[00:00:01] Speaker 00: Please be seated. [00:00:01] Speaker 00: Good afternoon, ladies and gentlemen. [00:00:06] Speaker 00: We have one case on the calendar this afternoon. [00:00:13] Speaker 00: Dynamic 3D solutions versus Schlumberger 2015-16-28. [00:00:21] Speaker 00: Mr. Hanley is going to argue first. [00:00:29] Speaker 00: And you are for Acacia? [00:00:32] Speaker 05: Yes, I represent Acacia, Your Honor. [00:00:33] Speaker 00: Yeah, I think you weren't on the briefs. [00:00:36] Speaker 05: You're correct, I was not. [00:00:37] Speaker 00: Yeah, you were from what firm? [00:00:39] Speaker 05: I'm from Stratton Yawka, the same firm that was on the briefs for Acacia, but I was not on the briefs at the time. [00:00:44] Speaker 00: Please proceed. [00:00:44] Speaker 05: Thank you, Your Honor. [00:00:46] Speaker 05: Good afternoon, and may it please the Court. [00:00:49] Speaker 05: For the record, Acacia's position would be not to proceed with the appeal based on the confidential settlement, but I'm prepared to address the merits, and I'll do that now. [00:00:58] Speaker 05: What if, during the Apple-Samsung wars, a young in-house attorney at Samsung had gone to Apple and started working for Apple? [00:01:06] Speaker 06: Well, let's not do hypotheticals. [00:01:09] Speaker 06: The district court found that Ms. [00:01:11] Speaker 06: Rutherford was presented with a PowerPoint presentation by outside counsel discussing Slumberger, after which Rutherford approved Collins-Edmond's recommendations to acquire the 319 patent and sue Slumberger. [00:01:28] Speaker 06: In contending this finding, on page 53 of Appellant's brief, Appellant states there are no facts showing that Charlotte Rutherford communicated confidential information that she received from Slumberger. [00:01:42] Speaker 06: Isn't it possible for Rutherford to have based the decision to sue on confidential information she acquired without further communicating that confidential information? [00:01:54] Speaker 05: If I understand your Honor's question. [00:01:56] Speaker 06: Well, if you don't, I'll restate it. [00:01:58] Speaker 05: As I do understand it, the Fifth Circuit standards require once the non-moving party, the party opposing disqualification, comes forward with a declaration saying that no actual confidential information was shared, the burden shifts to the moving party to show the specific confidential information that was shared. [00:02:19] Speaker 05: And that's what we think was insufficient. [00:02:20] Speaker 05: So this notion that concurring in the decision to file an action [00:02:25] Speaker 05: was implicit or an inference can be drawn that confidential information was shared is not viable. [00:02:31] Speaker 06: What I'm saying is, I'm not saying it's implicit. [00:02:35] Speaker 06: I'm saying that her vote could represent confidential information. [00:02:41] Speaker 05: Well, I would say three things. [00:02:43] Speaker 05: Number one, there's no case in the Fifth Circuit that applies that inference as where a wink and a nod as it's called in some of the briefing and some of the cases. [00:02:54] Speaker 05: constitutes a communication of affirmative evidence of a communication of confidential information. [00:02:59] Speaker 06: Number two... I'm not talking about a wink and a nod. [00:03:02] Speaker 06: I'm not talking about body language. [00:03:05] Speaker 06: I'm talking about a legal action which she took, a vote. [00:03:11] Speaker 06: And by doing that, can it be inferred that she's basing it on confidential information that she had? [00:03:20] Speaker 05: Well, that's where we get to this inference. [00:03:22] Speaker 05: And we don't believe that this inference is proper under the Fifth Circuit standards for the reasons, number one, there's no Fifth Circuit case that holds that. [00:03:29] Speaker 05: Number two, there's no case in any jurisdiction cited by any of the parties or that we're aware of that holds that this inference would apply in the context of attorney disqualification, which is an extreme remedy and requires this actual providing affirmative evidence. [00:03:45] Speaker 05: And the reason the affirmative evidence is required, and this was the National Oil Wealth [00:03:50] Speaker 05: court, the district court, in applying Fifth Circuit standards said, unless you tell us what actual confidential information is implicit in what you say was disclosed, we can't balance the harms. [00:04:02] Speaker 05: And that's the legal error that the district court committed here, is that it failed to do any balancing of the harms. [00:04:08] Speaker 05: And so without knowing what specific confidential information was allegedly [00:04:14] Speaker 05: in that approval, the district court simply could not balance the harms from what that information purportedly was. [00:04:24] Speaker 06: Let's see, how long did she work at Schlumberger? [00:04:26] Speaker 06: Was it 15 years? [00:04:28] Speaker 05: It was quite a long time. [00:04:33] Speaker 05: But the issue is, again, [00:04:35] Speaker 05: Once there's the submission of declarations, as in national way of well, as in pro-education. [00:04:42] Speaker 06: Well, let's look at it a slightly different way. [00:04:46] Speaker 06: Because she worked there, a Chinese wall was required to be constructed. [00:04:53] Speaker 05: That's not Fifth Circuit law. [00:04:54] Speaker 05: It's a balancing approach. [00:04:56] Speaker 05: The Chinese wall can be, the ethical wall, can be considered in assessing [00:05:04] Speaker 05: whether there should be qualification, but it's not. [00:05:06] Speaker 06: Are you conceding there was none? [00:05:07] Speaker 05: There was none per se, but there were steps taken to keep her from communicating information about Slumberge during the few meetings and telephone calls she participated. [00:05:20] Speaker 00: But she certainly had information about the patent and about the decision to purchase it and the decision to sue. [00:05:28] Speaker 00: That's pretty clear. [00:05:30] Speaker 05: And so what I'm focusing on is not whether there was a substantial relationship or whether there's a presumption that she had confidential information, but whether there is a presumption and whether that presumption has been rebutted that she shared confidential information with Acacia. [00:05:50] Speaker 00: So you accept that there's a presumption, but you would say that it's rebuttable? [00:05:56] Speaker 05: Not necessarily. [00:05:57] Speaker 05: The Fifth Circuit is unclear on whether there is a presumption or not with respect to the second step, namely the imputed disqualification step. [00:06:07] Speaker 05: But regardless of whether there is that second presumption or not, it's clear that balancing is required. [00:06:13] Speaker 05: And this district court performed no balancing. [00:06:16] Speaker 05: And it's also clear that there needs to be affirmative evidence of specific confidential information that was communicated and what the harm [00:06:26] Speaker 05: was to the Schlumberger, in this instance, with respect to the sharing of that information. [00:06:33] Speaker 06: Which of you counsel is responsible for the motion to dismiss? [00:06:44] Speaker 05: Both of us are responsible. [00:06:46] Speaker 06: I mean in the sense of discussing it. [00:06:51] Speaker 05: We don't need to discuss it unless your honor would have questions. [00:06:53] Speaker 05: Well, I do want to discuss it in this sense. [00:06:56] Speaker 05: All right, I'm into my rattle time, but I'm happy to answer your questions. [00:06:59] Speaker 06: Yeah, and you will. [00:07:00] Speaker 06: Yes. [00:07:01] Speaker 06: So you provided that with a statement that there was a confidential settlement agreement. [00:07:11] Speaker 06: And you discussed what were allegedly the terms of that confidential settlement agreement. [00:07:16] Speaker 06: But you declined to attach that settlement agreement, apparently in the belief that we couldn't see it. [00:07:24] Speaker 05: Well, we would have had to file a motion to file it under seal to be able to submit the entire settlement agreement. [00:07:33] Speaker 05: What we did is in a reply, we disclosed only so much of the settlement terms as were necessary to rebut the positions that were argued in the opposition. [00:07:42] Speaker 05: So there was a truncated quote of the settlement agreement in the opposition. [00:07:46] Speaker 05: So in a reply, we provided the full quote. [00:07:50] Speaker 02: Very truncated. [00:07:52] Speaker 05: I agree. [00:07:53] Speaker 02: So in your view, is this case settled? [00:07:56] Speaker 02: From Acacia's perspective, it's troubling to me that you can't answer that with a quick yes or no, but yet you asked us to dismiss the case based on the fact that it's settled. [00:08:09] Speaker 02: Is it settled or isn't it settled? [00:08:11] Speaker 05: There is a framework by which it can be settled for a nominal payment upon the conclusion of this appeal. [00:08:17] Speaker 02: That doesn't sound like it's settled. [00:08:19] Speaker 02: Then why did you waste our time with all these papers in the last couple days when we've already rescheduled this case for you once, and we had to prepare again, and you were going to ask us to dismiss it when it hadn't been settled? [00:08:35] Speaker 05: For purposes of a financial consideration of whether this appeal should go forward from the case perspective, it is settled. [00:08:43] Speaker 05: You're correct, Your Honor, that the case is not terminated by virtue of the settlement, however. [00:08:49] Speaker 01: Is there a signed settlement agreement by all parties? [00:08:52] Speaker 05: Yes. [00:08:53] Speaker 01: Then why are you saying it's not settled? [00:08:55] Speaker 05: It requires a future action to terminate the past case under the terms of that agreement. [00:09:01] Speaker 05: And we did put that quote in the reply. [00:09:03] Speaker 05: And what it involves is once the appeal is concluded, which Acacia has the right but not the obligation to do, then Schlumberger can terminate the case. [00:09:12] Speaker 