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State of New York v. Microsoft Corp.

April 12, 2002

STATE OF NEW YORK, ET AL., PLAINTIFFS
v.
MICROSOFT CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION AND ORDER

Before the Court is Microsoft's Motion to Strike Portions of the Written Direct Testimony of David Richards. Microsoft objects to portions of Mr. Richards' testimony and exhibits appended thereto on the grounds that they contain inadmissible hearsay. Although the Court has ruled orally on this motion, the Court issues this written opinion to ensure that the record accurately reflects the Court's ruling. In particular, the Court shall reiterate its ruling with regard to various documents attached to Mr. Richards' written direct testimony.

Microsoft objects to Plaintiffs' Exhibits numbered 1237, 1255, 768, 769, 759, 760, 762, 1178, 1259, and 1254. The Court will address each exhibit seriatim. For context, it is helpful to note at the outset that Mr. Richards is an employee of RealNetworks.

In simple terms, hearsay is an out-of-court statement, written or oral, *fn1 offered for the truth of the matter asserted therein. Fed. R. Evid. 801(c). Federal Rule of Evidence 802 provides for a general exclusion of hearsay, stating that "[h]earsay is not admissible except as provided by these rules . . . ." Fed. R. Evid. 802. As foreshadowed by Rule 802, Federal Rule of Evidence 803 provides a number of "exceptions" to the exclusion of hearsay evidence. Fed. R. Evid. 803. In this Memorandum Opinion, the Court addresses primarily documents, which by their nature are out of court written statements. As Plaintiffs appear to concede that these documents, if offered for the truth of the matter asserted therein, *fn2 constitute hearsay, the Court directs the majority of its attention to the various exceptions to the hearsay rule relied upon by Plaintiffs. These exceptions provide the framework for the discussion below.

Plaintiffs' Exhibit 1237 is an email written by Rob Glaser of RealNetworks. The letter recounts a meeting between Mr. Glaser and a representative of Defendant Microsoft Corporation. In his direct testimony, Mr. Richards cites to the letter to support his contention that "RealNetworks did not get out of the streaming media platform business, and thus its technology is being targeted by Microsoft." Richards Direct ¶ 59. Mr. Richards' citation to the letter provides in pertinent part: "See also the email, attached hereto at Tab F, in which Rob Glaser of RealNetworks describes a June 1997 meeting with Anthony Bay of Microsoft, in which Bay indicated Microsoft wanted RealNetworks to stop development of a competing media platform." Id. ¶ 59 and n.8. Microsoft objects to admission of the email on the grounds that the contents of the letter are being admitted for the truth of the matter asserted therein. Microsoft Mot. at 3. With regard to Microsoft's objections to this exhibit, and all of the other exhibits appended to Mr. Richards' direct, the Litigating States respond generally as follows:

[The relevant exhibits] are admissible under Rule 803, as records of regularly conducted activity under subsection (6) and/or as present sense impressions under subsection (1). In the alternative, the statements are offered not merely to prove the truth of the matter asserted (Federal Rule of Evidence 801(c) ("Rule 801(c)") but rather show that such communications were made and/or motive, intent, knowledge or notice. Pl. Opp'n at 4.

The Court first rejects the assertion that the contents of Plaintiffs' Exhibit 1237 are not offered for the truth of the matter asserted therein. As is apparent from Mr. Richards' testimony and his description of the letter, Mr. Richards is relying on the letter to establish that Microsoft, through its representative, behaved as recounted by Mr. Glaser in the email. In this regard, Mr. Richards uses the letter to lend credence to his testimony regarding the treatment of RealNetworks by Microsoft. Based upon this use, it does not appear that Mr. Glaser's "motive, intent, knowledge, or notice" is at issue in this portion of his testimony. Accordingly, the Court rejects Plaintiffs' contention that they have offered the Glaser email to establish such facts.

Addressing next Plaintiffs' assertion that the email reflects Mr. Glaser's "present sense impression," the Court notes that the email does not appear to have been composed while Mr. Glaser was "perceiving an event" or "immediately thereafter." Fed. R. Evid. 803(1). Mr. Glaser's email is dated Monday, October 6, 1997, and refers to a meeting "on Tuesday" and a "follow-on call" on Thursday. Richards Direct, Tab. F. (Pl. Ex. 1237). "The underlying theory of Exception (1) is that substantial contemporaneity of the event and the statement negate the likelihood of deliberate or conscious misrepresentation." Fed. R. Evid. 803 advisory committee's note. In light of the "underlying theory" of Exception (1), the lag time between the actual meeting and the email renders Exception (1) inapplicable. *fn3

Plaintiffs further contend that the letter is admissible as a "record of regularly conducted activity" pursuant to Rule 803(6). Rule 803(6) excludes from the hearsay prohibition:

A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by certification that complies with Rule 902(11), Rule 902(12), or a statute permitting certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. Fed. R. Evid. 803(6).

"The justification for this exception is that business records have a high degree of accuracy because the nation's business demands it, because the records are customarily checked for correctness, and because recordkeepers are trained in habits of precision." United States v. Baker, 693 F.2d 183, 188 (D.C. Cir. 1982). While Mr. Glaser's email may have been "kept in the course" of RealNetworks regularly conducted business activity, Plaintiffs have not, on the present record, established that it was the "regular practice" of RealNetworks employees to write and maintain such emails. Fed. R. Evid. 803(6). Indeed, the complete lack of information regarding the practice of composition and maintenance of such emails invokes the final clause of Rule 803(6), which permits exclusion of the evidence where "the method or circumstances of preparation indicate lack of trustworthiness." Id. and advisory committee's note ("Absence of routineness raises lack of motivation to be accurate."). "[T]he trial court has broad discretion in determining whether documents otherwise admissible as business records are sufficiently trustworthy." United States v. Kim, 595 F.2d 795, 762 (D.C. Cir. 1979) (quoting United States v. Reese, 561 F.2d 894, 903 n. 18 (1977)). Pursuant to this discretion, the Court declines, on this sparse record, to treat Plaintiffs' Exhibit 1237 as a trustworthy business record. *fn4

Plaintiffs' Exhibit 1255 is an email authored by another RealNetworks employee. The email recounts a meeting with representatives from Sony and contains statements allegedly made by Sony, which, in turn, purport to recount statements made by Defendant Microsoft. Mr. Richards cites to the email in his written direct testimony to support his assertion that, "[a]s of early Fall 2000, Microsoft was telling content providers, like Sony, that they should use SAP to protect their valuable content and that only WMP would have access to SAP." Richards Direct ¶ 77 and n.15. The citation provides "See the email from Jeff Ayars of RealNetworks to Marty Roberts of RealNetworks dated October 26, 2000, attached at Tab K. States' Exhibit 1255." Id. n.15.

Again, in light of the accompanying testimony, there is no basis for a contention that this document is offered for anything other than the truth asserted therein. As with the previous document, the record established by Mr. Richards' testimony is insufficient to support a conclusion that the email is a business record as defined in Rule 803(6). Furthermore, even if the email were admissible as a business record, the ...


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