Free Notice (Other) - District Court of Connecticut - Connecticut

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 1 of 42

UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE . . Chapter 11 . ACE-Texas, Incorporated . . . Debtor(s). . Bankruptcy #99-00166 (PJW) ............................................................. . United States of America, . . Plaintiff, . . vs. . . State Street Bank and Trust . Co., as Trustee for Junior . Subordinated Secured PIK . Notes, et. al. . . Defendants. . Adversary #01-4605 (KJC) ............................................................... IN RE: Wilmington, DE July 13, 2006 9:00 a.m. TRANSCRIPT OF TELEPHONIC STATUS HEARING BEFORE THE HONORABLE KEVIN J. CAREY UNITED STATES BANKRUPTCY JUDGE

APPEARANCES: For The Plaintiff, United States of America: Alan Shapiro, Esq. U.S. Department of Justice Tax Division 555 4th St. N.W., Room 7122 Washington, DC 20044

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 2 of 42

2 Peter Sclarew, Esq. U.S. Department of Justice Tax Division 555 4th St. N.W., Room 7122 Washington, DC 20044 For the Defendant(s), State Street Bank and Trust Co., as Trustee: For Allstate Insurance: Kathleen LaManna, Esq. Shipman & Goodman, LLP One Constitution Plaza Hartford, CT 06103-1919 Guy S. Neal, Esq. Sidley, Austin, Brown & Wood, LLP 1501 K Street N.W. Washington, DC 20005 Andrew Schwartz, Esq. Foley Hoag, LLP 155 Seaport Boulevard Boston, MA 02210-2600 Jason Smith Writer's Cramp, Inc. 6 Norton Rd. Monmouth Jct., NJ 08852 732-329-0191

For Media Communications Partners, et. al.:

Audio Operator: Transcribing Firm:

Proceedings recorded by electronic sound recording, transcript produced by transcription service.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 3 of 42

3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Schwartz. THE CLERK: THE COURT: ALL: Court is now in session. Good morning, Counsel.

Good morning, Your Honor. The purpose of this status hearing is just

THE COURT:

-- was initially anticipated, at least by me, it was for the purpose of touching base about the status primarily of what the District Court was doing and what, if anything, followed from that. I did receive the letter from the Government dated July And I suppose we can talk But if I could hear first

11th, along with the attachments.

about some of those things as well.

about the status of the District Court's decision on the appeal in Connecticut, I would appreciate it. MR. SCHWARTZ: Your Honor, preliminarily, it's Andrew

We had submitted a response to the Government's

letter late yesterday to your Chambers, I believe, by hand. And I wonder whether that reached you. THE COURT: Well, it didn't reach my desk. Whether

it's somewhere in the confines of my Chambers, I couldn't tell you. MR. SCHWARTZ: All right. Well, obviously we didn't We hastened to get a

get Mr. Shapiro's letter until yesterday.

response in to you by the end of the day, and we were concerned it might not reach your attention quickly enough, which is why I've raised that as an introductory comment. THE COURT: Okay.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 4 of 42

4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SCHWARTZ: We can cover the points that we've made

in that letter today orally. THE COURT: All righty. Your Honor, this is Peter Sklarew. It

MR. SKLAREW:

was my intention after the last hearing to wait for a transcript and file some sort of renewed request to expedite a ruling in the District Court, and unfortunately, no transcript came in. It's longer than usual that that Court has taken to -

- the Court Reporter has taken to respond to our request for a transcript. And the -- in the lack of transcript, Mr. Shapiro

has contacted the Court's reporting system, or I guess the coordinator there a couple of times but has not received return phone calls. So I never filed anything.

Instead, what we did was yesterday I asked the appellees in that case to join me on the line, and Ms. LaManna for the Indentured Trustee, with the permission of Debtor's Counsel as well, two of us called Chambers and spoke to the Law Clerk to ask if there had been any change or whether we'd get a status report from the Court on whether or not anything was imminent. And what we were told was that another criminal trial had intervened and had just concluded. In other words, that over

the past month, Judge Thompson's presided over a new criminal trial after he got off the Cendant trial that -- the testimony for which ended a couple of days ago, and that post-trial -and maybe even ended 2 days ago or something -- and that post-

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 5 of 42

5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I think. (Laughter) MR. SCHWARTZ: I'd actually like to interrupt, though, trial briefs are due I don't know exactly well on -- when on that. I guess there's some motion to draw out the verdict of I gather that is happening.

some sort or something like that.

So he hasn't actually hasn't worked on the opinion, it appears, in the past month. MS. LAMANNA: the Indentured Trustee. That's all we have.

Your Honor, this is Katie LaManna for That's correct, in a nutshell. It was

reported to us that nothing has happened on that since our last call. MR. SKLAREW: It is still my intention, Your Honor,

when we get a transcript of the May 8th hearing, I believe, to -- excuse me, June 5 and 8 hearings, when the continuance was granted and just add some of the questions I had about how many things might have to be done and some of the discovery things were put on hold pending whether a Trustee is appointed and when and what a Trustee does. shut my cell phone. know why. The -THE COURT: It's Mr. Schwartz calling to distract you, And -- excuse me, I've gotta I do not

It just went off several times.

and say that there is a transcript from June 5th, Mr. Sklarew. We have had it for a long period of time. we do not have one. June 8th, I think,

But for June 5th, which is the critical

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 6 of 42

6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hearing as far as I think what you have in mind, we've had a transcript for weeks -MR. SKLAREW: MR. SCHWARTZ: you by PDF -MR. SKLAREW: (Laughter) MR. SKLAREW: MR. SCHWARTZ: Please do that. Like I said, we've had it since almost Please forward it to me -Really. -- and we'd be happy to supply it to

immediately after the hearing, so I'm -- it's not clear why you had that difficulty, but we'll certainly -- I'll ask Mr. Dalmineres, who's in our office, to email it to you while I'm speaking. MR. SKLAREW: and file something. That's terrific. And I will go ahead

