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ASSOCIATION OF BUSINESS

Volume XIX NO.3

Electronics in the Courtroom - You'reAlready Too Late!

here is a rumor circulating throughthe finer law fIllTIS and cocktail lounges that Iam injail. I know thisis true because I started the rumor myself. Whispering to a fewtrusted cronies to "pass it on: within days I was rewarded to hearthat most of the local bar assumes I am a "goner;" even a federaljudge believed he had caught a glimpse of me being shuffled intothe new Twin Towers.

This desire to convince the worldthat I am "on ice: so to speak, comesfrom no desire to avoid my familial,legal, partnership or social responsibil-ities. I'm hiding from editors.Legal publications and their editorsproliferate and each Insists upon aspecial person to write for them. Inthe profession that person isknown asa "sucker: a word of ichthyic originconnoting "one who will work fornothing while believing it to be anhonor." To set the hook for the suck-

Thomas J. McDermott er, the editor has a shopworn buttrusty tactic: The article will not bedue for six months.Six months! That is a long time. Or so it seems when the"honor" is bestowed. "Six months, six months. tell me, secretary,when is my six months up?""Tomorrow, sucker." (My secretary is overly familiar.)Tomorrow! So, into hiding, into rumors, even into sucking the

lifeblood out of my betters, since the idea for that introductioncame from Benchley.What does this have to do with our lesson for the day? First, it

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.....p. II....p. 12

INSID EThe Extraterritorial Reachof U.S. Antitrust LawSection 998 Offe rs toCompromise: TheProcedural MinefieldCases of NoteSlgnficant Decisions fromthe Federal Courts

Committee

by Peter S. Selvin . ..p. 3

by Geoffrey L. Bryan .p. 5by Denise M. Parga p. 7

by Michael K GraceJeffrey W Kramer .. .. .....p. 10Highlights of Recent Changesto the Loca l Rules by Michael K GraceLetter from the President by Karen Kaplowitz

TR IA L LAWYERS

REPORT May 1997The Litigation Privilege: Protectionfor the Business Litigator

L earned Hand wrote: "As a litigantI should dread a law suit beyond almost anything else short ofsickness and death.' Lawyers are often accused of making lifemiserable for the rest of society (though not usually by a leg-endary judge), but what if a lawyer is the victim? In an increas-ingly popular retaliatory tactic, what ifa li tigator gets sued for justdoing hisjob? .

Fortunately, there are a number ofstatutes in California that provideeffective defenses to claims common-ly alleged against lawyers, includingdefamation, tortious Interferencewith business relationships, andinfliction of emotional distress.Venerated-at common law, and codl-fled in California for 125 years, theli tigation privilege found in Section47 of the Civil Code is one of the liti-gator's strongest defenses.

Section 47 of the Civil Code pro-vides: "A privileged communication John W, Ambergor broadcast Is one made: (b) Inany ... (2) judicial proceeding ." The usual formulation is thatthe privilege applies to any communications (1) made In judicialor quasi-judicial proceedings; (2) by litigants or other participantsauthorized by law; (3) to achieve the objects of the litigation; and(4) that have some connection or logical relation to the action.Silberg v.Anderson (1990) 50 Cal.3d 205, 212,

The litigation privi lege InSection 47(b) ref lects the public poll-r : : : ; of protecting the attorney's exercise of Independent judgmenton behalf of his or her client, without fear of retaliation. As theCalifornia Supreme Court explained In the leading modem case,Silberg v; Anderson. supra, the litigation privi lege Is Intended toencourage parties to feel free to exercise their fundamental r ightof resort to the courts for assistance In the resolution of disputes,to encourage open channels of communication and the presenta-tion of evidence, to encourage attorneys to zealously protect theirclients' Interests, and to require litigants to expose the bias of wit-nesses or false evidence during trial, not In a subsidiary lawsuit.50 CaI.3d at 213-214. In this way. the Supreme Court noted, theprivilege enhances the finality of judgments and avoids "anunending roundelay of litigation, an evil far worse than an occa-sional unfair result: Id. at 214. .