01: Why is that in there, then, if you're the ones that wanted the appeal dismissed? [00:09:16] Speaker 05: At the time of the settlement, there hadn't been an assessment of the full pros and cons of proceeding with the appeal. [00:09:22] Speaker 05: And so it's unfortunate, but that's once that came in. [00:09:26] Speaker 00: You told us the settlement was on June 16th. [00:09:29] Speaker 00: June 17th, yes, Your Honor. [00:09:30] Speaker 00: June 17th. [00:09:30] Speaker 00: Why did you wait six weeks before telling us that you weren't dismissed? [00:09:37] Speaker 05: I think as the time for the oral argument became closer, it became more clear that the business reasons for pursuing the appeal were just no longer present. [00:09:46] Speaker 05: It was a business decision. [00:09:47] Speaker 05: We apologize for any inconvenience that that caused. [00:09:50] Speaker 06: Somebody better be prepared to discuss your business model, which your opposing counsel has presented to us, as essentially a model of using litigation as a weapon in and of itself [00:10:07] Speaker 06: and then backing away at the last minute. [00:10:11] Speaker 05: I would submit that there was one case submitted of terminating a litigation after a motion had been filed. [00:10:19] Speaker 05: We addressed that in our reply. [00:10:21] Speaker 05: So this notion that that's Acacia's habit is simply not supported by the record before this court, that Acacia backs off when it's facing inconvenient strategic type of decision. [00:10:37] Speaker 05: So that's an allegation that was thrown out there. [00:10:40] Speaker 05: It wasn't support. [00:10:41] Speaker 06: Frankly, that sounds to me a lot more like slap than somebody suing a former attorney employee and being told that preventing her from discussing confidential matters is slap. [00:11:03] Speaker 05: Well, we do have the underlying ruling in the state court case where there was an announce that motion was granted. [00:11:09] Speaker 05: But I'm not prepared today to comment further on that. [00:11:14] Speaker 05: I'm happy to. [00:11:15] Speaker 00: Thank you, Mr. Hanley. [00:11:16] Speaker 00: We'll hear from Mr. Collins. [00:11:18] Speaker 00: And we'll give you three minutes if we've got our time. [00:11:21] Speaker 05: Thank you very much. [00:11:27] Speaker 03: May it please the court. [00:11:28] Speaker 03: I want to address the disqualification of my firm and the dismissal of case. [00:11:33] Speaker 03: but happy to. [00:11:34] Speaker 01: Are you part of this settlement? [00:11:37] Speaker 03: Your honor, D3D, Dynamic 3D Geosolutions, the Acacia [00:11:42] Speaker 03: subsidiary is a party to the settlement. [00:11:46] Speaker 02: But is your firm a party to the settlement? [00:11:47] Speaker 03: We are not. [00:11:48] Speaker 02: So we have to address your arguments about disqualification, whether this is dismissed or not. [00:11:56] Speaker 02: You're not dismissing your appeal. [00:11:58] Speaker 03: We don't have an appeal. [00:11:59] Speaker 03: Our only appeal, my firm is not appealing. [00:12:02] Speaker 03: The only appeal is of our client. [00:12:05] Speaker 03: as to the disqualification of its outside counsel. [00:12:08] Speaker 02: So then you are wrapped up in the settlement? [00:12:14] Speaker 03: That disqualification issue? [00:12:17] Speaker 02: Yes, we were not a part of the settlement. [00:12:19] Speaker 02: I'm just trying to figure out if the settlement resolves this case or not. [00:12:25] Speaker 03: In our view, the settlement does resolve the case. [00:12:30] Speaker 03: acacia the sole and unfettered right to continue the appeal or decide not to continue the appeal. [00:12:38] Speaker 03: But whether the appeal is continued or not, there are specific ends to the litigation. [00:12:44] Speaker 06: Where does it say that in the settlement agreement? [00:12:48] Speaker 03: And I'm going to quote without trying to reveal anything that's confidential. [00:12:53] Speaker 03: We'll be glad to file this under seal with the court. [00:12:56] Speaker 03: But it says that [00:12:59] Speaker 03: that all parties are going to bear their own costs and attorney's fees in all matters. [00:13:03] Speaker 03: That includes the appeals, the patent case, the state court case, that there are going to be mutual releases in the patent case, regardless of the outcome. [00:13:11] Speaker 03: But that Acacia retains the right to appeal the disqualification order, the order before this court, provided that Schlumberger can settle the merits of the case if our appeal is successful for a nominal amount, and then it will still be dismissed. [00:13:28] Speaker 03: And I think in D3D's view, this is a settlement. [00:13:37] Speaker 02: I think we'd like to see that if you could all agree to submit it under seal. [00:13:43] Speaker 02: Not now. [00:13:43] Speaker 02: I mean, you can submit it after the fact. [00:13:45] Speaker 02: It doesn't sound like it's a final settlement to me. [00:13:48] Speaker 02: It sounds like there's a lot of contingencies in