Mr. Shapiro's left, I think, three

messages with the Court's reporting system over the past week and a half or so for returned phone calls and not had one. I don't know what's going on with respect to that. So

But I do

still intend to file something, Your Honor, that will essentially be trying to explain to the District Court the things that we think a Trustee might have to do if the Trustee decided to waive the privilege, and the time it might take to do that, and then what might have to follow before the October trial in the hope of apprising the District Judge that the continuance to October does not mean we can wait until

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 7 of 42

7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 September, for example, for a ruling. So I 'm hoping that -- and as Your Honor is aware, it's not quite possible to force the District Court to do anything other than to beg, essentially, at this point. MR. SCHWARTZ: Media Defendants. Your Honor, Andrew Schwartz for the

I'd like to speak to the issue of lack of We are not parties

progress in the District Court proceeding.

in that, although the Indentured Trustee is, as Ms. LaManna has indicated. But what we are experiencing now, unfortunately, is

what we had envisioned might occur when we were before you on June 5th, and that is further delay in aid of, you know, what we've regarded as speculative developments to begin with. But

it has been over 7 weeks since May 23rd, when there was first an indication of the outcome of that appeal in Connecticut. It

has been over a month since you telephoned the District Court in Connecticut for confirmation of what was anticipated there. And now we have all sat waiting, and nothing has occurred. It's a matter of considerable concern to us. As you know, we've never really accepted the notion that the trial should have been continued in the first place on account of this development, but you overruled our position on that. And that's a ruling we have to live with now. But we

are increasingly concerned with the passage of over 7 weeks and no developments that -- and now we learn that some other matter, I'm sure of importance, has intervened that there may

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 8 of 42

8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be yet further drift as we get deeper into the summer. And our

case, which has been pending since November 1998, is being hamstrung by the lack of any progress in the Connecticut proceeding. And to the extent it's Mr. Sklarew's intention to submit a copy of the transcript from June 5th to the Connecticut Court as part of an effort to move things along there, I would suggest that perhaps the transcript from today's conference should be included as well. And what the Defendants would like

to see is a reaffirmation, if you will, from the Court here that the October 16th trial date is a firm date. In fact, you

were going to set a trial for September, but on account of the parties' various scheduling issues, we couldn't all convene on a date in September or any earlier in October. But that was

your original intention was only to continue it until September. Now here we are a month later into October, and we If the October date

do not want to see that date jeopardized.

were to slip, then you'll end up in the holiday period, and before you know it, it'll be February of 2007 before the parties could all convene. So what we would like to see come from today's hearing is a very firm statement that this October 16th date is going to hold, no matter what happens. And if a Trustee is appointed

and takes various actions that may have some bearing on the case between now and then, we'll all deal with those

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 9 of 42

9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 developments. But if, for whatever reason, it doesn't happen

in Connecticut or it doesn't happen in sufficient time in Connecticut for various events, speculative as they may be, to play out, at some point, you have to move on. And we think

we're long past that point in this case, and we just want to register our very profound sense of concern with the drift and our commitment, and hopefully the Court's commitment, that we can secure to go forward on October 16th. THE COURT: Well, Mr. Schwartz, I share some of your

frustration, and I think that my statements and rulings repeatedly, over the short course of my involvement, indicate that I intend to go forward with this case, and I intend take it to trial. The Government filed several motions and appealed

at least one of my rulings trying to move the trials elsewhere, and I think what I've done tells you that. Now that having

been said, as with the last ruling which granted the Government's request for a delay, when developments occur which warrant further delay, despite my intent to take this trial, I have to consider the developments on their merits. And based

upon an unequivocal statement by the District Judge, both to the parties and to me in my conversation that he intended to reverse the Bankruptcy Court's decision with respect to conversion, I felt that that was a significant enough development that the trial had to be postponed. Now, I had

also expected, as I think the parties had, that that

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 10 of 42

10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 decision, the written decision, was imminent. that other things have intervened. myself. So I don't know when the District Court is going to render a decision, but hopefully it'll be soon. And when that comes I understand

Believe me, I've had that

down and a Trustee is appointed, we'll then see what, if anything, the Trustee wants to involve him or herself in in this adversary; whether it's simply limited to deciding whether to waive the privilege, or whether it involves moving to intervene and/or moving to change venue with or without the joinder of the Government. And we can speculate about all the

possibilities of what might happen, but I -- hopefully the developments will occur soon, and I'll respond to them based upon the circumstances as they then exist and upon the request of the respective parties. But I -- you know, we're gonna move

it along, so long as it's within my power and so long as the circumstances warrant that we continue to move along. All right. Anyone else care to be heard on what we've

discussed so far? MR. SKLAREW: Your Honor, I would only ask that Mr.

