, and after the restatement" and "It sheds a very
negative light on all of these gentlemen's performance."
x


"*
87. After getting sent an email sent by former CEO to non-management board members critical of certain
managers and offering to provide information to help Board best evaluate executives at company, Director Edell sends
such email on to principal executive Brewer. Brewer then passes that email onto Lipp and Goldenberg to influence
them to be disloyal with adware and other transgressions against former CEO of Issuer. In Brewers email on this date
to Lipp and Goldenberg he states,
this guy is one of the biggest assholes that ever livedthere is no other way to say it.
xi

88. On Thursday December 18, 2003, at 1:46AM, Brewer emails board and states, Gentlemen- We will be having
our board call tomorrow as scheduled at 4pm sharp.
xii

89. There is no evidence that the Myspace asset sale agreement was disclosed or voted on by the board at the
December 19, 2003 board meeting. While there is significant evidence there was a focus according to Brewer on,
modifications of charters, reports on litigation, proxy contest issues
xiii

90. Annual Meeting date rescheduled on December 19, 2003 at 4:14PM, Flahie emails Lipp, Sheehan,

Carlick, Moreau, Mosher, Ward, Brewer, Edell, Subject: Filings and states,

The attached proxy amendment was filed today and the attached press release announcing the
new meeting date was issued.
xiv

THE 2003 DEFECTIVE AMENDED NOTE
91. On December 27, 2003, Lipp emails Harroch and Sheehan of VantagePoint with Subject Amended VPVP
Note and states, As discussed, please find attached for your review an amended note. and attaches a revised $2.5
million note that now has been amended under Section (1) Repayment to change the original due date of March 2005
to now be due February 8, 2004 a few days after the planned Shareholder meeting unless stockholders of the
Borrower, provide approvals necessary.
92. The December 30, 2003 Proxy falsely states:

"Pursuant to the Certificate of Designation of Series B Preferred Stock, 550 Digital Media
Ventures, Inc. ("550 DMV"), an indirect subsidiary of Sony Corporation of America, the majority
holder of our Series B preferred stock, has the exclusive right voting separately as a single class, to
elect two directors in the event the Board consists of six to eight members, 550 DMV has notified the
Company that it intends to elect Jeffrey Edell to the Board and leave one Series B Board seat vacant at
this time

93. Sony had not notified the company it intended to elect Edell as of and thru the date of the Chancery Court trial
in January 2004.
The false and defective January 2004 Proxy AND PUFFERY OF EDELL (EXHIBIT #6 pg 44-46)

94. In January 2004, Vantage sealed control over eUniverse thru one of three Proxy frauds

perpetuated on common stockholders by Carlick, Sheehan, Brewer, Lipp, Rosenblatt and associates. 2003-2005

Flahie who is disloyal along with Brewer in not revealing Edells fabricated resume then colludes with General

#+

Counsel Lipp to knowingly falsify January 2004, July 2004, August 2005 Proxies, violating Item 102 Rule SK.

95. Defendants decide to make detection of the fraudulently concealed Edell true professional experience

more difficult, and on the December 30, 2003 DEF14A Proxy, on page 4, the company states,

Jeffrey Edell has served as a Director since October 14, 2003 and as Chairman
of the Board since November 14, 2003. Mr. Edell is currently a member of eUniverses
Compensation and Audit Committees. Mr. Edell was employed as President and Chief
Executive Officer and a director of Soundelux Entertainment Group, Inc., a provider of
entertainment content and technologies, from 1995 until 2002

96. It was part of the Defendants scheme to use the United States Postal Service to deliver fraudulent SEC

Proxy to the eUniverse (Intermix) Inc. MySpace Parent Company Shareholders in December 2003, January

2004, July 2004, August 2005, and September 2005 and to conceal the errors contained in the Proxy Disclosure

statements on each occasion regarding Edell and Petitioner in violation of 18 U.S.C. 1341.

FRAUD UPON THE CHANCERY COURT (Exhibit #9, pg. 52-64)

97. After adverse ruling that caused general counsel Chris Lipp to admit he had taken several actions

without ever getting the critical consents needed as required by law to be first approved by the companys board

of directors and/or by Series B Preferred stockholder Sony Corp. These were also shown to be consents that the

general counsel knew were in fact required prior to general counsel taking such actions. These actions were to

claim consents and waivers were given and then to include these in Issuers proxy and describe they had

occurred when in fact such events had never taken place and such waivers or consents had not been given. This

behavior and activity was in court and in Judge Strines cross examination, shown to have occurred multiple

times on multiple dates and thru insertion of such fabricate events into multiple versions of Proxies distributed

to shareholders leading up to the 2004 Shareholder Annual meeting thru proxy.

98. Judge Strine was adamant about going on record multiple times during the trial to notify all parties of

his views that the testimony of general counsel Lipp was not believable as to Mr. Lipps rationales for certain

disclosures and statements in the companys Proxy.

SONYS SECURITIES FRAUD AND AIDING AND ABETTING BLASIUS VIOLATION AND AIDING AND
ABETTING FRAUDULENT CONVEYANCE

99. Sony Music Corp in 2004, transacted after a still uncured Federal Securities Violation and these


#"
transactions damaged and fraudulently conveyed assets to the detriment of Issuer shareholders.

100. Edells securities violation makes the Proxy and subsequent 10Qs and 10Ks and next Proxy statement

defective, all caused by Sony Music Corp aiding and abetting this securities fraud thru multiple acts in 2003 and

2004. Most directly by opting after Judge Strines January 14, adverse ruling to manipulations of defendants

and Sony Corps interactions relating to upcoming 2004 Proxy Disclosures.










Shockingly with evidence of Defendants improprieties laid bare in court and significant red flags raised, Sony then

agrees to nominate Edell to serve as Series B Director. Sonys aid eliminates shareholders ability to keep Edell off

Board & further conspiring with Defendants in late 2004 to complete a sweetheart deal to sell almost half of MySpace.

Defendants also breach pledge made with Judge Strine & Petitioner, failing to make corrective disclosure in January

2004 Proxy.

102. Defendants have also not legally effected a valid closing or vote on the Series C stock sale or transfer

from Sony of their Series B shares, blocking public issuers option received in three way agreement between

Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider

knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by


103. Defendants were aware and admitted the proxy statement was defective in January 2004. Defendants willfully

ignore Judge Strines ruling and continue to allow A defective proxy to be the final proxy for the annual shareholder


##
meeting that occurred in January 2004. Defendants fraudulently conceal Edells work experience and omit disclosure

of Edells bankruptcy of MTS, Inc. Defendants aid and abet Edell in violating Rule SK Item 401.

ISS REPORT DEFAMATION

104. Part of the Defendants scheme to conspire to interfere with Plaintiffs livelihood by disseminating

defamatory statements about Plaintiff to the public through media outlets in retaliation for providing truthful

information to SEC, FTC, DOJ and Chancery Court relating to the Defendants scheme, in violation of 1513(f).

105. Defendants press release titled eUniverse Wins ISS Support for Its Director Nominees; ISS Rejects

Greenspan's Hand-Picked Director Nominees.is published January 23, 2004:

eUniverse, Inc. today announced that Institutional Shareholder Services, Inc. (ISS) has
recommended that eUniverse stockholders vote FOR eUniverse's four director nominees -- Brett
Brewer, Daniel Mosher, Lawrence Moreau and Bradley Ward -- and vote FOR the Board's other
proposals at the Company's annual meeting on January 29, 2004.

ISS is widely recognized as the leading independent proxy advisory firm in the nation. Its
recommendations are relied upon by hundreds of major institutional investment firms, mutual funds,
and other fiduciaries throughout the country.

In recommending that eUniverse stockholders re-elect eUniverse's Board nominees, ISS stated
in its January 22, 2004 report that:

"[T]he dissident slate does not offer a clear plan to operate the business that distinguishes
themselves from the path of the current board of directors.

Further, we question the independence of the dissident slate as they were proposed by Mr.
Greenspan and Mr. Greenspan's record as CEO eUniverse is blemished with financial difficulties.

ISS also stated that:

"[T]he company's board has independent directors for six out of seven board seats, setup
independent board committees as of Nov. 14, 2003, and two new directors added after the company
announced its accounting problems.

Further, the board has taken steps to improve management of the company by removing Mr.
Greenspan and initiating the process of hiring a new CEO."

In conclusion, ISS believes that "the [eUniverse] nominees should have an opportunity to
implement plans to grow the business, shore up the company's finances, and find new management
leadership."

Jeffrey Edell, Chairman of the eUniverse Board of Directors, said, "We are very pleased that
ISS recognizes that the current Board is best suited to successfully guide eUniverse. We look forward to
moving beyond Mr. Greenspan's costly and counterproductive proxy contest and to continuing the
progress we have made to build a stronger future for eUniverse and all its stockholders."


#$
106. However, ISS is basing its report on the fabricated Edell bio and work experience that was created thru

emailing and mailing the fraudulent Proxy prior to the ISS report, in violation of Statue 1341.

107. ISS was not able to write an accurate report or reach an equitable conclusion because Defendants

destroyed the evidence of Edells true background violating 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519.

108. January 23, 2004 press release is defamatory attack on Petitioner and misleads all shareholders, and is

distributed via wire service in violation of 18 U.S.C. 1343.

Los Angeles Times Defamation

109 Defendants scheme to use fabricated and false Director Edell continued in a January 29, 2004

article titled, Battle of EUniverse Is Up in the Air that continues to harm Plaintiff and is located at

public web link: http://articles.latimes.com/2004/jan/29/business/fi-golden29 stating:

Battle of EUniverse Is Up in the Air
Michael Hiltzik / GOLDEN STATE/January 29, 2004|

There's an old joke about how university campus politics are so vicious because there's so little at stake.
From that, we might conclude that the proxy fight over the Internet company EUniverse Inc. would
have been more dignified had it concerned an operation that actually turned a profit over the last year
and didn't spend several months in the doghouse of a Nasdaq trading suspension.

Instead, the battle pitting EUniverse's founder and ex-chairman, Brad D. Greenspan, against a
management team that he had largely appointed himself has reached new standards in backbiting and
vituperation.

Over the last few weeks, the existing board has been issuing letters to shareholders with lurid headlines
such as: "BRAD GREENSPAN -- THE THREAT TO YOUR COMPANY'S SUCCESS," and
"GREENSPAN'S SOUR GRAPES."

Even the Democrats in New Hampshire backed away from this sort of campaigning.

The board accuses the 30-year-old Greenspan of employing "empty rhetoric" and "petty personal
attacks" in order to seize control of the Los Angeles-based company for personal financial gain and
self-aggrandizement. It notes that the trading suspension and a huge restatement of financial results
going back to 2002 occurred on his watch.

The incumbents further charge that he tried to torpedo an $8-million private equity deal that they deem
crucial to the survival of the company, which runs a collection of game and entertainment websites,
earning revenue from advertising and memberships.

Greenspan has fired back in kind. His shareholder letters accuse the officers and directors of conflicts of
interest, self-dealing and mudslinging. ("THERE THEY GO AGAIN! DO NOT BE MISLED BY
INCUMBENT MANAGEMENT'S CONTINUING MISSTATEMENTS, OMISSIONS AND

#%
MANIPULATION OF THE FACTS IN THEIR EFFORTS TO DIVERT YOUR ATTENTION FROM
THE REAL ISSUES.")

Greenspan's core charge is that the board colluded with a private venture firm to seize control of
EUniverse from the holders of its common shares, of which he owns the largest block. As for its
financial problems in the last year, he acknowledges that he was chairman and chief executive during
much of that period. But he says he had left day-to-day operations in the hands of some of the same
people now sniping at him from the opposite trench, including President Brett Brewer, 31, a board
member and his former UCLA classmate.

Under the circumstances, one can only sympathize with the 4,000 shareholders being importuned to
vote for one or another slate of four directors (out of seven) at the company's annual meeting, scheduled
for today. Both sides say their first order of business will be to hire a professional CEO for EUniverse,
obviously an admission that no one in place now is up to the job. Both also claim to possess the
strategic key to restoring EUniverse's former luster as one of the rare, pure Internet plays that worked.

The false and defective July 2004 Proxy (EXHIBIT #7, pg. 48-49)

110. Edells July 2004 Proxy disclosure totally omits any notion of bankruptcy. Edell and defendants later

after using the fabricated Edell to win the January 2004 Proxy contest, attempt thru a footnote, in second Proxy

distributed in July 2004, to avail themselves of the disclosure requirements they know exists by concealing

Edells true background by disclosing:

"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a
Delaware corporation that later changed its name to Media Technology Source of Delaware,
Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition
for relief under the United States Bankruptcy Code."

111. However, even with this disclosure of a bankruptcy Edell does not disclose the year that he works for

Showorks in his main bio area. Combined with fabricating the year Edell concluded his job at Soundelux to

2002, An informed investor would not be able to deduce that Edell worked for Showorks as CEO in 2001

before its bankruptcy in 2001. Edell misled investors, omitting fact that in 2001 & 2002 he was Showorks CEO.

112. Defendants are guilty of the destruction or altering of the true Edell background information and work

experience and bankruptcy by omission violating 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519.

113. Defendants violate . 1341 using email to send fabricated draft Proxy for review furthering scheme.

2009 FRAUD

114. Edell & Defendants in mid-2009 launch another prong of fraudulent concealment.

115. New evidence includes i) publication of a book by employee loyal to News Corp to fabricate the

background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that
E-Filed
CIVIL MINUTES - GENERAL
Case No. CV 06-3731-GHK (SHx) Date June 17, 2010
Title Jim Brown v. Brett Brewer, et al.
1
In our June 22, 2009 Order, we certified the following class: All holders of Intermix Media,
Inc. (Intermix or the Company) common stock, from July 18, 2005 through the consummation of the
sale of Intermix to News Corporation (News Corp) at the price of $12.00 per share on September 30,
2005 (the Acquisition), who were harmed by defendants improper conduct at issue in the litigation.
Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related to
or affiliated with any defendant. (Dkt. No. 197).
2
In our July 14, 2008 Order on the Motion to Dismiss, we dismissed with prejudice Defendants
Montgomery & Co. LLC (Montgomery), and Thomas Weisel Partners Group, Inc. and Thomas
Weisel Partners LLC (TWP), the investment banks which advised the Intermix board during the 2005
transaction and completed fairness analyses on the $12 per share price offered by News Corp. in the
consummated merger transaction. (Dkt. No. 110, at 4-5). In that same Order, we also dismissed with
prejudice Count I for violation of Section 14(a) of the 1934 Act and SEC Rule 14a-9, which was stated
against the 2003 Individual Defendants, which included Brewer, Mosher, Moreau, Jeffrey Scott Edell,
Bradley Ward, Carlick, Sheehan, and Lipp, and VantagePoint. (Id. at 1-3). Accordingly, Count III for
CV-90 (06/04) CIVIL MINUTES - GENERAL Page 1 of 39
Presiding: The Honorable GEORGE H. KING, U. S. DISTRICT JUDGE
Beatrice Herrera N/A N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
None None
Proceedings: (In Chambers) Order re: Cross-Motions for Summary Judgment; [213, 218,
244, 251, and 261]
This shareholder class action arises out of News Corporations (News Corp.) 2005 acquisition
of Intermix Media, Inc. (Intermix), formerly known as eUniverse Inc. (Brewer Decl. 3), a company
which owned, among other internet businesses, the social networking website MySpace. Plaintiff Jim
Brown (Plaintiff), individually and on behalf of all members of the certified class of former Intermix
shareholders,
1
claims that Defendants Brett Brewer (Brewer), Daniel Mosher (Mosher), Lawrence
Moreau (Moreau), David Carlick (Carlick), Andrew Sheehan (Sheehan), Richard Rosenblatt
(Rosenblatt), James Quandt (Quandt), and William Woodward (Woodward) (collectively,
Defendants), the eight Intermix directors at the time of the companys sale, breached their fiduciary
duties under state law and violated Section 14(a) of the Securities and Exchange Act of 1934 and SEC
Rule 14a-9 (Counts IV and II, respectively).
2
(Consolidated Second Amended Complaint [CSAC]
Case 2:06-cv-03731-GHK-SH Document 278 Filed 06/17/10 Page 1 of 39
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control person liability was dismissed as to Edell and Ward, as it was premised on the only other
claim against them, the dismissed Count I. (Id. at 7-8). The Parties stipulated to dismiss certain
Defendants. (Dkt. Nos. 190, 204). On June 10, 2009, pursuant to the Parties stipulation, we dismissed
without prejudice Defendants VantagePoint Venture Partners, VP Alpha Holdings IV L.L.C.,
VantagePoint Venture Partners IV (Q) L.P., VantagePoint Venture Partners IV L.P., and VantagePoint
Venture Partners IV Principals Fund L.P. (Dkt. No. 194). On August 28, 2009, pursuant to the Parties
stipulation, we dismissed without prejudice Defendant Christopher Lipp, Intermixs General Counsel.
(Dkt. No. 205).
168-74, 179-87; Brewer Decl. 5). The only other remaining claim is Count III for control person
liability under Section 20(a) of the 1934 Act against Defendants involved in the 2005 acquisition of
Intermix. (CSAC 175-78). This matter is before us on the Parties Cross-Motions for Summary
Judgment. We have considered the papers filed and all of the admissible evidence, and deem this matter
appropriate for resolution without oral argument. L.R. 7-15. As the Parties are familiar with the facts in
this case, we will repeat them only as necessary. Accordingly, we rule as follows.
I. Motion for Summary Judgment Standard
Summary judgment should be granted if the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c)(2); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). As to materiality, the substantive law will identify which facts are
material. Only disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). On a motion for summary judgment, our function is not . . . to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial. Id. at 249.
The moving party bears the initial responsibility to point to the absence of evidence of any
genuine issue of material fact. Celotex Corp., 477 U.S. at 323. When the party moving for summary
judgment would bear the burden of proof at trial, it must come forward with evidence which would
entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving
party has the initial burden of establishing the absence of a genuine issue of fact on each issue material
to its case. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006) (citation and
quotation marks omitted). By contrast, where the non-moving party bears the burden of proof at trial,
summary judgment is warranted if the nonmovant fails to make a showing sufficient to establish the
existence of an element essential to [its] case. Nebraska v. Wyoming, 507 U.S. 584, 590 (1993)
(quoting Celotex Corp., 477 U.S. at 322) (alteration in original). [T]he moving party can meet its
burden by pointing out the absence of evidence from the non-moving party, and it need not disprove
the other partys case. Miller, 454 F.3d at 987 (citation omitted). Accordingly, [t]he nonmoving
party must come forward with specific facts showing there is a genuine issue for trial. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citations
E-Filed
3
Under Delaware law, the business judgment rule creates a presumption that in making a
business decision, the directors of a corporation act on an informed basis, in good faith and in the honest
belief that the action taken was in the best interests of the company. Aronson v. Lewis, 473 A.2d 805,
812 (Del. 1984). A plaintiff challenging a board decision bears the burden to rebut the rules
presumption by providing evidence that the directors breached their fiduciary duties. Goodwin v. Live
Entmt, Inc., No. Civ. A. 15765, 1999 WL 64265, at *24 (Del. Ch. Jan. 25, 1999) (citing Cede & Co. v.
Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993), modified by, 636 A.2d 956 (Del. 1994) (Cede II);
Citron v. Fairchild Camera and Instrument Corp., 569 A.2d 53, 64 (Del. 1989)). In order to overcome
that presumption, a plaintiff must prove an act of bad faith by a preponderance of the evidence. In re
omitted). However, [i]f the opposing party does not so respond, summary judgment should, if
appropriate, be entered against that party. FED. R. CIV. P. 56(e)(2); see also Celotex Corp., 477 U.S. at
322 ([T]he plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party
who fails to make a showing sufficient to establish the existence of an element essential to that partys
case, and on which that party will bear the burden of proof at trial.). The opposing party may not rely
merely on allegations or denials in its own pleading[.] FED. R. CIV. P. 56(e)(2). The evidence of the
non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Anderson, 477
U.S. at 255; see also In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (The court must view all the
evidence in the light most favorable to the nonmoving party.) (citations omitted).
Only admissible evidence may be considered in deciding a motion for summary judgment.
Miller, 454 F.3d at 988. Under Federal Rule of Civil Procedure 56(e)(1), [a] supporting or opposing
affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and
show that the affiant is competent to testify on the matters stated. See also Block v. City of Los
Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001). Conclusory and speculative affidavits that fail to set
forth specific facts are insufficient to raise a genuine issue of material fact. Thornhill Publg Co., Inc. v.
Gen. Tel. & Elecs. Corp., 594 F.2d 730, 738 (9th Cir. 1979). Absent a proper exception, hearsay
statements are inadmissible. See Japan Telecom, Inc. v. Japan Telecom Am., Inc., 287 F.3d 866, 875
n.1 (9th Cir. 2002). Furthermore, neither an unverified complaint nor unsworn statements made in the
parties briefs can be considered as evidence at this stage. See Moran v. Selig, 447 F.3d 748, 759 &
n.16 (9th Cir. 2006) (noting that unverified complaint cannot be considered as evidence on motion for
summary judgment); British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978) ([L]egal
memoranda . . . are not evidence[.]).
II. Count IV: Breach of Fiduciary Duty Claim
A. Delaware Law on Corporate Fiduciary Duties Generally
Delaware law governs Plaintiffs state law claim of breach of fiduciary duty. Under Delaware
law, all directors and officers of a corporation owe their shareholders fiduciary duties of loyalty and
care. Gantler v. Stephens, 965 A.2d 695, 708-09 (Del. 2009).
3

E-Filed
Walt Disney Co. Derivative Litig., 907 A.2d 693 (Del. Ch. 2005). If the plaintiff fails to rebut the
presumption, the business judgment rule protects the decision made. Goodwin, 1999 WL 64265, at *4
(citation omitted). If the rule is rebutted, the burden shifts to the defendants . . . to prove that the
transaction was entirely fair to the plaintiff shareholder. Id. (citation omitted).
1. Duty of Care
Director liability for breaching the duty of care is predicated upon concepts of gross
negligence. Binks v. DSL.net, Inc., C.A. No. 2823-VCN, 2010 WL 1713629, at *8 (Del. Ch. Apr. 29,
2010) (quoting McMullin v. Beran, 705 A.2d 910, 921 (Del. 2000)). The Delaware General
Corporation Law permits a corporation to include a provision in its charter eliminating or limiting the
personal liability of a director to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. DEL. CODE ANN. tit. 8, 102(b)(7). While such an exculpatory provision
may eliminate any liability for breaches of the duty of care, it shall not eliminate or limit the liability of
a director: (i) For any breach of the directors duty of loyalty to the corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law; . . . or (iv) for any transaction from which the director derived an improper personal benefit. Id.
Intermixs charter exculpates Defendants from any duty of care claims. (J.A., Ex. 38, Certificate of
Incorporation). Accordingly, Defendants assert this provision as their fifth affirmative defense: The
breach of fiduciary duty claim is barred, in whole or in part, by the exculpatory provision contained in
Intermixs Certificate of Incorporation. (Dkt. No. 111, Aug. 4, 2008). In light of this provision, we
conclude that the director Defendants cannot be liable for any purported breach of fiduciary duty based
solely on their duty of care. Plaintiff does not argue otherwise.
Defendants also move for summary judgment on the question of whether Brewer and Rosenblatt,
who doubled as officers for Intermix, may be held liable for any breaches of the duty of care, since
Section 102(b)(7) only permits exculpation of duty of care claims for directors. It is undisputed that
both Brewer and Rosenblatt served as directors and officers of Intermix, Brewer as President and
Rosenblatt as CEO. (Brewer Decl. 1; Rosenblatt Decl. 1). The law is clear that where it is
impossible to separate actions taken in fulfillment of a defendants directorial duties from actions taken
in fulfillment of that defendants duties as a corporate officer, then any duty of care claim stated against
that individual is exculpated. In Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del.
1994), the Delaware Supreme Court held that since the plaintiff failed to highlight any specific actions
[the defendant] undertook as an officer (as distinct from actions as a director) that fall within the two
pertinent exceptions to Section 102(b)(7)[,] any duty of care claim was precluded under the
exculpatory clause. Id. at 1288 (citing R. Franklin Balotti & Jesse A. Finkelstein, Delaware Law of
Corp. & Business Org. 4.19, at 4-335 (Supp. 1992) (where a defendant is a director and officer, only
those actions taken solely in the defendants capacity as an officer are outside the purview of Section
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102(b)(7))). Plaintiffs have not identified any actions taken by Rosenblatt or Brewer solely in their
capacity as officers. Accordingly, to the extent any claim for breach of the duty of care is embodied in
Count IV, we GRANT summary judgment on that specific basis as to all director defendants, including
Brewer and Rosenblatt who also served as officers.

2. Duty of Loyalty
To hold a director liable for breach of the duty of loyalty, the plaintiff must establish that a
majority of the Director Defendants either [1] stood on both sides of the merger or were dominated and
controlled by someone who did; or [2] failed to act in good faith, i.e., where a fiduciary intentionally
fails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties. In re
NYMEX Sholder Litig., C.A. Nos. 3621-VCN, 3835-VCN, 2009 WL 3206051, at *6 (Del. Ch. Sept. 30,
2009) (internal citations and quotation marks omitted); Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 239-
40 (Del. 2009) (Lyondell) (Because the trial court determined that the board was independent and
was not motivated by self-interest or ill will, the sole issue is whether the directors are entitled to
summary judgment on the claim that they breached their duty of loyalty by failing to act in good
faith.).
With respect to the first basis for demonstrating breach of the duty of loyalty, Delaware law
provides that [w]hen directors . . . are on both sides of a transaction, they are required to demonstrate
their utmost good faith and the most scrupulous inherent fairness of the bargain. Weinberger v. UOP,
Inc., 457 A.2d 701, 710 (Del. 1983). Classic examples [of this type of breach] are when a director
appears on both sides of a transaction or receives a personal benefit not received by the shareholders,
generally. Oliver v. Boston Univ., No. Civ. A. 16570-NC, 2006 WL 1064169, at *18 (Del. Ch. Apr.
14, 2006) (citing Cede II, 634 A.2d at 362 (citing Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del.
1993))) (internal quotation marks and alterations omitted). If corporate fiduciaries stand on both sides
of a challenged transaction, an instance where the directors loyalty has been called into question, the
burden shifts to the fiduciaries to demonstrate the entire fairness of the transaction. Id. (citations
omitted). A showing of entire fairness requires proof that the transaction is the product of both fair
dealing and fair price. Cede II, 634 A.2d at 361 (emphasis in original and citations omitted).
With respect to the second basis for demonstrating breach of the duty of loyalty, Delaware
courts have noted that the requirement to act in good faith is a subsidiary element, i.e., a condition, of
the fundamental duty of loyalty. Stone v. Ritter, 911 A.2d 362, 369-70 (Del. 2006) (citation, alteration,
and internal quotation marks omitted) ([T]he fiduciary duty of loyalty is not limited to cases involving
a financial or other cognizable fiduciary conflict of interest. It also encompasses cases where the
fiduciary fails to act in good faith.). In Stone, the Delaware Supreme Court explained that although
good faith may be described colloquially as part of a triad of fiduciary duties that includes the duties
of care and loyalty, the obligation to act in good faith does not establish an independent fiduciary duty
that stands on the same footing as the duties of care and loyalty. Id. at 370.
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The Delaware Supreme Court has explained what constitutes bad faith by way of a spectrum of
directorial conduct. At one end of the spectrum, [there is] a category of acts involving non-exculpable,
so-called subjective bad faith, that is, fiduciary conduct motivated by an actual intent to do harm.
Ryan v. Lyondell Chem. Co., C.A. No. 3176-VCN, 2008 WL 4174038, at *3 (Del. Ch. Aug. 29, 2008)
(Ryan) (quoting In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 64 (Del. 2006) (Disney))
(internal quotation marks omitted). The second category of conduct, which is at the opposite end of
the spectrum, involves lack of due carethat is, fiduciary action taken solely by reason of gross
negligence and without any malevolent intent. Disney, 906 A.2d at 64. The court observed that
grossly negligent conduct, without more, does not and cannot constitute a breach of the fiduciary duty
to act in good faith. Id. at 65. The third category identified by the Delaware Supreme Court is the one
at issue in this case: intentional dereliction of duty or a conscious disregard for ones responsibilities.
Id. at 66. Such misconduct, according to the Court, is properly treated as a non-exculpable,
non-indemnifiable violation of the fiduciary duty to act in good faith. Ryan, 2008 WL 4174038, at *3
(quoting Disney, 906 A.2d at 66).
Accordingly, the distinction between gross negligence and non-exculpable bad faith (i.e., that
elusive something more) has important consequences in Delawares jurisprudence and corporate
statutory scheme because, for example, director conduct amounting only to a violation of the duty of
care, but otherwise taken in good faith, is exculpable under 8 Del. C. 102(b)(7) or indemnifiable under
8 Del. C. 145. Id. (citing Disney, 906 A.2d at 64-65).
B. Scope of Plaintiffs Claim of Breach of the Duty of Loyalty
Inasmuch as the director defendants are exculpated from potential breaches of their duty of care,
the success of Count IV necessarily depends on whether any arguable shortcomings on the part of the .
. . directors also implicate their duty of loyalty, a breach of which is not exculpated. Lyondell, 970
A.2d at 239. To that end, in order to rule on Defendants motion for summary judgment, we must
ascertain whether there are any genuine issues of material fact with respect to whether the directors
breached their duty of loyalty, not merely their duty of care. In keeping with the Parties Joint Brief, we
address the two bases for breach of the duty of loyalty in the reverse order: first, Plaintiffs assertion of
bad faith conduct by Defendants, and second, Plaintiffs allegation of a self-interested transaction not
shown to be entirely fair.

1. Bad Faith in Revlon Auction Context
The obligation to act in good faith, which is a necessary component of satisfying the duty of
loyalty, requires directors to act for the purpose of advancing corporate well-being. Therefore, any
intentional dereliction of duty, a conscious disregard for ones responsibilities[,] constitutes bad faith,
or the failure to act in good faith. Disney, 906 A.2d at 66; Stone, 911 A.2d at 370 (Where directors fail
to act in the face of a known duty to act, thereby demonstrating a conscious disregard for their
responsibilities, they breach their duty of loyalty by failing to discharge that fiduciary obligation in
good faith.). In this case, Plaintiff and the shareholder class which he represents argue Defendants
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consciously disregarded their responsibilities in selling Intermix to News Corp. for $12 per share, when,
so they contend, a likely topping bid from Viacom was imminent.
The seminal case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.
1986), regulates directorial conduct during a sale or change of control of a publicly held corporation.
Revlon holds that directors satisfy their fiduciary duties when their conduct is geared towards the
maximization of the companys value at a sale for the stockholders benefit. Id. at 182. Revlon is
triggered in the following three scenarios: (1) when a corporation initiates an active bidding process
seeking to sell itself or to effect a business reorganization involving a clear break-up of the company;
(2) where, in response to a bidders offer, a target abandons its long-term strategy and seeks an
alternative transaction involving the break-up of the company; or (3) when approval of a transaction
results in a sale or change of control. Arnold v. Socy for Sav. Bancorp., Inc., 650 A.2d 1270, 1289-90
(Del. 1994) (internal citations and quotation marks omitted). More recently, the Delaware Supreme
Court has stated that Revlon duties attach when a company embarks on a transactionon its own
initiative or in response to an unsolicited offerthat will result in a change of control. Lyondell, 970
A.2d at 242. When the companys break-up became inevitable, in Revlon, [t]he directors role
changed from defenders of the corporate bastion to auctioneers charged with getting the best price for
the stockholders at a sale of the company. 506 A.2d at 182. In addition to its principal holding that
shareholder wealth maximization must be the directors foremost objective, the court also noted that
favoritism for a white knight to the total exclusion of a hostile bidder was impermissible if divorced
from the objective of shareholder value maximization. Id. at 184. [W]hen bidders make relatively
similar offers, or dissolution of the company becomes inevitable, the directors cannot fulfill their
[fiduciary] duties by playing favorites with the contending factions. Market forces must be allowed to
operate freely to bring the targets shareholders the best price available for their equity. Id.

The Delaware Supreme Court has clarified that Revlon did not create any new fiduciary
duties[,] but rather simply held that the board must perform its fiduciary duties in the service of a
specific objective: maximizing the sale price of the enterprise. Lyondell, 970 A.2d at 239 (quoting
Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)). Additionally, Delaware case law has time
and again reaffirmed the anti-favoritism principle, i.e. that directors may not tilt the playing field in
favor of one bidder or otherwise skew the auction unless this conduct is designed to maximize
shareholder wealth. In Barkan v. Amsted Industries, 567 A.2d 1279 (Del. 1989), the court warned that
the board must act in a neutral manner to encourage the highest possible price for shareholders. Id. at
1286. To be sure, there is no single blueprint that a board must follow to fulfill its duties, and there
are no legally prescribed steps that directors must follow to satisfy their Revlon duties. Id.; Lyondell,
970 A.2d at 243. Nevertheless, [w]hen multiple bidders are competing for control, this concern for
fairness forbids directors from using defensive mechanisms to thwart an auction or to favor one bidder
over another. Id. at 1286-87 (citation omitted). More recently, in In re Toys R Us, Inc.,
Shareholder Litigation, 877 A.2d 975 (Del. Ch. 2005), the Delaware Chancery Court stated that a
selfish or idiosyncratic desire by the board to tilt the playing field towards a particular bidder for
reasons unrelated to the stockholders ability to get top dollar is a violation of a directors fiduciary
obligations. Id. at 1000-01.
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4
Favoritism and deal protection devices, such as a termination fee, are permissible so long as
they are strategically designed to maximize the price paid to shareholders. Macmillan, 559 A.2d at
1287 ([T]he boards primary objective, and essential purpose, must remain the enhancement of the
bidding process for the benefit of the stockholders.). Macmillan set forth a test which tolerates only
value-enhancing preferential treatment:

In the face of disparate treatment, the trial court must first examine whether the directors
properly perceived that shareholder interests were enhanced. In any event, the boards action
must be reasonable in relation to the advantage sought to be achieved, or conversely, to the
threat which a particular bid allegedly poses to stockholder interests.
559 A.2d at 1288; In re J.P. Stevens & Co., Inc. Sholders Litig., 542 A.2d 770, 782 (Del. Ch. 1988)
(The board may tilt the playing field if, but only if, it is in the shareholders interest to do so.).
To support his claim that Defendants acted in bad faith, Plaintiff cites Mills Acquisition Co. v.
Macmillan, Inc., 559 A.2d 1261 (Del. 1988). In that case, Macmillan, Inc.s Chairman and Chief
Executive Officer (CEO) and its President and Chief Operating Officer (COO) orchestrated a
leveraged buyout of their own company, resulting in a lock-up agreement between Macmillan and
Kohlberg Kravis Roberts & Co. (KKR), an investment firm specializing in leveraged buyouts. Id. at
1264-65. These directors, as participants in the leveraged buyout, had a significant self-interest in
ensuring the success of a KKR bid. Id. at 1279. Indeed, Macmillan senior management would
receive up to 20% ownership in the newly formed company. Id. at 1273. So strong was the pull of
that promised 20 percent ownership stake that even before KKR had communicated a bid price, these
self-interested actors indicated that they would endorse the acquisition to the full board of directors.
Id. To steer the process in the desired direction, they clandestinely and impermissibly skewed the
auction in KKRs favor by, among other things, tipping KKR off as to the amount of a competing bid
and then concealing this tip from the board of directors. Id. at 1279-81. On appeal, the Delaware
Supreme Court held that discriminatory treatment of a bidder, without any rational benefit to the
shareholders, was unwarranted. Id. at 1282 (emphasis added).
4
The court found that KKR repeatedly
received significant material advantages to the exclusion and detriment of [the competing bidder] to
stymie, rather than enhance, the bidding process. Id. at 1281. Moreover, the court concluded that
[t]he board was torpid, if not supine, in its efforts to establish a truly independent auction . . . . Id. at
1280. The court added: By placing the entire process in the hands of [the chairman], through his own
chosen financial advisors, with little or no board oversight, the board materially contributed to the
unprincipled conduct of those upon whom it looked with a blind eye. Id.
Defendants contend that Macmillan is distinguishable because the directors in that case were on
both sides of the transaction and therefore engaged in self-dealing. However, Defendants have pointed
us to no authority for the proposition that Macmillan is only applicable when a court reviews self-
interested transactions for fairness and may not support a finding of bad faith conduct in the Revlon
auction context.
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5
Although Viacom did not actually submit a bid, we conclude that there are triable issues of fact
as to whether Viacom was at least a serious potential bidder which was discouraged from actually
submitting a bid by Defendants alleged bad faith conduct.
6
The Delaware courts have explained that favoritism, untethered to any strategy to drive up bid
prices, is a breach of the fiduciary duties which Revlon focused through the lens of shareholder wealth
maximization:
Critically, in the wake of Revlon, Delaware courts have made clear that the enhanced judicial
review Revlon requires is not a license for law-trained courts to second-guess reasonable, but
We recognize that Wayne County Employees Retirement System v. Corti, Civil Action No.
3534-CC, 2009 WL 2219260 (Del. Ch. July 24, 2009), distinguishes Macmillan from the single-bidder
merger reviewed in that case on the absence of any conflicted insiders seeking to transfer control of a
company to themselves. Id. at *12-13 (There is much less cause for concern where managers will
continue their employment with the combined post-transaction entity, than when the conflicted
managers are bidders in an auction for control of the company, and are thereby seeking to transfer
control of the company to themselves personally.). But that discussion has no bearing on the
prohibition on favoring a particular bidder in a multiple-bidder context, which this case arguably
presents.
5
Defendants suggest that the directors may tilt the playing field in favor of a particular bidder,
without regard to shareholder wealth maximization, so long as they are not on both sides of a
transaction. We reject this argument. Simply because Macmillan examined disparate treatment
through the lens of disloyalty premised on a self-interested transaction does not mean field-tilting is
permissible in other contexts. See Emerson Radio Corp. v. Intl Jensen Inc., Civ. A. Nos. 15130,
14992, 1996 WL 483086, at *11-12 (Del. Ch. Aug. 20, 1996) (describing Macmillan as requiring
fiduciaries to treat all bidders equally and fairly in carrying out their Revlon duties and identifying
self-interested nature of merger transaction as an addition[al] or alternative theory for breach of
duty of loyalty); Roberts v. Gen. Instrument Corp., CIV. A. No. 11639, 1990 WL 118356, at *8 (Del.
Ch. Aug. 13, 1990) (citing Macmillan, 559 A.2d at 1287-88) (In each instance where the board is not
predominantly self-interested or under the control or dominating influence of a person with a conflicting
interest, the principal judicial inquiries relate to whether the board was adequately informed and acting
in good faith. This court has been pointedly instructed, however, that where issues of corporate control
are at stake action of even a disinterested board must meet an enhanced test before they will qualify for
the deference that courts ordinarily accord to good faith business judgments.).
Whatever a directors particular motivation, evidence that he skewed an auction in favor of a
particular bidder can support a finding of an intentional dereliction of duty, Disney, 906 A.2d at 66,
i.e. a violation of the obligation to act in good faith. See Nagy v. Bistricer, 770 A.2d 43, 48, n.2 (Del.
Ch. 2000) (observing that the duty of good faith may serve as a constant reminder . . . that, regardless
of his motive, a director who consciously disregards his duties to the corporation and its stockholders
may suffer a personal judgment for monetary damages for any harm he causes, even if for a reason
other than personal pecuniary interest).
6
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debatable, tactical choices that directors have made in good faith. For example, the Supreme
Court has held that the duty to take reasonable steps to secure the highest immediately available
price does not invariably require a board to conduct an auction process or even a targeted market
canvass in the first instance, emphasizing that there is no single blue-print for fulfilling the
duty to maximize value. Nor does a boards decision to sell a company prevent it from offering
bidders deal protections, so long as its decision to do so was reasonably directed to the objective
of getting the highest price, and not by a selfish or idiosyncratic desire by the board to tilt the
playing field towards a particular bidder for reasons unrelated to the stockholders ability to get
top dollar.
Toys R Us, 877 A.2d at 1000-01 (emphasis added; citations omitted).

Defendants principal argument is that recent Delaware Supreme Court case law creates a much
more stringent standard for claims of breaches of the obligation to act in good faith. To this end, they
cite language in the Delaware Supreme Courts decision in Lyondell. In that case, Lyondells board of
directors approved the sale of their company to Basell AF, a privately held Luxembourg company, after
negotiating several increases in the per share bid price up from $40 to $48, and a set of less stringent
deal protection devices, including a fiduciary out clause in the standard no-shop provision and a
reduced termination fee. 970 A.2d at 237-39. The court found no bad faith and therefore no breach of
the duty of loyalty. Id. at 242-44. The Supreme Court rested its decision on the following facts:
The Lyondell directors met several times to consider Basells premium offer. They were
generally aware of the value of their company and they knew the chemical company market.
The directors solicited and followed the advice of their financial and legal advisors. They
attempted to negotiate a higher offer even though all the evidence indicates that Basell had
offered a blowout price. Finally, they approved the merger agreement, because it was simply
too good not to pass along [to the stockholders] for their consideration. We assume, as we must
on summary judgment, that the Lyondell directors did absolutely nothing to prepare for Basells
offer, and that they did not even consider conducting a market check before agreeing to the
merger. Even so, this record clearly establishes that the Lyondell directors did not breach their
duty of loyalty by failing to act in good faith.
Id. at 244.
Contrary to Defendants argument, Lyondell did not work any transformation in Delaware law
on the duty of loyalty. Nothing in this case altered the standard definition of bad faith; indeed, the court
reaffirmed that bad faith will be found if a fiduciary intentionally fails to act in the face of a known
duty to act, demonstrating a conscious disregard for his duties. Id. at 243 (quoting Disney, 906 A.2d at
67). The court continued: there is a vast difference between an inadequate or flawed effort to carry out
fiduciary duties and a conscious disregard for those duties. Id. Despite all the references to the
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conscious disregard standard, Defendants nevertheless cherry-pick certain language to argue that a
more stringent standard applies, including the following lines: (1) Only if they knowingly and
completely failed to undertake their responsibilities would they breach their duty of loyalty; and (2)
[T]he inquiry should have been whether those directors utterly failed to obtain the best sale price. Id.
at 243-44 (emphasis added); (Joint Br. 5-7, 16). Defendants citation of this language is out of context
and misleading. A comprehensive review of the Lyondell opinion reveals that the court intended that
language to be synonymous and coterminous with the conscious disregard standard. The court did
not suggest that the utter failure standard would supplant the definition of bad faith set forth in
Disney. Nor did it suggest any unprecedented diminishment of Revlon duties, as suggested by the
minimalist standard Defendants advance. If such a radical departure were intended, we think the court
would have taken the pains to say as much. Divorced from the surrounding text, the utter failure
language could be said to require that directors simply do anything in the auction process, no matter
how feckless, ineffectual, or at odds with the goal of maximizing shareholder wealth.
The utter failure language derives from the Stone and In re Caremark decisions, which the
court cited. 911 A.2d 362 (Del. 2006); 698 A.2d 959, 971 (Del. Ch. 1996). Both of those decisions
concerned claims that directors failed to engage in the necessary oversight to ensure compliance with
laws such as the federal Bank Secrecy Act in Stone. That vital factual context helps explain why In re
Caremark defined bad faith as follows: Generally where a claim of directorial liability for corporate
loss is predicated upon ignorance of liability creating activities within the corporation, . . . only a
sustained or systematic failure of the board to exercise oversightsuch as an utter failure to attempt to
assure a reasonable information and reporting system existswill establish the lack of good faith that is
a necessary condition to liability. 698 A.2d at 971 (Such a test of liabilitylack of good faith as
evidenced by sustained or systematic failure of a director to exercise reasonable oversightis quite
high.). Nevertheless, the Delaware Supreme Court explained in Stone and reaffirmed in Lyondell that:
the Caremark standard is fully consistent with the Disney definition of bad faith. Lyondell, 970 A.2d
at 240 (citing Stone, 911 A.2d at 370). We cannot second-guess that determination as Defendants wish.
Instead of placing utter failure between subjective bad faith (i.e. actual intent to do harm)
and conscious disregard on the Disney bad faith spectrum, Lyondell equated the utter failure and
conscious disregard standards. 970 A.2d at 240. This reasoning was fully in keeping with the
Supreme Courts prior decision in Stone, where it noted that the duty of loyalty could be breached by
two specific kinds of conduct rising to the level of bad faith: (a) the directors utterly failed to
implement any reporting or information system or controls; or (b) having implemented such a system or
controls, consciously failed to monitor or oversee its operations thus disabling themselves from being
informed of risks or problems requiring their attention. 911 A.2d at 370. Crucially, though bad faith
could be demonstrated with either of these alternatives, the court emphasized, citing Disney, 906 A.2d at
67, that these were coterminous legal standards:
In either case, imposition of liability requires a showing that the directors knew that they were
not discharging their fiduciary obligations. Where directors fail to act in the face of a known
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7
A failure to act in good faith may be shown . . . where the fiduciary intentionally acts with a
purpose other than that of advancing the best interests of the corporation, where the fiduciary acts with
the intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face of
a known duty to act, demonstrating a conscious disregard for his duties. In re Walt Disney Co.
Derivative Litig., 907 A.2d at 755.
duty to act, thereby demonstrating a conscious disregard for their responsibilities, they breach
their duty of loyalty by failing to discharge that fiduciary obligation in good faith.
911 A.2d at 370 (emphasis added). Delaware courts generally seem to read Lyondell in this way. See,
e.g., Robotti & Co., LLC v. Liddell, C.A. No. 3128-VCN, 2010 WL 157474, at *11 (Del. Ch. Jan. 14,
2010) (characterizing Lyondell as holding that [b]ad faith, and thus a breach of the duty of loyalty, can
arise only when a fiduciary consciously disregards his or her responsibilities).
7

In addition, we do not read Lyondell as diminishing the prohibition on tilting the playing field in
favor of a particular bidder for any reason other than maximizing shareholder wealth. The lack of an
actual or even potential second bidder was a key undisputed fact on which that court relied, noting:
[The directors] had reason to believe that no other bidders would emerge, given the price Basell had
offered and the limited universe of companies that might be interested in acquiring Lyondells unique
assets. . . . Finally, no other acquiror [sic] expressed interest during the four months between the merger
announcement and the stockholder vote. 970 A.2d at 241. Other cases have distinguished between
single-bidder and multiple-bidder contexts as well. See, e.g., Barkan, 567 A.2d at 1286-87; Continuing
Creditors Comm. of Star Telecomms., Inc. v. Edgecomb, 385 F. Supp. 2d 449, 466 n.14 (D. Del. 2004)
(In [Macmillan], the claim was that the directors approved the use of a lock-up that stopped rival
bidders from winning the auction for the company so that fellow directors could purchase the company
through a leveraged buy-out. Here, however, there were no other bidders for Star, the Company was on
the verge of bankruptcy, and the Gotel financing was, by the Plaintiffs own admission, the only
financing option presented to the Board.) (emphasis added and citations omitted). Since Lyondell only
reviewed a merger with a lone bidder, even if we were to read its utter failure language as more
lenient on Defendants, it is of severely diminished relevance in the multiple-bidder scenario we
arguably confront here.
In short, Revlon and Macmillan are not displaced in any way by Stone or Lyondell.
Accordingly, we must ask whether there is a genuine issue of material fact as to whether Defendants
consciously disregarded their duties, i.e. fail[ed] to act in the face of a known duty to act. Stone, 911
A.2d at 370. There is nothing in the case law to warrant granting judgment as a matter of law for
Defendants, simply because they engaged in some bargaining.
Having considered all of the admissible evidence before us and viewing it in the light most
favorable to Plaintiff as we must under Rule 56, we conclude that there are genuine, triable issues of
material fact sufficient to defeat Defendants Motion for Summary Judgment on this Revlon claim.
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8
Although analytically we are reviewing the evidence on the bad faith prong of the duty of
loyalty component of the breach of fiduciary duty claim at this juncture, we consider Rosenblatts
alleged self-interest to the extent that it bears on whether Plaintiff has raised a triable issue of material
fact as to whether Rosenblatt acted in conscious disregard of his duties by impermissibly tilting the field
in favor of News Corp.
These issues fall into three categories: (1) whether Intermix CEO Rosenblatt impermissibly tilted the
playing field in favor of News Corp.; (2) whether the remaining board members consciously disregarded
their duties; and (3) whether the purported risk of a direct bid for MySpace, which would have frozen
the MySpace Option, precludes a finding that Defendants consciously disregard their duties.
a. Rosenblatt
Plaintiff proffers evidence tending to show that during the crucial week leading up to the July
18, 2005 merger, Rosenblatt evaded Viacoms advances, even though Viacoms representatives were
communicating that a competing bid was imminent. Plaintiff raises at least two interrelated triable
issues: (1) whether Rosenblatt was self-interested in the merger transaction;
8
and (2) whether he
impermissibly steered the auction in News Corp.s favor.
As to Rosenblatts purported self-interest, there is evidence of Rosenblatts motivation for the
alleged bidder favoritism, namely his anticipation of future employment with News Corp. In one
particularly revealing email sent on July 15, Rosenblatt excitedly endorses News Corp.s Ross
Levinsohns vision: So, we create the Fox Internet group, all our units (myspace, alena, grab) fall
under it, plus all new acquisitions, and you are CEO Fox Internet and I am Fox Internet grand Puba!!!!
(J.A., Ex. 184). Rosenblatt continues: I would like to discuss my specific role and structure whenever
you are ready. It is no rush unless Peter and Rupert want me to sign an employment agreement by
Sunday [July 17, 2005] . . . . (Id.). In an earlier email in that same chain, Rosenblatt wrote: [I] am
burning some real equity with every major media company by getting [the deal] done. . . . u [sic] have
no idea the pain I will suffer on Monday. U [sic] better have a good job for me cause I aint [sic] gonna
work in this town again. . . . (Id.). On July 13, Rosenblatt wrote: tell Thom Murdoch and I cut the
deal in 30 mins [sic] and I got 100% of what we wanted. Deal closing by Monday. (Id., Ex. 154).
This evidence at least raises the inference that Rosenblatt had a strong interest in seeing a merger
transaction with News Corp. completed and had made up his mind that Intermix would be sold to News
Corp. as of July 13.
Moreover, Plaintiff points to several key pieces of documentary evidence and witness testimony
which tend to support his contention that (1) Rosenblatt, in representing the Intermix board through the
Transaction Committee (TC), (2) Sheehan, who also sat on the TC, and (3) their agents, deliberately
dodged, if not frustrated, an arguably imminent bid from Viacom:
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9
Viacom owns MTV Networks.
10
The Parties initially sought to file Frestons deposition transcript under seal because it
contained information subject to the governing protective order. On November 13, 2009, the Parties
filed a joint stipulation to withdraw their application to file under seal unredacted versions of the Joint
Brief, the Joint Statement of Uncontroverted Facts, and Volumes 2-3 and 5-9 of the Joint Evidentiary
Appendix, as well as several full deposition transcripts, including Frestons testimony. (Dkt. No. 234).
In that document, the Parties stated that: WHEREAS the Parties have contacted all non-parties that
produced documents and/or gave deposition testimony which was the subject of the application to file
under seal, and obtained their permission for the documents to be publicly filed, and therefore withdraw
the Application to File Under Seal[.] (Id. at 3). Our November 17, 2009 Order regarding the joint
stipulation was not clear as to whether the deposition transcripts were also being filed in the public
record. (Dkt. No. 236). We now clarify that all of the deposition transcripts labeled Confidential
Pursuant to Protective Order and submitted to the Court along with the Cross-Motions for Summary
Judgment SHALL also be filed in the public record pursuant to the Parties joint stipulation.
First, on July 6, Montgomery responded to an email announcing Viacom coming in hard by
telling Rosenblatt: You need to dance with [Viacom] . . . slow them down. I know you can do
it. (Id., Ex. 117).
Second, TWP, specifically Robert Kitts (Kitts), was aware that Epstein was trying to reach
them to talk about a potential Viacom bid. (Kitts Tr. at 125:4-7, 126:4-13). Epstein noted on
July 16 that Kitts never called him back as promised. (J.A., Ex. 191 (We exchanged
subsequent emails and he indicated he would call me, but he never did.)).
Third, on July 15, Mosher wrote Rosenblatt following one of Rosenblatts updates to the full
board, saying Viacom sounds like a pipedream. (Id., Ex. 182).
Fourth, on July 15, Judy McGrath of MTV
9
wrote Rosenblatt to inform him that Viacom was
coming with a bid early next week. (Id., Ex. 183). She added: We really want to be with you
on this, and hope to get in the ring for it . . . . (Id.). Rosenblatt replied evasively, failing to
correct her mistaken impression that the auction would still be ongoing after Monday: I am on a
call but thanks so much for the email . . . . I will call you back soon . . . . (Id.). Rosenblatt
could not recall precisely whether he had returned her call: I may have tried. I think, actually, I
do think I tried and I couldnt get a hold of her. (Rosenblatt Tr. at 108:21-24).
Fifth, Viacoms CEO Thomas Freston (Freston), who reiterated Viacoms interest in
purchasing Intermix to Rosenblatt, has testified that he was only told that the process with the
competing bidder was moving quickly. (Freston Tr. at 17:12-20, 19:8-11, 22:4-14).
10
He
testified that he could not recall if [Rosenblatt] said that they were going to do a deal by
Sunday. (Id. at 22:21-24). When asked whether Rosenblatt had communicated that a deal
would be completed by Sunday, he stated that he did not believe so. (Freston Tr. at 19:8-11).
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11
Rosenblatt, on the other hand, has testified that he actually told Freston that a deal would
likely be over by Sunday, or (stated with more certainty) that the deal was going to be done by
Sunday. (Rosenblatt Tr. at 64:5-22, 65:22-25, 92:5-8). For purposes of summary judgment, this
conflicting evidence further supports the existence of a triable issue of fact as to Viacoms relative
awareness of the impending consummation of the merger with News Corp. Moreover, Jason
Hirschhorn (Hirschhorn), Viacoms top manager for Internet business, wrote in an internal email on
Saturday July 16 that News Corp. will deliver [its bid] anywhere from today-monday. (J.A., Ex.
192). Freston also states that Rosenblatt told him a specific deal was imminent. (Freston Tr. at
29:11-16). Though the actual meaning of that statement is obscure as to whether a deal or a bid would
have been imminent (particularly given Frestons other testimony), this ambiguity likewise buttresses
our conclusion that there are genuine issues for trial.
12
A reasonable jury could infer from this email that Rosenblatt intended to evade an arguably
imminent competing bid, and that the [h]ave a great weekend line at the end of the email was
dismissive, given the fact that the email was sent at nearly 6 p.m. on a Sunday night.
13
We do not read the deposition to suggest that these were his actual words; Kitts was merely
paraphrasing what he recalls saying to Viacom.
Kitts of TWP also confirmed that he failed to give Viacom any hard deadline by which to submit
a bid. (Kitts Tr. at 88:21-89:16, 90:11-22, 136:11-14).
11

Sixth, on July 17, Jason Hirschhorn emailed Chris DeWolfe, MySpaces CEO, to document his
difficulties in staying in the auction process: chris, quick concerns . . . Intermix management
did not show up on Friday as promised during our time there . . . Intermix legal cancels their
time with our legal today at the last minute . . . Heard you guys got called off the ad sales call
abruptly . . . In short, I have had a team of 20+ people here working for 72 hours straight on a
significant bid, is there anything I need to know? (J.A., Ex. 200).
Seventh, on July 17, Van Toffler of MTV also emailed Rosenblatt directly to complain politely
about the perceived run-around: They are in the office working round [sic] the clock so we can
put forth a number to you this week. They mentioned a couple of calls were cancelled at the end
of the day Friday, and seemed a bit concerned. Is there anything I can do to help the process for
both of us as this is clearly on the fast track? (Id., Ex. 202). Again, Rosenblatt replied in such
a way that a reasonable jury could infer an intent to evade an arguably imminent competing bid:
We like you and your guys a ton also. Chris called back or will your GC today. Have a great
weekend[.] (Id.).
12

Eighth, on July 17, Kitts of TWP, pursuant to the Intermix boards instructions, informed
Viacom that it would be in their best interest to make a bid that evening.
13
(Kitts Tr. at 69:13-
70:14, 88:21-89:16). Kitts admitted that he did not give Viacom a hard and fast deadline (see id.
at 88:21-89:16, 90:11-22; Epstein Tr. at 53:21-55:5), but that he relied upon the message [he]
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14
Rupert Murdoch is the Chairman and CEO of News Corp. Peter Chernin was the then-
President and COO of News Corp.
delivered as code that [Epstein] should get a bid in this evening. (Kitts Tr. at 90:20-22).
Furthermore, Kitts admitted in the deposition that he had been instructed to ask for a bid on a
timetable that he knew was infeasible. (Id. at 144:1-145:7). Kitts testified that he was aware of
an upcoming Viacom board meeting, at which [a potential bid] was going to be discussed. (Id.
at 69:13-70:14). The Viacom board was not scheduled to meet until the evening of Tuesday
July 19, 2005. (Rosenblatt Decl. 42; Brewer Decl. 29).
On the other hand, Defendants present the following evidence of events leading up to the July
18th merger, which they argue demonstrates the board members good faith. News Corp. initially
signaled that it would be willing to purchase Intermix in the $8-10 per share price range. (Rosenblatt
Decl. 18). During the Tuesday July 12, 2005 meeting between Rosenblatt, Rupert Murdoch, and Peter
Chernin,
14
News Corp. indicated that it would pay $12 per share, as long as the MySpace Option was
exercised and a merger agreement was executed by no later than Sunday, July 17, 2005. (Id. 24
(describing the handshake deal)). At the 2 p.m. meeting on July 15, the Intermix board of directors
rejected News Corp.s proposal to enter exclusive negotiations as premature. (Id. 29-30). At the 8
p.m. meeting on July 15, the Intermix board rejected the non-binding term sheet including a variety of
deal protection provisions as too strong a deterrent to other potential bidders. (Id. 33; J.A., Ex. 14).
At the 8 p.m. meeting on July 16, TWP advised the board that it would be reasonable to approve a
merger with News Corp. rather than waiting for Viacom to present an offer. (Brewer Decl. 27;
Rosenblatt Decl. 37). At the 7:30 p.m. TC meeting on July 17, the committee directed TWP to contact
Viacom and/or its representative, Morgan Stanley, to ascertain whether Viacom would be making an
offer before the opening of the market the next morning. (Rosenblatt Decl. 41; Sheehan Decl. 36;
J.A., Ex. 18). At the 10 p.m. Intermix board meeting on July 17, TWP advised that Viacom was not
prepared to make any offer until its board met on Tuesday July 19 and approved a bid. (Rosenblatt
Decl. 42; J.A., Ex. 19). At the 3:45 a.m. board meeting on July 18, both Montgomery and TWP
presented their valuation analyses, explaining that $12 per share was a fair price for Intermix, and the
Board voted to approve the merger. (Rosenblatt Decl. 44). On July 18, Intermix entered into a merger
agreement with News Corp.s Fox Interactive Media. (Rosenblatt Decl. 45; J.A., Ex. 4, at 319).
Defendants contend, and the record reflects, that throughout this process the board met repeatedly,
authorized ongoing discussions with both competing bidders, and consulted legal and financial advisers.
(J.A., Exs. 8-12, 14-19).
Viewing the evidence as a whole and in the light most favorable to Plaintiff, we conclude that
there are at least triable issues of fact as to whether Rosenblatt acted in good faith, whether he
impermissibly skewed the auction in favor of News Corp. for a purpose other than maximizing
shareholder value, knowing that a Viacom bid was likely and imminent, and whether this arguably
disparate treatment of Viacom and News Corp. had any effect on Viacoms appreciation of the arguable
need to make an offer by the evening of July 17, 2005.
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b. The Other Directors

i. Sheehan
In addition to Rosenblatt, there are also triable issues of fact as to whether Sheehan consciously
disregarded his fiduciary duties. On Friday July 15, Stuart Epstein (Epstein), the Morgan Stanley
investment banker representing Viacom, tried to reach Sheehan but was unsuccessful. (Sheehan Tr. at
83:12-18; J.A. Ex. 175). Sheehan instructed his secretary as follows: Do not tell [Epstein] anything
about what I am doing or where I am[.] (J.A., Ex. 175). In reply to his email, Sheehans secretary
informed him that she told Epstein that he was unavailable. (Id.). A reasonable jury could conclude
that this email chain evinces Sheehans intent to avoid Viacoms representatives.
ii. The Other Six Directors
In Gesoff v. IIC Industries, Inc., 902 A.2d 1130 (Del. Ch. 2006), the court stated that bad faith
may be found where directors have acted with conscious disregard or made decisions with knowledge
that they lacked material information. Id. at 1165 (emphasis added). Few Delaware cases attempt to
define precisely what conduct reaches the level of actionable bad faith, but there is at least agreement
that adopting a we dont care about the risks attitude concerning a material corporate decision
constitutes bad faith. In re Walt Disney Co. Derivative Litig., 825 A.2d 275, 289 (Del. Ch. 2003)
(finding bad faith claim properly alleged where factual allegations, if true, implied that the defendant
directors knew that they were making material decisions without adequate information and without
adequate deliberation, and that they simply did not care if the decisions caused the corporation and its
stockholders to suffer injury or loss) (emphasis in original).
Having reviewed the record in full, we conclude that there is sufficient admissible evidence to
create a triable question of fact as to whether the rest of the board, as in Macmillan, plac[ed] the entire
process in the hands of Rosenblatt and to a lesser extent Sheehan and thereby materially contributed
to the [allegedly] unprincipled conduct of those upon whom it looked with a blind eye. 559 A.2d at
1281.
On February 9, 2005, the Intermix board of directors formed a Transaction Committee
comprised of Rosenblatt, Sheehan, and Quandt. (Rosenblatt Decl. 6). From that point until July 18,
2005 when the merger was announced, it is undisputed that the Board received most of its information
about the negotiations from its self-interested CEO, Rosenblatt. Indeed, it is undisputed that Rosenblatt
was the only board member who had some first-hand information as to the circumstances of Viacoms
efforts to put in a bid. (See, e.g., Joint Statement of Uncontroverted Facts P347 (Rosenblatt was the
only person from the Intermix Board who negotiated with Viacom.)). Crucially, one of the board
members testified that Rosenblatt had led him to believe [t]hat Viacom was less urgent about the deal
and hadnt taken the time or done the same level of work as Fox Network and that Viacom was a
pipedream. (J.A., Ex. 182; Mosher Tr. at 25:24-26:1). This phrase is admittedly not indicative of
conscious wrongdoing. However, there is a triable question as to whether the other board members
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consciously abdicated their responsibilities as corporate fiduciaries in allegedly swallowing
Rosenblatts version of events and utterly failing to assess the situation for themselves.
More generally, a reasonable fact-finder could conclude that the other board members acted in
bad faith by making decisions with knowledge that they lacked material information. Gesoff, 902
A.2d at 1165. With respect to their knowledge of the relative likelihood of a Viacom bid, Mosher stated
that he could not recall if he or any other board member had asked any questions regarding Viacom or
its status. (Mosher Tr. at 26:14-21). Additionally, he could not recall whether he had any knowledge
of whether anyone from management was providing equal information to Viacom and Fox News Corp
about the time line for submitting a bid for Intermix. (Id. at 43:17-21).
With respect to their knowledge of bidder favoritism, though Mosher testified that he could not
recall the board ever instructing Rosenblatt to favor one bidder over another, he also could not
definitively represent that the board had not so instructed Rosenblatt. (Id. at 41:10-21). Other board
members besides Rosenblatt have also testified that they were unaware that any due diligence meetings
with Viacom had been cancelled. (Brewer Tr. at 119:11-15; Sheehan Tr. at 98:1-20). Furthermore,
Brewer testified that he was simply unaware that Viacom was conducting due diligence over the July
16-17, 2005 weekend. (Brewer Tr. at 26:5-24).
With respect to their knowledge of the fairness of the merger price, Rosenblatt did not inform
Brewer that he was requesting $12 per share from News Corp. until the day of the handshake deal
with Rupert Murdoch; it is unclear when the rest of the board learned this information. (Id. at 122:2-9).
He also did not explain how that requested price was derived. (Id. at 122:10-14). Brewer testified that
the board did not ask, and Mosher could not recall whether any board member sought an explanation.
(Id.; Mosher Tr. at 53:6-9). Moreover, Brewer testified that the board as a whole never conducted any
independent analysis to determine what an appropriate price per share would be. (Brewer Tr. at
122:15-18; see also Mosher Tr. at 49:24-50:4 (testifying that he himself did not perform any
independent analysis)). Additionally, Mosher confirmed that the board had not directed the
management team to go get the specific valuation work done prior to the acquisition. (Mosher Tr. at
52:4-18). Finally, Brewer has testified that he could not even recall whether any of the directors had
asked any questions about [Montgomery and TWPs] fairness presentations. (Brewer Tr. at 104:2-
10). Though Brewers failure to recall what everyone had specifically asked back in 2005 would be
understandable, a reasonable jury might draw a negative inference from his representation that he could
not recall any discussion as to the investment banks analyses.

Construing all of the above testimony in the light most favorable to Plaintiff as we must on
Defendants motion for summary judgment, we conclude that it is at least triable as to whether the
remaining six board members consciously disregarded their duties and acted in bad faith. There is
evidence in the record suggesting that no one on the board asked any questions about the requested per
share price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood of
a Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directors
consciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize
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shareholder wealth. Of course, we remain mindful that even gross negligence, premised on simple
inattention or failure to be informed of all facts material to the decision[,] violates only the duty of care
and is not actionable as bad faith. Disney, 906 A.2d at 66. Nevertheless, we think a reasonable jury
could find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded to
their decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and thereby
consciously disregarded their fiduciary duties. Disney, 906 A.2d at 66 (Cases have arisen where
corporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is more
culpable than simple inattention or failure to be informed of all facts material to the decision. To protect
the interests of the corporation and its shareholders, fiduciary conduct of this kind, which does not
involve disloyalty (as traditionally defined) but is qualitatively more culpable than gross negligence,
should be proscribed.).
c. The MySpace Option
The MySpace, Inc. Stockholders Agreement (MSA) (J.A., Ex. 2), executed on February 11,
2005, was the culmination of negotiations between MySpace, Inc., MySpace Ventures, LLC, Redpoint
Ventures I, L.P., Redpoint Associates I, LLC, Redpoint Ventures II, L.P., Redpoint Associates II, LLC,
Redpoint Technology Partners Q-1, L.P., and/or Redpoint Technology Partners A-1, L.P. (collectively,
the Redpoint Entities). (Brewer Decl. 6; Rosenblatt Decl. 7). Under the agreement, the Redpoint
Entities purchased a 47 percent minority interest in Intermix, and at the same time, the 53 percent
majority stockholders acquired an option (the MySpace Option) to buy back that minority interest if a
third party made a bona fide . . . offer for 50 percent or more of Intermixs shares:
So long as Intermix (together with its Affiliates) directly or indirectly holds at least 1,000,000
shares of Common Stock . . . , in the event Intermix receives a bona fide third-party offer with
respect to a Change of Control of Intermix . . . within the twelve (12) month-period commencing
on the date hereof . . . , then, following receipt of such offer (and provided discussions relating
to such offer are then-ongoing), Intermix shall have the right to purchase . . . up to 100% of
Common Stock and Common Stock Equivalents of the Corporation held by the other
Stockholders, whether now owned or hereafter acquired . . . .
(J.A., Ex. 2 7.1.1; Brewer Decl. 6-7; Rosenblatt 7-8). Section 7.1.5 of the MSA precluded the
majority from exercising the MySpace Option if a third party made a direct bid for MySpace of over
$125 million: Intermix may not exercise the Purchase Option if (a) the Corporation [MySpace, Inc.]
has previously received a bona fide third party offer to purchase the Corporations capital stock or
assets for a purchase price greater than $125.0 million and discussions regarding such acquisition
between the Corporation and such third party are ongoing . . . . (J.A., Ex. 2 7.1.5). The two
provisions are mutually exclusive: (1) a bid for 50 percent or more of Intermixs shares precludes any
subsequent direct bid for MySpace (while discussions for the Intermix control share are ongoing); and
(2) any direct bid for MySpace precludes any subsequent bid for 50 percent or more of Intermixs
shares (while discussions for the acquisition of MySpace are ongoing).
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Defendants contend their conduct was not in bad faith in light of the risk of a direct third-party
bid for MySpace, which would have precluded the 53 percent Intermix majority interest from exercising
the MySpace Option under the MSA to purchase the minority 47 percent interest. Accordingly, we
must consider whether the purported risk of a direct bid for MySpace, which would have frozen the
MySpace Option, dictates a conclusion that Defendants did not consciously disregard their duties as a
matter of law.
Defendants claim that the risk of such a freezing bid was real and that any delay in
consummating the merger with News Corp. threatened the loss of an opportunity to capture the value of
Intermixs crown jewel, MySpace, for their shareholders. (Joint Br. 11-15). At the July 15th board
meeting at 2 p.m., the directors discussed the status of conversations with News Corp. and Viacom and
considered the possibility that if either company viewed itself as unlikely to prevail in acquiring
[Intermix], it might submit an offer to acquire only MySpace in order to potentially suspend, at least
temporarily, [Intermixs] ability to exercise the MySpace option, thereby potentially jeopardizing
economically attractive transactions involving the Company including the potential News Corp.
transaction then under consideration. (Rosenblatt Decl. 31; J.A., Ex. 12). Rosenblatt and the other
directors have declared that they believed that the deadline provided by News Corp. by which to
execute the Merger Agreement was firm and that News Corp. was prepared to walk away if the deal was
not consummated by the opening of the stock market on July 18, 2005. (Rosenblatt Decl. 46).
To substantiate their purported concern over a potential freeze-out bid, Defendants suggest that a
bona fide third-party offer can only mean a fully executed agreement, as in the written merger
agreement executed on July 18, 2005. (Joint Br. 93-97). We reject Defendants assertion that this
proposed construction of bona fide third-party offer is compelled as a matter of law. Under Sections
7.1.1 and 7.1.5 of the MSA, a subsequent bid for MySpace or the Intermix control share, respectively,
will only be precluded if discussions regarding the bona fide third-party offer are ongoing. This
language in the agreement suggests that the term bona fide offer does not contemplate the final
execution of an agreement, at which point discussions would no longer be ongoing.
Even though we reject Defendants construction of the phrase bona fide third-party offer in the
MSA, we also reject Plaintiffs request that we rule as a matter of law on the purely legal question of
what constitutes a bona fide third-party offer under Sections 7.1.1 and 7.1.5 of the MSA. In our view,
Plaintiffs request misses the point. We are not here to construe the terms of the MSA, as such. Rather,
the question is whether there is a triable issue that Defendants, reasonably fearing being frozen out of
the MySpace Option, tilted the field in News Corp.s favor for the permissible purpose of maximizing
shareholder wealth, or whether Defendants had no such reasonable fear, but merely used the MySpace
Option as a rationalization for a selfish or idiosyncratic desire to favor News Corp. unrelated to securing
top dollar for the shareholders. We think the evidence fairly presents such triable issues as to
Defendants purported conscious disregard of their duties. In any event, our post hoc legal
determination cannot dictate the result of the question of the propriety of Defendants conduct that
indisputably occurred without the benefit of our construction of the MSA.
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Accordingly, we hereby DENY Plaintiffs Motion for Summary Judgment on this question of
contractual interpretation.
In light of all the reasons set forth above, we hereby DENY Defendants Motion for Summary
Judgment on the fiduciary duty claim with respect to Plaintiffs bad faith theory in the Revlon auction
context.
In the alternative, Defendants move for summary judgment on the second theory supporting the
breach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self-
interested or controlled by someone who was. The Delaware Supreme Court summarized the governing
law in Cinerama, Inc. v. Technicolor, Inc.:

A board of which a majority of directors is interested is not a neutral decision-making body.
See, e.g., Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34, 42 n.
9 (1994) ([w]here actual self-interest is present and affects a majority of the directors approving
a transaction, a court will apply [the entire fairness test]); Aronson v. Lewis, Del.Supr., 473
A.2d 805, 812 (1984). A majority of disinterested directors is not independent if that majority
was dominated by an interested director. See Heineman v. Datapoint Corp., Del.Supr., 611 A.2d
950, 955 (1992). Similarly, the manipulation of the disinterested majority by an interested
director vitiates the majoritys ability to act as a neutral decision-making body. See Mills
Acquisition Co. v. Macmillan, Inc., Del.Supr., 559 A.2d 1261, 1279 (1989).
663 A.2d 1156, 1170 n.25 (Del. 1995). Accordingly, Plaintiff must make two showings. First, the
plaintiff must proffer evidence showing that those members of the board had a material self-interest in
the challenged transaction[,] and this must be evidence of a substantial self-interest suggesting
disloyalty, such as evidence of entrenchment motives, vote selling, or fraud. Goodwin, 1999 WL
64265, at *25 (citing Cede II, 634 A.2d at 362-63; Cinerama, 663 A.2d at 1169). Second, the plaintiff
must show that those materially self-interested members either: a) constituted a majority of the board; b)
controlled and dominated the board as a whole; or c) i) failed to disclose their interests in the transaction
to the board; ii) and a reasonable board member would have regarded the existence of their material
interests as a significant fact in the evaluation of the proposed transaction. Id. (citing Cinerama, 663
A.2d at 1168).
There were eight directors on the Intermix board at the time of the merger: Rosenblatt, Sheehan,
Mosher, Quandt, Brewer, Carlick, Moreau, and Woodward. Rosenblatt was conflicted due to his
interest in becoming the head of Fox Interactive Media. He aimed to receiv[e] a personal benefit from
a transaction not received by the shareholders generally. Cede II, 634 A.2d at 362; McGowan, 2002
WL 77712, at *2 (deeming contracts for post-merger employment in acquiring entity a disabling
conflict of interest); Goodwin, 1999 WL 64265, at *25 (finding a triable issue of fact regarding
whether [directors] expectations constituted a material interest in the merger not shared by the
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stockholders but granting summary judgment on lack of evidence that any material interest infected
deliberative process); Oliver, 2006 WL 1064169, at *19 ([A]s a consequence of their personal interest
in the negotiation of the Accord Agreement, in light of its potential impact on their rights under their
employment agreements, they also were self-interested.). Rosenblatt did not simply seek to retain his
current position, but sought to secure a coveted position at the top of a division at News Corp.
Accordingly, read in conjunction with other admissible evidence we have cited previously, this self-
interested motivation is suggestive of disloyalty.
Defendants argue that Rosenblatts interests were coterminous with the shareholders interests
because every additional dollar increase in the price paid per share would yield roughly an additional $2
million for Rosenblatt, a significant shareholder in Intermix. (Rosenblatt 51; Joint Statement of
Uncontroverted Facts D89). This argument, however, misses the point that Rosenblatt arguably stood
to gain more money and prestige by becoming the grand Puba of Fox Interactive Media. If Chris
DeWolfe, the former CEO of MySpace, stood to make a $30 million salary over two years if retained by
the merged entity (the Parties appear to agree on this point) (see Joint Br. 37 n.42, 41-42), a reasonable
jury could infer that Rosenblatt, as head of Fox Interactive Media, would have been offered an even
higher salary. As such, a per share price of well above $20 would be needed to offset Rosenblatts
conflicting interest in a $30 million (or higher) salary. (Id. at 41-42). Defendants only reiterate that
Rosenblatt stood to gain a greater benefit from each incremental increase in the per share price.
It is undisputed that no director instructed any other director on how to vote or was influenced
by how other board members voted. (Joint Statement of Uncontroverted Facts D95-96; Brewer Decl.
36; Carlick Decl. 38; Mosher Decl. 34; Moreau Decl. 36; Quandt Decl. 42; Rosenblatt Decl.
49; Sheehan Decl. 44; Woodward Decl. 34). The real question is whether each board member acted
independently and free of any manipulation by the interested members, principally Rosenblatt, i.e.
whether [e]ach Board Member exercised his independent judgment and consideration in deciding how
to vote. (Joint Statement of Uncontroverted Facts D97). In virtually identical declarations, the
directors claim they were not so manipulated. (Brewer Decl. 36; Carlick Decl. 38; Mosher Decl.
34; Moreau Decl. 36; Quandt Decl. 42; Rosenblatt Decl. 49; Sheehan Decl. 44; Woodward Decl.
34). On the other hand, Plaintiff argues that Rosenblatt deliberately misled the other board members
regarding the viability of the Viacom bid, steering them into approving the merger without waiting even
a couple more days to see if Viacom would top News Corp.s offer. (Joint Br. 26-27). Plaintiff cites an
email Mosher sent to Rosenblatt after one of the July 15th meetings, stating: We need to honor our
commitment to Fox and get this done. Viacom sounds like a pipedream. Fox sounds dead serious and
not screwing around. (J.A., Ex. 182). When asked about this email during his deposition, Mosher
testified that Rosenblatts periodic updates to the board had led him to believe [t]hat Viacom was less
urgent about the deal and hadnt taken the time or done the same level of work as Fox Network.
(Mosher Tr. at 25:24-26:1, 26:5-13). He also noted that: The discussion around Viacom that the
management team had led indicated that Viacom did not seem as willing to come to the table with an
offer for the company. (Id. at 25:1-4). This evidence is sufficient to raise an inference that
Rosenblatts presentation to the board may have been misleading as to Viacoms seriousness.
According to Moshers description of the board meetings, from the management team estimation
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15
Van Toffler of MTV emailed Rosenblatt on July 17 to note that his people were in the office
working around the clock so [Viacom could] put forth a number to [him that] week. (J.A., Ex. 202).
On the same day, Jason Hirschhorn of Viacom informed Chris DeWolfe that he has had a team of 20+
people . . . working for 72 hours straight on a significant bid[.] (Id., Ex. 200).
standpoint [sic], they were not inclined to make an offer for the company on the time line that we were
looking at. (Id. at 25:18-21). Viewing the evidence as a whole in the light most favorable to Plaintiff,
including the contrary evidence that Viacom was indeed very seriously interested in bidding on
Intermix,
15
there are at least triable issues of fact as to whether Mosher was manipulated by a self-
interested director, Rosenblatt.
Moreover, based on Moshers description of the content of Rosenblatts presentations to the
board, the issue of manipulation is triable with respect to all of the other board members. Accordingly,
as a reasonable jury could potentially conclude that a majority of the directors was interested or
manipulated by someone who was, we hereby DENY Defendants Motion for Summary Judgment on
this second basis for Plaintiffs claim of breach of the duty of loyalty.
III. Count II: Violation of Section 14(a) of the Securities and Exchange Act of 1934 and SEC
Rule 14a-9
On August 25, 2005, Intermix issued a proxy statement (Proxy) concerning the News Corp.
merger. (Rosenblatt Decl. 53). On September 30, 2005, a majority of Intermix shareholders voted to
adopt the Merger Agreement. (Id. 55). Plaintiff alleges that there were five material omissions in the
Proxy. (J.A., Ex. 4). To succeed on a claim under 14(a) and Rule 14a-9, a plaintiff must establish
that (1) a proxy statement contained a material misrepresentation or omission which (2) caused the
plaintiff injury and (3) that the proxy solicitation itself, rather than the particular defect in the
solicitation materials, was an essential link in the accomplishment of the transaction. New York City
Employees Ret. Sys. v. Jobs, 593 F.3d 1018, 1022 (9th Cir. 2010) (citation and internal quotation marks
omitted); 15 U.S.C. 78j(b); 17 C.F.R. 240.14a-9(a) (No solicitation subject to this regulation shall
be made by means of any proxy statement, form of proxy, notice of meeting or other communication,
written or oral, containing any statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the solicitation of a proxy for the
same meeting or subject matter which has become false or misleading.).
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1. MySpaces Then-Current Revenue and Profits
Defendants first argue that Plaintiff failed to identify the alleged material omission of
MySpaces then-current revenue and profits as a basis for this Section 14(a) claim in its responses to
their interrogatories, thereby waiving this ground for his Section 14(a) claim. (Joint Br. 45 n.49). We
disagree. First, the CSAC clearly alleges that Defendants omitted the current revenues and profits
being generated by MySpace. (CSAC 130-33). Second, our July 14, 2008 Order clearly identified
this purported material omission as one of the five surviving bases for the Section 14(a) claim. (Dkt.
No. 110, at 5). Third, whether Plaintiff actually identified this alleged material omission in his Revised
Objections and Responses to Defendant VP Alpha Holdings IV, L.L.C.s First Set of Interrogatories is
unclear. (J.A., Ex. 28). Most of the response to Interrogatory No. 1 focused on the conspicuous
absence of internal projections for MySpaces prospective growth, not the companys then-current
revenue and profits. (Id. at 513-15). Plaintiff did not use the phrase current revenue and profits, but
rather, stated the following:
[S]hareholders . . . were never made aware of MySpaces true value or its true growth potential,
and had no way of comparing the information that was publicly available to managements
projections and growth assumptions. Thus, even though certain metrics that were used to track
MySpaces growth were available from some hard to find public sources (and were not made
available by the Company directly to its shareholders), shareholders and other members of the
investing public could not compare this data to the Companys internal data to determine if the
Investment Banks fairness opinions accurately reflected the explosive growth of MySpace.
(Id. at 515 (emphasis added)). Although somewhat opaque, we think the highlighted text above can
fairly be read to embrace internal data on MySpaces then-current financial position. Fourth, during the
Parties Local Rule 7-3 meet and confer, according to Defendants, Plaintiff did not identify this alleged
omission. (Joint Br. 45 n.49). Sheehan and Carlicks counsel has also declared that Plaintiff was asked
at the meeting whether they were pursuing any other misstatements or omissions, but he does not
declare that Plaintiffs counsel answered the question in the negative, thereby waiving this basis. (J.A.,
Ex. 30, Knaster Decl. 8-9). Fifth, Plaintiffs counsel also circulated a letter outlining the issues
discussed at the meet and confer, which did not list this purported material omission. (J.A., Ex. 35).
However, since this document purports to be an outline of the summary judgment arguments
Defendants identified, we decline to conclude that this document contemplated a waiver of the current
revenue and profits omission, which was so clearly identified in the CSAC (if not so clearly in the
interrogatory responses). Accordingly, as this argument was not waived, and Defendants have not made
any threshold showing entitling them to summary judgment on this basis, we DENY the Motion for
Summary Judgment as to this alleged material omission under Count II.
2. Intermix Managements 2005-2009 Financial Projections
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Plaintiff also alleges that Defendants failed to disclose Intermix managements internal financial
projections, and that this information was material. The Supreme Court set forth the materiality
standard for Section 14(a) claims in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976): An
omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider
it important in deciding how to vote. Id. at 449. The Court added that there must be a substantial
likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as
having significantly altered the total mix of information made available. Id.
While federal courts generally agree that financial projections, forward-looking statements,
puffing, or other soft financial information need not be disclosed, this case is distinguishable. See,
e.g., Walker v. Action Indus., Inc., 802 F.2d 703, 707-08 (4th Cir. 1986); Flynn v. Bass Bros. Enters.,
Inc., 744 F.2d 978, 985 (3d Cir. 1984) (noting SEC policy favoring nondisclosure of financial
projections due to their unreliability and potential to mislead voting stockholders). In this case, the
Proxy disclosed Montgomery and TWPs fairness analyses but did not disclose the underlying
2005-2009 Intermix management projections used in formulating those opinions. In Zemel Family
Trust v. Philips International Realty Corp., No. 00 CIV. 7438 MGC, 2000 WL 1772608 (S.D.N.Y.
Nov. 30, 2000), the court honed in on this distinction:
A company has no duty to include speculative financial predictions in a proxy. However, if a
Proxy discloses valuation information, it must be complete and accurate. Both the proxy and the
[financial valuation] opinion address the value of the Third Avenue property and so [the
defendant] has a duty to fully and accurately disclose information related to the valuation.
Id. at *6.
Here, the total mix of information before the shareholders did not include any of the projected
growth rates. See SEC v. Mozilo, No. CV 09-3994-JFW, 2009 WL 3807124, at *10 (C.D. Cal. Nov. 3,
2009) ([T]he total mix of information only includes information that is readily or reasonably
available to an investor.); Koppel v. 4987 Corp., 167 F.3d 125, 132 (2d Cir. 1999) (same). A
reasonable shareholder would have wanted to independently evaluate managements internal financial
projections to see if the company was being fairly valued. [T]here is a substantial likelihood that a
reasonable shareholder would consider it important in making his decision. TSC Indus., Inc., 426 U.S.
at 449. As we previously noted in our July 14, 2008 Order, the Ninth Circuit has observed that:
investors are concerned, perhaps above all else, with the future cash flows of the companies in which
they invest. Surely, the average investors interest would be piqued by a companys internal projections
. . . . United States v. Smith, 155 F.3d 1051, 1064 n.20 (9th Cir. 1998). Delaware courts concur. In a
case that also considered a discounted cash flow (DCF) analysis in a proxy statement, the same
technique utilized by Montgomery and TWP, the court held that the underlying projections informing a
DCF analysis completed for a fairness opinion were clearly material. See In re Netsmart Techs.
Sholders Litig., 924 A.2d 171, 203 (Del. Ch. 2007) ([P]rojections of this sort are probably among the
most highly-prized disclosures by investors. Investors can come up with their own estimates of
discount rates or . . . market multiples. What they cannot hope to do is replicate managements inside
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16
Even though this decision concerned a state law duty of disclosure claim, the materiality
standard is the same as set forth in TSC Industries. In re Netsmart Techs., 924 A.2d at 199-200.
view of the companys prospects.).
16
materiality of the omission of Intermixs internal financial projections.
Accordingly, Defendants Motion for Summary Judgment is DENIED as to this alleged material
omission.

3. Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending derivative lawsuit, LeBoyer
v. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standing
would be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuits
pending at the time the Proxy was issued. The Proxy merely stated: Following the effective time of the
merger, Fox Interactive Media will use commercially reasonable efforts to take such actions as are
within its control so as to obtain the dismissal of Greenspan v. Salzman, et al., LASC No. BC328558;
provided that it will not be required to make any payments to any of the plaintiffs (or their counsel) in
such litigation to do so. (J.A., Ex. 4, at 332).
Defendants concede that they did not disclose the existence of the pending LeBoyer action.
(Joint Br. 56 n.67). However, Defendants maintain that this lawsuit had been disclosed in Intermixs
prior public filings (see J.A., Exs. 47 (Form 10-Q), 3 (Form 10-K)), which they argue were incorporated
by reference in the Proxy. A document may be incorporated into proxy materials by reference, at the
least, in circumstances where no reasonable shareholder can be misled. Federated Bond Fund v.
Shopko Stores, Inc., No. 05 CV 9923(RO), 2006 WL 3378696, at *2 (S.D.N.Y. Nov. 17, 2006) (quoting
Kramer v. Time Warner Inc., 937 F.2d 767, 777 (2d Cir. 1991)). We do not think this is a case where
no reasonable shareholder can be misled. Id. Moreover, [c]orporate documents that have not been
distributed to the shareholders entitled to vote on the proposal should rarely be considered part of the
total mix of information reasonably available to those shareholders. United Paperworkers Intl Union
v. Intl Paper Co., 985 F.2d 1190, 1199-1200 (2d Cir. 1993) (rejecting notion that public reports and
10-K Report submitted to SEC were part of total mix). Accordingly, whether the undisclosed
derivative lawsuit constituted material information which was not part of the total mix of information
is at the very least a triable question.
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had no
obligation to further announce the extinguishment of derivative standing. In Delaware, with only two
exceptions not applicable here, a cash-out merger extinguishes the standing of shareholder plaintiffs to
maintain a derivative suit. Feldman v. Cutaia, 951 A.2d 727, 731 (Del. 2008) (citing Lewis v.
Anderson, 477 A.2d 1040, 1049 (Del. 1984)). This is so because a plaintiff must be a stockholder at the
time of the alleged wrongdoing and throughout the litigation. Lewis, 477 A.2d at 1046. The failure to
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disclose the potential extinguishment of a derivative lawsuit is material. See Lichtenberg v. Besicorp
Group Inc., 43 F. Supp. 2d 376, 387 (S.D.N.Y. 1999). In Lichtenberg, the court noted that the proxy
stated that the shareholder plaintiffs may not be able to maintain their derivative suits following the
merger. Id. The court found the word may to be affirmatively misleading, because it implie[d] a
possibility that the plaintiffs will be able to continue the actions as shareholder derivative suits, when
that was in fact foreclosed as a matter of New York law. Id. Here too, the disclosure above is arguably
misleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs
derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it only
stated that Fox Interactive Media would seek the dismissal of the action and would do so only if it was
not required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether the
above language was misleading as to the extinguishment of derivative standing, which was material
information.
Accordingly, we also hereby DENY Defendants Motion for Summary Judgment as to this
alleged material omission.

4. Alleged Material Omissions Concerning Viacom and the MySpace Option
Plaintiff has also argued that the directors made two other material omissions concerning: (1)
Viacoms ability to make an offer for Intermix or its ability to conduct due diligence; and (2) the
likelihood of a direct bid for MySpace, which would freeze the MySpace Option. This subpart of the
Section 14(a) claim essentially seeks to penalize Defendants for their failure to disclose that Viacom
was allegedly stonewalled or otherwise prevented from making a bid during the auction. It also seeks to
hold Defendants liable for purportedly exaggerating the threat of a direct bid for Intermixs crown
jewel, MySpace.
However, these purported material omissions are nothing more than the building blocks of
Plaintiffs fiduciary duty claim. Mandating the disclosure of the above allegations would compel
Defendants to essentially accuse themselves of breaching their fiduciary duties. In Koppel v. 4987
Corp., the court dismissed Rule 14a-9 claims based on its conclusion that these allegations constitute
no more than state law breach of fiduciary duty claims under a thin coat of federal paint. 167 F.3d at
133. The court explained:
We have long recognized that no general cause of action lies under 14(a) to remedy a simple
breach of fiduciary duty. See Field v. Trump, 850 F.2d 938, 947 (2d Cir. 1988) (quoting
Maldonado v. Flynn, 597 F.2d 789, 796 (2d Cir. 1979)), cert. denied, 489 U.S. 1012, 109 S.Ct.
1122, 103 L.Ed.2d 185 (1989); cf. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477, 97 S.Ct.
1292, 51 L.Ed.2d 480 (1977) (refusing to construe 10(b) to prohibit instances of corporate
mismanagement . . . in which the essence of the complaint is that shareholders were treated
unfairly by a fiduciary). Although the Supreme Court has explained that explicit, conclusory
statements concerning the wisdom of a proposed action are actionable, see generally Virginia
Bankshares, 501 U.S. 1083, 111 S.Ct. 2749, there is no 14(a) violation for merely failing to
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inform shareholders that a proposed action is not subjectively the most beneficial to an entitys
shareholders: Subjection to liability for misleading others does not raise a duty of
self-accusation; [rather] it enforces a duty to refrain from misleading. Id. at 1098 n. 7, 111
S.Ct. 2749. The securities laws do not effectively require [an issuer] to accuse [it]sel[f] of
breach of fiduciary duty. Id.
Id. at 133-34. The D.C. Circuit has arrived at the same conclusion: Though Santa Fe does not bar a
claim related to a breach of fiduciary duty if there has been a material misrepresentation or omission, a
plaintiff may not bootstrap a claim of breach of fiduciary duty into a federal securities claim by
alleging that directors failed to disclose that breach of fiduciary duty. Kas v. Fin. Gen. Bankshares,
Inc., 796 F.2d 508, 513 (D.C. Cir. 1986) (citations omitted).
In this case, the Proxy unambiguously disclosed Rosenblatts self-interested motivations,
anticipated future employment with News Corp., and the immediate vesting of all his unvested options.
(J.A., Ex. 4, at 272, 310, 312). The Proxy also disclosed that Viacom (Company D) conducted due
diligence and remained interested in making a bid for Intermix, but was not then in a position to make
a proposal [prior to] a [Viacom] board meeting later that week . . . . (Id. at 287, 289). Plaintiff claims
this disclosure was misleadingly incomplete, because it did not mention Rosenblatts alleged evasion of
Viacom executives and the alleged deliberate hampering of Viacoms due diligence efforts. (CSAC
147-48). Plaintiff claims that these omissions left shareholders with the false impression that Viacom
was given a full and fair opportunity to bid for the Company. (Id. 148). Plaintiff also claims that
Defendants misrepresented Viacom and News Corp.s ability to block a competing bid by freezing the
MySpace Option. (CSAC 149-51 (citing J.A., Ex. 4, at 284, 288)). As there is no duty of self-
accusation, these proffered material omissions cannot support a Section 14(a) claim. Indeed, the
allegedly omitted details are not necessarily facts, but rather factual allegations, and unless and until
judgment is granted in Plaintiffs favor, their omission from the Proxy simply could not have been
material. In Brown v. Perrette, No. CIV.A 13531, 1999 WL 342340 (Del. Ch. May 14, 1999), the court
explained this distinction:
Although a flawed bidding process would be a material fact, [the plaintiff] must prevail on the
substantive claim, that the process was flawed, before the alleged flaw becomes material. Once
[the plaintiff] prevails on her Revlon claim, the alleged disclosure claim becomes superfluous
because the defendants breach of duty becomes the wrong for which an appropriate remedy
must be crafted.
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17
Even though Brown analyzes the relationship between a state law fiduciary duty claim and a
state law duty of disclosure claim, brought on the same grounds, the principles articulated are equally
applicable to a Section 14(a) claim premised on the same allegations supporting a breach of fiduciary
duty claim.
18
Notwithstanding our ruling, nothing in the above discussion precludes Plaintiff from
introducing evidence of these omissions in the course of his breach of fiduciary duty claim.
Id. at *10-11
17
; see also Stroud v. Grace, 606 A.2d 75, 84 n.1 (Del. 1992) (We recognize the
long-standing principle that to comport with its fiduciary duty to disclose all relevant material facts, a
board is not required to engage in self-flagellation and draw legal conclusions implicating itself in a
breach of fiduciary duty from surrounding facts and circumstances prior to a formal adjudication of the
matter.) (citation omitted).
Accordingly, since self-flagellation omissions are not material, we hereby GRANT
Defendants Motion for Summary Judgment as to the purported material omissions concerning Viacom
and the MySpace Option.
18
B. Negligence
In Desaigoudar v. Meyercord, 223 F.3d 1020 (9th Cir. 2000), the Ninth Circuit stated that a
Rule 14a-9 plaintiff must demonstrate that the misstatement or omission was made with the requisite
level of culpability . . . . Id. at 1022 (citation omitted). To succeed on a Section 14(a)/Rule 14a-9
claim, a plaintiff need only establish that the defendant was negligent in drafting and reviewing the
proxy statement. Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1300-01 (2d Cir. 1973) (holding that
negligence suffices for claim based on misleading proxy statement and that plaintiffs are not required
to establish any evil motive or even reckless disregard of the facts). This holding was reaffirmed in the
oft-cited case of Wilson v. Great American Industries, Inc., 855 F.2d 987 (2d Cir. 1988): Liability can
be imposed for negligently drafting a proxy statement. Id. at 995 (citing Gerstle, 478 F.2d at 1301
n.20). As a matter of law, the preparation of a proxy statement by corporate insiders containing
materially false or misleading statements or omitting a material fact is sufficient to satisfy the Gerstle
negligence standard. Id. Accordingly, a director may be found negligent under Section 14(a) for a
failure to notice material omissions upon reading a proxy statement. See, e.g., Parsons v. Jefferson-
Pilot Corp., 789 F. Supp. 697, 703 (M.D.N.C. 1992) (Mr. Eagle [a senior in-house lawyer] is not the
only negligent party in this action. Each of the directors who reviewed the proxy statement is equally as
negligent for failing to notice the use of the word restricted ten times in the document.).
Here, each of the Defendants has declared that he was involved in the process of preparing,
reviewing, and disseminating the Proxy Statement to Intermix shareholders. (Sheehan Decl. 53
(internal citation omitted); Carlick Decl. 46; Brewer Decl. 39; Mosher Decl. 37; Moreau Decl.
39; Quandt Decl. 45; Rosenblatt Decl. 53; Woodward Decl. 37). Construing this sworn statement
in the light most favorable to Plaintiff, we read it to mean each director personally reviewed the Proxy
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before it was disseminated to the Intermix shareholders. Since we have denied summary judgment with
respect to three of the proffered material omissions in the Proxy, and Defendants have admitted to
participating in the process of preparing, reviewing, and disseminating that Proxy, we must also
DENY summary judgment with respect to the element of negligence. If Plaintiff can persuade a jury as
to both materiality and Defendants participation in the preparation and/or review of the Proxy at trial,
then a finding of negligence will flow from those findings.
C. Damages
1. Benefit-of-the-Bargain Damages
This theory of damages is wholly inapposite to this case. A request for benefit-of-the-bargain
damages seeks the value that was represented as coming to the shareholder under a particular
transaction, such as a merger. In re Real Estate Assocs. Ltd. Pship Litig., 223 F. Supp. 2d 1142, 1152
(C.D. Cal. 2002). [B]enefit-of-the-bargain damages are available in the limited instance where a
misrepresentation is made in the proxy solicitations as to the consideration to be forthcoming upon an
intended merger. Id. (citation omitted). As the Ninth Circuit has stated, [t]he benefit-of-the-bargain
measure of damages allows a plaintiff to recover the difference between what the plaintiff expected he
would receive . . . and the amount [the plaintiff] actually received . . . . DCD Programs, Ltd. v.
Leighton, 90 F.3d 1442, 1449 (9th Cir. 1996) (quoting Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1426
(9th Cir. 1986) (emphasis in original)). Here, the Proxy made no misrepresentation as to the per share
price offered to and ultimately received by the class members. The Proxy stated the class members
would receive $12 cash for each common share, and it is undisputed that they received $12 cash for
each common share. (J.A., Ex. 4, at 319; Joint Statement of Uncontroverted Facts D128). Accordingly,
this damages theory is not viable. We GRANT summary judgment with respect to this damages theory.

2. Out-of-Pocket Losses
a. Legal Framework
Out-of-pocket losses are the standard measure of damages for Rule 10b-5 and Section 14(a)
claims. In re DaimlerChrysler AG Secs. Litig., 294 F. Supp. 2d 616, 626 (D. Del. 2003) (citing Tse v.
Ventana Med. Sys., Inc., 123 F. Supp. 2d 213, 222 (D. Del. 2000) (Tse II)). Out-of-pocket losses
constitute the difference between the fair value of all that the seller received and the fair value of what
he would have received had there been no fraudulent conduct. Tse II, 123 F. Supp. 2d at 222 (quoting
Affiliated Ute Citizens of Utah v. U.S., 406 U.S. 128, 155 (1972)) (quotation marks omitted). The Ninth
Circuit concurs: The out-of-pocket rule fixes recoverable damages as the difference between the
purchase price and the value of the stock at the date of purchase. Wool v. Tandem Computers Inc.,
818 F.2d 1433, 1437 (9th Cir. 1987), impliedly overruled in part on other grounds by Hollinger v. Titan
Capital Corp., 914 F.2d 1564, 1577-78 (9th Cir. 1990) (en banc) (citation omitted). The guiding
philosophy of the out-of-pocket theory of damages . . . is to award not what the plaintiff might have
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gained, but what he has lost by being deceived into the purchase. Id. at 1437 n.2 (citation and internal
quotation marks omitted). Since this theory of damages is premised on an intrinsic valuation of the
company as it existed at the time of the merger, Plaintiff has produced expert witness testimony
consisting of two different financial valuations of Intermix/MySpace. Defendants have moved to
exclude that testimony as inadmissible.
b. Defendants Motion to Exclude; Plaintiffs Motions to Strike
Defendants move to exclude Plaintiffs proffered expert testimony by Dr. G. William Kennedy
as inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Plaintiff
has moved to strike both this Motion to Exclude and Defendants Motion for Summary Judgment,
arguing that this Daubert challenge was not included in the joint brief on the Cross-Motions for
Summary Judgment and therefore violates our Order Re: Summary Judgment Motions. (Dkt. No. 123,
Oct. 30, 2008). We reject this argument. First, Defendants included virtually the same arguments
attacking Dr. Kennedys testimony in the Joint Brief. (Mot. 77-80). Second, the Motion to Exclude is a
challenge to the admissibility of evidence crucial to one of Plaintiffs damages theories. As we may
only consider admissible evidence in ruling on the Parties Cross-Motions, nothing in the Order Re:
Summary Judgment Motions precludes a party from filing a separate motion to exclude certain evidence
from the Courts consideration. Third, it is common for litigants to move for the exclusion of certain
evidence at the summary judgment stage. See, e.g., In re Hanford Nuclear Reservation Litig., 292 F.3d
1124, 1131 (9th Cir. 2002) (Defendants linked their summary judgment motion to dozens of in limine
motions challenging the admissibility of plaintiffs expert witnesses, commonly known as Daubert
motions.) (citation omitted); OHanlon v. Matrixx Initiatives, No. CV 04-10391-AHM (JTLx), 2007
WL 2446496, at *1, 4 (C.D. Cal. Jan. 3, 2007) (considering motions in limine concurrently with motion
for summary judgment). Accordingly, we hereby DENY Plaintiffs Motions to Strike the Motion to
Exclude and the Motion for Summary Judgment.
We now consider the merits of the Motion to Exclude. Defendants attack the reliability of Dr.
Kennedys application of his chosen methodologies for estimating the value of MySpace: (1) discounted
cash flow (DCF) analysis; and (2) comparable public company analysis. Federal Rule of Evidence
702 states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill,
experience, training, or education, may testify thereto in the form of an opinion or otherwise, if
(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of
reliable principles and methods, and (3) the witness has applied the principles and methods
reliably to the facts of the case.
In Daubert, the Supreme Court construed Rule 702 to require district courts to ensur[e] that an experts
testimony both rests on a reliable foundation and is relevant to the task at hand. 509 U.S. at 597. The
Court noted that [p]ertinent evidence based on scientifically valid principles will satisfy those
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demands but cautioned that [t]he focus . . . must be solely on principles and methodology, not on the
conclusions that they generate. Id.; id. at 595. To assist courts in assessing whether the proffered
testimony is scientifically valid, the Supreme Court set forth a non-exhaustive list of factors, including:
whether the theory or technique employed by the expert is generally accepted in the scientific
community; whether it's been subjected to peer review and publication; whether it can be and has been
tested; and whether the known or potential rate of error is acceptable. Daubert v. Merrell Dow
Pharms., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (Daubert II) (citing Daubert, 509 U.S. at 593-94).
The gatekeeping obligation Daubert requires us to fulfill applies not only to testimony based
on scientific knowledge, but also to testimony based on technical and other specialized
knowledge. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Fed. R. Evid.
702). Because there are areas of expertise, such as the social sciences in which the research, theories
and opinions cannot have the exactness of hard science methodologies, trial judges are given broad
discretion to determine whether Dauberts specific factors are, or are not, reasonable measures of
reliability in a particular case. United States v. Simmons, 470 F.3d 1115, 1123 (5th Cir. 2006) (citing
Kumho, 526 U.S. at 153) (internal citations and quotation marks omitted). Courts have stated that [i]n
such instances, other indicia of reliability are considered under Daubert, including professional
experience, education, training, and observations. Id. Though perhaps not to the same degree as
psychology or social psychology, financial valuation is not an exact scientific methodology.
Estimations, predictions, and inferences based on professional judgment and experience are key
ingredients in any valuation. In a variety of contexts, the circuit courts have noted that economic
valuation is less than an exact science. See, e.g., In re Arnold & Baker Farms, 85 F.3d 1415, 1421
(9th Cir. 1996) (Experience has taught us that determining the value of real property at any given time
is not an exact science. Because each parcel of real property is unique, the precise value of land is
difficult, if not impossible, to determine until it is actually sold.); Metlyn Realty Corp. v. Esmark, Inc.,
763 F.2d 826, 830, 835 (7th Cir. 1985) (noting that [t]he process of valuation is inexact and that DCF
analyses are highly sensitive to assumptions about the firms costs and rate of growth, and about the
discount rate).

With respect to the DCF analysis, the principal difference from Montgomery and TWPs DCF
fairness analyses is Dr. Kennedys MySpace growth rate projections for 2007-2008 and 2008-2009.
(Baron Decl., Ex. 3, Expert Report of Dr. G. William Kennedy [Kennedy Report], May 20, 2009).
Intermix management projected the following revenue growth rates for the company: 107 percent for
2005-2006; 67 percent for 2006-2007; 20 percent for 2007-2008; and 15 percent for 2008-2009. (J.A.,
Ex. 242). Montgomery used these projections for its analysis without any modification. (Baron Decl.,
Ex. 3, at 39). TWPs projections differed slightly from managements projections: 107 percent for
2005-2006; 67 percent for 2006-2007; 21 percent for 2007-2008; and 10 percent for 2008-2009. (Id.).
Kennedy adopted managements growth rate projections for 2005-2006 and 2006-2007, derived a
deceleration rate of 62.06 percent from those figures, and then used that same deceleration rate to
calculate different revenue growth rates for 2007-2008 and 2008-2009, 41.36 percent and 25.67 percent,
respectively. (Id. at 39-40). Based on these new figures, Kennedy calculated new Earnings Before
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Interest, Taxes, Depreciation and Amortization (EBITDA) figures for 2008 and 2009 for MySpace.
(Id. at 40). Finally, [u]sing a discount rate of 19% and a terminal EBITDA multiple of 18[,] Dr.
Kennedy calculated a value of $962.4 million after subtracting the $69 million option exercise price
from the present value of MySpaces Cash Flows. (Id.). The 19 percent discount rate was chosen
based on the discount rates used in the Montgomery and TWP fairness opinions, which ranged from 17
percent up to 25 percent. (Id. at 41).
Defendants make several arguments against the reliability of this procedure. They argue first
that Dr. Kennedy has insufficiently justified his use of a uniform deceleration rate from 2005 to 2009
and the 18x terminal multiple. (Mot. 9-13). Defendants claim that Dr. Kennedy has offered no coherent
reason for his rejection of managements projections for 2007-2008 and 2008-2009. (Id. at 11). They
note that he has merely declared that Montgomery and TWPs projections were unreasonably low and
not consistent with the very rapid rates of growth currently observed at the time of the Proxy and
expected in the social networking sector at the time. (Id. at 11 (quoting Moriarty Decl., Ex. 7,
Kennedy Supplemental Decl. 6) (emphasis omitted)). Yet, Defendants neglect to mention that Dr.
Kennedy explained his use of higher growth rates for 2007-2008 and 2008-2009 by noting that
MySpace revenues consistently outperformed Intermix managements own projections in each of the
first four months of 2005. (Baron Decl., Ex. 3, Kennedy Report, at 35). This is at least one reasoned
basis for his adjustments to what he viewed as demonstrably conservative forecasts. (Id.). After all,
the entire endeavor is forecasting, not hard science. Projections themselves cannot be tested for
accuracy; they represent hopes rather than the results of scientific analysis. Zenith Elecs. Corp. v.
WH-TV Broad. Corp., 395 F.3d 416, 420 (7th Cir. 2005); see also In re Orchards Village Invs., LLC,
No. 09-30893-rldll, 2010 WL 143706, at *11 (Bankr. D. Or. Jan. 8, 2010) ([P]rojecting future financial
results from the operations of a business is not an exact science.).
Additionally, Defendants argue that: Kennedy provides no theoretical or empirical justification
for applying this incredibly aggressive 18x terminal multiple, except his statement that it is based on
forward EBITDA multiples observed in comparable publicly traded guideline companies referenced in
the comparable public company analysis below. (Mot. 12-13 (quoting Moriarty Decl., Ex. 1, Kennedy
Report, at 15) (quotation marks omitted)). They assert that Dr. Kennedy only relied on the most
profitable of the 14 comparable companies relied upon by Montgomery and TWP, including Google
and Yahoo!, and could not summon a single company that had grown at the rate projected with his
revenue growth rates and terminal value. (Id. at 13 (citing Moriarty Decl., Ex. 1, Kennedy Report, at
25; id., Ex. 6, Kennedy Tr. at 123:4-24)).
While these two challenges may be objections to Kennedys conclusions on his DCF analysis,
they do not render his methodology unreliable. Rather, the deviation from managements projections,
the use of an arguably aggressive terminal multiple, and the alleged selection of the most profitable
guideline companies are proper subjects for cross-examination. Defendants do not take issue with the
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19
Lippe v. Bairnco Corp., 288 B.R. 678, 689 (S.D.N.Y. 2003) (Many authorities recognize that
the most reliable method for determining the value of a business is the discounted cash flow (DCF)
method.) (citations omitted); see also Childrens Broad. Corp. v. The Walt Disney Co., 245 F.3d 1008,
1018 (8th Cir. 2001) (describing DCF analysis as an uncontroversial accounting method).
widely accepted DCF methodology;
19
nor do they attack any input that is identical to those used in the
Montgomery and TWP projections (for instance, the 2005-2006 and 2006-2007 projections or the
discount rate which fell within the same range in the investment banks fairness analyses). Even in light
of Dr. Kennedys less than fully reasoned explanations for his choices, given the inherent element of
judgment in these financial valuation analyses, we cannot say that he failed to identify any reliable
principles and methods or to apply those principles and methods reliably to the facts of [this] case.
FED. R. EVID. 702. A court may admit somewhat questionable testimony if it falls within the range
where experts might reasonably differ, and where the jury must decide among the conflicting views.
S.M. v. J.K., 262 F.3d 914, 921 (9th Cir. 2001) (quoting Kumho, 526 U.S. at 153).
Defendants also argue that there is a fundamental flaw in Dr. Kennedys DCF analysis, since it
allegedly yields an average growth rate into perpetuity above that of the U.S. economy as a whole
(12.74 percent versus a historical average of 6.5 percent). (Mot. 13-16; Cornell Decl. in Supp. of Mot.
to Exclude 5). Arguing that this outcome violates a key tenet of financial valuation, Defendants cite to
Professor Aswath Damodarans treatise, which states: The fact that a stable growth rate is sustained
forever, however, puts strong constraints on how high it can be. Since no firm can grow forever at a
rate higher than the growth rate of the economy in which it operates, the constant growth rate cannot be
greater than the overall growth rate of the economy. (Defs. Request for Judicial Notice [RJN], Ex.
B, ASWATH DAMODARAN, DAMODARAN ON VALUATION: SECURITY ANALYSIS FOR INVESTMENT AND
CORPORATE FINANCE 145 (John Wiley & Sons, Inc. 2d ed. 2006)). We have reviewed Defendants
expert Dr. Bradford Cornells declaration in support of this Motion to Exclude, in which he argues that
Dr. Kennedys use of an 18x EBITDA forward multiple is unreasonable . . . . (Cornell Decl. in Supp.
of Mot. to Exclude 5). To cross-check the outcome of Dr. Kennedys DCF analysis, Dr. Cornell used
three hypothetical scenarios, in which MySpaces revenue growth rate declines by 2 percent, 1 percent,
and 0.5 percent, respectively, each year until it reaches 6.5 percent, the average annual growth rate in
nominal Gross Domestic Product between 1928 and 2008. (Id. 8-10 (citing Defs. RJN, Ex. F,
Bureau of Economic Analysis News Release, July 31, 2009)). Using Dr. Kennedys assumptions and
the Gordon Growth Model (id. 11-13), Dr. Cornell calculated the following total present values as of
January 1, 2010 and implied EBITDA multiples for each scenario: (1) for the 2 percent annual
reduction, $549.13 million and a 4.7x multiple; (2) for the 1 percent annual reduction, $606.18 million
and a 5.2x multiple; and (3) for the 0.5 percent annual reduction (what he calls the most aggressive
scenario), $695.34 million and a 6.0x multiple. (Id. 14-19; see also id., Exs. 5, 6). Applying the 19
percent discount rate used by Dr. Kennedy, Dr. Cornell calculates discounted values as of mid-2005 for
each scenario, including: (1) $251.02 million; (2) $277.10 million; and (3) $317.8 million. (Cornell
Decl. in Supp. of Mot. to Exclude 20). Finally, Dr. Cornell concludes that even assuming an instance
where MySpaces revenues grow at a rate exceeding that of the economy as a whole for fifteen years
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after 2010, i.e., until 2025, Dr. Kennedys implied EBITDA multiple of 18x is three times too high
when compared with even [Dr. Cornells] most aggressive implied EBITDA multiple of 6.0x to give a
reasonable estimate of MySpaces value as of mid-2005. (Id. 21 (emphasis original)).

Though a jury might conclude at trial that Dr. Kennedys selection of an 18x EBITDA multiple
was overzealous, Dr. Cornells calculations do not demonstrate that Dr. Kennedys methodology is
fundamentally unreliable. At base, Dr. Cornells challenge to this DCF analysis constitutes an attack on
Dr. Kennedys projections as to MySpaces annual growth rates and as to how long those growth rates
can be sustained. Since Dr. Cornell is in essence attacking the reasonableness of Dr. Kennedys
projections, the generation of which we have already noted is not an exact science, we conclude that his
arguments do not render Dr. Kennedys methodology fundamentally unreliable and therefore
inadmissible. Dr. Cornell himself has testified that an adjustment in the terminal multiple based on the
experts assessment of the companys growth potential is appropriate. (Baron Decl., Ex. 2 (Cornell Tr. I
at 167:19-168:3)). Additionally, Dr. Cornell rejected the proposition that any time that the implied
perpetual growth rate exceeds the growth of the economy, that the terminal value multiple used would
be unreliable[.] (Id., Ex. 1 (Cornell Tr. II at 21:21-22:1)). He further explained that its just a
question of how much [the implied perpetual growth rate] exceeds [the economy rate,] and there is no
standardized method to determine whether the difference between the two rates is unreasonable. (Id.
at 22:3-24:6; id. at 23:12-25 (Q[:] And then do they use judgment to see whether its reasonable to
them or not reasonable to them? . . . . Is there some written scale as to how much variation there can be
before, in your view, it becomes reasonable or unreasonable; or is that a judgment of the analyst? A[:]
Well, theres not a written scale . . . . And these calculations Dr. Kennedy used struck me as
[unreasonable].)). These statements suggest that Defendants Motion turns on a difference of
professional opinion, not some fatal methodological flaw.
Based on our review of the papers and evidence submitted, if anything is clear, it is that DCF
analysis is, in not insubstantial measure, an inherently subjective and predictive methodology, which
relies in part on the experts judgment and experience. Indeed, neither Party has presented the Court
with any accepted, standardized methodology for deriving the required inputs for DCF analysis.
Accordingly, we are forced to conclude that DCF analysis is sufficiently pliable so that it may
reasonably lead to a wide breadth of plausible conclusions. Dr. Kennedys conclusions and the bases
therefor may ultimately be subject to legitimate attacks on cross-examination, but we perceive no
fundamental unreliability in his analysis that would counsel in favor of outright exclusion. We agree
that our gatekeeper role under Daubert is not intended to supplant the adversary system or the role of
the jury. DSU Med. Corp. v. JMS Co., Ltd., 296 F. Supp. 2d 1140, 1147 (N.D. Cal. 2003) (citation,
quotation marks, and alteration omitted). It is readily apparent that Defendants have thoroughly
researched the case law on DCF methodology, and in all but one of the several cases they cite, the
expert witnesss DCF analysis was considered at trial and then rejected by the court. Compare In re
Iridium Operating, LLC, 373 B.R. 283, 350-52 (Bankr. S.D.N.Y. 2007) (rejecting DCF analyses
following trial); In re Emerging Commcns, Inc. Sholders Litig., No. Civ.A. 16415, 2004 WL 1305745,
at *14-15 (Del. Ch. June 4, 2004) (same); Gray v. Cytokine Pharmasciences, Inc., No. Civ.A. 17451,
2002 WL 853549, at *8 (Del. Ch. Apr. 25, 2002) (same), with Kipperman v. Onex Corp., 411 B.R. 805,
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844-49 (Bankr. N.D. Ga. 2009) (simultaneously deciding summary judgment and granting motion to
exclude an experts testimony as unreliable under Rule 702, where the expert rejected managements
projections and generated his own DCF analysis).

