OneWorld fights back

Regarding the imminent Sean Reeves ruling

Monday August 12th 2002, Author: James Boyd, Location: Australasia
Last week the the America's Cup Challenger of Record and Defender (COR/D) announced that they had reached agreement on the details of a 'Supplementary Deed of Indemnity'. This deals with the concerns of the five-member Arbitration Panel over their personal liability that might follow any of the contentious cases that they must rule on. It also creates a fund for possible future insurance purposes that may exist after this current America's Cup cycle has ended.

The deed is currently being circulated to all participating syndicates and yacht clubs for signature.

On behalf of the Challenger of Record Management Dyer Jones commented: "I expect all challenging syndicates and their yacht clubs to sign off on this within the next few days. There are currently several outstanding issues before the Arbitration Panel and finalising this Deed of Indemnity will pave the way for their resolution well in advance of the first race of the Louis Vuitton Cup."

Team New Zealand's Russell Green agreed: "We are happy with this Deed of Indemnity and pleased that this issue has been resolved. We have a great relationship with CORM and although this process has been lengthy there has never been any confrontation between any parties. Moreover, there has only been constructive co-operation in dealing with this difficult and highly complex issue."

COR/D is the partnership between the Challenger of Record and the Defender responsible for the management structures that are common to both events, such as the Arbitration Panel, the International Jury and the ACC Measurement Committee.

With the Supplementary Deed of Indemnity signed, the Arbitration Panel will be free to rule to on the Sean Reeves case. With a decision on this imminent, Craig McCaw's OneWorld syndicate have issued the following statement:

Admissions by Sean St Leger Reeves, made under oath at his videotaped deposition in Seattle on August 8 and 9, revealed that the sworn and verified statements he made earlier this year regarding his possession and disclosure of OneWorld's confidential yacht design drawings were false. Those false statements were first publicly filed by Reeves' attorneys in the United States District Court for the Western District of Washington in February, 2002. The false statements thereafter received worldwide publicity.

Reeves' February statements were contained in his 'verified answer' which he certified was true and correct to the Court and were repeated in an affidavit filed with the Court on April 18, 2002:

'The only arguably Confidential Information from OneWorld Challenge (OWC), that I have had in my possession, custody, or control following termination of my relationship with OWC, is a duplicate original of a certain Design Package purchased by OWC from Laurie Davidson in August 2000.'

In addition, Reeves stated:

'It was kept in a locked cabinet at my home until it was requested by OWC in late 2001, at which time I forwarded it to my attorney, Guy Michelson, in Seattle.'

Reeves also stated:

'It is my understanding that at U.S. Magistrate John Weinberg's suggestion during a telephone hearing demanded by OWC late in the afternoon on Friday, November 30, 2001, over OWC's objections this Design Package is now being held by attorney Art Claflin in Seattle for safe keeping. I have no other arguably Confidential Information of OWC in my possession, custody or control.'

The April 18, 2002 affidavit bears Reeves' signature and a notary public's signature and seal stating that the affidavit had been 'subscribed and sworn to' under oath. Four days later, Reeves again repeated the false statements in a declaration filed with the Court bearing a notary public's seal and stating that 'I, Sean St. Leger Reeves of Auckland, New Zealand, declare under penalty of perjury as follows: . . . .'

However, contrary to these sworn and verified statements, Reeves testified in his deposition last Thursday and Friday that before returning the duplicate original design documents to his Seattle attorney nine months ago without telling even his Seattle lawyer he made full size copies of the drawings, together with copies of OneWorld's hydrostatic studies that were attached to the drawings. The copies were made for Reeves at a reprographic center in New Zealand. Reeves admitted in his deposition that he had taken the duplicate original of the design drawings from OneWorld's premises in New Zealand without permission and without disclosure to OneWorld.

Reeves did not disclose the truth regarding the existence of those copies to OneWorld, OneWorld's counsel, or even to his own Seattle attorney Mr. Michelson, until the day before his deposition. Reeves has yet to file his admissions with the Court.

