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An UNOFFICIAL transcript of a proceeding before The Honorable Rae Lee Chabot, Circuit Court Judge Sixth Judicial Circuit Court for the County of Oakland State of Michigan held in the City of Pontiac on Wednesday, November 24, 2004. [08:52:45] Caller: Now calling 2004-056587-CK, SCO versus DaimlerChrysler. [The Court sighs.] Mr. Rosenbaum: Good Morning, your Honor. The Court: Unh, you guys again. Mr. Rosenbaum: It's been a few months. [The Court laughs.] Mr. Rosenbaum: [laughs] Barry Rosenbaum and Steven Froot appearing on behalf of the plaintiff, your Honor. Mr. Feeney: James Feeney appearing on behalf of DaimlerChrysler. [08:53:05] Mr. Rosenbaum: Well, your Honor, this is our motion for a stay of proceedings in this matter. We're seeking to stay the case until a federal court in Utah, in the matter of SCO Group versus IBM, rules on a pending motion for summary judgment, scheduled -- well, it's supposed to be heard early next year. Let me say right out of the -- right out of the chute that DaimlerChrysler claims in their -- in their response that this court does not have the right to stay these proceedings unless the other case has identical parties and identical issues. As we've indicated in our reply memorandum that is clearly not the law in Michigan. There is no such requirement in seeking a stay. As Daimler even concedes in its response, this court has the inherent power to manage its own docket, were -- [08:53:50] The Court: Okay, but let me say this: the only issue before this court now is the timeliness issue. Mr. Rosenbaum: That's correct, your Honor. The Court: I don't think that's the issue in Utah. Mr Rosenbaum: It's not the issue, but there is a practical reason why the disposition in Utah will impact on further proceedings. And understanding that the only issue before this court is the timeliness issue, there is of course still, we have to deal with the effects of this court's ruling last July, which was the major ruling in this case, dealing with the certification issues. The Court: Right, I've already decided it. Mr Rosenbaum: You have decided that, but what we're hoping to avoid, your Honor, if possible, is having to immediately take an appeal from that ruling if we -- if we dispose of this case now. And if in fact this case ends up being dismissed -- The Court: "If we dispose of this case now" -- you mean, dismissing? Mr Rosenbaum: Dismiss it, yes, your Honor. The Court: Okay. Mr Rosenbaum: We would then have to go forward on an appeal -- The Court: Right. Mr Rosenbaum: -- in order to avoid the collateral estoppel effects of your ruling. -- Possible collateral estoppel effects. C: [laughs] Okay. Mr Rosenbaum: Possible. [Mr. Feeney laughs.] The Court: Okay. Mr Rosenbaum: [smiles] Let me qualify that. The Court: Yes. [08:54:51] Mr Rosenbaum: So, what we're suggesting to the court, as other -- as two other federal courts have done, and we have indicated, that there are two other cases involving the SCO Group and other end users, that have been stayed by the respective federal judges, pending the outcome in IBM, because the core issue in the IBM case is so critical and so crucial that it may impact on whether or not the cases go forward in these other matters. In particular in our case, we're dealing with a certification requirement, which is a information gathering. The issue in IBM goes to the actual scope of the licensing agreement, the right to use the UNIX system. The Court: Right. And I'm going to make it in as simple terms as I can. Mr. Froot has a much greater knowledge of the detail, but what I -- as I understand it, in the IBM case, what's going to be decided by the motion for summary judgment is whether or not the restrictions that come along with the license are going to be broadly construed or narrowly construed. If they're broadly construed, in favor of the SCO Group, then the certification requirement becomes very, very important, in terms of gathering information to find out how end users, such as DaimlerChrysler, are using the UNIX system. If, on the other hand, the judge in Utah decides that the license restrictions and the use of the license is to be very narrowly construed -- The Court: Right. Mr Rosenbaum: then of course the certification requirement becomes less valuable, because the rights that we have are going to be diminished as a result of that ruling in Utah. And if in fact the certification becomes less valuable, there's not as much incentive, if you will, for us to -- for SCO to go ahead and challenge this court's ruling where you narrowly construed the certification requirement. The Court: Okay, I understand. Mr Rosenbaum: And that's why -- and it's not like, your Honor, we've spent months and months in litigation and hundreds of -- The Court: Right. Mr Rosenbaum: -- thousands of dollars in attorney fees. Mr Rosenbaum: Both sides did