With respect to Dr. Kennedys comparable public company analysis, Defendants argue that he
only used the projected MySpace revenue and EBITDA figures for 2006, ignoring the 2005 numbers
without explanation. (Mot. 17-18 (citing Moriarty Decl., Ex. 1, Kennedy Report, at 24)). They argue
Dr. Kennedys explanation for choosing to disregard the 2005 figures was inadequate ipse dixit. When
asked if 2005 was an aberrant year for MySpace, he replied: No, but it wasnt who the company was
expected to be. (Kennedy Tr. at 129:19-22). Furthermore, Defendants argue that Kennedy cherry-
picked only the most profitable guideline companies referenced in Montgomery and TWPs fairness
analyses, instead of applying an average of the multiples applicable to several companies. (Mot. 18). In
support of this latter contention, they cite another treatise, which states: In employing the guideline
publicly traded company method, every effort should be made to select as broad a base of comparative
companies as is reasonably possible, as well as to give full consideration to every possible factor in
order to make the comparison more meaningful. (Defs. RJN, Ex. E, PRATT, REILLY AND SCHWIEHS,
THE ANALYSIS AND APPRAISAL OF CLOSELY HELD COMPANIES 233 (2000) (PRATT, et al.) (citation
and internal quotation marks omitted)). Defendants contend that Dr. Kennedy erred in whittling down
the broader base of comparable public companies identified by Montgomery and TWP to only Google
and Yahoo!, seasoned companies with proven revenue model[s] that experienced explosive growth.
(Mot. 19-20). Though this appears to strike Defendants as litigation-driven, we are instructed to
evaluate the methodology, not the ultimate determination reached by the expert. Our sole purpose is to
determine the reliability of a particular expert opinion through a preliminary assessment of the
methodologies underlying the opinion. DSU Med. Corp., 296 F. Supp. 2d at 1147 (citing Daubert, 509
U.S. at 592-93). Of course, we must consider whether the experts are proposing to testify about
matters growing naturally and directly out of research they have conducted independent of the litigation,
or whether they have developed their opinions expressly for purposes of testifying. Daubert II, 43
F.3d at 1317. However, there is no evidence in the record that Dr. Kennedy deviated from his standard
methodology for the purposes of testifying in this case.
Dr. Kennedy explained his method as follows. First, he analyzed the companies selected by
Montgomery and TWP and restricted his selection to those comparable companies. (Moriarty Decl.,
Ex. 1, Kennedy Report, at 18-20). Montgomery had chosen twelve companies (Google, Yahoo!, CNET
Networks, iVillage, Monster Worldwide, Aptimus, ValueClick, Vertrue, Church & Dwight Co.,
Herbalife Ltd., Jarden Corp., and Natures Sunshine Products) based on the following sectors: online
advertising, online content and networking, online direct marketing, and offline direct marketing. (Id. at
19). TWP had chosen fourteen guideline companies (Bankrate, CNET, iVillage,
1-800-FLOWERS.COM, Blue Nile, Celebrate Express, Netflix, NutriSystem, Overstock.com, Provide
Commerce, Aptimus, Marchex, ValueClick, and Vertrue) based on three sector categories: content,
eCommerce, and direct marketing. (Id.). In identifying a narrower set of comparable companies, Dr.
Kennedy explained that he considered these to be the most similar operational, financial, and growth
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guideline publicly traded companies. (Id. at 20). He justified his deviation from the investment banks,
beginning with TWP, as follows:
In implementing the public guideline company method, TWP selected guideline Companies
based on all of the businesses of Intermix on a combined basis. . . . Montgomery selected
guideline companies based on each business within Intermix because the three businesses have
different economics and peer groups. As a result, Montgomery selected only Online
Advertising and Online Content and Networking to apply to MySpace. We agree with
Montgomerys approach that each Intermix business segment, and specifically MySpace has
different growth and profit potential and therefore, different multiples would be appropriate to
apply to MySpace and the other Intermix business segments. Within TWPs comparables, only
the Content group is applicable.
(Id. at 20-21). Accordingly, Dr. Kennedy selected the following six comparable companies: Bankrate,
CNET, iVillage, Google, Yahoo!, and Monster. (Id. at 21). Then, based on separate MySpace
financial performance information, Dr. Kennedy narrowed the field down to Google and Yahoo!,
contending those were the only two companies with comparable revenue and EBITDA growth metrics.
(Id. at 21-25). Dr. Kennedy concluded that MySpace [fell] into the higher profitability tier of the six
guideline companies, and therefore, he could discount the 2005 figures for MySpace and utilize an
average of the multiples indicated by Google and Yahoo. (Id. at 24-25).
There is nothing in the record to support the proposition that selecting comparable companies
based on (1) services provided, (2) revenue metrics, and (3) EBITDA metrics renders a comparable
public company analysis fundamentally unreliable. We will not exclude this evidence simply because
Defendants dislike Dr. Kennedys conclusion that the only guideline companies left standing in the final
analysis were Google and Yahoo!. Even Defendants cited treatise urges the selection of as broad a
base of comparative companies as is reasonably possible. (Defs. RJN, Ex. E, PRATT, et al., supra, at
233 (emphasis added)). Dr. Kennedy concludes, in effect, that the remaining comparable companies are
as broad a base of comparable companies as is reasonably possible. Defendants disagreement with this
conclusion is properly explored on cross-examination.
Accordingly, we hereby DENY Defendants Motion to Exclude Dr. Kennedys testimony. As
Dr. Kennedys testimony is sufficient to at least raise triable issues on damages from out-of-pocket
losses, we also DENY Defendants Motion for Summary Judgment on this issue.
3. Lost Opportunity Damages
As a final alternative, Plaintiff seeks lost opportunity damages based on the allegedly
impending Viacom bid. When actual losses cannot be demonstrated, some circuit courts have
recognized an alternate theory of establishing damages, the lost opportunity theory.
DaimlerChrysler, 294 F. Supp. 2d at 627 (internal quotation marks omitted). Lost opportunity damages
represent loss of a possible profit or benefit, [defined as] an addition to the value of ones investment,
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unless the loss is wholly speculative. Tse II, 123 F. Supp. 2d at 223 (internal citations omitted;
alteration in original). Lost opportunity damages are not wholly speculative if they are based on
certain, fixed and demonstrable profits thwarted by a defendants alleged fraud. DaimlerChrysler,
294 F. Supp. 2d at 627 (quoting Rudinger v. Ins. Data Processing, Inc., 778 F. Supp. 1334, 1341 (E.D.
Pa. 1991)). Further, lost opportunities damages are not available where the fact of the loss, i.e.
whether there was any lost opportunity at all, is wholly speculative. Id. (quoting Tse v. Ventana Med.
Sys., Inc., 297 F.3d 210, 220 (3d Cir. 2002) (Tse III)). Finally, [t]he risk of uncertainty as to [the]
amount of damages is cast on the wrongdoer and it is the duty of the fact finder to determine the amount
of the damages as best he can from all the evidence in the case. Tse III, 297 F.3d at 220 (quoting
Gould v. American-Hawaiian S.S. Co., 535 F.2d 761, 781-82 (3d Cir. 1976)).
In support of this theory of damages, Plaintiff argues that Viacom was contemplating a bid
above $750 million, citing a single internal Viacom email, in which Jason Hirschhorn states: My guess
is that News [Corp.] is going to take the $12/share ask from Richard Rosenblatt and add a premium of
10-20%. $700-$750 million . . . . Dont know if offer will be binding from NEWS [Corp.]. But I
belioeve [sic] they will deliver it anywhere from today-monday. (J.A., Ex. 192). Viacom never in fact
put in a bid for Intermix. Therefore, the relevant question on this motion for summary judgment is
whether there is a triable issue of material fact as to whether Viacom would have submitted a bid. This
question must be answered in the negative, since it is undisputed that Viacoms board simply refused to
engage in a public bidding war with its competitor News Corp. Freston, Viacoms CEO, testified that
the Viacom board members were adamant on this point: There already had been an offer and it wasnt
ours and it didnt look like there was an opportunity to counter bid or if there was, we would have to do
so in a public way and the board had said on the spot, no, lets not get involved in that. (Freston Tr. at
35:11-15; see also West Tr. at 123:22-24 (We had some discussion and we ended up saying that it
wasnt worth pursuing a counterbid strategy.)). Therefore, given this unwavering refusal to engage in
a public bidding war following the July 18th merger announcement, the Proxy, including whatever
alleged material omissions, issued in late August had no effect whatsoever on Viacoms willingness to
place a bid for Intermix. Accordingly, the allegedly defective Proxy cannot support the notion that
Intermix shareholders missed out on an opportunity with Viacom.
While it may be theoretically possible that Viacom would have entered a subsequent bid had the
Intermix shareholders not been allegedly deceived by the defective Proxy and had they rejected the
merger with News Corp., we conclude that under the totality of the evidence, Plaintiffs showing is no
more than speculative. Moreover, mere rejection of the News Corp. bid by the shareholders would not
necessarily have eliminated the specter of a public bidding war that Viacom abhorred. Nothing
prevented News Corp. from countering any Viacom bid with a counterbid. This is precisely the type of
speculation and indeterminacy that is insufficient to create a triable issue on the existence of any lost
opportunity.
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20
We have no occasion to consider and therefore express no opinion on whether the lost
opportunity theory of damages premised on a potential Viacom bid would be viable with respect to the
breach of fiduciary duty claim which is based on evidence beyond the alleged material omissions from
the Proxy. The Parties have not addressed this issue in their Cross-Motions.
Accordingly, we GRANT Defendants Motion for Summary Judgment as to this theory of
damages.
20
On his Section 14(a) claim, Plaintiff may ONLY proceed at trial on his theory of out-of-
pocket losses based on an intrinsic valuation of Intermix at the time of the merger.
IV. Count III: Violation of Section 20(a) of the Securities and Exchange Act of 1934
Section 20(a) of the 1934 Act provides that: Every person who, directly or indirectly, controls
any person liable under any provision of this chapter or of any rule or regulation thereunder shall also
be liable jointly and severally with and to the same extent as such controlled person to any person to
whom such controlled person is liable, unless the controlling person acted in good faith and did not
directly or indirectly induce the act or acts constituting the violation or cause of action. 15 U.S.C.
78t(a). The Parties agree that if there is no primary liability under Section 14(a), there can be no control
person liability. (Joint Br. 87). However, since we have denied summary judgment with respect to
three of the bases for Count II, we likewise DENY the Motion for Summary Judgment with respect to
Count III.
V. Conclusion
Plaintiffs Motion for Summary Judgment is DENIED. Defendants Motion for Summary
Judgment is hereby GRANTED in part and DENIED in part as set forth in this Order. Within thirty
(30) days hereof, counsel SHALL file a joint status report setting forth their views regarding further
mediation in light of these rulings.
IT IS SO ORDERED.
-- : --
Initials of Deputy Clerk Bea
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UNI TED STATES COURT REPORTERS
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UNI TED STATES DI STRI CT COURT
NORTHERN DI STRI CT OF CALI FORNI A
SAN J OSE DI VI SI ON
I N RE: HI GH- TECH EMPLOYEE
ANTI TRUST LI TI GATI ON,
_________________________
THI S DOCUMENT RELATES TO:
ALL ACTI ONS
_________________________
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C- 11- 02509 LHK
SAN J OSE, CALI FORNI A
AUGUST 8, 2013
PAGES 1- 161
TRANSCRI PT OF PROCEEDI NGS
BEFORE THE HONORABLE LUCY H. KOH
UNI TED STATES DI STRI CT J UDGE
A P P E A R A N C E S:
FOR THE PLAI NTI FFS: J OSEPH SAVERI LAWFI RM
BY: J OSEPH SAVERI
LI SA J . LEEBOVE
J AMES G. DALLAL
255 CALI FORNI A STREET, SUI TE 450
SAN FRANCI SCO, CALI FORNI A 94111
LI EFF, CABRASER,
HEI MANN & BERNSTEI N
BY: KELLY M. DERMODY
BRENDAN P. GLACKI N
DEAN M. HARVEY
ANNE B. SHAVER
LI SA J . CI SNEROS
275 BATTERY STREET, 30TH FLOOR
APPEARANCES CONTI NUED ON NEXT PAGE
OFFI CI AL COURT REPORTER: LEE- ANNE SHORTRI DGE, CSR, CRR
CERTI FI CATE NUMBER 9595
PROCEEDI NGS RECORDED BY MECHANI CAL STENOGRAPHY
TRANSCRI PT PRODUCED WI TH COMPUTER
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APPEARANCES ( CONTI NUED)
FOR DEFENDANT KEKER & VAN NEST
GOOGLE: BY: ROBERT A. VAN NEST
DANI EL E. PURCELL
J USTI NA K SESSI ONS
633 BATTERY STREET
MAYER BROWN
BY: LEE H. RUBI N
TWO PALO ALTO SQUARE, SUI TE 300
PALO ALTO, CALI FORNI A 94306
FOR DEFENDANT O' MELVENY & MYERS
APPLE: BY: GEORGE A. RI LEY
MI CHAEL F. TUBACH
CHRI STI NA J . BROWN
TWO EMBARCADERO CENTER
28TH FLOOR
FOR DEFENDANTS J ONES DAY
ADOBE AND BY: DAVI D C. KI ERNAN
I NTUI T: LI N W. KAHN
CRAI G E. STEWART
555 CALI FORNI A STREET, 26TH FLOOR
FOR DEFENDANT BI NGHAMMCCUTCHEN
I NTEL: BY: DONN P. PI CKETT
FRANK HI NMAN
SUJ AL SHAH
THREE EMBARCADERO CENTER
FOR DEFENDANT COVI NGTON & BURLI NG
PI XAR: BY: EMI LY J . HENN
333 TWI N DOLPHI N DRI VE, SUI TE 700
REDWOOD SHORES, CALI FORNI A 94065
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SAN J OSE, CALI FORNI A AUGUST 8, 2013
P R O C E E D I N G S
( COURT CONVENED AND THE FOLLOWI NG PROCEEDI NGS WERE HELD: )
THE CLERK: CALLI NG CASE NUMBER C- 11- 02509 LHK, I N
RE: HI GH- TECH EMPLOYEE ANTI TRUST LI TI GATI ON.
MR. GLACKI N: BRENDAN GLACKI N, LEI FF, CABRASER,
HEI MANN & BERNSTEI N ON BEHALF OF THE PLAI NTI FFS.
MS. DERMODY: GOOD AFTERNOON, YOUR HONOR.
KELLY DERMODY, LEI F, CABRASER. AND THE OTHER LEI F, CABRASER
PEOPLE WI TH US ARE MY PARTNER, DEAN HARVEY, AND ASSOCI ATES
ANNE SHAVER AND LI SA CI SNEROS.
AND ALSO I N THE COURTROOMTODAY ARE NAMED PLAI NTI FFS,
BRANDON MARSHAL AND MI KE DEVI NE.
THE COURT: OKAY.
MR. SAVERI : GOOD AFTERNOON, YOUR HONOR.
J OSEPH SAVERI . WI TH ME FROMMY OFFI CE ARE LI SA LEELOVE AND
J AMES DALLAL.
THE COURT: OKAY.
MR. VAN NEST: GOOD AFTERNOON, YOUR HONOR.
BOB VAN NEST FROMKEKER & VAN NEST FOR GOOGLE. I ' MHERE WI TH
DAN PURCELL AND TI NA SESSI ONS.
ALSO, LEE RUBI N FROMMAYER BROWN.
AND I ' VE BEEN ASKED TO SPEAK ON BEHALF OF ALL DEFENDANTS
THI S AFTERNOON.
MR. RI LEY: GOOD AFTERNOON, YOUR HONOR. GEORGE RI LEY
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OF O' MELVENY & MYERS FOR APPLE. I ' MJ OI NED BY MY COLLEAGUES
CHRI STI NA BROWN AND MI CHAEL TUBACH.
THE COURT: OKAY. GOOD AFTERNOON.
MR. PI CKETT: GOOD AFTERNOON. DONN PI CKETT. I ' M
HERE ALONG WI TH FRANK HI NMAN AND SUJ AL SHAH FOR I NTEL.
MR. KI ERNAN: GOOD AFTERNOON, YOUR HONOR.
DAVI D KI ERNAN OF J ONES DAY ON BEHALF OF ADOBE. HERE WI TH ME
TODAY I S LI N KAHN. BOB MI TTELSTAEDT COULDN' T BE HERE TODAY
BECAUSE OF TRI AL ON ANOTHER MATTER.
THE COURT: OKAY. MR. KI ERNAN AND? I ' MSORRY.
MR. KI ERNAN: AND LI N KAHN.
THE COURT: OKAY. THANK YOU.
OKAY. AND THERE' S NO ONE HERE FOR LUCASFI LM, PI XAR, AND
I NTUI T; CORRECT?
MS. HENN: YOUR HONOR, EMI LY HENN, COVI NGTON &
BURLI NG. I ' MHERE FOR THE CMC FOR PI XAR.
THE COURT: OKAY. WOULD YOU MI ND I F WE DI D THAT AT
THE END, OR WOULD YOU LI KE TO DO THAT AT THE BEGI NNI NG? I S
THAT OKAY I F I T' S AT THE END?
MS. HENN: YES.
MR. STEWART: YOUR HONOR, CRAI G STEWART. I ' MHERE ON
BEHALF OF I NTUI T.
THE COURT: OKAY. ALL RI GHT. WELL, GOOD AFTERNOON
TO EVERYONE.
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SO ACTUALLY THE FI RST QUESTI ON WOULD GO TO I NTUI T,
LUCASFI LM, AND PI XAR, AS WELL AS THE PLAI NTI FFS.
WHEN DO YOU ANTI CI PATE FI LI NG YOUR MOTI ON FOR PRELI MI NARY
APPROVAL?
MS. DERMODY: WELL, YOUR HONOR, WE ARE HEAVI LY I N THE
PROCESS OF TRYI NG TO DOCUMENT THAT AGREEMENT, AND WI TH THE
ADDI TI ON OF THE I NTUI T SETTLEMENT, WE HAVE ANOTHER FAMI LY TO
DEAL WI TH I N FI GURI NG OUT THE BEST PROCESS.
WE' RE HOPI NG TO DO THAT VERY, VERY SOON. WE' RE WORKI NG
HARD TO ACCOMPLI SH THAT, YOUR HONOR.
THE COURT: CAN WE SET A DEADLI NE BY WHI CH THAT WI LL
BE DONE?
MR. SAVERI : I THI NK THERE ARE PROBABLY TWO THI NGS WE
WOULD NEED TO DO: SET A DEADLI NE FOR FI LI NG THE PRELI MI NARY
APPROVAL PAPERS; AND THEN WE WOULD LI KE TO COME I N AS SOON AS
POSSI BLE AND HAVE THE HEARI NG ON PRELI MI NARY APPROVAL.
THE COURT: WELL, I HAVE SOME POSSI BLE HEARI NG DATES
FOR YOU, SO I NEED TO KNOWWHEN YOU' RE GOI NG TO FI LE AND WE CAN
GO FROMTHERE.
MS. DERMODY: WHAT DO YOU HAVE, YOUR HONOR?
THE COURT: SO - -
MS. DERMODY: THAT MI GHT GI VE US A TARGET.
THE COURT: WELL, OCTOBER 3RD, NOVEMBER 21,
DECEMBER 19, J ANUARY 9, FEBRUARY 13, FEBRUARY 20.
MR. SAVERI : YOUR HONOR, CAN THE - - I S THERE ANY WAY
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TO GET I N EARLI ER THAN THAT FOR THE PRELI MI NARY APPROVAL
HEARI NG?
THE COURT: EARLI ER THAN OCTOBER 3? WHEN ARE YOU
GOI NG TO FI LE?
MS. HENN: YOUR HONOR, I THI NK THAT WOULD BE
AGGRESSI VE I N LI GHT OF WHERE WE ARE AT THI S POI NT I N TI ME, SO I
THI NK WE WOULD SUPPORT A DATE NO EARLI ER THAN OCTOBER.
THE COURT: WELL, HOWQUI CKLY ARE YOU GOI NG TO FI LE?
MR. SAVERI : WELL, THE - - I DON' T - - I ' MHOPI NG,
MAYBE I ' MOVERLY OPTI MI STI C, THAT WE' LL HAVE THE DOCUMENTATI ON
DONE I N A COUPLE WEEKS AND WE WOULD PREPARE - - BE PREPARED TO
FI LE SHORTLY THEREAFTER.
THE PRELI MI NARY APPROVAL HEARI NG I S GOI NG TO BE UNOPPOSED.
THE COURT: SO THERE HAVE BEEN NO EXCHANGES OF DRAFTS
YET OF FI NAL DOCUMENTS?
MR. SAVERI : NO, WE HAVE EXCHANGED DOCUMENTS.
MR. STEWART: NOT WI TH I NTUI T, YOUR HONOR. WE
HAVEN' T RECEI VED THE SETTLEMENT DOCUMENTS YET.
THE COURT: I SEE. WHAT ABOUT PI XAR AND LUCASFI LM?
MS. HENN: WE' VE RECEI VED ONE DOCUMENT, BUT THERE ARE
MANY DOCUMENTS THAT WE HAVEN' T SEEN, AND I T TOOK A WHI LE TO GET
THE FI RST DOCUMENTS.
SO WE DO THI NK THI S I S GOI NG TO TAKE SOME TI ME AND
SHOULDN' T BE RUSHED.
THE COURT: OKAY. SO GI VE ME A DEADLI NE THAT SEEMS
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REALI STI C FOR FI LI NG THE MOTI ON, AND THEN YOU CAN PI CK ANY OF
THESE DATES FOR THE HEARI NG.
MS. DERMODY: I F WE' RE WORKI NG FROMOCTOBER 3RD, YOUR
HONOR, I THI NK THE REAL QUESTI ON THEN I S HOWMUCH TI ME DO YOU
THI NK YOUR HONOR WOULD LI KE TO HAVE WI TH THE PAPERS BEFORE THE
HEARI NG? BECAUSE AS MR. SAVERI SAI D, I T WI LL BE UNCONTESTED,
SO THERE WON' T BE ANY ADDI TI ONAL FI LI NGS, PRESUMABLY, AFTER THE
MOTI ON FOR PRELI MI NARY APPROVAL, AND I T' S REALLY ABOUT THE
COURT' S CONVENI ENCE.
THE COURT: WELL, I NEED A MI NI MUMOF TWO WEEKS,
MI NI MUM.
MS. DERMODY: SO SEPTEMBER 19?
THE COURT: THAT WOULD BE THE LAST POSSI BLE DATE.
MS. DERMODY: I THI NK THAT SOUNDS ACHI EVABLE.
YES? SOUND RI GHT FOR YOU ALL?
MS. HENN: YES, YOUR HONOR.
THE COURT: I THI NK SEPTEMBER 12TH WOULD BE EVEN
BETTER, BUT I ' LL TAKE THE 19TH.
MS. DERMODY: THANK YOU, YOUR HONOR.
MR. SAVERI : I THI NK WE' D LI KE TO GET I T DONE AS SOON
AS WE CAN AND GET THE MOTI ONS ON FI LE AND GI VE THE COURT AS
MUCH TI ME AS WE CAN WI TH THE PAPERS.
THE COURT: UM- HUM. WHY DON' T WE SAY SEPTEMBER 16TH?
I S THAT OKAY?
MS. HENN, DOES THAT GI VE YOU ENOUGH TI ME, OR - - I F YOU WANT
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UNTI L THE 19TH, THAT' S FI NE.
MS. HENN: SEPTEMBER 19TH WOULD BE BETTER.
THE COURT: OKAY. ALL RI GHT. SO FI LE YOUR - - ALL
THREE, RI GHT? ALL THREE?
MS. HENN: YES.
MS. DERMODY: YES.
THE COURT: OKAY. SO FI LE THE MOTI ON BY
SEPTEMBER 19TH. I T WI LL BE HEARD ON OCTOBER THE 3RD.
MS. DERMODY: WI LL THAT BE 1: 30 OR 2: 00 O' CLOCK, YOUR
HONOR?
THE COURT: 1: 30.
MS. DERMODY: THANK YOU.
THE COURT: OKAY. NOW, ARE THERE ANY OTHER
NEGOTI ATI ONS WI TH OTHER REMAI NI NG DEFENDANTS? OR NOT?
MR. SAVERI : WELL, YOUR HONOR, WE WENT TO A MEDI ATI ON
ON WHI CH WE REPORTED AND THAT MEDI ATI ON I S NOWCONCLUDED.
SO - -
THE COURT: THERE' S NO FURTHER EFFORTS? I MEAN, I
DON' T WANT ANY DETAI L, BUT - -
MR. SAVERI : I GUESS I WANT TO BE CAREFUL ABOUT THAT.
THERE' S REALLY NOTHI NG ELSE THAT I CAN REPORT RI GHT NOW.
THE COURT: OKAY. COULD I SET J UST A SETTLEMENT
STATUS REPORT DATE FOR A WEEK FROMNOW? OR - -
MS. DERMODY: SURE, YOUR HONOR.
THE COURT: WHAT MAKES SENSE? I DON' T KNOWI F THE
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HEARI NG I S GOI NG TO MAKE A DI FFERENCE.
MR. VAN NEST: YOUR HONOR, THI S I S BOB VAN NEST.
I DON' T THI NK ANYTHI NG WI LL CHANGE I N A WEEK. I THI NK, AS
MR. SAVERI PUT I T QUI TE CORRECTLY, THE MEDI ATI ON OCCURRED, I T' S
OVER, AND NOTHI NG I S HAPPENI NG.
THE COURT: OKAY.
MR. VAN NEST: WI TH RESPECT TO THE FOUR REMAI NI NG
DEFENDANTS, NOTHI NG I S GOI NG TO CHANGE I N THE NEXT WEEK.
THE COURT: OKAY. WHAT ABOUT THE NEXT TWO WEEKS,
THREE WEEKS?
MR. VAN NEST: I THI NK I F YOU SET I T OUT A MONTH,
THEN FI NE, WE' LL SUBMI T A REPORT AND PERHAPS SOMETHI NG WI LL
HAPPEN I N THAT PERI OD OF TI ME. THAT' S FI NE.
OR SET I T FOR THE 19TH AND WE' LL FI LE SOMETHI NG ALONG WI TH
THE OPENI NG PAPERS.
THE COURT: OKAY. LET ME ASK - - I MEAN, OBVI OUSLY
YOU MAY NOT KNOWAND YOU HAVE TO CONSULT WI TH CLI ENTS, BUT DO
YOU NEED A RULI NG ON THE MOTI ON? OR DO YOU THI NK YOU NEED A
SUMMARY J UDGMENT RULI NG? WHAT - - WHAT ADDI TI ONAL I NFORMATI ON
DO YOU THI NK THE PARTI ES NEED FOR THE REMAI NI NG FOUR
DEFENDANTS?
MR. SAVERI : YOUR HONOR, J UST SPEAKI NG FOR MYSELF, I
THI NK WE CAN - -
THE COURT: UM- HUM.
MR. SAVERI : - - I DON' T THI NK WE NEED TO SET I T AT
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ANY PARTI CULAR MI LESTONE.
THE COURT: UM- HUM.
MR. SAVERI : I THI NK, FROMTHE PLAI NTI FFS'
PERSPECTI VE, WE' RE READY TO TALK. WE' RE - - I F I T WAS
APPROPRI ATE TO DO ANOTHER ROUND OF MEDI ATI ON, I THI NK WE' D BE
WI LLI NG TO DO THAT.
THE COURT: UM- HUM.
MR. SAVERI : TO ME I THI NK I T' S I MPORTANT TO KEEP
TALKI NG ALL THE TI ME, SO I ' D LI KE TO KEEP THE COMMUNI CATI ON
GOI NG.
SO I DON' T - - TO ANSWER YOUR QUESTI ON DI RECTLY, I DON' T
THI NK WE SHOULD PUT I T OFF UNTI L SUMMARY J UDGMENT OR RULI NG ON
THE CLASS.
I MEAN, OBVI OUSLY EVERYBODY I S I NTERESTED TO KNOWWHAT' S
GOI NG TO HAPPEN AS A RESULT OF TODAY OR - -
THE COURT: UM- HUM.
MR. SAVERI : - - DOWN THE ROAD.
THE COURT: UM- HUM. LET ME HEAR FROMMR. - -
MR. VAN NEST: MR. VAN NEST. THANK YOU, YOUR HONOR.
THE COURT: OF COURSE I WAS GOI NG TO SAY THAT.
WHAT DO YOU THI NK?
MR. VAN NEST: OBVI OUSLY CLASS CERT I S A VERY
I MPORTANT MI LESTONE.
THE COURT: UH- HUH.
MR. VAN NEST: OBVI OUSLY I F WE GO PAST THAT, SUMMARY
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J UDGMENT I S AN I MPORTANT MI LESTONE.
BUT I AGREE WI TH MR. SAVERI . THERE' S NOTHI NG MAGI C ABOUT
ANY PARTI CULAR TI ME. I J UST THI NK I T' S UNLI KELY THAT ANYTHI NG
WI LL HAPPEN BEFORE YOU RULE ON CLASS CERT.
THE COURT: I SEE.
MR. VAN NEST: I ' MNOT SAYI NG ANYTHI NG WOULD HAPPEN
AFTER THAT, EI THER, BUT I DON' T THI NK ANYTHI NG WI LL HAPPEN
UNTI L THEN.
THE COURT: UNTI L THERE' S AN ACTUAL RULI NG?
MR. VAN NEST: A RULI NG OR AN I NDI CATI ON FROMYOUR
HONOR AS TO WHAT THE RULI NG WI LL BE, YES. I DON' T THI NK
ANYTHI NG I S LI KELY TO HAPPEN I N THAT PERI OD.
ON THE OTHER HAND, I F MR. SAVERI WANTS TO TALK, THAT' S
FI NE. WE CAN CERTAI NLY SUBMI T A REPORT ON THE 19TH. THAT
WON' T TAX ANYBODY.
THE COURT: UM- HUM.
MR. VAN NEST: AND THEN YOU' LL KNOW.
THE COURT: ALL RI GHT. WELL, TELL ME, WI TH REGARD
TO - - ONCE A RULI NG I S I SSUED, WHAT' S GOI NG TO HAPPEN? LET' S
SAY I CERTI FY A CLASS. DO YOU WANT TO HAVE ANOTHER ADR SESSI ON
AT THAT POI NT?
MS. DERMODY: I THI NK THAT WOULD BE VERY HELPFUL,
YOUR HONOR, ACTUALLY.
THE COURT: LET ME SEE I F THE DEFENDANTS ARE WI LLI NG.
I S THAT SOMETHI NG THAT YOU' D BE WI LLI NG TO DO AT THAT
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POI NT?
MR. VAN NEST: YOUR HONOR, WE' RE ALWAYS WI LLI NG TO
CONSI DER ADR.
THE COURT: UM- HUM.
MR. VAN NEST: AS I SAI D, I THI NK I T' S UNLI KELY
ANYTHI NG WOULD HAPPEN BEFORE YOUR RULI NG ON CLASS CERT.
THE COURT: OKAY.
MR. VAN NEST: WE OBVI OUSLY FEEL STRONGLY ABOUT THAT
I SSUE, AS WE' RE GOI NG TO BE DI SCUSSI NG I N A MOMENT.
SO I DO THI NK, THOUGH, THAT ADR BEFORE THAT TI ME WOULD NOT
BE PRODUCTI VE. I DO AGREE WI TH YOU THERE.
THE COURT: OKAY. ALL RI GHT. LET' S SAY I DON' T
CERTI FY A CLASS. AT THAT POI NT?
MR. VAN NEST: I THI NK THE SAME THI NG. THAT' S AN
I MPORTANT MI LESTONE FOR ALL OF US AND - -
THE COURT: ALL RI GHT.
MR. VAN NEST: - - TALKI NG AFTER THAT WOULD BE - -
THE COURT: WOULD MAKE SENSE?
MR. VAN NEST: - - WORTHWHI LE, YES.
THE COURT: OKAY. WELL, I WOULD LI KE TO, BECAUSE I T
SOUNDS LI KE EI THER WAY THERE' S - - EI THER WAY I T SEEMS LI KE A
FURTHER ADR SESSI ON MI GHT BE HELPFUL AFTER A RULI NG.
SO CAN I GO AHEAD AND REFER YOU NOWAND SET A LONG ENOUGH
LEAD TI ME THAT YOU' RE ABLE TO MEET THAT DEADLI NE?
ASSUMI NG - - LET' S SAY ASSUMI NG YOU GET A RULI NG, I DON' T
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KNOW, I N THE NEXT MONTH. HOWMUCH TI ME WOULD YOU NEED FOR ADR?
MR. VAN NEST: TO GET READY FOR ADR?
THE COURT: AND TO COMPLETE I T, BECAUSE I ' LL SET A
DEADLI NE - -
MS. DERMODY: THE PROBLEMI S THE MEDI ATORS'
SCHEDULES, YOUR HONOR. THE VERY GOOD MEDI ATORS - - WE WENT
THROUGH THI S, ALL OF US, COLLECTI VELY TRYI NG TO GET DATES.
THE COURT: SURE.
MS. DERMODY: AND I T WAS UNBELI EVABLE TO GET DATES
OVER A FOUR MONTH PERI OD.
SO WE MAY ALL HAVE GOOD WI LL ABOUT WHEN WE COULD DO I T AND
HAVE AVAI LABI LI TY. SO THE SOONER WE KNOWWHAT YOU THI NK WI LL
BE THE SCHEDULE, WHEN THE RULI NG WI LL COME OUT, AND WHEN YOU
WOULD LI KE US TO COMPLETE ADR, WE CAN CALL TODAY TO FI ND OUT
SCHEDULES AND SEE I F WE CAN GET OURSELVES ON A CALENDAR J UST TO
HAVE THAT BOOKED.
MR. VAN NEST: YOUR HONOR, I F YOU GAVE US 90 DAYS
FROMTHE RULI NG, I THI NK WE WOULD BE ABLE TO GET I N AND OUT OF
THE MEDI ATI ON.
THE COURT: UM- HUM.
MR. SAVERI : MY CONCERN, THOUGH, YOUR HONOR, I S THAT
EVEN I F YOU WERE TO SAY TODAY, "I WANT YOU TO GO TO MEDI ATI ON, "
GI VEN THE WAY THE MEDI ATORS' CALENDARS GO AND SCHEDULI NG, I T
WOULD BE, I MEAN, 60 OR 90 DAYS BEFORE WE COULD PROBABLY GET I N
FRONT OF A MEDI ATOR I F THE PAST I S AN I NDI CATOR.
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SO I ' MA LI TTLE WORRI ED THAT - - I F YOUR HONOR WANTS US TO
GET I N AND DO I T, I THI NK WE NEED TO - - I T WOULD BE USEFUL TO
HAVE SOME PARAMETERS.
I THI NK A LOT OF I T DEPENDS ON WHEN YOU RULE AND THAT' S - -
THE COURT: UM- HUM. WELL, I AMTARGETI NG GETTI NG AN
ORDER OUT BY THE END OF THI S MONTH OR EARLY SEPTEMBER AT THE
LATEST, BUT PREFERABLY THE END OF AUGUST.
SO UNDERSTANDI NG THAT' S THE CASE, I WOULD SUGGEST YOU GO
AHEAD AND J UST ASSUME ANY DAY AFTER LABOR DAY I S FAI R GAME FOR
A MEDI ATI ON AND J UST GO AHEAD AND SCHEDULE ONE.
CAN I THEN SET YOU ON A NOVEMBER 15TH DEADLI NE?
MR. VAN NEST: SURE.
MS. DERMODY: THAT MAKES SENSE, YOUR HONOR.
MR. VAN NEST: THAT' S FI NE, YOUR HONOR.
THE COURT: ALL RI GHT. SO THEN THE REMAI NI NG
DEFENDANTS WI LL HAVE ANOTHER PRI VATE MEDI ATI ON SESSI ON TO BE
COMPLETED BY NOVEMBER 15TH OF 2013. OKAY.
MR. SAVERI : YOUR HONOR - -
THE COURT: SO YOU' RE SAYI NG, MR. VAN NEST, THAT YOU
DON' T THI NK THAT THERE WI LL BE ANY FURTHER SETTLEMENTS ABSENT
ANOTHER MEDI ATI ON SESSI ON?
MR. VAN NEST: THAT' S RI GHT.
THE COURT: SO GETTI NG AN I NTERI MSETTLEMENT STATUS
REPORT - -
MR. VAN NEST: NOT MEANI NGFUL.
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THE COURT: I F YOU WERE GOI NG TO RESOLVE THE CASE, I
WOULDN' T HAVE TO I SSUE THE ORDER. BUT YOU KNOWTHAT' S NOT
GOI NG TO HAPPEN?
MS. DERMODY: YOU KNOW, YOUR HONOR, WE' LL LET YOU
KNOWI F SOMETHI NG ELSE - -
MR. VAN NEST: I T' S NOT MEANI NGFUL.
MR. VAN NEST: I F YOU SET THE DEADLI NE, WE' LL
COMPLETE I T BY THEN.
MR. SAVERI : I WOULD HOPE, YOUR HONOR, THAT WE - - YOU
KNOW, WE WENT THROUGH MEDI ATI ON SESSI ONS, WE ESSENTI ALLY
ACCOMPLI SHED THE SETTLEMENTS WE DI D WI TH BI LATERAL NEGOTI ATI ONS
BETWEEN THE PLAI NTI FFS AND THE DEFENDANTS.
SO I WOULD HOPE THAT WE' D BE ABLE TO CONTI NUE THAT AND NOT
J UST WAI T FOR THE MEDI ATI ON SESSI ON TO TRY TO NARROWTHI S.
THE COURT: PLEASE. I MEAN, SAVE YOURSELVES THE
MONEY - -
MR. VAN NEST: ABSOLUTELY.
THE COURT: - - AND J UST DO I T YOURSELVES. OKAY,
YEAH, PLEASE.
MR. SAVERI : AND, YOUR HONOR, I GUESS THE OTHER THI NG
I WOULD SAY I S THAT FROMMY PERSPECTI VE, I THI NK I T I S - - I T I S
USEFUL TO HAVE DECI SI ON MAKERS TO BE PRESENT AND I NVOLVED AT
THE MEDI ATI ON, AND I THI NK I F WE' RE GOI NG TO DO THI S SERI OUSLY
THE NEXT TI ME, FROMMY PERSPECTI VE, I T WOULD BE USEFUL TO HAVE
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A COMMI TMENT FROMALL SI DES THAT PEOPLE WI TH AUTHORI TY AND
DECI SI ON MAKI NG POWER ARE GOI NG TO BE ACTI VE PARTI CI PANTS ON
THE DAY OF THE MEDI ATI ON.
THE COURT: HOWWERE THEY AVAI LABLE LAST TI ME? J UST
BY PHONE, OR - -
MR. SAVERI : FROMWHAT I UNDERSTAND, AND THE OTHER
SI DE CAN SPEAK TO THI S, THERE WERE I N- HOUSE COUNSEL REPRESENTED
AT THE MEDI ATI ON, BUT THAT WAS - - THAT WAS I T.
THE COURT: BUT THEY MUST HAVE HAD SETTLEMENT
AUTHORI TY UP TO A CERTAI N NUMBER.
MR. SAVERI : I DON' T KNOWANYTHI NG - - I DON' T KNOW
ANYTHI NG ABOUT THAT.
MR. VAN NEST: WE HAD PEOPLE THERE, YOUR HONOR, WI TH
SETTLEMENT AUTHORI TY, AND WE WI LL AGAI N, AND I UNDERSTAND
THAT' S THE BASELI NE, OF COURSE.
BUT AS MR. SAVERI SAYS - - AND I UNDERSTAND WHAT HE SAYS I S
TRUE - - SOME OF THE NEGOTI ATI ONS OCCURRED J UST BETWEEN THE
LAWYERS AND THAT' S WHAT ULTI MATELY GOT I T DONE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - FOR THE ONES THAT SETTLED.
THE COURT: UM- HUM.
MR. VAN NEST: SO UNDERSTOOD.
THE COURT: OKAY. ALL RI GHT. NOW, LET ME ASK, FOR
ANTI TRUST I MPACT, DO WE NEED TO CONSI DER NOWTHE ALLEGATI ONS
THAT YOU MADE AGAI NST LUCASFI LM, PI XAR, AND ADOBE - - AND
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I NTUI T? DO WE STI LL NEED TO - - I KNOWBOTH SI DES BELI EVE THAT
THERE' S NO I MPACT FROMTHE THREE DEFENDANTS SETTLI NG, BUT TELL
ME WHAT I S THERE, I F ANY, I MPACT ON WHETHER WE STI LL LOOK AT
THE DEPOSI TI ON TESTI MONY AND THE EVI DENCE OF THOSE THREE
COMPANI ES AS PART OF THE ANALYSI S I N THI S MOTI ON.
MR. VAN NEST: I THI NK, YOUR HONOR - -
THE COURT: WHAT DO WE DO WI TH THAT?
MR. VAN NEST: I THI NK THEY ESSENTI ALLY DROP OUT.
BUT THEY' RE A SMALL PART OF THE GROUP. I MEAN, THE THREE
TOGETHER EMPLOY LESS THAN 8 PERCENT OF THE EMPLOYEES I N THE
PROPOSED CLASS.
SO I THI NK THE REAL FOCUS NOWI S ON THE REMAI NI NG
DEFENDANTS AND THE - - AND WHATEVER AGREEMENTS THEY' RE ABLE TO
PROVE AS BETWEEN AND AMONG THEM.
BUT EI THER WAY, I THI NK BOTH OF US SAI D I N THE STATUS
CONFERENCE STATEMENTS, THE SETTLEMENTS DON' T CHANGE ANYTHI NG,
I N PART BECAUSE THE THREE SETTLI NG DEFENDANTS WERE A VERY SMALL
PART OF THI S TO BEGI N WI TH. AS I SAI D, LESS THAN 8 PERCENT OF
CLASS MEMBERS ARE EMPLOYED BY ALL THREE COMBI NED.
SO THE LARGEST PART OF THE CASE I S STI LL BEFORE YOUR HONOR
AND THE CONDUCT THAT I THI NK YOU' LL BE FOCUSSI NG ON I S THE
CONDUCT OF THE FOUR REMAI NI NG DEFENDANTS, NOT THOSE THAT HAVE
SETTLED OUT.
THE COURT: BUT WHY WOULDN' T THE COMMENTS OF
MR. CATMULL AND MR. LUCAS STI LL BE RELEVANT TO - -
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MR. VAN NEST: THEY MI GHT HAVE SOME - -
THE COURT: - - THE ANTI TRUST CONSPI RACY, HOWTHE
AGREEMENTS WERE ENFORCED, HOWTHEY WERE I MPLEMENTED?
MR. VAN NEST: THEY MI GHT HAVE SOME LI MI TED
RELEVANCE, YOUR HONOR.
BUT ESSENTI ALLY YOU' RE LOOKI NG NOW- - BECAUSE THE NATURE OF
THE AGREEMENTS THAT THEY' VE ALLEGED ARE BI LATERAL BETWEEN AND
AMONG I NDI VI DUAL PAI RS OF DEFENDANTS, I THI NK THAT EVI DENCE I S
GOI NG TO BE LARGELY RELEVANT BECAUSE THE FOCUS WI LL BE ON WHAT,
I F ANY, I MPACT WAS THERE FROMTHE BI LATERAL AGREEMENTS THAT ARE
BEI NG LI TI GATED NOWAS BETWEEN THE OTHER FOUR REMAI NI NG
DEFENDANTS.
SO, AGAI N, I DON' T WANT TO SAY ABSOLUTELY NO RELEVANCE, BUT
VERY LI MI TED.
THE COURT: OKAY.
THE COURT: LET ME HEAR FROMTHE PLAI NTI FFS. YOU
AGREE THAT YOU' RE NOT ADVOCATI NG AN OVERARCHI NG CONSPI RACY
ANYMORE, I T' S J UST BI LATERAL AGREEMENTS AND - -
MR. SAVERI : NO, YOUR HONOR. I DON' T THI NK THAT THE
FACT THAT WE' VE - - THAT WE' VE - - NOTHI NG HAS REALLY CHANGED I N
TERMS OF OUR THEORY OF THE CASE. WE ALLEGE - - AND MR. GLACKI N
I S GOI NG TO HANDLE THE SUBSTANCE OF THE ARGUMENT, BUT LET ME
J UST SAY THI S.
I THI NK THAT THE - - AS YOU SAI D, THE EVI DENCE OF THE
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SETTLI NG DEFENDANTS WI TH RESPECT TO THE AGREEMENTS, THE NATURE
AND THE SCOPE OF THE AGREEMENTS, I S STI LL GOI NG TO BE RELEVANT
I N THI S CASE.
AND TO THE EXTENT THAT THERE I S OTHER EVI DENCE THAT HAS TO
DO WI TH THE BUSI NESS PRACTI CES OF THOSE COMPANI ES THAT WE RELY
ON TO SHOWA CLASS- WI DE I MPACT, THE FACT THAT THOSE DEFENDANTS
HAVE SETTLED DOESN' T CHANGE THAT FACT.
REMEMBER THAT THI S REMAI NS A, AN ANTI TRUST CLAI MAND ALL
THE PARTI CI PANTS I N THE CONSPI RACY ARE, AS A MATTER OF LAW,
J OI NTLY AND SEVERALLY LI ABLE.
AND SO TO THE EXTENT THAT WE PROVE AN UNDERSTANDI NG, A
COMMON COURSE OF CONDUCT THAT I NVOLVES ALL OF THESE COMPANI ES,
I MEAN, THAT EVI DENCE I S RELEVANT.
THE COURT: WHAT I S THE BREAKDOWN OF THE, WHAT I S I T,
60, 000 THAT YOU' RE ALLEGI NG ARE I N YOUR TECHNI CAL EMPLOYEE
CLASS? WHAT' S THE BREAKDOWN AMONGST THE VARI OUS DEFENDANTS,
I NCLUDI NG THE ONES WHO ARE NOWOUT OF THE CASE?
MR. GLACKI N: WOULD YOU LI KE TO KNOWTHE BREAKDOWN ON
NUMBER OF CLASS MEMBERS OR - - WELL, I CAN TELL YOU WHERE THAT
I NFORMATI ON I S I N THE RECORD ACTUALLY I F THAT WOULD BE HELPFUL.
THE COURT: OKAY. THAT' S FI NE.
MR. GLACKI N: I F YOU GO TO THE OCTOBER 12, 2012
REPORT OF DR. LEAMER AND YOU GO TO PAGE 23, WHI CH I S BETWEEN
PARAGRAPHS 54 AND 55, THERE ARE TWO TABLES THERE THAT - - ONE OF
THEMI S FOR THE ALL SALARI ED CLASS AND ONE OF THEMI S FOR THE
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TECHNI CAL CLASS, WHI CH I S THE SAME CLASS THAT WE' RE NOWSEEKI NG
TO CERTI FY.
THE COURT: WHI CH REPORT? I HAVE THE MAY 10TH,
2013 - -
MR. GLACKI N: THI S I S LAST YEAR.
THE COURT: - - AND J ULY 12TH.
OH, I DON' T HAVE THAT.
MR. GLACKI N: RI GHT. BUT I F YOU WERE TO - - I ' D BE
HAPPY TO HAND YOU MY PAGE I F I T' S HELPFUL. I SHOWED THI S TO
MR. VAN NEST.
THE COURT: CAN YOU J UST GI VE ME THE BALLPARKS?
MR. GLACKI N: SURE. WELL, BY NUMBER OF EMPLOYEES, I
CAN TELL YOU THAT ADOBE I S 3, 601; APPLE I S 6, 835.
THE COURT: 6, 000 WHAT?
MR. GLACKI N: 835.
MR. GLACKI N: GOOGLE I S 7, 854.
THE COURT: OKAY.
MR. GLACKI N: I NTEL I S 36, 643.
THE COURT: OKAY.
MR. GLACKI N: I NTUI T I S 3, 236.
THE COURT: OKAY.
MR. GLACKI N: LUCAS I S 522; PI XAR I S 859.
THE COURT: ALL RI GHT. WHAT ABOUT THE - - HOWMANY
J OBS - - WELL, I GUESS THAT' S I N THE CHART THAT YOU PROVI DED,
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THE VARI OUS J OB TI TLES FOR EACH OF THOSE.
MR. VAN NEST: 2400, YOUR HONOR - -
MR. GLACKI N: 24 - -
MR. VAN NEST: - - I S THE TOTAL.
THE COURT: NOW, LET ME ASK, WI TH REGARD TO
MR. HARI HARAN - - DI D I PRONOUNCE THAT CORRECTLY?
MR. GLACKI N: CORRECT.
THE COURT: OKAY. HE DI D NOT WORK FOR A DEFENDANT
WHO I S LEFT I N THI S CASE, SO WHY SHOULD HE STI LL CONTI NUE TO
SERVE AS A CLASS REPRESENTATI VE?
MR. GLACKI N: WELL, AS MR. SAVERI SAI D, YOUR HONOR,
WE' RE ALLEGI NG A SI NGLE VI OLATI ON OF THE SHERMAN ACT, A SI NGLE
CONSPI RACY, COMBI NATI ON, AGREEMENT, UNDERSTANDI NG I N RESTRAI NT
OF TRADE.
AND EVEN - - THE EMPLOYEES WHO WERE AT THE - - THE PEOPLE WHO
WORKED FOR THE SETTLED COMPANI ES DURI NG THE CLASS PERI OD STI LL
HAVE ACTI VE CLAI MS AGAI NST THE OTHER MEMBERS OF THE CONSPI RACY
BECAUSE, AS MR. SAVERI SAI D, UNDER COPI OUS PRECEDENT, I NCLUDI NG
TEXAS VERSUS RADCLI FF, WHI CH I S THE SI GNATURE UNI TED STATES
SUPREME COURT CASE ON J OI NT AND SEVERAL LI ABI LI TY, AND UNDER
THE SHERMAN ACT, ALL OF THE MEMBERS OF THE COMBI NATI ON
CONSPI RACY UNDERSTANDI NG ARE LI ABLE FOR ONE ANOTHER' S CONDUCT,
OR WRONGDOI NG, I SHOULD SAY.
SO MR. HARI HARAN STI LL HAS AN ACTI VE CLAI MAGAI NST THE
OTHER FOUR DEFENDANTS, J UST AS ALL THE OTHER NAMED CLASS
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REPRESENTATI VES HAVE ACTI VE CLAI MS AGAI NST THOSE FOUR REMAI NI NG
DEFENDANTS.
THE COURT: SO YOU' RE NOT EVEN LI MI TI NG THAT TO ANY
OF THE DEFENDANTS WHO HAD A SPECI FI C BI LATERAL AGREEMENT WI TH
HI S EMPLOYER, LUCASFI LM?
MR. GLACKI N: CORRECT, BECAUSE WE' RE ALLEGI NG A
SI NGLE, A SI NGLE CONSPI RACY AND RESTRAI NT OF TRADE.
AND THE CLASS I S - - THE SETTLEMENT CLASS I S I DENTI CAL TO
THE PROPOSED TECHNI CAL CLASS. I T I NCLUDES MEMBERS OF ALL OF
THESE COMPANI ES.
SO, FOR EXAMPLE, YOU KNOW, I NTEL EMPLOYEES ARE MEMBERS OF
THE SETTLEMENT - - OF THE CLASS THAT WI LL BE PROPOSED FOR THE
SETTLEMENT, AND THERE ARE GOI NG TO BE CLASS MEMBERS WHO RELEASE
THEI R CLAI MS AGAI NST I NTUI T, PI XAR, AND LUCASFI LM.
SO WHEN WE FI LE THE PAPERS, THERE WON' T BE ANY DI FFERENCE
BETWEEN THE CLASSES, AND THAT I THI NK WE PUT FORWARD I N THE
UPDATE YOU REQUESTED.
THE COURT: SO LET ME HEAR FROMMR. VAN NEST. WHAT' S
YOUR POSI TI ON ON WHETHER MR. HARI HARAN CAN CONTI NUE TO SERVE AS
A CLASS REP?
MR. VAN NEST: I THI NK YOUR HONOR I S RI GHT. HE
DOESN' T REALLY HAVE A ROLE AT THI S POI NT.
I T' S NOTABLE THAT REALLY NONE OF THE CLASS REPS ARE FROM
J OB TI TLES THAT MAKE UP THE VAST MAJ ORI TY OF J OB TI TLES THAT
ARE NOWBEI NG PROPOSED.
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THESE 2400 J OB TI TLES, TWO- THI RDS OF THE CLASS WORK AT
I NTEL. OF THOSE, ROUGHLY HALF WORK I N SEMI CONDUCTOR
MANUFACTURI NG, WHI CH I S UNI QUE TO THEM.
THERE ARE J OB TI TLES ALL OVER THE LOT THAT HAVE NOTHI NG TO
DO WI TH THE J OB TI TLES OF THE CLASS REPS, WHO ARE ESSENTI ALLY,
MOST OF THEM, SOFTWARE ENGI NEERS. SO THEY DON' T REALLY HAVE
TYPI CAL REPRESENTATI VES TO BEGI N WI TH.
HE' S I N A UNI QUE SI TUATI ON SI NCE HE DOESN' T WORK FOR
ANYBODY THAT' S GOI NG TO BE I N THE CASE.
AND, OF COURSE, LUCASFI LMAND PI XAR ARE KI ND OF I N A
SEPARATE I NDUSTRY, TOO. THEY' RE I N THI S NORTHERN CALI FORNI A
FI LMI NDUSTRY, WHI CH NOBODY ELSE PARTI CI PATES I N, SO THEY ARE
UNI QUE.
HE I S UNI QUE. THEY' RE NO LONGER I N THE CASE. THEY HAVE
FOUR OTHER CLASS REPS.
FRANKLY, I DON' T THI NK ANY OF THEMARE PARTI CULARLY TYPI CAL
OF SOMETHI NG WHERE YOU' RE TRYI NG TO CERTI FY 2400 J OB TI TLES,
BUT CERTAI NLY HE' S PROBABLY AT THE BOTTOMOF THE LI ST AND
THERE' S NO LONGER ANY REASON FOR HI MTO SERVE.
THE COURT: DI D ANY OF THE NAMED PLAI NTI FFS WORK FOR
APPLE OR GOOGLE?
MR. GLACKI N: I BELI EVE THE ANSWER I S NO, YOUR HONOR.
THE COURT: OKAY.
MR. GLACKI N: I F I - - SORRY.
THE COURT: SO WHAT' S THE THEORY OF, OF THE NAMED
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PLAI NTI FFS REPRESENTI NG EMPLOYEES AT THOSE TWO COMPANI ES?
MR. GLACKI N: WELL, THERE' S NO - - I MEAN, SAYI NG THAT
I T WAS NECESSARY TO HAVE AN EMPLOYEE FROMEACH COMPANY I N
THE - - AS A CLASS REPRESENTATI VE WOULD BE AKI N TO SAYI NG THAT
YOU COULD NOT CERTI FY A CLASS I N A PRI CE FI XI NG CONSPI RACY CASE
UNLESS YOU HAD SOMEBODY WHO HAD BOUGHT FROMEVERY DEFENDANT.
AND I F YOU TOOK MR. VAN NEST' S ARGUMENT AND TRANSLATED I T
I NTO THAT CONTEXT, WI TH WHI CH WE' RE ALL VERY FAMI LI AR, THE
ARGUMENT WOULD BE THAT I F YOU BOUGHT FROMA SETTLED DEFENDANT,
YOU ARE NO LONGER AN APPROPRI ATE CLASS REPRESENTATI VE I N A
GARDEN VARI ETY PRI CE FI XI NG CONSPI RACY CASE.
AND I CAN TELL YOU THAT HAVI NG - - I MEAN, I ' MNOT - - I ' LL
SI MPLY SAY I AMNOT AWARE OF THAT EVER HAPPENI NG. I ' MNOT
AWARE OF ANYONE EVER MAKI NG THAT CONTENTI ON. I ' MNOT AWARE OF
ANY COURT EVER COMI NG TO THAT CONCLUSI ON.
BECAUSE EVEN I F YOU - - I MEAN, WE HAD THI S COME UP SI MPLY
12 MONTHS AGO. I MEAN, THERE WERE - - WHEN WE TRI ED THE LCDS
CASE, WE HAD A NUMBER OF CLASS REPRESENTATI VES. THE TRI AL WAS
AGAI NST TOSHI BA. EVERY OTHER DEFENDANT SETTLED. BUT THE VAST
MAJ ORI TY OF OUR CLASS REPRESENTATI VES DI D NOT BUY FROMTOSHI BA
BECAUSE TOSHI BA WAS A VERY SMALL MANUFACTURER I N THAT MARKET.
SO I T' S TOTALLY NORMAL TO HAVE - - TO NOT HAVE COMPLETE
COVERAGE OF EVERY MEMBER OF THE CONSPI RACY I N TERMS OF
TRANSACTI ONS, AND I T' S TOTALLY NORMAL FOR THOSE WHO BOUGHT FROM
SETTLED DEFENDANTS TO STAY I N THE CASE BECAUSE MR. HARI HARAN,
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HE' S STI LL J UST I N THE SAME POSI TI ON AS EVERY OTHER CLASS
MEMBER. HE STI LL HAS A CLAI MAGAI NST THE OTHER FOUR MEMBERS
WHO HAVE NOT SETTLED.
MR. VAN NEST: YOUR HONOR, THERE' S REALLY A MORE
FUNDAMENTAL PROBLEMTHAN THI S, AND THAT I S THERE I S NO CASE
THAT HAS CERTI FI ED A CLASS THI S BROAD AND THI S DI VERSE I N A
WAGE SUPPRESSI ON CONTEXT.
WE HAVE, AMONG THE EVI DENCE HERE - - AND I HAVE AN APPENDI X
I CAN HAND UP - - 2400 J OB TI TLES, 60, 000 EMPLOYEES. THEY COVER
A WI DE RANGE OF AREAS. MORE THAN HALF OF THEMWORK OUTSI DE OF
SI LI CON VALLEY. I T I S AN ENORMOUS CLASS AND ENORMOUSLY
DI SPARATE.
I F YOU LOOK AT THE J OB TI TLES THAT THEY ARE CLAI MI NG ARE
LI NKED TOGETHER, I T' S EVERYTHI NG FROMA MASK DESI GNER TO A
SEMI CONDUCTOR MANUFACTURER TO AN ARTI ST TO A SOFTWARE ENGI NEER
TO A CHEMI CAL ENGI NEER. I T' S ENORMOUS AND NONE OF THESE
PEOPLE - -
THE COURT: I ' MSORRY TO I NTERRUPT YOU.
MR. VAN NEST: YEAH.
THE COURT: BUT THE COMPANI ES THEMSELVES I DENTI FI ED
WHO THEY BELI EVE THEI R PEERS WERE FOR TALENT AND THEY DI D
BASI CALLY I DENTI FY EACH OTHER AS PEERS. I MEAN, I HAVE
SPECI FI C EXHI BI T NUMBERS I F YOU WANT TO GO THERE.
BUT THEY DI D DO SOME ANALYSI S OF WHO WOULD BE COMPETI NG FOR
THE SAME TALENT AND THEY WOULD SAY THE OTHER COMPANI ES.
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SO I HEAR WHAT YOU' RE SAYI NG, YOU KNOW, THE WAFER MASK
DESI GNER I S DI FFERENT THAN, YOU KNOW, SOMEONE DESI GNI NG APPS
SOMEWHERE ELSE.
BUT EFFECTI VELY - -
MR. VAN NEST: NOT J UST THAT, YOUR HONOR, BUT I
THI NK, AS YOU NOTED LAST TI ME AND I N YOUR ORDER, OBVI OUSLY SOME
CATEGORI ES OF EMPLOYEES WERE MORE I MPORTANT THAN OTHERS, OR
MORE - - PEOPLE WERE MORE CONCERNED ABOUT SOME CATEGORI ES THAN
OTHERS, OBVI OUSLY.
AND HERE WHERE ONE OF THE COMPANI ES WI TH TWO- THI RDS OF THE
CLASS I S PRI MARI LY ENGAGED I N AN AREA THAT NO OTHER DEFENDANT
I S ENGAGED I N - - YOU KNOW, I NTEL HAS - - THERE' S ONLY A CLAI MOF
ONE BI LATERAL AGREEMENT BETWEEN I NTEL AND GOOGLE, NOT A LOT OF
AUDI TORS.
AND EVEN THERE, THERE ARE SO MANY - - THI S I S WHAT YOU SAI D
LAST TI ME. ONE OF YOUR TWO BI G CONCERNS WAS, I S THE CLASS SO
BI G AND SO LARGE AND SO DI VERSE THAT THERE ARE PEOPLE I N I T
THAT WEREN' T I MPACTED AND THAT SUFFERED NO I NJ URY?
AND OBVI OUSLY WHERE YOU HAVE MORE THAN HALF OF THE FOLKS
OUTSI DE OF SI LI CON VALLEY, SUBJ ECT TO DI FFERENT PAY STRUCTURE
ALTOGETHER, AND WHERE TWO- THI RDS OF THEMWORK FOR A COMPANY
THAT DOES SOMETHI NG UNI QUE, WE' VE GOT AN ENORMOUS PROBLEM.
NO OTHER CASE, NOT WEI SBERG, NOT REED, NOT FLEI SHMAN, NO
OTHER CASE HAS CERTI FI ED A CLASS ANYWHERE NEAR THI S SI ZE I N A
WAGE SUPPRESSI ON CASE BECAUSE THEY' RE LOOKI NG AT, HEY, WHAT,
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WHAT POSI TI ONS ARE COMPARABLE? HOWMUCH HOMOGENEI TY I S THERE?
HOWARE THEY GOI NG TO BE ABLE TO SHOWI MPACT ACROSS THE WHOLE
GROUP?
I T MAKES NO LOGI CAL SENSE THAT THE ABSENCE OF A CALL TO AN
ENGI NEER I N SI LI CON VALLEY WOULD AFFECT A MASK DESI GNER I N
MASSACHUSETTS OR ARI ZONA OR NEWMEXI CO, AND THAT' S WHAT
THEY' RE - - THEY' RE HERE CLAI MI NG THAT THESE 2400 J OB TI TLES ARE
ALL SOMEHOWLI NKED TOGETHER. THERE' S 800 OF THEMALONE AT
I NTEL, ALMOST 400 OF THEMAT GOOGLE, 350 OF THEMAT APPLE, AND
THEY' RE SAYI NG THI S I S ALL LI NKED TOGETHER.
I N THE OTHER CASES WHERE THI S HAS COME UP, THE CLAI MHAS
BEEN THAT ONE - -
THE COURT: BUT THERE I S - -
MR. VAN NEST: - - J OB TI TLE - -
THE COURT: - - EVI DENCE FOR EACH OF THE DEFENDANTS
THAT THEY HAD THESE J OB FAMI LI ES, THAT THEY HAD THESE PAY
RANGES THAT ARE SI MI LAR TO CRI MI NAL SENTENCI NG, YOU HAD THE
LOW, THE MEDI UM, AND THE HI GH.
( LAUGHTER. )
THE COURT: AND THAT I N SOME I NSTANCES, I F YOU WANTED
TO GO OUTSI DE THAT RANGE, YOU HAD TO GET AN EXTRA LEVEL OF
APPROVAL; THAT THEY WERE ALWAYS AWARE, WHEN THEY WERE BRI NGI NG
A LATERAL PERSON I N, WHERE EVERYONE ELSE STOOD SO THERE
WOULDN' T BE AN I SSUE OF DI SPARI TY.
SO I - - LET ME ASK YOU A QUESTI ON. AT THE LAST HEARI NG THE
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DEFENDANTS' COUNSEL SAI D THAT - - I ' LL J UST QUOTE I T - - "AND I
ADMI T AT THE START, WE ARE NOT SAYI NG THAT NOBODY WAS
I MPACTED. "
SO LET ME ASK - - I J UST WANT TO FOLLOW- UP. HOWMANY WERE
I MPACTED? WHO WAS I MPACTED?
MR. VAN NEST: WELL, I DON' T THI NK THERE' S ANY WAY - -
THE COURT: UM- HUM.
MR. VAN NEST: - - TO KNOWTHAT.
BUT WHAT WE DO KNOW- -
THE COURT: WELL, HOWCAN YOU SAY THAT NO ONE WAS
I MPACTED?
MR. VAN NEST: I ' MNOT SAYI NG THAT NO ONE WAS
I MPACTED.
THE COURT: OKAY.
MR. VAN NEST: BUT FOR THE PURPOSE OF - - WHAT WE
UNDERSTOOD TO BE YOUR HONOR' S CONCERN WAS, CAN THE PLAI NTI FF
SHOW, I N ORDER TO ESTABLI SH CLASS- WI DE I NJ URY - -
THE COURT: LET ME ASK YOU A QUESTI ON. I BELI EVE
THAT WAS MR. MI TTELSTAEDT AT THE TI ME. WHEN HE SAYS, "WE' RE
NOT SAYI NG THAT NOBODY WAS I MPACTED, " WHAT DI D THAT MEAN?
MR. VAN NEST: I THI NK WHAT HE MEANT WAS FOR THE
PURPOSES OF CLASS CERT, WE' RE NOT TAKI NG THE POSI TI ON THAT THEY
CAN' T SHOWANY I MPACT.
THE I SSUE I S, CAN THEY SHOWI MPACT TO ALL OR NEARLY ALL OF
THE MEMBERS OF THE CLASS?
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I THI NK THAT' S ALL MR. MI TTELSTAEDT MEANT, AND THAT' S ALL I
MEAN, TOO. WE' RE NOT GOI NG TO DEBATE TODAY, I DON' T THI NK I T' S
PROPER, HOWMANY. I ' MNOT SURE THEY' RE GOI NG TO PROVE MUCH OF
ANYTHI NG.
THE COURT: WELL, HOWMUCH I S REQUI RED? I N ORDER TO
CERTI FY CLASS, THEY DON' T HAVE TO SHOWTHAT 60, 000 WAS ENOUGH.
40 I S USUALLY ENOUGH. SOMETI MES 20 MI GHT BE ENOUGH. WHAT' S
THE NUMBER THAT THEY' RE - - SEPARATE FROMWHETHER THEY' VE SHOWN
I MPACT OR NOT, WHAT I S THE MI NI MUMLEVEL OF SHOWI NG I N TERMS OF
PEOPLE THAT THEY NEED TO MAKE I N ORDER TO GET CERTI FI ED?
MR. VAN NEST: THEY NEED TO SHOWTHAT NEARLY ALL - -
I F THEY WANT TO PROCEED AS A CLASS - -
THE COURT: OKAY.
MR. VAN NEST: - - THEY NEED TO SHOW- - AND YOU
RECOGNI ZED THI S AT PAGE 46 OF YOUR ORDER LAST TI ME - - THEY NEED
TO SHOWTHAT THE WAGE STRUCTURES WERE SO, SO RI GI D THAT THEY
WOULD HAVE AFFECTED ALL OR NEARLY ALL MEMBERS OF THE CLASS.
THAT' S EXACTLY WHAT YOU SAI D AND THAT' S EXACTLY RI GHT.
THESE CASES ALL SAY, I F WE' RE GOI NG TO PROCEED AS A CLASS,
YOU' VE GOT TO SHOWTHAT CLASS- WI DE I MPACT, AND CLASS- WI DE MEANS
ALL OR NEARLY ALL. NOT EVERYBODY. NOT 60, 000, CERTAI NLY.
BUT I T' S - - I T' S GOT TO BE A SI TUATI ON WHERE THEY PROVE, I N
ONE TRI AL, THAT VI RTUALLY ALL MEMBERS OF THE CLASS WERE
I MPACTED.
AND THEN YOU GO ON, I F THEY PREVAI L, TO TRY TO ESTABLI SH
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DAMAGES.
SO WHAT WE' VE DONE HERE I S THEY' VE COME I N, AND YOU PUT
THEMTO I T LAST TI ME, YOU SAI D, "CAN YOU SHOWME THAT THE
STRUCTURES FOR WAGES AT THE COMPANI ES WERE SO RI GI D THAT AN
I MPACT ON SOME PEOPLE WOULD HAVE PROPAGATED TO ALL OR NEARLY
ALL?"
AND THEY ABSOLUTELY HAVE FAI LED TO DO THAT. DR. LEAMER
SAYS HE CAN' T REACH THAT CONCLUSI ON. HE FLAT OUT ADMI TTED I N
DEPOSI TI ON - - AND I HAVE THE CI TATI ON, YOUR HONOR - - THAT "I
CAN' T TELL YOU THAT ADOBE' S STRUCTURE WAS SO RI GI D THAT I MPACT
TO SOME WOULD, WOULD FLOWDOWN TO I MPACT TO OTHERS. " AND HE
SAYS, "I DON' T BELI EVE THAT I T WOULD. "
NOW, YOU HAVE, FROMDR. MURPHY, YOUR HONOR, THE - -
THE COURT: LET ME ASK YOU A QUESTI ON. LET' S SAY
THI S PROCEEDS ALONG I NDI VI DUAL CLAI MS. HOWI S THAT GOI NG TO
WORK?
MR. VAN NEST: I WOULD CALL THAT A MASS ACTI ON.
THE COURT: A CLASS - -
MR. VAN NEST: NO, I WOULDN' T. ACTUALLY, I THI NK
THAT I S AN EASI ER, MORE EFFI CI ENT WAY TO HANDLE THI S. WE WI LL
CALL THAT A MASS ACTI ON, NOT A CLASS ACTI ON.
I F THERE ARE PEOPLE, AND CERTAI NLY THE CLASS REPS WOULD BE
AMONG THEM, WHO BELI EVE THEY WERE I NJ URED, THEY WOULD COME I N,
THEY WOULD PRESENT THEI R COMPLAI NT, MAYBE WE' D HAVE 200 OF
THEM, MAYBE WE' D HAVE 300 OF THEM, BUT WHAT WE WOULD DO I S WE
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WOULD NEGOTI ATE A REPRESENTATI VE FEWOF THOSE TO TRY THE FI RST
COUPLE OF CASES, OR THE FI RST CASE, AND SEE WHERE WE COME OUT
AND TRY TO BENCHMARK WHETHER THEY CAN ESTABLI SH LI ABI LI TY I N
THE FI RST PLACE, AND I F THEY CAN, WHAT ARE THE RANGES OF
DAMAGES.
NOW, REMEMBER, WE' RE TALKI NG - -
THE COURT: SO YOU' RE GOI NG TO HAVE BELLWETHER TRI ALS
WHI CH ARE THEN GOI NG TO EXTRAPOLATE THE CLASS AND SETTLE ON A
CLASS SI ZE. THAT' S WHAT' S GOI NG TO HAPPEN?
MR. VAN NEST: HAPPENS ALL THE TI ME.
AND I N THI S CASE, I ' D SAY, YOUR HONOR, I T' S ABSOLUTELY
APPROPRI ATE.
WHY? BECAUSE WHAT THEY' RE ALLEGI NG I S A BUNCH OF BI LATERAL
AGREEMENTS. THEY CAN TALK ABOUT OVERARCHI NG CONSPI RACY, BUT
THERE' S ONLY EVI DENCE SO FAR OF THESE BI LATERAL AGREEMENTS
BETWEEN COMPANI ES.
THE COURT: SO YOU' RE SAYI NG 200 BELLWETHER TRI ALS
AND FROMTHERE WE' LL EXTRAPOLATE TO 60, 000?
MR. VAN NEST: NO, NO, NO. I ' MSAYI NG I F WE HAD 200
PEOPLE MAKI NG CLAI MS - - I DON' T KNOWHOWMANY PEOPLE ACTUALLY
FEEL THEY HAVE A CLAI M. I ' MSAYI NG I F WE HAVE 200 OR 300
PLAI NTI FFS, WE WOULD CONDUCT A FEW, ONE, TWO, OR THREE
BELLWETHER TRI ALS, NOT A LOT, AND THAT HAPPENS ALL THE TI ME.
AND HERE I T' S APPROPRI ATE, YOUR HONOR, BECAUSE THEY FAI LED
TO SHOW, AFTER YOU GAVE THEMA CLEAR ROADMAP, THAT THE SALARY
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STRUCTURES ARE SO RI GI D - -
THE COURT: SO LET ME ASK YOU, AFTER THE THREE
BELLWETHER TRI ALS, THEN WHAT' S GOI NG TO HAPPEN? YOU' RE GOI NG
TO ASSUME, OKAY, THI S 1, 000, 2, 000 GROUP OF CLASS MEMBERS HAVE
CLAI MS THAT ARE SOMEWHAT SI MI LAR TO BELLWETHER TRI AL NUMBER TWO
AND SO, THEREFORE, THEI R DAMAGES SHOULD ROUGHLY APPROXI MATE - -
THE COURT: - - WHATEVER THE FI NDI NG WAS I N BELLWETHER
TRI AL NUMBER TWO?
MR. VAN NEST: THAT' S WHAT TYPI CALLY TAKES PLACE.
THAT' S WHAT' S TAKI NG PLACE I N A LOT OF THESE MASS TORT CASES
THAT ARE BEI NG HANDLED AROUND THE COUNTRY.
AFTER A COUPLE OF TRI ALS, SMART TRI AL LAWYERS,
SOPHI STI CATED COUNSEL FI GURE OUT WHAT' S HAPPENI NG. YOU PRI CE
THE CASES AND YOU GO.
TO ME, GI VEN THE EVI DENCE YOU HAVE, THEY ARE SWI NGI NG FOR
THE FENCES WI TH THI S CLASS THEY WANT, AND THEY HAVEN' T SHOWN
THE BASI C PREDI CATE.
THEY NOWADMI T THAT THE SALARY STRUCTURES ARE NOT SO RI GI D
THAT I MPACT ON SOME WOULD HAVE I MPACTED ALL.
THE COURT: ACTUALLY, I DI SAGREE WI TH YOU. I THI NK
ON THE I NTERNAL EQUI TY AND ON THE RI GI D WAGE STRUCTURE, I T' S
MUCH STRONGER NOWTHAN I T WAS LAST TI ME AROUND.
MR. VAN NEST: WELL, I F I COULD HAND UP WHAT I THI NK
ARE THE KEY PI ECES OF EVI DENCE, YOUR HONOR, AND ASK THE COURT
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TO TAKE A LOOK AT J UST THE VERY FI RST TAB ( HANDI NG) - - I HAVE
ONE FOR THE COURT AND ONE FOR THE CLERK.
MR. GLACKI N: I HAVE ONE.
MR. VAN NEST: THE QUESTI ON YOU ASKED LAST TI ME, YOUR
HONOR, WAS CAN YOU SHOW, WI TH CLASS- WI DE EVI DENCE, THAT
I MPACT - - THAT THE STRUCTURE I S SO RI GI D THAT I MPACT TO ONE
WOULD AFFECT ALL?
TAB 1 I S FROMDR. LEAMER' S MOST RECENT DEPOSI TI ON.
THE COURT: RI GHT. AND WE' RE GOI NG TO GET I NTO THI S.
LET ME ASK MY QUESTI ONS I F YOU DON' T MI ND.
MR. VAN NEST: SURE.
THE COURT: OKAY?
MR. VAN NEST: OF COURSE.
THE COURT: ALL RI GHT. LET ME GO TO THE PLAI NTI FFS.
WHAT EXACTLY I S YOUR THEORY OF I MPACT? HOWARE YOU
EXPLAI NI NG HOW, I F A COLD CALL WAS MADE, HOWTHE I NCREASE I N
SALARY WOULD AFFECT MORE PEOPLE THAN J UST THE RECI PI ENT OF THE
CALL?
MR. GLACKI N: SO I THI NK THAT WE WOULD SAY THAT THERE
ARE A NUMBER OF WAYS I N WHI CH THI S WOULD HAVE OCCURRED.
AND OF COURSE WE' LL NEVER KNOWEXACTLY WHAT WOULD HAVE
HAPPENED BECAUSE OF THE AGREEMENTS.
BUT THE - - OUR THEORY OF I MPACT I S THAT I T' S NOT J UST ONE
COLD CALL THAT WOULD HAVE MOVED THE DEFENDANTS' ENTI RE
COMPENSATI ON STRUCTURE. WE' VE NEVER ADVOCATED THAT. I AGREE
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THAT' S CRAZY TO SAY THAT ONE SI NGLE COLD CALL I S GOI NG TO MOVE
THE COMPENSATI ON STRUCTURE FOR THOUSANDS OF EMPLOYEES.
I NSTEAD, I F YOU LOOK AT MR. CAMPBELL' S TESTI MONY, THE CEO
OF I NTUI T WHO ALSO I S A FI GURE AT GOOGLE AND APPLE, HE EXPLAI NS
THAT WHAT HE WAS CONCERNED ABOUT AND THE REASON HE WANTED I N ON
THI S WAS I T WAS THE WAVES OF COLD CALLS. I T WAS SOMEBODY AT
GOOGLE PI CKI NG UP THE PHONE AND STARTI NG AT THE LETTER A ON,
YOU KNOW, THE LI ST OF ENGI NEERS AT I NTUI T AND CALLI NG AND J UST
DI ALI NG DOWN THE PHONE TREE AND CALLI NG EVERY SI NGLE ONE OF
THEM.
AND I T WAS THE DI SRUPTI ON THAT WAS CAUSED BY THAT WAVE OF
CALLS, OR THOSE WAVES OF CALLS, THAT THE DEFENDANTS WERE TRYI NG
TO HEAD OFF THROUGH THESE ANTI - SOLI CI TATI ON AGREEMENTS.
NOW, HAD THOSE - - HAD THE AGREEMENTS NOT BEEN I N PLACE, WE
THI NK THAT THE WORLD WOULD HAVE BEEN DI FFERENT I N A NUMBER OF
DI FFERENT WAYS.
WE THI NK THAT WHEN THE WAVES OF COLD CALLS HAPPENED, THAT
THAT WOULD HAVE PUT UPWARD PRESSURE ON THE ENTI RE SALARY
STRUCTURE BECAUSE MANAGERS WOULD LET THE - - YOU KNOW, THE LOWER
LEVEL MANAGERS WOULD LET THE HI GHER LEVEL MANAGERS KNOWTHAT
THE COMPANY' S EMPLOYEES WERE VULNERABLE, AND THAT WOULD HAVE
LED TO ADJ USTMENTS AT THE TOP OF THE SALARY STRUCTURE TO
I MPROVE THE SALARI ES, OR THE COMPENSATI ON OF ALL EMPLOYEES.
BUT THE CEOS THEMSELVES, I MEAN, WHO ENTERED I NTO THESE
AGREEMENTS I N THE FI RST PLACE WOULD HAVE BEEN AWARE, WOULD HAVE
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KNOWN THAT THEY FACED I NCREASED COMPETI TI ON FROMOTHER, FROM
THEI R OTHER PEER COMPANI ES I N SI LI CON VALLEY AND WOULD HAVE - -
AND ELSEWHERE I N NORTHERN CALI FORNI A - - AND WOULD HAVE ACTED
PREEMPTI VELY. THEY AND THEI R MANAGERS WOULD HAVE ACTED
PREEMPTI VELY. THEY WOULD HAVE RESPONDED TO THE THREAT OF
COMPETI TI ON AS WELL BY I MPROVI NG THE SALARI ES OF THEI R
EMPLOYEES, OR THE COMPENSATI ON OF THEI R EMPLOYEES.
SO I THI NK THAT, YOU KNOW, THE I NCREASE - - I F YOU LOOK AT
THE - - I F YOU LOOK AT THE COMPANI ES THEMSELVES - - THE REASON
I ' MBEI NG A LI TTLE GENERAL I S BECAUSE EACH OF THEMMANAGED
THEI R COMPENSATI ON I N SLI GHTLY DI FFERENT WAYS. I MEAN, THEY
DI DN' T - - THEY ALL USED THEI R OWN PROPRI ETARY, YOU KNOW,
PAYMENT TOOL, WHI CH I S - - OR WHATEVER SORT OF COMPUTER PROGRAM
THEI R MANAGERS WERE SUPPOSED TO LOG I NTO.
THE COURT: I GUESS I DON' T UNDERSTAND HOWTHI S
UPWARD PRESSURE ON THE ENTI RE SALARY STRUCTURE, HOWWAS THAT
SUPPOSED TO HAPPEN?
MR. GLACKI N: WELL, YOU - - THE EMPLOYEES - - YOU MEAN
FROMTHE I NCOMI NG COLD CALLS?
THE COURT: YEAH.
MR. GLACKI N: SO THE - -
THE COURT: WHAT' S THE CHAI N OF EVENTS THAT CAUSES
THAT TO HAPPEN?
MR. GLACKI N: YEAH.
THE COURT: BECAUSE I DON' T SEE I T.
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MR. GLACKI N: SO THE CHAI N OF EVENTS I S THAT SOMEBODY
AT - - YOU KNOW, ONE OF THE 800 RECRUI TERS AT GOOGLE, FOR
EXAMPLE, PI CKS UP THE PHONE, OR MAYBE SEVERAL OF THEMPI CK UP
THEI R PHONES AND THEY NEED TO HI RE A SOFTWARE ENGI NEER, AND SO
THEY GET, YOU KNOW, WHATEVER PHONE LI ST THEY HAVE FOR I NTUI T
AND THEY START AT LETTER A AND THEY GO DOWN TO LETTER Z AND
THEY CALL ALL THOSE PEOPLE, AND MAYBE THEY GET SOME LEADS, OR
MAYBE THEY DON' T.
BUT EI THER WAY, RI GHT THERE, THE PEOPLE WHO RECEI VED THOSE
CALLS HAVE GAI NED SOME I NFORMATI ON ABOUT HOWTHEY ARE PERHAPS
MORE VALUABLE THAN WHAT THEY' RE BEI NG PAI D AT I NTUI T.
I F THE - - I F I T GOES TO ANOTHER LEVEL WHERE THEY RECEI VE
J OB I NTERVI EWS OR OFFERS OR I F THEY GET A NEWJ OB AND LEAVE,
THERE' S AN ADDI TI ONAL AND GREATER LEVEL OF DI SRUPTI ON THAT
HAPPENS TO I NTUI T.
THE COURT: WELL, I GUESS I - - I GUESS I DON' T SEE
HOWTHAT' S HAPPENI NG. I SEE WHAT YOU' RE SAYI NG ABOUT THE
RECI PI ENT OF THE CALL NOWHAVI NG A BETTER SENSE OF HOWMUCH HE
OR SHE I S WORTH, BUT I GUESS I ' MNOT SEEI NG THE RELATI ONSHI P
BETWEEN THAT ONE PERSON' S BETTER REALI ZATI ON OF THEI R MARKET
VALUE AND HOWTHAT TRANSLATES TO THE ENTI RE SALARY STRUCTURE.
MR. GLACKI N: WELL, THE POI NT - - SO LET' S ASSUME THAT
SOMEBODY AT GOOGLE HAS PI CKED UP THE PHONE AND CALLED 100
SOFTWARE ENGI NEERS AT I NTUI T, SO ALL OF A SUDDEN YOU' VE GOT 100
SOFTWARE ENGI NEERS WHO HAVE GAI NED SOME I NFORMATI ON, AND THEN
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YOU MAYBE ULTI MATELY GET A SMALLER NUMBER WHO HAVE RECEI VED J OB
OFFERS OR HAVE BEEN I NVI TED I N FOR I NTERVI EWS WHO ARE GOI NG TO
GET MORE I NFORMATI ON ABOUT THEI R WORTH.
THOSE SOFTWARE ENGI NEERS - - NOW, ONCE THEY LEARN THAT
THEY' RE MORE VALUABLE, THEY' RE NOT J UST GOI NG TO SI T THERE AND
SAY, "OKAY, I UNDERSTAND THAT THE GOOGLE PEOPLE WOULD REALLY
LOVE TO HI RE ME, BUT I ' MSO HAPPY AT I NTUI T, I DON' T CARE WHAT
I NTUI T PAYS ME. "
I MEAN, THEY' RE GOI NG TO AGGREGATE. THEY' RE GOI NG TO TALK
TO THEI R MANAGER. THEY' RE GOI NG TO MAKE I T KNOWN THAT THEY
WANT MORE MONEY OR THAT THEY FEEL THEY ARE AT RI SK OF BEI NG
HI RED AWAY AND THAT' S GOI NG TO PUT PRESSURE ON THE COMPANY.
AND THE DOCUMENTS SHOWTHAT THE COMPANI ES ARE AWARE OF THI S
THREAT AND THEY TAKE I T I NTO CONSI DERATI ON. YOU KNOW, ONE
DOCUMENT I WOULD POI NT TO I S - - I T WAS EXHI BI T 17, I BELI EVE,
TO MR. HARVEY' S ORI GI NAL DECLARATI ON FROM2012, WHI CH I S THI S
DONNA MORRI S E- MAI L WHI CH I S ADOBE_008692 AND I N WHI CH
MS. MORRI S I S DESCRI BI NG THI S EXACT PROCESS.
SHE SAYS, "SALARI ES ARE GETTI NG OUT OF WHACK, OUR
EMPLOYEES' SALARI ES ARE MOVI NG APART, THERE' S NOT ENOUGH
COMPRESSI ON, WE NEED TO DO AN OUT OF CYCLE ADJ USTMENT TO DEAL
WI TH THE COMPETI TI ON THAT WE' RE GETTI NG FOR OUR COMPANI ES, "
EXCUSE ME, "FOR OUR EMPLOYEES. "
THE COURT: UM- HUM.
MR. GLACKI N: AND I T' S THAT KI ND - - AND THI S WAS I N
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FEBRUARY OF 2005, MERE MONTHS BEFORE ADOBE ENTERED I NTO I TS
COMPANY- WI DE AGREEMENT WI TH MR. J OBS.
AND SO THI S I S EXACTLY THE KI ND OF THI NG THAT WE SAY WOULD
HAVE HAPPENED A LOT MORE OFTEN HAD THESE DEFENDANTS NOT ENTERED
I NTO THESE AGREEMENTS.
THE COURT: WELL, I GUESS I ' MSTI LL CONFUSED AS TO
I F - - LET' S SAY THE GOOGLE PERSON I S CALLI NG A THROUGH Z AT
I NTUI T WI THI N A SPECI FI C J OB FAMI LY. I CAN SEE WHY, WI THI N
THAT J OB FAMI LY, SALARI ES MI GHT GO UP AT I NTUI T.
BUT WHAT I DON' T SEE I S WHY OTHER J OB FAMI LI ES AT I NTUI T
WOULD BE AFFECTED BY THE I NCREASE.
MR. GLACKI N: OH, OKAY. I UNDERSTAND.
THE COURT: YEAH. I F THESE ARE THE DI FFERENT SI LOS,
HOWI S THAT COMPENSATI ON I NFORMATI ON SUPPOSED TO BE TRANSLATED
ACROSS THE DI FFERENT FAMI LI ES?
MR. GLACKI N: RI GHT.
THE COURT: OR - -
MR. GLACKI N: THI S I S - - I THI NK WHEN YOU GET TO THE
LEVEL OF J OB FAMI LI ES AND J OB TI TLES, THI S I S WHERE I NTERNAL
EQUI TY AND THE WAY THAT THESE COMPANI ES STRUCTURE THEI R
COMPENSATI ON SYSTEMS STARTS TO PLAY THE BI G ROLE, BECAUSE THE
EVI DENCE SHOWS THAT THESE - - AND THI S I S SUMMARI ZED I N OUR, AT
LENGTH I N THE BRI EFS AND I N DR. HALLOCK' S REPORT, THAT THESE
COMPANI ES CARE ABOUT MAI NTAI NI NG RELATI VE POSI TI ONI NG BETWEEN
THEI R J OB TI TLES AND THEI R J OB FAMI LI ES.
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I MEAN, I T J UST MAKES SENSE, RI GHT, THAT YOU WOULD CARE
ABOUT HOWSOFTWARE ENGI NEER 1 I S PAI D RELATI VE TO SOFTWARE
ENGI NEER 6, OR HOWA PARTI CULAR FAMI LY OF ENGI NEERS I S PAI D
RELATI VE TO ANOTHER FAMI LY OF ENGI NEERS.
I T' S NOT, I DON' T THI NK, PARTI CULARLY CONTROVERSI AL AT THI S
POI NT ACTUALLY.
THE COURT: BUT TELL ME ABOUT THE RADFORD DATA.
WHI CH COMPANI ES ARE I NCLUDED I N THAT DATA?
MR. GLACKI N: I T' S - - MY UNDERSTANDI NG I S THAT I T I S
A LARGE - - I MEAN, I T' S A LARGE GROUP OF COMPANI ES. I T' S MORE
THAN J UST THESE FI RMS, THAT' S FOR SURE.
AND I THI NK THAT YOU CAN BE - - I F YOU' RE A SUBSCRI BER TO
THE RADFORD DATA AS A COMPANY, I THI NK YOU CAN BE SELECTI VE
ABOUT THE KI NDS OF COMPANI ES THAT YOU WANT DATA FOR, AGGREGATE
DATA FOR.
THE COURT: ARE THE DEFENDANTS THAT ARE I N THI S CASE
I NCLUDED I N THE RADFORD DATA?
MR. GLACKI N: I BELI EVE SO.
THE COURT: HOW- - AND HOWI S THAT DATA ORGANI ZED? I
KNOW- - I SAWSOMEWHERE THAT I T' S J OB TI TLE AND CATEGORY.
MR. GLACKI N: RI GHT. I - - MY UNDERSTANDI NG I S THAT
THERE ARE - - YOU KNOW, THERE ARE CERTAI N BENCHMARK J OB TI TLES
THAT ARE - - WHERE MARKET AVERAGES ARE REPORTED BY RADFORD FOR
A - -
THE COURT: AND WHAT ARE THOSE?
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MR. GLACKI N: WHAT ARE THE SPECI FI C BENCHMARK J OB
TI TLES?
THE COURT: DO THEY I NCLUDE ANY THAT WOULD BE I N YOUR
ALLEGED TECHNI CAL EMPLOYEE CLASS?
MR. GLACKI N: YES, THEY DO.
THE COURT: WHAT - -
MR. GLACKI N: I HAVE TO CONFESS TO YOU, I DON' T KNOW
THEMOFF THE TOP OF MY HEAD.
THE COURT: OKAY. BUT YOU THI NK THAT THEY WOULD
I NCLUDE J OB TI TLES THAT ARE I N - -
MR. GLACKI N: YES.
THE COURT: - - THE TECHNI CAL CLASS?
MR. GLACKI N: CERTAI NLY.
THE COURT: AND WHAT DO YOU MEAN BY "BENCHMARK"? WHY
DON' T YOU EXPLAI N THAT?
MR. GLACKI N: SURE. SO, I MEAN, THE WAY THAT
COMPANI ES, I N GENERAL, USE THE RADFORD DATA I S THAT THE RADFORD
DATA SAYS - - THE DATA THAT THEY GET FROMRADFORD TELLS THEM
THAT A PARTI CULAR KI ND OF EMPLOYEE I N THE MARKET I S BEI NG PAI D
ON AVERAGE A PARTI CULAR WAGE, OR A PARTI CULAR RANGE OF WAGES,
AND THE COMPANY DECI DES THEN, WHERE DO WE WANT TO BE RELATI VE
TO THE RADFORD DATA? DO WE WANT TO BE I N THE 50TH PERCENTI LE,
WHI CH WOULD MEAN WE' RE RI GHT AT THE MEDI AN? DO WE WANT TO BE
75TH PERCENTI LE? OR DO WE WANT TO BE HI GHER OR DO WE WANT TO
BE LOWER PERHAPS?
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AND THEN THEY WOULD USE THE - - THEN THEY WOULD J UST COMPUTE
OUT OF THE RADFORD DATA WHAT THAT BENCHMARK WOULD BE FOR THEI R
I NTERNAL USE AND USE THAT TO SET THE SALARY STRUCTURES.
THE COURT: I S THE RADFORD DATA BROKEN DOWN BY
GEOGRAPHY I N ADDI TI ON TO J OB TI TLE?
MR. GLACKI N: I WOULD SUSPECT I T I S, BUT I DON' T KNOW
FOR SURE. I COULD ASK.
THE COURT: DO ANY OF THE DEFENDANTS - - MR. VAN NEST,
DO YOU KNOW? I ' MCURI OUS ABOUT THI S, YOU KNOW, BENCHMARKI NG
AND - -
MR. VAN NEST: YOUR HONOR - -
THE COURT: - - THE RADFORD DATA.
MR. VAN NEST: YOU' VE GOT YOUR FI NGER ON EXACTLY THE
PROBLEM, AND THE PROBLEMI S THAT YOU HAVE 2400 J OB TI TLES, AND
YOU' RE QUI TE RI GHT, I T MAKES NO SENSE THAT I F SOMEONE I N
SANTA CLARA THAT' S A SOFTWARE ENGI NEER GETS OR DOESN' T GET A
CALL, A MASK DESI GNER OR A SEMI CONDUCTOR PERSON I N NEWMEXI CO
WOULD BE I MPACTED. THERE' S NO EVI DENCE OF THAT AND I T DOESN' T
MAKE ANY SENSE.
RADFORD I S MADE UP OF THOUSANDS OF COMPANI ES, AND THERE ARE
THOUSANDS OF J OB TI TLES, AND WHAT THE DEFENDANTS HAVE TESTI FI ED
I S THAT WHEN THEY LOOK AT A J OB TI TLE, THEY' RE BENCHMARKI NG TO
A SPECI FI C J OB TI TLE.
I NTERNAL EQUI TY I S A FACTOR THAT ONE MI GHT USE I N LOOKI NG
AT SI MI LAR EMPLOYEES DOI NG A SI MI LAR THI NG AND PERFORMI NG THE
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SAME WAY, SURE.
THE COURT: BUT I SN' T THE BENCHMARK THE WAY YOU' RE
ABLE TO DETERMI NE WHERE YOU STAND RELATI VE TO YOUR PEERS I N
TERMS OF COMPENSATI ON?
MR. VAN NEST: I T WOULD ALLOWYOU, FOR A PARTI CULAR
J OB TI TLE, TO TELL WHERE YOU FELL WI THI N THE RANGE.
THE COURT: UM- HUM.
MR. VAN NEST: BUT, AGAI N, I T' S THOUSANDS OF
COMPANI ES AND THOUSANDS OF J OB TI TLES.
AND THEI R WHOLE THEORY - - YOU' VE GOT YOUR FI NGER RI GHT ON
I T - - I S THAT EVERY ONE OF THESE 2400 J OB TI TLES WOULD HAVE
AFFECTED EVERY OTHER ONE.
AND WHEN WE ASKED DR. LEAMER, "CAN YOU SHOWTHAT THE
STRUCTURES ARE SO RI GI D THAT I MPACT ON SOME WAS I MPACT ON ALL?"
HE NOT ONLY SAI D, "NO, I DI DN' T SHOWTHAT, " BUT HE SAI D, "I
DON' T BELI EVE I T' S TRUE. "
TABS 1 AND 2 ARE THE QUOTES FROMHI S DEPOSI TI ON, YOUR
HONOR, WHERE THI S WAS MADE ABUNDANTLY CLEAR THAT HE DI D NOT - -
HE WAS NOT ABLE TO CORRELATE TI TLE TO TI TLE; HE WAS NOT ABLE TO
SAY THAT A CHANGE TO SOME WOULD BE A CHANGE TO ALL; AND HE WAS
NOT ABLE TO SAY THAT I F YOU AFFECT THE SALARI ES OF SOME PEOPLE,
YOU THEREFORE WI LL AFFECT THE SALARI ES OF SOME OR ALL BECAUSE
THE J OB STRUCTURE I S RI GI D.
AND WE KNOW- -
THE COURT: TELL ME, WHAT ARE THE RADFORD BENCHMARKS
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FOR J OB TI TLES THAT MI GHT BE WI THI N THI S PUTATI VE TECHNI CAL
EMPLOYEE CLASS? I S THERE, LI KE, SOFTWARE ENGI NEER?
MR. GLACKI N: YEAH.
THE COURT: TECHNI CAL ENGI NEER?
MR. GLACKI N: I MEAN, I BELI EVE, FOR EXAMPLE, THAT
THE TESTI MONY WAS THAT AT I NTEL, YOU KNOW, THEY COULD BENCHMARK
80 PERCENT, 75 PERCENT OF THEI R WORK FORCE DI RECTLY OFF OF
RADFORD J OB TI TLES.
SO I THI NK THERE - - AS MR. VAN NEST SAYS, THERE ARE
THOUSANDS OF COMPANI ES I N THE DATA SET, THERE' S LOTS OF J OB
TI TLES, AND I F YOU' RE I NTEL OR GOOGLE OR I NTUI T, YOU CAN
REQUEST FROMRADFORD THE BENCHMARKS THAT YOU THI NK ARE RELEVANT
TO YOU.
AND I DON' T - - I DON' T KNOWTHE LI ST OFF THE TOP OF MY
HEAD, BUT THE TESTI MONY I N GENERAL WAS THAT THESE COMPANI ES
FOUND THI S TO BE VERY USEFUL BECAUSE THERE WAS VERY - - PRETTY
COMPREHENSI VE COVERAGE OF THEI R WORK FORCES.
AND I NDEED, YOU CAN SEE WHY THERE WOULD BE AN I NCENTI VE TO
STANDARDI ZE YOUR WORK FORCE AROUND THI S PARTI CULAR DATA SET.
I T WOULD HELP YOU BE ORGANI ZED.
THE COURT: DI D ANY OF THE FOUR REMAI NI NG DEFENDANTS
BENCHMARK COMPENSATI ON AGAI NST EACH OTHER OR AGAI NST ANY OF THE
OTHER - -
MR. VAN NEST: THERE' S NO EVI DENCE OF THAT, YOUR
HONOR.
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MS. DERMODY: YES, THERE I S.
MR. GLACKI N: WELL, I DON' T - - THEY DI DN' T BENCHMARK
AGAI NST EACH OTHER. THEY BENCHMARKED AGAI NST RADFORD, WHI CH
I NCLUDED EACH OTHER' S DATA. I MEAN, I - - WE' RE NOT - - I DON' T
THI NK WE' RE ARGUI NG THAT THEY - - THI S I SN' T - - WE' RE NOT SAYI NG
THEY CALLED EACH OTHER UP AND SET PRI CE LEVELS.
MR. VAN NEST: YOUR HONOR, I DON' T THI NK THAT ALL
FOUR REMAI NI NG DEFENDANTS EVEN USED RADFORD.
THERE' S NO EVI DENCE THAT ANY DEFENDANT BENCHMARKED OFF OF
I T. THAT' S NEVER BEEN THEI R THEORY.
THEI R THEORY HAS BEEN THAT I F SOME EMPLOYEES WERE AFFECTED,
THERE WOULD THEN BE THI S RI PPLE THAT RI PPLES OUT, AND AS YOU
POI NTED OUT, MAYBE THERE' S A RI PPLE TO THE FOLKS AROUND YOU I N
YOUR J OB, YOU KNOW, AREA.
BUT CERTAI NLY NO EVI DENCE, EI THER ANECDOTALLY OR
ECONOMI CALLY, OF ANYTHI NG GOI NG ANY PARTI CULAR DI STANCE,
PARTI CULARLY WHEN WE' RE TALKI NG ABOUT 60, 000 PEOPLE. THAT' S
OUR POI NT.
SO RADFORD I S UNI VERSAL - -
THE COURT: DO ANY OF THE REMAI NI NG FOUR DEFENDANTS
USE RADFORD?
MR. GLACKI N: I BELI EVE THEY ALL DO.
THE COURT: YEAH, THAT WAS MY I MPRESSI ON.
MR. GLACKI N: YEAH.
THE COURT: OKAY. SO I ' MLOOKI NG AT A SLI DE FROM
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GOOGLE ENTI TLED "BENCHMARKI NG OVERVI EW. WHAT I S GOOGLE' S
I NTENDED POSI TI ON RELATI VE TO MARKET, NON- SALES. "
AND I T TALKS ABOUT THE ELEMENT OF PAY, BASE SALARY,
I NCENTI VE, EQUI TY COMPOSI TI ON, HOWDO WE MEASURE THE MARKET,
PEER COMPARATOR COMPANI ES, AND I T LI STS APPLE, I NTEL, I NTUI T,
AND ADOBE, ALONG WI TH OTHERS.
SO I READ THAT AND I T APPEARS THAT GOOGLE I S BENCHMARKI NG
I TS PAY AGAI NST GOOGLE, I NTEL, I NTUI T, AND ADOBE.
AND THERE ARE SI MI LAR DOCUMENTS FOR APPLE, SI MI LAR
DOCUMENTS FOR ADOBE WHERE THEY ARE BENCHMARKI NG AGAI NST EACH
OTHER.
SO - -
THE COURT: DO YOU WANT TO RESPOND TO THAT?
MR. VAN NEST: YEAH, ABSOLUTELY.
THE COURT: YEAH.
MR. VAN NEST: THE POI NT I S THAT RADFORD I S - -
THE COURT: NO, THI S I S NOT RADFORD. THI S I S A
GOOGLE DOCUMENT SAYI NG WE BENCHMARK - -
THE COURT: - - AGAI NST OUR PEER COMPARATOR COMPANI ES.
MR. VAN NEST: BY - -
THE COURT: - - WHI CH I NCLUDE APPLE, I NTEL, I NTUI T,
AND ADOBE.
MR. VAN NEST: BY J OB. BY J OB TI TLE. BY J OB TI TLE,
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RI GHT? THAT' S OUR POI NT.
THE COURT: I T DOESN' T SAY THAT.
MR. VAN NEST: WELL, I - -
THE COURT: GO AHEAD.
MR. VAN NEST: WELL, BUT THAT' S HOWALL THESE SURVEYS
AND THAT' S HOWALL THE EVI DENCE SHAKES OUT I S THERE ARE, AS I
SAI D, THOUSANDS OF DI FFERENT J OB CATEGORI ES, AND ALL THI S DATA
I S ORGANI ZED BY J OB CATEGORY, AND SO WHI LE THE COMPANI ES WANT
TO KNOWWHERE THEY STAND WI THI N A PARTI CULAR J OB TI TLE, THERE' S
NO EVI DENCE OF ANY RI PPLE AFFECT THAT WOULD AFFECT THE WHOLE
J OB STRUCTURE. THAT' S MY POI NT.
THE COURT: SO THEN SHOULD THERE J UST BE A CLASS
CERTI FI CATI ON FOR EACH J OB TI TLE AND SAY, OKAY, SOFTWARE
ENGI NEER, THERE' S BENCHMARKI NG AMONGST THESE REMAI NI NG
DEFENDANTS, AMONGST EACH OTHER, AND SO FOR THAT J OB TI TLE, THAT
WI LL BE CLASS NUMBER ONE, SOFTWARE ENGI NEER.
MR. VAN NEST: THEY - - THEY - -
THE COURT: WHY NOT?
MR. VAN NEST: WELL, THEY HAVEN' T - -
THE COURT: WHY NOT?
MR. VAN NEST: LET ME SAY TWO THI NGS.
THE COURT: OKAY.
MR. VAN NEST: THEY HAVEN' T SHOWN FOR ANY ONE TI TLE
THAT I F SOME FOLKS I N THAT TI TLE GET A BENEFI T, OR DON' T, I T' LL
AFFECT EVERYBODY. THEY HAVEN' T SHOWN THAT BECAUSE WHAT
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DR. MURPHY SHOWS, AND WHAT THE RAWDATA SHOWS, I S THAT THERE' S
HUGE VARI ATI ON YEAR TO YEAR WI THI N A TI TLE.
I N OTHER WORDS, THE AVERAGES MOVE, BUT MANY PEOPLE WI THI N A
J OB TI TLE MOVE CONTRA TO THE AVERAGE, SOME BY A LI TTLE, SOME BY
A LOT.
I F YOU LOOK AT TAB 4, YOUR HONOR, WHI CH I ' VE PLACED BEFORE
YOU, DR. MURPHY PUTS THE RAWDATA FOR EVERY YEAR, FOR VARI OUS
TI TLES, AND WHAT YOU SEE ARE CHARTS EXACTLY LI KE THE ONE THAT
YOU SEE I N TAB 4 WHERE YOU HAVE MOVEMENT UP BY A LI TTLE FOR
SOME EMPLOYEES, MOVEMENT UP BY A LOT, MOVEMENT DOWN BY A
LI TTLE, MOVEMENT DOWN BY A LOT.
THERE I S NO - -
THE COURT: AND I AMGOI NG TO GET TO ALL OF THE
MURPHY AND LEAMER CHARTS AND MATERI ALS.
MR. VAN NEST: BUT CERTAI NLY - - CERTAI NLY, YOUR
HONOR, CERTAI NLY THERE I S MERI T I N SAYI NG YOU CAN' T CERTI FY A
60, 000 EMPLOYEE CLASS WI TH 2400 J OB TI TLES WHERE THEY DON' T
HAVE ANY EVI DENCE OF ANY CORRELATI ON BETWEEN AND AMONG J OB
TI TLES.
AND AS YOU POI NTED OUT LAST TI ME, CLEARLY THERE ARE SOME
CATEGORI ES OF EMPLOYEES THAT FOLKS CARED ABOUT MORE THAN
OTHERS.
THE COURT: AND WHI CH ONES ARE THOSE?
MR. VAN NEST: WELL, I THI NK MOST OF THE PEOPLE I N
THE DOCUMENTS YOUR HONOR CI TED LAST TI ME ARE SOFTWARE ENGI NEERS
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AND THEY TENDED TO BE PEOPLE MORE SENI OR THAN OTHERS, AND THE
TOP TALENT, I THI NK, WAS THE QUOTE THAT YOU GAVE AND THE
SOFTWARE ENGI NEERS MAKE UP - - AND THERE' S A WI DE RANGE OF
SOFTWARE ENGI NEERS, TOO, SO THEY DO A WI DE VARI ETY OF THI NGS.
BUT CERTAI NLY HERE WHERE WE' VE GOT TWO- THI RDS OF OUR CLASS
AT I NTEL WI TH J OBS LI KE SEMI CONDUCTOR MANUFACTURER AND CHEMI CAL
ENGI NEER, ELECTRI CAL ENGI NEER, MASK DESI GNER, THEY HAVE NOTHI NG
TO DO WI TH ANY OF THE DOCUMENTS YOUR HONOR HAS SEEN OR CI TED,
OR ANY OF THE EVI DENCE I N THE CASE.
AND I F THEY HAD GONE AND SAI D - - AND TAKEN YOUR ADVI CE AND
TRI ED TO FI GURE OUT WHI CH OF THESE CLASSES OR TI TLES CAN I SHOW
SOME CORRELATI ON WI THI N, MAYBE WE' D HAVE SOMETHI NG TO TALK
ABOUT.
THEY HAVEN' T DONE EVEN THAT. THEY HAVEN' T DONE EVEN THAT
BECAUSE, AS TAB 4 SHOWS - - AND I ' VE GOT A COUPLE OTHER TABS
WHEN WE GET TO THEM, YOUR HONOR - - THERE I S HUGE VARI ATI ON
WI THI N EACH TI TLE.
FOR EXAMPLE - -
THE COURT: SO LET ME MAKE SURE I UNDERSTAND.
SO THE DEFENDANTS WOULD CONCEDE THAT THERE' S BENCHMARKI NG
WI THI N A J OB TI TLE, BUT YOU' RE SAYI NG THERE' S NO RELATI ONSHI P
ACROSS J OB TI TLES?
MR. VAN NEST: WE' RE - - YES. WE' RE SAYI NG THAT - -
THE COURT: OKAY.
MR. VAN NEST: - - WHEN PEOPLE SAY, "I WANT TO BE 65
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PERCENT OF SOMETHI NG, " THEY' RE LOOKI NG AT A SPECI FI C J OB
CLASSI FI CATI ON.
THERE I S NO BENCHMARKI NG - -
THE COURT: SO THE CLASSI FI CATI ON CAN CERTAI NLY
I NCLUDE A FAMI LY OF J OB TI TLES, THOUGH.
MR. VAN NEST: I THI NK THEY' RE RATHER SPECI FI C I N
RADFORD, BUT, YOU KNOW, I DON' T WANT TO SPEAK - - RADFORD I S NOT
THE ONLY SURVEY OUT THERE.
BUT CERTAI NLY, YOUR HONOR, CERTAI NLY NOBODY I S LOOKI NG AT
RADFORD TO BENCHMARK ACROSS J OB TI TLES.
AND, AGAI N, EVEN WI THI N TI TLES, THE POI NT THAT WE' RE MAKI NG
I S THERE I S AN ENORMOUS RANGE OF DI SCRETI ON. THESE SALARY
BANDS WHI CH AFFECTED SOME OF THE BASE SALARI ES, SOME OF THEM
WERE $100, 000, $100, 000 WI THI N A BAND, AND THAT' S J UST SALARY,
NOT BONUS OR EQUI TY.
THAT' S WHY YOU SEE THI NGS LI KE TAB 4 WHERE SOME
EMPLOYEES - -
THE COURT: WE' RE GOI NG TO GET TO MR. MURPHY, BUT I
THI NK WE' LL HAVE WAY MORE THAN ENOUGH STATI STI CS THAN WE ALL
WANT BY THE END OF THE DAY.
MR. VAN NEST: I THI NK - -
THE COURT: LET ME ASK A QUESTI ON.
MR. VAN NEST: SURE.
THE COURT: AND THI S GOES TO MR. GLACKI N.
WHAT EVI DENCE CAN YOU CI TE TO THAT THE DEFENDANTS VI EWED
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EACH OTHER AS PEERS FOR COMPARI NG COMPENSATI ON, FOR HAVI NG SOME
TYPE OF COMPENSATI ON EQUI TY ACROSS COMPANI ES?
MR. GLACKI N: SO I ' MLOOKI NG AT SOMETHI NG THAT WAS
J UST KI NDLY HANDED TO ME.
DO YOU KNOWWHAT THI S I S AN EXHI BI T TO?
MR. HARVEY: THAT' S EXHI BI T NUMBER - - THAT' S THE
CI SNEROS DECLARATI ON.
MR. GLACKI N: SO THI S WOULD BE AN EXHI BI T TO
MS. CI SNEROS' S DECLARATI ON, I T' S PLAI NTI FF' S 621, WHI CH I S A
FAI RLY TYPI CAL DOCUMENT. I T' S AN E- MAI L WHERE - - I FEEL LI KE I
OUGHT TO J UST LET MR. VAN NEST AT LEAST SEE WHAT I ' MTALKI NG
ABOUT.
MR. VAN NEST: THANK YOU.
MR. GLACKI N: I N FACT, WE CAN STAND HERE TOGETHER.
THI S I S AN E- MAI L, AN I NTERNAL E- MAI L TO GOOGLE. THE TOP
LI NE RECI PI ENT I S SHONA BROWN, WHO' S THE HEAD PERSON AT GOOGLE
WI TH RESPECT TO H. R. AND COMPENSATI ON, AND I T' S A - - THERE' S A
SPECI FI C CALL OUT I N THE SECOND PAGE - - AND THI S I S PLAI NTI FF' S
621, GOOGLE/ HI GH- TECH - -
EXCUSE ME, BOB.
MR. VAN NEST: SURE.
MR. GLACKI N: YEAH, 00336877.
AND, YOU KNOW, PARTWAY THROUGH THE E- MAI L, THEY ASK
THEMSELVES THE QUESTI ON, WELL, HOWDOES OUR OVERALL BUDGET
COMPARE TO WHO WE CONSI DER TO BE OUR PEERS?
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AND THE - - THE PEERS THAT ARE LI STED HERE ARE ADOBE,
AMAZON, APPLE, CI SCO, AND I NTEL.
AND THEY ASK, HOWDOES WHAT WE' RE DOI NG I N TERMS OF MERI T
I NCREASES AND BONUS POOL THI S YEAR COMPARE TO THOSE COMPANI ES?
AND I THI NK THERE ARE - -
THE COURT: WHAT' S THE - - WHAT' S THAT EXHI BI T NUMBER?
THAT' S THE CI SNEROS DECLARATI ON?
MR. GLACKI N: I T' S PLAI NTI FF' S EXHI BI T 621, AND I ' LL
READ THE BATES NUMBER I N CASE THAT NEEDS TO BE LOOKED AT LATER.
I T' S GOOGLE/ HI GH- TECH - - 00 - - 621 TO CI SNEROS, 00336877.
THE COURT: 0033687?
MR. GLACKI N: 6877.
THE COURT: OKAY. THAT' S THE BATES NUMBER.
MR. GLACKI N: AND, YOU KNOW, I DEPOSED MR. SMI TH, THE
CEO OF I NTUI T, AND THERE WAS A - - YOU KNOW, THERE WAS A - -
THERE WAS AN AWARENESS AMONG, CERTAI NLY AT I NTUI T, AND I
BELI EVE AT THESE OTHER FI RMS, OF WHAT I T MEANT TO BE SORT OF A
TOP RANKED FI RMAND THEY HAD A VI EWOF THEMSELVES AND A DESI RE
TO BE THAT, AND THE OTHER TOP RANKED FI RMS I N SI LI CON VALLEY
ARE THE DEFENDANTS, YOU KNOW, I NTEL, APPLE, GOOGLE.
I MEAN, THESE COMPANI ES ARE THE - - THEY ARE THE STABLE
I NSTI TUTI ONAL, YOU KNOW, CREME DE LA CREME, TOP OF THE CROP I N
TERMS OF WHO YOU' D WANT TO WORK FOR, AND THERE ARE - - THERE ARE
MANY EXAMPLES I N THE RECORD OF THEMLOOKI NG AT EACH OTHER TO
COMPARE THEMSELVES I N TERMS OF COMPENSATI ON.
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THE COURT: BUT HOWDOES THAT - - I T APPEARS THAT EACH
OF THE REMAI NI NG DEFENDANTS HAD THESE ON- LI NE TOOLS TO GET
I NFORMATI ON ABOUT A SPECI FI C J OB TI TLE, THE SALARY BAND AND
WHATNOT, AND ALSO TO SORT OF DO SOME BENCHMARKI NG.
WHERE DI D - - DI D YOU GET I NTO, I N ANY OF THE DEPOSI TI ONS,
HOWTHOSE ON- LI NE TOOLS WERE CREATED, WHAT I NFORMATI ON WAS USED
AND I NPUTTED TO CREATE THAT SYSTEM? OR - -
MR. GLACKI N: WELL, I THI NK WE DI D GET I NTO THAT I N
THE DEPOSI TI ONS.
THE COURT: OKAY.
MR. GLACKI N: THE - - YOU KNOW, THE ANSWER I S THAT THE
H. R. DEPARTMENT WOULD I NPUT THI NGS LI KE RADFORD DATA, OR WHAT
PERCENTI LE THEY WANTED TO BE AT VI S- A- VI S THE RADFORD DATA.
AND ANYTHI NG ELSE I N TERMS OF LI KE - - YOU KNOW, FOR
EXAMPLE, WHAT THE - - YOU SEE THI S I N THE BRI EFS. I MEAN, WHAT
THE APPROPRI ATE BONUS WAS FOR ONE OF FI VE PERFORMANCE RANKI NGS,
SO THAT WOULD BE SOMETHI NG THAT WOULD BE DETERMI NED AT THE TOP,
WHAT THE APPROPRI ATE PERCENTAGE OR EQUI TY GRANT WAS FOR A
PARTI CULAR - - YOU KNOW, HOWYOU DI D THAT I N TERMS OF YOUR
PERFORMANCE RANKI NG.
AND THEN I F YOU' RE THE - - AND ALL OF THAT ALSO WE SEE I N
THE DOCUMENTS, AND THI S I S EXPLAI NED I N THE BRI EF, I S CURVED
OUT. I MEAN, I T' S ALL SET RELATI VE.
SO, FOR EXAMPLE, AT I NTEL, I NTEL - - YOU KNOW, THERE' S A LOT
OF TALK ABOUT VARI ABLE COMPENSATI ON, BUT I NTEL WANTED TO MAKE
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SURE THAT 60 TO 70 PERCENT OF I TS MANAGERS, OR EXCUSE ME, OF
I TS EMPLOYEES WERE RATED MEDI UM, AND THEN I T WANTED TO MAKE
SURE THAT DI FFERENT PERCENTI LES AT THE TOP AND THE BOTTOMWERE
RATED EXCELLENT OR, YOU KNOW, NEEDS I MPROVEMENT.
AND I T WAS STRUCTURED OUT ON A CURVE, J UST LI KE I T WAS AT
ADOBE. ADOBE' S H. R. MANAGER TESTI FI ED THAT THEY SET
COMPENSATI ON ON A BELL CURVE. I MEAN, I T' S HARD TO I MAGI NE A
MORE STRUCTURED COMPENSATI ON SYSTEM.
THE COURT: WHAT ARE THE THOUSANDS OF COMPANI ES THAT
ARE I N RADFORD? WHAT OTHER TYPES OF J OBS, I ' MASSUMI NG I T' S
NOT ALL TECH, ARE I N RADFORD?
MR. GLACKI N: NO. RADFORD I S A HUGE COMPANY AND I T
SERVES ALL KI NDS OF DI FFERENT CORPORATI ONS I N AMERI CA,
I NCLUDI NG PEOPLE - - YOU KNOW, COMPANI ES THAT HAVE NOTHI NG TO DO
WI TH TECH.
AND WHAT YOU ARE - - I F YOU' RE A CLI ENT OF RADFORD, YOU GI VE
THEM- - YOU TELL THEMWHAT YOU' RE I NTERESTED I N. YOU SAY, "I
WANT TO KNOWABOUT THESE KI NDS OF J OBS OR THESE J OB TI TLES. I
EMPLOY THESE KI NDS OF PEOPLE. I EMPLOY PEOPLE WHO DO THI S KI ND
OF WORK. "
AND THEN RADFORD GI VES YOU, YOU KNOW, A SELECTI ON OF 30 OR
50 OR 100 OR MAYBE MORE J OB TI TLES.
THE COURT: AND WHERE ARE ALL THESE COMPANI ES BASED?
I S I T WORLDWI DE?
MR. GLACKI N: WELL, THERE' S A - - I MEAN, RADFORD
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HAS - - I DON' T KNOWTHE ANSWER TO THAT QUESTI ON. I DON' T KNOW
I F RADFORD I NCLUDES I NTERNATI ONAL DATA.
BUT I KNOWTHAT RADFORD DOES HAVE A SUBSET OF TECH SECTOR
DATA WHI CH WOULD HAVE BEEN THE SUBSET THAT THI S - - THAT THESE
FAMI LY OF COMPANI ES, OR GROUP OF COMPANI ES WOULD HAVE
SUBSCRI BED TO, OR DI D SUBSCRI BE TO.
THE COURT: MR. VAN NEST, DO YOU KNOWI F RADFORD HAS
GLOBAL SALARY I NFORMATI ON?
MR. VAN NEST: I BELI EVE I T DOES, YOUR HONOR. BUT
YOU CAN GET VARI OUS SLI CES OF RADFORD.
BUT A MORE I MPORTANT POI NT, I THI NK, YOUR HONOR, I S RADFORD
REALLY I S NOT RELEVANT TO THEI R THEORY OF THI S CASE. I T' S NOT
A PRI CE FI XI NG CASE. THAT' S NOT THE POI NT.
THEI R THEORY I S THAT WHEN SOME COLD - - WHEN COLD CALLS WERE
PROHI BI TED, SOME PEOPLE I N EACH COMPANY DI DN' T GET A CALL AND
DI DN' T GET I NFORMATI ON AND, THEREFORE, THAT I NFORMATI ON DI DN' T
BUBBLE UP AND, THEREFORE, THERE WAS SUPPRESSI ON THAT PROPAGATED
OUT TO EVERYBODY.
RADFORD HAS ABSOLUTELY NOTHI NG TO DO WI TH THAT. RADFORD I S
MARKET DATA FROMTHOUSANDS OF COMPANI ES THAT ALL COMPANI ES LOOK
AT, NOT J UST THESE, BUT HEWLETT- PACKARD AND EVERYBODY HERE I N
THE VALLEY AND EVERYWHERE ACROSS THE UNI TED STATES. RADFORD I S
NOT A PART OF THEI R THEORY OF I MPACT.
AND WHAT I KEEP COMI NG BACK TO I S THERE I S NO CORRELATI ON
BETWEEN J OB TI TLES, EI THER WI THI N A COMPANY OR ACROSS
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COMPANI ES. DR. LEAMER LOOKED AT ALL OF THI S AND HE CONCLUDED
HE COULDN' T FI ND CORRELATI ON BETWEEN J OB TI TLES ACROSS
COMPANI ES BECAUSE THERE I S NONE, AND THAT' S WHAT I KEEP COMI NG
BACK TO.
I F YOU WANT TO CERTI FY SOMETHI NG, I T CAN' T POSSI BLY BE A
CLASS OF 2400 J OB TI TLES.
NOW, EVEN WI THI N A FEWJ OB TI TLES, WE HAVE SHOWN, AND I
DON' T THI NK THEY' RE DI SPUTI NG I T, THAT THERE' S A WI DE VARI ATI ON
I N WHAT PEOPLE ARE PAI D, BECAUSE MANAGERS - - AND THERE ARE
12, 000 OF THEMI N THESE COMPANI ES THAT ARE, THAT ARE
DEFENDANTS - - THEY HAD ABI LI TY, WI THI N WI DE BANDS, TO AWARD
DI FFERENT SALARI ES, DI FFERENT BONUSES, DI FFERENT EQUI TY, AND
THAT' S WHY TAB 4 LOOKS LI KE I T DOES.
THE COURT: WE' RE GOI NG TO GET TO THAT. I HAVE
SPECI FI C QUESTI ONS ABOUT THOSE CHARTS.
MR. VAN NEST: OKAY. BUT THAT' S - - MY POI NT I S
THERE' S WI DE VARI ATI ON AND FLEXI BI LI TY.
THE COURT: I HEAR YOU.
MR. VAN NEST: NOT LOCKSTEP.
MR. GLACKI N: MAY I RESPOND TO ONE OF YOUR QUESTI ONS
NOWTHAT I HAVE BETTER I NFORMATI ON, WHI CH I S THE DATA THAT
THESE COMPANI ES SUBSCRI BED TO FROMRADFORD WAS U. S. , SO THESE
COMPANI ES WERE GETTI NG THE TECH SECTOR SLI CE OF U. S. WAGE DATA
THAT WAS BEI NG COLLECTED BY RADFORD.
MR. VAN NEST: YOU CAN CUT I T THI NNER THAN THAT, TOO.
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I NSI DE SI LI CON VALLEY, OUTSI DE SI LI CON VALLEY. OBVI OUSLY MOST
OF I NTEL' S EMPLOYEES ARE OUTSI DE SI LI CON VALLEY. MORE THAN
HALF OF THE PROPOSED CLASS I S OUTSI DE SI LI CON VALLEY.
SO, AGAI N, I THI NK, YOUR HONOR, RADFORD, WE' RE SORT OF
BARKI NG UP THE WRONG TREE. I T' S NOT THEI R THEORY OF I MPACT.
THE COURT: WELL, I T' S A WAY THAT YOU CAN GET A
SPREADI NG OF EI THER THE SUPPRESSI ON OR - - I SHOULD SAY THE
ALLEGED SUPPRESSI ON OR ALLEGED SALARY I NCREASE BASED ON THE
COLD CALLI NG I S I F I T SORT OF GETS I NCORPORATED I NTO RADFORD
AND THEN OTHER COMPANI ES ARE BENCHMARKI NG OFF OF RADFORD, YOU
CAN SEE HOWTHE EFFECTS COULD GET PROPAGATED AND SPREAD - -
MR. GLACKI N: YES.
THE COURT: - - BY BENCHMARKI NG THROUGH THESE, I N
ADDI TI ON TO J UST WORD OF MOUTH AND - -
MR. VAN NEST: THERE ARE THOUSANDS OF - -
THE COURT: - - I NTERNAL EQUI TY.
MR. VAN NEST: EXCUSE ME.
MR. VAN NEST: THERE ARE THOUSANDS OF COMPANI ES THAT
FEED THE RADFORD DATA. THEY HAVEN' T EVEN ATTEMPTED TO SHOW
THAT THESE COMPANI ES, EI THER ONE OF THEMOR ALL FOUR OF THEM,
COULD AFFECT THE RADFORD DATA.
I MEAN, THERE ARE THOUSANDS - - YOU' VE GOT HEWLETT- PACKARD.
YOU' VE GOT - - HOWMANY COMPANI ES DO WE HAVE DOWN HERE THAT ARE
NOT I N THE GROUP, NOT TO MENTI ON PEOPLE AROUND THE
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UNI TED STATES, ENORMOUS TECH COMPANI ES?
SO RADFORD I S NOT I MPACTED BY WHAT THESE COMPANI ES DO, NOR
ARE THEY CLAI MI NG THAT.
WHAT THEY' RE CLAI MI NG I S PEOPLE I N THE COMPANI ES DI DN' T
GET THE I NFORMATI ON THEY WANTED AND, THEREFORE, THEI R WAGES
WERE SUPPRESSED AND, THEREFORE, THAT SUPPRESSI ON WOULD HAVE
PROPAGATED OUT ACROSS J OB TI TLES.
AND THAT' S WHERE WE' RE SAYI NG THEY HAVE THI S COMPLETE
FAI LURE OF PROOF. THEY CAN' T SHOWTHAT.
THEY' VE TRI ED TO SHOW, THROUGH AVERAGI NG, THAT THERE' S
SOME SI MI LARI TY WI THI N TI TLES. THAT' S WHAT DR. LEAMER DI D.
BUT AVERAGI NG DOES EXACTLY WHAT YOU TOLD THEMNOT TO DO
LAST TI ME. YOU SAI D, "TELL ME HOWYOU CAN SHOW, WI TH ALL THI S
VARI ATI ON, THAT THE STRUCTURE WAS SO RI GI D THAT AN I MPACT ON
SOME WOULD I MPACT OTHERS. "
AND I NSTEAD OF LOOKI NG AT THE KI ND OF VARI ATI ON THAT
EXI STS, HE AVERAGED I T.
AND THAT' S WHAT J UDGE ALSUP I N GPU AND WHAT J UDGE BRADY I N
REED - - J UDGE GRADY I N REED SAI D. I F YOU' RE LOOKI NG TO SEE
WHETHER THERE I S I MPACT ON ALL OR NEARLY ALL, OR ON A WI DE
GROUP, YOU CAN' T AVERAGE, BECAUSE THE FACT THAT AN AVERAGE GOES
UP OR DOWN DOESN' T TELL YOU WHETHER SOME, A LOT, A FEW, OR MANY
WERE I MPACTED. THAT' S THE WHOLE POI NT.
AND THEY DI D EXACTLY WHAT J UDGE ALSUP, J UDGE GRADY, THE
WEI SFELDT CASE, THE FLEI SHMAN CASE, ALL THESE CASES SAY WHEN
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THE I SSUE I S, I S THERE A BAND OF EMPLOYEES FOR WHOMWE CAN
PROVE THAT ALL OR NEARLY ALL WERE I MPACTED, YOU CANNOT AVERAGE.
THAT I S BECAUSE - - BECAUSE THE AVERAGI NG TAKES AWAY THE WI DE
VARI ATI ON THAT EXI STS, AND THAT' S WHY J UDGE ALSUP REFUSED TO
CERTI FY I N GPU.
J UDGE GRADY REFUSED TO CERTI FY - -
THE COURT: WELL, HE DI D CERTI FY THE CLASS I N GPU.
I AGREE THAT HE DI D ALSO DENY CERTI FYI NG - -
MR. VAN NEST: RI GHT. THERE WAS A VERY - -
THE COURT: HE DENI ED I N SOME AND GRANTED I N OTHERS.
MR. VAN NEST: WHAT HE GRANTED WAS A VERY SMALL GROUP
OF PEOPLE WHO DI D EVERYTHI NG I N A SAME WAY ON A WEBSI TE AND
BOUGHT THE SAME PRODUCT AT THE SAME TI ME.
THAT' S VERY DI FFERENT - - I N THE REED CASE, J UDGE GRADY
SAI D, "I ' MNOT GOI NG TO CERTI FY A CLASS OF EVEN 19, 000 NURSES
THAT ALL HAVE THE SAME TI TLE WHO ARE PAI D ON A WAGE GRI D THAT
DOESN' T EVEN MEASURE PERFORMANCE, J UST YEARS OF SERVI CE. "
THE COURT: UM- HUM.
MR. VAN NEST: HE SAI D, "BECAUSE YOU AVERAGED, YOU' RE
NOT TELLI NG ME WHETHER OR NOT THERE I S I MPACT ON SOME, ALL, OR
NEARLY ALL MEMBERS OF THE CLASS. "
AND SO HE SAI D, "NO CERT. YOU HAVE TO PROCEED BY
I NDI VI DUAL CLAI MS OR I N A MASS ACTI ON, " AS I MENTI ONED EARLI ER,
WHI CH I S EXACTLY THE RESULT THAT SHOULD FLOWHERE, PARTI CULARLY
WHERE YOU MADE VERY CLEAR LAST TI ME THAT BASED ON THEI R
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THEORY - -
THE COURT: LET ME I NTERRUPT YOU ONE SECOND.
MR. VAN NEST: YEAH.
THE COURT: SO THE PLAI NTI FFS HAVE SUBMI TTED EVI DENCE
THAT ADOBE USES SALARY MATRI XES, A SALARY PLANNI NG TOOL, AN
ON- LI NE SALARY RANGE WEBSI TE FOR MANAGERS, AND SOMETHI NG CALLED
THE OMNI TURE CURRENT COST STRUCTURE.
CAN YOU GI VE US A LI TTLE I NFORMATI ON ABOUT WHAT THAT
OMNI TURE CURRENT COST STRUCTURE I S?
OR MAYBE THE PLAI NTI FFS KNOW. WHOEVER KNOWS THE ANSWER TO
THI S QUESTI ON.
MR. VAN NEST: YOUR HONOR, I CAN ANSWER GENERALLY - -
THE COURT: OKAY.
MR. VAN NEST: - - THAT ALL THESE COMPANI ES - -
THE COURT: UM- HUM.
MR. VAN NEST: - - HAVE SOME KI ND OF COMPENSATI ON
TOOLS THAT THEY USE. OBVI OUSLY I F YOU HAVE 100, 000 EMPLOYEES
LI KE I NTEL, YOU' VE GOT TO HAVE SOME KI ND OF TOOL TO HELP YOU
MANAGE COMPENSATI ON.
THE POI NT OF ALL OF THESE - -
THE COURT: AND WHY I S THAT, FOR I NTERNAL EQUI TY?
MR. VAN NEST: NO, TO MANAGE THE COMPANY.
THE COURT: WHY I S THAT?
MR. VAN NEST: I F YOU' VE GOT A HUNDRED THOUSAND
PEOPLE, SOMEBODY HAS TO KNOWWHAT THEY' RE BEI NG PAI D. SOMEBODY
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HAS TO KNOW- -
THE COURT: YOU DON' T NEED A TOOL FOR THAT. YOU J UST
NEED A SPREADSHEET WI TH THE NAME AND AMOUNT OF MONEY THEY' RE
MAKI NG.
WHAT I S THE OMNI TURE, PLEASE?
MR. VAN NEST: I T' S A COMPANY THAT ADOBE ACQUI RED.
THE COURT: OKAY.
MR. VAN NEST: OMNI TURE WAS BASI CALLY AN ON- LI NE
ASSI STANT FOR MARKETI NG. I T' S NOT REALLY SOMETHI NG THAT DI D
TOO MUCH WI TH COMPENSATI ON. THE MAI N POI NT OF OMNI TURE WAS
ON- LI NE MARKETI NG AND THEY WERE ACQUI RED BY ADOBE SEVERAL YEARS
AGO. MY DAUGHTER USED TO WORK THERE, SO I KNOW.
BUT GETTI NG BACK TO MY PRI NCI PAL POI NT, YOUR HONOR - -
THE COURT: WELL, LET ME ASK MR. GLACKI N, DO YOU HAVE
ANY OTHER I NFORMATI ON ON THI S, OR I S I T NOT REALLY RELEVANT TO
COMPENSATI ON?
MR. GLACKI N: I DON' T HAVE ANY MORE I NFORMATI ON FOR
YOU, YOUR HONOR.
THE COURT: OKAY.
MR. GLACKI N: SORRY.
MR. GLACKI N: I ' D BE HAPPY TO RESPOND TO SOME THI NGS
THAT MR. VAN NEST HAS SAI D ABOUT OTHER CASES. I ' MHAPPY TO
TAKE YOUR QUESTI ONS.
THE COURT: YOU KNOW, WE TALKED A LOT ABOUT REED AND
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GPU LAST TI ME, SO I ' MOKAY.
LET ME ASK THE NEXT QUESTI ON. LET ME ASK MR. GLACKI N, LAST
TI ME AROUND YOU ALL HAD ARGUED THAT THE COURT SHOULD GRANT
CLASS CERT I F COMMON PROOF OF THE DEFENDANTS' ANTI TRUST
CONSPI RACY WOULD BE THE PROMI NENT I SSUE AT TRI AL.
THE COURT: I S THAT - - I S THAT STI LL YOUR POSI TI ON?
MR. GLACKI N: YES, YOUR HONOR. I MEAN, WE THI NK - -
WE - - OUR POSI TI ON I S THAT CLASS CERTI FI CATI ON COULD BE GRANTED
BASED SOLELY ON THE FACT - - ON THE OVERWHELMI NG I SSUE OF THE
DEFENDANTS' LI ABI LI TY FOR THE COMMON I LLEGAL AGREEMENTS.
THE COURT: BUT HOWWOULD THAT PLAY OUT?
MR. GLACKI N: WELL, I MEAN, I THI NK THAT THI S GETS - -
BACKS I NTO A LI TTLE BI T OF THE CONVERSATI ON WE WERE HAVI NG
EARLI ER ABOUT TREATI NG THI S AS A MASS TORT ACTI ON - -
THE COURT: UM- HUM.
MR. GLACKI N: - - WHI CH I S THAT WHETHER - - REGARDLESS
OF HOWTHI S ACTI ON I S BROUGHT, THE PROOF I S GOI NG TO BE THE
SAME.
I F YOU - - I F MR. HARI HARAN CAME I N HERE AND TRI ED TO
MAI NTAI N AN I NDI VI DUAL ACTI ON AGAI NST THESE COMPANI ES FOR THI S
VI OLATI ON, HE' D BE MAKI NG THE SAME ARGUMENTS AND ADVANCI NG THE
SAME PROOF ABOUT THE SEMI - RI GI D J OB STRUCTURE AT THE FI RMS,
WHI CH MEANT THAT ANY REACTI ON TO THI S I NCREASED LEVEL OF
COMPETI TI ON WAS GOI NG TO BE - - TO HAVE TO HAPPEN FI RM- WI DE.
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SO THERE' S NO - - I MEAN, THI S I S WHERE WE KI ND OF GET I NTO
THE AMGEN AREA. YOU KNOW, WE ARE REQUI RED TO SHOWA PLAUSI BLE
METHODOLOGY FOR MOVI NG I MPACT. WE' VE - -
THE COURT: WELL, THAT' S - - THAT' S FROM
J UDGE I LLSTON' S CASE, RI GHT, THE METHODOLOGY? WHAT, OTHER THAN
J UDGE I LLSTON' S CASE, SAYS PLAUSI BLE METHODOLOGY I S ENOUGH? I S
THERE ANYTHI NG ELSE?
MR. GLACKI N: I ' D HAVE TO GO BACK - - I COULD LOOK AT
THE LCDS CASE AND SEE WHAT SHE' S CI TI NG THERE. I THI NK THERE
ARE A NUMBER OF CASES THAT HAVE USED THE PHRASEOLOGY PLAUSI BLE
METHODOLOGY FOR PROVI NG I MPACT.
THE COURT: AREN' T PEOPLE NOWSAYI NG SI GNI FI CANT
PROOF?
MR. VAN NEST: UM- HUM.
MR. GLACKI N: NO, ABSOLUTELY NOT.
THE COURT: I WI LL J UST TELL YOU, AS MUCH RESPECT AS
I HAVE FOR J UDGE I LLSTON, I WOULD FEEL RELUCTANT TO RELY ON A
DI STRI CT COURT CASE THAT' S PRE- AMGEN, PRE- COMCAST, THAT WAS
AGGREGATED ON OTHER GROUNDS.
I DON' T KNOW. WAS HER CLASS CERT I SSUE ACTUALLY EVEN
REVI EWED BY THE CI RCUI T COURT?
MR. GLACKI N: WELL, A 23( F) POSI TI ON WAS FI LED. I
WROTE THE OPPOSI TI ON.
SO, YEAH, I MEAN - -
THE COURT: SO WAS I T - -
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MR. GLACKI N: A 23( F) PETI TI ON WENT UP AND I T WAS
DENI ED. THE PETI TI ON PRESUMABLY WENT TO THE PANEL, THE MOTI ONS
PANEL OF THE NI NTH CI RCUI T.
THE COURT: UH- HUH.
MR. GLACKI N: AND THEY READ THE PETI TI ON, THEY READ
OUR OPPOSI TI ON, AND ABOUT 30 DAYS LATER THEY REJ ECTED THE
PETI TI ON.
SO I F I - - I F I COULD ADDRESS THI S - -
THE COURT: YOU MEAN REJ ECTED THE PETI TI ON TO J UST
OVERTURN THE CLASS CERT DECI SI ON?
MR. GLACKI N: CORRECT. WELL, THEY DENI ED - - I T' S A
PETI TI ON FOR REVI EW, AND THEN THEY COULD, I THI NK I N THEORY,
REQUEST FURTHER BRI EFI NG OR THEY COULD DECI DE - - THEY COULD
DECI DE THE QUESTI ON BASED SI MPLY ON THE PETI TI ON AND THE
RESPONSE, WHI CH I THI NK I S TOTALLY NORMAL.
BUT I N THE - - I N ANY EVENT, THEY DENI ED THE PETI TI ON I S
WHAT THEY DI D.
THE COURT: BUT WHY SHOULD I USE THE PLAUSI BLE
METHODOLOGY? THAT SEEMS LI KE THAT' S A RI SKY MOVE I N THI S
ENVI RONMENT WHEN ALL THE CASE LAWHAS BEEN CHANGI NG SO MUCH.
MR. GLACKI N: WELL, I THI NK THAT THE - - THE
SI GNI FI CANT PROOF STANDARD THAT - - THE SI GNI FI CANT PROOF OR THE
CONVI NCI NG PROOF STANDARD THAT' S BEEN CI TED BY THE
DEFENDANTS - -
THE COURT: YEAH.
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MR. GLACKI N: - - I F YOU LOOK AND SEE WHERE THAT COMES
FROM, EVERY SI NGLE TI ME I T COMES FROMDUKES.
AND WHEN WE WERE HERE LAST TI ME WE TALKED ABOUT THE FACT
THAT DUKES I S A CASE THAT' S ABOUT 23( A) . AND I N DUKES THE
SUPREME COURT SAI D THAT I F YOU ARE ARGUI NG THAT I T I S THE
ABSENCE OF A POLI CY THAT HAS CAUSED HARMBY LEADI NG TO
DI SCRI MI NATI ON AGAI NST A MI LLI ON WORKERS AND THAT I S THE - - I T
I S THE ABSENCE OF THE POLI CY THAT I S YOUR VI OLATI ON, AND I F
YOUR ONLY EVI DENCE THAT THI S I S TRULY A COMMON I SSUE I S
STATI STI CAL PROOF, I F THI S I S THE ONLY EVI DENCE OF ANY COMMON
I SSUE I N THE CASE UNDER RULE 23( A) , THEN THAT PROOF, THEY
USED - - I N ONE PLACE THEY USED STRONG PROOF, I N ANOTHER PLACE
THEY USED CONVI NCI NG PROOF.
I THI NK THE NI NTH CI RCUI T, I N ELLI S VERSUS COSTCO,
ADDRESSI NG THE SAME QUESTI ON, USED THE PHRASE SI GNI FI CANT
PROOF.
SO THAT I S THE STANDARD WHEN YOU HAVE - - WHEN YOU ARE
ASKI NG WHETHER THE ONLY QUESTI ON UNDER 23( A) THAT COULD
POSSI BLY BE COMMON I S REALLY COMMON WHEN THE ONLY EVI DENCE OF
I T I S STATI STI CAL EVI DENCE.
THERE I S - - WE ARE - - WE CLEAR 23( A) BY A COUNTRY MI LE.
THI S - - WHEN I T COMES TO RULE 23( A) , THI S TRULY I S A TYPI CAL
ANTI TRUST CASE WHERE THERE I S A COMMON I SSUE, AN OVERWHELMI NG
COMMON I SSUE ABOUT WHETHER OR NOT THE DEFENDANTS VI OLATED THE
LAW.
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AND THAT I S GOI NG TO BE - - THAT I S - - YOU KNOW, PERI OD,
FULL STOP.
THE COURT: BUT YOU' RE REALLY ASKI NG FOR
CERTI FI CATI ON UNDER ( B) ( 3) ; RI GHT?
MR. GLACKI N: CORRECT. BUT THE POI NT I S THAT THE
DUKES CASE I S A CASE THAT' S ABOUT RULE 23( A) AND I T' S ABOUT
THI S UNUSUAL CI RCUMSTANCE WHERE THE ONLY POSSI BLE - - THE ONLY
COMMON - - I MEAN, THI S I S THE TRI AL THAT THE SUPREME COURT WAS
LOOKI NG AT, A TRI AL WHERE AN EXPERT WI TNESS TAKES THE STAND AND
THE ONLY EVI DENCE OF A VI OLATI ON THAT I S COMPANY- WI DE I S
STATI STI CAL, AND THAT I S THE ONLY COMMON I SSUE I N THE CASE.
AND AT THE TI ME THE COMPANY HAS - - SHOULD, I N THEORY, HAVE,
AS A DEFENSE AGAI NST THI S CASE, THE I NDI VI DUAL DECI SI ONS OF THE
MANAGERS THAT ARE ALLEGED TO BE DI SCRI MI NATORY.
SO I N THAT SI TUATI ON, THE SUPREME COURT SAI D THAT WHEN YOU
HAVE - - AND THI S I S WHY DUKES HAS NOT, I MEAN, HAS NOT
MEANI NGFULLY CHANGED THE LANDSCAPE. CERTAI NLY I N ANTI TRUST
CLASS CASES I T HAS NOT HAD A MEANI NGFUL EFFECT, BECAUSE I N AN
ANTI TRUST CASE, THE COMMON I SSUE I S SOMETHI NG WE BLOWBY VERY
QUI CKLY AND THEY, I N FACT, CONCEDED THAT AT THE BEGI NNI NG OF
THE FI RST ARGUMENT.
SO WHAT WE' RE ASKI NG I S WE' RE I N 23( B) ( 3) , AND THE
QUESTI ON I S, HAVI NG OTHERWI SE MET THE REQUI REMENTS FOR A CLASS
ACTI ON, SHOULD WE BE ALLOWED TO GO FORWARD WI TH A DAMAGES CLASS
ACTI ON?
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AND THERE THE STANDARD I S, HAVE WE ADVANCED A PLAUSI BLE
METHODOLOGY FOR PROVI NG I MPACT? AND THE REASON - -
THE COURT: BUT YOU' RE GOI NG TO HAVE TO GI VE ME SOME
AUTHORI TY, OTHER THAN THE LCD ORDER, FOR PLAUSI BLE METHODOLOGY.
DO YOU HAVE - - I S THERE ANYTHI NG ELSE?
MR. GLACKI N: WELL, I WOULD - - I WOULD RESPECTFULLY
SUBMI T THAT - -
THE COURT: UH- HUH.
MR. GLACKI N: - - THE AMGEN CASE I S THE BEST AUTHORI TY
FOR THI S POI NT, BECAUSE WHAT THE SUPREME COURT SAYS I N AMGEN I S
THAT - - WHAT I THI NK THE DEFENDANTS WANT YOU TO DO, WHI CH I S
CALL A WI NNER OR A LOSER ON THI S QUESTI ON OF WHETHER OR NOT
WE' VE PROVEN COMMON I MPACT, THAT I S EXACTLY WHAT THE COURT I S
NOT SUPPOSED TO DO.
THE COURT I S SUPPOSED TO SI MPLY I NQUI RE WHETHER OR NOT THE
I SSUE I S COMMON. AND I F THE I SSUE I S COMMON, I F I T' S GOI NG TO
RI SE OR FALL ON COMMON PROOF, THEN I T' S APPROPRI ATE TO CERTI FY
A CLASS ACTI ON.
AND I T' S NOT APPROPRI ATE FOR THE COURT TO WEI GH THE
I NFERENCES THAT ARE BEI NG OFFERED BY THE PARTI ES.
THE COURT: LET ME ASK YOU TO COMMENT ON
MR. VAN NEST' S SUGGESTI ON ABOUT THE MASS TORT BELLWETHER MODEL.
HOWWOULD THAT - - I GUESS I ' MJ UST NOT CLEAR. I F YOU' RE
SAYI NG, OBVI OUSLY THI S I S YOUR DEFAULT, DEFAULT, DEFAULT,
DEFAULT POSI TI ON, J UST CERTI FY A CLASS ON ANTI TRUST LI ABI LI TY,
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HOWWOULD THAT PLAY OUT? WE' RE GOI NG TO HAVE, WHAT, I NDI VI DUAL
TRI ALS ON I NDI VI DUAL I MPACT AND DAMAGES? OR WHAT?
MR. GLACKI N: WELL, THI S I S - - I MEAN, THI S I S
EXACTLY WHY I T WOULD BE, I THI NK, THE WRONG - - BECAUSE, OKAY,
TO TELL YOU HOWI T WOULD PLAY OUT - -
THE COURT: YEAH.
MR. GLACKI N: - - I N THE HYPOTHETI CAL SCENARI O WHERE
THAT HAPPENED - -
THE COURT: UM- HUM.
MR. GLACKI N: - - WE WOULD HAVE THE TRI AL ON
LI ABI LI TY, THAT WOULD HAPPEN. AND THEN WE WOULD BRI NG - - I
GUESS WE WOULD BRI NG I N THE EMPLOYEES OF THESE COMPANI ES ONE AT
A TI ME TO PROVE I MPACT.
BUT I N EVERY SI NGLE CASE, THE PROOF OF I MPACT WOULD BE THE
OPI NI ON THAT THI S CONDUCT, THAT THI S CONDUCT AFFECTED THE PAY
STRUCTURE OF THE ENTI RE COMPANY.
AND I DON' T - - YOU KNOW, WE' RE NOT ASKI NG FOR THAT KI ND OF
A CLASS TO BE CERTI FI ED. I SEE NO WAY TO PROSECUTE THE CASE
THAT WAY, FRANKLY. I T MAKES ABSOLUTELY NO SENSE.
THE COURT: ALL RI GHT. SO I F I ' MNOT GOI NG TO - - SO
THEN YOU WOULDN' T WANT A CLASS CERTI FI ED J UST BASED ON
ANTI TRUST LI ABI LI TY?
MR. GLACKI N: NO, BECAUSE I CAN' T - - I REALLY CAN' T
SEE A PLAN AFTER THAT THAT WOULD MAKE ANY SENSE, J UST LI KE I
CAN' T SEE HOWA MASS TORT PLAN WOULD MAKE ANY SENSE, BECAUSE
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THE WHOLE POI NT HERE THAT WE ESTABLI SHED WI TH MR. MI TTELSTAEDT
AT THE FI RST HEARI NG I S THAT WE' RE NEVER GOI NG TO KNOWWHO
WOULD HAVE GOTTEN THE COLD CALLS. WE' RE NEVER GOI NG TO KNOW
WHI CH SPECI FI C J OB TI TLES WOULD HAVE GOTTEN THE WAVES OF - - THE
COLD CALLS FROMTHE 800 GOOGLE RECRUI TERS. WE' LL NEVER KNOW
BECAUSE I T DI DN' T HAPPEN. SO WE CAN NEVER TRACE OUT, YOU KNOW,
THE I MPACT FROMTHE COLD CALL THAT DI DN' T HAPPEN BECAUSE WE
DON' T KNOWWHERE THAT COLD CALL WENT.
AND THAT' S WHY THE DEFENDANTS WANT THI S STANDARD. I F THE
STANDARD I S WE HAVE TO SHOW- - THAT WE HAVE TO PROVE THAT A
COLD CALL HAPPENED, WOULD HAVE HAPPENED TO A SPECI FI C PERSON
AND SHOWTHE PROPAGATI ON OUTWARD FROMTHAT COLD CALL, I MEAN,
WE CAN' T WI N. I MEAN, WE MI GHT AS WELL GO HOME, AND THAT' S WHY
THAT STANDARD I S SO FAVORABLE TO THEM.
THE COURT: WELL, LAST TI ME WHEN WE HAD SEVEN
DEFENDANTS, THE PARTI ES PREDI CTED THAT THE TRI AL WOULD BE 17
DAYS. WHAT I S I T NOWTHAT I T' S MI NUS LUCASFI LM, PI XAR, AND
I NTUI T?
MR. GLACKI N: I ' MTHI NKI NG. I MEAN, I WOULD I MAGI NE
THAT THE PLAI NTI FFS' CASE PROBABLY COULD BE PUT ON I N SOMETHI NG
LI KE SI X OR SEVEN TRI AL DAYS, MAYBE EI GHT OR NI NE. I DON' T
KNOW. I ' MA LI TTLE HESI TANT.
I WOULD I MAGI NE THAT THE REDUCTI ON I N THE NUMBER OF
DEFENDANTS WOULD MEAN THAT YOU WOULD HAVE, YOU KNOW, FEWER
DEFENDANTS WHO WANTED TO PUT ONE OR TWO CORPORATE
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REPRESENTATI VES ON THE STAND TO SAY EI THER THAT THEY DI DN' T DO
ANYTHI NG WRONG OR THE AGREEMENTS NEVER WOULD HAVE HAD THI S
I MPACT.
SO I WOULD SUSPECT THAT ON THE DEFENSE SI DE, THE BACK END
WOULD GET LOWER. I THI NK OUR CASE I S KI ND OF THE SAME NO
MATTER WHAT.
THE COURT: WHAT ABOUT FOR THE DEFENDANTS? WHAT I S
THE NEWESTI MATED TRI AL LENGTH?
MR. VAN NEST: I HAVEN' T THOUGHT THAT THROUGH
CAREFULLY ENOUGH, YOUR HONOR.
BUT I WOULD SAY, I THI NK I T DOES MATTER. I F THE EVI DENCE
FOR LUCASFI LMAND PI XAR AND I NTUI T I S OUT, WHI CH I THI NK I T
SHOULD BE, THEN ARGUABLY WE COULD DO I T I N LESS TI ME. I THI NK
THAT' S CLEARLY RI GHT.
AND I F - - I F THEY' RE SAYI NG THEY WANT TO PROVE J UST EXACTLY
WHAT THEY STARTED OFF WI TH, THEN I DON' T THI NK THE TI ME
SHRI NKS.
BUT I N MY VI EW, THE EVI DENCE AFFECTI NG THOSE COMPANI ES I S
DI FFERENT AND NOT REALLY RELATED ANYMORE AND I T WOULD BE A
LI TTLE SHORTER.
I - -
THE COURT: LET ME - -
MR. VAN NEST: OH, SORRY.
THE COURT: LET ME HEAR FROMMR. GLACKI N. FOR
YOUR - - TELL ME HOWYOUR CASE AT TRI AL WOULD LOOK. HOWWOULD
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I T BREAK DOWN BETWEEN LI ABI LI TY VERSUS I MPACT VERSUS DAMAGES?
MR. GLACKI N: WELL, I CAN TELL YOU THAT, HAVI NG DONE
ONE OF THESE CASES, THAT THE I MPACT AND DAMAGES PART OF THE
CASE I S NOT GOI NG TO TAKE A LOT OF TI ME. I MEAN, WE - - WE
SPEND A LOT OF TI ME ON THOSE I SSUES AT CLASS CERTI FI CATI ON, BUT
AT TRI AL, THE DI RECT EXPERT TESTI MONY ON THOSE POI NTS WI LL BE
OVER I N TWO TO THREE HOURS I WOULD SUSPECT ON I MPACT AND
DAMAGES.
AND THEN I WOULD SUSPECT THAT THE DEFENDANTS ARE GOI NG TO
HAVE AT LEAST ONE OR POSSI BLY TWO ECONOMETRI CI ANS WHO WI LL COME
I N AND SAY THAT OUR ECONOMETRI CI AN I S WRONG.
YOU KNOW, THI S CASE - - I SUPPOSE I MI GHT HAVE TO EXPAND
THAT ESTI MATE A BI T I F WE' RE GOI NG TO HAVE EXPERT TESTI MONY - -
I F WE' RE BUI LDI NG I NTO THAT CATEGORY EXPERT TESTI MONY ABOUT
THESE COMPANI ES' COMPENSATI ON STRUCTURES.
BUT, AGAI N, I T' S NOT A BI G PART OF THE CASE. MOST OF THE
CASE WI LL BE ABOUT THE AGREEMENTS AND THE, THE SUBJ ECTI VE
I NTENT OF THE PEOPLE WHO REACHED THEM.
BY THE WAY, I HAVE - -
MR. VAN NEST: I HAVE A DI FFERENT VI EW, OBVI OUSLY,
YOUR HONOR, ON A NUMBER OF THESE POI NTS.
MR. GLACKI N: I HAVE A PLAUSI BLE METHODOLOGY CASE FOR
YOU, YOUR HONOR.
THE COURT: ALL RI GHT. WHAT' S THAT?
MR. GLACKI N: I ' D OFFER YOU THE GPUS DECI SI ON, WHI CH
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WE QUOTED I N OUR BRI EF, AND I WOULD ACTUALLY OFFER THE PASSAGE
THAT WE QUOTED, I THI NK I N OUR REPLY BRI EF, WHI CH SAYS - -
THE COURT: YOU KNOW, I FEEL SOMEWHAT HESI TANT ON
RELYI NG ON ANY DI STRI CT COURT CASE THAT WAS BEFORE THE SUPREME
COURT CASES. I MEAN, OBVI OUSLY THEY' RE - - WE MAY HAVE TO J UST
BECAUSE THEY MAY ADDRESS I SSUES THAT ARE MORE ON POI NT.
BUT ANYWAY, GO AHEAD. SO YOU WANTED GPU, J UDGE ALSUP' S
DECI SI ON.
MR. GLACKI N: J UDGE ALSUP' S DECI SI ON, WHI CH I S THE
AUTHORI TY THAT THE DEFENDANTS HAVE - - I MEAN, WE BLOCK QUOTED
THI S I N OUR BRI EF. WHEN HE - - WHEN HE RULED THAT WHAT THE
PLAI NTI FFS DI D I N THAT CASE WASN' T ENOUGH, HE WAS CAREFUL TO
QUALI FY I T BY SAYI NG, "THI S ORDER AGREES THAT SUCH METHODS WERE
PLAUSI BLY RELI ABLE, SHOULD BE ALLOWED AS A MEANS OF COMMON
PROOF. TO RULE OTHERWI SE WOULD ALLOWANTI TRUST VI OLATORS A
FREE PASS I N MANY I NDUSTRI ES. "
THE COURT: ALL RI GHT. LET ME ASK MY QUESTI ON. LET
ME ASK MR. VAN NEST, AND I THI NK WE' RE GETTI NG - - WE' VE BEEN
GOI NG ALMOST AN HOUR AND A HALF.
( DI SCUSSI ON OFF THE RECORD BETWEEN THE COURT AND THE COURT
REPORTER. )
THE COURT: LET' S GO A LI TTLE BI T MORE AND THEN WE' LL
HAVE TO TAKE A BREAK.
LET ME ASK MR. VAN NEST, I T SEEMS - - I T SEEMS LI KE THE
DEFENDANTS ARE ARGUI NG THAT I T' S NOT ENOUGH THAT THERE ARE
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COMMON QUESTI ONS, BUT THAT THE RESULT HAS TO BE THE SAME FOR
ALL 60, 000 CLASS MEMBERS.
DO YOU WANT TO COMMENT ON THE WHOLE SORT OF COMMON QUESTI ON
VERSUS COMMON ANSWERS - -
MR. VAN NEST: SURE.
THE COURT: - - I SSUE AND WHAT' S REQUI RED BY THE CASE
LAW- -
MR. VAN NEST: YEAH.
THE COURT: - - CURRENTLY?
MR. VAN NEST: ABSOLUTELY, YOUR HONOR.
THAT' S NOT WHAT WE' RE ARGUI NG. WE' RE ARGUI NG - - WE' RE
FOLLOWI NG UP ON WHAT YOU SAI D LAST TI ME, WHI CH I S THAT I F YOU
WANT TO PROCEED AS A CLASS, A ( B) ( 3) CLASS WHERE PEOPLE ARE
GOI NG TO GET DAMAGES, AND YOU WANT TO DO I T I N ONE BI G TRI AL,
YOU HAVE TO SHOWTHAT ALL OR NEARLY ALL OF THE CLASS MEMBERS
WERE I MPACTED, BECAUSE I MPACT I S AN ELEMENT OF LI ABI LI TY.
THAT' S THE WHOLE POI NT. I N AN ANTI TRUST CASE, WHETHER THEY' RE
I MPACTED I S NECESSARY TO ESTABLI SH LI ABI LI TY.
SO I F WE' RE GOI NG TO DO I T FOR A CLASS, THE RULE I S - - AND
THI S I S WHAT J UDGE ALSUP SAI D I N GPU AND J UDGE GRADY SAI D I N
REED - - YOU HAVE TO SHOWTHAT ALL OR NEARLY ALL MEMBERS OF THE
CLASS WERE I MPACTED.
AND YOU SAI D THAT LAST TI ME, TOO. THAT' S THE ASSI GNMENT
YOU GAVE US.
NOW, I N ORDER TO SHOWTHAT, YOU' RE QUI TE RI GHT, THERE' S
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NO - - NO LONGER I S A PLAUSI BLE THEORY ENOUGH. COMCAST CHANGED
THAT, DUKES CHANGED THAT, AND ELLI S I N THE NI NTH CI RCUI T
CHANGED THAT.
AND YOU SAI D - - YOU GOT I T RI GHT AT PAGE 16 OF YOUR ORDER
WHERE YOU SUMMARI ZE ALL OF THI S. YOU SAI D, "I ' MNOT GOI NG TO
RELY ON PLAUSI BLE THEORI ES. I THI NK YOU HAVE TO CONDUCT A
THOROUGH REVI EWOF THEI R THEORY AND YOU HAVE TO DO A RI GOROUS
EVALUATI ON AND ANALYSI S TO SEE I F THI S I S REALLY PERSUASI VE. "
AND WHAT YOU SAI D LAST TI ME WAS, "I F YOU GUYS WANT TO
CERTI FY A CLASS, YOU HAVE TO SATI SFY TWO REQUI REMENTS. YOU
HAVE TO SHOWTHAT THE COMP STRUCTURES WERE SO RI GI D THAT I MPACT
ON SOME WOULD AFFECT EVERYBODY, OR NEARLY EVERYBODY; AND YOU
HAVE TO SHOWTHAT YOUR CLASS I S NARROWLY DRAWN SO THERE AREN' T
A WHOLE LOT OF PEOPLE I N I T THAT WEREN' T I MPACTED AT ALL AND
WEREN' T I NJ URED AND DAMAGED, " AND THEY FLUNKED ON BOTH OF THOSE
UNDER ANY STANDARD.
REMEMBER, UNDER THE STANDARD THAT J UDGE ALSUP APPLI ED I N
GPU, HE DENI ED CERT EVEN THERE.
THEY FAI LED TO SHOWTHAT THE SALARY STRUCTURES ARE SO RI GI D
THAT WHATEVER HAPPENED WHEN PEOPLE DI DN' T GET CALLS WOULD
PROPAGATE.
AND AS I POI NTED OUT, TAB 1 AND TAB 2, DR. LEAMER ADMI TS
THAT HE CAN' T MAKE THAT SHOWI NG AND HE DOESN' T THI NK I T' S TRUE.
SO I F THAT' S THE CASE, NOWWE' RE LOOKI NG AT, OKAY, WHAT DO
WE HAVE? DO WE HAVE SOME TI TLES THAT - - WHERE WE CAN SHOW
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PROPAGATI ON EVEN WI THI N A TI TLE?
AND THE ANSWER TO THAT I S THE MURPHY EXHI BI TS SHOWI NG LOTS
OF VARI ATI ON I N THE SAME J OB TI TLE YEAR I N AND YEAR OUT AT
EVERY ONE OF THE DEFENDANTS.
SO THERE I SN' T A RI GI D WAGE STRUCTURE, AND - -
THE COURT: YOU KNOW, LAST TI ME AROUND YOU ALL
WEREN' T EVEN REALLY CHALLENGI NG LI ABI LI TY, SO - -
MR. VAN NEST: WELL, BUT - - NO, WE WERE CHALLENGI NG
THE SAME THI NG.
THE COURT: BUT - -
MR. VAN NEST: I MPACT I S - -
THE COURT: WELL, I MEAN, NO. YOU BASI CALLY SORT OF
CONCEDED LI ABI LI TY LAST TI ME.
MR. VAN NEST: NO. WHAT WAS - -
THE COURT: SO I ' MCURI OUS, NOWYOU' RE SAYI NG, "OH,
NO, NO. LET' S GO BACK" - -
MR. VAN NEST: NO.
THE COURT: - - "AND LI ABI LI TY AND I MPACT I S PART OF
LI ABI LI TY, " BUT YOU ESSENTI ALLY CONCEDED THAT POI NT LAST TI ME.
MR. VAN NEST: NO, NO. WHAT WAS SAI D LAST TI ME, YOUR
HONOR, I S - - YOU J UST I NVI TED THEM, DO THEY WANT TO HAVE A
CLASS CERTI FI ED OVER WHETHER THERE WAS A CONSPI RACY TO I MPACT
WAGES, ET CETERA, ET CETERA.
AND THEY DON' T WANT THAT. THEY WANT - - THEY WANT THE WHOLE
KAHUNA. THEY WANT EVERYTHI NG I N ONE TRI AL.
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FAI R ENOUGH. FAI R ENOUGH.
I F THEY WANT - - WHAT WE SAI D LAST TI ME WAS WE' RE NOT
CHALLENGI NG THAT PROOF OF THE CONSPI RACY I S NOT COMMON. THAT' S
COMMON. WE SAI D THAT' S A COMMON I SSUE.
BUT THAT DOES NOT ENTI TLE YOU TO CERTI FI CATI ON BECAUSE YOU
HAVE TO SHOWTHAT COMMON I SSUES PREDOMI NATE, AND THE BI G I SSUE
FOR THEMI S GOI NG TO BE - - AND BELI EVE ME, I T' S NOT A COUPLE
HOURS - - THE HUGE I SSUE I N THI S CASE I S GOI NG TO BE, GI VEN THE
NATURE OF WHAT THEY' RE ALLEGI NG, CAN THEY SHOWI MPACT TO ALL OR
NEARLY ALL MEMBERS OF THE CLASS?
THAT' S GOI NG TO REQUI RE TESTI MONY FROMTHE H. R. PEOPLE AT
EVERY SI NGLE DEFENDANT. I T' S GOI NG TO REQUI RE TESTI MONY FROM
EXPERTS ABOUT WHAT THE DEFENDANTS' PAY STRUCTURES AND PRACTI CES
WERE. THERE' S GOI NG TO BE TESTI MONY FROMEACH COMPANY ABOUT
WHAT THEY DI D AND WHY. I T' S NOT J UST PUTTI NG A COUPLE OF
EXPERTS UP TO TALK ABOUT THE BI G PI CTURE.
THE J URY WOULD HAVE TO KNOW, BECAUSE YOU' RE TALKI NG ABOUT
THI S MANY EMPLOYEES, HOWDO THESE COMPANI ES MANAGE H. R. ? WHAT
DI D THEY LOOK AT? HOWMUCH VARI ATI ON WAS THERE?
WE WI LL PROBABLY BE CALLI NG MANAGERS TO SAY, "I WOULD
NEVER RAI SE THE SALARY OF EVERYBODY I N MY UNI T BECAUSE I ' VE GOT
TO PROTECT MY TOP PERFORMER. I ' D RUN OUT OF BUDGET. THAT
WOULD BE CRAZY. "
AND THERE' S NO EVI DENCE THAT ANYBODY EVER DI D THAT.
ALL THE EVI DENCE I S THAT I F YOU HAVE SOMEBODY THAT' S A
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HI GH PERFORMER YOU HAVE TO PROTECT, THEY GET A BI G SALARY
SPI KE, J UST LI KE TAB 4 AND TAB 5 SHOW.
AND SO THE BI G I SSUE THAT WE UNDERSTOOD FROMYOUR HONOR' S
ORDER, ONE OF THE BI G I SSUES THAT WAS LEFT OVER WAS, CAN THEY
SHOWI MPACT ON A CLASS- WI DE BASI S?
THAT' S WHY, I N MY VI EW, A - -
THE COURT: SO DO YOU BELI EVE THAT THE TEST RI GHT NOW
I S J UST WHETHER COMMON QUESTI ONS PREDOMI NATE FOR A 23( B) ( 3)
CLASS - -
MR. VAN NEST: YOU HAVE - -
THE COURT: - - TO BE CERTI FI ED?
MR. GLACKI N: ARE YOU POSI TI NG THAT TO ME OR TO HI M?
THE COURT: TO MR. VAN NEST.
MR. VAN NEST: FOR A ( B) ( 3) CLASS - -
THE COURT: YES.
MR. VAN NEST: - - YOU HAVE TO SHOWTHAT COMMON
QUESTI ONS PREDOMI NATE AND THAT THERE I S, THAT THERE I S A THEORY
THAT PASSES A RI GOROUS ANALYSI S BASED ON RELI ABLE EVI DENCE THAT
THERE WAS I MPACT TO ALL OR NEARLY ALL MEMBERS OF THE CLASS.
I F YOU DON' T HAVE THAT, THEN YOU CAN PROCEED WI TH
BELLWETHER TRI ALS, CERTAI NLY, AND WI TH A BELLWETHER TRI AL - -
THE COURT: AND YOU' RE RELYI NG, FOR THAT SECOND HALF,
SEPARATE FROMWHETHER COMMON QUESTI ONS PREDOMI NATE, J UST ON MY
ORDER? THAT' S WHAT YOU' RE BASI NG I T ON?
MR. VAN NEST: I ' MRELYI NG PRI MARI LY ON YOUR ORDER.
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BUT THAT' S WHAT J UDGE ALSUP AND J UDGE GRADY, ALL THESE
CASES - - THE WHOLE POI NT - -
THE COURT: WHAT ARE YOU RELYI NG ON FOR YOUR
SECOND - - ARTI CULATE THE SECOND HALF - -
MR. VAN NEST: THE SECOND HALF - -
THE COURT: - - OF WHAT YOU BELI EVE THE STANDARD TO
BE.
MR. VAN NEST: I BELI EVE THE STANDARD I S THAT THE
PLAI NTI FFS HAVE TO SHOWTHAT THEY CAN PROVE, BY COMMON
EVI DENCE, THAT THERE WAS CLASS- WI DE I MPACT, AND I ' LL CI TE
COMCAST FOR THAT, I ' LL CI TE AMCHEMFOR THAT, I ' LL CI TE REED FOR
THAT, I ' LL CI TE GPU FOR THAT.
ALL THESE CASES SAY THAT YOU HAVE TO BE ABLE TO PROVE, FOR
A ( B) ( 3) CLASS - - WHI CH I S A HI GHER STANDARD, BY THE WAY, THAN
J UST A 23( A) - - YOU HAVE TO PROVE THAT THERE WAS I MPACT,
CLASS- WI DE I MPACT AS PART OF YOUR ANTI TRUST CLAI M.
AND THEY DI DN' T DI SAGREE WI TH THAT.
THE COURT: SO YOUR STANDARD I S COMMON EVI DENCE TO
PROVE CLASS- WI DE I MPACT?
MR. VAN NEST: RI GHT.
THE COURT: OKAY. BECAUSE YOU HAD OTHER EXTRA
ADVERBS AND ADJ ECTI VES I N THERE EARLI ER.
MR. VAN NEST: WELL, I ' M- - WHAT YOU - - THE WAY YOU
DESCRI BED I T I N THE ORDER, YOU DESCRI BED I T AS PROVI NG THAT
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THAT' S WHAT YOU SAI D I N YOUR ORDER.
AND I WOULD AGREE WI TH THAT. THAT' S WHAT THESE CASES ALL
REQUI RE WHEN THEY SAY YOU HAVE TO HAVE PROOF OF CLASS- WI DE
I MPACT.
AND YOU CAN SEE - - PAGE 43 OF YOUR ORDER I S WHAT I ' M
DRAWI NG ON. PAGE 36 TO THE SAME EFFECT. THAT' S WHAT - - THAT' S
THE STANDARD YOU SET UP AND THAT' S THE STANDARD THAT APPLI ES.
AND THEY HAVEN' T MET I T. THEY HAVEN' T MET I T BECAUSE
DR. LEAMER ADMI TS THAT HE CAN' T SAY THAT THE SALARY STRUCTURES
WERE SO RI GI D THAT CHANGES TO SOME WOULD HAVE TRANSLATED I NTO
CHANGES FOR ALL.
AND THE RAWDATA THAT WE' VE PRESENTED AND THAT DR. MURPHY
ANALYZED PROVES I T AGAI N, NAMELY, THERE' S HUGE VARI ATI ON AND
FLEXI BI LI TY I N PAY AND I T' S BASED ON I NDI VI DUAL FACTORS.
AND WHAT DR. SHAWDI D, OUR ECONOMI ST FROMSTANFORD - - SHE
HAS BEEN I N SI LI CON VALLEY FOR THE PAST 20 YEARS TALKI NG TO
H. R. PEOPLE, AND SHE SAYS THE DATA THAT COMES OUT OF THESE
COMPANI ES I S CONSI STENT WI TH THE PREVAI LI NG PRI NCI PLE I N
SI LI CON VALLEY, PAY FOR PERFORMANCE. PAY FOR PERFORMANCE.
THESE ARE ENTREPRENEURI AL COMPANI ES. THEY ARE CUTTI NG EDGE.
THEY ARE NOT LOCKSTEP. THEY ARE NOT LABOR. THEY ARE NOT, YOU
KNOW, GOVERNED BY COLLECTI VE BARGAI NI NG AGREEMENTS WHERE
EVERYTHI NG I S I N SOME KI ND OF A SCHEDULE. I T' S PAY FOR
PERFORMANCE, AND THE DATA PROVES THAT.
AND GI VEN THAT THAT' S THE CASE, WE' RE BETTER OFF TRYI NG A
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HANDFUL - - AND I MEAN A HANDFUL - - OF CASES WHERE AN I NDI VI DUAL
PLAI NTI FF COMES I N AND SAYS, "I WAS AT COMPANY A AND COMPANY A
HAD AN AGREEMENT WI TH COMPANY B AND I AND MANY OTHERS WERE
PRI ME PERFORMI NG CANDI DATES THAT WOULD HAVE GOTTEN COLD CALLS
AND HERE' S HOWI WAS I NJ URED. I WOULD HAVE GOTTEN A CALL, MY
PAY WOULD HAVE GONE UP, " AND SO ON AND SO FORTH.
THAT' S GOI NG TO BE A BETTER WAY TO RESOLVE THI S CASE THAN
SOME TRI AL, WHI CH THEY HAVEN' T ESTABLI SHED A BASI S FOR, WHERE
THEY TRY TO PROVE CLASS- WI DE I MPACT ACROSS THE WHOLE CLASS WI TH
COMMON EVI DENCE.
AND YOUR HONOR, I T' S - -
THE COURT: YOU KNOW, I ' MLOOKI NG AT THE DEFENDANTS'
ADMI NI STRATI VE MOTI ON TO CONSI DER WHETHER CASES SHOULD BE
RELATED FI LED ON J ULY 19TH OF 2011, AND THE DEFENDANTS I N THI S
CASE BASI CALLY SAI D, "THESE CASES I NVOLVE THE SAME ALLEGED
CLASS, SAME FACTUAL ALLEGATI ONS, SAME CLAI MS FOR RELI EF.
BECAUSE THE CASES I NVOLVE SUBSTANTI ALLY THE SAME PARTI ES,
EVENTS, AND ALLEGATI ONS, AND BECAUSE I T APPEARS LI KELY THAT
THERE WI LL BE AN UNDULY BURDENSOME DUPLI CATI ON OF LABOR AND
EXPENSE OR CONFLI CTI NG RESULTS I F THEY ARE HEARD BEFORE
DI FFERENT J UDGES, DEFENDANTS BELI EVE THEY ARE RELATED WI THI N
THE MEANI NG OF THE RELATED CASE. "
MR. VAN NEST: I ' LL STAND BY EVERY WORD OF THAT.
THE COURT: THERE WAS A TI ME WHERE YOU ALL WANTED ALL
THI S CONSOLI DATED BECAUSE YOU CONCEDED THAT, FOR PURPOSES OF
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ADMI NI STRATI ON, I T MADE MUCH MORE SENSE - -
MR. VAN NEST: I T DOES.
THE COURT: - - TO HAVE THESE TOGETHER.
MR. VAN NEST: ABSOLUTELY. AND I ' MNOT SAYI NG
ANYTHI NG DI FFERENT TODAY, YOUR HONOR.
THE COURT: UM- HUM.
MR. VAN NEST: THERE' S NO - - WE WOULDN' T WANT FI VE
J UDGES DECI DI NG THE I SSUE THAT YOUR HONOR I S EVALUATI NG NOW,
AND WE WOULDN' T WANT FI VE J UDGES HANDLI NG THE CASE, NO MATTER
HOWWE DI D I T, BECAUSE AS WE SAI D LAST TI ME, I F THEY' RE GOI NG
TO PROVE A CONSPI RACY, THAT EVI DENCE I S COMMON TO EVERYONE.
RI GHT? THAT' S WHAT WE' RE SAYI NG I S THAT THE PROOF OF PART ONE
OF THI S WHERE YOU HAVE TO SHOWTHAT SOMEBODY CONSPI RED TO DO
SOMETHI NG, THAT I S COMMON AND THEY I NTEND TO PROVE THAT I N A
COMMON WAY. WE GET THAT.
NOW, YOU OFFERED THEMCERTI FI CATI ON ON THAT AND THEY DON' T
WANT I T. THEY DON' T WANT THAT. THEY DON' T WANT THAT BECAUSE
THEY WANT TO PUT 60, 000 PEOPLE I N A CLASS AND START THROWI NG
SOME HUGE NUMBERS AROUND, WHI CH I S WHAT THEY' RE DOI NG.
AND WHAT WE' RE SAYI NG I S YOU HAVEN' T ESTABLI SHED THE
PREDI CATE FOR THAT BECAUSE YOU HAVEN' T - -
THE COURT: OKAY. LET ME I NTERRUPT YOU ONE SECOND,
PLEASE.
MR. VAN NEST: SURE.
THE COURT: LET ME ASK MR. GLACKI N - -
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MR. GLACKI N: I HAVE A FEWWORDS ABOUT THE LEGAL
STANDARD I THI NK YOU' RE MULLI NG OVER, I F I COULD RESPOND TO
THAT BRI EFLY.
THE COURT: GO AHEAD, PLEASE.
MR. GLACKI N: SO FI RST I ' D OFFER YOU ANOTHER DI STRI CT
COURT CASE, WHI CH I S PRE- AMGEN, OF COURSE, BUT I BELI EVE I T' S
POST- DUKES - -
THE COURT: OKAY.
MR. GLACKI N: - - WHI CH I S THE I N RE: RAI L FREI GHT
DECI SI ON OUT OF THE DI STRI CT OF COLUMBI A, WHI CH I S 2012 WL,
WEST LAW, 2870207 AT STAR 60.
THE COURT: 2870207?
MR. GLACKI N: 2870207, CORRECT.
THE COURT: OKAY.
MR. GLACKI N: AND I THI NK THE URETHANES CASE THAT WE
CI TED I N OUR MOST RECENT BRI EF, WHI CH WAS A CASE I N WHI CH THE
COURT, AFTER TRI AL, CONSI DERED A REQUEST TO DECERTI FY A CLASS
POST- COMCAST AND AMGEN - - I ALWAYS MI X UP AMCHEMAND AMGEN - -
POST- AMGEN AND COMCAST WOULD ALSO BE I NSTRUCTI VE, AND I T WOULD
SEE - - YOU WOULD SEE A DI STRI CT COURT I N AN ANTI TRUST CASE
APPLYI NG THOSE NEWCASES AND DENYI NG A MOTI ON TO DECERTI FY A
CLASS.
THE COURT: WHI CH CASE I S THAT?
MR. GLACKI N: THAT I S - - I T' S I N OUR MOST RECENT
REPLY BRI EF, I N RE: URETHANE ANTI TRUST LI TI GATI ON, 2013 U. S.
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DI ST LEXI S, I T' S THE LEXI S CI TE, 69784.
AND I F I COULD SAY J UST ONE MORE THI NG? I MEAN, WHAT I
UNDERSTAND YOUR HONOR TO BE GRAPPLI NG WI TH A LI TTLE BI T HERE I S
THE STRONG PROOF, CONVI NCI NG PROOF VERSUS A COMMON QUESTI ON I S
ENOUGH REGARDLESS OF WHETHER OR NOT THE ANSWER TO THE COMMON
QUESTI ON I S YES OR NO.
THE COURT: UM- HUM.
MR. GLACKI N: AND WHAT I WOULD POI NT OUT I S THAT I F
DUKES WAS ABOUT THE 23( B) ( 3) STANDARD, YOU COULD NOT RECONCI LE
I T WI TH AMGEN. THE CASES SAY VERY DI FFERENT THI NGS ABOUT WHAT
THE PLAI NTI FFS HAVE TO DO, AND THE REASON I S THAT DUKES I S A
CASE ABOUT - - I N THE CI RCUMSTANCES I DESCRI BED, WHI CH I WON' T
REPEAT, AND AMGEN I S A CASE THAT' S ACTUALLY ABOUT RULE
23( B) ( 3) .
SO I THI NK THAT, YOU KNOW, THE LI GHT HERE I N TERMS OF WHAT
SHOULD BE FOLLOWED I N DECI DI NG WHETHER OR NOT WE' VE MET THE
STANDARD OF RULE 23( B) ( 3) , WHI CH I S PREDOMI NANCE OF COMMON
QUESTI ONS, I S AMGEN. I T' S CLEARLY AMGEN AND I T' S CLEARLY NOT
DUKES.
SO, YOU KNOW, I THI NK THAT - - I WOULD J UST POI NT OUT THAT
I F THE DEFENDANTS ARE RI GHT AND DUKES I S A 23( B) ( 3) CASE, THE
SUPREME COURT I N AMGEN WOULD HAVE HAD TO OVERTURN I T BECAUSE
YOU CAN' T RECONCI LE THOSE TWO STANDARDS.
THE COURT: LET ME ASK, YOU KNOW, THE CASES - - THE
AMOUNT OF DOCUMENTARY EVI DENCE I N THI S CASE I S SI GNI FI CANTLY
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GREATER, I THI NK, THAN PRETTY MUCH ANY OF THE OTHER CASES. YOU
KNOW, FOR EXAMPLE, I N DUKES THEY HAD SOME ANECDOTAL EVI DENCE OF
DI SCRI MI NATI ON FROM, WHAT, 200 - - 120 WOMEN. THEY HAD
STATI STI CAL EVI DENCE AND THEN THEY HAD A SOCI OLOGI ST TALK ABOUT
WAL- MART CULTURE.
WE DON' T HAVE THAT SI TUATI ON.
THE COURT: WE HAVE A POLI CY, A SPECI FI C CONTRACTUAL
POLI CY AMONGST THE DEFENDANTS.
THE COURT: WE' RE J UST NOT - - I F YOU LOOK AT THE
OTHER CASES, THEY J UST DON' T HAVE THI S LEVEL OF DOCUMENTARY
EVI DENCE.
MR. GLACKI N: I MEAN, I F - -
THE COURT: SO WHAT I S THE SI GNI FI CANCE OF THE
STATI STI CAL EVI DENCE? HOWI MPORTANT I S I T I N A CASE THAT HAS
THI S MUCH DOCUMENTARY EVI DENCE?
MR. GLACKI N: WELL, I THI NK THAT I T I S OF MUCH LESS
I MPORTANCE.
AND, YOU KNOW, AS AN EXERCI SE, BECAUSE I WAS I NTERESTED,
BEFORE WE CAME DOWN HERE I ASKED MY PARTNER, MR. HARVEY, TO
PULL THE EXPERT REPORTS I N GPUS, BECAUSE I WAS CURI OUS TO SEE
EXACTLY WHAT HAD HAPPENED BECAUSE J UDGE ALSUP' S OPI NI ON I S A
LI TTLE AMBI GUOUS. AND WE' D BE HAPPY TO SUPPLY THEMTO YOU, AND
THE DEFENDANTS CAN PULL THEMOFF OF ECF, AND YOU CAN DOWNLOAD
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THEMFROMECF, TOO.
AND WHAT DR. TEECE HAS I N THAT CASE I S HE HAS A CORRELATI ON
ANALYSI S WHERE HE' S MASHED TOGETHER - - HE' S CALCULATED THREE
CORRELATI ONS. HE' S MASHED TOGETHER ALL THE PRODUCTS I N TERMS
OF THE ACTI ON I NTO THREE GROUPS AND SHOWTHAT THEY CORRELATE.
HE' S GOT NO DOCUMENTARY EVI DENCE SHOWI NG THAT THERE WAS ANY
STRUCTURE TO HOWTHESE TRANSACTI ONS WERE PRI CED, NONE AT ALL.
THI S I S - - THI S I S A CASE WHERE, I F I WERE GOI NG TO
ANALOGI ZE I T TO A PRI CE FI XI NG CASE, WE HAVE THE AGREEMENT AND
THEN, ON THE QUESTI ON OF I MPACT - - I MEAN, THI S - - AND LET ME
BACK UP AND SAY THI S I SSUE COMES UP BECAUSE I N THE MODERN
CORPORATE WORLD I N THESE PRI CE FI XI NG CASES THERE ARE - - YOU
KNOW, I NEVI TABLY THERE ARE THOUSANDS OF DI FFERENT PRODUCTS THAT
ARE I NVOLVED BECAUSE THERE ARE HUNDREDS OF DI FFERENT GRADES OF
WHATEVER CHEMI CAL I T I S, OR THERE MI GHT BE - - I THI NK I N THE
LCDS CASE, THERE WERE - - AT ANY GI VEN TI ME THERE WERE HUNDREDS,
I F NOT THOUSANDS, OF DI FFERENT MODELS OF TFTL SCREENS, TFT LCD
SCREENS, EACH OF WHI CH WAS J UST A LI TTLE BI T DI FFERENT I N THE
SENSE THAT THE SCREWWAS I N A DI FFERENT PLACE.
THE COURT: BUT YOU DON' T HAVE ANY CASE LAWTHAT
REALLY SAYS THERE' S A SLI DI NG SCALE OF I MPORTANCE OF
STATI STI CAL EVI DENCE BASED ON OTHER FORMS OF EVI DENCE, DO YOU?
MR. GLACKI N: I ' MNOT AWARE OF A CASE THAT PUTS I T
EXACTLY THAT WAY.
THE COURT: UM- HUM.
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MR. GLACKI N: BUT I WOULD OFFER THAT I F YOU HAD A
PRI CE FI XI NG CASE, LI KE GPUS WHERE ALL YOU HAVE I S THREE
CORRELATI ONS, YOU' RE LOOKI NG AT ONE THI NG.
THE COURT: YEAH.
MR. GLACKI N: I F YOU HAD A PRI CE FI XI NG CASE WHERE
THE DEFENDANTS NOT ONLY DI D THE VI OLATI ON, BUT THEN THEY ALL
CAME I N AND ADMI TTED THAT THE THOUSANDS OF DI FFERENT PRODUCTS
WERE ALL PRI CED OFF OF A BELL CURVE, THEN I THI NK YOU WOULD BE
A LONG WAY TOWARDS PROVI NG THAT THE UNLAWFUL AGREEMENT THAT
AFFECTED THE PRI CE OF SOME OF THESE THI NGS HAD AN AFFECT ON ALL
OF THEM.
I T WOULD BE ALMOST AKI N TO SETTI NG, YOU KNOW, A PRI CE
FI XI NG CONSPI RACY WHERE TARGETS WERE SET FOR BENCHMARK PRI CES.
I F YOU COULD SHOWTHEN THAT ALL THE PRI CES WERE SET OFF A BELL
CURVE BECAUSE THAT' S J UST HOWTHE DEFENDANTS DI D BUSI NESS, I ' M
NOT ACTUALLY SURE - - I ACTUALLY THI NK THAT TO SHOWI MPACT, YOU
WOULDN' T NEED TO DO ANYTHI NG ELSE.
YOU MI GHT NEED TO DO SOMETHI NG ELSE TO PROVE DAMAGES, WHI CH
I S A WHOLE DI FFERENT I SSUE.
BUT TO SHOWI MPACT, I F YOU SHOWED, I N A PRI CE FI XI NG CASE,
AN AGREEMENT TO FI X THE TARGET PRI CE OF A HI GH VOLUME PRODUCT
AND THE DEFENDANTS CAME I N AND ADMI TTED THAT THE PRI CES OF THE
OTHER PRODUCTS WERE SET ON A BELL CURVE OFF THE HI GH VOLUME
PRODUCT, I N MY OPI NI ON YOU' VE PROVEN I MPACT RI GHT THEN AND
THERE, OR YOU' VE CERTAI NLY, I N THE ABSENCE OF ANY CONTRARY
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EVI DENCE, MET YOUR BURDEN OF PRODUCTI ON.
THE COURT: LET' S GO TO AND START THE QUESTI ONS ON - -
I WAS SAVI NG THE BEST FOR LAST - - ALL THE STATI STI CAL QUESTI ONS
FOR THE END.
LET' S - -
MR. VAN NEST: CAN I - -
THE COURT: OH, I ' MSORRY. I T' S ACTUALLY 3: 30.
MAYBE WE SHOULD - - DO YOU WANT TO J UST DO A QUI CK - - TWO
MI NUTES, PLEASE.
MR. VAN NEST: I ' LL DO WHATEVER YOU WANT, YOUR
HONOR - -
THE COURT: I N A MI NUTE - -
MR. VAN NEST: - - FOR LEE- ANNE.
THE COURT: - - LET' S TAKE A BREAK. WELL, MAYBE WE
SHOULD TAKE A BREAK.
MR. VAN NEST: I CAN' T DO MUCH I N A MI NUTE.
MR. GLACKI N: OH, YES, YOU CAN.
THE COURT: LET' S GO AHEAD - - I ' LL GI VE YOU HALF A
MI NUTE. GO FOR I T.
( LAUGHTER. )
MR. VAN NEST: I CAN DO EVEN MORE I N HALF A MI NUTE.
THE COURT: I ' MFEELI NG GENEROUS.
( LAUGHTER. )
MR. GLACKI N: NO I MPACT.
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MR. VAN NEST: THE BI G PI CTURE, YOUR HONOR, I S THAT
I F YOU LOOK AT ALL OF THE STATI STI CS, WHAT YOU SEE I S THE
OPPOSI TE OF A RI GI D WAGE STRUCTURE. YOU SEE A STRUCTURE WHI CH
I S BASED ON PAYI NG I NDI VI DUAL PEOPLE ON A LOT OF DI FFERENT
FACTORS BASED ON THEI R PERFORMANCE WHERE THERE I S ENORMOUS
VARI ABI LI TY, YEAR TO YEAR, WI THI N THE SAME J OB TI TLES
EMPLOYEE- TO- EMPLOYEE. THERE I S NO PATTERN. I T I S - - I T I S
VERY DI SCRETI ONARY.
THAT I S THE OPPOSI TE OF WHAT WOULD BE REQUI RED BASED ON
THEI R THEORY, THAT CALLS NOT MADE WOULD HAVE RESONATED THROUGH
THE WHOLE CLASS.
AND SO WHEN WE GET TO TALKI NG I N DETAI L - - AND I ' VE ONLY
GOT A FEWPAGES OF THEMTO SHOWYOUR HONOR, J UST THE
HI GHLI GHTS - - YOU WI LL SEE THAT WHETHER YOU LOOK AT I T WI THI N A
CLASS - - EXCUSE ME - - WI THI N A TI TLE OR ACROSS TI TLES OR ACROSS
COMPANI ES, THERE I S NO RI GI D STRUCTURE THAT COULD SUPPORT THE
THEORY THAT THEY ARE ADVANCI NG.
AND I WOULD SAY WI TH RESPECT TO YOUR HONOR' S QUESTI ON ON
DOCUMENTARY EVI DENCE, THERE I SN' T ANY DOCUMENTARY EVI DENCE OF
I MPACT. THAT' S THE I MPORTANT THI NG.
I N A LOT OF THESE CASES THERE ARE - - THERE' S ACTUAL
AGREEMENT BY THE DEFENDANTS THAT THERE WAS A DO NOT HI RE
AGREEMENT I N PLACE, OR SOME SUCH THI NG. THAT WAS THE WEI SFELDT
CASE WHERE THERE THE COURT FAI LED TO CERTI FY A MUCH SMALLER
CLASS, EVEN THOUGH LI ABI LI TY WAS VI RTUALLY ADMI TTED, BECAUSE
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THE COURT SAI D "YOU HAVEN' T PROVEN THAT THERE WAS I MPACT TO THE
CLASS ON A CLASS- WI DE BASI S. "
AND THE SAME I S TRUE HERE. ALL THE EVI DENCE YOUR HONOR I S
CI TI NG, AND WE DON' T NEED TO DEBATE I T TODAY, ALL THAT GOES TO
WHETHER OR NOT THERE WERE AGREEMENTS, WHAT THE I NTENT OF THEM
WAS, HOWWI DESPREAD THEY WERE, AND SO ON.
NONE OF I T GOES TO I MPACT. THERE AREN' T DOCUMENTS THAT
SHOWOR ANY DI SCUSSI ON THAT SHOWS ANYBODY WAS I MPACTED. THAT' S
WHAT' S LACKI NG.
THAT' S WHY THI S CASE I S GOI NG TO TURN ON STATI STI CS AND
STATI STI CAL PROOF, AND THAT' S WHY - -
THE COURT: BUT YOU' RE ASKI NG THEMTO PROVE A
NEGATI VE.
MR. GLACKI N: THI S I S THE PROBLEM- -
MR. VAN NEST: NO.
THE COURT: BECAUSE THEY HAD THE AGREEMENT, BECAUSE
THERE WAS NO COLD CALLI NG, BECAUSE PEOPLE COULD NOT SOLI CI T
EACH OTHER' S EMPLOYEES.
MR. VAN NEST: I ' MNOT, YOUR HONOR.
THE COURT: WHAT' S THE - -
MR. VAN NEST: THEY SAI D THEY COULD PROVE I T BECAUSE
THEI R WHOLE CASE THEORY WAS "WE' RE GOI NG TO SHOWTHAT THERE' S A
RI GI D J OB PAY STRUCTURE AT ALL OF THE DEFENDANTS, SO THAT I F WE
CAN SHOWTHAT COLD CALLS WEREN' T MADE AND PEOPLE DI DN' T GET
I NFORMATI ON, THAT THAT I MPACT ON THAT EMPLOYEE, OR THAT GROUP
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OF EMPLOYEES, WOULD RESONATE THROUGH THE WHOLE FI RM. "
THAT WAS THE PROMI SE THEY MADE. THAT WAS THE THEORY THEY
ARGUED ON THE MOTI ON TO DI SMI SS. THAT WAS THE THEORY THEY
ARGUED LAST TI ME.
AND YOU SAI D, "FI NE. I F THAT' S YOUR THEORY OF COMMON
I MPACT, PROVE I T. LET' S SEE WHAT THE NUMBERS SHOW. "
THEY' VE COME BACK AND THEY' VE FAI LED TO PROVE I T, AND
DR. LEAMER ADMI TS THAT HE CAN' T SHOWI T.
THE COURT: LET' S SAVE THAT FOR AFTER THE BREAK. WE
ARE GOI NG TO GET I NTO THE WEEDS ON THE STATS.
MR. VAN NEST: VERY GOOD.
THE COURT: OKAY? ALL RI GHT. LET' S TAKE A BREAK
UNTI L 3: 45. OKAY? THANK YOU.
MR. VAN NEST: THANK YOU, YOUR HONOR.
THE COURT: THANK YOU ALL VERY MUCH.
( RECESS FROM3: 34 P. M. UNTI L 3: 58 P. M. )
THE COURT: OKAY. LET' S GO TO DR. LEAMER' S OPENI NG
EXPERT REPORT.
MR. GLACKI N: YOU MEAN THE ONE DATED MAY 10TH, OF
COURSE?
THE COURT: YES, THE ONE DATED I N MAY.
WHY DON' T YOU EXPLAI N - - LET' S START WI TH EXHI BI T 2. WHY
DON' T YOU J UST EXPLAI N WHAT HI S CORRELATI ON ANALYSI S THEORY I S.
WHAT DO THESE DI FFERENT THI NGS REPRESENT?
MR. GLACKI N: SURE.
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THE COURT: START WI TH EXHI BI T 2, APPLE.
MR. GLACKI N: EXHI BI T 2, APPLE. I S THERE A REASON
YOU DON' T WANT TO START WI TH EXHI BI T 1, ADOBE? BECAUSE THEY' RE
EXACTLY THE SAME I N TERMS OF WHAT' S THERE AND THE ADOBE ONE HAS
SOME HI GHLI GHTI NG ON I T THAT MI GHT BE HELPFUL.
THE COURT: THAT' S FI NE.
MR. GLACKI N: WE CAN START WI TH APPLE. I T' S THE SAME
CHARTS EI THER WAY.
EXHI BI T 1 I S THE OUTPUT OF THE REGRESSI ON ANALYSI S FOR
ADOBE; AND THEN EXHI BI T 2 I S THE OUTPUT OF THE REGRESSI ON
ANALYSI S FOR EVERY OTHER COMPANY. SO WE CAN START - -
THE COURT: WHY DOES I T LOOK DI FFERENT THAN THE APPLE
ONE?
MR. GLACKI N: YOU MEAN WHY I S THERE HI GHLI GHTI NG?
THE COURT: NO. I F YOU LOOK UNDER SECTI ON 1, THE
CATEGORI ES ARE DI FFERENT.
MR. GLACKI N: I THI NK - - SO PROBABLY - - WHAT' S
DI FFERENT I S THE - - SECTI ON 1 I S ALL J UST A REPORT OF THE
CHARACTERI STI CS OF THE TI TLE I N TERMS OF HOWMANY EMPLOYEES ARE
THERE AND WHAT THE HI RI NG RATE I S FOR EMPLOYEES I N THAT TI TLE.
I THI NK THAT SOME OF THAT I NFORMATI ON WAS OMI TTED FROM
EXHI BI T 2 BECAUSE I T' S NOT THAT I MPORTANT AND I T ALLOWED THERE
TO BE MORE SPACE BETWEEN THE COEFFI CI ENTS ON THE REGRESSI ON
OUTPUTS, WHI CH ARE ALL THE SAME - - I MEAN, ALL THE SAME
COLUMNS. I THI NK THAT WAS THE ONLY REASON THAT WAS OMI TTED.
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BUT I COULD WALK THROUGH EI THER ONE AND EXPLAI N WHAT THEY
MEAN.
SO I N OTHER WORDS, THE ONLY - - THE DI FFERENT - - THE
REASON - - I F YOU LOOK AT SECTI ON 1 OF ADOBE AND COMPARE I T TO
SECTI ON 1 OF APPLE, THEY BOTH SHOWTHE YEARS OF DATA FOR THE
TI TLE, AND WHAT THAT MEANS I S - - THAT' S THE NUMBER OF YEARS FOR
WHI CH WE HAVE DATA FOR THAT J OB TI TLE BECAUSE THAT' S A RELEVANT
THI NG TO KNOW.
AND THEN THE NEXT COLUMN I S TOTAL EMPLOYEE YEARS, WHI CH
TELLS YOU THE NEXT THI NG YOU NEED TO KNOW, WHI CH I S HOWMANY - -
WHAT' S THE WEI GHT OF THAT J OB TI TLE WI THI N THE DATA? SO YOU
HAVE THE NUMBER OF YEARS.
AND THEN YOU HAVE THE NUMBER OF YEARS WORKED BY EMPLOYEES
I N THAT J OB TI TLE, WHI CH I S A RELEVANT THI NG TO KNOW.
THEN THE OTHER COLUMNS I N THE ADOBE CHART ARE ABOUT THE - -
THEY' RE SORT OF OTHER WAYS OF - - OTHER DESCRI PTI ONS OF THE
CHARACTERI STI CS OF THE NUMBER OF EMPLOYEES I N THAT TI TLE.
SO AV EMP I S THE AVERAGE NUMBER OF EMPLOYEES I N THAT TI TLE
AT ANY GI VEN TI ME.
D- LOG AVERAGE I S THE RATE OF CHANGE OF THE NUMBER OF
EMPLOYEES I N THE TI TLE.
SO, FOR EXAMPLE, I F YOU - - LOOKI NG AT THE VERY TOP ONE
WHERE I T SAYS D- LOG AVERAGE I S . 27, THAT MEANS THAT ON AVERAGE,
THAT TI TLE WAS I NCREASI NG BY 27 PERCENT PER YEAR.
AND THEN D- LOG STANDARD DEVI ATI ON I S THE STANDARD DEVI ATI ON
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OF THE RATE OF CHANGE, AND THE BI GGER THAT NUMBER I S, THE MORE
FLUCTUATI ON THERE WAS AROUND THE CHANGE OF HEAD COUNT I N ANY
GI VEN YEAR.
SO I N OTHER WORDS, I F THE STANDARD DEVI ATI ON WAS 0, THAT
WOULD, I THI NK, I MPLY THAT THERE WAS A STATI C 27 PERCENT
I NCREASE I N HEAD COUNT EVERY YEAR.
WI TH A STANDARD DEVI ATI ON - -
THE COURT: AND WHERE DO YOU GET THAT 27 PERCENT?
MR. GLACKI N: THAT' S D- LOG AVERAGE . 27 ON THE
ADOBE EXHI BI T 1.
THE COURT: I T' S . 018 AND THEN I T' S MI NUS . 027.
MR. GLACKI N: WHAT I ' MLOOKI NG AT I S EXHI BI T 1, WHI CH
I S ADOBE.
THE COURT: OH, YOU' RE LOOKI NG AT THE FI RST PAGE OF
I T.
MR. GLACKI N: YEAH.
THE COURT: OKAY. I SEE.
MR. GLACKI N: YOU SEE THE . 27, THE VERY TOP ENTRY.
SO THE . 34 TELLS YOU THAT I T WASN' T . 27 EVERY YEAR.
THE HEAD COUNT - - HOWTHE HEAD COUNT MOVED I S NOT SUPER
I MPORTANT TO THE ANALYSI S AND THAT' S WHY I T WAS OMI TTED FROM
THE LARGER REPORT OF REGRESSI ON RESULTS I N EXHI BI T 2.
WHAT YOU REALLY NEED TO KNOWTO UNDERSTAND - - TO I NTERPRET
THOSE RESULTS, I THI NK, I S THE NUMBER OF EMPLOYEE YEARS AND THE
NUMBER OF YEARS OF DATA WE HAVE. THOSE ARE THE MOST I MPORTANT
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THI NGS TO KNOW.
THE COURT: OKAY. WHAT DOES THE T- STAT SHOW?
MR. GLACKI N: SO A T- STAT I S A MEASURE OF STATI STI CAL
SI GNI FI CANCE, AND A - - THE BEST WAY TO I NTERPRET THEMI S THAT A
T- STAT OF 2. 0 OR GREATER MEANS THAT THE COEFFI CI ENT I S
STATI STI CALLY SI GNI FI CANT TO CONVENTI ONAL CONFI DENCE LEVELS,
WHI CH I THI NK I N THI S CASE WOULD BE 95 PERCENT LEVELS, OR 5
PERCENT LEVELS.
THE COURT: SO WHAT I S HI S THEORY? HI S THEORY I S
THAT I F HE CAN SHOWTHAT THE AVERAGE COMPENSATI ON FOR A SI NGLE
J OB TI TLE, THAT THE CHANGES I N THAT COMPENSATI ON ARE CORRELATED
TO CHANGES I N THE AVERAGE COMPENSATI ON FOR THE ENTI RE TECHNI CAL
CLASS, THAT THAT MEANS THEY' RE RI SI NG AND FALLI NG TOGETHER? I S
THAT THE THEORY? OR WHAT I S I T?
MR. GLACKI N: SO I F YOU' LL I NDULGE ME, I T MI GHT HELP
TO GO BACK TO THE BEGI NNI NG A LI TTLE BI T, WHI CH I S TO GO BACK
TO THE COMMON FACTORS ANALYSI S FROMTHE VERY FI RST REPORT.
AND THE REASON I T' S I MPORTANT TO GO BACK THERE I S THAT THE
DEFENDANTS' MAI N ATTACK ON THI S ANALYSI S HAS BEEN TO SAY THAT
DR. LEAMER I GNORED I NDI VI DUAL LEVEL DATA AND DI DN' T TAKE I NTO
ACCOUNT I NDI VI DUAL VARI ATI ON WI THI N J OB TI TLE AND HOWI MPORTANT
THAT I S.
AND I T' S ABSOLUTELY NOT TRUE. THE VERY FI RST THI NG THAT
DR. LEAMER DI D WAS TO ESTABLI SH WHAT - - TO WHAT EXTENT COMMON
FACTORS LI KE J OB TI TLE, AGE, AND COMPANY EXPLAI N THE
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COMPENSATI ON OF I NDI VI DUAL EMPLOYEES.
AND THI S I S AT THE AREA OF, LI KE, PARAGRAPH 129 I N HI S VERY
FI RST REPORT OF OCTOBER 1ST OF 2012.
THE COURT: BUT THAT DOESN' T EXPLAI N WHY HE DI DN' T
TAKE I NDI VI DUAL COMPENSATI ON HERE, WHY HE AVERAGED I T BY J OB
TI TLE.
MR. GLACKI N: WELL, I T DOES ACTUALLY, BECAUSE WHAT
THE - - WHAT THE COMMON FACTORS ANALYSI S SHOWED I S THAT - - AND
EVERYBODY AGREES ABOUT THI S AT THI S POI NT - - I S THAT THESE
COMMON FACTORS EXPLAI N 90- PLUS PERCENT OF AN EMPLOYEE' S
COMPENSATI ON, WHI CH I S - - WHI CH MEANS THAT I F YOU KNOWTHE
COMPANY, J OB TI TLE, AGE, AND GENDER, I THI NK, ARE THE FACTORS
OF ANY MEMBER OF THE CLASS, YOU CAN CALCULATE, ON AVERAGE,
THEI R COMPENSATI ON, 94 PERCENT OF THEI R COMPENSATI ON, OR YOU
CAN EXPLAI N 90- PLUS PERCENT OF THEI R COMPENSATI ON. EXCUSE ME.
AND EVERYONE AGREES THAT THAT RESULT I S MAI NLY DRI VEN BY
TI TLE, THAT I T' S ACTUALLY THE TI TLE THAT DRI VES 90 PERCENT OF
THAT RESULT, EVEN ACCORDI NG TO DR. MURPHY.
SO - - AND OF COURSE WE EXPECT THAT, RI GHT? I F WE HAD A
CASE WHERE MOST OF THE EMPLOYEES' COMPENSATI ON WAS EXPLAI NED BY
THEI R GENDER, THI S WOULD BE A TI TLE 7 LAWSUI T, RI GHT? THAT' S
NOT HOWCOMPANI ES PAY PEOPLE. THEY DON' T PAY THEMACCORDI NG TO
THEI R GENDER, OR THEY TRY NOT TO. AND THEY DO PAY ACCORDI NG TO
THEI R AGE TO THE EXTENT I T' S A PROXY FOR TENURE.
BUT J OB TI TLE, EVERYONE AGREES, DRI VES 90 PERCENT PLUS OF
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THE COMPENSATI ON OF EVERY MEMBER OF THE CLASS, AND DR. MURPHY
AGREED WI TH THI S. HE AGREED TO I T UNDER OATH AT HI S
DEPOSI TI ON.
SO THE VERY FI RST THI NG DR. LEAMER DI D I S ESTABLI SH THAT
THESE EMPLOYEES ARE EMBEDDED I N A SYSTEMTHAT PAYS THEMBASED
ON THEI R J OB TI TLE.
AND ALL OF THE VARI ATI ON THE DEFENDANTS ARE TALKI NG ABOUT
I N TOTAL COMPENSATI ON - - BY THE WAY, THAT COMMON FACTORS
ANALYSI S I S A TOTAL COMP ANALYSI S. I T' S NOT AN ANALYSI S ONLY
OF BASE SALARY.
ALL THE VARI ATI ON THAT THE DEFENDANTS ARE SAYI NG I S SO
I MPORTANT I S I N THAT TOP AREA. I T' S I N THAT 90 TO 100 PERCENT
AREA. THAT' S WHERE ALL THE VARI ATI ON I S HAPPENI NG. 90 AND
BELOWI S DETERMI NED BY COMPANY, TENURE, GENDER, AND J OB TI TLE,
AND 90 PERCENT OF THAT I S DETERMI NED BY J OB TI TLE.
NOW, THAT DOESN' T EVEN MEAN, BY THE WAY, THAT THE VARI ATI ON
PART I S ALL DI SCRETI ONARY BECAUSE THERE' S OTHER FACTORS WE
DON' T KNOW, LI KE PEOPLE' S EDUCATI ON, WHI CH I S NOT I N THE DATA
SET, THAT PROBABLY WOULD EXPLAI N EVEN MORE APPROACHI NG UP TO
THAT 100 PERCENT LEVEL.
SO THE BOTTOMLI NE I S, AND THE REASON I ' M- -
THE COURT: SO FROMWHAT I HEAR, WHAT YOU' RE SAYI NG
I S BECAUSE HE FELT THAT THE I NDI VI DUAL VARI ATI ONS WOULD BE
MI NOR AND WOULD BE EXPLAI NABLE BY GENDER, J OB TI TLE, AND
WHATEVER, HE DI DN' T FEEL LI KE HE NEEDED TO I NCORPORATE
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I NDI VI DUAL AVERAGES I N THI S CORRELATI ON ANALYSI S, THAT HE
THOUGHT HE COULD J UST AVERAGE I T ACROSS THE WHOLE J OB TI TLE?
I S THAT WHAT YOU' RE - - LI KE WHAT I S THE BOTTOMLI NE OF WHAT
YOU' RE SAYI NG?
MR. GLACKI N: THAT I S ALMOST RI GHT, EXCEPT I ' D SAY
I T' S EVEN A LI TTLE STRONGER.
THE COURT: UM- HUM.
MR. GLACKI N: ONCE YOU KNOWTHAT 90 PERCENT OF HOW
THE EMPLOYEES ARE PAI D I S BASI CALLY BASED ON THEI R J OB TI TLE,
THEN THE QUESTI ON I S, I S THERE - - AND THI S I S THE QUESTI ON THAT
WE UNDERSTOOD, THE LI NK THAT WE UNDERSTOOD THE COURT TO HAVE
FOUND MI SSI NG, WHAT I S I T THAT - - I S THERE SOMETHI NG HOLDI NG
THOSE J OB TI TLES TOGETHER? RI GHT? I S THE TRUTH THAT I N THE
REAL WORLD THE J OB TI TLES GO LI KE THI S ( I NDI CATI NG) , AND I AM
MOVI NG MY ARMS UP AND DOWN, OR I S THE TRUTH THAT I N THE REAL
WORLD THE J OB TI TLES MOVE TOGETHER AND ARE CORRELATED?
BECAUSE I F YOU SHOWTHAT 90 PERCENT OF THE EMPLOYEE TOTAL
COMPENSATI ON I S DRI VEN BY THEI R J OB TI TLE AND YOU SHOWTHAT THE
J OB TI TLES ARE CORRELATED, THEN YOU HAVE SHOWN THAT THERE I S A
PAY STRUCTURE I N PLACE THAT WI LL TEND TO HAVE - - THAT WI LL TEND
TO SPREAD THE EFFECTS OF THESE AGREEMENTS EXACTLY THE WAY THAT
DR. LEAMER POSI TED THEY WOULD AS A MATTER OF ECONOMI C THEORY.
AND THAT I S EXACTLY WHAT WE HAVE SHOWN.
THE COURT: WHAT - - YOU KNOW, I N TAB 3 OF WHAT
MR. VAN NEST GAVE ME, I GUESS THAT' S PROBABLY FROMTHE
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SUPPLEMENTAL REPORT, HE SAYS HE' S WORKI NG WI TH TI TLE AVERAGES
BECAUSE I NDI VI DUAL DATA I S LI KELY TO BE DOMI NATED BY FORCES
THAT OPERATE AT THE I NDI VI DUAL LEVEL.
WHAT I S THAT? SO THOSE ARE THE FACTORS THAT YOU' RE TALKI NG
ABOUT RI GHT NOW?
MR. GLACKI N: WELL, THE - -
THE COURT: OR WHAT? WHAT' S BEI NG REFERRED TO HERE?
SI MI LARLY WHEN HE SAYS I N HI S REPLY REPORT THAT AVERAGI NG
ACROSS THE I NDI VI DUALS AND ANY TI TLE CAN REDUCE THE I NDI VI DUAL
I DI OSYNCRATI C EFFECTS, WHAT' S HE REFERRI NG TO?
MR. GLACKI N: WELL, WHAT HE' S REFERRI NG TO I S THAT I F
YOU - - AND THI S I S THE SAME THI NG THAT DR. MURPHY, THE SAME
EXPLANATI ON DR. MURPHY GAVE FOR USI NG THE ACS DATA SET - -
EXCUSE ME - - AVERAGI NG, AGGREGATI NG AND AVERAGI NG THE DATA I N
THE ACS DATA SET, WHI CH I S I F YOU WANT TO DETECT WHETHER OR NOT
THERE I S A STRUCTURE I N WHI CH THESE J OB TI TLES ARE EMBEDDED,
YOU HAVE TO LOOK AT THE AVERAGES, THE AVERAGE COMPENSATI ON
WI THI N THE J OB TI TLE.
AND WE' VE ESTABLI SHED THAT THAT' S THE APPROPRI ATE LEVEL OF
AGGREGATI ON I N A NUMBER OF WAYS.
FI RST OF ALL, WE' VE SHOWN THAT 90 PERCENT OF THE EMPLOYEES'
COMPENSATI ON I S DRI VEN BY J OB TI TLE.
SECOND OF ALL - -
THE COURT: DO YOU AGREE WI TH THAT?
MR. VAN NEST: I THI NK - - I DON' T KNOWI F I T' S 90
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PERCENT, YOUR HONOR. I DI SAGREE WI TH THE SI GNI FI CANCE OF I T,
BUT I THI NK THAT J OB TI TLE DOES EXPLAI N A LOT OF COMPENSATI ON.
BUT THE J OB TI TLE RANGES ARE HUGE AND THEY I NCLUDE SALARY,
BONUS, AND EQUI TY, WHI CH I S WHY DR. LEAMER HAD TO AVERAGE TO
GET EVEN THE RESULTS HE DI D.
THE I NDI VI DUAL FORCES HE' S TALKI NG ABOUT THAT DOMI NATE ARE
THI NGS LI KE HOWWELL DI D THE I NDI VI DUAL PERFORM? WAS HE I N A
REALLY I MPORTANT UNI T? HOW- - YOU KNOW, HOWWELL I S THE
COMPANY DOI NG THAT YEAR? FOUR FACTORS THAT APPLY TO THE
I NDI VI DUAL.
AND THOSE DOMI NATE, AND THEY DOMI NATE BECAUSE I N
SI LI CON VALLEY, PEOPLE ARE PAI D BASED ON PERFORMANCE AND THERE
I S NO WRI TTEN - - YOU KNOW, THERE' S NO RI GI D STRUCTURE. SOME OF
THE BANDS ARE - -
THE COURT: BUT CAN YOU CONTROL FOR PERFORMANCE AND
STI LL HAVE THE COMPENSATI ON MOVI NG TOGETHER?
MR. VAN NEST: COULD YOU?
THE COURT: YEAH.
MR. VAN NEST: I ' MNOT SURE, BECAUSE CERTAI NLY THE
RAWDATA HERE SHOWS THAT THE COMPENSATI ON NEVER MOVES TOGETHER
FOR ANY TI TLE FOR ANY OF THESE COMPANI ES. THAT' S WHAT WE' LL
GET TO I N MY DATA, YOU KNOW, THE RAWDATA I N A MI NUTE.
AND WHAT HE' S SAYI NG HERE, DR. LEAMER, I S "I F I HAD TO LOOK
AT I NDI VI DUAL DATA, I T WOULD BE DOMI NATED BY I NDI VI DUAL
FACTORS. "
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AND THI S I S WHAT GRADY AND ALSUP BOTH SAI D, TOO, I S THAT - -
THE COURT: BUT WHAT DI D HE DEFI NE AS THE I NDI VI DUAL
FACTORS, THE I DI OSYNCRATI C EFFECTS? WHAT WAS HE REFERRI NG TO?
MR. VAN NEST: THI NGS THAT OPERATE ON THE I NDI VI DUAL
LEVEL, LI KE PERFORMANCE OF THE I NDI VI DUAL.
THE COURT: DO YOU AGREE WI TH THAT, MR. GLACKI N?
MR. GLACKI N: NO, I DON' T AGREE THAT THAT' S THE ONLY
FACTOR.
THE COURT: BUT YOU AGREE THAT I T I S, THE PAI D FOR
PERFORMANCE?
MR. GLACKI N: YES. I AGREE - -
THE COURT: OKAY. WHAT ELSE? WHAT ELSE?
MR. GLACKI N: ANOTHER FACTOR WOULD BE EDUCATI ON,
WHI CH WE DON' T HAVE - - WHI CH WE CAN' T USE AS A VARI ABLE BECAUSE
I T WASN' T CONSI STENTLY RECORDED I N THE DATA, AND WE WOULD HAVE
LOVED TO DO THAT BECAUSE I THI NK THEN WE WOULD BE ABLE TO
EXPLAI N EVEN MORE. BUT THAT' S ONE.
AND THEN ANOTHER I MPORTANT ONE I S TENURE, OR WE' VE I NCLUDED
THE VARI ABLE OF AGE, BUT THE FACTOR I S TENURE. PEOPLE WHO ARE
LONGER I N THE COMPANY ARE GOI NG TO - - AND MORE EXPERI ENCED ARE
GOI NG TO GET PAI D MORE THAN PEOPLE WHO ARE NEW, AND THAT' S J UST
A FACT OF LI FE.
AND SO I F YOU' RE TRYI NG TO ESTABLI SH, OR DETERMI NE I SHOULD
SAY, WHETHER OR NOT THERE' S A STRUCTURE HOLDI NG TOGETHER THESE
J OB TI TLES, I T' S APPROPRI ATE TO AVERAGE THE I NDI VI DUAL DATA TO
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REDUCE THE EFFECT OF THOSE FACTORS.
AND THI S I S EXACTLY THE SAME APPROACH THAT DR. MURPHY TOOK
WI TH RESPECT TO THE ACS DATA SET, AND HE EXPLAI NED I T I N
EXACTLY THE SAME WORDS ACTUALLY.
MR. VAN NEST: SO - -
THE COURT: WELL, DOES - - WOULD DR. LEAMER AGREE THAT
THERE ARE SUBSTANTI AL VARI ATI ONS I N COMPENSATI ON WI THI N A J OB
TI TLE?
MR. GLACKI N: I THI NK HE' D CERTAI NLY AGREE THAT
SOMETI MES THERE ARE, THAT THERE COULD BE. I MEAN, I DON' T
THI NK WE' RE RULI NG THAT OUT AS A POSSI BI LI TY. I MEAN, I THI NK
I T DEPENDS WHAT YOU MEAN BY "SUBSTANTI AL. "
BUT THE - - YOU KNOW, LOOK, THE DI FFERENCES I N PAY LEVEL, I
MEAN, THEY ARE WHAT THEY ARE.
AND, YOU KNOW, THE DEFENDANTS HAVE NOT DONE AN
EMPLOYEE- BY- EMPLOYEE CORRELATI ON ANALYSI S TO SHOWTHAT THE PAY
OF THE EMPLOYEES I S NOT CORRELATED TOGETHER.
TO DO THAT, YOU WOULD HAVE TO CREATE A MATRI X THAT WAS
60, 000 - - OR FOR THE BI GGEST EMPLOYER, I NTEL, YOU' D HAVE TO
CREATE A MATRI X THAT WAS 36, 000 BY 36, 000 ACROSS.
BUT I F YOU DI D THAT, THE COMMON FACTORS ANALYSI S TELLS YOU
WHAT YOU WOULD SEE, WHI CH I S THAT EMPLOYEES I N THE SAME J OB
TI TLE, YOU KNOW, DO TEND TO HANG TOGETHER BECAUSE THEI R
COMPENSATI ON I S PRI NCI PALLY DRI VEN BY J OB TI TLE. I T' S J UST AN
UNDI SPUTED FACT AT THI S POI NT, AS I UNDERSTAND I T, THAT J OB
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TI TLE I S THE MAJ OR DETERMI NI NG FACTOR I N COMPENSATI ON. AND SO
HENCE THE I NQUI RY THAT WE TURNED TO, WHI CH I S, DOES THI S
STRUCTURE EXI ST?
AND WE UNDERSTOOD THE CRI TI CI SMS OF THE DEFENDANTS LAST
TI ME TO BE THAT WE HAD NOT SHOWN THAT THI S CORRELATI ON HELD
OVER TI ME, AND WE HAD NOT SHOWN THAT THE - - WE HAD NOT SHOWN
COMPREHENSI VELY THE CORRELATI ON OF THE J OB TI TLES BECAUSE THE
CO- MOVEMENT CHARTS WERE SELECTI VE.
SO WE SET ABOUT TO ANSWER THOSE CRI TI CI SMS, I N ADDI TI ONAL
TO THE OVERBREADTH CONCERN I WOULD SAY.
MR. VAN NEST: SO, YOUR HONOR, I T I S - - I T I S
DEFI NI TELY AGREED BY EVERYONE THAT PERFORMANCE I S A HUGE
FACTOR; AND I T I S NOT AGREED, CERTAI NLY NOT BY US, AND I DON' T
THI NK DR. LEAMER DI SPUTES THI S, THAT THERE I S ENORMOUS
VARI ATI ON I N PAY WI THI N EACH J OB TI TLE.
THAT' S WHAT WE' RE SHOWI NG I N TABS 4 AND 5. I T' S NOT THAT
COMPLI CATED, EI THER. WHAT WE SHOWHERE I N TAB 4 I S - - AND THI S
I S I N DR. MURPHY, EXHI BI T 1 - - THAT I F YOU PI CK A TI TLE, LI KE
ARCHI TECT AT I NTUI T, AND YOU PLOT THE PEOPLE I N THAT CATEGORY,
RI GHT THERE ON TAB 4 - -
THE COURT: WELL, LET ME ASK YOU A QUESTI ON.
MR. VAN NEST: - - YOU SEE HUGE VARI ATI ON UP AND DOWN.
THE COURT: I HEAR THAT.
BUT YOU ALSO SEE THAT WI TH GOOGLE AFTER THE BI G BANG WHERE
THEY GAVE ACROSS THE BOARD 10 PERCENT I NCREASE TO ALL EMPLOYEES
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AND YOU STI LL SEE THAT LEVEL OF VARI ATI ON.
THE COURT: SO LET ME ASK - -
MR. VAN NEST: THERE' S AN EXPLANATI ON FOR THAT, TOO.
THE COURT: - - WHY I S THAT? WHY ARE SOME PEOPLE' S
SALARI ES GOI NG DOWN WHEN THE ENTI RE WORK FORCE I S GETTI NG A 10
PERCENT SALARY I NCREASE?
MR. VAN NEST: THEY DI DN' T GET A 10 PERCENT SALARY
I NCREASE WI TH BI G BANG, YOUR HONOR. SO WHAT THEY GOT WAS A
CHANGE I N THE FORMOF COMPENSATI ON. PEOPLE GOT A BUMP I N THEI R
BASE PAY, BUT NOT NECESSARI LY I N THEI R TOTAL COMP.
NOT EVERYBODY GOT AN I NCREASE, BY THE WAY, AS DR. LEAMER' S
TABLE SHOWS.
WHAT HAPPENED WI TH BI G BANG, BY THE WAY, I S NOT AN EXAMPLE
OF RI PPLE. I T' S NOT AN EXAMPLE OF RI PPLE. RI PPLE I S I F I
CHANGE A FEW, THEN EVERYBODY GETS CHANGED BECAUSE THE J OB
STRUCTURES ARE RI GI D.
RI PPLE - - OR EXCUSE ME. BI G BANG WAS A VERY UNI QUE, AS
DR. LEAMER PUT I T, SPECI FI C RESPONSE TO ONE SET OF FACTS, WHI CH
WAS ENORMOUS HI RI NG BY FACEBOOK OF GOOGLE EMPLOYEES, AND I T I S
AN EXTERNAL FACTOR. I T' S A COMPANY- WI DE DECI SI ON TO MOVE
EVERYTHI NG.
I T' S NOT AN EXAMPLE OF DR. LEAMER' S THEORY.
I N BI G BANG, BY THE WAY, TOTAL COMP DI D NOT GO UP ANY MORE
THAT YEAR THAN I N ANY OTHER YEAR AT GOOGLE, BECAUSE WHAT THEY
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DI D WAS THEY SAI D, "WE' RE GOI NG TO PAY MORE I N BASE PAY, BUT
NOT AS MUCH I N BONUS AND EQUI TY. "
I T WAS A CHANGE I N THE MI X. GOOGLE EMPLOYEES WERE
OBJ ECTI NG TO A MI X OF PAY I N WHI CH EQUI TY WAS HEAVI LY WEI GHED
BECAUSE THEY DI DN' T VALUE EQUI TY AS HI GH, AS HI GHLY, AND SO
I T - - I T WAS A SHI FT I N THE FORMOF PAYMENT, NOT NECESSARI LY
THE TOTAL.
AND AS YOU LOOK AT CHARTS LI KE THE CHART I ' MSHOWI NG HERE
I N TAB 4, YOUR HONOR, THE KEY POI NT I S THAT PAY I S MOVI NG I N
EACH YEAR FOR SOME EMPLOYEES WI THI N THE SAME TI TLE UP A LI TTLE,
SOME DOWN A LI TTLE, SOME UP A LOT, A FEWDOWN A LOT.
AND I F YOU LOOK AT HOWPEOPLE MOVED AGAI NST THE AVERAGE, I N
MANY OF THESE YEARS, MORE THAN HALF THE PEOPLE I N A GI VEN TI TLE
MOVE I N A DI FFERENT DI RECTI ON THAN THE AVERAGE.
AND WHAT WE' RE SAYI NG NOW- -
THE COURT: OKAY. I ' MSORRY. LET ME I NTERRUPT YOU.
MR. VAN NEST: YES.
THE COURT: MY QUESTI ON WAS HOWTO EXPLAI N THE SALARY
FALLS DURI NG THE BI G BANG YEAR.
SO LET ME ASK THAT TO MR. GLACKI N.
MR. GLACKI N: SURE. I MEAN, I - - SO THE - - WE' VE
NEVER DI SPUTED - - WE' VE NEVER SAI D THAT THE PLAI NTI FF - - THAT
THE DEFENDANTS PAY ALL THEI R EMPLOYEES THE SAME OR THAT THEY
PAY THEMI N LOCKSTEP. WE NEVER SAI D THAT, THAT THERE' S NO
VARI ATI ON. THERE I S ABSOLUTELY VARI ATI ON I N HOWTHEY PAY THEI R
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EMPLOYEES.
BUT THE POI NT I THI NK - - I KNOWTHE CHART YOU' RE THI NKI NG
OF I N DR. LEAMER' S REPLY REPORT. WHAT YOU LEARN FROMTHAT - -
SO YOU WANT - - THE ANSWER TO YOUR QUESTI ON I S WHY WOULD
SOMEBODY' S TOTAL COMP GO DOWN? THE ANSWER MI GHT BE THAT I N
2010, THEY WERE - - PERHAPS THEY GOT A HI GHER, A HI GHER AMOUNT
OF TOTAL COMP BECAUSE THEY HAD A GOOD YEAR OR THEY GOT A BONUS.
I MEAN, THERE CERTAI NLY CAN BE VARI ABI LI TY I N PAY, AND SO I T
MI GHT BE THAT WHATEVER THEY GOT I N 2010, DESPI TE THE BI G BANG,
EXCEEDED WHAT THEY GOT I N 2011, BUT THEI R BASE SALARY, FROM
WHI CH A LOT OF OTHER THI NGS FLOWAT THESE COMPANI ES, WAS
I NCREASED BY 10 PERCENT I N 2011.
AND THAT' S - - THE POI NT OF THAT CHART I S TO I LLUSTRATE WHY
I T I S MI SLEADI NG TO LOOK AT THE I NDI VI DUAL LEVEL DATA, BECAUSE
I COMPLETELY DI SAGREE WI TH MR. VAN NEST. THI S I S EXACTLY THE
KI ND OF PREEMPTI VE RESPONSE THAT I T I S OUR POSI TI ON WOULD HAVE
OCCURRED HAD THESE AGREEMENTS NOT BEEN ENTERED I NTO. I T MI GHT
NOT HAVE BEEN 10 PERCENT EVERY YEAR, BUT I T WAS THESE KI NDS OF
PREEMPTI VE RESPONSES THAT WE SAY WERE PRECLUDED BY THE
AGREEMENTS.
AND LET ME SAY ONE OTHER THI NG. I MEAN, WHEN MR. VAN NEST
SAYS THAT GOOGLE J UST SORT OF WASHED I T ALL OUT AND DI DN' T GI VE
THEI R EMPLOYEES ANY MONEY, GOOGLE TESTI FI ED I N THI S CASE, AND I
WOULD HAVE TO GET THE CI TE OUT OF THE BRI EFS, THAT THE BI G BANG
COST THEM$500 MI LLI ON. SO SOMEHOWNOTWI THSTANDI NG THAT THEY
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SMOOTHED EVERYTHI NG OUT AND I T DI DN' T REALLY HAVE ANY I MPACT,
I T COST THEM$500 MI LLI ON.
SO I J UST DON' T AGREE WI TH THAT AS A FACTUAL ASSERTI ON THAT
THI S WAS A NON- EVENT FOR THE EMPLOYEES OF GOOGLE.
THE COURT: SO LET ME ASK, WHAT I S YOUR BEST EVI DENCE
THAT COMPENSATI ON FOR EMPLOYEES MOVES TOGETHER WI THI N THE SAME
J OB TI TLE? WHAT' S THE BEST EVI DENCE THAT YOU HAVE ON THAT?
MR. GLACKI N: THE BEST - - WI THI N THE J OB TI TLE - -
THE COURT: UM- HUM.
MR. GLACKI N: - - THE BEST ANALYSI S WE HAVE I S THE
COMMON FACTORS ANALYSI S WHI CH SHOWS THAT I T I S THE TI TLE I TSELF
THAT DETERMI NES 90 PERCENT, APPROXI MATELY, OF THE I NDI VI DUAL
EMPLOYEE' S SALARY.
AND I J UST WANT TO STRESS AGAI N, THAT ANALYSI S WAS RUN ON
AN EMPLOYEE- BY- EMPLOYEE BASI S. I T WAS NOT AVERAGED. I T WAS - -
WE ASKED, WHAT PERCENT OF EACH EMPLOYEE' S COMPENSATI ON CAN YOU
EXPLAI N WI TH THESE COMMON FACTORS? AND THE ANSWER I S, YOU
KNOW, APPROXI MATELY 90 PERCENT I S EXPLAI NED BY J OB TI TLE.
AND THAT I S THE EVI DENCE - - I T I S THAT EVI DENCE, PLUS THE
HUGE DOCUMENTARY RECORD, THAT THE DEFENDANTS OPERATE A
TI TLE- BASED PAY SYSTEM. AGAI N, I CAN' T I MAGI NE THAT THERE I S
SERI OUS DI SPUTE AT THI S POI NT THAT THE DEFENDANTS OPERATE A
TI TLE- BASED - - THAT EACH OF THEMOPERATES A TI TLE- BASED
COMPENSATI ON SYSTEM.
THE - - I T I S THOSE TWO FACTS THAT TELL US THAT J OB TI TLE I S
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THE RI GHT PLACE TO LOOK FOR THE EXI STENCE OF A STRUCTURE AND
THE RI GHT PLACE TO ASK THE QUESTI ON OF WHETHER OR NOT
COMPENSATI ON I S MOVI NG TOGETHER.
THE COURT: BUT YOU WOULD CONCEDE THAT AVERAGI NG I T
BY TI TLE, AS DR. LEAMER DI D, DOES MASK SOME OF THE I NDI VI DUAL
VARI ATI ONS - -
MR. GLACKI N: THAT' S THE POI NT - -
THE COURT: - - THAT WOULD HAPPEN WI THI N A TI TLE?
MR. GLACKI N: I ABSOLUTELY AGREE. I CONCEDE THAT AND
I AGREE WI TH I T. AND I N FACT, I T I S NECESSARY TO DO I T, AS A
MATTER OF GOOD STATI STI CS, FOR THE VERY REASONS GI VEN BY
DR. MURPHY WHEN HE EXPLAI NED DOI NG THI S WI TH RESPECT TO THE ACS
DATA.
LET ME - - AGAI N, TO TALK ABOUT AVERAGI NG AND GPUS FOR A
MI NUTE, GPUS DOES NOT STAND FOR THE PROPOSI TI ON THAT ONE MAY
NEVER AVERAGE. YOU HAVE TO AVERAGE TO DO CORRELATI ON ANALYSI S.
AVERAGI NG I S FUNDAMENTAL TO MOST STATI STI CAL I NQUI RI ES.
AND DR. MURPHY TESTI FI ED THAT HE AVERAGES DATA ALL THE
TI ME. HE SAI D SOMETI MES HE DOESN' T, SOMETI MES HE DOESN' T USE
AGGREGATE OR AVERAGE DATA, BUT A LOT OF TI MES HE DOES. AND HE
CONCEDED, AVERAGI NG I S A BASI C, USEFUL STOOL I N STATI STI CS.
WHAT HAPPENED I N GPUS, AS I SAI D, AND YOU CAN PULL THE
REPORTS OFF ECF, DR. TEECE, I THI NK, DI D THREE CORRELATI ON
ANALYSES. HE ASKED WHETHER YOU COULD CORRELATE ALL THE
PURCHASERS OF THE LI TTLE - - ALL THE LI TTLE GUYS AND ALL THE BI G
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GUYS AND WHETHER THOSE THI NGS MOVED TOGETHER I N TI ME, AND HE
MASHED TOGETHER ALL THE PRODUCTS, ALL OF THE DI STRI BUTI ON
CHANNELS, ALL OF THE DI FFERENT OEMS I NTO BI G BLOCKS.
WE HAVE - - YOU CAN SEE HI S REPORT OF THE CORRELATI ON
RESULTS. I T' S A SI NGLE TABLE WI TH THREE ROWS.
WE HAVE DONE - - WE HAVE DONE THE CORRELATI ON ANALYSI S ON
THE 2400 J OB TI TLES. WE HAVE - - WHERE POSSI BLE, WHERE WE HAVE
ENOUGH DATA. WE HAVEN' T DONE I T FOR ALL 2400, TO BE CLEAR.
WE HAVE EXPANDED THI S ANALYSI S TO I NCLUDE ALL 2400 TI TLES
I N AN ATTEMPT - -
THE COURT: EVERYONE KEEPS SAYI NG 2400 AND I THOUGHT
THE ORI GI NAL NUMBER WAS A LI TTLE HI GHER THAN THAT. I S THE
DI FFERENCE BECAUSE I NTUI T, LUCASFI LM, AND PI XAR ARE GONE?
MR. GLACKI N: NO, I DON' T THI NK THAT MAKES ANY
DI FFERENCE. AND I THI NK - - I WANT TO SAY THE NUMBER I S
2350- I SH. BUT I DON' T HAVE - -
THE COURT: I THOUGHT I T WAS 2536 I S WHAT I READ FROM
ONE OF THE EARLI ER - - I T' S 2400 NOW?
MR. GLACKI N: I THI NK WE' RE USI NG THAT NUMBER
LOOSELY.
THE COURT: OKAY.
MR. GLACKI N: I WOULD GO WI TH WHAT' S WRI TTEN DOWN.
THE COURT: OKAY.
MR. VAN NEST: 2400 I S, I F NOT THE PRECI SE NUMBER,
YOUR HONOR, VERY CLOSE.
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THE COURT: VERY CLOSE.
MR. VAN NEST: RI GHT. AND THERE' S NO DI SPUTE ABOUT
THAT.
MR. GLACKI N: YEAH, THERE' S A LOT OF TI TLES.
THE COURT: OKAY. LET' S GO TO THE MURPHY EXHI BI TS 7
AND 8.
MR. VAN NEST: WHI CH ONE, YOUR HONOR?
THE COURT: EXHI BI TS 7 AND 8. AND THAT' S I N YOUR - -
MR. VAN NEST: WE HAVE I T BEHI ND TAB 6, YOUR HONOR.
THE COURT: BEHI ND TAB 6.
MR. VAN NEST: AND I F YOU' D LI KE ME TO EXPLAI N THAT,
I CAN.
THE COURT: LET ME ASK, HOWDO THE PLAI NTI FFS RESPOND
TO THI S?
MR. GLACKI N: SURE. SO - -
THE COURT: DOESN' T THI S UNDERMI NE YOUR CORRELATI ON
THEORY?
MR. GLACKI N: NOT AT ALL.
THE COURT: WHY NOT?
MR. GLACKI N: THERE' S TWO REASONS THAT THESE CHARTS
ARE MI SLEADI NG.
YOU HAVE TO REMEMBER THAT THE THI NG WE' RE ASKI NG I S, I S
THERE A RELATI ONSHI P BETWEEN THE TI TLES OVER TI ME, OR I S THERE
A RELATI ONSHI P BETWEEN THE TI TLES AND AVERAGE - - TECHNI CALLY
WHAT WE' VE MEASURED I S A RELATI ONSHI P BETWEEN THE TI TLES AND
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ALL THE OTHER TI TLES AT THE SAME COMPANY. I S THERE A
RELATI ONSHI P THERE, A POSI TI VE RELATI ONSHI P OVER TI ME?
THE QUESTI ON I SN' T, DO THEY ALL MOVE TOGETHER AT EXACTLY
THE SAME TI ME?
THE QUESTI ON I S, I S THAT RELATI ON POSI TI VE OVER TI ME?
AND SO THAT PROPOSI TI ON THAT THE RELATI ONSHI P I S POSI TI VE
OVER TI ME I S COMPLETELY CONSI STENT WI TH THERE SOMETI MES BEI NG
VARI ATI ON AND WI TH THEMSOMETI MES GOI NG I N DI FFERENT
DI RECTI ONS.
BUT WHAT I T TELLS YOU I S, AND THI S WAS EXACTLY THE
QUESTI ON THAT WE UNDERSTOOD TO HAVE BEEN POSED, WHAT I T TELLS
YOU I S THAT OVER TI ME, THE RELATI ONSHI P I S POSI TI VE AND THAT
THEY WI LL TEND - - THEY ARE MOVI NG I N THE SAME DI RECTI ON
TOGETHER.
THE REASON THAT - - SO THAT' S WHY I T' S MI SLEADI NG WI TH
RESPECT TO THE FI RST CHART TO FOCUS ON - - I MEAN, CERTAI NLY
THERE I S VARI ATI ON. BUT I T' S MI SLEADI NG TO LOOK AT THE FI RST
CHART AND SI MPLY SAY, OH, YOU KNOW, THEY DI DN' T ALL MOVE THE
SAME WAY AT THE SAME TI ME, HENCE, THERE' S NO STRUCTURE, BECAUSE
OVER TI ME THERE I S A STRUCTURE.
WI TH RESPECT TO THE SECOND CHART, WHAT' S COMPLETELY
MI SLEADI NG ABOUT THAT CHART I S THAT THOSE, THOSE DOTS ARE NOT
NECESSARI LY THE SAME, I N THE SAME POSI TI ON EVERY YEAR. I MEAN,
WHAT YOU' RE SEEI NG HERE I S - - WHAT THERE ARE - - WHAT THI S I S
SHOWI NG I S THAT I N 2002, ALL OF THE - - FOR EXAMPLE, AT ADOBE
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THE J OB TOTAL AVERAGE COMPENSATI ON WENT DOWN AND I T WENT DOWN
BY DI FFERENT AMOUNTS FOR DI FFERENT TI TLES, AND THEN YOU SEE THE
NEXT YEAR I T WENT UP FOR MOST TI TLES, AND FOR SOME TI TLES I T
WENT DOWN.
BUT I T DOESN' T - - AND THEN YOU SEE THAT I T' S - - ACTUALLY
YOU CAN SEE A PATTERN THERE BEI NG REPEATED OVER TI ME.
BUT THE BOTTOMDOT I S NOT ALWAYS THE BOTTOMDOT, RI GHT?
SO I T' S TOTALLY FI NE. I MEAN, WE AGREE THAT I N ANY GI VEN
YEAR, THERE MAY BE A DI VERGENCE. THERE MAY BE VARI ABI LI TY.
BUT WHAT THE STATI STI CAL ANALYSI S TELLS US I S THAT OVER
TI ME, THAT VARI ABI LI TY I S TI ED TO A POSI TI VE STRUCTURE.
THE COURT: MR. VAN NEST.
MR. VAN NEST: YOUR HONOR, YOU' VE HI T I T RI GHT ON THE
HEAD. THI S - - WE WERE TALKI NG A MI NUTE AGO ABOUT VARI ATI ON
WI THI N A TI TLE, THAT WAS TAB 4 AND 5, AND I T' S CONCEDED NOW
THAT THE AVERAGI NG MASKS THAT.
THI S ASKS A DI FFERENT QUESTI ON. THI S I S BETWEEN TI TLES.
CAN THEY SHOWTHAT THERE' S A RI GI D J OB STRUCTURE SO THAT THE
TI TLES ARE CORRELATED BETWEEN THEMSELVES?
THE TOP OF THE PAGE, I N MY TAB, I S WHAT DR. LEAMER SAYS I S
HI S BEST CASE. THAT' S HI S BEST CORRELATI ON. HE' S TAKEN SOME
TI TLES AT ADOBE, HE' S CHERRY PI CKED SI X OF THEM, HE' S SHOWN THE
GRAPH AND HE SAYS THI S I S A GREAT CORRELATI ON BETWEEN TI TLES.
ALL MURPHY DI D WAS, AT THE BOTTOMOF THE PAGE, I S HE
EXPANDED THE NUMBER OF TI TLES WI THI N EACH COMPANY YOU LOOK AT.
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HE LOOKED AT THE 50 MOST POPULATED, THE TI TLES WI TH THE MOST
EMPLOYEES, AND HE' S PLOTTI NG, YEAR TO YEAR, WHETHER THAT TI TLE
MOVED UP OR MOVED DOWN.
AND AS YOUR HONOR CAN SEE, AND THI S HAS BEEN DEMONSTRATED
OVER AND OVER AGAI N, THERE' S HUGE VARI ATI ON.
EACH COMPANY, YEAR BY YEAR, SOME TI TLES MOVE UP A LI TTLE,
SOME MOVE UP A LOT, SOME MOVE DOWN A LI TTLE, SOME MOVE DOWN A
LOT.
AND I T' S NOT THE SAME TI TLES. THERE I S NO FI XED PATTERN
OF ANY OF THI S. THERE I S ENORMOUS VARI ABI LI TY.
AND WHAT EXHI BI T 7 AND EXHI BI T 8 ARE SHOWI NG RI GHT ON THE
HEAD I S THE SECOND PART OF THE EQUATI ON. WE' VE SHOWN HUGE
VARI ATI ON WI THI N A TI TLE. THI S SHOWS HUGE VARI ATI ON ACROSS
TI TLES BECAUSE I T SHOWS THAT WHEN YOU LOOK AT MORE THAN A FEW
AND YOU EXPAND I T TO THE TOP 50 FOR EACH COMPANY, YOU SEE,
OBVI OUSLY ON THE PAGE, AN ENORMOUS VARI ATI ON UP AND DOWN OF
DI FFERENT TI TLES YEAR AFTER YEAR AFTER YEAR, WHI CH PROVES OUR
POI NT THAT THERE I SN' T ANY SORT OF A RI GI D J OB STRUCTURE WHERE
PEOPLE MOVE - - WHERE EVERYTHI NG - - WHERE A CHANGE I N SOME WOULD
AFFECT I N A CHANGE I N ALL, OR A CHANGE I N SOME WOULD PROPAGATE
OUT.
AND THI NK ABOUT I T LOGI CALLY. WHY I N THE WORLD WOULD THE
FACT THAT A SOFTWARE ENGI NEER HERE I N SI LI CON VALLEY WHO DI DN' T
GET A CALL, WHY WOULD THAT AFFECT A MASK DESI GNER I N
NEWMEXI CO? WHY WOULD THAT AFFECT A SEMI CONDUCTOR
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MANUFACTURI NG PERSON I N ARI ZONA? WHY WOULD THAT AFFECT A
CONSTRUCTI ON MANAGER, AN ARTI ST, A CHEMI CAL ENGI NEER, AN
ELECTRI CAL ENGI NEER? THAT' S THE POI NT OF THI S 2400 TI TLE
PROBLEMAND 60, 000 EMPLOYEES.
I T' S UNPRECEDENTED FOR A REASON. NO COURT ANYWHERE HAS
EVER FOUND, I N A CASE LI KE THI S, THAT YOU CAN CERTI FY AND
EXPECT TO PROVE COMMON I MPACT OVER A GROUP THI S DI SPARATE.
AND THI S TAB 6, EXHI BI T 7 FROMMURPHY, PROVES THAT THERE
I S NO RI GI D PAY STRUCTURE, RI GHT? I T I S A STRUCTURE BASED ON
PAYI NG FOR PERFORMANCE WHERE TI TLES MOVE I N DI FFERENT
DI RECTI ONS EACH YEAR AND WHERE I NDI VI DUAL EMPLOYEES MOVE I N
DI FFERENT DI RECTI ONS EACH YEAR.
AND THE ONLY WAY LEAMER CAN GET ANYWHERE CLOSE TO WHAT HE
GOT I S BY AVERAGI NG. HE AVERAGED EVERYTHI NG. HE AVERAGED
I NDI VI DUAL EMPLOYEE PAY WI THI N A TI TLE. HI S REGRESSI ONS ARE
BASED ON AVERAGES. HI S CORRELATI ONS ARE BASED ON AVERAGES.
AND WHAT THE CASE LAWSAYS REPEATEDLY I S NOT THAT YOU CAN
NEVER AVERAGE. THAT' S NOT WHAT WE' RE SAYI NG. YOU CAN AVERAGE
I N ECONOMI C ANALYSI S.
BUT WHEN THE QUESTI ON I S WHETHER YOU CAN PROVE COMMON
I MPACT WHEN WHAT' S I NVOLVED ARE LOTS OF I NDI VI DUAL PEOPLE AND
DECI SI ONS, AVERAGI NG THEMTELLS YOU NOTHI NG BECAUSE THE FACT
THAT AN AVERAGE GOES UP OR DOWN DOESN' T TELL YOU WHETHER ALL OR
NEARLY ALL PEOPLE WERE AFFECTED.
SO OUR POI NT WI TH TABS 4, 5, 6, AND 7 I S THEY FLUNKED THE
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BASI C TEST THAT YOU GAVE THEMAND NOWTHEY' RE WALKI NG AWAY FROM
I T, AND THEY FLUNKED I T SO BAD THAT DR. LEAMER HAS TO ADMI T,
WHI CH I S I N TAB 1 - - WE ASKED HI MPOI NT BLANK, "DO YOUR
RESULTS, YOUR CORRELATI ON, YOUR REGRESSI ON, EVERYTHI NG YOU DI D,
DO THEY ENABLE YOU TO CONCLUDE THAT ADOBE' S COMP STRUCTURE WAS
SO RI GI D THAT RAI SES FOR ONE OR A FEWWOULD HAVE NECESSARI LY
PROPAGATED I NTO RAI SES FOR ALL?"
"NO. I CAN' T CONCLUDE THAT. I DI DN' T CONCLUDE THAT. "
AND HE CAN' T CONCLUDE I T BECAUSE THE DATA DOESN' T SUPPORT
I T.
THE COURT: LET ME ASK MR. GLACKI N, WHAT I S YOUR BEST
EVI DENCE THAT COMPENSATI ON MOVES TOGETHER ACROSS J OB TI TLES?
MR. GLACKI N: WELL, THERE' S - - I - - WHAT' S MY BEST
EVI DENCE?
THE COURT: YES.
MR. GLACKI N: I HESI TATE BECAUSE I FEEL THE RECORD I S
SO RI CH AND I ' MNOT SURE I CAN ACTUALLY PI CK A WI NNER.
THE COURT: UM- HUM.
MR. GLACKI N: YOU KNOW, THERE' S THI S - - THERE' S THE
RI CH DOCUMENTARY RECORD THAT SHOWS THAT THE DEFENDANTS
MODULATED THEI R ENTI RE PAY SYSTEMS AT THE J OB TI TLE LEVEL AND
THAT THEY SET COMPENSATI ON ON A BELL CURVE I N A NUMBER OF
I NSTANCES.
BUT I N ADDI TI ON TO THAT, YOU KNOW- - AND AGAI N I HESI TATE
BECAUSE WE TOOK THE CRI TI CI SMS VERY SERI OUSLY AND WE DI DN' T
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J UST DO ONE ADDI TI ONAL STATI STI CAL ANALYSI S. WE LOOKED AT THI S
FROMFOUR DI FFERENT - - I SHOULD SAY DR. LEAMER STATI STI CALLY
LOOKED AT I T FROMFOUR DI FFERENT DI RECTI ONS. HE LOOKED AT I T
ON THE LEVEL OF CONTEMPORANEOUS CORRELATI ONS, WHETHER OR NOT
THERE' S A SI MPLE CORRELATI ON, HE LOOKED AT THAT AT THE J OB
TI TLE LEVEL, AND HE LOOKED AT I T AT THE ENTI RE COMPANY LEVEL BY
COMBI NI NG SMALL TI TLES I NTO GROUPS.
THEN HE RAN A MULTI PLE REGRESSI ON ANALYSI S WHI CH ALLOWED
THE STRUCTURAL VARI ABLES TO COMPETE WI TH THE EXTERNAL VARI ABLES
THAT THE DEFENDANTS SAY ARE SO I MPORTANT, AND THE EXTERNAL
VARI ABLES LOST. THE STRUCTURAL VARI ABLES HAD VERY HI GH
COEFFI CI ENTS, THE EXTERNAL MARKET FORCE VARI ABLES HAD VERY LOW
COEFFI CI ENTS, WHI CH CONFI RMS AGAI N WHAT WE KNEWFROMTHE COMMON
FACTORS ANALYSI S, WHI CH I S THAT THE MAJ ORI TY OF WHAT THE
EMPLOYEES ARE PAI D I S DETERMI NED BY J OB TI TLE.
SO HAVI NG DONE THAT ANALYSI S, I T REALLY I S - - YOU KNOW,
HAVI NG BEEN CRI TI CI ZED FOR ONLY DI SPLAYI NG CHARTS AND NOT
LOOKI NG AT EVERY TI TLE I N THE COMPANY, WE HAVE NOWDONE THE
ANALYSI S OF LOOKI NG AT EVERY TI TLE I N THE COMPANY, I N THE
COMPANI ES. WE HAVE DONE MULTI PLE ANALYSES OF EVERY TI TLE I N
THE COMPANI ES, AND NOWTHE DEFENDANTS ARE CHERRY PI CKI NG THEI R
OWN CHARTS AND SAYI NG I F YOU LOOK AT THESE CHARTS, YOU SEE
THI NGS MOVI NG I N A LOT OF DI FFERENT DI RECTI ONS, WHI CH WAS
EXACTLY WHAT WE WERE TAKEN TO TASK FOR THE FI RST TI ME AROUND.
THEY HAVEN' T OFFERED A SI NGLE - - DR. MURPHY HAS NOT OFFERED
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A SI NGLE LEGI TI MATE CRI TI CI SMOF THE MULTI PLE REGRESSI ON
ANALYSI S THAT DR. LEAMER HAS DONE.
I T I S, FRANKLY, AMAZI NG TO ME, AFTER THE YEARS THAT I HAVE
DONE THI S, THAT WE DO NOT SEE FROMDR. MURPHY A COMPETI NG
REGRESSI ON I N WHI CH HE HAS ADDED A VARI ABLE AND BLOWN THI S
REGRESSI ON UP. THAT' S EXACTLY WHAT HE DI D NUMEROUS TI MES I N
THE OPENI NG REPORT. I T I S A STANDARD DEFENSE TACTI C. I T I S - -
THE FI RST THI NG THEY DO I S ADD THE S&P 500 TOTAL RETURN I NDEX
AND SHOWTHAT I T BLOWS UP WHATEVER THE PLAI NTI FFS' EXPERT I S
TRYI NG TO DO.
THERE I S NOT ONE SI NGLE EXAMPLE OF THAT KI ND OF ATTACK I N
HERE, AND I T I S BECAUSE THE REGRESSI ON I S TELLI NG THE TRUTH.
I T' S BECAUSE THE REGRESSI ON I S RI GHT, THAT THERE I S THI S
RELATI ONSHI P BETWEEN THE TI TLES OVER TI ME, NOT THAT THEY HAVE
TO MOVE I N LOCKSTEP EVERY YEAR, BUT THERE I S A STRUCTURE THAT
BI NDS THESE TI TLES TOGETHER OVER TI ME.
I T' S WHAT THE DEFENDANTS' EMPLOYEES SAY, THEI R H. R.
EMPLOYEES SAY, I T' S WHAT THE CEOS SAY, I T' S WHAT THE PEOPLE WHO
ENTERED I NTO THESE AGREEMENTS SAY, AND I T' S WHAT THE DATA SAYS,
AND THEY HAVE NOT EVER ATTACKED THAT ANALYSI S.
THEI R ONLY RESORT I S TO GO BACK TO THE I NDI VI DUAL LEVEL AND
SHOWTHI NGS MOVI NG I N A LOT OF DI FFERENT DI RECTI ONS AND ACCUSE
US OF AVERAGI NG.
THE COURT: SO LET ME GO TO PARAGRAPH 22 OF
DR. MURPHY' S REPORT. I T' S ON PAGE 8. WHY I S THE CORRELATI ON
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NOT RELEVANT? WHAT I S THE BENEFI T - -
MR. VAN NEST: WHAT HE' S SAYI NG, YOUR HONOR - - AND
OBVI OUSLY DR. MURPHY I S HERE I F YOU WANT TO HEAR FROMHI M, AND
HE CAN PROBABLY EXPLAI N THI S BETTER THAN I CAN - - BUT THE
FUNDAMENTAL POI NT I S THAT CORRELATI ON OF - - THI S CORRELATI ON
STUDY OR TEST I S MEANI NGLESS.
ALL HE' S SAYI NG - - ALL LEAMER I S SAYI NG ON THE CORRELATI ON
I S I F I TAKE THE AVERAGE OF A J OB TI TLE AND COMPARE I T TO THE
AVERAGE PAY OF CLASS MEMBERS AT THAT COMPANY, I SEE A
CORRELATI ON.
WELL, OBVI OUSLY BOTH THE TI TLES AT THE COMPANY AND ALL THE
EMPLOYEES I N THE TECH GROUP AT THE COMPANY, THEY' RE ALL SUBJ ECT
TO THE SAME EXACT EXTERNAL FACTORS, HOWWELL DI D THE COMPANY DO
THAT YEAR, HOWWELL I S THE ECONOMY DOI NG, WHAT' S THE J OB
MARKET - -
THE COURT: BUT WHAT' S THE BENEFI T OF - -
MR. VAN NEST: THERE I SN' T.
THE COURT: - - MEASURI NG THE DEVI ATI ON? WHAT' S THAT
BENEFI T?
MR. VAN NEST: THERE' S NO - - THERE' S NO BENEFI T I N
DETERMI NI NG WHETHER THERE' S A RI GI D J OB STRUCTURE. THE
CORRELATI ON DOESN' T TELL YOU THAT.
THAT' S WHY DR. LEAMER SAYS "I CAN' T TELL YOU THAT CHANGES
TO SOME EMPLOYEES WOULD PROPAGATE. " THERE' S NO - - WHAT
DR. MURPHY I S SAYI NG I S CORRELATI ON, I N THI S CONTEXT WHERE
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YOU' RE COMPARI NG A TI TLE TO THE REST OF THE EMPLOYEES AT THE
COMPANY, THAT WI LL MOVE TOGETHER WHETHER THE STRUCTURE I S RI GI D
OR NOT BECAUSE THEY' RE ALL SUBJ ECT TO THE SAME SET OF FACTORS.
AND WHEN YOU LOOK AT EXHI BI T 8, OR FI GURE 8 AND FI GURE 7,
HE TESTED THE THEORY. WHAT HAPPENS WHEN YOU LOOK AT THESE TOP
50 TI TLES? DO THEY ALL SEEMTO - - I S THERE A TI GHT, RI GI D
PATTERN?
ABSOLUTELY NOT. THERE' S HUGE VARI ATI ON.
THE COURT: WHY I SN' T ALL THI S MERI TS ANALYSI S FOR
LATER?
MR. VAN NEST: BECAUSE COMCAST AND ELLI S TELL US THAT
THE STANDARD FOR ESTABLI SHI NG CERTI FI ABI LI TY I N ( B) ( 3) I S
EXTREMELY HI GH.
YOU ASKED EARLI ER ABOUT CASE LAW. COMCAST CI TES DUKES AND
I T SAYS DUKES APPLI ES WI TH EVEN MORE FORCE I N ( B) ( 3) , AND I F
YOU WANT TO CERTI FY A CLASS OF 60, 000 PEOPLE WI TH 2400 - -
THE COURT: OKAY. BUT DUKES HAD NO DOCUMENTARY
EVI DENCE. DUKES HAD A SOCI OLOGI ST TALKI NG ABOUT WAL- MART
CULTURE.
MR. VAN NEST: WELL, LOOK AT - -
THE COURT: I T HAD 120 ANECDOTES FROMWOMEN
EMPLOYEES.
MR. VAN NEST: LOOK AT ELLI S.
THE COURT: THEY HAD STATI STI CS. THEY DI D NOT HAVE
THE WEALTH OF DOCUMENTARY EVI DENCE THAT EXI STS HERE.
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MR. VAN NEST: BUT - - BUT AGAI N, YOUR HONOR - -
THE COURT: YEAH.
MR. VAN NEST: I DON' T WANT TO DI SPUTE THAT THERE' S
DOCUMENTARY EVI DENCE THAT PEOPLE WERE TALKI NG ABOUT AGREEMENTS.
BUT THERE' S NO DOCUMENTARY EVI DENCE OF ANY COMMON I MPACT
ACROSS THE CLASS. THERE' S NO EVI DENCE I N DOCUMENTS OF REALLY
ANY I MPACT.
THERE MAY BE EVI DENCE OF I NTENT. THERE MAY BE EVI DENCE OF
PEOPLE TALKI NG TOGETHER, OF COURSE. WE' VE REVI EWED THAT LAST
TI ME. THAT EVI DENCE I S COMMON.
THE POI NT HERE I S THAT I F YOU HAVE TO SHOW, AS COMCAST
REQUI RES AND ELLI S - -
THE COURT: ANYWAY, OKAY.
THE COURT: LET ME GI VE MR. GLACKI N AN OPPORTUNI TY TO
RESPOND TO THI S I SSUE ABOUT I S I T BETTER TO MEASURE DEVI ATI ON
VERSUS THE CORRELATI ON?
MR. GLACKI N: CAN YOU POI NT ME TO EXACTLY - -
THE COURT: I T' S PARAGRAPH 22. I T' S ON PAGE 8 OF
DR. MURPHY' S - -
MR. GLACKI N: WELL - -
THE COURT: - - J UNE 2013 REPORT.
MR. GLACKI N: OKAY, YEAH, I UNDERSTAND.
I MEAN, THI S I S - - YOU KNOW, SO THI S I S THE HEART OF DR. ,
OF DR. MURPHY' S CRI TI CI SM, SO TO SPEAK, I S HE' S SAYI NG
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DEVI ATI ON REALLY MATTERS.
AND WHAT I S HI S EXPLANATI ON FOR WHY DEVI ATI ON REALLY
MATTERS? YOU MI GHT HAVE LOOKED LONG AND HARD FOR I T. I THI NK
SOMEWHERE I N HI S REPORT HE SAYS BASI C ECONOMI CS.
AND WHAT HE EXPLAI NED AT HI S DEPOSI TI ON I S THAT THE REASON
DEVI ATI ON MATTERS I S THAT I T SHOWS THAT I T I S POSSI BLE FOR THE
DEFENDANTS TO PAY THEI R EMPLOYEES DI FFERENTLY. THAT I S WHAT I T
SHOWS.
AND I F I T I S POSSI BLE FOR DEFENDANTS TO PAY THEI R EMPLOYEES
DI FFERENTLY, THEN THEY WI LL TRY TO PAY THEMAS LI TTLE AS
POSSI BLE, EVEN I N RESPONSE TO COMPETI TI ON.
THAT I S WHAT I UNDERSTAND TO BE HI S, THE THEORY BEHI ND HI S
ECONOMI CS.
AND I - - MY RESPONSE TO THAT I S WE ARE WAY BEYOND BASI C
ECONOMI CS. WE ARE WAY BEYOND TALKI NG REASONABLY ABOUT A
SI TUATI ON WHERE EVERY COMPANY FACES OFF AGAI NST I TS I NDI VI DUAL
EMPLOYEES I N ONE- ON- ONE NEGOTI ATI ONS AND J UST DOES A SI MPLE
COST MI NI MI ZATI ON FORMULA.
I T I S UNDI SPUTED BY ANY OF THE EXPERTS AT THI S POI NT THAT
THESE COMPANI ES USE PAY STRUCTURES, THAT I NFORMATI ON ECONOMI CS
AND THE PRI NCI PLES OF I NTERNAL EQUI TY ARE I MPORTANT FACTORS I N
HOWTHESE COMPANI ES PAY THEI R EMPLOYEES.
SO WHAT DR. MURPHY I S DOI NG I S SI MPLY SAYI NG, "WELL, I F I
LI VED I N A WORLD WHERE NONE OF THOSE THI NGS MATTERED AND THE
WAY GOOGLE PAI D I TS EMPLOYEES WAS TO SI T DOWN ACROSS THE TABLE
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FROMTHEMAND NEGOTI ATE A SALARY AND THERE WAS NOTHI NG ELSE
THAT MATTERED TO THAT CALCULUS, THEN GOOGLE WOULD HAVE AN
I NCENTI VE TO PAY THAT EMPLOYEE AS LI TTLE AS POSSI BLE. " I T' S
J UST AN I RRELEVANT HYPOTHETI CAL.
MR. VAN NEST: I F I MAY - -
THE COURT: WHAT ABOUT WHAT I S MR. VAN NEST' S TAB 5?
I HAD SOME QUESTI ONS ABOUT THESE CHARTS.
THE FI RST QUESTI ON I S, I N FOOTNOTE 10, DR. MURPHY SAYS,
"I ' MI NCLUDI NG PEOPLE WHO GOT PROMOTI ONS AND WHO BASI CALLY LEFT
ONE J OB TI TLE AND MOVED TO ANOTHER ONE. " SHOULD THOSE PEOPLE
BE I NCLUDED HERE? BECAUSE THAT COULD EXPLAI N A LOT OF THE
VARI ATI ON AS WELL I F YOU' RE TRACKI NG OVER TI ME PEOPLE WHO ARE
I N MULTI PLE J OB TI TLES. THAT COULD EXPLAI N SOME OF THE
VARI ATI ON.
MR. VAN NEST: I THI NK - - I T COULD.
BUT THI S VARI ATI ON I S ENORMOUS, YOUR HONOR, AS YOU CAN SEE.
ALL WE' RE DOI NG HERE I S LOOKI NG AT EMPLOYEES WI THI N EACH OF
THESE J OB TI TLES I N A PARTI CULAR YEAR. SO THI S I S J UST ONE
YEAR. THI S I SN' T OVER TI ME. THI S I S I N 2007.
SO YOU CAN SEE - -
THE COURT: RI GHT. BUT I GUESS I ' M- - BUT HE SAYS I N
THE FOOTNOTE THAT HE I NCLUDED PEOPLE THAT CHANGED J OBS.
MR. VAN NEST: HE DI D.
THE COURT: SO - -
MR. VAN NEST: SO THERE WOULD BE SOME PEOPLE - -
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THE COURT: SO THERE' S GOI NG TO BE - - SO THERE' S ONE
TI TLE LI STED ON TOP OF EACH CHART, BUT THAT' S OBVI OUSLY
I NCORRECT BECAUSE SOME OF THESE PEOPLE HAD DI FFERENT J OB
TI TLES.
MR. VAN NEST: BUT TAKE A LOOK, THOUGH, YOUR HONOR.
I F THI S WERE CLOSE, THEN MAYBE WE WOULD BE - - MAYBE WE WOULD BE
LOOKI NG MORE CAREFULLY AT THAT FOOTNOTE.
BUT TAKE A LOOK. FOR EACH ONE OF THESE COMPANI ES, THERE I S
NOT ONLY A HUGE RANGE BETWEEN WHETHER YOU GO UP I N PAY OR GO
DOWN - -
THE COURT: UM- HUM.
MR. VAN NEST: - - BUT THERE' S ALSO A HUGE RANGE I N
HOWMUCH. SOME OF THESE PEOPLE GO UP AS MUCH AS 75 PERCENT I N
A YEAR OR DOWN AS MUCH AS 60 PERCENT, AND THAT' S TRUE FOR
APPLE, I T' S TRUE FOR GOOGLE, I T SLI GHTLY LESS TRUE FOR I NTUI T.
THE COURT: BUT THAT COULD BE EXPLAI NED BY YOU
GETTI NG A NEWJ OB.
MR. GLACKI N: YES.
THE COURT: THE QUESTI ON I HAD ALSO - -
MR. GLACKI N: DO YOU STI LL WANT ME TO RESPOND TO THI S
OR NOT?
MR. GLACKI N: I DON' T THI NK WE TAKE SERI OUS I SSUE
WI TH I T ONE WAY OR ANOTHER.
I WI LL SAY THAT I THI NK THE ANSWER TO THE QUESTI ON DEPENDS
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ON - - THE ANSWER TO THAT QUESTI ON DEPENDS ON WHAT THE RELEVANT
QUESTI ON I S. I F THE QUESTI ON I S, I S THERE A STRUCTURE HOLDI NG
TOGETHER J OB TI TLES, PROBABLY YOU SHOULD EXCLUDE THE PEOPLE WHO
CHANGED J OB TI TLES.
I F THE QUESTI ON I S, DI D THE DEFENDANTS PAY THEI R EMPLOYEES
DI FFERENTLY, THEN MAYBE YOU SHOULD I NCLUDE THEM.
MR. VAN NEST: AND I SN' T THAT THE POI NT? I SN' T THAT
THE POI NT? PROMOTI ON I S ANOTHER WAY TO RESPOND, YOUR HONOR.
MR. VAN NEST: PROMOTI ON I S ANOTHER WAY TO
DI FFERENTI ATE BETWEEN EMPLOYEES. THAT' S OUR WHOLE POI NT - -
MR. GLACKI N: I RESPECTFULLY - - SORRY.
MR. VAN NEST: - - I S THAT WHEN YOU MOVE SOMEONE UP,
I T' S ANOTHER TOOL TO DI FFERENTI ATE BETWEEN I NDI VI DUALS, WHI CH
I S WHAT - - A TOOL I S SALARY, A TOOL I S BONUS, A TOOL I S EQUI TY,
AND A TOOL I S PROMOTI ON.
THE COURT: THE DOCUMENTARY EVI DENCE DOES SUPPORT
THAT PROMOTI ON WAS ONE WAY THAT MANAGERS DEALT WI TH HOWTO
COMPENSATE THE TOP PERFORMERS.
MR. GLACKI N: SURE.
MR. VAN NEST: AND THAT' S I NDI VI DUALS. THAT' S
I NDI VI DUALS. THAT' S OUR POI NT. THAT' S AN I NDI VI DUAL THI NG.
AND OUR WHOLE PI TCH HERE, AND THE DATA SUPPORT I T, MURPHY' S
DATA AND SHAW' S DATA ALL SUPPORT THI S, I S THAT PEOPLE ARE
MAKI NG WI DE DI STI NCTI ONS I N VARI ATI ONS AMONG EMPLOYEES WI THI N
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THE CLASS.
THE COURT: UM- HUM.
MR. VAN NEST: AND THERE ARE WI DE VARI ATI ONS BETWEEN
THE TI TLES, WI THI N THE TI TLES AND BETWEEN THE TI TLES.
THERE I SN' T THI S SORT OF RI GI D J OB STRUCTURE THAT THEY SAI D
THEY WOULD PROVE I N ORDER TO SHOWTHAT CHANGES TO SOME WOULD
PROPAGATE OUT.
THE COURT: LET ME ASK - - AND I ' MGOI NG TO GI VE YOU A
CHANCE TO RESPOND.
MR. GLACKI N: OKAY. THANK YOU.
THE COURT: LAST TI ME I GAVE DR. LEAMER A HARD TI ME
FOR CHERRY PI CKI NG J OB TI TLES OUT OF GOOGLE AND APPLE AND
NOBODY ELSE.
AND THERE CERTAI NLY SEEMS TO BE SOME CHERRY PI CKI NG HERE,
BECAUSE FOR LUCASFI LM, WE' RE COMPARI NG ARTI ST 2 AND SENI OR
ARTI ST 1 AND SOFTWARE ENGI NEER, BUT THEN YOU GO SOMEWHERE ELSE
AND WE' RE COMPARI NG SOMETHI NG TOTALLY DI FFERENT.
WAS AN ANALYSI S DONE FOR ALL THE DI FFERENT J OB TI TLES AND
THEN YOU J UST PI CKED THE TOP THREE FOR EACH COMPANY THAT HAD
THE MOST VARI ATI ON? OR WHAT - - I T' S NOT CONSI STENT ACROSS.
MR. VAN NEST: I THI NK THAT DR. MURPHY WOULD HAVE TO
ANSWER THAT.
MR. GLACKI N: I CAN TELL YOU WHAT HE SAI D AT HI S
DEPOSI TI ON I F YOU WANT.
THE COURT: WHAT DI D HE SAY?
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MR. GLACKI N: WHAT HE SAI D I S HE RAN I T BACK AT THE
RANCH, SO TO SPEAK, FOR EVERYTHI NG. HE PI CKED 2007 BECAUSE I T
WAS I N THE MI DDLE OF THE CLASS PERI OD, AND HE PI CKED - - I
THI NK - - THE PROBLEMI S THAT - - I THI NK I F YOU LOOK I N THE
REPORT, HI S REPORT, I T MAY SAY THAT THESE WERE THE MOST
POPULATED J OB TI TLES AT THESE FI RMS. I ' MNOT - - I CAN' T TELL
BECAUSE I T' S TAKEN OUT OF THE REPORT, BUT I KNOWTHAT WI TH
RESPECT TO AT LEAST SOME OF THESE CHARTS, THAT WAS HOWHE
EXPLAI NED HI S SELECTI ON OF THE J OB TI TLES, WHI CH I S FI NE.
THE COURT: ALL RI GHT. DO YOU WANT TO RESPOND TO
THI S, TO THESE CHARTS? THEY CERTAI NLY SHOWA LOT OF VARI ATI ON
WI THI N A YEAR, WI THI N A SI NGLE J OB TI TLE.
MR. VAN NEST: AND APPENDI X B, YOUR HONOR, I S EVERY
TI TLE, EVERY TI TLE. APPENDI X B TO MURPHY, EVERY TI TLE.
MR. GLACKI N: SO THI S I S MY RESPONSE TO THAT.
THE COURT: UM- HUM.
MR. GLACKI N: TO ACCEPT THE DEFENDANTS' POSI TI ON, YOU
HAVE TO ACCEPT THAT THE EXI STENCE OF VARI ATI ON I N PAY DI SPROVES
THE EXI STENCE OF A J OB STRUCTURE THAT HOLDS TOGETHER BASED ON
I NTERNAL EQUI TY.
AND DR. MURPHY, AT HI S DEPOSI TI ON, WI SELY CONCEDED THAT
THERE I S NO I NCONSI STENCY BETWEEN THOSE TWO THI NGS. YOU CAN
PAY YOUR EMPLOYEES DI FFERENTLY I N THAT TOP - - YOU KNOW, AT THAT
TOP LEVEL I N TERMS OF THE TOP OF THEI R COMPENSATI ON, BUT STI LL
HOLD THEMALL TOGETHER I N A J OB TI TLE STRUCTURE.
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AND THI S WAS - - I MEAN, THI S I S THE QUOTE THAT WE SET OFF
FROMHI M. WHEN I ASKED HI MAT HI S DEPOSI TI ON, "ARE YOU SAYI NG
I T' S I NCONSI STENT THAT - - ARE YOU SAYI NG THAT I T' S I NCONSI STENT
TO HAVE WI DE VARI ATI ON I N PAY AND A STRUCTURE THAT HOLDS
TOGETHER ON I NTERNAL EQUI TY?" HE SAI D, "NO, THEY' RE NOT
I NCONSI STENT. "
AND WE DRI LLED DOWN ON I T AND HE SAI D, "YEAH, " HE SAI D, "I
CAN' T TELL YOU THAT THE EXI STENCE OF WI DE VARI ATI ON DI SPROVES A
J OB STRUCTURE THAT RESPECTS I NTERNAL EQUI TY. I CAN' T TELL YOU
I T DI SPROVES I T. "
AND THI S I S WHEN HE SAI D THERE' S NO ABSOLUTES I N STATI STI CS
AND I F YOU WANT ABSOLUTES, YOU HAVE TO TALK TO GOD.
BUT PUTTI NG ALL THAT ASI DE, THE DEFENDANTS' BRI EF I S SI MPLY
NOT CONSI STENT WI TH COMMON SENSE. THERE' S NO REASON THAT YOU
CAN' T HAVE A STRUCTURE THAT I S HOLDI NG TOGETHER 90 PERCENT OF
THE COMPENSATI ON WHI LE, AT THE SAME TI ME, THERE I S VARI ATI ON
OVER ON TOP OF THAT TO REFLECT THE FACT THAT PEOPLE ARE OLDER,
OR YOUNGER, OR OF DI FFERENT GENDERS, UNFORTUNATELY, OR HAVE
PERFORMED BETTER I N A GI VEN YEAR.
THERE' S NOTHI NG I NCONSI STENT BETWEEN THOSE TWO THI NGS,
WHI CH I S WHY WE HAVEN' T EVER SAI D THERE' S NO VARI ATI ON BETWEEN
THE DEFENDANTS' PAYMENT.
THE COURT: I GUESS I ' MNOT CLEAR. ARE YOU SAYI NG
FOR THE VAST MAJ ORI TY OF PEOPLE, THEI R COMPENSATI ON WI LL MOVE
TOGETHER WI THI N J OB TI TLE, BUT THEN THERE' S GOI NG TO BE THE TOP
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AND THE BOTTOM, THE TOP PERFORMERS, FOR EXAMPLE, AND PEOPLE WHO
MAY, FOR WHATEVER REASONS, NOT BE VALUED AS HI GHLY, BUT THOSE
WI LL VARY THE MOST, BUT THE VAST MAJ ORI TY I N THE MI DDLE I S
GOI NG TO MOVE - -
MR. GLACKI N: NO, NO, NO.
THE COURT: I ' MJ UST NOT CLEAR ON WHAT YOU' RE SAYI NG.
MR. GLACKI N: WHAT I ' MSAYI NG I S I F YOU LOOK AT ANY
I NDI VI DUAL EMPLOYEE' S COMPENSATI ON, HI GH PERFORMER OR LOW
PERFORMER, ABOUT 90 PERCENT OF I T I S EXPLAI NED BY THEI R J OB
TI TLE, WHI CH MAKES PERFECT SENSE, YOU KNOW, WHEN YOU LOOK AT
THE FACT THAT THE DEFENDANTS TRACK ALL THEI R EMPLOYEES I N THE
SALARY RANGES THAT ARE NOT I NFI NI TE ON THE TOP OR BOTTOMEND.
SO WHATEVER EMPLOYEE YOU LOOK AT, HI GH OR LOW, GOOD YEAR,
BAD YEAR, MOST OF THEI R COMPENSATI ON I S EXPLAI NED BY THEI R J OB
TI TLE.
I MEAN, AND THAT I S WHY - - THAT I S ONE OF MANY REASONS THAT
THE J OB TI TLE I S THE RI GHT PLACE TO LOOK FOR A STRUCTURE TO THE
DEFENDANTS' COMPENSATI ON AS A MATTER OF STATI STI CS, I N ADDI TI ON
TO THE RI CH RECORD THAT TELLS US THAT THAT' S THE RI GHT PLACE TO
LOOK.
THE COURT: CAN WE GO TO DR. LEAMER' S REPLY REPORT,
PARAGRAPH 35?
MR. VAN NEST: YOUR HONOR, CAN I J UST RESPOND VERY
QUI CKLY TO WHAT HE J UST SAI D?
THE COURT: YES.
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MR. VAN NEST: THE POI NT I S WHERE THE J OB TI TLE
SHOWS - - HAS AN ENORMOUS RANGE OF COMPENSATI ON WI THI N I T BASED
ON SALARY, EQUI TY, AND BONUS, WHAT HE SAI D MAKES ABSOLUTELY NO
DI FFERENCE, AND THAT' S WHY YOU HAVE THE RESULTS THAT YOU HAVE
WHEN YOU LOOK AT THE RAWDATA.
THE EMPLOYEES' PAY I S WI DELY VARI ED YEAR TO YEAR, AND THE
TI TLES VARY WI DELY YEAR TO YEAR.
THE COURT: BUT I T' S - -
MR. VAN NEST: BECAUSE THERE' S SO MUCH DI SCUSSI ON - -
THE COURT: BUT I T' S NOT CONSI STENT WI TH THE
DOCUMENTARY EVI DENCE THAT SAYS HERE ARE THE RANGES, AND I F YOU
WANT TO GO ABOVE THI S LEVEL, YOU NEED TO GET ONE ADDI TI ONAL
LEVEL OF APPROVAL, OR THAT - -
MR. VAN NEST: I T I S CONSI STENT - - EXCUSE ME, YOUR
HONOR.
MR. VAN NEST: I APOLOGI ZE.
I T' S CONSI STENT WI TH THE LEVEL - - YOU CAN LOOK AT
DR. HALLOCK' S FI GURE 7. SOME OF THE RANGES ARE $100, 000,
$50, 000. THAT' S THE RANGE OF SOME OF THESE J OB TI TLES. THAT' S
J UST SALARY, NOT I NCLUDI NG BONUS AND EQUI TY.
THE REASON THAT YOU HAVE SOMETHI NG LI KE TABS 4, 5, AND 6 I S
THAT THERE I S AN ENORMOUS RANGE WI THI N EACH J OB TI TLE.
NO ONE I S DENYI NG THAT THE DEFENDANTS HAVE STRUCTURES AND
THAT THEY PAY PEOPLE WI THI N J OB TI TLES.
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BUT J OB TI TLES, LI KE EVERYTHI NG ELSE, ARE BASED ON
PERFORMANCE, AND WHEN YOU PERFORMOUT OF ONE, YOU MOVE I NTO
ANOTHER.
AND EVEN WI THI N A J OB TI TLE, AS YOU CAN SEE I N TAB 4,
THERE' S MOVEMENT EVERY YEAR, UP AND DOWN. THERE' S MOVEMENT A
LOT, THERE' S MOVEMENT A LI TTLE, AND THAT' S WHY THERE' S SO MUCH
VARI ABI LI TY. THAT' S WHY DR. LEAMER CAN' T SAY THAT HE CAN
CONCLUDE I MPACT TO SOME WOULD TRANSLATE TO I MPACT FOR OTHERS.
SOME OF THESE BANDS, J UST BASED ON BASE SALARY, ARE 50 TO
$100, 000. THAT DOESN' T COUNT EQUI TY.
THE COURT: WELL, THERE' S CERTAI NLY A LOT OF
DOCUMENTARY EVI DENCE THAT SAYS WHAT THE SPECI FI C BAND I S FOR
EACH J OB TI TLE FOR ALL OF THE DI FFERENT DEFENDANTS.
MR. VAN NEST: TRUE.
THE COURT: SO ANYWAY. LET ME GO TO, PLEASE,
PARAGRAPH 35.
MR. GLACKI N: THI S I S THE REBUTTAL, SUPPLEMENTAL
EXPERT REPORT?
THE COURT: I ' MSORRY, NO. THI S I S HI S ORI GI NAL.
LET' S GO TO THE MULTI PLE REGRESSI ON ANALYSI S.
MR. GLACKI N: SURE.
MR. VAN NEST: I ' VE GOT I T, TI NA.
THE COURT: THI S I S WHERE HE WAS COMPARI NG THE
I NTERNAL VERSUS THE EXTERNAL FACTORS.
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THE COURT: SO DO WE HAVE TO COMPARE THE MAGNI TUDE OF
THE COEFFI CI ENTS FOR THE I NTERNAL FACTORS RELATI VE TO THE
COEFFI CI ENTS FOR THE EXTERNAL FACTORS?
MR. GLACKI N: WELL, SO I DON' T THI NK I T' S NECESSARY.
I THI NK, YOU KNOW, THE WAY THAT THI S - - THE WAY THAT THI S
REGRESSI ON WORKS I S THAT I F THE DEFENDANTS WERE RI GHT THAT
EVERYBODY' S PAY I S COMPLETELY DETERMI NED BY EXTERNAL FACTORS,
SUCH AS FI RMREVENUE OR PERFORMANCE OF THE FI RMOR THI NGS GOI NG
ON I N THE GENERAL TECH J OB MARKET, I F YOU I NCLUDE THOSE FACTORS
AND THEN YOU ALSO I NCLUDE THE SHARI NG VARI ABLES AND YOU RUN THE
REGRESSI ON AND THE SHARI NG VARI ABLES STAY POSI TI VE, I F THEY
DON' T ALL J UST GO AWAY, THEN YOU' VE STI LL DETECTED THE
EXI STENCE OF A STRUCTURE.
BUT I DO THI NK I T I S WORTH NOTI NG HERE THAT I N MANY CASES,
I BELI EVE I N - - I BELI EVE, OVERALL, THAT THE SHARI NG VARI ABLES
DI D BETTER AND PERFORMED BETTER I N DR. LEAMER' S OPI NI ON THAN
THE EXTERNAL FACTOR VARI ABLES.
SO I DON' T THI NK THAT, YOU KNOW, STRI CTLY SPEAKI NG YOU HAVE
TO COMPARE THE MAGNI TUDE.
I F THE ONLY THI NG THAT MATTERED WAS THE EXTERNAL FACTORS,
WHEN YOU RAN THE REGRESSI ON YOU WOULD GET BACK BI G RESULTS ON
THE EXTERNAL FACTORS AND YOU WOULD GET BACK ZERO ON THE SHARI NG
VARI ABLES BECAUSE THE EXTERNAL FACTORS ARE ACCOUNTI NG FOR
EVERYTHI NG.
THE COURT: DO THE DEFENDANTS AGREE THAT THE
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MAGNI TUDE OF THE SHARI NG EFFECT VARI ABLES I S LARGER THAN THE
EXTERNAL ONES?
MR. VAN NEST: NO, YOUR HONOR. WE - - OUR POI NT - -
THEY' RE NOT SI GNI FI CANT. THEY' RE NOT SI GNI FI CANT AT ALL,
NUMBER ONE.
AND NUMBER TWO, AGAI N, WHAT DR. MURPHY SAYS ABOUT THI S
REGRESSI ON I S YOU WOULD EXPECT THE SAME RESULT WHETHER YOU HAD
A RI GI D STRUCTURE OR A NON- RI GI D STRUCTURE, BECAUSE I F WHAT
YOU' RE COMPARI NG I S A TI TLE WI THI N ONE COMPANY TO THE SALARI ES
AVERAGED OF ALL TECHNI CAL EMPLOYEES I N THAT COMPANY, THERE' S
ALWAYS GOI NG TO BE SOME CORRELATI ON BECAUSE THEY' RE ALL SUBJ ECT
TO THE SAME EXTERNAL FACTORS, COMPANY PERFORMANCE, ECONOMY.
SO THEY' RE - - THESE ARE NOT SI GNI FI CANT, AND WE SHOWTHI S
I N FI GURE 8 OF - - YOU CAN SEE I T I N FI GURE 8 OF DR. LEAMER' S
REPORT. HE' S SAYI NG A LARGE NUMBER, ADOBE, 75 PERCENT, NOT
SI GNI FI CANT.
APPLE, 62 PERCENT, NOT SI GNI FI CANT.
MR. GLACKI N: I - -
MR. VAN NEST: GOOGLE, 69 PERCENT, NOT SI GNI FI CANT.
I MEAN, THEY' RE NOT - - AND BOTTOMLI NE, WHAT I HAVE AT
TAB 8 I S LEAMER' S ADMI SSI ON THAT AFTER ALL OF THE REGRESSI ONS
HE DI D, HE CANNOT TESTI FY THAT THERE' S ANYTHI NG THAT WOULD SHOW
CHANGES I N WAGES BEI NG TRANSLATED ACROSS THE FI RM.
THAT' S WHAT - - THAT' S THE POI NT. THAT' S WHAT HE' S TRYI NG
TO SHOW. THAT' S WHAT YOU CHALLENGED HI MON LAST TI ME I S CAN
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YOU SHOW, TI TLE TO TI TLE, THAT ONE TI TLE CAUSES ANOTHER TI TLE
TO MOVE? OR THAT A CHANGE I N PAY I N ONE TI TLE WOULD CAUSE
ANOTHER TI TLE TO MOVE?
THE POI NT I SN' T, DO WE HAVE A STRUCTURE?
I T' S, I S THE STRUCTURE RI GI D OR I S I T FLEXI BLE?
AND WHAT DR. LEAMER ADMI TTED I N HI S DEPOSI TI ON AT PAGES
658 TO 660 WAS THAT EVEN THE COEFFI CI ENTS THAT HE SHOWS DO NOT
DEMONSTRATE THAT A CHANGE I N WAGES WOULD BE TRANSLATED ACROSS
THE FI RM.
SAME THI NG I N TAB 9. WE ASKED HI MAGAI N, "BASED ON
EVERYTHI NG YOU DI D, CAN YOU TELL US THAT WHEN A COMPANY CHANGES
THE PAY OF SOME PEOPLE, I T PROPAGATES TO EVERYONE ELSE?"
"NO, I CAN' T DO THAT. AND THAT' S NOT MY VI EW. "
THE QUESTI ON I SN' T, DO WE HAVE A STRUCTURE? EVERY COMPANY
HAS TO HAVE SOME STRUCTURE FOR PAYI NG 50 TO 100, 000 PEOPLE.
THE QUESTI ON I S, I S THE STRUCTURE RI GI D AND DOES A CHANGE
I N ONE TI TLE CAUSE A CHANGE I N ANOTHER TI TLE?
AND ALL THE EVI DENCE I S TO THE SAME EFFECT, NO.
THE COURT: HAS DR. MURPHY DONE ANY STUDI ES OR ANY
QUANTI TATI VE ANALYSI S SHOWI NG WHAT THE RELATI ONSHI P MAY BE
BETWEEN SAN J OSE EMPLOYMENT RATES AND THE AVERAGE COMPENSATI ON
FOR A TECHNI CAL CLASS MEMBER?
MR. VAN NEST: I ' MNOT SURE WHETHER HE' S DONE THAT OR
NOT. HE' S HERE. I ' MNOT SURE WHETHER HE' S DONE THAT ANALYSI S
OR NOT.
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MR. GLACKI N: I T' S CERTAI NLY NOT I N HI S REPORT.
THE COURT: UM- HUM.
MR. GLACKI N: I MEAN, LI KE, I F DR. MURPHY HAD A
BETTER VARI ABLE, RI GHT, I F SAN J OSE METRO AREA EMPLOYMENT WAS
THE WRONG VARI ABLE, HE CERTAI NLY HAD THE OPPORTUNI TY TO TAKE
THE SAME REGRESSI ON AND PUT A DI FFERENT VARI ABLE I N I T.
MR. VAN NEST: NO. HI S POI NT I SN' T THAT THERE' S - -
MR. GLACKI N: EXCUSE ME. I WASN' T FI NI SHED.
MR. VAN NEST: I ' MSORRY.
MR. GLACKI N: I WAS ANSWERI NG THE J UDGE' S, WHAT I
UNDERSTOOD THE COURT' S QUESTI ON TO BE.
HE DI D NOT DO THAT. HE DI D NOT RE- RUN THI S REGRESSI ON WI TH
A, QUOTE UNQUOTE, BETTER VARI ABLE.
I NSTEAD HE WENT TO OTHER DATA SETS, LI KE THE WEATHER, AND
TRI ED TO SHOWTHAT HE CAN GET - -
THE COURT: I WAS NOT PERSUADED.
MR. GLACKI N: - - SI MI LAR RESULTS.
AND AGAI N, THE ABSENCE OF THAT, THE ABSENCE - - I MEAN, YOU
REMEMBER HE TESTI FI ED AT HI S DEPOSI TI ON THE FI RST TI ME AROUND
THAT ADDI NG THE S&P 500 TOTAL RETURN I NDEX I S SOMETHI NG HE
ALWAYS DOES TO TEST THE SENSI TI VI TY OF A REGRESSI ON AND WE HAD
TO, YOU KNOW, SLOG THROUGH MULTI PLE DI FFERENT REPORTS OF
REGRESSI ON RESULTS USI NG THI NGS LI KE THE S&P 500 TOTAL RETURN
I NDEX AND GI VI NG US CRAZY ANSWERS. HE HASN' T DONE THAT I N ANY
RESPECT.
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THE BEST HE CAN DO I S SAY THAT I F YOU HYPOTHESI ZE THAT WE
HAVE FAI LED TO ACCOUNT FOR HALF OF THE RELEVANT FACTORS, THEN
THE ANSWER WOULD BE DI FFERENT.
WELL, I AGREE. I F YOU HYPOTHESI ZE THAT, THEN THERE MI GHT
BE A DI FFERENT ANSWER.
BUT HE HAS NOT DONE THE STANDARD THI NG THAT, FRANKLY, I
THI NK I T SPEAKS VOLUMES THAT HE DI D NOT DO.
MR. VAN NEST: YOUR HONOR, THE REASON YOU WOULDN' T DO
I T I S THAT OBVI OUSLY I F WHAT YOU' RE TRYI NG TO COMPARE I S PAY
WI THI N ONE TI TLE ON AN AVERAGE TO PAY WI THI N ALL TECHNI CAL
EMPLOYEES I N A COMPANY, A REGRESSI ON DOESN' T ANSWER THE
QUESTI ON BECAUSE THEY WI LL ALWAYS BE RELATED. THEY WI LL ALWAYS
BE RELATED BECAUSE THEY' RE ALL SUBJ ECT TO THE SAME EXTERNAL SET
OF FACTORS.
WHAT THEY FAI LED TO SHOWWAS THAT A CHANGE I N ONE TI TLE
WOULD CAUSE A CHANGE I N ANOTHER. DR. LEAMER DOESN' T SAY THAT.
I N FACT, HE SAYS, "I DON' T THI NK I T' S TRUE. "
AND THAT I S GAME OVER BECAUSE THE WHOLE POI NT I S NOT THAT
YOU HAVE A STRUCTURE, NOT THAT YOU PAY PEOPLE ACCORDI NG TO
TI TLE. WE DO THAT.
BUT I S I T RI GI D SO THAT EI THER WI THI N A TI TLE OR ACROSS
TI TLES, A CHANGE I N ONE WOULD PROPAGATE OUT?
THERE' S NO DATA TO SUPPORT THAT.
THE COURT: SO WHAT - - I ' MSORRY TO I NTERRUPT YOU.
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THE COURT: WHAT I S YOUR EVI DENCE OF CAUSATI ON? I S
I T THE DOCUMENTARY EVI DENCE? WHAT DO YOU HAVE ON CAUSATI ON?
MR. GLACKI N: I NSOFAR AS THAT I S DI FFERENT FROM
I MPACT? I GUESS - - I MEAN, I THI NK OF - - I THI NK ANTI TRUST
I MPACT AND CAUSATI ON ARE - - PEOPLE FREQUENTLY COMPARE ANTI TRUST
I MPACT TO THE CONCEPT OF PROXI MATE CAUSATI ON I N GENERAL TORT,
SO I THI NK THAT I T I S THE SAME EVI DENCE.
THE COURT: AND WHAT I S I T? WHAT I S I T THAT SHOWS
THE CAUSATI ON? LET' S SAY I ACCEPT THAT THERE' S A CORRELATI ON.
MR. GLACKI N: OKAY.
THE COURT: WHAT' S THE CAUSATI ON?
MR. GLACKI N: WELL, THE EVI DENCE - - AGAI N, I T HELPS
TO BACK UP A LI TTLE BI T TO WHERE, TO WHERE WE STARTED.
THE COURT: UM- HUM.
MR. GLACKI N: WHAT I UNDERSTOOD THE I NQUI RY TO BE I S,
YOU KNOW, WE HAD DONE THE WORK TO SHOWTHAT PEOPLE' S PAY AT
THESE COMPANI ES, CLASS MEMBERS' PAY I S MAI NLY DRI VEN BY J OB
TI TLE.
AND WE HAD DONE THE WORK TO SHOWTHAT THE - - TO AT LEAST
OFFER PROOF THAT THE AGREEMENTS HAD A BROAD AND GENERALI ZED
EFFECT, WHI CH WAS THE ADMI SSI ONS OF THE CEOS, THE DOCUMENTS,
THE NATURE OF THE AGREEMENTS THEMSELVES, AND THE REGRESSI ON
ANALYSI S.
THEY ALL SHOWED THAT THE I NTENT AND THE ACTUAL EFFECT OF
THESE AGREEMENTS - - I MEAN, THI S I S PROOF - - I UNDERSTAND THAT
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THE DEFENDANTS WI LL DI SPUTE I T AT TRI AL - - BUT I T I S PROOF THAT
THESE AGREEMENTS HAD AN EFFECT BEYOND ONE WORKER.
THE THI NG THAT I UNDERSTOOD TO BE MI SSI NG FROMTHE COURT' S
PERSPECTI VE WAS SOME OF THE I NFERENTI AL LI NKS ALONG THE WAY,
AND SO WHAT WE HAVE DONE I S TO SHOW- - AND MAI NLY ABOUT WHETHER
OR NOT THERE I S ACTUALLY A TI TLE STRUCTURE THAT I S RESPECT - -
THAT RESPECTS I NTERNAL EQUI TY AND THAT APPLI ES THROUGHOUT THE
FI RM. THAT' S THE QUESTI ON THAT WE UNDERSTOOD TO BE POSED.
AND WE HAVE, I THI NK, ANSWERED I T.
SO I WOULD SAY THAT I T I S - - I T I S ALL THAT EVI DENCE. WHAT
I S THE EVI DENCE OF CAUSATI ON? I T I S THE EVI DENCE THAT THEY PAY
ACCORDI NG TO TI TLE? I T I S THE EVI DENCE OF BROAD AND GENERAL
EFFECT, I NCLUDI NG THE EVI DENCE - - ADMI SSI ONS BY THE CEOS THAT
THEY HAVE A PAY STRUCTURE AND THAT THE GOAL OF THE AGREEMENTS
WAS TO PROTECT THE PAY STRUCTURE?
AND THEN I T I S ALL THE I NFERENTI AL LI NKS I N BETWEEN THAT
SHOWTHAT HAD PREEMPTI VE MEASURES BEEN TAKEN BY THESE COMPANI ES
TO RESPOND TO I NCREASED COMPETI TI ON, THAT THESE PREEMPTI VE
MEASURES WOULD HAVE APPLI ED ACROSS THE FI RM.
AND TO RESPOND TO ONE THI NG THAT MR. VAN NEST SAI D, I
BELI EVE, I F HE' S STI LL REFERRI NG TO TAB 8 OF DR. LEAMER' S
TESTI MONY, HE' S OVERSTATI NG I T.
I DON' T THI NK DR. LEAMER WAS EVER ASKED, NOR DI D HE EVER
TESTI FY, ABOUT WHETHER MOVI NG A TI TLE' S COMPENSATI ON WOULD
AFFECT THE REST OF THE FI RM.
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THE DOCUMENTARY EVI DENCE, I THI NK, SHOWS THAT AT SOME OF
THESE FI RMS I T WOULD HAVE, BECAUSE THEY - - BECAUSE THEY SET ALL
THEI R TI TLES AS A PERCENTI LE OFF OF RADFORD, AND SO THE WAY
THAT THEY WOULD MOVE THE TI TLES I S TO CHANGE THE PERCENTI LE
THAT THEY WERE PEGGI NG OFF OF RADFORD.
WHAT DR. LEAMER WAS ASKED OVER AND OVER AGAI N I S, "ARE YOU
SAYI NG THAT I F ONLY A FEWPEOPLE' S PAY CHANGED, THAT I T WOULD
AFFECT THE WHOLE FI RM?" AND HE' S NEVER OFFERED THAT OPI NI ON
AND THAT I S NOT OUR THEORY OF THE CASE AND THAT I S NOT HI S
OPI NI ON.
THE COURT: BUT WHAT' S YOUR EVI DENCE OF CAUSATI ON
MR. GLACKI N: WELL, AGAI N, THE EVI DENCE OF CAUSATI ON
I S THE EVI DENCE THAT THESE, THAT THESE FI RMS RESPECT THE
PRI NCI PLE OF I NTERNAL EQUI TY AND THAT THE TI TLES ARE HELD
TOGETHER I N A STRUCTURE, I N PART TO PRESERVE I NTERNAL EQUI TY.
THE COURT: BUT I SN' T I NTERNAL EQUI TY ALL WI THI N THE
J OB TI TLE?
MR. GLACKI N: NO, I T' S NOT. I NTERNAL EQUI TY OPERATES
AT DI FFERENT - - AT EVERY LEVEL OF THE COMPANY. I MEAN, THE - -
MAI NTAI NI NG A RELATI VE DI STANCE BETWEEN THE J OB TI TLES I S J UST
AS I MPORTANT AS MAI NTAI NI NG THE RI GHT DI STANCE BETWEEN THE
EMPLOYEES WI THI N THE J OB TI TLE.
SO I NTERNAL EQUI TY I S A CONCEPT THAT APPLI ES UP AND DOWN
THE FI RMAT EVERY LEVEL OF AGGREGATI ON.
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THE COURT: OKAY. BUT WHAT I S YOUR EVI DENCE OF
CAUSATI ON ACROSS THE J OB TI TLES? LET' S SAY I ASSUME THAT THERE
I S A CORRELATI ON. WHAT WOULD - - WHAT WOULD YOUR CAUSATI ON
EVI DENCE BE?
MR. GLACKI N: WELL, THE CAUSATI ON EVI DENCE, I N
ADDI TI ON TO THE CORRELATI ON, I S THE CONDUCT REGRESSI ON WHI CH I S
EVI DENCE OF BROAD AND GENERALI ZED - - I N ADDI TI ON TO BEI NG AN
ESTI MATE OF DAMAGES, I T I S EVI DENCE OF BROAD AND GENERALI ZED
HARM.
AND SO THE COMBI NATI ONS - - AGAI N, I DON' T WANT TO J UST KEEP
SAYI NG THE DOCUMENTS AND THE CEOS OVER AND OVER AGAI N. YOU
KNOWABOUT THAT STUFF. I WOULD SAY THAT' S ALSO EVI DENCE OF
CAUSATI ON.
BUT WHEN YOU TAKE THE CONDUCT - - STATI STI CALLY WHEN YOU
TAKE THE CONDUCT REGRESSI ON AND YOU ADD I T THE CORRELATI ON
ANALYSI S, YOU CONCLUDE THAT THE BROAD AND GENERAL HARMWOULD
HAVE BEEN FELT THROUGHOUT THE COMPANY AND NOT CONCENTRATED AT
HALF THE TI TLES, FOR EXAMPLE. THAT WAS THE I NQUI RY THAT WE
UNDERSTOOD.
THE COURT: DO YOU THI NK THAT THE CORRELATI ON
ANALYSI S AND THE REGRESSI ON ANALYSI S PROVES THE CAUSATI ON, OR
NOT?
MR. GLACKI N: SO I THI NK THAT THE CONDUCT REGRESSI ON,
WHI CH I S ALSO THE ESTI MATE OF DAMAGES, WHEN ADDED TO THE OTHER
STATI STI CAL EVI DENCE PROVES CAUSATI ON, WHI CH I UNDERSTAND TO BE
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THE SAME THI NG AS ANTI TRUST I MPACT.
THE COURT: THE CONDUCT REGRESSI ON AND WI TH WHAT
OTHER STATI STI CAL EVI DENCE?
MR. GLACKI N: WI TH THE EVI DENCE THAT ALL THE TI TLES
AT THESE FI RMS HAVE A POSI TI VE SHARI NG RELATI ONSHI P WI TH ONE
ANOTHER, BOTH CONTEMPORANEOUSLY AND OVER TI ME. THAT I S
EVI DENCE THAT THE EFFECT OF THESE AGREEMENTS WOULD HAVE BEEN
CLASS- WI DE.
THE COURT: EVI DENCE THAT ALL TI TLES HAVE POSI TI VE
SHARI NG RELATI ONSHI PS OVER TI ME?
MR. GLACKI N: AND I WANT TO BE - - I SHOULD BE
CAREFUL. I MEAN, DR. LEAMER NOTED THAT THERE ARE A FEWTI TLES
THAT HAVE NEGATI VE RELATI ONSHI PS, BUT HE ALSO - - HE EXPLORED
THOSE TI TLES, EXPLAI NED WHY I T' S NOT SURPRI SI NG TO FI ND SOME
THAT HAVE NEGATI VE RELATI ONSHI PS, AND EXPLAI NED THAT HI S
OVERALL OPI NI ON I S THAT THOSE TI TLES ARE HELD TOGETHER THAT
WAY, AS I S DR. HALLOCK' S OPI NI ON BASED ON THE EVI DENTI ARY
RECORD.
THE COURT: SO WHAT I S THE - - SO FOR THE COEFFI CI ENT,
YOUR CASE I S PROVEN I F THE NUMBER I S CLOSEST TO 1? I S THAT
RI GHT? AND FOR THE T- STAT, WHAT NUMBER I S I T TO BE
STATI STI CALLY SI GNI FI CANT?
MR. GLACKI N: SO FOR - - OKAY. SO LET ME TAKE THE
SECOND THI NG FI RST BECAUSE I T RELATES TO SOMETHI NG THAT
MR. VAN NEST WAS TALKI NG ABOUT BEFORE.
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HE CALLED THE COURT' S ATTENTI ON TO NOT SI GNI FI CANT, TO THE
NOT SI GNI FI CANT COLUMN I N THE REGRESSI ON ANALYSI S, SO THAT
MEANS THAT THOSE RESULTS DON' T MEET STATI STI CAL SI GNI FI CANCE AT
CONVENTI ONAL LEVELS.
A T- STAT OF 2 OR MORE I S STATI STI CAL SI GNI FI CANCE AT
HOWEVER, THE FACT THAT WE DON' T - - THE POI NT I SN' T THAT - -
I T' S NOT NECESSARY TO DR. LEAMER' S OPI NI ON THAT ALL THE
COEFFI CI ENTS BE POSI TI VE, ALTHOUGH THE VAST MAJ ORI TY ARE; NOR
I S I T NECESSARY TO HI S OPI NI ON THAT THEY ALL BE STATI STI CALLY
SI GNI FI CANT.
WHAT THE TOTAL PI CTURE OF VAST, VASTLY POSI TI VE
COEFFI CI ENTS AND VASTLY STATI STI CALLY SI GNI FI CANT COEFFI CI ENTS
WHERE YOU HAVE 11 YEARS OF DATA TELLS HI MTHAT THI S STRUCTURE
DOES EXI ST.
AND I ' LL J UST POI NT OUT THAT I T' S, AGAI N, I T' S SORT OF - -
I T' S SORT OF ESTABLI SHED AGREEMENT I N THI S CASE AT THI S POI NT
THAT STATI STI CAL SI GNI FI CANCE I S NOT NECESSARY TO THE
RELI ABI LI TY OF AN ECONOMETRI C OPI NI ON. THAT WAS AGREED TO BY
DR. MURPHY THE FI RST TI ME AROUND. I THI NK, AGAI N, THAT' S SORT
OF BEHI ND US ON THE I SSUE. SO I DON' T THI NK I T' S HELPFUL TO
ZONE I N ON THAT COLUMN.
THE COURT: WHAT' S THE CHANGE CORRELATI ON?
MR. GLACKI N: COULD YOU TELL ME WHAT YOU' RE LOOKI NG
AT?
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THE COURT: I ' MLOOKI NG AT EXHI BI T 2 - -
MR. GLACKI N: SURE.
THE COURT: - - OF THE OPENI NG REPORT.
MR. GLACKI N: OKAY. SO, YOU KNOW, I F I T WOULD BE
HELPFUL, I WOULD BE HAPPY TO J UST GO ACROSS THE COLUMNS, OR I
CAN J UST FOCUS ON - -
MR. GLACKI N: - - CHANGE CORRELATI ON.
SO LEVEL CORRELATI ON I S THE DEGREE TO WHI CH THE
COMPENSATI ON LEVELS ARE CORRELATED, SO I F THE AVERAGE
COMPENSATI ON I S A HUNDRED GRAND FOR ONE TI TLE, THE QUESTI ON I S,
HOWI S THAT LEVEL CORRELATED TO THE AVERAGES AT ANY GI VEN POI NT
I N TI ME?
CHANGE COMPENSATI ON I S THE RATE OF - - TO WHAT DEGREE ARE
THE RATES OF CHANGE CORRELATED?
SO WHEN THE - - WHEN THE OTHER COMPENSATI ON AT THE COMPANY
GOES UP BY X PERCENT, 5 PERCENT, WHAT HAPPENS - - HOWMUCH DOES
THE COMPENSATI ON FOR THAT TI TLE CHANGE? WHAT PERCENT DOES I T
CHANGE?
AND THEN THE REGRESSI ON COEFFI CI ENTS ARE - - THE
CONTEMPORANEOUS COEFFI CI ENT I S - - BASI CALLY I T SAYS HOWMUCH
EXPLANATORY POWER I S I N THE - - I S WHAT' S HAPPENI NG AT THE SAME
TI ME WI TH COMPENSATI ON TO THE REST OF THE CLASS? HOWMUCH OF A
FACTOR I S THAT I N THE PAY OF THE TI TLE?
THE LAGGED COEFFI CI ENT, OR VARI ABLE, ASKS HOW- -
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THE COURT: WHY DON' T YOU HAVE DATA FOR MOST OF
ADOBE' S J OB TI TLES? WHY I S I T BLANK?
MR. GLACKI N: BECAUSE - - SO YOU' RE TALKI NG - - SO THE
DATA FOR ADOBE TI TLES I S BROKEN DOWN BY - - ALL THE DATA I N
THESE EXHI BI TS I S BROKEN DOWN BY THE NUMBER OF YEARS FOR WHI CH
WE HAVE DATA FOR A TI TLE.
FOR EXAMPLE, WE HAVE 11 YEARS OF DATA. SOME OF THESE
TI TLES ARE I N EXI STENCE FOR ALL 11 YEARS. THAT' S A LOT OF DATA
TO WORK WI TH.
SOME OF THESE TI TLES ARE I N EXI STENCE FOR TWO OR THREE
YEARS. THAT' S NOT ENOUGH DATA TO WORK WI TH.
SOME OF THESE TI TLES ARE I N EXI STENCE FOR SI X, SEVEN, OR
EI GHT YEARS.
THE REASON THAT YOU SEE BLANKS ON - - I THI NK THE PAGE
YOU' RE LOOKI NG AT FOR ADOBE I S YOU' LL SEE THOSE ARE ALL TI TLES
FOR WHI CH WE ONLY HAVE SI X YEARS OF DATA. THAT I S ENOUGH DATA
TO DO THE CORRELATI ON ANALYSI S, BUT I T I S NOT ENOUGH DATA TO DO
THE REGRESSI ON ANALYSI S, BECAUSE THE REGRESSI ON ANALYSI S HAS
FOUR VARI ABLES, AND WI TH SI X - - AND ONE OF THOSE VARI ABLES I S A
RATE OF CHANGE, AND WI TH SI X - - I ' MGOI NG TO TRY TO GET THI S
RI GHT - - WI TH ONLY SI X YEARS OF DATA AND ONE OF YOUR VARI ABLES
BEI NG A CHANGE VARI ABLE, YOU ONLY HAVE 5 DEGREES OF FREEDOM,
WHI CH I S NOT ENOUGH DATA. I T' S NOT ENOUGH FREEDOMTO GET ANY
KI ND OF SENSI BLE ANSWER ABOUT FOUR EXPLANATORY VARI ABLES AND
ONE DEPENDENT VARI ABLE, WHI CH I S FI VE VARI ABLES TOTAL.
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THE COURT: WHY DON' T YOU CONTI NUE WI TH THE
CONTEMPORARY AND THE LAGGED VARI ABLE?
MR. GLACKI N: SURE. SO THE CONTEMPORARY VARI ABLE
REFLECTS HOWMUCH, HOWMUCH THE J OB TI TLE' S COMPENSATI ON I S
EXPLAI NED BY WHAT' S HAPPENI NG AT THE REST OF THE COMPANY.
THE LAGGED VARI ABLE ASKS HOWMUCH OF THE J OB TI TLE' S
COMPENSATI ON, I N THE REGRESSI ON, I S EXPLAI NED BY THE DI FFERENCE
BETWEEN THE J OB TI TLE AND THE REST OF THE CLASS, THE REST OF
THE COMPANY I N THE PRI OR YEAR.
SO I N OTHER WORDS, I F THERE WAS A BI G DI FFERENCE, DO WE
SEE A CONVERGENCE I N THE SECOND YEAR, OR VI CE- VERSA? I T ALLOWS
I T TO BE EI THER ONE.
AND SO THAT I S TO ACCOUNT FOR THE POSSI BI LI TY THAT
SOMETI MES THE EFFECT OF THE I NTERNAL EQUI TY ON THE STRUCTURE
WI LL BE FELT I N A SUBSEQUENT YEAR.
AND THEN THE OTHER TWO VARI ABLES ARE THE EXTERNAL FACTOR
VARI ABLES. REVENUE I S THE FI RM' S REVENUE, WHI CH ACCOUNTS FOR
FI RMPERFORMANCE, YOU KNOW, THE COMPANY HAS A GOOD YEAR, SO
EVERYONE GETS PAI D MORE; AND - - OR THAT TI TLE GETS PAI D MORE;
AND THE SJ EMP I S SAN J OSE EMPLOYMENT, SO THAT ACCOUNTS FOR THE
TECH SECTOR I S HOT, J OBS ARE SCARCE, PAY GOES UP.
AND WHAT YOU SEE WHEN YOU LOOK AT THESE I S A LOT OF MOSTLY
GOOD SI ZED AND POSI TI VE COEFFI CI ENTS ON THE I NTERNAL SHARI NG
VARI ABLES.
THEY' RE NOT ALWAYS POSI TI VE AND THEY' RE NOT ALWAYS LARGE.
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BUT THEY CERTAI NLY DON' T GO AWAY WHEN YOU ACCOUNT FOR THE
EXTERNAL FACTORS, WHI CH I S WHAT WOULD HAPPEN I F THE DEFENDANTS'
THEORY OF THE CASE WERE CORRECT.
THE COURT: WHAT ABOUT THE NET EFFECT?
MR. GLACKI N: OH, SO - -
THE COURT: UM- HUM.
MR. GLACKI N: - - ALL THE NET - - SO T STATUS I S
T- STAT, AND THE NET EFFECT I S I F YOU ADD THE CONTEMPORANEOUS
AND THE LAGGED VARI ABLES TOGETHER, THAT' S THE ANSWER.
SO FOR - - I F YOU' RE LOOKI NG AT EXHI BI T 2, APPLE, YOU SEE
THAT FOR THE FI RST ONE, I NFORMATI ON SYSTEMS MANAGER 2, THE
CONTEMP I S . 8, THE LAGGED I S . 04, I F YOU ADD THEMTOGETHER, YOU
GET . 84.
THE COURT: AND WHAT I S THE OBS I N SECTI ON 6?
MR. GLACKI N: THAT I S THE R SQUARED. SO THAT I S
THE - - THAT I S J UST A - - THAT I S A STANDARD ECONOMI C, OR
STATI STI CAL MEASURE OF WHAT' S CALLED GOODNESS OF FI T TO THE
DATA. I T TELLS YOU SOMETHI NG ABOUT HOWMUCH OF THE DEPENDENT
VARI ABLE I S BEI NG EXPLAI NED BY THE EXPLANATORY VARI ABLES.
I ' MSURE SOMEONE COULD PROBABLY EXPLAI N I T TECHNI CALLY
BETTER THAN THAT, BUT I THI NK EVERYONE AGREES THAT THAT' S
GENERALLY WHAT I T I S.
THE COURT: LET ME ASK BOTH SI DES, HOWDO YOU EXPLAI N
WHY THE TWO EXPERTS CAME OUT WI TH CONFLI CTI NG ANALYSI S OF THE
ACS DATA? DI D THEY DO I T I N DI FFERENT WAYS? DI D THEY LOOK AT
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SOMETHI NG DI FFERENTLY?
MR. GLACKI N: WELL, I DON' T THI NK THAT THEI R
ANALYSI S - - HOWDI D THEY COME OUT WI TH CONFLI CTI NG ANALYSI S OF
THE ACS DATA?
THI S I S THE STATE OF PLAY WI TH THE ACS DATA. WHAT
DR. MURPHY DI D I S HE TOOK ALL OF THE SURVEY DATA FROMALL OF
THESE DI FFERENT J OBS ACROSS THE UNI TED STATES AND HE PLUGGED I T
I NTO A REGRESSI ON ANALYSI S AND HE SAI D, "SEE, I CAN GET
POSI TI VE RESULTS ON THE SHARI NG VARI ABLES, SO THAT MEANS THAT
WHAT DR. LEAMER DI D I S I NVALI D. "
WHAT DR. LEAMER HAS POI NTED OUT I N HI S REBUTTAL REPORT, HI S
REPLY OR REBUTTAL REPORT, I S THAT THAT DATA SET I S COMPLETELY
UNSUI TED TO THI S PURPOSE BECAUSE OF THI S HUGE METHODOLOGI CAL
FLAWWI TH THE WAY THE DATA I S GATHERED.
WHAT THE - - WHEN THE SURVEY I S ADMI NI STERED TO THE OCCUPANT
OF THE HOUSE, A SI NGLE PERSON FROMTHE HOUSE ANSWERS ON BEHALF
OF EVERYBODY I N THE HOUSE AND SAYS THE LOT - - "I N THE LAST 365
DAYS, WE HAVE EARNED X AMOUNT OF MONEY, " AND THAT SURVEY I S
ADMI NI STERED EVERY MONTH.
SO I N EVERY MONTH, OTHER THAN DECEMBER, YOU' RE GETTI NG
ANSWERS FOR BOTH THE PRI OR YEAR AND - - YOU' RE GETTI NG AN AMOUNT
OF MONEY THAT I NCLUDES MONEY FROMTHE PRI OR YEAR AND MONEY FROM
THE CURRENT YEAR.
SO I F THE SURVEY I S ADMI NI STERED I N J UNE, HE TELLS YOU, "I
EARNED 80 GRAND THI S YEAR, " BUT YOU DON' T KNOWWHAT OF THAT 80
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GRAND WAS EARNED I N 2013 VERSUS WHAT OF THAT 80 GRAND WAS
EARNED I N 2012. YOU HAVE NO I DEA.
SO THEN DR. MURPHY TAKES THI S DATA SET AND HE USES - - HE
APPLI ES TO I T CALENDAR YEAR VARI ABLES AND GETS THESE RESULTS.
AND, YOU KNOW, I DON' T KNOWWHAT, WHAT OTHER ANALYSI S HE
DI D, BUT THI S ONE I S COMPLETELY I NAPPROPRI ATE AND I T I S SUBJ ECT
TO A HUGE METHODOLOGI CAL FLAWAND THAT' S WHY I T' S NOT RELI ABLE.
AND THEN AS DR. LEAMER POI NTS OUT, THERE - - I F YOU - - I F
YOU ASK YOURSELF HOWWELL THESE TI TLES ARE CORRELATED WI TH ONE
ANOTHER I N THE ACS DATA SET, WHAT YOU SEE I S - - AND THI S I S I N
HI S REBUTTAL REPORT - - THAT I N THE ACS DATA - - SO THERE ARE - -
THERE I S ACTUALLY THE KI ND OF CORRELATI ONS YOU MI GHT EXPECT TO
SEE. THERE ARE SOME POSI TI VE CORRELATI ONS, THERE ARE SOME
NEGATI VE CORRELATI ONS, AND THEY FALL ROUGHLY EVENLY AROUND 0.
I N THE DEFENDANTS' DATA, THE CORRELATI ONS ARE ALMOST ALL
POSI TI VE, AND MOST OF THEMARE UP AROUND . 8 OR . 9, AND THAT
J UST SHOWS THAT THE ACS DATA I S COMPLETELY UNCOMPARABLE TO THE
DEFENDANTS' DATA AND ANALYZI NG I T I S A POI NTLESS EXERCI SE UNDER
THESE CI RCUMSTANCES.
THE COURT: LET ME LET MR. VAN NEST RESPOND TO THE
ACS DATA.
MR. VAN NEST: AND I WANT TO GO BEYOND THAT A LI TTLE
BI T.
BUT THE ACS DATA J UST PROVES THE BASI C POI NT THAT
DR. MURPHY I S MAKI NG, THAT THESE REGRESSI ONS DON' T MEAN A
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THI NG, AND EVEN LEAMER SAYS THESE ARE LI MI TED EXERCI SES.
LEAMER SAYS THESE DON' T SHOWCAUSATI ON. HE SAYS I T AT PAGE 525
OF HI S DEPO AND, REPEATEDLY, THESE DO NOT SHOWCAUSATI ON. ALL
THEY ARE I S CORRELATI ON.
THE COURT: UM- HUM.
MR. VAN NEST: AND THE ACS DATA SHOWS THAT I F WHAT
YOU' RE COMPARI NG I S A TI TLE WI THI N A COMPANY TO EVERYBODY I N
THE COMPANY, GETTI NG A POSI TI VE CORRELATI ON DOESN' T TELL YOU
WHETHER YOU HAVE A RI GI D OR A NON- RI GI D STRUCTURE BECAUSE THOSE
THI NGS WI LL TEND TO BE CORRELATED NO MATTER WHAT - -
THE COURT: UM- HUM.
MR. VAN NEST: - - BECAUSE THEY ARE ALL SUBJ ECT TO THE
SAME EXTERNAL FACTORS.
LET ME MAKE ANOTHER POI NT ABOUT THI S, YOUR HONOR.
THE COURT: WHY DO YOU THI NK THAT DR. MURPHY GOT THE
HI GH, THESE HI GH COEFFI CI ENTS AND DR. LEAMER GOT THE LOWONES
WI TH THE SAME DATA?
MR. VAN NEST: I DON' T KNOWEXACTLY WHAT DR. LEAMER
DI D WI TH THE ACS DATA.
ALL I KNOWI S THAT DR. MURPHY TRI ED TO REPLI CATE EXACTLY
WHAT LEAMER HAD DONE WI TH THE COMPANY DATA. HE USED AVERAGES
LI KE LEAMER DI D, SO HE WENT ABOUT I T THE SAME WAY LEAMER DI D,
GOT THE SAME HI GH CORRELATI ONS.
AND J UST AN EXAMPLE OF THI S, YOUR HONOR - -
THE COURT: EVEN HI GHER.
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MR. VAN NEST: I F YOU LOOK - - I F YOU LOOK AT THE
CORRELATI ONS HE J UST TOLD YOU ABOUT FROMADOBE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - YOU WI LL SEE THE THI RD TI TLE DOWN
I S A PRI NCI PAL SCI ENTI ST 6.
THE COURT: UM- HUM.
MR. VAN NEST: THE CORRELATI ONS ARE HI GH, AND YET, I F
YOU LOOK AT THE RAWDATA FOR THAT ADOBE PRI NCI PAL SCI ENTI ST 6,
BEHI ND TAB 4 YOU' LL SEE THERE I S ENORMOUS VARI ATI ON, ENORMOUS
VARI ATI ON WI THI N THAT TI TLE WI THI N THE PEOPLE EMPLOYED THERE.
AND SO THAT' S WHY MURPHY SAYS THI S REGRESSI ON AND
CORRELATI ON MEAN NOTHI NG. WHEN YOU AVERAGE TO START WI TH,
YOU' VE TAKEN THE VARI ATI ON OUT.
BUT I F YOU COMPARE WHAT HE' S SHOWI NG AS CORRELATI ON, HE' S
GOT A . 86, HE' S GOT A . 89 AND . 79 ON HI S LEVEL AND CHANGE
CORRELATI ONS FOR THI S PRI NCI PAL SCI ENTI ST 6.
I F YOU LOOK AT THE RAWDATA BEHI ND TAB 4, THERE I S AN
ENORMOUS AMOUNT OF VARI ATI ON, PROVI NG OUR POI NT THAT THESE
REGRESSI ONS TELL YOU NOTHI NG. THEY ARE SET UP USI NG AVERAGES
AND THEY ARE SET UP TO SHOWSOMETHI NG THAT DOESN' T ANSWER THE
RI GHT QUESTI ON.
THE RI GHT QUESTI ON I S, DOES A CHANGE I N ONE TI TLE CAUSE A
CHANGE I N OTHER TI TLES?
HE HASN' T POI NTED YOU TO ANY STATI STI CAL EVI DENCE TO PROVE
THAT. THERE I S NO DOCUMENTARY EVI DENCE TO PROVE THAT.
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THE FACT THAT WE HAVE A STRUCTURE MEANS NOTHI NG WHEN THOSE
STRUCTURES HAVE 50 TO $100, 000 OF RANGE WI THI N A BAND.
AND I F YOU LOOK AT MURPHY 7 AND MURPHY 8, THERE I S
ABSOLUTELY NO WAY TO CONCLUDE, OTHER THAN WI TH RESPECT TO THESE
TI TLES - -
THE COURT: WHAT EXHI BI T NUMBER HAS THE $100, 000
RANGE?
MR. VAN NEST: EXCUSE ME?
THE COURT: WHAT EXHI BI T NUMBER?
MR. VAN NEST: I T' S EXHI BI T 7 I N HALLOCK. I T' S
EXHI BI T 7 I N HALLOCK, AND HE' S SHOWI NG AN EXAMPLE THERE OF
SALARY RANGES AT GOOGLE. AND THAT' S J UST, YOU KNOW, ONE OF THE
COMPANI ES. BUT I T' S FI GURE 7 FROMHALLOCK' S REPORT. HE' S
GOT - - I T' S FROMHI S MAY 10TH REPORT. HE' S SHOWI NG A J OB GRADE
AT GOOGLE AND YOU CAN SEE THAT - -
THE COURT: UM- HUM.
MR. VAN NEST: - - AT THE HI GH END, I T' S MORE THAN
100, AND THEN YOU' VE GOT ANOTHER ONE THAT' S ALMOST A HUNDRED,
I T' S 90, ANOTHER ONE THAT' S 70.
I MEAN - - AND THI S I S J UST SALARY, YOUR HONOR, BASE. THI S
DOESN' T I NCLUDE EQUI TY.
THE COURT: UM- HUM.
MR. VAN NEST: I T DOESN' T I NCLUDE BONUS.
THE COURT: UM- HUM.
MR. VAN NEST: AND SO YOU WOULD EXPECT TO SEE THESE
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WI DE VARI ATI ONS WI THI N A TI TLE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - AND WI DE VARI ATI ONS BETWEEN AND
AMONG TI TLES.
THE COURT: UM- HUM.
MR. VAN NEST: AND I GUESS - - WHEN YOU HAVE LEAMER
ADMI TTI NG THAT HE CAN' T SHOWCAUSATI ON AND YOU HAVE HI M
CONCEDI NG THAT HE CAN' T SAY THE STRUCTURE I S SO RI GI D THAT
THERE WOULD BE PROPAGATI ON, ADD THAT TO APPENDI X E, WHI CH I S
TAB 11 I N WHAT I HANDED UP, YOUR HONOR. APPENDI X E I S THE LI ST
OF 2400 J OB TI TLES THAT THEY' RE TRYI NG TO STAND HERE AND TELL
YOU ARE ALL MOVI NG TOGETHER AND ALL CAUSE ONE TO THE OTHER.
I T' S LUDI CROUS. YOU CAN GO TO ANY PAGE OF THI S AND SEE AN
ENORMOUS AMOUNT OF VARI ATI ON ON ALL THESE COMPANI ES.
I NTEL, 800 TI TLES.
APPLE, 350 TI TLES.
GOOGLE, 300 TI TLES.
AND J UST LOOK AT THE RANGE. PI CK UP THE FI RST PAGE OF
I NTEL: ASSEMBLY TD PROCESSOR AND I NTEGRATOR; YOU' VE GOT A CAD
ENGI NEERI NG MANAGER; YOU' VE GOT A CHEMI CAL ENGI NEER; A CI RCUI T
DESI GN ENGI NEER; CONSTRUCTI ON PROJ ECT MANAGER; CONSULTI NG
ENGI NEERI NG MANAGER; FAI LURE ANALYSI S ENGI NEER. I T GOES ON AND
ON AND ON AND ON.
AND WI TH 2400 OF THESE, THE I DEA THAT THEY - - THAT THERE' S
SOME, QUOTE, LI NKAGE WI THI N COMPANI ES I S ABSOLUTELY CRAZY.
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AND THAT' S WHY THERE I SN' T ANY STATI STI CAL EVI DENCE. THERE
I S NONE. THE STATI STI CAL EVI DENCE POI NTS THE OTHER WAY. HUGE
VARI ATI ON, WI DE DI SCRETI ON, BI G DI FFERENCES YEAR TO YEAR.
MR. GLACKI N: I - -
MR. VAN NEST: AND SO WHAT THEY' RE ASKI NG YOU TO
DO - - THI S I S A SWI NG FOR THE FENCES TYPE PLAY. I T' S BI GGER BY
A FACTOR OF THREE THAN ANY SI MI LAR CASE THAT' S - - WHERE I T' S
EVEN BEEN REQUESTED.
AND I N REED AND THE OTHER CASES THAT WE CI TED, YOUR HONOR,
WEI SFELDT AND FLEI SHMAN, MUCH SMALLER CLASSES WI TH SI NGLE J OB
TI TLES WERE NOT CERTI FI ED.
THE COURT: UM- HUM.
MR. VAN NEST: AND THAT' S BEFORE COMCAST SAI D YOU
HAVE TO MAKE A RI GOROUS ANALYSI S OF THE DATA AND SEE HOW
RELI ABLE AND PERSUASI VE I T I S I F WHAT THEY WANT I S SOMETHI NG
THI S BI G WHERE THEY' RE GOI NG TO PROVE I N ONE TRI AL ALL OF THI S,
ALL THI S STUFF.
NOW, YOU OFFERED THEMSOMETHI NG LESS AND THEY DON' T WANT
I T, AND THAT SOMETHI NG LESS WAS, LET' S TRY THE CONSPI RACY I SSUE
FI RST.
THEY' VE GOT TO PROVE I MPACT ACROSS THE CLASS AND THEY
HAVEN' T DONE I T. THE DATA DON' T REFLECT I T. THERE ARE NO
DOCUMENTS THAT REFLECT THAT.
AND SO WE NEED TO THI NK ABOUT ANOTHER WAY TO RESOLVE THI S
CASE, AND I THI NK COMI NG BACK TO THE I DEA OF LETTI NG PEOPLE, I N
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EFFECT, OPT I NTO A MASS ACTI ON WHERE WE CAN ACTUALLY MANAGE HOW
I T GETS TRI ED AND WHAT PORTI ONS OF I T GET TRI ED AND HOWWE CAN
SET OURSELVES UP TO RESOLVE THI S I S A LOT BETTER THAN THI S HAI L
MARY WHERE THEY WANT 60, 000 PEOPLE I N A CLASS WI TH 2400 TI TLES.
I T' S J UST GOI NG TO BE A MESS AND WE' RE BETTER OFF SAYI NG NO
NOW. BECAUSE THEY DI DN' T TAKE YOUR MORE LI MI TED OFFER, LET' S
SAY NO AND FI GURE OUT ANOTHER BETTER WAY TO DO THI S, WHI CH, AS
I SAY, I S HOWWE' RE TRYI NG THESE TORT CASES AROUND CALI FORNI A
AND THE UNI TED STATES NOWMORE AND MORE.
WI TH THESE STANDARDS BEI NG I MPOSED FROMCOMCAST AND ELLI S
AND AMGEN AND ALL THI S, WHAT COURTS ARE DOI NG I S REFUSI NG TO
CERTI FY AND FI NDI NG A BETTER WAY, USUALLY A MASS APPROACH WHERE
PEOPLE MAKE THEI R CLAI MS AND WE TRY, I N A BELLWETHER TRI AL, A
SERI ES OF THOSE.
THAT' S THE WAY THI S CASE SHOULD BE RESOLVED. THAT' S A LOT
FAI RER TO THE DEFENDANTS. I T' S A LOT BETTER ACROSS THE BOARD.
WE' LL GET A BETTER RESULT.
THI S CLASS CAN' T STAND UP.
THE COURT: ALL RI GHT. LET ME I NTERRUPT YOU ONE
SECOND.
MR. VAN NEST: YEAH.
THE COURT: LET ME ASK MR. GLACKI N, LAST TI ME YOU HAD
MENTI ONED THAT YOU MI GHT BE I NTRODUCI NG THE STATI STI CAL
EVI DENCE FOR FALSI FI CATI ON PURPOSES.
ARE YOU DOI NG THAT NOW, OR THAT' S NOT REALLY AN I SSUE
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ANYMORE?
MR. GLACKI N: I DON' T THI NK THAT THAT' S A VERY
I MPORTANT I SSUE.
THE COURT: OKAY.
MR. GLACKI N: CAN I RESPOND TO SOME OF THAT?
THE COURT: WELL, I ' MGOI NG TO - - I ' D LI KE TO WRAP
UP, AND I ALSO WANT TO HAVE A LI TTLE BI T OF A CMC, BUT I WANT
TO FI NI SH I N THE NEXT TEN, NO LATER THAN THE NEXT TEN MI NUTES.
SO - -
MR. VAN NEST: ME, TOO, YOUR HONOR.
THE COURT: YES, I KNOW. YOU HAVE A FLI GHT TO CATCH,
RI GHT?
MR. VAN NEST: I DO.
THE COURT: OKAY. I S I T OKAY I F WE GO TO 5: 30?
MR. VAN NEST: SURE.
THE COURT: OKAY.
MR. GLACKI N: THERE' S J UST A COUPLE OF POI NTS I N THAT
THAT I THI NK I CAN RESPOND TO RATHER BRI EFLY I F I T' S ALL RI GHT.
THE COURT: OKAY. VERY QUI CK.
MR. GLACKI N: SO FI RST OF ALL, THE RI GOROUS ANALYSI S
STANDARD I S NOT NEARLY - - I T' S BEEN AROUND FOR 30 YEARS.
DUKES, COMCAST, AMGEN, NONE OF THOSE CASES CHANGE I T. I T' S
BEEN AROUND FOREVER. I T' S BEEN AROUND SI NCE EI SEN.
SECOND OF ALL, THI S I S NOT A BI G CLASS. THI S I S NOT A
PARTI CULARLY LARGE OR COMPLI CATED CLASS ACTI ON. I MEAN, WE
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REGULARLY CERTI FY, I N ANTI TRUST CASES, CLASS ACTI ONS WI TH
THOUSANDS OF PRODUCTS, THOUSANDS OF PURCHASERS. I T I S THE - -
I T I S THE REASON - - THE FACT THAT CLASS RELI EF - -
THE COURT: CAN I - - LET ME I NTERRUPT YOU AND ASK A
QUESTI ON. YOU KNOW, J UDGE BREYER RECENTLY DENI ED CLASS CERT TO
THE SMALLER 150, 000 MEMBER WAL- MART CLASS, AND ONE OF HI S
COMMENTS I N HI S CONCLUSI ON WAS, "LOOK, I T' S KI ND OF ARBI TRARY
HOWYOU CHOSE TO NARROWTHI S. YOU KNOW, THE GEOGRAPHI CAL
REGI ONS YOU CHOSE ARE REALLY NOT ANY DI FFERENT THAN ANY OTHER
REGI ONS WHERE WAL- MART OPERATES. "
WHAT - - HOWWOULD YOU RESPOND TO - - YOU KNOW, WHAT
J USTI FI ES THI S TECHNI CAL CLASS? AND MAYBE I ' MPARTI ALLY TO
BLAME FOR THI S, BUT WHAT J USTI FI ES THI S VERSUS THE ALL EMPLOYEE
CLASS? OR WHAT - - YOU KNOW, WHAT - -
MR. GLACKI N: SO THE - - THE SUBSEQUENT DI SCOVERY THAT
WE' VE TAKEN SI NCE THE HEARI NG - -
THE COURT: UH- HUH.
MR. GLACKI N: - - HAS CONFI RMED THAT THESE AGREEMENTS
WERE PARTI CULARLY TARGETED AT HI GH TECH WORKERS.
THE - - SO THERE' S A LI TTLE BI T MORE EVI DENCE ABOUT THAT I N
THE RECORD NOWTHAT WE ALSO CI TED.
BUT THE SELECTI ON OF THI S GROUP OF PEOPLE WAS NOT AT ALL
ARBI TRARY. I MEAN, THE DEFENDANTS THEMSELVES, SEVERAL OF
THEM- - AND THI S I S ALL I N APPENDI X B TO DR. LEAMER' S FI RST
REPORT - - SEVERAL OF THESE DEFENDANTS SEGMENT THEI R EMPLOYEES
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I NTO TECH AND NON- TECH. GOOGLE PUTS A "T" NEXT TO EVERY
EMPLOYEE AND EVERY J OB TI TLE THAT I T CONSI DERS TO BE TECHNI CAL,
SO WE I NCLUDED THOSE. WE EXCLUDED THE OTHER ONES.
YOU KNOW, THI S I S A DI FFERENTI ATI ON THAT' S BEI NG DRI VEN BY
THE DEFENDANTS' OWN APPROACH TO THEI R EMPLOYEES.
AND THEN I N ADDI TI ON TO THAT, WE' VE ASKED DR. HALLOCK, WHO
I S A LEADI NG EXPERT ON COMPANY PAY SYSTEMS AND HOWCOMPANI ES
ORGANI ZE AND COMPENSATE THEI R EMPLOYEES, HE' S REVI EWED THE
TECHNI CAL CLASS AND HE' S OFFERED THE OPI NI ON THAT, FI RST OF
ALL, I T' S A SENSI BLE COLLECTI ON THAT I S CONSI STENT WI TH THE WAY
THAT COMPANI ES ORGANI ZE THEI R J OB FAMI LI ES TO REFLECT
PARTI CULAR FUNCTI ONS WI THI N THE FI RM, AND HE' S ALSO OFFERED THE
OPI NI ON THAT HARMLI KELY WOULD HAVE BEEN CONCENTRATED ON THE
TECHNI CAL CLASS GI VEN THE NATURE OF THE AGREEMENTS.
SO I T WAS NOT AN ARBI TRARY DECI SI ON AT ALL.
THE COURT: ALL RI GHT. LET ME DO A LI TTLE
HOUSEKEEPI NG AND THEN I ' MGOI NG TO GI VE YOU THE LAST COUPLE
MI NUTES TO WRAP UP TO SAY WHATEVER, HOWEVER YOU WI SH TO CLOSE.
LET' S HAVE THE FURTHER CMC ON OCTOBER 3RD, WHI CH I S WHEN
WE' RE GETTI NG TOGETHER ANYWAY FOR THE PRELI MI NARY APPROVAL.
DOES THAT SOUND OKAY?
THE COURT: ALL RI GHT. I WOULD - - I N LI GHT OF THE
THREE DEFENDANTS SETTLI NG, I ' D LI KE TO REDUCE SOME OF THE PAGE
LI MI TS THAT I HAD PREVI OUSLY SET FOR PRETRI AL DOCUMENTS.
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MR. VAN NEST: COULD I J UST BRI EFLY MAKE A PLEA THAT
YOU NOT DO THAT, YOUR HONOR?
WE' RE HAVI NG - - WE HAVE - - I T' S STI LL FOUR DEFENDANTS. WE
EACH HAVE I SSUES THAT WE NEED TO PRESS. WE' RE NOT ALL THE
SAME.
AND HONESTLY, I F THEI R POSI TI ON I S THAT ALL THE SAME
EVI DENCE AND STUFF I S RELEVANT, I T SHOULDN' T CHANGE THE PAGE
LI MI TS.
I WOULD J UST LEAVE I T AT THAT, YOUR HONOR, AND ASK YOU
PLEASE NOT TO DO THAT. I T' S ALREADY REALLY TI GHT.
THE COURT: WELL, THI S I S WHAT I ' LL DO. LET' S TALK
ABOUT THI S - - SI NCE I T' S A LATE HOUR NOW, LET' S TALK ABOUT THI S
ON OCTOBER 3RD SI NCE WE HAVE TI ME. NONE OF THOSE DEADLI NES ARE
GOI NG TO RUN UNTI L, I THI NK, FEBRUARY.
MR. VAN NEST: GOOD TO GO.
THE COURT: OR J ANUARY. BUT I F YOU WOULD AT LEAST
TALK ABOUT MAYBE YOU COULD SHAVE SOME OFF HERE AND THERE. I
MEAN, THESE LI MI TS WERE SET ASSUMI NG ALL SEVEN DEFENDANTS WOULD
BE PARTI CI PATI NG. SO I F YOU WOULD PLEASE AT LEAST CONSI DER
SOME LI MI TS AND THEN PUT YOUR PROPOSAL I N THE J OI NT CASE
MANAGEMENT STATEMENT.
MR. VAN NEST: CERTAI NLY WE WI LL.
THE COURT: ALL RI GHT. SO - - WELL, I WAS GOI NG TO
MAKE SOME PAGE REDUCTI ONS, BUT I F YOU WANT ME TO HOLD OFF ON
THAT, THEN I DON' T THI NK THAT - -
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156
MR. VAN NEST: PLEASE.
THE COURT: - - THERE' S ANYTHI NG MORE WE NEED TO DO ON
THE CMC.
MR. SAVERI : I THI NK THAT' S FI NE. WE' LL WORK I T
OUT - -
MR. VAN NEST: WE' LL WORK I T OUT.
MR. SAVERI : - - AFTER MR. VAN NEST' S SOJ OURN.
THE COURT: I WOULD APPRECI ATE ANY SHAVI NG.
MR. SAVERI : YOU GOT I T.
MR. VAN NEST: WE KNOWTHAT, YOUR HONOR.
THE COURT: OKAY. AND ALSO I F YOU WOULD GI VE ME A
NEWTRI AL ESTI MATE AS WELL, YOU KNOW, DEPENDI NG ON WHO I S LEFT
TO TRY THE CASE, WHETHER THAT WOULD ACTUALLY CHANGE THE LENGTH
OF THE TRI AL.
MR. SAVERI : SO WE HAVE 17 DAYS. YOU WANT TO SEE I F
WE CAN TRI MTHAT BACK?
THE COURT: YEAH. I J UST WANT TO KNOW, I S THERE A
NEWESTI MATE NOWTHAT THERE ARE THREE FEWER DEFENDANTS?
MR. SAVERI : OH, OKAY.
THE COURT: OKAY. WHY DON' T - - WE' LL KEEP EVERYTHI NG
AS I S, BUT I F YOU WOULD PLEASE MEET AND CONFER AND MAKE SOME
PROPOSALS.
MR. VAN NEST: WE' LL DO THAT.
THE COURT: OKAY. LET ME GI VE THE LAST, REALLY, TWO
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MI NUTES, BECAUSE POOR MS. SHORTRI DGE I S PROBABLY GOI NG TO LOSE
HER ARMS I N A MI NUTE, J UST THE LAST TWO MI NUTES OF YOUR
STRONGEST WHATEVER YOU WANT TO SAY ON I MPACT OR WHY THI S SHOULD
BE CERTI FI ED OR - -
MR. GLACKI N: WELL, THERE' S ONE, ONE POI NT I WANTED
TO MAKE.
MR. VAN NEST SAI D THAT DR. LEAMER ADMI TTED NOTHI NG HE DOES
CAN SHOWCAUSALI TY AND HE CI TED TO 525 OF THE DEPOSI TI ON OF
DR. LEAMER.
I WENT I MMEDI ATELY TO THE EXCERPTS THAT WE HAVE THAT WERE
SUBMI TTED BY THE DEFENDANTS. I DI DN' T SEE THAT PAGE, SO I
CAN' T CONFI RMTHAT HE DI D SAY THAT.
BUT I WAS AT HI S DEPOSI TI ON. I DON' T REMEMBER HI MEVER
SAYI NG THAT.
AND HE EXPRESSLY SAYS I N HI S FI NAL REPORT THAT THE KI ND OF
REGRESSI ON ANALYSI S HE' S DONE, WHI CH I NCLUDES TEMPORAL ORDERI NG
AND ALSO I NCLUDES ACCOUNTI NG FOR THE EXTERNAL FACTORS THAT THE
DEFENDANTS HAVE CLAI MED ARE I MPORTANT, CAN SUPPORT AN I NFERENCE
OF CAUSALI TY.
SO, YOU KNOW, WE HAVE - - I ' MONLY GOI NG TO - - YOU' VE HEARD
A LOT OF ARGUMENT TODAY. I ' MNOT GOI NG TO WALK THROUGH I T ALL
AGAI N.
ALL I WI LL SAY I S THAT, YOU KNOW, WE SORT OF UNDERSTOOD
THERE TO BE A SPECI FI C I SSUE, A DEFI CI ENCY THAT HAD BEEN RAI SED
WI TH RESPECT TO THE EVI DENCE THAT WE HAD SUBMI TTED. WE HADN' T
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SHOWN MOVEMENT OVER TI ME, WE HADN' T EXPANDED THE ANALYSI S TO
THE ENTI RE STRUCTURE, AND WE HADN' T ACCOUNTED FOR EXTERNAL
FACTORS.
WE' VE NOWDONE ALL THREE OF THOSE THI NGS. WE HAVE
COMPLETED ALL THE I NFERENTI AL LI NKS THAT THE DEFENDANTS
COMPLAI NED ABOUT LAST TI ME, AND THAT' S WHY, I NSTEAD OF SAYI NG
WE HAVEN' T, THEY' RE J UST FOCUSSI NG BACK ON THI S QUESTI ON OF
I NDI VI DUAL VARI ATI ON AND SAYI NG THAT I T MATTERS.
BUT I N THE TEXT OF HI S DEPOSI TI ON THAT WE BLOCK QUOTED I N
OUR REPLY BRI EF, DR. MURPHY ADMI TS THAT I T DOESN' T MATTER, THAT
WI DE VARI ATI ON I N I NDI VI DUAL PAY I S NOT I NCONSI STENT WI TH A J OB
TI TLE STRUCTURE HELD TOGETHER BY I NTERNAL EQUI TY.
AND SO WHAT THAT TELLS YOU I S WE HAVE - - WE HAVE NOT J UST
GI VEN THE COURT A PLAUSI BLE METHODOLOGY. AT THI S POI NT WE HAVE
GI VEN THE COURT, I THI NK, SI GNI FI CANT PROOF OF ANTI TRUST
I MPACT, FAR MORE SI GNI FI CANT PROOF THAN I HAVE SEEN I N AN
ANTI TRUST CLASS CASE.
SO I RESPECTFULLY SUBMI T WE' VE MORE THAN CLEARED THE HURDLE
ON THAT ONE.
MR. VAN NEST: SO, YOUR HONOR, I ' LL STI CK WI TH THE
KEY POI NTS I N THE TABS I HANDED UP. I THI NK THEY TELL THE
STORY.
AND LET ME TELL I T J UST FROMTHE VERY HI GHEST POI NT. THERE
ARE THREE REASONS WHY THEY FAI L THE TEST THAT COMCAST SETS OUT.
COMCAST SAYS RI GOROUS ANALYSI S, YOU' VE GOT TO PROVE CLASS- WI DE
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159
I NJ URY, WHI CH YOU' VE I NTERPRETED, I THI NK CORRECTLY SO, AS ALL
OR NEARLY ALL PEOPLE.
ONE. LEAMER AVERAGED AND THE CASE LAWUNI FORMLY REJ ECTS
THAT. GPU REJ ECTED I T, REED REJ ECTED I T, AND I T' S BEEN
UNI FORMLY REJ ECTED THAT AVERAGI NG CAN ALLOWYOU TO SHOW
CLASS- WI DE I MPACT.
I T CAN' T, BECAUSE THE WAY THE AVERAGE MOVES DOESN' T TELL
YOU ANYTHI NG ABOUT HOWMANY PEOPLE WERE I MPACTED. THAT' S POI NT
ONE.
POI NT TWO. THE RAWDATA THAT WE LOOKED AT I N TABS 4, 5, 6,
AND 7 SHOWS TWO THI NGS CLEARLY AS A BELL. ONE, THERE I S
ENORMOUS VARI ATI ON WI THI N EACH J OB TI TLE BECAUSE THE BANDS ARE
BROAD, BECAUSE THERE I S SALARY, BONUS AND EQUI TY ALL I N PLAY,
AND FOR ALL THESE TI TLES, AND MURPHY LOOKED AT EVERY ONE, THERE
I S A WI DE RANGE OF VARI ATI ON WI THI N THE TI TLE.
AND POI NT TWO, THERE I S NO SHOWI NG THAT MOVI NG ONE TI TLE
CAUSES ANY OTHER TI TLE TO MOVE. THAT' S THE POI NT OF MURPHY 7
AND MURPHY 8. THERE I S ENORMOUS VARI ATI ON BETWEEN AND AMONG
TI TLES.
AND THE THI RD POI NT I S THEY SI MPLY HAVEN' T SHOWN THI S
RI PPLE EFFECT OR HOWTHE HECK I T WOULD WORK. WE KEEP ASKI NG,
WHAT DO YOU HAVE TO SHOWCAUSATI ON? WHAT DO YOU HAVE - - WHAT
I S YOUR THEORY OF PROPAGATI ON?
THEY DON' T REALLY HAVE A THEORY OF PROPAGATI ON BECAUSE
THERE' S NO EVI DENCE OF I T, THERE' S NO ANECDOTES OF I T EI THER
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BEFORE, DURI NG, OR AFTER THE CLASS PERI OD.
THI S RI PPLE THEORY I S A MADE UP THEORY THAT THE EVI DENCE
WI LL NOT SUPPORT, AND WI THOUT THAT, WI THOUT THAT, THEY CAN' T
SHOWCLASS- WI DE I NJ URY.
MY FI NAL POI NT, YOUR HONOR, I S J UST APPENDI X B. 2400
TI TLES, 60, 000 CLASS MEMBERS. I T' S NOT THAT THAT' S A BI G CLASS
AMONG ALL THE CLASSES I N THE UNI TED STATES. I T' S THAT THAT' S
AN ENORMOUS CLASS FOR ANY WAGE SUPPRESSI ON CASE.
REED SAI D 19, 000, TOO MANY.
FLEI SHMAN, EVEN LESS THAN THAT, TOO MANY.
WEI SFELDT, LESS THAN THAT, TOO MANY.
AND THE REASON I S THAT WHEN YOU HAVE THI S MUCH DI SPARI TY
AND DI FFERENCE BETWEEN AND AMONG THESE TYPES OF J OBS, THERE I S
NO WAY TO SHOWTHAT I MPACT ON SOME OF THEMWOULD HAVE I MPACTED
ALL OR NEARLY EVERYONE, ESPECI ALLY WHEN THEY' RE SWI NGI NG FOR
THE FENCE WI TH A 2400 TI TLE PROPOSED CLASS.
I T I S UNWORKABLE. I T I S UNPRECEDENTED. THEY CAN' T POI NT
TO A SI NGLE CASE WHERE ANYTHI NG EVEN APPROACHI NG THI S WAS
CERTI FI ED, NOT ONE. THEY HAVEN' T CI TED ONE.
THERE I SN' T ONE BECAUSE THE CASES THAT ARE ANYWHERE NEAR
THI S ARE ALL CASES DENYI NG CLASS CERT.
AND THAT' S WHY WE EMPHASI ZE REED, WEI SFELDT, FLEI SHMAN AND
THE LI KE. THEY ALL RECOGNI ZE WHAT WE RECOGNI ZE, THAT AVERAGI NG
DOESN' T TELL YOU ANYTHI NG, AND YOU CAN' T RUN A CLASS ACTI ON I N
THI S WAY.
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LET' S SAY NO AND GET ON TO A MORE REASONABLE WAY OF DOI NG
THI S AND FI GURE OUT A BETTER WAY TO RESOLVE THESE CLAI MS.
THANKS FOR YOUR ATTENTI ON, YOUR HONOR.
THE COURT: ALL RI GHT. WELL, THANK YOU ALL VERY
MUCH. I REALLY APPRECI ATE I T. THANKS FOR YOUR PATI ENCE TODAY.
MR. GLACKI N: THANK YOU, YOUR HONOR.
( THE PROCEEDI NGS I N THI S MATTER WERE CONCLUDED. )
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CERTI FI CATE OF REPORTER
I , THE UNDERSI GNED OFFI CI AL COURT REPORTER OF THE UNI TED
STATES DI STRI CT COURT FOR THE NORTHERN DI STRI CT OF CALI FORNI A,
280 SOUTH FI RST STREET, SAN J OSE, CALI FORNI A, DO HEREBY
CERTI FY:
THAT THE FOREGOI NG TRANSCRI PT, CERTI FI CATE I NCLUSI VE, I S
A CORRECT TRANSCRI PT FROMTHE RECORD OF PROCEEDI NGS I N THE
ABOVE- ENTI TLED MATTER.
_______________________________
LEE- ANNE SHORTRI DGE, CSR, CRR
DATED: AUGUST 19, 2013
Home | News | Abigail LeGrow 04 appointed to Master in Chancery for Delaware Judiciary
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Abigail LeGrow 04 appointed to Master in
Chancery for Delaware Judiciary
February 22, 2012
Abigail LeGrow 04 was recently appointed Master in Chancery for the Delaware Judiciary, a court which has been
ranked first in the nation since 2002.
To me, working on this court, and for the Delaware Judiciary in general, is a tremendous honor, said LeGrow. The
Court of Chancery is held in high esteem nationwide, both because of the qualifications and dedication of the
chancellor and vice chancellors (past and present), and because of the courts willingness to consider and decide
expedited cases in a very prompt fashion.
The Court of Chancerys jurisdiction is primarily limited to cases based in equity. Historically speaking, the Masters
in Chancery have handled the traditional equity jurisdiction of the Court, particularly trusts and estates,
guardianship, and disputes involving real property.
Ive only been here a few months, but so far the thing I most enjoy is
being in a position to help people and make decisions that (hopefully)
resolve stressful problems that have arisen in their lives, said LeGrow.
There is a human, real-life element to the cases on my docket that
was sometimes missing in private practice.
Prior to joining the Delaware Judiciary, LeGrow was an associate in the
Corporate Group of Potter Anderson & Corroon LLP. During my time
in private practice, I was able to represent different corporations which
gave me the chance to learn about a variety of fields, said LeGrow.
Each corporation is different and in order to represent them
effectively I usually had to learn about their business. I became intimately familiar with orphan drugs, the New York
real estate market, differentiated chemicals, residential mortgage-backed securities, and high speed lasers for
cardiac imaging, to name a few. It helped keep each case interesting when I was engaged in some of the more
mundane aspects of litigation. Among the many reasons LeGrow chose to practice in corporate law is its dynamic
nature. It is always changing and evolving as businesses grow and change, said LeGrow.
Her switch from advocacy to impartiality has been challenging for LeGrow, but in a good way, she said. I think
advocacy comes easier to most lawyers (myself included), because we are usually arguers by nature, and it is fun to
be told here is your side, here is where you want to end up, now go do it. But so far Ive enjoyed the role of
impartial decision-maker. It is nice to consider a case from all sides and all angles, and then try to reach the right
result. In that sense, it is similar to a law school exam, only there is a lot more riding on the outcome.
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LeGrow enjoys living and working in Delaware. When I was in practice, I worked in a sophisticated, challenging,
high-profile field while enjoying the advantages of life in a relatively small city. As a corporate litigator, I represented
multinational corporations, yet my job was a ten-minute commute from my home in the suburbs. Very few people
can have the best of both worlds, in that sense. Now, the commute is the same and Im part of a court that Ive
admired since my summer associate year. It doesnt get much better than this.
Her husband, Brian LeGrow 04 is an associate with the Law Offices of Vincent B. Mancini & Associates, and focuses
his practice on business litigation, commercial litigation, real estate, civil rights section 1983, property law, federal
civil practice, and landlord-tenant law. They met during law school and are the parents of two children.