Schwartz, if he'd like me to include today's transcript, which is perfectly fine with me, also contact me if he gets a copy as soon as he does in case we don't get it again. And assuming it

can come as quickly as he got the last one, I think waiting another few days for it is probably appropriate so that I could

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 11 of 42

11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do one filing. THE COURT: Well, I'll order that the transcript of

today's teleconference be prepared on an expedited basis. MR. SCHWARTZ: MR. SKLAREW: THE COURT: Thank you, Your Honor. Thank you, Your Honor. Okay, let's turn to the other

All right.

issues, but before we discuss specifically what's been raised in the letter and any response which I have not been able to locate -- we were scurrying around while we had the discussion just now and haven't turned it up. at the last hearing. Let me just say what I said

I don't want to, because of the increase

in cost and time and effort, continue to have a rolling extension of both discovery and/or pre-trial preparation before we know what a Chapter 7 Trustee is going to do, if anything. I'd rather just deal with it all at once if I can. Now, that having been said, I don't want to hamstring anybody so that by the time the Trustee does something, you know, we're faced with another request to continue trial because the Trustee hasn't had enough time to do things. I do

want to put us in a position where we can go forward in October on a timely basis. So with that framework, at least from my

standpoint, I'll turn to the Government and ask them to talk about what they'd like. MR. SHAPIRO: for the Government. Okay, Your Honor, this is Alan Shapiro

First, some of my overall concerns, which

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 12 of 42

12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 caused me to write the letter, are that after I had received all of the objections, the trial exhibits, briefs -- all the other stuff that I'm supposed to receive pursuant to the pretrial order process from the Defendants -- it would be something that I would like to have would be, you know, several weeks without having to continue to participate in doing more briefs, documents, and other things with the Defendants and just have undivided time to get ready for this trial. And that And I

is a large part of what has led me to write this letter.

think looking at the Defendant's pre-trial order documents that they have thus far turned over to the Government and that I filed with my letter, together with the Government's similar documents, is we can expect that there will be countless evidentiary and legal substantive issues raised by the Defendants. And I feel that the Government really needs a

significant amount of time to research these and to incorporate the results of its research into its preparation of its presentation of its case in chief and what it anticipates it will have to do in response to the Defendant's case in chief. Now, what I propose for today is that perhaps if we turn to page 4 of my letter where I lay out the beginning of about seven items, maybe we could go through them one at a time. I

will say a few things about, you know, the first item that is not contained in my letter, and the Defendants can say what they wanna say and, you know, we can take it from there. I

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 13 of 42

13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the way. think that might be the way that we can plough through these and reach some resolution. THE COURT: Any objection? We have no objection to proceeding in

MR. SKLAREW:

that matter, Your Honor, as long as we'll have our opportunity to address these points. We have addressed, of course, quite a

few of them already in the letter that -THE COURT: All right. That was just handed to me, by

I do have it. MR. SKLAREW: Would you like to take -- it's only a Would it make sense for us to pause long

couple of pages long.

enough for you to review it? THE COURT: I have actually. Oh. Your Honor, this is Katie LaManna again.

MR. SKLAREW: MS. LAMANNA:

Just for the record, the Indentured Trustee, given the timing, did not have an opportunity to join in that letter, but they do join in all the principles and positions taken in the letter. THE COURT: Very well. Mr. Shapiro? As a preliminary matter, one

MR. SHAPIRO:

All right.

thing that I noticed in my rather quick review of the Defendant's materials is that they have changed the designation of one of their witnesses, James Wade, who is one of key witnesses from the Media Communications Group, from a person who will be called to a person who may be called. As you may

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 14 of 42

14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recall, in the middle of May I believe, the parties were required to exchange lists of witnesses that they would or may call. And we expected, both as a result of the document that I

just described that the parties exchanged in mid-May, but also because of comments and statement made by Judge Walsh at an earlier time about parties bringing their key witnesses to the case, that Mr. Wade would be available for the Government to question at the trial. And quite candidly, in preparing the

pre-trial order and in further preparation of our case for trial, I have identified that there are additional exhibits listed in our trial exhibit list that Mr. Wade apparently signed and that were not used at his deposition, and that I expect to be able to question him about if, for no other reason, to authenticate and move those documents into evidence. So I would like to get some sort of ruling that indicates Mr. Wade will be required to appear and be available for the Government to question at trial. MR. SCHWARTZ: There need be no ruling. Your Honor, it's Andrew Schwartz. Mr. Wade will be present. This was

not referenced in Mr. Shapiro's letter of the other day, but we will -- whether we choose to call him or whether we may call him is a strategic determination that will be made at the trial. But in terms of whether he's available, he is somebody

controlled by our clients, and we've always understood that to be the ruling in the case, consistent with some -- what Judge

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 15 of 42

15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Walsh had said, and likewise for the Government with respect to all the various witnesses it controls, so Mr. Wade will be there. This is a non-issue. THE COURT: Very well. The next item from page 4 is the United

MR. SHAPIRO:

States' designation of pages and lines of deposition testimony. As you may have seen in the Pre-Trial Information Memorandum prepared by the Defendants, they raised a bunch of objections about that. And I read your letter of July 12th quickly. I'm

not sure that I recall seeing anything in it regarding what I've written in our July 11th letter, which you also have. strikes me that if there isn't anything in the July 12th letter, then perhaps the Defendants have withdrawn their objection to the Government's designation of pages and lines of deposition testimony. But if not, I think that we have laid It

out quite a few reasons why our designation of pages and lines of deposition testimony is proper and should be accepted as such. MR. SCHWARTZ: Your Honor, Andrew Schwartz. Let me

just put this into context.

As you'll recall from one of the

prior last two conferences, we had made a reasonable request that the Government amend its deposition designations so as to give us the pages and lines, not just the pages that it wished to designate; the rationale being we couldn't tell where Mr. Shapiro was starting and where he was stopping. And as you

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 16 of 42

16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know from reviewing depositions, sometimes questions carry over from page to page, or answers carry over and separate subjects start in the middle of a page. So we had asked for that

clarification, and there was a little disagreement on that about how long it would take and what-not, but eventually you ordered the Government to do what we had asked, giving Mr. Shapiro considerable time to do something that, in our estimation, should have only taken several hours. But in any

event, we then received within the timeframe that you had set, the Government's Amended Superseding Information, and with it the deposition designations -- the new deposition designations. And although you couldn't tell this from reading the covering memorandum that Mr. Shapiro included, when you actually went and looked at the actual deposition designations now by page and line, it turned out that what the Government had done, in addition to supplying the line numbers that had previously been missing, was it added various pages, which it had not asked for leave to do and had not indicated that it was doing. And it

had withdrawn other of the designations from its original goaround. So we had already been through the process of

reviewing the Government's designations for purposes of making counter designations. We thought we'd just be checking the

opening line and closing line to make sure we understood what the Government was trying to do, and it turned out the Government was doing more than it had asked leave to do or been