nothing after this court's ruling, because you dealt with the major issue in this case. The Court: Right. Mr Rosenbaum: Not to diminish the significance of timeliness. The reason we filed the case in the first place is because we were -- received no response whatsoever from DaimlerChrysler to our letter asking them to certify. They didn't respond at all. So in effect, when we filed our lawsuit, they did respond and our lawsu-- our case -- you know, the reason we filed the lawsuit then was validated. But at this point in time, in light of this court's ruling, it just doesn't make practical sense for us to either procede to trial on the timeliness case, or, more importantly, for us to take an immediate appeal, if this case were dismissed, of the -- of your -- of your ruling on the -- The Court: Okay. Mr Rosenbaum: -- scope of the certification. So for those reasons, we're asking that the court stay the proceedings. We would periodically report, as is the requirement in the other two federal cases -- The Court: Right. Mr Rosenbaum: -- I've cited, and keep the court apprised of what's going on in Utah. The Court: I understand. Thank you. Mr Rosenbaum: Thank you, your Honor. [08:57:45] Mr. Feeney: Good morning, your Honor. Your Honor, simply stated, the reasons that they want a stay are tactical. They're tactical from the point of view of the plaintiff. They're entirely tactical. It's not about legal mootness. It's not about identicality of issues. The Utah case, in and of itself, will have zero legal effect on what happens here. The only issue before the court now is timeliness. We have a case evaluation, for which we have filed our statement, next Tuesday, at 1:20. We've got a January trial date. We didn't start the lawsuit. We have a right to have it resolved. If they don't -- if they disagree with the court's ruling from last July, they ought to either dismiss this case and take an appeal, or litigate the timeliness issue and take an appeal. The only advantage here to a stay is to favor the tactical considerations of SCO, and there's no other practical reason to do it, and we'd ask you to deny the motion. The Court: Okay, anything further? [08:58:46] Mr Rosenbaum: Well, yes, your Honor, I mean -- The Court: I knew I was gonna regret leaving that timeliness issue in there -- [Messrs. Rosenbaum and Feeney laugh.] [The Court laughs and shakes its head regretfully.] The Court: -- I should have found a way to deal with it. Mr Rosenbaum: Well, as I've indicated, dismissal is not the preferred option. I mean yes -- is the question of tactics? We're asking for what we think would be best for all parties. A stay means neither party spends any more time or money on this matter, at least in the short term, including the court's. The Court: I understand your purpose is economy of ... ya know, assets, ... working hours -- Mr Rosenbaum: Resources. The Court: Yeah. Mr Rosenbaum: The court's resources as well. It may be, and I emphasize may, I'm certainly not going to guarantee it, but depending on what happens in Utah, it may be that this case ends up being dismissed voluntarily at some point down the line. But it may not be that case, your Honor, and in the mean time we ought to give the court in Utah, which has the primary issue involving the UNIX license the opportunity to rule and -- have an -- and again, it's going to be short term. At least, at the very least, this is an '04 case, at the very least we could put a -- put a -- The Court: I'm not -- I'm not convinced it's gonna be short term. Mr Rosenbaum: But it could be. It could be -- The Court: [shaking head doubtfully] uhhhhhhhh -- Mr Rosenbaum: And Your Honor, if it's not -- if it's not, so we come back in January or February and The Court says, you know, this case in Utah isn't going anywhere, I wanna -- you guys have to either dismiss it or go to trial on the timeliness issue. I don't think a few months your Honor is that onerous of a request under the circumstances -- The Court: I don't know. [09:00:05] Okay, here's my view on this. I guess one of the things that concerns me when I look at this is that the issue that I would be staying this action for is not my issue. The only issue I have is timeliness. That's the only issue. I decided the other one, and I understand you don't want to spend assets appealing me right now, but I also agree with the defendants that they did not ask to be invited into court. They have a right, now that they have been, to have this issue resolved. And I understand it's gonna go on in other forums, ... ya know, after I'm done, but ... that's the way it works. I'm not convinced that there is a reason for a stay, and I'm going to deny the motion. Mr Rosenbaum: Your Honor, may we approach the bench -- The Court: Yes. Mr Rosenbaum: -- on the scheduling issue? Thank you. [Unrecorded bench conference from 09:01:07 to 09:02:34.] [Next case is called at 09:02:41.]