Federal Trade Commission v. Directv, Inc. et al

Northern District of California, cand-4:2015-cv-01129

Declaration

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Jeff Tillotson, SBN 139372 jtillotson @ TillotsonLaw. com Tillotson Law 750 North Saint Paul, Suite 610 Dallas, TX 75201 Telephone: (214) 382 - 3040 # n o r Chad S. Hummel, SBN 139055 chummel @ sidley. com Mark D. Campbell, SBN 180528 mcampbell @ sidley. com Bridget S. Johnsen, SBN 210778 bjohnsen @ sidley. com Ryan M. Sandrock, SBN 251781 rsandrock @ sidley. com SIDLEY AUSTIN LLP 555 California Street, Suite 2000 San Francisco, CA 94104 Telephone: (415) 722 - 1200 Facsimile; (415) 772 - 7400 a: E À Attorneys for Defendants DIRECTV and DIRECTV, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION ? ☺ FEDERAL TRADE COMMISSION, Case No. 3: 15 - cv - 01129 HSG E Plaintiff, Assigned to the Hon. Haywood S. Gilliam, Jr. 9 DIRECTV, a corporation, DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (e) (1) À and ñ Hon, Maria - Elena James, Referral DIRECTV, LLC, a limited liability company, ñ Defendants. ñ å tô DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 = A A A A TY A = x o keser o I, Chad Hummel, declare and state as follows: 1. I am an attorney duly licensed to practice law before all of the courts of the State of California and the United States District Court for the Northern District of California. I am a partne of Sidley Austin LLP, counsel of record in this matter for defendants DIRECTV and DIRECTV, LLC (collectively, " DIRECTV") and am trial counsel in this action. I submit this Declaration in support of DIRECTV's Opposition to the Federal Trade Commission's ("FTC") Motion for Sanctions Under Rule 37 (e) (1) (the " Motion") . I have personal, first - hand knowledge of the facts sey forth herein, and, if called upon to do so, I could and would competently testify thereto. DIRECTV's Preservation of Its Website 2. Prior to filing this litigation, on April 23, 2010 and December 13, 2013, the FTC served two Civil Investigatory Demands ("CIDs") on DIRECTV, The CIDs requested DIRECTV to answer numerous interrogatories and produce numerous categories of documents. Among other things, the first CID requested DIRECTV to " [ p ] rovide copies of all versions of all websites and associated webpages " . În response, DIRECTV's counsel (1) advised the FTC that it had not maintained copies of the thousands of iterations of its website, and (2) explained that it was not possible to do so. This was explained repeatedly to the FTC, beginning as early as June 2010. 3. Subsequently, there were numerous conversations between the FTC and DIRECTV's counsel regarding the technological preservation and production limitations associated with the website, and, as a compromise, in August 2013, DIRECTV advised that it would produce monthly screenshots of the website. In its February 14, 2014 CID response letter, DIRECTV described to the FTC its then present understanding of the issues concerning preserving copies of the website. Attached hereto as Exhibit 2 is a true and correct copy of the relevant excerpt of that letter. 4. From 2010 to the filing of this action in 2015, DIRECTV preserved and produced documents depicting the website purchase flow at issue ("webflow"), including emails with attached screenshots depicting changes to the website and launch notices depicting changes to the website. Also, beginning in 2013, DIRECTV prepared, on a monthly basis, screenshots of the webflow and produced those to the FTC. na in LWWLWWLW IIMHHHHHTET HYTT HT DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 1 | | 5. In the five - year CID period, the FTC never sought to enforce or seek any relief under the CID's to address DIRECTV's preservation and production efforts relating to the website. 6. After the FTC commenced litigation, in June 2015, the FTC again requested historical copies of the website in document requests. In an August 18, 2015, phone call, I again explained to the FTC that it was technologically infeasible to preserve and produce every iteration of DIRECTV'S live, interactive website, but that DIRECTV would continue to preserve and produce monthly screenshots of the webflow (which it did through the close of discovery) . 7. Indeed, DIRECTV has produced tens of thousands of pages of screenshots and other ant documents depicting the content and manner of the disclosures historically. 8. Subsequently, the FTC's discovery to DIRECTV shifted to pursing the website's source code and supporting material to provide the ability to reconstruct the website. In an October 6, 2015 email to me, the FTC clearly stated: " Our request remains straightforward: DIRECTV must provide either historical versions of its website or the materials and information necessary to reconstruct historical versions. " Attached hereto as Exhibit 3 is a true and correct copy of that email. 9. In order to provide the FTC with a complete understanding of what source code and other information were available, by agreement, DIRECTV then provided two 30 (b) (6) witnesses to testify regarding " whether the source code for the website exists, but also, whether other assets, ewwwwww m including images, texts, or data exist that would have been delivered to the user as part of the website operating in the past. " The designated deponents were Douglas Wells, DIRECTV's Senior Director of Dotcom Product Development, to discuss the website function and reconstruction, and Liz Poling - Hiraldo, DIRECTV's former Director of Product Management and Strategy, Digital Media Group, to discuss the website content updates and preservation. 