F.B.T. Productions LLC et al v. Aftermath Records et al, No. 5:2008mc80040 - Document 15 (N.D. Cal. 2008)

Court Description: OBJECTION to 14 Magistrate's Order Denying Mr. Jobs's Motion for Protective Order to Quash "Apex" Deposition Subpoena filed by Steve Jobs. (Attachments: # 1 Proposed Order, # 2 Signature Page (Declarations/Stipulations) Declaration of Eddy Cue, # 3 Signature Page (Declarations/Stipulations) Declaration of Kevin Saul, # 4 Signature Page (Declarations/Stipulations) Declaration of Colin B. Vandell, # 5 Exhibit Exhibit Cover Sheet, # 6 Exhibit Exhibit A, # 7 Exhibit Exhibit B, # 8 Exhibit Exhibit C, # 9 Exhibit Exhibit D, # 10 Exhibit Exhibit E, # 11 Exhibit Exhibit F, # 12 Exhibit Exhibit G, # 13 Exhibit Exhibit H, # 14 Exhibit Exhibit I)(Riley, George) (Filed on 5/15/2008)** Modified on 5/16/2008. Document posted is an objection, not a motion** (dhm, COURT STAFF). (Entered: 05/15/2008)
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F.B.T. Productions LLC et al v. Aftermath Records et al 1 2 3 4 5 6 7 8 9 Doc. 15 LATHAM & WATKINS LLP DANIEL SCOTT SCHECTER (S.B. #171472) - daniel.schecter@lw.com COLIN B. VANDELL (S.B. #240653) - colin.vandell@lw.com 633 West Fifth Street, Suite 4000 Los Angeles, California 90071-2007 Telephone: (213) 485-1234 Facsimile: (213) 891-8763 O’MELVENY & MYERS LLP GEORGE A. RILEY (S.B. #118304) - griley@omm.com Embarcadero Center West 275 Battery Street, Suite 2600 San Francisco, California 94111-3305 Telephone: (415) 984-8741 Facsimile: (415) 984-8701 Attorneys for Non-Party Deponent Steve Jobs 10 UNITED STATES DISTRICT COURT 11 NORTHERN DISTRICT OF CALIFORNIA 12 SAN JOSE DIVISION 13 14 IN THE MATTER OF A DEPOSITION SUBPOENA SERVED IN: 15 16 F.B.T. PRODUCTIONS, LLC AND EM2M, LLC, Plaintiffs, 17 18 19 20 21 v. Case No. 08-80040 Misc. RMW (PVT) [Related to Case No. CV 07-3314 PSG (MANx) (C.D. Cal.)] NON-PARTY STEVE JOBS’S OBJECTION TO ORDER DENYING MR. JOBS’S MOTION FOR PROTECTIVE ORDER TO QUASH “APEX” DEPOSITION SUBPOENA AFTERMATH RECORDS, INTERSCOPE RECORDS, UMG RECORDING, INC., and ARY, INC., Defendants. 22 23 24 25 26 27 28 OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) Dockets.Justia.com 1 TABLE OF CONTENTS 2 3 4 Page I. II. III. 5 6 7 8 9 10 11 12 13 14 15 IV. INTRODUCTION .............................................................................................................. 1 FACTUAL BACKGROUND AND PROCEDURAL HISTORY ..................................... 1 ARGUMENT ...................................................................................................................... 4 A. The Order Is Contrary to the Law Limiting Apex Depositions .............................. 4 1. Steve Jobs Does Not Possess Unique Personal Knowledge of Any Relevant Fact............................................................................................... 4 a. Mr. Jobs’s Execution of One Download Agreement Does Not Support a Finding That He Has Relevant Personal Knowledge, Much Less Unique Knowledge .................................. 5 b. Thoughts on Music Does Not Support a Finding That Mr. Jobs Has Relevant Personal Knowledge, Much Less Unique Knowledge ......................................................................... 6 c. Mr. Jobs’s Subjective Understanding of the Download Agreements Is Irrelevant ................................................................. 7 2. The Order Is Contrary to Law Because It Permits the Deposition of a Non-Party Apex Witness Without a Showing of Exhaustion of Other Sources .............................................................................................. 9 B. Because Plaintiffs Failed to Raise Mr. Jobs’s Participation in Executing the Download Agreements During the Meet and Confer Discussions, This Court Should Consider the Additional Factual Declarations................................ 10 CONCLUSION ................................................................................................................. 11 16 17 18 19 20 21 22 23 24 25 26 27 28 -i- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 TABLE OF AUTHORITIES 2 Page 3 CASES 4 Alex Robertson Co. v. Imperial Cas. & Idem. Co., 8 Cal. App. 4th 338 (1992) ....................................................................................................... 8 5 6 7 Baine v. Gen. Motors Corp., 141 F.R.D. 332 (M.D. Ala. 1991) ........................................................................................... 10 Brown v. Roe, 279 F.3d 742 (9th Cir. 2002)................................................................................................... 