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 17 of 42

17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ordered to do. So we registered our objection, because there

had been no leave to amend these things to add additional designations or withdraw other ones. considerable burden on us. And it did impose a

In essence, we had to go back and

go through the whole thing again a second time, which is not what we anticipated. Having said all that, and having had the opportunity to consult with all the other Defendants' Counsel about this, and given the passage of time and how long there is between now and the trial, we have decided not to stand on this objection. did note it as a matter of the record in the papers that we submitted in response to the Government's Amended Superseding Pre-Trial Information Memo. But at this point, we're not gonna We

stand on this objection; we've had adequate time to go through the new additional designations and to take stock of the ones that have disappeared and adjust our counter designations accordingly, we think. THE COURT: Okay. Mr. Shapiro? I

MR. SHAPIRO:

Your Honor, this is Alan Shapiro.

will just quickly note for the record that I have several additional reasons, which I would argue counter to what Mr. Schwartz just said. If the Court feels that it's necessary to If not,

hear them to preserve the record, I'll provide them. in light of what Mr. Schwartz said, I will not. THE COURT: Yes, I mean, he said it's okay.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 18 of 42

18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SHAPIRO: Okay. The next item up is the item 2.

When we spoke with you the last time, I believe on June 8th, I had raised the issue that in light of what had occurred during the depositions themselves and throughout this case with the uncountable number of objections, that it would be necessary for the Government's preparation to have some specificity of what things designated by the Government from the deposition transcripts that the Defendants are objecting to and their grounds for the objections so that we can research all of their objections and decide, you know, how we want to respond to them, either at trial, or in some instances if necessary, we may seek to file a Motion in Limine, which you may or may not choose to rule on before trial. But most importantly, by

having their objections and their grounds in advance, it will enable us to avoid the unfair situation of going to trial not knowing what specific evidence we may or may not be able to get in. It alters the way we would prepare our case. Without

having certainty, or at least an idea of, you know, what things we know for certain will not be objected to and what passages of testimony will and then be able to prepare a contingency plan in case the Court upholds objections, I think it should be borne in mind that if you look at the deposition transcripts themselves, the Defendants made literally hundreds of objections. I believe Ms. LaManna made 140 or more objections

just in the deposition of Richard Dopple.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 19 of 42

19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now I'm not gonna get into my characterization of what I think of those objections, but I think that does at least begin to give you an idea of how many objections the Government anticipates, not only based on evidentiary grounds, but also very different positions the parties take on the substantive issues. And we would like to have their objections made clear

to use at this time so we can use the summer to properly prepare and be able to go into Court and to have answers for you when they raise these objections. THE COURT: Mr. Shapiro, I tend to agree with you that

it might be helpful for everybody, including the Court, to have that clarified before trial. It's also my experience with the

use of designations and counter designations that objections -many of the objections, sometimes most of them, made at the depositions themselves are not re-made at trial. those may fall through. So a lot of

But if I decide to require that this

exercise take place prior to trial, I'm not inclined to do it today. We'll set -- before we're done, we'll set another

status conference in another 30 days or so and see where things stand at that point. I'm also -- it may be that further developments may change some of the parties' views about this particular part of the pre-trial activity, so let's -- I'm inclined to just wait a little longer before so ordering. But I'm mindful of the

Government's position, and it has some merit.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 20 of 42

20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 said. MR. SHAPIRO: Your Honor, I appreciate what you have

I want to at least raise one other thing for you to Certainly

think about, although it may not change your view.

we can have a status conference in another 30 days, and I'm sure it will help everyone. But the problem is that if we put

off a decision once again for 30 days, you're not going to order them -- assuming you even agree with me on that date 30 days from now that we should exchange these objections, you're not gonna order the parties to turn their objections over that instant. So then there'll be another lag time. I think,

frankly, in making all of their objections and in all the years they've had to look at this, the Defendants already should be prepared to provide us what their objections are and their grounds for them. And so if you wanna provide a period of time

for them to turn them over, certainly that's what I expected. I had proposed the end of this month. If you feel that that's But I think that

an insufficient amount of time, I understand.

we should set a date and allow both parties opportunities to make these objections known to their opponents and let their opponents have a chance to prepare for them. THE COURT: Let's move on. MR. SCHWARTZ: Your Honor, we're gonna hold our tongue We have things we would say if the I'm not going to today, but thank you.

on this particular point.

issue were going to be debated any further, but we'll save this

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 21 of 42

21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 for another time. THE COURT: Mr. Schwartz. And that's why I jumped in ahead of you,

I didn't think it was necessary. All right. Let me find my place in this

MR. SHAPIRO: order, Your Honor. THE COURT:

Okay. Okay. Another thing we encountered when

MR. SHAPIRO:

we reviewed the Defendant's Pre-Trial Information Memoranda, and in particular their statement of what they allege to be uncontested facts, is a significant absence of evidentiary citations for their paragraphs. couple of quick examples: I mean, I'll just note a We would like the

2, 6, and 15.

