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Netscape Communications Corporation et al v. Federal Insurance Company et al Doc.

92
Case 5:06-cv-00198-JW Document 92 Filed 02/09/2007 Page 1 of 13

1 SARA M. THORPE (SBN 146529)


sthorpe@gordonrees.com
2 D. CHRISTOPHER KERBY (SBN 124546)
ckerby@gordonrees.com
3 GORDON & REES LLP
Embarcadero Center West
4 275 Battery Street, Suite 2000
San Francisco, CA 94111
5 Telephone: (415) 986-5900
Facsimile: (415) 986-8054
6
Attorneys for Defendant ST. PAUL MERCURY INSURANCE COMPANY
7

8 UNITED STATES DISTRICT COURT

9 NORTHERN DISTRICT COURT OF CALIFORNIA


10 SAN JOSE DIVISION

11 NETSCAPE COMMUNICATIONS ) CASE NO. 5:06-CV-00198 JW (PVT)


CORPORATION, a Delaware corporation; and )
12 AMERICAN ONLINE, INC., a Delaware ) ST. PAUL’S OBJECTIONS TO AND
corporation, ) MOTION TO STRIKE EVIDENCE IN
275 Battery Street, Suite 2000

13 ) PLAINTIFFS’ CROSS-MOTION FOR


San Francisco, CA 94111

Plaintiffs, ) PARTIAL SUMMARY JUDGMENT


Gordon & Rees LLP

14 vs. ) AND OPPOSITION


)
15 FEDERAL INSURANCE COMPANY, an ) Date: March 26, 2007
Indiana corporation, et al., ) Time: 9:00 a.m.
16 ) Judge: Honorable James Ware
Defendants. ) Courtroom: 8, 4th Floor, San Jose
17 )
)
18 )

19 Defendant St. Paul Mercury Insurance Company (“St. Paul”) hereby objects to and

20 moves to strike, pursuant to Federal Rule of Evidence 103(a)(1), the following evidence

21 presented by plaintiffs America Online Inc. and Netscape Communications Corp. (collectively,

22 “AOL” or “plaintiffs”) in connection with plaintiffs’ cross-motion for partial summary judgment

23 and its opposition to St. Paul’s motion for partial summary judgment.

24 Plaintiffs’ proffered evidence violates the Federal Rules of Evidence (“FRE”) and

25 Federal Rules of Civil Procedure (“FRCP”). Accordingly, this Court should not consider this

26 evidence in deciding St. Paul’s motion or plaintiffs’ cross-motion. Hollingsworth Solderless

27 Terminal Co. v. Turley, 622 F.2d 1324, 1335 n.9 (9th Cir. 1980) (only admissible evidence

28 properly considered by trial court in granting summary judgment).

1 CASE NO. 5:06-CV-00198 JW (PVT)


TRAV/1036622/1131951v.2
ST. PAUL’S OBJECTIONS TO AND MOTION TO STRIKE EVIDENCE IN
PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION
Dockets.Justia.com
Case 5:06-cv-00198-JW Document 92 Filed 02/09/2007 Page 2 of 13

1 Proffered Evidence/Grounds For Objection

2 1. Marc Patterson Declaration


3 St. Paul objects to and moves to strike the Declaration of Marc Patterson in its entirety.

4 Inadmissible, undisclosed expert: FRCP 26(a), 26(e), 37(c)(1). AOL did not disclose

5 Patterson as an expert pursuant to FRCP 26(a) or 26(e). Absent such disclosure, AOL is not

6 permitted to offer Patterson’s declaration in connection with plaintiffs’ motion and opposition.

7 FRCP 37(c)(1) (“A party that without substantial justification fails to disclose information

8 required … is not … permitted to use as evidence … at a hearing, or on a motion any witness or

9 information not so disclosed.”) (emphasis added); Trost v. Trek Bicycle Corp., 162 F.3d 1004,
10 1008 (8th Cir. 1998) (excluding expert declaration under FRCP 37(c)(1) because of party’s

11 failure to disclose prior to motion for summary judgment). Thus, Patterson’s Declaration should

12 be stricken in its entirety.