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2013 The Pennsylvania State University | Lewis Katz Building, University Park, PA 16802
Phone: 814.865.8900 | 800.840.1122
Dilbert
Genre Comedy
Format Animation
Created by Scott Adams
Developed by Scott Adams
Larry Charles
Directed by Rick Del Carmen
James Hull
Voices of Daniel Stern
Chris Elliott
Larry Miller
Gordon Hunt
Kathy Griffin
Jackie Hoffman
Theme music
composer
Danny Elfman
Opening theme "The Dilbert Zone"
Composer(s) Adam Cohen
Ian Dye
Country of origin United States
Original
language(s)
English
No. of seasons 2
Dilbert (TV series)
From Wikipedia, the free encyclopedia
Dilbert is an animated television series adaptation of
the comic strip of the same name, produced by
Adelaide Productions, Idbox, and United Media and
distributed by Columbia TriStar Television. The first
episode was broadcast on January 25, 1999, and was
UPN's highest-rated comedy series premiere at that
point in the network's history; it lasted two seasons on
UPN and won a Primetime Emmy before its
cancellation.
[1]
Contents
1 Synopsis
2 History
2.1 Conception
2.2 Cancellation
3 Cast
3.1 Guest stars
4 Episodes
4.1 Season 1 (1999)
4.2 Season 2 (19992000)
5 Reception
5.1 Ratings
5.2 Awards
6 Home releases
7 See also
8 References
9 External links
Synopsis
The series follows the adventures of a middle-aged
white collar office worker, named Dilbert who is
extremely intelligent in regards to all things that fall
within the boundaries of electrical engineering.
Although Dilberts intelligence greatly surpasses that of
his incompetent colleagues at work, he is unable to
question certain processes that he believes to be
No. of episodes 30 (List of episodes)
Production
Executive
producer(s)
Scott Adams
Larry Charles
Producer(s) Jeffrey L. Goldstein
Ron Nelson
Kara Vallow
Editor(s) Mark Scheib
Running time 22 minutes
Production
company(s)
Idbox
United Media
Columbia TriStar
Television
Distributor Sony Pictures Television
Broadcast
Original channel UPN
Picture format 4:3 SDTV
Audio format Dolby Surround
Original run January 25, 1999 July
25, 2000
organization. Thus, he is consistently found to be
unsatisfied with the decisions that are made in his
workplace, because of the fact that many times he has
many suggestions to improve the decision, yet is
incapable of expressing them. Consequently, he is
often found to show a pessimistic and frustrated
attitude, which ultimately lands him in various comedic
situations that revolve around concepts like leadership,
teamwork, communication and corporate culture.
History
The first season centers on the creation of a new
product, the "Gruntmaster 6000". The first three
episodes involve the idea process ("The Name", "The
Competition", and "The Prototype" respectively); the
fifth ("Testing") involves having it survive a malevolent
company tester named "Bob Bastard" (who is
somewhat like Dilbert before being humiliated and
disfigured), and the sixth ("Elbonian Trip") is about
production in the famine-stricken fourth-world country
of Elbonia. The prototype is delivered to an incredibly
stupid family in Squiddler's Patch, Texas, during the
thirteenth and final episode of the season,
"Infomercial", even though it was not tested in a lab
beforehand. The family's misuse of the prototype
creates a black hole that sucks Dilbert in; he instantly wakes up in the meeting seen at the start of
the episode, then locks his design lab to keep the prototype from being shipped out.
[2]
The second season features seventeen episodes, bringing the total number of episodes to thirty.
Unlike the first season, the episodes are not part of a larger story arc and have a different storyline
for each of the episodes (with the exception of episodes 26 and 27, "Pregnancy" and "The
Delivery"). Elbonia is revisited once more in "Hunger"; Dogbert still manages to scam people in
"Art"; Dilbert is accused of mass murder in "The Trial"; and Wally gets his own disciples (the result of
a complicated misunderstanding, the company launching a rocket for NASA, and a brainwashing
seminar) in episode 16, "The Shroud of Wally".
[3]
The theme music, "The Dilbert Zone", was written by Danny Elfman, and is a slight rewrite from the
theme of the film Forbidden Zone, originally performed by Elfman's band, The Mystic Knights of the
Oingo Boingo.
Conception
Scott Adams, the creator of Dilbert, decided to create the series for UPN because the network
promised 13 episodes on air, while other networks would only consider the series against other
programming options. Adams added to that "If we had gone with NBC, they would have given
Dilbert a love interest with sexual tension." UPN was the sixth-ranked network at the time and
picked up the show in hopes of broadening their appeal and to prove they were committed to riskier
alternative shows. Adams stated about turning Dilbert into a series "It's a very freeing experience
because doing the comic strip limits me to three (picture) panels with four lines or less of dialogue
per issue, in the TV series, I have 21 minutes per episode to be funny. I can follow a theme from
beginning to end, which will add lots of richness to the characters." Adams wanted the series to be
animated because the live action version shot previously for FOX didn't translate well. Adams added
to that "If Dilbert's going to be at the top of the Alps, you just draw it that way and you don't have to
build an Alps scene. You can also violate some laws of physics, and cause and effect. People
forgive it very easily. So it's much more freeing creatively."
[4][5][6][7]
Cancellation
On November 22, 2006, when Adams was asked why the show was canceled, he stated "It was on
UPN, a network that few people watch. And because of some management screw-ups between the
first and second seasons the time slot kept changing and we lost our viewers. We were also
scheduled to follow the worst TV show ever made: Shasta McNasty. On TV, your viewership is 75%
determined by how many people watched the show before yours. That killed us."
[8]
Cast
Daniel Stern Dilbert
[9]
Chris Elliott Dogbert
Larry Miller The Pointy-Haired Boss
Gordon Hunt Wally
Kathy Griffin Alice (uncredited)
Jackie Hoffman Dilmom
Jim Wise Loud Howard
Tom Kenny Ratbert, Asok, additional Voices
Gary Kroeger Additional voices
Maurice LaMarche The World's Smartest Garbageman, Bob the Dinosaur, additional voices
Tress MacNeille Carol, Lena, additional voices
Jason Alexander Catbert
Guest stars
Stone Cold Steve Austin Himself
Jennifer Bransford Ashley
Andy Dick Dilbert's Assistant Alfonso
Jon Favreau Holden Callfielder
Gilbert Gottfried Accounting Troll
Tom Green Jerrold
Christopher Guest The Dupey
Buck Henry Dadbert
Harry Kalas Baseball Announcer
Wayne Knight Path-E-Tech Security Guard
Jay Leno Himself
Eugene Levy Comp-U-Comp's Plug Guard
Camryn Manheim Juliet
Mr. Moviefone Himself
Chazz Palminteri Leonardo da Vinci
Jeri Ryan Seven of Nine Alarm Clock
Jerry Seinfeld Comp-U-Comp
Billy West Vibrating Chair Salesman, Rioting Engineer (Pilot episode only)
Episodes
Season 1 (1999)
Production
code
1 "The Name" Seth Kearsley
Adams
January 25, 1999 101
Dilbert is tasked with naming a product that hasn't even been designed yet, and the stress (brought
on by a recurring nightmare) makes Dilbert think he's turning into a chicken.
2
"The
Competition"
Seth Kearsley Ned Goldreyer February 1, 1999 103
Dilbert is fired from his job when he is suspected of being a spy for a rival company (which was a
rumor cooked up by Dogbert's online newsletter) and gets hired at a company that actually treats
their workers like people.
3
"The
Prototype"
Alfred Gimeno Jeff Kahn February 8, 1999 102
Dilbert and Alice must work together to stop a rival team led by the legendary "Lena" from stealing
their ideas and presenting them to the Boss as her own.
4
"The
Takeover"
Andi Klein
Adams & Ned
Goldreyer
February 15, 1999 106
Dilbert and Wally become majority shareholders of their company after Dogbert manipulates the
stock market.
5 "Testing" Chris Dozois
David Silverman &
Stephen Sustrastic
February 22, 1999 104
The Gruntmaster 6000 prototype is put to the test by an evil masked test engineer named Bob
Bastard (Tom Kenny).
6
"Elbonian
Trip"
Mike Kim
David Silverman &
Stephen Sustrastic
March 1, 1999 105
Dilbert, Alice, Wally, Dogbert, and the Pointy-Haired Boss take a business trip to Elbonia. Alice and
Dilbert attempt to free the Elbonian people (Alice adopts an Elbonian baby while Dilbert introduces
the workers to human rights) while Wally becomes a prophet.
7
"Tower of
Babel"
Gloria Jenkins
David Silverman &
tephen Sustrastic
March 22, 1999 108
The repetitive passing-on of the same cold strain in Dilbert's office causes it to mutate and turns
the coworkers into monsters. Rather than eliminate the virus, the company decides to start fresh by
moving everyone to a new office, which Dilbert is tasked with designing.
8
"Little
People"
Barry Vodos
David Silverman,
Stephen Sustrastic,
Scott Adams & Larry
Charles
April 5, 1999 107
Dilbert discovers that the office is inhabited by a race of former employees who have been
"downsized" (literally shrunken down to size after they've been laid off) after finding all of his
belongings used, the dry-erase markers disappearing, and X-rated websites on his computer.
9 "The Knack" Michael Goguen
Adams, Andrew
Borakove & Rachel
Powell
April 26, 1999 110
Dilbert loses "the knack" for technology when he gets management DNA from accidentally drinking
from the Boss's cup. His resulting mis-steps send the world back to the Dark Ages.
10 "Y2K"
Jennifer Graves, Bob
Hathcock & Andi Tom
Adams, Andrew
Borakove & Rachel
Powell
May 3, 1999 109
On the eve of the new millennium, everyone except Dilbert is making New Year's plans. While
assuring everyone that the company is prepared for Y2K, Dilbert discovers that the computer
mainframe's main processor isn't Y2K-compatible and all the company's systems will crash if it
isn't fixed. Dilbert is rewarded for discovering this by being assigned to fix it, and he discovers that
the system's original programmer was Wally. But have years of drudgework dulled his brain too
much to be able to tackle this crucial task?
11 "Charity" Chris Dozois
Adams, David
Silverman & Stephen
Sustrastic
May 10, 1999 111
Dilbert is forced to be a charity coordinator for the "Associated Way" charity drive.
Adams, David
12 "Holiday" Andi Klein Silverman, Stephen
Sustrastic & Ned
Goldreyer
May 17, 1999 112
Dilbert thinks there are too many time-wasting holidays; Dogbert concurrently convinces Congress
to abandon all holidays in favor of a National Dogbert Day.
13
"The
Infomercial"
Todd Frederiksen,
Joe Vaux
Adams & Ned
Goldreyer
May 24, 1999 113
The pre-productionnon-lab-testedGruntmaster 6000 is scheduled to be tested by a Texan
family.
Season 2 (19992000)
Production
code
14 "The Gift" Gloria Jenkins Ned Goldreyer November 2, 1999 201
Dilbert's mother's birthday is coming up, and in search of the perfect gift, he returns to the mall
where he was abandoned by his father (voiced by Buck Henry) years ago.
15
"The Shroud
of Wally"
Andi Klein Scott Adams November 9, 1999 203
Dilbert has a near-death experience at a gas station, and finds that the afterlife is exactly like the
office. Meanwhile, a group listening to a multi-level marketing speech become hypnotized, and
through a bizarre accident create a religion based on Wally.
16 "Art" Linda Miller
Adams & Ned
Goldreyer
November 16, 1999 205
Dilbert is assigned to create a digital work of art. The result, the "Blue Duck," ends up appealing to
the lowest common denominator of society and destroys the value and popularity of classic
artworks.
17 "The Trial" Chris Dozois
Joe Port & Joe
Wiseman
November 23, 1999 202
Dilbert is sent to prison after the boss frames him for a fatal traffic accident. Once inside, he applies
his knowledge of mathematics and engineering to prison life and takes over his cell block.
18
"The
Dupey"
Michael Goguen
Adams
December 7, 1999 204
Dilbert's attempts to design a Furby-style children's toy go horribly awry when the toys gain
sentience and mutate into hideous but benevolent creatures that want independence.
19
"The
Security
Guard"
Rick Del Carmen Scott Adams January 18, 2000 207
After a heated debate, Dilbert and the building's security guard (voiced by Wayne Knight) trade
jobs to see who can do the other's job better. Dilbert quickly finds himself in over his head when he
discovers an illegal casino being run underneath the building.
20
"The
Merger"
Jim Hull
Adams, David
Silverman & Stephen
Sustrastic
January 25, 2000 208
The Boss decides that the company needs to merge with another, and chooses a company of
brain-sucking extraterrestrials.
21 "Hunger" Craig R. Maras
Adams
Dilbert tries to end world hunger by creating a new, safe, artificial food, but it tastes so bad that
even people dying of starvation refuse to eat it until his mother gets involved.
22
"The Off-
Site
Meeting"
Seth Kearsley
Mark Steen, Ron
Nelson & Scott Adams
Dilbert's home is chosen as the location for an off-site meeting when a dendrophile sues his
company because of their deforestation policies.
23
"The
Assistant"
Gloria Jenkins &
Declan M. Moran
Adams, Ron Nelson &
Mark Steen
February 15, 2000 210
Dilbert is unwillingly promoted to management and given an assistant (Andy Dick), sparking a
showdown with the other engineers.
24
"The
Return"
Mike Kuntel
Adams & Ned
Goldreyer
February 22, 2000 213
Dilbert tries to buy a computer online but gets the wrong model, leading to an unpleasant surprise
when he tries to return it to the company warehouse. Jerry Seinfeld and Eugene Levy guest-star as
Comp-U-Comp and the plug guard, respectively; Jon Favreau guest-stars as Holden Callfielder.
25
"The Virtual
Employee"
Perry Zombalas
Adams & Ned
Goldreyer
May 30, 2000 212
Dilbert and his co-workers find an empty cubicle and start dumping their obsolete computer
equipment into it. To keep the marketing department from claiming the cubicle, they hack into the
human resources database and create a profile for a fake engineer named Todd. The plan backfires
when Todd is named project leader and develops a messianic reputation.
26 "Pregnancy" Andi Klein
Adams
June 6, 2000 216
Ratbert accidentally sends Dilbert's model rocket into space. When it returns with samples of DNA
from aliens, cows, hillbillies, engineers, and robots, it rectally impales Dilbert, impregnating him.
27
"The
Delivery"
Craig R. Maras
Adams
June 13, 2000 217
Dilbert fights to keep his baby, a human-alien-cow-robot hybrid whose various "parents" sue for
joint custody. Stone Cold Steve Austin guest-stars as himself.
28
"Company
Picnic"
Chris Dozios
Scott Adams, David
Silverman & Stephen
Sustrastic
July 11, 2000 211
The annual company picnic comes around and so does the softball game between Marketing and
Engineering. This episode is based on Romeo and Juliet.
29 "The Fact" Linda Miller
Adams, Ron Nelson &
Mark Steen
July 18, 2000 215
Dogbert is catapulted into fame and fortune when he posts false information on the Internet about
his imaginary disease, "Chronic Cubicle Syndrome," and releases a best-selling book about it.
Ironically, Dilbert is forced to come up with the cure.
30 "Ethics" Michael Goguen
Adams
July 25, 2000 214
The company employees are forced to take ethical training classes, then Dilbert is made project
lead for the National Internet Voting Network. An attractive female employee of a special-interest
group attempts to seduce Dilbert, putting his ethical limitations to the test.
Reception
Ray Richmond of Variety.com liked the show stating "its surely the wittiest thing the netlet has ever
had the good fortune to schedule, and based on the opening two installments, it has the potential to
score with the same upscale auds that flocked to The Simpsons and transformed Fox from a
wannabe to a player a decade ago."
[10]
David Zurawik of The Baltimore Sun gave the show a
postivie review stating "sit down tonight in front of the tube with more reasonable expectations, and
you will find yourself smiling, if not laughing out loud at least once or twice."
[11]
Terry Kelleher of
People Magazine picked Dilbert for "Show of the week" and said the show featured "smart, pointed
humor aimed at corporate bureaucracy, mendacity and absurdity."
[12]
Ratings
Dilbert's premiere episode received a 7.3 rating, the highest of the 1998-1999 season for UPN.
[13]
Awards
Primetime Emmy: Outstanding Main Title Design - 1999
[14]
Home releases
Sony Pictures Home Entertainment released the complete series on DVD in Region 1 for the very
first time on January 27, 2004. The set included some special features including trailers and clip
compilations with commentary by Scott Adams, executive producer Larry Charles, and voice actors
Chris Elliott, Larry Miller, Kathy Griffin, and Gordon Hunt.
[15]
The DVDs can be played on some PCs
and DVD players with Region 2. This release has been discontinued and is now out of print. The
complete series is available for free on Hulu and Crackle.
[16][17]
On November 8, 2013, it was announced that Mill Creek Entertainment had acquired the rights to
the series. They will be re-releasing the complete series on January 21, 2014.
[18]
See also
New Dilbert Animation
References
1. ^ "Dilbert Debut Sets Record For Upn" (http://articles.chicagotribune.com/1999-02-
02/features/9902020332_1_pointy-haired-boss-upn-dilbert). Chicago Tribune. February 2, 1999. Retrieved
2010-09-09.
2. ^ "Dilbert: The Complete Series : DVD Talk Review of the DVD Video"
(http://www.dvdtalk.com/reviews/9457/dilbert-the-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
3. ^ "Dilbert: Complete Series : DVD Talk Review of the DVD Video"
(http://www.dvdtalk.com/reviews/9494/dilbert-complete-series/). Dvdtalk.com. Retrieved 2013-09-08.
4. ^ Knutzen, Eirik. "An Animated Cartoon `Dilbert' Comes To The Tube On Upn"
(http://articles.mcall.com/1999-01-24/entertainment/3241748_1_dilbert-scott-adams-bank-teller/2). The
Morning Call. Retrieved 10 February 2014.
5. ^ Rubin, Sylvia. "Meeting of the Minds / `Dilbert' creators slogged through corporate mire to bring lovable
office dweeb to TV" (http://www.sfgate.com/entertainment/article/Meeting-of-the-Minds-Dilbert-creators-
slogged-2952018.php#page-1). SFGate. Retrieved 10 February 2014.
6. ^ Rozansky, Michael. "`Dilbert' Is Serious Business From The Cubicle To . . . Practically Everywhere."
(http://articles.philly.com/1999-01-03/news/25492959_1_dilbert-fans-4s700r-cubicle). philly.com. Retrieved
10 February 2014.
7. ^ Jicha, Tom. "Dilbert To Get A New Cubicle -- On Upn" (http://articles.sun-sentinel.com/1999-01-
25/lifestyle/9901250155_1_dilbert-scott-adams-upn). SunSentinel. Retrieved 10 February 2014.
8. ^ Foster, Darren. "Scott Adams Interview creator of Dilbert" (http://groundreport.com/Scott-Adams-
Interview-creator-of-Dilbert/). ground report. Retrieved 9 February 2014.
9. ^ "Upn hopes ride on dilbert's white shirttails new animated series just doesn't do the job"
(https://web.archive.org/web/20140209010821/http://www.nydailynews.com/archives/entertainment/upn-
hopes-ride-dilbert-white-shirttails-new-animated-series-doesn-job-article-1.829135). The New York Daily
News. Retrieved 2010-10-26.
10. ^ Richmond, Ray. "Review: Dilbert" (http://variety.com/1999/tv/reviews/dilbert-1200456408/). Variety.
11. ^ Zurawik, David. "UPN is counting on `Dilbert' " (http://articles.baltimoresun.com/1999-01-
25/features/9901250183_1_dilbert-dogbert-omen). The Baltimore Sun. Retrieved 9 February 2014.
12. ^ Kelleher, Terry. "Picks and Pans Main: Tub"
(http://www.people.com/people/archive/article/0,,20127492,00.html). People Magazine. Retrieved 9
February 2014.
13. ^ Carter, Bill. "TV NOTES" (http://www.nytimes.com/1999/01/27/arts/tv-notes.html). The New York Times.
14. ^ "Dilbert" (http://www.emmys.com/shows/dilbert). The Academy of Television Arts & Sciences. Retrieved 9
February 2014.
15. ^ "Dilbert - The Complete Series Review" (http://www.tvshowsondvd.com/reviews/Dilbert-Complete-
Series/3283). TVShowsOnDVD.com. Retrieved 2013-09-08.
16. ^ "Dilbert" (http://www.hulu.com/dilbert). Hulu. Retrieved 10 February 2014.
17. ^ "Dilbert" (http://www.crackle.com/c/dilbert). Crackle.com. Retrieved 10 February 2014.
18. ^ Mill Creek to Re-Release 'The Complete Series' on DVD (http://www.tvshowsondvd.com/news/Dilbert-
The-Complete-Series/19158)
External links
Dilbert (http://www.imdb.com/title/tt0118984/) at the Internet Movie Database
Dilbert (http://www.tv.com/shows/dilbert/) at TV.com
Retrieved from "http://en.wikipedia.org/w/index.php?title=Dilbert_(TV_series)&oldid=601831869"
Categories: Dilbert 1990s American animated television series
2000s American animated television series Television programs based on comic strips
UPN network shows 1999 American television series debuts
2000 American television series endings Comedy Central shows
Television series by Sony Pictures Television Animated sitcoms
Television programs featuring anthropomorphic characters Satirical television programmes
English-language television programming Lists of television series episodes
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organization.

