GEORGE & DONALDSON, L.L.P. LAW FIRM 1100 NORWOOD TOWER 114 WEST 7TH STREET AUSTIN, TEXAS 78701 TELEPHONE: (512) 495-1400 FACSIMILE: (512) 499-0094 www.gdf.com NANNESKA N. HAZEL (512) 495-1424 nhazel@gdf.com September 9, 2002 Barry K. Bishop via Fax 512-474-1129 Clark, Thomas & Winters, P.C 300 West 6th Street, 15th Floor Austin, Texas 78701 Aaron C. Gundzik via Fax 213-623-6699 John Cotton Cotton & Gundzik, L.L. P. 725 S. Figueroa St., 34th Floor Los Angeles,California 90017 Re: FundsXpress Financial Network Inc. v. Digital Insight Corporation, et al., In the Western District of Texas, Austin Division; No. A-02-CA-141 SS. Dear Counsel: I am writing about the telephone conference we had on Friday to resolve disputes about discovery informally as required by the Protective Order. We agreed to draft more specific answers to your interrogatories 2, 4-6, 10, and 11 hopefully by Friday, September 13, 2002. In drafting those more specific answers, however, I find myself in a quandary not of my own making. I must refer to information and documents in my answers that you have designated as attorneys' eyes only. I must also have my client verify those amended answers -- presumably without letting him see the information he is verifying but not allowed to see. This makes no sense. You did not want to commit yourselves to re-designating the documents we had requested. I cannot have our responses verified until you do so. Although I plan to have more complete answers drafted, I do not intend to serve those answers until we have resolved the reclassification issue. By this letter, we are formally objecting to Digital Insight's designation of these documents as Attorneys Eyes only under the terms of the Protective Order under which discovery in this lawsuit is proceeding. In our telephone conference, we also discussed your unwillingness to provide us names of financial institutions that Digital Insight contacted, spoke to, and sold or attempted to sell its services to unless FundsXpress could provide a list of financial institutions that it had lost as clients or had failed to sign as clients because of Digital Insight's use of FundsXpress's stolen documents and information. You asked why these documents were relevant. Here is why. While I offered to provide you with a list of financial institutions named in your own documents as having been "courted" with the help of FundsXpress's information, such a list would not exhaust Digital Insight's liability for its contacts with financial institutions. I explained that we had a right to know what Digital Insight said to the financial institutions it contacted during the period between January 1, 2000 and April 18, 2002 to determine if FundsXpress's financial information and trade secrets were used to try to persuade those institutions to become clients of Digital Insight. It does not matter whether those institutions were existing clients of FundsXpress. Nor does it matter whether those institutions eventually became clients of Digital Insight. All of them were potential customers of FundsXpress and FundsXpress's confidential information was available to Digital Insight when it was attempting to make them or keep them as Digital Insight clients. Digital Insight obviously believed this information was valuable because it was provided to all Digital Insight's sales personnel and defendants Edwards and Brennan were repeatedly congratulated for obtaining it. FundsXpress also has a right to discovery what financial institutions Digital Insight contacted in order to defame FundsXpress. Digital Insight's own documents, for example, show that on February 26, 2002, Ronald Goffman told the sales "teams" of Digital Insight and Vincent Brennan that the First National Bank of Brookfield Illinois had received a call from the OCC saying that FundsXpress would soon be going out of business. Early the next day, Brennan directed Digital Insight's "Sales Management" and various officers to call financial institutions to "confirm." Susan Steele asked her "team" and Benjamin Wyrick to "call on some FI's that have dealings with Funds x" and to check on "our holding company in Texas," and to "tap" other "resources" to ask whether the OCC had told them that FundsXpress would be going out of business. Other emails show that Digital Insight salesmen such as Rebecca Duckworth continued to use this story, even after this lawsuit was filed, to suggest that FundsXpress had been determined by the OCC to be financially unstable that that people should have "back-up insurance" just in case FundsXpress went broke. Still other emails show that Digital Insight personnel were directed to "get a standard message out to the field of how to address this [the OCC "report"] to its customers. The OCC is prevented by statute from making such a statement and contacting financial institutions and suggesting that such statements had been made was defamatory. FundsXpress has a right to discover to whom Digital Insight was making these defamatory statements about an "OCC statement." We repeat our requests for documents showing who Digital Insight contacted between January 1, 2000 and the end of April 2002 and ask that you respond to our requests by Friday, September 13, 2002. Because I have referred to specific documents in this letter that are still classified as attorneys' eyes only, I will not send a copy of this letter to our client at this time. I cannot conceive, however, that these restrictions will continue. Yours sincerely, GEORGE & DONALDSON, L.L.P. By Nanneska N. Hazel cc: Peter Nolan/Stuart Whitehead Martha Dickie A. Boone Almanza [Fax cover sheet from George & Donaldson, L.L.P., to Jonathan Dorton and John Burns at FundsXpress and Peter Nolan and Stuart Whitehead at Winstead Sechrest & Minick from Nan Hazel at G&D. The subject is "FundsXpress(R)/DI", the date is 9 September 2002. There is a warning at the bottom of the page to the effect that this fax is covered by the work product privilege and the attorney-client privilege.] [Fax result page for faxing to 493-2625, 493-2513, and 370-2850, transmittal timestamped 9 September 2002, 9:25 AM. All statuses were successful.]