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13 Irrelevant, not proper expert witness testimony: FRE 401, 402, 702. Expert testimony is
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14 not permitted on a question of law for the court to decide. McHugh v. United Serv. Auto. Ass'n,

15 164 F.3d 451, 463 (9th Cir. 1999) (experts’ testimony cannot be used to provide legal meaning

16 or interpret insurance policies); Crow Tribe of Indians v. Racicot, 87 F.3d 1039, 1045 (9th Cir.

17 1996) (expert testimony is not proper for issues of law, like contract interpretation); Flintkote Co.

18 v. Gen. Accident Assur. Co. of Can., 410 F.Supp.2d 875, 885 (N.D. Cal. 2006) (expert testimony

19 inadmissible to establish meaning of language in an insurance policy); Cooper Companies v.

20 Transcontinental Ins. Co., 31 Cal.App.4th 1094,1100 (Cal.App. 1995) (“meaning of the policy is

21 a question of law about which expert opinion testimony is inappropriate”); Chatton v. National

22 Union Fire Ins. Co., 10 Cal.App.4th 846, 865 (Cal.App. 1992) ("opinion evidence is completely

23 irrelevant to interpret an insurance contract"); Suarez v. Life Ins. Co. of North America, 206

24 Cal.App.3d 1396, 1406-07 (Cal.App. 1988) (trial court did not abuse discretion in ruling expert

25 testimony from linguistics professor on meaning of policy’s terms was inadmissible).

26 Irrelevant: FRE 401, 402. Patterson’s testimony is offered on the subject of the meaning

27 of online activities and internet access in the Online Activities Exclusion that St. Paul and AOL
28 negotiated and whether the function of the SmartDownload product falls within that definition.
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1 Patterson was not involved in the negotiation of St. Paul’s policy language. There is no evidence

2 the parties involved in negotiating the exclusion consulted any technical information about the

3 Internet or used anything other than their common sense meaning in the words they chose. See,

4 e.g., Ex. 36, 37, 21, 22, 23, 24. Patterson is attempting to interject technical meaning into an

5 exclusion that is not based upon any technical explanation.

6 Lack of personal knowledge: FRE 602. Patterson has no personal knowledge of

7 SmartDownload or of the creation of the Online Activities Exclusion. While he states he

8 reviewed data and information regarding it, Patterson never states he actually used the

9 SmartDownload function. He does not indicate he has read the allegations of the complaints in
10 the class action suits or is familiar with the claims. His testimony is at odds with AOL’s own

11 description of SmartDownload as a product that assisted Internet users so as to avoid interrupted

12 Internet access. See, e.g., Exs. 220, 231. His testimony is at odds with the parties’ statements of
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13 their intentions at the time of contracting. Exs. 36, 37, 21, 22, 23, 24.
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14 2. Patrick Carome Declaration


15 St. Paul objects to and moves to strike the Declaration of Patrick Carome in its entirety.

16 Irrelevant: FRE 401, 402. The Carome Declaration (“Carome Decl.”) is presented in

17 support of plaintiffs’ “making known” argument. (AOL Brf. at 5, 6, 22.) The Declaration is

18 irrelevant under both Virginia and California law. Under Virginia law, the duty to defend is

19 determined from the four corners of the complaint. An insurer’s obligation to defend an action

20 “depends on comparison of the policy language with the underlying complaint to determine

21 whether the claims alleged [in the complaint] are covered by the policy.” Resource Bankshares

22 Corp. v. St. Paul Mercury Ins. Co. 407 F.3d 631, 636 (4th Cir. 2005) (applying Va. law); America

23 Online, Inc. v. St. Paul Mercury Ins. Co., 347 F.3d 89, 93 (4th Cir. 2003) (applying Va. law).

24 Even if California law were to apply, the Declaration is still irrelevant. California law

25 requires the insurer to take into account facts known or readily available to it at the time of

26 tender. Waller v. Truck Ins. Exch. Inc., 44 Cal.Rptr.2d 370, 378 (Cal. 1995); Safeco Ins. Co. v.