Defendants to provide us with the documents or testimony that they relied on for the allegations in their statement of facts. The Government painstakingly provided them, I believe, for every paragraph, if not for every sentence of every paragraph, that we employed in our statement of what we alleged to be the uncontested facts. And in addition, they did not, in cases

where they did cite a document, always tell us which page of what might be a lengthy document where you would find, you know, the information that they were relying on. And that too

would be, you know, very useful to us and helpful to us in doing what needs to be done in the future. In addition, there are documents identified in the statement of alleged uncontested facts prepared by the

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 22 of 42

22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Defendants which were not produced to the Government during the course of discovery, even though it would be our contention that they should have been produced. And I give you as an You

example paragraphs 230, 231, 234, and 235, in particular.

know, the Indentured Trustee's listing documents which they've apparently had in their possession for some time, and they've never produced them to us. So it wouldn't even be possible for

us to even begin to decide whether to contest or not contest, you know, facts for which we don't even have the documents. So those are a couple of things that I feel need to be upgraded with respect to #3. MR. SCHWARTZ: Your Honor, Mr. Schwartz here again. I

don't think you can take up #3 without looking ahead to #4 and 5, because these are all related points, so let me try to -THE COURT: I agree. They are related, and --

MR. SHAPIRO:

Your Honor, if you wanna take up 4 and

5, I'd like to finish my answers to those before Mr. Schwartz proceeds. THE COURT: Go ahead. I have looked through all of their --

MR. SHAPIRO:

the Defendant's Statement of Facts quickly and I note -­ and I've also read their letter of July 12th. And I think there's

a very important overall theme that is running through the Defendant's objections to my requests. And that is that they

wish to put off turning over trial exhibits, what their basis

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 23 of 42

23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of objections will be, their trial brief -­ and everything until basically just before the trial. Now the parties should

have been prepared to turn these things over before June 12th, and the Defendants have had five or six additional weeks that the Government didn't have. And more importantly, no good

basis would be served by not turning these things over now. And the Government needs these things now to prepare its case. So with that in mind, these statements about wanting us to go through this whole process of identifying paragraphs and then working with their junior attorneys to prepare some sort of joint statement of the facts is viewed by me as an exercise in just once again trying to tie me up, since I am the only attorney that really has for the Government, knowledge of all of the facts and the substantive law. In weeks if not more

months of this whole process of negotiating things so I don't have time to prepare my case and I don't have the materials I need to prepare it. They have an army of junior attorneys

which they've been using to handle stipulations and things of that nature. And as an example, when we tried to stipulate

regarding the Channing and Company documents and the Flanagan document and even the -­ an order to be used for the April 12th hearing, that process took easily three weeks, and much of those three weeks, with countless drafts sent back and forth as I would work with one or two of their attorneys and then seem to have an agreement on some language and then all of a sudden

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 24 of 42

24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 another attorney for another party would come in and they would want to upset the apple cart. indefinitely. And things went on like that

And I'm not even getting into questions of good That's just the reality of

or bad faith or anything like that. what happened.

Logistically, it was extremely difficult and it And that was involving

consumed enormous amounts of my time. very small numbers of paragraphs.

The notion of addressing 277

paragraphs of the Defendants' and 680 of the Plaintiffs' and trying to work out some sort of joint statement, given the history in this case, it just is something that would take us beyond October 16th. on the law. And in addition to that, we do not agree We

We do not agree on the application of the law.

do not agree on what facts are relevant.

And we believe that

nothing of any meaningfulness will come out of that exercise of trying to come up with a joint statement. Now having read what

the Defendants wrote in their July 12th letter, I have a compromise position. My suggestion would be this. I'll go

through their 277 paragraphs and I will write the letter C beside those that I ­- that the Government seeks to ­- or intends to introduce evidence at trial to contest. And then

the Defendants -­ they should go back through the Government's 680 paragraphs and they should address them similarly, writing a C beside the ones that they wish to contest. But before they

merely just take what they've already done and just transfer it to a piece of paper, I want to point out that I believe that an

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 25 of 42

25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 enormous number of what they listed as contested should be revisited. For example, they have acknowledged in their papers

that many of the things that they have objected to were simply because they didn't agree with an abbreviation that we used for the notes at issue or they didn't agree with how we summarized a block of the Defendants. Those are the types of things that

should be able to be resolved and should enable the Defendants to write uncontested or not write a C on some of the things. Those are the types of things that I would imagine could be easily resolved. And in the end, when this exercise of both

sides writing a C beside the other side's list of facts is complete, we could submit those two lists to the Court and instead of continuing to spend months trying to hammer out something else which would never have any context and would not, you know, given how many paragraphs both sides wouldn't agree to, have anything but other or totally provide anything other than a totally distorted view of what the case is about, such that the Government would never agree to it. the Defendants would be happy with it either. And I doubt

This would at

least provide the parties with an understanding of what things will or will not be contested and will also do that for the Court and it'll also let the Court read each side's prepared Statement of Facts, looking at it quickly to see those that'll be contested and those that are not, but at least also seeing it in some context where each party felt that it was being able

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 26 of 42

26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to present to the Court before trial what the facts will be at trial. And that way it won't lead to the just incessant and

lengthy process of trying to reach an agreement that will never happen. THE COURT: Mr. Shapiro, my practice is not ­- is

usually not to proceed with trial until the parties have submitted a truly joint statement. There are circumstances

under which I sometimes relieve the parties of their obligations or modify them because either of the difficulty of dealing with each other or sometimes the adversaries involved pro se litigants. This is a circumstance in which,at least

according to what I've heard so far and the Government has certainly asserted, that the record will be so voluminous that I am ­- I will tell you, I am unwilling at this point to relieve the parties of their obligation to continue good faith efforts to arrange ­- to arrive at a Statement of Uncontested Facts. I don't -- at this point I'm not inclined to require

that anybody identify those contested paragraphs in which it intends to introduce evidence at trial -- the pretrial order says that if you're not going to agree to a fact, you know, you've got to show me something about why at trial. And I

don't think anything further needs to be ordered at this point. So I do want the parties to continue to try to work to develop a Statement of Uncontested Facts. I do expect that the parties And I did read

will be able to, the designation of entities.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 27 of 42

27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the concern in the July 12th letter that was expressed about that but it seems to me that can be overcome. I am not going

to require that the Defendants designate evidentiary citations for their Statement of Facts. I realize that would be helpful

to the Government and frankly it would be helpful to the Court. But I have not required that in the past and I'm not inclined to require that here. We really did also talk about #6 which And I typically don't require them

was exchange of exhibits. this early. Shapiro.