BRAD D. GREENSPAN, Plaintiff Case No: 9567-ML

V.

NEWS CORPORATION NEWS CORPORATION, 21ST CENTURY FOX
CORPORATION, NEWS AMERICA CORPORATION,WASHINGTON POST
CORPORATION, SONY CORPORATION, SONY CORPORATION AMERICA, SONY
MUSIC ENTERTAINMENT INC., 550 DIGITAL MEDIA VENTURES, INC. SONY
BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC NEWS CORPORATION, 21ST
CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC, VANTAGEPOINT VENTURE
PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC., ASKJEEVES, INC., JP MORGAN CHASE
CORPORATION, REDPOINT PARTNERS CORPORATION ARENT FOX LAW LLC INC.
Defendants

PRAECIPE

To: Register In Chancery

PLEASE ISSUE Summons and a copy of the Complaint and Motion to Expedite through the
Sheriff of New Castle County, 800 N French Street, 5
th
Floor, Wilmington, Delaware 19801; To
be served on the following Defendants in the above listed caption

Name: News Corporation & 21
st
Century Fox Corporation
Address: c/o The Corporation Trust Company Corporation Trust Center, 1209 Orange St.
Wilmington, Delaware, 19801
Service pursuant to 10 Del. C. 3111

/s/ Brad Greenspan
Signature for Pro Se
Suite 1216
Dated: 4/25/2014

1
I N THE COURT OF CHANCERY OF THE STATE OF DELAWARE
BRAD D. GREENSPAN,
Suite 1216

Plaintiff,
v.

ST
CENTURY FOX CORPORATION, NEWS AMERICA CORPORATION,
WASHINGTON POST CORPORATION,
SONY CORPORATION, SONY CORPORATION AMERICA, SONY MUSIC ENTERTAINMENT INC.,
550 DIGITAL MEDIA VENTURES, INC. SONY BROADBAND ENTERTAINMENT, INC., EUNIVERSE, INC
ST
CENTURY FOX, EUNIVERSE, INC. , RGRD LAW LLC,
VANTAGEPOINT VENTURE PARTNERS, ORRICK HERRINGTON LAW LLC, EMI MUSIC, WARNER MUSIC GROUP,
IAC CORPORATION, MYSPACE, INC.,
ASKJEEVES, INC.,
JP MORGAN CHASE CORPORATION, REDPOINT PARTNERS CORPORATION,
ARENT FOX LAW LLC INC.

)
)
)
)
)
)
)
)
)
)
)

C.A. No. ________

1503 & INDEMNIFICATION COMPLAINT

2

Plaintiff, for his Complaint against the Defendants, alleging as follows:

I- PRELIMINARY STATEMENT & SYNOPSIS

1. Plaintiff Brad D. Greenspan (Plaintiff), a former Director an Officer of

eUniverse, Inc. a Delaware Corporation hereby files this complaint. Petitioner is

entitleu to a piivate cause of action foi uamages suffeieu as a iesult of Befenuant

acts , omissions, uamages, violations, anu othei losses causeu by the long iunning

1SuS(u) conspiiacy among Befenuants. Petitionei also has contiactual iights foi

Inuemnification anu Auvancement.

II - PARTIES

PLAINTIFF

2. Brad Greenspan, former Director, Officer, Shareholder of eUniverse, Inc

DEFENDANTS

3. News Corporation, a Delaware Corporation

4. 21
st
Century Fox Corporation, a Delaware Corporation

5. News America Corporation, Delaware corporations

6. Sony Corporation, incorporated in Japan (herein Sony Corporation

and its subsidiaries listed below will be referred to as Sony)

7. Sony Corporation America, a Delaware corporation

8. Sony Music Entertainment Inc., a Delaware Corporation

9. 550 Digital Media Ventures, Inc. (550 DMV), a Delaware Corporation

1u. Sony Bioaubanu Enteitainment, Inc., a Belawaie coipoiation
S

11. e0niveise Inc. , (name latei changeu to Inteimix) a Belawaie

Coipoiation (News Coip acquiieu in 2uuS)

12. Nyspace, Inc., a Belawaie Coipoiation (News Coip acquiieu in 2uuS)

1S. RuRB Law LLC, a Califoinia LLC

14. vantagePoint ventuie Paitneis, a Califoinia LLC

1S. 0iiick Beiiington Law LLC, a Califoinia LLC

16. ENI Nusic, a Belawaie Coipoiation

17. Wainei Nusic uioup, a Belawaie Coipoiation

18. Ask}eeves Inc., a Belawaie coipoiation (IAC Coip acquiieu in 2uuS)

19. IAC Coipoiation, a Belawaie coipoiation

2u. }P Noigan Chase, a Belawaie coipoiation

21. ReuPoint Paitneis, a Califoinia LLC

22. Washington Post Coipoiation, a Belawaie Coipoiation

2S. Aient Fox Law, a Belawaie LLC

III - JURISDICTION AND VENUE

24. The jurisdiction of this Court is conferred and invoked pursuant to

eUniverse, Inc., and its buyer, News Corporation being Delaware incorporated

IV- FACT HISTORY

The 1503 & 1505 Claims

25. 1503 & 1505 according to Delaware statute 1501 have a purpose:
4
to guard against and prevent the infiltration and illegal acquisition of legitimate
economic enterprises by racketeering practices, and the use and exploitation of both legal
and illegal enterprises to further criminal activities.

to apply to conduct beyond what is traditionally regarded as "organized crime" or
"racketeering."

26. Enterprise under 1502 is defined:
(3) "Enterprise" shall include any individual, sole proprietorship, partnership,
corporation, trust or other legal entity; and any union, association or group of persons
associated in fact, although not a legal entity. The word "enterprise" shall include illicit
as well as licit enterprises, and governmental as well as other entities.

27. Members of the SearchBriberyHacking (SBH) Enterprise are an

association-in-fact enterprise that are known as of the date of filing this

complaint to include: IAC, AskJeeves, News Corporation, Orrick Herrington,

VantagePoint Partners, RedPoint Partners, JPMorgan, Washington Post Corporation,

RGRD Law LLC, Sony Corporation, Sony Music Entertainment, Arent Fox, EMI,

Warner Brothers Music, MySpace Inc., Intermix Inc., Sony Corporation America, 550

DMV, Sony Bioaubanu Enteitainment Inc., as well as certain of their Officers,

Directors, and employees (Enterprise).

28. This Enterprise possessed and continues to possess a common

purpose and goal, a membership, organizational structure, and ongoing

relationships with sufficient longevity to permit and enable pursuit of the

Enterprises purpose and long-term objective through a continuous course of

conduct that affected and continues to affect interstate and foreign commerce.

Most or all of the members of the Enterprise are also Principals, defined under

Delaware statue,

S
(8) "Principal" shall mean a person who engages in conduct
constituting a violation, or one who is legally accountable for the
unlawful conduct of another person or entity.
29. The SBH Enterprise, members, and/or Principals engaged, attempted to

engage in, or conspired to engage in or to solicit, coerce or intimidate other person

to engage in Racketeering violations which under Delaware state law is defined as:

(9) "Racketeering" shall mean to engage in, to attempt to engage in, to conspire to
engage in or to solicit, coerce or intimidate another person to engage in:
a. Any activity defined as "racketeering activity" under 18 U.S.C. 1961(1)(A),
(1)(B), (1)(C) or (1)(D); or
b. Any activity constituting any felony which is chargeable under the Delaware
Code or any activity constituting a misdemeanor under the following provisions of
the Delaware Code:
Chapter 73 of Title 6 relating to the sale of securities; Chapter 5 of Title 11 & Title
6 relating to forgery and counterfeiting; Chapter 5 of Title 11 relating to perjury;
Chapter 5 of Title 11 and Title 28 relating to bribery and misuse of public office
and improper influence; Chapter 5 of Title 11 relating to tampering with jurors,
evidence and witnesses;
30. SBH Enterprise, members, and Principals that make up the SBH

Enterprise initiated a Pattern of racketeering activity between 2003 thru 2013,

defined as:

(5) "Pattern of racketeering activity" shall mean 2 or more incidents of conduct:
a. That:
1. Constitute racketeering activity;
2. Are related to the affairs of the enterprise;
3. Are not so closely related to each other and connected in point of time and
place that they constitute a single event; and
b. Where:
1. At least 1 of the incidents of conduct occurred after July 9, 1986;
6
2. The last incident of conduct occurred within 10 years after a prior
occasion of conduct; and
3. As to criminal charges, but not as to civil proceedings, at least 1 of the
incidents of conduct constituted a felony under the Delaware Criminal
Code, or if committed subject to the jurisdiction of the United States or
any state of the United States, would constitute a felony under the
Delaware Criminal Code if committed in the State.
31. SBH Enterprise racketeering activity included: 18 U.S.C. 1341
(relating to mail fraud), 18 U.S.C. 1512 (relating to tampering with a witness,
victim, or an informant) 18 U.S.C. 1513 (relating to retaliating against a witness,
victim, or an informant) and 18 U.S.C. 1519 (relating to destruction, alteration, or
falsification of records in Federal investigation and bankruptcy).
32. The pattern of racketeering activity is based on the following facts:

33. Principals and members of the SBH enterprise desired and wanted

to fraudulently take control of a publicly traded company that was the #1 fastest

growing Top 10 Property in the world as of October 2003.

34. Defendants launch series of schemes and frauds to take control of publicly

traded MySpace and its parent corporation eUniverse (later renamed Intermix) and oust

founder/CEO Brad Greenspan.

35. Defendants also initiate schemes to defame and harass Petitioner, and

additionally obstruct justice.

36. Not satisfied with their existing economic gains, defendants embarked on an

ever growing series of schemes and misdeeds to loot the public company.

37. Petitioner on January 23, 2004 published press release titled:

Substantial Conflicts of Interest with Respect to Verisign
Nasdaq:VRSN And Ask Jeeves NASDAQ: ASKJ
7
stating:
i.eUniverses Future Success in Lucrative Paid Search Space Is
Threatened By Existing Director Conflicts

ii.certain of eUniverses incumbent Directors have substantial conflicts of interest
that could threaten the Companys success in the paid search industry.

iii.Daniel Mosher has conflicts of interest arising from his middle management role
at Verisign, Inc. (NASDAQ: VRSN) which introduced the sitefinder redirect
service in direct competition with eUniverses PerfectNav application.

iv.David Carlick has a conflict of interest arising from his membership on the Board
of Ask Jeeves (Nasdaq: ASKJ), which is a pure play in the paid search space.

V.Carlick has the ability to influence management decisions which may adversely
affect eUniverses Paid Search division.

DEFENDANTS ENTRENCHMENT SCHEME SHIFTS CONTROL

38. Petitioner incorporates by reference Exhibit #1 which includes:

i. January 2, 2014 letter to Chancellor Strine

ii. NOTICE MOTION IN CONTEMPT

iii. MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)

iii. DECLARATION IN SUPPORT OF MOTION 70(b) 42(b) CONTEMPT

iv. JUDGMENT ENTRY SETTING HEARING

(Note: All above unsigned documents were signed and submitted by courier
January 2, 2014 to Brenda at intake with copy of December 2013 proof of
service to Defendants )

DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DI SCLOSURE VI OLATI ON TO
ACQUI ROR NEWS CORPORATI ON

39. July 17, 2005 News Corporation Corporate counsel Lang emailed at 4:13AM
to Defendant eUniverse Director Sheehan and states, by interstate wire or interstate
carrier an email furthering the fraudulent concealment scheme to fabricate and
8
fraudulently conceal unlawful acts including contempt of Court to acquiror News
Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal
security fraud class action. Subject: 'Purchase Agreement, stating,

"On the issues, let's close on the remaining ones in a fair and reasonable
way-- so we can build out relationship. And

3. We feel like we have given indemnification on the shares and the
purchase agreement itself to do so on any issue we have had no
involvement in whatsoever (i.e. Greenspan) - that seems like
too much. Andy, I know we are very eager to get this done. Let do it
so both sides can feel good and move forward on our longer-term
relationship."

Langs communication is in violation of 18 U.S.C. 1341, 18 U.S.C. 1343, and 18
U.S.C. 1519 (relating to destruction, alteration, or falsification of records in Federal
investigation and bankruptcy).

2013 HITECH FEDERAL CLASS ACTION EVIDENCE
40. Evidence disclosed for the first time May 2013 in the Hitech Class Action

Case 5:1102509, specifically document 198-3, page 37 and 38, proves Google had

undisclosed illegal agreements in place with AskJeeves, AOL, Intel, Intuit, IAC Corp.

and Apple as of March 6, 2005 or earlier violating Federal antitrust statues. The

companies fraudulently concealed the agreements and failed to disclose them in

their annual 10K SEC or Proxy filings, violating security law and Director fiduciary

duties.

41. The evidence confirms Petitioner and shareholders were victims in

2005 of an bid rigging conspiracy led by Google and enacted in coordination with

AskJeevess Directors who used their positions on the Boards of both MySpace,

Inc. and Parent eUniverse to mislead the other Directors and shareholders while
9

facilitating and enjoying the economic benefits of an illegal bid rigging scheme.

42. This conspiracy included: (i) fabricating prior sale of MySpace stock

with backdated agreement in November 2004 (ii) agreements allowing AskJeeves

Director Jeff Yang to purchase 30% of MySpace, Inc. in February 2005 at below

fair market value using his RedPoint fund where he is managing Director;

a. September 27, 2004 Vantagepoint internal report proves SBH Enterprise,
Carlick, and AskJeeves manipulated Intermix Directors to forgo using less dilutive debt
financing available, instead facilitating sweetheart equity sale to Yang and RedPoint
Partners.
Myspace wi l l r equi r e appr oxi mat el y $1. 5 - 2 mi l l i on i n t he next 2
mont hs f or st or age ar r ays, dat abase ser ver s, swi t ches and
r out er s.
And
The company i s i n di scussi ons wi t h Si l i con Val l ey Bank r egar di ng
a $4m l i ne of cr edi t , whi ch i s l i kel y t o be appr oved.

b. October 1, 2004, 3:05PM Rosenblatt contacts Sheehan using interstate wire

or interstate carrier to send and deliver the email:

J ust had a t ough t al k wi t h Chr i s DeWol f . Hi s l awyer i d def i ni t el y gi vi ng
hi m concer ns about our of f er . Hear t ache about us t aki ng t he t ech, val ue
i f we sel l , et c. He r eal l y t hi nks he i s wor t h mor e i ndependent l yI am
t ol d hi m t hat i s not goi ng t o happen.

the disclosed order of events described in the November 2004 10Q is fabricated and this
email is in violation of both 18 U.S.C. 1341 & 18 U.S.C. 1343, and is a Key
component and predicate act in fraudulently concealing the false facts in the November
eUniverse 2004 10Q filing related to hiding backdated MySpace stock purchase
agreement by defendants.
c. October 7, 2004 3:45PM Sheehan contacts Rosenblatt & Carlick by interstate
wire or interstate carrier using an email in violation of 18 U.S.C. 1341 &/or 1343
1u
fabricated and backdated with Subject: MS t hought s of t he day,
My cur r ent t hought s on t he MS si t uat i on:

We need t o get i n pl ace t he r evi sed agr eement bef or e any meani ngf ul
negot i at i ons wi t h any ot her t hi r d par t y.

* I bel i eve I under st and Chr i s concer ns about bei ng l ocked i nt o an i l l i qui d
subsi di ar y, but t hat i t s t hei r choi ce t hey coul d have MI X st ock i f t hey
want l i qui di t y.

* They ar e mi nor i t y shar ehol der s and need t o accept t hi s f act .

* We, I nt er Mi x, need t he r i ght t o be abl e t o sel l al l of MS. I ncl udi ng
f ounder s shar es.

We, I nt er Mi x, need t he r i ght t o buy out t he f ounder s at a pr i ce or a
f or mul a

On Redpoi nt :
* Why not cont i nue t al ki ng t o t hem, i t i s t oo har d t o f i gur e out i f t hey
coul d pr esent t he most at t r act i ve deal or not at t hi s t i me

d. November 4, 2004 11:43PM Carlick emails Sheehan, by interstate wire or
backdated Subject: My t al k wi t h Yang stating,

Andr ew, Spoke wi t h Geof f , who hol ds you i n t he hi ghest r egar d. I
am not i n t he l oop on t hei r of f er , whi ch he descr i bed as 23%
Redpoi nt , 25% Founder s and pool and 52% I nt er mi x.

Hi s case f or t he of f er was i nt er est i ng and compel l i ng, as I nt er mi x
coul d st i l l f ol d i n t he ear ni ngs, t r af f i c, et c. I want t o di scuss wi t h
you my t hought s on t he subj ect t omor r ow, God know when, as we
11
have no br eaks I can count on. I n any case, I suggest ed t hat Geof f
speak wi t h you di r ect l y.

e. November 5, 2004 11:58AM Sheehan contacts Carlick and states, by
interstate wire or interstate carrier an email in violation 18 U.S.C. 1341 &/or 1343
fabricated and backdated
what i t comes down t o i s do we sel l ms now or keep i t . Doi ng a
deal wher e mi x keeps 52% doesn t make any sense f or anyone
except Yang. Al l t he banks and i nvest or s t hi nk we woul d be f ool i sh
t o sel l some or al l of ms now. We wi l l get much l ess benef i t t o mi x
i f we own 52% and have gi ve al l sor t s of r i ght s t o an i nvest or .
Ri char d want s t o keep i t i n mi x.

f. November 18, 2004, 3:56PM Orricks Richard Harroch contacted Sheehan,
Redpoint & AskJeeves Director Yang and RedPoints Beasly, by interstate wire or
backdated
Subject: MySpace Ter m Sheet and states,
Gent l eman: As a f ol l ow up t o our conver sat i on t oday, at t ached i a a
cl ean and r edl i ned mar kup of t he l ast ver si on of t he t er m sheet t hat was
gi ve t o us i n connect i on wi t h t he Myspace t r ansact i on. Let us di scuss t he
i ssues at your conveni ence. Ri char d Har r och <<MySpace Sal e of Ser i es
A Pr ef er r ed St ock. doc>>

g. Rosenblatt by interstate wire or interstate carrier uses email in violation 18
U.S.C. 1341 &/or 1343 to further the fraudulent concealment scheme forwards an
incoming Orrick email to Chris Lipp and Tom Flahie at 4:28PM to fabricate and
The email states: I have not seen yet
12
Rosenblatt professes to not know the terms that the company has already agreed to sell a
portion of MySpace.com to VantagePoints fellow board member on Ask Jeeves, Geoff
Yang and his fund company he is a principal in, Redpoint.

h. November 18, 2004 CFO Flahie emails Rosenblatt, Subject: RE: MySpace
Term Sheet and states,
t hi s si t uat i on r eal l y goes beyond anyt hi ng I want t o be a par t
of . I communi cat ed my f eel i ngs i n wr i t i ng t wi ce now about t he
l awyer f or a l ar ge pr ef er r ed st ockhol der and one di r ect or
negot i at i ng a maj or busi ness t r ansact i on on behal f of t he company
wi t hout aut hor i zat i on of our boar d and al l I r ecei ved was an
admoni shment f r om Har r och about my emai l and t ol d t o shut up i n
a conf er ence cal l .

Si nce you have not seen t hi s yet and I have cer t ai nl y not , t hi s
makes a br oader st at ement about our Seni or Management . As an
of f i cer I woul d be der el i ct i n my dut i es t o our company t o al l ow
t hi s t o cont i nue out si de of t he vi ew of t he Boar d wi t hout doi ng
somet hi ng about i t

Flahie uses interstate wire or interstate carrier in violation 18 U.S.C. 1341 &/or 1343
to deliver email to further the fraudulent concealment scheme to fabricate and

i. November 18, 7:20PM Rosenblatt emails Flahie Subject: Re:Myspace Term
Sheet, stating:
Tom, I know how t hi s coul d l ook but i t i s NOT at - al l how i t may
appear .
and
Andy NEVER l ooked at i t as a vant age shar ehol der , but as a
Boar d member l ooki ng out f or I nt er mi x as a whol e.
and
I bel i eved (and was r i ght ) t hat he was bet t er posi t i oned t han I
was t o ext ract t er ms t hat woul d be accept abl e t o t he Boar d at
l ar ge. Over t he past week he was, t o my sur pr i se, abl e t o get t he
1S
t er ms we al l t hi nk ar e BETTER f or t he company and make t he
Redpoi nt deal a gr eat deal .
and
I n hi ndsi ght , I shoul d have asked hi m t o gi ve t hose new t er ms t o
Chr i s and we shoul d have sent t he t er m sheet t o Redpoi nt . I pl an
on cl ar i f yi ng wi t h Redpoi nt t omor r ow t hat Andy was si mpl y hel pi ng us
get a deal done and t he Company wi l l t ake i t f r om her e.
i

Rosenblatt uses interstate wire or interstate carrier in violation 18 U.S.C. 1341 &/or
1343 to deliver email to further the fraudulent concealment scheme to fabricate and
j. November 18, 2004 at 7:51PM, Sheehan forwards the email thread and
CFOs effective whistleblower notification to Orricks Harroch who is directly
involved in the incident. Sheehan uses interstate wire or interstate carrier to deliver
email to further the fraudulent concealment scheme to fabricate and fraudulently conceal
the MySpace Stock purchase documents published in the November 2004 10Q, to hide
the fact the documents were fabricated and backdated, to conceal scheme to sell 25% of
Myspace.com to conflicted Interlocking Director violating Clayton Act fellow
AskJeeves Director, Geoff Yang in violation of 18 0.S.C. 1S41, 18 U.S.C. 1343,
anu violation of 18 0.S.C. 1S19 (ielating to uestiuction, alteiation, oi falsification
of iecoius in Feueial investigation anu bankiuptcy).

(iii) agreements allowing Google, TimeWarner/AOL, News Corporation, AskJeeves,

IAC, and other defendants to collude to gain economic benefits by delaying

closing of a competitive EUNI MySpace search engine auction for a new

commercial search engine agreement in the months leading up to News Corporation

acquiring 100% of eUniverse in September 2005. This arrangement ensured

Googles $4.4 Billion dollar August 2005 secondary by tying up the fast growing

14
online audience of MySpace, significantly growing its share of online

search engine advertising while shrinking share of main rival #2 Yahoo; (iv)

An arrangement allowing News Corporation to purchase MySpace.com at below

fair market value, growing its market valuation and generating billions in

incremental profits and a massive online audience to seed new online assets for

years to come, while preventing a competitive auction with main rival Viacom.

k. MySpace and eUniverses failure to elect 5
th
MySpace Director was key

part of scheme to rig bidding in Search Auction and sale of eUniverse. Failure to

disclose Intermixs majority owned MySpace, Inc. was in breach of this covenant in the

August 2005 Proxy was a 14A violation. Defendants breach and non disclosure of such

breach are used to effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C.

1341 thru publishing,distributing and mailing the August 2005 Proxy omitting the

disclosure of such breach.

l. euniverses failure to cure breach of Merger Agreement Sections

6.3 & 6.4 & 6.5. was a key part of scheme to rig bidding in Search Auction and

sale of eUniverse. Failure to disclose the breach in the August 2005 Proxy was a

14A violation. Defendants breach and non disclosure of such breach are used to

effect the Antitrust bid rigging scheme. Defendants violated 18 U.S.C. 1341

thru publishing, distributing and mailing the August 2005 Proxy omitting the

disclosure of such breach

m. eUniverse and CEO Rosenblatt by end of June has earmarked $25-30
million in monies the executives are not owed or entitled to which helps float his own
1S
requests for consideration higher. June 23, 2005 Email from Rosenblatt to
Montgomery on with subject presentation and attachment foxmeeting.ppt states,
This deal would need to be a win-win for everybody. I think we could motivate and
energize the Myspace team if we took $25-30mm and put in escrow for 12-24 months.
They would receive that money if they continued to build Myspace and remained at the
Company. Right now, they own 20% and would receive about $20MM (due to the
preference from Redpoint) if we exercised our option. If they could sell for $250mm they
would receive $50mm. While they think Myspace is worth far more than $250mm, the
escrow would clearly be enough incentive to keep them very motivated and want to stay
on board.

eUniverse and Rosenblatt thru use of such email violate 18 0.S.C. 1S41 &oi 1343,
anu 18 0.S.C. 1S19 (ielating to uestiuction, alteiation, oi falsification of iecoius in
Feueial investigation anu bankiuptcy). Scheme is designed to bribe certain members
of management to support the below fair market sale of MySpace to News Corporation
while not disclosing such additional payments in the Proxy as required by Federal law.

n. On July 18, 2005 at 8:19PM, eUniverses Rosenblatt uses interstate wire to

email News Corporation executive, Levinsohn in violation 18 U.S.C. 1341 &/or

1343 to further the fraudulent scheme to sell eUniverse and Myspace below fair market

value. The email indicates Rosenblatt is aware the $12.00 per share price he negotiated

with News Corporation days earlier is below fair market value and is aware of the

correct valuation level for internet assets including the future value Google will use to

value AOL in the months ahead,

Snippet of the press playa. You will be famousnow 20B

BROWN v. BREWER FEDERAL SECURITY FRAUD CLASS ACTION

42. Petitioner was originally part of a Federal Class Action filed in
16

Federal Court as a securities class action, titled Brown v. Brewer. However,

the defendants led by News Corporation and Hogan Lovell , engaged in a

series of coverups and struck a deal with Class Counsel to remove key

evidence and claims including initiating a scheme to blatently obstruct justice

by eliminating petitioner before he could submit evidence into the Federal

court in 2009 which would have led to adding claims

43. June 17, 2010 Federal Judge King Summary Judgement states:

Though Brewers failure to recall what everyone had specifically
asked back in 2005 would be understandable, a reasonable jury
might draw a negative inference from his representation that he
could not recall any discussion as to the investment banks analyses.

Construing all of the above testimony in the light most favorable to
Plaintiff as we must on Defendants motion for summary judgment,
we conclude that it is at least triable as to whether the remaining six
board members consciously disregarded their duties and acted in bad
faith. There is evidence in the record suggesting that no one on the
board asked any questions about the requested per share price, the
treatment of the competing bidders, the fairness valuations, or the
relative likelihood of a Viacom bid.

A reasonable jury could infer that this evidence demonstrates the
other six directors consciously abdicated their roles as corporate
fiduciaries required by law to do their utmost to maximize
shareholder wealth.

Nevertheless, we think a reasonable jury could find that the other
six directors exceeded the bounds of negligent conduct, willfully
proceeded to their decisions knowing they lacked material
information, Gesoff, 902 A.2d at 1165, and thereby consciously
disregarded their fiduciary duties. Disney, 906 A.2d at 66


In the alternative, Defendants move for summary judgment on the
second theory supporting the breach of fiduciary duty claim, arguing
that five of the eight Defendants (a majority) were not self interested
or controlled by someone who was.

17
Plaintiff argues that Rosenblatt deliberately misled the other board
members regarding the viability of the Viacom bid, steering them
into approving the merger without waiting even a couple more days
to see if Viacom would top News Corp.s offer. (Joint Br. 26-27).

This evidence is sufficient to raise an inference that Rosenblatts
presentation to the board may have been misleading as to Viacoms
seriousness.

According to Moshers description of the board meetings, from the
management team estimation standpoint [sic], they were not
inclined to make an offer for the company on the time line that we
were looking at. (Id. at 25:18-21).

there are at least triable issues of fact as to whether Mosher was
manipulated by a self interested director, Rosenblatt. Moreover,
based on Moshers description of the content of Rosenblatts
presentations to the board, the issue of manipulation is triable with
respect to all of the other board members.

Accordingly, as a reasonable jury could potentially conclude that a
majority of the directors was interested or manipulated by someone
who was, we hereby DENY Defendants Motion for Summary
Judgment on this second basis for Plaintiffs claim of breach of the
duty of loyalty.


current revenue and profits omission, which was so clearly
identified in the CSAC (if not so clearly in the interrogatory
responses). Accordingly, as this argument was not waived, and
Defendants have not made any threshold showing entitling them
to summary judgment on this basis, we DENY the Motion for
Summary Judgment as to this alleged material omission under
Count I

materiality of the omission of Intermixs internal financial
projections. Accordingly, Defendants Motion for Summary
Judgment is DENIED as to this alleged material omission.

Outstanding Derivative Lawsuits

Plaintiff also argues that Defendants failed to disclose one pending
18
derivative lawsuit, LeBoyer v. Greenspan, et al., No. CV 03-5603-
GHK (JTLx), and the fact that shareholder derivative standing would
be extinguished as to both LeBoyer and Greenspan v. Salzman, the
two derivative lawsuits pending at the time the Proxy was issued.

Defendants concede that they did not disclose the existence of the
pending LeBoyer action. (Joint Br. 56 n.67).

With respect to the disclosed Greenspan v. Salzman action,
Defendants argue they had no obligation to further announce the
extinguishment of derivative standing.

Here too, the disclosure above is arguably misleading as well, as it
did not affirmatively disclose that the Greenspan v. Salzman
plaintiffs derivative standing would be extinguished under Delaware
law. (J.A., Ex. 4, at 332). Instead, it only stated that Fox Interactive
Media would seek the dismissal of the action and would do so only if
it was not required to pay the plaintiffs or their counsel. (Id.).
Accordingly, it is at least triable whether the above language was
misleading as to the extinguishment of derivative standing, which
was material information.

Accordingly, we also hereby DENY Defendants Motion for Summary
Judgment as to this alleged material omission.

44. Edell & Defendants in mid-2009 launch another prong of fraudulent

concealment. includes i) publication of a book by employee loyal to

News Corp to fabricate the background of Jeff Edell a former Director ii) Using

fabricated Edell character to conceal truth that MySpace asset sale documents were

not executed until 2004. These schemes create a fraud upon the court and keep

petitioner and Class members from getting benefit of fair judicial process.

45. Defendants leverage their relationship with acquiror to create

defamatory and fabricated lies thru acquiror News Corporation employee Angwins

published in late 2009 book, Stealing MySpace which fraudulently conceals the

true background of former Director and Chairman Jeff Edell and his scheme with
19

Brewer to forward a fabricated false resume.

46. This creates further ongoing defamatory damages to Plaintiff and

Shareholders because Class Counsel accepts and uses false Edell facts in book

instead of Plaintiffs facts offered to Class Counsel in 2012 Federal Class Action in

Los Angeles Central District. Edells false facts allow the fraudulent conveyance

Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004.

Further, Edells false facts which become Acquiror News Corporation false facts,

obstruct Plaintiffs true facts from entering the record for the benefit of the Federal

Court learning the true damages and claims rightfully owed to shareholders. Plaintiff

and shareholders will continue to suffer until the defective disclosure is cured by


47. Additional act of fraudulent concealment is part of scheme by defendants tied

to 2009 Angwin published book that uses fabricated documents to support critical

contentions. altering, destroying, mutilating, or concealing a document with the intent to

obstruct justice in violation of 18 U.S.C. 1512(c)(1);

48. Petitioner a fact witness with testimony that was adverse to Defendants was

excluded and obstructed from entering evidence into the Brown Brewer case,

immediately before Defendants plugged in Angwins false facts and testimony while

using Stealing MySpace as an uncontested source of facts to corrupt the

Classs case And damage/expert reports.

49. News Corporation destroyed Petitioner testimony from appearing which

damages Petitioner and violates Section 1512(d) which criminalizes the actions of

2u
[w]hoever intentionally harasses another person and thereby hinders, delays, prevents,
or dissuades any person from appearing before an official proceeding, law enforcement
officer, or United States judge.

50. Angwin fraudulently conceals evidence of Edells true work experience and

back ground and his violation of SEC rules in 2003 and 2004. Defendants conceal their

knowledge of this scheme thru the March 19, 2012 Approval of the Federal Brown

Brewer settlement that Petitioner and 4 other Class members attempted to object to or

intervene to remove RGRD and Jim Brown from representing the Federal

Class and agreeing to An Inadequate consideration for the settlement and failure to assert

more valuable claims and evidence into the Court prior to approving settlement.

51. Angwin, Hinton, News Corporation, Hogan Lovell, RGRD, and eUniverse

Defendants violate 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519 by hiding evidence of

Edells two resignations on his bio that were really his last two jobs instead of submitting

an accurate bio, defendants stretched the job of Edell that was actually 3 jobs prior, and

increased this 3rd job by another 2 years, to the year 2002 (from 2000). Edell both

omits to accomplish his end goal of making detection and disclosure of his true track

record and financial history as difficult as possible.

i. Angwin, News Corporation, Hinton, Murdoch, RGRD, eUniverse

and Orrick Conceal the false revised BIO of Edell filed in July 2004 SEC filings:

"Mr. Edell was the Chief Executive Officer of Showorks Entertainment
Group. Inc., a Delaware corporation that later changed its name to Media
Technology Source of Delaware, Inc. Within two years of the time that Mr.
Edell resigned from that company, it filed a petition for relief under the
United States Bankruptcy Code."

52. Defendants scheme entailed Creating a fictitious Glowing work experience

21
for Edell using a fabricated Resume in 2003 that News Corporation, Hinton, Angwin,

and Murdoch determined would be used to harm Petitioner In a book that was published

called Stealing MySpace and was sent in US Mail to bookstores Across the United

States beginning in March 2009, and overseas with the fabricated false facts related to

Edells true work Experience and his SEC violations in 2003, 2004, 2005 in violation of

Rule 401, this violated section 18 U.S.C. 1341.

53. After the Class won summary judgement in June 2010, petitioner in

2011 tried to bring new evidence to the attention of Class Counsel indicating the

true damages were related to the value of MySpaces search value, the claims and

facts which had never been put before the Federal Court. Petitioners Rule 701

damage report providing for damages of over $96 billion dollars was ignored by

Class Counsel who instead joined with defendants in a brazen scheme to: i)

mislead and initiate a fraud upon the Court by changing the definition of the

certified class to eliminate upwards of 60% of the eligible shares and shareholders

and ii) enter into a sham settlement for pennies on the dollar which was accepted

by the Federal Court in March 2012.

S4. In Septembei 2u1u, by RuRB, Baion, Bogan Lovell, Stone, News

Coipoiation, 0iiick anu othei Befenuants filea }oint Notion to ban fact witness anu

Petitionei fiom the Feueial Class to uelay anu haiass Petitionei fiom appeaiing

befoie Feueial }uuge. Befenuants knew the motion to ban the petitionei coulu not

be tiue unless 0iiick coulu continue to suppiess new eviuence anu uiscoveiy fiom

enteiing the Feueial Biown v. Biewei ongoing case.
22

SS. 0thei Eviuence uestioyeu by 0iiick incluueu theii ties anu business

with NySpace Paient Company executive Chiis BeWolfe. 0iiick anu BeWolfe woik

togethei in 2uu4 anu 2uuS to uocument a fabiicateu sale of equity of NySpace at

iock bottom piices foi BeWolfe.

S6. In 2u1u, Baion anu News Coipoiation anu Bogan & Lovell, anu Stone, anu

RuRB anu 0iiick violateu 18 0.S.C. 1S41 (ielating to mail fiauu) by senuing notice

of the }oint Notion to Biief the "Notion to Ban Biau uieenspan" foi puipoiteu "ies

juuicata" they intenueu to file in Feueial Couit via email to Petitionei's then lawyei

Ni. Lawience.

i. Above Befenuants violateu fuithei 18 0.S.C. 1S12 (ielating to

tampeiing with a witness, victim, oi an infoimant) 18 0.S.C. 1S1S (ielating to

ietaliating against a witness, victim, oi an infoimant) anu 18 0.S.C. 1S19 (ielating

to uestiuction, alteiation, oi falsification of iecoius in Feueial investigation anu

bankiuptcy) by omitting anu uestioying the eviuence they possesseu at the time

the above actions weie taken that woulu have pioviueu new facts anu infoimation

anu claims not iaiseu oi in State pioceeuing anu that woulu have the effect of

voiuing the uefenuant's motion.

ii. RuRB, Baion, Wissbioeckei violateu theii fiuuciaiy uuty to Petitionei as

well as aiuing anu abetting above violations of othei Befenuants.

iii. Baion & RuRB lieu anu fabiicateu biiefings, pleauings, anu affiuavits in 2u11
anu 2u12 to fiauuulently conceal the piioi ciiminal acts in Feueial Couit.

S7. In Becembei 2u1u, RuRB was again uisloyal by changing the Class
2S

Ceitification to ieuuce the # of eligible shaies.

i. 6/8/09 Judge King approved Certified Class with definition:

Most clear is position of RGRD Law at the time:

Plaintiff responds herein to both questions raised by the Court in its Order re:
Plaintiffs Motion for Class Certification: (1) should the class definition be
modified to include only holders of Intermix Media, Inc. common stock who
held continuously from July 18, 2005 (the date the merger with News
Corporation was announced) through the consummation of the merger on
September 30, 2005; and (2) should the plaintiffs in the state court actions be
carved out of the class definition? As set forth below, the answer to both
questions is no.

ii. 12/23/10 Certified Class is victim of definitional change by RGRD

Law, inserting ulawfully, word continuously. This cuts approximately 60% of total

shares that were eligible under Certified Class definition.

iii. December 2011 RGRD challenged by Shareholders objecting
1
to

Settlement denied the Class Certificate had been switched.

58. Sony Music Corp and Seligmann using its control position on the Board of

the RIAA and its relationship with EMI and Warner Music Group, induced Arent Fox to

falsify his affidavit and the fact contained which were used to conceal the fact that EMI

and Petitioners startup LiveUniverse, Inc. had entered into a music text lyric license

prior to Warner Music, EMI, RIAA, Sony Music, and PeerMusic filing a federal

1
*Included:
-Largest shareholder of original Certified Class defined in 2009, Trafelet & Co., a multi billion dollar
NY Hedge Fund which retains law firm referred by Brad Greenspan, another injured shareholder and
fact witness. Brad was one of named plaintiffs in State Class action which was dismissed in 2006.
-Similar to Cut/lost shares, RGRD switched its position unlawfully, allowing
Defendants to file uncontested Motion to Ban state court plaintiffs, un defended, default judgment
carved out Brads 2,900,000 shares. (Brad was the largest single shareholder, owning about 10%
commons stock at time of sale.

24

copyright infringement complaint that claimed LiveUniverse had never entered into such

an agreement in 2009.

59. It was part of the Defendants scheme to conspire to interfere with Plaintiffs

livelihood by filing a lawsuit against Plaintiff in 2009 in retaliation for providing

truthful information to the SEC, DOJ, and FTC relating to the Defendants scheme, in

violation of 18 U.S.C. 1513(e) and (f).

60. It was part of the Defendants scheme to interfere with Plaintiffs

livelihood by disseminating defamatory statements about Plaintiff to the public through

various media outlets in retaliation for providing truthful information to the SEC, DOJ,

FTC, and Federal and State court relating to the RICO Defendants scheme, in violation

of 18 U.S.C. 1513(e) and 1513(f),

NEWS CORPORATION: CRIMINAL HACKING & BRIBERY

61. In 2012, News Corporation, who indemnified director defendants in

Brown v. Brewer and was operating the cases U.S. legal strategy, was exposed as

a criminal enterprise that had hacked the phones of over 1000 UK citizens and

employed a massive campaign of bribing police and public officials.

62. News Corporations general counsel resigned in 2011 and its

CEO appearing under oath at the Leveson Inquiry admitted he was the victim

of a coverup and all criminal acts exposed had gone on without his knowledge.

63. News Corporation conceded its internal controls were

defective as a result of the exposure of years of bribes its UK subsidiaries had

paid out and hidden by falsifying its financials.

64. At the current time, the CEOs most trusted lieutenants and top

2S
employees are on criminal trial for obstruction of justice, bribery of government

and police officials, and criminal phone hacking in the UK.

65. Four employees of News Corporation have already pled guilty.

66. News Corporation, has already conceded it has no defense for the

illegal acts charged and admits its internal controls were defective and the CEO

didnt know what was going on and the same coverup News Corp claims to be a

victim of was operating and responsible for the acts petitioner claims herein.

V - CONCLUSION:

67. Chancery Courts failure to force Defendants to honor their promise to

fix the defective Disclosure in 2003 is directly responsible for allowing Defendants

to steal upwards of $32 Billion in damages (Rule 701 Damage Report) from thousands

of shareholders in 2005 including Petitioner.

68. Defendants have failed to respond to a Motion 70(b) filed with Judge Strine

January 2, 2014 seeking relief from the contempt of then Vice Chancellor Strines order

and ruling January 14, 2004 and the included agreed relief for any technical violation.

VI. CLAIM COUNTS






26


74. All Defendants have violated 1503 (c)




78. News Corporation 2013 UK CRIMINAL GUILTY PLEAS UNLAWFUL

UNDER 1504 and 1505(f)



80. Sony has breached The }uly 2uuS 0ption agieement which stateu,

iv. Pursuant to the debt financing agreements, eUniverse and VPVP
agreed that in the event that VPVP does not exercise the Option within 120
days of its grant, that VPVP may, within 10 days after the expiration of such
120-day period, transfer the Option to eUniverse in exchange for a warrant
(the Warrant) to purchase 200,000 shares of the Companys Series C
Convertible Preferred Stock.

81. Sony and VantagePoint Venture Partners have further breached
OPTION AGREEMENT, dated as of July 15, 2003, among 550 Digital Media
Ventures, Inc. (Seller), an affiliate of Sony Broadband Entertainment, Inc.,
eUniverse, Inc., a Delaware corporation (the Company), and VP Alpha
Holdings IV, L.L.C. (Buyer).
Sections 6 & 7 & 10 & 14 which state:

6. Representations and Warranties of Seller. Seller represents, warrants and
covenants to Buyer, as of the date hereof and as of the Closing Date, that:
27
(e) No Price Stabilization or Manipulation. Seller has not taken and will not
take, directly or indirectly, any action designed cause or result in stabilization
or manipulation of the price of any of the Shares.

7. Representations and Warranties of Buyer. Buyer represents, warrants and
covenants to Seller, as of the date hereof and as of the Closing Date, that:

(c) No Price Stabilization or Manipulation. Buyer has not taken and will not
take, directly or indirectly, any action designed to cause or result in
stabilization or manipulation of the price of any of the Shares.
14. Buyer May Exercise Option For Less Than All Shares. Notwithstanding any
other provision herein to the contrary, Buyer may exercise the Option with respect to
less than all of the Shares, but in no event less than 50% of the Shares.
10. Certain Transactions. Seller shall vote as a stockholder in favor of an investment
and loan transaction between the Company and Buyer resulting in an additional
investment in the Company by Buyer of no less than $5 million at a price of at least
$1 per share (if an equity transaction), as approved by the Board of Directors of the
Company (the Transaction).

16. Miscellaneous.
This Agreement may not be modified or amended, except by an instrument in
writing signed by duly authorized officers of both of the parties hereto.

82. Proxy notes on page 17. that on October 31, 2003, the option term

was extended to April 16, 2004 and VantagePoint partially exercised the option and

purchased 454,545 shares of our Series B preferred stock from 550 Digital Media

Ventures. The note an exhibit had an original term of 120 days or November 16,

2003 for VantagePoint to purchase the Sony Corp shares under the option.

83. In Intermix 3/31/04 - 10K section 'Certain Relationships

"On October 31, 2003, the option term was extended to April 16, 2004 and
VantagePoint partially exercised the option and purchased 454,545 shares
of our Series B preferred stock from 550 Digital Media Ventures. On April
16, 2004, VantagePoint exercised the remainder of the option.

84. However, The October 31, 2003 extended option agreement between

28
Sony and VantagePoint was improper and what was not disclosed to shareholders

was that thru Orrick and defendants actions, shareholders i) were losing the bargain

of the deal which called for Issuer to have the right to purchase 100% of the Sony

Option Shares after January 16, 2004 as part of an agreement that would transfer

200,000 Series B Warrants of Issuer to VantagePoint and ii) The October 31, 2003

extended option actually acted as a way that Orrick and defendants sought to avail

themselves of the 19.9% nasdaq and other exchange limits that required Issuer to

have a shareholder vote prior to approving any issuance of stock of Issuer including

an issuance of stock as part of an integrated deal that shifted more then 19.9% of

Issuers stock to new party.




FAILURES


90. 1304. Transfers fraudulent as to present and future creditors.
U.S.C. 1513(e))
29

92. Petitioner is entitled to a private cause of action for damages suffered Pursuant to

the Dodd Frank Whistleblower Statute. Mr. Greenspan is entitled to a private cause of

action for whistleblowers alleging retaliatory discharge or other discrimination. Id.

78u-6(h)(1)(B)(i). Relief includes Right to Jury Trial, reinstatement, double the back

pay owed, and costs and fees. Id. 78u-6(h)(1)(C).

i. Damages including loss of employment and Chairman Director

position from Myspace Parent company in 2003 under 15 U.S.C. 78u-6 ("Section

922") and loss of Director employment under the same statues. Petitioner reported

information concerning Defendants breach of fiduciary duty, disloyalty, and violation

of Section 10(b) of the Exchange Act when he resigned as CEO on October 30, 2003.

Petitioner reported information concerning Defendants breach of fiduciary duty,

disloyalty, and violation of Section 10(b) of the Exchange Act when he resigned as

Director in December 2003.

Mr. Greenspan was terminated for two reasons: (i) in retaliation for reporting

misconduct of Brewer, Edell, Lipp, and other Defendants; and (ii) to stop the CEO from

terminating,demoting or decreasing the compensation of Brewer, Edell, Lipp, Moreau.

iii) The CEOs refusal to sign a Board created settlement agreement during the week of

October 30, 2003 which would have prevented Greenspan from contacting other

shareholders or regulators and disclosing the breach of fiduciary duty or other security

violations the Board and certain executives had committed in the process of

consummating the VantagePoint Series C

Financing in October 2003. The acts had been committed by Defendants
Su

while blocking the superior rate Common Stock financing sitting in Issuer

outside law firms bank account. Endangering the entire Public Corporation
PETITIONER ALSO HAS CLAIMS AGAINST SONY
ix. Sony Corp executives, Defendants in this Complaint, abused their

fiduciary duty to Issuer by misleading the Public and shareholders as part of

assisting Defendants scheme to take control of eUniverse, Inc. in 2003 and get

approval and entrench Defendants as a result of the January 2004 Annual Meeting

and Proxy Battle against Petitioner.

x. Sony Corp Defendants possessed a critical Board Seat Nomination

legal right the Series B Stock possessed. Sony Corp nominated Edell as the Series B

Stockholder in 2004 even after evidence in Delaware Court showed Edell and

Defendants had mislead shareholders by Filing multiple defective and false proxy

statements to Issuers shareholders in 2003 and 2004.

xi. As a Result of the applicable Defendants involvement in the above-

described conspiracy and conspiratorial scheme, the Plaintiff has suffered severe

emotional, financial, mental, and physical harm and other deleterious effects; been

unfairly disadvantaged in multiple civil lawsuits initiated against him by several of

the Defendants and other parties; had his freedom of speech severely impinged;

been forced to spend hundreds of thousands of dollars on legal fees; been forced to;

And had his personal and professional reputation severely and permanently

damaged. Based upon information and belief, some of the Defendants are

continuing to engage in the above-described conspiracy and conspiratorial scheme

S1
even though they are well aware of the devastating toll that their prior conspiratorial

actions have already taken on Petitioner and Petitioners business assets.



94. All Defendants are charged with Count #11



96. Defendants lied to Court regarding Defendants Proxy disclosure related to

Edell. Defendants Failure to make this right as claimed by Defendant

Delaware counsel is worthy of Contempt violation.



98. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October

17,2003. Defendants fraudulently concealed such properly noticed slate.

Defendants have also not legally effected a valid closing or vote on the Series C stock

sale or transfer from Sony of their Series B shares, blocking public issuers option

received in three way agreement between Sony, VantagePoint, and public issuer in 2003.

The crooked dealings expand when Orrick uses its insider knowledge to produce a

commercial benefit for VantagePoint while having Issuer pay 100% of the cost by


S2


100. Defendant Directors right to Exculpation because of Judge King ruling finding

bad faith and disloyalty must be void.



102. Plaintiff effects 3-1-1 approval of properly noticed Director slate on October 17,

Defendants fraudulently concealed such properly noticed slate. Therefore, Defendants

have also not legally effected a valid closing or vote on the Series C stock sale or transfer

from Sony of their Series B shares, blocking public issuers option right to rebuy the

shares for benefit of common stock shareholders received

in three way agreement between Sony, VantagePoint, and public issuer in 2003.

103. voids Blasius Directors compensation post Blasius event

104.voids VantagePoint financing tranche I on October 31, 2003

105.voids VantagePoint financing tranche 2 on January 24, 2003 which was subject to

shareholder vote of items in Blasius Proxy created by Blasius Directors.

106.Plaintiff awarded damages to stock owned equal to the dilution caused by Blasius


107. Plaintiff awarded Expectency damages as Proxy Slate backer damaged by Blasius


108. Award to competing Proxy slate compensation as if Slate Directors had not been
SS

victim of Blasius violation by defendants.


109. Plaintiff repeats and realleges the foregoing paragraphs as set forth herein

110. PLAINTIFF RIGHT TO INDEMNIFICATION AND ALSO RIGHT TO
IDEMNIFICATION FOR ADVANCEMENT LEGAL FEES. INCLUDING ALL
MATTERS OR EVENTS OR FACTS CITED

111. Plaintiff was Director and Officer at Issuer that owes Plaintiff benefit of contract

rights defined in Section 7 of Issuer Bylaws for Indemnification and Advancement:

The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights
and such rights shall continue as to an indemnitee who has ceased to be a director,
officer or trustee and shall inure to the benefit of the indemnitees heirs, executors and
administrators. (Exhibit 1,Article VIII Section 7. Nature of Rights )

112. Plaintiff s Right to Indemnification is entitled to: i) indemnification to

fullest extent authorized by the Delaware General Corporation Law or broader

indemnification rights
2
:

113. Plaintiff is also beneficiary broader protection compared to Del 145 statue limits
3

114.Indemnitee in addition to being an Officer, was Director and due benefit of Issuers

Eighth Bylaw broadening scope of Indemnification and Advancement rights:

EIGHTH: Directors of the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which involve

2
"shall be inuemnifieu anu helu haimless by the Coipoiation to the fullest extent authoiizeu by the
Belawaie ueneial Coipoiation Law, as the same exists oi may heieaftei be amenueu (but, in the case of
any such amenument, only to the extent that such amenument peimits the Coipoiation to pioviue bioauei
inuemnification iights than such law peimitteu the Coipoiation to pioviue piioi to such amenument),"
(Aiticle vIII Section 1;Exhibit 1)

S
"any action, suit oi pioceeuing, whethei civil, ciiminal, auministiative oi investigative (heieinaftei a
"pioceeuing")" (Exhibit 1 e0niveise Aiticle vIII Section 1. "Right to Inuemnification")

S4
intentional misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. (Exhibit 2)
INDEMNIFIED FOR ALL EXPENSE, LIABILITY, AND LOSS SUFFERED

115. Indemnittee contract right is Mandatory advancement. Plaintiff is not

limited by standard Delaware 145 Permissive advancement limitations such as allowing

terms and conditions to be set that a corporation deems appropriate.

116. Petitioner seeks to be indemnified for following:

(a1) Damages and impact on Indemnitee from fabricated dividend or fraudulent
conveyance of 33% of Myspace.com to insiders initiated in November 2004.

(a2) Damages and impact on Indemnitee from void October 31, 2003 Certificate
of Designation of Series C Preferred Stock, void Series C Preferred Stock sale,
void Series C Directors, void January 2004 Annual Shareholder meeting, void sale
of Skilljam.com,

(a3) Damages and impact on Indemnitee from void February 2005 sale to
RedPoint Capital of 25% of Myspace, Inc. stock.

(a4) Damages and impact on Indemnitee from void name change by eUniverse,
Inc. to Intermix, Inc., and sale of eUniverse, Inc. aka Intermix, Inc. to Defendant
in September 2005.

(a5) Damages and impact on Indemnitee from void issuances of stock and
options to certain Officers and Directors after October 30, 2003.

(a6) Damages and impact on Indemnitee from fraudulent concealment by
Defendants of valid October 17, 2003 Annual Slate of Directors being validly
nominated for Annual Shareholder meeting with a shareholder record date of
October 23, 2003.

(a7) Damages and impact on Indemnitee from void News Corporation 2005
purchase of eUniverse, Inc. since indemnitee owned 30% of eUniverse, Inc.

(a8) Damages and impact on Indemnitee from lost $900 million Google Search
Commerciial agreement.

(b1) Damages and impact on Indemnitees January 2004 conflicted search
SS
engine conflict and warning notice filed with SEC.

(b2) Damages and impact on Indemnitees May 2005 Whistleblower notice to
Intermix, Inc. and Intermixs june 2005 reply and actions.

(b3) Damages and impact to Indemnitee thru Carlick June 2005 fraudulent
concealment while Carlick controlled Manatt Law firm misled & manipulated
NYAG to investigate Indemnitee

Indemnitees $13.50 Counter Offer to Purchase Intermix, Inc. and Myspace Inc

Indemnitees failed online music lyric text community website venture after and
as part of Sony facilitated November 30, 2012 Warner Music Group PeerMusic
lawsuit against Indemnitee.

Indemnitees failed buyout of publicly traded Delaware Incorporated
Answers.com in 2011.

Indemnitees failed buyout of subsidiary of publicly traded Delaware
Corporation, Washington Post Corporation in 2013.

(c1) Damages and impact to Indemitee and Expectancy Damages from
preventing Indemnitee from entering Rule 701 Damage Report into Federal
Court in Los Angeles in 2011 and 2012.

(c2) Plaintiff did not receive $2.75 per share despite having qualifying stock
Held of over 2,900,000 shares.

Plaintiff as shareholder was damaged by reason that Plaintiff was Director
and Officer of eUniverse, Inc. Plaintiff was obstructed from puttingRule
701 Damage Report into Federal Court before the December 31, 2012 final
Disposition.

COMPLAINT FOR DAMAGES

Requiring disgorgement and/or imposing a constructive trust upon Defendants ill-

gotten gains, freezing Defendants assets, and/or requiring Defendants to pay restitution

to Plaintiff and to all members of the class of all funds acquired by means of any act or
S6

practice declared by this Court to be an unlawful, unfair, or fraudulent.

VIII - RELIEF REQUESTED

A. WHERFORE, Plaintiff demands judgment and preliminary and permanent relief,
including injunctive relief, in its favor and in favor of the Class and against the
Defendants as follows:

B. Awarding Plaintiff appropriate damages including compensatory damages,
together with pre- and post-judgment interest;

C. Awarding Plaintiff the costs, expenses and disbursements of this action, including
any attorneys and experts fees and, if applicable, pre-judgment and post-
judgment interest; and

D. Awarding Plaintiff such other relief as this Court deems just,equitable and proper.

Dated: April 16, 2014

_________________________________

S7

EXHIBIT #1

January 2, 2014

Brad D. Greenspan
Suite 1236

Case C.A. No. 106-VCS
Greenspan v. Brewer, et. Al.

Dear Honorable Chief Chancellor Strine

Attached for your consideration under Exhibit A herein is a Motion 60(B)(6) requesting the case be re-
opened to allow for the merits of a Motion for Contempt 70(B) to be considered, along with the other
relief your ruling explicitly allowed for under the ruling and statements you made during the hearing in
January 2004 (A transcript of the hearing is attached as Exhibit #9 of Declaration in support of Motion
70(B) , specifically a Motion to Conform the Evidence, and a Motion for Judgment on the Pleadings.

While several years have gone by since the case was closed in 2004, I believe it is meritious for
The Chancery Court to accept the Motion 60(B)(6) that attaches as exhibit Motion (70)(B) for filing
along with the other documents.

First, procedurally, I followed the precedent and sequence for such an action from your decision in
C.A. No. 4780-VCS (WIMBLEDON FUND LP ABSOLUTE ) RETURN FUND SERIES v. SV SPECIAL
SITUATIONS FUND, February 2011), in which you stated in the ruling,

the way for a party to obtain relief from a final judgment is for it to file a motion in this court
under Court of Chancery Rule 60(b).

Second, because the underlying facts of the Motion for Contempt 70(B) involve fraudulent concealment
by the defendants of the scheme that the motion seeks relief from, the amount of time that has passed
should not bar this Motion from being accepted by the Court to consider.

Specifically, the evidence discovered to pierce the fraudulent concealment scheme only became
available after: i) defendants as part of the scheme published a book in 2009 calling Stealing
MySpace with false facts in an attempt to further the fraudulent concealment which began in Chancery
Court after your ruling and findings in 2004.

The defendants then induced the Plaintiff Class Counsel RGRD Law to substitute the false facts from
the defendants published book in place of my evidence I was seeking to submit into the Los Angeles
Central District Federal Class Action Security Fraud case (Brown v. Brewer, which consolidated 2005
events and claims surrounding the September 30, 2005 Cash sale of eUniverse, Inc which had changed
its name to Intermix to acquiror News Corporation, and certain 2003 claims related to the restatement
eUniverse had suffered ). Therefore, I was a member of the Class of Plaintiff shareholders in regards to
the 2005 claims, but a potential defendant Director in regards to the 2003 claims from the restatement.

A fight broke out as I sought to alert other shareholders of the Class to the fact that Plaintiff Class
Counsel had turned into a renegade suddenly sprinting to settle the claims for .07 cents on the dollar
after Federal Judge Kings June 2010 Summary Judgment finding in favor of the Plaintiff Class (of
which I was a member of such class because of my shareholdings in the underlying public company).
Judge Kings Summary Judgment focuses only on the 2005 matters.

Both myself and the second largest member of the certified class, an institutional stockholder Trafelet
& Co, a NY hedge fund, then attempted to object to the inequitable Settlement fashioned by RGRD
Law. Further, I tried to intervene to stop the settlement and get the Federal Court in Los Angeles to
review the new evidence covered up by defendants fraudulent concealment and fraud on the Chancery
Court evidence and matters that I had discovered by March 2012.

While I was forced because of monetary constraints (and the breach of a 2007 Common Interests
Agreement I signed with RGRD Law) to file pro se, I was not allowed to intervene to inject the newly
discovered facts, and the Federal Class Action Security Fraud class action had its final disposition with
the December 31, 2012 distribution of $45,000,000 in settlement proceeds to the Class

However, my alerting the other Class members led to Trafelet & Cos retained lawyer being allowed
to intervene at which time we discovered that RGRD Law had initiated a scheme to change the
definition of the certified class in the settlement documents which effectively removed 60% of the
eligible shares for participation in the settlement (RGRDLAW changed the legal definition of the Class
in the 2012 settlement documents from the previous May 2009 definition which the federal court
certified allowing anyone holding shares as of July 18, 2005 thru September 30, 2005 (date of
consummation of the merger) to receive a share of settlement proceeds, to instead a new different legal
definition which RGRD Law printed in the 2012 settlement documents which injected the word
Continuously as a qualifier. RGRD Law had a copy of the 13-F SEC list of institutional holders
which they had sent me in 2007, and realized by simply adding this one qualifying word, 60%+ of the
eligible shares would be cut out because 80%+ of the institutional shareholders holding shares on July
18, 2005 when the merger was announced, sold their shares before September 30, 2005 when the
company announced they would not entertain the competing $13.50 bid I had publicly announced (and
in which I was fronting for Viacom, Inc. a rival bidder, who was not given a chance to bid and such
scheme discussed by Judge King in his 2010 summary Judgement ruling. Thus the Federal Judge could
not consider the facts and evidence including my emails with Viacom, their desire for me to keep their
involvement in my bid anonymous unless the Company agreed to delay the September 30, 2005
shareholder meeting to approve the sale to News Corporation).

My alerting the other class members resulted in Trafelet & Co. first discovering that they were in fact
not eligible to receive any of the award because they had sold all 3 million of their shares before
consummation of the merger before September 30, 2005, and working with a boutique law firm in Los
Angeles such effort caused the Federal Judge to reject the first Settlement terms. While Judge King
noted in his ruling rejecting the first Settlement terms, that it was odd that RGRD Law in 2009 had
fought to create a certified class that included the type of shares held by Trafelet & Co and that in 2012
RGRD Law was now fighting jointly with the Defendants to claim continuous holding of the shares
thru the date of the September 30, 2005 consumation was necessary to be a member of the newly
defined certified class that RGRD printed in the settlement documents.

Judge King appeared exhausted by the proceedings and not desirous to take action on RGRDs breach
of its duty of loyalty, fiduciary duty to the Class members, fraudulent concealment of new evidence,
and fraud upon the Court (all of which I sought to be reviewed and considered by the Court in my
intervention filings and 60b3 motions which the Court rejected to be heard because more then 12
months since the default judgement banning me as a member of the Class that I sought to vacate had
passed) and approved a March 2012 2
nd
Settlement structure in which RGRD admitted Trafelet & Co.
was a member of the certified class but had shares which were not as valuable as the Continuous
shareholder, and a smaller portion per share of the award was given to Non-Continuous shares held that
were also members of the 2009 certified class

During this time, I became aware of one of the underlying reasons for RGRD Laws misdeeds. RGRD
was sanctioned in 2008 in Chancery Court as part of the findings and rulings of (SS&C
TECHNOLOGIES, INC. C.A. No. 1525-VCL). However, RGRD fraudulently concealed this sanction
from me and never disclosed it to the Federal Court in Los Angeles. This was because the defendant in
the Brown v. Brewer case was represented by Latham Watkins (although Latham directly represented
the defendants in the California State Class Action which was dismissed at demurrer stage in 2006
before discovery was reviewed by myself and new findings and claims were created from such
discovery that I subsequently shared with RGRD in 2006 which was then filed as part of the Federal
Class Action Security fraud claims, Latham wisely allowed Hogan Hartson to sub in for Latham during
the Federal Class action), the law firm that was opposite RGRD In SS&C.

