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Psystar Responds to Apple’s Discovery Allegations, Calls Blogosphere “Rabid”
World of Apple ^ | Monday 4th May, 2009 - 20:19 BST

Posted on 05/05/2009 12:57:38 AM PDT by Swordmaker

Just a little while ago, Psystar filed its response to Apple’s letter brief alleging discovery violations. The letter alleges that Psystar has produced all of the relevant documents in its possession, and it is Apple who has impeded the discovery process by producing reams of irrelevant documentary information. Psystar further alleges that Apple’s request for the Court to compel a supplementary Rule 30(b)(6) deposition was moot at the time that Apple submitted the request to the Court as supplementary dates had already been given to Apple. In many cases, documents sought by Apple simply do not exist since Psystar is a small company with a “continuously changing staff of less than 20 employees.” Psystar asserts:

"Apple’s filing serves no other purpose than to serve as fodder for a blogosphere otherwise rabid for new details on this litigation or to incur unnecessary expense on behalf of Psystar."

That is quite an outburst. While I appreciate the ad hominem attack, I would really like to know how Psystar can prove such motivations on the part of Apple. Apple certainly has ignored my requests for information or clarification so they really don’t seem too hungry to feed this rabid writer.

Here though is the very interesting portion:

"Psystar has produced the financial projections related to its products that exist and that are in its possession or control. Despite Apple’s assumption to the contrary, drafts of the financial projection document that Psystar created to obtain funding do not exist. The document ultimately sent to possible venture capital investors was a work in progress; Psystar did not print and save a hard copy whenever a change to the document was made. Because Apple wants a document to exist does not make it so."

Can anyone say spoliation of evidence? I can. Psystar from the beginning knew that it was acting contrary to Apple and that there was a very good chance that a lawsuit would ensue. Rudy Pedraza made it a point to openly mock and challenge Apple. As such, generally speaking (a qualified attorney would need to give a definitive opinion on this, I am not an attorney), Psystar had a duty to preserve all relevant documentation. Psystar claims that it has retained all of the documentation that it generated since it retained counsel. I wonder: what counsel? This current firm or any counsel? I ask because I find it VERY DIFFICULT to believe that they did not have legal counsel from the beginning to assist them, and I cannot imagine any prior counsel not cautioning them to keep everything.

Now with regard to the supplementary dates for the continuation of a Rule 30(b)(6) deposition and Psystar’s insinuation that Apple filed a letter brief on an issue that was already moot (which would be in bad faith), I believe that Psystar has left out some very important facts. Apple did not merely ask for a Motion to Compel the testimony. It asked for any such costs for this additional deposition to be paid by Psystar. Did Psystar agree to that already? If they didn’t, it is Psystar who is giving incomplete facts to the Court as well as Apple (for if there were already dates on the table, Apple should have disclosed that fact).


TOPICS: Business/Economy; Computers/Internet
KEYWORDS: apple; bestcomputer; macintosh; spamiswindows; spammer
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Transcript of the FAX sent to Judge Alsup by Psystar's attorney...


Carr & Farrell, LLC
Attorneys at Law
2200 GENG ROAD, PALO ALTO, CALIFORNIA 94303
TELEPHONE (650) 812-3400, FACSIMILE (650) 812-3444
www.CarrFerrell.com

VIA ELECTRONIC FILING

Honorable William H. Alsup
United States District Court
450 Golden Gate Avenue
Courtroom 9, 19th Floor
San Francisco, CA 94102

Re: Apple Inc. v. Psystar Corporation (Case No. CV 08-03251 WHA)

Dear Judge Alsup:

Apple Inc. (“Apple”), through its letter dated April 29, 2009, asserts that Psystar Corporation (“Psystar”) has failed to meet its discovery obligations with regard to the production of requested financial information. Apple’s assertion is incorrect as Psystar, a start-up company with a continuously changing staff of less than 20 employees, has made a good faith effort to meet—and has met—all of its obligations to produce responsive documents to Apple. Apple’s request for relief should be denied.