27 Parks, 19 Cal.Rptr.3d 17, 27 (Cal.App. 2004); Gunderson v. Fire Ins. Exchange, 44 Cal.Rptr.2d
28 272, 277 (Cal.App. 1995). Once an insurer denies a claim, the insurer does not have a
3 CASE NO. 5:06-CV-00198 JW (PVT)
ST. PAUL’S OBJECTIONS TO AND MOTION TO STRIKE EVIDENCE IN
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1 continuing duty to investigate to see if anything changes that might create a potential for

2 coverage. Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277. The duty to defend

3 is not judged by information the insured provides after the claim is resolved and it sues its

4 insurer. Safeco, 19 Cal.Rptr.3d at 27; Haggerty v. Fed. Ins. Co., 32 Fed.Appx. 845, 848 n. 4 (9th

5 Cir. 2002).

6 The Declaration is also irrelevant for the reasons set forth below as to the specific

7 exhibits attached to the Declaration.

8 Hearsay: FRE 801, 802. Carome’s testimony regarding what theories plaintiffs were

9 pursuing in the class actions is hearsay since that testimony is presented for the truth that those
10 statements were made and actions taken.

11 Misleading, incomplete, incorrect testimony: FRE 403. Carome’s testimony regarding

12 what plaintiffs were alleging in the class actions is not only contrary to the allegations in the
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13 complaints (see, e.g., Ex. 129), but also contrary to pleadings AOL filed in the class actions
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Gordon & Rees LLP

14 which argued the claimants were not contending there had been any sharing of private

15 information (see, Ex. 217). Indeed, class plaintiffs’ counsel irrefutably indicated that class

16 plaintiffs were not alleging there had been use of the stolen private information, because class

17 plaintiffs did not need to allege this in order to prove a violation of the criminal statutes. Ex. 226

18 (at NET/SDL 0004140).

19 3. PowerPoint Settlement Presentation, Ex. H to Carome Decl.


20 Irrelevant: FRE 401, 402. The PowerPoint presentation is relied on by plaintiffs for

21 their “making known” argument. (See, e.g., AOL Brf. at 6, n. 28.) The PowerPoint is irrelevant

22 under Virginia law because the duty to defend is determined from the four corners of the

23 complaint. Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent California

24 law applies, the PowerPoint is also irrelevant because it was not provided to St. Paul at the time

25 of tender or at any time during the class action suits; it was not provided until this coverage

26 lawsuit. Thus, it is not evidence that is proper for consideration on the duty to defend. Waller,

27 44 Cal.Rptr.2d at 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277;


28 Haggerty, 32 Fed.Appx. at 848, n. 4.
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1 Hearsay: FRE 801, 802. The PowerPoint is inadmissible hearsay since it is presented for

2 the truth that those statements were made and actions taken.

3 Misleading: FRE 403. Plaintiffs suggest the PowerPoint indicates there was a claim of

4 injury from disclosure of private information, but the PowerPoint does not say that. At the most

5 it can only be said to suggest AdForce was capable of using user’s information. The class

6 plaintiffs were not in fact making any claim for injury from the disclosure of private information

7 and plaintiffs’ own witness, Park, testified that no private information was given to AdForce.

8 Ex. 229 (at NET/SDL 0006529-6527, 6429, 6430).

9 4. @stake, Ex. J to Carome Decl.


10 Irrelevant: FRE 401, 402. This document is apparently presented for the purpose of

11 plaintiffs’ choice of law argument. (AOL Brf. at 4, n. 11; at 5, n. 15.) Plaintiffs argue the

12 document shows SmartDownload was distributed to users from Netscape’s servers in California
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13 and certain electronic data was transmitted to and stored on Netscape’s services in California.
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Gordon & Rees LLP

14 All of this is irrelevant. The relevant factors are where the named insured (AOL) and St. Paul

15 negotiated and issued this insurance policy, that the claims were to be handled through AOL’s

16 office, and that AOL has already selected a jurisdiction to interpret this very insurance contract.

17 Cal. Civ. Code § 1646. The state that has those type of contacts and has the greatest interest in

18 this coverage dispute is Virginia (not California).

19 5. David Park Declaration


20 St. Paul objects to and moves to strike the Declaration of David Park in its entirety.

21 Making known testimony irrelevant: FRE 401, 402. Park’s Declaration (“Park Decl.”) is

22 presented for the purpose of plaintiffs’ “making known” argument. (AOL Brf. at 5, 6, 14, 22.)

23 Park’s testimony is irrelevant under Virginia law because the duty to defend is determined from

24 the four corners of the complaint. Resource, 407 F.3d at 636; America Online, 347 F.3d at 93.

