REPLY IN SUPPORT OF MOTION TO STRIKE SUMMARY JUDGMENT EVIDENCE Page 1
THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
SECURITIES & EXCHANGE COMMISSION,
Plaintiff,
v.
WILLIAM E. MAPP, III,
Defendant.
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Case No. 4:16-CV-00246
DEFENDANT’S REPLY IN SUPPORT OF MOTION TO STRIKE
PLAINTIFF’S SUMMARY JUDGMENT EVIDENCE
Defendant William E. Mapp, III (“Mapp”) hereby respectfully submits his Reply in
Support of Motion to Strike Plaintiff’s Summary Judgment Evidence [Dkt. 121]:
I. ARGUMENT AND AUTHORITIES
A. The Declaration of Carol Hahn Should be Struck as Impermissible Expert
Testimony.
The SEC fails to show that Carol Hahn is not an expert witness. The SEC’s Response
states that Hahn’s testimony does not contain specialized knowledge because the amounts raised
and spent by Servergy are not controversial. Dkt. 126 at 2. This is not the standard. “[T]he
distinction between lay and expert witness testimony is that lay testimony results from a process
of reasoning familiar in everyday life, while expert testimony results from a process of reasoning
which can be mastered only by specialists in the field.”
1
Hahn is an experienced professional
whose testimony belies the SEC’s claim that she is an appropriate lay witness. APP 000002-05
¶ 1–2. Hahn used her expertise to summarize documents that a lay person would not know how
1
United States v. Yanez Sosa, 513 F.3d 194, 200 (5th Cir. 2008).
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to interpret.
2
Id. ¶ 5. The SEC should not be allowed to introduce Hahn’s testimony under the
guise of a lay witness.
3
Furthermore, Hahn’s statements identified in Mapp’s motion as conclusory are still just
that. The SEC has not established that facts within the declaration support Hahn’s conclusions or
that these statements are not legal conclusions.
4
The SEC cannot, as it has done, refer to its
motion for summary judgment exhibits in hopes of supplying the missing factual predicate for
these statements—neither the Court nor Mapp knows if Hahn actually relied on these documents
to conclude as she did. The conclusory statements should, therefore, be struck.
B. The Declaration of Kyle Chase Should be Struck.
Though Chase may have had personal knowledge of the facts relayed in his declaration,
his inability to testify with any certainty shows that his statements now constitute mere
speculation and are impermissibly based on “information and belief.”
5
APP 000007-08 ¶ 1.
Regardless, the declaration contains impermissible hearsay. Contrary to the SEC’s argument,
statements in Chase’s declaration are being used to prove the truth of the matter asserted. For
example, the SEC uses the statement “After this discovery, on or before March 10, 2013, I
informed Will Mapp that Koerr was not interested in a 32-bit server . . . .” to prove an assertion
in Plaintiff’s Statement of Fact section—that “Koerr’s CTO then informed Will Mapp that Koerr
was not interested in a 32-bit system,” Dkt. 113 ¶ 29. Thus, Chase’s declaration, or (at the very
least) the inadmissible hearsay in the declaration, should be struck.
2
See In re REMEC Inc. Sec. Litig., 702 F. Supp. 2d 1202, 1215 (S.D. Cal. 2010) (“‘[G]enerally accepted accounting
principles’ are far from being a canonical set of rules that will ensure identical accounting treatment of identical
transactions,” and instead “tolerate a range of ‘reasonable’ treatments.”).
3
See United States v. Hart, 295 F.3d 451, 459 (5th Cir. 2002) (government witness using his or her background and
expertise to reach conclusions by analyzing financial documents constitutes expert testimony).
4
TIG Ins. Co. v. Sedgwick James of Washington, 276 F.3d 754, 759 (5th Cir. 2002).
5
Mosley v. City of Pittsburgh Pub. Sch. Dist., No. CIV. A. 07-1560, 2009 WL 2948519, at *1 (W.D. Pa. Sept. 8,
2009) (“[C]ourts routinely grant motions to strike affidavits that are based upon ‘belief’ or ‘information and belief,’
or which contain conclusory language, vague assertions, gross speculation and inferences.”).
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C. The SEC’s Attempt at Authentication Is Untimely and Insufficient.
To authenticate challenged records, the SEC attached purported business records
certifications and a declaration of counsel to the SEC’s Response. This information was available
to the SEC when its dispositive motion deadline passed; the SEC should not be permitted to
supplement the summary judgment record.
6
Further, the SEC’s belated attempt at authentication
did not overcome each of Mapp’s authentication challenges. The SEC wholly fails to offer any
basis for authentication as to Exhibit 54. The SEC incorrectly characterizes subpoenas
purporting to authenticate Exhibit 7 as “production of a document by an opponent,” Dkt. 126 at
6.
7
Third parties—not Mapp—produced the documents in compliance with the subpoenas. The
SEC attempts to use a Servergy affidavit to authenticate Exhibits 19, 40, 41, 45, and 53, which
were produced by other third parties. But, for instance, Exhibit B to the SEC’s Response, the
document meant to replace Exhibit 19, differs as to form and content. The SEC attaches a
declaration from counsel stating that Exhibits 25, 26, 27, 30, 31, 32, 43, and 55 were produced
pursuant to a subpoena; documents produced via subpoena, however, are not automatically self-
authenticating.
8
Thus, the SEC’s unauthenticated exhibits should be struck.