But frankly, I happen to agree with you, Mr.

I don't see any reason why there couldn't be an And I would be willing to

exhibit exchange at this point.

consider a reasonable period of time for the parties to do that. I'm also jumping to #7, not inclined to require that a Again, if we have to face

trial brief be submitted this early.

that issue I think I'll do it at the next status conference. Mr. Schwartz, any response to what I've just indicated in light of Mr. Shapiro's requests? MR. SCHWARTZ: Well, I'll be very brief. We don't

want to be relieved of the obligation to try to work out a truly joint Statement of Uncontested Facts with the Government. We think it'll be quite helpful if we do meet with the Government. We think it should be done in person. We're not

asking for an order to that effect but the Government did serve on us 681 proposed undisputed facts. We mobilized our so-

called army and went through those with great care and agreed

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 28 of 42

28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to more than half of them, which is itself I think, you know, a testament to our good faith. There remain 330-some-odd of the

Government's proposed undisputed facts that are still the subject of objections by us in whole or in part. I happen to

think that there are some significant number of them where if we spend some time with the Government's Counsel working through what are language issues and other not-always terribly substantive concerns, we ought to be able to narrow even further the scope of the disagreement. We would like the

Government to take the same time we did and go through our 277 proposed undisputed facts. I'd like to think there are some

significant number of those where the Government will see that they are truly uncontested and at the end of the day I think we ought to be able to submit to the Court one consolidated joint Statement of Undisputed Facts. That's certain already. It'll be in the hundreds.

And it will serve to greatly And I

streamline the proceedings, narrow the issues. ultimately believe, shorten the trial. meet with the Government in good faith.

And we are prepared to And if it will make

the Government feel any better about not having the so-called junior lawyers participate, I'll assure Mr. Shapiro that I'll personally participate in that session. And we won't gain any

unfair advantage in terms of tying up his time if he perceives it that way. But that's what we'd like to see happen. The

only other thing I'll address is the exchange of exhibits.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 29 of 42

29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 We're not trying to hide the ball in any respect with that. There are hundreds of exhibits. recall this correctly. Each side has nearly 200 if I

And the lion's share of these documents And the overwhelming The only reason

-- they've all been identified now.

majority of them are familiar to both sides.

we had resisted actually compiling notebooks now and exchanging them is that there is going to be at least one more deposition in the case that's being held in abeyance. If a trustee ever

gets appointed, and that leads to further discovery which may or may not happen for a variety of reasons. documents and more depositions. There may be more

So we were resistant to

compiling notebooks and then having to take them apart and put them back together again when the parties already know what the documents are. If there are some documents the Government says

it hasn't seen before, if Mr. Shapiro wanted to identify those, at least as far as I'm concerned and the other Defendants can speak to that, we would provide those to him right away. But

with regard to ones where we know what he's talking about and he knows what we're talking about, and we all have the documents to start stickering them and putting them in notebooks and exchanging them now knowing we'll have to take them apart and put them back together again doesn't seem to be a particularly useful exercise. THE COURT: Well, I'm not so -I don't think the case is going to turn

MR. SCHWARTZ:

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 30 of 42

30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 form. on this, but that's really the reason we had in mind for looking to put that off somewhat. THE COURT: Yes. And I'm not so concerned about the

So long as whatever's produced is easily searchable, I

mean, so that Mr. Shapiro just doesn't get a stack of documents, you know, without tabs or without an index. They

don't have to be in notebooks as far as the Court's concerned but I think -- and it's -- and by the way the exchange now I understand may be open to, you know, there'll be supplemental. Possibility there'll be other documents and we'll -- you know, we can set a firm deadline at the next status hearing for that. But there's no reason why the lion's share of what the parties intend to use at this point and -- those they intend to use shouldn't be made known to each other given the volume. MR. SCHWARTZ: my point, though. Oh, it has been known to each other is

Where for example, somebody has identified a

particular deposition exhibit as one of their trial exhibits. Everybody has those already. So the -- not sure what point is

served by sticking a trial exhibit sticker on them and exchanging them now. If there are indeed documents where

there's a legitimate question as to what is being referred to, that's a very different situation and my view is we ought to each exchange with the other any such documents where there's some uncertainty as to what they are. THE COURT: Mr. --

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 31 of 42

31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SCHWARTZ: MR. SHAPIRO: THE COURT: Other than that it's just housekeeping. Your Honor, may I respond to that? Yes. First of all these exhibit books should The Government has already

MR. SHAPIRO:

have been ready a long time ago. prepared its exhibit books. Defendants tomorrow.