25 To the extent California law applies, Park’s testimony is also irrelevant because it was not

26 provided to St. Paul at the time of tender or at any time during the class action suits; it was not

27 provided until this coverage lawsuit. Thus, it is not evidence that is proper for consideration on
28 the duty to defend. Waller, 44 Cal.Rptr.2d at 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44
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1 Cal.Rptr.2d at 277; Haggerty, 32 Fed.Appx. at 848, n. 4. The Declaration is also irrelevant for

2 the reasons set forth below as to the specific exhibits and deposition testimony attached to the

3 Declaration.

4 Choice of law testimony irrelevant: FRE 401, 402. To the extent AOL is relying upon

5 Park’s testimony for its choice of law argument, the testimony is irrelevant to the factors this

6 Court should consider. (AOL Brf. at 4.) Where Park was working and where Netscape is

7 located has no relevance to this insurance coverage dispute. The relevant factors are where the

8 named insured (AOL) and St. Paul negotiated and issued this insurance policy, that the claims

9 were to be handled through AOL’s office, and that AOL has already selected a jurisdiction to
10 interpret this very insurance contract. Cal. Civ. Code § 1646. The state that has those type of

11 contacts and has the greatest interest in this coverage dispute is Virginia (not California).

12 6. Augusta Feature Plan, Ex. A to Park Decl.


275 Battery Street, Suite 2000

13 Irrelevant: FRE 401, 402. This document is apparently presented for the purpose of
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14 plaintiffs’ “making known” argument. (AOL Brf. at 5, 22.) The memo is irrelevant under

15 Virginia law because the duty to defend is determined from the four corners of the complaint.

16 Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent California law

17 applies, the memo is also irrelevant because it was not provided to St. Paul at the time of tender

18 or at any time during the class action suits; it was not provided until this coverage lawsuit. Thus,

19 it is not evidence that is proper for consideration on the duty to defend. Waller, 44 Cal.Rptr.2d at

20 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277; Haggerty, 32 Fed.Appx. at

21 848, n. 4.

22 7. Sept. 19, 1998 Memo, Ex. B to Park Decl.


23 Irrelevant: FRE 401, 402. This memo is apparently presented in support of plaintiffs’

24 “making known” argument. (No specific mention in AOL Brf.) The memo is irrelevant under

25 Virginia law because the duty to defend is determined from the four corners of the complaint.

26 Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent California law

27 applies, the memo is also irrelevant because it was not provided to St. Paul at the time of tender
28 or at any time during the class action suits; it was not provided until this coverage lawsuit. Thus,
6 CASE NO. 5:06-CV-00198 JW (PVT)
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1 it is not evidence that is proper for consideration on the duty to defend. Waller, 44 Cal.Rptr.2d at

2 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277; Haggerty, 32 Fed.Appx. at

3 848, n. 4.

4 8. Park Deposition Testimony, Ex. C to Park Decl.


5 Irrelevant: FRE 401, 402. The deposition testimony of Park used by plaintiffs to support

6 their “making known” argument is irrelevant. (AOL Brf. at 4, 5, 22.) Park’s testimony is

7 irrelevant under Virginia law because the duty to defend is determined from the four corners of

8 the complaint. Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent

9 California law applies, the testimony is also irrelevant because it was not provided to St. Paul at
10 the time of tender or at any time during the class action suits; it was not provided until this

11 coverage lawsuit. Thus, it is not evidence that is proper for consideration on the duty to defend.

12 Waller, 44 Cal.Rptr.2d at 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277;


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13 Haggerty, 32 Fed.Appx. at 848, n. 4.


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14 Misleading, incomplete: FRE 403. The excerpts from Park’s deposition are misleading

15 and incomplete because they are offered to suggest there was evidence of possible disclosure of

16 private information to an advertising agency, AdForce. However, there is no evidence the class

17 plaintiffs were ever alleging injury from the disclosure of private information to a third party. In

18 fact, Park testified at his deposition that there was no disclosure of private information to third

19 parties. Ex. 229 (at NET/SDL 0006529-6527, 6429, 6430). Park testified the use of

20 SmartDownload for advertising purposes was an idea that was not executed upon because of loss

21 of focus and lack of resources. See, Ex. 229 (at NET/SDL 0006419). There also was nothing

22 nefarious about AOL’s use of AdForce: AdForce was providing banner ads that ran while a

23 person was downloading information. Ex. 229 (at NET/SDL 0006469-6470).