Reeves also testified at his deposition that through his New Zealand counsel he recently delivered copies of the Design Package to representatives of Team New Zealand. He admitted that he did so even though he had been formally enjoined by the United States District Court and even though he had personally drafted and negotiated for OneWorld the original contract pursuant to which Laurie Davidson had sold the design drawings to OneWorld. The contract drafted by Reeves - a lawyer - included representations that Laurie Davidson had title to and owned the intellectual property - the design documents - that he was selling to OneWorld. Reeves knew that the design documents bore Laurie Davidson's copyright and OneWorld's name.

Reeves further testified at his deposition that approximately a week before the deposition he had made his copies of the design drawings available for inspection by a New Zealand naval architect. Reeves testified he could not recall the name of the naval architect, and that he had not appointed him or paid him and did not know who the architect was working for.

OneWorld's counsel inquired during the deposition as to any potential defenses Reeves might assert to a claim of perjury regarding his prior false statements. Reeves responded by testifying among other things that there was no Bible made available for him to put his hand on when one of his prior sworn statements was made; that the New Zealand notary he had appeared before did not actually swear him in before he signed the document; that one statement which contained a typographical error might not be a valid oath because it said that the statements had been 'worn under oath' rather than 'sworn under oath;' and that there was a difference between certifying the truthfulness of a statement to the Court and taking an oath.

OneWorld contends that these statements are part of a continuing course of deception by Reeves. As recently as June 27, 2002, Reeves misled the Court by filing a motion seeking access to the design drawings being held for safekeeping by the custodian in Seattle. Reeves argued that he needed access to the design drawings in order to conduct his defense. Yet, under oath at the first day of his Seattle deposition, Reeves admitted that he had secretly kept a copy of the design drawings in New Zealand. Thus, as recently as the end of June, Reeves was continuing his deception of the Court, OneWorld, OneWorld's legal counsel, and his own Seattle attorney.

Following these admissions, Reeves' Seattle attorneys filed a motion with the Court seeking to withdraw from representing Reeves. Although the motion did not specify the reasons for the request to withdraw, it cited a Rule of Professional Conduct that permits an attorney to withdraw "if (1) The client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent; (2) The client has used the lawyer's services to perpetrate a crime or fraud; (3) The client insists upon pursuing an objective that the lawyer considers repugnant or imprudent; (4) The client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled; (5) The representation will result in an unreasonable financial burden on the lawyer or has been rendered difficult by the client; or (6) Other good cause for withdrawal exists."

OneWorld believes that Reeves, and possibly others, have acted in contempt of the United States Court by keeping, using and disclosing copies of the design drawings and then falsely swearing in his court papers that the only arguably confidential OneWorld information that he had possessed had been returned to a custodian in Seattle. The Court had expressly restrained Reeves, and anyone acting in concert with him, from using, disclosing, offering to disclose, or otherwise benefiting from, directly or indirectly, any of OneWorld's confidential and proprietary information or trade secrets. OneWorld also believes that Reeves violated the Court's protective order, which stated that Reeves 'shall not be shown' OneWorld's design documents. OneWorld intends to seek an order from the Court holding Reeves in contempt and imposing appropriate sanctions for his misconduct.

OneWorld also believes that Reeves may have committed a violation of United States federal law by making false statements to the Court under oath. Furthermore - as Reeves, who is himself a lawyer testified - under some circumstances the taking of design drawings could constitute a criminal act. OneWorld intends to request that the United States Federal Bureau of Investigation and/or the United States Attorney's office investigate potential criminal conduct both in respect to the taking of OneWorld's property and with respect to false testimony under United States law, including 18 U.S.C. § 1623.

OneWorld is shocked by Reeves' misconduct, and by the misconduct of Team New Zealand and others who have apparently acted in concert with him. OneWorld is concerned that Team New Zealand, the trustee of the America's Cup, may have breached the America's Cup Protocol. As such, OneWorld is making an application to the America's Cup Arbitration Panel seeking immediate return of all copies of OneWorld's design package and appropriate penalties against Team New Zealand for any breach of the Protocol that may have occurred.

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