We could give them to the

And it would be extraordinarily difficult

and time consuming for me to go through 60 to 100 cartons of documents. To go pull out by Bate stamp number all of the

stuff that they listed plus all the documents that they didn't produce to us during discovery. And while I disagree with you

that anything of real significance in terms of advancing or streamlining this case will come out of the exercise of meeting with Mr. Schwartz and any other attorneys for the Defendants to try to work out a statement, if we're going to sit down and try to work things out and I'm going to spend a lot of time doing that it would be greatly advanced if I were given hard copies of their exhibits now. ago. They should have had them ready weeks

So if they want to go through this exercise and they in

good faith genuinely think that they're going to negotiate with me for that purpose they should give us the documents now. We'll give them the documents now ourselves. go. We're ready to

If they don't want to put them in binders fine, but I

think they should give us hard copies with the stickers on it. If we take some more depositions and there are more exhibits

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 32 of 42

32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that come out of this case then both parties will just simply throw them into the back of their trial exhibit binders and add them to their list of trial exhibits. But that's not going to

in any way impact what has already been done and what should already be exchanged now in order to let the parties prepare for this case. In addition regarding trial briefs, your Legal issues

Pretrial Order requires, and I'll read from it.

presented and the constitutional statutory regulatory and decisional authorities relied upon, Counsel should include a brief statement regarding which party has the burden of proof on each legal issue. When I saw that in preparing the

Government's pretrial information memoranda, I thought that there was a couple of ways of handling it. Of course, the way

a lot of attorneys handle that is they write the most smallest and least amount of information they can and turn that over. What I figured was, you got to go ahead and prepare what your position legally is anyhow. I prepared a trial brief. And I

turned that over in lieu of giving a much shorter explanation of what the legal authorities were and what the Government's position was as well as its legal issues. Certainly the

Defendants have already identified what their legal issues are because they did list those in their pretrial memo. And I

assume that in listing those issues they have already done the research and decided what they're going to argue. But what

they did not put in their pretrial information memoranda and

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 33 of 42

33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what your rules require was at least what I just read. So

either they should give us that or they should give us their trial brief in a reasonably short period of time. And that

(indiscern.) will go towards an effort to try to work out any joint statement, because once again I just view it as an effort for them to 1, tie me up while they have an army of attorneys and 2, sandbag us by getting us to reach agreements and springing everything on us a week before trial. Dumping all

kinds of legal issues and objections and everything else so that I won't have time to prepare for the trial. THE COURT: I assume, Mr. -I feel that we should just get ­-

MR. SHAPIRO: THE COURT:

-- Shapiro ­-- things overwith now in terms of

MR. SHAPIRO:

exchanging things and making whatever efforts can be made at working out a joint statement. Get it overwith and then let

the parties separate and spend the rest of the summer getting ready for the trial. everyone. THE COURT: I assume, Mr. Shapiro, that the joint That's what I think is fairest for

pretrial memorandum will be submitted in the form that is required by the order. So you'll have whatever information the Which I'm

order requires unless I relieve the parties of that. not -MR. SHAPIRO:

But you already ordered them to produce

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 34 of 42

34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those things to us on July 6th and they didn't do it. MR. SCHWARTZ: Your Honor, I have no idea what Mr. It's our view that we did comply

Shapiro is referring to here.

with the requirements of what needed to be exchanged both as a matter of fact and law and with regard to identifying documents et cetera. And despite the repeated suggestions that we're

somehow trying to take advantage of the Government or use our superior resources to leverage some unfair outcome, we're really just trying to get through the process, do what's required of us as Counsel and get this case set up for a trial in the most efficient manner. And we're going to continue to

approach the exercise despite the accusations in that spirit. THE COURT: All right. Your Honor, this is Katie LaManna. I

MS. LAMANNA:

just want to add that this process, as you know and everyone knows, is aimed at narrowing the issues. think that we can do that in this case. think are not in dispute. And we very much Many of the issues I

We could not fail to contest

statements that were factually inaccurate or misleading but the underlying principles in many cases I think are in agreement. So this is a productive exercise. With respect to the

Government's representations that documents were not produced during discover and we're trying to sandbag them with last minute information, I looked quickly at the references that Mr. Shapiro alluded to earlier with respect to documents that had

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 35 of 42

35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. not been produced. I believe what he was referring to is an

updated list of registered holders which is simply a very recent list of registered holders. We obviously produced

everything that was in the file at the time of discovery and we'd be happy to provide this to Mr. Shapiro. bad faith here. But there's no

And we really are trying to just work with the

process as Mr. Schwartz indicated. THE COURT: All right. Well, I will ask that

Defendants' trial exhibits be put, if not in books, then in some produced and in some easily usable form. would the Defendants need? do that now. How much time

The Government says it's ready to

How much time do the Defendants need? Let me ask Mr. Dalmonares to address

MR. SCHWARTZ:

I can't imagine it will be much ­MR. DALMONARES: Your Honor, we were thinking, at

least from our side, August 4th would be a good date to do that. If the parties could Fed-Ex the exhibits to each other We think that's an

on the 3rd for arrival on the 4th. appropriate amount of time. THE COURT: All right.

That's fine.

MS. LAMANNA:

And Your Honor, I believe you indicated

earlier that these are subject to be modified as we get closer to trial and things may or may not change. THE COURT: That's correct. Just want to make sure that's correct.

MS. LAMANNA:

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 36 of 42

36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: All right. Let me summarize our Defendants indicated #2

discussions using Mr. Shapiro's letter.

they had no objection to his request in # ­- paragraph #1. we'll hold to the next status hearing which we'll fix in a minute.

I'm not requiring that Defendants provide the evidence And 3, not requiring what's been

through citations called for.

asked in paragraph #4, with respect to identifying in paragraphs -- with respect to Defendant's statement of facts it will introduce evidence to contest at trial. Parties are not

relieved from their obligations under the Pretrial Order to continue to try to develop a joint pretrial statement. Trial

exhibits will be exchanged so that they are received no later than August 4th and we'll consider further trial brief ­ whether I will require an earlier filing of the trial brief at the next status hearing. MR. SHAPIRO: Have I left anything out, Counsel? As I was trying to

Yes, Your Honor.

make clear with regard to #7, your Pretrial Order requires the parties to exchange constitutional statutory regulatory and decisional authorities that -THE COURT: I'm sorry, Mr. Shapiro? -- they're relying upon.

