Free MEMORANDUM in Support - District Court of Delaware - Delaware

Case 1:04-cv-01494-JJF

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE MAGTEN ASSET MANAGEMENT CORPORATION and LAW DEBENTURE TRUST COMPANY OF NEW YORK, Plaintiffs, v. NORTHWESTERN CORPORATION, Defendant. MAGTEN ASSET MANAGEMENT CORP., Plaintiff, v. MIKE J. HANSON and ERNIE J. KINDT, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

C.A. No. 04-1494 (JJF)

C.A. No. 05-499 (JJF)

NORTHWESTERN'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION IN LIMINE TO EXCLUDE THE TESTIMONY OF KIPP ORME CURTIS, MALLET-PREVOST, COLT & MOSLE LLP Joseph D. Pizzurro Nancy E. Delaney Myles K. Bartley 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Attorneys for NorthWestern Corporation Dated: January 31, 2008 GREENBERG TRAURIG, LLP Victoria W. Counihan (No. 3488) Dennis A. Meloro (No. 4435) The Nemours Building 1007 North Orange Street Wilmington, DE 19801 Telephone: (302) 661-7000 Facsimile: (302) 661-7360 [email protected] [email protected]

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TABLE OF CONTENTS Page PRELIMINARY STATEMENT .................................................................................................... 1 ARGUMENT.................................................................................................................................. 2 I. Orme's Silence Cannot Supply The Link Between The Misstated Financials And The Going Flat Transaction........................................................................................ 2

CONCLUSION............................................................................................................................... 3

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TABLE OF AUTHORITIES Page Cases Baxter v. Palmigiano, 425 U.S. 308 (1976).................................................................................................................... 2 In re: Winstar Commc'ns, Inc., 348 B.R. 234 (Bankr. D. Del. 2005) ........................................................................................... 2 RAD Servs., Inc. v. Aetna Cas. & Sur. Co., 808 F.2d 271 (3d Cir. 1986) ....................................................................................................... 2 United States v. Local 560 of the Int'l Bhd. of Teamsters, 780 F.2d 267 (3d Cir. 1985) ....................................................................................................... 2 United States v. Stelmokas, 100 F.3d 302 (3d Cir. 1996) ....................................................................................................... 2

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In accordance with the Court's January 18, 2008 Order, Defendant NorthWestern Corporation ("NorthWestern"), respectfully submits this motion in limine to exclude the deposition testimony of Kipp Orme and deny Plaintiffs' request for an adverse inference based upon Orme's invocation of his Fifth Amendment privilege at his deposition. For the reasons set forth below, this evidence should be excluded. PRELIMINARY STATEMENT On April 12, 2007, Plaintiffs conducted the deposition of Kipp Orme, the former Chief Financial Officer of NorthWestern. Orme invoked his Fifth Amendment privilege against selfincrimination in response to all questions. In their opposition to NorthWestern's motion for summary judgment, Plaintiffs asserted that Orme's invocation of his Fifth Amendment privilege in response to questions concerning the accuracy of NorthWestern's original financial statements permitted an inference that NorthWestern's 2002 financials were intentionally misstated. [D.I. 251 at p. 9-10 , Case No. 04-1494.] In addition, Plaintiffs contended that Orme's invocation of the privilege against self incrimination when asked whether the Going Flat Transaction would have been able to go forward had NOR's true financial condition been disclosed, permitted the inference that the inaccurate financials were causally linked to the Going Flat Transaction. [D.I. 251 at p. 26, Case No. 04-1494.] In the Pre-Trial Order Plaintiffs have listed Orme as a witness by deposition and state that they will seek an adverse evidentiary inference. (Pl. Pre-Trial Order Ex. 5 at ¶ 9, Ex. 11.) The request for an adverse inference based upon Orme's invocation of his Fifth Amendment privilege should be denied because Plaintiffs have no independent corroborating evidence, other than Orme's silence, to link the misstated financials to the Going Flat Transaction.

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ARGUMENT Orme's Silence Cannot Supply The Link Between The Misstated Financials And The Going Flat Transaction Plaintiffs point to no evidence to support their contention that the misstated financials facilitated the Going Flat Transaction. In fact, Plaintiffs implicitly admit that they have no independent corroborating evidence on these issues when they assert in their opposition to NorthWestern's summary judgment motion that Orme's silence "is likewise sufficient by itself to establish the causal link between the fraud and the Transfer." [D.I. 251 at p. 27, Case No. 041494]. In Baxter v. Palmigiano, 425 U.S. 308, 319 (1976) the Supreme Court held that in a civil case the finder of fact may draw an adverse inference from a party's invocation of his Fifth Amendment right against self-incrimination. The Court recognized, however, that there must be sufficient independent evidence--besides the mere invocation of the privilege--upon which to base the privilege. Baxter, 425 U.S. at 319; see also In re: Winstar Commc'ns, Inc., 348 B.R. 234, 281 (Bankr. D. Del. 2005) ("[l]iability should not be imposed based solely upon the adverse inference") (internal quotations omitted); United States v. Stelmokas, 100 F.3d 302, 311 (3d Cir. 1996); RAD Servs., Inc. v. Aetna Cas. & Sur. Co., 808 F.2d 271, 277 (3d Cir. 1986); United States v. Local 560 of the Int'l Bhd. of Teamsters, 780 F.2d 267, 292 (3d Cir. 1985). In the instant case, there is not a sufficient evidentiary foundation which can support Plaintiffs' request for a negative inference. Indeed there is no evidence to support Plaintiffs' theory that financial statements were intentionally falsified in order to accomplish the Going Flat Transaction. Plaintiffs are not entitled to infer the causal link they cannot prove by relying on Orme's invocation of the Fifth Amendment. Plaintiffs' request for a negative inference should be denied and Orme's testimony should be precluded.

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CONCLUSION For the foregoing reasons, it is respectfully submitted that NorthWestern's motion in limine to exclude the deposition testimony of Kipp Orme and deny Plaintiffs' request for an adverse inference based upon Orme's invocation of his Fifth Amendment privilege at his deposition be granted. Dated: Wilmington, Delaware January 31, 2008 GREENBERG TRAURIG, LLP By: /s/ Dennis A. Meloro Victoria W. Counihan (No. 3488) Dennis A. Meloro (No. 4435) The Nemours Building 1007 North Orange Street Wilmington, DE 19801 Telephone: (302) 661-7000 Facsimile: (302) 661-7360 [email protected] [email protected] -andCURTIS, MALLET-PREVOST, COLT & MOSLE LLP Joseph D. Pizzurro Nancy E. Delaney Myles K. Bartley 101 Park Avenue New York, New York 10178-0061 Telephone: (212) 696-6000 Facsimile: (212) 697-1559 Attorneys for NorthWestern Corporation

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