there. [00:13:54] Speaker 03: All I can say is that the litigation would not continue. [00:13:58] Speaker 03: Regardless of what happens with this appeal, the litigation is over between Dynamic 3D and Slumberjay and between Ms. [00:14:06] Speaker 03: Rutherford and Slumberjay in the state court case. [00:14:13] Speaker 00: Go ahead and proceed. [00:14:17] Speaker 03: Your Honor, it's D3D's position that the district court in disqualifying outside counsel, my firm, committed two legal errors. [00:14:26] Speaker 03: The first was that it ignored binding Fifth Circuit precedent, the Brennan's case, which has never been criticized, never been overruled. [00:14:34] Speaker 03: And it misapplied the burden shifting approach that it did end up adopting, albeit erroneously. [00:14:42] Speaker 03: Now, the Brennan case requires the movement for disqualification to show that confidential information of the former client was communicated, actually disclosed to co-counsel in the Fifth Circuit [00:14:56] Speaker 03: There's no imputation of disqualification to co-counsel. [00:15:00] Speaker 03: There's no presumption of disclosure of confidential information of the former client to co-counsel. [00:15:07] Speaker 03: Actual disclosure has to be shown. [00:15:09] Speaker 03: And it's our position that in this case, there was no evidence showing actual disclosure. [00:15:15] Speaker 03: There's no evidence in the record that Ms. [00:15:17] Speaker 03: Rutherford ever disclosed Schlumberger's confidential information. [00:15:21] Speaker 03: to us. [00:15:22] Speaker 03: Now, the court asked about the Wink and the Nod theory. [00:15:25] Speaker 03: This idea that Ms. [00:15:27] Speaker 06: Rutherford's agreement to... I didn't ask about a Wink and... Are you referring to my questions? [00:15:33] Speaker 06: Because I didn't ask about a Wink and a Nod theory. [00:15:36] Speaker 06: I asked about her actual conduct [00:15:40] Speaker 03: Okay. [00:15:43] Speaker 03: But I think then it's not a wink and a nod. [00:15:46] Speaker 03: It's this theory that her... Communication by conduct. [00:15:51] Speaker 03: Communication by conduct being an implied communication as opposed to an actual communication, but there... No. [00:15:58] Speaker 06: You're misunderstanding me. [00:16:00] Speaker 06: An actual communication by conduct. [00:16:04] Speaker 06: It's not a wink and a nod. [00:16:05] Speaker 06: It's not saying, [00:16:07] Speaker 06: Oh, well, maybe, or something along those lines. [00:16:11] Speaker 06: It's a communication by conduct. [00:16:14] Speaker 06: Such events occur and are recognized by the law. [00:16:20] Speaker 03: But there's no evidence in the record. [00:16:25] Speaker 03: First of all, there's no case law support for this idea that communication by conduct can be an actual communication of the confidential information of slundering. [00:16:37] Speaker 03: And there's no evidence that any information was communicated to my firm by Ms. [00:16:45] Speaker 03: Rutherford. [00:16:48] Speaker 03: Obviously, there are a number of declarations in the record that the alleged presentation in PowerPoint never took place, but assuming that it did for purposes of argument, [00:16:59] Speaker 03: There's no evidence that any concurrence or any agreement on the part of Ms. [00:17:05] Speaker 03: Rutherford was communicated to my firm. [00:17:09] Speaker 03: And even if the American Home Products burden shifting approach was the law in this circuit, which it's not, the district court simply misapplied it. [00:17:22] Speaker 03: Even if it was proper to shift the burden to my firm or to D3E to come forward with some evidence [00:17:28] Speaker 03: The uncontroverted evidence establishes that no confidential information of Schlumberger could have been communicated to my firm. [00:17:36] Speaker 00: Thank you, Mr. Collins, Mr. Grant. [00:17:41] Speaker 00: We have a full 15 minutes. [00:17:49] Speaker 06: What's the law on the Fifth Circuit? [00:17:51] Speaker 04: The law in the First and Fifth Circuit as to Ms. [00:17:54] Speaker 04: Rutherford is that once we show a substantial relationship, she's irrebuttably presumed to have obtained confidential information, and she is disqualified on that basis. [00:18:04] Speaker 04: That's because we're not required to demonstrate the confidential information she had access to should she do precisely what she did, which is deny she had it or say she didn't remember it. [00:18:16] Speaker 04: With regards to the second level, with regards to the in-house counsel, [00:18:19] Speaker 04: The law in the Fifth Circuit, in my opinion, Your Honor, and I agree with the court, it's not crystal clear, is that there's a distinction between whether the representation is personal or not. [00:18:32] Speaker 04: So if Ms. [00:18:33] Speaker 04: Rutherford had been a labor lawyer and not personally representing Slumberge on matters regarding the Patrell software and the value of Patrell and arguably the willfulness responsibility, then her [00:18:45] Speaker 04: disqualification would have