Thus, RGRD was induced to turn renegade against the interests of myself and the other Federal Class
members because Latham was willing to pass on launching a new set of claims against RGRD and
significant new liability for RGRD (using the findings the Vice Chancellor hints at in the SS&C
Sanction ruling) that may have terminated RGRDs ability to practice law. RGRD also wanted a piece
of the $45 million dollar settlement and Lathams silence on informing the Federal Court that RGRD
was fraudulently concealing notice and disclosure of its Sanction from Chancery Court, allowed RGRD
to remain as Class Counsel. Noting that I was unaware initially of the SS&C Sanction matter when I
began in 2009, sending emails to RGRD indicating I was seeking to have them removed as Class
Counsel after they did a joint motion to ban me as a Witness and not use my evidence (May 2009) after
I informed them I would submit new evidence into the record I had discovered and had agreed to be
subpoened by Defendants counsel Hogan Lovell and submit such new evidence imminently)

ii) The additional critical evidence that caused me to purchase and review the 2009 Stealing Myspace
book that RGRD used as the false facts injected into the Federal Court Summary Judgment, as well as
the impetus for a below fair market settlement of the case in 2012, was the ongoing Federal Class action
HiTech Employees v. Google, Apple, et. Al I discovered existed in 2012 (the class action had been filed
in San Jose Federal Court in late 2011). After purchase of the Stealing Myspace book I discovered
references to interviews with Jeff Edell at the back of the 300 page book (after seeing reference to use
of Stealing Myspace by RGRD Law in the post 2010 Summary Judgement underlying summary of
facts documents I reviewed after being forced to stop my internet business (my full time job at the time)
and become Active as a class member that became aware RGRD had gone renegade and the entire
Shareholder Classs rights and claims were exposed and likely to be lost or severly diminished unless I
personally became active.

Only after launching a new investigation of Jeff Edell because the Stealing Myspace book
underpinned its facts from the interviews with Edell, did I get access to an original D&O Questionaire
that Edell had filled out in 2003 and submitted to the Nominating Committee of the eUniverse Board
(of which I was not a member).

It was this evidence of fraud that is at the heart of the 70(B) motion and is part of the Exhibits that
proves clearly a new crime of Fraud Upon the Chancery Court (along with other equitable claims).

Additionally new evidence disclosed in discovery in Hitech Employees v. Google only became
available in May 2013 (when disclosed in that cases attempt to Certify its Class), and such new
evidence connects Director Carlick with being a party to secret bilateral agreements that Defendants in
that case admitted were formed in 2004 and 2005. As Carlick was a Director of AskJeeves Inc. which
was one of the co-bilateral agreement parties that entered the admitted unlawful and illegal agreements
With Google (and Google had signed a Settlement admitting as such with the Department of Justice in
late 2011). Carlick was simultaneously a Director of eUniverse and his firm was control shareholder
after using Edell to help take control and win the 2004 Proxy vs. my competing Proxy bid.). Thus
Edells continuation of the fraud started in Chancery Court, discovered by Chancery Court, and then
doubled up on by defendants, was also the key scheme of the fraudulent concealment that the 2009
Stealing Myspace book accelerated, and underpinned RGRD Laws claims to the Federal Court in
Their 2012 joint bid telling the Federal Court that my claims I sought to inject into the Court were
lacking in credibility.

Therefore, unless the Chancery Court provides the relief I am seeking, I can never recover my
credibility versus the fabricated Director Edell scheme that the Motion 70(B) seeks to lance.

Further, unless the Chancery Court re-opens the matter under its right to do so via 60(B)(6), then
The Chancery Court will be allowing Defendants including Delaware defense counsel to lie to the
Court and completely disregard the Courts rulings when they are made.

Therefore, I urge your consideration of the facts included in the attached Motions and appeal to your
sense of equitableness in allowing these Motions to be filed in the Chancery Court despite the time
since the matter was closed. I also note that because my Slate of Directors was nominated rightfully
October 17, 2003 before I resigned as Chairman and CEO, and the Defendants fraudulently concealed
this fact from the Chancery Court and the public, doesnt provide a cure for the VOID actions
defendants took after such date, nor does it provide a cure for the VOID actions the defendants took
after thumbing their nose at the Chancery Court ruling in January 2004 (and fraudulently concealing
from the Chancery Court in July 2004 at which time the Court entertained an award of legal fees but
only granted in part because defendants were fraudulently concealing the aforementioned matters which
are detailed fully in the underlying Motions).

Sincerely,

Brad D. Greenspan

EXHIBIT A

"

BRAD D. GREENSPAN,

Plaintiff,

v.

BRETT BREWER, et al.

Defendants
)
)
)
)
)
)
)
)
)
)
)

C.A. No. 106-VCS

MOTION FOR CONTEMPT 70(B) 42(B) AND/OR 60(B)(3)

#
I INTRODUCTION.pg.3

II SUMMARY OF ALLEGATIONS..pg. 4

III ARGUMENTpg. 5

A. DEFENDANTS WILLFULLY IGNORED
WARNINGS AND MULTIPLE NOTICES...pg. 6

B. COURT PROVIDES RECOMMENDATION
THAT DEFENDANTS OPTED TO IGNORE....pg. 6

C. BOTH DELAWARE COUNSEL AND
DEFENDANT BROKE PROMISE TO COURT.pg. 7

D. DEFENDANTS IGNORED FIDUCIARY DUTY
TO HONOR OCTOBER 17, 2003 DULY ELECTED PROXY SLATE.pg. 8

E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED
EDELL DISCLOSURE VIOLATION TO ACQUIROR NEWS CORPORATIONpg. 8

F. SONY IS CONFLICTED AND HAS INFLICTED
MULTIPLE PREDICATE ACTS.pg. 9

NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEMEpg. 9

SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED
BY FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004
DEFECTIVE DISCLOSUREpg. 10

IV CONCLUSION..pg. 10

I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION.pg. 10

$

COMES NOW the Plaintiff acting on his own behalf, hereby moves this Honorable Court to enter Judgment on

the Pleadings in Plaintiffs favor and offers in support the following:

I - INTRODUCTION

1. The Plaintiff moves the Court to find Defendants in contempt under 70(B),

42(B) and/or 60(B)(3). Additionally, Plaintiff requests Court to sanction Defendants $25,000 per day

since Chancery Court January 2004 hearing that corrective disclosure ordered by then Vice Chancellor

Strine was not undertaken by Defendants and such per day sanction to continue until Defendants provide

proof to the Chancery Court that corrective disclosure has been made to the public.
1

2. During January 2004 trial, then Vice Chancellor finds Defendants guilty of Proxy

Disclosure Violations.

i. clearly, Mr. Edell was not validly elected to a Series B slot on October 6th. He just wasn't
He could not have been appointed by the Board to a Series B slot.(70B Declaration,
Exhibit# 9, pg.63)

ii. It's even odder when it's supposed to be retroactive to October 6th, especially when as of
October 6th, as I understand it, Mr. Edell hasn't even agreed to be on the board.( 70B
Declaration, Exhibit# 9, pg.63)

iii. As of October 6th, I have got to say, I really -- I think Mr. Lipp basically said the board had
no idea that it was slotting him in a Series B. I think there is a great deal of record evidence--
it's not a big record, but what record evidence there is suggests that the board wasn't really
thinking about putting him in as a Series B director but thought Sony was simply waiving its
right.( 70B Declaration, Exhibit# 9, pg.63)

iv. It's a very strange -- I mean, I have got to say--I will say this on the record. I'm very
dubious about the validity of this election, and there is a certain formality that has to be
done around electing people. And I mean, is this a proxy? (70B Declaration, Exhibit# 9, pg.63)

v. It's not really, I guess, my job to be Director of Hygiene for eUniverse, but now that very
competent Delaware counsel has been engaged to assist the company, I mean, it's pretty
common knowledge that the board of directors has to approve the actual certificate of

"
In Gallagher v. Long, the Delaware Supreme Court stated, [a] trial judge has broad discretion to impose sanctions for failure
to abide by its orders, so long as the sanctions are just and reasonable.
%
designation amendment that's being proposed. And you know-- and this isn't the first dot
come kind of company that's tried to be a bit innovative. (70B Declaration, Exhibit# 9, pg.63)

v. There is a certain elegant order in things. You have to -- the board has to approve it. And
they have to approve it in the form they are proposing. Then the stockholders have to do it.

vi. The Court: I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)

II SUMMARY OF ALLEGATIONS

3. Defendants, VantagePoint, and Orrick are guilty of Fraud upon the Chancery Court thru first

trying to mislead then Vice Chancellor Strine that Proxy disclosure is factual. Next caught in multiple lies

before the court, defendants agree to fix defective disclosure and fail to do so.

4. Vice Chancellor Strine further discovered the certificate of designation amendment was

never approved by Board:

THE COURT: Has the board actually voted upon, Mr. Teklits, a final copy of the
certificate of designation amendment?

MR. TEKLITS: There was some confusion. We had done it with Mr. Lipp, Your Honor.
Sony would not consent to an amendment that didn't require Vantage to exercise over 50
percent. They didn't want Vantage to exercise one share and they would lose their right to
the seats. I'm not sure what was attached to what.

THE COURT: It's not really, I guess, my job to be Director of Hygiene for eUniverse, but
now that very competent Delaware counsel has been engaged to assist the company, I
mean, it's pretty common knowledge that the board of directors has to approve the actual
certificate of designation amendment that's being proposed. And you know-- and this isn't
the first dot com kind of company thats tried to be a bit innovative. (70B Declaration,
Exhibit# 9, pg.63)

5. Omission of Edells bankruptcy in Proxy statements is violation of: Rule S-K Item 401 and

Rule S-K Item 401 (f). (70B Declaration, pg.19-21, paragraph #s 94-103)

6. Defendants aware the January 2004 Proxy was defective, fraudulently concealing

Edells work experience, ignore then Vice Chancellor Strine ruling, dont cure the defects and make more

&
disclosure violations in order to mislead shareholders and shift control of publicly traded eUniverse, Inc.

7. Sony Corp is guilty of aiding & abetting Edell and defendants to violate Rule SK Item 401

and defame Plaintiff and Plaintiffs competing slate of Directors in January 2004 Proxy contest.

8. Defendants & their Counsel are guilty of Fraudulently concealing Edells background

in 2003, 2004, 2005, 2009, 2010, and 2012, resulting in damages to Plaintiff and shareholders, as well as

fraud upon the Chancery Court in Delaware and the Federal Court in Los Angeles Central District because

Defendants induce Shareholder Class Counsel to substitute fabricated facts from fabricated Director Edell

instead of Plaintiffs true facts.

III ARGUMENT

9. Under Court of Chancery Rule 70(b), this Court may find a party in contempt when it

fails to obey a Court order of which it had knowledge.
2

10. The moving party is not required to show that the violation was willful or intentional,

but the intentional or willful nature of a contemnors acts may be considered in determining the

appropriate sanction.
3

i. Scienter of Defendants is supported by (70B Declaration, pg.4-22, paragraph #s 20-103)

11. A party moving for a finding of contempt bears the burden of establishing by clear and

convincing evidence that a court order was violated. If the movant makes that showing, the burden then

shifts to the contemnor to show why it was impossible to comply with the order or why.
4

#
Court of Chancery Rule 70(b) supplies this court with the power and broad latitude to remedy violations of its orders.
$
27 Mother African Union First Colored Methodist Protestant Church v. The Conference of African Union First Colored
Methodist Protestant Church, 1998 WL 892642, at *6 (Dec. 11, 1998).

%
State ex rel. Oberly v. Atlas Sanitation Co. Inc., 1988 WL 88494, at *2 (Del. Ch. Aug. 17, 1988) ([O]nce the party with the
burden of proof has introduced evidence from which a fact finder could conclude that he has established a prima facie case, then
the burden of going forward with the evidence shifts to the alleged contemnor to . . . [show] it was impossible to comply with
the court order.); see Rolex Watch U.S.A., Inc. v. Crowley, 74 F.3d 716, 720 (6th Cir. 1996); F.T.C. v. Affordable Media, 179
F.3d 1228, 1239 (9th Cir. 1999); see also AM. JUR. 2D Injunctions 321.

'
12. Defendants based on precedential Delaware rulings, should be sanctioned and fined.
5

13. January, July 2004, & August 2005 Proxies omit key facts rendering them defective and void.

A. DEFENDANTS WILLFULLY IGNORED WARNINGS AND MULTIPLE NOTICES

14. Warnings by then Vice Chancellor Strine included:

i. "But you can get this stuff fixed out or you put me in a position where I have got some sort
of -- this is low hanging fruit (70B Declaration, Exhibit# 9, pg.63)

ii. I don't have to say these words and you don't have to go fix them or call your client.

iii. the way the board purported to fill it was invalid.(70B Declaration, Exhibit# 9, pg.63)

iv. You may need to do corrective disclosure to begin with, because of this( 70B Declaration,
Exhibit# 9, pg.63)

v. Then I have a disclosure violation here," (70B Declaration, Exhibit# 9, pg.63)

vi. real problem that I may have to take some notice of (70B Declaration, Exhibit# 9, pg.64)

vii. "could I plead with the Delaware lawyers for the company that if we are going to get -- if
you are going to get a consent from Sony, craft it. I mean, it's one thing Mr. Shannon and
Mr. Walsh -- it's one thing if they want to do a Blasius thing. You know, you don't want to
walk in here again with some sort of technical problem," (70B Declaration, Exhibit# 9, pg.64)

viii. You know you probably have to amend your proxy statement, then. (70B Declaration,
Exhibit# 9, pg.64)

ix. make sure you get it done right (70B Declaration, Exhibit# 9, pg.64)

x. the company amends its proxy statement (70B Declaration, Exhibit# 9, pg.64)

xi. You clean that up (70B Declaration, Exhibit# 9, pg.64)

B. COURT PROVIDES RECOMMENDATION THAT DEFENDANTS OPTED TO IGNORE

15. Then Vice Chancellor Strine tips to avoid Blasius and Disclosure violations ignored:

i. "I can't help but observe the other thing, which is if this -- if the company --if the

&
()*+,)* -.//*,0/ 12 3*456 0+748 .44+9:/.+40; .4<2; <2:2 4=2 >>??@A-;#?"$B Because First State and CAMI failed
to comply with paragraphs 3 and 5 of the PI Order, IDB is entitled to an order holding First State and CAMI in contempt and
imposing an appropriate sanction. This Court has broad discretion in formulating a remedy for violations of its orders.6 As part
of its broad remedial powers, the Court may impose a fine, for example, to coerce a non-complying party to cease improper conduct.

>
incumbent board is really fine with a fair fight and doesn't mind the common and the
preferred voting together to elect a majority even now, which I don't know to be the case --
but if it were and you said, "Let's have a showdown. We have a large stockholder. We
have a disagreement. Vantage is in here. Let's have the showdown in the OK Corral. We
want Mr. Edell to be on the board." Well, there is an obvious way to do that. Right? And
if you don't want to have a legal fight, then you know, you figure out who your four are.
You know who the Vantage two are If Edell is one of the fighting four, you make sure the
certificate of designation has been approved. You clean that up. You know you probably
have to amend your proxy statement, then. Then maybe you change your sale and put
Edell on it. And the four that is currently in there, make a decision as to being on the board
or not.. You have a fight about the majority. That is the judge trying to be practical in a
situation where I have seen both sides, "I'm saying if it's fair fight time and you are
ultimately going to have a majority up, that is a real clean way to do it. I don't know how
Blasius comes into that at all. (70B Declaration, Exhibit# 9, pg.64)

ii. "I'm saying if it's fair fight time and you are ultimately going to have a majority up,
that is a real clean way to do it. I don't know how Blasius comes into that at all.

iii. "So to the extent that Sony -- for example, if Mr. Edell were to resign today, to say,
"I am not longer on the board," one of his other colleagues would resign -- and you do it in
however elegant fashion to make sure you get it done right. Mr. Edell is immediately
reelected to the vacancy a common vacancy, and the company amends its proxy statement
and puts him as one of the four. (70B Declaration, Exhibit# 9, pg.64)

C. BOTH DELAWARE COUNSEL AND DEFENDANTS BROKE PROMISE TO COURT

16. Delaware Counsel Teklits and Defendants plus Sony break promise to Court:

MR. TEKLITS: We will make sure this is right, Your Honor. I think everybody wants this
amendment approved. (70B Declaration, Exhibit# 9, pg.63)

17. Defendants fail to make Court ordered corrective disclosure of:

i. False December 30, 2003 Proxy: (70B Declaration, pg.19-21, paragraph #s 94-103)

ii. False October 31, 2003 Press release (70B Declaration, Exhibit #4, pg. 38-39)

iii. False Defamatory December 11, 2003 8k: (70B Declaration, Exhibit #6, pg. 44)

18. Defendants opt instead to initiate multiple new Edell disclosure violations thumbing nose

at Chancery Court and promise made to then Vice Chancellor Strine:

i. Thru ISS Report Defamatory attack on Petitioner: (70B Declaration, pg.22, paragraph #s
104-108)

C
ii. Thru Los Angeles Times Defamatory attack on Petitioner: (70B Declaration, pg. 23,
paragraph # 109)

iii. Thru false and defective July 2004 Proxy (70B Declaration, pg. 24, paragraph #s 110-113 &
Exhibit #7, pg.48-49)

iv. False and defamatory January 26, 2004 Proxy Disclosure (70B Declaration, Exhibit #6,
pages 45-46)

iv. Misleading investment bankers in 2005 Bidding Contest by failing to correct
previous Proxy statements and disclosures, ensuring Plaintiff status would be Does
not have significant credibility so that Plaintiff would not have equitable
opportunity to participate with $13.50 counter bid announced in September 2005
before Defendants consummated $12.00 per share sale to News Corporation.
(70B Declaration, Exhibit #8, page 51)

D. DEFENDANTS IGNORED FIDUCIARY DUTY TO HONOR OCTOBER 17, 2003 DULY
ELECTED PROXY SLATE

19. After January 2004 Chancery Court hearing, it was unlawful for Defendants to fraudulently

conceal and to not honor Plaintiffs October 17, 2003 approved Director slate nominated at validly called

Board Meeting. (70B Declaration, pg.13, paragraph #48)

20. Voided Edell Director, voids Edell vote during Plaintiff and eUniverses October 16, 2003

Vote to Nominate Director slate proposed by Plaintiff before Plaintiff resigned as Chairman and CEO.

This effects 3-1-1 win by Plaintiff vs. previous No pass Defendants purport existed from 3-1-2 vote

before Chancery Court ruled Edell was never validly elected as Director in October 2003.

E. DEFENDANTS PASS ON FRAUDULENTLY CONCEALED EDELL DISCLOSURE
VIOLATION TO ACQUIROR NEWS CORPORATION

21. Defendants pass on fraudulently concealed unlawful acts including contempt of Court to

acquiror News Corporation as clearly exhibited in email disclosed by Class Counsel in 2011 Federal

security fraud class action. Such email on July 17, 2005 from Corporate counsel Lang emailed at 4:13AM

to Defendant Director Sheehan, Subject: 'Purchase Agreement, stating,

"On the issues, let's close on the remaining ones in a fair and reasonable way-- so we can build out
relationship. And

D
3. We feel like we have given indemnification on the shares and the purchase agreement itself to
do so on any issue we have had no involvement in whatsoever (i.e. Greenspan) - that seems like
too much. Andy, I know we are very eager to get this done. Let do it so both sides can feel good
and move forward on our longer-term relationship."

F. SONY IS CONFLICTED AND HAS INFLICTED MULTIPLE PREDICATE ACTS:

22. Sony was an insider shareholder in eUniverse (Intermix, and Myspace by ownership level prior

to Sale of VantagePoint VC firm in July 2003;October30, 2003;April 2004 (SEC disclosure) and had a

Director and Series B Nominee Edell in January 2004 Proxy.

23. Sony Corps general counsel Seligman is married to Joel Klein who began working for

News Corp in 2009. Sony has fraudulently concealed the defective Edell background & both violations of

Rule SK Item 401 in January and July 2004 Proxy and Annual meetings respectively. Sony and/or

Seligman are aiding and abetting News Corp for the benefit of Joel Klein who is an executive and Director

earning $1m+ per year from News Corp.

NATIONALLY PUBLISHED NOVEL AND TO FURTHER UNLAWFUL SCHEME

24. Defendants leverage their relationship with acquiror to create defamatory and fabricated lies

thru acquiror News Corporation employee Angwins published in late 2009 book, Stealing MySpace

which fraudulently conceals the true background of former Director and Chairman Jeff Edell and his

scheme with Brewer to forward a fabricated false resume, misleading CEO to get Edell onto the Board.

This creates further ongoing defamatory damages to Plaintiff and Shareholders because Class Counsel

accepts and uses false Edell facts in book instead of Plaintiffs facts offered to Class Counsel in 2012

Federal Class Action in Los Angeles Central District. Edells false facts allow the fraudulent conveyance

Of approximately 50% of Myspace.com, the crown jewel of eUniverse, Inc. in 2004. Further, Edells false

facts which become Acquiror News Corporation false facts, obstruct Plaintiffs true facts from entering

the record for the benefit of the Federal Court learning the true damages and claims rightfully owed to

shareholders. Plaintiff and shareholders will continue to suffer until the defective disclosure is cured by
"?


25. Defendants use ongoing Edell defective disclosure scheme to defame Plaintiff and impugn

reputation in book Falsely claiming, violent mood swings were part of Greenspans character.
(70B Declaration, pg. 26, paragraphs 127)

SHAREHOLDERS IN FEDERAL 2010 SUMMARY JUDGMENT RULING WERE CAUSED BY
FAILURE OF CHANCERY COURT TO FORCE DEFENDANTS TO FIX 2004 DEFECTIVE
DISCLOSURE

26. Chancery Courts failure to force Defendants to honor their promise to fix the defective

Disclosure in 2003 is directly responsible for allowing Defendants to steal a minimum of $670 million in

damages (Federal Judge King 2010 approved damage report) and upwards of $32 Billion in damages (Rule

701 Damage Report not used by Class Counsel because of ongoing Edell fraud) from thousands of

shareholders in 2005.

(Exhibit #1, page 12, June 2010 Federal Central District, Judge King, Summary Judgment Ruling)

IV- CONCLUSION

I. DEFENDANTS FAIL TO CURE RULE S-K ITEM 401 (F) VIOLATION

27. Rule S-K Item 401 (f) states the requirement for information disclosed in Intermixs

January 2004 & July 2004 Proxy filings for Directors Involvement in certain legal proceedings stating,

Describe any of the following events that occurred during the past ten years and that are
material an evaluation of the ability or integrity of any director, person nominated to become a
director or executive officer of the registrant:
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or
against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or
property of such person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association of which he was
an executive officer at or within two years before the time of such filing;

28. To make Proxy not defective under 14a or Delaware security laws, issuer would have to

disclose that,

""
Our former Chairman who resigned effective December 2003 was replaced by Jeffrey S. Edell.
Edell was most recently President and CEO of Showorks Entertainment Group, Inc. from January
2001 thru April 2002. Sometime in 2002, Showorks Entertainment Group, Inc. underwent a name
change to MTS, Inc. Sometime in September of 2002 Edell learned that MTS, Inc. had filed for
bankruptcy under Chapter 7. Edell was not there at the time of filing. Edell has informed the
company Edell was never personally named or contacted as part of the bankruptcy under Chapter 7
or subsequent proceedings. Edell was from 1995 thru December 31, 2000,President and CEO of
Soundelux Entertainment Group., Inc.

29. Defendants also fail to fix disclosure related to fraudulent Amended October 31, 2003

Note. Defendants cannot lawfully or validly backdate the October 31, 2003 $2.5 million dollar

note by simply creating a new Note disclosed in December 2003 with a date of October 31, 2003.
(70B Declaration, pg.19, paragraph #91)

30. Plaintiff requests Court to sanction Defendants $25,000 per day since Chancery Court

January 2004 hearing that corrective disclosure ordered by then Vice Chancellor Strine was not

undertaken by Defendants and such per day sanction to continue until Defendants provide proof to the

Chancery Court that corrective disclosure has been made to the public.

31. The interests of justice are properly served by the grant of this Motion.

Respectfully submitted


"#

EXHIBIT #1

June 2010 Federal Central District, Judge King, Summary Judgment Ruling


"

BRAD D. GREENSPAN,

Plaintiff,

v.

BRETT BREWER et al.

Defendants.
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C.A. No. 106-VCS



#
1. I submit this declaration in order to provide the Court and the parties to the above captioned

litigation with information regarding this matter as.

2. I am over 21 years of age and I have personal knowledge of the facts set forth herein and, if called

as a witness, could and would testify competently thereto.

3. I was founder of Issuer eUniverse, Inc. (eUniverse) which later changed its named to Intermix,

Inc. and was the largest common stock holder from Issuers creation and public listing in April 1999, thru

the September 30, 2005 merger consummation at issue in this case.

4. On April 14, 1999, eUniverse began publicly trading under the symbol EUNI.

The initial Directors and executive officers of eUniverse were Brad D. Greenspan, age 26, Chairman

of the Board, Leland W. Silvas, age 44, President Chief Executive Officer and Director, Charles

Beilman, Age 39, Chief Operating Officer and Director, and William R. Wagner, age 52, Vice

President, Chief Financial Officer.

5. According to the SEC filing in 1999, Chairman and Director BG owned 57.2%.of the

company and was a control shareholder of the public corporation as it began public trading.

6. eUniverse closed its first day of trading at $12.50 per share on April 14. 1999, at this

time, eUniverse had less then 1 million unique users coming to its network of owned websites. None

of the defendants were officers or senior executives of eUniverse at the time of the public listing or

by the end of 1999.

7. In December of 1999, eUniverse launched its first social network platform,

LivePlace.com, with proprietary technology acquired thru the Big Network Acquisition.

Unfortunately, a year later, eUniverse exited the LivePlace business when it determined the

technology at the time was not sufficient to prevent websites from slowing down for users after

installing the LivePlace technology. However, LivePlaces launch by eUniverse cements the fact

that eUniverse was a pioneer in the social network space. LivePlace was described as:

a proprietary technology that turns a website into a public place where users can meet and interact

through chat, instant messaging, and co-browsing.


$
8. On July 31, 2001, eUniverse announces that for its March 31, 2001 quarter, it has

generated its first net profit and third consecutive ebitda positive quarter. Becoming profitable was

critical for eUniverse because as of its 7/31/2001 SEC filing the company only had $218,000 in cash

vs. $2.3 million in cash as of the year before.

9. By October 2001, eUniverse had 31.3 million unique U.S. users and had the 8th

largest online audience in United States for the period. By comparison, Ebay was ranked #9 with

31.29 million users and Google was ranked #14 with 26.9 million users.

10. On December 17, 2001, the NY Times features a story on eUniverse titled,

For Some Dot-Coms there Are Real Profits, stating

Meet Brad D. Greenspan and at first it seems like hes a visitor from another era-- the Internet bubble of 1999.
He's a 28-year-old chief executive of a public Internet company, eUniverse, with tens of millions of users and
big backers like Sony."

11. eUniverse has $33.19 million revenue for 12 months ended March 2002 & $6.64 million EBITDA.

12. eUniverse by the end of 2002 had over 250 employees working in Los Angeles amongst this

group, the company had developed highly skilled technology and internet Strategy executives. eUniverse

also developed significant technology resources and assets gathered over its many years of operations.

13. Mr. Greenspan resigned as CEO on October 30, 2003 and on November 21, 2003, Morgan Stanley

issued its annual internet report ranking eUniverse as the #1 fastest growing Portal based on data from the prior

90 days, ahead of AOL and Yahoo and Excite Network which AskJeeves acquired in 2003.

14. The eUniverse board during week ending October 31, 2003 reneged on a common stock financing

arranged by ThinkEquity and Greenspan which the same board had approved on October 16, 2003.

15. Instead the Board manipulated by defendants, changed course and determined to sell effective

control of eUniverse, Inc. to San Francisco based private equity fund VantagePoint Ventures LLC, issuing

below market price preferred stock and simultaneously breaching the 19.9% shareholder vote threshold

which the company had also specifically promised it would not do in any financing weeks earlier

to the Nasdaq listing panel.

16. VantagePoint had been told the week before by the Chairman and CEO of eUniverse that the


%
company had determined not to proceed with their highly dilutive $8 million preferred stock proposal

which offered to buy shares at below $1.35 and effect a change of control of the $80 million market

capitalized eUniverse without a shareholder vote, which violated the Nasdaq 19.9% threshold rule.

17. VantagePoint was informed that their proposed financing was economically inferior and that

because Vantagepoint was still negotiating both terms and documentation and had not finished their

diligence, the company had opted to close a $1.85 common stock financing from existing and new

institutional investors. However, Chairman and CEO Greenspan invited VantagePoints David Carlick

and their counsel, Orricks Richard Harroch to participate on the same terms as the institutional investors

which was a significant discount already to the then approximate $2.25 - $2.40 per share public trading

price range of eUniverse.

18. VantagePoint determined to not only reject the offer from eUniverses chairman and CEO to

invest at $1.85, but embarked on and facilitated a brazen scheme to manipulate and defraud eUniverses

Board and shareholders that put defendants Carlick, Sheehan, and Harroch in control of eUniverses board

by October 31, 2003 and allowed defendants to recognize an almost sure windfall on their below market

Series C preferred stock financing.

19. Not satisfied with their existing economic gains, defendants then Embarked between late 2003

thru September 30, 2005 on an ever growing series of schemes and misdeeds to loot the public company

and effect transactions that benefitted themselves and related parties at the expense of the common stock

shareholders who had held the majority of eUniverse.

DEFENDANTS SCHEME TO ENTRENCH THEMSELVES AND SHIFT CONTROL

20. Mr. Greenspan was on the verge of terminating the general counsel and Chris Lipp, and the

President of eUniverse, Inc. Brett Brewer, for their roles or poor performance in the restatement the

company had suffered between October 2002 and May 2003, and ultimately a new controller and CFO

were hired and eUniverse refiled via its 10k in August of 2003. Defendants General Counsel Chris Lipp was

told the company would transition to a new general counsel after closing the next round of financing and

President Brett Brewer was informed in the summer of 2003 he would be demoted.


&
21. Mr. Greenspan instead was faced with a scheme by Brewer to take control of the Board and shift control of
company over to VantagePoint and Defendants. The scheme is admitted in a letter from Edell to certain of the
defendants on the night of October 27, 2003, 3 days before Chairman, CEO, founder Brad Greenspan resigns:
Brett is always on the side of Brad's removal when not around Brad, but has no backbone when in
front of him. He is looking for us to do the dirty work but will not stand tall himself.

i. The first fraud was Brewer recommending and endorsing a friend of his Jeffrey Edell to

come onto the Board of Directors in mid-October 2003. Edell, Brewer, and the Chief Financial Officer

Flahie who had worked for Edell at a previous company all misled Mr. Greenspan and the other Directors

as to the qualifications of Mr. Edell. Brewer distributed a 3 page resume/background prior to Mr.

Greenspan determining to support Edell as a new board member, but such 3 pages did not disclose the

truth that Jeffrey Edell had just bankrupted the last company he worked for. Nor did Edells public filings

or Proxy background or press release made by Edell disclose this pertinent and critical information.

Instead, Edell, Brewer, and Flahie knowingly omitted this information in order to get Edell onto the Board

where Edell quickly damaged the franchise value of eUniverse, Inc. by several disloyal acts and breaches

of fiduciary duty. (EXHIBIT #1, pg. 29. & EXHIBIT #2, pg. 31)

ii. Defendants key strategy that enabled them to take control of the board of eUniverse was by
fabricating or aiding and abetting the fabrication of information to mislead independent directors and CEO about
background of Jeffrey Edell. Instead, defendants artificially branded Edell with false credentials and set him loose to
engage recklessly with the corporate assets and the important financing the CEO had closed with common
stockholders clearly on better terms the the lower priced preferred stock peddled by venture capital firm. Defendants
cover up a recent bankruptcy under his stewardship. Brewer, Flahie, Edell, Lipp, Moreau, Carlick, Harroch, and
Sheehan do not correct the defective proxy that they all approve multiple times between November 2003 and
September 2005. The defect is caused by the omission of Edells recent bankruptcy a violation Item 401 Rule-SK
related to Director & Officer work experience background.

iii. Defendants recognized the already locked in profits and upside that existed
for them if they could force eUniverse to accept VantagePoints inferior more costly financing.

iv. Defendants use the fabricated Edell resume in a series of Shareholder letters and press releases in an

attempt to cover the unexpected news that the CEO has been forced to resign as part of defendants scheme to

cause eUniverse shareholders to be diluted and pay for more expensive financing so that the Directors

'
led by Brewer could keep their jobs and receive significant upside from the incoming directors from

VantagePoint and Orricks Harrosh. (Exhibit #4,pg.38-39) is November 2003 press release omitting Edells CEO role

in the MTS 2002 Chapter 7 bankruptcy and also another turnaround company he ran in 2003 more recently that

also failed according to Edells accurate D&O submitted to the Nominating Committee. However, Edell

continues his sleight of hand and now promotes only the Soundelux CEO role without disclosing end of tenure

in 2000 when it was sold and creates Impression he was most recently working as CEO of eLabor, Inc., stating

Additionally, Edell served as Founder, Director and CEO of eLabor, Inc., which was sold to ADP in February

of 2003. In fact, Edell was only a director of eLabor since at least 1995.

HIDING ONE BANKRUPTCY AND ONE FAILED TURNAROUND IN PUBLIC DISCLOSURES

22. Edells two resignations on his bio that were really his last two jobs instead of submitting an accurate bio,

defendants stretched the job of Edell that was actually 3 jobs prior, and increased this 3rd job by another 2

years, to the year 2002 (from 2000). Edell both omits to accomplish his end goal of making detection and

disclosure of his true track record. (EXHIBIT #1, pg. 29, EXHIBIT #2, pg. 31, EXHIBIT #3 pg. 33-36, EXHIBIT #5,
pg.41-42)

FLAHIE THE NEW CFO

23. Brewer, also a Director, took advantage of his position leading the interviews and recruitment of the

companys new CFO during the summer of 2003 to recommend final candidate, Tom Flahie,

i. Flahie had previously worked as CFO at eLabor, America, Inc. under Brewers close friend and

fellow YPO member Jeffrey Edell s brother. Edell was Director of eLabor where Edells brother served as

CEO Based on Brewers recommendation, the CEO met with the candidate, and in August 2003, Tom Flahie

was approved and offered a position as the new Chief Financial Officer of eUniverse.

EDELL THE NEW DIRECTOR CANDIDATE

24. After current board member Thomas Gewecke, a senior business development executive of Sony

Music, informed the board in the summer of 2003 of his desire not to serve as director for another annual term,

Chairman/CEO Brad Greenspan agrees to review resume of candidate Jeffrey Edell.

25. In or around August 2003, eUniverse had need to recruit a new independent Board Member who was

also qualified to sit on the audit committee. Brewer and Flahie initiated a scheme to promote their associate

(

Jeffrey Edell as a candidate for the board slot so that they could be assured job security and benefit in the clear

upside that existed to be a senior officer or top employee of Issuer as of October 2003.

i. Based on information and belief, Brewer had been in a Southern California Chapter of the Young

Presidents Organization (YPO) with Edell and they would meet regularly to discuss each others business

challenges and prospects for three years prior to Edell joining the eUniverse board.

ii. New CFO Flahie had pre existing business relationship with Edell, working for a company

where Jeff Edell served as Director and Edells brother served as CEO managing Flahie immediately prior to

coming to work for eUniverse in August 2003.

ii. Brewer and Flahie were challenged to get the Chairman/CEO to nominate Edell to the board

based on Edells actual work experience which would call into question his fitness to serve on the board of a

publicly traded company.

iii. The plan to nominate Edell to the eUniverse board based on his real work experience became

more challenging when the most recently nominated Director, Lawrence Moreau, who had joined eUniverses

board in May of 2003, admitted to being less then candid About his track record after a Los Angeles Business

Journal article in August of 2003 brought such facts to the attention of the other eUniverse directors.

iv. Based on Information and belief, Brewer, Flahie, and Edell realized that to get the support of the

Chairman/CEO to back nomination of Edell to the Board, they would have to inflate and falsify Edells track

record to make it appear flawless.

26. Defendants thru this fraudulent scheme and omissions of Edells true work experience, created a fake

Director candidate misleading shareholders and Petitioner with what appeared to be a perfect track record with

no negative recent work experience disclosed.

i. Defendants determine to accomplish the deed by omitting Edells two most recent work

experiences which were both failures and falsifying the time frame he worked as CEO of an, earlier successful

venture, Soundelux.

ii. Defendants accomplished this thru falsifying the Soundelux timeframe Edell worked as CEO by

two years while omitting the actual prior two jobs, both negative tenures where Edell had failed to improve the

)

Companys where he was principal executive officer.

iii. Defendants fraudulent concealment of Edells true work experience allowed Edell to apply to be

on eUniverse Board in 2003 and become supported by fellow Board Member, founder, and largest shareholder,

CEO Brad Greenspan.

27. Defendants fraudulently conceal the true background of former Director and Chairman Jeff Edell and

forward a fabricated false resume, misleading CEO to get Edell onto the Board.

i. Edell benefitted from fraud of fabricating his work experience by gaining access to the public

issuers board.

28. Edell had not come off a successful business endeavor as his fabricated resume stated but really

had failed in his last two ventures including one of two failures resulting in a Chapter 7 Bankruptcy filing.

29. Brewer moved scheme forward with aid of new CFO Flahie whose disloyalty in not reporting to the

CEO or public that Edell resume was fabricated demonstrates Scienter intent to defraud & mislead shareholders.

30. Jeff Edells omission to trick CEO of Issuer via omission of his immediate two prior employment jobs. A
Directors last two jobs and such director candidates performance or the companys performance being the most
critical bit of information for Issuer or CEO to parse or review to do his duty.
31. Edell scheme results in eUniverse shareholders being diluted via more expensive VantagePoint financing.
32. On August 26, 2003 at 5:39PM Brewer forwards via email a fabricated three page (EXHIBIT #1. Pg. 29)

resume for Jeffrey S. Edell to the CEO with CFO Flahie ccd and states,

looks strong again jeff will be here tomorrow to have lunch with tom and i. brad, Ill set
something up for you later this week or next depending on your schedule.

i. Brewer lies, misleading the CEO further, asserting Edells resume looks strong, even as

Brewer and Flahie are aware that Edells prior two actual jobs are being intentionally omitted from the

document sent to Greenspan. Edell, Brewer, and Flahie have destroyed the actual true work experience

information prior to sending the fabricated Edell resume, this is a violation of 18 U.S.C. 1512(c)(1), which

prohibits the destruction of records.

ii. Defendants omitted a portion of the true documents and information in the Resume sent to

Petitioner, with the intent to obstruct justice in violation of 18 U.S.C. 1512(c)(1) and also since the false


*
document was sent via email, Edell, Brewer, Flahie, and Lipp violate 18 U.S.C. 1341 (relating to mail fraud),

33. On August 27, 2003, the CEO is deceived by the fabricated resume of Edell and responds to Brewer

and Flahie after being misled and reviewing the fabricated resume of Edell, Great resume!. Since the CEO

is misled via email, this is a violation of 18 U.S.C. 1341 (relating to mail fraud).

34. On the first page of the fabricated Edell resume Brewer forwards, in the section labeled Professional

Experience. Edell lists first: Soundelux Entertainment Group, Inc. Hollywood, CA, from 1995-2002 and

the next line purports that during this period, Edell was President/CEO/Director. Edell & Defendants

violate 18 U.S.C. 1519 (relating to destruction, alteration, or falsification of records in Federal investigation

and bankruptcy) and defendants are destroying Edells true work experience and put in its place the fake

Fabricated work experience purporting that 2000-2002 Edell worked still for Soundelux.

i. Edells resume forwarded by Brewer, falsely creates the appearance and assumption that

Soundelux Entertainment Group has been the sole Professional Experience of Edells as a full time

Executive since 2002.

ii. Edells fabricated Professional Experience section creates the appearance that

Edell, Successfully initiated, negotiated and closed sale of the Hollywood postproduction

division of SEG (Soundelux) to the Liberty Media Group and Edell lists he was President/CEO/Director of

Soundelux Entertainment Group from 1995-2002, then the reader of the fabricated document would assume

Edell departed as CEO after Soundelux was sold in 2002. Brewer, Edell, Orrick, VantagePoint, Harroch,

Carlick, Rosenblatt, Sheehan, DeWolfe, Latham, and Sony Corp violate 18 U.S.C. 1519 because they have

altered records of a Board candidate during the SEC restatement inquiry that ended October 2004.

iii. Defendants specifically violated Section 1512 and U.S.C. 1519 by destroying and altering

Edells true background and work experience which should have truthfully disclosed:

i) ShoWorks, where Edell was CEO starting April 2001 thru 2002 (name changed
immediately prior to bankruptcy in September 2002)
and
ii) Enterprise Entertainment Group LLP at which Edell was President/CEO/Director for less
then a year before he resigned from company citing his resignation came after working on
severe turnaround situation in May of 2003. (EXHIBIT #3,. Pg. 33-36)

35. Director Lawrence Moreau on September 30, 2003 at 10:15AM emails Brewer, Mosher, and Lipp,

"+

Subject: RE: Potential EUNI Board Member, stating ,

Also we need to have both he and Jeff Edell complete the companys D&O questionnaire
so we can review it for any problems prior to the Board vote.
The false and defective October 3, 2003 Nominating Committee Recommendation

36. Larry Moreau, Director and Nominating Committee member tasked with review of Edell, Sends email

stating, Jeff Edell Completed D&O Questionnaire to Director Brewer, Director Greenspan, Director

Mosher, General Counsel Lipp, and Sonys sole series B Director Gewecke and states,

i. Moreau and Defendants lie in his email about what is contained in the D&O questionnaire,

failing to disclose Edells disclosed recent bankruptcy and declaring:

Based on my review, there are no negatives for the Nominating Committee to report to
the Board.

ii. This false statement is distributed thru email to Petitioner and other Directors misleading them

and causing them to be unaware that Edells Proxy disclosure is false. This is a violation of 18 U.S.C. 1341

(relating to mail fraud). Moreau, heading the nominating committee, concealed his knowledge that Edell does

have negatives that should be brought to the Boards attention like fact that Edell has a mandatory disclosable

SEC event under Rule S-K Item 401 (f), requiring specific disclosure on Edells recent federal bankruptcy.

iii. Furthermore the destruction or altering of the true information by omission which Edell, Brewer,

and Moreau are guilty of in violation of of 18 U.S.C. 1512(c)(1) and violation of 18 U.S.C. 1519.

iv. Moreau and Defendants further misleads the board by stating:

the Nominating Committees previous legal and financial background checks did not disclose
any negatives.

Based on the results of the Nominating Committees due diligence procedures including meeting
and various discussions with Jeff, I think he is an outstanding candidate and hereby recommend
that the Board approval his appointment.

37. An attached D&O questionnaire is distributed in October 3, 2003 email with false claims used to

coverup underlying facts, in violation of of 18 U.S.C. 1341 (relating to mail fraud).

38. In late 2011, Petitioner discovered a D&O questionnaire Edell submitted to eUniverses Nominating

Committee headed by Director Larry Moreau. Edells true work experiences consists of:


""
i. On the first page, in the first paragraph, there is information to read for the

questionnaire submission. The third line from the bottom states,

Accordingly, great care should be exercised in completing this questionnaire. You should be aware that
if the Proxy Statement contains any false or misleading statements, the Company and those in control of
the Company could be subject to liability under federal securities laws.

ii. The factual D&O Questionnaire of Edell from Exhibit XX reveals:

a. On the second page of the document titled,

EUNIVERSE, INC. QUESTIONNAIRE FOR DIRECTORS AND OFFICERS,

the first section is labeled: I. Employment, Occupation, and Business Experience.

And it lists information submitted by Jeffrey S. Edell, 11/10/57.

b. Under section , document states,

Please Indicate all positions and offices which you hold or have held during the past five(5)years

c. Edells Questionnaire For Directors And Officers lists 3 submissions under Positions/Office:

President/CEO & Director Showorks Entertainment Group, Inc.

from January 2001- April 2002 and notes he resigned April 2002.

President/CEO/Director, Soundelux Entertainment Grp., Inc.

from November 1995- 12/31/2000.

President/CEO/Director, Enterprise Entertainment Grp, LLC.

From November 2002-May2003

and the next line in parenthesis immediately below states,

resigned May 2003, after working on severe turnaround situation.

d. On page 14 of Edells Questionnaire For Directors And Officers, Edell checks YES for

section (a) when asked if any of the following events has occurred since April 1, 1998, please

provide a brief description of the event.

e. Section (a) states:

A petition under the Federal bankruptcy laws or any states insolvency law was filed by or against you,
or any corporation or business association of which you were an executive officer at or within two years
before the time of such filing.


"#
f. Edell discloses under Description::

Showorks Entertainment Group, Inc. underwent a name change in 2002 to MTS, Inc. I resigned as
President and CEO of this company in April of 2002. Subsequent to my leaving, sometime in September
of 2002, I learned that they had filed bankruptcy under Chapter 7.

39. Therefore, Edells scheme to defraud the eUniverse Directors is effected by changing the time frame and

term of his Soundelux employment from the factual end of 12/31/2000, to the fabricated and false claim that

Edells end of his work tenure being thru 2002. This allows Edell to effectively cover up or disguise his true

historical work performance and mislead Petitioner & shareholders that need accurate and true professional

experience to determine if someone is qualified to be a Director of a public company.

i. As part of scheme, Edell omits his January 2001-April 2002 true employment where he was

President/CEO & Director Showorks Entertainment Group, Inc. that he had disclosed in a prior D&O

Questionaire.

ii. Edell also omits his November 2002-May 2003 professional experience as

President/CEO/Director, Enterprise Entertainment Grp, LLC,

resigning after just five months, blaming a severe turnaround. (EXHIBIT #3, pg. 33-36)

Predicate Acts related to 2003 press release announcing Edell

40. On October 9, 2003, Brewer furthers the fraudulent concealment scheme by forwarding eUniverses PR

firm the fabricated resume which incorrectly shows Edell worked at Soundelux Entertainment until 2002 and

omits both the Showorks/MTS bankruptcy and working most recently at troubled Enterprise Entertainment Grp,

LLC. Brewer also misleads PR firm by sending fabricated work experience and bankruptcy omission from their

PR firm.Laurie Eisner,

laurie-we need a very basic- Thomas Gewecke has resigned from the euniverse board. And
jeff edell (bio attached) has been appointed-

41. October 10, 2003 at 2:05PM, PR firm emails Brewer and Greenspan draft of Edell press release stating,

Prior to his Board appointment at eUniverse, Edell served as President and CEO of Soundelux
Entertainment Group, Inc., a provider of entertainment content technologies, with revenues
exceeding $110 million

"$
42. October 11, 2003 at 2:43PM, Edell emails Greenspan requesting puffery to be added to the draft press release
about his background, stating,

Brad, Comments on Release- It says nothing of the record sale to Liberty Media and John
Malone for apprx. $100m, the sale of the software company elabor, Inc. that I served as CEO
and founder for 10 years, and sold to ADP, the sitting on the Public board of IVC industries and
sale of it to Inverness Medical. Also the winner of Entertainment Entrepreneur of the YEAR
by NASDAQ and Ernst and Young in 2000, and member of both TV and Film
Academies..member of Young Presidents Organization.. Get some bang out of it!! That should
all be somewhere in it..please have them take another shot
43. October 11, 2003 at 4:43PM Edell emails Greenspan and Brewer:
Subject: RE: Press Release: Jeffrey Edell and states,

Your PR dept can do a better job extracting what I have on my bio related to the subjects that are
pertinent to eUNI,,, but please do not ease this until we finalize our deal

44. October 11, 2003, at 6:15PM Greenspan emails Lipp and Brewer forwarding above Edell

Email and states, call me to discuss So we can finalize.

45. The October 11, 2003 draft PR submission Defendants Edell and Brewer are hiding and have destroyed

the evidence of Edells True work experience in the press release draft being distributed as well as the final

release in violation of of 18 U.S.C. 1512(c)(1) and violation of 18 U.S.C. 1519.

46. Also Defendants violate Section 1341 by using email to send false fact draft press release to PR firm
47. Brewer enlists Highland Partners and Jim Quandt to provide background checks for the eUniverse nominating
committee for Director candidate Edell and Ward. As evidence of this scheme, Brewer emails Mosher on October 16,
at 3:56PM and states,
dan- have you received the background check from highland partners for bradley ward?

48. BOARD MEETING- October 17, 2003 there is Board meeting where Brad Greenspan attempt to elect the

annual board slate and his slate leaves off Lawrence Moreau and Dan Mosher. General counsel Chris Lipp

deems Greenspan's slate did not pass even though 3 Directors approved the new slate, 1 disapproved, and 2

Directors Abstained. Lipps Board minutes indicate, "The motion failed with a vote of 3 for, 1 against and 2

abstentions, constituting less then the requisite majority of directors present."

49. On October 30, 2003 at 4:57PM, Flahies emails Lipp, Subject: Bio for New Directors For proxy Draft


"%
and provides a bio for Edell which states

Jeffrey S. Edell has served as a Director since October 14, 2003. Mr. Edell was employed as
President and Chief Executive Officer and a director of Showorks Entertainment Group, Inc.
(previously known as Soundelux Entertainment Group, Inc.) a provider or entertainment content and
technologies, from 1995 until 2002.

50. On Friday, October 31, 2003 Defendants cause the company to put out a press release with false information:

"eUniverse announces eUniverse Announce CEO Departure and Board of Director Changes Brad Greenspan
Steps Down as Chief Executive Officer Jeffrey Edell eLabor Founder and Former CEO/President of
Soundelux Entertainment Group, and Bradley Ward, CEO of The Game Tree, Join eUniverse Board.
51. Significant puffery created by Edell and put into press release but omits mention of his true work experience
such as his recent fraudulently concealed MTS Bankruptcy and other employment information provided in the original
D&O Questionnaire Edell provided to eUniverse. Defendants also violate Section 1343 as the defendants cause the
false information to be distributed via news wire to the public. (EXHIBIT #4, pg. 38-39)
52. Sony in fact specifically made it known that it would not allow VantagePoint to take over or transfer the
rights to vote Series B until VantagePoint bought all the stock held by Sony Corp of public issuer.
53. November 7, 2003 at 3:59M- Intermix CFO Tom Flahie sends a draft Proxy to Chris Lipp, Subject: Proxy
which states,
54. On November 17, 2003, Chris Lipp sends Consents to Sony Corp to sign.
LIPP KNEW SONY DID NOT SIGN THE CONSENT ON NOVEMBER 17
th

55. Sonys Mark Eisenberg only signs the consent to change the Certificate of Designation of the Series B
provided by Lipp.
56. Sonys Eisenberg executes the consent on November 18, 2003 according to his testimony read in court.
i

57. On November 18, 2003 at 12:50PM, Lipp emails Vantagepoints Carlick and Sheehan a new draft Series C
consent that appears to have some backdated element of optimizing the prior Notes to the detriment of the
shareholders.
58. Orricks Harroch active in the planning of the Proxy and Edell frauds emails Lipp stating,
I dont understand the background of this, and it will take some time to review. Chris
are you working on the proxy statement language to implement the things required by
the Option Agreement?

59. On November 18, 2003, at 4:09PM, Lipp asks PR company run by Jonathan Heit to put out Annual Meeting
Release. The release falsely states Issuers

annual meeting of stockholders has been rescheduled for January 21, 2004 so that certain
aspects of the Companys recently announced financing transaction with VantagePoint Venture

"&
Partners, among other items, may be submitted to the Companys stockholders for approval. A
new record date for the meeting of December 1, 2003 has also been set.

60. November 20, 2003- Flahie emails Board Members including Edell, Subject 'Director Bios for Proxy' and
states,
"In preparation for filing of the proxy, I have updated the director bio information from the
Form 10-K. David, Andy, Jeff and Bradley, I took a first pass to put a bio together for you.
Since this information is personal, please make edits to your bio and return the word doc to me.
I will make your edits in the actual proxy. Thanks, Tom"
ii

DEFENDANTS FALSIFY PROXY HOPING SONY WILL SIGN OFF ON NOMINATING EDELL AS
SERIES B DIRECTOR
61. November 21, 2003- Intermix CFO Tom Flahie sends an email, Subject: 'Proxy', stating,
i. "I completed the first draft of the 2003 proxy."
ii. Given the major changes to the Board,
iii. the proxy needs a close look this year,
iv. We intend to file with the SEC on Wednesday.",

62. Flahie attaches a draft of proxy which falsely states, "550 DMV notified the Company that Lawrence Moreau
and Jeffrey Edell have been nominated by the Series B preferred stockholders.
iii

63. Issuer announces on November 21, 2003 that it has raised $2.5 million in Common stock financing selling
1,643,000 shares at $1.50 instead of the $1.85 previously agreed price with the same investors, or a loss of $575,050
for shareholders in the bargain made by management to mitigate one of the agreived parties from defendants actions
around the 2004 proxy.
64. At 5:46PM on Saturday November 22, 2003, eUniverse Sr. VP Legal, Chris Lipp emails Orricks Harroch and
VantagePoints Harroch and internal general counsel Guidero with Subject: Series C Consent re Bylaw Amendment
and attached, Series C Written Consent to Amend Bylaws and states,
Rich, Please find attached the Series C consent with the changes we discussed. Thanks, -Chris
iv

65. On November 24, 2003 at 12:05PM, Flahie emails outside general counsel Cartmell, Subject RE: Proxy and
states, I need to file on Wednesday. I hope that your comments do not impact the schedule

66. Defendants in November 2003 press release omit Edells CEO role in the MTS 2002 Chapter 7 bankruptcy and
failure of another turnaround company he ran in 2003. Edell continues his sleight of hand and promotes only the
Soundelux CEO role without disclosing end of tenure in 2000 when it was sold, creating impression he was most
recently working as CEO of eLabor, Inc., stating, Additionally, Edell served as Founder, Director and CEO of

"'
eLabor, Inc., which was sold to ADP in February of 2003. In fact, Edell was only a director of eLabor since at least
1995.
v

NOVEMBER 2003- SONY SERIES B SHAM CONSENT SCHEME
67. November 25, 2003 at 5:33AM, Moreau emails Flahie, Carlick, Mosher, Subject: RE: Nomating Committee-
Dropped nominations, and states, Tom, Did you mean to drop David Carlick, Andy Sheehan, Jeff Edell and I from
the Board? Also, when is the proxy deadline?
vi

68. Flahie responds at 8:27AM on November 25
th
, falsly stating:
Only three directors are up from election at the January 24 stockholders meeting. The
Series B stockholders (Sony) have elected Larry Moreau and Jeff Edell. The Series C
stockholders have selected Andry Sheehan and David Carlick. The only directors that up for
election are Dan Mosher, Brett Brewer and Bradley Ward. And

The proxy deadline is driven by the timing of Chris Liupps vacation. Chris has put off
a European vacation several times due to the issues we are working through. He will be out all
next week. I will prepare the proxy in his absence.

69. On November 25, 2003, at 10:11PM, Lipp emails Flahie, Subject Proxy Excerpt with attached files including
one called By-Laws and states,

Attached is the language I would suggest for Proposal 2 and the Other Business
sections. Also attached is the newly added Section 10 of the Article I of the Bylaws.

70. On November 25, 2003, Chris Lipp emails Sony's Melissa Cole and Mark Eisenberg, Subject: 'One More
Series B Consent' and attaches a draft of Series B consent form re: election of directors, and states,
Melissa- Please find attached what should be the final Series B consent we will need in
connection with getting the director issues sorted out"

71. Director Ward is puzzled at the Flahie claim that a new Board slate has been elected which includes Edell and
Moreau as Series B Directors Ward who had just voted with the rest of the Directors to elect the slate on November
20, 2003, states in a November 26, 2003 9:28AM

Quick question.The role of the Nominating and Corporate Governance Committee
(NCGC) shall be to determine the slate of director nominees for election to the Companys
Board of Directors (the Board) to be included in the Companys annual proxy statement,
And

Will this committee solely determine the nominees on the slate and no longer require a
full Board vote like we just had last week? In the absence of any specification for a full Board
vote, thats how I read that.

72. November 26, 2003 at 11:26AM, Outside eUniverse counsel Nate Cartmell emails Chris Lipp, Subject:
'Series B Written Consent re Election of Directors 11-26-03.DOC' and states,

"(
"Chris, I have modified the consent slightly to deal with the fact that the right belongs to
the Series B but that Sony can exercise that right as majority holder. Redline to follow in PDF
format'

attaching a document titled:
'ACTION BY WRITTEN CONSENT OF MAJORITY SERIES B STOCKHOLDER OF EUNIVERSE, INC.'

NOVEMBER 26, 2003 - CFO FLAHIE INSTRUCTS STAFF TO FILE PROXY
73. November 26, 2003, 1:41PM, Flahie emails Samina Merchant, Subject: 'Proxy', and states,
"Please send the proxy over to Donnelley for Edgar formatting".
74. As of November 26, Sony had not given its consent to nominate Moreau or Edell as Series B nominees.
DECEMBER 1. 2003 PROXY IS FILED
75. The December 1, 2003 Proxy lists Edell & Moreau as Series B Preferred Nominated Directors stating:

"the majority holder of our Series B preferred stock, has the exclusive right, voting separately
as a single class, to elect two directors" and "550 DMV has notified the Company that it intends to
elect Lawrence Moreau and Jeffrey Edell to the Board.

PROXY CONTEST DECEMBER 2003- JANUARY 2004
76. According to former Director Greenspan, his email sent on December 5, 2003, at 3:17PM, to Lipp, Brewer,
Edell, Fojut, Subject: Need immediate documents and states, Chris/Matt- As both a director and shareholders, I
demand to see the following documents. did not result in the company sending him the Myspace Asset Sale
agreement that was purported to have been signed on December 17, 2003. This is further key evidence that supports
such agreement not having really existed at such time and prior to November 2004 when defendants first publicly
disclose the claim that the MySpace Asset Agreement selling 33% to DeWolfes MSV LLC really occurred on
December 17, 2003.
77. Email evidence shows the chilling effect of defendants fabricating proxy to make it appear Sony had
nominated Edell and originally also, Moreau as Series B Directors. Showing initial response from an informed
investor can be seen thru email on December 4, 2003, at 3:30pm, current board member, former CEO and 20%
stockholder of Issuer emails proxy information to his outside counsel, Subject: Darn and states,
Tougher Road to fight. It looks like these guys got Sony to PURPOSELY elect directors so
there are only 3 slots open and 4 forced seats. Only three directors are up for nomination.
And
Sony owns the Series B which VantagePoint has a right to purchase and the Series B has rights
to elect 2 Board Members, but Vantagepoint had specifically agreed to cancel such rights as part of
their acquisition of Sonys Series B just for the reason of not doubling up on forced directors. And
Sneaky sneakyThey got Sony to nominate 2 of the existing directors to BulletProof these guys.
78. Edell emails Flahie and states on December 4, 2003,
Only comment, is please make sure from Nate that this info is clearly necessary of a
press releaseI am sure you checked already but let me know? Thanks jeff
vii


")
79. CFO Flahie a few minutes later replies via email and states,
Yes, all three lawyers agreed. They also want me to Form 8-k the press release.
viii

80. Lipp emails Harroch on December 8, 2003 at 4:01PM and states,
Richard, Last time we discussed this, I thought we agreed that it was neither partys intent to
have the shares purchased under the option be anything other than the Series C shares

81. Ultimately, Lipp capitulates to the dominant Orrick firm and agrees to issue C-1 shares which are worth $2.00
in extra preferred liquidation vs. $1.50. A loss of .50 cents per share for shareholders and additional corporate waste
by defendants, using shareholder money to effect a change of control.
82. December 8, 2003- 2:16PM, from Harroch of Vantage/Orrick to Chris Lipp and other Carlick and Sheehan and
Rodi Guidero;, Subject: Option.
"Chris, we still need to deal with the Sony option, Series B issue. As I see it, the proxy
statement should also seek approval for amending the Series B Certificate of Designation to
encompass the matters set forth in Exhibit B of the Option Agreement (PIK/dividend for VPVP
Shares elimination of company Election concepts, authorized # of shares, etc :) " and,

"If we had a chance to review the proxy statement before you filed it, I would have
pointed this out to you. So let us figure out how we implement this now. Thanks!"

83. December 9, 2003, at 11:29AM, Edell emails Chris Lipp, Sheehan, Carlick, Moreau, Brewer, and states,
Chris, The meeting took place this morning and the board is in the dark about its
results. and
Please see to it that Nate reports on the Nasdaq meeting ASAP. I heard that there were
some problematic issues, such as dilution that we should have known about with the VP deal,
that I would love to sort out.

84. Lipp sends a revised Note to VantagePoint and the January Proxy confirms that indeed, the Accelerator was
part of the January 2004 proxy material and shareholders were forced to vote or be victims the accelerated Note
scheme.
85. On December 17, 2003 at 10:46PM, Brewer emails Edell. Lipp, Sheehan, Flahie, Carlick, Moreau, Ward,
Mosher and states,
Gentlemen- We will be having our board call tomorrow as scheduled at 4 PM sharp.
And
Also, after speaking with some of the board and management, we think it would be
useful to have an in person board meeting next Tuesday in LA.
The meeting will be from 10-4pm and will include Mike Kennedy from WS as well as
other lawyers if needed. We have several ratifications of chartes, reports on litigation, proxy
contest issues, and other house keeping matters to take care of.
ix

86. December 18, 2003- Greeenspan emails Carlick, Edell, Mosher, Subject: 'Info-' and states,

"Guys- I have lots of additional information on the performance of Brett Brewer, Chris
Lipp, and Adam Goldenberg before, during, and after the restatement" and "It sheds a very
negative light on all of these gentlemen's performance."
x


"*
87. After getting sent an email sent by former CEO to non-management board members critical of certain
managers and offering to provide information to help Board best evaluate executives at company, Director Edell sends
such email on to principal executive Brewer. Brewer then passes that email onto Lipp and Goldenberg to influence
them to be disloyal with adware and other transgressions against former CEO of Issuer. In Brewers email on this date
to Lipp and Goldenberg he states,
this guy is one of the biggest assholes that ever livedthere is no other way to say it.
xi

88. On Thursday December 18, 2003, at 1:46AM, Brewer emails board and states, Gentlemen- We will be having
our board call tomorrow as scheduled at 4pm sharp.
xii

89. There is no evidence that the Myspace asset sale agreement was disclosed or voted on by the board at the
December 19, 2003 board meeting. While there is significant evidence there was a focus according to Brewer on,
modifications of charters, reports on litigation, proxy contest issues
xiii

90. Annual Meeting date rescheduled on December 19, 2003 at 4:14PM, Flahie emails Lipp, Sheehan,

Carlick, Moreau, Mosher, Ward, Brewer, Edell, Subject: Filings and states,

The attached proxy amendment was filed today and the attached press release announcing the
new meeting date was issued.
xiv

THE 2003 DEFECTIVE AMENDED NOTE
91. On December 27, 2003, Lipp emails Harroch and Sheehan of VantagePoint with Subject Amended VPVP
Note and states, As discussed, please find attached for your review an amended note. and attaches a revised $2.5
million note that now has been amended under Section (1) Repayment to change the original due date of March 2005
to now be due February 8, 2004 a few days after the planned Shareholder meeting unless stockholders of the
Borrower, provide approvals necessary.
92. The December 30, 2003 Proxy falsely states:

"Pursuant to the Certificate of Designation of Series B Preferred Stock, 550 Digital Media
Ventures, Inc. ("550 DMV"), an indirect subsidiary of Sony Corporation of America, the majority
holder of our Series B preferred stock, has the exclusive right voting separately as a single class, to
elect two directors in the event the Board consists of six to eight members, 550 DMV has notified the
Company that it intends to elect Jeffrey Edell to the Board and leave one Series B Board seat vacant at
this time

93. Sony had not notified the company it intended to elect Edell as of and thru the date of the Chancery Court trial
in January 2004.
The false and defective January 2004 Proxy AND PUFFERY OF EDELL (EXHIBIT #6 pg 44-46)

94. In January 2004, Vantage sealed control over eUniverse thru one of three Proxy frauds

perpetuated on common stockholders by Carlick, Sheehan, Brewer, Lipp, Rosenblatt and associates. 2003-2005

Flahie who is disloyal along with Brewer in not revealing Edells fabricated resume then colludes with General

#+

Counsel Lipp to knowingly falsify January 2004, July 2004, August 2005 Proxies, violating Item 102 Rule SK.

95. Defendants decide to make detection of the fraudulently concealed Edell true professional experience

more difficult, and on the December 30, 2003 DEF14A Proxy, on page 4, the company states,

Jeffrey Edell has served as a Director since October 14, 2003 and as Chairman
of the Board since November 14, 2003. Mr. Edell is currently a member of eUniverses
Compensation and Audit Committees. Mr. Edell was employed as President and Chief
Executive Officer and a director of Soundelux Entertainment Group, Inc., a provider of
entertainment content and technologies, from 1995 until 2002

96. It was part of the Defendants scheme to use the United States Postal Service to deliver fraudulent SEC

Proxy to the eUniverse (Intermix) Inc. MySpace Parent Company Shareholders in December 2003, January

2004, July 2004, August 2005, and September 2005 and to conceal the errors contained in the Proxy Disclosure

statements on each occasion regarding Edell and Petitioner in violation of 18 U.S.C. 1341.

FRAUD UPON THE CHANCERY COURT (Exhibit #9, pg. 52-64)










98. Judge Strine was adamant about going on record multiple times during the trial to notify all parties of

his views that the testimony of general counsel Lipp was not believable as to Mr. Lipps rationales for certain

disclosures and statements in the companys Proxy.

SONYS SECURITIES FRAUD AND AIDING AND ABETTING BLASIUS VIOLATION AND AIDING AND
ABETTING FRAUDULENT CONVEYANCE

99. Sony Music Corp in 2004, transacted after a still uncured Federal Securities Violation and these


#"
transactions damaged and fraudulently conveyed assets to the detriment of Issuer shareholders.

100. Edells securities violation makes the Proxy and subsequent 10Qs and 10Ks and next Proxy statement

defective, all caused by Sony Music Corp aiding and abetting this securities fraud thru multiple acts in 2003 and

2004. Most directly by opting after Judge Strines January 14, adverse ruling to manipulations of defendants

and Sony Corps interactions relating to upcoming 2004 Proxy Disclosures.










Shockingly with evidence of Defendants improprieties laid bare in court and significant red flags raised, Sony then

agrees to nominate Edell to serve as Series B Director. Sonys aid eliminates shareholders ability to keep Edell off

Board & further conspiring with Defendants in late 2004 to complete a sweetheart deal to sell almost half of MySpace.

Defendants also breach pledge made with Judge Strine & Petitioner, failing to make corrective disclosure in January

2004 Proxy.

102. Defendants have also not legally effected a valid closing or vote on the Series C stock sale or transfer

from Sony of their Series B shares, blocking public issuers option received in three way agreement between

Sony, VantagePoint, and public issuer in 2003. The crooked dealings expand when Orrick uses its insider

knowledge to produce a commercial benefit for VantagePoint while having Issuer pay 100% of the cost by


103. Defendants were aware and admitted the proxy statement was defective in January 2004. Defendants willfully

ignore Judge Strines ruling and continue to allow A defective proxy to be the final proxy for the annual shareholder


##
meeting that occurred in January 2004. Defendants fraudulently conceal Edells work experience and omit disclosure

of Edells bankruptcy of MTS, Inc. Defendants aid and abet Edell in violating Rule SK Item 401.

ISS REPORT DEFAMATION

104. Part of the Defendants scheme to conspire to interfere with Plaintiffs livelihood by disseminating

defamatory statements about Plaintiff to the public through media outlets in retaliation for providing truthful

information to SEC, FTC, DOJ and Chancery Court relating to the Defendants scheme, in violation of 1513(f).

105. Defendants press release titled eUniverse Wins ISS Support for Its Director Nominees; ISS Rejects

Greenspan's Hand-Picked Director Nominees.is published January 23, 2004:

eUniverse, Inc. today announced that Institutional Shareholder Services, Inc. (ISS) has
recommended that eUniverse stockholders vote FOR eUniverse's four director nominees -- Brett
Brewer, Daniel Mosher, Lawrence Moreau and Bradley Ward -- and vote FOR the Board's other
proposals at the Company's annual meeting on January 29, 2004.

ISS is widely recognized as the leading independent proxy advisory firm in the nation. Its
recommendations are relied upon by hundreds of major institutional investment firms, mutual funds,
and other fiduciaries throughout the country.

In recommending that eUniverse stockholders re-elect eUniverse's Board nominees, ISS stated
in its January 22, 2004 report that:

"[T]he dissident slate does not offer a clear plan to operate the business that distinguishes
themselves from the path of the current board of directors.

Further, we question the independence of the dissident slate as they were proposed by Mr.
Greenspan and Mr. Greenspan's record as CEO eUniverse is blemished with financial difficulties.

ISS also stated that:

"[T]he company's board has independent directors for six out of seven board seats, setup
independent board committees as of Nov. 14, 2003, and two new directors added after the company
announced its accounting problems.

Further, the board has taken steps to improve management of the company by removing Mr.
Greenspan and initiating the process of hiring a new CEO."

In conclusion, ISS believes that "the [eUniverse] nominees should have an opportunity to
implement plans to grow the business, shore up the company's finances, and find new management
leadership."

Jeffrey Edell, Chairman of the eUniverse Board of Directors, said, "We are very pleased that
ISS recognizes that the current Board is best suited to successfully guide eUniverse. We look forward to
moving beyond Mr. Greenspan's costly and counterproductive proxy contest and to continuing the
progress we have made to build a stronger future for eUniverse and all its stockholders."


#$
106. However, ISS is basing its report on the fabricated Edell bio and work experience that was created thru

emailing and mailing the fraudulent Proxy prior to the ISS report, in violation of Statue 1341.

107. ISS was not able to write an accurate report or reach an equitable conclusion because Defendants

destroyed the evidence of Edells true background violating 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519.

108. January 23, 2004 press release is defamatory attack on Petitioner and misleads all shareholders, and is

distributed via wire service in violation of 18 U.S.C. 1343.

Los Angeles Times Defamation

109 Defendants scheme to use fabricated and false Director Edell continued in a January 29, 2004

article titled, Battle of EUniverse Is Up in the Air that continues to harm Plaintiff and is located at

public web link: http://articles.latimes.com/2004/jan/29/business/fi-golden29 stating:

Battle of EUniverse Is Up in the Air
Michael Hiltzik / GOLDEN STATE/January 29, 2004|

There's an old joke about how university campus politics are so vicious because there's so little at stake.
From that, we might conclude that the proxy fight over the Internet company EUniverse Inc. would
have been more dignified had it concerned an operation that actually turned a profit over the last year
and didn't spend several months in the doghouse of a Nasdaq trading suspension.

Instead, the battle pitting EUniverse's founder and ex-chairman, Brad D. Greenspan, against a
management team that he had largely appointed himself has reached new standards in backbiting and
vituperation.

Over the last few weeks, the existing board has been issuing letters to shareholders with lurid headlines
such as: "BRAD GREENSPAN -- THE THREAT TO YOUR COMPANY'S SUCCESS," and
"GREENSPAN'S SOUR GRAPES."

Even the Democrats in New Hampshire backed away from this sort of campaigning.

The board accuses the 30-year-old Greenspan of employing "empty rhetoric" and "petty personal
attacks" in order to seize control of the Los Angeles-based company for personal financial gain and
self-aggrandizement. It notes that the trading suspension and a huge restatement of financial results
going back to 2002 occurred on his watch.

The incumbents further charge that he tried to torpedo an $8-million private equity deal that they deem
crucial to the survival of the company, which runs a collection of game and entertainment websites,
earning revenue from advertising and memberships.

Greenspan has fired back in kind. His shareholder letters accuse the officers and directors of conflicts of
interest, self-dealing and mudslinging. ("THERE THEY GO AGAIN! DO NOT BE MISLED BY
INCUMBENT MANAGEMENT'S CONTINUING MISSTATEMENTS, OMISSIONS AND

#%
MANIPULATION OF THE FACTS IN THEIR EFFORTS TO DIVERT YOUR ATTENTION FROM
THE REAL ISSUES.")

Greenspan's core charge is that the board colluded with a private venture firm to seize control of
EUniverse from the holders of its common shares, of which he owns the largest block. As for its
financial problems in the last year, he acknowledges that he was chairman and chief executive during
much of that period. But he says he had left day-to-day operations in the hands of some of the same
people now sniping at him from the opposite trench, including President Brett Brewer, 31, a board
member and his former UCLA classmate.

Under the circumstances, one can only sympathize with the 4,000 shareholders being importuned to
vote for one or another slate of four directors (out of seven) at the company's annual meeting, scheduled
for today. Both sides say their first order of business will be to hire a professional CEO for EUniverse,
obviously an admission that no one in place now is up to the job. Both also claim to possess the
strategic key to restoring EUniverse's former luster as one of the rare, pure Internet plays that worked.

The false and defective July 2004 Proxy (EXHIBIT #7, pg. 48-49)

110. Edells July 2004 Proxy disclosure totally omits any notion of bankruptcy. Edell and defendants later

after using the fabricated Edell to win the January 2004 Proxy contest, attempt thru a footnote, in second Proxy

distributed in July 2004, to avail themselves of the disclosure requirements they know exists by concealing

Edells true background by disclosing:

"Mr. Edell was the Chief Executive Officer of Showorks Entertainment Group. Inc., a
Delaware corporation that later changed its name to Media Technology Source of Delaware,
Inc. Within two years of the time that Mr. Edell resigned from that company, it filed a petition
for relief under the United States Bankruptcy Code."

111. However, even with this disclosure of a bankruptcy Edell does not disclose the year that he works for

Showorks in his main bio area. Combined with fabricating the year Edell concluded his job at Soundelux to

2002, An informed investor would not be able to deduce that Edell worked for Showorks as CEO in 2001

before its bankruptcy in 2001. Edell misled investors, omitting fact that in 2001 & 2002 he was Showorks CEO.

112. Defendants are guilty of the destruction or altering of the true Edell background information and work

experience and bankruptcy by omission violating 18 U.S.C. 1512(c)(1) and 18 U.S.C. 1519.

113. Defendants violate . 1341 using email to send fabricated draft Proxy for review furthering scheme.

2009 FRAUD

114. Edell & Defendants in mid-2009 launch another prong of fraudulent concealment.

115. New evidence includes i) publication of a book by employee loyal to News Corp to fabricate the

background of Jeff Edell a former Director ii) Using fabricated Edell character to conceal truth that
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1
In our June 22, 2009 Order, we certified the following class: All holders of Intermix Media,
Inc. (Intermix or the Company) common stock, from July 18, 2005 through the consummation of the
sale of Intermix to News Corporation (News Corp) at the price of $12.00 per share on September 30,
2005 (the Acquisition), who were harmed by defendants improper conduct at issue in the litigation.
Excluded from the Class are defendants and any person, firm, trust, corporation or other entity related to
or affiliated with any defendant. (Dkt. No. 197).
2
In our July 14, 2008 Order on the Motion to Dismiss, we dismissed with prejudice Defendants
Montgomery & Co. LLC (Montgomery), and Thomas Weisel Partners Group, Inc. and Thomas
Weisel Partners LLC (TWP), the investment banks which advised the Intermix board during the 2005
transaction and completed fairness analyses on the $12 per share price offered by News Corp. in the
consummated merger transaction. (Dkt. No. 110, at 4-5). In that same Order, we also dismissed with
prejudice Count I for violation of Section 14(a) of the 1934 Act and SEC Rule 14a-9, which was stated
against the 2003 Individual Defendants, which included Brewer, Mosher, Moreau, Jeffrey Scott Edell,
Bradley Ward, Carlick, Sheehan, and Lipp, and VantagePoint. (Id. at 1-3). Accordingly, Count III for
Presiding: The Honorable GEORGE H. KING, U. S. DISTRICT JUDGE
Beatrice Herrera N/A N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
None None
Proceedings: (In Chambers) Order re: Cross-Motions for Summary Judgment; [213, 218,
244, 251, and 261]
This shareholder class action arises out of News Corporations (News Corp.) 2005 acquisition
of Intermix Media, Inc. (Intermix), formerly known as eUniverse Inc. (Brewer Decl. 3), a company
which owned, among other internet businesses, the social networking website MySpace. Plaintiff Jim
Brown (Plaintiff), individually and on behalf of all members of the certified class of former Intermix
shareholders,
1
claims that Defendants Brett Brewer (Brewer), Daniel Mosher (Mosher), Lawrence
Moreau (Moreau), David Carlick (Carlick), Andrew Sheehan (Sheehan), Richard Rosenblatt
(Rosenblatt), James Quandt (Quandt), and William Woodward (Woodward) (collectively,
Defendants), the eight Intermix directors at the time of the companys sale, breached their fiduciary
duties under state law and violated Section 14(a) of the Securities and Exchange Act of 1934 and SEC
Rule 14a-9 (Counts IV and II, respectively).
2
(Consolidated Second Amended Complaint [CSAC]
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control person liability was dismissed as to Edell and Ward, as it was premised on the only other
claim against them, the dismissed Count I. (Id. at 7-8). The Parties stipulated to dismiss certain
Defendants. (Dkt. Nos. 190, 204). On June 10, 2009, pursuant to the Parties stipulation, we dismissed
without prejudice Defendants VantagePoint Venture Partners, VP Alpha Holdings IV L.L.C.,
VantagePoint Venture Partners IV (Q) L.P., VantagePoint Venture Partners IV L.P., and VantagePoint
Venture Partners IV Principals Fund L.P. (Dkt. No. 194). On August 28, 2009, pursuant to the Parties
stipulation, we dismissed without prejudice Defendant Christopher Lipp, Intermixs General Counsel.
(Dkt. No. 205).
168-74, 179-87; Brewer Decl. 5). The only other remaining claim is Count III for control person
liability under Section 20(a) of the 1934 Act against Defendants involved in the 2005 acquisition of
Intermix. (CSAC 175-78). This matter is before us on the Parties Cross-Motions for Summary
Judgment. We have considered the papers filed and all of the admissible evidence, and deem this matter
appropriate for resolution without oral argument. L.R. 7-15. As the Parties are familiar with the facts in
this case, we will repeat them only as necessary. Accordingly, we rule as follows.
I. Motion for Summary Judgment Standard
Summary judgment should be granted if the pleadings, the discovery and disclosure materials
on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c)(2); see also Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986). As to materiality, the substantive law will identify which facts are
material. Only disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). On a motion for summary judgment, our function is not . . . to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial. Id. at 249.
The moving party bears the initial responsibility to point to the absence of evidence of any
genuine issue of material fact. Celotex Corp., 477 U.S. at 323. When the party moving for summary
judgment would bear the burden of proof at trial, it must come forward with evidence which would
entitle it to a directed verdict if the evidence went uncontroverted at trial. In such a case, the moving
party has the initial burden of establishing the absence of a genuine issue of fact on each issue material
to its case. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 987 (9th Cir. 2006) (citation and
quotation marks omitted). By contrast, where the non-moving party bears the burden of proof at trial,
summary judgment is warranted if the nonmovant fails to make a showing sufficient to establish the
existence of an element essential to [its] case. Nebraska v. Wyoming, 507 U.S. 584, 590 (1993)
(quoting Celotex Corp., 477 U.S. at 322) (alteration in original). [T]he moving party can meet its
burden by pointing out the absence of evidence from the non-moving party, and it need not disprove
the other partys case. Miller, 454 F.3d at 987 (citation omitted). Accordingly, [t]he nonmoving
party must come forward with specific facts showing there is a genuine issue for trial. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal quotation marks and citations
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3
Under Delaware law, the business judgment rule creates a presumption that in making a
business decision, the directors of a corporation act on an informed basis, in good faith and in the honest
belief that the action taken was in the best interests of the company. Aronson v. Lewis, 473 A.2d 805,
812 (Del. 1984). A plaintiff challenging a board decision bears the burden to rebut the rules
presumption by providing evidence that the directors breached their fiduciary duties. Goodwin v. Live
Entmt, Inc., No. Civ. A. 15765, 1999 WL 64265, at *24 (Del. Ch. Jan. 25, 1999) (citing Cede & Co. v.
Technicolor, Inc., 634 A.2d 345, 361 (Del. 1993), modified by, 636 A.2d 956 (Del. 1994) (Cede II);
Citron v. Fairchild Camera and Instrument Corp., 569 A.2d 53, 64 (Del. 1989)). In order to overcome
that presumption, a plaintiff must prove an act of bad faith by a preponderance of the evidence. In re
omitted). However, [i]f the opposing party does not so respond, summary judgment should, if
appropriate, be entered against that party. FED. R. CIV. P. 56(e)(2); see also Celotex Corp., 477 U.S. at
322 ([T]he plain language of Rule 56(c) mandates the entry of summary judgment . . . against a party
who fails to make a showing sufficient to establish the existence of an element essential to that partys
case, and on which that party will bear the burden of proof at trial.). The opposing party may not rely
merely on allegations or denials in its own pleading[.] FED. R. CIV. P. 56(e)(2). The evidence of the
non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Anderson, 477
U.S. at 255; see also In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (The court must view all the
evidence in the light most favorable to the nonmoving party.) (citations omitted).
Only admissible evidence may be considered in deciding a motion for summary judgment.
Miller, 454 F.3d at 988. Under Federal Rule of Civil Procedure 56(e)(1), [a] supporting or opposing
affidavit must be made on personal knowledge, set out facts that would be admissible in evidence, and
show that the affiant is competent to testify on the matters stated. See also Block v. City of Los
Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001). Conclusory and speculative affidavits that fail to set
forth specific facts are insufficient to raise a genuine issue of material fact. Thornhill Publg Co., Inc. v.
Gen. Tel. & Elecs. Corp., 594 F.2d 730, 738 (9th Cir. 1979). Absent a proper exception, hearsay
statements are inadmissible. See Japan Telecom, Inc. v. Japan Telecom Am., Inc., 287 F.3d 866, 875
n.1 (9th Cir. 2002). Furthermore, neither an unverified complaint nor unsworn statements made in the
parties briefs can be considered as evidence at this stage. See Moran v. Selig, 447 F.3d 748, 759 &
n.16 (9th Cir. 2006) (noting that unverified complaint cannot be considered as evidence on motion for
summary judgment); British Airways Bd. v. Boeing Co., 585 F.2d 946, 952 (9th Cir. 1978) ([L]egal
memoranda . . . are not evidence[.]).
II. Count IV: Breach of Fiduciary Duty Claim
A. Delaware Law on Corporate Fiduciary Duties Generally
Delaware law governs Plaintiffs state law claim of breach of fiduciary duty. Under Delaware
law, all directors and officers of a corporation owe their shareholders fiduciary duties of loyalty and
care. Gantler v. Stephens, 965 A.2d 695, 708-09 (Del. 2009).
3

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Walt Disney Co. Derivative Litig., 907 A.2d 693 (Del. Ch. 2005). If the plaintiff fails to rebut the
presumption, the business judgment rule protects the decision made. Goodwin, 1999 WL 64265, at *4
(citation omitted). If the rule is rebutted, the burden shifts to the defendants . . . to prove that the
transaction was entirely fair to the plaintiff shareholder. Id. (citation omitted).
1. Duty of Care
Director liability for breaching the duty of care is predicated upon concepts of gross
negligence. Binks v. DSL.net, Inc., C.A. No. 2823-VCN, 2010 WL 1713629, at *8 (Del. Ch. Apr. 29,
2010) (quoting McMullin v. Beran, 705 A.2d 910, 921 (Del. 2000)). The Delaware General
Corporation Law permits a corporation to include a provision in its charter eliminating or limiting the
personal liability of a director to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. DEL. CODE ANN. tit. 8, 102(b)(7). While such an exculpatory provision
may eliminate any liability for breaches of the duty of care, it shall not eliminate or limit the liability of
a director: (i) For any breach of the directors duty of loyalty to the corporation or its stockholders; (ii)
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law; . . . or (iv) for any transaction from which the director derived an improper personal benefit. Id.
Intermixs charter exculpates Defendants from any duty of care claims. (J.A., Ex. 38, Certificate of
Incorporation). Accordingly, Defendants assert this provision as their fifth affirmative defense: The
breach of fiduciary duty claim is barred, in whole or in part, by the exculpatory provision contained in
Intermixs Certificate of Incorporation. (Dkt. No. 111, Aug. 4, 2008). In light of this provision, we
conclude that the director Defendants cannot be liable for any purported breach of fiduciary duty based
solely on their duty of care. Plaintiff does not argue otherwise.
Defendants also move for summary judgment on the question of whether Brewer and Rosenblatt,
who doubled as officers for Intermix, may be held liable for any breaches of the duty of care, since
Section 102(b)(7) only permits exculpation of duty of care claims for directors. It is undisputed that
both Brewer and Rosenblatt served as directors and officers of Intermix, Brewer as President and
Rosenblatt as CEO. (Brewer Decl. 1; Rosenblatt Decl. 1). The law is clear that where it is
impossible to separate actions taken in fulfillment of a defendants directorial duties from actions taken
in fulfillment of that defendants duties as a corporate officer, then any duty of care claim stated against
that individual is exculpated. In Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270 (Del.
1994), the Delaware Supreme Court held that since the plaintiff failed to highlight any specific actions
[the defendant] undertook as an officer (as distinct from actions as a director) that fall within the two
pertinent exceptions to Section 102(b)(7)[,] any duty of care claim was precluded under the
exculpatory clause. Id. at 1288 (citing R. Franklin Balotti & Jesse A. Finkelstein, Delaware Law of
Corp. & Business Org. 4.19, at 4-335 (Supp. 1992) (where a defendant is a director and officer, only
those actions taken solely in the defendants capacity as an officer are outside the purview of Section
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102(b)(7))). Plaintiffs have not identified any actions taken by Rosenblatt or Brewer solely in their
capacity as officers. Accordingly, to the extent any claim for breach of the duty of care is embodied in
Count IV, we GRANT summary judgment on that specific basis as to all director defendants, including
Brewer and Rosenblatt who also served as officers.

2. Duty of Loyalty
To hold a director liable for breach of the duty of loyalty, the plaintiff must establish that a
majority of the Director Defendants either [1] stood on both sides of the merger or were dominated and
controlled by someone who did; or [2] failed to act in good faith, i.e., where a fiduciary intentionally
fails to act in the face of a known duty to act, demonstrating a conscious disregard for his duties. In re
NYMEX Sholder Litig., C.A. Nos. 3621-VCN, 3835-VCN, 2009 WL 3206051, at *6 (Del. Ch. Sept. 30,
2009) (internal citations and quotation marks omitted); Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 239-
40 (Del. 2009) (Lyondell) (Because the trial court determined that the board was independent and
was not motivated by self-interest or ill will, the sole issue is whether the directors are entitled to
summary judgment on the claim that they breached their duty of loyalty by failing to act in good
faith.).
With respect to the first basis for demonstrating breach of the duty of loyalty, Delaware law
provides that [w]hen directors . . . are on both sides of a transaction, they are required to demonstrate
their utmost good faith and the most scrupulous inherent fairness of the bargain. Weinberger v. UOP,
Inc., 457 A.2d 701, 710 (Del. 1983). Classic examples [of this type of breach] are when a director
appears on both sides of a transaction or receives a personal benefit not received by the shareholders,
generally. Oliver v. Boston Univ., No. Civ. A. 16570-NC, 2006 WL 1064169, at *18 (Del. Ch. Apr.
14, 2006) (citing Cede II, 634 A.2d at 362 (citing Nixon v. Blackwell, 626 A.2d 1366, 1375 (Del.
1993))) (internal quotation marks and alterations omitted). If corporate fiduciaries stand on both sides
of a challenged transaction, an instance where the directors loyalty has been called into question, the
burden shifts to the fiduciaries to demonstrate the entire fairness of the transaction. Id. (citations
omitted). A showing of entire fairness requires proof that the transaction is the product of both fair
dealing and fair price. Cede II, 634 A.2d at 361 (emphasis in original and citations omitted).
With respect to the second basis for demonstrating breach of the duty of loyalty, Delaware
courts have noted that the requirement to act in good faith is a subsidiary element, i.e., a condition, of
the fundamental duty of loyalty. Stone v. Ritter, 911 A.2d 362, 369-70 (Del. 2006) (citation, alteration,
and internal quotation marks omitted) ([T]he fiduciary duty of loyalty is not limited to cases involving
a financial or other cognizable fiduciary conflict of interest. It also encompasses cases where the
fiduciary fails to act in good faith.). In Stone, the Delaware Supreme Court explained that although
good faith may be described colloquially as part of a triad of fiduciary duties that includes the duties
of care and loyalty, the obligation to act in good faith does not establish an independent fiduciary duty
that stands on the same footing as the duties of care and loyalty. Id. at 370.
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The Delaware Supreme Court has explained what constitutes bad faith by way of a spectrum of
directorial conduct. At one end of the spectrum, [there is] a category of acts involving non-exculpable,
so-called subjective bad faith, that is, fiduciary conduct motivated by an actual intent to do harm.
Ryan v. Lyondell Chem. Co., C.A. No. 3176-VCN, 2008 WL 4174038, at *3 (Del. Ch. Aug. 29, 2008)
(Ryan) (quoting In re Walt Disney Co. Derivative Litig., 906 A.2d 27, 64 (Del. 2006) (Disney))
(internal quotation marks omitted). The second category of conduct, which is at the opposite end of
the spectrum, involves lack of due carethat is, fiduciary action taken solely by reason of gross
negligence and without any malevolent intent. Disney, 906 A.2d at 64. The court observed that
grossly negligent conduct, without more, does not and cannot constitute a breach of the fiduciary duty
to act in good faith. Id. at 65. The third category identified by the Delaware Supreme Court is the one
at issue in this case: intentional dereliction of duty or a conscious disregard for ones responsibilities.
Id. at 66. Such misconduct, according to the Court, is properly treated as a non-exculpable,
non-indemnifiable violation of the fiduciary duty to act in good faith. Ryan, 2008 WL 4174038, at *3
(quoting Disney, 906 A.2d at 66).
Accordingly, the distinction between gross negligence and non-exculpable bad faith (i.e., that
elusive something more) has important consequences in Delawares jurisprudence and corporate
statutory scheme because, for example, director conduct amounting only to a violation of the duty of
care, but otherwise taken in good faith, is exculpable under 8 Del. C. 102(b)(7) or indemnifiable under
8 Del. C. 145. Id. (citing Disney, 906 A.2d at 64-65).
B. Scope of Plaintiffs Claim of Breach of the Duty of Loyalty
Inasmuch as the director defendants are exculpated from potential breaches of their duty of care,
the success of Count IV necessarily depends on whether any arguable shortcomings on the part of the .
. . directors also implicate their duty of loyalty, a breach of which is not exculpated. Lyondell, 970
A.2d at 239. To that end, in order to rule on Defendants motion for summary judgment, we must
ascertain whether there are any genuine issues of material fact with respect to whether the directors
breached their duty of loyalty, not merely their duty of care. In keeping with the Parties Joint Brief, we
address the two bases for breach of the duty of loyalty in the reverse order: first, Plaintiffs assertion of
bad faith conduct by Defendants, and second, Plaintiffs allegation of a self-interested transaction not
shown to be entirely fair.

1. Bad Faith in Revlon Auction Context
The obligation to act in good faith, which is a necessary component of satisfying the duty of
loyalty, requires directors to act for the purpose of advancing corporate well-being. Therefore, any
intentional dereliction of duty, a conscious disregard for ones responsibilities[,] constitutes bad faith,
or the failure to act in good faith. Disney, 906 A.2d at 66; Stone, 911 A.2d at 370 (Where directors fail
to act in the face of a known duty to act, thereby demonstrating a conscious disregard for their
responsibilities, they breach their duty of loyalty by failing to discharge that fiduciary obligation in
good faith.). In this case, Plaintiff and the shareholder class which he represents argue Defendants
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consciously disregarded their responsibilities in selling Intermix to News Corp. for $12 per share, when,
so they contend, a likely topping bid from Viacom was imminent.
The seminal case of Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del.
1986), regulates directorial conduct during a sale or change of control of a publicly held corporation.
Revlon holds that directors satisfy their fiduciary duties when their conduct is geared towards the
maximization of the companys value at a sale for the stockholders benefit. Id. at 182. Revlon is
triggered in the following three scenarios: (1) when a corporation initiates an active bidding process
seeking to sell itself or to effect a business reorganization involving a clear break-up of the company;
(2) where, in response to a bidders offer, a target abandons its long-term strategy and seeks an
alternative transaction involving the break-up of the company; or (3) when approval of a transaction
results in a sale or change of control. Arnold v. Socy for Sav. Bancorp., Inc., 650 A.2d 1270, 1289-90
(Del. 1994) (internal citations and quotation marks omitted). More recently, the Delaware Supreme
Court has stated that Revlon duties attach when a company embarks on a transactionon its own
initiative or in response to an unsolicited offerthat will result in a change of control. Lyondell, 970
A.2d at 242. When the companys break-up became inevitable, in Revlon, [t]he directors role
changed from defenders of the corporate bastion to auctioneers charged with getting the best price for
the stockholders at a sale of the company. 506 A.2d at 182. In addition to its principal holding that
shareholder wealth maximization must be the directors foremost objective, the court also noted that
favoritism for a white knight to the total exclusion of a hostile bidder was impermissible if divorced
from the objective of shareholder value maximization. Id. at 184. [W]hen bidders make relatively
similar offers, or dissolution of the company becomes inevitable, the directors cannot fulfill their
[fiduciary] duties by playing favorites with the contending factions. Market forces must be allowed to
operate freely to bring the targets shareholders the best price available for their equity. Id.

The Delaware Supreme Court has clarified that Revlon did not create any new fiduciary
duties[,] but rather simply held that the board must perform its fiduciary duties in the service of a
specific objective: maximizing the sale price of the enterprise. Lyondell, 970 A.2d at 239 (quoting
Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)). Additionally, Delaware case law has time
and again reaffirmed the anti-favoritism principle, i.e. that directors may not tilt the playing field in
favor of one bidder or otherwise skew the auction unless this conduct is designed to maximize
shareholder wealth. In Barkan v. Amsted Industries, 567 A.2d 1279 (Del. 1989), the court warned that
the board must act in a neutral manner to encourage the highest possible price for shareholders. Id. at
1286. To be sure, there is no single blueprint that a board must follow to fulfill its duties, and there
are no legally prescribed steps that directors must follow to satisfy their Revlon duties. Id.; Lyondell,
970 A.2d at 243. Nevertheless, [w]hen multiple bidders are competing for control, this concern for
fairness forbids directors from using defensive mechanisms to thwart an auction or to favor one bidder
over another. Id. at 1286-87 (citation omitted). More recently, in In re Toys R Us, Inc.,
Shareholder Litigation, 877 A.2d 975 (Del. Ch. 2005), the Delaware Chancery Court stated that a
selfish or idiosyncratic desire by the board to tilt the playing field towards a particular bidder for
reasons unrelated to the stockholders ability to get top dollar is a violation of a directors fiduciary
obligations. Id. at 1000-01.
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4
Favoritism and deal protection devices, such as a termination fee, are permissible so long as
they are strategically designed to maximize the price paid to shareholders. Macmillan, 559 A.2d at
1287 ([T]he boards primary objective, and essential purpose, must remain the enhancement of the
bidding process for the benefit of the stockholders.). Macmillan set forth a test which tolerates only
value-enhancing preferential treatment:

In the face of disparate treatment, the trial court must first examine whether the directors
properly perceived that shareholder interests were enhanced. In any event, the boards action
must be reasonable in relation to the advantage sought to be achieved, or conversely, to the
threat which a particular bid allegedly poses to stockholder interests.
559 A.2d at 1288; In re J.P. Stevens & Co., Inc. Sholders Litig., 542 A.2d 770, 782 (Del. Ch. 1988)
(The board may tilt the playing field if, but only if, it is in the shareholders interest to do so.).
To support his claim that Defendants acted in bad faith, Plaintiff cites Mills Acquisition Co. v.
Macmillan, Inc., 559 A.2d 1261 (Del. 1988). In that case, Macmillan, Inc.s Chairman and Chief
Executive Officer (CEO) and its President and Chief Operating Officer (COO) orchestrated a
leveraged buyout of their own company, resulting in a lock-up agreement between Macmillan and
Kohlberg Kravis Roberts & Co. (KKR), an investment firm specializing in leveraged buyouts. Id. at
1264-65. These directors, as participants in the leveraged buyout, had a significant self-interest in
ensuring the success of a KKR bid. Id. at 1279. Indeed, Macmillan senior management would
receive up to 20% ownership in the newly formed company. Id. at 1273. So strong was the pull of
that promised 20 percent ownership stake that even before KKR had communicated a bid price, these
self-interested actors indicated that they would endorse the acquisition to the full board of directors.
Id. To steer the process in the desired direction, they clandestinely and impermissibly skewed the
auction in KKRs favor by, among other things, tipping KKR off as to the amount of a competing bid
and then concealing this tip from the board of directors. Id. at 1279-81. On appeal, the Delaware
Supreme Court held that discriminatory treatment of a bidder, without any rational benefit to the
shareholders, was unwarranted. Id. at 1282 (emphasis added).
4
The court found that KKR repeatedly
received significant material advantages to the exclusion and detriment of [the competing bidder] to
stymie, rather than enhance, the bidding process. Id. at 1281. Moreover, the court concluded that
[t]he board was torpid, if not supine, in its efforts to establish a truly independent auction . . . . Id. at
1280. The court added: By placing the entire process in the hands of [the chairman], through his own
chosen financial advisors, with little or no board oversight, the board materially contributed to the
unprincipled conduct of those upon whom it looked with a blind eye. Id.
Defendants contend that Macmillan is distinguishable because the directors in that case were on
both sides of the transaction and therefore engaged in self-dealing. However, Defendants have pointed
us to no authority for the proposition that Macmillan is only applicable when a court reviews self-
interested transactions for fairness and may not support a finding of bad faith conduct in the Revlon
auction context.
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5
Although Viacom did not actually submit a bid, we conclude that there are triable issues of fact
as to whether Viacom was at least a serious potential bidder which was discouraged from actually
submitting a bid by Defendants alleged bad faith conduct.
6
The Delaware courts have explained that favoritism, untethered to any strategy to drive up bid
prices, is a breach of the fiduciary duties which Revlon focused through the lens of shareholder wealth
maximization:
Critically, in the wake of Revlon, Delaware courts have made clear that the enhanced judicial
review Revlon requires is not a license for law-trained courts to second-guess reasonable, but
We recognize that Wayne County Employees Retirement System v. Corti, Civil Action No.
3534-CC, 2009 WL 2219260 (Del. Ch. July 24, 2009), distinguishes Macmillan from the single-bidder
merger reviewed in that case on the absence of any conflicted insiders seeking to transfer control of a
company to themselves. Id. at *12-13 (There is much less cause for concern where managers will
continue their employment with the combined post-transaction entity, than when the conflicted
managers are bidders in an auction for control of the company, and are thereby seeking to transfer
control of the company to themselves personally.). But that discussion has no bearing on the
prohibition on favoring a particular bidder in a multiple-bidder context, which this case arguably
presents.
5
Defendants suggest that the directors may tilt the playing field in favor of a particular bidder,
without regard to shareholder wealth maximization, so long as they are not on both sides of a
transaction. We reject this argument. Simply because Macmillan examined disparate treatment
through the lens of disloyalty premised on a self-interested transaction does not mean field-tilting is
permissible in other contexts. See Emerson Radio Corp. v. Intl Jensen Inc., Civ. A. Nos. 15130,
14992, 1996 WL 483086, at *11-12 (Del. Ch. Aug. 20, 1996) (describing Macmillan as requiring
fiduciaries to treat all bidders equally and fairly in carrying out their Revlon duties and identifying
self-interested nature of merger transaction as an addition[al] or alternative theory for breach of
duty of loyalty); Roberts v. Gen. Instrument Corp., CIV. A. No. 11639, 1990 WL 118356, at *8 (Del.
Ch. Aug. 13, 1990) (citing Macmillan, 559 A.2d at 1287-88) (In each instance where the board is not
predominantly self-interested or under the control or dominating influence of a person with a conflicting
interest, the principal judicial inquiries relate to whether the board was adequately informed and acting
in good faith. This court has been pointedly instructed, however, that where issues of corporate control
are at stake action of even a disinterested board must meet an enhanced test before they will qualify for
the deference that courts ordinarily accord to good faith business judgments.).
Whatever a directors particular motivation, evidence that he skewed an auction in favor of a
particular bidder can support a finding of an intentional dereliction of duty, Disney, 906 A.2d at 66,
i.e. a violation of the obligation to act in good faith. See Nagy v. Bistricer, 770 A.2d 43, 48, n.2 (Del.
Ch. 2000) (observing that the duty of good faith may serve as a constant reminder . . . that, regardless
of his motive, a director who consciously disregards his duties to the corporation and its stockholders
may suffer a personal judgment for monetary damages for any harm he causes, even if for a reason
other than personal pecuniary interest).
6
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debatable, tactical choices that directors have made in good faith. For example, the Supreme
Court has held that the duty to take reasonable steps to secure the highest immediately available
price does not invariably require a board to conduct an auction process or even a targeted market
canvass in the first instance, emphasizing that there is no single blue-print for fulfilling the
duty to maximize value. Nor does a boards decision to sell a company prevent it from offering
bidders deal protections, so long as its decision to do so was reasonably directed to the objective
of getting the highest price, and not by a selfish or idiosyncratic desire by the board to tilt the
playing field towards a particular bidder for reasons unrelated to the stockholders ability to get
top dollar.
Toys R Us, 877 A.2d at 1000-01 (emphasis added; citations omitted).

Defendants principal argument is that recent Delaware Supreme Court case law creates a much
more stringent standard for claims of breaches of the obligation to act in good faith. To this end, they
cite language in the Delaware Supreme Courts decision in Lyondell. In that case, Lyondells board of
directors approved the sale of their company to Basell AF, a privately held Luxembourg company, after
negotiating several increases in the per share bid price up from $40 to $48, and a set of less stringent
deal protection devices, including a fiduciary out clause in the standard no-shop provision and a
reduced termination fee. 970 A.2d at 237-39. The court found no bad faith and therefore no breach of
the duty of loyalty. Id. at 242-44. The Supreme Court rested its decision on the following facts:
The Lyondell directors met several times to consider Basells premium offer. They were
generally aware of the value of their company and they knew the chemical company market.
The directors solicited and followed the advice of their financial and legal advisors. They
attempted to negotiate a higher offer even though all the evidence indicates that Basell had
offered a blowout price. Finally, they approved the merger agreement, because it was simply
too good not to pass along [to the stockholders] for their consideration. We assume, as we must
on summary judgment, that the Lyondell directors did absolutely nothing to prepare for Basells
offer, and that they did not even consider conducting a market check before agreeing to the
merger. Even so, this record clearly establishes that the Lyondell directors did not breach their
duty of loyalty by failing to act in good faith.
Id. at 244.
Contrary to Defendants argument, Lyondell did not work any transformation in Delaware law
on the duty of loyalty. Nothing in this case altered the standard definition of bad faith; indeed, the court
reaffirmed that bad faith will be found if a fiduciary intentionally fails to act in the face of a known
duty to act, demonstrating a conscious disregard for his duties. Id. at 243 (quoting Disney, 906 A.2d at
67). The court continued: there is a vast difference between an inadequate or flawed effort to carry out
fiduciary duties and a conscious disregard for those duties. Id. Despite all the references to the
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conscious disregard standard, Defendants nevertheless cherry-pick certain language to argue that a
more stringent standard applies, including the following lines: (1) Only if they knowingly and
completely failed to undertake their responsibilities would they breach their duty of loyalty; and (2)
[T]he inquiry should have been whether those directors utterly failed to obtain the best sale price. Id.
at 243-44 (emphasis added); (Joint Br. 5-7, 16). Defendants citation of this language is out of context
and misleading. A comprehensive review of the Lyondell opinion reveals that the court intended that
language to be synonymous and coterminous with the conscious disregard standard. The court did
not suggest that the utter failure standard would supplant the definition of bad faith set forth in
Disney. Nor did it suggest any unprecedented diminishment of Revlon duties, as suggested by the
minimalist standard Defendants advance. If such a radical departure were intended, we think the court
would have taken the pains to say as much. Divorced from the surrounding text, the utter failure
language could be said to require that directors simply do anything in the auction process, no matter
how feckless, ineffectual, or at odds with the goal of maximizing shareholder wealth.
The utter failure language derives from the Stone and In re Caremark decisions, which the
court cited. 911 A.2d 362 (Del. 2006); 698 A.2d 959, 971 (Del. Ch. 1996). Both of those decisions
concerned claims that directors failed to engage in the necessary oversight to ensure compliance with
laws such as the federal Bank Secrecy Act in Stone. That vital factual context helps explain why In re
Caremark defined bad faith as follows: Generally where a claim of directorial liability for corporate
loss is predicated upon ignorance of liability creating activities within the corporation, . . . only a
sustained or systematic failure of the board to exercise oversightsuch as an utter failure to attempt to
assure a reasonable information and reporting system existswill establish the lack of good faith that is
a necessary condition to liability. 698 A.2d at 971 (Such a test of liabilitylack of good faith as
evidenced by sustained or systematic failure of a director to exercise reasonable oversightis quite
high.). Nevertheless, the Delaware Supreme Court explained in Stone and reaffirmed in Lyondell that:
the Caremark standard is fully consistent with the Disney definition of bad faith. Lyondell, 970 A.2d
at 240 (citing Stone, 911 A.2d at 370). We cannot second-guess that determination as Defendants wish.
Instead of placing utter failure between subjective bad faith (i.e. actual intent to do harm)
and conscious disregard on the Disney bad faith spectrum, Lyondell equated the utter failure and
conscious disregard standards. 970 A.2d at 240. This reasoning was fully in keeping with the
Supreme Courts prior decision in Stone, where it noted that the duty of loyalty could be breached by
two specific kinds of conduct rising to the level of bad faith: (a) the directors utterly failed to
implement any reporting or information system or controls; or (b) having implemented such a system or
controls, consciously failed to monitor or oversee its operations thus disabling themselves from being
informed of risks or problems requiring their attention. 911 A.2d at 370. Crucially, though bad faith
could be demonstrated with either of these alternatives, the court emphasized, citing Disney, 906 A.2d at
67, that these were coterminous legal standards:
In either case, imposition of liability requires a showing that the directors knew that they were
not discharging their fiduciary obligations. Where directors fail to act in the face of a known
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7
A failure to act in good faith may be shown . . . where the fiduciary intentionally acts with a
purpose other than that of advancing the best interests of the corporation, where the fiduciary acts with
the intent to violate applicable positive law, or where the fiduciary intentionally fails to act in the face of
a known duty to act, demonstrating a conscious disregard for his duties. In re Walt Disney Co.
Derivative Litig., 907 A.2d at 755.
duty to act, thereby demonstrating a conscious disregard for their responsibilities, they breach
their duty of loyalty by failing to discharge that fiduciary obligation in good faith.
911 A.2d at 370 (emphasis added). Delaware courts generally seem to read Lyondell in this way. See,
e.g., Robotti & Co., LLC v. Liddell, C.A. No. 3128-VCN, 2010 WL 157474, at *11 (Del. Ch. Jan. 14,
2010) (characterizing Lyondell as holding that [b]ad faith, and thus a breach of the duty of loyalty, can
arise only when a fiduciary consciously disregards his or her responsibilities).
7

In addition, we do not read Lyondell as diminishing the prohibition on tilting the playing field in
favor of a particular bidder for any reason other than maximizing shareholder wealth. The lack of an
actual or even potential second bidder was a key undisputed fact on which that court relied, noting:
[The directors] had reason to believe that no other bidders would emerge, given the price Basell had
offered and the limited universe of companies that might be interested in acquiring Lyondells unique
assets. . . . Finally, no other acquiror [sic] expressed interest during the four months between the merger
announcement and the stockholder vote. 970 A.2d at 241. Other cases have distinguished between
single-bidder and multiple-bidder contexts as well. See, e.g., Barkan, 567 A.2d at 1286-87; Continuing
Creditors Comm. of Star Telecomms., Inc. v. Edgecomb, 385 F. Supp. 2d 449, 466 n.14 (D. Del. 2004)
(In [Macmillan], the claim was that the directors approved the use of a lock-up that stopped rival
bidders from winning the auction for the company so that fellow directors could purchase the company
through a leveraged buy-out. Here, however, there were no other bidders for Star, the Company was on
the verge of bankruptcy, and the Gotel financing was, by the Plaintiffs own admission, the only
financing option presented to the Board.) (emphasis added and citations omitted). Since Lyondell only
reviewed a merger with a lone bidder, even if we were to read its utter failure language as more
lenient on Defendants, it is of severely diminished relevance in the multiple-bidder scenario we
arguably confront here.
In short, Revlon and Macmillan are not displaced in any way by Stone or Lyondell.
Accordingly, we must ask whether there is a genuine issue of material fact as to whether Defendants
consciously disregarded their duties, i.e. fail[ed] to act in the face of a known duty to act. Stone, 911
A.2d at 370. There is nothing in the case law to warrant granting judgment as a matter of law for
Defendants, simply because they engaged in some bargaining.
Having considered all of the admissible evidence before us and viewing it in the light most
favorable to Plaintiff as we must under Rule 56, we conclude that there are genuine, triable issues of
material fact sufficient to defeat Defendants Motion for Summary Judgment on this Revlon claim.
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8
Although analytically we are reviewing the evidence on the bad faith prong of the duty of
loyalty component of the breach of fiduciary duty claim at this juncture, we consider Rosenblatts
alleged self-interest to the extent that it bears on whether Plaintiff has raised a triable issue of material
fact as to whether Rosenblatt acted in conscious disregard of his duties by impermissibly tilting the field
in favor of News Corp.
These issues fall into three categories: (1) whether Intermix CEO Rosenblatt impermissibly tilted the
playing field in favor of News Corp.; (2) whether the remaining board members consciously disregarded
their duties; and (3) whether the purported risk of a direct bid for MySpace, which would have frozen
the MySpace Option, precludes a finding that Defendants consciously disregard their duties.
a. Rosenblatt
Plaintiff proffers evidence tending to show that during the crucial week leading up to the July
18, 2005 merger, Rosenblatt evaded Viacoms advances, even though Viacoms representatives were
communicating that a competing bid was imminent. Plaintiff raises at least two interrelated triable
issues: (1) whether Rosenblatt was self-interested in the merger transaction;
8
and (2) whether he
impermissibly steered the auction in News Corp.s favor.
As to Rosenblatts purported self-interest, there is evidence of Rosenblatts motivation for the
alleged bidder favoritism, namely his anticipation of future employment with News Corp. In one
particularly revealing email sent on July 15, Rosenblatt excitedly endorses News Corp.s Ross
Levinsohns vision: So, we create the Fox Internet group, all our units (myspace, alena, grab) fall
under it, plus all new acquisitions, and you are CEO Fox Internet and I am Fox Internet grand Puba!!!!
(J.A., Ex. 184). Rosenblatt continues: I would like to discuss my specific role and structure whenever
you are ready. It is no rush unless Peter and Rupert want me to sign an employment agreement by
Sunday [July 17, 2005] . . . . (Id.). In an earlier email in that same chain, Rosenblatt wrote: [I] am
burning some real equity with every major media company by getting [the deal] done. . . . u [sic] have
no idea the pain I will suffer on Monday. U [sic] better have a good job for me cause I aint [sic] gonna
work in this town again. . . . (Id.). On July 13, Rosenblatt wrote: tell Thom Murdoch and I cut the
deal in 30 mins [sic] and I got 100% of what we wanted. Deal closing by Monday. (Id., Ex. 154).
This evidence at least raises the inference that Rosenblatt had a strong interest in seeing a merger
transaction with News Corp. completed and had made up his mind that Intermix would be sold to News
Corp. as of July 13.
Moreover, Plaintiff points to several key pieces of documentary evidence and witness testimony
which tend to support his contention that (1) Rosenblatt, in representing the Intermix board through the
Transaction Committee (TC), (2) Sheehan, who also sat on the TC, and (3) their agents, deliberately
dodged, if not frustrated, an arguably imminent bid from Viacom:
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9
Viacom owns MTV Networks.
10
The Parties initially sought to file Frestons deposition transcript under seal because it
contained information subject to the governing protective order. On November 13, 2009, the Parties
filed a joint stipulation to withdraw their application to file under seal unredacted versions of the Joint
Brief, the Joint Statement of Uncontroverted Facts, and Volumes 2-3 and 5-9 of the Joint Evidentiary
Appendix, as well as several full deposition transcripts, including Frestons testimony. (Dkt. No. 234).
In that document, the Parties stated that: WHEREAS the Parties have contacted all non-parties that
produced documents and/or gave deposition testimony which was the subject of the application to file
under seal, and obtained their permission for the documents to be publicly filed, and therefore withdraw
the Application to File Under Seal[.] (Id. at 3). Our November 17, 2009 Order regarding the joint
stipulation was not clear as to whether the deposition transcripts were also being filed in the public
record. (Dkt. No. 236). We now clarify that all of the deposition transcripts labeled Confidential
Pursuant to Protective Order and submitted to the Court along with the Cross-Motions for Summary
Judgment SHALL also be filed in the public record pursuant to the Parties joint stipulation.
First, on July 6, Montgomery responded to an email announcing Viacom coming in hard by
telling Rosenblatt: You need to dance with [Viacom] . . . slow them down. I know you can do
it. (Id., Ex. 117).
Second, TWP, specifically Robert Kitts (Kitts), was aware that Epstein was trying to reach
them to talk about a potential Viacom bid. (Kitts Tr. at 125:4-7, 126:4-13). Epstein noted on
July 16 that Kitts never called him back as promised. (J.A., Ex. 191 (We exchanged
subsequent emails and he indicated he would call me, but he never did.)).
Third, on July 15, Mosher wrote Rosenblatt following one of Rosenblatts updates to the full
board, saying Viacom sounds like a pipedream. (Id., Ex. 182).
Fourth, on July 15, Judy McGrath of MTV
9
wrote Rosenblatt to inform him that Viacom was
coming with a bid early next week. (Id., Ex. 183). She added: We really want to be with you
on this, and hope to get in the ring for it . . . . (Id.). Rosenblatt replied evasively, failing to
correct her mistaken impression that the auction would still be ongoing after Monday: I am on a
call but thanks so much for the email . . . . I will call you back soon . . . . (Id.). Rosenblatt
could not recall precisely whether he had returned her call: I may have tried. I think, actually, I
do think I tried and I couldnt get a hold of her. (Rosenblatt Tr. at 108:21-24).
Fifth, Viacoms CEO Thomas Freston (Freston), who reiterated Viacoms interest in
purchasing Intermix to Rosenblatt, has testified that he was only told that the process with the
competing bidder was moving quickly. (Freston Tr. at 17:12-20, 19:8-11, 22:4-14).
10
He
testified that he could not recall if [Rosenblatt] said that they were going to do a deal by
Sunday. (Id. at 22:21-24). When asked whether Rosenblatt had communicated that a deal
would be completed by Sunday, he stated that he did not believe so. (Freston Tr. at 19:8-11).
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11
Rosenblatt, on the other hand, has testified that he actually told Freston that a deal would
likely be over by Sunday, or (stated with more certainty) that the deal was going to be done by
Sunday. (Rosenblatt Tr. at 64:5-22, 65:22-25, 92:5-8). For purposes of summary judgment, this
conflicting evidence further supports the existence of a triable issue of fact as to Viacoms relative
awareness of the impending consummation of the merger with News Corp. Moreover, Jason
Hirschhorn (Hirschhorn), Viacoms top manager for Internet business, wrote in an internal email on
Saturday July 16 that News Corp. will deliver [its bid] anywhere from today-monday. (J.A., Ex.
192). Freston also states that Rosenblatt told him a specific deal was imminent. (Freston Tr. at
29:11-16). Though the actual meaning of that statement is obscure as to whether a deal or a bid would
have been imminent (particularly given Frestons other testimony), this ambiguity likewise buttresses
our conclusion that there are genuine issues for trial.
12
A reasonable jury could infer from this email that Rosenblatt intended to evade an arguably
imminent competing bid, and that the [h]ave a great weekend line at the end of the email was
dismissive, given the fact that the email was sent at nearly 6 p.m. on a Sunday night.
13
We do not read the deposition to suggest that these were his actual words; Kitts was merely
paraphrasing what he recalls saying to Viacom.
Kitts of TWP also confirmed that he failed to give Viacom any hard deadline by which to submit
a bid. (Kitts Tr. at 88:21-89:16, 90:11-22, 136:11-14).
11

Sixth, on July 17, Jason Hirschhorn emailed Chris DeWolfe, MySpaces CEO, to document his
difficulties in staying in the auction process: chris, quick concerns . . . Intermix management
did not show up on Friday as promised during our time there . . . Intermix legal cancels their
time with our legal today at the last minute . . . Heard you guys got called off the ad sales call
abruptly . . . In short, I have had a team of 20+ people here working for 72 hours straight on a
significant bid, is there anything I need to know? (J.A., Ex. 200).
Seventh, on July 17, Van Toffler of MTV also emailed Rosenblatt directly to complain politely
about the perceived run-around: They are in the office working round [sic] the clock so we can
put forth a number to you this week. They mentioned a couple of calls were cancelled at the end
of the day Friday, and seemed a bit concerned. Is there anything I can do to help the process for
both of us as this is clearly on the fast track? (Id., Ex. 202). Again, Rosenblatt replied in such
a way that a reasonable jury could infer an intent to evade an arguably imminent competing bid:
We like you and your guys a ton also. Chris called back or will your GC today. Have a great
weekend[.] (Id.).
12

Eighth, on July 17, Kitts of TWP, pursuant to the Intermix boards instructions, informed
Viacom that it would be in their best interest to make a bid that evening.
13
(Kitts Tr. at 69:13-
70:14, 88:21-89:16). Kitts admitted that he did not give Viacom a hard and fast deadline (see id.
at 88:21-89:16, 90:11-22; Epstein Tr. at 53:21-55:5), but that he relied upon the message [he]
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14
Rupert Murdoch is the Chairman and CEO of News Corp. Peter Chernin was the then-
President and COO of News Corp.
delivered as code that [Epstein] should get a bid in this evening. (Kitts Tr. at 90:20-22).
Furthermore, Kitts admitted in the deposition that he had been instructed to ask for a bid on a
timetable that he knew was infeasible. (Id. at 144:1-145:7). Kitts testified that he was aware of
an upcoming Viacom board meeting, at which [a potential bid] was going to be discussed. (Id.
at 69:13-70:14). The Viacom board was not scheduled to meet until the evening of Tuesday
July 19, 2005. (Rosenblatt Decl. 42; Brewer Decl. 29).
On the other hand, Defendants present the following evidence of events leading up to the July
18th merger, which they argue demonstrates the board members good faith. News Corp. initially
signaled that it would be willing to purchase Intermix in the $8-10 per share price range. (Rosenblatt
Decl. 18). During the Tuesday July 12, 2005 meeting between Rosenblatt, Rupert Murdoch, and Peter
Chernin,
14
News Corp. indicated that it would pay $12 per share, as long as the MySpace Option was
exercised and a merger agreement was executed by no later than Sunday, July 17, 2005. (Id. 24
(describing the handshake deal)). At the 2 p.m. meeting on July 15, the Intermix board of directors
rejected News Corp.s proposal to enter exclusive negotiations as premature. (Id. 29-30). At the 8
p.m. meeting on July 15, the Intermix board rejected the non-binding term sheet including a variety of
deal protection provisions as too strong a deterrent to other potential bidders. (Id. 33; J.A., Ex. 14).
At the 8 p.m. meeting on July 16, TWP advised the board that it would be reasonable to approve a
merger with News Corp. rather than waiting for Viacom to present an offer. (Brewer Decl. 27;
Rosenblatt Decl. 37). At the 7:30 p.m. TC meeting on July 17, the committee directed TWP to contact
Viacom and/or its representative, Morgan Stanley, to ascertain whether Viacom would be making an
offer before the opening of the market the next morning. (Rosenblatt Decl. 41; Sheehan Decl. 36;
J.A., Ex. 18). At the 10 p.m. Intermix board meeting on July 17, TWP advised that Viacom was not
prepared to make any offer until its board met on Tuesday July 19 and approved a bid. (Rosenblatt
Decl. 42; J.A., Ex. 19). At the 3:45 a.m. board meeting on July 18, both Montgomery and TWP
presented their valuation analyses, explaining that $12 per share was a fair price for Intermix, and the
Board voted to approve the merger. (Rosenblatt Decl. 44). On July 18, Intermix entered into a merger
agreement with News Corp.s Fox Interactive Media. (Rosenblatt Decl. 45; J.A., Ex. 4, at 319).
Defendants contend, and the record reflects, that throughout this process the board met repeatedly,
authorized ongoing discussions with both competing bidders, and consulted legal and financial advisers.
(J.A., Exs. 8-12, 14-19).
Viewing the evidence as a whole and in the light most favorable to Plaintiff, we conclude that
there are at least triable issues of fact as to whether Rosenblatt acted in good faith, whether he
impermissibly skewed the auction in favor of News Corp. for a purpose other than maximizing
shareholder value, knowing that a Viacom bid was likely and imminent, and whether this arguably
disparate treatment of Viacom and News Corp. had any effect on Viacoms appreciation of the arguable
need to make an offer by the evening of July 17, 2005.
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b. The Other Directors

i. Sheehan
In addition to Rosenblatt, there are also triable issues of fact as to whether Sheehan consciously
disregarded his fiduciary duties. On Friday July 15, Stuart Epstein (Epstein), the Morgan Stanley
investment banker representing Viacom, tried to reach Sheehan but was unsuccessful. (Sheehan Tr. at
83:12-18; J.A. Ex. 175). Sheehan instructed his secretary as follows: Do not tell [Epstein] anything
about what I am doing or where I am[.] (J.A., Ex. 175). In reply to his email, Sheehans secretary
informed him that she told Epstein that he was unavailable. (Id.). A reasonable jury could conclude
that this email chain evinces Sheehans intent to avoid Viacoms representatives.
ii. The Other Six Directors
In Gesoff v. IIC Industries, Inc., 902 A.2d 1130 (Del. Ch. 2006), the court stated that bad faith
may be found where directors have acted with conscious disregard or made decisions with knowledge
that they lacked material information. Id. at 1165 (emphasis added). Few Delaware cases attempt to
define precisely what conduct reaches the level of actionable bad faith, but there is at least agreement
that adopting a we dont care about the risks attitude concerning a material corporate decision
constitutes bad faith. In re Walt Disney Co. Derivative Litig., 825 A.2d 275, 289 (Del. Ch. 2003)
(finding bad faith claim properly alleged where factual allegations, if true, implied that the defendant
directors knew that they were making material decisions without adequate information and without
adequate deliberation, and that they simply did not care if the decisions caused the corporation and its
stockholders to suffer injury or loss) (emphasis in original).
Having reviewed the record in full, we conclude that there is sufficient admissible evidence to
create a triable question of fact as to whether the rest of the board, as in Macmillan, plac[ed] the entire
process in the hands of Rosenblatt and to a lesser extent Sheehan and thereby materially contributed
to the [allegedly] unprincipled conduct of those upon whom it looked with a blind eye. 559 A.2d at
1281.
On February 9, 2005, the Intermix board of directors formed a Transaction Committee
comprised of Rosenblatt, Sheehan, and Quandt. (Rosenblatt Decl. 6). From that point until July 18,
2005 when the merger was announced, it is undisputed that the Board received most of its information
about the negotiations from its self-interested CEO, Rosenblatt. Indeed, it is undisputed that Rosenblatt
was the only board member who had some first-hand information as to the circumstances of Viacoms
efforts to put in a bid. (See, e.g., Joint Statement of Uncontroverted Facts P347 (Rosenblatt was the
only person from the Intermix Board who negotiated with Viacom.)). Crucially, one of the board
members testified that Rosenblatt had led him to believe [t]hat Viacom was less urgent about the deal
and hadnt taken the time or done the same level of work as Fox Network and that Viacom was a
pipedream. (J.A., Ex. 182; Mosher Tr. at 25:24-26:1). This phrase is admittedly not indicative of
conscious wrongdoing. However, there is a triable question as to whether the other board members
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consciously abdicated their responsibilities as corporate fiduciaries in allegedly swallowing
Rosenblatts version of events and utterly failing to assess the situation for themselves.
More generally, a reasonable fact-finder could conclude that the other board members acted in
bad faith by making decisions with knowledge that they lacked material information. Gesoff, 902
A.2d at 1165. With respect to their knowledge of the relative likelihood of a Viacom bid, Mosher stated
that he could not recall if he or any other board member had asked any questions regarding Viacom or
its status. (Mosher Tr. at 26:14-21). Additionally, he could not recall whether he had any knowledge
of whether anyone from management was providing equal information to Viacom and Fox News Corp
about the time line for submitting a bid for Intermix. (Id. at 43:17-21).
With respect to their knowledge of bidder favoritism, though Mosher testified that he could not
recall the board ever instructing Rosenblatt to favor one bidder over another, he also could not
definitively represent that the board had not so instructed Rosenblatt. (Id. at 41:10-21). Other board
members besides Rosenblatt have also testified that they were unaware that any due diligence meetings
with Viacom had been cancelled. (Brewer Tr. at 119:11-15; Sheehan Tr. at 98:1-20). Furthermore,
Brewer testified that he was simply unaware that Viacom was conducting due diligence over the July
16-17, 2005 weekend. (Brewer Tr. at 26:5-24).
With respect to their knowledge of the fairness of the merger price, Rosenblatt did not inform
Brewer that he was requesting $12 per share from News Corp. until the day of the handshake deal
with Rupert Murdoch; it is unclear when the rest of the board learned this information. (Id. at 122:2-9).
He also did not explain how that requested price was derived. (Id. at 122:10-14). Brewer testified that
the board did not ask, and Mosher could not recall whether any board member sought an explanation.
(Id.; Mosher Tr. at 53:6-9). Moreover, Brewer testified that the board as a whole never conducted any
independent analysis to determine what an appropriate price per share would be. (Brewer Tr. at
122:15-18; see also Mosher Tr. at 49:24-50:4 (testifying that he himself did not perform any
independent analysis)). Additionally, Mosher confirmed that the board had not directed the
management team to go get the specific valuation work done prior to the acquisition. (Mosher Tr. at
52:4-18). Finally, Brewer has testified that he could not even recall whether any of the directors had
asked any questions about [Montgomery and TWPs] fairness presentations. (Brewer Tr. at 104:2-
10). Though Brewers failure to recall what everyone had specifically asked back in 2005 would be
understandable, a reasonable jury might draw a negative inference from his representation that he could
not recall any discussion as to the investment banks analyses.