Traditionally, the litigation privilege existed to protect pub-lished communications in a pleading or during a trial from

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Electronics in the Courtroom _Continued from page 1explains why you have not heard from me in this publication forsome time on my favorite topic of electronics in the courtroom. Myother commitments. also regularly missed, were simply too great."Scribble, scribble, scribble," as they said of Gibbon; "too manynotes," as they said of Mozart (although I do not altogether consid-er myself in a class with Gibbon and Mozart).Second, it allows me to assure those writers of the thousands ofcards and letters demanding: "What's new?" that there is nothingnew. Y ou will still want video depositions transferred in part tolaser disk for impeachment, video and static graphics to i llustratetestimony, particularly with experts, and electronic overhead pro-jectors. DVD i s not here yet. (See infra)Third and most important, my introduction hopes to highlight,in a light-hearted way, I believe, the point that it is never too earlyto begin preparation for your electronic presentation at trial.It's also never too early to start saving your money for your elec-tronic presentation at trial.A friend of mine just completed a case in a state court inOklahoma. The parties went the whole nine yards in equipment -a 90" screen for the jury, video/computer projection equipment,smaller monitors for the court, the witness stand and counsel table,.audio equipment, laser disks, electronic overhead projector. Theequipment was so extensive it required rewiring the courtroomwith a stepped-up power source . The cost? A mere $500.000 withthe plaintiff and defendant each contributing one-half. How didthey spli t up the equipment after the trial? They didn't. They leftit in the courtroom for future lucky plaintiffs and defendants whowill reap the benefits without the cost.

The Basics Require Early Decis ionsI st il l feel the most effective use of electronics in the courtroom

is the laser disk for impeachment and the laser disk to illustrateexpert testimony. (The electronic overhead projector is wonderfuland you will use it often and effectively if the courtroom is alreadywired; you'll hardiy go to this expense just for the electronic over-head.)To impeach, you require the video depositions of your adver-saries. These are then edited to preserve just the areas where yoususpect you may not get the same good.answer in the courtroomwhen you ask the same question. If you don't get that answer,you'll immediately play back the deposition testimony.This requires an early decision. You must start Videotapingdepositions from the beginning. Your deposition notice must stateyou are going to videotape it. Pressures a t the beginning ofa caseto keep costs down (cl ient: "Don't worry, they'll settle the minuteyou ... ") may militate against Videotaping those ini tial depositions.I f the case is important, give much thought to this decision. Missthe oppor tuni ty, and i t's gone forever.Editing these tapes is a major chore and requires an early begin-ning. Some form of selection should sta rt right after the depositionis taken. At least, mark up the good parts inthe typed transcript.

Try to get the best transcript-video synchronization you can.This isa function between the court reporter and the videographerand is seldom coordinated effectively. I have been told that thereare electronic connects which allow the transcript to be preciselycoordinated with the tape in real time - that is, while the deposi-t ion is being taken. I have never been able to hire a team with sucha deVice. Some court reporting organizations will go back and syncthe tape to the transcript by hand, but this is expensive. The bestI've been able to do is to get a transcript with time codes thatroughly match the time codes on the tape. Insist, at least, on this;it's a great help.As the Federal Rules of CiVilProcedure progress toward perfec-t ion (another r ibaldry, of course) it seems expert reports maybecome due before the compla int is flied. In the Central District,they are now due by local rule eight weeks before the discovery

cutoff, which may be as much as six months before trial.Do these reports require some reference, if contemplated, tothe use of moving or static graphics to illustrate the proposed testi-mony? When do the actual graphics have to be exchanged andviewed by the court? Although there appears to be no specific

timeframe, "early" is the most likelyoperative word.Graphics to aid in expert testimony are usually among the lastthings done because issues need to be fine-tuned. Development ofmoving graphics (animations, motion pictures) can take a greatdeal of time, so very early attention to these matters IS requiredand often overlooked.I stretched it a bit when I said there was nothing new. There arenew developments, but they may be premature for the lawyer.