MR. SHAPIRO: THE COURT:

I thought I responded to that by telling

the parties that I expected them to continue to work to provide a joint pretrial memorandum in the form that's required by the order. And the form that's required by the order requires that

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 37 of 42

37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that be included. So I expect that the Defendants will supply

that information in the form in which it is required. MR. SHAPIRO: All right. And in addition, if we

encounter difficulties in making headway through the joint Statement of Uncontested Facts, I take it we can request a conference at that point or in some way bring it to your attention? THE COURT: telephone. Yes, I'm available by conference Now looking at the week of August 14th

All right.

for our next status hearing. MR. SHAPIRO: THE COURT: Will this be telephonic, Your Honor?

Yes, telephonic. Your Honor, this is Alan Shapiro for the

MR. SHAPIRO: Government. proposed.

I don't necessarily object to what you've

But that is only 10 days from when I'm going to get So I don't know how much is going to be If you want, you know, we

their exhibit books.

accomplished in that period of time. can have that.

I mean, I'll just assume that I'm going to get

their books on the 4th and you know, maybe we'll have met with them before the 14th and have something to report to you. MR. SCHWARTZ: Incidentally, Mr. Shapiro, I assume if

we are able to get our exhibit books assembled and sent to you in advance of that date, logistically then you have no objection to reciprocating by return mail and sending us yours? MR. SHAPIRO: I have no objection to that.

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 38 of 42

38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. Trustee. THE COURT: MR. NEAL: Company, Your Honor. THE COURT: MS. PRASAD: All right. And it works for Allstate Insurance Guy Neal. All right. And that works for the Debtors, Your MR. SCHWARTZ: MR. SHAPIRO: Thank you. In fact, I think that that would

actually make the August 14th date more useful because it would theoretically permit us to have done more work together to try to work out a joint statement. MR. SCHWARTZ: All right, well we'll do what we can.

I don't want to make any promises because I'm not -- you know, the general of the army is not in charge of that aspect of the war. But if we can do it we will. THE COURT: All right. Well, let's set a --

MR. SHAPIRO:

Any date but the 18th, Your Honor, would

work from my standpoint. THE COURT: Okay. Let's do Wednesday, August 16th at Is that suitable?

10 o'clock for a telephone conference. MR. SCHWARTZ: that's fine. MS. LAMANNA:

From the Media Defendant standpoint

Yes, that's fine for the Indentured

Shupa Sethi Prasad from Mason Gill. THE COURT: And Mr. --

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 39 of 42

39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SHAPIRO: Your Honor, this is Alan Shapiro again.

I have no objection to that date but I would like some clarification on the joint efforts to work out a statement. assume the parties are left to try to make some sort of arrangements to discuss these things either in person or by telephone. But I also want to make clear something else. I I

don't want to be put in a position as I was before where I think I have worked out some language with one party and then you know, it ends up being upset by every subsequent party. Wouldn't it be more logistically useful for the Defendants to choose one or two of their attorneys that can speak for all of them and just discuss these things with me and perhaps one other attorney from our office such as Mr. Sclarew to try to get the joint statement together that you've spoken of? MS. LAMANNA: Your Honor, this is Katie LaManna.

There are ­- the Government has named various Defendants in this case. And you know, they have an entitlement to speak on

their own behalf. THE COURT: Well, let's put ­We ­- absolutely want to work with the

MS. LAMANNA:

parties but I don't think we can name one Defendant to determine ­THE COURT: I'm not going to require that but I will

ask that the Defendants make the process as efficient and economical for the Plaintiff in this case as is possible. I do

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 40 of 42

40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 understand Mr. Shapiro's situation and ask that you act collectively as much as possible that way. MR. SCHWARTZ: Your Honor? THE COURT: Yes. On this point, by the way, I happen to And that is that May I make a request in that regard,

MR. SCHWARTZ:

agree with Mr. Shapiro to a limited extent.

we probably should all be present when these conversations take place. I don't want to be acquiescing in his characterization

of anything that's happened previously with those other stipulations but the Defendants' interests are not all precisely aligned in every issue. Even though they often are And maybe

and they all need to have a look at what's going on. it ought to be done with a representative or more representatives of each of the parties.

And I happen to

believe, not that I'm asking for a Court Order that it should be done in person. I think that would be most constructive.

The other thing I would request and again, I don't, I'm not seeking a Court Order on this. But in order for the process to

work we will need from Mr. Shapiro some time relatively soon the equivalent of what we did with his proposed 681 assertions of fact and that is at least a preliminary indication of which of our 277 he can agree with and then we know the others are the ones we have to concentrate on. that's part of the process. And again I, you know,

I know ordinarily there wouldn't

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 41 of 42

41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be a Court Order requiring that. I'm just noting for the

record that we have an expectation that for the process to be conducted meaningfully we would need that ahead of time from the Government. The Government says it needs our exhibits in So I just note

the same vein and I understand that request.

that, that it won't work unless we have that from the Government in advance of our getting together. MR. SHAPIRO: Well, as soon as I get their exhibits

I'll go through it and try to put something together and turn it over to them quickly so that then we can have joint discussions. MR. SCHWARTZ: THE COURT: this morning? Thank you. Counsel, anything further for

All right.

Thank you.

That concludes this conference.

MR. SHAPIRO: MS. LAMANNA: MR. SCHWARTZ: MS. PRASAD: THE COURT:

Thank you, Your Honor. Thank you, Your Honor. Thank you.

Thank you. All right. Court will stand in recess to

permit the parties in the next matter to set up. (Court adjourned)

Case 3:02-cv-01725-AWT

Document 81-2

Filed 08/04/2006

Page 42 of 42

42 1 2 3 4 5 6 7 8 CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter. ___________________________ Signature of Transcriber __________ Date