Construing all of the above testimony in the light most favorable to Plaintiff as we must on
Defendants motion for summary judgment, we conclude that it is at least triable as to whether the
remaining six board members consciously disregarded their duties and acted in bad faith. There is
evidence in the record suggesting that no one on the board asked any questions about the requested per
share price, the treatment of the competing bidders, the fairness valuations, or the relative likelihood of
a Viacom bid. A reasonable jury could infer that this evidence demonstrates the other six directors
consciously abdicated their roles as corporate fiduciaries required by law to do their utmost to maximize
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shareholder wealth. Of course, we remain mindful that even gross negligence, premised on simple
inattention or failure to be informed of all facts material to the decision[,] violates only the duty of care
and is not actionable as bad faith. Disney, 906 A.2d at 66. Nevertheless, we think a reasonable jury
could find that the other six directors exceeded the bounds of negligent conduct, willfully proceeded to
their decisions knowing they lacked material information, Gesoff, 902 A.2d at 1165, and thereby
consciously disregarded their fiduciary duties. Disney, 906 A.2d at 66 (Cases have arisen where
corporate directors have no conflicting self-interest in a decision, yet engage in misconduct that is more
culpable than simple inattention or failure to be informed of all facts material to the decision. To protect
the interests of the corporation and its shareholders, fiduciary conduct of this kind, which does not
involve disloyalty (as traditionally defined) but is qualitatively more culpable than gross negligence,
should be proscribed.).
c. The MySpace Option
The MySpace, Inc. Stockholders Agreement (MSA) (J.A., Ex. 2), executed on February 11,
2005, was the culmination of negotiations between MySpace, Inc., MySpace Ventures, LLC, Redpoint
Ventures I, L.P., Redpoint Associates I, LLC, Redpoint Ventures II, L.P., Redpoint Associates II, LLC,
Redpoint Technology Partners Q-1, L.P., and/or Redpoint Technology Partners A-1, L.P. (collectively,
the Redpoint Entities). (Brewer Decl. 6; Rosenblatt Decl. 7). Under the agreement, the Redpoint
Entities purchased a 47 percent minority interest in Intermix, and at the same time, the 53 percent
majority stockholders acquired an option (the MySpace Option) to buy back that minority interest if a
third party made a bona fide . . . offer for 50 percent or more of Intermixs shares:
So long as Intermix (together with its Affiliates) directly or indirectly holds at least 1,000,000
shares of Common Stock . . . , in the event Intermix receives a bona fide third-party offer with
respect to a Change of Control of Intermix . . . within the twelve (12) month-period commencing
on the date hereof . . . , then, following receipt of such offer (and provided discussions relating
to such offer are then-ongoing), Intermix shall have the right to purchase . . . up to 100% of
Common Stock and Common Stock Equivalents of the Corporation held by the other
Stockholders, whether now owned or hereafter acquired . . . .
(J.A., Ex. 2 7.1.1; Brewer Decl. 6-7; Rosenblatt 7-8). Section 7.1.5 of the MSA precluded the
majority from exercising the MySpace Option if a third party made a direct bid for MySpace of over
$125 million: Intermix may not exercise the Purchase Option if (a) the Corporation [MySpace, Inc.]
has previously received a bona fide third party offer to purchase the Corporations capital stock or
assets for a purchase price greater than $125.0 million and discussions regarding such acquisition
between the Corporation and such third party are ongoing . . . . (J.A., Ex. 2 7.1.5). The two
provisions are mutually exclusive: (1) a bid for 50 percent or more of Intermixs shares precludes any
subsequent direct bid for MySpace (while discussions for the Intermix control share are ongoing); and
(2) any direct bid for MySpace precludes any subsequent bid for 50 percent or more of Intermixs
shares (while discussions for the acquisition of MySpace are ongoing).
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Defendants contend their conduct was not in bad faith in light of the risk of a direct third-party
bid for MySpace, which would have precluded the 53 percent Intermix majority interest from exercising
the MySpace Option under the MSA to purchase the minority 47 percent interest. Accordingly, we
must consider whether the purported risk of a direct bid for MySpace, which would have frozen the
MySpace Option, dictates a conclusion that Defendants did not consciously disregard their duties as a
matter of law.
Defendants claim that the risk of such a freezing bid was real and that any delay in
consummating the merger with News Corp. threatened the loss of an opportunity to capture the value of
Intermixs crown jewel, MySpace, for their shareholders. (Joint Br. 11-15). At the July 15th board
meeting at 2 p.m., the directors discussed the status of conversations with News Corp. and Viacom and
considered the possibility that if either company viewed itself as unlikely to prevail in acquiring
[Intermix], it might submit an offer to acquire only MySpace in order to potentially suspend, at least
temporarily, [Intermixs] ability to exercise the MySpace option, thereby potentially jeopardizing
economically attractive transactions involving the Company including the potential News Corp.
transaction then under consideration. (Rosenblatt Decl. 31; J.A., Ex. 12). Rosenblatt and the other
directors have declared that they believed that the deadline provided by News Corp. by which to
execute the Merger Agreement was firm and that News Corp. was prepared to walk away if the deal was
not consummated by the opening of the stock market on July 18, 2005. (Rosenblatt Decl. 46).
To substantiate their purported concern over a potential freeze-out bid, Defendants suggest that a
bona fide third-party offer can only mean a fully executed agreement, as in the written merger
agreement executed on July 18, 2005. (Joint Br. 93-97). We reject Defendants assertion that this
proposed construction of bona fide third-party offer is compelled as a matter of law. Under Sections
7.1.1 and 7.1.5 of the MSA, a subsequent bid for MySpace or the Intermix control share, respectively,
will only be precluded if discussions regarding the bona fide third-party offer are ongoing. This
language in the agreement suggests that the term bona fide offer does not contemplate the final
execution of an agreement, at which point discussions would no longer be ongoing.
Even though we reject Defendants construction of the phrase bona fide third-party offer in the
MSA, we also reject Plaintiffs request that we rule as a matter of law on the purely legal question of
what constitutes a bona fide third-party offer under Sections 7.1.1 and 7.1.5 of the MSA. In our view,
Plaintiffs request misses the point. We are not here to construe the terms of the MSA, as such. Rather,
the question is whether there is a triable issue that Defendants, reasonably fearing being frozen out of
the MySpace Option, tilted the field in News Corp.s favor for the permissible purpose of maximizing
shareholder wealth, or whether Defendants had no such reasonable fear, but merely used the MySpace
Option as a rationalization for a selfish or idiosyncratic desire to favor News Corp. unrelated to securing
top dollar for the shareholders. We think the evidence fairly presents such triable issues as to
Defendants purported conscious disregard of their duties. In any event, our post hoc legal
determination cannot dictate the result of the question of the propriety of Defendants conduct that
indisputably occurred without the benefit of our construction of the MSA.
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Accordingly, we hereby DENY Plaintiffs Motion for Summary Judgment on this question of
contractual interpretation.
In light of all the reasons set forth above, we hereby DENY Defendants Motion for Summary
Judgment on the fiduciary duty claim with respect to Plaintiffs bad faith theory in the Revlon auction
context.
In the alternative, Defendants move for summary judgment on the second theory supporting the
breach of fiduciary duty claim, arguing that five of the eight Defendants (a majority) were not self-
interested or controlled by someone who was. The Delaware Supreme Court summarized the governing
law in Cinerama, Inc. v. Technicolor, Inc.:

A board of which a majority of directors is interested is not a neutral decision-making body.
See, e.g., Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34, 42 n.
9 (1994) ([w]here actual self-interest is present and affects a majority of the directors approving
a transaction, a court will apply [the entire fairness test]); Aronson v. Lewis, Del.Supr., 473
A.2d 805, 812 (1984). A majority of disinterested directors is not independent if that majority
was dominated by an interested director. See Heineman v. Datapoint Corp., Del.Supr., 611 A.2d
950, 955 (1992). Similarly, the manipulation of the disinterested majority by an interested
director vitiates the majoritys ability to act as a neutral decision-making body. See Mills
Acquisition Co. v. Macmillan, Inc., Del.Supr., 559 A.2d 1261, 1279 (1989).
663 A.2d 1156, 1170 n.25 (Del. 1995). Accordingly, Plaintiff must make two showings. First, the
plaintiff must proffer evidence showing that those members of the board had a material self-interest in
the challenged transaction[,] and this must be evidence of a substantial self-interest suggesting
disloyalty, such as evidence of entrenchment motives, vote selling, or fraud. Goodwin, 1999 WL
64265, at *25 (citing Cede II, 634 A.2d at 362-63; Cinerama, 663 A.2d at 1169). Second, the plaintiff
must show that those materially self-interested members either: a) constituted a majority of the board; b)
controlled and dominated the board as a whole; or c) i) failed to disclose their interests in the transaction
to the board; ii) and a reasonable board member would have regarded the existence of their material
interests as a significant fact in the evaluation of the proposed transaction. Id. (citing Cinerama, 663
A.2d at 1168).
There were eight directors on the Intermix board at the time of the merger: Rosenblatt, Sheehan,
Mosher, Quandt, Brewer, Carlick, Moreau, and Woodward. Rosenblatt was conflicted due to his
interest in becoming the head of Fox Interactive Media. He aimed to receiv[e] a personal benefit from
a transaction not received by the shareholders generally. Cede II, 634 A.2d at 362; McGowan, 2002
WL 77712, at *2 (deeming contracts for post-merger employment in acquiring entity a disabling
conflict of interest); Goodwin, 1999 WL 64265, at *25 (finding a triable issue of fact regarding
whether [directors] expectations constituted a material interest in the merger not shared by the
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stockholders but granting summary judgment on lack of evidence that any material interest infected
deliberative process); Oliver, 2006 WL 1064169, at *19 ([A]s a consequence of their personal interest
in the negotiation of the Accord Agreement, in light of its potential impact on their rights under their
employment agreements, they also were self-interested.). Rosenblatt did not simply seek to retain his
current position, but sought to secure a coveted position at the top of a division at News Corp.
Accordingly, read in conjunction with other admissible evidence we have cited previously, this self-
interested motivation is suggestive of disloyalty.
Defendants argue that Rosenblatts interests were coterminous with the shareholders interests
because every additional dollar increase in the price paid per share would yield roughly an additional $2
million for Rosenblatt, a significant shareholder in Intermix. (Rosenblatt 51; Joint Statement of
Uncontroverted Facts D89). This argument, however, misses the point that Rosenblatt arguably stood
to gain more money and prestige by becoming the grand Puba of Fox Interactive Media. If Chris
DeWolfe, the former CEO of MySpace, stood to make a $30 million salary over two years if retained by
the merged entity (the Parties appear to agree on this point) (see Joint Br. 37 n.42, 41-42), a reasonable
jury could infer that Rosenblatt, as head of Fox Interactive Media, would have been offered an even
higher salary. As such, a per share price of well above $20 would be needed to offset Rosenblatts
conflicting interest in a $30 million (or higher) salary. (Id. at 41-42). Defendants only reiterate that
Rosenblatt stood to gain a greater benefit from each incremental increase in the per share price.
It is undisputed that no director instructed any other director on how to vote or was influenced
by how other board members voted. (Joint Statement of Uncontroverted Facts D95-96; Brewer Decl.
36; Carlick Decl. 38; Mosher Decl. 34; Moreau Decl. 36; Quandt Decl. 42; Rosenblatt Decl.
49; Sheehan Decl. 44; Woodward Decl. 34). The real question is whether each board member acted
independently and free of any manipulation by the interested members, principally Rosenblatt, i.e.
whether [e]ach Board Member exercised his independent judgment and consideration in deciding how
to vote. (Joint Statement of Uncontroverted Facts D97). In virtually identical declarations, the
directors claim they were not so manipulated. (Brewer Decl. 36; Carlick Decl. 38; Mosher Decl.
34; Moreau Decl. 36; Quandt Decl. 42; Rosenblatt Decl. 49; Sheehan Decl. 44; Woodward Decl.
34). On the other hand, Plaintiff argues that Rosenblatt deliberately misled the other board members
regarding the viability of the Viacom bid, steering them into approving the merger without waiting even
a couple more days to see if Viacom would top News Corp.s offer. (Joint Br. 26-27). Plaintiff cites an
email Mosher sent to Rosenblatt after one of the July 15th meetings, stating: We need to honor our
commitment to Fox and get this done. Viacom sounds like a pipedream. Fox sounds dead serious and
not screwing around. (J.A., Ex. 182). When asked about this email during his deposition, Mosher
testified that Rosenblatts periodic updates to the board had led him to believe [t]hat Viacom was less
urgent about the deal and hadnt taken the time or done the same level of work as Fox Network.
(Mosher Tr. at 25:24-26:1, 26:5-13). He also noted that: The discussion around Viacom that the
management team had led indicated that Viacom did not seem as willing to come to the table with an
offer for the company. (Id. at 25:1-4). This evidence is sufficient to raise an inference that
Rosenblatts presentation to the board may have been misleading as to Viacoms seriousness.
According to Moshers description of the board meetings, from the management team estimation
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15
Van Toffler of MTV emailed Rosenblatt on July 17 to note that his people were in the office
working around the clock so [Viacom could] put forth a number to [him that] week. (J.A., Ex. 202).
On the same day, Jason Hirschhorn of Viacom informed Chris DeWolfe that he has had a team of 20+
people . . . working for 72 hours straight on a significant bid[.] (Id., Ex. 200).
standpoint [sic], they were not inclined to make an offer for the company on the time line that we were
looking at. (Id. at 25:18-21). Viewing the evidence as a whole in the light most favorable to Plaintiff,
including the contrary evidence that Viacom was indeed very seriously interested in bidding on
Intermix,
15
there are at least triable issues of fact as to whether Mosher was manipulated by a self-
interested director, Rosenblatt.
Moreover, based on Moshers description of the content of Rosenblatts presentations to the
board, the issue of manipulation is triable with respect to all of the other board members. Accordingly,
as a reasonable jury could potentially conclude that a majority of the directors was interested or
manipulated by someone who was, we hereby DENY Defendants Motion for Summary Judgment on
this second basis for Plaintiffs claim of breach of the duty of loyalty.
III. Count II: Violation of Section 14(a) of the Securities and Exchange Act of 1934 and SEC
Rule 14a-9
On August 25, 2005, Intermix issued a proxy statement (Proxy) concerning the News Corp.
merger. (Rosenblatt Decl. 53). On September 30, 2005, a majority of Intermix shareholders voted to
adopt the Merger Agreement. (Id. 55). Plaintiff alleges that there were five material omissions in the
Proxy. (J.A., Ex. 4). To succeed on a claim under 14(a) and Rule 14a-9, a plaintiff must establish
that (1) a proxy statement contained a material misrepresentation or omission which (2) caused the
plaintiff injury and (3) that the proxy solicitation itself, rather than the particular defect in the
solicitation materials, was an essential link in the accomplishment of the transaction. New York City
Employees Ret. Sys. v. Jobs, 593 F.3d 1018, 1022 (9th Cir. 2010) (citation and internal quotation marks
omitted); 15 U.S.C. 78j(b); 17 C.F.R. 240.14a-9(a) (No solicitation subject to this regulation shall
be made by means of any proxy statement, form of proxy, notice of meeting or other communication,
written or oral, containing any statement which, at the time and in the light of the circumstances under
which it is made, is false or misleading with respect to any material fact, or which omits to state any
material fact necessary in order to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the solicitation of a proxy for the
same meeting or subject matter which has become false or misleading.).
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1. MySpaces Then-Current Revenue and Profits
Defendants first argue that Plaintiff failed to identify the alleged material omission of
MySpaces then-current revenue and profits as a basis for this Section 14(a) claim in its responses to
their interrogatories, thereby waiving this ground for his Section 14(a) claim. (Joint Br. 45 n.49). We
disagree. First, the CSAC clearly alleges that Defendants omitted the current revenues and profits
being generated by MySpace. (CSAC 130-33). Second, our July 14, 2008 Order clearly identified
this purported material omission as one of the five surviving bases for the Section 14(a) claim. (Dkt.
No. 110, at 5). Third, whether Plaintiff actually identified this alleged material omission in his Revised
Objections and Responses to Defendant VP Alpha Holdings IV, L.L.C.s First Set of Interrogatories is
unclear. (J.A., Ex. 28). Most of the response to Interrogatory No. 1 focused on the conspicuous
absence of internal projections for MySpaces prospective growth, not the companys then-current
revenue and profits. (Id. at 513-15). Plaintiff did not use the phrase current revenue and profits, but
rather, stated the following:
[S]hareholders . . . were never made aware of MySpaces true value or its true growth potential,
and had no way of comparing the information that was publicly available to managements
projections and growth assumptions. Thus, even though certain metrics that were used to track
MySpaces growth were available from some hard to find public sources (and were not made
available by the Company directly to its shareholders), shareholders and other members of the
investing public could not compare this data to the Companys internal data to determine if the
Investment Banks fairness opinions accurately reflected the explosive growth of MySpace.
(Id. at 515 (emphasis added)). Although somewhat opaque, we think the highlighted text above can
fairly be read to embrace internal data on MySpaces then-current financial position. Fourth, during the
Parties Local Rule 7-3 meet and confer, according to Defendants, Plaintiff did not identify this alleged
omission. (Joint Br. 45 n.49). Sheehan and Carlicks counsel has also declared that Plaintiff was asked
at the meeting whether they were pursuing any other misstatements or omissions, but he does not
declare that Plaintiffs counsel answered the question in the negative, thereby waiving this basis. (J.A.,
Ex. 30, Knaster Decl. 8-9). Fifth, Plaintiffs counsel also circulated a letter outlining the issues
discussed at the meet and confer, which did not list this purported material omission. (J.A., Ex. 35).
However, since this document purports to be an outline of the summary judgment arguments
Defendants identified, we decline to conclude that this document contemplated a waiver of the current
revenue and profits omission, which was so clearly identified in the CSAC (if not so clearly in the
interrogatory responses). Accordingly, as this argument was not waived, and Defendants have not made
any threshold showing entitling them to summary judgment on this basis, we DENY the Motion for
Summary Judgment as to this alleged material omission under Count II.
2. Intermix Managements 2005-2009 Financial Projections
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Plaintiff also alleges that Defendants failed to disclose Intermix managements internal financial
projections, and that this information was material. The Supreme Court set forth the materiality
standard for Section 14(a) claims in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976): An
omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider
it important in deciding how to vote. Id. at 449. The Court added that there must be a substantial
likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as
having significantly altered the total mix of information made available. Id.
While federal courts generally agree that financial projections, forward-looking statements,
puffing, or other soft financial information need not be disclosed, this case is distinguishable. See,
e.g., Walker v. Action Indus., Inc., 802 F.2d 703, 707-08 (4th Cir. 1986); Flynn v. Bass Bros. Enters.,
Inc., 744 F.2d 978, 985 (3d Cir. 1984) (noting SEC policy favoring nondisclosure of financial
projections due to their unreliability and potential to mislead voting stockholders). In this case, the
Proxy disclosed Montgomery and TWPs fairness analyses but did not disclose the underlying
2005-2009 Intermix management projections used in formulating those opinions. In Zemel Family
Trust v. Philips International Realty Corp., No. 00 CIV. 7438 MGC, 2000 WL 1772608 (S.D.N.Y.
Nov. 30, 2000), the court honed in on this distinction:
A company has no duty to include speculative financial predictions in a proxy. However, if a
Proxy discloses valuation information, it must be complete and accurate. Both the proxy and the
[financial valuation] opinion address the value of the Third Avenue property and so [the
defendant] has a duty to fully and accurately disclose information related to the valuation.
Id. at *6.
Here, the total mix of information before the shareholders did not include any of the projected
growth rates. See SEC v. Mozilo, No. CV 09-3994-JFW, 2009 WL 3807124, at *10 (C.D. Cal. Nov. 3,
2009) ([T]he total mix of information only includes information that is readily or reasonably
available to an investor.); Koppel v. 4987 Corp., 167 F.3d 125, 132 (2d Cir. 1999) (same). A
reasonable shareholder would have wanted to independently evaluate managements internal financial
projections to see if the company was being fairly valued. [T]here is a substantial likelihood that a
reasonable shareholder would consider it important in making his decision. TSC Indus., Inc., 426 U.S.
at 449. As we previously noted in our July 14, 2008 Order, the Ninth Circuit has observed that:
investors are concerned, perhaps above all else, with the future cash flows of the companies in which
they invest. Surely, the average investors interest would be piqued by a companys internal projections
. . . . United States v. Smith, 155 F.3d 1051, 1064 n.20 (9th Cir. 1998). Delaware courts concur. In a
case that also considered a discounted cash flow (DCF) analysis in a proxy statement, the same
technique utilized by Montgomery and TWP, the court held that the underlying projections informing a
DCF analysis completed for a fairness opinion were clearly material. See In re Netsmart Techs.
Sholders Litig., 924 A.2d 171, 203 (Del. Ch. 2007) ([P]rojections of this sort are probably among the
most highly-prized disclosures by investors. Investors can come up with their own estimates of
discount rates or . . . market multiples. What they cannot hope to do is replicate managements inside
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Even though this decision concerned a state law duty of disclosure claim, the materiality
standard is the same as set forth in TSC Industries. In re Netsmart Techs., 924 A.2d at 199-200.
view of the companys prospects.).
16
materiality of the omission of Intermixs internal financial projections.
Accordingly, Defendants Motion for Summary Judgment is DENIED as to this alleged material
omission.

3. Outstanding Derivative Lawsuits
Plaintiff also argues that Defendants failed to disclose one pending derivative lawsuit, LeBoyer
v. Greenspan, et al., No. CV 03-5603-GHK (JTLx), and the fact that shareholder derivative standing
would be extinguished as to both LeBoyer and Greenspan v. Salzman, the two derivative lawsuits
pending at the time the Proxy was issued. The Proxy merely stated: Following the effective time of the
merger, Fox Interactive Media will use commercially reasonable efforts to take such actions as are
within its control so as to obtain the dismissal of Greenspan v. Salzman, et al., LASC No. BC328558;
provided that it will not be required to make any payments to any of the plaintiffs (or their counsel) in
such litigation to do so. (J.A., Ex. 4, at 332).
Defendants concede that they did not disclose the existence of the pending LeBoyer action.
(Joint Br. 56 n.67). However, Defendants maintain that this lawsuit had been disclosed in Intermixs
prior public filings (see J.A., Exs. 47 (Form 10-Q), 3 (Form 10-K)), which they argue were incorporated
by reference in the Proxy. A document may be incorporated into proxy materials by reference, at the
least, in circumstances where no reasonable shareholder can be misled. Federated Bond Fund v.
Shopko Stores, Inc., No. 05 CV 9923(RO), 2006 WL 3378696, at *2 (S.D.N.Y. Nov. 17, 2006) (quoting
Kramer v. Time Warner Inc., 937 F.2d 767, 777 (2d Cir. 1991)). We do not think this is a case where
no reasonable shareholder can be misled. Id. Moreover, [c]orporate documents that have not been
distributed to the shareholders entitled to vote on the proposal should rarely be considered part of the
total mix of information reasonably available to those shareholders. United Paperworkers Intl Union
v. Intl Paper Co., 985 F.2d 1190, 1199-1200 (2d Cir. 1993) (rejecting notion that public reports and
10-K Report submitted to SEC were part of total mix). Accordingly, whether the undisclosed
derivative lawsuit constituted material information which was not part of the total mix of information
is at the very least a triable question.
With respect to the disclosed Greenspan v. Salzman action, Defendants argue they had no
obligation to further announce the extinguishment of derivative standing. In Delaware, with only two
exceptions not applicable here, a cash-out merger extinguishes the standing of shareholder plaintiffs to
maintain a derivative suit. Feldman v. Cutaia, 951 A.2d 727, 731 (Del. 2008) (citing Lewis v.
Anderson, 477 A.2d 1040, 1049 (Del. 1984)). This is so because a plaintiff must be a stockholder at the
time of the alleged wrongdoing and throughout the litigation. Lewis, 477 A.2d at 1046. The failure to
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disclose the potential extinguishment of a derivative lawsuit is material. See Lichtenberg v. Besicorp
Group Inc., 43 F. Supp. 2d 376, 387 (S.D.N.Y. 1999). In Lichtenberg, the court noted that the proxy
stated that the shareholder plaintiffs may not be able to maintain their derivative suits following the
merger. Id. The court found the word may to be affirmatively misleading, because it implie[d] a
possibility that the plaintiffs will be able to continue the actions as shareholder derivative suits, when
that was in fact foreclosed as a matter of New York law. Id. Here too, the disclosure above is arguably
misleading as well, as it did not affirmatively disclose that the Greenspan v. Salzman plaintiffs
derivative standing would be extinguished under Delaware law. (J.A., Ex. 4, at 332). Instead, it only
stated that Fox Interactive Media would seek the dismissal of the action and would do so only if it was
not required to pay the plaintiffs or their counsel. (Id.). Accordingly, it is at least triable whether the
above language was misleading as to the extinguishment of derivative standing, which was material
information.
Accordingly, we also hereby DENY Defendants Motion for Summary Judgment as to this
alleged material omission.

4. Alleged Material Omissions Concerning Viacom and the MySpace Option
Plaintiff has also argued that the directors made two other material omissions concerning: (1)
Viacoms ability to make an offer for Intermix or its ability to conduct due diligence; and (2) the
likelihood of a direct bid for MySpace, which would freeze the MySpace Option. This subpart of the
Section 14(a) claim essentially seeks to penalize Defendants for their failure to disclose that Viacom
was allegedly stonewalled or otherwise prevented from making a bid during the auction. It also seeks to
hold Defendants liable for purportedly exaggerating the threat of a direct bid for Intermixs crown
jewel, MySpace.
However, these purported material omissions are nothing more than the building blocks of
Plaintiffs fiduciary duty claim. Mandating the disclosure of the above allegations would compel
Defendants to essentially accuse themselves of breaching their fiduciary duties. In Koppel v. 4987
Corp., the court dismissed Rule 14a-9 claims based on its conclusion that these allegations constitute
no more than state law breach of fiduciary duty claims under a thin coat of federal paint. 167 F.3d at
133. The court explained:
We have long recognized that no general cause of action lies under 14(a) to remedy a simple
breach of fiduciary duty. See Field v. Trump, 850 F.2d 938, 947 (2d Cir. 1988) (quoting
Maldonado v. Flynn, 597 F.2d 789, 796 (2d Cir. 1979)), cert. denied, 489 U.S. 1012, 109 S.Ct.
1122, 103 L.Ed.2d 185 (1989); cf. Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477, 97 S.Ct.
1292, 51 L.Ed.2d 480 (1977) (refusing to construe 10(b) to prohibit instances of corporate
mismanagement . . . in which the essence of the complaint is that shareholders were treated
unfairly by a fiduciary). Although the Supreme Court has explained that explicit, conclusory
statements concerning the wisdom of a proposed action are actionable, see generally Virginia
Bankshares, 501 U.S. 1083, 111 S.Ct. 2749, there is no 14(a) violation for merely failing to
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inform shareholders that a proposed action is not subjectively the most beneficial to an entitys
shareholders: Subjection to liability for misleading others does not raise a duty of
self-accusation; [rather] it enforces a duty to refrain from misleading. Id. at 1098 n. 7, 111
S.Ct. 2749. The securities laws do not effectively require [an issuer] to accuse [it]sel[f] of
breach of fiduciary duty. Id.
Id. at 133-34. The D.C. Circuit has arrived at the same conclusion: Though Santa Fe does not bar a
claim related to a breach of fiduciary duty if there has been a material misrepresentation or omission, a
plaintiff may not bootstrap a claim of breach of fiduciary duty into a federal securities claim by
alleging that directors failed to disclose that breach of fiduciary duty. Kas v. Fin. Gen. Bankshares,
Inc., 796 F.2d 508, 513 (D.C. Cir. 1986) (citations omitted).
In this case, the Proxy unambiguously disclosed Rosenblatts self-interested motivations,
anticipated future employment with News Corp., and the immediate vesting of all his unvested options.
(J.A., Ex. 4, at 272, 310, 312). The Proxy also disclosed that Viacom (Company D) conducted due
diligence and remained interested in making a bid for Intermix, but was not then in a position to make
a proposal [prior to] a [Viacom] board meeting later that week . . . . (Id. at 287, 289). Plaintiff claims
this disclosure was misleadingly incomplete, because it did not mention Rosenblatts alleged evasion of
Viacom executives and the alleged deliberate hampering of Viacoms due diligence efforts. (CSAC
147-48). Plaintiff claims that these omissions left shareholders with the false impression that Viacom
was given a full and fair opportunity to bid for the Company. (Id. 148). Plaintiff also claims that
Defendants misrepresented Viacom and News Corp.s ability to block a competing bid by freezing the
MySpace Option. (CSAC 149-51 (citing J.A., Ex. 4, at 284, 288)). As there is no duty of self-
accusation, these proffered material omissions cannot support a Section 14(a) claim. Indeed, the
allegedly omitted details are not necessarily facts, but rather factual allegations, and unless and until
judgment is granted in Plaintiffs favor, their omission from the Proxy simply could not have been
material. In Brown v. Perrette, No. CIV.A 13531, 1999 WL 342340 (Del. Ch. May 14, 1999), the court
explained this distinction:
Although a flawed bidding process would be a material fact, [the plaintiff] must prevail on the
substantive claim, that the process was flawed, before the alleged flaw becomes material. Once
[the plaintiff] prevails on her Revlon claim, the alleged disclosure claim becomes superfluous
because the defendants breach of duty becomes the wrong for which an appropriate remedy
must be crafted.
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17
Even though Brown analyzes the relationship between a state law fiduciary duty claim and a
state law duty of disclosure claim, brought on the same grounds, the principles articulated are equally
applicable to a Section 14(a) claim premised on the same allegations supporting a breach of fiduciary
duty claim.
18
Notwithstanding our ruling, nothing in the above discussion precludes Plaintiff from
introducing evidence of these omissions in the course of his breach of fiduciary duty claim.
Id. at *10-11
17
; see also Stroud v. Grace, 606 A.2d 75, 84 n.1 (Del. 1992) (We recognize the
long-standing principle that to comport with its fiduciary duty to disclose all relevant material facts, a
board is not required to engage in self-flagellation and draw legal conclusions implicating itself in a
breach of fiduciary duty from surrounding facts and circumstances prior to a formal adjudication of the
matter.) (citation omitted).
Accordingly, since self-flagellation omissions are not material, we hereby GRANT
Defendants Motion for Summary Judgment as to the purported material omissions concerning Viacom
and the MySpace Option.
18
B. Negligence
In Desaigoudar v. Meyercord, 223 F.3d 1020 (9th Cir. 2000), the Ninth Circuit stated that a
Rule 14a-9 plaintiff must demonstrate that the misstatement or omission was made with the requisite
level of culpability . . . . Id. at 1022 (citation omitted). To succeed on a Section 14(a)/Rule 14a-9
claim, a plaintiff need only establish that the defendant was negligent in drafting and reviewing the
proxy statement. Gerstle v. Gamble-Skogmo, Inc., 478 F.2d 1281, 1300-01 (2d Cir. 1973) (holding that
negligence suffices for claim based on misleading proxy statement and that plaintiffs are not required
to establish any evil motive or even reckless disregard of the facts). This holding was reaffirmed in the
oft-cited case of Wilson v. Great American Industries, Inc., 855 F.2d 987 (2d Cir. 1988): Liability can
be imposed for negligently drafting a proxy statement. Id. at 995 (citing Gerstle, 478 F.2d at 1301
n.20). As a matter of law, the preparation of a proxy statement by corporate insiders containing
materially false or misleading statements or omitting a material fact is sufficient to satisfy the Gerstle
negligence standard. Id. Accordingly, a director may be found negligent under Section 14(a) for a
failure to notice material omissions upon reading a proxy statement. See, e.g., Parsons v. Jefferson-
Pilot Corp., 789 F. Supp. 697, 703 (M.D.N.C. 1992) (Mr. Eagle [a senior in-house lawyer] is not the
only negligent party in this action. Each of the directors who reviewed the proxy statement is equally as
negligent for failing to notice the use of the word restricted ten times in the document.).
Here, each of the Defendants has declared that he was involved in the process of preparing,
reviewing, and disseminating the Proxy Statement to Intermix shareholders. (Sheehan Decl. 53
(internal citation omitted); Carlick Decl. 46; Brewer Decl. 39; Mosher Decl. 37; Moreau Decl.
39; Quandt Decl. 45; Rosenblatt Decl. 53; Woodward Decl. 37). Construing this sworn statement
in the light most favorable to Plaintiff, we read it to mean each director personally reviewed the Proxy
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before it was disseminated to the Intermix shareholders. Since we have denied summary judgment with
respect to three of the proffered material omissions in the Proxy, and Defendants have admitted to
participating in the process of preparing, reviewing, and disseminating that Proxy, we must also
DENY summary judgment with respect to the element of negligence. If Plaintiff can persuade a jury as
to both materiality and Defendants participation in the preparation and/or review of the Proxy at trial,
then a finding of negligence will flow from those findings.
C. Damages
1. Benefit-of-the-Bargain Damages
This theory of damages is wholly inapposite to this case. A request for benefit-of-the-bargain
damages seeks the value that was represented as coming to the shareholder under a particular
transaction, such as a merger. In re Real Estate Assocs. Ltd. Pship Litig., 223 F. Supp. 2d 1142, 1152
(C.D. Cal. 2002). [B]enefit-of-the-bargain damages are available in the limited instance where a
misrepresentation is made in the proxy solicitations as to the consideration to be forthcoming upon an
intended merger. Id. (citation omitted). As the Ninth Circuit has stated, [t]he benefit-of-the-bargain
measure of damages allows a plaintiff to recover the difference between what the plaintiff expected he
would receive . . . and the amount [the plaintiff] actually received . . . . DCD Programs, Ltd. v.
Leighton, 90 F.3d 1442, 1449 (9th Cir. 1996) (quoting Cunha v. Ward Foods, Inc., 804 F.2d 1418, 1426
(9th Cir. 1986) (emphasis in original)). Here, the Proxy made no misrepresentation as to the per share
price offered to and ultimately received by the class members. The Proxy stated the class members
would receive $12 cash for each common share, and it is undisputed that they received $12 cash for
each common share. (J.A., Ex. 4, at 319; Joint Statement of Uncontroverted Facts D128). Accordingly,
this damages theory is not viable. We GRANT summary judgment with respect to this damages theory.

2. Out-of-Pocket Losses
a. Legal Framework
Out-of-pocket losses are the standard measure of damages for Rule 10b-5 and Section 14(a)
claims. In re DaimlerChrysler AG Secs. Litig., 294 F. Supp. 2d 616, 626 (D. Del. 2003) (citing Tse v.
Ventana Med. Sys., Inc., 123 F. Supp. 2d 213, 222 (D. Del. 2000) (Tse II)). Out-of-pocket losses
constitute the difference between the fair value of all that the seller received and the fair value of what
he would have received had there been no fraudulent conduct. Tse II, 123 F. Supp. 2d at 222 (quoting
Affiliated Ute Citizens of Utah v. U.S., 406 U.S. 128, 155 (1972)) (quotation marks omitted). The Ninth
Circuit concurs: The out-of-pocket rule fixes recoverable damages as the difference between the
purchase price and the value of the stock at the date of purchase. Wool v. Tandem Computers Inc.,
818 F.2d 1433, 1437 (9th Cir. 1987), impliedly overruled in part on other grounds by Hollinger v. Titan
Capital Corp., 914 F.2d 1564, 1577-78 (9th Cir. 1990) (en banc) (citation omitted). The guiding
philosophy of the out-of-pocket theory of damages . . . is to award not what the plaintiff might have
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gained, but what he has lost by being deceived into the purchase. Id. at 1437 n.2 (citation and internal
quotation marks omitted). Since this theory of damages is premised on an intrinsic valuation of the
company as it existed at the time of the merger, Plaintiff has produced expert witness testimony
consisting of two different financial valuations of Intermix/MySpace. Defendants have moved to
exclude that testimony as inadmissible.
b. Defendants Motion to Exclude; Plaintiffs Motions to Strike
Defendants move to exclude Plaintiffs proffered expert testimony by Dr. G. William Kennedy
as inadmissible under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Plaintiff
has moved to strike both this Motion to Exclude and Defendants Motion for Summary Judgment,
arguing that this Daubert challenge was not included in the joint brief on the Cross-Motions for
Summary Judgment and therefore violates our Order Re: Summary Judgment Motions. (Dkt. No. 123,
Oct. 30, 2008). We reject this argument. First, Defendants included virtually the same arguments
attacking Dr. Kennedys testimony in the Joint Brief. (Mot. 77-80). Second, the Motion to Exclude is a
challenge to the admissibility of evidence crucial to one of Plaintiffs damages theories. As we may
only consider admissible evidence in ruling on the Parties Cross-Motions, nothing in the Order Re:
Summary Judgment Motions precludes a party from filing a separate motion to exclude certain evidence
from the Courts consideration. Third, it is common for litigants to move for the exclusion of certain
evidence at the summary judgment stage. See, e.g., In re Hanford Nuclear Reservation Litig., 292 F.3d
1124, 1131 (9th Cir. 2002) (Defendants linked their summary judgment motion to dozens of in limine
motions challenging the admissibility of plaintiffs expert witnesses, commonly known as Daubert
motions.) (citation omitted); OHanlon v. Matrixx Initiatives, No. CV 04-10391-AHM (JTLx), 2007
WL 2446496, at *1, 4 (C.D. Cal. Jan. 3, 2007) (considering motions in limine concurrently with motion
for summary judgment). Accordingly, we hereby DENY Plaintiffs Motions to Strike the Motion to
Exclude and the Motion for Summary Judgment.
We now consider the merits of the Motion to Exclude. Defendants attack the reliability of Dr.
Kennedys application of his chosen methodologies for estimating the value of MySpace: (1) discounted
cash flow (DCF) analysis; and (2) comparable public company analysis. Federal Rule of Evidence
702 states:
If scientific, technical, or other specialized knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill,
experience, training, or education, may testify thereto in the form of an opinion or otherwise, if
(1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of
reliable principles and methods, and (3) the witness has applied the principles and methods
reliably to the facts of the case.
In Daubert, the Supreme Court construed Rule 702 to require district courts to ensur[e] that an experts
testimony both rests on a reliable foundation and is relevant to the task at hand. 509 U.S. at 597. The
Court noted that [p]ertinent evidence based on scientifically valid principles will satisfy those
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demands but cautioned that [t]he focus . . . must be solely on principles and methodology, not on the
conclusions that they generate. Id.; id. at 595. To assist courts in assessing whether the proffered
testimony is scientifically valid, the Supreme Court set forth a non-exhaustive list of factors, including:
whether the theory or technique employed by the expert is generally accepted in the scientific
community; whether it's been subjected to peer review and publication; whether it can be and has been
tested; and whether the known or potential rate of error is acceptable. Daubert v. Merrell Dow
Pharms., Inc., 43 F.3d 1311, 1316 (9th Cir. 1995) (Daubert II) (citing Daubert, 509 U.S. at 593-94).
The gatekeeping obligation Daubert requires us to fulfill applies not only to testimony based
on scientific knowledge, but also to testimony based on technical and other specialized
knowledge. Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999) (quoting Fed. R. Evid.
702). Because there are areas of expertise, such as the social sciences in which the research, theories
and opinions cannot have the exactness of hard science methodologies, trial judges are given broad
discretion to determine whether Dauberts specific factors are, or are not, reasonable measures of
reliability in a particular case. United States v. Simmons, 470 F.3d 1115, 1123 (5th Cir. 2006) (citing
Kumho, 526 U.S. at 153) (internal citations and quotation marks omitted). Courts have stated that [i]n
such instances, other indicia of reliability are considered under Daubert, including professional
experience, education, training, and observations. Id. Though perhaps not to the same degree as
psychology or social psychology, financial valuation is not an exact scientific methodology.
Estimations, predictions, and inferences based on professional judgment and experience are key
ingredients in any valuation. In a variety of contexts, the circuit courts have noted that economic
valuation is less than an exact science. See, e.g., In re Arnold & Baker Farms, 85 F.3d 1415, 1421
(9th Cir. 1996) (Experience has taught us that determining the value of real property at any given time
is not an exact science. Because each parcel of real property is unique, the precise value of land is
difficult, if not impossible, to determine until it is actually sold.); Metlyn Realty Corp. v. Esmark, Inc.,
763 F.2d 826, 830, 835 (7th Cir. 1985) (noting that [t]he process of valuation is inexact and that DCF
analyses are highly sensitive to assumptions about the firms costs and rate of growth, and about the
discount rate).

With respect to the DCF analysis, the principal difference from Montgomery and TWPs DCF
fairness analyses is Dr. Kennedys MySpace growth rate projections for 2007-2008 and 2008-2009.
(Baron Decl., Ex. 3, Expert Report of Dr. G. William Kennedy [Kennedy Report], May 20, 2009).
Intermix management projected the following revenue growth rates for the company: 107 percent for
2005-2006; 67 percent for 2006-2007; 20 percent for 2007-2008; and 15 percent for 2008-2009. (J.A.,
Ex. 242). Montgomery used these projections for its analysis without any modification. (Baron Decl.,
Ex. 3, at 39). TWPs projections differed slightly from managements projections: 107 percent for
2005-2006; 67 percent for 2006-2007; 21 percent for 2007-2008; and 10 percent for 2008-2009. (Id.).
Kennedy adopted managements growth rate projections for 2005-2006 and 2006-2007, derived a
deceleration rate of 62.06 percent from those figures, and then used that same deceleration rate to
calculate different revenue growth rates for 2007-2008 and 2008-2009, 41.36 percent and 25.67 percent,
respectively. (Id. at 39-40). Based on these new figures, Kennedy calculated new Earnings Before
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Interest, Taxes, Depreciation and Amortization (EBITDA) figures for 2008 and 2009 for MySpace.
(Id. at 40). Finally, [u]sing a discount rate of 19% and a terminal EBITDA multiple of 18[,] Dr.
Kennedy calculated a value of $962.4 million after subtracting the $69 million option exercise price
from the present value of MySpaces Cash Flows. (Id.). The 19 percent discount rate was chosen
based on the discount rates used in the Montgomery and TWP fairness opinions, which ranged from 17
percent up to 25 percent. (Id. at 41).
Defendants make several arguments against the reliability of this procedure. They argue first
that Dr. Kennedy has insufficiently justified his use of a uniform deceleration rate from 2005 to 2009
and the 18x terminal multiple. (Mot. 9-13). Defendants claim that Dr. Kennedy has offered no coherent
reason for his rejection of managements projections for 2007-2008 and 2008-2009. (Id. at 11). They
note that he has merely declared that Montgomery and TWPs projections were unreasonably low and
not consistent with the very rapid rates of growth currently observed at the time of the Proxy and
expected in the social networking sector at the time. (Id. at 11 (quoting Moriarty Decl., Ex. 7,
Kennedy Supplemental Decl. 6) (emphasis omitted)). Yet, Defendants neglect to mention that Dr.
Kennedy explained his use of higher growth rates for 2007-2008 and 2008-2009 by noting that
MySpace revenues consistently outperformed Intermix managements own projections in each of the
first four months of 2005. (Baron Decl., Ex. 3, Kennedy Report, at 35). This is at least one reasoned
basis for his adjustments to what he viewed as demonstrably conservative forecasts. (Id.). After all,
the entire endeavor is forecasting, not hard science. Projections themselves cannot be tested for
accuracy; they represent hopes rather than the results of scientific analysis. Zenith Elecs. Corp. v.
WH-TV Broad. Corp., 395 F.3d 416, 420 (7th Cir. 2005); see also In re Orchards Village Invs., LLC,
No. 09-30893-rldll, 2010 WL 143706, at *11 (Bankr. D. Or. Jan. 8, 2010) ([P]rojecting future financial
results from the operations of a business is not an exact science.).
Additionally, Defendants argue that: Kennedy provides no theoretical or empirical justification
for applying this incredibly aggressive 18x terminal multiple, except his statement that it is based on
forward EBITDA multiples observed in comparable publicly traded guideline companies referenced in
the comparable public company analysis below. (Mot. 12-13 (quoting Moriarty Decl., Ex. 1, Kennedy
Report, at 15) (quotation marks omitted)). They assert that Dr. Kennedy only relied on the most
profitable of the 14 comparable companies relied upon by Montgomery and TWP, including Google
and Yahoo!, and could not summon a single company that had grown at the rate projected with his
revenue growth rates and terminal value. (Id. at 13 (citing Moriarty Decl., Ex. 1, Kennedy Report, at
25; id., Ex. 6, Kennedy Tr. at 123:4-24)).
While these two challenges may be objections to Kennedys conclusions on his DCF analysis,
they do not render his methodology unreliable. Rather, the deviation from managements projections,
the use of an arguably aggressive terminal multiple, and the alleged selection of the most profitable
guideline companies are proper subjects for cross-examination. Defendants do not take issue with the
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19
Lippe v. Bairnco Corp., 288 B.R. 678, 689 (S.D.N.Y. 2003) (Many authorities recognize that
the most reliable method for determining the value of a business is the discounted cash flow (DCF)
method.) (citations omitted); see also Childrens Broad. Corp. v. The Walt Disney Co., 245 F.3d 1008,
1018 (8th Cir. 2001) (describing DCF analysis as an uncontroversial accounting method).
widely accepted DCF methodology;
19
nor do they attack any input that is identical to those used in the
Montgomery and TWP projections (for instance, the 2005-2006 and 2006-2007 projections or the
discount rate which fell within the same range in the investment banks fairness analyses). Even in light
of Dr. Kennedys less than fully reasoned explanations for his choices, given the inherent element of
judgment in these financial valuation analyses, we cannot say that he failed to identify any reliable
principles and methods or to apply those principles and methods reliably to the facts of [this] case.
FED. R. EVID. 702. A court may admit somewhat questionable testimony if it falls within the range
where experts might reasonably differ, and where the jury must decide among the conflicting views.
S.M. v. J.K., 262 F.3d 914, 921 (9th Cir. 2001) (quoting Kumho, 526 U.S. at 153).
Defendants also argue that there is a fundamental flaw in Dr. Kennedys DCF analysis, since it
allegedly yields an average growth rate into perpetuity above that of the U.S. economy as a whole
(12.74 percent versus a historical average of 6.5 percent). (Mot. 13-16; Cornell Decl. in Supp. of Mot.
to Exclude 5). Arguing that this outcome violates a key tenet of financial valuation, Defendants cite to
Professor Aswath Damodarans treatise, which states: The fact that a stable growth rate is sustained
forever, however, puts strong constraints on how high it can be. Since no firm can grow forever at a
rate higher than the growth rate of the economy in which it operates, the constant growth rate cannot be
greater than the overall growth rate of the economy. (Defs. Request for Judicial Notice [RJN], Ex.
B, ASWATH DAMODARAN, DAMODARAN ON VALUATION: SECURITY ANALYSIS FOR INVESTMENT AND
CORPORATE FINANCE 145 (John Wiley & Sons, Inc. 2d ed. 2006)). We have reviewed Defendants
expert Dr. Bradford Cornells declaration in support of this Motion to Exclude, in which he argues that
Dr. Kennedys use of an 18x EBITDA forward multiple is unreasonable . . . . (Cornell Decl. in Supp.
of Mot. to Exclude 5). To cross-check the outcome of Dr. Kennedys DCF analysis, Dr. Cornell used
three hypothetical scenarios, in which MySpaces revenue growth rate declines by 2 percent, 1 percent,
and 0.5 percent, respectively, each year until it reaches 6.5 percent, the average annual growth rate in
nominal Gross Domestic Product between 1928 and 2008. (Id. 8-10 (citing Defs. RJN, Ex. F,
Bureau of Economic Analysis News Release, July 31, 2009)). Using Dr. Kennedys assumptions and
the Gordon Growth Model (id. 11-13), Dr. Cornell calculated the following total present values as of
January 1, 2010 and implied EBITDA multiples for each scenario: (1) for the 2 percent annual
reduction, $549.13 million and a 4.7x multiple; (2) for the 1 percent annual reduction, $606.18 million
and a 5.2x multiple; and (3) for the 0.5 percent annual reduction (what he calls the most aggressive
scenario), $695.34 million and a 6.0x multiple. (Id. 14-19; see also id., Exs. 5, 6). Applying the 19
percent discount rate used by Dr. Kennedy, Dr. Cornell calculates discounted values as of mid-2005 for
each scenario, including: (1) $251.02 million; (2) $277.10 million; and (3) $317.8 million. (Cornell
Decl. in Supp. of Mot. to Exclude 20). Finally, Dr. Cornell concludes that even assuming an instance
where MySpaces revenues grow at a rate exceeding that of the economy as a whole for fifteen years
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after 2010, i.e., until 2025, Dr. Kennedys implied EBITDA multiple of 18x is three times too high
when compared with even [Dr. Cornells] most aggressive implied EBITDA multiple of 6.0x to give a
reasonable estimate of MySpaces value as of mid-2005. (Id. 21 (emphasis original)).

Though a jury might conclude at trial that Dr. Kennedys selection of an 18x EBITDA multiple
was overzealous, Dr. Cornells calculations do not demonstrate that Dr. Kennedys methodology is
fundamentally unreliable. At base, Dr. Cornells challenge to this DCF analysis constitutes an attack on
Dr. Kennedys projections as to MySpaces annual growth rates and as to how long those growth rates
can be sustained. Since Dr. Cornell is in essence attacking the reasonableness of Dr. Kennedys
projections, the generation of which we have already noted is not an exact science, we conclude that his
arguments do not render Dr. Kennedys methodology fundamentally unreliable and therefore
inadmissible. Dr. Cornell himself has testified that an adjustment in the terminal multiple based on the
experts assessment of the companys growth potential is appropriate. (Baron Decl., Ex. 2 (Cornell Tr. I
at 167:19-168:3)). Additionally, Dr. Cornell rejected the proposition that any time that the implied
perpetual growth rate exceeds the growth of the economy, that the terminal value multiple used would
be unreliable[.] (Id., Ex. 1 (Cornell Tr. II at 21:21-22:1)). He further explained that its just a
question of how much [the implied perpetual growth rate] exceeds [the economy rate,] and there is no
standardized method to determine whether the difference between the two rates is unreasonable. (Id.
at 22:3-24:6; id. at 23:12-25 (Q[:] And then do they use judgment to see whether its reasonable to
them or not reasonable to them? . . . . Is there some written scale as to how much variation there can be
before, in your view, it becomes reasonable or unreasonable; or is that a judgment of the analyst? A[:]
Well, theres not a written scale . . . . And these calculations Dr. Kennedy used struck me as
[unreasonable].)). These statements suggest that Defendants Motion turns on a difference of
professional opinion, not some fatal methodological flaw.
Based on our review of the papers and evidence submitted, if anything is clear, it is that DCF
analysis is, in not insubstantial measure, an inherently subjective and predictive methodology, which
relies in part on the experts judgment and experience. Indeed, neither Party has presented the Court
with any accepted, standardized methodology for deriving the required inputs for DCF analysis.
Accordingly, we are forced to conclude that DCF analysis is sufficiently pliable so that it may
reasonably lead to a wide breadth of plausible conclusions. Dr. Kennedys conclusions and the bases
therefor may ultimately be subject to legitimate attacks on cross-examination, but we perceive no
fundamental unreliability in his analysis that would counsel in favor of outright exclusion. We agree
that our gatekeeper role under Daubert is not intended to supplant the adversary system or the role of
the jury. DSU Med. Corp. v. JMS Co., Ltd., 296 F. Supp. 2d 1140, 1147 (N.D. Cal. 2003) (citation,
quotation marks, and alteration omitted). It is readily apparent that Defendants have thoroughly
researched the case law on DCF methodology, and in all but one of the several cases they cite, the
expert witnesss DCF analysis was considered at trial and then rejected by the court. Compare In re
Iridium Operating, LLC, 373 B.R. 283, 350-52 (Bankr. S.D.N.Y. 2007) (rejecting DCF analyses
following trial); In re Emerging Commcns, Inc. Sholders Litig., No. Civ.A. 16415, 2004 WL 1305745,
at *14-15 (Del. Ch. June 4, 2004) (same); Gray v. Cytokine Pharmasciences, Inc., No. Civ.A. 17451,
2002 WL 853549, at *8 (Del. Ch. Apr. 25, 2002) (same), with Kipperman v. Onex Corp., 411 B.R. 805,
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844-49 (Bankr. N.D. Ga. 2009) (simultaneously deciding summary judgment and granting motion to
exclude an experts testimony as unreliable under Rule 702, where the expert rejected managements
projections and generated his own DCF analysis).