DVDThe Digital Versatile Disk (nee the Digital Video Disc) is, in its

present commercial embodiment, a sort of souped-up laser disc. Itdoes the same thing as a laser disc with a few additional bells andwhistles. It's smaller than a laser disc, the size of a CD-ROM. DVDholds more information so movies can be subtitled in several lan-guages and various high-end audio tracks can be more easilyaccommodated. It also gives a clearer picture than a laser disc,with no color bleeding. Even red is rock solid within the lines. Itcan accomplish these small miracles because it's a somewhat differ-ent technology than a laser disc. This difference probably makes Itunusable by a lawyer today but opens up vast possibilities for thefuture.All of the digital ente rtainment technologies, laser disc, CO-RaM (the music kind) and DVD use a laser beam to optically readsmall pits on the surface of the disc. These pits contain ones andzeros. which are scanned, decoded and eventually re-renderedback intheir analog form. The pits on a DVD are smaller and clos-er together than on a laser disc. That's one reason for its extraordi-nary storage capacity. However, the second reason is more impor-tant to lawyers.On a laser disc, every single frame of whatever you installresides as a complete image. whether picture or document. Thisallows you to show video and freeze on any frame, or display docu-ments which are stored one frame at a time. DVD does not mcor-porate every part of every frame onto the disc. Rather, complexalgorithms are applied which "interpret" each scene and eliminate"unnecessary" information. Thus, if in a movie scene, two charac-ters are talking before a blue sky background, the coding will notethe first frame in which the blue sky appears. and then instruct therest of the sequence to incorporate a blue sky background throughits conclusion. It's there in the algorithm but it's not there on everyframe of the disc. Your freeze capabilities are limited.These algorithms are quite complex and are custom to eachmotion picture DVD now being delivered. Thus, the algorithmscontrolling The Wizard of Oz do not control Blade Runner.Preparing a DVD moVie is said to be a time-consuming. expensive,delicate process, and if the algorithms are not done with great care,the final result is disappointing.This is not for lawyers yet.Soon one will be able to write to a DVD (all current releases are"read-only"). A DVD can store information on both sides of a discand in double layers. Initial capacity estimates are 17 gigabytes.Even without the algorithms. this is immense capacity and shouldaccommodate all the visual information any lawyer might need inthe largest trial. If you can write to it from your own computer, theability to create valuable visuals at a reasonable cost on your ownappears to be right around the comer. (However. for companson,the Internet started in 1969. Feel slightly late?)

The InternetSeveral law firms with more advanced technology units are

developing the "virtual desktop." This allows a user to accesshislher office computer desktop from anyplace that has a phone(Cont inued next page)

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Electronics in the Courtroom _Continued from page 2line by use of a laptop and a modem. It's done on the Internet.You plug in your modem, access~ specific Internet site, and yourlaptop screen shows your office desktop screen with the exactcapabilities, access to servers, etc., as if you were in your' office.This is no small technological feat and may be available only to"power" users for a while. Slow transmission lines also currentlytend to limit the usefuiness.

But within three to four years it's possible to visualize a laptopin the courtroom that has access to a law firms entire computerpower. Everything in the office system is available in the court, sovast amounts of information can be accessed and displayedinstantly to the trier of fact. When satellite connectivity to theInternet becomes commonplace and speed reaches satisfactorylevels, this could be a courtroom tool. All your video, documents,etc. reside in youroffices MIS Department. You sign on to theInternet and bring them into the courtroom.

It's really a race between the DVD and the Internet satelliteconnection for the next great courtroom application. .Theatrical Motion Pictures

Recently, at a Ninth Circuit judicial conference, I chaired apanel on Electronic Presentations of Evidence in the Courtroom.Myjob was to round up and show some excellent and provocativevideo actually admitted at trial to develop and explain certainissues, and then to shut up while the federal judges opined. I hadan airline catastrophe, a murder and a Fifth Amendment issue.At the conclusion, I slipped in a 3D-second shot of the Titanicsinking and asked how that would go over in closing argument.(Even this I stole, since I had heard that Tom Barr of Cravath,Swain &Moore had done something similar.)