been an imputed one. [00:18:48] Speaker 04: And when she left, she would have been in a position to rebut that, to say, I am no longer subject to the imputed confidential information I had because I didn't personally represent slumberjee on those matters. [00:19:00] Speaker 04: I think pro-education shows. [00:19:02] Speaker 04: I agree that the statement in American Airlines is a footnote in Ditka. [00:19:06] Speaker 04: But I think if the court looks at the pro-education, it'll see that pro-education is carefully delineating the difference between [00:19:13] Speaker 04: a personal representation and makes very close care to say, in the absence of a personal representation or acquisition of confidential information, and bases it's holding on that. [00:19:24] Speaker 04: The Texas rules note this importance of personal representation. [00:19:27] Speaker 04: The ABA model rules don't talk about personal representation. [00:19:31] Speaker 04: The law in the Fifth Circuit, in my view, Your Honor, is because she was personally involved, the imputation to the other lawyers at her quote firm, and there's been no dispute that the in-house law firm constitutes a firm, [00:19:42] Speaker 04: is also irrebuttable. [00:19:44] Speaker 04: But Judge Yackel didn't go that far. [00:19:46] Speaker 04: Judge Yackel found that presumption to be rebuttable and then focused on the facts of the case. [00:19:52] Speaker 04: The issue here, Your Honor, is Ms. [00:19:55] Speaker 04: Rutherford left her client. [00:19:57] Speaker 04: And then almost immediately, she began working against her former client over her own work. [00:20:07] Speaker 04: The conduct here and the [00:20:11] Speaker 04: The testimony that she provided was not wink and a nod testimony. [00:20:16] Speaker 04: It was not testimony about clicking a computer button. [00:20:20] Speaker 04: She testified repeatedly, repeatedly, that she verbally communicated her recommendation to acquire the 319 patent and to sue Slumberge to her lawyer colleagues in Acacia and to the Outside Litigation Council. [00:20:34] Speaker 04: She participated in numerous meetings by her own deposition sworn testimony [00:20:38] Speaker 04: in her capacity as an Acacia lawyer. [00:20:41] Speaker 04: That was very clear. [00:20:43] Speaker 04: And in those meetings that she did not excuse herself from, the record shows that she participated in many meetings. [00:20:49] Speaker 04: It was a phone call that she did excuse herself from, but there were many meetings that she didn't where the patent, where Slumberjay and Slumberjay's financials related to the Patrell product were discussed. [00:21:00] Speaker 04: And after Acacia's CEO green-lighted the lawsuit, it's in the record, Your Honor, she was sent an email [00:21:06] Speaker 04: with the benefit of Ms. [00:21:07] Speaker 04: Rutherford's endorsement. [00:21:09] Speaker 04: She was directed by her CEO to convince Contingency Council to take the case, knowing full well that much of the revenue that was implicated by the sequence of lawsuits was slumberjay revenue. [00:21:21] Speaker 04: The Accused Patel product is a product that Ms. [00:21:24] Speaker 04: Rutherford worked on personally, directly. [00:21:27] Speaker 06: And the allegations of willful- Believe me, we've read them. [00:21:30] Speaker 04: Yes, Your Honor. [00:21:31] Speaker 04: And the allegations of willful infringement [00:21:33] Speaker 04: implicate not just her personal representation, but her personal knowledge. [00:21:37] Speaker 04: She was the person at Schlumberger for a two and a half year period that was responsible for obtaining opinions and counsel. [00:21:43] Speaker 04: Your Honor, I hate to quote my cousin Vinny, but those matters aren't substantially related. [00:21:48] Speaker 04: As the lawyer said, they're identical. [00:21:51] Speaker 04: So the disqualification of Ms. [00:21:54] Speaker 04: Rutherford, in our view, Your Honor, is compelled by the law and the ethical rules [00:22:00] Speaker 04: And the disqualification of the attorneys that were infected with her disclosure of confidential information is also compelled. [00:22:06] Speaker 04: Now, there was a discussion about the legal standard for the Collins Edmonds firm. [00:22:12] Speaker 04: The Texas Supreme Court law on this is pretty clear. [00:22:15] Speaker 04: Once the party seeking disqualification, us, establishes that there was contact or communication between, in this case, Mr. Rutherford and Mr. Collins and his firm, then the burden shifts. [00:22:27] Speaker 04: And it would shift to the party resisting disqualification to show two things. [00:22:32] Speaker 04: They have to show no reasonable prospect that our confidential information was disclosed. [00:22:37] Speaker 04: And they have to show that it was, in fact, not disclosed. [00:22:40] Speaker 04: That's the law. [00:22:41] Speaker 04: And that's what was appropriately provided. [00:22:43] Speaker 04: The declarations that counsel pointed out to, I commit them to your honor for review. [00:22:48] Speaker 04: We