Per the agreement of the parties, Psystar has produced documents on a rolling basis beginning December 5, 2008. Psystar continues to produce documents to Apple on a rolling basis in line with latest documents created or received by Psystar in the month prior to production.1 As of the date of this letter, Psystar has produced all responsive financial documents in its possession. Psystar continues to—and will continue to— produce responsive financial documents in line with its monthly rolling production.

Psystar has also submitted proposed dates to Apple for supplementing deposition testimony on the 30(b)(6) deposition topic related to Psystar's financial information. In that regard, Apple’s motion to compel is moot. Apple was informed of this forthcoming production and identification of dates prior to its filing of the April 29, 2009 letter. Notwithstanding, Apple elected to submit the aforementioned letter to the


1 By comparison, Apple has produced almost exclusively non-responsive documents despite numerous meet and confer sessions on the part of Psystar to streamline Apple’s production to certain keywords. The documents produced by Apple are generally publicly available documents (e.g., screen shots of Psystar’s website) that ignore the scope of Psystar's discovery requests. Absent a January 9, 2009 ‘production’ of publically available copyright and trademark registrations along with copies of decades old litigation pleadings, Apple’s ‘production’ did not even begin in earnest until April 13, 2009.


Hon. William H. Alsup
Re: Apple Inc. v. Psystar Corporation
May 4, 2009
Page Two

Court. Apple’s filing serves no other purpose than to serve as fodder for a blogosphere otherwise rabid for new details on this litigation or to incur unnecessary expense on behalf of Psystar. Such a filing, in either case, is inappropriate.

The Categories of Alleging Missing Documents

Apple complains that Psystar has not produced P&L, balance, and “other” financial statements. As Apple readily admits, Rudy Pedraza, CEO of Psystar, has testified that P&L and balance statements do not exist. As explained during deposition and during meet and confer sessions between counsel, Psystar has not generated any formal monthly/quarterly/yearly profit and loss statements. Psystar did create a financial statement for certain payment processor vendors, such as Gravity Payments, in order to do business with those entities based on receipts and other information that was either on hand or recalled at the time of its creation. Psystar has produced such documents to Apple. Apple has subpoenaed—and received—information from those third-party entities. Apple’s request—regardless of merit—thus seeks to have Psystar reproduce or create ‘from scratch’ information already in Apple’s possession via a third- party production.

Psystar has also produced all of the underlying documentation in its possession, including invoices as well as those related to sales and revenue. Prior to this litigation, some documents were lost during Psystar’s transition to its current office space. Psystar has, however, diligently retained and produced all documents in its possession responsive to Apple’s discovery requests since Psystar retained counsel. Psystar has also produced all of the paper invoices, electronic invoices, electronic receipts and other forms of receipts in its possession.

Psystar has produced the financial projections related to its products that exist and that are in its possession or control. Despite Apple’s assumption to the contrary, drafts of the financial projection document that Psystar created to obtain funding do not exist. The document ultimately sent to possible venture capital investors was a work in progress; Psystar did not print and save a hard copy whenever a change to the document was made. Because Apple wants a document to exist does not make it so.

Unlike Apple, Psystar is a small start-up company with limited resources. Psystar has, due to Apple’s discovery tactics, focused much of those resources on litigation. Most of Psystar’s financial transactions – including customer receipts – occur in electronic form. Psystar does not receive hard copies of its bank statements. Psystar does not unnecessarily create paper documents that exist in electronic form. Psystar has


Hon. William H. Alsup
Re: Apple Inc. v. Psystar Corporation
May 4, 2009
Page Three

not created formal monthly/quarterly/yearly profit and loss statements and is just now beginning to aggregate such information based on the same documents and information that Psystar produced to Apple in this litigation.

Psystar has, however, undeniably met its obligation under the Federal Rules of Civil Procedure and produced all responsive documents in its possession in response to Apple’s discovery requests regarding Psystar’s financial information. Psystar has produced roughly 12,000 pages of documents in response to Apple’s requests – roughly equivalent to the scope of Apple’s limited production prior to the filing of this motion, which will, unfortunately, be the topic of a forthcoming letter from Psystar to this Court.