With respect to Dr. Kennedys comparable public company analysis, Defendants argue that he
only used the projected MySpace revenue and EBITDA figures for 2006, ignoring the 2005 numbers
without explanation. (Mot. 17-18 (citing Moriarty Decl., Ex. 1, Kennedy Report, at 24)). They argue
Dr. Kennedys explanation for choosing to disregard the 2005 figures was inadequate ipse dixit. When
asked if 2005 was an aberrant year for MySpace, he replied: No, but it wasnt who the company was
expected to be. (Kennedy Tr. at 129:19-22). Furthermore, Defendants argue that Kennedy cherry-
picked only the most profitable guideline companies referenced in Montgomery and TWPs fairness
analyses, instead of applying an average of the multiples applicable to several companies. (Mot. 18). In
support of this latter contention, they cite another treatise, which states: In employing the guideline
publicly traded company method, every effort should be made to select as broad a base of comparative
companies as is reasonably possible, as well as to give full consideration to every possible factor in
order to make the comparison more meaningful. (Defs. RJN, Ex. E, PRATT, REILLY AND SCHWIEHS,
THE ANALYSIS AND APPRAISAL OF CLOSELY HELD COMPANIES 233 (2000) (PRATT, et al.) (citation
and internal quotation marks omitted)). Defendants contend that Dr. Kennedy erred in whittling down
the broader base of comparable public companies identified by Montgomery and TWP to only Google
and Yahoo!, seasoned companies with proven revenue model[s] that experienced explosive growth.
(Mot. 19-20). Though this appears to strike Defendants as litigation-driven, we are instructed to
evaluate the methodology, not the ultimate determination reached by the expert. Our sole purpose is to
determine the reliability of a particular expert opinion through a preliminary assessment of the
methodologies underlying the opinion. DSU Med. Corp., 296 F. Supp. 2d at 1147 (citing Daubert, 509
U.S. at 592-93). Of course, we must consider whether the experts are proposing to testify about
matters growing naturally and directly out of research they have conducted independent of the litigation,
or whether they have developed their opinions expressly for purposes of testifying. Daubert II, 43
F.3d at 1317. However, there is no evidence in the record that Dr. Kennedy deviated from his standard
methodology for the purposes of testifying in this case.
Dr. Kennedy explained his method as follows. First, he analyzed the companies selected by
Montgomery and TWP and restricted his selection to those comparable companies. (Moriarty Decl.,
Ex. 1, Kennedy Report, at 18-20). Montgomery had chosen twelve companies (Google, Yahoo!, CNET
Networks, iVillage, Monster Worldwide, Aptimus, ValueClick, Vertrue, Church & Dwight Co.,
Herbalife Ltd., Jarden Corp., and Natures Sunshine Products) based on the following sectors: online
advertising, online content and networking, online direct marketing, and offline direct marketing. (Id. at
19). TWP had chosen fourteen guideline companies (Bankrate, CNET, iVillage,
1-800-FLOWERS.COM, Blue Nile, Celebrate Express, Netflix, NutriSystem, Overstock.com, Provide
Commerce, Aptimus, Marchex, ValueClick, and Vertrue) based on three sector categories: content,
eCommerce, and direct marketing. (Id.). In identifying a narrower set of comparable companies, Dr.
Kennedy explained that he considered these to be the most similar operational, financial, and growth
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guideline publicly traded companies. (Id. at 20). He justified his deviation from the investment banks,
beginning with TWP, as follows:
In implementing the public guideline company method, TWP selected guideline Companies
based on all of the businesses of Intermix on a combined basis. . . . Montgomery selected
guideline companies based on each business within Intermix because the three businesses have
different economics and peer groups. As a result, Montgomery selected only Online
Advertising and Online Content and Networking to apply to MySpace. We agree with
Montgomerys approach that each Intermix business segment, and specifically MySpace has
different growth and profit potential and therefore, different multiples would be appropriate to
apply to MySpace and the other Intermix business segments. Within TWPs comparables, only
the Content group is applicable.
(Id. at 20-21). Accordingly, Dr. Kennedy selected the following six comparable companies: Bankrate,
CNET, iVillage, Google, Yahoo!, and Monster. (Id. at 21). Then, based on separate MySpace
financial performance information, Dr. Kennedy narrowed the field down to Google and Yahoo!,
contending those were the only two companies with comparable revenue and EBITDA growth metrics.
(Id. at 21-25). Dr. Kennedy concluded that MySpace [fell] into the higher profitability tier of the six
guideline companies, and therefore, he could discount the 2005 figures for MySpace and utilize an
average of the multiples indicated by Google and Yahoo. (Id. at 24-25).
There is nothing in the record to support the proposition that selecting comparable companies
based on (1) services provided, (2) revenue metrics, and (3) EBITDA metrics renders a comparable
public company analysis fundamentally unreliable. We will not exclude this evidence simply because
Defendants dislike Dr. Kennedys conclusion that the only guideline companies left standing in the final
analysis were Google and Yahoo!. Even Defendants cited treatise urges the selection of as broad a
base of comparative companies as is reasonably possible. (Defs. RJN, Ex. E, PRATT, et al., supra, at
233 (emphasis added)). Dr. Kennedy concludes, in effect, that the remaining comparable companies are
as broad a base of comparable companies as is reasonably possible. Defendants disagreement with this
conclusion is properly explored on cross-examination.
Accordingly, we hereby DENY Defendants Motion to Exclude Dr. Kennedys testimony. As
Dr. Kennedys testimony is sufficient to at least raise triable issues on damages from out-of-pocket
losses, we also DENY Defendants Motion for Summary Judgment on this issue.
3. Lost Opportunity Damages
As a final alternative, Plaintiff seeks lost opportunity damages based on the allegedly
impending Viacom bid. When actual losses cannot be demonstrated, some circuit courts have
recognized an alternate theory of establishing damages, the lost opportunity theory.
DaimlerChrysler, 294 F. Supp. 2d at 627 (internal quotation marks omitted). Lost opportunity damages
represent loss of a possible profit or benefit, [defined as] an addition to the value of ones investment,
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unless the loss is wholly speculative. Tse II, 123 F. Supp. 2d at 223 (internal citations omitted;
alteration in original). Lost opportunity damages are not wholly speculative if they are based on
certain, fixed and demonstrable profits thwarted by a defendants alleged fraud. DaimlerChrysler,
294 F. Supp. 2d at 627 (quoting Rudinger v. Ins. Data Processing, Inc., 778 F. Supp. 1334, 1341 (E.D.
Pa. 1991)). Further, lost opportunities damages are not available where the fact of the loss, i.e.
whether there was any lost opportunity at all, is wholly speculative. Id. (quoting Tse v. Ventana Med.
Sys., Inc., 297 F.3d 210, 220 (3d Cir. 2002) (Tse III)). Finally, [t]he risk of uncertainty as to [the]
amount of damages is cast on the wrongdoer and it is the duty of the fact finder to determine the amount
of the damages as best he can from all the evidence in the case. Tse III, 297 F.3d at 220 (quoting
Gould v. American-Hawaiian S.S. Co., 535 F.2d 761, 781-82 (3d Cir. 1976)).
In support of this theory of damages, Plaintiff argues that Viacom was contemplating a bid
above $750 million, citing a single internal Viacom email, in which Jason Hirschhorn states: My guess
is that News [Corp.] is going to take the $12/share ask from Richard Rosenblatt and add a premium of
10-20%. $700-$750 million . . . . Dont know if offer will be binding from NEWS [Corp.]. But I
belioeve [sic] they will deliver it anywhere from today-monday. (J.A., Ex. 192). Viacom never in fact
put in a bid for Intermix. Therefore, the relevant question on this motion for summary judgment is
whether there is a triable issue of material fact as to whether Viacom would have submitted a bid. This
question must be answered in the negative, since it is undisputed that Viacoms board simply refused to
engage in a public bidding war with its competitor News Corp. Freston, Viacoms CEO, testified that
the Viacom board members were adamant on this point: There already had been an offer and it wasnt
ours and it didnt look like there was an opportunity to counter bid or if there was, we would have to do
so in a public way and the board had said on the spot, no, lets not get involved in that. (Freston Tr. at
35:11-15; see also West Tr. at 123:22-24 (We had some discussion and we ended up saying that it
wasnt worth pursuing a counterbid strategy.)). Therefore, given this unwavering refusal to engage in
a public bidding war following the July 18th merger announcement, the Proxy, including whatever
alleged material omissions, issued in late August had no effect whatsoever on Viacoms willingness to
place a bid for Intermix. Accordingly, the allegedly defective Proxy cannot support the notion that
Intermix shareholders missed out on an opportunity with Viacom.
While it may be theoretically possible that Viacom would have entered a subsequent bid had the
Intermix shareholders not been allegedly deceived by the defective Proxy and had they rejected the
merger with News Corp., we conclude that under the totality of the evidence, Plaintiffs showing is no
more than speculative. Moreover, mere rejection of the News Corp. bid by the shareholders would not
necessarily have eliminated the specter of a public bidding war that Viacom abhorred. Nothing
prevented News Corp. from countering any Viacom bid with a counterbid. This is precisely the type of
speculation and indeterminacy that is insufficient to create a triable issue on the existence of any lost
opportunity.
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20
We have no occasion to consider and therefore express no opinion on whether the lost
opportunity theory of damages premised on a potential Viacom bid would be viable with respect to the
breach of fiduciary duty claim which is based on evidence beyond the alleged material omissions from
the Proxy. The Parties have not addressed this issue in their Cross-Motions.
Accordingly, we GRANT Defendants Motion for Summary Judgment as to this theory of
damages.
20
On his Section 14(a) claim, Plaintiff may ONLY proceed at trial on his theory of out-of-
pocket losses based on an intrinsic valuation of Intermix at the time of the merger.
IV. Count III: Violation of Section 20(a) of the Securities and Exchange Act of 1934
Section 20(a) of the 1934 Act provides that: Every person who, directly or indirectly, controls
any person liable under any provision of this chapter or of any rule or regulation thereunder shall also
be liable jointly and severally with and to the same extent as such controlled person to any person to
whom such controlled person is liable, unless the controlling person acted in good faith and did not
directly or indirectly induce the act or acts constituting the violation or cause of action. 15 U.S.C.
78t(a). The Parties agree that if there is no primary liability under Section 14(a), there can be no control
person liability. (Joint Br. 87). However, since we have denied summary judgment with respect to
three of the bases for Count II, we likewise DENY the Motion for Summary Judgment with respect to
Count III.
V. Conclusion
Plaintiffs Motion for Summary Judgment is DENIED. Defendants Motion for Summary
Judgment is hereby GRANTED in part and DENIED in part as set forth in this Order. Within thirty
(30) days hereof, counsel SHALL file a joint status report setting forth their views regarding further
mediation in light of these rulings.
IT IS SO ORDERED.
-- : --
Initials of Deputy Clerk Bea
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UNI TED STATES DI STRI CT COURT
NORTHERN DI STRI CT OF CALI FORNI A
SAN J OSE DI VI SI ON
I N RE: HI GH- TECH EMPLOYEE
ANTI TRUST LI TI GATI ON,
_________________________
THI S DOCUMENT RELATES TO:
ALL ACTI ONS
_________________________
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C- 11- 02509 LHK
SAN J OSE, CALI FORNI A
AUGUST 8, 2013
PAGES 1- 161
TRANSCRI PT OF PROCEEDI NGS
BEFORE THE HONORABLE LUCY H. KOH
UNI TED STATES DI STRI CT J UDGE
A P P E A R A N C E S:
FOR THE PLAI NTI FFS: J OSEPH SAVERI LAWFI RM
BY: J OSEPH SAVERI
LI SA J . LEEBOVE
J AMES G. DALLAL
255 CALI FORNI A STREET, SUI TE 450
LI EFF, CABRASER,
HEI MANN & BERNSTEI N
BY: KELLY M. DERMODY
BRENDAN P. GLACKI N
DEAN M. HARVEY
ANNE B. SHAVER
LI SA J . CI SNEROS
275 BATTERY STREET, 30TH FLOOR
APPEARANCES CONTI NUED ON NEXT PAGE
OFFI CI AL COURT REPORTER: LEE- ANNE SHORTRI DGE, CSR, CRR
PROCEEDI NGS RECORDED BY MECHANI CAL STENOGRAPHY
TRANSCRI PT PRODUCED WI TH COMPUTER
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APPEARANCES ( CONTI NUED)
FOR DEFENDANT KEKER & VAN NEST
GOOGLE: BY: ROBERT A. VAN NEST
DANI EL E. PURCELL
J USTI NA K SESSI ONS
633 BATTERY STREET
MAYER BROWN
BY: LEE H. RUBI N
TWO PALO ALTO SQUARE, SUI TE 300
PALO ALTO, CALI FORNI A 94306
FOR DEFENDANT O' MELVENY & MYERS
APPLE: BY: GEORGE A. RI LEY
MI CHAEL F. TUBACH
CHRI STI NA J . BROWN
TWO EMBARCADERO CENTER
28TH FLOOR
FOR DEFENDANTS J ONES DAY
ADOBE AND BY: DAVI D C. KI ERNAN
I NTUI T: LI N W. KAHN
CRAI G E. STEWART
555 CALI FORNI A STREET, 26TH FLOOR
FOR DEFENDANT BI NGHAMMCCUTCHEN
I NTEL: BY: DONN P. PI CKETT
FRANK HI NMAN
SUJ AL SHAH
THREE EMBARCADERO CENTER
FOR DEFENDANT COVI NGTON & BURLI NG
PI XAR: BY: EMI LY J . HENN
333 TWI N DOLPHI N DRI VE, SUI TE 700
REDWOOD SHORES, CALI FORNI A 94065
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SAN J OSE, CALI FORNI A AUGUST 8, 2013
P R O C E E D I N G S
( COURT CONVENED AND THE FOLLOWI NG PROCEEDI NGS WERE HELD: )
THE CLERK: CALLI NG CASE NUMBER C- 11- 02509 LHK, I N
RE: HI GH- TECH EMPLOYEE ANTI TRUST LI TI GATI ON.
MR. GLACKI N: BRENDAN GLACKI N, LEI FF, CABRASER,
HEI MANN & BERNSTEI N ON BEHALF OF THE PLAI NTI FFS.
MS. DERMODY: GOOD AFTERNOON, YOUR HONOR.
KELLY DERMODY, LEI F, CABRASER. AND THE OTHER LEI F, CABRASER
PEOPLE WI TH US ARE MY PARTNER, DEAN HARVEY, AND ASSOCI ATES
ANNE SHAVER AND LI SA CI SNEROS.
AND ALSO I N THE COURTROOMTODAY ARE NAMED PLAI NTI FFS,
BRANDON MARSHAL AND MI KE DEVI NE.
THE COURT: OKAY.
MR. SAVERI : GOOD AFTERNOON, YOUR HONOR.
J OSEPH SAVERI . WI TH ME FROMMY OFFI CE ARE LI SA LEELOVE AND
J AMES DALLAL.
THE COURT: OKAY.
MR. VAN NEST: GOOD AFTERNOON, YOUR HONOR.
BOB VAN NEST FROMKEKER & VAN NEST FOR GOOGLE. I ' MHERE WI TH
DAN PURCELL AND TI NA SESSI ONS.
ALSO, LEE RUBI N FROMMAYER BROWN.
AND I ' VE BEEN ASKED TO SPEAK ON BEHALF OF ALL DEFENDANTS
THI S AFTERNOON.
MR. RI LEY: GOOD AFTERNOON, YOUR HONOR. GEORGE RI LEY
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OF O' MELVENY & MYERS FOR APPLE. I ' MJ OI NED BY MY COLLEAGUES
CHRI STI NA BROWN AND MI CHAEL TUBACH.
MR. PI CKETT: GOOD AFTERNOON. DONN PI CKETT. I ' M
HERE ALONG WI TH FRANK HI NMAN AND SUJ AL SHAH FOR I NTEL.
MR. KI ERNAN: GOOD AFTERNOON, YOUR HONOR.
DAVI D KI ERNAN OF J ONES DAY ON BEHALF OF ADOBE. HERE WI TH ME
TODAY I S LI N KAHN. BOB MI TTELSTAEDT COULDN' T BE HERE TODAY
BECAUSE OF TRI AL ON ANOTHER MATTER.
THE COURT: OKAY. MR. KI ERNAN AND? I ' MSORRY.
MR. KI ERNAN: AND LI N KAHN.
OKAY. AND THERE' S NO ONE HERE FOR LUCASFI LM, PI XAR, AND
I NTUI T; CORRECT?
MS. HENN: YOUR HONOR, EMI LY HENN, COVI NGTON &
BURLI NG. I ' MHERE FOR THE CMC FOR PI XAR.
THE COURT: OKAY. WOULD YOU MI ND I F WE DI D THAT AT
THE END, OR WOULD YOU LI KE TO DO THAT AT THE BEGI NNI NG? I S
THAT OKAY I F I T' S AT THE END?
MS. HENN: YES.
MR. STEWART: YOUR HONOR, CRAI G STEWART. I ' MHERE ON
BEHALF OF I NTUI T.
THE COURT: OKAY. ALL RI GHT. WELL, GOOD AFTERNOON
TO EVERYONE.
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SO ACTUALLY THE FI RST QUESTI ON WOULD GO TO I NTUI T,
LUCASFI LM, AND PI XAR, AS WELL AS THE PLAI NTI FFS.
WHEN DO YOU ANTI CI PATE FI LI NG YOUR MOTI ON FOR PRELI MI NARY
APPROVAL?
MS. DERMODY: WELL, YOUR HONOR, WE ARE HEAVI LY I N THE
PROCESS OF TRYI NG TO DOCUMENT THAT AGREEMENT, AND WI TH THE
ADDI TI ON OF THE I NTUI T SETTLEMENT, WE HAVE ANOTHER FAMI LY TO
DEAL WI TH I N FI GURI NG OUT THE BEST PROCESS.
WE' RE HOPI NG TO DO THAT VERY, VERY SOON. WE' RE WORKI NG
HARD TO ACCOMPLI SH THAT, YOUR HONOR.
THE COURT: CAN WE SET A DEADLI NE BY WHI CH THAT WI LL
BE DONE?
MR. SAVERI : I THI NK THERE ARE PROBABLY TWO THI NGS WE
WOULD NEED TO DO: SET A DEADLI NE FOR FI LI NG THE PRELI MI NARY
APPROVAL PAPERS; AND THEN WE WOULD LI KE TO COME I N AS SOON AS
POSSI BLE AND HAVE THE HEARI NG ON PRELI MI NARY APPROVAL.
THE COURT: WELL, I HAVE SOME POSSI BLE HEARI NG DATES
FOR YOU, SO I NEED TO KNOWWHEN YOU' RE GOI NG TO FI LE AND WE CAN
GO FROMTHERE.
MS. DERMODY: WHAT DO YOU HAVE, YOUR HONOR?
THE COURT: SO - -
MS. DERMODY: THAT MI GHT GI VE US A TARGET.
THE COURT: WELL, OCTOBER 3RD, NOVEMBER 21,
DECEMBER 19, J ANUARY 9, FEBRUARY 13, FEBRUARY 20.
MR. SAVERI : YOUR HONOR, CAN THE - - I S THERE ANY WAY
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TO GET I N EARLI ER THAN THAT FOR THE PRELI MI NARY APPROVAL
HEARI NG?
THE COURT: EARLI ER THAN OCTOBER 3? WHEN ARE YOU
GOI NG TO FI LE?
MS. HENN: YOUR HONOR, I THI NK THAT WOULD BE
AGGRESSI VE I N LI GHT OF WHERE WE ARE AT THI S POI NT I N TI ME, SO I
THI NK WE WOULD SUPPORT A DATE NO EARLI ER THAN OCTOBER.
THE COURT: WELL, HOWQUI CKLY ARE YOU GOI NG TO FI LE?
MR. SAVERI : WELL, THE - - I DON' T - - I ' MHOPI NG,
MAYBE I ' MOVERLY OPTI MI STI C, THAT WE' LL HAVE THE DOCUMENTATI ON
DONE I N A COUPLE WEEKS AND WE WOULD PREPARE - - BE PREPARED TO
FI LE SHORTLY THEREAFTER.
THE PRELI MI NARY APPROVAL HEARI NG I S GOI NG TO BE UNOPPOSED.
THE COURT: SO THERE HAVE BEEN NO EXCHANGES OF DRAFTS
YET OF FI NAL DOCUMENTS?
MR. SAVERI : NO, WE HAVE EXCHANGED DOCUMENTS.
MR. STEWART: NOT WI TH I NTUI T, YOUR HONOR. WE
HAVEN' T RECEI VED THE SETTLEMENT DOCUMENTS YET.
THE COURT: I SEE. WHAT ABOUT PI XAR AND LUCASFI LM?
MS. HENN: WE' VE RECEI VED ONE DOCUMENT, BUT THERE ARE
MANY DOCUMENTS THAT WE HAVEN' T SEEN, AND I T TOOK A WHI LE TO GET
THE FI RST DOCUMENTS.
SO WE DO THI NK THI S I S GOI NG TO TAKE SOME TI ME AND
SHOULDN' T BE RUSHED.
THE COURT: OKAY. SO GI VE ME A DEADLI NE THAT SEEMS
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REALI STI C FOR FI LI NG THE MOTI ON, AND THEN YOU CAN PI CK ANY OF
THESE DATES FOR THE HEARI NG.
MS. DERMODY: I F WE' RE WORKI NG FROMOCTOBER 3RD, YOUR
HONOR, I THI NK THE REAL QUESTI ON THEN I S HOWMUCH TI ME DO YOU
THI NK YOUR HONOR WOULD LI KE TO HAVE WI TH THE PAPERS BEFORE THE
HEARI NG? BECAUSE AS MR. SAVERI SAI D, I T WI LL BE UNCONTESTED,
SO THERE WON' T BE ANY ADDI TI ONAL FI LI NGS, PRESUMABLY, AFTER THE
MOTI ON FOR PRELI MI NARY APPROVAL, AND I T' S REALLY ABOUT THE
COURT' S CONVENI ENCE.
THE COURT: WELL, I NEED A MI NI MUMOF TWO WEEKS,
MI NI MUM.
MS. DERMODY: SO SEPTEMBER 19?
THE COURT: THAT WOULD BE THE LAST POSSI BLE DATE.
MS. DERMODY: I THI NK THAT SOUNDS ACHI EVABLE.
YES? SOUND RI GHT FOR YOU ALL?
MS. HENN: YES, YOUR HONOR.
THE COURT: I THI NK SEPTEMBER 12TH WOULD BE EVEN
BETTER, BUT I ' LL TAKE THE 19TH.
MS. DERMODY: THANK YOU, YOUR HONOR.
MR. SAVERI : I THI NK WE' D LI KE TO GET I T DONE AS SOON
AS WE CAN AND GET THE MOTI ONS ON FI LE AND GI VE THE COURT AS
MUCH TI ME AS WE CAN WI TH THE PAPERS.
THE COURT: UM- HUM. WHY DON' T WE SAY SEPTEMBER 16TH?
I S THAT OKAY?
MS. HENN, DOES THAT GI VE YOU ENOUGH TI ME, OR - - I F YOU WANT
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UNTI L THE 19TH, THAT' S FI NE.
MS. HENN: SEPTEMBER 19TH WOULD BE BETTER.
THE COURT: OKAY. ALL RI GHT. SO FI LE YOUR - - ALL
THREE, RI GHT? ALL THREE?
MS. HENN: YES.
MS. DERMODY: YES.
THE COURT: OKAY. SO FI LE THE MOTI ON BY
SEPTEMBER 19TH. I T WI LL BE HEARD ON OCTOBER THE 3RD.
MS. DERMODY: WI LL THAT BE 1: 30 OR 2: 00 O' CLOCK, YOUR
HONOR?
THE COURT: 1: 30.
MS. DERMODY: THANK YOU.
THE COURT: OKAY. NOW, ARE THERE ANY OTHER
NEGOTI ATI ONS WI TH OTHER REMAI NI NG DEFENDANTS? OR NOT?
MR. SAVERI : WELL, YOUR HONOR, WE WENT TO A MEDI ATI ON
ON WHI CH WE REPORTED AND THAT MEDI ATI ON I S NOWCONCLUDED.
SO - -
THE COURT: THERE' S NO FURTHER EFFORTS? I MEAN, I
DON' T WANT ANY DETAI L, BUT - -
MR. SAVERI : I GUESS I WANT TO BE CAREFUL ABOUT THAT.
THERE' S REALLY NOTHI NG ELSE THAT I CAN REPORT RI GHT NOW.
THE COURT: OKAY. COULD I SET J UST A SETTLEMENT
STATUS REPORT DATE FOR A WEEK FROMNOW? OR - -
MS. DERMODY: SURE, YOUR HONOR.
THE COURT: WHAT MAKES SENSE? I DON' T KNOWI F THE
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HEARI NG I S GOI NG TO MAKE A DI FFERENCE.
MR. VAN NEST: YOUR HONOR, THI S I S BOB VAN NEST.
I DON' T THI NK ANYTHI NG WI LL CHANGE I N A WEEK. I THI NK, AS
MR. SAVERI PUT I T QUI TE CORRECTLY, THE MEDI ATI ON OCCURRED, I T' S
OVER, AND NOTHI NG I S HAPPENI NG.
THE COURT: OKAY.
MR. VAN NEST: WI TH RESPECT TO THE FOUR REMAI NI NG
DEFENDANTS, NOTHI NG I S GOI NG TO CHANGE I N THE NEXT WEEK.
THE COURT: OKAY. WHAT ABOUT THE NEXT TWO WEEKS,
THREE WEEKS?
MR. VAN NEST: I THI NK I F YOU SET I T OUT A MONTH,
THEN FI NE, WE' LL SUBMI T A REPORT AND PERHAPS SOMETHI NG WI LL
HAPPEN I N THAT PERI OD OF TI ME. THAT' S FI NE.
OR SET I T FOR THE 19TH AND WE' LL FI LE SOMETHI NG ALONG WI TH
THE OPENI NG PAPERS.
THE COURT: OKAY. LET ME ASK - - I MEAN, OBVI OUSLY
YOU MAY NOT KNOWAND YOU HAVE TO CONSULT WI TH CLI ENTS, BUT DO
YOU NEED A RULI NG ON THE MOTI ON? OR DO YOU THI NK YOU NEED A
SUMMARY J UDGMENT RULI NG? WHAT - - WHAT ADDI TI ONAL I NFORMATI ON
DO YOU THI NK THE PARTI ES NEED FOR THE REMAI NI NG FOUR
DEFENDANTS?
MR. SAVERI : YOUR HONOR, J UST SPEAKI NG FOR MYSELF, I
THI NK WE CAN - -
THE COURT: UM- HUM.
MR. SAVERI : - - I DON' T THI NK WE NEED TO SET I T AT
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ANY PARTI CULAR MI LESTONE.
THE COURT: UM- HUM.
MR. SAVERI : I THI NK, FROMTHE PLAI NTI FFS'
PERSPECTI VE, WE' RE READY TO TALK. WE' RE - - I F I T WAS
APPROPRI ATE TO DO ANOTHER ROUND OF MEDI ATI ON, I THI NK WE' D BE
WI LLI NG TO DO THAT.
THE COURT: UM- HUM.
MR. SAVERI : TO ME I THI NK I T' S I MPORTANT TO KEEP
TALKI NG ALL THE TI ME, SO I ' D LI KE TO KEEP THE COMMUNI CATI ON
GOI NG.
SO I DON' T - - TO ANSWER YOUR QUESTI ON DI RECTLY, I DON' T
THI NK WE SHOULD PUT I T OFF UNTI L SUMMARY J UDGMENT OR RULI NG ON
THE CLASS.
I MEAN, OBVI OUSLY EVERYBODY I S I NTERESTED TO KNOWWHAT' S
GOI NG TO HAPPEN AS A RESULT OF TODAY OR - -
THE COURT: UM- HUM.
MR. SAVERI : - - DOWN THE ROAD.
THE COURT: UM- HUM. LET ME HEAR FROMMR. - -
MR. VAN NEST: MR. VAN NEST. THANK YOU, YOUR HONOR.
THE COURT: OF COURSE I WAS GOI NG TO SAY THAT.
WHAT DO YOU THI NK?
MR. VAN NEST: OBVI OUSLY CLASS CERT I S A VERY
I MPORTANT MI LESTONE.
THE COURT: UH- HUH.
MR. VAN NEST: OBVI OUSLY I F WE GO PAST THAT, SUMMARY
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J UDGMENT I S AN I MPORTANT MI LESTONE.
BUT I AGREE WI TH MR. SAVERI . THERE' S NOTHI NG MAGI C ABOUT
ANY PARTI CULAR TI ME. I J UST THI NK I T' S UNLI KELY THAT ANYTHI NG
WI LL HAPPEN BEFORE YOU RULE ON CLASS CERT.
THE COURT: I SEE.
MR. VAN NEST: I ' MNOT SAYI NG ANYTHI NG WOULD HAPPEN
AFTER THAT, EI THER, BUT I DON' T THI NK ANYTHI NG WI LL HAPPEN
UNTI L THEN.
THE COURT: UNTI L THERE' S AN ACTUAL RULI NG?
MR. VAN NEST: A RULI NG OR AN I NDI CATI ON FROMYOUR
HONOR AS TO WHAT THE RULI NG WI LL BE, YES. I DON' T THI NK
ANYTHI NG I S LI KELY TO HAPPEN I N THAT PERI OD.
ON THE OTHER HAND, I F MR. SAVERI WANTS TO TALK, THAT' S
FI NE. WE CAN CERTAI NLY SUBMI T A REPORT ON THE 19TH. THAT
WON' T TAX ANYBODY.
THE COURT: UM- HUM.
MR. VAN NEST: AND THEN YOU' LL KNOW.
THE COURT: ALL RI GHT. WELL, TELL ME, WI TH REGARD
TO - - ONCE A RULI NG I S I SSUED, WHAT' S GOI NG TO HAPPEN? LET' S
SAY I CERTI FY A CLASS. DO YOU WANT TO HAVE ANOTHER ADR SESSI ON
AT THAT POI NT?
MS. DERMODY: I THI NK THAT WOULD BE VERY HELPFUL,
YOUR HONOR, ACTUALLY.
THE COURT: LET ME SEE I F THE DEFENDANTS ARE WI LLI NG.
I S THAT SOMETHI NG THAT YOU' D BE WI LLI NG TO DO AT THAT
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POI NT?
MR. VAN NEST: YOUR HONOR, WE' RE ALWAYS WI LLI NG TO
CONSI DER ADR.
THE COURT: UM- HUM.
MR. VAN NEST: AS I SAI D, I THI NK I T' S UNLI KELY
ANYTHI NG WOULD HAPPEN BEFORE YOUR RULI NG ON CLASS CERT.
THE COURT: OKAY.
MR. VAN NEST: WE OBVI OUSLY FEEL STRONGLY ABOUT THAT
I SSUE, AS WE' RE GOI NG TO BE DI SCUSSI NG I N A MOMENT.
SO I DO THI NK, THOUGH, THAT ADR BEFORE THAT TI ME WOULD NOT
BE PRODUCTI VE. I DO AGREE WI TH YOU THERE.
THE COURT: OKAY. ALL RI GHT. LET' S SAY I DON' T
CERTI FY A CLASS. AT THAT POI NT?
MR. VAN NEST: I THI NK THE SAME THI NG. THAT' S AN
I MPORTANT MI LESTONE FOR ALL OF US AND - -
MR. VAN NEST: - - TALKI NG AFTER THAT WOULD BE - -
THE COURT: WOULD MAKE SENSE?
MR. VAN NEST: - - WORTHWHI LE, YES.
THE COURT: OKAY. WELL, I WOULD LI KE TO, BECAUSE I T
SOUNDS LI KE EI THER WAY THERE' S - - EI THER WAY I T SEEMS LI KE A
FURTHER ADR SESSI ON MI GHT BE HELPFUL AFTER A RULI NG.
SO CAN I GO AHEAD AND REFER YOU NOWAND SET A LONG ENOUGH
LEAD TI ME THAT YOU' RE ABLE TO MEET THAT DEADLI NE?
ASSUMI NG - - LET' S SAY ASSUMI NG YOU GET A RULI NG, I DON' T
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KNOW, I N THE NEXT MONTH. HOWMUCH TI ME WOULD YOU NEED FOR ADR?
MR. VAN NEST: TO GET READY FOR ADR?
THE COURT: AND TO COMPLETE I T, BECAUSE I ' LL SET A
DEADLI NE - -
MS. DERMODY: THE PROBLEMI S THE MEDI ATORS'
SCHEDULES, YOUR HONOR. THE VERY GOOD MEDI ATORS - - WE WENT
THROUGH THI S, ALL OF US, COLLECTI VELY TRYI NG TO GET DATES.
THE COURT: SURE.
MS. DERMODY: AND I T WAS UNBELI EVABLE TO GET DATES
OVER A FOUR MONTH PERI OD.
SO WE MAY ALL HAVE GOOD WI LL ABOUT WHEN WE COULD DO I T AND
HAVE AVAI LABI LI TY. SO THE SOONER WE KNOWWHAT YOU THI NK WI LL
BE THE SCHEDULE, WHEN THE RULI NG WI LL COME OUT, AND WHEN YOU
WOULD LI KE US TO COMPLETE ADR, WE CAN CALL TODAY TO FI ND OUT
SCHEDULES AND SEE I F WE CAN GET OURSELVES ON A CALENDAR J UST TO
HAVE THAT BOOKED.
MR. VAN NEST: YOUR HONOR, I F YOU GAVE US 90 DAYS
FROMTHE RULI NG, I THI NK WE WOULD BE ABLE TO GET I N AND OUT OF
THE MEDI ATI ON.
THE COURT: UM- HUM.
MR. SAVERI : MY CONCERN, THOUGH, YOUR HONOR, I S THAT
EVEN I F YOU WERE TO SAY TODAY, "I WANT YOU TO GO TO MEDI ATI ON, "
GI VEN THE WAY THE MEDI ATORS' CALENDARS GO AND SCHEDULI NG, I T
WOULD BE, I MEAN, 60 OR 90 DAYS BEFORE WE COULD PROBABLY GET I N
FRONT OF A MEDI ATOR I F THE PAST I S AN I NDI CATOR.
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SO I ' MA LI TTLE WORRI ED THAT - - I F YOUR HONOR WANTS US TO
GET I N AND DO I T, I THI NK WE NEED TO - - I T WOULD BE USEFUL TO
HAVE SOME PARAMETERS.
I THI NK A LOT OF I T DEPENDS ON WHEN YOU RULE AND THAT' S - -
THE COURT: UM- HUM. WELL, I AMTARGETI NG GETTI NG AN
ORDER OUT BY THE END OF THI S MONTH OR EARLY SEPTEMBER AT THE
LATEST, BUT PREFERABLY THE END OF AUGUST.
SO UNDERSTANDI NG THAT' S THE CASE, I WOULD SUGGEST YOU GO
AHEAD AND J UST ASSUME ANY DAY AFTER LABOR DAY I S FAI R GAME FOR
A MEDI ATI ON AND J UST GO AHEAD AND SCHEDULE ONE.
CAN I THEN SET YOU ON A NOVEMBER 15TH DEADLI NE?
MR. VAN NEST: SURE.
MS. DERMODY: THAT MAKES SENSE, YOUR HONOR.
THE COURT: ALL RI GHT. SO THEN THE REMAI NI NG
DEFENDANTS WI LL HAVE ANOTHER PRI VATE MEDI ATI ON SESSI ON TO BE
COMPLETED BY NOVEMBER 15TH OF 2013. OKAY.
THE COURT: SO YOU' RE SAYI NG, MR. VAN NEST, THAT YOU
DON' T THI NK THAT THERE WI LL BE ANY FURTHER SETTLEMENTS ABSENT
ANOTHER MEDI ATI ON SESSI ON?
THE COURT: SO GETTI NG AN I NTERI MSETTLEMENT STATUS
REPORT - -
MR. VAN NEST: NOT MEANI NGFUL.
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THE COURT: I F YOU WERE GOI NG TO RESOLVE THE CASE, I
WOULDN' T HAVE TO I SSUE THE ORDER. BUT YOU KNOWTHAT' S NOT
GOI NG TO HAPPEN?
MS. DERMODY: YOU KNOW, YOUR HONOR, WE' LL LET YOU
KNOWI F SOMETHI NG ELSE - -
MR. VAN NEST: I T' S NOT MEANI NGFUL.
MR. VAN NEST: I F YOU SET THE DEADLI NE, WE' LL
COMPLETE I T BY THEN.
MR. SAVERI : I WOULD HOPE, YOUR HONOR, THAT WE - - YOU
KNOW, WE WENT THROUGH MEDI ATI ON SESSI ONS, WE ESSENTI ALLY
ACCOMPLI SHED THE SETTLEMENTS WE DI D WI TH BI LATERAL NEGOTI ATI ONS
BETWEEN THE PLAI NTI FFS AND THE DEFENDANTS.
SO I WOULD HOPE THAT WE' D BE ABLE TO CONTI NUE THAT AND NOT
J UST WAI T FOR THE MEDI ATI ON SESSI ON TO TRY TO NARROWTHI S.
THE COURT: PLEASE. I MEAN, SAVE YOURSELVES THE
MONEY - -
MR. VAN NEST: ABSOLUTELY.
THE COURT: - - AND J UST DO I T YOURSELVES. OKAY,
YEAH, PLEASE.
MR. SAVERI : AND, YOUR HONOR, I GUESS THE OTHER THI NG
I WOULD SAY I S THAT FROMMY PERSPECTI VE, I THI NK I T I S - - I T I S
USEFUL TO HAVE DECI SI ON MAKERS TO BE PRESENT AND I NVOLVED AT
THE MEDI ATI ON, AND I THI NK I F WE' RE GOI NG TO DO THI S SERI OUSLY
THE NEXT TI ME, FROMMY PERSPECTI VE, I T WOULD BE USEFUL TO HAVE
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A COMMI TMENT FROMALL SI DES THAT PEOPLE WI TH AUTHORI TY AND
DECI SI ON MAKI NG POWER ARE GOI NG TO BE ACTI VE PARTI CI PANTS ON
THE DAY OF THE MEDI ATI ON.
THE COURT: HOWWERE THEY AVAI LABLE LAST TI ME? J UST
BY PHONE, OR - -
MR. SAVERI : FROMWHAT I UNDERSTAND, AND THE OTHER
SI DE CAN SPEAK TO THI S, THERE WERE I N- HOUSE COUNSEL REPRESENTED
AT THE MEDI ATI ON, BUT THAT WAS - - THAT WAS I T.
THE COURT: BUT THEY MUST HAVE HAD SETTLEMENT
AUTHORI TY UP TO A CERTAI N NUMBER.
MR. SAVERI : I DON' T KNOWANYTHI NG - - I DON' T KNOW
ANYTHI NG ABOUT THAT.
MR. VAN NEST: WE HAD PEOPLE THERE, YOUR HONOR, WI TH
SETTLEMENT AUTHORI TY, AND WE WI LL AGAI N, AND I UNDERSTAND
THAT' S THE BASELI NE, OF COURSE.
BUT AS MR. SAVERI SAYS - - AND I UNDERSTAND WHAT HE SAYS I S
TRUE - - SOME OF THE NEGOTI ATI ONS OCCURRED J UST BETWEEN THE
LAWYERS AND THAT' S WHAT ULTI MATELY GOT I T DONE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - FOR THE ONES THAT SETTLED.
THE COURT: UM- HUM.
MR. VAN NEST: SO UNDERSTOOD.
THE COURT: OKAY. ALL RI GHT. NOW, LET ME ASK, FOR
ANTI TRUST I MPACT, DO WE NEED TO CONSI DER NOWTHE ALLEGATI ONS
THAT YOU MADE AGAI NST LUCASFI LM, PI XAR, AND ADOBE - - AND
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I NTUI T? DO WE STI LL NEED TO - - I KNOWBOTH SI DES BELI EVE THAT
THERE' S NO I MPACT FROMTHE THREE DEFENDANTS SETTLI NG, BUT TELL
ME WHAT I S THERE, I F ANY, I MPACT ON WHETHER WE STI LL LOOK AT
THE DEPOSI TI ON TESTI MONY AND THE EVI DENCE OF THOSE THREE
COMPANI ES AS PART OF THE ANALYSI S I N THI S MOTI ON.
MR. VAN NEST: I THI NK, YOUR HONOR - -
THE COURT: WHAT DO WE DO WI TH THAT?
MR. VAN NEST: I THI NK THEY ESSENTI ALLY DROP OUT.
BUT THEY' RE A SMALL PART OF THE GROUP. I MEAN, THE THREE
TOGETHER EMPLOY LESS THAN 8 PERCENT OF THE EMPLOYEES I N THE
PROPOSED CLASS.
SO I THI NK THE REAL FOCUS NOWI S ON THE REMAI NI NG
DEFENDANTS AND THE - - AND WHATEVER AGREEMENTS THEY' RE ABLE TO
PROVE AS BETWEEN AND AMONG THEM.
BUT EI THER WAY, I THI NK BOTH OF US SAI D I N THE STATUS
CONFERENCE STATEMENTS, THE SETTLEMENTS DON' T CHANGE ANYTHI NG,
I N PART BECAUSE THE THREE SETTLI NG DEFENDANTS WERE A VERY SMALL
PART OF THI S TO BEGI N WI TH. AS I SAI D, LESS THAN 8 PERCENT OF
CLASS MEMBERS ARE EMPLOYED BY ALL THREE COMBI NED.
SO THE LARGEST PART OF THE CASE I S STI LL BEFORE YOUR HONOR
AND THE CONDUCT THAT I THI NK YOU' LL BE FOCUSSI NG ON I S THE
CONDUCT OF THE FOUR REMAI NI NG DEFENDANTS, NOT THOSE THAT HAVE
SETTLED OUT.
THE COURT: BUT WHY WOULDN' T THE COMMENTS OF
MR. CATMULL AND MR. LUCAS STI LL BE RELEVANT TO - -
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MR. VAN NEST: THEY MI GHT HAVE SOME - -
THE COURT: - - THE ANTI TRUST CONSPI RACY, HOWTHE
AGREEMENTS WERE ENFORCED, HOWTHEY WERE I MPLEMENTED?
MR. VAN NEST: THEY MI GHT HAVE SOME LI MI TED
RELEVANCE, YOUR HONOR.
BUT ESSENTI ALLY YOU' RE LOOKI NG NOW- - BECAUSE THE NATURE OF
THE AGREEMENTS THAT THEY' VE ALLEGED ARE BI LATERAL BETWEEN AND
AMONG I NDI VI DUAL PAI RS OF DEFENDANTS, I THI NK THAT EVI DENCE I S
GOI NG TO BE LARGELY RELEVANT BECAUSE THE FOCUS WI LL BE ON WHAT,
I F ANY, I MPACT WAS THERE FROMTHE BI LATERAL AGREEMENTS THAT ARE
BEI NG LI TI GATED NOWAS BETWEEN THE OTHER FOUR REMAI NI NG
DEFENDANTS.
SO, AGAI N, I DON' T WANT TO SAY ABSOLUTELY NO RELEVANCE, BUT
VERY LI MI TED.
THE COURT: OKAY.
THE COURT: LET ME HEAR FROMTHE PLAI NTI FFS. YOU
AGREE THAT YOU' RE NOT ADVOCATI NG AN OVERARCHI NG CONSPI RACY
ANYMORE, I T' S J UST BI LATERAL AGREEMENTS AND - -
MR. SAVERI : NO, YOUR HONOR. I DON' T THI NK THAT THE
FACT THAT WE' VE - - THAT WE' VE - - NOTHI NG HAS REALLY CHANGED I N
TERMS OF OUR THEORY OF THE CASE. WE ALLEGE - - AND MR. GLACKI N
I S GOI NG TO HANDLE THE SUBSTANCE OF THE ARGUMENT, BUT LET ME
J UST SAY THI S.
I THI NK THAT THE - - AS YOU SAI D, THE EVI DENCE OF THE
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SETTLI NG DEFENDANTS WI TH RESPECT TO THE AGREEMENTS, THE NATURE
AND THE SCOPE OF THE AGREEMENTS, I S STI LL GOI NG TO BE RELEVANT
I N THI S CASE.
AND TO THE EXTENT THAT THERE I S OTHER EVI DENCE THAT HAS TO
DO WI TH THE BUSI NESS PRACTI CES OF THOSE COMPANI ES THAT WE RELY
ON TO SHOWA CLASS- WI DE I MPACT, THE FACT THAT THOSE DEFENDANTS
HAVE SETTLED DOESN' T CHANGE THAT FACT.
REMEMBER THAT THI S REMAI NS A, AN ANTI TRUST CLAI MAND ALL
THE PARTI CI PANTS I N THE CONSPI RACY ARE, AS A MATTER OF LAW,
J OI NTLY AND SEVERALLY LI ABLE.
AND SO TO THE EXTENT THAT WE PROVE AN UNDERSTANDI NG, A
COMMON COURSE OF CONDUCT THAT I NVOLVES ALL OF THESE COMPANI ES,
I MEAN, THAT EVI DENCE I S RELEVANT.
THE COURT: WHAT I S THE BREAKDOWN OF THE, WHAT I S I T,
60, 000 THAT YOU' RE ALLEGI NG ARE I N YOUR TECHNI CAL EMPLOYEE
CLASS? WHAT' S THE BREAKDOWN AMONGST THE VARI OUS DEFENDANTS,
I NCLUDI NG THE ONES WHO ARE NOWOUT OF THE CASE?
MR. GLACKI N: WOULD YOU LI KE TO KNOWTHE BREAKDOWN ON
NUMBER OF CLASS MEMBERS OR - - WELL, I CAN TELL YOU WHERE THAT
I NFORMATI ON I S I N THE RECORD ACTUALLY I F THAT WOULD BE HELPFUL.
THE COURT: OKAY. THAT' S FI NE.
MR. GLACKI N: I F YOU GO TO THE OCTOBER 12, 2012
REPORT OF DR. LEAMER AND YOU GO TO PAGE 23, WHI CH I S BETWEEN
PARAGRAPHS 54 AND 55, THERE ARE TWO TABLES THERE THAT - - ONE OF
THEMI S FOR THE ALL SALARI ED CLASS AND ONE OF THEMI S FOR THE
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TECHNI CAL CLASS, WHI CH I S THE SAME CLASS THAT WE' RE NOWSEEKI NG
TO CERTI FY.
THE COURT: WHI CH REPORT? I HAVE THE MAY 10TH,
2013 - -
MR. GLACKI N: THI S I S LAST YEAR.
THE COURT: - - AND J ULY 12TH.
OH, I DON' T HAVE THAT.
MR. GLACKI N: RI GHT. BUT I F YOU WERE TO - - I ' D BE
HAPPY TO HAND YOU MY PAGE I F I T' S HELPFUL. I SHOWED THI S TO
MR. VAN NEST.
THE COURT: CAN YOU J UST GI VE ME THE BALLPARKS?
MR. GLACKI N: SURE. WELL, BY NUMBER OF EMPLOYEES, I
CAN TELL YOU THAT ADOBE I S 3, 601; APPLE I S 6, 835.
THE COURT: 6, 000 WHAT?
MR. GLACKI N: 835.
MR. GLACKI N: GOOGLE I S 7, 854.
THE COURT: OKAY.
MR. GLACKI N: I NTEL I S 36, 643.
THE COURT: OKAY.
MR. GLACKI N: I NTUI T I S 3, 236.
THE COURT: OKAY.
MR. GLACKI N: LUCAS I S 522; PI XAR I S 859.
THE COURT: ALL RI GHT. WHAT ABOUT THE - - HOWMANY
J OBS - - WELL, I GUESS THAT' S I N THE CHART THAT YOU PROVI DED,
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THE VARI OUS J OB TI TLES FOR EACH OF THOSE.
MR. VAN NEST: 2400, YOUR HONOR - -
MR. GLACKI N: 24 - -
MR. VAN NEST: - - I S THE TOTAL.
THE COURT: NOW, LET ME ASK, WI TH REGARD TO
MR. HARI HARAN - - DI D I PRONOUNCE THAT CORRECTLY?
THE COURT: OKAY. HE DI D NOT WORK FOR A DEFENDANT
WHO I S LEFT I N THI S CASE, SO WHY SHOULD HE STI LL CONTI NUE TO
SERVE AS A CLASS REPRESENTATI VE?
MR. GLACKI N: WELL, AS MR. SAVERI SAI D, YOUR HONOR,
WE' RE ALLEGI NG A SI NGLE VI OLATI ON OF THE SHERMAN ACT, A SI NGLE
CONSPI RACY, COMBI NATI ON, AGREEMENT, UNDERSTANDI NG I N RESTRAI NT
OF TRADE.
AND EVEN - - THE EMPLOYEES WHO WERE AT THE - - THE PEOPLE WHO
WORKED FOR THE SETTLED COMPANI ES DURI NG THE CLASS PERI OD STI LL
HAVE ACTI VE CLAI MS AGAI NST THE OTHER MEMBERS OF THE CONSPI RACY
BECAUSE, AS MR. SAVERI SAI D, UNDER COPI OUS PRECEDENT, I NCLUDI NG
TEXAS VERSUS RADCLI FF, WHI CH I S THE SI GNATURE UNI TED STATES
SUPREME COURT CASE ON J OI NT AND SEVERAL LI ABI LI TY, AND UNDER
THE SHERMAN ACT, ALL OF THE MEMBERS OF THE COMBI NATI ON
CONSPI RACY UNDERSTANDI NG ARE LI ABLE FOR ONE ANOTHER' S CONDUCT,
OR WRONGDOI NG, I SHOULD SAY.
SO MR. HARI HARAN STI LL HAS AN ACTI VE CLAI MAGAI NST THE
OTHER FOUR DEFENDANTS, J UST AS ALL THE OTHER NAMED CLASS
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REPRESENTATI VES HAVE ACTI VE CLAI MS AGAI NST THOSE FOUR REMAI NI NG
DEFENDANTS.
THE COURT: SO YOU' RE NOT EVEN LI MI TI NG THAT TO ANY
OF THE DEFENDANTS WHO HAD A SPECI FI C BI LATERAL AGREEMENT WI TH
HI S EMPLOYER, LUCASFI LM?
MR. GLACKI N: CORRECT, BECAUSE WE' RE ALLEGI NG A
SI NGLE, A SI NGLE CONSPI RACY AND RESTRAI NT OF TRADE.
AND THE CLASS I S - - THE SETTLEMENT CLASS I S I DENTI CAL TO
THE PROPOSED TECHNI CAL CLASS. I T I NCLUDES MEMBERS OF ALL OF
THESE COMPANI ES.
SO, FOR EXAMPLE, YOU KNOW, I NTEL EMPLOYEES ARE MEMBERS OF
THE SETTLEMENT - - OF THE CLASS THAT WI LL BE PROPOSED FOR THE
SETTLEMENT, AND THERE ARE GOI NG TO BE CLASS MEMBERS WHO RELEASE
THEI R CLAI MS AGAI NST I NTUI T, PI XAR, AND LUCASFI LM.
SO WHEN WE FI LE THE PAPERS, THERE WON' T BE ANY DI FFERENCE
BETWEEN THE CLASSES, AND THAT I THI NK WE PUT FORWARD I N THE
UPDATE YOU REQUESTED.
THE COURT: SO LET ME HEAR FROMMR. VAN NEST. WHAT' S
YOUR POSI TI ON ON WHETHER MR. HARI HARAN CAN CONTI NUE TO SERVE AS
A CLASS REP?
MR. VAN NEST: I THI NK YOUR HONOR I S RI GHT. HE
DOESN' T REALLY HAVE A ROLE AT THI S POI NT.
I T' S NOTABLE THAT REALLY NONE OF THE CLASS REPS ARE FROM
J OB TI TLES THAT MAKE UP THE VAST MAJ ORI TY OF J OB TI TLES THAT
ARE NOWBEI NG PROPOSED.
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THESE 2400 J OB TI TLES, TWO- THI RDS OF THE CLASS WORK AT
I NTEL. OF THOSE, ROUGHLY HALF WORK I N SEMI CONDUCTOR
MANUFACTURI NG, WHI CH I S UNI QUE TO THEM.
THERE ARE J OB TI TLES ALL OVER THE LOT THAT HAVE NOTHI NG TO
DO WI TH THE J OB TI TLES OF THE CLASS REPS, WHO ARE ESSENTI ALLY,
MOST OF THEM, SOFTWARE ENGI NEERS. SO THEY DON' T REALLY HAVE
TYPI CAL REPRESENTATI VES TO BEGI N WI TH.
HE' S I N A UNI QUE SI TUATI ON SI NCE HE DOESN' T WORK FOR
ANYBODY THAT' S GOI NG TO BE I N THE CASE.
AND, OF COURSE, LUCASFI LMAND PI XAR ARE KI ND OF I N A
SEPARATE I NDUSTRY, TOO. THEY' RE I N THI S NORTHERN CALI FORNI A
FI LMI NDUSTRY, WHI CH NOBODY ELSE PARTI CI PATES I N, SO THEY ARE
UNI QUE.
HE I S UNI QUE. THEY' RE NO LONGER I N THE CASE. THEY HAVE
FOUR OTHER CLASS REPS.
FRANKLY, I DON' T THI NK ANY OF THEMARE PARTI CULARLY TYPI CAL
OF SOMETHI NG WHERE YOU' RE TRYI NG TO CERTI FY 2400 J OB TI TLES,
BUT CERTAI NLY HE' S PROBABLY AT THE BOTTOMOF THE LI ST AND
THERE' S NO LONGER ANY REASON FOR HI MTO SERVE.
THE COURT: DI D ANY OF THE NAMED PLAI NTI FFS WORK FOR
APPLE OR GOOGLE?
MR. GLACKI N: I BELI EVE THE ANSWER I S NO, YOUR HONOR.
THE COURT: OKAY.
MR. GLACKI N: I F I - - SORRY.
THE COURT: SO WHAT' S THE THEORY OF, OF THE NAMED
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PLAI NTI FFS REPRESENTI NG EMPLOYEES AT THOSE TWO COMPANI ES?
MR. GLACKI N: WELL, THERE' S NO - - I MEAN, SAYI NG THAT
I T WAS NECESSARY TO HAVE AN EMPLOYEE FROMEACH COMPANY I N
THE - - AS A CLASS REPRESENTATI VE WOULD BE AKI N TO SAYI NG THAT
YOU COULD NOT CERTI FY A CLASS I N A PRI CE FI XI NG CONSPI RACY CASE
UNLESS YOU HAD SOMEBODY WHO HAD BOUGHT FROMEVERY DEFENDANT.
AND I F YOU TOOK MR. VAN NEST' S ARGUMENT AND TRANSLATED I T
I NTO THAT CONTEXT, WI TH WHI CH WE' RE ALL VERY FAMI LI AR, THE
ARGUMENT WOULD BE THAT I F YOU BOUGHT FROMA SETTLED DEFENDANT,
YOU ARE NO LONGER AN APPROPRI ATE CLASS REPRESENTATI VE I N A
GARDEN VARI ETY PRI CE FI XI NG CONSPI RACY CASE.
AND I CAN TELL YOU THAT HAVI NG - - I MEAN, I ' MNOT - - I ' LL
SI MPLY SAY I AMNOT AWARE OF THAT EVER HAPPENI NG. I ' MNOT
AWARE OF ANYONE EVER MAKI NG THAT CONTENTI ON. I ' MNOT AWARE OF
ANY COURT EVER COMI NG TO THAT CONCLUSI ON.
BECAUSE EVEN I F YOU - - I MEAN, WE HAD THI S COME UP SI MPLY
12 MONTHS AGO. I MEAN, THERE WERE - - WHEN WE TRI ED THE LCDS
CASE, WE HAD A NUMBER OF CLASS REPRESENTATI VES. THE TRI AL WAS
AGAI NST TOSHI BA. EVERY OTHER DEFENDANT SETTLED. BUT THE VAST
MAJ ORI TY OF OUR CLASS REPRESENTATI VES DI D NOT BUY FROMTOSHI BA
BECAUSE TOSHI BA WAS A VERY SMALL MANUFACTURER I N THAT MARKET.
SO I T' S TOTALLY NORMAL TO HAVE - - TO NOT HAVE COMPLETE
COVERAGE OF EVERY MEMBER OF THE CONSPI RACY I N TERMS OF
TRANSACTI ONS, AND I T' S TOTALLY NORMAL FOR THOSE WHO BOUGHT FROM
SETTLED DEFENDANTS TO STAY I N THE CASE BECAUSE MR. HARI HARAN,
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HE' S STI LL J UST I N THE SAME POSI TI ON AS EVERY OTHER CLASS
MEMBER. HE STI LL HAS A CLAI MAGAI NST THE OTHER FOUR MEMBERS
WHO HAVE NOT SETTLED.
MR. VAN NEST: YOUR HONOR, THERE' S REALLY A MORE
FUNDAMENTAL PROBLEMTHAN THI S, AND THAT I S THERE I S NO CASE
THAT HAS CERTI FI ED A CLASS THI S BROAD AND THI S DI VERSE I N A
WAGE SUPPRESSI ON CONTEXT.
WE HAVE, AMONG THE EVI DENCE HERE - - AND I HAVE AN APPENDI X
I CAN HAND UP - - 2400 J OB TI TLES, 60, 000 EMPLOYEES. THEY COVER
A WI DE RANGE OF AREAS. MORE THAN HALF OF THEMWORK OUTSI DE OF
SI LI CON VALLEY. I T I S AN ENORMOUS CLASS AND ENORMOUSLY
DI SPARATE.
I F YOU LOOK AT THE J OB TI TLES THAT THEY ARE CLAI MI NG ARE
LI NKED TOGETHER, I T' S EVERYTHI NG FROMA MASK DESI GNER TO A
SEMI CONDUCTOR MANUFACTURER TO AN ARTI ST TO A SOFTWARE ENGI NEER
TO A CHEMI CAL ENGI NEER. I T' S ENORMOUS AND NONE OF THESE
PEOPLE - -
THE COURT: I ' MSORRY TO I NTERRUPT YOU.
MR. VAN NEST: YEAH.
THE COURT: BUT THE COMPANI ES THEMSELVES I DENTI FI ED
WHO THEY BELI EVE THEI R PEERS WERE FOR TALENT AND THEY DI D
BASI CALLY I DENTI FY EACH OTHER AS PEERS. I MEAN, I HAVE
SPECI FI C EXHI BI T NUMBERS I F YOU WANT TO GO THERE.
BUT THEY DI D DO SOME ANALYSI S OF WHO WOULD BE COMPETI NG FOR
THE SAME TALENT AND THEY WOULD SAY THE OTHER COMPANI ES.
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SO I HEAR WHAT YOU' RE SAYI NG, YOU KNOW, THE WAFER MASK
DESI GNER I S DI FFERENT THAN, YOU KNOW, SOMEONE DESI GNI NG APPS
SOMEWHERE ELSE.
BUT EFFECTI VELY - -
MR. VAN NEST: NOT J UST THAT, YOUR HONOR, BUT I
THI NK, AS YOU NOTED LAST TI ME AND I N YOUR ORDER, OBVI OUSLY SOME
CATEGORI ES OF EMPLOYEES WERE MORE I MPORTANT THAN OTHERS, OR
MORE - - PEOPLE WERE MORE CONCERNED ABOUT SOME CATEGORI ES THAN
OTHERS, OBVI OUSLY.
AND HERE WHERE ONE OF THE COMPANI ES WI TH TWO- THI RDS OF THE
CLASS I S PRI MARI LY ENGAGED I N AN AREA THAT NO OTHER DEFENDANT
I S ENGAGED I N - - YOU KNOW, I NTEL HAS - - THERE' S ONLY A CLAI MOF
ONE BI LATERAL AGREEMENT BETWEEN I NTEL AND GOOGLE, NOT A LOT OF
AUDI TORS.
AND EVEN THERE, THERE ARE SO MANY - - THI S I S WHAT YOU SAI D
LAST TI ME. ONE OF YOUR TWO BI G CONCERNS WAS, I S THE CLASS SO
BI G AND SO LARGE AND SO DI VERSE THAT THERE ARE PEOPLE I N I T
THAT WEREN' T I MPACTED AND THAT SUFFERED NO I NJ URY?
AND OBVI OUSLY WHERE YOU HAVE MORE THAN HALF OF THE FOLKS
OUTSI DE OF SI LI CON VALLEY, SUBJ ECT TO DI FFERENT PAY STRUCTURE
ALTOGETHER, AND WHERE TWO- THI RDS OF THEMWORK FOR A COMPANY
THAT DOES SOMETHI NG UNI QUE, WE' VE GOT AN ENORMOUS PROBLEM.
NO OTHER CASE, NOT WEI SBERG, NOT REED, NOT FLEI SHMAN, NO
OTHER CASE HAS CERTI FI ED A CLASS ANYWHERE NEAR THI S SI ZE I N A
WAGE SUPPRESSI ON CASE BECAUSE THEY' RE LOOKI NG AT, HEY, WHAT,
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WHAT POSI TI ONS ARE COMPARABLE? HOWMUCH HOMOGENEI TY I S THERE?
HOWARE THEY GOI NG TO BE ABLE TO SHOWI MPACT ACROSS THE WHOLE
GROUP?
I T MAKES NO LOGI CAL SENSE THAT THE ABSENCE OF A CALL TO AN
ENGI NEER I N SI LI CON VALLEY WOULD AFFECT A MASK DESI GNER I N
MASSACHUSETTS OR ARI ZONA OR NEWMEXI CO, AND THAT' S WHAT
THEY' RE - - THEY' RE HERE CLAI MI NG THAT THESE 2400 J OB TI TLES ARE
ALL SOMEHOWLI NKED TOGETHER. THERE' S 800 OF THEMALONE AT
I NTEL, ALMOST 400 OF THEMAT GOOGLE, 350 OF THEMAT APPLE, AND
THEY' RE SAYI NG THI S I S ALL LI NKED TOGETHER.
I N THE OTHER CASES WHERE THI S HAS COME UP, THE CLAI MHAS
BEEN THAT ONE - -
THE COURT: BUT THERE I S - -
MR. VAN NEST: - - J OB TI TLE - -
THE COURT: - - EVI DENCE FOR EACH OF THE DEFENDANTS
THAT THEY HAD THESE J OB FAMI LI ES, THAT THEY HAD THESE PAY
RANGES THAT ARE SI MI LAR TO CRI MI NAL SENTENCI NG, YOU HAD THE
LOW, THE MEDI UM, AND THE HI GH.
( LAUGHTER. )
THE COURT: AND THAT I N SOME I NSTANCES, I F YOU WANTED
TO GO OUTSI DE THAT RANGE, YOU HAD TO GET AN EXTRA LEVEL OF
APPROVAL; THAT THEY WERE ALWAYS AWARE, WHEN THEY WERE BRI NGI NG
A LATERAL PERSON I N, WHERE EVERYONE ELSE STOOD SO THERE
WOULDN' T BE AN I SSUE OF DI SPARI TY.
SO I - - LET ME ASK YOU A QUESTI ON. AT THE LAST HEARI NG THE
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DEFENDANTS' COUNSEL SAI D THAT - - I ' LL J UST QUOTE I T - - "AND I
ADMI T AT THE START, WE ARE NOT SAYI NG THAT NOBODY WAS
I MPACTED. "
SO LET ME ASK - - I J UST WANT TO FOLLOW- UP. HOWMANY WERE
I MPACTED? WHO WAS I MPACTED?
MR. VAN NEST: WELL, I DON' T THI NK THERE' S ANY WAY - -
THE COURT: UM- HUM.
MR. VAN NEST: - - TO KNOWTHAT.
BUT WHAT WE DO KNOW- -
THE COURT: WELL, HOWCAN YOU SAY THAT NO ONE WAS
I MPACTED?
MR. VAN NEST: I ' MNOT SAYI NG THAT NO ONE WAS
I MPACTED.
THE COURT: OKAY.
MR. VAN NEST: BUT FOR THE PURPOSE OF - - WHAT WE
UNDERSTOOD TO BE YOUR HONOR' S CONCERN WAS, CAN THE PLAI NTI FF
SHOW, I N ORDER TO ESTABLI SH CLASS- WI DE I NJ URY - -
THE COURT: LET ME ASK YOU A QUESTI ON. I BELI EVE
THAT WAS MR. MI TTELSTAEDT AT THE TI ME. WHEN HE SAYS, "WE' RE
NOT SAYI NG THAT NOBODY WAS I MPACTED, " WHAT DI D THAT MEAN?
MR. VAN NEST: I THI NK WHAT HE MEANT WAS FOR THE
PURPOSES OF CLASS CERT, WE' RE NOT TAKI NG THE POSI TI ON THAT THEY
CAN' T SHOWANY I MPACT.
THE I SSUE I S, CAN THEY SHOWI MPACT TO ALL OR NEARLY ALL OF
THE MEMBERS OF THE CLASS?
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I THI NK THAT' S ALL MR. MI TTELSTAEDT MEANT, AND THAT' S ALL I
MEAN, TOO. WE' RE NOT GOI NG TO DEBATE TODAY, I DON' T THI NK I T' S
PROPER, HOWMANY. I ' MNOT SURE THEY' RE GOI NG TO PROVE MUCH OF
ANYTHI NG.
THE COURT: WELL, HOWMUCH I S REQUI RED? I N ORDER TO
CERTI FY CLASS, THEY DON' T HAVE TO SHOWTHAT 60, 000 WAS ENOUGH.
40 I S USUALLY ENOUGH. SOMETI MES 20 MI GHT BE ENOUGH. WHAT' S
THE NUMBER THAT THEY' RE - - SEPARATE FROMWHETHER THEY' VE SHOWN
I MPACT OR NOT, WHAT I S THE MI NI MUMLEVEL OF SHOWI NG I N TERMS OF
PEOPLE THAT THEY NEED TO MAKE I N ORDER TO GET CERTI FI ED?
MR. VAN NEST: THEY NEED TO SHOWTHAT NEARLY ALL - -
I F THEY WANT TO PROCEED AS A CLASS - -
THE COURT: OKAY.
MR. VAN NEST: - - THEY NEED TO SHOW- - AND YOU
RECOGNI ZED THI S AT PAGE 46 OF YOUR ORDER LAST TI ME - - THEY NEED
TO SHOWTHAT THE WAGE STRUCTURES WERE SO, SO RI GI D THAT THEY
WOULD HAVE AFFECTED ALL OR NEARLY ALL MEMBERS OF THE CLASS.
THAT' S EXACTLY WHAT YOU SAI D AND THAT' S EXACTLY RI GHT.
THESE CASES ALL SAY, I F WE' RE GOI NG TO PROCEED AS A CLASS,
YOU' VE GOT TO SHOWTHAT CLASS- WI DE I MPACT, AND CLASS- WI DE MEANS
ALL OR NEARLY ALL. NOT EVERYBODY. NOT 60, 000, CERTAI NLY.
BUT I T' S - - I T' S GOT TO BE A SI TUATI ON WHERE THEY PROVE, I N
ONE TRI AL, THAT VI RTUALLY ALL MEMBERS OF THE CLASS WERE
I MPACTED.
AND THEN YOU GO ON, I F THEY PREVAI L, TO TRY TO ESTABLI SH
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DAMAGES.
SO WHAT WE' VE DONE HERE I S THEY' VE COME I N, AND YOU PUT
THEMTO I T LAST TI ME, YOU SAI D, "CAN YOU SHOWME THAT THE
STRUCTURES FOR WAGES AT THE COMPANI ES WERE SO RI GI D THAT AN
I MPACT ON SOME PEOPLE WOULD HAVE PROPAGATED TO ALL OR NEARLY
ALL?"
AND THEY ABSOLUTELY HAVE FAI LED TO DO THAT. DR. LEAMER
SAYS HE CAN' T REACH THAT CONCLUSI ON. HE FLAT OUT ADMI TTED I N
DEPOSI TI ON - - AND I HAVE THE CI TATI ON, YOUR HONOR - - THAT "I
CAN' T TELL YOU THAT ADOBE' S STRUCTURE WAS SO RI GI D THAT I MPACT
TO SOME WOULD, WOULD FLOWDOWN TO I MPACT TO OTHERS. " AND HE
SAYS, "I DON' T BELI EVE THAT I T WOULD. "
NOW, YOU HAVE, FROMDR. MURPHY, YOUR HONOR, THE - -
THE COURT: LET ME ASK YOU A QUESTI ON. LET' S SAY
THI S PROCEEDS ALONG I NDI VI DUAL CLAI MS. HOWI S THAT GOI NG TO
WORK?
MR. VAN NEST: I WOULD CALL THAT A MASS ACTI ON.
THE COURT: A CLASS - -
MR. VAN NEST: NO, I WOULDN' T. ACTUALLY, I THI NK
THAT I S AN EASI ER, MORE EFFI CI ENT WAY TO HANDLE THI S. WE WI LL
CALL THAT A MASS ACTI ON, NOT A CLASS ACTI ON.
I F THERE ARE PEOPLE, AND CERTAI NLY THE CLASS REPS WOULD BE
AMONG THEM, WHO BELI EVE THEY WERE I NJ URED, THEY WOULD COME I N,
THEY WOULD PRESENT THEI R COMPLAI NT, MAYBE WE' D HAVE 200 OF
THEM, MAYBE WE' D HAVE 300 OF THEM, BUT WHAT WE WOULD DO I S WE
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WOULD NEGOTI ATE A REPRESENTATI VE FEWOF THOSE TO TRY THE FI RST
COUPLE OF CASES, OR THE FI RST CASE, AND SEE WHERE WE COME OUT
AND TRY TO BENCHMARK WHETHER THEY CAN ESTABLI SH LI ABI LI TY I N
THE FI RST PLACE, AND I F THEY CAN, WHAT ARE THE RANGES OF
DAMAGES.
NOW, REMEMBER, WE' RE TALKI NG - -
THE COURT: SO YOU' RE GOI NG TO HAVE BELLWETHER TRI ALS
WHI CH ARE THEN GOI NG TO EXTRAPOLATE THE CLASS AND SETTLE ON A
CLASS SI ZE. THAT' S WHAT' S GOI NG TO HAPPEN?
MR. VAN NEST: HAPPENS ALL THE TI ME.
AND I N THI S CASE, I ' D SAY, YOUR HONOR, I T' S ABSOLUTELY
APPROPRI ATE.
WHY? BECAUSE WHAT THEY' RE ALLEGI NG I S A BUNCH OF BI LATERAL
AGREEMENTS. THEY CAN TALK ABOUT OVERARCHI NG CONSPI RACY, BUT
THERE' S ONLY EVI DENCE SO FAR OF THESE BI LATERAL AGREEMENTS
BETWEEN COMPANI ES.
THE COURT: SO YOU' RE SAYI NG 200 BELLWETHER TRI ALS
AND FROMTHERE WE' LL EXTRAPOLATE TO 60, 000?
MR. VAN NEST: NO, NO, NO. I ' MSAYI NG I F WE HAD 200
PEOPLE MAKI NG CLAI MS - - I DON' T KNOWHOWMANY PEOPLE ACTUALLY
FEEL THEY HAVE A CLAI M. I ' MSAYI NG I F WE HAVE 200 OR 300
PLAI NTI FFS, WE WOULD CONDUCT A FEW, ONE, TWO, OR THREE
BELLWETHER TRI ALS, NOT A LOT, AND THAT HAPPENS ALL THE TI ME.
AND HERE I T' S APPROPRI ATE, YOUR HONOR, BECAUSE THEY FAI LED
TO SHOW, AFTER YOU GAVE THEMA CLEAR ROADMAP, THAT THE SALARY
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STRUCTURES ARE SO RI GI D - -
THE COURT: SO LET ME ASK YOU, AFTER THE THREE
BELLWETHER TRI ALS, THEN WHAT' S GOI NG TO HAPPEN? YOU' RE GOI NG
TO ASSUME, OKAY, THI S 1, 000, 2, 000 GROUP OF CLASS MEMBERS HAVE
CLAI MS THAT ARE SOMEWHAT SI MI LAR TO BELLWETHER TRI AL NUMBER TWO
AND SO, THEREFORE, THEI R DAMAGES SHOULD ROUGHLY APPROXI MATE - -
THE COURT: - - WHATEVER THE FI NDI NG WAS I N BELLWETHER
TRI AL NUMBER TWO?
MR. VAN NEST: THAT' S WHAT TYPI CALLY TAKES PLACE.
THAT' S WHAT' S TAKI NG PLACE I N A LOT OF THESE MASS TORT CASES
THAT ARE BEI NG HANDLED AROUND THE COUNTRY.
AFTER A COUPLE OF TRI ALS, SMART TRI AL LAWYERS,
SOPHI STI CATED COUNSEL FI GURE OUT WHAT' S HAPPENI NG. YOU PRI CE
THE CASES AND YOU GO.
TO ME, GI VEN THE EVI DENCE YOU HAVE, THEY ARE SWI NGI NG FOR
THE FENCES WI TH THI S CLASS THEY WANT, AND THEY HAVEN' T SHOWN
THE BASI C PREDI CATE.
THEY NOWADMI T THAT THE SALARY STRUCTURES ARE NOT SO RI GI D
THAT I MPACT ON SOME WOULD HAVE I MPACTED ALL.
THE COURT: ACTUALLY, I DI SAGREE WI TH YOU. I THI NK
ON THE I NTERNAL EQUI TY AND ON THE RI GI D WAGE STRUCTURE, I T' S
MUCH STRONGER NOWTHAN I T WAS LAST TI ME AROUND.
MR. VAN NEST: WELL, I F I COULD HAND UP WHAT I THI NK
ARE THE KEY PI ECES OF EVI DENCE, YOUR HONOR, AND ASK THE COURT
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TO TAKE A LOOK AT J UST THE VERY FI RST TAB ( HANDI NG) - - I HAVE
ONE FOR THE COURT AND ONE FOR THE CLERK.
MR. GLACKI N: I HAVE ONE.
MR. VAN NEST: THE QUESTI ON YOU ASKED LAST TI ME, YOUR
HONOR, WAS CAN YOU SHOW, WI TH CLASS- WI DE EVI DENCE, THAT
I MPACT - - THAT THE STRUCTURE I S SO RI GI D THAT I MPACT TO ONE
WOULD AFFECT ALL?
TAB 1 I S FROMDR. LEAMER' S MOST RECENT DEPOSI TI ON.
THE COURT: RI GHT. AND WE' RE GOI NG TO GET I NTO THI S.
LET ME ASK MY QUESTI ONS I F YOU DON' T MI ND.
MR. VAN NEST: SURE.
THE COURT: OKAY?
MR. VAN NEST: OF COURSE.
THE COURT: ALL RI GHT. LET ME GO TO THE PLAI NTI FFS.
WHAT EXACTLY I S YOUR THEORY OF I MPACT? HOWARE YOU
EXPLAI NI NG HOW, I F A COLD CALL WAS MADE, HOWTHE I NCREASE I N
SALARY WOULD AFFECT MORE PEOPLE THAN J UST THE RECI PI ENT OF THE
CALL?
MR. GLACKI N: SO I THI NK THAT WE WOULD SAY THAT THERE
ARE A NUMBER OF WAYS I N WHI CH THI S WOULD HAVE OCCURRED.
AND OF COURSE WE' LL NEVER KNOWEXACTLY WHAT WOULD HAVE
HAPPENED BECAUSE OF THE AGREEMENTS.
BUT THE - - OUR THEORY OF I MPACT I S THAT I T' S NOT J UST ONE
COLD CALL THAT WOULD HAVE MOVED THE DEFENDANTS' ENTI RE
COMPENSATI ON STRUCTURE. WE' VE NEVER ADVOCATED THAT. I AGREE
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THAT' S CRAZY TO SAY THAT ONE SI NGLE COLD CALL I S GOI NG TO MOVE
THE COMPENSATI ON STRUCTURE FOR THOUSANDS OF EMPLOYEES.
I NSTEAD, I F YOU LOOK AT MR. CAMPBELL' S TESTI MONY, THE CEO
OF I NTUI T WHO ALSO I S A FI GURE AT GOOGLE AND APPLE, HE EXPLAI NS
THAT WHAT HE WAS CONCERNED ABOUT AND THE REASON HE WANTED I N ON
THI S WAS I T WAS THE WAVES OF COLD CALLS. I T WAS SOMEBODY AT
GOOGLE PI CKI NG UP THE PHONE AND STARTI NG AT THE LETTER A ON,
YOU KNOW, THE LI ST OF ENGI NEERS AT I NTUI T AND CALLI NG AND J UST
DI ALI NG DOWN THE PHONE TREE AND CALLI NG EVERY SI NGLE ONE OF
THEM.
AND I T WAS THE DI SRUPTI ON THAT WAS CAUSED BY THAT WAVE OF
CALLS, OR THOSE WAVES OF CALLS, THAT THE DEFENDANTS WERE TRYI NG
TO HEAD OFF THROUGH THESE ANTI - SOLI CI TATI ON AGREEMENTS.
NOW, HAD THOSE - - HAD THE AGREEMENTS NOT BEEN I N PLACE, WE
THI NK THAT THE WORLD WOULD HAVE BEEN DI FFERENT I N A NUMBER OF
DI FFERENT WAYS.
WE THI NK THAT WHEN THE WAVES OF COLD CALLS HAPPENED, THAT
THAT WOULD HAVE PUT UPWARD PRESSURE ON THE ENTI RE SALARY
STRUCTURE BECAUSE MANAGERS WOULD LET THE - - YOU KNOW, THE LOWER
LEVEL MANAGERS WOULD LET THE HI GHER LEVEL MANAGERS KNOWTHAT
THE COMPANY' S EMPLOYEES WERE VULNERABLE, AND THAT WOULD HAVE
LED TO ADJ USTMENTS AT THE TOP OF THE SALARY STRUCTURE TO
I MPROVE THE SALARI ES, OR THE COMPENSATI ON OF ALL EMPLOYEES.
BUT THE CEOS THEMSELVES, I MEAN, WHO ENTERED I NTO THESE
AGREEMENTS I N THE FI RST PLACE WOULD HAVE BEEN AWARE, WOULD HAVE
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KNOWN THAT THEY FACED I NCREASED COMPETI TI ON FROMOTHER, FROM
THEI R OTHER PEER COMPANI ES I N SI LI CON VALLEY AND WOULD HAVE - -
AND ELSEWHERE I N NORTHERN CALI FORNI A - - AND WOULD HAVE ACTED
PREEMPTI VELY. THEY AND THEI R MANAGERS WOULD HAVE ACTED
PREEMPTI VELY. THEY WOULD HAVE RESPONDED TO THE THREAT OF
COMPETI TI ON AS WELL BY I MPROVI NG THE SALARI ES OF THEI R
EMPLOYEES, OR THE COMPENSATI ON OF THEI R EMPLOYEES.
SO I THI NK THAT, YOU KNOW, THE I NCREASE - - I F YOU LOOK AT
THE - - I F YOU LOOK AT THE COMPANI ES THEMSELVES - - THE REASON
I ' MBEI NG A LI TTLE GENERAL I S BECAUSE EACH OF THEMMANAGED
THEI R COMPENSATI ON I N SLI GHTLY DI FFERENT WAYS. I MEAN, THEY
DI DN' T - - THEY ALL USED THEI R OWN PROPRI ETARY, YOU KNOW,
PAYMENT TOOL, WHI CH I S - - OR WHATEVER SORT OF COMPUTER PROGRAM
THEI R MANAGERS WERE SUPPOSED TO LOG I NTO.
THE COURT: I GUESS I DON' T UNDERSTAND HOWTHI S
UPWARD PRESSURE ON THE ENTI RE SALARY STRUCTURE, HOWWAS THAT
SUPPOSED TO HAPPEN?
MR. GLACKI N: WELL, YOU - - THE EMPLOYEES - - YOU MEAN
FROMTHE I NCOMI NG COLD CALLS?
THE COURT: YEAH.
MR. GLACKI N: SO THE - -
THE COURT: WHAT' S THE CHAI N OF EVENTS THAT CAUSES
THAT TO HAPPEN?
MR. GLACKI N: YEAH.
THE COURT: BECAUSE I DON' T SEE I T.
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MR. GLACKI N: SO THE CHAI N OF EVENTS I S THAT SOMEBODY
AT - - YOU KNOW, ONE OF THE 800 RECRUI TERS AT GOOGLE, FOR
EXAMPLE, PI CKS UP THE PHONE, OR MAYBE SEVERAL OF THEMPI CK UP
THEI R PHONES AND THEY NEED TO HI RE A SOFTWARE ENGI NEER, AND SO
THEY GET, YOU KNOW, WHATEVER PHONE LI ST THEY HAVE FOR I NTUI T
AND THEY START AT LETTER A AND THEY GO DOWN TO LETTER Z AND
THEY CALL ALL THOSE PEOPLE, AND MAYBE THEY GET SOME LEADS, OR
MAYBE THEY DON' T.
BUT EI THER WAY, RI GHT THERE, THE PEOPLE WHO RECEI VED THOSE
CALLS HAVE GAI NED SOME I NFORMATI ON ABOUT HOWTHEY ARE PERHAPS
MORE VALUABLE THAN WHAT THEY' RE BEI NG PAI D AT I NTUI T.
I F THE - - I F I T GOES TO ANOTHER LEVEL WHERE THEY RECEI VE
J OB I NTERVI EWS OR OFFERS OR I F THEY GET A NEWJ OB AND LEAVE,
THERE' S AN ADDI TI ONAL AND GREATER LEVEL OF DI SRUPTI ON THAT
HAPPENS TO I NTUI T.
THE COURT: WELL, I GUESS I - - I GUESS I DON' T SEE
HOWTHAT' S HAPPENI NG. I SEE WHAT YOU' RE SAYI NG ABOUT THE
RECI PI ENT OF THE CALL NOWHAVI NG A BETTER SENSE OF HOWMUCH HE
OR SHE I S WORTH, BUT I GUESS I ' MNOT SEEI NG THE RELATI ONSHI P
BETWEEN THAT ONE PERSON' S BETTER REALI ZATI ON OF THEI R MARKET
VALUE AND HOWTHAT TRANSLATES TO THE ENTI RE SALARY STRUCTURE.
MR. GLACKI N: WELL, THE POI NT - - SO LET' S ASSUME THAT
SOMEBODY AT GOOGLE HAS PI CKED UP THE PHONE AND CALLED 100
SOFTWARE ENGI NEERS AT I NTUI T, SO ALL OF A SUDDEN YOU' VE GOT 100
SOFTWARE ENGI NEERS WHO HAVE GAI NED SOME I NFORMATI ON, AND THEN
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YOU MAYBE ULTI MATELY GET A SMALLER NUMBER WHO HAVE RECEI VED J OB
OFFERS OR HAVE BEEN I NVI TED I N FOR I NTERVI EWS WHO ARE GOI NG TO
GET MORE I NFORMATI ON ABOUT THEI R WORTH.
THOSE SOFTWARE ENGI NEERS - - NOW, ONCE THEY LEARN THAT
THEY' RE MORE VALUABLE, THEY' RE NOT J UST GOI NG TO SI T THERE AND
SAY, "OKAY, I UNDERSTAND THAT THE GOOGLE PEOPLE WOULD REALLY
LOVE TO HI RE ME, BUT I ' MSO HAPPY AT I NTUI T, I DON' T CARE WHAT
I NTUI T PAYS ME. "
I MEAN, THEY' RE GOI NG TO AGGREGATE. THEY' RE GOI NG TO TALK
TO THEI R MANAGER. THEY' RE GOI NG TO MAKE I T KNOWN THAT THEY
WANT MORE MONEY OR THAT THEY FEEL THEY ARE AT RI SK OF BEI NG
HI RED AWAY AND THAT' S GOI NG TO PUT PRESSURE ON THE COMPANY.
AND THE DOCUMENTS SHOWTHAT THE COMPANI ES ARE AWARE OF THI S
THREAT AND THEY TAKE I T I NTO CONSI DERATI ON. YOU KNOW, ONE
DOCUMENT I WOULD POI NT TO I S - - I T WAS EXHI BI T 17, I BELI EVE,
TO MR. HARVEY' S ORI GI NAL DECLARATI ON FROM2012, WHI CH I S THI S
DONNA MORRI S E- MAI L WHI CH I S ADOBE_008692 AND I N WHI CH
MS. MORRI S I S DESCRI BI NG THI S EXACT PROCESS.
SHE SAYS, "SALARI ES ARE GETTI NG OUT OF WHACK, OUR
EMPLOYEES' SALARI ES ARE MOVI NG APART, THERE' S NOT ENOUGH
COMPRESSI ON, WE NEED TO DO AN OUT OF CYCLE ADJ USTMENT TO DEAL
WI TH THE COMPETI TI ON THAT WE' RE GETTI NG FOR OUR COMPANI ES, "
EXCUSE ME, "FOR OUR EMPLOYEES. "
THE COURT: UM- HUM.
MR. GLACKI N: AND I T' S THAT KI ND - - AND THI S WAS I N
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FEBRUARY OF 2005, MERE MONTHS BEFORE ADOBE ENTERED I NTO I TS
COMPANY- WI DE AGREEMENT WI TH MR. J OBS.
AND SO THI S I S EXACTLY THE KI ND OF THI NG THAT WE SAY WOULD
HAVE HAPPENED A LOT MORE OFTEN HAD THESE DEFENDANTS NOT ENTERED
I NTO THESE AGREEMENTS.
THE COURT: WELL, I GUESS I ' MSTI LL CONFUSED AS TO
I F - - LET' S SAY THE GOOGLE PERSON I S CALLI NG A THROUGH Z AT
I NTUI T WI THI N A SPECI FI C J OB FAMI LY. I CAN SEE WHY, WI THI N
THAT J OB FAMI LY, SALARI ES MI GHT GO UP AT I NTUI T.
BUT WHAT I DON' T SEE I S WHY OTHER J OB FAMI LI ES AT I NTUI T
WOULD BE AFFECTED BY THE I NCREASE.
MR. GLACKI N: OH, OKAY. I UNDERSTAND.
THE COURT: YEAH. I F THESE ARE THE DI FFERENT SI LOS,
HOWI S THAT COMPENSATI ON I NFORMATI ON SUPPOSED TO BE TRANSLATED
ACROSS THE DI FFERENT FAMI LI ES?
THE COURT: OR - -
MR. GLACKI N: THI S I S - - I THI NK WHEN YOU GET TO THE
LEVEL OF J OB FAMI LI ES AND J OB TI TLES, THI S I S WHERE I NTERNAL
EQUI TY AND THE WAY THAT THESE COMPANI ES STRUCTURE THEI R
COMPENSATI ON SYSTEMS STARTS TO PLAY THE BI G ROLE, BECAUSE THE
EVI DENCE SHOWS THAT THESE - - AND THI S I S SUMMARI ZED I N OUR, AT
LENGTH I N THE BRI EFS AND I N DR. HALLOCK' S REPORT, THAT THESE
COMPANI ES CARE ABOUT MAI NTAI NI NG RELATI VE POSI TI ONI NG BETWEEN
THEI R J OB TI TLES AND THEI R J OB FAMI LI ES.
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I MEAN, I T J UST MAKES SENSE, RI GHT, THAT YOU WOULD CARE
ABOUT HOWSOFTWARE ENGI NEER 1 I S PAI D RELATI VE TO SOFTWARE
ENGI NEER 6, OR HOWA PARTI CULAR FAMI LY OF ENGI NEERS I S PAI D
RELATI VE TO ANOTHER FAMI LY OF ENGI NEERS.
I T' S NOT, I DON' T THI NK, PARTI CULARLY CONTROVERSI AL AT THI S
POI NT ACTUALLY.
THE COURT: BUT TELL ME ABOUT THE RADFORD DATA.
WHI CH COMPANI ES ARE I NCLUDED I N THAT DATA?
MR. GLACKI N: I T' S - - MY UNDERSTANDI NG I S THAT I T I S
A LARGE - - I MEAN, I T' S A LARGE GROUP OF COMPANI ES. I T' S MORE
THAN J UST THESE FI RMS, THAT' S FOR SURE.
AND I THI NK THAT YOU CAN BE - - I F YOU' RE A SUBSCRI BER TO
THE RADFORD DATA AS A COMPANY, I THI NK YOU CAN BE SELECTI VE
ABOUT THE KI NDS OF COMPANI ES THAT YOU WANT DATA FOR, AGGREGATE
DATA FOR.
THE COURT: ARE THE DEFENDANTS THAT ARE I N THI S CASE
I NCLUDED I N THE RADFORD DATA?
MR. GLACKI N: I BELI EVE SO.
THE COURT: HOW- - AND HOWI S THAT DATA ORGANI ZED? I
KNOW- - I SAWSOMEWHERE THAT I T' S J OB TI TLE AND CATEGORY.
MR. GLACKI N: RI GHT. I - - MY UNDERSTANDI NG I S THAT
THERE ARE - - YOU KNOW, THERE ARE CERTAI N BENCHMARK J OB TI TLES
THAT ARE - - WHERE MARKET AVERAGES ARE REPORTED BY RADFORD FOR
A - -
THE COURT: AND WHAT ARE THOSE?
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MR. GLACKI N: WHAT ARE THE SPECI FI C BENCHMARK J OB
TI TLES?
THE COURT: DO THEY I NCLUDE ANY THAT WOULD BE I N YOUR
ALLEGED TECHNI CAL EMPLOYEE CLASS?
MR. GLACKI N: YES, THEY DO.
THE COURT: WHAT - -
MR. GLACKI N: I HAVE TO CONFESS TO YOU, I DON' T KNOW
THEMOFF THE TOP OF MY HEAD.
THE COURT: OKAY. BUT YOU THI NK THAT THEY WOULD
I NCLUDE J OB TI TLES THAT ARE I N - -
MR. GLACKI N: YES.
THE COURT: - - THE TECHNI CAL CLASS?
MR. GLACKI N: CERTAI NLY.
THE COURT: AND WHAT DO YOU MEAN BY "BENCHMARK"? WHY
DON' T YOU EXPLAI N THAT?
MR. GLACKI N: SURE. SO, I MEAN, THE WAY THAT
COMPANI ES, I N GENERAL, USE THE RADFORD DATA I S THAT THE RADFORD
DATA SAYS - - THE DATA THAT THEY GET FROMRADFORD TELLS THEM
THAT A PARTI CULAR KI ND OF EMPLOYEE I N THE MARKET I S BEI NG PAI D
ON AVERAGE A PARTI CULAR WAGE, OR A PARTI CULAR RANGE OF WAGES,
AND THE COMPANY DECI DES THEN, WHERE DO WE WANT TO BE RELATI VE
TO THE RADFORD DATA? DO WE WANT TO BE I N THE 50TH PERCENTI LE,
WHI CH WOULD MEAN WE' RE RI GHT AT THE MEDI AN? DO WE WANT TO BE
75TH PERCENTI LE? OR DO WE WANT TO BE HI GHER OR DO WE WANT TO
BE LOWER PERHAPS?
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AND THEN THEY WOULD USE THE - - THEN THEY WOULD J UST COMPUTE
OUT OF THE RADFORD DATA WHAT THAT BENCHMARK WOULD BE FOR THEI R
I NTERNAL USE AND USE THAT TO SET THE SALARY STRUCTURES.
THE COURT: I S THE RADFORD DATA BROKEN DOWN BY
GEOGRAPHY I N ADDI TI ON TO J OB TI TLE?
MR. GLACKI N: I WOULD SUSPECT I T I S, BUT I DON' T KNOW
FOR SURE. I COULD ASK.
THE COURT: DO ANY OF THE DEFENDANTS - - MR. VAN NEST,
DO YOU KNOW? I ' MCURI OUS ABOUT THI S, YOU KNOW, BENCHMARKI NG
AND - -
THE COURT: - - THE RADFORD DATA.
MR. VAN NEST: YOU' VE GOT YOUR FI NGER ON EXACTLY THE
PROBLEM, AND THE PROBLEMI S THAT YOU HAVE 2400 J OB TI TLES, AND
YOU' RE QUI TE RI GHT, I T MAKES NO SENSE THAT I F SOMEONE I N
SANTA CLARA THAT' S A SOFTWARE ENGI NEER GETS OR DOESN' T GET A
CALL, A MASK DESI GNER OR A SEMI CONDUCTOR PERSON I N NEWMEXI CO
WOULD BE I MPACTED. THERE' S NO EVI DENCE OF THAT AND I T DOESN' T
MAKE ANY SENSE.
RADFORD I S MADE UP OF THOUSANDS OF COMPANI ES, AND THERE ARE
THOUSANDS OF J OB TI TLES, AND WHAT THE DEFENDANTS HAVE TESTI FI ED
I S THAT WHEN THEY LOOK AT A J OB TI TLE, THEY' RE BENCHMARKI NG TO
A SPECI FI C J OB TI TLE.
I NTERNAL EQUI TY I S A FACTOR THAT ONE MI GHT USE I N LOOKI NG
AT SI MI LAR EMPLOYEES DOI NG A SI MI LAR THI NG AND PERFORMI NG THE
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SAME WAY, SURE.
THE COURT: BUT I SN' T THE BENCHMARK THE WAY YOU' RE
ABLE TO DETERMI NE WHERE YOU STAND RELATI VE TO YOUR PEERS I N
TERMS OF COMPENSATI ON?
MR. VAN NEST: I T WOULD ALLOWYOU, FOR A PARTI CULAR
J OB TI TLE, TO TELL WHERE YOU FELL WI THI N THE RANGE.
THE COURT: UM- HUM.
MR. VAN NEST: BUT, AGAI N, I T' S THOUSANDS OF
COMPANI ES AND THOUSANDS OF J OB TI TLES.
AND THEI R WHOLE THEORY - - YOU' VE GOT YOUR FI NGER RI GHT ON
I T - - I S THAT EVERY ONE OF THESE 2400 J OB TI TLES WOULD HAVE
AFFECTED EVERY OTHER ONE.
AND WHEN WE ASKED DR. LEAMER, "CAN YOU SHOWTHAT THE
STRUCTURES ARE SO RI GI D THAT I MPACT ON SOME WAS I MPACT ON ALL?"
HE NOT ONLY SAI D, "NO, I DI DN' T SHOWTHAT, " BUT HE SAI D, "I
DON' T BELI EVE I T' S TRUE. "
TABS 1 AND 2 ARE THE QUOTES FROMHI S DEPOSI TI ON, YOUR
HONOR, WHERE THI S WAS MADE ABUNDANTLY CLEAR THAT HE DI D NOT - -
HE WAS NOT ABLE TO CORRELATE TI TLE TO TI TLE; HE WAS NOT ABLE TO
SAY THAT A CHANGE TO SOME WOULD BE A CHANGE TO ALL; AND HE WAS
NOT ABLE TO SAY THAT I F YOU AFFECT THE SALARI ES OF SOME PEOPLE,
YOU THEREFORE WI LL AFFECT THE SALARI ES OF SOME OR ALL BECAUSE
THE J OB STRUCTURE I S RI GI D.
AND WE KNOW- -
THE COURT: TELL ME, WHAT ARE THE RADFORD BENCHMARKS
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FOR J OB TI TLES THAT MI GHT BE WI THI N THI S PUTATI VE TECHNI CAL
EMPLOYEE CLASS? I S THERE, LI KE, SOFTWARE ENGI NEER?
MR. GLACKI N: YEAH.
THE COURT: TECHNI CAL ENGI NEER?
MR. GLACKI N: I MEAN, I BELI EVE, FOR EXAMPLE, THAT
THE TESTI MONY WAS THAT AT I NTEL, YOU KNOW, THEY COULD BENCHMARK
80 PERCENT, 75 PERCENT OF THEI R WORK FORCE DI RECTLY OFF OF
RADFORD J OB TI TLES.
SO I THI NK THERE - - AS MR. VAN NEST SAYS, THERE ARE
THOUSANDS OF COMPANI ES I N THE DATA SET, THERE' S LOTS OF J OB
TI TLES, AND I F YOU' RE I NTEL OR GOOGLE OR I NTUI T, YOU CAN
REQUEST FROMRADFORD THE BENCHMARKS THAT YOU THI NK ARE RELEVANT
TO YOU.
AND I DON' T - - I DON' T KNOWTHE LI ST OFF THE TOP OF MY
HEAD, BUT THE TESTI MONY I N GENERAL WAS THAT THESE COMPANI ES
FOUND THI S TO BE VERY USEFUL BECAUSE THERE WAS VERY - - PRETTY
COMPREHENSI VE COVERAGE OF THEI R WORK FORCES.
AND I NDEED, YOU CAN SEE WHY THERE WOULD BE AN I NCENTI VE TO
STANDARDI ZE YOUR WORK FORCE AROUND THI S PARTI CULAR DATA SET.
I T WOULD HELP YOU BE ORGANI ZED.
THE COURT: DI D ANY OF THE FOUR REMAI NI NG DEFENDANTS
BENCHMARK COMPENSATI ON AGAI NST EACH OTHER OR AGAI NST ANY OF THE
OTHER - -
MR. VAN NEST: THERE' S NO EVI DENCE OF THAT, YOUR
HONOR.
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MS. DERMODY: YES, THERE I S.
MR. GLACKI N: WELL, I DON' T - - THEY DI DN' T BENCHMARK
AGAI NST EACH OTHER. THEY BENCHMARKED AGAI NST RADFORD, WHI CH
I NCLUDED EACH OTHER' S DATA. I MEAN, I - - WE' RE NOT - - I DON' T
THI NK WE' RE ARGUI NG THAT THEY - - THI S I SN' T - - WE' RE NOT SAYI NG
THEY CALLED EACH OTHER UP AND SET PRI CE LEVELS.
MR. VAN NEST: YOUR HONOR, I DON' T THI NK THAT ALL
FOUR REMAI NI NG DEFENDANTS EVEN USED RADFORD.
THERE' S NO EVI DENCE THAT ANY DEFENDANT BENCHMARKED OFF OF
I T. THAT' S NEVER BEEN THEI R THEORY.
THEI R THEORY HAS BEEN THAT I F SOME EMPLOYEES WERE AFFECTED,
THERE WOULD THEN BE THI S RI PPLE THAT RI PPLES OUT, AND AS YOU
POI NTED OUT, MAYBE THERE' S A RI PPLE TO THE FOLKS AROUND YOU I N
YOUR J OB, YOU KNOW, AREA.
BUT CERTAI NLY NO EVI DENCE, EI THER ANECDOTALLY OR
ECONOMI CALLY, OF ANYTHI NG GOI NG ANY PARTI CULAR DI STANCE,
PARTI CULARLY WHEN WE' RE TALKI NG ABOUT 60, 000 PEOPLE. THAT' S
OUR POI NT.
SO RADFORD I S UNI VERSAL - -
THE COURT: DO ANY OF THE REMAI NI NG FOUR DEFENDANTS
USE RADFORD?
MR. GLACKI N: I BELI EVE THEY ALL DO.
THE COURT: YEAH, THAT WAS MY I MPRESSI ON.
MR. GLACKI N: YEAH.
THE COURT: OKAY. SO I ' MLOOKI NG AT A SLI DE FROM
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GOOGLE ENTI TLED "BENCHMARKI NG OVERVI EW. WHAT I S GOOGLE' S
I NTENDED POSI TI ON RELATI VE TO MARKET, NON- SALES. "
AND I T TALKS ABOUT THE ELEMENT OF PAY, BASE SALARY,
I NCENTI VE, EQUI TY COMPOSI TI ON, HOWDO WE MEASURE THE MARKET,
PEER COMPARATOR COMPANI ES, AND I T LI STS APPLE, I NTEL, I NTUI T,
AND ADOBE, ALONG WI TH OTHERS.
SO I READ THAT AND I T APPEARS THAT GOOGLE I S BENCHMARKI NG
I TS PAY AGAI NST GOOGLE, I NTEL, I NTUI T, AND ADOBE.
AND THERE ARE SI MI LAR DOCUMENTS FOR APPLE, SI MI LAR
DOCUMENTS FOR ADOBE WHERE THEY ARE BENCHMARKI NG AGAI NST EACH
OTHER.
SO - -
THE COURT: DO YOU WANT TO RESPOND TO THAT?
MR. VAN NEST: YEAH, ABSOLUTELY.
THE COURT: YEAH.
MR. VAN NEST: THE POI NT I S THAT RADFORD I S - -
THE COURT: NO, THI S I S NOT RADFORD. THI S I S A
GOOGLE DOCUMENT SAYI NG WE BENCHMARK - -
THE COURT: - - AGAI NST OUR PEER COMPARATOR COMPANI ES.
MR. VAN NEST: BY - -
THE COURT: - - WHI CH I NCLUDE APPLE, I NTEL, I NTUI T,
AND ADOBE.
MR. VAN NEST: BY J OB. BY J OB TI TLE. BY J OB TI TLE,
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RI GHT? THAT' S OUR POI NT.
THE COURT: I T DOESN' T SAY THAT.
MR. VAN NEST: WELL, I - -
MR. VAN NEST: WELL, BUT THAT' S HOWALL THESE SURVEYS
AND THAT' S HOWALL THE EVI DENCE SHAKES OUT I S THERE ARE, AS I
SAI D, THOUSANDS OF DI FFERENT J OB CATEGORI ES, AND ALL THI S DATA
I S ORGANI ZED BY J OB CATEGORY, AND SO WHI LE THE COMPANI ES WANT
TO KNOWWHERE THEY STAND WI THI N A PARTI CULAR J OB TI TLE, THERE' S
NO EVI DENCE OF ANY RI PPLE AFFECT THAT WOULD AFFECT THE WHOLE
J OB STRUCTURE. THAT' S MY POI NT.
THE COURT: SO THEN SHOULD THERE J UST BE A CLASS
CERTI FI CATI ON FOR EACH J OB TI TLE AND SAY, OKAY, SOFTWARE
ENGI NEER, THERE' S BENCHMARKI NG AMONGST THESE REMAI NI NG
DEFENDANTS, AMONGST EACH OTHER, AND SO FOR THAT J OB TI TLE, THAT
WI LL BE CLASS NUMBER ONE, SOFTWARE ENGI NEER.
MR. VAN NEST: THEY - - THEY - -
THE COURT: WHY NOT?
MR. VAN NEST: WELL, THEY HAVEN' T - -
THE COURT: WHY NOT?
MR. VAN NEST: LET ME SAY TWO THI NGS.
THE COURT: OKAY.
MR. VAN NEST: THEY HAVEN' T SHOWN FOR ANY ONE TI TLE
THAT I F SOME FOLKS I N THAT TI TLE GET A BENEFI T, OR DON' T, I T' LL
AFFECT EVERYBODY. THEY HAVEN' T SHOWN THAT BECAUSE WHAT
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DR. MURPHY SHOWS, AND WHAT THE RAWDATA SHOWS, I S THAT THERE' S
HUGE VARI ATI ON YEAR TO YEAR WI THI N A TI TLE.
I N OTHER WORDS, THE AVERAGES MOVE, BUT MANY PEOPLE WI THI N A
J OB TI TLE MOVE CONTRA TO THE AVERAGE, SOME BY A LI TTLE, SOME BY
A LOT.
I F YOU LOOK AT TAB 4, YOUR HONOR, WHI CH I ' VE PLACED BEFORE
YOU, DR. MURPHY PUTS THE RAWDATA FOR EVERY YEAR, FOR VARI OUS
TI TLES, AND WHAT YOU SEE ARE CHARTS EXACTLY LI KE THE ONE THAT
YOU SEE I N TAB 4 WHERE YOU HAVE MOVEMENT UP BY A LI TTLE FOR
SOME EMPLOYEES, MOVEMENT UP BY A LOT, MOVEMENT DOWN BY A
LI TTLE, MOVEMENT DOWN BY A LOT.
THERE I S NO - -
THE COURT: AND I AMGOI NG TO GET TO ALL OF THE
MURPHY AND LEAMER CHARTS AND MATERI ALS.
MR. VAN NEST: BUT CERTAI NLY - - CERTAI NLY, YOUR
HONOR, CERTAI NLY THERE I S MERI T I N SAYI NG YOU CAN' T CERTI FY A
60, 000 EMPLOYEE CLASS WI TH 2400 J OB TI TLES WHERE THEY DON' T
HAVE ANY EVI DENCE OF ANY CORRELATI ON BETWEEN AND AMONG J OB
TI TLES.
AND AS YOU POI NTED OUT LAST TI ME, CLEARLY THERE ARE SOME
CATEGORI ES OF EMPLOYEES THAT FOLKS CARED ABOUT MORE THAN
OTHERS.
THE COURT: AND WHI CH ONES ARE THOSE?
MR. VAN NEST: WELL, I THI NK MOST OF THE PEOPLE I N
THE DOCUMENTS YOUR HONOR CI TED LAST TI ME ARE SOFTWARE ENGI NEERS
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AND THEY TENDED TO BE PEOPLE MORE SENI OR THAN OTHERS, AND THE
TOP TALENT, I THI NK, WAS THE QUOTE THAT YOU GAVE AND THE
SOFTWARE ENGI NEERS MAKE UP - - AND THERE' S A WI DE RANGE OF
SOFTWARE ENGI NEERS, TOO, SO THEY DO A WI DE VARI ETY OF THI NGS.
BUT CERTAI NLY HERE WHERE WE' VE GOT TWO- THI RDS OF OUR CLASS
AT I NTEL WI TH J OBS LI KE SEMI CONDUCTOR MANUFACTURER AND CHEMI CAL
ENGI NEER, ELECTRI CAL ENGI NEER, MASK DESI GNER, THEY HAVE NOTHI NG
TO DO WI TH ANY OF THE DOCUMENTS YOUR HONOR HAS SEEN OR CI TED,
OR ANY OF THE EVI DENCE I N THE CASE.
AND I F THEY HAD GONE AND SAI D - - AND TAKEN YOUR ADVI CE AND
TRI ED TO FI GURE OUT WHI CH OF THESE CLASSES OR TI TLES CAN I SHOW
SOME CORRELATI ON WI THI N, MAYBE WE' D HAVE SOMETHI NG TO TALK
ABOUT.
THEY HAVEN' T DONE EVEN THAT. THEY HAVEN' T DONE EVEN THAT
BECAUSE, AS TAB 4 SHOWS - - AND I ' VE GOT A COUPLE OTHER TABS
WHEN WE GET TO THEM, YOUR HONOR - - THERE I S HUGE VARI ATI ON
WI THI N EACH TI TLE.
FOR EXAMPLE - -
THE COURT: SO LET ME MAKE SURE I UNDERSTAND.
SO THE DEFENDANTS WOULD CONCEDE THAT THERE' S BENCHMARKI NG
WI THI N A J OB TI TLE, BUT YOU' RE SAYI NG THERE' S NO RELATI ONSHI P
MR. VAN NEST: WE' RE - - YES. WE' RE SAYI NG THAT - -
THE COURT: OKAY.
MR. VAN NEST: - - WHEN PEOPLE SAY, "I WANT TO BE 65
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PERCENT OF SOMETHI NG, " THEY' RE LOOKI NG AT A SPECI FI C J OB
CLASSI FI CATI ON.
THERE I S NO BENCHMARKI NG - -
THE COURT: SO THE CLASSI FI CATI ON CAN CERTAI NLY
I NCLUDE A FAMI LY OF J OB TI TLES, THOUGH.
MR. VAN NEST: I THI NK THEY' RE RATHER SPECI FI C I N
RADFORD, BUT, YOU KNOW, I DON' T WANT TO SPEAK - - RADFORD I S NOT
THE ONLY SURVEY OUT THERE.
BUT CERTAI NLY, YOUR HONOR, CERTAI NLY NOBODY I S LOOKI NG AT
RADFORD TO BENCHMARK ACROSS J OB TI TLES.
AND, AGAI N, EVEN WI THI N TI TLES, THE POI NT THAT WE' RE MAKI NG
I S THERE I S AN ENORMOUS RANGE OF DI SCRETI ON. THESE SALARY
BANDS WHI CH AFFECTED SOME OF THE BASE SALARI ES, SOME OF THEM
WERE $100, 000, $100, 000 WI THI N A BAND, AND THAT' S J UST SALARY,
NOT BONUS OR EQUI TY.
THAT' S WHY YOU SEE THI NGS LI KE TAB 4 WHERE SOME
EMPLOYEES - -
THE COURT: WE' RE GOI NG TO GET TO MR. MURPHY, BUT I
THI NK WE' LL HAVE WAY MORE THAN ENOUGH STATI STI CS THAN WE ALL
WANT BY THE END OF THE DAY.
MR. VAN NEST: I THI NK - -
THE COURT: LET ME ASK A QUESTI ON.
MR. VAN NEST: SURE.
THE COURT: AND THI S GOES TO MR. GLACKI N.
WHAT EVI DENCE CAN YOU CI TE TO THAT THE DEFENDANTS VI EWED
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EACH OTHER AS PEERS FOR COMPARI NG COMPENSATI ON, FOR HAVI NG SOME
TYPE OF COMPENSATI ON EQUI TY ACROSS COMPANI ES?
MR. GLACKI N: SO I ' MLOOKI NG AT SOMETHI NG THAT WAS
J UST KI NDLY HANDED TO ME.
DO YOU KNOWWHAT THI S I S AN EXHI BI T TO?
MR. HARVEY: THAT' S EXHI BI T NUMBER - - THAT' S THE
CI SNEROS DECLARATI ON.
MR. GLACKI N: SO THI S WOULD BE AN EXHI BI T TO
MS. CI SNEROS' S DECLARATI ON, I T' S PLAI NTI FF' S 621, WHI CH I S A
FAI RLY TYPI CAL DOCUMENT. I T' S AN E- MAI L WHERE - - I FEEL LI KE I
OUGHT TO J UST LET MR. VAN NEST AT LEAST SEE WHAT I ' MTALKI NG
ABOUT.
MR. GLACKI N: I N FACT, WE CAN STAND HERE TOGETHER.
THI S I S AN E- MAI L, AN I NTERNAL E- MAI L TO GOOGLE. THE TOP
LI NE RECI PI ENT I S SHONA BROWN, WHO' S THE HEAD PERSON AT GOOGLE
WI TH RESPECT TO H. R. AND COMPENSATI ON, AND I T' S A - - THERE' S A
SPECI FI C CALL OUT I N THE SECOND PAGE - - AND THI S I S PLAI NTI FF' S
621, GOOGLE/ HI GH- TECH - -
EXCUSE ME, BOB.
MR. VAN NEST: SURE.
MR. GLACKI N: YEAH, 00336877.
AND, YOU KNOW, PARTWAY THROUGH THE E- MAI L, THEY ASK
THEMSELVES THE QUESTI ON, WELL, HOWDOES OUR OVERALL BUDGET
COMPARE TO WHO WE CONSI DER TO BE OUR PEERS?
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AND THE - - THE PEERS THAT ARE LI STED HERE ARE ADOBE,
AMAZON, APPLE, CI SCO, AND I NTEL.
AND THEY ASK, HOWDOES WHAT WE' RE DOI NG I N TERMS OF MERI T
I NCREASES AND BONUS POOL THI S YEAR COMPARE TO THOSE COMPANI ES?
AND I THI NK THERE ARE - -
THE COURT: WHAT' S THE - - WHAT' S THAT EXHI BI T NUMBER?
THAT' S THE CI SNEROS DECLARATI ON?
MR. GLACKI N: I T' S PLAI NTI FF' S EXHI BI T 621, AND I ' LL
READ THE BATES NUMBER I N CASE THAT NEEDS TO BE LOOKED AT LATER.
I T' S GOOGLE/ HI GH- TECH - - 00 - - 621 TO CI SNEROS, 00336877.
THE COURT: 0033687?
MR. GLACKI N: 6877.
THE COURT: OKAY. THAT' S THE BATES NUMBER.
MR. GLACKI N: AND, YOU KNOW, I DEPOSED MR. SMI TH, THE
CEO OF I NTUI T, AND THERE WAS A - - YOU KNOW, THERE WAS A - -
THERE WAS AN AWARENESS AMONG, CERTAI NLY AT I NTUI T, AND I
BELI EVE AT THESE OTHER FI RMS, OF WHAT I T MEANT TO BE SORT OF A
TOP RANKED FI RMAND THEY HAD A VI EWOF THEMSELVES AND A DESI RE
TO BE THAT, AND THE OTHER TOP RANKED FI RMS I N SI LI CON VALLEY
ARE THE DEFENDANTS, YOU KNOW, I NTEL, APPLE, GOOGLE.
I MEAN, THESE COMPANI ES ARE THE - - THEY ARE THE STABLE
I NSTI TUTI ONAL, YOU KNOW, CREME DE LA CREME, TOP OF THE CROP I N
TERMS OF WHO YOU' D WANT TO WORK FOR, AND THERE ARE - - THERE ARE
MANY EXAMPLES I N THE RECORD OF THEMLOOKI NG AT EACH OTHER TO
COMPARE THEMSELVES I N TERMS OF COMPENSATI ON.
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THE COURT: BUT HOWDOES THAT - - I T APPEARS THAT EACH
OF THE REMAI NI NG DEFENDANTS HAD THESE ON- LI NE TOOLS TO GET
I NFORMATI ON ABOUT A SPECI FI C J OB TI TLE, THE SALARY BAND AND
WHATNOT, AND ALSO TO SORT OF DO SOME BENCHMARKI NG.
WHERE DI D - - DI D YOU GET I NTO, I N ANY OF THE DEPOSI TI ONS,
HOWTHOSE ON- LI NE TOOLS WERE CREATED, WHAT I NFORMATI ON WAS USED
AND I NPUTTED TO CREATE THAT SYSTEM? OR - -
MR. GLACKI N: WELL, I THI NK WE DI D GET I NTO THAT I N
THE DEPOSI TI ONS.
THE COURT: OKAY.
MR. GLACKI N: THE - - YOU KNOW, THE ANSWER I S THAT THE
H. R. DEPARTMENT WOULD I NPUT THI NGS LI KE RADFORD DATA, OR WHAT
PERCENTI LE THEY WANTED TO BE AT VI S- A- VI S THE RADFORD DATA.
AND ANYTHI NG ELSE I N TERMS OF LI KE - - YOU KNOW, FOR
EXAMPLE, WHAT THE - - YOU SEE THI S I N THE BRI EFS. I MEAN, WHAT
THE APPROPRI ATE BONUS WAS FOR ONE OF FI VE PERFORMANCE RANKI NGS,
SO THAT WOULD BE SOMETHI NG THAT WOULD BE DETERMI NED AT THE TOP,
WHAT THE APPROPRI ATE PERCENTAGE OR EQUI TY GRANT WAS FOR A
PARTI CULAR - - YOU KNOW, HOWYOU DI D THAT I N TERMS OF YOUR
PERFORMANCE RANKI NG.
AND THEN I F YOU' RE THE - - AND ALL OF THAT ALSO WE SEE I N
THE DOCUMENTS, AND THI S I S EXPLAI NED I N THE BRI EF, I S CURVED
OUT. I MEAN, I T' S ALL SET RELATI VE.
SO, FOR EXAMPLE, AT I NTEL, I NTEL - - YOU KNOW, THERE' S A LOT
OF TALK ABOUT VARI ABLE COMPENSATI ON, BUT I NTEL WANTED TO MAKE
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SURE THAT 60 TO 70 PERCENT OF I TS MANAGERS, OR EXCUSE ME, OF
I TS EMPLOYEES WERE RATED MEDI UM, AND THEN I T WANTED TO MAKE
SURE THAT DI FFERENT PERCENTI LES AT THE TOP AND THE BOTTOMWERE
RATED EXCELLENT OR, YOU KNOW, NEEDS I MPROVEMENT.
AND I T WAS STRUCTURED OUT ON A CURVE, J UST LI KE I T WAS AT
ADOBE. ADOBE' S H. R. MANAGER TESTI FI ED THAT THEY SET
COMPENSATI ON ON A BELL CURVE. I MEAN, I T' S HARD TO I MAGI NE A
MORE STRUCTURED COMPENSATI ON SYSTEM.
THE COURT: WHAT ARE THE THOUSANDS OF COMPANI ES THAT
ARE I N RADFORD? WHAT OTHER TYPES OF J OBS, I ' MASSUMI NG I T' S
NOT ALL TECH, ARE I N RADFORD?
MR. GLACKI N: NO. RADFORD I S A HUGE COMPANY AND I T
SERVES ALL KI NDS OF DI FFERENT CORPORATI ONS I N AMERI CA,
I NCLUDI NG PEOPLE - - YOU KNOW, COMPANI ES THAT HAVE NOTHI NG TO DO
WI TH TECH.
AND WHAT YOU ARE - - I F YOU' RE A CLI ENT OF RADFORD, YOU GI VE
THEM- - YOU TELL THEMWHAT YOU' RE I NTERESTED I N. YOU SAY, "I
WANT TO KNOWABOUT THESE KI NDS OF J OBS OR THESE J OB TI TLES. I
EMPLOY THESE KI NDS OF PEOPLE. I EMPLOY PEOPLE WHO DO THI S KI ND
OF WORK. "
AND THEN RADFORD GI VES YOU, YOU KNOW, A SELECTI ON OF 30 OR
50 OR 100 OR MAYBE MORE J OB TI TLES.
THE COURT: AND WHERE ARE ALL THESE COMPANI ES BASED?
I S I T WORLDWI DE?
MR. GLACKI N: WELL, THERE' S A - - I MEAN, RADFORD
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HAS - - I DON' T KNOWTHE ANSWER TO THAT QUESTI ON. I DON' T KNOW
I F RADFORD I NCLUDES I NTERNATI ONAL DATA.
BUT I KNOWTHAT RADFORD DOES HAVE A SUBSET OF TECH SECTOR
DATA WHI CH WOULD HAVE BEEN THE SUBSET THAT THI S - - THAT THESE
FAMI LY OF COMPANI ES, OR GROUP OF COMPANI ES WOULD HAVE
SUBSCRI BED TO, OR DI D SUBSCRI BE TO.
THE COURT: MR. VAN NEST, DO YOU KNOWI F RADFORD HAS
GLOBAL SALARY I NFORMATI ON?
MR. VAN NEST: I BELI EVE I T DOES, YOUR HONOR. BUT
YOU CAN GET VARI OUS SLI CES OF RADFORD.
BUT A MORE I MPORTANT POI NT, I THI NK, YOUR HONOR, I S RADFORD
REALLY I S NOT RELEVANT TO THEI R THEORY OF THI S CASE. I T' S NOT
A PRI CE FI XI NG CASE. THAT' S NOT THE POI NT.
THEI R THEORY I S THAT WHEN SOME COLD - - WHEN COLD CALLS WERE
PROHI BI TED, SOME PEOPLE I N EACH COMPANY DI DN' T GET A CALL AND
DI DN' T GET I NFORMATI ON AND, THEREFORE, THAT I NFORMATI ON DI DN' T
BUBBLE UP AND, THEREFORE, THERE WAS SUPPRESSI ON THAT PROPAGATED
OUT TO EVERYBODY.
RADFORD HAS ABSOLUTELY NOTHI NG TO DO WI TH THAT. RADFORD I S
MARKET DATA FROMTHOUSANDS OF COMPANI ES THAT ALL COMPANI ES LOOK
AT, NOT J UST THESE, BUT HEWLETT- PACKARD AND EVERYBODY HERE I N
THE VALLEY AND EVERYWHERE ACROSS THE UNI TED STATES. RADFORD I S
NOT A PART OF THEI R THEORY OF I MPACT.
AND WHAT I KEEP COMI NG BACK TO I S THERE I S NO CORRELATI ON
BETWEEN J OB TI TLES, EI THER WI THI N A COMPANY OR ACROSS
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COMPANI ES. DR. LEAMER LOOKED AT ALL OF THI S AND HE CONCLUDED
HE COULDN' T FI ND CORRELATI ON BETWEEN J OB TI TLES ACROSS
COMPANI ES BECAUSE THERE I S NONE, AND THAT' S WHAT I KEEP COMI NG
BACK TO.
I F YOU WANT TO CERTI FY SOMETHI NG, I T CAN' T POSSI BLY BE A
CLASS OF 2400 J OB TI TLES.
NOW, EVEN WI THI N A FEWJ OB TI TLES, WE HAVE SHOWN, AND I
DON' T THI NK THEY' RE DI SPUTI NG I T, THAT THERE' S A WI DE VARI ATI ON
I N WHAT PEOPLE ARE PAI D, BECAUSE MANAGERS - - AND THERE ARE
12, 000 OF THEMI N THESE COMPANI ES THAT ARE, THAT ARE
DEFENDANTS - - THEY HAD ABI LI TY, WI THI N WI DE BANDS, TO AWARD
DI FFERENT SALARI ES, DI FFERENT BONUSES, DI FFERENT EQUI TY, AND
THAT' S WHY TAB 4 LOOKS LI KE I T DOES.
THE COURT: WE' RE GOI NG TO GET TO THAT. I HAVE
SPECI FI C QUESTI ONS ABOUT THOSE CHARTS.
MR. VAN NEST: OKAY. BUT THAT' S - - MY POI NT I S
THERE' S WI DE VARI ATI ON AND FLEXI BI LI TY.
THE COURT: I HEAR YOU.
MR. VAN NEST: NOT LOCKSTEP.
MR. GLACKI N: MAY I RESPOND TO ONE OF YOUR QUESTI ONS
NOWTHAT I HAVE BETTER I NFORMATI ON, WHI CH I S THE DATA THAT
THESE COMPANI ES SUBSCRI BED TO FROMRADFORD WAS U. S. , SO THESE
COMPANI ES WERE GETTI NG THE TECH SECTOR SLI CE OF U. S. WAGE DATA
THAT WAS BEI NG COLLECTED BY RADFORD.
MR. VAN NEST: YOU CAN CUT I T THI NNER THAN THAT, TOO.
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I NSI DE SI LI CON VALLEY, OUTSI DE SI LI CON VALLEY. OBVI OUSLY MOST
OF I NTEL' S EMPLOYEES ARE OUTSI DE SI LI CON VALLEY. MORE THAN
HALF OF THE PROPOSED CLASS I S OUTSI DE SI LI CON VALLEY.
SO, AGAI N, I THI NK, YOUR HONOR, RADFORD, WE' RE SORT OF
BARKI NG UP THE WRONG TREE. I T' S NOT THEI R THEORY OF I MPACT.
THE COURT: WELL, I T' S A WAY THAT YOU CAN GET A
SPREADI NG OF EI THER THE SUPPRESSI ON OR - - I SHOULD SAY THE
ALLEGED SUPPRESSI ON OR ALLEGED SALARY I NCREASE BASED ON THE
COLD CALLI NG I S I F I T SORT OF GETS I NCORPORATED I NTO RADFORD
AND THEN OTHER COMPANI ES ARE BENCHMARKI NG OFF OF RADFORD, YOU
CAN SEE HOWTHE EFFECTS COULD GET PROPAGATED AND SPREAD - -
MR. GLACKI N: YES.
THE COURT: - - BY BENCHMARKI NG THROUGH THESE, I N
ADDI TI ON TO J UST WORD OF MOUTH AND - -
MR. VAN NEST: THERE ARE THOUSANDS OF - -
THE COURT: - - I NTERNAL EQUI TY.
MR. VAN NEST: EXCUSE ME.
MR. VAN NEST: THERE ARE THOUSANDS OF COMPANI ES THAT
FEED THE RADFORD DATA. THEY HAVEN' T EVEN ATTEMPTED TO SHOW
THAT THESE COMPANI ES, EI THER ONE OF THEMOR ALL FOUR OF THEM,
COULD AFFECT THE RADFORD DATA.
I MEAN, THERE ARE THOUSANDS - - YOU' VE GOT HEWLETT- PACKARD.
YOU' VE GOT - - HOWMANY COMPANI ES DO WE HAVE DOWN HERE THAT ARE
NOT I N THE GROUP, NOT TO MENTI ON PEOPLE AROUND THE
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UNI TED STATES, ENORMOUS TECH COMPANI ES?
SO RADFORD I S NOT I MPACTED BY WHAT THESE COMPANI ES DO, NOR
ARE THEY CLAI MI NG THAT.
WHAT THEY' RE CLAI MI NG I S PEOPLE I N THE COMPANI ES DI DN' T
GET THE I NFORMATI ON THEY WANTED AND, THEREFORE, THEI R WAGES
WERE SUPPRESSED AND, THEREFORE, THAT SUPPRESSI ON WOULD HAVE
PROPAGATED OUT ACROSS J OB TI TLES.
AND THAT' S WHERE WE' RE SAYI NG THEY HAVE THI S COMPLETE
FAI LURE OF PROOF. THEY CAN' T SHOWTHAT.
THEY' VE TRI ED TO SHOW, THROUGH AVERAGI NG, THAT THERE' S
SOME SI MI LARI TY WI THI N TI TLES. THAT' S WHAT DR. LEAMER DI D.
BUT AVERAGI NG DOES EXACTLY WHAT YOU TOLD THEMNOT TO DO
LAST TI ME. YOU SAI D, "TELL ME HOWYOU CAN SHOW, WI TH ALL THI S
VARI ATI ON, THAT THE STRUCTURE WAS SO RI GI D THAT AN I MPACT ON
SOME WOULD I MPACT OTHERS. "
AND I NSTEAD OF LOOKI NG AT THE KI ND OF VARI ATI ON THAT
EXI STS, HE AVERAGED I T.
AND THAT' S WHAT J UDGE ALSUP I N GPU AND WHAT J UDGE BRADY I N
REED - - J UDGE GRADY I N REED SAI D. I F YOU' RE LOOKI NG TO SEE
WHETHER THERE I S I MPACT ON ALL OR NEARLY ALL, OR ON A WI DE
GROUP, YOU CAN' T AVERAGE, BECAUSE THE FACT THAT AN AVERAGE GOES
UP OR DOWN DOESN' T TELL YOU WHETHER SOME, A LOT, A FEW, OR MANY
WERE I MPACTED. THAT' S THE WHOLE POI NT.
AND THEY DI D EXACTLY WHAT J UDGE ALSUP, J UDGE GRADY, THE
WEI SFELDT CASE, THE FLEI SHMAN CASE, ALL THESE CASES SAY WHEN
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THE I SSUE I S, I S THERE A BAND OF EMPLOYEES FOR WHOMWE CAN
PROVE THAT ALL OR NEARLY ALL WERE I MPACTED, YOU CANNOT AVERAGE.
THAT I S BECAUSE - - BECAUSE THE AVERAGI NG TAKES AWAY THE WI DE
VARI ATI ON THAT EXI STS, AND THAT' S WHY J UDGE ALSUP REFUSED TO
CERTI FY I N GPU.
J UDGE GRADY REFUSED TO CERTI FY - -
THE COURT: WELL, HE DI D CERTI FY THE CLASS I N GPU.
I AGREE THAT HE DI D ALSO DENY CERTI FYI NG - -
MR. VAN NEST: RI GHT. THERE WAS A VERY - -
THE COURT: HE DENI ED I N SOME AND GRANTED I N OTHERS.
MR. VAN NEST: WHAT HE GRANTED WAS A VERY SMALL GROUP
OF PEOPLE WHO DI D EVERYTHI NG I N A SAME WAY ON A WEBSI TE AND
BOUGHT THE SAME PRODUCT AT THE SAME TI ME.
THAT' S VERY DI FFERENT - - I N THE REED CASE, J UDGE GRADY
SAI D, "I ' MNOT GOI NG TO CERTI FY A CLASS OF EVEN 19, 000 NURSES
THAT ALL HAVE THE SAME TI TLE WHO ARE PAI D ON A WAGE GRI D THAT
DOESN' T EVEN MEASURE PERFORMANCE, J UST YEARS OF SERVI CE. "
THE COURT: UM- HUM.
MR. VAN NEST: HE SAI D, "BECAUSE YOU AVERAGED, YOU' RE
NOT TELLI NG ME WHETHER OR NOT THERE I S I MPACT ON SOME, ALL, OR
NEARLY ALL MEMBERS OF THE CLASS. "
AND SO HE SAI D, "NO CERT. YOU HAVE TO PROCEED BY
I NDI VI DUAL CLAI MS OR I N A MASS ACTI ON, " AS I MENTI ONED EARLI ER,
WHI CH I S EXACTLY THE RESULT THAT SHOULD FLOWHERE, PARTI CULARLY
WHERE YOU MADE VERY CLEAR LAST TI ME THAT BASED ON THEI R
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THEORY - -
THE COURT: LET ME I NTERRUPT YOU ONE SECOND.
MR. VAN NEST: YEAH.
THE COURT: SO THE PLAI NTI FFS HAVE SUBMI TTED EVI DENCE
THAT ADOBE USES SALARY MATRI XES, A SALARY PLANNI NG TOOL, AN
ON- LI NE SALARY RANGE WEBSI TE FOR MANAGERS, AND SOMETHI NG CALLED
THE OMNI TURE CURRENT COST STRUCTURE.
CAN YOU GI VE US A LI TTLE I NFORMATI ON ABOUT WHAT THAT
OMNI TURE CURRENT COST STRUCTURE I S?
OR MAYBE THE PLAI NTI FFS KNOW. WHOEVER KNOWS THE ANSWER TO
THI S QUESTI ON.
MR. VAN NEST: YOUR HONOR, I CAN ANSWER GENERALLY - -
THE COURT: OKAY.
MR. VAN NEST: - - THAT ALL THESE COMPANI ES - -
THE COURT: UM- HUM.
MR. VAN NEST: - - HAVE SOME KI ND OF COMPENSATI ON
TOOLS THAT THEY USE. OBVI OUSLY I F YOU HAVE 100, 000 EMPLOYEES
LI KE I NTEL, YOU' VE GOT TO HAVE SOME KI ND OF TOOL TO HELP YOU
MANAGE COMPENSATI ON.
THE POI NT OF ALL OF THESE - -
THE COURT: AND WHY I S THAT, FOR I NTERNAL EQUI TY?
MR. VAN NEST: NO, TO MANAGE THE COMPANY.
THE COURT: WHY I S THAT?
MR. VAN NEST: I F YOU' VE GOT A HUNDRED THOUSAND
PEOPLE, SOMEBODY HAS TO KNOWWHAT THEY' RE BEI NG PAI D. SOMEBODY
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HAS TO KNOW- -
THE COURT: YOU DON' T NEED A TOOL FOR THAT. YOU J UST
NEED A SPREADSHEET WI TH THE NAME AND AMOUNT OF MONEY THEY' RE
MAKI NG.
WHAT I S THE OMNI TURE, PLEASE?
MR. VAN NEST: I T' S A COMPANY THAT ADOBE ACQUI RED.
THE COURT: OKAY.
MR. VAN NEST: OMNI TURE WAS BASI CALLY AN ON- LI NE
ASSI STANT FOR MARKETI NG. I T' S NOT REALLY SOMETHI NG THAT DI D
TOO MUCH WI TH COMPENSATI ON. THE MAI N POI NT OF OMNI TURE WAS
ON- LI NE MARKETI NG AND THEY WERE ACQUI RED BY ADOBE SEVERAL YEARS
AGO. MY DAUGHTER USED TO WORK THERE, SO I KNOW.
BUT GETTI NG BACK TO MY PRI NCI PAL POI NT, YOUR HONOR - -
THE COURT: WELL, LET ME ASK MR. GLACKI N, DO YOU HAVE
ANY OTHER I NFORMATI ON ON THI S, OR I S I T NOT REALLY RELEVANT TO
COMPENSATI ON?
MR. GLACKI N: I DON' T HAVE ANY MORE I NFORMATI ON FOR
YOU, YOUR HONOR.
THE COURT: OKAY.
MR. GLACKI N: SORRY.
MR. GLACKI N: I ' D BE HAPPY TO RESPOND TO SOME THI NGS
THAT MR. VAN NEST HAS SAI D ABOUT OTHER CASES. I ' MHAPPY TO
TAKE YOUR QUESTI ONS.
THE COURT: YOU KNOW, WE TALKED A LOT ABOUT REED AND
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GPU LAST TI ME, SO I ' MOKAY.
LET ME ASK THE NEXT QUESTI ON. LET ME ASK MR. GLACKI N, LAST
TI ME AROUND YOU ALL HAD ARGUED THAT THE COURT SHOULD GRANT
CLASS CERT I F COMMON PROOF OF THE DEFENDANTS' ANTI TRUST
CONSPI RACY WOULD BE THE PROMI NENT I SSUE AT TRI AL.
THE COURT: I S THAT - - I S THAT STI LL YOUR POSI TI ON?
MR. GLACKI N: YES, YOUR HONOR. I MEAN, WE THI NK - -
WE - - OUR POSI TI ON I S THAT CLASS CERTI FI CATI ON COULD BE GRANTED
BASED SOLELY ON THE FACT - - ON THE OVERWHELMI NG I SSUE OF THE
DEFENDANTS' LI ABI LI TY FOR THE COMMON I LLEGAL AGREEMENTS.
THE COURT: BUT HOWWOULD THAT PLAY OUT?
MR. GLACKI N: WELL, I MEAN, I THI NK THAT THI S GETS - -
BACKS I NTO A LI TTLE BI T OF THE CONVERSATI ON WE WERE HAVI NG
EARLI ER ABOUT TREATI NG THI S AS A MASS TORT ACTI ON - -
THE COURT: UM- HUM.
MR. GLACKI N: - - WHI CH I S THAT WHETHER - - REGARDLESS
OF HOWTHI S ACTI ON I S BROUGHT, THE PROOF I S GOI NG TO BE THE
SAME.
I F YOU - - I F MR. HARI HARAN CAME I N HERE AND TRI ED TO
MAI NTAI N AN I NDI VI DUAL ACTI ON AGAI NST THESE COMPANI ES FOR THI S
VI OLATI ON, HE' D BE MAKI NG THE SAME ARGUMENTS AND ADVANCI NG THE
SAME PROOF ABOUT THE SEMI - RI GI D J OB STRUCTURE AT THE FI RMS,
WHI CH MEANT THAT ANY REACTI ON TO THI S I NCREASED LEVEL OF
COMPETI TI ON WAS GOI NG TO BE - - TO HAVE TO HAPPEN FI RM- WI DE.
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SO THERE' S NO - - I MEAN, THI S I S WHERE WE KI ND OF GET I NTO
THE AMGEN AREA. YOU KNOW, WE ARE REQUI RED TO SHOWA PLAUSI BLE
METHODOLOGY FOR MOVI NG I MPACT. WE' VE - -
THE COURT: WELL, THAT' S - - THAT' S FROM
J UDGE I LLSTON' S CASE, RI GHT, THE METHODOLOGY? WHAT, OTHER THAN
J UDGE I LLSTON' S CASE, SAYS PLAUSI BLE METHODOLOGY I S ENOUGH? I S
THERE ANYTHI NG ELSE?
MR. GLACKI N: I ' D HAVE TO GO BACK - - I COULD LOOK AT
THE LCDS CASE AND SEE WHAT SHE' S CI TI NG THERE. I THI NK THERE
ARE A NUMBER OF CASES THAT HAVE USED THE PHRASEOLOGY PLAUSI BLE
METHODOLOGY FOR PROVI NG I MPACT.
THE COURT: AREN' T PEOPLE NOWSAYI NG SI GNI FI CANT
PROOF?
MR. VAN NEST: UM- HUM.
MR. GLACKI N: NO, ABSOLUTELY NOT.
THE COURT: I WI LL J UST TELL YOU, AS MUCH RESPECT AS
I HAVE FOR J UDGE I LLSTON, I WOULD FEEL RELUCTANT TO RELY ON A
DI STRI CT COURT CASE THAT' S PRE- AMGEN, PRE- COMCAST, THAT WAS
AGGREGATED ON OTHER GROUNDS.
I DON' T KNOW. WAS HER CLASS CERT I SSUE ACTUALLY EVEN
REVI EWED BY THE CI RCUI T COURT?
MR. GLACKI N: WELL, A 23( F) POSI TI ON WAS FI LED. I
WROTE THE OPPOSI TI ON.
SO, YEAH, I MEAN - -
THE COURT: SO WAS I T - -
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MR. GLACKI N: A 23( F) PETI TI ON WENT UP AND I T WAS
DENI ED. THE PETI TI ON PRESUMABLY WENT TO THE PANEL, THE MOTI ONS
PANEL OF THE NI NTH CI RCUI T.
THE COURT: UH- HUH.
MR. GLACKI N: AND THEY READ THE PETI TI ON, THEY READ
OUR OPPOSI TI ON, AND ABOUT 30 DAYS LATER THEY REJ ECTED THE
PETI TI ON.
SO I F I - - I F I COULD ADDRESS THI S - -
THE COURT: YOU MEAN REJ ECTED THE PETI TI ON TO J UST
OVERTURN THE CLASS CERT DECI SI ON?
MR. GLACKI N: CORRECT. WELL, THEY DENI ED - - I T' S A
PETI TI ON FOR REVI EW, AND THEN THEY COULD, I THI NK I N THEORY,
REQUEST FURTHER BRI EFI NG OR THEY COULD DECI DE - - THEY COULD
DECI DE THE QUESTI ON BASED SI MPLY ON THE PETI TI ON AND THE
RESPONSE, WHI CH I THI NK I S TOTALLY NORMAL.
BUT I N THE - - I N ANY EVENT, THEY DENI ED THE PETI TI ON I S
WHAT THEY DI D.
THE COURT: BUT WHY SHOULD I USE THE PLAUSI BLE
METHODOLOGY? THAT SEEMS LI KE THAT' S A RI SKY MOVE I N THI S
ENVI RONMENT WHEN ALL THE CASE LAWHAS BEEN CHANGI NG SO MUCH.
MR. GLACKI N: WELL, I THI NK THAT THE - - THE
SI GNI FI CANT PROOF STANDARD THAT - - THE SI GNI FI CANT PROOF OR THE
CONVI NCI NG PROOF STANDARD THAT' S BEEN CI TED BY THE
DEFENDANTS - -
THE COURT: YEAH.
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MR. GLACKI N: - - I F YOU LOOK AND SEE WHERE THAT COMES
FROM, EVERY SI NGLE TI ME I T COMES FROMDUKES.
AND WHEN WE WERE HERE LAST TI ME WE TALKED ABOUT THE FACT
THAT DUKES I S A CASE THAT' S ABOUT 23( A) . AND I N DUKES THE
SUPREME COURT SAI D THAT I F YOU ARE ARGUI NG THAT I T I S THE
ABSENCE OF A POLI CY THAT HAS CAUSED HARMBY LEADI NG TO
DI SCRI MI NATI ON AGAI NST A MI LLI ON WORKERS AND THAT I S THE - - I T
I S THE ABSENCE OF THE POLI CY THAT I S YOUR VI OLATI ON, AND I F
YOUR ONLY EVI DENCE THAT THI S I S TRULY A COMMON I SSUE I S
STATI STI CAL PROOF, I F THI S I S THE ONLY EVI DENCE OF ANY COMMON
I SSUE I N THE CASE UNDER RULE 23( A) , THEN THAT PROOF, THEY
USED - - I N ONE PLACE THEY USED STRONG PROOF, I N ANOTHER PLACE
THEY USED CONVI NCI NG PROOF.
I THI NK THE NI NTH CI RCUI T, I N ELLI S VERSUS COSTCO,
ADDRESSI NG THE SAME QUESTI ON, USED THE PHRASE SI GNI FI CANT
PROOF.
SO THAT I S THE STANDARD WHEN YOU HAVE - - WHEN YOU ARE
ASKI NG WHETHER THE ONLY QUESTI ON UNDER 23( A) THAT COULD
POSSI BLY BE COMMON I S REALLY COMMON WHEN THE ONLY EVI DENCE OF
I T I S STATI STI CAL EVI DENCE.
THERE I S - - WE ARE - - WE CLEAR 23( A) BY A COUNTRY MI LE.
THI S - - WHEN I T COMES TO RULE 23( A) , THI S TRULY I S A TYPI CAL
ANTI TRUST CASE WHERE THERE I S A COMMON I SSUE, AN OVERWHELMI NG
COMMON I SSUE ABOUT WHETHER OR NOT THE DEFENDANTS VI OLATED THE
LAW.
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AND THAT I S GOI NG TO BE - - THAT I S - - YOU KNOW, PERI OD,
FULL STOP.
THE COURT: BUT YOU' RE REALLY ASKI NG FOR
CERTI FI CATI ON UNDER ( B) ( 3) ; RI GHT?
MR. GLACKI N: CORRECT. BUT THE POI NT I S THAT THE
DUKES CASE I S A CASE THAT' S ABOUT RULE 23( A) AND I T' S ABOUT
THI S UNUSUAL CI RCUMSTANCE WHERE THE ONLY POSSI BLE - - THE ONLY
COMMON - - I MEAN, THI S I S THE TRI AL THAT THE SUPREME COURT WAS
LOOKI NG AT, A TRI AL WHERE AN EXPERT WI TNESS TAKES THE STAND AND
THE ONLY EVI DENCE OF A VI OLATI ON THAT I S COMPANY- WI DE I S
STATI STI CAL, AND THAT I S THE ONLY COMMON I SSUE I N THE CASE.
AND AT THE TI ME THE COMPANY HAS - - SHOULD, I N THEORY, HAVE,
AS A DEFENSE AGAI NST THI S CASE, THE I NDI VI DUAL DECI SI ONS OF THE
MANAGERS THAT ARE ALLEGED TO BE DI SCRI MI NATORY.
SO I N THAT SI TUATI ON, THE SUPREME COURT SAI D THAT WHEN YOU
HAVE - - AND THI S I S WHY DUKES HAS NOT, I MEAN, HAS NOT
MEANI NGFULLY CHANGED THE LANDSCAPE. CERTAI NLY I N ANTI TRUST
CLASS CASES I T HAS NOT HAD A MEANI NGFUL EFFECT, BECAUSE I N AN
ANTI TRUST CASE, THE COMMON I SSUE I S SOMETHI NG WE BLOWBY VERY
QUI CKLY AND THEY, I N FACT, CONCEDED THAT AT THE BEGI NNI NG OF
THE FI RST ARGUMENT.
SO WHAT WE' RE ASKI NG I S WE' RE I N 23( B) ( 3) , AND THE
QUESTI ON I S, HAVI NG OTHERWI SE MET THE REQUI REMENTS FOR A CLASS
ACTI ON, SHOULD WE BE ALLOWED TO GO FORWARD WI TH A DAMAGES CLASS
ACTI ON?
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AND THERE THE STANDARD I S, HAVE WE ADVANCED A PLAUSI BLE
METHODOLOGY FOR PROVI NG I MPACT? AND THE REASON - -
THE COURT: BUT YOU' RE GOI NG TO HAVE TO GI VE ME SOME
AUTHORI TY, OTHER THAN THE LCD ORDER, FOR PLAUSI BLE METHODOLOGY.
DO YOU HAVE - - I S THERE ANYTHI NG ELSE?
MR. GLACKI N: WELL, I WOULD - - I WOULD RESPECTFULLY
SUBMI T THAT - -
THE COURT: UH- HUH.
MR. GLACKI N: - - THE AMGEN CASE I S THE BEST AUTHORI TY
FOR THI S POI NT, BECAUSE WHAT THE SUPREME COURT SAYS I N AMGEN I S
THAT - - WHAT I THI NK THE DEFENDANTS WANT YOU TO DO, WHI CH I S
CALL A WI NNER OR A LOSER ON THI S QUESTI ON OF WHETHER OR NOT
WE' VE PROVEN COMMON I MPACT, THAT I S EXACTLY WHAT THE COURT I S
NOT SUPPOSED TO DO.
THE COURT I S SUPPOSED TO SI MPLY I NQUI RE WHETHER OR NOT THE
I SSUE I S COMMON. AND I F THE I SSUE I S COMMON, I F I T' S GOI NG TO
RI SE OR FALL ON COMMON PROOF, THEN I T' S APPROPRI ATE TO CERTI FY
A CLASS ACTI ON.
AND I T' S NOT APPROPRI ATE FOR THE COURT TO WEI GH THE
I NFERENCES THAT ARE BEI NG OFFERED BY THE PARTI ES.
THE COURT: LET ME ASK YOU TO COMMENT ON
MR. VAN NEST' S SUGGESTI ON ABOUT THE MASS TORT BELLWETHER MODEL.
HOWWOULD THAT - - I GUESS I ' MJ UST NOT CLEAR. I F YOU' RE
SAYI NG, OBVI OUSLY THI S I S YOUR DEFAULT, DEFAULT, DEFAULT,
DEFAULT POSI TI ON, J UST CERTI FY A CLASS ON ANTI TRUST LI ABI LI TY,
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HOWWOULD THAT PLAY OUT? WE' RE GOI NG TO HAVE, WHAT, I NDI VI DUAL
TRI ALS ON I NDI VI DUAL I MPACT AND DAMAGES? OR WHAT?
MR. GLACKI N: WELL, THI S I S - - I MEAN, THI S I S
EXACTLY WHY I T WOULD BE, I THI NK, THE WRONG - - BECAUSE, OKAY,
TO TELL YOU HOWI T WOULD PLAY OUT - -
THE COURT: YEAH.
MR. GLACKI N: - - I N THE HYPOTHETI CAL SCENARI O WHERE
THAT HAPPENED - -
THE COURT: UM- HUM.
MR. GLACKI N: - - WE WOULD HAVE THE TRI AL ON
LI ABI LI TY, THAT WOULD HAPPEN. AND THEN WE WOULD BRI NG - - I
GUESS WE WOULD BRI NG I N THE EMPLOYEES OF THESE COMPANI ES ONE AT
A TI ME TO PROVE I MPACT.
BUT I N EVERY SI NGLE CASE, THE PROOF OF I MPACT WOULD BE THE
OPI NI ON THAT THI S CONDUCT, THAT THI S CONDUCT AFFECTED THE PAY
STRUCTURE OF THE ENTI RE COMPANY.
AND I DON' T - - YOU KNOW, WE' RE NOT ASKI NG FOR THAT KI ND OF
A CLASS TO BE CERTI FI ED. I SEE NO WAY TO PROSECUTE THE CASE
THAT WAY, FRANKLY. I T MAKES ABSOLUTELY NO SENSE.
THE COURT: ALL RI GHT. SO I F I ' MNOT GOI NG TO - - SO
THEN YOU WOULDN' T WANT A CLASS CERTI FI ED J UST BASED ON
ANTI TRUST LI ABI LI TY?
MR. GLACKI N: NO, BECAUSE I CAN' T - - I REALLY CAN' T
SEE A PLAN AFTER THAT THAT WOULD MAKE ANY SENSE, J UST LI KE I
CAN' T SEE HOWA MASS TORT PLAN WOULD MAKE ANY SENSE, BECAUSE
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THE WHOLE POI NT HERE THAT WE ESTABLI SHED WI TH MR. MI TTELSTAEDT
AT THE FI RST HEARI NG I S THAT WE' RE NEVER GOI NG TO KNOWWHO
WOULD HAVE GOTTEN THE COLD CALLS. WE' RE NEVER GOI NG TO KNOW
WHI CH SPECI FI C J OB TI TLES WOULD HAVE GOTTEN THE WAVES OF - - THE
COLD CALLS FROMTHE 800 GOOGLE RECRUI TERS. WE' LL NEVER KNOW
BECAUSE I T DI DN' T HAPPEN. SO WE CAN NEVER TRACE OUT, YOU KNOW,
THE I MPACT FROMTHE COLD CALL THAT DI DN' T HAPPEN BECAUSE WE
DON' T KNOWWHERE THAT COLD CALL WENT.
AND THAT' S WHY THE DEFENDANTS WANT THI S STANDARD. I F THE
STANDARD I S WE HAVE TO SHOW- - THAT WE HAVE TO PROVE THAT A
COLD CALL HAPPENED, WOULD HAVE HAPPENED TO A SPECI FI C PERSON
AND SHOWTHE PROPAGATI ON OUTWARD FROMTHAT COLD CALL, I MEAN,
WE CAN' T WI N. I MEAN, WE MI GHT AS WELL GO HOME, AND THAT' S WHY
THAT STANDARD I S SO FAVORABLE TO THEM.
THE COURT: WELL, LAST TI ME WHEN WE HAD SEVEN
DEFENDANTS, THE PARTI ES PREDI CTED THAT THE TRI AL WOULD BE 17
DAYS. WHAT I S I T NOWTHAT I T' S MI NUS LUCASFI LM, PI XAR, AND
I NTUI T?
MR. GLACKI N: I ' MTHI NKI NG. I MEAN, I WOULD I MAGI NE
THAT THE PLAI NTI FFS' CASE PROBABLY COULD BE PUT ON I N SOMETHI NG
LI KE SI X OR SEVEN TRI AL DAYS, MAYBE EI GHT OR NI NE. I DON' T
KNOW. I ' MA LI TTLE HESI TANT.
I WOULD I MAGI NE THAT THE REDUCTI ON I N THE NUMBER OF
DEFENDANTS WOULD MEAN THAT YOU WOULD HAVE, YOU KNOW, FEWER
DEFENDANTS WHO WANTED TO PUT ONE OR TWO CORPORATE
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REPRESENTATI VES ON THE STAND TO SAY EI THER THAT THEY DI DN' T DO
ANYTHI NG WRONG OR THE AGREEMENTS NEVER WOULD HAVE HAD THI S
I MPACT.
SO I WOULD SUSPECT THAT ON THE DEFENSE SI DE, THE BACK END
WOULD GET LOWER. I THI NK OUR CASE I S KI ND OF THE SAME NO
MATTER WHAT.
THE COURT: WHAT ABOUT FOR THE DEFENDANTS? WHAT I S
THE NEWESTI MATED TRI AL LENGTH?
MR. VAN NEST: I HAVEN' T THOUGHT THAT THROUGH
CAREFULLY ENOUGH, YOUR HONOR.
BUT I WOULD SAY, I THI NK I T DOES MATTER. I F THE EVI DENCE
FOR LUCASFI LMAND PI XAR AND I NTUI T I S OUT, WHI CH I THI NK I T
SHOULD BE, THEN ARGUABLY WE COULD DO I T I N LESS TI ME. I THI NK
THAT' S CLEARLY RI GHT.
AND I F - - I F THEY' RE SAYI NG THEY WANT TO PROVE J UST EXACTLY
WHAT THEY STARTED OFF WI TH, THEN I DON' T THI NK THE TI ME
SHRI NKS.
BUT I N MY VI EW, THE EVI DENCE AFFECTI NG THOSE COMPANI ES I S
DI FFERENT AND NOT REALLY RELATED ANYMORE AND I T WOULD BE A
LI TTLE SHORTER.
I - -
THE COURT: LET ME - -
MR. VAN NEST: OH, SORRY.
THE COURT: LET ME HEAR FROMMR. GLACKI N. FOR
YOUR - - TELL ME HOWYOUR CASE AT TRI AL WOULD LOOK. HOWWOULD
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I T BREAK DOWN BETWEEN LI ABI LI TY VERSUS I MPACT VERSUS DAMAGES?
MR. GLACKI N: WELL, I CAN TELL YOU THAT, HAVI NG DONE
ONE OF THESE CASES, THAT THE I MPACT AND DAMAGES PART OF THE
CASE I S NOT GOI NG TO TAKE A LOT OF TI ME. I MEAN, WE - - WE
SPEND A LOT OF TI ME ON THOSE I SSUES AT CLASS CERTI FI CATI ON, BUT
AT TRI AL, THE DI RECT EXPERT TESTI MONY ON THOSE POI NTS WI LL BE
OVER I N TWO TO THREE HOURS I WOULD SUSPECT ON I MPACT AND
DAMAGES.
AND THEN I WOULD SUSPECT THAT THE DEFENDANTS ARE GOI NG TO
HAVE AT LEAST ONE OR POSSI BLY TWO ECONOMETRI CI ANS WHO WI LL COME
I N AND SAY THAT OUR ECONOMETRI CI AN I S WRONG.
YOU KNOW, THI S CASE - - I SUPPOSE I MI GHT HAVE TO EXPAND
THAT ESTI MATE A BI T I F WE' RE GOI NG TO HAVE EXPERT TESTI MONY - -
I F WE' RE BUI LDI NG I NTO THAT CATEGORY EXPERT TESTI MONY ABOUT
THESE COMPANI ES' COMPENSATI ON STRUCTURES.
BUT, AGAI N, I T' S NOT A BI G PART OF THE CASE. MOST OF THE
CASE WI LL BE ABOUT THE AGREEMENTS AND THE, THE SUBJ ECTI VE
I NTENT OF THE PEOPLE WHO REACHED THEM.
BY THE WAY, I HAVE - -
MR. VAN NEST: I HAVE A DI FFERENT VI EW, OBVI OUSLY,
YOUR HONOR, ON A NUMBER OF THESE POI NTS.
MR. GLACKI N: I HAVE A PLAUSI BLE METHODOLOGY CASE FOR
YOU, YOUR HONOR.
THE COURT: ALL RI GHT. WHAT' S THAT?
MR. GLACKI N: I ' D OFFER YOU THE GPUS DECI SI ON, WHI CH
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WE QUOTED I N OUR BRI EF, AND I WOULD ACTUALLY OFFER THE PASSAGE
THAT WE QUOTED, I THI NK I N OUR REPLY BRI EF, WHI CH SAYS - -
THE COURT: YOU KNOW, I FEEL SOMEWHAT HESI TANT ON
RELYI NG ON ANY DI STRI CT COURT CASE THAT WAS BEFORE THE SUPREME
COURT CASES. I MEAN, OBVI OUSLY THEY' RE - - WE MAY HAVE TO J UST
BECAUSE THEY MAY ADDRESS I SSUES THAT ARE MORE ON POI NT.
BUT ANYWAY, GO AHEAD. SO YOU WANTED GPU, J UDGE ALSUP' S
DECI SI ON.
MR. GLACKI N: J UDGE ALSUP' S DECI SI ON, WHI CH I S THE
AUTHORI TY THAT THE DEFENDANTS HAVE - - I MEAN, WE BLOCK QUOTED
THI S I N OUR BRI EF. WHEN HE - - WHEN HE RULED THAT WHAT THE
PLAI NTI FFS DI D I N THAT CASE WASN' T ENOUGH, HE WAS CAREFUL TO
QUALI FY I T BY SAYI NG, "THI S ORDER AGREES THAT SUCH METHODS WERE
PLAUSI BLY RELI ABLE, SHOULD BE ALLOWED AS A MEANS OF COMMON
PROOF. TO RULE OTHERWI SE WOULD ALLOWANTI TRUST VI OLATORS A
FREE PASS I N MANY I NDUSTRI ES. "
THE COURT: ALL RI GHT. LET ME ASK MY QUESTI ON. LET
ME ASK MR. VAN NEST, AND I THI NK WE' RE GETTI NG - - WE' VE BEEN
GOI NG ALMOST AN HOUR AND A HALF.
( DI SCUSSI ON OFF THE RECORD BETWEEN THE COURT AND THE COURT
REPORTER. )
THE COURT: LET' S GO A LI TTLE BI T MORE AND THEN WE' LL
HAVE TO TAKE A BREAK.
LET ME ASK MR. VAN NEST, I T SEEMS - - I T SEEMS LI KE THE
DEFENDANTS ARE ARGUI NG THAT I T' S NOT ENOUGH THAT THERE ARE
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COMMON QUESTI ONS, BUT THAT THE RESULT HAS TO BE THE SAME FOR
ALL 60, 000 CLASS MEMBERS.
DO YOU WANT TO COMMENT ON THE WHOLE SORT OF COMMON QUESTI ON
VERSUS COMMON ANSWERS - -
MR. VAN NEST: SURE.
THE COURT: - - I SSUE AND WHAT' S REQUI RED BY THE CASE
LAW- -
MR. VAN NEST: YEAH.
THE COURT: - - CURRENTLY?
MR. VAN NEST: ABSOLUTELY, YOUR HONOR.
THAT' S NOT WHAT WE' RE ARGUI NG. WE' RE ARGUI NG - - WE' RE
FOLLOWI NG UP ON WHAT YOU SAI D LAST TI ME, WHI CH I S THAT I F YOU
WANT TO PROCEED AS A CLASS, A ( B) ( 3) CLASS WHERE PEOPLE ARE
GOI NG TO GET DAMAGES, AND YOU WANT TO DO I T I N ONE BI G TRI AL,
YOU HAVE TO SHOWTHAT ALL OR NEARLY ALL OF THE CLASS MEMBERS
WERE I MPACTED, BECAUSE I MPACT I S AN ELEMENT OF LI ABI LI TY.
THAT' S THE WHOLE POI NT. I N AN ANTI TRUST CASE, WHETHER THEY' RE
I MPACTED I S NECESSARY TO ESTABLI SH LI ABI LI TY.
SO I F WE' RE GOI NG TO DO I T FOR A CLASS, THE RULE I S - - AND
THI S I S WHAT J UDGE ALSUP SAI D I N GPU AND J UDGE GRADY SAI D I N
REED - - YOU HAVE TO SHOWTHAT ALL OR NEARLY ALL MEMBERS OF THE
CLASS WERE I MPACTED.
AND YOU SAI D THAT LAST TI ME, TOO. THAT' S THE ASSI GNMENT
YOU GAVE US.
NOW, I N ORDER TO SHOWTHAT, YOU' RE QUI TE RI GHT, THERE' S
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NO - - NO LONGER I S A PLAUSI BLE THEORY ENOUGH. COMCAST CHANGED
THAT, DUKES CHANGED THAT, AND ELLI S I N THE NI NTH CI RCUI T
CHANGED THAT.
AND YOU SAI D - - YOU GOT I T RI GHT AT PAGE 16 OF YOUR ORDER
WHERE YOU SUMMARI ZE ALL OF THI S. YOU SAI D, "I ' MNOT GOI NG TO
RELY ON PLAUSI BLE THEORI ES. I THI NK YOU HAVE TO CONDUCT A
THOROUGH REVI EWOF THEI R THEORY AND YOU HAVE TO DO A RI GOROUS
EVALUATI ON AND ANALYSI S TO SEE I F THI S I S REALLY PERSUASI VE. "
AND WHAT YOU SAI D LAST TI ME WAS, "I F YOU GUYS WANT TO
CERTI FY A CLASS, YOU HAVE TO SATI SFY TWO REQUI REMENTS. YOU
HAVE TO SHOWTHAT THE COMP STRUCTURES WERE SO RI GI D THAT I MPACT
ON SOME WOULD AFFECT EVERYBODY, OR NEARLY EVERYBODY; AND YOU
HAVE TO SHOWTHAT YOUR CLASS I S NARROWLY DRAWN SO THERE AREN' T
A WHOLE LOT OF PEOPLE I N I T THAT WEREN' T I MPACTED AT ALL AND
WEREN' T I NJ URED AND DAMAGED, " AND THEY FLUNKED ON BOTH OF THOSE
UNDER ANY STANDARD.
REMEMBER, UNDER THE STANDARD THAT J UDGE ALSUP APPLI ED I N
GPU, HE DENI ED CERT EVEN THERE.
THEY FAI LED TO SHOWTHAT THE SALARY STRUCTURES ARE SO RI GI D
THAT WHATEVER HAPPENED WHEN PEOPLE DI DN' T GET CALLS WOULD
PROPAGATE.
AND AS I POI NTED OUT, TAB 1 AND TAB 2, DR. LEAMER ADMI TS
THAT HE CAN' T MAKE THAT SHOWI NG AND HE DOESN' T THI NK I T' S TRUE.
SO I F THAT' S THE CASE, NOWWE' RE LOOKI NG AT, OKAY, WHAT DO
WE HAVE? DO WE HAVE SOME TI TLES THAT - - WHERE WE CAN SHOW
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PROPAGATI ON EVEN WI THI N A TI TLE?
AND THE ANSWER TO THAT I S THE MURPHY EXHI BI TS SHOWI NG LOTS
OF VARI ATI ON I N THE SAME J OB TI TLE YEAR I N AND YEAR OUT AT
EVERY ONE OF THE DEFENDANTS.
SO THERE I SN' T A RI GI D WAGE STRUCTURE, AND - -
THE COURT: YOU KNOW, LAST TI ME AROUND YOU ALL
WEREN' T EVEN REALLY CHALLENGI NG LI ABI LI TY, SO - -
MR. VAN NEST: WELL, BUT - - NO, WE WERE CHALLENGI NG
THE SAME THI NG.
THE COURT: BUT - -
MR. VAN NEST: I MPACT I S - -
THE COURT: WELL, I MEAN, NO. YOU BASI CALLY SORT OF
CONCEDED LI ABI LI TY LAST TI ME.
MR. VAN NEST: NO. WHAT WAS - -
THE COURT: SO I ' MCURI OUS, NOWYOU' RE SAYI NG, "OH,
NO, NO. LET' S GO BACK" - -
MR. VAN NEST: NO.
THE COURT: - - "AND LI ABI LI TY AND I MPACT I S PART OF
LI ABI LI TY, " BUT YOU ESSENTI ALLY CONCEDED THAT POI NT LAST TI ME.
MR. VAN NEST: NO, NO. WHAT WAS SAI D LAST TI ME, YOUR
HONOR, I S - - YOU J UST I NVI TED THEM, DO THEY WANT TO HAVE A
CLASS CERTI FI ED OVER WHETHER THERE WAS A CONSPI RACY TO I MPACT
WAGES, ET CETERA, ET CETERA.
AND THEY DON' T WANT THAT. THEY WANT - - THEY WANT THE WHOLE
KAHUNA. THEY WANT EVERYTHI NG I N ONE TRI AL.
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FAI R ENOUGH. FAI R ENOUGH.
I F THEY WANT - - WHAT WE SAI D LAST TI ME WAS WE' RE NOT
CHALLENGI NG THAT PROOF OF THE CONSPI RACY I S NOT COMMON. THAT' S
COMMON. WE SAI D THAT' S A COMMON I SSUE.
BUT THAT DOES NOT ENTI TLE YOU TO CERTI FI CATI ON BECAUSE YOU
HAVE TO SHOWTHAT COMMON I SSUES PREDOMI NATE, AND THE BI G I SSUE
FOR THEMI S GOI NG TO BE - - AND BELI EVE ME, I T' S NOT A COUPLE
HOURS - - THE HUGE I SSUE I N THI S CASE I S GOI NG TO BE, GI VEN THE
NATURE OF WHAT THEY' RE ALLEGI NG, CAN THEY SHOWI MPACT TO ALL OR
NEARLY ALL MEMBERS OF THE CLASS?
THAT' S GOI NG TO REQUI RE TESTI MONY FROMTHE H. R. PEOPLE AT
EVERY SI NGLE DEFENDANT. I T' S GOI NG TO REQUI RE TESTI MONY FROM
EXPERTS ABOUT WHAT THE DEFENDANTS' PAY STRUCTURES AND PRACTI CES
WERE. THERE' S GOI NG TO BE TESTI MONY FROMEACH COMPANY ABOUT
WHAT THEY DI D AND WHY. I T' S NOT J UST PUTTI NG A COUPLE OF
EXPERTS UP TO TALK ABOUT THE BI G PI CTURE.
THE J URY WOULD HAVE TO KNOW, BECAUSE YOU' RE TALKI NG ABOUT
THI S MANY EMPLOYEES, HOWDO THESE COMPANI ES MANAGE H. R. ? WHAT
DI D THEY LOOK AT? HOWMUCH VARI ATI ON WAS THERE?
WE WI LL PROBABLY BE CALLI NG MANAGERS TO SAY, "I WOULD
NEVER RAI SE THE SALARY OF EVERYBODY I N MY UNI T BECAUSE I ' VE GOT
TO PROTECT MY TOP PERFORMER. I ' D RUN OUT OF BUDGET. THAT
WOULD BE CRAZY. "
AND THERE' S NO EVI DENCE THAT ANYBODY EVER DI D THAT.
ALL THE EVI DENCE I S THAT I F YOU HAVE SOMEBODY THAT' S A
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HI GH PERFORMER YOU HAVE TO PROTECT, THEY GET A BI G SALARY
SPI KE, J UST LI KE TAB 4 AND TAB 5 SHOW.
AND SO THE BI G I SSUE THAT WE UNDERSTOOD FROMYOUR HONOR' S
ORDER, ONE OF THE BI G I SSUES THAT WAS LEFT OVER WAS, CAN THEY
SHOWI MPACT ON A CLASS- WI DE BASI S?
THAT' S WHY, I N MY VI EW, A - -
THE COURT: SO DO YOU BELI EVE THAT THE TEST RI GHT NOW
I S J UST WHETHER COMMON QUESTI ONS PREDOMI NATE FOR A 23( B) ( 3)
CLASS - -
MR. VAN NEST: YOU HAVE - -
THE COURT: - - TO BE CERTI FI ED?
MR. GLACKI N: ARE YOU POSI TI NG THAT TO ME OR TO HI M?
THE COURT: TO MR. VAN NEST.
MR. VAN NEST: FOR A ( B) ( 3) CLASS - -
THE COURT: YES.
MR. VAN NEST: - - YOU HAVE TO SHOWTHAT COMMON
QUESTI ONS PREDOMI NATE AND THAT THERE I S, THAT THERE I S A THEORY
THAT PASSES A RI GOROUS ANALYSI S BASED ON RELI ABLE EVI DENCE THAT
I F YOU DON' T HAVE THAT, THEN YOU CAN PROCEED WI TH
BELLWETHER TRI ALS, CERTAI NLY, AND WI TH A BELLWETHER TRI AL - -
THE COURT: AND YOU' RE RELYI NG, FOR THAT SECOND HALF,
SEPARATE FROMWHETHER COMMON QUESTI ONS PREDOMI NATE, J UST ON MY
ORDER? THAT' S WHAT YOU' RE BASI NG I T ON?
MR. VAN NEST: I ' MRELYI NG PRI MARI LY ON YOUR ORDER.
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BUT THAT' S WHAT J UDGE ALSUP AND J UDGE GRADY, ALL THESE
CASES - - THE WHOLE POI NT - -
THE COURT: WHAT ARE YOU RELYI NG ON FOR YOUR
SECOND - - ARTI CULATE THE SECOND HALF - -
MR. VAN NEST: THE SECOND HALF - -
THE COURT: - - OF WHAT YOU BELI EVE THE STANDARD TO
BE.
MR. VAN NEST: I BELI EVE THE STANDARD I S THAT THE
PLAI NTI FFS HAVE TO SHOWTHAT THEY CAN PROVE, BY COMMON
EVI DENCE, THAT THERE WAS CLASS- WI DE I MPACT, AND I ' LL CI TE
COMCAST FOR THAT, I ' LL CI TE AMCHEMFOR THAT, I ' LL CI TE REED FOR
THAT, I ' LL CI TE GPU FOR THAT.
ALL THESE CASES SAY THAT YOU HAVE TO BE ABLE TO PROVE, FOR
A ( B) ( 3) CLASS - - WHI CH I S A HI GHER STANDARD, BY THE WAY, THAN
J UST A 23( A) - - YOU HAVE TO PROVE THAT THERE WAS I MPACT,
CLASS- WI DE I MPACT AS PART OF YOUR ANTI TRUST CLAI M.
AND THEY DI DN' T DI SAGREE WI TH THAT.
THE COURT: SO YOUR STANDARD I S COMMON EVI DENCE TO
PROVE CLASS- WI DE I MPACT?
MR. VAN NEST: RI GHT.
THE COURT: OKAY. BECAUSE YOU HAD OTHER EXTRA
ADVERBS AND ADJ ECTI VES I N THERE EARLI ER.
MR. VAN NEST: WELL, I ' M- - WHAT YOU - - THE WAY YOU
DESCRI BED I T I N THE ORDER, YOU DESCRI BED I T AS PROVI NG THAT
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THAT' S WHAT YOU SAI D I N YOUR ORDER.
AND I WOULD AGREE WI TH THAT. THAT' S WHAT THESE CASES ALL
REQUI RE WHEN THEY SAY YOU HAVE TO HAVE PROOF OF CLASS- WI DE
I MPACT.
AND YOU CAN SEE - - PAGE 43 OF YOUR ORDER I S WHAT I ' M
DRAWI NG ON. PAGE 36 TO THE SAME EFFECT. THAT' S WHAT - - THAT' S
THE STANDARD YOU SET UP AND THAT' S THE STANDARD THAT APPLI ES.
AND THEY HAVEN' T MET I T. THEY HAVEN' T MET I T BECAUSE
DR. LEAMER ADMI TS THAT HE CAN' T SAY THAT THE SALARY STRUCTURES
WERE SO RI GI D THAT CHANGES TO SOME WOULD HAVE TRANSLATED I NTO
CHANGES FOR ALL.
AND THE RAWDATA THAT WE' VE PRESENTED AND THAT DR. MURPHY
ANALYZED PROVES I T AGAI N, NAMELY, THERE' S HUGE VARI ATI ON AND
FLEXI BI LI TY I N PAY AND I T' S BASED ON I NDI VI DUAL FACTORS.
AND WHAT DR. SHAWDI D, OUR ECONOMI ST FROMSTANFORD - - SHE
HAS BEEN I N SI LI CON VALLEY FOR THE PAST 20 YEARS TALKI NG TO
H. R. PEOPLE, AND SHE SAYS THE DATA THAT COMES OUT OF THESE
COMPANI ES I S CONSI STENT WI TH THE PREVAI LI NG PRI NCI PLE I N
SI LI CON VALLEY, PAY FOR PERFORMANCE. PAY FOR PERFORMANCE.
THESE ARE ENTREPRENEURI AL COMPANI ES. THEY ARE CUTTI NG EDGE.
THEY ARE NOT LOCKSTEP. THEY ARE NOT LABOR. THEY ARE NOT, YOU
KNOW, GOVERNED BY COLLECTI VE BARGAI NI NG AGREEMENTS WHERE
EVERYTHI NG I S I N SOME KI ND OF A SCHEDULE. I T' S PAY FOR
PERFORMANCE, AND THE DATA PROVES THAT.
AND GI VEN THAT THAT' S THE CASE, WE' RE BETTER OFF TRYI NG A
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HANDFUL - - AND I MEAN A HANDFUL - - OF CASES WHERE AN I NDI VI DUAL
PLAI NTI FF COMES I N AND SAYS, "I WAS AT COMPANY A AND COMPANY A
HAD AN AGREEMENT WI TH COMPANY B AND I AND MANY OTHERS WERE
PRI ME PERFORMI NG CANDI DATES THAT WOULD HAVE GOTTEN COLD CALLS
AND HERE' S HOWI WAS I NJ URED. I WOULD HAVE GOTTEN A CALL, MY
PAY WOULD HAVE GONE UP, " AND SO ON AND SO FORTH.
THAT' S GOI NG TO BE A BETTER WAY TO RESOLVE THI S CASE THAN
SOME TRI AL, WHI CH THEY HAVEN' T ESTABLI SHED A BASI S FOR, WHERE
THEY TRY TO PROVE CLASS- WI DE I MPACT ACROSS THE WHOLE CLASS WI TH
COMMON EVI DENCE.
AND YOUR HONOR, I T' S - -
THE COURT: YOU KNOW, I ' MLOOKI NG AT THE DEFENDANTS'
ADMI NI STRATI VE MOTI ON TO CONSI DER WHETHER CASES SHOULD BE
RELATED FI LED ON J ULY 19TH OF 2011, AND THE DEFENDANTS I N THI S
CASE BASI CALLY SAI D, "THESE CASES I NVOLVE THE SAME ALLEGED
CLASS, SAME FACTUAL ALLEGATI ONS, SAME CLAI MS FOR RELI EF.
BECAUSE THE CASES I NVOLVE SUBSTANTI ALLY THE SAME PARTI ES,
EVENTS, AND ALLEGATI ONS, AND BECAUSE I T APPEARS LI KELY THAT
THERE WI LL BE AN UNDULY BURDENSOME DUPLI CATI ON OF LABOR AND
EXPENSE OR CONFLI CTI NG RESULTS I F THEY ARE HEARD BEFORE
DI FFERENT J UDGES, DEFENDANTS BELI EVE THEY ARE RELATED WI THI N
THE MEANI NG OF THE RELATED CASE. "
MR. VAN NEST: I ' LL STAND BY EVERY WORD OF THAT.
THE COURT: THERE WAS A TI ME WHERE YOU ALL WANTED ALL
THI S CONSOLI DATED BECAUSE YOU CONCEDED THAT, FOR PURPOSES OF
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ADMI NI STRATI ON, I T MADE MUCH MORE SENSE - -
MR. VAN NEST: I T DOES.
THE COURT: - - TO HAVE THESE TOGETHER.
MR. VAN NEST: ABSOLUTELY. AND I ' MNOT SAYI NG
ANYTHI NG DI FFERENT TODAY, YOUR HONOR.
THE COURT: UM- HUM.
MR. VAN NEST: THERE' S NO - - WE WOULDN' T WANT FI VE
J UDGES DECI DI NG THE I SSUE THAT YOUR HONOR I S EVALUATI NG NOW,
AND WE WOULDN' T WANT FI VE J UDGES HANDLI NG THE CASE, NO MATTER
HOWWE DI D I T, BECAUSE AS WE SAI D LAST TI ME, I F THEY' RE GOI NG
TO PROVE A CONSPI RACY, THAT EVI DENCE I S COMMON TO EVERYONE.
RI GHT? THAT' S WHAT WE' RE SAYI NG I S THAT THE PROOF OF PART ONE
OF THI S WHERE YOU HAVE TO SHOWTHAT SOMEBODY CONSPI RED TO DO
SOMETHI NG, THAT I S COMMON AND THEY I NTEND TO PROVE THAT I N A
COMMON WAY. WE GET THAT.
NOW, YOU OFFERED THEMCERTI FI CATI ON ON THAT AND THEY DON' T
WANT I T. THEY DON' T WANT THAT. THEY DON' T WANT THAT BECAUSE
THEY WANT TO PUT 60, 000 PEOPLE I N A CLASS AND START THROWI NG
SOME HUGE NUMBERS AROUND, WHI CH I S WHAT THEY' RE DOI NG.
AND WHAT WE' RE SAYI NG I S YOU HAVEN' T ESTABLI SHED THE
PREDI CATE FOR THAT BECAUSE YOU HAVEN' T - -
THE COURT: OKAY. LET ME I NTERRUPT YOU ONE SECOND,
PLEASE.
MR. VAN NEST: SURE.
THE COURT: LET ME ASK MR. GLACKI N - -
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MR. GLACKI N: I HAVE A FEWWORDS ABOUT THE LEGAL
STANDARD I THI NK YOU' RE MULLI NG OVER, I F I COULD RESPOND TO
THAT BRI EFLY.
THE COURT: GO AHEAD, PLEASE.
MR. GLACKI N: SO FI RST I ' D OFFER YOU ANOTHER DI STRI CT
COURT CASE, WHI CH I S PRE- AMGEN, OF COURSE, BUT I BELI EVE I T' S
POST- DUKES - -
THE COURT: OKAY.
MR. GLACKI N: - - WHI CH I S THE I N RE: RAI L FREI GHT
DECI SI ON OUT OF THE DI STRI CT OF COLUMBI A, WHI CH I S 2012 WL,
WEST LAW, 2870207 AT STAR 60.
THE COURT: 2870207?
MR. GLACKI N: 2870207, CORRECT.
THE COURT: OKAY.
MR. GLACKI N: AND I THI NK THE URETHANES CASE THAT WE
CI TED I N OUR MOST RECENT BRI EF, WHI CH WAS A CASE I N WHI CH THE
COURT, AFTER TRI AL, CONSI DERED A REQUEST TO DECERTI FY A CLASS
POST- COMCAST AND AMGEN - - I ALWAYS MI X UP AMCHEMAND AMGEN - -
POST- AMGEN AND COMCAST WOULD ALSO BE I NSTRUCTI VE, AND I T WOULD
SEE - - YOU WOULD SEE A DI STRI CT COURT I N AN ANTI TRUST CASE
APPLYI NG THOSE NEWCASES AND DENYI NG A MOTI ON TO DECERTI FY A
CLASS.
THE COURT: WHI CH CASE I S THAT?
MR. GLACKI N: THAT I S - - I T' S I N OUR MOST RECENT
REPLY BRI EF, I N RE: URETHANE ANTI TRUST LI TI GATI ON, 2013 U. S.
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DI ST LEXI S, I T' S THE LEXI S CI TE, 69784.
AND I F I COULD SAY J UST ONE MORE THI NG? I MEAN, WHAT I
UNDERSTAND YOUR HONOR TO BE GRAPPLI NG WI TH A LI TTLE BI T HERE I S
THE STRONG PROOF, CONVI NCI NG PROOF VERSUS A COMMON QUESTI ON I S
ENOUGH REGARDLESS OF WHETHER OR NOT THE ANSWER TO THE COMMON
QUESTI ON I S YES OR NO.
THE COURT: UM- HUM.
MR. GLACKI N: AND WHAT I WOULD POI NT OUT I S THAT I F
DUKES WAS ABOUT THE 23( B) ( 3) STANDARD, YOU COULD NOT RECONCI LE
I T WI TH AMGEN. THE CASES SAY VERY DI FFERENT THI NGS ABOUT WHAT
THE PLAI NTI FFS HAVE TO DO, AND THE REASON I S THAT DUKES I S A
CASE ABOUT - - I N THE CI RCUMSTANCES I DESCRI BED, WHI CH I WON' T
REPEAT, AND AMGEN I S A CASE THAT' S ACTUALLY ABOUT RULE
23( B) ( 3) .
SO I THI NK THAT, YOU KNOW, THE LI GHT HERE I N TERMS OF WHAT
SHOULD BE FOLLOWED I N DECI DI NG WHETHER OR NOT WE' VE MET THE
STANDARD OF RULE 23( B) ( 3) , WHI CH I S PREDOMI NANCE OF COMMON
QUESTI ONS, I S AMGEN. I T' S CLEARLY AMGEN AND I T' S CLEARLY NOT
DUKES.
SO, YOU KNOW, I THI NK THAT - - I WOULD J UST POI NT OUT THAT
I F THE DEFENDANTS ARE RI GHT AND DUKES I S A 23( B) ( 3) CASE, THE
SUPREME COURT I N AMGEN WOULD HAVE HAD TO OVERTURN I T BECAUSE
YOU CAN' T RECONCI LE THOSE TWO STANDARDS.
THE COURT: LET ME ASK, YOU KNOW, THE CASES - - THE
AMOUNT OF DOCUMENTARY EVI DENCE I N THI S CASE I S SI GNI FI CANTLY
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GREATER, I THI NK, THAN PRETTY MUCH ANY OF THE OTHER CASES. YOU
KNOW, FOR EXAMPLE, I N DUKES THEY HAD SOME ANECDOTAL EVI DENCE OF
DI SCRI MI NATI ON FROM, WHAT, 200 - - 120 WOMEN. THEY HAD
STATI STI CAL EVI DENCE AND THEN THEY HAD A SOCI OLOGI ST TALK ABOUT
WAL- MART CULTURE.
WE DON' T HAVE THAT SI TUATI ON.
THE COURT: WE HAVE A POLI CY, A SPECI FI C CONTRACTUAL
POLI CY AMONGST THE DEFENDANTS.
THE COURT: WE' RE J UST NOT - - I F YOU LOOK AT THE
OTHER CASES, THEY J UST DON' T HAVE THI S LEVEL OF DOCUMENTARY
EVI DENCE.
MR. GLACKI N: I MEAN, I F - -
THE COURT: SO WHAT I S THE SI GNI FI CANCE OF THE
STATI STI CAL EVI DENCE? HOWI MPORTANT I S I T I N A CASE THAT HAS
THI S MUCH DOCUMENTARY EVI DENCE?
MR. GLACKI N: WELL, I THI NK THAT I T I S OF MUCH LESS
I MPORTANCE.
AND, YOU KNOW, AS AN EXERCI SE, BECAUSE I WAS I NTERESTED,
BEFORE WE CAME DOWN HERE I ASKED MY PARTNER, MR. HARVEY, TO
PULL THE EXPERT REPORTS I N GPUS, BECAUSE I WAS CURI OUS TO SEE
EXACTLY WHAT HAD HAPPENED BECAUSE J UDGE ALSUP' S OPI NI ON I S A
LI TTLE AMBI GUOUS. AND WE' D BE HAPPY TO SUPPLY THEMTO YOU, AND
THE DEFENDANTS CAN PULL THEMOFF OF ECF, AND YOU CAN DOWNLOAD
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THEMFROMECF, TOO.
AND WHAT DR. TEECE HAS I N THAT CASE I S HE HAS A CORRELATI ON
ANALYSI S WHERE HE' S MASHED TOGETHER - - HE' S CALCULATED THREE
CORRELATI ONS. HE' S MASHED TOGETHER ALL THE PRODUCTS I N TERMS
OF THE ACTI ON I NTO THREE GROUPS AND SHOWTHAT THEY CORRELATE.
HE' S GOT NO DOCUMENTARY EVI DENCE SHOWI NG THAT THERE WAS ANY
STRUCTURE TO HOWTHESE TRANSACTI ONS WERE PRI CED, NONE AT ALL.
THI S I S - - THI S I S A CASE WHERE, I F I WERE GOI NG TO
ANALOGI ZE I T TO A PRI CE FI XI NG CASE, WE HAVE THE AGREEMENT AND
THEN, ON THE QUESTI ON OF I MPACT - - I MEAN, THI S - - AND LET ME
BACK UP AND SAY THI S I SSUE COMES UP BECAUSE I N THE MODERN
CORPORATE WORLD I N THESE PRI CE FI XI NG CASES THERE ARE - - YOU
KNOW, I NEVI TABLY THERE ARE THOUSANDS OF DI FFERENT PRODUCTS THAT
ARE I NVOLVED BECAUSE THERE ARE HUNDREDS OF DI FFERENT GRADES OF
WHATEVER CHEMI CAL I T I S, OR THERE MI GHT BE - - I THI NK I N THE
LCDS CASE, THERE WERE - - AT ANY GI VEN TI ME THERE WERE HUNDREDS,
I F NOT THOUSANDS, OF DI FFERENT MODELS OF TFTL SCREENS, TFT LCD
SCREENS, EACH OF WHI CH WAS J UST A LI TTLE BI T DI FFERENT I N THE
SENSE THAT THE SCREWWAS I N A DI FFERENT PLACE.
THE COURT: BUT YOU DON' T HAVE ANY CASE LAWTHAT
REALLY SAYS THERE' S A SLI DI NG SCALE OF I MPORTANCE OF
STATI STI CAL EVI DENCE BASED ON OTHER FORMS OF EVI DENCE, DO YOU?
MR. GLACKI N: I ' MNOT AWARE OF A CASE THAT PUTS I T
EXACTLY THAT WAY.
THE COURT: UM- HUM.
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MR. GLACKI N: BUT I WOULD OFFER THAT I F YOU HAD A
PRI CE FI XI NG CASE, LI KE GPUS WHERE ALL YOU HAVE I S THREE
CORRELATI ONS, YOU' RE LOOKI NG AT ONE THI NG.
THE COURT: YEAH.
MR. GLACKI N: I F YOU HAD A PRI CE FI XI NG CASE WHERE
THE DEFENDANTS NOT ONLY DI D THE VI OLATI ON, BUT THEN THEY ALL
CAME I N AND ADMI TTED THAT THE THOUSANDS OF DI FFERENT PRODUCTS
WERE ALL PRI CED OFF OF A BELL CURVE, THEN I THI NK YOU WOULD BE
A LONG WAY TOWARDS PROVI NG THAT THE UNLAWFUL AGREEMENT THAT
AFFECTED THE PRI CE OF SOME OF THESE THI NGS HAD AN AFFECT ON ALL
OF THEM.
I T WOULD BE ALMOST AKI N TO SETTI NG, YOU KNOW, A PRI CE
FI XI NG CONSPI RACY WHERE TARGETS WERE SET FOR BENCHMARK PRI CES.
I F YOU COULD SHOWTHEN THAT ALL THE PRI CES WERE SET OFF A BELL
CURVE BECAUSE THAT' S J UST HOWTHE DEFENDANTS DI D BUSI NESS, I ' M
NOT ACTUALLY SURE - - I ACTUALLY THI NK THAT TO SHOWI MPACT, YOU
WOULDN' T NEED TO DO ANYTHI NG ELSE.
YOU MI GHT NEED TO DO SOMETHI NG ELSE TO PROVE DAMAGES, WHI CH
I S A WHOLE DI FFERENT I SSUE.
BUT TO SHOWI MPACT, I F YOU SHOWED, I N A PRI CE FI XI NG CASE,
AN AGREEMENT TO FI X THE TARGET PRI CE OF A HI GH VOLUME PRODUCT
AND THE DEFENDANTS CAME I N AND ADMI TTED THAT THE PRI CES OF THE
OTHER PRODUCTS WERE SET ON A BELL CURVE OFF THE HI GH VOLUME
PRODUCT, I N MY OPI NI ON YOU' VE PROVEN I MPACT RI GHT THEN AND
THERE, OR YOU' VE CERTAI NLY, I N THE ABSENCE OF ANY CONTRARY
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EVI DENCE, MET YOUR BURDEN OF PRODUCTI ON.
THE COURT: LET' S GO TO AND START THE QUESTI ONS ON - -
I WAS SAVI NG THE BEST FOR LAST - - ALL THE STATI STI CAL QUESTI ONS
FOR THE END.
LET' S - -
MR. VAN NEST: CAN I - -
THE COURT: OH, I ' MSORRY. I T' S ACTUALLY 3: 30.
MAYBE WE SHOULD - - DO YOU WANT TO J UST DO A QUI CK - - TWO
MI NUTES, PLEASE.
MR. VAN NEST: I ' LL DO WHATEVER YOU WANT, YOUR
HONOR - -
THE COURT: I N A MI NUTE - -
MR. VAN NEST: - - FOR LEE- ANNE.
THE COURT: - - LET' S TAKE A BREAK. WELL, MAYBE WE
SHOULD TAKE A BREAK.
MR. VAN NEST: I CAN' T DO MUCH I N A MI NUTE.
MR. GLACKI N: OH, YES, YOU CAN.
THE COURT: LET' S GO AHEAD - - I ' LL GI VE YOU HALF A
MI NUTE. GO FOR I T.
( LAUGHTER. )
MR. VAN NEST: I CAN DO EVEN MORE I N HALF A MI NUTE.
THE COURT: I ' MFEELI NG GENEROUS.
( LAUGHTER. )
MR. GLACKI N: NO I MPACT.
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MR. VAN NEST: THE BI G PI CTURE, YOUR HONOR, I S THAT
I F YOU LOOK AT ALL OF THE STATI STI CS, WHAT YOU SEE I S THE
OPPOSI TE OF A RI GI D WAGE STRUCTURE. YOU SEE A STRUCTURE WHI CH
I S BASED ON PAYI NG I NDI VI DUAL PEOPLE ON A LOT OF DI FFERENT
FACTORS BASED ON THEI R PERFORMANCE WHERE THERE I S ENORMOUS
VARI ABI LI TY, YEAR TO YEAR, WI THI N THE SAME J OB TI TLES
EMPLOYEE- TO- EMPLOYEE. THERE I S NO PATTERN. I T I S - - I T I S
VERY DI SCRETI ONARY.
THAT I S THE OPPOSI TE OF WHAT WOULD BE REQUI RED BASED ON
THEI R THEORY, THAT CALLS NOT MADE WOULD HAVE RESONATED THROUGH
THE WHOLE CLASS.
AND SO WHEN WE GET TO TALKI NG I N DETAI L - - AND I ' VE ONLY
GOT A FEWPAGES OF THEMTO SHOWYOUR HONOR, J UST THE
HI GHLI GHTS - - YOU WI LL SEE THAT WHETHER YOU LOOK AT I T WI THI N A
CLASS - - EXCUSE ME - - WI THI N A TI TLE OR ACROSS TI TLES OR ACROSS
COMPANI ES, THERE I S NO RI GI D STRUCTURE THAT COULD SUPPORT THE
THEORY THAT THEY ARE ADVANCI NG.
AND I WOULD SAY WI TH RESPECT TO YOUR HONOR' S QUESTI ON ON
DOCUMENTARY EVI DENCE, THERE I SN' T ANY DOCUMENTARY EVI DENCE OF
I MPACT. THAT' S THE I MPORTANT THI NG.
I N A LOT OF THESE CASES THERE ARE - - THERE' S ACTUAL
AGREEMENT BY THE DEFENDANTS THAT THERE WAS A DO NOT HI RE
AGREEMENT I N PLACE, OR SOME SUCH THI NG. THAT WAS THE WEI SFELDT
CASE WHERE THERE THE COURT FAI LED TO CERTI FY A MUCH SMALLER
CLASS, EVEN THOUGH LI ABI LI TY WAS VI RTUALLY ADMI TTED, BECAUSE
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THE COURT SAI D "YOU HAVEN' T PROVEN THAT THERE WAS I MPACT TO THE
CLASS ON A CLASS- WI DE BASI S. "
AND THE SAME I S TRUE HERE. ALL THE EVI DENCE YOUR HONOR I S
CI TI NG, AND WE DON' T NEED TO DEBATE I T TODAY, ALL THAT GOES TO
WHETHER OR NOT THERE WERE AGREEMENTS, WHAT THE I NTENT OF THEM
WAS, HOWWI DESPREAD THEY WERE, AND SO ON.
NONE OF I T GOES TO I MPACT. THERE AREN' T DOCUMENTS THAT
SHOWOR ANY DI SCUSSI ON THAT SHOWS ANYBODY WAS I MPACTED. THAT' S
WHAT' S LACKI NG.
THAT' S WHY THI S CASE I S GOI NG TO TURN ON STATI STI CS AND
STATI STI CAL PROOF, AND THAT' S WHY - -
THE COURT: BUT YOU' RE ASKI NG THEMTO PROVE A
NEGATI VE.
MR. GLACKI N: THI S I S THE PROBLEM- -
MR. VAN NEST: NO.
THE COURT: BECAUSE THEY HAD THE AGREEMENT, BECAUSE
THERE WAS NO COLD CALLI NG, BECAUSE PEOPLE COULD NOT SOLI CI T
EACH OTHER' S EMPLOYEES.
MR. VAN NEST: I ' MNOT, YOUR HONOR.
THE COURT: WHAT' S THE - -
MR. VAN NEST: THEY SAI D THEY COULD PROVE I T BECAUSE
THEI R WHOLE CASE THEORY WAS "WE' RE GOI NG TO SHOWTHAT THERE' S A
RI GI D J OB PAY STRUCTURE AT ALL OF THE DEFENDANTS, SO THAT I F WE
CAN SHOWTHAT COLD CALLS WEREN' T MADE AND PEOPLE DI DN' T GET
I NFORMATI ON, THAT THAT I MPACT ON THAT EMPLOYEE, OR THAT GROUP
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OF EMPLOYEES, WOULD RESONATE THROUGH THE WHOLE FI RM. "
THAT WAS THE PROMI SE THEY MADE. THAT WAS THE THEORY THEY
ARGUED ON THE MOTI ON TO DI SMI SS. THAT WAS THE THEORY THEY
ARGUED LAST TI ME.
AND YOU SAI D, "FI NE. I F THAT' S YOUR THEORY OF COMMON
I MPACT, PROVE I T. LET' S SEE WHAT THE NUMBERS SHOW. "
THEY' VE COME BACK AND THEY' VE FAI LED TO PROVE I T, AND
DR. LEAMER ADMI TS THAT HE CAN' T SHOWI T.
THE COURT: LET' S SAVE THAT FOR AFTER THE BREAK. WE
ARE GOI NG TO GET I NTO THE WEEDS ON THE STATS.
MR. VAN NEST: VERY GOOD.
THE COURT: OKAY? ALL RI GHT. LET' S TAKE A BREAK
UNTI L 3: 45. OKAY? THANK YOU.
THE COURT: THANK YOU ALL VERY MUCH.
( RECESS FROM3: 34 P. M. UNTI L 3: 58 P. M. )
THE COURT: OKAY. LET' S GO TO DR. LEAMER' S OPENI NG
EXPERT REPORT.
MR. GLACKI N: YOU MEAN THE ONE DATED MAY 10TH, OF
COURSE?
THE COURT: YES, THE ONE DATED I N MAY.
WHY DON' T YOU EXPLAI N - - LET' S START WI TH EXHI BI T 2. WHY
DON' T YOU J UST EXPLAI N WHAT HI S CORRELATI ON ANALYSI S THEORY I S.
WHAT DO THESE DI FFERENT THI NGS REPRESENT?
MR. GLACKI N: SURE.
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THE COURT: START WI TH EXHI BI T 2, APPLE.
MR. GLACKI N: EXHI BI T 2, APPLE. I S THERE A REASON
YOU DON' T WANT TO START WI TH EXHI BI T 1, ADOBE? BECAUSE THEY' RE
EXACTLY THE SAME I N TERMS OF WHAT' S THERE AND THE ADOBE ONE HAS
SOME HI GHLI GHTI NG ON I T THAT MI GHT BE HELPFUL.
MR. GLACKI N: WE CAN START WI TH APPLE. I T' S THE SAME
CHARTS EI THER WAY.
EXHI BI T 1 I S THE OUTPUT OF THE REGRESSI ON ANALYSI S FOR
ADOBE; AND THEN EXHI BI T 2 I S THE OUTPUT OF THE REGRESSI ON
ANALYSI S FOR EVERY OTHER COMPANY. SO WE CAN START - -
THE COURT: WHY DOES I T LOOK DI FFERENT THAN THE APPLE
ONE?
MR. GLACKI N: YOU MEAN WHY I S THERE HI GHLI GHTI NG?
THE COURT: NO. I F YOU LOOK UNDER SECTI ON 1, THE
CATEGORI ES ARE DI FFERENT.
MR. GLACKI N: I THI NK - - SO PROBABLY - - WHAT' S
DI FFERENT I S THE - - SECTI ON 1 I S ALL J UST A REPORT OF THE
CHARACTERI STI CS OF THE TI TLE I N TERMS OF HOWMANY EMPLOYEES ARE
THERE AND WHAT THE HI RI NG RATE I S FOR EMPLOYEES I N THAT TI TLE.
I THI NK THAT SOME OF THAT I NFORMATI ON WAS OMI TTED FROM
EXHI BI T 2 BECAUSE I T' S NOT THAT I MPORTANT AND I T ALLOWED THERE
TO BE MORE SPACE BETWEEN THE COEFFI CI ENTS ON THE REGRESSI ON
OUTPUTS, WHI CH ARE ALL THE SAME - - I MEAN, ALL THE SAME
COLUMNS. I THI NK THAT WAS THE ONLY REASON THAT WAS OMI TTED.
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BUT I COULD WALK THROUGH EI THER ONE AND EXPLAI N WHAT THEY
MEAN.
SO I N OTHER WORDS, THE ONLY - - THE DI FFERENT - - THE
REASON - - I F YOU LOOK AT SECTI ON 1 OF ADOBE AND COMPARE I T TO
SECTI ON 1 OF APPLE, THEY BOTH SHOWTHE YEARS OF DATA FOR THE
TI TLE, AND WHAT THAT MEANS I S - - THAT' S THE NUMBER OF YEARS FOR
WHI CH WE HAVE DATA FOR THAT J OB TI TLE BECAUSE THAT' S A RELEVANT
THI NG TO KNOW.
AND THEN THE NEXT COLUMN I S TOTAL EMPLOYEE YEARS, WHI CH
TELLS YOU THE NEXT THI NG YOU NEED TO KNOW, WHI CH I S HOWMANY - -
WHAT' S THE WEI GHT OF THAT J OB TI TLE WI THI N THE DATA? SO YOU
HAVE THE NUMBER OF YEARS.
AND THEN YOU HAVE THE NUMBER OF YEARS WORKED BY EMPLOYEES
I N THAT J OB TI TLE, WHI CH I S A RELEVANT THI NG TO KNOW.
THEN THE OTHER COLUMNS I N THE ADOBE CHART ARE ABOUT THE - -
THEY' RE SORT OF OTHER WAYS OF - - OTHER DESCRI PTI ONS OF THE
CHARACTERI STI CS OF THE NUMBER OF EMPLOYEES I N THAT TI TLE.
SO AV EMP I S THE AVERAGE NUMBER OF EMPLOYEES I N THAT TI TLE
AT ANY GI VEN TI ME.
D- LOG AVERAGE I S THE RATE OF CHANGE OF THE NUMBER OF
EMPLOYEES I N THE TI TLE.
SO, FOR EXAMPLE, I F YOU - - LOOKI NG AT THE VERY TOP ONE
WHERE I T SAYS D- LOG AVERAGE I S . 27, THAT MEANS THAT ON AVERAGE,
THAT TI TLE WAS I NCREASI NG BY 27 PERCENT PER YEAR.
AND THEN D- LOG STANDARD DEVI ATI ON I S THE STANDARD DEVI ATI ON
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OF THE RATE OF CHANGE, AND THE BI GGER THAT NUMBER I S, THE MORE
FLUCTUATI ON THERE WAS AROUND THE CHANGE OF HEAD COUNT I N ANY
GI VEN YEAR.
SO I N OTHER WORDS, I F THE STANDARD DEVI ATI ON WAS 0, THAT
WOULD, I THI NK, I MPLY THAT THERE WAS A STATI C 27 PERCENT
I NCREASE I N HEAD COUNT EVERY YEAR.
WI TH A STANDARD DEVI ATI ON - -
THE COURT: AND WHERE DO YOU GET THAT 27 PERCENT?
MR. GLACKI N: THAT' S D- LOG AVERAGE . 27 ON THE
ADOBE EXHI BI T 1.
THE COURT: I T' S . 018 AND THEN I T' S MI NUS . 027.
MR. GLACKI N: WHAT I ' MLOOKI NG AT I S EXHI BI T 1, WHI CH
I S ADOBE.
THE COURT: OH, YOU' RE LOOKI NG AT THE FI RST PAGE OF
I T.
MR. GLACKI N: YEAH.
THE COURT: OKAY. I SEE.
MR. GLACKI N: YOU SEE THE . 27, THE VERY TOP ENTRY.
SO THE . 34 TELLS YOU THAT I T WASN' T . 27 EVERY YEAR.
THE HEAD COUNT - - HOWTHE HEAD COUNT MOVED I S NOT SUPER
I MPORTANT TO THE ANALYSI S AND THAT' S WHY I T WAS OMI TTED FROM
THE LARGER REPORT OF REGRESSI ON RESULTS I N EXHI BI T 2.
WHAT YOU REALLY NEED TO KNOWTO UNDERSTAND - - TO I NTERPRET
THOSE RESULTS, I THI NK, I S THE NUMBER OF EMPLOYEE YEARS AND THE
NUMBER OF YEARS OF DATA WE HAVE. THOSE ARE THE MOST I MPORTANT
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THI NGS TO KNOW.
THE COURT: OKAY. WHAT DOES THE T- STAT SHOW?
MR. GLACKI N: SO A T- STAT I S A MEASURE OF STATI STI CAL
SI GNI FI CANCE, AND A - - THE BEST WAY TO I NTERPRET THEMI S THAT A
T- STAT OF 2. 0 OR GREATER MEANS THAT THE COEFFI CI ENT I S
STATI STI CALLY SI GNI FI CANT TO CONVENTI ONAL CONFI DENCE LEVELS,
WHI CH I THI NK I N THI S CASE WOULD BE 95 PERCENT LEVELS, OR 5
PERCENT LEVELS.
THE COURT: SO WHAT I S HI S THEORY? HI S THEORY I S
THAT I F HE CAN SHOWTHAT THE AVERAGE COMPENSATI ON FOR A SI NGLE
J OB TI TLE, THAT THE CHANGES I N THAT COMPENSATI ON ARE CORRELATED
TO CHANGES I N THE AVERAGE COMPENSATI ON FOR THE ENTI RE TECHNI CAL
CLASS, THAT THAT MEANS THEY' RE RI SI NG AND FALLI NG TOGETHER? I S
THAT THE THEORY? OR WHAT I S I T?
MR. GLACKI N: SO I F YOU' LL I NDULGE ME, I T MI GHT HELP
TO GO BACK TO THE BEGI NNI NG A LI TTLE BI T, WHI CH I S TO GO BACK
TO THE COMMON FACTORS ANALYSI S FROMTHE VERY FI RST REPORT.
AND THE REASON I T' S I MPORTANT TO GO BACK THERE I S THAT THE
DEFENDANTS' MAI N ATTACK ON THI S ANALYSI S HAS BEEN TO SAY THAT
DR. LEAMER I GNORED I NDI VI DUAL LEVEL DATA AND DI DN' T TAKE I NTO
ACCOUNT I NDI VI DUAL VARI ATI ON WI THI N J OB TI TLE AND HOWI MPORTANT
THAT I S.
AND I T' S ABSOLUTELY NOT TRUE. THE VERY FI RST THI NG THAT
DR. LEAMER DI D WAS TO ESTABLI SH WHAT - - TO WHAT EXTENT COMMON
FACTORS LI KE J OB TI TLE, AGE, AND COMPANY EXPLAI N THE
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COMPENSATI ON OF I NDI VI DUAL EMPLOYEES.
AND THI S I S AT THE AREA OF, LI KE, PARAGRAPH 129 I N HI S VERY
FI RST REPORT OF OCTOBER 1ST OF 2012.
THE COURT: BUT THAT DOESN' T EXPLAI N WHY HE DI DN' T
TAKE I NDI VI DUAL COMPENSATI ON HERE, WHY HE AVERAGED I T BY J OB
TI TLE.
MR. GLACKI N: WELL, I T DOES ACTUALLY, BECAUSE WHAT
THE - - WHAT THE COMMON FACTORS ANALYSI S SHOWED I S THAT - - AND
EVERYBODY AGREES ABOUT THI S AT THI S POI NT - - I S THAT THESE
COMMON FACTORS EXPLAI N 90- PLUS PERCENT OF AN EMPLOYEE' S
COMPENSATI ON, WHI CH I S - - WHI CH MEANS THAT I F YOU KNOWTHE
COMPANY, J OB TI TLE, AGE, AND GENDER, I THI NK, ARE THE FACTORS
OF ANY MEMBER OF THE CLASS, YOU CAN CALCULATE, ON AVERAGE,
THEI R COMPENSATI ON, 94 PERCENT OF THEI R COMPENSATI ON, OR YOU
CAN EXPLAI N 90- PLUS PERCENT OF THEI R COMPENSATI ON. EXCUSE ME.
AND EVERYONE AGREES THAT THAT RESULT I S MAI NLY DRI VEN BY
TI TLE, THAT I T' S ACTUALLY THE TI TLE THAT DRI VES 90 PERCENT OF
THAT RESULT, EVEN ACCORDI NG TO DR. MURPHY.
SO - - AND OF COURSE WE EXPECT THAT, RI GHT? I F WE HAD A
CASE WHERE MOST OF THE EMPLOYEES' COMPENSATI ON WAS EXPLAI NED BY
THEI R GENDER, THI S WOULD BE A TI TLE 7 LAWSUI T, RI GHT? THAT' S
NOT HOWCOMPANI ES PAY PEOPLE. THEY DON' T PAY THEMACCORDI NG TO
THEI R GENDER, OR THEY TRY NOT TO. AND THEY DO PAY ACCORDI NG TO
THEI R AGE TO THE EXTENT I T' S A PROXY FOR TENURE.
BUT J OB TI TLE, EVERYONE AGREES, DRI VES 90 PERCENT PLUS OF
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THE COMPENSATI ON OF EVERY MEMBER OF THE CLASS, AND DR. MURPHY
AGREED WI TH THI S. HE AGREED TO I T UNDER OATH AT HI S
DEPOSI TI ON.
SO THE VERY FI RST THI NG DR. LEAMER DI D I S ESTABLI SH THAT
THESE EMPLOYEES ARE EMBEDDED I N A SYSTEMTHAT PAYS THEMBASED
ON THEI R J OB TI TLE.
AND ALL OF THE VARI ATI ON THE DEFENDANTS ARE TALKI NG ABOUT
I N TOTAL COMPENSATI ON - - BY THE WAY, THAT COMMON FACTORS
ANALYSI S I S A TOTAL COMP ANALYSI S. I T' S NOT AN ANALYSI S ONLY
OF BASE SALARY.
ALL THE VARI ATI ON THAT THE DEFENDANTS ARE SAYI NG I S SO
I MPORTANT I S I N THAT TOP AREA. I T' S I N THAT 90 TO 100 PERCENT
AREA. THAT' S WHERE ALL THE VARI ATI ON I S HAPPENI NG. 90 AND
BELOWI S DETERMI NED BY COMPANY, TENURE, GENDER, AND J OB TI TLE,
AND 90 PERCENT OF THAT I S DETERMI NED BY J OB TI TLE.
NOW, THAT DOESN' T EVEN MEAN, BY THE WAY, THAT THE VARI ATI ON
PART I S ALL DI SCRETI ONARY BECAUSE THERE' S OTHER FACTORS WE
DON' T KNOW, LI KE PEOPLE' S EDUCATI ON, WHI CH I S NOT I N THE DATA
SET, THAT PROBABLY WOULD EXPLAI N EVEN MORE APPROACHI NG UP TO
THAT 100 PERCENT LEVEL.
SO THE BOTTOMLI NE I S, AND THE REASON I ' M- -
THE COURT: SO FROMWHAT I HEAR, WHAT YOU' RE SAYI NG
I S BECAUSE HE FELT THAT THE I NDI VI DUAL VARI ATI ONS WOULD BE
MI NOR AND WOULD BE EXPLAI NABLE BY GENDER, J OB TI TLE, AND
WHATEVER, HE DI DN' T FEEL LI KE HE NEEDED TO I NCORPORATE
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I NDI VI DUAL AVERAGES I N THI S CORRELATI ON ANALYSI S, THAT HE
THOUGHT HE COULD J UST AVERAGE I T ACROSS THE WHOLE J OB TI TLE?
I S THAT WHAT YOU' RE - - LI KE WHAT I S THE BOTTOMLI NE OF WHAT
YOU' RE SAYI NG?
MR. GLACKI N: THAT I S ALMOST RI GHT, EXCEPT I ' D SAY
I T' S EVEN A LI TTLE STRONGER.
THE COURT: UM- HUM.
MR. GLACKI N: ONCE YOU KNOWTHAT 90 PERCENT OF HOW
THE EMPLOYEES ARE PAI D I S BASI CALLY BASED ON THEI R J OB TI TLE,
THEN THE QUESTI ON I S, I S THERE - - AND THI S I S THE QUESTI ON THAT
WE UNDERSTOOD, THE LI NK THAT WE UNDERSTOOD THE COURT TO HAVE
FOUND MI SSI NG, WHAT I S I T THAT - - I S THERE SOMETHI NG HOLDI NG
THOSE J OB TI TLES TOGETHER? RI GHT? I S THE TRUTH THAT I N THE
REAL WORLD THE J OB TI TLES GO LI KE THI S ( I NDI CATI NG) , AND I AM
MOVI NG MY ARMS UP AND DOWN, OR I S THE TRUTH THAT I N THE REAL
WORLD THE J OB TI TLES MOVE TOGETHER AND ARE CORRELATED?
BECAUSE I F YOU SHOWTHAT 90 PERCENT OF THE EMPLOYEE TOTAL
COMPENSATI ON I S DRI VEN BY THEI R J OB TI TLE AND YOU SHOWTHAT THE
J OB TI TLES ARE CORRELATED, THEN YOU HAVE SHOWN THAT THERE I S A
PAY STRUCTURE I N PLACE THAT WI LL TEND TO HAVE - - THAT WI LL TEND
TO SPREAD THE EFFECTS OF THESE AGREEMENTS EXACTLY THE WAY THAT
DR. LEAMER POSI TED THEY WOULD AS A MATTER OF ECONOMI C THEORY.
AND THAT I S EXACTLY WHAT WE HAVE SHOWN.
THE COURT: WHAT - - YOU KNOW, I N TAB 3 OF WHAT
MR. VAN NEST GAVE ME, I GUESS THAT' S PROBABLY FROMTHE
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SUPPLEMENTAL REPORT, HE SAYS HE' S WORKI NG WI TH TI TLE AVERAGES
BECAUSE I NDI VI DUAL DATA I S LI KELY TO BE DOMI NATED BY FORCES
THAT OPERATE AT THE I NDI VI DUAL LEVEL.
WHAT I S THAT? SO THOSE ARE THE FACTORS THAT YOU' RE TALKI NG
ABOUT RI GHT NOW?
MR. GLACKI N: WELL, THE - -
THE COURT: OR WHAT? WHAT' S BEI NG REFERRED TO HERE?
SI MI LARLY WHEN HE SAYS I N HI S REPLY REPORT THAT AVERAGI NG
ACROSS THE I NDI VI DUALS AND ANY TI TLE CAN REDUCE THE I NDI VI DUAL
I DI OSYNCRATI C EFFECTS, WHAT' S HE REFERRI NG TO?
MR. GLACKI N: WELL, WHAT HE' S REFERRI NG TO I S THAT I F
YOU - - AND THI S I S THE SAME THI NG THAT DR. MURPHY, THE SAME
EXPLANATI ON DR. MURPHY GAVE FOR USI NG THE ACS DATA SET - -
EXCUSE ME - - AVERAGI NG, AGGREGATI NG AND AVERAGI NG THE DATA I N
THE ACS DATA SET, WHI CH I S I F YOU WANT TO DETECT WHETHER OR NOT
THERE I S A STRUCTURE I N WHI CH THESE J OB TI TLES ARE EMBEDDED,
YOU HAVE TO LOOK AT THE AVERAGES, THE AVERAGE COMPENSATI ON
WI THI N THE J OB TI TLE.
AND WE' VE ESTABLI SHED THAT THAT' S THE APPROPRI ATE LEVEL OF
AGGREGATI ON I N A NUMBER OF WAYS.
FI RST OF ALL, WE' VE SHOWN THAT 90 PERCENT OF THE EMPLOYEES'
COMPENSATI ON I S DRI VEN BY J OB TI TLE.
SECOND OF ALL - -
THE COURT: DO YOU AGREE WI TH THAT?
MR. VAN NEST: I THI NK - - I DON' T KNOWI F I T' S 90
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PERCENT, YOUR HONOR. I DI SAGREE WI TH THE SI GNI FI CANCE OF I T,
BUT I THI NK THAT J OB TI TLE DOES EXPLAI N A LOT OF COMPENSATI ON.
BUT THE J OB TI TLE RANGES ARE HUGE AND THEY I NCLUDE SALARY,
BONUS, AND EQUI TY, WHI CH I S WHY DR. LEAMER HAD TO AVERAGE TO
GET EVEN THE RESULTS HE DI D.
THE I NDI VI DUAL FORCES HE' S TALKI NG ABOUT THAT DOMI NATE ARE
THI NGS LI KE HOWWELL DI D THE I NDI VI DUAL PERFORM? WAS HE I N A
REALLY I MPORTANT UNI T? HOW- - YOU KNOW, HOWWELL I S THE
COMPANY DOI NG THAT YEAR? FOUR FACTORS THAT APPLY TO THE
I NDI VI DUAL.
AND THOSE DOMI NATE, AND THEY DOMI NATE BECAUSE I N
SI LI CON VALLEY, PEOPLE ARE PAI D BASED ON PERFORMANCE AND THERE
I S NO WRI TTEN - - YOU KNOW, THERE' S NO RI GI D STRUCTURE. SOME OF
THE BANDS ARE - -
THE COURT: BUT CAN YOU CONTROL FOR PERFORMANCE AND
STI LL HAVE THE COMPENSATI ON MOVI NG TOGETHER?
MR. VAN NEST: COULD YOU?
THE COURT: YEAH.
MR. VAN NEST: I ' MNOT SURE, BECAUSE CERTAI NLY THE
RAWDATA HERE SHOWS THAT THE COMPENSATI ON NEVER MOVES TOGETHER
FOR ANY TI TLE FOR ANY OF THESE COMPANI ES. THAT' S WHAT WE' LL
GET TO I N MY DATA, YOU KNOW, THE RAWDATA I N A MI NUTE.
AND WHAT HE' S SAYI NG HERE, DR. LEAMER, I S "I F I HAD TO LOOK
AT I NDI VI DUAL DATA, I T WOULD BE DOMI NATED BY I NDI VI DUAL
FACTORS. "
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AND THI S I S WHAT GRADY AND ALSUP BOTH SAI D, TOO, I S THAT - -
THE COURT: BUT WHAT DI D HE DEFI NE AS THE I NDI VI DUAL
FACTORS, THE I DI OSYNCRATI C EFFECTS? WHAT WAS HE REFERRI NG TO?
MR. VAN NEST: THI NGS THAT OPERATE ON THE I NDI VI DUAL
LEVEL, LI KE PERFORMANCE OF THE I NDI VI DUAL.
THE COURT: DO YOU AGREE WI TH THAT, MR. GLACKI N?
MR. GLACKI N: NO, I DON' T AGREE THAT THAT' S THE ONLY
FACTOR.
THE COURT: BUT YOU AGREE THAT I T I S, THE PAI D FOR
PERFORMANCE?
MR. GLACKI N: YES. I AGREE - -
THE COURT: OKAY. WHAT ELSE? WHAT ELSE?
MR. GLACKI N: ANOTHER FACTOR WOULD BE EDUCATI ON,
WHI CH WE DON' T HAVE - - WHI CH WE CAN' T USE AS A VARI ABLE BECAUSE
I T WASN' T CONSI STENTLY RECORDED I N THE DATA, AND WE WOULD HAVE
LOVED TO DO THAT BECAUSE I THI NK THEN WE WOULD BE ABLE TO
EXPLAI N EVEN MORE. BUT THAT' S ONE.
AND THEN ANOTHER I MPORTANT ONE I S TENURE, OR WE' VE I NCLUDED
THE VARI ABLE OF AGE, BUT THE FACTOR I S TENURE. PEOPLE WHO ARE
LONGER I N THE COMPANY ARE GOI NG TO - - AND MORE EXPERI ENCED ARE
GOI NG TO GET PAI D MORE THAN PEOPLE WHO ARE NEW, AND THAT' S J UST
A FACT OF LI FE.
AND SO I F YOU' RE TRYI NG TO ESTABLI SH, OR DETERMI NE I SHOULD
SAY, WHETHER OR NOT THERE' S A STRUCTURE HOLDI NG TOGETHER THESE
J OB TI TLES, I T' S APPROPRI ATE TO AVERAGE THE I NDI VI DUAL DATA TO
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REDUCE THE EFFECT OF THOSE FACTORS.
AND THI S I S EXACTLY THE SAME APPROACH THAT DR. MURPHY TOOK
WI TH RESPECT TO THE ACS DATA SET, AND HE EXPLAI NED I T I N
EXACTLY THE SAME WORDS ACTUALLY.
THE COURT: WELL, DOES - - WOULD DR. LEAMER AGREE THAT
THERE ARE SUBSTANTI AL VARI ATI ONS I N COMPENSATI ON WI THI N A J OB
TI TLE?
MR. GLACKI N: I THI NK HE' D CERTAI NLY AGREE THAT
SOMETI MES THERE ARE, THAT THERE COULD BE. I MEAN, I DON' T
THI NK WE' RE RULI NG THAT OUT AS A POSSI BI LI TY. I MEAN, I THI NK
I T DEPENDS WHAT YOU MEAN BY "SUBSTANTI AL. "
BUT THE - - YOU KNOW, LOOK, THE DI FFERENCES I N PAY LEVEL, I
MEAN, THEY ARE WHAT THEY ARE.
AND, YOU KNOW, THE DEFENDANTS HAVE NOT DONE AN
EMPLOYEE- BY- EMPLOYEE CORRELATI ON ANALYSI S TO SHOWTHAT THE PAY
OF THE EMPLOYEES I S NOT CORRELATED TOGETHER.
TO DO THAT, YOU WOULD HAVE TO CREATE A MATRI X THAT WAS
60, 000 - - OR FOR THE BI GGEST EMPLOYER, I NTEL, YOU' D HAVE TO
CREATE A MATRI X THAT WAS 36, 000 BY 36, 000 ACROSS.
BUT I F YOU DI D THAT, THE COMMON FACTORS ANALYSI S TELLS YOU
WHAT YOU WOULD SEE, WHI CH I S THAT EMPLOYEES I N THE SAME J OB
TI TLE, YOU KNOW, DO TEND TO HANG TOGETHER BECAUSE THEI R
COMPENSATI ON I S PRI NCI PALLY DRI VEN BY J OB TI TLE. I T' S J UST AN
UNDI SPUTED FACT AT THI S POI NT, AS I UNDERSTAND I T, THAT J OB
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TI TLE I S THE MAJ OR DETERMI NI NG FACTOR I N COMPENSATI ON. AND SO
HENCE THE I NQUI RY THAT WE TURNED TO, WHI CH I S, DOES THI S
STRUCTURE EXI ST?
AND WE UNDERSTOOD THE CRI TI CI SMS OF THE DEFENDANTS LAST
TI ME TO BE THAT WE HAD NOT SHOWN THAT THI S CORRELATI ON HELD
OVER TI ME, AND WE HAD NOT SHOWN THAT THE - - WE HAD NOT SHOWN
COMPREHENSI VELY THE CORRELATI ON OF THE J OB TI TLES BECAUSE THE
CO- MOVEMENT CHARTS WERE SELECTI VE.
SO WE SET ABOUT TO ANSWER THOSE CRI TI CI SMS, I N ADDI TI ONAL
TO THE OVERBREADTH CONCERN I WOULD SAY.
MR. VAN NEST: SO, YOUR HONOR, I T I S - - I T I S
DEFI NI TELY AGREED BY EVERYONE THAT PERFORMANCE I S A HUGE
FACTOR; AND I T I S NOT AGREED, CERTAI NLY NOT BY US, AND I DON' T
THI NK DR. LEAMER DI SPUTES THI S, THAT THERE I S ENORMOUS
VARI ATI ON I N PAY WI THI N EACH J OB TI TLE.
THAT' S WHAT WE' RE SHOWI NG I N TABS 4 AND 5. I T' S NOT THAT
COMPLI CATED, EI THER. WHAT WE SHOWHERE I N TAB 4 I S - - AND THI S
I S I N DR. MURPHY, EXHI BI T 1 - - THAT I F YOU PI CK A TI TLE, LI KE
ARCHI TECT AT I NTUI T, AND YOU PLOT THE PEOPLE I N THAT CATEGORY,
RI GHT THERE ON TAB 4 - -
THE COURT: WELL, LET ME ASK YOU A QUESTI ON.
MR. VAN NEST: - - YOU SEE HUGE VARI ATI ON UP AND DOWN.
THE COURT: I HEAR THAT.
BUT YOU ALSO SEE THAT WI TH GOOGLE AFTER THE BI G BANG WHERE
THEY GAVE ACROSS THE BOARD 10 PERCENT I NCREASE TO ALL EMPLOYEES
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AND YOU STI LL SEE THAT LEVEL OF VARI ATI ON.
THE COURT: SO LET ME ASK - -
MR. VAN NEST: THERE' S AN EXPLANATI ON FOR THAT, TOO.
THE COURT: - - WHY I S THAT? WHY ARE SOME PEOPLE' S
SALARI ES GOI NG DOWN WHEN THE ENTI RE WORK FORCE I S GETTI NG A 10
PERCENT SALARY I NCREASE?
MR. VAN NEST: THEY DI DN' T GET A 10 PERCENT SALARY
I NCREASE WI TH BI G BANG, YOUR HONOR. SO WHAT THEY GOT WAS A
CHANGE I N THE FORMOF COMPENSATI ON. PEOPLE GOT A BUMP I N THEI R
BASE PAY, BUT NOT NECESSARI LY I N THEI R TOTAL COMP.
NOT EVERYBODY GOT AN I NCREASE, BY THE WAY, AS DR. LEAMER' S
TABLE SHOWS.
WHAT HAPPENED WI TH BI G BANG, BY THE WAY, I S NOT AN EXAMPLE
OF RI PPLE. I T' S NOT AN EXAMPLE OF RI PPLE. RI PPLE I S I F I
CHANGE A FEW, THEN EVERYBODY GETS CHANGED BECAUSE THE J OB
STRUCTURES ARE RI GI D.
RI PPLE - - OR EXCUSE ME. BI G BANG WAS A VERY UNI QUE, AS
DR. LEAMER PUT I T, SPECI FI C RESPONSE TO ONE SET OF FACTS, WHI CH
WAS ENORMOUS HI RI NG BY FACEBOOK OF GOOGLE EMPLOYEES, AND I T I S
AN EXTERNAL FACTOR. I T' S A COMPANY- WI DE DECI SI ON TO MOVE
EVERYTHI NG.
I T' S NOT AN EXAMPLE OF DR. LEAMER' S THEORY.
I N BI G BANG, BY THE WAY, TOTAL COMP DI D NOT GO UP ANY MORE
THAT YEAR THAN I N ANY OTHER YEAR AT GOOGLE, BECAUSE WHAT THEY
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DI D WAS THEY SAI D, "WE' RE GOI NG TO PAY MORE I N BASE PAY, BUT
NOT AS MUCH I N BONUS AND EQUI TY. "
I T WAS A CHANGE I N THE MI X. GOOGLE EMPLOYEES WERE
OBJ ECTI NG TO A MI X OF PAY I N WHI CH EQUI TY WAS HEAVI LY WEI GHED
BECAUSE THEY DI DN' T VALUE EQUI TY AS HI GH, AS HI GHLY, AND SO
I T - - I T WAS A SHI FT I N THE FORMOF PAYMENT, NOT NECESSARI LY
THE TOTAL.
AND AS YOU LOOK AT CHARTS LI KE THE CHART I ' MSHOWI NG HERE
I N TAB 4, YOUR HONOR, THE KEY POI NT I S THAT PAY I S MOVI NG I N
EACH YEAR FOR SOME EMPLOYEES WI THI N THE SAME TI TLE UP A LI TTLE,
SOME DOWN A LI TTLE, SOME UP A LOT, A FEWDOWN A LOT.
AND I F YOU LOOK AT HOWPEOPLE MOVED AGAI NST THE AVERAGE, I N
MANY OF THESE YEARS, MORE THAN HALF THE PEOPLE I N A GI VEN TI TLE
MOVE I N A DI FFERENT DI RECTI ON THAN THE AVERAGE.
AND WHAT WE' RE SAYI NG NOW- -
THE COURT: OKAY. I ' MSORRY. LET ME I NTERRUPT YOU.
MR. VAN NEST: YES.
THE COURT: MY QUESTI ON WAS HOWTO EXPLAI N THE SALARY
FALLS DURI NG THE BI G BANG YEAR.
SO LET ME ASK THAT TO MR. GLACKI N.
MR. GLACKI N: SURE. I MEAN, I - - SO THE - - WE' VE
NEVER DI SPUTED - - WE' VE NEVER SAI D THAT THE PLAI NTI FF - - THAT
THE DEFENDANTS PAY ALL THEI R EMPLOYEES THE SAME OR THAT THEY
PAY THEMI N LOCKSTEP. WE NEVER SAI D THAT, THAT THERE' S NO
VARI ATI ON. THERE I S ABSOLUTELY VARI ATI ON I N HOWTHEY PAY THEI R
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EMPLOYEES.
BUT THE POI NT I THI NK - - I KNOWTHE CHART YOU' RE THI NKI NG
OF I N DR. LEAMER' S REPLY REPORT. WHAT YOU LEARN FROMTHAT - -
SO YOU WANT - - THE ANSWER TO YOUR QUESTI ON I S WHY WOULD
SOMEBODY' S TOTAL COMP GO DOWN? THE ANSWER MI GHT BE THAT I N
2010, THEY WERE - - PERHAPS THEY GOT A HI GHER, A HI GHER AMOUNT
OF TOTAL COMP BECAUSE THEY HAD A GOOD YEAR OR THEY GOT A BONUS.
I MEAN, THERE CERTAI NLY CAN BE VARI ABI LI TY I N PAY, AND SO I T
MI GHT BE THAT WHATEVER THEY GOT I N 2010, DESPI TE THE BI G BANG,
EXCEEDED WHAT THEY GOT I N 2011, BUT THEI R BASE SALARY, FROM
WHI CH A LOT OF OTHER THI NGS FLOWAT THESE COMPANI ES, WAS
I NCREASED BY 10 PERCENT I N 2011.
AND THAT' S - - THE POI NT OF THAT CHART I S TO I LLUSTRATE WHY
I T I S MI SLEADI NG TO LOOK AT THE I NDI VI DUAL LEVEL DATA, BECAUSE
I COMPLETELY DI SAGREE WI TH MR. VAN NEST. THI S I S EXACTLY THE
KI ND OF PREEMPTI VE RESPONSE THAT I T I S OUR POSI TI ON WOULD HAVE
OCCURRED HAD THESE AGREEMENTS NOT BEEN ENTERED I NTO. I T MI GHT
NOT HAVE BEEN 10 PERCENT EVERY YEAR, BUT I T WAS THESE KI NDS OF
PREEMPTI VE RESPONSES THAT WE SAY WERE PRECLUDED BY THE
AGREEMENTS.
AND LET ME SAY ONE OTHER THI NG. I MEAN, WHEN MR. VAN NEST
SAYS THAT GOOGLE J UST SORT OF WASHED I T ALL OUT AND DI DN' T GI VE
THEI R EMPLOYEES ANY MONEY, GOOGLE TESTI FI ED I N THI S CASE, AND I
WOULD HAVE TO GET THE CI TE OUT OF THE BRI EFS, THAT THE BI G BANG
COST THEM$500 MI LLI ON. SO SOMEHOWNOTWI THSTANDI NG THAT THEY
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SMOOTHED EVERYTHI NG OUT AND I T DI DN' T REALLY HAVE ANY I MPACT,
I T COST THEM$500 MI LLI ON.
SO I J UST DON' T AGREE WI TH THAT AS A FACTUAL ASSERTI ON THAT
THI S WAS A NON- EVENT FOR THE EMPLOYEES OF GOOGLE.
THE COURT: SO LET ME ASK, WHAT I S YOUR BEST EVI DENCE
THAT COMPENSATI ON FOR EMPLOYEES MOVES TOGETHER WI THI N THE SAME
J OB TI TLE? WHAT' S THE BEST EVI DENCE THAT YOU HAVE ON THAT?
MR. GLACKI N: THE BEST - - WI THI N THE J OB TI TLE - -
THE COURT: UM- HUM.
MR. GLACKI N: - - THE BEST ANALYSI S WE HAVE I S THE
COMMON FACTORS ANALYSI S WHI CH SHOWS THAT I T I S THE TI TLE I TSELF
THAT DETERMI NES 90 PERCENT, APPROXI MATELY, OF THE I NDI VI DUAL
EMPLOYEE' S SALARY.
AND I J UST WANT TO STRESS AGAI N, THAT ANALYSI S WAS RUN ON
AN EMPLOYEE- BY- EMPLOYEE BASI S. I T WAS NOT AVERAGED. I T WAS - -
WE ASKED, WHAT PERCENT OF EACH EMPLOYEE' S COMPENSATI ON CAN YOU
EXPLAI N WI TH THESE COMMON FACTORS? AND THE ANSWER I S, YOU
KNOW, APPROXI MATELY 90 PERCENT I S EXPLAI NED BY J OB TI TLE.
AND THAT I S THE EVI DENCE - - I T I S THAT EVI DENCE, PLUS THE
HUGE DOCUMENTARY RECORD, THAT THE DEFENDANTS OPERATE A
TI TLE- BASED PAY SYSTEM. AGAI N, I CAN' T I MAGI NE THAT THERE I S
SERI OUS DI SPUTE AT THI S POI NT THAT THE DEFENDANTS OPERATE A
TI TLE- BASED - - THAT EACH OF THEMOPERATES A TI TLE- BASED
COMPENSATI ON SYSTEM.
THE - - I T I S THOSE TWO FACTS THAT TELL US THAT J OB TI TLE I S
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THE RI GHT PLACE TO LOOK FOR THE EXI STENCE OF A STRUCTURE AND
THE RI GHT PLACE TO ASK THE QUESTI ON OF WHETHER OR NOT
COMPENSATI ON I S MOVI NG TOGETHER.
THE COURT: BUT YOU WOULD CONCEDE THAT AVERAGI NG I T
BY TI TLE, AS DR. LEAMER DI D, DOES MASK SOME OF THE I NDI VI DUAL
VARI ATI ONS - -
MR. GLACKI N: THAT' S THE POI NT - -
THE COURT: - - THAT WOULD HAPPEN WI THI N A TI TLE?
MR. GLACKI N: I ABSOLUTELY AGREE. I CONCEDE THAT AND
I AGREE WI TH I T. AND I N FACT, I T I S NECESSARY TO DO I T, AS A
MATTER OF GOOD STATI STI CS, FOR THE VERY REASONS GI VEN BY
DR. MURPHY WHEN HE EXPLAI NED DOI NG THI S WI TH RESPECT TO THE ACS
DATA.
LET ME - - AGAI N, TO TALK ABOUT AVERAGI NG AND GPUS FOR A
MI NUTE, GPUS DOES NOT STAND FOR THE PROPOSI TI ON THAT ONE MAY
NEVER AVERAGE. YOU HAVE TO AVERAGE TO DO CORRELATI ON ANALYSI S.
AVERAGI NG I S FUNDAMENTAL TO MOST STATI STI CAL I NQUI RI ES.
AND DR. MURPHY TESTI FI ED THAT HE AVERAGES DATA ALL THE
TI ME. HE SAI D SOMETI MES HE DOESN' T, SOMETI MES HE DOESN' T USE
AGGREGATE OR AVERAGE DATA, BUT A LOT OF TI MES HE DOES. AND HE
CONCEDED, AVERAGI NG I S A BASI C, USEFUL STOOL I N STATI STI CS.
WHAT HAPPENED I N GPUS, AS I SAI D, AND YOU CAN PULL THE
REPORTS OFF ECF, DR. TEECE, I THI NK, DI D THREE CORRELATI ON
ANALYSES. HE ASKED WHETHER YOU COULD CORRELATE ALL THE
PURCHASERS OF THE LI TTLE - - ALL THE LI TTLE GUYS AND ALL THE BI G
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GUYS AND WHETHER THOSE THI NGS MOVED TOGETHER I N TI ME, AND HE
MASHED TOGETHER ALL THE PRODUCTS, ALL OF THE DI STRI BUTI ON
CHANNELS, ALL OF THE DI FFERENT OEMS I NTO BI G BLOCKS.
WE HAVE - - YOU CAN SEE HI S REPORT OF THE CORRELATI ON
RESULTS. I T' S A SI NGLE TABLE WI TH THREE ROWS.
WE HAVE DONE - - WE HAVE DONE THE CORRELATI ON ANALYSI S ON
THE 2400 J OB TI TLES. WE HAVE - - WHERE POSSI BLE, WHERE WE HAVE
ENOUGH DATA. WE HAVEN' T DONE I T FOR ALL 2400, TO BE CLEAR.
WE HAVE EXPANDED THI S ANALYSI S TO I NCLUDE ALL 2400 TI TLES
I N AN ATTEMPT - -
THE COURT: EVERYONE KEEPS SAYI NG 2400 AND I THOUGHT
THE ORI GI NAL NUMBER WAS A LI TTLE HI GHER THAN THAT. I S THE
DI FFERENCE BECAUSE I NTUI T, LUCASFI LM, AND PI XAR ARE GONE?
MR. GLACKI N: NO, I DON' T THI NK THAT MAKES ANY
DI FFERENCE. AND I THI NK - - I WANT TO SAY THE NUMBER I S
2350- I SH. BUT I DON' T HAVE - -
THE COURT: I THOUGHT I T WAS 2536 I S WHAT I READ FROM
ONE OF THE EARLI ER - - I T' S 2400 NOW?
MR. GLACKI N: I THI NK WE' RE USI NG THAT NUMBER
LOOSELY.
THE COURT: OKAY.
MR. GLACKI N: I WOULD GO WI TH WHAT' S WRI TTEN DOWN.
THE COURT: OKAY.
MR. VAN NEST: 2400 I S, I F NOT THE PRECI SE NUMBER,
YOUR HONOR, VERY CLOSE.
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THE COURT: VERY CLOSE.
MR. VAN NEST: RI GHT. AND THERE' S NO DI SPUTE ABOUT
THAT.
MR. GLACKI N: YEAH, THERE' S A LOT OF TI TLES.
THE COURT: OKAY. LET' S GO TO THE MURPHY EXHI BI TS 7
AND 8.
MR. VAN NEST: WHI CH ONE, YOUR HONOR?
THE COURT: EXHI BI TS 7 AND 8. AND THAT' S I N YOUR - -
MR. VAN NEST: WE HAVE I T BEHI ND TAB 6, YOUR HONOR.
THE COURT: BEHI ND TAB 6.
MR. VAN NEST: AND I F YOU' D LI KE ME TO EXPLAI N THAT,
I CAN.
THE COURT: LET ME ASK, HOWDO THE PLAI NTI FFS RESPOND
TO THI S?
MR. GLACKI N: SURE. SO - -
THE COURT: DOESN' T THI S UNDERMI NE YOUR CORRELATI ON
THEORY?
MR. GLACKI N: NOT AT ALL.
THE COURT: WHY NOT?
MR. GLACKI N: THERE' S TWO REASONS THAT THESE CHARTS
ARE MI SLEADI NG.
YOU HAVE TO REMEMBER THAT THE THI NG WE' RE ASKI NG I S, I S
THERE A RELATI ONSHI P BETWEEN THE TI TLES OVER TI ME, OR I S THERE
A RELATI ONSHI P BETWEEN THE TI TLES AND AVERAGE - - TECHNI CALLY
WHAT WE' VE MEASURED I S A RELATI ONSHI P BETWEEN THE TI TLES AND
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ALL THE OTHER TI TLES AT THE SAME COMPANY. I S THERE A
RELATI ONSHI P THERE, A POSI TI VE RELATI ONSHI P OVER TI ME?
THE QUESTI ON I SN' T, DO THEY ALL MOVE TOGETHER AT EXACTLY
THE SAME TI ME?
THE QUESTI ON I S, I S THAT RELATI ON POSI TI VE OVER TI ME?
AND SO THAT PROPOSI TI ON THAT THE RELATI ONSHI P I S POSI TI VE
OVER TI ME I S COMPLETELY CONSI STENT WI TH THERE SOMETI MES BEI NG
VARI ATI ON AND WI TH THEMSOMETI MES GOI NG I N DI FFERENT
DI RECTI ONS.
BUT WHAT I T TELLS YOU I S, AND THI S WAS EXACTLY THE
QUESTI ON THAT WE UNDERSTOOD TO HAVE BEEN POSED, WHAT I T TELLS
YOU I S THAT OVER TI ME, THE RELATI ONSHI P I S POSI TI VE AND THAT
THEY WI LL TEND - - THEY ARE MOVI NG I N THE SAME DI RECTI ON
TOGETHER.
THE REASON THAT - - SO THAT' S WHY I T' S MI SLEADI NG WI TH
RESPECT TO THE FI RST CHART TO FOCUS ON - - I MEAN, CERTAI NLY
THERE I S VARI ATI ON. BUT I T' S MI SLEADI NG TO LOOK AT THE FI RST
CHART AND SI MPLY SAY, OH, YOU KNOW, THEY DI DN' T ALL MOVE THE
SAME WAY AT THE SAME TI ME, HENCE, THERE' S NO STRUCTURE, BECAUSE
OVER TI ME THERE I S A STRUCTURE.
WI TH RESPECT TO THE SECOND CHART, WHAT' S COMPLETELY
MI SLEADI NG ABOUT THAT CHART I S THAT THOSE, THOSE DOTS ARE NOT
NECESSARI LY THE SAME, I N THE SAME POSI TI ON EVERY YEAR. I MEAN,
WHAT YOU' RE SEEI NG HERE I S - - WHAT THERE ARE - - WHAT THI S I S
SHOWI NG I S THAT I N 2002, ALL OF THE - - FOR EXAMPLE, AT ADOBE
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THE J OB TOTAL AVERAGE COMPENSATI ON WENT DOWN AND I T WENT DOWN
BY DI FFERENT AMOUNTS FOR DI FFERENT TI TLES, AND THEN YOU SEE THE
NEXT YEAR I T WENT UP FOR MOST TI TLES, AND FOR SOME TI TLES I T
WENT DOWN.
BUT I T DOESN' T - - AND THEN YOU SEE THAT I T' S - - ACTUALLY
YOU CAN SEE A PATTERN THERE BEI NG REPEATED OVER TI ME.
BUT THE BOTTOMDOT I S NOT ALWAYS THE BOTTOMDOT, RI GHT?
SO I T' S TOTALLY FI NE. I MEAN, WE AGREE THAT I N ANY GI VEN
YEAR, THERE MAY BE A DI VERGENCE. THERE MAY BE VARI ABI LI TY.
BUT WHAT THE STATI STI CAL ANALYSI S TELLS US I S THAT OVER
TI ME, THAT VARI ABI LI TY I S TI ED TO A POSI TI VE STRUCTURE.
THE COURT: MR. VAN NEST.
MR. VAN NEST: YOUR HONOR, YOU' VE HI T I T RI GHT ON THE
HEAD. THI S - - WE WERE TALKI NG A MI NUTE AGO ABOUT VARI ATI ON
WI THI N A TI TLE, THAT WAS TAB 4 AND 5, AND I T' S CONCEDED NOW
THAT THE AVERAGI NG MASKS THAT.
THI S ASKS A DI FFERENT QUESTI ON. THI S I S BETWEEN TI TLES.
CAN THEY SHOWTHAT THERE' S A RI GI D J OB STRUCTURE SO THAT THE
TI TLES ARE CORRELATED BETWEEN THEMSELVES?
THE TOP OF THE PAGE, I N MY TAB, I S WHAT DR. LEAMER SAYS I S
HI S BEST CASE. THAT' S HI S BEST CORRELATI ON. HE' S TAKEN SOME
TI TLES AT ADOBE, HE' S CHERRY PI CKED SI X OF THEM, HE' S SHOWN THE
GRAPH AND HE SAYS THI S I S A GREAT CORRELATI ON BETWEEN TI TLES.
ALL MURPHY DI D WAS, AT THE BOTTOMOF THE PAGE, I S HE
EXPANDED THE NUMBER OF TI TLES WI THI N EACH COMPANY YOU LOOK AT.
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HE LOOKED AT THE 50 MOST POPULATED, THE TI TLES WI TH THE MOST
EMPLOYEES, AND HE' S PLOTTI NG, YEAR TO YEAR, WHETHER THAT TI TLE
MOVED UP OR MOVED DOWN.
AND AS YOUR HONOR CAN SEE, AND THI S HAS BEEN DEMONSTRATED
OVER AND OVER AGAI N, THERE' S HUGE VARI ATI ON.
EACH COMPANY, YEAR BY YEAR, SOME TI TLES MOVE UP A LI TTLE,
SOME MOVE UP A LOT, SOME MOVE DOWN A LI TTLE, SOME MOVE DOWN A
LOT.
AND I T' S NOT THE SAME TI TLES. THERE I S NO FI XED PATTERN
OF ANY OF THI S. THERE I S ENORMOUS VARI ABI LI TY.
AND WHAT EXHI BI T 7 AND EXHI BI T 8 ARE SHOWI NG RI GHT ON THE
HEAD I S THE SECOND PART OF THE EQUATI ON. WE' VE SHOWN HUGE
VARI ATI ON WI THI N A TI TLE. THI S SHOWS HUGE VARI ATI ON ACROSS
TI TLES BECAUSE I T SHOWS THAT WHEN YOU LOOK AT MORE THAN A FEW
AND YOU EXPAND I T TO THE TOP 50 FOR EACH COMPANY, YOU SEE,
OBVI OUSLY ON THE PAGE, AN ENORMOUS VARI ATI ON UP AND DOWN OF
DI FFERENT TI TLES YEAR AFTER YEAR AFTER YEAR, WHI CH PROVES OUR
POI NT THAT THERE I SN' T ANY SORT OF A RI GI D J OB STRUCTURE WHERE
PEOPLE MOVE - - WHERE EVERYTHI NG - - WHERE A CHANGE I N SOME WOULD
AFFECT I N A CHANGE I N ALL, OR A CHANGE I N SOME WOULD PROPAGATE
OUT.
AND THI NK ABOUT I T LOGI CALLY. WHY I N THE WORLD WOULD THE
FACT THAT A SOFTWARE ENGI NEER HERE I N SI LI CON VALLEY WHO DI DN' T
GET A CALL, WHY WOULD THAT AFFECT A MASK DESI GNER I N
NEWMEXI CO? WHY WOULD THAT AFFECT A SEMI CONDUCTOR
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MANUFACTURI NG PERSON I N ARI ZONA? WHY WOULD THAT AFFECT A
CONSTRUCTI ON MANAGER, AN ARTI ST, A CHEMI CAL ENGI NEER, AN
ELECTRI CAL ENGI NEER? THAT' S THE POI NT OF THI S 2400 TI TLE
PROBLEMAND 60, 000 EMPLOYEES.
I T' S UNPRECEDENTED FOR A REASON. NO COURT ANYWHERE HAS
EVER FOUND, I N A CASE LI KE THI S, THAT YOU CAN CERTI FY AND
EXPECT TO PROVE COMMON I MPACT OVER A GROUP THI S DI SPARATE.
AND THI S TAB 6, EXHI BI T 7 FROMMURPHY, PROVES THAT THERE
I S NO RI GI D PAY STRUCTURE, RI GHT? I T I S A STRUCTURE BASED ON
PAYI NG FOR PERFORMANCE WHERE TI TLES MOVE I N DI FFERENT
DI RECTI ONS EACH YEAR AND WHERE I NDI VI DUAL EMPLOYEES MOVE I N
DI FFERENT DI RECTI ONS EACH YEAR.
AND THE ONLY WAY LEAMER CAN GET ANYWHERE CLOSE TO WHAT HE
GOT I S BY AVERAGI NG. HE AVERAGED EVERYTHI NG. HE AVERAGED
I NDI VI DUAL EMPLOYEE PAY WI THI N A TI TLE. HI S REGRESSI ONS ARE
BASED ON AVERAGES. HI S CORRELATI ONS ARE BASED ON AVERAGES.
AND WHAT THE CASE LAWSAYS REPEATEDLY I S NOT THAT YOU CAN
NEVER AVERAGE. THAT' S NOT WHAT WE' RE SAYI NG. YOU CAN AVERAGE
I N ECONOMI C ANALYSI S.
BUT WHEN THE QUESTI ON I S WHETHER YOU CAN PROVE COMMON
I MPACT WHEN WHAT' S I NVOLVED ARE LOTS OF I NDI VI DUAL PEOPLE AND
DECI SI ONS, AVERAGI NG THEMTELLS YOU NOTHI NG BECAUSE THE FACT
THAT AN AVERAGE GOES UP OR DOWN DOESN' T TELL YOU WHETHER ALL OR
NEARLY ALL PEOPLE WERE AFFECTED.
SO OUR POI NT WI TH TABS 4, 5, 6, AND 7 I S THEY FLUNKED THE
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BASI C TEST THAT YOU GAVE THEMAND NOWTHEY' RE WALKI NG AWAY FROM
I T, AND THEY FLUNKED I T SO BAD THAT DR. LEAMER HAS TO ADMI T,
WHI CH I S I N TAB 1 - - WE ASKED HI MPOI NT BLANK, "DO YOUR
RESULTS, YOUR CORRELATI ON, YOUR REGRESSI ON, EVERYTHI NG YOU DI D,
DO THEY ENABLE YOU TO CONCLUDE THAT ADOBE' S COMP STRUCTURE WAS
SO RI GI D THAT RAI SES FOR ONE OR A FEWWOULD HAVE NECESSARI LY
PROPAGATED I NTO RAI SES FOR ALL?"
"NO. I CAN' T CONCLUDE THAT. I DI DN' T CONCLUDE THAT. "
AND HE CAN' T CONCLUDE I T BECAUSE THE DATA DOESN' T SUPPORT
I T.
THE COURT: LET ME ASK MR. GLACKI N, WHAT I S YOUR BEST
EVI DENCE THAT COMPENSATI ON MOVES TOGETHER ACROSS J OB TI TLES?
MR. GLACKI N: WELL, THERE' S - - I - - WHAT' S MY BEST
EVI DENCE?
THE COURT: YES.
MR. GLACKI N: I HESI TATE BECAUSE I FEEL THE RECORD I S
SO RI CH AND I ' MNOT SURE I CAN ACTUALLY PI CK A WI NNER.
THE COURT: UM- HUM.
MR. GLACKI N: YOU KNOW, THERE' S THI S - - THERE' S THE
RI CH DOCUMENTARY RECORD THAT SHOWS THAT THE DEFENDANTS
MODULATED THEI R ENTI RE PAY SYSTEMS AT THE J OB TI TLE LEVEL AND
THAT THEY SET COMPENSATI ON ON A BELL CURVE I N A NUMBER OF
I NSTANCES.
BUT I N ADDI TI ON TO THAT, YOU KNOW- - AND AGAI N I HESI TATE
BECAUSE WE TOOK THE CRI TI CI SMS VERY SERI OUSLY AND WE DI DN' T
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J UST DO ONE ADDI TI ONAL STATI STI CAL ANALYSI S. WE LOOKED AT THI S
FROMFOUR DI FFERENT - - I SHOULD SAY DR. LEAMER STATI STI CALLY
LOOKED AT I T FROMFOUR DI FFERENT DI RECTI ONS. HE LOOKED AT I T
ON THE LEVEL OF CONTEMPORANEOUS CORRELATI ONS, WHETHER OR NOT
THERE' S A SI MPLE CORRELATI ON, HE LOOKED AT THAT AT THE J OB
TI TLE LEVEL, AND HE LOOKED AT I T AT THE ENTI RE COMPANY LEVEL BY
COMBI NI NG SMALL TI TLES I NTO GROUPS.
THEN HE RAN A MULTI PLE REGRESSI ON ANALYSI S WHI CH ALLOWED
THE STRUCTURAL VARI ABLES TO COMPETE WI TH THE EXTERNAL VARI ABLES
THAT THE DEFENDANTS SAY ARE SO I MPORTANT, AND THE EXTERNAL
VARI ABLES LOST. THE STRUCTURAL VARI ABLES HAD VERY HI GH
COEFFI CI ENTS, THE EXTERNAL MARKET FORCE VARI ABLES HAD VERY LOW
COEFFI CI ENTS, WHI CH CONFI RMS AGAI N WHAT WE KNEWFROMTHE COMMON
FACTORS ANALYSI S, WHI CH I S THAT THE MAJ ORI TY OF WHAT THE
EMPLOYEES ARE PAI D I S DETERMI NED BY J OB TI TLE.
SO HAVI NG DONE THAT ANALYSI S, I T REALLY I S - - YOU KNOW,
HAVI NG BEEN CRI TI CI ZED FOR ONLY DI SPLAYI NG CHARTS AND NOT
LOOKI NG AT EVERY TI TLE I N THE COMPANY, WE HAVE NOWDONE THE
ANALYSI S OF LOOKI NG AT EVERY TI TLE I N THE COMPANY, I N THE
COMPANI ES. WE HAVE DONE MULTI PLE ANALYSES OF EVERY TI TLE I N
THE COMPANI ES, AND NOWTHE DEFENDANTS ARE CHERRY PI CKI NG THEI R
OWN CHARTS AND SAYI NG I F YOU LOOK AT THESE CHARTS, YOU SEE
THI NGS MOVI NG I N A LOT OF DI FFERENT DI RECTI ONS, WHI CH WAS
EXACTLY WHAT WE WERE TAKEN TO TASK FOR THE FI RST TI ME AROUND.
THEY HAVEN' T OFFERED A SI NGLE - - DR. MURPHY HAS NOT OFFERED
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A SI NGLE LEGI TI MATE CRI TI CI SMOF THE MULTI PLE REGRESSI ON
ANALYSI S THAT DR. LEAMER HAS DONE.
I T I S, FRANKLY, AMAZI NG TO ME, AFTER THE YEARS THAT I HAVE
DONE THI S, THAT WE DO NOT SEE FROMDR. MURPHY A COMPETI NG
REGRESSI ON I N WHI CH HE HAS ADDED A VARI ABLE AND BLOWN THI S
REGRESSI ON UP. THAT' S EXACTLY WHAT HE DI D NUMEROUS TI MES I N
THE OPENI NG REPORT. I T I S A STANDARD DEFENSE TACTI C. I T I S - -
THE FI RST THI NG THEY DO I S ADD THE S&P 500 TOTAL RETURN I NDEX
AND SHOWTHAT I T BLOWS UP WHATEVER THE PLAI NTI FFS' EXPERT I S
TRYI NG TO DO.
THERE I S NOT ONE SI NGLE EXAMPLE OF THAT KI ND OF ATTACK I N
HERE, AND I T I S BECAUSE THE REGRESSI ON I S TELLI NG THE TRUTH.
I T' S BECAUSE THE REGRESSI ON I S RI GHT, THAT THERE I S THI S
RELATI ONSHI P BETWEEN THE TI TLES OVER TI ME, NOT THAT THEY HAVE
TO MOVE I N LOCKSTEP EVERY YEAR, BUT THERE I S A STRUCTURE THAT
BI NDS THESE TI TLES TOGETHER OVER TI ME.
I T' S WHAT THE DEFENDANTS' EMPLOYEES SAY, THEI R H. R.
EMPLOYEES SAY, I T' S WHAT THE CEOS SAY, I T' S WHAT THE PEOPLE WHO
ENTERED I NTO THESE AGREEMENTS SAY, AND I T' S WHAT THE DATA SAYS,
AND THEY HAVE NOT EVER ATTACKED THAT ANALYSI S.
THEI R ONLY RESORT I S TO GO BACK TO THE I NDI VI DUAL LEVEL AND
SHOWTHI NGS MOVI NG I N A LOT OF DI FFERENT DI RECTI ONS AND ACCUSE
US OF AVERAGI NG.
THE COURT: SO LET ME GO TO PARAGRAPH 22 OF
DR. MURPHY' S REPORT. I T' S ON PAGE 8. WHY I S THE CORRELATI ON
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NOT RELEVANT? WHAT I S THE BENEFI T - -
MR. VAN NEST: WHAT HE' S SAYI NG, YOUR HONOR - - AND
OBVI OUSLY DR. MURPHY I S HERE I F YOU WANT TO HEAR FROMHI M, AND
HE CAN PROBABLY EXPLAI N THI S BETTER THAN I CAN - - BUT THE
FUNDAMENTAL POI NT I S THAT CORRELATI ON OF - - THI S CORRELATI ON
STUDY OR TEST I S MEANI NGLESS.
ALL HE' S SAYI NG - - ALL LEAMER I S SAYI NG ON THE CORRELATI ON
I S I F I TAKE THE AVERAGE OF A J OB TI TLE AND COMPARE I T TO THE
AVERAGE PAY OF CLASS MEMBERS AT THAT COMPANY, I SEE A
CORRELATI ON.
WELL, OBVI OUSLY BOTH THE TI TLES AT THE COMPANY AND ALL THE
EMPLOYEES I N THE TECH GROUP AT THE COMPANY, THEY' RE ALL SUBJ ECT
TO THE SAME EXACT EXTERNAL FACTORS, HOWWELL DI D THE COMPANY DO
THAT YEAR, HOWWELL I S THE ECONOMY DOI NG, WHAT' S THE J OB
MARKET - -
THE COURT: BUT WHAT' S THE BENEFI T OF - -
MR. VAN NEST: THERE I SN' T.
THE COURT: - - MEASURI NG THE DEVI ATI ON? WHAT' S THAT
BENEFI T?
MR. VAN NEST: THERE' S NO - - THERE' S NO BENEFI T I N
DETERMI NI NG WHETHER THERE' S A RI GI D J OB STRUCTURE. THE
CORRELATI ON DOESN' T TELL YOU THAT.
THAT' S WHY DR. LEAMER SAYS "I CAN' T TELL YOU THAT CHANGES
TO SOME EMPLOYEES WOULD PROPAGATE. " THERE' S NO - - WHAT
DR. MURPHY I S SAYI NG I S CORRELATI ON, I N THI S CONTEXT WHERE
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YOU' RE COMPARI NG A TI TLE TO THE REST OF THE EMPLOYEES AT THE
COMPANY, THAT WI LL MOVE TOGETHER WHETHER THE STRUCTURE I S RI GI D
OR NOT BECAUSE THEY' RE ALL SUBJ ECT TO THE SAME SET OF FACTORS.
AND WHEN YOU LOOK AT EXHI BI T 8, OR FI GURE 8 AND FI GURE 7,
HE TESTED THE THEORY. WHAT HAPPENS WHEN YOU LOOK AT THESE TOP
50 TI TLES? DO THEY ALL SEEMTO - - I S THERE A TI GHT, RI GI D
PATTERN?
ABSOLUTELY NOT. THERE' S HUGE VARI ATI ON.
THE COURT: WHY I SN' T ALL THI S MERI TS ANALYSI S FOR
LATER?
MR. VAN NEST: BECAUSE COMCAST AND ELLI S TELL US THAT
THE STANDARD FOR ESTABLI SHI NG CERTI FI ABI LI TY I N ( B) ( 3) I S
EXTREMELY HI GH.
YOU ASKED EARLI ER ABOUT CASE LAW. COMCAST CI TES DUKES AND
I T SAYS DUKES APPLI ES WI TH EVEN MORE FORCE I N ( B) ( 3) , AND I F
YOU WANT TO CERTI FY A CLASS OF 60, 000 PEOPLE WI TH 2400 - -
THE COURT: OKAY. BUT DUKES HAD NO DOCUMENTARY
EVI DENCE. DUKES HAD A SOCI OLOGI ST TALKI NG ABOUT WAL- MART
CULTURE.
MR. VAN NEST: WELL, LOOK AT - -
THE COURT: I T HAD 120 ANECDOTES FROMWOMEN
EMPLOYEES.
MR. VAN NEST: LOOK AT ELLI S.
THE COURT: THEY HAD STATI STI CS. THEY DI D NOT HAVE
THE WEALTH OF DOCUMENTARY EVI DENCE THAT EXI STS HERE.
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MR. VAN NEST: BUT - - BUT AGAI N, YOUR HONOR - -
THE COURT: YEAH.
MR. VAN NEST: I DON' T WANT TO DI SPUTE THAT THERE' S
DOCUMENTARY EVI DENCE THAT PEOPLE WERE TALKI NG ABOUT AGREEMENTS.
BUT THERE' S NO DOCUMENTARY EVI DENCE OF ANY COMMON I MPACT
ACROSS THE CLASS. THERE' S NO EVI DENCE I N DOCUMENTS OF REALLY
ANY I MPACT.
THERE MAY BE EVI DENCE OF I NTENT. THERE MAY BE EVI DENCE OF
PEOPLE TALKI NG TOGETHER, OF COURSE. WE' VE REVI EWED THAT LAST
TI ME. THAT EVI DENCE I S COMMON.
THE POI NT HERE I S THAT I F YOU HAVE TO SHOW, AS COMCAST
REQUI RES AND ELLI S - -
THE COURT: ANYWAY, OKAY.
THE COURT: LET ME GI VE MR. GLACKI N AN OPPORTUNI TY TO
RESPOND TO THI S I SSUE ABOUT I S I T BETTER TO MEASURE DEVI ATI ON
VERSUS THE CORRELATI ON?
MR. GLACKI N: CAN YOU POI NT ME TO EXACTLY - -
THE COURT: I T' S PARAGRAPH 22. I T' S ON PAGE 8 OF
DR. MURPHY' S - -
THE COURT: - - J UNE 2013 REPORT.
MR. GLACKI N: OKAY, YEAH, I UNDERSTAND.
I MEAN, THI S I S - - YOU KNOW, SO THI S I S THE HEART OF DR. ,
OF DR. MURPHY' S CRI TI CI SM, SO TO SPEAK, I S HE' S SAYI NG
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DEVI ATI ON REALLY MATTERS.
AND WHAT I S HI S EXPLANATI ON FOR WHY DEVI ATI ON REALLY
MATTERS? YOU MI GHT HAVE LOOKED LONG AND HARD FOR I T. I THI NK
SOMEWHERE I N HI S REPORT HE SAYS BASI C ECONOMI CS.
AND WHAT HE EXPLAI NED AT HI S DEPOSI TI ON I S THAT THE REASON
DEVI ATI ON MATTERS I S THAT I T SHOWS THAT I T I S POSSI BLE FOR THE
DEFENDANTS TO PAY THEI R EMPLOYEES DI FFERENTLY. THAT I S WHAT I T
SHOWS.
AND I F I T I S POSSI BLE FOR DEFENDANTS TO PAY THEI R EMPLOYEES
DI FFERENTLY, THEN THEY WI LL TRY TO PAY THEMAS LI TTLE AS
POSSI BLE, EVEN I N RESPONSE TO COMPETI TI ON.
THAT I S WHAT I UNDERSTAND TO BE HI S, THE THEORY BEHI ND HI S
ECONOMI CS.
AND I - - MY RESPONSE TO THAT I S WE ARE WAY BEYOND BASI C
ECONOMI CS. WE ARE WAY BEYOND TALKI NG REASONABLY ABOUT A
SI TUATI ON WHERE EVERY COMPANY FACES OFF AGAI NST I TS I NDI VI DUAL
EMPLOYEES I N ONE- ON- ONE NEGOTI ATI ONS AND J UST DOES A SI MPLE
COST MI NI MI ZATI ON FORMULA.
I T I S UNDI SPUTED BY ANY OF THE EXPERTS AT THI S POI NT THAT
THESE COMPANI ES USE PAY STRUCTURES, THAT I NFORMATI ON ECONOMI CS
AND THE PRI NCI PLES OF I NTERNAL EQUI TY ARE I MPORTANT FACTORS I N
HOWTHESE COMPANI ES PAY THEI R EMPLOYEES.
SO WHAT DR. MURPHY I S DOI NG I S SI MPLY SAYI NG, "WELL, I F I
LI VED I N A WORLD WHERE NONE OF THOSE THI NGS MATTERED AND THE
WAY GOOGLE PAI D I TS EMPLOYEES WAS TO SI T DOWN ACROSS THE TABLE
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FROMTHEMAND NEGOTI ATE A SALARY AND THERE WAS NOTHI NG ELSE
THAT MATTERED TO THAT CALCULUS, THEN GOOGLE WOULD HAVE AN
I NCENTI VE TO PAY THAT EMPLOYEE AS LI TTLE AS POSSI BLE. " I T' S
J UST AN I RRELEVANT HYPOTHETI CAL.
MR. VAN NEST: I F I MAY - -
THE COURT: WHAT ABOUT WHAT I S MR. VAN NEST' S TAB 5?
I HAD SOME QUESTI ONS ABOUT THESE CHARTS.
THE FI RST QUESTI ON I S, I N FOOTNOTE 10, DR. MURPHY SAYS,
"I ' MI NCLUDI NG PEOPLE WHO GOT PROMOTI ONS AND WHO BASI CALLY LEFT
ONE J OB TI TLE AND MOVED TO ANOTHER ONE. " SHOULD THOSE PEOPLE
BE I NCLUDED HERE? BECAUSE THAT COULD EXPLAI N A LOT OF THE
VARI ATI ON AS WELL I F YOU' RE TRACKI NG OVER TI ME PEOPLE WHO ARE
I N MULTI PLE J OB TI TLES. THAT COULD EXPLAI N SOME OF THE
VARI ATI ON.
MR. VAN NEST: I THI NK - - I T COULD.
BUT THI S VARI ATI ON I S ENORMOUS, YOUR HONOR, AS YOU CAN SEE.
ALL WE' RE DOI NG HERE I S LOOKI NG AT EMPLOYEES WI THI N EACH OF
THESE J OB TI TLES I N A PARTI CULAR YEAR. SO THI S I S J UST ONE
YEAR. THI S I SN' T OVER TI ME. THI S I S I N 2007.
SO YOU CAN SEE - -
THE COURT: RI GHT. BUT I GUESS I ' M- - BUT HE SAYS I N
THE FOOTNOTE THAT HE I NCLUDED PEOPLE THAT CHANGED J OBS.
MR. VAN NEST: HE DI D.
THE COURT: SO - -
MR. VAN NEST: SO THERE WOULD BE SOME PEOPLE - -
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THE COURT: SO THERE' S GOI NG TO BE - - SO THERE' S ONE
TI TLE LI STED ON TOP OF EACH CHART, BUT THAT' S OBVI OUSLY
I NCORRECT BECAUSE SOME OF THESE PEOPLE HAD DI FFERENT J OB
TI TLES.
MR. VAN NEST: BUT TAKE A LOOK, THOUGH, YOUR HONOR.
I F THI S WERE CLOSE, THEN MAYBE WE WOULD BE - - MAYBE WE WOULD BE
LOOKI NG MORE CAREFULLY AT THAT FOOTNOTE.
BUT TAKE A LOOK. FOR EACH ONE OF THESE COMPANI ES, THERE I S
NOT ONLY A HUGE RANGE BETWEEN WHETHER YOU GO UP I N PAY OR GO
DOWN - -
THE COURT: UM- HUM.
MR. VAN NEST: - - BUT THERE' S ALSO A HUGE RANGE I N
HOWMUCH. SOME OF THESE PEOPLE GO UP AS MUCH AS 75 PERCENT I N
A YEAR OR DOWN AS MUCH AS 60 PERCENT, AND THAT' S TRUE FOR
APPLE, I T' S TRUE FOR GOOGLE, I T SLI GHTLY LESS TRUE FOR I NTUI T.
THE COURT: BUT THAT COULD BE EXPLAI NED BY YOU
GETTI NG A NEWJ OB.
MR. GLACKI N: YES.
THE COURT: THE QUESTI ON I HAD ALSO - -
MR. GLACKI N: DO YOU STI LL WANT ME TO RESPOND TO THI S
OR NOT?
MR. GLACKI N: I DON' T THI NK WE TAKE SERI OUS I SSUE
WI TH I T ONE WAY OR ANOTHER.
I WI LL SAY THAT I THI NK THE ANSWER TO THE QUESTI ON DEPENDS
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ON - - THE ANSWER TO THAT QUESTI ON DEPENDS ON WHAT THE RELEVANT
QUESTI ON I S. I F THE QUESTI ON I S, I S THERE A STRUCTURE HOLDI NG
TOGETHER J OB TI TLES, PROBABLY YOU SHOULD EXCLUDE THE PEOPLE WHO
CHANGED J OB TI TLES.
I F THE QUESTI ON I S, DI D THE DEFENDANTS PAY THEI R EMPLOYEES
DI FFERENTLY, THEN MAYBE YOU SHOULD I NCLUDE THEM.
MR. VAN NEST: AND I SN' T THAT THE POI NT? I SN' T THAT
THE POI NT? PROMOTI ON I S ANOTHER WAY TO RESPOND, YOUR HONOR.
MR. VAN NEST: PROMOTI ON I S ANOTHER WAY TO
DI FFERENTI ATE BETWEEN EMPLOYEES. THAT' S OUR WHOLE POI NT - -
MR. GLACKI N: I RESPECTFULLY - - SORRY.
MR. VAN NEST: - - I S THAT WHEN YOU MOVE SOMEONE UP,
I T' S ANOTHER TOOL TO DI FFERENTI ATE BETWEEN I NDI VI DUALS, WHI CH
I S WHAT - - A TOOL I S SALARY, A TOOL I S BONUS, A TOOL I S EQUI TY,
AND A TOOL I S PROMOTI ON.
THE COURT: THE DOCUMENTARY EVI DENCE DOES SUPPORT
THAT PROMOTI ON WAS ONE WAY THAT MANAGERS DEALT WI TH HOWTO
COMPENSATE THE TOP PERFORMERS.
MR. GLACKI N: SURE.
MR. VAN NEST: AND THAT' S I NDI VI DUALS. THAT' S
I NDI VI DUALS. THAT' S OUR POI NT. THAT' S AN I NDI VI DUAL THI NG.
AND OUR WHOLE PI TCH HERE, AND THE DATA SUPPORT I T, MURPHY' S
DATA AND SHAW' S DATA ALL SUPPORT THI S, I S THAT PEOPLE ARE
MAKI NG WI DE DI STI NCTI ONS I N VARI ATI ONS AMONG EMPLOYEES WI THI N
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THE CLASS.
THE COURT: UM- HUM.
MR. VAN NEST: AND THERE ARE WI DE VARI ATI ONS BETWEEN
THE TI TLES, WI THI N THE TI TLES AND BETWEEN THE TI TLES.
THERE I SN' T THI S SORT OF RI GI D J OB STRUCTURE THAT THEY SAI D
THEY WOULD PROVE I N ORDER TO SHOWTHAT CHANGES TO SOME WOULD
PROPAGATE OUT.
THE COURT: LET ME ASK - - AND I ' MGOI NG TO GI VE YOU A
CHANCE TO RESPOND.
MR. GLACKI N: OKAY. THANK YOU.
THE COURT: LAST TI ME I GAVE DR. LEAMER A HARD TI ME
FOR CHERRY PI CKI NG J OB TI TLES OUT OF GOOGLE AND APPLE AND
NOBODY ELSE.
AND THERE CERTAI NLY SEEMS TO BE SOME CHERRY PI CKI NG HERE,
BECAUSE FOR LUCASFI LM, WE' RE COMPARI NG ARTI ST 2 AND SENI OR
ARTI ST 1 AND SOFTWARE ENGI NEER, BUT THEN YOU GO SOMEWHERE ELSE
AND WE' RE COMPARI NG SOMETHI NG TOTALLY DI FFERENT.
WAS AN ANALYSI S DONE FOR ALL THE DI FFERENT J OB TI TLES AND
THEN YOU J UST PI CKED THE TOP THREE FOR EACH COMPANY THAT HAD
THE MOST VARI ATI ON? OR WHAT - - I T' S NOT CONSI STENT ACROSS.
MR. VAN NEST: I THI NK THAT DR. MURPHY WOULD HAVE TO
ANSWER THAT.
MR. GLACKI N: I CAN TELL YOU WHAT HE SAI D AT HI S
DEPOSI TI ON I F YOU WANT.
THE COURT: WHAT DI D HE SAY?
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MR. GLACKI N: WHAT HE SAI D I S HE RAN I T BACK AT THE
RANCH, SO TO SPEAK, FOR EVERYTHI NG. HE PI CKED 2007 BECAUSE I T
WAS I N THE MI DDLE OF THE CLASS PERI OD, AND HE PI CKED - - I
THI NK - - THE PROBLEMI S THAT - - I THI NK I F YOU LOOK I N THE
REPORT, HI S REPORT, I T MAY SAY THAT THESE WERE THE MOST
POPULATED J OB TI TLES AT THESE FI RMS. I ' MNOT - - I CAN' T TELL
BECAUSE I T' S TAKEN OUT OF THE REPORT, BUT I KNOWTHAT WI TH
RESPECT TO AT LEAST SOME OF THESE CHARTS, THAT WAS HOWHE
EXPLAI NED HI S SELECTI ON OF THE J OB TI TLES, WHI CH I S FI NE.
THE COURT: ALL RI GHT. DO YOU WANT TO RESPOND TO
THI S, TO THESE CHARTS? THEY CERTAI NLY SHOWA LOT OF VARI ATI ON
WI THI N A YEAR, WI THI N A SI NGLE J OB TI TLE.
MR. VAN NEST: AND APPENDI X B, YOUR HONOR, I S EVERY
TI TLE, EVERY TI TLE. APPENDI X B TO MURPHY, EVERY TI TLE.
MR. GLACKI N: SO THI S I S MY RESPONSE TO THAT.
THE COURT: UM- HUM.
MR. GLACKI N: TO ACCEPT THE DEFENDANTS' POSI TI ON, YOU
HAVE TO ACCEPT THAT THE EXI STENCE OF VARI ATI ON I N PAY DI SPROVES
THE EXI STENCE OF A J OB STRUCTURE THAT HOLDS TOGETHER BASED ON
I NTERNAL EQUI TY.
AND DR. MURPHY, AT HI S DEPOSI TI ON, WI SELY CONCEDED THAT
THERE I S NO I NCONSI STENCY BETWEEN THOSE TWO THI NGS. YOU CAN
PAY YOUR EMPLOYEES DI FFERENTLY I N THAT TOP - - YOU KNOW, AT THAT
TOP LEVEL I N TERMS OF THE TOP OF THEI R COMPENSATI ON, BUT STI LL
HOLD THEMALL TOGETHER I N A J OB TI TLE STRUCTURE.
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AND THI S WAS - - I MEAN, THI S I S THE QUOTE THAT WE SET OFF
FROMHI M. WHEN I ASKED HI MAT HI S DEPOSI TI ON, "ARE YOU SAYI NG
I T' S I NCONSI STENT THAT - - ARE YOU SAYI NG THAT I T' S I NCONSI STENT
TO HAVE WI DE VARI ATI ON I N PAY AND A STRUCTURE THAT HOLDS
TOGETHER ON I NTERNAL EQUI TY?" HE SAI D, "NO, THEY' RE NOT
I NCONSI STENT. "
AND WE DRI LLED DOWN ON I T AND HE SAI D, "YEAH, " HE SAI D, "I
CAN' T TELL YOU THAT THE EXI STENCE OF WI DE VARI ATI ON DI SPROVES A
J OB STRUCTURE THAT RESPECTS I NTERNAL EQUI TY. I CAN' T TELL YOU
I T DI SPROVES I T. "
AND THI S I S WHEN HE SAI D THERE' S NO ABSOLUTES I N STATI STI CS
AND I F YOU WANT ABSOLUTES, YOU HAVE TO TALK TO GOD.
BUT PUTTI NG ALL THAT ASI DE, THE DEFENDANTS' BRI EF I S SI MPLY
NOT CONSI STENT WI TH COMMON SENSE. THERE' S NO REASON THAT YOU
CAN' T HAVE A STRUCTURE THAT I S HOLDI NG TOGETHER 90 PERCENT OF
THE COMPENSATI ON WHI LE, AT THE SAME TI ME, THERE I S VARI ATI ON
OVER ON TOP OF THAT TO REFLECT THE FACT THAT PEOPLE ARE OLDER,
OR YOUNGER, OR OF DI FFERENT GENDERS, UNFORTUNATELY, OR HAVE
PERFORMED BETTER I N A GI VEN YEAR.
THERE' S NOTHI NG I NCONSI STENT BETWEEN THOSE TWO THI NGS,
WHI CH I S WHY WE HAVEN' T EVER SAI D THERE' S NO VARI ATI ON BETWEEN
THE DEFENDANTS' PAYMENT.
THE COURT: I GUESS I ' MNOT CLEAR. ARE YOU SAYI NG
FOR THE VAST MAJ ORI TY OF PEOPLE, THEI R COMPENSATI ON WI LL MOVE
TOGETHER WI THI N J OB TI TLE, BUT THEN THERE' S GOI NG TO BE THE TOP
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AND THE BOTTOM, THE TOP PERFORMERS, FOR EXAMPLE, AND PEOPLE WHO
MAY, FOR WHATEVER REASONS, NOT BE VALUED AS HI GHLY, BUT THOSE
WI LL VARY THE MOST, BUT THE VAST MAJ ORI TY I N THE MI DDLE I S
GOI NG TO MOVE - -
MR. GLACKI N: NO, NO, NO.
THE COURT: I ' MJ UST NOT CLEAR ON WHAT YOU' RE SAYI NG.
MR. GLACKI N: WHAT I ' MSAYI NG I S I F YOU LOOK AT ANY
I NDI VI DUAL EMPLOYEE' S COMPENSATI ON, HI GH PERFORMER OR LOW
PERFORMER, ABOUT 90 PERCENT OF I T I S EXPLAI NED BY THEI R J OB
TI TLE, WHI CH MAKES PERFECT SENSE, YOU KNOW, WHEN YOU LOOK AT
THE FACT THAT THE DEFENDANTS TRACK ALL THEI R EMPLOYEES I N THE
SALARY RANGES THAT ARE NOT I NFI NI TE ON THE TOP OR BOTTOMEND.
SO WHATEVER EMPLOYEE YOU LOOK AT, HI GH OR LOW, GOOD YEAR,
BAD YEAR, MOST OF THEI R COMPENSATI ON I S EXPLAI NED BY THEI R J OB
TI TLE.
I MEAN, AND THAT I S WHY - - THAT I S ONE OF MANY REASONS THAT
THE J OB TI TLE I S THE RI GHT PLACE TO LOOK FOR A STRUCTURE TO THE
DEFENDANTS' COMPENSATI ON AS A MATTER OF STATI STI CS, I N ADDI TI ON
TO THE RI CH RECORD THAT TELLS US THAT THAT' S THE RI GHT PLACE TO
LOOK.
THE COURT: CAN WE GO TO DR. LEAMER' S REPLY REPORT,
PARAGRAPH 35?
MR. VAN NEST: YOUR HONOR, CAN I J UST RESPOND VERY
QUI CKLY TO WHAT HE J UST SAI D?
THE COURT: YES.
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MR. VAN NEST: THE POI NT I S WHERE THE J OB TI TLE
SHOWS - - HAS AN ENORMOUS RANGE OF COMPENSATI ON WI THI N I T BASED
ON SALARY, EQUI TY, AND BONUS, WHAT HE SAI D MAKES ABSOLUTELY NO
DI FFERENCE, AND THAT' S WHY YOU HAVE THE RESULTS THAT YOU HAVE
WHEN YOU LOOK AT THE RAWDATA.
THE EMPLOYEES' PAY I S WI DELY VARI ED YEAR TO YEAR, AND THE
TI TLES VARY WI DELY YEAR TO YEAR.
THE COURT: BUT I T' S - -
MR. VAN NEST: BECAUSE THERE' S SO MUCH DI SCUSSI ON - -
THE COURT: BUT I T' S NOT CONSI STENT WI TH THE
DOCUMENTARY EVI DENCE THAT SAYS HERE ARE THE RANGES, AND I F YOU
WANT TO GO ABOVE THI S LEVEL, YOU NEED TO GET ONE ADDI TI ONAL
LEVEL OF APPROVAL, OR THAT - -
MR. VAN NEST: I T I S CONSI STENT - - EXCUSE ME, YOUR
HONOR.
MR. VAN NEST: I APOLOGI ZE.
I T' S CONSI STENT WI TH THE LEVEL - - YOU CAN LOOK AT
DR. HALLOCK' S FI GURE 7. SOME OF THE RANGES ARE $100, 000,
$50, 000. THAT' S THE RANGE OF SOME OF THESE J OB TI TLES. THAT' S
J UST SALARY, NOT I NCLUDI NG BONUS AND EQUI TY.
THE REASON THAT YOU HAVE SOMETHI NG LI KE TABS 4, 5, AND 6 I S
THAT THERE I S AN ENORMOUS RANGE WI THI N EACH J OB TI TLE.
NO ONE I S DENYI NG THAT THE DEFENDANTS HAVE STRUCTURES AND
THAT THEY PAY PEOPLE WI THI N J OB TI TLES.
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BUT J OB TI TLES, LI KE EVERYTHI NG ELSE, ARE BASED ON
PERFORMANCE, AND WHEN YOU PERFORMOUT OF ONE, YOU MOVE I NTO
ANOTHER.
AND EVEN WI THI N A J OB TI TLE, AS YOU CAN SEE I N TAB 4,
THERE' S MOVEMENT EVERY YEAR, UP AND DOWN. THERE' S MOVEMENT A
LOT, THERE' S MOVEMENT A LI TTLE, AND THAT' S WHY THERE' S SO MUCH
VARI ABI LI TY. THAT' S WHY DR. LEAMER CAN' T SAY THAT HE CAN
CONCLUDE I MPACT TO SOME WOULD TRANSLATE TO I MPACT FOR OTHERS.
SOME OF THESE BANDS, J UST BASED ON BASE SALARY, ARE 50 TO
$100, 000. THAT DOESN' T COUNT EQUI TY.
THE COURT: WELL, THERE' S CERTAI NLY A LOT OF
DOCUMENTARY EVI DENCE THAT SAYS WHAT THE SPECI FI C BAND I S FOR
EACH J OB TI TLE FOR ALL OF THE DI FFERENT DEFENDANTS.
MR. VAN NEST: TRUE.
THE COURT: SO ANYWAY. LET ME GO TO, PLEASE,
PARAGRAPH 35.
MR. GLACKI N: THI S I S THE REBUTTAL, SUPPLEMENTAL
EXPERT REPORT?
THE COURT: I ' MSORRY, NO. THI S I S HI S ORI GI NAL.
LET' S GO TO THE MULTI PLE REGRESSI ON ANALYSI S.
MR. GLACKI N: SURE.
MR. VAN NEST: I ' VE GOT I T, TI NA.
THE COURT: THI S I S WHERE HE WAS COMPARI NG THE
I NTERNAL VERSUS THE EXTERNAL FACTORS.
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THE COURT: SO DO WE HAVE TO COMPARE THE MAGNI TUDE OF
THE COEFFI CI ENTS FOR THE I NTERNAL FACTORS RELATI VE TO THE
COEFFI CI ENTS FOR THE EXTERNAL FACTORS?
MR. GLACKI N: WELL, SO I DON' T THI NK I T' S NECESSARY.
I THI NK, YOU KNOW, THE WAY THAT THI S - - THE WAY THAT THI S
REGRESSI ON WORKS I S THAT I F THE DEFENDANTS WERE RI GHT THAT
EVERYBODY' S PAY I S COMPLETELY DETERMI NED BY EXTERNAL FACTORS,
SUCH AS FI RMREVENUE OR PERFORMANCE OF THE FI RMOR THI NGS GOI NG
ON I N THE GENERAL TECH J OB MARKET, I F YOU I NCLUDE THOSE FACTORS
AND THEN YOU ALSO I NCLUDE THE SHARI NG VARI ABLES AND YOU RUN THE
REGRESSI ON AND THE SHARI NG VARI ABLES STAY POSI TI VE, I F THEY
DON' T ALL J UST GO AWAY, THEN YOU' VE STI LL DETECTED THE
EXI STENCE OF A STRUCTURE.
BUT I DO THI NK I T I S WORTH NOTI NG HERE THAT I N MANY CASES,
I BELI EVE I N - - I BELI EVE, OVERALL, THAT THE SHARI NG VARI ABLES
DI D BETTER AND PERFORMED BETTER I N DR. LEAMER' S OPI NI ON THAN
THE EXTERNAL FACTOR VARI ABLES.
SO I DON' T THI NK THAT, YOU KNOW, STRI CTLY SPEAKI NG YOU HAVE
TO COMPARE THE MAGNI TUDE.
I F THE ONLY THI NG THAT MATTERED WAS THE EXTERNAL FACTORS,
WHEN YOU RAN THE REGRESSI ON YOU WOULD GET BACK BI G RESULTS ON
THE EXTERNAL FACTORS AND YOU WOULD GET BACK ZERO ON THE SHARI NG
VARI ABLES BECAUSE THE EXTERNAL FACTORS ARE ACCOUNTI NG FOR
EVERYTHI NG.
THE COURT: DO THE DEFENDANTS AGREE THAT THE
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MAGNI TUDE OF THE SHARI NG EFFECT VARI ABLES I S LARGER THAN THE
EXTERNAL ONES?
MR. VAN NEST: NO, YOUR HONOR. WE - - OUR POI NT - -
THEY' RE NOT SI GNI FI CANT. THEY' RE NOT SI GNI FI CANT AT ALL,
NUMBER ONE.
AND NUMBER TWO, AGAI N, WHAT DR. MURPHY SAYS ABOUT THI S
REGRESSI ON I S YOU WOULD EXPECT THE SAME RESULT WHETHER YOU HAD
A RI GI D STRUCTURE OR A NON- RI GI D STRUCTURE, BECAUSE I F WHAT
YOU' RE COMPARI NG I S A TI TLE WI THI N ONE COMPANY TO THE SALARI ES
AVERAGED OF ALL TECHNI CAL EMPLOYEES I N THAT COMPANY, THERE' S
ALWAYS GOI NG TO BE SOME CORRELATI ON BECAUSE THEY' RE ALL SUBJ ECT
TO THE SAME EXTERNAL FACTORS, COMPANY PERFORMANCE, ECONOMY.
SO THEY' RE - - THESE ARE NOT SI GNI FI CANT, AND WE SHOWTHI S
I N FI GURE 8 OF - - YOU CAN SEE I T I N FI GURE 8 OF DR. LEAMER' S
REPORT. HE' S SAYI NG A LARGE NUMBER, ADOBE, 75 PERCENT, NOT
SI GNI FI CANT.
APPLE, 62 PERCENT, NOT SI GNI FI CANT.
MR. GLACKI N: I - -
MR. VAN NEST: GOOGLE, 69 PERCENT, NOT SI GNI FI CANT.
I MEAN, THEY' RE NOT - - AND BOTTOMLI NE, WHAT I HAVE AT
TAB 8 I S LEAMER' S ADMI SSI ON THAT AFTER ALL OF THE REGRESSI ONS
HE DI D, HE CANNOT TESTI FY THAT THERE' S ANYTHI NG THAT WOULD SHOW
CHANGES I N WAGES BEI NG TRANSLATED ACROSS THE FI RM.
THAT' S WHAT - - THAT' S THE POI NT. THAT' S WHAT HE' S TRYI NG
TO SHOW. THAT' S WHAT YOU CHALLENGED HI MON LAST TI ME I S CAN
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YOU SHOW, TI TLE TO TI TLE, THAT ONE TI TLE CAUSES ANOTHER TI TLE
TO MOVE? OR THAT A CHANGE I N PAY I N ONE TI TLE WOULD CAUSE
ANOTHER TI TLE TO MOVE?
THE POI NT I SN' T, DO WE HAVE A STRUCTURE?
I T' S, I S THE STRUCTURE RI GI D OR I S I T FLEXI BLE?
AND WHAT DR. LEAMER ADMI TTED I N HI S DEPOSI TI ON AT PAGES
658 TO 660 WAS THAT EVEN THE COEFFI CI ENTS THAT HE SHOWS DO NOT
DEMONSTRATE THAT A CHANGE I N WAGES WOULD BE TRANSLATED ACROSS
THE FI RM.
SAME THI NG I N TAB 9. WE ASKED HI MAGAI N, "BASED ON
EVERYTHI NG YOU DI D, CAN YOU TELL US THAT WHEN A COMPANY CHANGES
THE PAY OF SOME PEOPLE, I T PROPAGATES TO EVERYONE ELSE?"
"NO, I CAN' T DO THAT. AND THAT' S NOT MY VI EW. "
THE QUESTI ON I SN' T, DO WE HAVE A STRUCTURE? EVERY COMPANY
HAS TO HAVE SOME STRUCTURE FOR PAYI NG 50 TO 100, 000 PEOPLE.
THE QUESTI ON I S, I S THE STRUCTURE RI GI D AND DOES A CHANGE
I N ONE TI TLE CAUSE A CHANGE I N ANOTHER TI TLE?
AND ALL THE EVI DENCE I S TO THE SAME EFFECT, NO.
THE COURT: HAS DR. MURPHY DONE ANY STUDI ES OR ANY
QUANTI TATI VE ANALYSI S SHOWI NG WHAT THE RELATI ONSHI P MAY BE
BETWEEN SAN J OSE EMPLOYMENT RATES AND THE AVERAGE COMPENSATI ON
FOR A TECHNI CAL CLASS MEMBER?
MR. VAN NEST: I ' MNOT SURE WHETHER HE' S DONE THAT OR
NOT. HE' S HERE. I ' MNOT SURE WHETHER HE' S DONE THAT ANALYSI S
OR NOT.
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MR. GLACKI N: I T' S CERTAI NLY NOT I N HI S REPORT.
THE COURT: UM- HUM.
MR. GLACKI N: I MEAN, LI KE, I F DR. MURPHY HAD A
BETTER VARI ABLE, RI GHT, I F SAN J OSE METRO AREA EMPLOYMENT WAS
THE WRONG VARI ABLE, HE CERTAI NLY HAD THE OPPORTUNI TY TO TAKE
THE SAME REGRESSI ON AND PUT A DI FFERENT VARI ABLE I N I T.
MR. VAN NEST: NO. HI S POI NT I SN' T THAT THERE' S - -
MR. GLACKI N: EXCUSE ME. I WASN' T FI NI SHED.
MR. GLACKI N: I WAS ANSWERI NG THE J UDGE' S, WHAT I
UNDERSTOOD THE COURT' S QUESTI ON TO BE.
HE DI D NOT DO THAT. HE DI D NOT RE- RUN THI S REGRESSI ON WI TH
A, QUOTE UNQUOTE, BETTER VARI ABLE.
I NSTEAD HE WENT TO OTHER DATA SETS, LI KE THE WEATHER, AND
TRI ED TO SHOWTHAT HE CAN GET - -
THE COURT: I WAS NOT PERSUADED.
MR. GLACKI N: - - SI MI LAR RESULTS.
AND AGAI N, THE ABSENCE OF THAT, THE ABSENCE - - I MEAN, YOU
REMEMBER HE TESTI FI ED AT HI S DEPOSI TI ON THE FI RST TI ME AROUND
THAT ADDI NG THE S&P 500 TOTAL RETURN I NDEX I S SOMETHI NG HE
ALWAYS DOES TO TEST THE SENSI TI VI TY OF A REGRESSI ON AND WE HAD
TO, YOU KNOW, SLOG THROUGH MULTI PLE DI FFERENT REPORTS OF
REGRESSI ON RESULTS USI NG THI NGS LI KE THE S&P 500 TOTAL RETURN
I NDEX AND GI VI NG US CRAZY ANSWERS. HE HASN' T DONE THAT I N ANY
RESPECT.
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THE BEST HE CAN DO I S SAY THAT I F YOU HYPOTHESI ZE THAT WE
HAVE FAI LED TO ACCOUNT FOR HALF OF THE RELEVANT FACTORS, THEN
THE ANSWER WOULD BE DI FFERENT.
WELL, I AGREE. I F YOU HYPOTHESI ZE THAT, THEN THERE MI GHT
BE A DI FFERENT ANSWER.
BUT HE HAS NOT DONE THE STANDARD THI NG THAT, FRANKLY, I
THI NK I T SPEAKS VOLUMES THAT HE DI D NOT DO.
MR. VAN NEST: YOUR HONOR, THE REASON YOU WOULDN' T DO
I T I S THAT OBVI OUSLY I F WHAT YOU' RE TRYI NG TO COMPARE I S PAY
WI THI N ONE TI TLE ON AN AVERAGE TO PAY WI THI N ALL TECHNI CAL
EMPLOYEES I N A COMPANY, A REGRESSI ON DOESN' T ANSWER THE
QUESTI ON BECAUSE THEY WI LL ALWAYS BE RELATED. THEY WI LL ALWAYS
BE RELATED BECAUSE THEY' RE ALL SUBJ ECT TO THE SAME EXTERNAL SET
OF FACTORS.
WHAT THEY FAI LED TO SHOWWAS THAT A CHANGE I N ONE TI TLE
WOULD CAUSE A CHANGE I N ANOTHER. DR. LEAMER DOESN' T SAY THAT.
I N FACT, HE SAYS, "I DON' T THI NK I T' S TRUE. "
AND THAT I S GAME OVER BECAUSE THE WHOLE POI NT I S NOT THAT
YOU HAVE A STRUCTURE, NOT THAT YOU PAY PEOPLE ACCORDI NG TO
TI TLE. WE DO THAT.
BUT I S I T RI GI D SO THAT EI THER WI THI N A TI TLE OR ACROSS
TI TLES, A CHANGE I N ONE WOULD PROPAGATE OUT?
THERE' S NO DATA TO SUPPORT THAT.
THE COURT: SO WHAT - - I ' MSORRY TO I NTERRUPT YOU.
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THE COURT: WHAT I S YOUR EVI DENCE OF CAUSATI ON? I S
I T THE DOCUMENTARY EVI DENCE? WHAT DO YOU HAVE ON CAUSATI ON?
MR. GLACKI N: I NSOFAR AS THAT I S DI FFERENT FROM
I MPACT? I GUESS - - I MEAN, I THI NK OF - - I THI NK ANTI TRUST
I MPACT AND CAUSATI ON ARE - - PEOPLE FREQUENTLY COMPARE ANTI TRUST
I MPACT TO THE CONCEPT OF PROXI MATE CAUSATI ON I N GENERAL TORT,
SO I THI NK THAT I T I S THE SAME EVI DENCE.
THE COURT: AND WHAT I S I T? WHAT I S I T THAT SHOWS
THE CAUSATI ON? LET' S SAY I ACCEPT THAT THERE' S A CORRELATI ON.
MR. GLACKI N: OKAY.
THE COURT: WHAT' S THE CAUSATI ON?
MR. GLACKI N: WELL, THE EVI DENCE - - AGAI N, I T HELPS
TO BACK UP A LI TTLE BI T TO WHERE, TO WHERE WE STARTED.
THE COURT: UM- HUM.
MR. GLACKI N: WHAT I UNDERSTOOD THE I NQUI RY TO BE I S,
YOU KNOW, WE HAD DONE THE WORK TO SHOWTHAT PEOPLE' S PAY AT
THESE COMPANI ES, CLASS MEMBERS' PAY I S MAI NLY DRI VEN BY J OB
TI TLE.
AND WE HAD DONE THE WORK TO SHOWTHAT THE - - TO AT LEAST
OFFER PROOF THAT THE AGREEMENTS HAD A BROAD AND GENERALI ZED
EFFECT, WHI CH WAS THE ADMI SSI ONS OF THE CEOS, THE DOCUMENTS,
THE NATURE OF THE AGREEMENTS THEMSELVES, AND THE REGRESSI ON
ANALYSI S.
THEY ALL SHOWED THAT THE I NTENT AND THE ACTUAL EFFECT OF
THESE AGREEMENTS - - I MEAN, THI S I S PROOF - - I UNDERSTAND THAT
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THE DEFENDANTS WI LL DI SPUTE I T AT TRI AL - - BUT I T I S PROOF THAT
THESE AGREEMENTS HAD AN EFFECT BEYOND ONE WORKER.
THE THI NG THAT I UNDERSTOOD TO BE MI SSI NG FROMTHE COURT' S
PERSPECTI VE WAS SOME OF THE I NFERENTI AL LI NKS ALONG THE WAY,
AND SO WHAT WE HAVE DONE I S TO SHOW- - AND MAI NLY ABOUT WHETHER
OR NOT THERE I S ACTUALLY A TI TLE STRUCTURE THAT I S RESPECT - -
THAT RESPECTS I NTERNAL EQUI TY AND THAT APPLI ES THROUGHOUT THE
FI RM. THAT' S THE QUESTI ON THAT WE UNDERSTOOD TO BE POSED.
AND WE HAVE, I THI NK, ANSWERED I T.
SO I WOULD SAY THAT I T I S - - I T I S ALL THAT EVI DENCE. WHAT
I S THE EVI DENCE OF CAUSATI ON? I T I S THE EVI DENCE THAT THEY PAY
ACCORDI NG TO TI TLE? I T I S THE EVI DENCE OF BROAD AND GENERAL
EFFECT, I NCLUDI NG THE EVI DENCE - - ADMI SSI ONS BY THE CEOS THAT
THEY HAVE A PAY STRUCTURE AND THAT THE GOAL OF THE AGREEMENTS
WAS TO PROTECT THE PAY STRUCTURE?
AND THEN I T I S ALL THE I NFERENTI AL LI NKS I N BETWEEN THAT
SHOWTHAT HAD PREEMPTI VE MEASURES BEEN TAKEN BY THESE COMPANI ES
TO RESPOND TO I NCREASED COMPETI TI ON, THAT THESE PREEMPTI VE
MEASURES WOULD HAVE APPLI ED ACROSS THE FI RM.
AND TO RESPOND TO ONE THI NG THAT MR. VAN NEST SAI D, I
BELI EVE, I F HE' S STI LL REFERRI NG TO TAB 8 OF DR. LEAMER' S
TESTI MONY, HE' S OVERSTATI NG I T.
I DON' T THI NK DR. LEAMER WAS EVER ASKED, NOR DI D HE EVER
TESTI FY, ABOUT WHETHER MOVI NG A TI TLE' S COMPENSATI ON WOULD
AFFECT THE REST OF THE FI RM.
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THE DOCUMENTARY EVI DENCE, I THI NK, SHOWS THAT AT SOME OF
THESE FI RMS I T WOULD HAVE, BECAUSE THEY - - BECAUSE THEY SET ALL
THEI R TI TLES AS A PERCENTI LE OFF OF RADFORD, AND SO THE WAY
THAT THEY WOULD MOVE THE TI TLES I S TO CHANGE THE PERCENTI LE
THAT THEY WERE PEGGI NG OFF OF RADFORD.
WHAT DR. LEAMER WAS ASKED OVER AND OVER AGAI N I S, "ARE YOU
SAYI NG THAT I F ONLY A FEWPEOPLE' S PAY CHANGED, THAT I T WOULD
AFFECT THE WHOLE FI RM?" AND HE' S NEVER OFFERED THAT OPI NI ON
AND THAT I S NOT OUR THEORY OF THE CASE AND THAT I S NOT HI S
OPI NI ON.
THE COURT: BUT WHAT' S YOUR EVI DENCE OF CAUSATI ON
MR. GLACKI N: WELL, AGAI N, THE EVI DENCE OF CAUSATI ON
I S THE EVI DENCE THAT THESE, THAT THESE FI RMS RESPECT THE
PRI NCI PLE OF I NTERNAL EQUI TY AND THAT THE TI TLES ARE HELD
TOGETHER I N A STRUCTURE, I N PART TO PRESERVE I NTERNAL EQUI TY.
THE COURT: BUT I SN' T I NTERNAL EQUI TY ALL WI THI N THE
J OB TI TLE?
MR. GLACKI N: NO, I T' S NOT. I NTERNAL EQUI TY OPERATES
AT DI FFERENT - - AT EVERY LEVEL OF THE COMPANY. I MEAN, THE - -
MAI NTAI NI NG A RELATI VE DI STANCE BETWEEN THE J OB TI TLES I S J UST
AS I MPORTANT AS MAI NTAI NI NG THE RI GHT DI STANCE BETWEEN THE
EMPLOYEES WI THI N THE J OB TI TLE.
SO I NTERNAL EQUI TY I S A CONCEPT THAT APPLI ES UP AND DOWN
THE FI RMAT EVERY LEVEL OF AGGREGATI ON.
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THE COURT: OKAY. BUT WHAT I S YOUR EVI DENCE OF
CAUSATI ON ACROSS THE J OB TI TLES? LET' S SAY I ASSUME THAT THERE
I S A CORRELATI ON. WHAT WOULD - - WHAT WOULD YOUR CAUSATI ON
EVI DENCE BE?
MR. GLACKI N: WELL, THE CAUSATI ON EVI DENCE, I N
ADDI TI ON TO THE CORRELATI ON, I S THE CONDUCT REGRESSI ON WHI CH I S
EVI DENCE OF BROAD AND GENERALI ZED - - I N ADDI TI ON TO BEI NG AN
ESTI MATE OF DAMAGES, I T I S EVI DENCE OF BROAD AND GENERALI ZED
HARM.
AND SO THE COMBI NATI ONS - - AGAI N, I DON' T WANT TO J UST KEEP
SAYI NG THE DOCUMENTS AND THE CEOS OVER AND OVER AGAI N. YOU
KNOWABOUT THAT STUFF. I WOULD SAY THAT' S ALSO EVI DENCE OF
CAUSATI ON.
BUT WHEN YOU TAKE THE CONDUCT - - STATI STI CALLY WHEN YOU
TAKE THE CONDUCT REGRESSI ON AND YOU ADD I T THE CORRELATI ON
ANALYSI S, YOU CONCLUDE THAT THE BROAD AND GENERAL HARMWOULD
HAVE BEEN FELT THROUGHOUT THE COMPANY AND NOT CONCENTRATED AT
HALF THE TI TLES, FOR EXAMPLE. THAT WAS THE I NQUI RY THAT WE
UNDERSTOOD.
THE COURT: DO YOU THI NK THAT THE CORRELATI ON
ANALYSI S AND THE REGRESSI ON ANALYSI S PROVES THE CAUSATI ON, OR
NOT?
MR. GLACKI N: SO I THI NK THAT THE CONDUCT REGRESSI ON,
WHI CH I S ALSO THE ESTI MATE OF DAMAGES, WHEN ADDED TO THE OTHER
STATI STI CAL EVI DENCE PROVES CAUSATI ON, WHI CH I UNDERSTAND TO BE
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THE SAME THI NG AS ANTI TRUST I MPACT.
THE COURT: THE CONDUCT REGRESSI ON AND WI TH WHAT
OTHER STATI STI CAL EVI DENCE?
MR. GLACKI N: WI TH THE EVI DENCE THAT ALL THE TI TLES
AT THESE FI RMS HAVE A POSI TI VE SHARI NG RELATI ONSHI P WI TH ONE
ANOTHER, BOTH CONTEMPORANEOUSLY AND OVER TI ME. THAT I S
EVI DENCE THAT THE EFFECT OF THESE AGREEMENTS WOULD HAVE BEEN
CLASS- WI DE.
THE COURT: EVI DENCE THAT ALL TI TLES HAVE POSI TI VE
SHARI NG RELATI ONSHI PS OVER TI ME?
MR. GLACKI N: AND I WANT TO BE - - I SHOULD BE
CAREFUL. I MEAN, DR. LEAMER NOTED THAT THERE ARE A FEWTI TLES
THAT HAVE NEGATI VE RELATI ONSHI PS, BUT HE ALSO - - HE EXPLORED
THOSE TI TLES, EXPLAI NED WHY I T' S NOT SURPRI SI NG TO FI ND SOME
THAT HAVE NEGATI VE RELATI ONSHI PS, AND EXPLAI NED THAT HI S
OVERALL OPI NI ON I S THAT THOSE TI TLES ARE HELD TOGETHER THAT
WAY, AS I S DR. HALLOCK' S OPI NI ON BASED ON THE EVI DENTI ARY
RECORD.
THE COURT: SO WHAT I S THE - - SO FOR THE COEFFI CI ENT,
YOUR CASE I S PROVEN I F THE NUMBER I S CLOSEST TO 1? I S THAT
RI GHT? AND FOR THE T- STAT, WHAT NUMBER I S I T TO BE
STATI STI CALLY SI GNI FI CANT?
MR. GLACKI N: SO FOR - - OKAY. SO LET ME TAKE THE
SECOND THI NG FI RST BECAUSE I T RELATES TO SOMETHI NG THAT
MR. VAN NEST WAS TALKI NG ABOUT BEFORE.
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HE CALLED THE COURT' S ATTENTI ON TO NOT SI GNI FI CANT, TO THE
NOT SI GNI FI CANT COLUMN I N THE REGRESSI ON ANALYSI S, SO THAT
MEANS THAT THOSE RESULTS DON' T MEET STATI STI CAL SI GNI FI CANCE AT
A T- STAT OF 2 OR MORE I S STATI STI CAL SI GNI FI CANCE AT
HOWEVER, THE FACT THAT WE DON' T - - THE POI NT I SN' T THAT - -
I T' S NOT NECESSARY TO DR. LEAMER' S OPI NI ON THAT ALL THE
COEFFI CI ENTS BE POSI TI VE, ALTHOUGH THE VAST MAJ ORI TY ARE; NOR
I S I T NECESSARY TO HI S OPI NI ON THAT THEY ALL BE STATI STI CALLY
SI GNI FI CANT.
WHAT THE TOTAL PI CTURE OF VAST, VASTLY POSI TI VE
COEFFI CI ENTS AND VASTLY STATI STI CALLY SI GNI FI CANT COEFFI CI ENTS
WHERE YOU HAVE 11 YEARS OF DATA TELLS HI MTHAT THI S STRUCTURE
DOES EXI ST.
AND I ' LL J UST POI NT OUT THAT I T' S, AGAI N, I T' S SORT OF - -
I T' S SORT OF ESTABLI SHED AGREEMENT I N THI S CASE AT THI S POI NT
THAT STATI STI CAL SI GNI FI CANCE I S NOT NECESSARY TO THE
RELI ABI LI TY OF AN ECONOMETRI C OPI NI ON. THAT WAS AGREED TO BY
DR. MURPHY THE FI RST TI ME AROUND. I THI NK, AGAI N, THAT' S SORT
OF BEHI ND US ON THE I SSUE. SO I DON' T THI NK I T' S HELPFUL TO
ZONE I N ON THAT COLUMN.
THE COURT: WHAT' S THE CHANGE CORRELATI ON?
MR. GLACKI N: COULD YOU TELL ME WHAT YOU' RE LOOKI NG
AT?
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THE COURT: I ' MLOOKI NG AT EXHI BI T 2 - -
MR. GLACKI N: SURE.
THE COURT: - - OF THE OPENI NG REPORT.
MR. GLACKI N: OKAY. SO, YOU KNOW, I F I T WOULD BE
HELPFUL, I WOULD BE HAPPY TO J UST GO ACROSS THE COLUMNS, OR I
CAN J UST FOCUS ON - -
MR. GLACKI N: - - CHANGE CORRELATI ON.
SO LEVEL CORRELATI ON I S THE DEGREE TO WHI CH THE
COMPENSATI ON LEVELS ARE CORRELATED, SO I F THE AVERAGE
COMPENSATI ON I S A HUNDRED GRAND FOR ONE TI TLE, THE QUESTI ON I S,
HOWI S THAT LEVEL CORRELATED TO THE AVERAGES AT ANY GI VEN POI NT
I N TI ME?
CHANGE COMPENSATI ON I S THE RATE OF - - TO WHAT DEGREE ARE
THE RATES OF CHANGE CORRELATED?
SO WHEN THE - - WHEN THE OTHER COMPENSATI ON AT THE COMPANY
GOES UP BY X PERCENT, 5 PERCENT, WHAT HAPPENS - - HOWMUCH DOES
THE COMPENSATI ON FOR THAT TI TLE CHANGE? WHAT PERCENT DOES I T
CHANGE?
AND THEN THE REGRESSI ON COEFFI CI ENTS ARE - - THE
CONTEMPORANEOUS COEFFI CI ENT I S - - BASI CALLY I T SAYS HOWMUCH
EXPLANATORY POWER I S I N THE - - I S WHAT' S HAPPENI NG AT THE SAME
TI ME WI TH COMPENSATI ON TO THE REST OF THE CLASS? HOWMUCH OF A
FACTOR I S THAT I N THE PAY OF THE TI TLE?
THE LAGGED COEFFI CI ENT, OR VARI ABLE, ASKS HOW- -
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THE COURT: WHY DON' T YOU HAVE DATA FOR MOST OF
ADOBE' S J OB TI TLES? WHY I S I T BLANK?
MR. GLACKI N: BECAUSE - - SO YOU' RE TALKI NG - - SO THE
DATA FOR ADOBE TI TLES I S BROKEN DOWN BY - - ALL THE DATA I N
THESE EXHI BI TS I S BROKEN DOWN BY THE NUMBER OF YEARS FOR WHI CH
WE HAVE DATA FOR A TI TLE.
FOR EXAMPLE, WE HAVE 11 YEARS OF DATA. SOME OF THESE
TI TLES ARE I N EXI STENCE FOR ALL 11 YEARS. THAT' S A LOT OF DATA
TO WORK WI TH.
SOME OF THESE TI TLES ARE I N EXI STENCE FOR TWO OR THREE
YEARS. THAT' S NOT ENOUGH DATA TO WORK WI TH.
SOME OF THESE TI TLES ARE I N EXI STENCE FOR SI X, SEVEN, OR
EI GHT YEARS.
THE REASON THAT YOU SEE BLANKS ON - - I THI NK THE PAGE
YOU' RE LOOKI NG AT FOR ADOBE I S YOU' LL SEE THOSE ARE ALL TI TLES
FOR WHI CH WE ONLY HAVE SI X YEARS OF DATA. THAT I S ENOUGH DATA
TO DO THE CORRELATI ON ANALYSI S, BUT I T I S NOT ENOUGH DATA TO DO
THE REGRESSI ON ANALYSI S, BECAUSE THE REGRESSI ON ANALYSI S HAS
FOUR VARI ABLES, AND WI TH SI X - - AND ONE OF THOSE VARI ABLES I S A
RATE OF CHANGE, AND WI TH SI X - - I ' MGOI NG TO TRY TO GET THI S
RI GHT - - WI TH ONLY SI X YEARS OF DATA AND ONE OF YOUR VARI ABLES
BEI NG A CHANGE VARI ABLE, YOU ONLY HAVE 5 DEGREES OF FREEDOM,
WHI CH I S NOT ENOUGH DATA. I T' S NOT ENOUGH FREEDOMTO GET ANY
KI ND OF SENSI BLE ANSWER ABOUT FOUR EXPLANATORY VARI ABLES AND
ONE DEPENDENT VARI ABLE, WHI CH I S FI VE VARI ABLES TOTAL.
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THE COURT: WHY DON' T YOU CONTI NUE WI TH THE
CONTEMPORARY AND THE LAGGED VARI ABLE?
MR. GLACKI N: SURE. SO THE CONTEMPORARY VARI ABLE
REFLECTS HOWMUCH, HOWMUCH THE J OB TI TLE' S COMPENSATI ON I S
EXPLAI NED BY WHAT' S HAPPENI NG AT THE REST OF THE COMPANY.
THE LAGGED VARI ABLE ASKS HOWMUCH OF THE J OB TI TLE' S
COMPENSATI ON, I N THE REGRESSI ON, I S EXPLAI NED BY THE DI FFERENCE
BETWEEN THE J OB TI TLE AND THE REST OF THE CLASS, THE REST OF
THE COMPANY I N THE PRI OR YEAR.
SO I N OTHER WORDS, I F THERE WAS A BI G DI FFERENCE, DO WE
SEE A CONVERGENCE I N THE SECOND YEAR, OR VI CE- VERSA? I T ALLOWS
I T TO BE EI THER ONE.
AND SO THAT I S TO ACCOUNT FOR THE POSSI BI LI TY THAT
SOMETI MES THE EFFECT OF THE I NTERNAL EQUI TY ON THE STRUCTURE
WI LL BE FELT I N A SUBSEQUENT YEAR.
AND THEN THE OTHER TWO VARI ABLES ARE THE EXTERNAL FACTOR
VARI ABLES. REVENUE I S THE FI RM' S REVENUE, WHI CH ACCOUNTS FOR
FI RMPERFORMANCE, YOU KNOW, THE COMPANY HAS A GOOD YEAR, SO
EVERYONE GETS PAI D MORE; AND - - OR THAT TI TLE GETS PAI D MORE;
AND THE SJ EMP I S SAN J OSE EMPLOYMENT, SO THAT ACCOUNTS FOR THE
TECH SECTOR I S HOT, J OBS ARE SCARCE, PAY GOES UP.
AND WHAT YOU SEE WHEN YOU LOOK AT THESE I S A LOT OF MOSTLY
GOOD SI ZED AND POSI TI VE COEFFI CI ENTS ON THE I NTERNAL SHARI NG
VARI ABLES.
THEY' RE NOT ALWAYS POSI TI VE AND THEY' RE NOT ALWAYS LARGE.
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BUT THEY CERTAI NLY DON' T GO AWAY WHEN YOU ACCOUNT FOR THE
EXTERNAL FACTORS, WHI CH I S WHAT WOULD HAPPEN I F THE DEFENDANTS'
THEORY OF THE CASE WERE CORRECT.
THE COURT: WHAT ABOUT THE NET EFFECT?
MR. GLACKI N: OH, SO - -
THE COURT: UM- HUM.
MR. GLACKI N: - - ALL THE NET - - SO T STATUS I S
T- STAT, AND THE NET EFFECT I S I F YOU ADD THE CONTEMPORANEOUS
AND THE LAGGED VARI ABLES TOGETHER, THAT' S THE ANSWER.
SO FOR - - I F YOU' RE LOOKI NG AT EXHI BI T 2, APPLE, YOU SEE
THAT FOR THE FI RST ONE, I NFORMATI ON SYSTEMS MANAGER 2, THE
CONTEMP I S . 8, THE LAGGED I S . 04, I F YOU ADD THEMTOGETHER, YOU
GET . 84.
THE COURT: AND WHAT I S THE OBS I N SECTI ON 6?
MR. GLACKI N: THAT I S THE R SQUARED. SO THAT I S
THE - - THAT I S J UST A - - THAT I S A STANDARD ECONOMI C, OR
STATI STI CAL MEASURE OF WHAT' S CALLED GOODNESS OF FI T TO THE
DATA. I T TELLS YOU SOMETHI NG ABOUT HOWMUCH OF THE DEPENDENT
VARI ABLE I S BEI NG EXPLAI NED BY THE EXPLANATORY VARI ABLES.
I ' MSURE SOMEONE COULD PROBABLY EXPLAI N I T TECHNI CALLY
BETTER THAN THAT, BUT I THI NK EVERYONE AGREES THAT THAT' S
GENERALLY WHAT I T I S.
THE COURT: LET ME ASK BOTH SI DES, HOWDO YOU EXPLAI N
WHY THE TWO EXPERTS CAME OUT WI TH CONFLI CTI NG ANALYSI S OF THE
ACS DATA? DI D THEY DO I T I N DI FFERENT WAYS? DI D THEY LOOK AT
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SOMETHI NG DI FFERENTLY?
MR. GLACKI N: WELL, I DON' T THI NK THAT THEI R
ANALYSI S - - HOWDI D THEY COME OUT WI TH CONFLI CTI NG ANALYSI S OF
THE ACS DATA?
THI S I S THE STATE OF PLAY WI TH THE ACS DATA. WHAT
DR. MURPHY DI D I S HE TOOK ALL OF THE SURVEY DATA FROMALL OF
THESE DI FFERENT J OBS ACROSS THE UNI TED STATES AND HE PLUGGED I T
I NTO A REGRESSI ON ANALYSI S AND HE SAI D, "SEE, I CAN GET
POSI TI VE RESULTS ON THE SHARI NG VARI ABLES, SO THAT MEANS THAT
WHAT DR. LEAMER DI D I S I NVALI D. "
WHAT DR. LEAMER HAS POI NTED OUT I N HI S REBUTTAL REPORT, HI S
REPLY OR REBUTTAL REPORT, I S THAT THAT DATA SET I S COMPLETELY
UNSUI TED TO THI S PURPOSE BECAUSE OF THI S HUGE METHODOLOGI CAL
FLAWWI TH THE WAY THE DATA I S GATHERED.
WHAT THE - - WHEN THE SURVEY I S ADMI NI STERED TO THE OCCUPANT
OF THE HOUSE, A SI NGLE PERSON FROMTHE HOUSE ANSWERS ON BEHALF
OF EVERYBODY I N THE HOUSE AND SAYS THE LOT - - "I N THE LAST 365
DAYS, WE HAVE EARNED X AMOUNT OF MONEY, " AND THAT SURVEY I S
ADMI NI STERED EVERY MONTH.
SO I N EVERY MONTH, OTHER THAN DECEMBER, YOU' RE GETTI NG
ANSWERS FOR BOTH THE PRI OR YEAR AND - - YOU' RE GETTI NG AN AMOUNT
OF MONEY THAT I NCLUDES MONEY FROMTHE PRI OR YEAR AND MONEY FROM
THE CURRENT YEAR.
SO I F THE SURVEY I S ADMI NI STERED I N J UNE, HE TELLS YOU, "I
EARNED 80 GRAND THI S YEAR, " BUT YOU DON' T KNOWWHAT OF THAT 80
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GRAND WAS EARNED I N 2013 VERSUS WHAT OF THAT 80 GRAND WAS
EARNED I N 2012. YOU HAVE NO I DEA.
SO THEN DR. MURPHY TAKES THI S DATA SET AND HE USES - - HE
APPLI ES TO I T CALENDAR YEAR VARI ABLES AND GETS THESE RESULTS.
AND, YOU KNOW, I DON' T KNOWWHAT, WHAT OTHER ANALYSI S HE
DI D, BUT THI S ONE I S COMPLETELY I NAPPROPRI ATE AND I T I S SUBJ ECT
TO A HUGE METHODOLOGI CAL FLAWAND THAT' S WHY I T' S NOT RELI ABLE.
AND THEN AS DR. LEAMER POI NTS OUT, THERE - - I F YOU - - I F
YOU ASK YOURSELF HOWWELL THESE TI TLES ARE CORRELATED WI TH ONE
ANOTHER I N THE ACS DATA SET, WHAT YOU SEE I S - - AND THI S I S I N
HI S REBUTTAL REPORT - - THAT I N THE ACS DATA - - SO THERE ARE - -
THERE I S ACTUALLY THE KI ND OF CORRELATI ONS YOU MI GHT EXPECT TO
SEE. THERE ARE SOME POSI TI VE CORRELATI ONS, THERE ARE SOME
NEGATI VE CORRELATI ONS, AND THEY FALL ROUGHLY EVENLY AROUND 0.
I N THE DEFENDANTS' DATA, THE CORRELATI ONS ARE ALMOST ALL
POSI TI VE, AND MOST OF THEMARE UP AROUND . 8 OR . 9, AND THAT
J UST SHOWS THAT THE ACS DATA I S COMPLETELY UNCOMPARABLE TO THE
DEFENDANTS' DATA AND ANALYZI NG I T I S A POI NTLESS EXERCI SE UNDER
THESE CI RCUMSTANCES.
THE COURT: LET ME LET MR. VAN NEST RESPOND TO THE
ACS DATA.
MR. VAN NEST: AND I WANT TO GO BEYOND THAT A LI TTLE
BI T.
BUT THE ACS DATA J UST PROVES THE BASI C POI NT THAT
DR. MURPHY I S MAKI NG, THAT THESE REGRESSI ONS DON' T MEAN A
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THI NG, AND EVEN LEAMER SAYS THESE ARE LI MI TED EXERCI SES.
LEAMER SAYS THESE DON' T SHOWCAUSATI ON. HE SAYS I T AT PAGE 525
OF HI S DEPO AND, REPEATEDLY, THESE DO NOT SHOWCAUSATI ON. ALL
THEY ARE I S CORRELATI ON.
THE COURT: UM- HUM.
MR. VAN NEST: AND THE ACS DATA SHOWS THAT I F WHAT
YOU' RE COMPARI NG I S A TI TLE WI THI N A COMPANY TO EVERYBODY I N
THE COMPANY, GETTI NG A POSI TI VE CORRELATI ON DOESN' T TELL YOU
WHETHER YOU HAVE A RI GI D OR A NON- RI GI D STRUCTURE BECAUSE THOSE
THI NGS WI LL TEND TO BE CORRELATED NO MATTER WHAT - -
THE COURT: UM- HUM.
MR. VAN NEST: - - BECAUSE THEY ARE ALL SUBJ ECT TO THE
SAME EXTERNAL FACTORS.
LET ME MAKE ANOTHER POI NT ABOUT THI S, YOUR HONOR.
THE COURT: WHY DO YOU THI NK THAT DR. MURPHY GOT THE
HI GH, THESE HI GH COEFFI CI ENTS AND DR. LEAMER GOT THE LOWONES
WI TH THE SAME DATA?
MR. VAN NEST: I DON' T KNOWEXACTLY WHAT DR. LEAMER
DI D WI TH THE ACS DATA.
ALL I KNOWI S THAT DR. MURPHY TRI ED TO REPLI CATE EXACTLY
WHAT LEAMER HAD DONE WI TH THE COMPANY DATA. HE USED AVERAGES
LI KE LEAMER DI D, SO HE WENT ABOUT I T THE SAME WAY LEAMER DI D,
GOT THE SAME HI GH CORRELATI ONS.
AND J UST AN EXAMPLE OF THI S, YOUR HONOR - -
THE COURT: EVEN HI GHER.
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MR. VAN NEST: I F YOU LOOK - - I F YOU LOOK AT THE
CORRELATI ONS HE J UST TOLD YOU ABOUT FROMADOBE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - YOU WI LL SEE THE THI RD TI TLE DOWN
I S A PRI NCI PAL SCI ENTI ST 6.
THE COURT: UM- HUM.
MR. VAN NEST: THE CORRELATI ONS ARE HI GH, AND YET, I F
YOU LOOK AT THE RAWDATA FOR THAT ADOBE PRI NCI PAL SCI ENTI ST 6,
BEHI ND TAB 4 YOU' LL SEE THERE I S ENORMOUS VARI ATI ON, ENORMOUS
VARI ATI ON WI THI N THAT TI TLE WI THI N THE PEOPLE EMPLOYED THERE.
AND SO THAT' S WHY MURPHY SAYS THI S REGRESSI ON AND
CORRELATI ON MEAN NOTHI NG. WHEN YOU AVERAGE TO START WI TH,
YOU' VE TAKEN THE VARI ATI ON OUT.
BUT I F YOU COMPARE WHAT HE' S SHOWI NG AS CORRELATI ON, HE' S
GOT A . 86, HE' S GOT A . 89 AND . 79 ON HI S LEVEL AND CHANGE
CORRELATI ONS FOR THI S PRI NCI PAL SCI ENTI ST 6.
I F YOU LOOK AT THE RAWDATA BEHI ND TAB 4, THERE I S AN
ENORMOUS AMOUNT OF VARI ATI ON, PROVI NG OUR POI NT THAT THESE
REGRESSI ONS TELL YOU NOTHI NG. THEY ARE SET UP USI NG AVERAGES
AND THEY ARE SET UP TO SHOWSOMETHI NG THAT DOESN' T ANSWER THE
RI GHT QUESTI ON.
THE RI GHT QUESTI ON I S, DOES A CHANGE I N ONE TI TLE CAUSE A
CHANGE I N OTHER TI TLES?
HE HASN' T POI NTED YOU TO ANY STATI STI CAL EVI DENCE TO PROVE
THAT. THERE I S NO DOCUMENTARY EVI DENCE TO PROVE THAT.
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THE FACT THAT WE HAVE A STRUCTURE MEANS NOTHI NG WHEN THOSE
STRUCTURES HAVE 50 TO $100, 000 OF RANGE WI THI N A BAND.
AND I F YOU LOOK AT MURPHY 7 AND MURPHY 8, THERE I S
ABSOLUTELY NO WAY TO CONCLUDE, OTHER THAN WI TH RESPECT TO THESE
TI TLES - -
THE COURT: WHAT EXHI BI T NUMBER HAS THE $100, 000
RANGE?
MR. VAN NEST: EXCUSE ME?
THE COURT: WHAT EXHI BI T NUMBER?
MR. VAN NEST: I T' S EXHI BI T 7 I N HALLOCK. I T' S
EXHI BI T 7 I N HALLOCK, AND HE' S SHOWI NG AN EXAMPLE THERE OF
SALARY RANGES AT GOOGLE. AND THAT' S J UST, YOU KNOW, ONE OF THE
COMPANI ES. BUT I T' S FI GURE 7 FROMHALLOCK' S REPORT. HE' S
GOT - - I T' S FROMHI S MAY 10TH REPORT. HE' S SHOWI NG A J OB GRADE
AT GOOGLE AND YOU CAN SEE THAT - -
THE COURT: UM- HUM.
MR. VAN NEST: - - AT THE HI GH END, I T' S MORE THAN
100, AND THEN YOU' VE GOT ANOTHER ONE THAT' S ALMOST A HUNDRED,
I T' S 90, ANOTHER ONE THAT' S 70.
I MEAN - - AND THI S I S J UST SALARY, YOUR HONOR, BASE. THI S
DOESN' T I NCLUDE EQUI TY.
THE COURT: UM- HUM.
MR. VAN NEST: I T DOESN' T I NCLUDE BONUS.
THE COURT: UM- HUM.
MR. VAN NEST: AND SO YOU WOULD EXPECT TO SEE THESE
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WI DE VARI ATI ONS WI THI N A TI TLE - -
THE COURT: UM- HUM.
MR. VAN NEST: - - AND WI DE VARI ATI ONS BETWEEN AND
AMONG TI TLES.
THE COURT: UM- HUM.
MR. VAN NEST: AND I GUESS - - WHEN YOU HAVE LEAMER
ADMI TTI NG THAT HE CAN' T SHOWCAUSATI ON AND YOU HAVE HI M
CONCEDI NG THAT HE CAN' T SAY THE STRUCTURE I S SO RI GI D THAT
THERE WOULD BE PROPAGATI ON, ADD THAT TO APPENDI X E, WHI CH I S
TAB 11 I N WHAT I HANDED UP, YOUR HONOR. APPENDI X E I S THE LI ST
OF 2400 J OB TI TLES THAT THEY' RE TRYI NG TO STAND HERE AND TELL
YOU ARE ALL MOVI NG TOGETHER AND ALL CAUSE ONE TO THE OTHER.
I T' S LUDI CROUS. YOU CAN GO TO ANY PAGE OF THI S AND SEE AN
ENORMOUS AMOUNT OF VARI ATI ON ON ALL THESE COMPANI ES.
I NTEL, 800 TI TLES.
APPLE, 350 TI TLES.
GOOGLE, 300 TI TLES.
AND J UST LOOK AT THE RANGE. PI CK UP THE FI RST PAGE OF
I NTEL: ASSEMBLY TD PROCESSOR AND I NTEGRATOR; YOU' VE GOT A CAD
ENGI NEERI NG MANAGER; YOU' VE GOT A CHEMI CAL ENGI NEER; A CI RCUI T
DESI GN ENGI NEER; CONSTRUCTI ON PROJ ECT MANAGER; CONSULTI NG
ENGI NEERI NG MANAGER; FAI LURE ANALYSI S ENGI NEER. I T GOES ON AND
ON AND ON AND ON.
AND WI TH 2400 OF THESE, THE I DEA THAT THEY - - THAT THERE' S
SOME, QUOTE, LI NKAGE WI THI N COMPANI ES I S ABSOLUTELY CRAZY.
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AND THAT' S WHY THERE I SN' T ANY STATI STI CAL EVI DENCE. THERE
I S NONE. THE STATI STI CAL EVI DENCE POI NTS THE OTHER WAY. HUGE
VARI ATI ON, WI DE DI SCRETI ON, BI G DI FFERENCES YEAR TO YEAR.
MR. GLACKI N: I - -
MR. VAN NEST: AND SO WHAT THEY' RE ASKI NG YOU TO
DO - - THI S I S A SWI NG FOR THE FENCES TYPE PLAY. I T' S BI GGER BY
A FACTOR OF THREE THAN ANY SI MI LAR CASE THAT' S - - WHERE I T' S
EVEN BEEN REQUESTED.
AND I N REED AND THE OTHER CASES THAT WE CI TED, YOUR HONOR,
WEI SFELDT AND FLEI SHMAN, MUCH SMALLER CLASSES WI TH SI NGLE J OB
TI TLES WERE NOT CERTI FI ED.
THE COURT: UM- HUM.
MR. VAN NEST: AND THAT' S BEFORE COMCAST SAI D YOU
HAVE TO MAKE A RI GOROUS ANALYSI S OF THE DATA AND SEE HOW
RELI ABLE AND PERSUASI VE I T I S I F WHAT THEY WANT I S SOMETHI NG
THI S BI G WHERE THEY' RE GOI NG TO PROVE I N ONE TRI AL ALL OF THI S,
ALL THI S STUFF.
NOW, YOU OFFERED THEMSOMETHI NG LESS AND THEY DON' T WANT
I T, AND THAT SOMETHI NG LESS WAS, LET' S TRY THE CONSPI RACY I SSUE
FI RST.
THEY' VE GOT TO PROVE I MPACT ACROSS THE CLASS AND THEY
HAVEN' T DONE I T. THE DATA DON' T REFLECT I T. THERE ARE NO
DOCUMENTS THAT REFLECT THAT.
AND SO WE NEED TO THI NK ABOUT ANOTHER WAY TO RESOLVE THI S
CASE, AND I THI NK COMI NG BACK TO THE I DEA OF LETTI NG PEOPLE, I N
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EFFECT, OPT I NTO A MASS ACTI ON WHERE WE CAN ACTUALLY MANAGE HOW
I T GETS TRI ED AND WHAT PORTI ONS OF I T GET TRI ED AND HOWWE CAN
SET OURSELVES UP TO RESOLVE THI S I S A LOT BETTER THAN THI S HAI L
MARY WHERE THEY WANT 60, 000 PEOPLE I N A CLASS WI TH 2400 TI TLES.
I T' S J UST GOI NG TO BE A MESS AND WE' RE BETTER OFF SAYI NG NO
NOW. BECAUSE THEY DI DN' T TAKE YOUR MORE LI MI TED OFFER, LET' S
SAY NO AND FI GURE OUT ANOTHER BETTER WAY TO DO THI S, WHI CH, AS
I SAY, I S HOWWE' RE TRYI NG THESE TORT CASES AROUND CALI FORNI A
AND THE UNI TED STATES NOWMORE AND MORE.
WI TH THESE STANDARDS BEI NG I MPOSED FROMCOMCAST AND ELLI S
AND AMGEN AND ALL THI S, WHAT COURTS ARE DOI NG I S REFUSI NG TO
CERTI FY AND FI NDI NG A BETTER WAY, USUALLY A MASS APPROACH WHERE
PEOPLE MAKE THEI R CLAI MS AND WE TRY, I N A BELLWETHER TRI AL, A
SERI ES OF THOSE.
THAT' S THE WAY THI S CASE SHOULD BE RESOLVED. THAT' S A LOT
FAI RER TO THE DEFENDANTS. I T' S A LOT BETTER ACROSS THE BOARD.
WE' LL GET A BETTER RESULT.
THI S CLASS CAN' T STAND UP.
THE COURT: ALL RI GHT. LET ME I NTERRUPT YOU ONE
SECOND.
MR. VAN NEST: YEAH.
THE COURT: LET ME ASK MR. GLACKI N, LAST TI ME YOU HAD
MENTI ONED THAT YOU MI GHT BE I NTRODUCI NG THE STATI STI CAL
EVI DENCE FOR FALSI FI CATI ON PURPOSES.
ARE YOU DOI NG THAT NOW, OR THAT' S NOT REALLY AN I SSUE
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ANYMORE?
MR. GLACKI N: I DON' T THI NK THAT THAT' S A VERY
I MPORTANT I SSUE.
THE COURT: OKAY.
MR. GLACKI N: CAN I RESPOND TO SOME OF THAT?
THE COURT: WELL, I ' MGOI NG TO - - I ' D LI KE TO WRAP
UP, AND I ALSO WANT TO HAVE A LI TTLE BI T OF A CMC, BUT I WANT
TO FI NI SH I N THE NEXT TEN, NO LATER THAN THE NEXT TEN MI NUTES.
SO - -
MR. VAN NEST: ME, TOO, YOUR HONOR.
THE COURT: YES, I KNOW. YOU HAVE A FLI GHT TO CATCH,
RI GHT?
MR. VAN NEST: I DO.
THE COURT: OKAY. I S I T OKAY I F WE GO TO 5: 30?
MR. VAN NEST: SURE.
THE COURT: OKAY.
MR. GLACKI N: THERE' S J UST A COUPLE OF POI NTS I N THAT
THAT I THI NK I CAN RESPOND TO RATHER BRI EFLY I F I T' S ALL RI GHT.
THE COURT: OKAY. VERY QUI CK.
MR. GLACKI N: SO FI RST OF ALL, THE RI GOROUS ANALYSI S
STANDARD I S NOT NEARLY - - I T' S BEEN AROUND FOR 30 YEARS.
DUKES, COMCAST, AMGEN, NONE OF THOSE CASES CHANGE I T. I T' S
BEEN AROUND FOREVER. I T' S BEEN AROUND SI NCE EI SEN.
SECOND OF ALL, THI S I S NOT A BI G CLASS. THI S I S NOT A
PARTI CULARLY LARGE OR COMPLI CATED CLASS ACTI ON. I MEAN, WE
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REGULARLY CERTI FY, I N ANTI TRUST CASES, CLASS ACTI ONS WI TH
THOUSANDS OF PRODUCTS, THOUSANDS OF PURCHASERS. I T I S THE - -
I T I S THE REASON - - THE FACT THAT CLASS RELI EF - -
THE COURT: CAN I - - LET ME I NTERRUPT YOU AND ASK A
QUESTI ON. YOU KNOW, J UDGE BREYER RECENTLY DENI ED CLASS CERT TO
THE SMALLER 150, 000 MEMBER WAL- MART CLASS, AND ONE OF HI S
COMMENTS I N HI S CONCLUSI ON WAS, "LOOK, I T' S KI ND OF ARBI TRARY
HOWYOU CHOSE TO NARROWTHI S. YOU KNOW, THE GEOGRAPHI CAL
REGI ONS YOU CHOSE ARE REALLY NOT ANY DI FFERENT THAN ANY OTHER
REGI ONS WHERE WAL- MART OPERATES. "
WHAT - - HOWWOULD YOU RESPOND TO - - YOU KNOW, WHAT
J USTI FI ES THI S TECHNI CAL CLASS? AND MAYBE I ' MPARTI ALLY TO
BLAME FOR THI S, BUT WHAT J USTI FI ES THI S VERSUS THE ALL EMPLOYEE
CLASS? OR WHAT - - YOU KNOW, WHAT - -
MR. GLACKI N: SO THE - - THE SUBSEQUENT DI SCOVERY THAT
WE' VE TAKEN SI NCE THE HEARI NG - -
THE COURT: UH- HUH.
MR. GLACKI N: - - HAS CONFI RMED THAT THESE AGREEMENTS
WERE PARTI CULARLY TARGETED AT HI GH TECH WORKERS.
THE - - SO THERE' S A LI TTLE BI T MORE EVI DENCE ABOUT THAT I N
THE RECORD NOWTHAT WE ALSO CI TED.
BUT THE SELECTI ON OF THI S GROUP OF PEOPLE WAS NOT AT ALL
ARBI TRARY. I MEAN, THE DEFENDANTS THEMSELVES, SEVERAL OF
THEM- - AND THI S I S ALL I N APPENDI X B TO DR. LEAMER' S FI RST
REPORT - - SEVERAL OF THESE DEFENDANTS SEGMENT THEI R EMPLOYEES
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I NTO TECH AND NON- TECH. GOOGLE PUTS A "T" NEXT TO EVERY
EMPLOYEE AND EVERY J OB TI TLE THAT I T CONSI DERS TO BE TECHNI CAL,
SO WE I NCLUDED THOSE. WE EXCLUDED THE OTHER ONES.
YOU KNOW, THI S I S A DI FFERENTI ATI ON THAT' S BEI NG DRI VEN BY
THE DEFENDANTS' OWN APPROACH TO THEI R EMPLOYEES.
AND THEN I N ADDI TI ON TO THAT, WE' VE ASKED DR. HALLOCK, WHO
I S A LEADI NG EXPERT ON COMPANY PAY SYSTEMS AND HOWCOMPANI ES
ORGANI ZE AND COMPENSATE THEI R EMPLOYEES, HE' S REVI EWED THE
TECHNI CAL CLASS AND HE' S OFFERED THE OPI NI ON THAT, FI RST OF
ALL, I T' S A SENSI BLE COLLECTI ON THAT I S CONSI STENT WI TH THE WAY
THAT COMPANI ES ORGANI ZE THEI R J OB FAMI LI ES TO REFLECT
PARTI CULAR FUNCTI ONS WI THI N THE FI RM, AND HE' S ALSO OFFERED THE
OPI NI ON THAT HARMLI KELY WOULD HAVE BEEN CONCENTRATED ON THE
TECHNI CAL CLASS GI VEN THE NATURE OF THE AGREEMENTS.
SO I T WAS NOT AN ARBI TRARY DECI SI ON AT ALL.
THE COURT: ALL RI GHT. LET ME DO A LI TTLE
HOUSEKEEPI NG AND THEN I ' MGOI NG TO GI VE YOU THE LAST COUPLE
MI NUTES TO WRAP UP TO SAY WHATEVER, HOWEVER YOU WI SH TO CLOSE.
LET' S HAVE THE FURTHER CMC ON OCTOBER 3RD, WHI CH I S WHEN
WE' RE GETTI NG TOGETHER ANYWAY FOR THE PRELI MI NARY APPROVAL.
DOES THAT SOUND OKAY?
THE COURT: ALL RI GHT. I WOULD - - I N LI GHT OF THE
THREE DEFENDANTS SETTLI NG, I ' D LI KE TO REDUCE SOME OF THE PAGE
LI MI TS THAT I HAD PREVI OUSLY SET FOR PRETRI AL DOCUMENTS.
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MR. VAN NEST: COULD I J UST BRI EFLY MAKE A PLEA THAT
YOU NOT DO THAT, YOUR HONOR?
WE' RE HAVI NG - - WE HAVE - - I T' S STI LL FOUR DEFENDANTS. WE
EACH HAVE I SSUES THAT WE NEED TO PRESS. WE' RE NOT ALL THE
SAME.
AND HONESTLY, I F THEI R POSI TI ON I S THAT ALL THE SAME
EVI DENCE AND STUFF I S RELEVANT, I T SHOULDN' T CHANGE THE PAGE
LI MI TS.
I WOULD J UST LEAVE I T AT THAT, YOUR HONOR, AND ASK YOU
PLEASE NOT TO DO THAT. I T' S ALREADY REALLY TI GHT.
THE COURT: WELL, THI S I S WHAT I ' LL DO. LET' S TALK
ABOUT THI S - - SI NCE I T' S A LATE HOUR NOW, LET' S TALK ABOUT THI S
ON OCTOBER 3RD SI NCE WE HAVE TI ME. NONE OF THOSE DEADLI NES ARE
GOI NG TO RUN UNTI L, I THI NK, FEBRUARY.
MR. VAN NEST: GOOD TO GO.
THE COURT: OR J ANUARY. BUT I F YOU WOULD AT LEAST
TALK ABOUT MAYBE YOU COULD SHAVE SOME OFF HERE AND THERE. I
MEAN, THESE LI MI TS WERE SET ASSUMI NG ALL SEVEN DEFENDANTS WOULD
BE PARTI CI PATI NG. SO I F YOU WOULD PLEASE AT LEAST CONSI DER
SOME LI MI TS AND THEN PUT YOUR PROPOSAL I N THE J OI NT CASE
MANAGEMENT STATEMENT.
MR. VAN NEST: CERTAI NLY WE WI LL.
THE COURT: ALL RI GHT. SO - - WELL, I WAS GOI NG TO
MAKE SOME PAGE REDUCTI ONS, BUT I F YOU WANT ME TO HOLD OFF ON
THAT, THEN I DON' T THI NK THAT - -
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MR. VAN NEST: PLEASE.
THE COURT: - - THERE' S ANYTHI NG MORE WE NEED TO DO ON
THE CMC.
MR. SAVERI : I THI NK THAT' S FI NE. WE' LL WORK I T
OUT - -
MR. VAN NEST: WE' LL WORK I T OUT.
MR. SAVERI : - - AFTER MR. VAN NEST' S SOJ OURN.
THE COURT: I WOULD APPRECI ATE ANY SHAVI NG.
MR. SAVERI : YOU GOT I T.
MR. VAN NEST: WE KNOWTHAT, YOUR HONOR.
THE COURT: OKAY. AND ALSO I F YOU WOULD GI VE ME A
NEWTRI AL ESTI MATE AS WELL, YOU KNOW, DEPENDI NG ON WHO I S LEFT
TO TRY THE CASE, WHETHER THAT WOULD ACTUALLY CHANGE THE LENGTH
OF THE TRI AL.
MR. SAVERI : SO WE HAVE 17 DAYS. YOU WANT TO SEE I F
WE CAN TRI MTHAT BACK?
THE COURT: YEAH. I J UST WANT TO KNOW, I S THERE A
NEWESTI MATE NOWTHAT THERE ARE THREE FEWER DEFENDANTS?
MR. SAVERI : OH, OKAY.
THE COURT: OKAY. WHY DON' T - - WE' LL KEEP EVERYTHI NG
AS I S, BUT I F YOU WOULD PLEASE MEET AND CONFER AND MAKE SOME
PROPOSALS.
MR. VAN NEST: WE' LL DO THAT.
THE COURT: OKAY. LET ME GI VE THE LAST, REALLY, TWO
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MI NUTES, BECAUSE POOR MS. SHORTRI DGE I S PROBABLY GOI NG TO LOSE
HER ARMS I N A MI NUTE, J UST THE LAST TWO MI NUTES OF YOUR
STRONGEST WHATEVER YOU WANT TO SAY ON I MPACT OR WHY THI S SHOULD
BE CERTI FI ED OR - -
MR. GLACKI N: WELL, THERE' S ONE, ONE POI NT I WANTED
TO MAKE.
MR. VAN NEST SAI D THAT DR. LEAMER ADMI TTED NOTHI NG HE DOES
CAN SHOWCAUSALI TY AND HE CI TED TO 525 OF THE DEPOSI TI ON OF
DR. LEAMER.
I WENT I MMEDI ATELY TO THE EXCERPTS THAT WE HAVE THAT WERE
SUBMI TTED BY THE DEFENDANTS. I DI DN' T SEE THAT PAGE, SO I
CAN' T CONFI RMTHAT HE DI D SAY THAT.
BUT I WAS AT HI S DEPOSI TI ON. I DON' T REMEMBER HI MEVER
SAYI NG THAT.
AND HE EXPRESSLY SAYS I N HI S FI NAL REPORT THAT THE KI ND OF
REGRESSI ON ANALYSI S HE' S DONE, WHI CH I NCLUDES TEMPORAL ORDERI NG
AND ALSO I NCLUDES ACCOUNTI NG FOR THE EXTERNAL FACTORS THAT THE
DEFENDANTS HAVE CLAI MED ARE I MPORTANT, CAN SUPPORT AN I NFERENCE
OF CAUSALI TY.
SO, YOU KNOW, WE HAVE - - I ' MONLY GOI NG TO - - YOU' VE HEARD
A LOT OF ARGUMENT TODAY. I ' MNOT GOI NG TO WALK THROUGH I T ALL
AGAI N.
ALL I WI LL SAY I S THAT, YOU KNOW, WE SORT OF UNDERSTOOD
THERE TO BE A SPECI FI C I SSUE, A DEFI CI ENCY THAT HAD BEEN RAI SED
WI TH RESPECT TO THE EVI DENCE THAT WE HAD SUBMI TTED. WE HADN' T
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SHOWN MOVEMENT OVER TI ME, WE HADN' T EXPANDED THE ANALYSI S TO
THE ENTI RE STRUCTURE, AND WE HADN' T ACCOUNTED FOR EXTERNAL
FACTORS.
WE' VE NOWDONE ALL THREE OF THOSE THI NGS. WE HAVE
COMPLETED ALL THE I NFERENTI AL LI NKS THAT THE DEFENDANTS
COMPLAI NED ABOUT LAST TI ME, AND THAT' S WHY, I NSTEAD OF SAYI NG
WE HAVEN' T, THEY' RE J UST FOCUSSI NG BACK ON THI S QUESTI ON OF
I NDI VI DUAL VARI ATI ON AND SAYI NG THAT I T MATTERS.
BUT I N THE TEXT OF HI S DEPOSI TI ON THAT WE BLOCK QUOTED I N
OUR REPLY BRI EF, DR. MURPHY ADMI TS THAT I T DOESN' T MATTER, THAT
WI DE VARI ATI ON I N I NDI VI DUAL PAY I S NOT I NCONSI STENT WI TH A J OB
TI TLE STRUCTURE HELD TOGETHER BY I NTERNAL EQUI TY.
AND SO WHAT THAT TELLS YOU I S WE HAVE - - WE HAVE NOT J UST
GI VEN THE COURT A PLAUSI BLE METHODOLOGY. AT THI S POI NT WE HAVE
GI VEN THE COURT, I THI NK, SI GNI FI CANT PROOF OF ANTI TRUST
I MPACT, FAR MORE SI GNI FI CANT PROOF THAN I HAVE SEEN I N AN
ANTI TRUST CLASS CASE.
SO I RESPECTFULLY SUBMI T WE' VE MORE THAN CLEARED THE HURDLE
ON THAT ONE.
MR. VAN NEST: SO, YOUR HONOR, I ' LL STI CK WI TH THE
KEY POI NTS I N THE TABS I HANDED UP. I THI NK THEY TELL THE
STORY.
AND LET ME TELL I T J UST FROMTHE VERY HI GHEST POI NT. THERE
ARE THREE REASONS WHY THEY FAI L THE TEST THAT COMCAST SETS OUT.
COMCAST SAYS RI GOROUS ANALYSI S, YOU' VE GOT TO PROVE CLASS- WI DE
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I NJ URY, WHI CH YOU' VE I NTERPRETED, I THI NK CORRECTLY SO, AS ALL
OR NEARLY ALL PEOPLE.
ONE. LEAMER AVERAGED AND THE CASE LAWUNI FORMLY REJ ECTS
THAT. GPU REJ ECTED I T, REED REJ ECTED I T, AND I T' S BEEN
UNI FORMLY REJ ECTED THAT AVERAGI NG CAN ALLOWYOU TO SHOW
CLASS- WI DE I MPACT.
I T CAN' T, BECAUSE THE WAY THE AVERAGE MOVES DOESN' T TELL
YOU ANYTHI NG ABOUT HOWMANY PEOPLE WERE I MPACTED. THAT' S POI NT
ONE.
POI NT TWO. THE RAWDATA THAT WE LOOKED AT I N TABS 4, 5, 6,
AND 7 SHOWS TWO THI NGS CLEARLY AS A BELL. ONE, THERE I S
ENORMOUS VARI ATI ON WI THI N EACH J OB TI TLE BECAUSE THE BANDS ARE
BROAD, BECAUSE THERE I S SALARY, BONUS AND EQUI TY ALL I N PLAY,
AND FOR ALL THESE TI TLES, AND MURPHY LOOKED AT EVERY ONE, THERE
I S A WI DE RANGE OF VARI ATI ON WI THI N THE TI TLE.
AND POI NT TWO, THERE I S NO SHOWI NG THAT MOVI NG ONE TI TLE
CAUSES ANY OTHER TI TLE TO MOVE. THAT' S THE POI NT OF MURPHY 7
AND MURPHY 8. THERE I S ENORMOUS VARI ATI ON BETWEEN AND AMONG
TI TLES.
AND THE THI RD POI NT I S THEY SI MPLY HAVEN' T SHOWN THI S
RI PPLE EFFECT OR HOWTHE HECK I T WOULD WORK. WE KEEP ASKI NG,
WHAT DO YOU HAVE TO SHOWCAUSATI ON? WHAT DO YOU HAVE - - WHAT
I S YOUR THEORY OF PROPAGATI ON?
THEY DON' T REALLY HAVE A THEORY OF PROPAGATI ON BECAUSE
THERE' S NO EVI DENCE OF I T, THERE' S NO ANECDOTES OF I T EI THER
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BEFORE, DURI NG, OR AFTER THE CLASS PERI OD.
THI S RI PPLE THEORY I S A MADE UP THEORY THAT THE EVI DENCE
WI LL NOT SUPPORT, AND WI THOUT THAT, WI THOUT THAT, THEY CAN' T
SHOWCLASS- WI DE I NJ URY.
MY FI NAL POI NT, YOUR HONOR, I S J UST APPENDI X B. 2400
TI TLES, 60, 000 CLASS MEMBERS. I T' S NOT THAT THAT' S A BI G CLASS
AMONG ALL THE CLASSES I N THE UNI TED STATES. I T' S THAT THAT' S
AN ENORMOUS CLASS FOR ANY WAGE SUPPRESSI ON CASE.
REED SAI D 19, 000, TOO MANY.
FLEI SHMAN, EVEN LESS THAN THAT, TOO MANY.
WEI SFELDT, LESS THAN THAT, TOO MANY.
AND THE REASON I S THAT WHEN YOU HAVE THI S MUCH DI SPARI TY
AND DI FFERENCE BETWEEN AND AMONG THESE TYPES OF J OBS, THERE I S
NO WAY TO SHOWTHAT I MPACT ON SOME OF THEMWOULD HAVE I MPACTED
ALL OR NEARLY EVERYONE, ESPECI ALLY WHEN THEY' RE SWI NGI NG FOR
THE FENCE WI TH A 2400 TI TLE PROPOSED CLASS.
I T I S UNWORKABLE. I T I S UNPRECEDENTED. THEY CAN' T POI NT
TO A SI NGLE CASE WHERE ANYTHI NG EVEN APPROACHI NG THI S WAS
CERTI FI ED, NOT ONE. THEY HAVEN' T CI TED ONE.
THERE I SN' T ONE BECAUSE THE CASES THAT ARE ANYWHERE NEAR
THI S ARE ALL CASES DENYI NG CLASS CERT.
AND THAT' S WHY WE EMPHASI ZE REED, WEI SFELDT, FLEI SHMAN AND
THE LI KE. THEY ALL RECOGNI ZE WHAT WE RECOGNI ZE, THAT AVERAGI NG
DOESN' T TELL YOU ANYTHI NG, AND YOU CAN' T RUN A CLASS ACTI ON I N
THI S WAY.
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LET' S SAY NO AND GET ON TO A MORE REASONABLE WAY OF DOI NG
THI S AND FI GURE OUT A BETTER WAY TO RESOLVE THESE CLAI MS.
THANKS FOR YOUR ATTENTI ON, YOUR HONOR.
THE COURT: ALL RI GHT. WELL, THANK YOU ALL VERY
MUCH. I REALLY APPRECI ATE I T. THANKS FOR YOUR PATI ENCE TODAY.
MR. GLACKI N: THANK YOU, YOUR HONOR.
( THE PROCEEDI NGS I N THI S MATTER WERE CONCLUDED. )
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CERTI FI CATE OF REPORTER
I , THE UNDERSI GNED OFFI CI AL COURT REPORTER OF THE UNI TED
STATES DI STRI CT COURT FOR THE NORTHERN DI STRI CT OF CALI FORNI A,
280 SOUTH FI RST STREET, SAN J OSE, CALI FORNI A, DO HEREBY
CERTI FY:
THAT THE FOREGOI NG TRANSCRI PT, CERTI FI CATE I NCLUSI VE, I S
A CORRECT TRANSCRI PT FROMTHE RECORD OF PROCEEDI NGS I N THE
ABOVE- ENTI TLED MATTER.
_______________________________
LEE- ANNE SHORTRI DGE, CSR, CRR
DATED: AUGUST 19, 2013