did review. [00:22:49] Speaker 04: They're highly equivocal. [00:22:51] Speaker 04: What they say is, at no point did anyone at the Acacia entities ever inform me [00:22:57] Speaker 04: that Ms. [00:22:58] Speaker 04: Rutherford shared knowledge with them. [00:22:59] Speaker 04: To my knowledge, at no point has anyone asked to obtain this information. [00:23:04] Speaker 04: There are two declarations, the privileged log that were produced over great objection and after much motion practice in this case, show 16 Acacia attorneys who were involved in the conveyance of confidential information. [00:23:18] Speaker 04: It's a highly distinct case. [00:23:19] Speaker 04: Those declarations, by the way, were evaluated by Judge Yackel. [00:23:23] Speaker 04: And he made important credibility determinations that are the key [00:23:26] Speaker 04: to much of his rulings. [00:23:28] Speaker 04: And in those credibility and determinations, he credited unsurprisingly Ms. [00:23:33] Speaker 04: Rutherford's testimony that was adverse to her interests and not the self-serving declarations and not the self-serving testimony [00:23:40] Speaker 04: that Ms. [00:23:41] Speaker 04: Rutherford gave, and that's consistent with the way many fact-finders do. [00:23:45] Speaker 04: Only if you say something that's bad for yourself is it taken at face value. [00:23:48] Speaker 00: Do you want to respond to the comments of your opponents who say the case was settled? [00:23:54] Speaker 04: Yes, Your Honor. [00:23:55] Speaker 04: First of all, we're happy to provide a copy. [00:23:57] Speaker 04: Second of all, what Mr. Collins read, and I listened to him very carefully as he said, Acacia retains the right to appeal, and Slumberge has a right to settle the merits case if, [00:24:10] Speaker 04: the appeal is fully concluded. [00:24:12] Speaker 04: That's not what it says, Your Honor. [00:24:13] Speaker 04: It says after the appeal is fully concluded. [00:24:18] Speaker 04: I don't think this case is settled and I don't think the dismissal should be given the time of day [00:24:24] Speaker 02: Let me ask you about that, because to me, it doesn't sound like there's an actual settlement of everything. [00:24:32] Speaker 02: But they're the appellant. [00:24:34] Speaker 02: They can dismiss their appeal if they want to, can't they? [00:24:37] Speaker 02: You're the prevailing party. [00:24:38] Speaker 02: You don't have a right to seek review. [00:24:40] Speaker 02: So what harm would there be to you if this case were dismissed? [00:24:47] Speaker 04: Yeah. [00:24:47] Speaker 02: So. [00:24:47] Speaker 02: A car for maybe costs. [00:24:50] Speaker 04: Fair point, Your Honor. [00:24:51] Speaker 04: And costs, I agree, are resolved in terms of how they're... Look, a denial of a voluntary dismissal is only appropriate based on our review of the case law if the parties are institutional litigants engaging in strategic behavior or if it concerns a matter of public importance. [00:25:06] Speaker 04: I would submit, Your Honor, [00:25:07] Speaker 04: that both of those apply here. [00:25:09] Speaker 04: Now had Acacia moved to dismiss the appeal on June 18th or 20th or 25th, I think we'd be in an entirely different place. [00:25:16] Speaker 04: But the fact that they attempted to do this at the very last minute provided us with a, quote, stipulation. [00:25:22] Speaker 00: You mean on June 18th they would have been within rule 42B? [00:25:27] Speaker 04: I think the argument that these institutional litigant and strategic behavior arguments would have been [00:25:35] Speaker 04: And the fact that it comes at the last minute gives the court a prime opportunity to review those issues. [00:25:41] Speaker 04: I don't think it changes the facts, though, Your Honor, about the strategic behavior that's been occurring here. [00:25:46] Speaker 04: This practice of hiring in-house counsel, setting up a, quote, new line of work and the energy, quote. [00:25:53] Speaker 02: I get it. [00:25:54] Speaker 02: I'm just not sure what it gets you other than another court decision just saying that the disqualification was correct. [00:26:01] Speaker 02: I mean, you've already got that district court [00:26:03] Speaker 02: It doesn't appear that that's going to be vacated as part of the settlement. [00:26:08] Speaker 02: So what difference does it make whether you have that decision or three of us saying that the district court was right? [00:26:15] Speaker 04: Well, I think what it does, Your Honor, is it creates precedent that goes beyond the Western District of Texas and would go to the Fifth Circuit, would encompass the Eastern District of Texas. [00:26:24] Speaker 04: And there was another case. [00:26:25] Speaker 04: that Acacia filed against Slumberge shortly after this one in the Eastern District of Texas. [00:26:30] Speaker 04: And when similar disqualification issues arose, that case was resolved. [00:26:34] Speaker 04: Now, there wasn't a motion filed, as I recall, in that case, as it was in the Sony case. [00:26:38] Speaker 04: But this