Psystar has also proposed additional dates for the supplemental 30(b)(6) deposition regarding Psystar’s financial information. Apple’s motion to compel is unnecessary and should be denied. The production that Apple seeks to compel has already been produced to the extent that it exists, and Psystar continues to produce documents on a rolling basis for each successive month.

Very truly yours,

(signature)

Colby B. Springer
Counsel for Psystar Corporation

1 posted on 05/05/2009 12:57:38 AM PDT by Swordmaker
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To: ~Kim4VRWC's~; 1234; 50mm; 6SJ7; Abundy; Action-America; acoulterfan; Aliska; aristotleman; ...
Psystar's response to Apple's demand for financial documents... PING!


Apple v. Psystar Ping!

If you want on or off the Mac Ping List, Freepmail me.

2 posted on 05/05/2009 12:59:14 AM PDT by Swordmaker (Remember, the proper pronunciation of IE is "AAAAIIIIIEEEEEEE!)
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To: All
"Rudy Pedraza, CEO of Psystar, has testified that P&L and balance statements do not exist. As explained during deposition and during meet and confer sessions between counsel, Psystar has not generated any formal monthly/quarterly/yearly profit and loss statements. Psystar did create a financial statement for certain payment processor vendors, such as Gravity Payments, in order to do business with those entities based on receipts and other information that was either on hand or recalled at the time of its creation."

How did Psystar file its Federal and State income Tax Returns for 2008 without a standard P&L??? Are they admitting that the financial statements they provided to financial institutions (payment processor vendors) were false to fact and not a true representation of the financial state of Psystar? Sounds like it to me. How about Florida State Sales tax returns?

3 posted on 05/05/2009 1:05:04 AM PDT by Swordmaker (Remember, the proper pronunciation of IE is "AAAAIIIIIEEEEEEE!)
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To: Swordmaker

It is obvious that Apple is trying to litigate the Pedraza brothers to death by making unreasonable demands from a very small company. Steve can open up his checkbook and sue anyone at any time at any place. The Pedraza brothers are small entrepreneurs thus limited

The court will take this skulduggery into account and rule against the Steve-less rudderless Leviathan


4 posted on 05/05/2009 1:16:31 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: dennisw

Not that obvious. Basically Apple has asked for the financial declarations that all companies must make to the tax authorities. This is *standard procedure* in a lawsuit (I’ve been on both sides of similar suits.)

Psystar is claiming that the standard documentation *does not exist*. So either they’re just a lawsuit factory, they didn’t pay their taxes, or they’re lying.


5 posted on 05/05/2009 1:22:44 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: dennisw

Also, Psystar’s claims that “Apple didn’t provide similar documentation” when that exact set of information they filed for is available off their web site and via business sites. Apple is a publicly traded company - and since the SEC has an eye on them, no way in hell would they try to hide anything now.

Look for Psystar to get slammed in the sanctions hearing tomorrow. This may be all over by then. Judges do not appreciate it when plaintiffs think they’re stupid enough to believe that documents that *must* be submitted to tax authorities to operate “do not exist”.


6 posted on 05/05/2009 1:25:18 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

So either they’re just a lawsuit factory.......

How is someone being sued a lawsuit factory? Anyway they are legit and honorable and the court will rule for them. They pay taxes and they keep books


7 posted on 05/05/2009 1:28:10 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: dennisw

Um... if so, they just lied to the court, so which is it? Do they pay taxes and keep books? If so, they must produce them, now. Or do they not keep books and pay taxes? In that case, they’re an illegal business and are about to lose, bigtime.


8 posted on 05/05/2009 1:29:49 AM PDT by Spktyr (Overwhelmingly superior firepower and the willingness to use it is the only proven peace solution.)
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To: Spktyr

Psystar will come out of this just fine. Apple cannot limit one time installation of its OS on another machine, a clone. When Steve gets back he will be faced with an Argentinian and German clone maker


9 posted on 05/05/2009 4:36:14 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: dennisw
How is someone being sued a lawsuit factory?

More like a lawsuit lightning rod, set up for the purpose of getting the question of OS X on other computers to court. Psystar is hosed if this is ever proven since courts don't take kindly to manufactured lawsuits. And it looks like Psystar has been playing CYA by not keeping any documents around, so it will be difficult to prove.

10 posted on 05/05/2009 5:12:35 AM PDT by antiRepublicrat
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To: Swordmaker
How did Psystar file its Federal and State income Tax Returns for 2008 without a standard P&L?

One can assume a P&L statement does exist, but Psystar does not want it made public. My bet is it would show Psystar is a front group funded by another company.

11 posted on 05/05/2009 5:54:37 AM PDT by 6SJ7 (atlasShruggedInd: ON)
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To: 6SJ7
One can assume a P&L statement does exist, but Psystar does not want it made public. My bet is it would show Psystar is a front group funded by another company.

I highly doubt that. They are struggling entrepreneurs just like the two Steves were who founded Apple. Steve Jobs secretly admires their verve and tenacity

Someone might be paying Psystar's Sunnyvale lawyer who is a good one. But even if M$ is paying legal fees that just makes it a fair fight, levels the playing field against the Steve Jobs wrecking crew

12 posted on 05/05/2009 6:11:40 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: antiRepublicrat

Psystar has a great lawyer who knows his way around Silicon Valley. Apple is in for a spanking


13 posted on 05/05/2009 6:13:24 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: Spktyr
Do they pay taxes and keep books?

How many sets?

14 posted on 05/05/2009 7:34:45 AM PDT by steve-b (Intelligent design is to evolutionary biology what socialism is to free-market economics.)
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To: dennisw
Psystar has a great lawyer who knows his way around Silicon Valley. Apple is in for a spanking

Hmmmm, small start-up is able to afford a top-notch legal team capable of taking down Apple. You are helping the theory that this is a straw lawsuit funded by another larger company behind the scenes.

15 posted on 05/05/2009 7:45:56 AM PDT by antiRepublicrat
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To: dennisw
Steve Jobs secretly admires their verve and tenacity

I highly doubt that. Jobs and Woz built their company on inventing and marketing groundbreaking technology. These guys are slapping together standard boxes and putting Jobs' OS on them. There might be some cajones to admire if this weren't likely funded behind the scenes, if it were just a small businessman up against Goliath.

16 posted on 05/05/2009 7:49:37 AM PDT by antiRepublicrat
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To: dennisw
It is obvious that Apple is trying to litigate the Pedraza brothers to death by making unreasonable demands from a very small company. Steve can open up his checkbook and sue anyone at any time at any place. The Pedraza brothers are small entrepreneurs thus limited

Oh, BS, Dennis. A P&L and a Balance Sheet are not "unreasonable demands." Any small business should be able to produce either of those on a moment;s notice. Are you telling me that this computer company doesn't know how to use Quickbooks???

You are just being confrontational because you have an irrational dislike of Apple for some reason.

17 posted on 05/05/2009 7:52:32 AM PDT by Swordmaker (Remember, the proper pronunciation of IE is "AAAAIIIIIEEEEEEE!)
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To: Spktyr
Psystar is claiming that the standard documentation *does not exist*. So either they’re just a lawsuit factory, they didn’t pay their taxes, or they’re lying.

You forgot to add: or some combination of the three.

18 posted on 05/05/2009 8:36:28 AM PDT by kevkrom
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To: antiRepublicrat
Psystar has a great lawyer who knows his way around Silicon Valley. Apple is in for a spanking

Hmmmm, small start-up is able to afford a top-notch legal team capable of taking down Apple. You are helping the theory that this is a straw lawsuit funded by another larger company behind the scenes.

You have it backwards
Some deep pockets (Gates, Balmer, who knows?) may be helping out Psystar to defend themselves against this frivolous lawsuit
The little guy deserves just as good legal representation as Apple

19 posted on 05/05/2009 8:36:39 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: Swordmaker

Get real. The Pedraza brothers books have nothing to do with the lawsuit at hand. This is a fishing expedition.There are no clandestine funders of Psystar. Except perhaps paying some of their legal bills making it a fair fight

As far as day today operations of PsyStar? Get real. IIRC correctly they operate out of a low cost industrial garage type of complex.The kind with the roll up steel garage doors


20 posted on 05/05/2009 8:41:51 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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