Status Report and Suggestion for Further Proceedings

Remember when we pointed out Linhardt's potential witness list at any upcoming damages hearing?

Here, let me refresh your memory:

People will think that this is a loss for Spamhaus, and maybe you can see it like that, but it's a much larger loss for e360. Now, their damages are capped. And, in trying to justify the $11.2 million in damages that they can still try to prove up, they can't call upon any of the 16 newly named people to support their case. That will make it more difficult to prove what's left of their case.

[UPDATE: Here's the list of people that he can call at the damages hearing as a witness: Dave Linhardt.

Here is the answer to Interrogatory #2 (people with knowledge of relevant facts): Dave Linhardt ("Linhardt"); counsel for e360 and Linhardt; Virgil Smith; Robert Horn; Mike Klein; Andrew Canellos; Jeff Nulsen; John Wright; Brian Haberstroh; Bill Farrell; John Rudnick; Darren Green; Michael Girard; Jerrold Son; Laura Cruz; Thomas Honec; Lynn Hoover; and Steve Chisholm

Here is the answer to Interrogatory #3 (people who may be called as witnesses by the Plaintiff): Dave Linhardt; Virgil Smith; Robert Horn; Mike Klein; Andrew Canellos; Jeff Nulsen; John Wright; Brian Haberstroh; Bill Farrell; John Rudnick; Darren Green; Michael Girard; Jerrold Son; Laura Cruz; Thomas Honec; Lynn Hoover; and Steve Chisholm

Now, start at the back of those lists and count off 16. Whoever is left may be called as a witness.]

Yeah? Remember that now?

Well, here's Spamhaus pointing that out to the judge, along with Linhardt's admission that the $11 million dollar judgment is "inaccurate" and that he is not an expert on legal damages.

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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

e360 INSIGHT, LLC, an Illinois Limited
Liability Company, and DAVID LINHARDT,
an individual,
Plaintiffs,

v.

THE SPAMHAUS PROJECT, a company
limited by guarantee and organized under the
laws of England, a/k/a THE SPAMHAUS
PROJECT, LTD.,
Defendant.

DEFENDANT THE SPAMHAUS PROJECT’S
STATUS REPORT AND SUGGESTIONS FOR FURTHER PROCEEDING

Defendant The Spamhaus Project (“Spamhaus”) respectfully submits this status report and suggestions for further proceeding in light of the Court’s directive on October 30, 2008 that the parties return for a “definitive final schedule for the resolution of this case.” (10/30/08 Tr. at 6.)

1. Status.

As Your Honor knows, this case is before the Court for prove-up of damages on the default finding of liability entered by the Court. Between November 2007 and December 1, 2008, Spamhaus diligently pursued the fact discovery necessary to defend that damages claim against dilatory and contemptuous conduct by the Plaintiffs. In the process of fact discovery, the Court granted two motions to compel against Plaintiffs, and awarded Spamhaus its fees for bringing a motion to dismiss after Plaintiffs defaulted on the second order compelling production. Spamhaus finally was able to take the deposition of David Linhardt and the Rule
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30(b)(6) deposition of plaintiff e360 Insight LLC on November 10 and 11, 2008. The deadline for plaintiffs to identify expert witnesses passed on April 28, 2008, with no reports served, and the only “expert” identified was the individual plaintiff himself, David Linhardt. No deadline was set for Spamhaus to identify its expert witnesses, as the Court preferred to allow the parties to determine whether that was necessary. Fact discovery in this case has now closed.

2. Spamhaus’ Suggestions For Proceeding.

Spamhaus respectfully suggests that this case can and should be resolved in its favor on motion, without the need for a live evidentiary hearing. Spamhaus’ suggestion is based on the following discrete facts that are not in any dispute:

• Plaintiffs do not claim any liquidated or out-of-pocket damages.

• Plaintiffs’ damages claims are all purportedly based on estimated future lost revenues and their purported effect on business value, all of which must be proven to a “reasonable certainty.”

• The only support for Plaintiffs’ future lost revenues and business value claim is the testimony of individual plaintiff David Linhardt.

• Linhardt admitted at his deposition that he is not an expert on legal damages, on projecting lost profits, or on company valuations.

• Linhardt also admitted at his deposition that he considered the $11.7 million damages request to not be “accurate” (11/10/08 Tr. at 258-59), but relied on a subsequent method he used to arrive at a number exceeding $136 million, even though the Court has barred that subsequent method and higher damages number for discovery defaults under Rule 37.

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Consequently, Spamhaus believes that the admissions at Linhardt’s deposition preclude him from offering expert testimony on damages under Federal Rule of Evidence 702, and without that testimony, Plaintiffs have no proof of damages.

In light of these facts, Spamhaus suggests the following schedule to resolve the issue on the papers or, if the Court deems it necessary, by evidentiary hearing:

December 9, 2008 Spamhaus to file motion to exclude all testimony regarding damages by Linhardt under Rule 37 and Federal Rule of Evidence 702 and motion for summary judgment
January 5, 2009 Plaintiffs to respond to Spamhaus motions
January 19, 2009 Spamhaus to make Rule 26(a)(2) expert disclosure
January 26, 2009 Spamhaus to reply in support of motions
February 28, 2009 Plaintiffs to complete deposition of Spamhaus expert(s)
April 1, 2009 Pretrial order due (if the Court desires)
April 2009 or after Damages hearing at the Court’s convenience (if necessary)

Respectfully submitted,

THE SPAMHAUS PROJECT

Dated: December 1, 2008

By: s/ David Jiménez-Ekman

Craig C. Martin
David Jiménez-Ekman
Chad Emerson Bell
JENNER & BLOCK LLP
330 North Wabash Avenue
Chicago, IL 60611
Telephone: (312) 222-9350
Facsimile: (312) 527-0484

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[file] StatusReport4.pdf12/02/08 12:57 pm23.68 KB