is behavior that I think there is a public value. [00:26:43] Speaker 04: And I think this court should not only affirm, but it should offer guidance to district courts. [00:26:49] Speaker 04: Let me ask you a question. [00:26:50] Speaker 04: Yes, sir. [00:26:52] Speaker 06: I asked your opposing counsel. [00:26:54] Speaker 06: Because my recollection was that your allegations indicated a pattern of this conduct, not just the Sony matter, but other matters. [00:27:06] Speaker 06: Am I correct? [00:27:07] Speaker 06: Is my recollection correct? [00:27:08] Speaker 04: Yes, Your Honor. [00:27:09] Speaker 04: And so those three cases are the ones we had in mind, two of which were actual cases brought to a head. [00:27:17] Speaker 04: Our case was the first one. [00:27:19] Speaker 04: It's no surprise, Your Honor, that after our disqualification motion came up, the Sony motion was filed shortly thereafter. [00:27:25] Speaker 04: As you know, Acacia is an institutional litigant. [00:27:28] Speaker 04: And I think this caught the attention of many lawyers defending companies adverse to Acacia. [00:27:33] Speaker 04: So I do think this is important. [00:27:34] Speaker 04: And I do think it's important to provide district court's guidance in their duty to protect the integrity of the legal profession. [00:27:42] Speaker 04: Because as the Fifth Circuit law says, this isn't about merely confidential information and confidentiality. [00:27:47] Speaker 04: This is about an attorney's duty of loyalty. [00:27:50] Speaker 04: And that was what was really violated here. [00:27:55] Speaker 06: I would say I think it's also about an attorney's duty not to support disloyalty. [00:28:04] Speaker 04: I'll have no dispute with that. [00:28:06] Speaker 04: I think that's a fair point as well, Your Honor. [00:28:08] Speaker 04: And I think this energy business that Mr. Rutherford was in charge of creating had three people in it. [00:28:15] Speaker 04: And the idea that she was somehow walled off or screened is not, I think, just a falsity in terms of the legal construct that was created, but also in the reality of it. [00:28:28] Speaker 04: She was part and parcel of every piece of conduct that was going on. [00:28:32] Speaker 04: And part of what was notable to me, Your Honor, you have to recall, I was the one who deposed her. [00:28:37] Speaker 04: And that deposition occurred just a couple months after those complaints were filed. [00:28:41] Speaker 04: So when she testified that she hadn't reviewed the complaint until it was after it was filed and we found out differently, when she testified she hadn't reviewed the financials and we found out differently, not only had she reviewed them and approved them, she retained a copy so that she could confer with Acacia's CEO about it, that was only a couple months after those events occurred. [00:29:00] Speaker 04: They would have been fresh in her mind. [00:29:01] Speaker 06: Is it reasonable to assume that a published decision in this case [00:29:08] Speaker 06: may impact an appeal in what is now a non-final case in the district court in Texas, the SLAT. [00:29:23] Speaker 04: Well, so I think it may, Your Honor. [00:29:26] Speaker 04: Just so that the Court has the record clear, the anti-slap finding was upheld by the Court with an understanding that we had to prove, based on merely the pleadings in our complaint, that we had satisfied a clear and convincing level of evidence. [00:29:41] Speaker 04: It was legally erroneous. [00:29:43] Speaker 04: He imposed those sanctions, which he said he felt compelled to impose and had no discretion not to. [00:29:49] Speaker 04: That went up to the Court of Appeals, and that decision was vacated. [00:29:52] Speaker 04: That case went down. [00:29:53] Speaker 04: It was subsequently settled. [00:29:55] Speaker 04: But contrary to the misimpression created in the pleading yesterday, the money didn't go from us to them. [00:30:00] Speaker 04: It went very much in the other direction. [00:30:02] Speaker 04: So I think the litigants know where the merits of that case should have laid. [00:30:06] Speaker 06: That's very serious, what you're telling me. [00:30:10] Speaker 06: is very serious because it represents an allegation that your opposing counsel has made a direct misrepresentation of this court. [00:30:18] Speaker 04: Your Honor, to the extent the court read that pleading to imply we paid them... They say that they won a $600,000 judgment. [00:30:27] Speaker 04: Yeah. [00:30:28] Speaker 04: Well, that's why I look forward to providing a copy of the settlement agreement to the court, because I think the court will see the truth in the plain words of that settlement agreement. [00:30:37] Speaker 04: And I think the court's questions regarding whether the settlement is final or whether [00:30:41] Speaker 04: It's only final after the appeal will be clarified. [00:30:45] Speaker 04: And I think the court will see crystal clearly which way the money went. [00:30:48] Speaker 04: And I think while that is confidential, I think there was a deliberate misimpression created for public consumption. [00:30:56] Speaker 04: If I just close, Your Honor, Ms. [00:30:59] Speaker 04: Rutherford's verbal concurrence and endorsement of the decision to acquire the patent [00:31:04] Speaker 04: and to sue Schlumberger violated her continuing duty of loyalty and conveyed the most important confidential information possible to Acacia's internal and external lawyers. [00:31:14] Speaker 04: Instead of divulging minor details that would have facilitated Acacia's due diligence and pre-suit investigation, she answered the two most important questions that anybody would want answered. [00:31:26] Speaker 04: When she concurred and provided her verbal endorsement, she said, [00:31:31] Speaker 04: by the Austin Geopatent and Sue Slumberjee. [00:31:36] Speaker 04: There were no more important confidential information that Ms. [00:31:39] Speaker 04: Rutherford could convey based on her many years of service covering that precise product, and there was no more violent breach of the continuing duty of loyalty she had to her former client Slumberjee that she could have committed. [00:31:52] Speaker 04: I would say that I would respectfully ask that the court affirm and provide guidance to the district courts, which I believe is important to protecting the integrity of our profession. [00:32:03] Speaker 04: The court has no further questions. [00:32:06] Speaker 04: Thank you. [00:32:06] Speaker 00: Thank you, Mr. Grant. [00:32:08] Speaker 00: Mr. Hanley, we'll give you three minutes for a bottle. [00:32:11] Speaker 05: Thank you. [00:32:14] Speaker 06: You need to discuss. [00:32:15] Speaker 05: Yeah, addressing first your concern. [00:32:19] Speaker 05: there was an award against Schlumberger in the state court case. [00:32:27] Speaker 05: And that is the extent of what we represented in our reply, and that the settlement wiped that or resolved that award, among other things, including the patent case upon conclusion of this appeal and payment of a substantial sum. [00:32:47] Speaker 05: that your honor understood us to be saying that there was a lot of money being paid to occasion the settlement. [00:32:55] Speaker 05: We certainly didn't intend to imply that, and I don't think we did. [00:33:01] Speaker 05: So I just want to be clear. [00:33:02] Speaker 05: And I think when we provide the settlement agreement, it'll clear up what we're saying. [00:33:07] Speaker 06: That's not what interests me. [00:33:10] Speaker 06: What interests me is the opposing council's statement that it was vacated. [00:33:17] Speaker 05: It would be wiped off the books by the settlement. [00:33:23] Speaker 06: That's not what I heard him say. [00:33:26] Speaker 06: Was it vacated by a higher court? [00:33:32] Speaker 05: To the extent it's off the books, it's off the books by virtue of the settlement. [00:33:36] Speaker 06: That's not what I asked you. [00:33:38] Speaker 06: Was it vacated by a higher court? [00:33:41] Speaker 05: I don't believe it was. [00:33:47] Speaker 00: We understand the distinction. [00:33:50] Speaker 00: OK. [00:33:51] Speaker 05: So moving on, at the beginning of counsel's comments, there was a comment that the distinction in Fifth Circuit law depends on whether the representation of the lawyer who goes from one firm to another is a personal representation. [00:34:05] Speaker 05: And I would say that that's inconsistent with at least the National Oil Well case, which is the most recent district court case, other than ours, that also applied the pro-education standard. [00:34:16] Speaker 05: In that case, [00:34:17] Speaker 05: there was personal representation, the attorney moved, and there was no imputed disqualification. [00:34:24] Speaker 05: So I would say that's not the case. [00:34:27] Speaker 05: Going back to Judge Hughes asked counsel if there was any harm to Schlumberger if the appeal were dismissed, and no answer was provided of harm to Schlumberger. [00:34:40] Speaker 05: There was comments about [00:34:42] Speaker 05: other factors outside of Schlumberger, but there was nothing identified as far as harm to Schlumberger. [00:34:49] Speaker 05: Going back to Judge Wallach's question about communication by conduct, which I understand more fully now based on the colloquy, the Fifth Circuit, even if that's the case, the Fifth Circuit's approach requires the court then to look at, even if you've got a communication by conduct, now you need to look at what confidential information was allegedly shared and identify [00:35:12] Speaker 05: And the burden is on the moving party to identify the specific harm that would be associated with whatever confidential information was deemed shared and to balance that harm against the harm to the non-moving party that would result from disqualification, which is an extreme remedy. [00:35:28] Speaker 05: And the district court just didn't do that here. [00:35:30] Speaker 05: And that was clear error. [00:35:32] Speaker 00: Thank you, Mr. Hanley. [00:35:33] Speaker 00: We'll take the case under discussion.