D. The SEC’s Exhibits are Inappropriate for Summary Judgment.
The SEC does not dispute that Exhibits 29, 30, 43, and 55 are hearsay, and the SEC fails
to provide satisfactory responses to Mapp’s remaining hearsay challenges. The SEC asserts the
business records exception in response to Mapp’s objection to Exhibit 7, but Exhibit 7 is not the
same document the business records affidavit covered as the SEC has admitted to altering the
6
Cf. Roehrs v. Conesys, Inc., 332 F. App'x 184, 190 (5th Cir. 2009); Blue Spike, LLC v. Audible Magic Corp., No.
6:15-CV-584, 2016 WL 7636118, at *3 (E.D. Tex. June 21, 2016).
7
The authentication of Exhibit 7 is further hindered in that this Exhibit is not in the same condition as the document
produced by Servergy. Indeed, the Commission admittedly made alterations to the spreadsheet.
8
United States v. Solvay, No. CV H-06-2662, 2016 WL 1258401, at *3 (S.D. Tex. Mar. 31, 2016), aff'd sub nom.
U.S. ex rel King v. Solvay Pharm., Inc., 871 F.3d 318 (5th Cir. 2017).
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document. Moreover, Mapp did not authorize the author to make the statements in Exhibit 7—
Servergy did. Exhibit 16 is being offered to prove that a live presentation occurred “on or before
March 5, 2013,” Dkt. 113 ¶ 9, and in which Mapp “touted Servergy stock,” id. at 15.
9
Exhibit 17
is offered to show that an audio recording containing Mapp’s presentation was, in fact, uploaded,
Dkt. 113 ¶ 9. The SEC offers Exhibit 19 to prove the contents of a presentation and its date,
location, and purpose to prove alleged facts in the SEC’s Statement of Facts section, Dkt. 113
¶ 10. The SEC’s categorization of Exhibits 25–27 does not relieve the SEC of its obligation to
demonstrate that these Exhibits are not hearsay.
10
The SEC offers Exhibits 25–27 to prove the
status of a few investors as either accredited or unaccredited, Dkt. 113 ¶ 15, and not for the
purpose of merely proving the existence of the Exhibits. Exhibit 41 contains double hearsay: the
out-of-court statement of Will Mapp relays the out-of-court statement of Koerr. Both layers of
hearsay must be resolved before the contents of Exhibit 41 may be admissible, FED. R.
EVID. 805, but both are offered for the truth of the matter asserted. Indeed, the SEC relies on
Exhibit 41 to prove assertions in its Statement of Fact section, Dkt. 113 ¶ 29, and to prove that
Koerr “made it unequivocally clear” that it would not buy a 32-bit server, Dkt. 113 at 22. Finally,
because Will Mapp was Servergy’s agent or employee, Federal Rule of Evidence 801(d)(2)(D)
11
does not apply to his statements in Exhibit 41. The SEC uses Exhibit 49 to prove that the PPM
Supplement was finalized in September 2013, as stated in the Exhibit, Dkt. 113 ¶ 34 n.6. Though
the SEC claims it is using Exhibit 52 for the effect on the recipient, the SEC makes no mention
of the “effect” in its Motion for Summary Judgment but references the Exhibit for its contents:
9
The SEC has not presented any case law holding that an exhibit to a deposition falls under Federal Rule of
Evidence 801(d)(2).
10
See United States v. Tann, 425 F. Supp. 2d 26, 31–34 (D.D.C. 2006) (a check may constitute non-hearsay as a
legally operative document, but falls outside this exception when it is offered for the truth of the matter asserted
therein).
11
The Commission references Federal Rule of Evidence 802(d)(2)(D), Dkt. 126 at 8, as an applicable exception to
Mapp’s hearsay challenge against Exhibit 41. Mapp believes the Commission intended to cite Federal Rule of
Evidence 801(d)(2)(D).
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the statement that the opportunity with Freescale was a “proposal,” Dkt. 113 ¶ 40, 24. The SEC
offers Exhibits 53-54 to prove their contents as well—that Servergy obtained audited balance
sheets for the years 2009, 2010, 2011, and 2012, as stated in the Exhibits. Dkt. 113 at 18.
As stated above, each exhibit is used by the SEC for the truth of the matter asserted, and
no valid exceptions apply.
12
The mere fact that the SEC has attempted to authenticate certain
exhibits or badly state the exhibits are not offered for the truth of the matter asserted does not
alter their status as impermissible hearsay. Thus, the Exhibits must be struck.
II. CONCLUSION AND PRAYER
Mapp respectfully requests that his Motion to Strike Plaintiff’s Summary Judgment
Evidence [Dkt. 121] be granted in its entirety.
/s/ Jason S. Lewis
Jason S. Lewis
Texas Bar No. 24007551
lewisjs@gtlaw.com
David W. Klaudt
Texas Bar No. 00796073
klaudtd@gtlaw.com
Amanda R. McKinzie
Texas Bar No. 24088028
mckinziea@gtlaw.com
GREENBERG TRAURIG, LLP
2200 Ross Avenue, Suite 5200
Dallas, Texas 75201
(214) 665-3600 (Telephone)
(214) 665-3601 (Facsimile)
ATTORNEYS FOR WILLIAM E. MAPP, III
CERTIFICATE OF SERVICE
I hereby certify that the foregoing document was served on all counsel of record via the
Court’s CM/ECF system this 3rd day of November, 2017.
/s/ Jason S. Lewis
12
Notably, the hearsay objection to Exhibit 7 is the only objection to which the SEC has asserted the business
records exception.
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