I set the scene by stating that it was closing argument for theplaintiff in a securities fraud case against accountants. The argu-ment was: "The accountants slink away while the shareholders godown with the ship." Flash to the Titanic going straight down witha roar while woebegone people paddle away in lifeboats. (This isthe final 30 seconds of T itanic, a 20th Century-Fox picture starringBarbara Stanwyck and Clifton Webb, available on videotape.)Believe me, it shows better than it reads.' On a large screen, asurprise viewing of a spectacular 30 seconds from a theatricalmotion picture explodes.Two issues: (a) will it be allowed? and (b) does it work, I.e.,

persuade? The answer to (a) is "perhaps." Show it to the judgefirst. Ofthe some 300judges at the presentation, none came up tome and said. "Not in my courtroom." Of course, I wasn't in theircourtroom.The answer to (b) is "perhaps." It certainly packs a wallop andwill be remembered. But it may be remembered as just a "stunt,"the wrong impression. The key is to pick the right 30 seconds thatjust precisely make the point. I am not recommending this - onlygiving you some ideas.

I don't see how we can push electronics inthe courtroom muchfurther than the use of theatrical motion pictures, which have thebenefit of the greatest technlcal competence and the highest bud-gets of any graphic presentation anywhere.Unless ... at some future date, the trial generally follows currentprocedures but it's all on DVD. Just bring your 5 112"disc to court,empanel your jury, give each juror a copy of the disc and sendthem home to watch. Or for a bench trial, just mail the judge yourdisc. Every lawyer his own auteur.Now that I think of that, perhaps artificial Intelligence algo-rithms could be developed that would scan your disc, declare thewinner, compute the damages, print the decision and mail it out.

Tune no longer flies; it goes by at the speed of light. Start earlywith your electronics.

-Thomas J. 'McDennott

The Extraterritorial Reachof U.S. Antitrust Law

Ia decision with profound impltions for companies either with a direct business presence inU.S. or conducting conunerce through U.S. subsidiaries or partnethe U.S. Court of Appeals for the First Circult recently held thaJapanese corporation could be prosecuted for criminal antitruviolations even though the underlying acts had occurreentirely outside the U.S. United States vs. Nippon PaIndustries Co..Ltd 1'997WL 109199 (Ist Clr, March 17.1997).This case represents an important extension of the princithat overseas business activities whichwere meant to produce, and did infact produce, a "substantial effect" onU.S. conunerce will be subject to theU.S. antitrust laws, even if t he offend-ing conduct took place entirely out-side the US. Although this principlewas recently applied by the U.S.Supreme Court In 1993 with respectto civil antitrust actions in HartfordFire Ins. Co. v California, 509 U.S.764, 125 L.Ed.2d 612 (1993). theNippon. Paper decision is the firstdecision applying this principle tocriminal prosecutions initiated by theU.S. government. Peter S, Selvin

The FactsAccording to an indictment issued by a federal grand jury, repsentatives of Nippon Paper Industries Co., Ltd. ("Nippon") helseries of meetings in 1990 in Japan with other manufacturersthermal fax paper. Those meetings allegedly led to an agreemeto fix prices of thermal fax paper throughout North America.Further according to the indictment, Nippon and its co-consp

ators implemented this plan by selling the paper to unaffiliattrading houses on the condition that those trading houses wocharge inflated prices for the paper to buyers in North America.fact, the trading houses, through their respective U.S. subsidiariresold the paper in the U.S. market at the artificially high pricesall allegedly pursuant to the agreement involving Nippon andother manufacturers.The indictment alleged that Nippon had sold approximatelyrnillion for import into the U.S. market and that by reason offoregoing scheme Nippon's activities had a substantial advereffect on commerce in the U.S. and unreasonably restrained train violation of Section One ofthe Sherman Act (15 U.S.C. I).Nippon moved to dismiss the indictment on the ground thatconduct attributed to It had all allegediy occurred outside the Uand hence could not constitute an offense under Sect ion One ofSherman Act. The U.S. District Court agreed with Nippon and dmissed the indictment, but the First Circuit reversed, holding tNippon could be prosecuted under Section One if I ts activities wintended to, and in fact did have, a "substantial effect" on Uconunerce.

The Holding of the CourtThe Court's conclusion was fundamentally based on its cstruction of Section One itself. In this regard, the Court drew s

stantially on the U.S. Supreme Court's decision in the HartfoFire Ins. case, which had determined that a civil action for daages by private parties under Section One could be maintained

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