10. During Mr. Wells's deposition, he provided the FTC with a document titled " Dotcom 1. 0 Solution ", which he had prepared for the deposition to explain the structure and components, among other things, of the DIRECTV website. 11. Further accommodating the FTC, and making sure that the FTC had the information and data on the website that it needed, on December 16, 2015, DIRECTV permitted the FTC and its IL DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (I) 3: 15 - CV - 01129 expert, Dr. Nathaniel Good, to review and inspect DIRECTV's source code and asset management systems (ATG and TeamSite) in - person to evaluate and understand how the website functions and what data is capable of preservation. The FTC has since disclosed Dr. Good as an expert and produced to DIRECTV a simulated version of a 2013 iteration of the DIRECTV website created by Dr. Good. 12. On January 8, 2016, the FTC served on DIRECTV document demands 14 - 15, which sought production all of DIRECTV's historic website source code and related assets. Attached hereto as Exhibit 4 is a true and correct copy of the relevant excerpt of the document demands. 13. After DIRECTV served objections related to the scope of those demands, the FTC served a letter brief on February 19, 2016, to move to compel the requested source code and related assets, stating that the source code (in combination with related assets) is the most accurate evidence of the operation of any aspects or elements of the advertising that the FTC claims violates Section 5 and ROSCA " and " will allow the FTC to recreate reasonably accurate, interactive versions INIC OTT of the pages that appeared live on DIRECTV's website. " Attached hereto as Exhibit 5 is a true and correct copy of the FTC's email and attached letter brief. 14. On March 24, 2016, DIRECTV produced all historic website source code and related assets to the FTC, which included the data reflecting the webpages used in the Convergys Study and the A / B testing that the FTC claims in its Motion that DIRECTV did not retain in " interactive " form. 15. Additionally on March 24, 2016, during a meet confer with the FTC, DIRECTV expressly disclosed to the FTC that it had tested a live version of its website in 2015 in connection with expert consultant work. DIRECTV had also previously disclosed this to the FTC during the deposition testimony of Karen Leever on February 3, 2016. Attached hereto as Exhibits 6 and 7, WWWLWWLLL. m are the relevant excerpts from the transcripts of Ms. Leever's deposition and the March 24, 2016 Y 1 1 1 meet and confer, respectively. See Ex. 6 at 100: 22 - 103: 13, 111: 9 - 1: 14: 12; Ex. 7 at 86: 12 - 88: 8, 97: 17 - 20, 100: 20 - 101: 6, 102: 17 - 103: 9. 16. On September 16, 2016, DIRECTV served on the FTC the expert report of Dr. 27 | Yoram Wind, which incorporated the results of the Convergys Study. Attached hereto as Exhibit 8 are true and correct copies of relevant excerpts of Dr. Wind's report discussing the methodology and DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 TILL results of the Convergys Study. The modifications made to the Control webflow are shown in Figure 21 and Appendix A to Exhibit 2 therein. For the Court's convenience, Figure 21, alone, is attached hereto as Exhibit 1. A / B Studies 17. The FTC argues in its Motion that DIRECTV in the ordinary course of business conducted thousands of A / B tests relating to its terms and conditions of its service which are at issue in this case. (Motion at 7: 4 - 5) . This is not true. 18. I have repeatedly discussed A / B tests with the FTC. On June 14, 2016, I met and conferred with the FTC about, among other things, consumer research. During that meet and confer, the FTC requested A / B testing about consumer's responses to advertisements, and it gave as an example an A / B test of an ad with a price point slashed out. During that meet and confer, I informed the FTC that DIRECTV looked for these types of studies but that none like the FTC requested exist within the company. Attached hereto as Exhibit 9 is a true and correct copy of relevant portions of that June 14, 2016 transcript. 19. On July 15, 2016, the FTC took the deposition of Audrey Chen, in which she was " " " as asked questions about web analytics and A / B testing. As described in the concurrently filed Opposition, the FTC takes her statements out of context. Nor did the FTC include all relevant portions of her transcript, which it filed under seal as Exhibit E to the Declaration of Jacob Snow. Attached hereto as Exhibit 10 is a true and correct copy of additional relevant portions of that transcript which the FTC omitted. 