Audio recording (74 minutes):
Other information about the appeals, including all of the briefing, can be found here:
http://eagle.petrofsky.org/appeal.htmlhttp://eagle.petrofsky.org/appeal2.html
The official minutes say:
In The Court Of Appeal Of The State Of California
Sixth Appellate District
San Jose, California... Thursday, September 20, 2007 ...
The Court reconvened at 1:30 p.m. in its courtroom at 333 West Santa Clara Street, Suite 1060, San Jose, California. Present: McAdams, J.; Bamattre-Manoukian, Acting P.J.; Duffy, J.; and LaNae Brooks, Deputy Clerk. ...
H030185 JORGE OLVERA ... Cause called and argued ...
H030169 EAGLE BROADBAND v. THOMAS MOULD AND RICHARD WILLIAMS
H030719 EAGLE BROADBAND v. THOMAS MOULDCause called and argued by Jeffrey Michael Ratinoff appearing for Appellant Eagle Broadband and by Karineh Khachatourian appearing for Respondent and by Mark Goldowitz appearing for Appellant Richard Williams. Cause ordered submitted.
Court adjourns.
In fact, Khachatourian argued for Eagle Broadband as Appellant, and Ratinoff argued for Eagle Broadband as Cross-Respondent. Goldowitz argued for Respondent Mould as well as for Cross-Appellant Williams.
The minutes also neglect to mention that after the Olvera case, Justice Bamattre-Manoukian's place on the panel was taken by Justice Nathan D. Mihara.
Below is an unofficial, uncertified, incomplete transcript by Al
Petrofsky of portions of the audio recording. Please submit any
corrections to <al@petrofsky.org>.
Important note: This unofficial, uncertified, incomplete transcript should only be used to help you find a portion of the recording that you wish to listen to, or to help you point out a portion of the recording that you are suggesting somebody else listen to. The recording, which I am passing on unchanged from how it was provided to me by the court, is obviously much less likely to have errors than this transcript. Also, much of the information in the timing, tone, and other prosody of human speech is lost in transcription. In fact, one of the major reasons that the court holds oral proceedings, rather than just deciding things on the written briefs, is to give the court a chance to hear the arguments with these unwritten nuances intact.
Curiously, Eagle has actually argued that the public would be better off relying on my written reports of a hearing rather than listening to the audio for themselves. See Eagle's Opposition to Media Request, at 4:16 (September 12, 2006) (media reporting on a hearing should be done by publishing the accounts of attendees rather than by publishing an audio recording, in part because the latter is "a manner that lends itself to tampering and inaccuracies"); and my letter in response, at 2-3 (September 17, 2006). I strongly suggest that you do not take Eagle's argument on that point seriously, and that you listen to the audio yourself.
----- INDEX ----- The Recording starts at 2:08:23 P.M. Pacific Daylight Time. All times below are offsets from the start of the recording. -00:00:0? Justice Mihara (recording starts a few seconds late) +00:00:00 Start of Recording Case H030169: Eagle v. Mould +00:01:49 Khachatourian's opening for Plaintiff/Appellant Eagle +00:24:54 Goldowitz's response for Defendant/Respondent Mould +00:37:51 Khachatourian's reply Case H030169 (cross-appeal): Williams v. Eagle +00:44:57 Goldowitz's opening for Defendant/Cross-Appellant Williams +00:51:38 Ratinoff's response for Plaintiff/Cross-Respondent Eagle +01:05:49 Goldowitz's reply Case H030719: Eagle v. Mould (re: attorney fees) +01:08:48 Khachatourian's opening for Plaintiff/Appellant Eagle +01:11:13 Goldowitz's response for Defendant/Respondent Mould +01:13:20 Khachatourian's reply +01:13:43 Justice Mihara +01:14:05 End of Recording -------- EXCERPTS -------- (I've transcribed at least some of the beginning and ending of each argument, to help people find their way around the recording, and I've also transcribed a few other portions that I found interesting.) (Recording begins at 2:08:23 Pacific Daylight Time) ... +00:01:06 JUSTICE MIHARA: Now, your time estimate, then, counsel? +00:01:09 MS. KHACHATOURIAN: Thirty minutes. +00:01:11 JUSTICE MIHARA: Thirty minutes is extraordinary, counsel, in a case like this. I just want to advise counsel, as Justice Manoukian has already, that we're familiar with the briefing, we're familiar with the record. We've gone over it carefully. What we'd like you to do is to focus on your "winners". The points and the case law and so forth, and the legal theories you'd like to advance to us, that you feel will be most persuasive, and however you do that is fine, but I do not want you to reread your briefs, I do not want a regurgitation of some things you've already said, all right? Is that fairly clear? Could I have another estimate please? +00:01:40 MS. KHACHATOURIAN: Twenty minutes. +00:01:41 JUSTICE MIHARA: Thank you, counsel. And we'll reserve some of that for rebuttal? MS. KHACHATOURIAN: Thank you, yes. JUSTICE MIHARA: All right, fine. And Mr. Goldowitz? MR. GOLDOWITZ: Twenty minutes. JUSTICE MIHARA: That's fine. All right, counsel, proceed. +00:01:49 MS. KHACHATOURIAN: Thank you. Good afternoon, Justices. We'd like to point out today some issues that didn't really jump off the pages, we don't believe, in our appeal papers, and also to bring to the court's attention the newly issued Overstock case. This case, in our view, is about Eagle Broadband being a victim of a "short and distort" stock scheme, which is the very stock scheme that was discussed in the Overstock case. ... +00:16:57 JUSTICE MCADAMS: We're losing sight of the fact this is an internet chat room. This is not CNBC. Maybe that's not a good example to use, but it is not a government agency putting out something, or a person who's putting himself/herself out as a position of authority, but, -- this is back-and-forth chatter. +00:17:22 MS. KHACHATOURIAN: But as the declaration of Dee Flaherty and Frederick Reynolds points out, and even the declaration of Mould, the "chat room" is actually a finance message board, off of the Yahoo link, that many people go to to see information, because somehow they think there'll be insider information on it. Mould himself argues that this is a matter of public concern, that it's a public forum, and that that's where people go to discourse about Eagle's financial status, marketing, and such. +00:17:59 JUSTICE MCADAMS: But isn't that a modern version of Hyde Park soap box, that anybody can -- I'm not sure what the rules are in Hyde Park -- essentially anybody can stand up on a soapbox and -- and rant. A free-flowing -- It's a free form without any curtailment. +00:18:17 MS. KHACHATOURIAN: Of course, but the distinction here is that that's not what's going on. We didn't sue because someone called the CEO a clown. We sued because if you look at not only the Mould post, but the Williams post, and then other Does that aren't subject of this appeal, there are false press releases and SEC filings and the like, that look real, that we believe are part and parcel of a scheme to short and distort so that they can reap the benefits of illegal short sales. And it doesn't matter where that is, it doesn't matter if it's on a soapbox. It doesn't matter if it's in a magazine. It doesn't matter where it is. It's false and it is, I would submit, illegal. And that's the line. +00:18:58 If we had sued on "The CEO is a clown", then I wouldn't be here. ... +00:22:24 JUSTICE MCADAMS: What evidence did Plaintiff present of the -- of Mould's -- we'll deal with just Mr. Mould, same question's going to come up in Williams -- that he was engaged in a short-sell scheme? +00:22:39 MS. KHACHATOURIAN: The evidence presented is the declaration of Dee [Deirdre] Flaherty, who was the expert who reviewed Eagle's stock-trading patterns. And what she said was she reviewed Mould's post, that had all the indicia of a short and distort scheme, that had all the indicia of FUD and that on the day of Mould's post, that was the largest decline of Eagle's stock, that day, and in the year period. +00:23:08 And she tied the actual post at issue with declines in stock. And I believe she also showed that if you look at Eagle's trading patterns, there's a lot of short sales that aren't covered. Far more than comparable companies. +00:23:24 So the causal key here for us, without having the benefit of looking at Mould's trading records, because they were not provided to us, and our request for discovery was denied, is that Mould intentionally posted, and that it actually hurt the stock, on that day and going forward. And that it fits the indicia of a short and distort scheme. +00:23:49 And that is sufficient under a minimal-merit burden to move forward. I mean, providing an expert declaration at the beginning of your case is unheard of. +00:24:00 It is illogical to expect a company, without the benefit of any discovery, to establish one hundred percent conclusive damages. That's why Overstock is so helpful here, because the Overstock panel came out and said that you have to show, you know, some type of damage. And no one would dispute that there's been some damage here. But beyond submitting an expert declaration and the declaration of Frederick Reynolds, who said shareholders called him and were complaining because they couldn't buy and sell stock. Beyond the declaration of Dee Flaherty. That is the main evidence that the plaintiff submitted. +00:24:41 JUSTICE MIHARA: All right counsel, thank you. We'll hear from Mr. Goldowitz at this point. Proceed, counsel. +00:24:54 MR. GOLDOWITZ: Thank you. In addition to the grounds that the trial court found for granting the special motion to strike, there's another argument that we think is very important that the trial court didn't address, and that is what was referenced earlier, the specific rule for libel pleading, that one must specifically identify, if not plead verbatim, the words constituting the allegedly defamatory statement. That was not done. +00:25:20 Eagle's complaint here in fact did expressly allege two specific statements, but they never tried to prove that those were false, and those aren't the ones that they're now basing their position on. In fact, one of them wasn't even in the post. +00:25:37 Eagle argues that there should be liberal construction, and the case law allows you to simply attach a document and say "there's some defamatory matter in the attachment", but that's not the case. ... +00:33:15 The facts actually surrounding the stock price and when this was posted, as we set forth in the trial court -- evidence in the trial court that we submitted that was not objected to -- is that before the market opened on the day that Mould's post came, Eagle announced that they were essentially watering down their stock by thirteen percent. They were issuing huge amount of new stock, so it would be logical that there would be major fall in the price of the stock, and there was, but after Eagle's post, the price actually went up. He posted later in the day, and it had fallen twelve and a half percent, thirteen percent, before his post, and the stock actually went up. So there's no -- Even if there was some falsity here, there's no evidence of damages, and you have to have damages. ... +00:37:30 If Eagle was really seriously concerned about this, they could have easily posted corrections to what they thought were false, and instead, they sued people to terrorize people and to shut people up, who were critics of the company, on the eve of a shareholders' meeting. Eagle shouldn't be allowed to do that. Thank you. +00:37:49 JUSTICE MIHARA: Thank you. Khachatourian? +00:37:51 MS. KHACHATOURIAN: Thank you, Justices. Very briefly, a few things ... ... +00:41:45 He's saying, all of a sudden now, after the fact, "this was my opinion. At best it was hyperbolic." Although, you don't see any "In My Opinion" on his post. The disclaimer is the yahoo disclaimer and the legal portion that nobody ever looks at, including myself. You know, he didn't use curse words, he didn't misspell things. I mean, that kind of information goes to whether you're exercising your free speech. The damages portion he decided to submit a declaration -- fine, but our point is that we were denied discovery. We didn't know who this person was. ... +00:43:32 I also wanted to point out malice. There are some cases that say that the malice element is only in the mind of the actual defendant. That that's information that we couldn't have. Also, I'd just like to touch upon the attorneys' fee issue for a moment, if I could, because that's part of the appeal. +00:43:53 JUSTICE MIHARA: Let's not do that at this point. ... +00:44:55 JUSTICE MIHARA: Go ahead. +00:44:57 MR. GOLDOWITZ: The fundamental issue in this appeal is what is a parody, and was Mr. Williams' post a parody. We believe it's very clear, and the trial court erred in not recognizing that. +00:45:06 And that should be clear from both the content and the context of the post. The content, it clearly was not the kind of statement which a publicly traded company would issue, quoting its CEO as saying -- referring to Eagle's continued failures in executing our business plan, continued stagnation, worsening financials, further customer rejection of Eagle's technology and services, the indifference of our employees, and our continued focus on eroding shareholder value. +00:45:40 I can't imagine a company would ever post -- put out a press release saying that, if they wanted to preserve the value of their stock. And, in fact, what Williams had done was merely negative a post -- I'm sorry, the press release from about a year earlier that Eagle itself had put out when it was added to the Russell 3000 Index. ... +00:51:29 Thank you. +00:51:30 JUSTICE MIHARA: Thank you. A response, Mr. Ratinoff? +00:51:38 MR. RATINOFF: Thank you, Good afternoon. ... +00:56:15 JUSTICE DUFFY: Do you think the line right under "Press release", which is "by: Richwill21", might tip the reader off to the fact that it wasn't posted by the company? +00:56:27 MR. RATINOFF: Well, as you'll see on the board usually, people many times will post links or cut and paste press releases and things of that nature. ... +01:01:03 MR. RATINOFF: To say and speculate that a CEO would never make those statements I think is turning a blind eye to the corporate world we live in now, post-Enron. I mean, we've got Steve Jobs, just the other day, apologizing to all the purchasers of Iphones, you know, "Hey, we're sorry we just cut the price", and "Here's a hundred dollar credit to Itunes". Their stock went down. Heh. So, the average investor may read that and say "Wow", you know, "He's probably going to put his neck out there and talk about the company and what's really going on", and you can't sit there and just surmise what a CEO may and may not say in this day and age. There is personal liability for not saying the right thing, in a press release or otherwise. So, I think you need to dismiss that argument. ... +01:05:35 MR. RATINOFF: ... and the fact that it was not viewed as a parody, and the average reader would not view it as a parody. +01:05:39 JUSTICE MIHARA: Counsel, thank you. Mr. Goldowitz, brief rebuttal. +01:05:49 MR. GOLDOWITZ: Several points. ... ... +01:08:36 The trial court should have recognized this was a parody and should have granted the motion. +01:08:39 JUSTICE MIHARA: Thank you. We have one matter left, of course, and that has to do with the attorneys fees appeal, and Ms. Khachatourian, now we'll hear from you. I think a few minutes should do it, don't you think? +01:08:48 MS. KHACHATOURIAN: Yes. Just briefly on the attorney fees issue ... ... +01:11:06 MS. KHACHATOURIAN: So that's what we would ask. +01:11:08 JUSTICE MIHARA: Thank you, counsel. Mr. Goldowitz, response? +01:11:13 MR. GOLDOWITZ: Yes, well, Eagle did not ask for a statement of decision. ... +01:13:13 MR. GOLDOWITZ: So we think that the fee award should be affirmed. +01:13:17 JUSTICE MIHARA: Thank you, counsel. Brief, brief closing. +01:13:20 MS. KHACHATOURIAN: Brief closing. +01:13:22 JUSTICE MIHARA: Go right ahead, counsel. +01:13:24 MS. KHACHATOURIAN: The Serrano case says that if you can't bill something to your client, then you can't bill it to the other side, and that's what we would submit here. You could not bill Williams for Mould work, and vice-versa. And, um, that's it. Thank you. +01:13:43 JUSTICE MIHARA: Well, we enjoyed those arguments, counsel. Thank you for your preparation and your patience this afternoon. This was a long case, was it not, and indeed complicated and I appreciate the good effort. This case stands submitted. You'll have a written decision in ninety days. We stand adjourned. +01:14:00 (Whereupon, the acting presiding justice did strike his gavel) +01:14:05 (End of recording).
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