24 9. Software Requirements Spec. for NSDA, Ex. D to Park Decl.


25 Irrelevant: FRE 401, 402. This exhibit is apparently presented for the purpose of

26 plaintiffs’ “making known” argument. (AOL Brf. at 5, n. 14.) The exhibit is irrelevant under

27 Virginia law because the duty to defend is determined by the four corners of the complaint.
28 Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent California law
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1 applies, the exhibit is also irrelevant because it was not provided to St. Paul at the time of tender

2 or at any time during the class action suits; it was not provided until this coverage lawsuit. Thus,

3 it is not evidence that is proper for consideration on the duty to defend. Waller, 44 Cal.Rptr.2d at

4 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277; Haggerty, 32 Fed.Appx. at

5 848, n. 4.

6 10. Augusta Feature Plan, Ex. E to Park Decl.


7 Irrelevant: FRE 401, 402. This exhibit is apparently presented for the purpose of

8 plaintiffs’ “making known” argument. The exhibit is irrelevant under Virginia law because the

9 duty to defend is determined from the four corners of the complaint. Resource, 407 F.3d at 636;
10 America Online, 347 F.3d at 93. To the extent California law applies, the exhibit is also

11 irrelevant because it was not provided to St. Paul at the time of tender or at any time during the

12 class action suits; it was not provided until this coverage lawsuit. Thus, it is not evidence that is
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13 proper for consideration on the duty to defend. Waller, 44 Cal.Rptr.2d at 378; Safeco, 19
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14 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277; Haggerty v. Fed. Ins. Co., 32 Fed.Appx.

15 848, n. 4.

16 11. Sept. 30, 1998 Memo, Ex. F to Park Decl.


17 Irrelevant: FRE 401, 402. This memo is apparently presented for the purpose of

18 plaintiffs’ “making known” argument. (No specific mention in AOL Brf.) The memo is

19 irrelevant under Virginia law because the duty to defend is determined from the four corners of

20 the complaint. Resource, 407 F.3d at 636; America Online, 347 F.3d at 93. To the extent

21 California law applies, the memo is also irrelevant because it was not provided to St. Paul at the

22 time of tender or at any time during the class action suits; it was not provided until this coverage

23 lawsuit. Thus, it is not evidence that is proper for consideration on the duty to defend. Waller,

24 44 Cal.Rptr.2d at 378; Safeco, 19 Cal.Rptr.3d at 27; Gunderson, 44 Cal.Rptr.2d at 277;

25 Haggerty, 32 Fed.Appx. at 848, n. 4.

26 12. Dan Weiss Deposition Testimony


27 “Making known” testimony irrelevant: FRE 401, 402. Weiss’ testimony regarding the
28 meaning of “making known” is irrelevant. (AOL Brf. at 15, n. 59 [Weiss 76:17-77:14]; AOL
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1 Brf. at 21, n. 73 [Weiss 282:15-283:9].) Interpretation of policy language is a question of law for

2 the court to decide. Pilot Life Ins. Co. v. Crosswhite, 145 S.E.2d 143, 146 (Va. 1965); Seabulk

3 Offshore, Ltd. v. American Home Assur. Co., 377 F.3d 408, 418 (4th Cir. 2004) (applying Va.

4 law); Waller, 44 Cal.Rptr.2d at 378; Palmer v. Truck Ins. Exch., 90 Cal.Rptr.2d. 647, 652 (Cal.

5 1999). The policy language should be interpreted as to its plain meaning. Id.

6 Irrelevant, misleading: FRE 401, 402, 403. To the extent the testimony was based upon

7 incomplete hypotheticals and assumed facts not then or now in evidence, the testimony is

8 irrelevant and misleading.

9 13. Dale Evensen Deposition Testimony


10 “Making known” testimony irrelevant: FRE 401, 402. Evensen’s testimony as to the

11 meaning of the “making known” provision is irrelevant. (AOL Brf. at 15, n. 58 [Evensen

12 134:14-17]; AOL Brf. at 16, n. 63 [Evensen 232:7-233:6, 233:19-234:2].) Interpretation of


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13 policy language is a question of law for the court to decide. Pilot, 145 S.E.2d at 146; Seabulk,
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14 377 F.3d at 418; Waller, 44 Cal.Rptr.2d at 378; Palmer, 90 Cal.Rptr.2d at 652. The policy

15 language should be interpreted as to its plain meaning. Id.