11 8 9 10 Celerity, Inc. v. Ultra Clean Holding, Inc., No. C 05-4374 MMC (JL), 2007 WL 205067 (N.D. Cal. Jan. 25, 2007)........................... 4, 10 Conetta v. Nat’l Hair Care Ctrs., Inc., 236 F.3d 67 (2001).................................................................................................................. 11 11 12 13 Dart Indus. Co. v. Westwood Chem. Co., 649 F.2d 646 (9th Cir. 1980)................................................................................................. 4, 9 Del Campo v. Kennedy, 236 F.R.D. 454 (N.D. Cal. 2006) .............................................................................................. 9 14 15 16 Houghton v. Kerr Glass Mfg. Corp., 261 Cal. App. 2d 530 (1968)..................................................................................................... 8 Jack Frost Lab. Inc. v. Physicians & Nurses Mfg. Corp., No. 92 Civ 9264 (MGC), 1994 WL 9690 (S.D.N.Y. Jan. 13, 1994) ........................................ 9 17 18 19 Medmarc Cas. Ins. Co. v. Arrow Int’l, Inc., No. CIV A 01 CV 2394, 2002 WL 1870452 (E.D. Pa. July 29, 2002)..................................... 7 Morrow v. L.A. Unified Sch. Dist., 149 Cal. App. 4th 1424 (2007) ................................................................................................. 7 20 21 22 Mulvey v. Chrysler, 106 F.R.D. 364 (D.R.I. 1985) ............................................................................................. 6, 10 Nidec Corp. v. Victor Co., __ F. Supp. 2d __, 2007 WL 1994171 (N.D. Cal. July 5, 2007) .............................................. 9 23 24 25 Orton v. Embassy Realty Assocs., 91 Cal. App. 2d 434 (1949)....................................................................................................... 8 Ribiero v. Dotson, 187 Cal. App. 3d 819 (1960)..................................................................................................... 8 26 27 Salter v. Upjohn Co., 593 F.2d 649 (5th Cir. 1979)................................................................................................... 10 28 - ii - OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 TABLE OF AUTHORITIES (continued) 2 3 Page Thomas v. IBM, 48 F.3d 478 (10th Cir. 1995)..................................................................................................... 4 4 5 6 United States v. Howell, 231 F.3d 615 (2000)................................................................................................................ 11 Webside Story v. Netratings Inc., No. 06cv408 WQH (AJB), 2007 WL 1120567 (S.D. Cal. Apr. 6, 2007) ................................. 4 7 STATUTES 8 Cal. Civ. Code § 1649 ..................................................................................................................... 8 9 Cal. Civ. Proc. Code § 1860............................................................................................................ 8 10 RULES 11 Civ. L.R. 37-1 ................................................................................................................................. 2 12 Civ. L.R. 72-2 ................................................................................................................................. 1 13 Fed. R. Civ. P. 26 ........................................................................................................................ 4, 6 14 Fed. R. Civ. P. 26(b)(2)(C) ............................................................................................................. 9 15 Fed. R. Civ. P. 30(b)(6)................................................................................................................... 6 16 Fed. R. Civ. P. 45(c)(3) ................................................................................................................... 9 17 Fed. R. Civ. P. 72(a)........................................................................................................................ 