Addamax Corp and its law firm Kelley Drye & Warren are moving to impede any restructuring of assets by the Open Software Foundation before Addamax’s potentially $100m antitrust suit against the Foundation is resolved. Addamax’s action was touched off by reports that the powers-that-be may attempt to slide the Foundation assets into NewOrg, the new consortium they are currently negotiating to set up, and leave behind as so much baggage whatever liabilities they can. In a letter sent on October 28 to 11 chief executives, including the heads of Digital Equipment Corp and Hewlett-Packard Co, who are also named in the suit, as well as Fujitsu Ltd, Hitachi Ltd, ICL Plc, Novell Inc, NCR Corp, Santa Cruz Operation Inc, SunSoft, Unisys Corp and IBM Corp, Champaign, Illinois-based Addamax asserts its rights as a creditor to be informed of any plans or transactions being considered that would affect the Foundation’s assets or operations. It also demands that it be apprised of any such plans or actions on an on-going basis. The letter advises the chief executives that any restructuring or transaction is fraudulent to the extent that it in any manner frustrates the capacity of Addamax, or any other creditor of the Foundation, to realise on its claims against the Foundation, and such restructurings or transactions are subject to attack as fraudulent transfers.
In the event of such action, liability on behalf of the Foundation, as well as its officers and directors, will be pursued fully to the extent of applicable law. The Federal Court in Massachusetts also last week finally ruled on a motion lodged by Addamax some months ago to disqualify Hale & Dorr as the Open Software Foundation’s legal counsel because of an alleged attempt by one of its partners, Charles Gray, to suborn a witness in the antitrust suit. The court stopped short of disqualifying Hale & Dorr but did formally turn the issue over to the Board of Bar Overseers in Boston. Gray could be disbarred or suspended from the practice of law for a time. Addamax filed its motion after it learned that Gray had attempted to induce David Andrus, the chairman of Netwise Inc and a key Addamax witness, to change his sworn testimony in return for the Foundation and Hale & Dorr dropping a subpoena commanding the production of documents that Netwise’s own counsel complained was overbroad, unduly burdensome and designed to harass because the documents were irrevelant, privileged and constituted in part confidential business information.
By Maureen O’Gara
Andrus, whose firm had participated in the Distributed Computing Environment Request For Technology, had previously testified that during the Request process Netwise heard from both the Foundation members and independent sources that the DCE RFT was ‘wired’ in favour of the sponsor’s technology. He also testified that the Distributed Computing Environment Technology Criteria document, defining the specifications of the technology to be acquired, was drafted by a committee dominated by the Foundation sponsors and was skewed in favour of the sponsors’ DCE technology offering. Andrus also alleged in his affidavit that subsequently the Foundation announced a pricing model for DCE technology in which it carried out its threat to price this technology far below its market value. As a result, Netwise and other indpendent software vendors have been substantially foreclosed from the market for DCE technology. In a letter dated October 21 1992 Grey wrote the Foundation would prefer to avoid seeking extensive discovery from Netwise to defend the suit brought by Addamax. One way for Netwise to obviate the need to produce documents relating to its products would be to persuade Addamax to drop its allegations concerning Netwise and the Distributed Computing Environment (‘DCE’) selection process. Alternatively, the Foundation might agree to withdraw its request for these documents if Netwise were willing to sign an affidavit recanting the testimony of Mr Andrus in his affidavit. For example, in lieu of the documents requeste
d, the Foundation would accept an affidavit from Mr Andrus stating in substance that he has no evidence of bias or unfairness in the Foundation’s selection process and that the Foundation in fact did not destroy Netwise’s market for its RPC technology. Adrus would not change his testimony and also resisted the subpoena. The Foundation moved to compel and a hearing on its motion was held in the US District Court in Denver before Judge Edward Nottingham who said he found Grey’s conduct shocking and on the cusp of suborning perjury and admonished Grey for writing the letter describing it as close to the line but granted his motion to compel.
Grey claimed that Hale & Dorr had substantial evidence that Andrus’s first affidavit was false and suggested that Addamax, Netwise and Sun Microsystems were basically in cahoots to put the Foundation out of business. Federal Judge Robert Collings last week called Grey’s conduct troubling and, at a minimum, gives the appearance of heavy-handedness. At its worst, the conduct evidences a specific intent to pressure a witness to change testimony given under oath by offering to withdraw a subpoena duces tecum which the witness at least viewed as extremely burdensome and costly. Grey may well have trodden periously close to or even crossed the line of propriety, the judge said, adding that he did not disqualify Hale & Dorr because the Foundation relied on it so heavily, claiming its defence would be crippled perhaps irreparably if it were to lose them as counsel, particularly at this stage in the case. He also drew back from prejudicing the Foundation’s case further. Collings noted at the beginning of his decision that the disqualification motion alone had created three inches of paperwork for his court, indicative, he said, not only of the gravity of the issue but the intensity with which this entire case has been litigated.