16 Irrelevant: FRE 401, 402, 403. To the extent the testimony was based upon incomplete

17 hypotheticals and assumed facts not then or now in evidence, the testimony is irrelevant and

18 misleading.

19 Online Activities Exclusion testimony irrelevant: FRE 401, 402. Evensen’s testimony as

20 to the meaning of the “internet access” portion of the Online Activities Exclusion is irrelevant.

21 (AOL Brf. at 28, n. 101 [Evensen 182:19-23]; AOL Brf. at 28, n. 102 [Evensen 180:12-182:14];

22 AOL Brf. at 28, n. 103 [Evensen 184:1-15].) Interpretation of policy language is a question of

23 law for the court to decide. Pilot, 145 S.E.2d at 146; Seabulk, 377 F.3d at 418; Waller, 44

24 Cal.Rptr.2d at 378; Palmer, 90 Cal.Rptr.2d at 652. The language should be interpreted as to its

25 plain meaning. Id. If there is any ambiguity, the court should consider the parties’ mutual

26 intentions at the time of contracting. American Realty Trust v. Chase Manhattan Bank, N.A., 281

27 S.E.2d 825 (Va. 1981); Bay Cities Paving & Grading v. Lawyers Mut., 21 Cal.Rptr.2d 691, 699
28 Cal. 1993).
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1 Irrelevant, misleading: FRE 401, 402, 403. To the extent the testimony was based upon

2 incomplete hypotheticals and assumed facts not then or now in evidence, the testimony is

3 irrelevant and misleading.

4 14. Eric Solberg Deposition Excerpts


5 “Making known” testimony irrelevant: FRE 401, 402. Solberg’s testimony as to the

6 meaning of the “making known” provision is irrelevant. (AOL Brf. at 15, n. 59 [Solberg 121:3-

7 122:9]; AOL Brf. at 15, n. 60 [128:24-129:12, 132:6-134:4]; AOL Brf. at 16, n. 63 [97:13-98:17,

8 120:13-122:9].) Interpretation of policy language is a question of law for the court to decide.

9 Pilot, 145 S.E.2d at 146; Seabulk, 377 F.3d at 418; Waller, 44 Cal.Rptr.2d at 378; Palmer, 90
10 Cal.Rptr.2d. at 652. The policy’s language should be interpreted as to its plain meaning. Id.

11 Irrelevant, misleading: FRE 401, 402, 403. To the extent the testimony was based upon

12 incomplete hypotheticals and assumed facts not then or now in evidence, the testimony is
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13 irrelevant and misleading.


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14 “Deliberately breaking the law” testimony irrelevant: FRE 401, 402. Solberg’s

15 testimony as to the meaning of the “deliberately breaking the law” provision is irrelevant. (AOL

16 Brf. at 24, n. 83 [Solberg 227:4-228:18]; AOL Brf. at 24, n. 84 [Solberg 227:18-24], AOL Brf. at

17 25, n. 89 [Solberg 230:1-231:1, 238:12-239:6].) Interpretation of policy language is a question

18 of law for the court to decide. Pilot, 145 S.E.2d at 146; Seabulk, 377 F.3d at 418; Waller, 44

19 Cal.Rptr.2d at 378; Palmer, 90 Cal.Rptr. 2d. at 652. The language should be interpreted as to its

20 plain meaning. Id.

21 Irrelevant, misleading: FRE 401, 402, 403. To the extent the testimony was based upon

22 incomplete hypotheticals and assumed facts not then or now in evidence, the testimony is

23 irrelevant and misleading.

24 15. Glenn Spencer’s Deposition Testimony


25 Online Activities Exclusion testimony irrelevant: FRE 401, 402. Spencer’s testimony in

26 2006 that the definition portion of the Online Activities Exclusion was his attempt to limit what

27 online activities meant is irrelevant. (AOL Brf. at 27, n. 95, and at 28, ns. 104, 105, 107
28 [(Spencer 170:21-23; 173:17-174:6; 184:9-185:11].) A “party’s unexpressed subjective intent or
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1 understanding is inadmissible to prove an intent different from either the expressed terms of the

2 written agreement or the parties’ mutual understanding.” St. Paul Mercury Insurance Co. v.