MEMORANDUM IN SUPPORT OF MOTION 60(B)

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Suite 1216


EUNICE HUTHART, ) Case No. CV 13-4253 MWF
)
Plaintiff, ) Honorable Michael W. Fitzgerald
v. )
)
)
)
)
)
MOTION FOR RELIEF FROM JUDGEMENT UNDER FRCP 60(b)(1),
(b)(2), (b)(3), (b)(4), (b)(5), (b)(6) OR 60(d)(3) or 60(d),

LIMITED f/k/a NEWS )
INTERNATIONAL LIMITED, )

NEWS GROUP NEWSPAPERS )
LIMITED, and JOHN and JANE )
DOES 1-10 )
)
Defendants. )
)
)


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2

)

TABLE OF CONTENTS
I. INTRODUCTION
II. SUMMARY OF ALLEGATIONS
III. ARGUMENT
A.
B.
C.
IV. CONCLUSION


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CASE LAW CITED

Jones v. Swanson, 512 F.3d 1045, 1048 (8th Cir. 2008) pg. 8.

United States v. Young, 806 F.2d 805, 806 (8th Cir. 1986 ) pg. 8

Atkinson v. Prudential Prop. Co., Inc., 43 F.3d 367, 372-73 (8th Cir. 1994) pg. 8

Paige v. Sandbulte, 917 F.2d 1108, 1009 (8th Cir. 1990) pg. 8

Johnson v. Law Offices of Marshall C. Watson, P.A., 348 F. Appx 447, 448 pg. 8
(11th Cir. 2009)

(Kenner v. C.I.R., 387F. 3d 689 (1968); Moores Federal Practice, 2d ed., p. 512, 60.23) pg. 9

(Demjanjuk v. Petrovsky, 10 F.3d 338,) pg. 9

(People v. Zajic, 88 Ill. App. 3d 477, 410 N.E. 2d 626 [1980]) pg.9

Sandstrom v. Chel Lawn Corp., 904 F. 2d 83. Fed CivProc 1741) pg. 9

Abatti v. C.I.R., 859 F.2d 115, Me., (1990). Fed CivProc 2654 pg. 9

Bulloch v, United States, 763 F. 2d 1115, 1121 (10
th
Cir. 1985). Pg. 9

(Derzack v. County of Allegheny, Pa., 173 F.R.D. 40ff affirmed 118 F.3d 1575 pg. 10
(Pa. 1996). Fed CivProc279]
Television & Radio, Inc., 894 F.2d 696, 702 (5th Cir.1990), affd, 501 U.S. 32 (1991). pg.10


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MOTION BY PETITIONER FOR RELIEF FROM JUDGEMENT

UNDER FRCP 60(b)(1), (b)(2), (b)(3), (b)(4), (b)(5), (b)(6) OR 60(d)(3)

I INTRODUCTION

1. Petitioner Brad Greenspan seeks a Court Order to grant relief from

the Order finding petitioner guilty of Copyright Infringement pursuant to

Federal Rule of Civil Procedure 60(b)(1), (b)(2), (b)(3), (b)(4), (b)(5), (b)(6) OR

60(d)(3).

II FACTUAL BACKGROUND

2. Petitioner

60(b)(2) newly discovered evidence that, with reasonable diligence, could
not have been discovered in time to move for a new trial under Rule 59(b);

i. Federal Koh Summary Judgement on same Defendants

If Rico or Antitrust or 1503(d) Delaware conspiracy proved against

News Corporation and one or more of ten co-defendants, News Corporation

Attorneys admit is proper venue for all Hacking claims by their clear language.

Or a Stay is the only other remedy possible because thats the exact

Remedy the Ex parte pleading asked for and should not be given

Higher relief not requested.

III LEGAL STANDARDS AND ARGUMENTS

3. A party may seek relief from a judgment or order pursuant to Rule 60(b) of


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the Federal Rules of Civil Procedure for:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not
have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released or discharged; it is based
on an earlier judgment that has been reversed or vacated;

(6) any other reason that justifies relief.

4. A party may seek relief from a judgment or order pursuant to Motion Rule

60(d)(3) for fraud upon the Court. Rule 60(d)(3) is not time-barred because it is

intended to protect the integrity of the judicial process.

5. Fraud upon the court has been defined by the 7
th
Circuit Court of Appeals

to embrace that species of fraud which does, or attempts to, defile the court itself, or

is a fraud perpetrated by officers of the court so that the judicial machinery cannot

perform in the usual manner its impartial task of adjusging cases that are presented

for adjudication. (Kenner v. C.I.R., 387F. 3d 689 (1968); 7 Moores Federal

Practice, 2d ed., p. 512, 60.23). The 7
th
Ciruit further stated a decision produced

by fraud upon the court is not in essence a decision at all, and never becomes final.

6. 60b and Duty of Candor Case law states, Fraud on the court consists of

conduct: (1) on part of officer of the court, (2) that is directed to judicial machinery


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itself, (3) that is intentionally false, willfully blind to the truth, or is in reckless

disregard for the truth, that is positive averment or is concealment when one is under

duty to disclose, that deceives court. (Demjanjuk v. Petrovsky, 10 F.3d 338, rehearing

and suggestion for rehearing denied, certiorari denied Rison v. Demjanjuk, 115 S. Ct.

295, 513 U.S. 914, 130 L. Ed. 2d 205 (Ohio) 1993. Fed Civ Proc 2654.

7. Attorneys are officers of the court according to case law which states, an

officer of the courtare all attorneys (People v. Zajic, 88 Ill. App. 3d 477, 410 N.E.

2d 626 [1980]). Whenever any officer of the court commits fraud during a proceeding

in the court, he/she is engaged in fraud upon the court. In Bulloch v, United States,

763 F. 2d 1115, 1121 (10
th
Cir. 1985).

8. In Sandstrom v. Chel Lawn Corp., 904 F. 2d 83. Fed CivProc 1741, the

court found Litigant commits fraud on court when litigant and attorney concoct

some unconscionable scheme calculated to impair courts ability fairly and impartially

to adjudicate dispute.

9. In Abatti v. C.I.R., 859 F.2d 115, Me., (1990). Fed CivProc 2654, the court

found that, Fraud on the court may occur when acts of party prevent his adversary

from fully and fairly presenting his case or defense.

10. Generally, federal appellate courts have the inherent power to set

aside at any time a mandate to prevent an injustice or to preserve the

integrity of the judicial process. as the court found in Ute Indian Tribe of the

Uintah and Ouray Reservation v. State of Utah, 114 F.3d 1513, 1522 (10th Cir.

1997) (Tacha, J.) (quoting Coleman v. Turpen, 827 F.2d 667, 671 (10th Cir.


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7
1987)).

V. VIOLATION OF NAPSTER PROTOCOL AND COURTS INSTRUCTIONS

VI.

PRELIMINARY STATEMENT


I. INTRODUCTION

1. Petitioner moves the Court to strike its May 19, 2014 filed:

DEFENDANTS EX PARTE APPLICATION TO CONTINUE
MOTION FOR INTERVENTION OF BRAD GREENSPAN
PENDING THE COURTS DETERMINATION ON DEFENDANTS
MOTION TO DISMISS

II. SUMMARY OF ALLEGATIONS

2. Petitioner files this Motion to Strike Defendants May 19, 2014

Pleading because it contains false statements and is underpinned by lies.

3. Under 12(f) petitioner may file a Motion to Strike

any insufficient defense, redundancy, or scandalous matter

4. Further, MR 4.1 provides that a lawyer shall not knowingly (1) make a false

statement of material fact or law to a third person.

i. B&PC 6068(d) prohibits California lawyers from making false

statements of fact or law to any judge or judicial officer.


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ii. B&PC 6106 provides that the commission of any act of moral

turpitude or dishonesty constitutes a cause for disbarment or suspension. B&PC !

6106 is sufficiently broad to prohibit false statements by lawyers to third parties.

iii. DR 7-102(A)(5) provides that "[i]n his representation of a client, a

lawyer shall not . . . [k]nowingly make a false statement of law or fact."

5. It is also clear that a California lawyer may not make false or misleading

statements in affidavits or other court papers. See, e.g., Lee v. State Bar

(1970) 2 Cal.3d 927, 88 Cal.Rptr. 361, 472 P.2d 449 (disciplinary action against

lawyer who made false statements in sworn testimony); Sturr v. State Bar (1959)

52 Cal.2d 125, 338 P.2d 897 (involving affidavit containing false statements);

Vickers v. State Bar (1948) 32 Cal.2d 247, 196 P.2d 10 (disciplinary action

against lawyer who made false statement in proceeding for letters of special

administration that he was the surviving husband of decedent).

6. This broad interpretation is supported by the case law in California. For

example, in People v. Petas (1st Dist. 1989) 214 Cal.App.3d 70, 262 Cal.Rptr.

467, the court held that a lawyer could be charged with a misdemeanor where the

lawyer presented a false or fraudulent claim for payment of insurance by falsely

representing in insurance demand letters that the client's injuries resulted

from a single accident when the lawyer knew that they did not.

7. Besides prohibiting false statements, the provisions of the B&PC prohibit

all forms of deceit, including selective presentation of incomplete facts. For

example, a California lawyer may not author a legal opinion on a transaction

that discloses only facts favorable to his client where the lawyer is aware of

other adverse material facts that may affect another's decision in the

transaction. Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (2nd Dist. 1976) 57

Cal.App.3d 104, 128 Cal.Rptr. 901. But see Price v. Superior Court (2nd Dist.

1983) 139 Cal.App.3d 518, 188 Cal.Rptr. 832 (criminal defense counsel must


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disclose to prosecutor that another prosecutor had previously refused a plea

bargain that defense counsel was now proposing to the prosecutor). Moreover, a

California lawyer has an affirmative duty to correct prior misleading statements

by disclosing true facts or new information to persons who may act in reliance

on the original statement. Failure to disclose correct facts or new information

constitutes tortious abuse in California. See, e.g., Dyke v. Zaiser (4th Dist.

1947) 80 Cal.App.2d 639, 182 P.2d 344.

8. B&PC 6128 provides that "every attorney is guilty of a misdemeanor who

. . . is guilty of any deceit or collusion, or consents to any deceit or collusion, with

intent to deceive the court or any party." Taken together, B&PC 6068(d) and B&PC

6128 require California lawyers to be truthful in all statements, whether to the court,

opposing parties, clients, or third parties.

ARGUMENT

9. Plaintiff admits to receiving and being in possession of petitioners

proposed Complaint in Intervention as of May 2, 2014.

Greenspan additionally served on Defendants local counsel a proposed
Complaint in Intervention, (Document 65 Filed 05/19/14 Page 5 of 12)

FALSE STATEMENT #1: Document 65 Filed 05/19/14 Page 6 of 12

Greenspan does not allege he is the victim of any allegedly wrongful
conduct by Defendants similar to that complained of by Huthart. (Karasik
Decl., 4.)

And also :

Court would invoke 60(b)(2) with above false statement because

The Court could without fault have taken the word of Defendants attorneys


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Retained and worked for firm. Out of over $100 million per year paid

to law firms, its understandable that at worst, Defendants rushed court

into premature ruling because of not informing 1503(d) conspiracy

facts in Delaware, its first admitted May 19, 2014, two days

before Courts Dismissal in lengthy ruling May 21, 2014.

ii. Further connected if (i) above is true, then Federal ruling

March 31, 2014 in case, that Defendants cites in May 19, 2014 pleading.

So a stay, to have San Jose Federal Conslidate the Class Actions

A SIMPLE TEST OF MATCHING PATTERN TEXT AND WORDS PER LINE
ANALYSIS PROVES FOX CORPORATION, NEWS CORPORATION, 21
ST

CENTURY (Defendants) in Huthart case lied to Federal Court unless

The Attorneys were negligent about updating cases in Federal Court including

1503(d) conspiracy they admitted facing against Petitioner, but

due to 60(

10. To determine if Statement #1 is false, the Court must review and compare

Defendants claim Petitioner does not allege any allegedly wrongful

conduct by Defendants similar to that complained of by Huthart

11. The Huthart complaints first claim:

i. FIRST CLAIM FOR RELIEF (Violation Of The Stored
Communications Act, 18 U.S.C. 2701 and 2707- All Defendants)

ii. is exactly the same as Petitioners first claim:

FIRST CLAIM FOR RELIEF (Violation Of The Stored


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Communications Act, 18 U.S.C. 2701 and 2707- All Defendants)
(pg. 54 COMPLAINT IN INTERVENTION Exhibit #2 attached to
Motion to Intervene)

12. The Huthart complaints second claim:

i. SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18
U.S.C. 2510, 2511 & 2520 All Defendants)

ii. is exactlty the same as Petitioners second claim:

SECOND CLAIM FOR RELIEF (Violation of Wiretap Act, 18 U.S.C.
2510, 2511 & 2520 All Defendants)

13. The Huthart complaints third claim:

i. THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of
The California State Constitution All Defendants)

ii. is exactly the same as Petitioners third claim:

THIRD CLAIM FOR RELIEF (Violation of Article I, Section I Of
The California State Constitution All Defendants)

14. The Huthart complaints fourth claim:

i. FOURTH CLAIM FOR RELIEF (Violation of California Penal
Code 630, 631, 632, 632.7 & 637(2)(a) All Defendants)

ii. is exactly the same as Petitioners fourth claim:

FOURTH CLAIM FOR RELIEF (Violation of California Penal
Code 630, 631, 632, 632.7 & 637(2)(a) All Defendants)

15. The Huthart complaints fifth claim:

i. FIFTH CLAIM FOR RELIEF (Violation of California Civil Code


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1708.8(b), 1708.8(d) & 1708.8(e) All Defendants)

ii. is exactly the same as Petitioners fifth claim:

FIFTH CLAIM FOR RELIEF (Violation of California Civil Code
1708.8(b), 1708.8(d) & 1708.8(e) All Defendants)
6/6 triggers 60(d)(3)
16. The Huthart complaints sixth claim:

i. SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs
California Common Law All Defendants)

iii. is exactly the same as Petitioners sixth claim:

SIXTH CLAIM FOR RELIEF (Intrusion Into Private Affairs
California Common Law All Defendants)

5. A party may seek relief from a judgment or order pursuant to Motion Rule

60(d)(3) for fraud upon the Court. Rule 60(d)(3) is not time-barred because it is

intended to protect the integrity of the judicial process.


Greenspan does not allege he is the victim of any voicemail hacking

17. Defendants claim petitioner does not allege he is the victim of any

voicemail hacking is a false statement and lie when compared to

Petitioners Complaint in Intervention that Defendant admits Defendant has received

and reviewed.

i. 46. Defendants violated 18 U.S.C. 2701 (a)(1), in that they
accessed a facility through which an electronic communication
service is provided. (18 U.S.C. 2701(a)) by intentionally accessing
Plaintiffs voicemails without authorization and obtaining and/or
altering authorized access to a wire or electronic communication
while in electronic storage by collecting and accessing temporarily


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stored voicemails or those maintained for purposes of backup
protection.
47. Additionally, Defendants violated 18 U.S.C. 2701(a)(2) because
they intentionally exceeded or had no authorization to access
Plaintiffs communications and obtained, altered, or prevented
authorized access to a wire or electronic communication while in
electronic storage by interfering with Plaintiffs temporarily stored
voicemails, as disclosed hereinabove. Defendants had actual
knowledge of, participated in, directed and/or approved of, and benefitted
from, this practice


he has already filed a lawsuit in Delaware advancing these very claims.

18.

FALSE STATEMENT #4: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)

the existence of a pending action in Delaware where Greenspan is
advancing the same claims that are the subject of the proposed
intervention.

COLLATERAL CHALLENGE AND ATTACK WITHOUT GRANTING
MOTION TO STRIKE INEQUITABLE, UNTIMELY, DEFENDANTS EX
PARTE APPLICATION TO CONTINUE MOTION FOR INTERVENTION
ERRONEOUSLY GIVES DEFENDANT EX PARTE UNREPLIABLE
SUMMARY JUDGEMENT PLEADING

FALSE STATEMENT #5: (At footnote 4: Document 65 Filed 05/19/14 Page 9 of 12)

1 Among other things, Greenspans intervention pleadings violate Federal Rule
of Civil Procedure Rule 8, fail to state any coherent much less cognizable claim
for relief,


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of legitimate public concern, and which Plaintiff was entitled ot keep private and
confidential.
99. Defendants were motivated for financial profit and gain and to exploit
Plaintiffs private and confidential information for their own ends without regard to
Plaintiffs privacy rights.
100. As a direct and proximate result of Defendants wrongful conduct,
Plaintiff suffered emotional distress, an invasion of his rights of privacy and other
incidential and consequential damages. Plaintiff was harmed and Defendants
conduct was a substantial factor in causing such harm.
101. By reason of the foregoing, Plaintiff is entitled ot actual damages in an
amount to be determined by the Court.
102. By reason of Defendants actions, which constitiued outrageous conduct,
were reckless, showed a callous indifference to, and willful disregard, of Plaintiffs
rights of priuvacy, and were contrary to the public policy of the State of California,
Plaintiff is also entitled to punitive damages in an amount to be determined by the
Court.
103. Pursuant to 28 U.S.C. 1367, this Court has pendent or supplemtnal
jurisdiction to hear and adjudicate such claims.

COMPARE PRAYER FOR RELIEF

PAGE 35-37 HUTHART ORIGINALLY AND ONLY FILED COMPLAINT:

VS.

PETITIONER COMPLAINT IN INTERVENTION: PRAYER FOR RELIEF (pg. 67)

1. An award of the maximum statutory actual damages, including profits made by
Defendanrts, pursuant to 18 U.S.C. 2707;
2. Punitive damages, pursuant to 18 U.S.C. 2707(b)(3);
3. Reasonable attorneys fees and costs, pursuant to 18 U.S.C. 2707(b)(3)l and
4. Such other and further relief as the Court may deem just, proper and equitable.

On the Second Claim for Relief.

1. The greater of actual damages and any profits made by Defendants by
their violations of 18 U.S.C. 2520 and 2511, or statutory damages, pursuant to 18
U.S.C. 2520


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2. Punitive damages, pursuant to 18 U.S.C. 2520
3. Reasonable attorneys fees and costs, pursuant to 18 U.S.C. 2520
4. Such other and further relief as the Court mauy deem just, proper and
equitable.

On the Third Claim for Relief
1. General and specific damages, in an amount to be determined by the Court; and
2.Such other and further relief as the Court may deem just, proper and equitable.

On the Fourth Claim For Relief:
1. The greater of statutory damages, pursuant to 637(2)(a)(1) or three times the
actual damages Plaintiff suffered for each instance in which Defendants violated
631 and 632 of the California Penal Code, pursuant to 637(2)(a)(2)l and

On the Fifth Claim for Relief.

1. An award of three times Plaintiffs general and specific damages, pursuant to
1708.8(d) of the California Civil Code;

2. Disgorgement of any proceeds or other consideration obtained by Defendants as a
result of thei violations of Plaintiffs rights under 1708.8(d) of the Californai
Civil Code;
3. Punitive damages by reason of Defendants violations of Plaintiffs rights under
1708.8(d) of the California Civil Code; and
4. Such other and further relief as the Court may deem just, proper and
equitable. On the Sixth Claim for Relief:
1. Actual damages in an amount to be determined by the court;
2. Punitive Damages in an amount to be determined by the Court; and
DEMAND FOR JURY TRIAL:
Plaintiff demands trial by jury.

SEVENTH CLAIM FOR

Defendants misled Plaintiff on May 15, 2014


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14. Page 2 ex parte application states:

Notice of this Application was provided to Plaintiffs counsel by telephone call on
May 15, 2014, and Plaintiffs counsel advises that Plaintiff does not joint the ex parte
and intends to oppose the motion to intervene. (Declaration of Louis A. Karasik
(Karasik Decl.), 7.)

PRELIMINARY STATEMENT

On page 20 of Motion for Intervention filed May 2, 2014

violations of federal law as the underlying action.

1. This is a civil action brought against Defendants for damages for violations of
Plaintiffs right to privacy; for the unlawful access to stored communicationl and for
the
intrusion into, interception of, email and other wire communications while Plaintiff
was
living in Los Anglees in violation of 18 U.S.C. 2701, 2707; 18 U.S.C. 2510, 2511,
2520; Article I, Section 1of the California State Constituion; 630-637.0 of the
California
Penal Code; 1708.8 of the California Civil Code; and California common law.
JURISDICTION AND VENUE
2. This action is brought pursuant to 18 U.S.C. 2701 and 2707, 18 U.S.C. 2510,
2511 and 2520. This Court has jurisdiction of the action pursuant to 28 U.S.C.
1331, as this is a civl action arising under the laws of the United States. This
Court has jurisdiction over the supplemental claims arising under the
Constituion of the State of California, California State law and California
common law pursuant to 28 U.S.C. 1367(a).
3. Venue is proper in the United States District Court for the Central District of
California pursuant to 28 U.S.C 1391(a) and (b)(2) because the claims arose in
this district.


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Defendants copy of cited Complaing in Intervention

Delaware action cited by Defendants:

VI. CLAIM COUNTS on page 25, has 16 counts which consist of following:

FAILURES
U.S.C. 1513(e))

On page 20 of Motion for Intervention filed May 2, 2014


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violations of federal law as the underlying action.

1. This is a civil action brought against Defendants for damages for violations of
Plaintiffs right to privacy; for the unlawful access to stored communicationl and for
the
intrusion into, interception of, email and other wire communications while Plaintiff
was
living in Los Anglees in violation of 18 U.S.C. 2701, 2707; 18 U.S.C. 2510, 2511,
2520; Article I, Section 1of the California State Constituion; 630-637.0 of the
California
Penal Code; 1708.8 of the California Civil Code; and California common law.
JURISDICTION AND VENUE
2. This action is brought pursuant to 18 U.S.C. 2701 and 2707, 18 U.S.C. 2510,
2511 and 2520. This Court has jurisdiction of the action pursuant to 28 U.S.C.
1331, as this is a civl action arising under the laws of the United States. This
Court has jurisdiction over the supplemental claims arising under the
Constituion of the State of California, California State law and California
common law pursuant to 28 U.S.C. 1367(a).
3. Venue is proper in the United States District Court for the Central District of
California pursuant to 28 U.S.C 1391(a) and (b)(2) because the claims arose in
this district.

Defendants copy of cited Complaing in Intervention

Delaware action cited by Defendants:

VI. CLAIM COUNTS on page 25, has 16 counts which consist of following:

FAILURES


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U.S.C. 1513(e))

VI- RELIEF

Substantial Justice Will Be Served by Granting this Motion.

13. Petitioner requests Court vacate the Judgement for either of the good

reasons stated above.

DATED: May 23, 2014

Respectfully submitted,

Brad D. Greenspan
Pro Se

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UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

1 . Pursuant to Federal Rule of Civil Procedure 24(a), Plaintiffs

2. Plaintiff seeks permission to join the litigation to protect interests,

A) Defendants, ongoing, systematic and fraudulent scheme to maximize financial

6. Pursuant to private right of action under antitrust Federal law, more

7. According to SEC documents, Brad D. Greenspan incorporated

8. The credibility of News Corps Board including Kleiner Perkins Partner

i. The credibility of Google largest shareholder Doerr Director of Defendant

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35 . In class actions, intervention is "highly desirable" "to ensure adequate class

The decision in Shields v. Washington Bancorporation, Civ. A. No. 90-110 1,

3 6. In this case, failing to pursue immediate intervention and insertion of new

It also prevent Intervenor from taking advantage of Federal anti-

3 7. The Intervenor is willing to be represented by counsel f so "undue delay,

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