1 18 19 20 21 22 23 24 25 26 27 28 - iii - OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 I. 2 INTRODUCTION Pursuant to Rule 72(a) of the Federal Rules of Civil Procedure and Civil L.R. 72-2, non- 3 party Steve Jobs, the CEO of Apple, Inc. (“Apple”), respectfully objects to Magistrate Judge 4 Patricia V. Trumbull’s May 1, 2008 Order Denying Non-Party’s Steve Jobs’ Motion to Quash 5 Subpoena (the “Order”).1 6 The Order is clearly erroneous and contrary to the well-settled law governing apex 7 depositions and discovery from non-parties. The underlying litigation, pending in the Central 8 District of California, focuses solely on the interpretation of certain terms in a contract between 9 music artist Eminem and his record company, Universal Music Group. Neither Mr. Jobs nor 10 Apple is a party to the litigation or to the underlying contract, and Mr. Jobs does not have any 11 knowledge relevant to the dispute. Plaintiffs, moreover, have not shown that any information 12 pertaining to Apple’s distribution of Eminem’s music on iTunes is not available through other 13 means or from more knowledgeable witnesses. Therefore, the Order must be set aside. 14 II. 15 FACTUAL BACKGROUND AND PROCEDURAL HISTORY On May 21, 2007, Plaintiffs F.B.T. Productions, LLC and Em2M, LLC (collectively, 16 “Plaintiffs”) commenced an action (“Action”) against Defendants Aftermath Records, Interscope 17 Records, UMG Recordings, Inc., and Ary, Inc. (collectively, “Defendants”). On June 13, 2007, 18 Plaintiffs filed a First Amended Complaint (“Complaint”) asserting claims for breach of contract 19 and declaratory judgment. (Vandell Decl. ¶ 3, Ex. A (Complaint).) The Complaint alleges that 20 Defendants have breached certain agreements (the “UMG Agreements”) relating to the payment 21 of royalties for recordings of performances by Eminem (the “Eminem Masters”). (Vandell Decl. 22 ¶ 4.) According to the Complaint, the UMG Agreements require Defendants to pay royalties at a 23 rate of 50 percent “[o]n masters licensed by us or our licensees to others for their manufacture and 24 sale of records or for any other use.” (Vandell Decl. ¶ 3, Ex. A (Complaint ¶ 29).) Plaintiffs 25 allege that this provision of the UMG Agreements governs the payment of royalties for the sale of 26 digital downloads of Eminem’s recordings. (Vandell Decl. Ex. A (Complaint ¶ 35.) Instead, 27 28 1 A copy of the Order is attached to the declaration of Colin Vandell as Exhibit I. -1- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 Defendants have allegedly calculated the royalties under the “distribution” provisions of the 2 UMG Agreements at a 12 percent royalty rate. (Vandell Decl. ¶ 5, Ex. A (Complaint ¶ 35); 3 Plaintiffs’ Opposition to Motion for Protective Order at 1-2.) 4 Mr. Jobs and Apple are not parties to the Action or to the UMG Agreements. Mr. Jobs 5 and Apple were not involved in negotiating, drafting, or executing the UMG Agreements, and 6 Apple has no agreements with Plaintiffs specific to the Eminem Masters. (Saul Decl. ¶¶ 3-5; Cue 7 Decl. ¶¶ 3-4.) Apple’s relationship with Defendants is limited to a series of distribution 8 agreements entitled “Digital Music Download Sales Agreements” (the “Download Agreements”). 9 (Saul Decl. ¶ 5; Cue Decl. ¶ 5.) The Download Agreements provide the terms under which Apple 10 may make electronic digital copies of sound recordings, owned or controlled by the Defendants, 11 available for preview and purchase through Apple’s iTunes Store. (Saul Decl. ¶ 5; Cue Decl. 12 ¶ 5.) 13 On January 11, 2008, Plaintiffs served a document subpoena on Apple consisting of 14 numerous over broad and vague requests (the “Apple Document Subpoena”). (Vandell Decl. ¶ 6, 15 Ex. B (Apple Document Subpoena).) The subpoena covered matter far beyond the scope of the 16 Action including, inter alia, any and all agreements between Apple and UMG Recordings, Inc. 17 regarding the distribution of music, and all communications and other documents relating in any 18 way to such agreements. (Vandell Decl. ¶ 8, Ex. B (Apple Document Subpoena).) Apple 19 engaged in meet and confer discussions with Plaintiffs in an effort to negotiate, in good faith, a 20 proper scope of production. (Vandell Decl. ¶ 9.) Apple offered to provide a number of 21 documents, including any agreements between Apple and any of Defendants (and any 22 amendments) that pertain to distribution of the Eminem Masters. (Vandell Decl. ¶ 10.) 23 Plaintiffs refused Apple’s offer and instead served a deposition subpoena on Steve Jobs, 24 Apple’s CEO (the “Jobs Deposition Subpoena”). (Vandell Decl. ¶ 12, Ex. F (Jobs Deposition 25 Subpoena).) Plaintiffs also filed a motion to compel further responses to the Apple Document 26 Subpoena in the Central District of California. (Vandell Decl. ¶ 11.) 27 During the meet and confer discussions required under Civil L.R. 37-1 that preceded 28 Mr. Jobs’s Motion for Protective Order, Plaintiffs’ sole explanation for the relevance of Mr. -2- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 Jobs’s deposition was the fact that he authored an essay entitled Thoughts on Music. (Vandell 2 Decl. ¶ 13.) In this essay, Mr. Jobs discusses his views on why Apple uses a digital rights 3 management system to protect content offered through the iTunes Store. (See Vandell Decl. ¶ 14, 4 Ex. H (Thoughts on Music).) The music available through iTunes is subject to various 5 agreements with content owners that require Apple to protect the content from unauthorized 6 distribution. To emphasize this point, Mr. Jobs observed that because Apple does not own the 7 music, “it must license the rights to distribute music from others.” (See Vandell Decl. ¶ 14, Ex. H 8 (Thoughts on Music).) In the essay, Mr. Jobs does not define or use the term “license” in any 9 technical or legal sense, and he does not offer any opinion on the scope of the rights of on-line 10 distributors to sell music content. (See Vandell Decl. ¶ 15, Ex. H (Thoughts on Music).) Mr. Jobs 11 simply uses common terminology to underscore the fact that Apple does not own the music 12 available through its iTunes store but must acquire the rights to distribute that content from 13 others. (See Vandell Decl. ¶ 15, Ex. H (Thoughts on Music).) 14 During the meet and confer discussions, Plaintiffs did not – and could not – show that 15 Thoughts on Music had any relevance to the Action. Given Mr. Jobs’s numerous responsibilities 16 as the CEO of Apple and the fact that he does not possess any unique knowledge relevant to the 17 Action, Mr. Jobs moved to quash the deposition subpoena on March 24, 2008. 18 During the hearing, Plaintiffs asserted that the deposition of Mr. Jobs was warranted 19 because he executed the original Download Agreement. Plaintiffs, however, never made this 20 argument during the meet and confer discussions that preceded the hearing. (Vandell Decl. ¶ 16.) 21 The Order denied the motion for protective order and granted Plaintiffs a two-hour 22 deposition of Mr. Jobs. The Order states that the “nature of the [Download Agreements are] 23 relevant to the present litigation, because the contract at issue in this litigation provides for 24 different royalty rates depending on whether the recordings covered by the contract are sold or 25 licensed.” (Vandell Decl. Ex. I (Order at 2).) Citing the fact that Mr. Jobs authored the essay and 26 signed one of the Download Agreements, the Order concludes that “a party’s subjective 27 understanding may be relevant to the interpretation of a contract.” (Vandell Decl. Ex. I (Order at 28 2-3).) Mr. Jobs timely filed an objection to the Order. -3- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 2 III. ARGUMENT The Order should be set aside because it is a complete departure from well-established 3 precedent governing apex depositions and the law governing third-party discovery under Rule 26 4 of the Federal Rules of Civil Procedure. 5 A. 6 Federal courts routinely protect non-parties, particularly high-level, apex corporate The Order Is Contrary to the Law Limiting Apex Depositions. 7 officials, from harassing, inconvenient, and repetitive depositions and discovery. See, e.g., Dart 8 Indus. Co. v. Westwood Chem. Co., 649 F.2d 646, 649 (9th Cir. 1980); Thomas v. IBM, 48 F.3d 9 478, 483 (10th Cir. 1995). The doctrine requires that a party seeking to depose an apex employee 10 must first establish that the deposition is necessary by showing that: (1) the high-level official 11 possesses unique personal knowledge of relevant facts at issue; and (2) the party seeking the 12 deposition has already exhausted less intrusive discovery methods. See Celerity, Inc. v. Ultra 13 Clean Holding, Inc., No. C 05-4374 MMC (JL), 2007 WL 205067, at *4 (N.D. Cal. Jan. 25, 14 2007); Webside Story v. Netratings Inc., No. 06cv408 WQH (AJB), 2007 WL 1120567, at *2 15 (S.D. Cal. Apr. 6, 2007). The Order is contrary to the law and clearly erroneous because it 16 permits the deposition of a non-party, apex witness without any showing that the witness has 17 unique knowledge of relevant facts or that Plaintiffs have exhausted other sources. 18 19 1. Steve Jobs Does Not Possess Unique Personal Knowledge of Any Relevant Fact. 20 The Order is contrary to law because it permits the deposition to proceed even though 21 Plaintiffs failed to establish that Mr. Jobs has unique personal knowledge of a relevant fact at 22 issue. Unique personal knowledge “is an essential component of the standard for an apex 23 deposition - [meaning] unique personal knowledge by the high corporate official, unavailable 24 from less intrusive discovery, including interrogatories and the depositions of lower-level 25 employees.” See Celerity, 2007 WL 205067, at *8. 26 The Order states: “[I]t appears that [Steve Jobs] may have first-hand knowledge of a 27 relevant fact.” Mr. Jobs executed a Download Agreement and, according to the Order, there is 28 “at least some reason to believe that Jobs understood the nature” of the Download Agreements -4- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 based on the Thoughts on Music essay. (Vandell Decl. Ex. I (Order at 2-3).) The Order’s 2 findings are clearly erroneous for at least two reasons. First, Mr. Jobs does not have unique 3 personal knowledge of the Download Agreements or the provisions relating to the grant of 4 authority to Apple to offer digital downloads of sound recordings. (Saul Decl. ¶¶ 6, 8; Cue Decl. 5 ¶ 6.) Second, even if Mr. Jobs had some unique understanding of those provisions – which he 6 does not – his understanding is irrelevant. 7 a. 8 Mr. Jobs’s Execution of One Download Agreement Does Not Support a Finding That He Has Relevant Personal Knowledge, Much Less Unique Knowledge. 9 Mr. Jobs does not have unique personal knowledge of the Download Agreements. While 10 Mr. Jobs executed one of the several contracts that make up the Download Agreements, he was 11 not involved in negotiating the provisions relating to the scope of Apple’s authority to offer 12 Defendants’ content on iTunes. (Saul Decl. ¶ 8; Cue Decl. ¶ 7.) In fact, Mr. Jobs was not a 13 member of the negotiating team and he did not attend the negotiation sessions. (Saul Decl. ¶ 6.) 14 Apple’s negotiating team consisted of Kevin Saul, Eddy Cue, Bud Tribble, James Higa, and Jeff 15 Robbin. (Saul Decl. ¶ 6; Cue Decl. ¶ 6.) The negotiations covered all the details that appeared in 16 the final Download Agreements, including the terms governing the scope of authority granted to 17 Apple for the distribution of content owned by UMG. (Saul Decl. ¶ 8.) The structure of the 18 Download Agreements as well as their definitions, terms, and technical requirements were the 19 sole responsibility of the negotiating team. (Saul Decl. ¶ 8.) Mr. Jobs’s involvement was limited 20 to providing direction in determining high-level business points such as price. (Saul Decl. ¶ 8.) 21 Mr. Jobs was not involved in drafting or negotiating the provisions contained in the Download 22 Agreements that bear on Apple’s authority to offer for sale digital downloads. Thus, Mr. Jobs 23 does not have unique personal knowledge of the nature or scope of Apple’s rights regarding 24 digital downloads. 25 26 Mr. Cue, Mr. Saul and the other members of the negotiation team are far more familiar with the “nature” of the Download Agreements and have substantially more information 27 28 -5- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 concerning the nature of the relationships between Apple and the Defendants.2 (Saul Decl. 2 ¶¶ 6-8; Cue Decl. ¶ 6.) As Mr. Jobs’s counsel suggested at the hearing – and as Plaintiffs have 3 done in other related litigation – Plaintiffs should be required to exhaust these alternative sources 4 of relevant evidence before they seek Mr. Jobs’s deposition. (Cue Decl. ¶¶ 10-13.) See Fed. R. 5 Civ. P. 26; Mulvey v. Chrysler, 106 F.R.D. 364, 366 (D.R.I. 1985). Apple has offered a 30(b)(6) 6 deposition on the Download Agreements as well as the depositions of Mr. Cue and Mr. Saul. 7 Therefore, the law plainly precludes Mr. Jobs’s deposition at this time, and the Order must be set 8 aside. 9 b. 10 Thoughts on Music Does Not Support a Finding That Mr. Jobs Has Relevant Personal Knowledge, Much Less Unique Knowledge. 11 Nothing in Thoughts on Music supports the Order’s conclusion that Mr. Jobs may have 12 relevant personal knowledge based on the contents of the essay. (Vandell Decl. Ex. I (Order at 13 2-3).) In Thoughts on Music, Mr. Jobs offers his personal views on the use of digital rights 14 management systems to protect content available through the iTunes Store. (Vandell Decl. Ex. H 15 (Thoughts on Music).) Mr. Jobs wrote: “Since Apple does not own or control any music itself, it 16 must license the rights to distribute music from others, primarily the ‘big four’ music companies.” 17 (Vandell Decl. ¶ 14, Ex. H (Thoughts on Music).) This observation simply underscores that 18 Apple does not own the music but must acquire the rights to distribute the content from the 19 owners. 20 This is a far cry from the question at issue in the Action. The dispute in the Action is over 21 whether Plaintiffs should be paid under the UMG Agreements for music sold and downloaded 22 from the Internet under a royalty rate based on the distribution of “records” or under a royalty rate 23 based on the licensing of master recordings. (Vandell Decl. Ex. A (Complaint ¶¶ 29 & 35); 24 Plaintiffs’ Opposition to Motion for Protective Order at 1-2.) The UMG Agreements provide that 25 26 27 28 2 In fact, Mr. Cue was deposed by Plaintiffs’ counsel in lieu of deposing Mr. Jobs in a similar litigation pending in New York. Mr. Cue was questioned on both the substance of the Download Agreements and on the meaning of the Thoughts on Music essay, which he reviewed and provided comments on prior to its publication. (See Cue Decl. ¶¶ 10-13.) After Mr. Cue’s deposition, Plaintiffs’ counsel did not seek to depose Mr. Jobs. -6- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 Plaintiffs are entitled to a special 50 percent royalty (instead of the 12 percent royalty they receive 2 for sales of non-LP records) for “masters licensed by us or our Licensees to others for their 3 manufacture and sale of records or for any other use.” (Vandell Decl. Ex. A (Complaint ¶ 29).) 4 Any third party selling Eminem’s music must have authority from UMG because UMG controls 5 the rights to “manufacture, distribute, sell, and license for sale and distribution those master 6 recordings in various configurations throughout the universe.” (Vandell Decl. Ex. A (Complaint 7 ¶ 26).) But Mr. Jobs’s essay does not demonstrate that he has any knowledge relevant to the 8 Action because the essay does not consider the very distinction upon which the parties are 9 litigating. Thoughts on Music does not address, either explicitly or implicitly, whether Apple 10 licensed a master recording for “manufacture and sale of records or for any other use” from 11 Defendants within the meaning of the UMG Agreements. 12 The Order’s finding that the essay provides “at least some reason to believe that Jobs 13 understood the nature of the iTunes Agreement to be a license rather than a sale” (Vandell Decl. 14 Ex. I (Order at 2)) fails to appreciate that the issue is not one of sale versus license but whether 15 Apple has been granted a license to a master recording for the uses specified in the UMG 16 Agreement. Mr. Jobs’s essay does not begin to address this distinction and thus does not suggest 17 that Mr. Jobs has unique personal information relevant to the Action. 18 19 c. Mr. Jobs’s Subjective Understanding of the Download Agreements Is Irrelevant. 20 Even if Mr. Jobs had some unique opinion regarding the nature of the authority granted to 21 Apple in the Download Agreements – which he does not – that opinion would be irrelevant to the 22 underlying dispute. When a third-party contract arguably bears some relevance to litigation, 23 courts have uniformly held that a non-party’s opinion about the contract is inadmissible and 24 irrelevant as a matter of law. See, e.g., Morrow v. L.A. Unified Sch. Dist., 149 Cal. App. 4th 25 1424, 1444-45 (2007); Medmarc Cas. Ins. Co. v. Arrow Int’l, Inc., No. CIV A 01 CV 2394, 2002 26 WL 1870452, at *6 (E.D. Pa. July 29, 2002) (denying discovery of agreements between defendant 27 and third party on ground that they were irrelevant to interpretation of contract between plaintiff 28 and defendant) (citation omitted). While the Download Agreements may be relevant to determine -7- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 whether the Defendants granted Apple rights to “masters licensed by [Defendants] for their 2 manufacture and sale of records or for any other use,” as specified in the UMG Agreements, this 3 turns on the legal interpretation of the UMG Agreement and the rights granted in the Download 4 Agreements, not on Mr. Jobs’s subjective opinion. 5 The Order states that “there are situations in which a contracting party’s subjective 6 understanding may be relevant to the interpretation of a contract,” and suggests that Thoughts on 7 Music may evidence Mr. Jobs’s understanding of the nature of the UMG Agreements. (Order at 8 2-3 (citing Cal. Civ. Code § 1649).) This determination is wrong as a matter of law and 9 constitutes clear error. See Houghton v. Kerr Glass Mfg. Corp., 261 Cal. App. 2d 530, 536-37 10 (1968) (holding that trial court’s admission of evidence of party’s subjective understanding of 11 contract constituted reversible error). A party’s uncommunicated subjective understanding of a 12 contract is not relevant. Houghton, 261 Cal. App. 2d at 537 (“It has long been a settled principle 13 of contract law that the intention of a party to a bilateral agreement which is undisclosed and 14 uncommunicated to the other party is, in the absence of mistake or fraud, immaterial under the 15 objective theory of contract.”) (collecting cases); see also Orton v. Embassy Realty Assocs., 91 16 Cal. App. 2d 434, 441 (1949) (“When words of a doubtful meaning are used in a writing, parol 17 testimony is admissible to show the common meaning of the words used, but it is not admissible 18 to show the private understandings of the parties as to the meaning of such words.”). 19 What may be relevant, if a contract is held to be ambiguous, is evidence of the 20 communicated, mutual intent of the parties. See Cal. Civ. Code §§ 1649; Cal. Civ. Proc. Code 21 § 1860; Ribiero v. Dotson, 187 Cal. App. 3d 819 (1960) (“[W]hen the language of a contract is 22 fairly susceptible to one of two constructions (i.e., when it is ambiguous) extrinsic evidence may 23 be considered not to vary or modify the terms of the agreement but to aid the court in ascertaining 24 the true intent of the parties.”); see also Alex Robertson Co. v. Imperial Cas. & Idem. Co., 8 Cal. 25 App. 4th 338, 346 (1992) (holding that, because a contract “must be interpreted to give effect to 26 the mutual intention of the parties,” evidence of a party’s subjective intent is irrelevant in the 27 absence of any evidence that “this intent was ever communicated” to the other party) (emphasis in 28 original). Neither Mr. Jobs’s undisclosed subjective understanding of the Download Agreements -8- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 nor the views expressed in Thoughts on Music constitute the type of parol evidence that may be 2 admissible to interpret the mutual intention of the parties to the contract. Because the evidence 3 Plaintiffs seek from Mr. Jobs is immaterial to the Action, the Order is in clear error and must be 4 set aside. 5 6 7 2. The Order Is Contrary to Law Because It Permits the Deposition of a Non-Party Apex Witness Without a Showing of Exhaustion of Other Sources. The Order’s holding that, “[a]bsent at least some actual showing of undue burden, there is 8 no legal authority for requiring Defendants [sic] to use purportedly less burdensome means of 9 obtaining the discovery before allowing ‘apex’ depositions,” is contrary to the law. The Federal 10 Rules of Civil Procedure require the court to limit discovery “if it determines that the discovery 11 sought is . . . obtainable from some other sources that is more convenient, less burdensome, or 12 less expensive.” See Fed. R. Civ. P. 26(b)(2)(C); see also Fed. R. Civ. P. 45(c)(3) (setting forth 13 court’s power to quash or modify unduly burdensome subpoenas); Nidec Corp. v. Victor Co., __ 14 F. Supp. 2d __, 2007 WL 1994171, at *1 (N.D. Cal. July 5, 2007) (holding that motion to quash 15 should be granted when non-party discovery sought is “obtainable from a source more direct, 16 convenient, and less burdensome”). 17 The Order’s formulation of the law ignores the inherent burden imposed by non-party 18 discovery, particularly when the non-party is a busy CEO at the apex of corporate management. 19 See Del Campo v. Kennedy, 236 F.R.D. 454, 458 (N.D. Cal. 2006) (“Underlying the protections 20 of Rule 45 is the recognition that ‘the word non-party serves a constant reminder of the reasons 21 for the limitations that characterize third party discovery.’”) (quoting Dart Indus., 649 F.2d at 22 649). Courts have uniformly recognized the major burden imposed by third-party discovery and 23 held that a subpoenaed individual’s non-party status is significant in determining whether the 24 discovery sought is appropriate. See Dart Indus., 649 F.2d at 649 (holding that trial court must 25 impose restrictions on non-party discovery to “protect third parties from harassment, 26 inconvenience, or disclosure of confidential documents”); Jack Frost Lab. Inc. v. Physicians & 27 Nurses Mfg. Corp., No. 92 Civ 9264 (MGC), 1994 WL 9690, at *2 (S.D.N.Y. Jan. 13, 1994) 28 (“[T]he most obvious burden is borne by the non-party witness, and we are instructed to be -9- OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 particularly sensitive to any prejudice to non-litigants drawn against their will into the legal 2 disputes of others.”). The Order’s failure to consider the burden imposed by a deposition on an 3 apex witness of a non-party constitutes clear error. 4 The Order is also inconsistent with the long line of cases holding that, when the deposition 5 of an apex witness is sought, the court must consider the relatively high likelihood of harassment 6 and burden, which will often outweigh the potential benefits of the discovery. See, e.g., Salter v. 7 Upjohn Co., 593 F.2d 649, 651 (5th Cir. 1979); Celerity, Inc., 2007 WL 205067 at *2-3; Baine v. 8 Gen. Motors Corp., 141 F.R.D. 332, 334 (M.D. Ala. 1991); Mulvey, 106 F.R.D. at 366 (corporate 9 officers are “easily subjected to unwarranted harassment and abuse”). The purpose of the apex 10 doctrine – to prevent unnecessary harassment of prominent corporate individuals – is undermined 11 by the Order’s failure to require Plaintiffs to exhaust less burdensome means of obtaining 12 discovery.3 See Celerity, Inc., 2007 WL 205067 at *2-3; Mulvey, 106 F.R.D. at 366. Such a 13 result would permit parties to use the discovery process to harass companies and their highest 14 level corporate managers, even when less burdensome sources of discovery are readily available. 15 The law does not support such a result. 16 B. 17 18 Because Plaintiffs Failed to Raise Mr. Jobs’s Participation in Executing the Download Agreements During the Meet and Confer Discussions, This Court Should Consider the Additional Factual Declarations. The Court should consider the declarations of Eddy Cue and Kevin Saul submitted in 19 support of Mr. Jobs’s Objections to the Order. The declarations are offered to refute new 20 arguments presented by Plaintiffs at the hearing on the Motion for Protective Order. During the 21 meet and confer discussions preceding the Motion, Plaintiffs insisted that Mr. Jobs’s essay, 22 Thoughts on Music, was the sole basis for proceeding with a deposition of Mr. Jobs. (Vandell 23 Decl. ¶ 13.) Plaintiffs never sought Mr. Jobs’s deposition on the basis of his execution of one of 24 25 26 27 28 3 Even if the Court could justify its refusal to apply the apex doctrine to Mr. Jobs’s Motion, its refusal to require Plaintiffs to exhaust alternative sources of discovery would still be in error because it ignores the strong evidence of harassment manifested by the deposition subpoena. As Mr. Jobs argued in his Motion and Reply brief, Plaintiffs’ conduct in serving the deposition subpoena during the course of contentious negotiations over Plaintiffs’ document demands strongly suggests that their primary motivation in seeking Mr. Jobs’s deposition is to harass Apple. (Reply Brief (Docket #10) at 6.) It is clear error to let Mr. Jobs’s deposition proceed in the face of such clear potential for harassment. - 10 - OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT) 1 the Download Agreements, or his role in the negotiation and drafting of those agreements. (Id. 2 ¶ 16.) Accordingly, the moving papers focused on showing that the Thoughts on Music essay 3 alone was irrelevant to the parties’ contract dispute and did not afford proper grounds for an apex 4 deposition. 5 At the hearing, Plaintiffs insisted that Mr. Jobs’s execution of a Download Agreement was 6 a sufficient basis to justify his deposition. The Order, moreover, relies on both his execution of 7 the agreement and the essay. Because the issue of Mr. Jobs’s actual involvement with the 8 negotiation, drafting and execution of the Download Agreements – as opposed to his views in the 9 Thoughts on Music – was not properly raised before the motion was filed, the Court should 10 exercise its discretion to consider the additional facts submitted in the declarations of Eddy Cue 11 and Kevin Saul. See United States v. Howell, 231 F.3d 615, 621-22 (2000) (holding that district 12 court “has discretion” to “consider evidence presented for the first time” in party’s objection to 13 magistrate judge’s order); Brown v. Roe, 279 F.3d 742, 745 (9th Cir. 2002) (“[I]n making a 14 decision on whether to consider newly offered evidence, the district court must actually exercise 15 its discretion, rather than summarily accepting or denying the motion.”); see also Conetta v. Nat’l 16 Hair Care Ctrs., Inc., 236 F.3d 67, 74 (2001) (district court should also be permitted to consider 17 new evidence when it reviews magistrate orders pursuant to 28 U.S.C. § 636(b)(1)(A)). 18 IV. 19 CONCLUSION For the foregoing reasons, Non-Party Steve Jobs’s Objection should be sustained. 20 Accordingly, the Court should set aside the Order and grant Non-Party’s Motion for Protective 21 Order to Quash “Apex” Deposition Subpoena. 22 23 DATED: May 15, 2008 GEORGE A. RILEY O’MELVENY & MYERS LLP 24 25 By: George Riley /s/ George A. Riley Attorneys for Non-Party Deponent Steve Jobs 26 27 SF1:715873.1 28 - 11 - OBJECTION TO ORDER DENYING MOTION TO QUASH DEPOSITION CASE NO. 08-80040 Misc. RMW (PVT)