3 Frontier Pacific Union Ins. Co., 4 Cal.Rptr.3d 416, 428, n.8 (Cal.App. 2003). There is no

4 evidence Spencer’s purported interest in limiting or narrowing the exclusion was disclosed to St.

5 Paul at the time the definition was added to the exclusion. See, Exs. 174, 175, 39; Ex. G

6 (O’Connor 74:13-23, 82:14-20; 86:4-21); Ex. E (Midwinter, 322:8-323:2).

7 Also, irrelevant, misleading: FRE 403. Spencer’s 2006 testimony as to his intention in

8 defining online activities is at odds with what the parties (including Spencer) intended and

9 understood the words “online” and “internet access” meant at the time the policy was negotiated.
10 See, e.g., Exs. 36, 37, 22, 23, 24. Spencer’s June 2000 email (prepared prior to service of the

11 class action suits) stated in no uncertain terms that his understanding (as the risk manager of

12 AOL and former broker on the AOL team) was that there was no intention to have personal
275 Battery Street, Suite 2000

13 injury coverage in the St. Paul policy for AOL’s online business activities. Exs. 36, 37.
San Francisco, CA 94111
Gordon & Rees LLP

14 16. Complete Idiot’s Guide To The Internet (7th ed. 2001), Ex G to Pereira Decl.
15 Irrelevant, lack of foundation: FRE 401, 402. AOL relies upon The Complete Idiot’s

16 Guide to the Internet to establish what “providing internet access” means in the Online Activities

17 Exclusion. (AOL Brf. at 27, n. 99; Ex. G to Pereira Decl.) However, the book, published in

18 2001, was not in existence at the time St. Paul’s policy was negotiated, the policy was issued, or

19 the definition was added to the Online Activities Exclusion.

20 Interpretation of policy language is a question of law for the court to decide. Pilot, 145

21 S.E.2d at 146; Seabulk, 377 F.3d at 418; Waller, 44 Cal.Rptr.2d at 378; Palmer, 90 Cal.Rptr.2d

22 at 652. The policy language should be interpreted as to its plain meaning. Id. To the extent

23 there is any ambiguity, the Court should consider the parties’ intentions at the time of

24 contracting. American Realty, 281 S.E.2d 825; Bay Cities, 21 Cal.Rptr.2d at 699.

25 At issue is the meaning of the Online Activities Exclusion. There is no evidence any of

26 the persons involved in negotiation and preparation of this exclusion or its definition consulted

27 this book or considered any technical or special meaning for the word “access” in the context of
28 this exclusion. “Access” has an ordinary and popular dictionary definition. “Access” means
11 CASE NO. 5:06-CV-00198 JW (PVT)
ST. PAUL’S OBJECTIONS TO AND MOTION TO STRIKE EVIDENCE IN
PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION
Case 5:06-cv-00198-JW Document 92 Filed 02/09/2007 Page 12 of 13

1 “the ability . . . to approach, enter, exist, communicate with, or make use of.” American Heritage

2 Dictionary, 4th ed., c. 2000, p. 10. Furthermore, the exhibit is irrelevant because it is at odds with

3 the parties’ testimony regarding their intentions in having the Online Activities Exclusion. See

4 Exs. 36, 37, 21, 22, 23, 24.

5 17. St. Paul’s Responses to Requests for Admissions, Ex. 224


6 Irrelevant, misleading: FRE 401, 402, 403. AOL relies upon St. Paul’s response to

7 requests for admissions in which St. Paul admits, based upon the information provided to St.

8 Paul at the time the class action suits and AG Investigation were tendered, the SmartDownload

9 claims do not involve “3rd party advertising.” Ex. 224. (AOL Brf. at 27, n. 96). The new
10 information plaintiffs provided during discovery in this coverage lawsuit and in the arguments

11 now being advanced in support of their motion for partial summary judgment (to which St. Paul

12 has objected on the grounds of relevancy and under the law on the duty to defend1), does

implicate the “3rd party advertising” part of the Online Activities Exclusion. On that basis St.
275 Battery Street, Suite 2000

13
San Francisco, CA 94111
Gordon & Rees LLP

14 Paul denies the request for admission. See Ex. 232.

15 18. August 29, 2006 Email from Sara Thorpe, Ex. 222
16 Irrelevant: FRE 401, 402. The August 29, 2006 e-mail that plaintiffs attach as “Exhibit

17 222” is part of a meet-and-confer between St. Paul’s outside counsel in this action (Sara Thorpe)

18 and plaintiffs’ counsel over plaintiffs’ request for the deposition transcript of James Zacharski.