20. On September 13, 2016, the FTC took the deposition of Giles Lundberg, who was DIRECTV's former Senior Vice President of Consumer Research. During that deposition, the FTC was asked Mr. Lundberg whether DIRECTV performed A / B testing on advertisements with different sized disclosures to see which advertisement received " better results. " Mr. Lundberg responded " * no, " and he further explained that this type of A / B testing was not the primary focus of testing in his department. Attached hereto as Exhibit 11 is a true and correct copy of relevant portions of that OIT transcript. VW THEY WILL WITH DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 - M le L 8 P O N 21. Contrary to the FTC's argument that A / B testing data has been destroyed, A / B tests | | that the company did conduct were produced to the FTC. For instance, numerous Power Point presentations that were produced to the FTC referred to A / B testing. Moreover, as described above, DIRECTV on March 24, 2016, produced its historic source code and all related web assets. A / B testing was included in this production. Additional A / B testing that the FTC specifically requested from DIRECTV was produced on September 9, 2016. Web Analytics 22. The history of the FTC's and DIRECTV's conversations about web analytics dates back to April 2014 during the FTC's Civil Investigative Demand, at which time DIRECTV first made offers to the FTC for it to inspect its web analytics data. 23. On April 30, 2014, I gave a presentation to FTC staff attorneys, including trial counsel Stacy Procter and Raymond McKown, about DIRECTV's web analytics platform, Site Catalyst. During this presentation, among other things, I informed the FTC that numerous types of o o 5 reports could be generated from DIRECTV's web analytics system and that DIRECTV could produce customized reports for the FTC, but limitations had to be agreed upon by the parties becaus of the thousands of iterations of reports that could be generated, many of which would not be relevant. I also emailed a copy of the Power Point presentation to the FTC on May 12, 2014. 24. Moreover, on June 4, 2014, I produced to the FTC via email sample reports from DIRECTV's Site Catalyst system. DIRECTV also answered the FTC's questions it asked about web analytics during the CID, as described in its submissions to the FTC that it made on May 6, 2014, May 16, 2014, May 19, 2014, and June 13, 2014. In the June 13, 2014 submission, DIRECTV also explicitly identified Ms. Chen as being responsible for compiling web analytics reports. ' In lieu of attaching these voluminous documents to this declaration, DIRECTV directs the FTC to the documents bates stamped as FTC - CONVERGEDIRECT - 000853 at 20; FTC - CONVERGEDIRECT - 001024 at 7 - 8; FTC CONVERGEDIRECT - 001013 at 11; FTC - CONVERGEDIRECT - 001013 at 10; FTC - CONVERGEDIRECT - 001215 at 11; FTC - CONVERGEDIRECT - 001024 at 8; FTC - CONVERGEDIRECT - 001026 at 7; FTC - CONVERGEDIRECT 001025 at 9; FTC - CONVERGEDIRECT - 001025 at 10; FTC - CONVERGEDIRECT - 001152 at 12; FTC CONVERGEDIRECT - 001181 at 8; FTC - CONVERGEDIRECT - 001163 at 9; FTC - CONVERGEDIRECT - 001166 at 10. ? In lieu of attaching these voluminous documents to this declaration, DIRECTV directs the FTC to the documents bates stamped as DIRECTV - 0568617 - 31. DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 25. Web analytics then became a topic of discussion during written discovery in this case. In response to the FTC's Request for Production No. 10 about " all Documents relating to Website Analytics " (see ECF No. 113 - 1), DIRECTV responded that it would " agree to produce additional, relevant, non - privileged documents, if any, based on the FTC's specific requests for documents. " Attached hereto as Exhibit 12 is a true and correct copy of DIRECTV's Supplemental Responses to FTC's First Set of Requests for Production of Documents. 26. Despite DIRECTV's willingness to run reports for the FTC, the FTC never made any specific requests that DIRECTV generate certain types of web analytics reports. 27. The parties instead agreed, during January 2016, that the FTC would meet with Ms. Chen so that the FTC could ask her questions about the available web analytics. To facilitate this meeting, I asked the FTC to provide me with a list of topics it wished to go through with Ms. Chen. But the FTC never did. Attached hereto as Exhibits 9, 13 & 14 are true and correct copies of relevant portions transcripts from the parties ' meet and confers which took place on March 24, May 10, and June 14, 2016, during which web analytics and this informal meeting with Ms. Chen were discussed, and where I reminded the FTC that there are thousands of iterations of reports that DIRECTV could run from its stored data, many of which were not relevant to the case. 28. Instead of providing to me the requested list of topics for a meeting with Ms. Chen, 18 | the FTC noticed Ms. Chen's deposition for July 15, 2016, which was one week prior to the then existing close of fact discovery. The FTC deposed Ms. Chen on that date, and then — despite having 20 | | had months to do so — met with Ms. Chen on August 4, 2016, to again discuss web analytics issues. 29. On August 10, 2016, the FTC finally sent to me for the first time, via email, a summary of the categories of documents and information regarding web analytics that it wanted DIRECTV to produce. The FTC filed a copy of its August 10, 2016, correspondence requesting this information as Exhibit F to the Declaration of Jacob Snow, ECF No. 207 - 7. On August 22, 2016, I indicated to the FTC what DIRECTV could and could not produce from this list (Snow Decl ., Ex. F at 3), and then on September 8, 2016, DIRECTV produced the documents it indicated it would produce, which bear bates numbers DIRECTV - 0568617 - 31. DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129 I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on November 30, 2016, at Century City, California Chad Hummel Ēo covou to 5 ā ū Ē Ē Ē So Ñ DECLARATION OF CHAD HUMMEL IN SUPPORT OF OPPOSITION TO FEDERAL TRADE COMMISSION'S MOTION FOR SANCTIONS UNDER RULE 37 (E) (1) 3: 15 - CV - 01129