19 AOL relies upon this email to contend “St. Paul has previously admitted [the] irrelevance” of the

20 Melrose Hotel and Resource Bankshares “blast fax” cases. (AOL Brf. at 18, n. 68.) However, in

21 meeting and conferring with plaintiffs’ counsel and debating over discovery issues, Thorpe did

22 not intend to nor did she waive any argument as to the relevancy of those cases to this dispute.

23 See Suppl. Thorpe Decl. at ¶ 5. Counsel’s argument is not an admission. Interpretation of the

24 insurance contract is for this Court to decide. Clearly Melrose Hotel and Resource Bankshares

25 are relevant as they interpret St. Paul’s language. They are also consistent with California’s new

26
1
27 Evidence that was not presented to the insurer at the time of the tender is not relevant on the
duty to defend. Resource, 407 F.3d at 636; America Online, 347 F.3d at 93; Waller, 44
28 Cal.Rptr.2d at 378; Safeco, 19 Cal.Rptr.3d at 24-25, 27; Haggerty, 32 Fed.Appx. at 848, n. 4.

12 CASE NO. 5:06-CV-00198 JW (PVT)


ST. PAUL’S OBJECTIONS TO AND MOTION TO STRIKE EVIDENCE IN
PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION
Case 5:06-cv-00198-JW Document 92 Filed 02/09/2007 Page 13 of 13

1 decision of ACS Systems, Inc. v. St. Paul Fire & Marine Ins. Co., __ Cal.Rptr.3d __, 2007 WL

2 214258 (Cal.App. 2007).

3 19. Side by Side Comparison, Ex. 118


4 Irrelevant: FRE 401, 402. AOL relies upon the “Side by side comparison” that St. Paul

5 prepared of the changes to policy language in the St. Paul policy in 1991. Ex. 118. (AOL Brf. at

6 15, n. 60.) Ex. 118 is irrelevant. It shows that the “making known” language in the St. Paul

7 policy at issue in this coverage lawsuit was a change from an earlier version that used the words

8 “made public.” Ex. 118 (at SPM 2801). Interpretation of policy language is a question of law

9 for the court to decide. Pilot, 145 S.E.2d at 146; Seabulk, 377 F.3d at 418; Waller, 44
10 Cal.Rptr.2d at 378; Palmer, 90 Cal.Rptr.2d. at 652. The policy’s language should be interpreted

11 as to its plain meaning. Id.

12 20. Memorandum and Order Denying Motion to Compel Arbitration, Ex. 221
275 Battery Street, Suite 2000

13 Irrelevant: FRE 401, 402. AOL submits Ex. 221, the Order Denying AOL’s motion to
San Francisco, CA 94111
Gordon & Rees LLP

14 compel arbitration, in support of its choice of law argument. (AOL Brf. at 9, n. 40.) However,

15 the contract at issue in the decision is a software licensing agreement, and not the same contract

16 that is at issue in this coverage lawsuit. This Court’s decision about choice of law should be

17 determined by the contract at issue in this coverage dispute – the St. Paul policy. The policy was

18 negotiated in Virginia and issued to a corporation with its principal place of business in Virginia.

19 Virginia is the state in which AOL chose to litigate an earlier coverage dispute with St. Paul

20 under this very same policy. Under Cal. Civ. Code § 1646, this dispute should be determined

21 applying Virginia’s law.

22 Dated: February 9, 2007 GORDON & REES LLP

23

24 By /s/ Sara M. Thorpe


SARA M. THORPE
25 Attorneys for Defendant
ST. PAUL MERCURY INSURANCE COMPANY
26

27
28

13 CASE NO. 5:06-CV-00198 JW (PVT)


ST. PAUL’S OBJECTIONS TO AND MOTION TO STRIKE EVIDENCE IN
PLAINTIFFS’ CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION