Free Response to Motion - District Court of Arizona - Arizona

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Christopher R. Kaup, Esq. State Bar No. 014820
THIRD FLOOR CAMELBACK ESPLANADE II 2525 EAST CAMELBACK ROAD PHOENIX, ARIZONA 85016-4237 TELEPHONE: (602) 255-6000 FACSIMILE: (602) 255-0103

Counsel for Biltmore Associates, Trustee Of the Visitalk.com creditors' trust

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA BILTMORE ASSOCIATES, as Trustee for the Visitalk Creditors' Trust, Plaintiff, vs. CASE NO. CV 02 2405 PHX HRH

13 14 15 16 17 18 19 20 21 22 23 24 25 26 I. PETER THIMMESCH, et al., Defendants. INTRODUCTION

PLAINTIFF'S RESPONSE TO DEFENDANT SNELL & WILMER, LLP'S MOTION IN LIMINE TO EXCLUDE TESTIMONY OF RENEE JENKINS, OR FOR DAUBERT HEARING

Defendant Snell & Wilmer, LLP's ("Snell") strategy in its Daubert motions is to recast plaintiff's experts, suggest they are offering opinions they are not offering, and then to criticize the experts' qualifications to offer the opinions Snell has invented. It is bad enough for Snell to try to misdirect the Court as to what Ms. Jenkins' opinions actually are, but Snell went further. It brought its motion without citing a single case from the Ninth Circuit Court of Appeals or any district court in the Ninth Circuit. Other than the general propositions of Daubert and Kumho, Snell has cited no controlling case law for this Court. Moreover, the non-controlling cases on which it relies are so factually disparate from the issues here that they are not only non-binding decisions, they are inapplicable. 1Filed 07/19/2007

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Finally, Snell filed its motion in limine regarding Ms. Jenkins on June 4, 2007, the same date on which she submitted her rebuttal report. That report addresses all the issues Snell raises in its motion. Snell failed to modify its motion based on that supplemental report and it failed to disclose the report to the Court. In this responsive memorandum, we will focus the Court on Ms. Jenkins' actual expert opinions, identify the clarifications Ms. Jenkins offers in her rebuttal report, and discuss why the case law on which Snell relies is factually inapposite. In short, the issue here is that two experts disagree. That disagreement does not make one expert's opinions inadmissible under Daubert. To the contrary, it provides the jury the opportunity to reach an informed verdict after evaluating different theories. The jury, therefore, must be allowed to hear Ms. Jenkins' testimony. II. ARGUMENT A. The Daubert Standard is Relevant and Reliable.

In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786 (1993), the United States Supreme Court established that federal judges must serve as gatekeepers of evidence. The Court held that under Rule 702 of the Federal Rules of Evidence, "the trial judge must ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable." Id. at 589, 113 S.Ct. 2786. As part of this assessment, the Court evaluates an expert's qualifications, the relevance of the opinion, and its reliability. Id. at 509 U.S. 592. Six years later, the Court explained that its "gatekeeper" holding in Daubert is not limited to scientific expert testimony but rather extends to all expert testimony. Kumho Tire Co. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167 (1999). Ms. Jenkins offers two opinions in this case. First she determined whether, and if so, when, Visitalk was insolvent. She prepared this analysis in accordance with the standard of The American Institute of Certified Public Accountants. Second, she

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evaluated whether Visitalk should be characterized as a "Ponzi" scheme. She bases this opinion on her training and experience as a CPA, certified fraud examiner, and business person and a wealth of literature. These opinions are identified at the outset of her report, a copy of which is attached as Exhibit A, (see pp. 1-2). We attach as Exhibit B Ms. Jenkins' curriculum vitae, where she explains her CPA affiliations and Certified Fraud Examiner affiliations, including serving as a member of the board of directors of the Arizona Chapter of the Association of Certified Fraud Examiners from 2003-2006. Despite what Snell argues, those two opinions are her only opinions. Both are relevant and reliable, and therefore both are admissible under Daubert. Accordingly, Snell's motion should be denied. B. Snell's Factual Arguments are Incorrect.

Snell's argument comes in two parts. First, it argues factual issues and then it cites non-controlling and inapplicable law to fashion its legal arguments. We respond by addressing the fact issues first and then by discussing the legal issues. At the outset it is critical to note that most of Snell's argument is that its expert, David Weekly, disagrees with Ms. Jenkins. Daubert, however, does not empower courts to choose between competing expert opinions. The Ninth Circuit made clear that a battle of experts is a matter for the jury to resolve. Humetrix., Inc. v. Gemplus SCA, 268 F.3d 910, 919 (9th Cir. 2001). 1. Insolvency

Ms. Jenkins' insolvency analysis is based upon Visitalk's contingent liability for securities fraud and breach of fiduciary. This analysis is entirely appropriate under the Bankruptcy Code and Ninth Circuit precedent. Title 11 of the Bankruptcy Code defines insolvency as a "financial condition such that the sum of such entity's debts is greater than all of such entity's property." 11 U.S.C.A. § 101 (32). Further, the Code defines a debt as a "liability on a claim," and it

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defines a claim as a "right to payment [or equitable remedy], whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured." 11 U.S.C.A. § 101 (5) and (12) (emphasis added.). Contingent liabilities are expressly within a solvency analysis under the Bankruptcy Code. Arizona statutes reflect the same definitions. See A.R.S. §44-1001(4) defining liability as a claim, and A.R.S. § 44-1001(2) defining claim to include contingent claims. Ninth Circuit case law is in accord. In In re Sierra Steel, Inc., 96 B.R. 275 (9th Cir. BAP 1989), the court evaluated a solvency analysis. In determining what one should consider in performing that analysis, it held, citing Collier on Bankruptcy, that contingent liabilities "must be included in determining total indebtedness" for the purposes of analyzing a company's solvency. Sierra Steel, 96 B.R. at 279 (quoting 2 Collier on Bankruptcy 101.32[5]) (emphasis added). See also 4 Collier on Bankruptcy 101.26 ("The inescapable conclusion is that all liabilities contingent or otherwise must be considered in determining whether a debtor was insolvent at the time of the transfer in question."). The Ninth Circuit concluded that contingent liabilities must be included in a solvency determination. Ms. Jenkins followed the Ninth Circuit's mandate. Snell criticizes Ms. Jenkins' analysis by arguing that (1) Visitalk's contingent liabilities are phantom liabilities; and (2) that she did not follow accounting standards in classifying potential claims as liabilities; and (3) that Ms. Jenkins and Snell's expert disagree. We address each argument here. Snell claims that the Visitalk's contingent liabilities are unlikely to mature into debt. It bases this argument on its claim that no shareholders brought suit, Visitalk obtained some releases and there were some disclosures. As the Court is aware from the summary judgment briefing in this case, the validity of the releases and the adequacy of the disclosures on which Snell relies is disputed. In addition, defective releases and

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incomplete disclosures are not the entire record on whether shareholder claims are likely. Snell neglected to advise the Court that in Visitalk's bankruptcy, the Court issued an order clarifying the role of Visitalk's Creditors' Trust to expressly include the claims on which Ms. Jenkins relies in calculating Visitalk's insolvency. See Exhibit C, Jenkins Rebuttal Report, p. 4, citing the Court order. The Court again confirmed the existence of the claims in paragraph 5.9 of the Second Joint Plan of Reorganization. Ex. D, p. 17. Finally, each shareholder signed an acknowledgement of these claims, and we attach those as Exhibit E. No matter what Snell says, neither Judge Baum in the bankruptcy proceedings nor the shareholders agree with Snell that the claims in this case are unlikely or improbable. Snell impugns Ms. Jenkins claiming that she failed to follow Statement 5 of the Financial Accounting Standards Board ("FASB 5"). Ms. Jenkins explains in her rebuttal report that FASB 5 simply does not apply here. There she writes that although FASB 5 is part of generally accepted accounting principals ("GAAP"), it is not appropriate for the present analysis: Rule 203 of The American Institute of Certified Public Accountants "Code of the Professional Conduct" requires practitioners to apply FASB 5 and other generally accepted accounting principles in cases where the CPA is performing an attestation engagement (i.e. where the CPA is assessing the fairness of the written assertions of others). This rule can sometimes apply to aspects of litigation engagements but does not in the case of my expert report because I am not assessing the fairness of a written assertion of others (e.g. auditing). This distinction is important and fundamental to the appropriateness of the methodology I employed when preparing my insolvency (damages) calculation. Ex. C, pp. 2-3. Even Snell's expert agrees that GAAP, of which FASB 5 is a part, is inapplicable in this case. In response to questions about when one would apply GAAP, Snell's expert stated under oath as follows: I think this case is a perfect example of where you would consider it, but it doesn't necessarily apply in terms of not being financial statements.
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Ex. F, Deposition of David Weekly, 45:9-11. The issue here is not one where Ms. Jenkins ignored applicable standards or violated the canons of her discipline. Instead, she and Snell's expert disagree. A jury must be allowed to decide who is correct. 2. Ponzi Scheme

Snell misconstrues Ms. Jenkins' Ponzi scheme opinion. It argues that there is no Ponzi scheme claim in the case and that Ms. Jenkins ignores facts in rendering her opinion. These arguments are irrelevant to the Daubert standard. We agree there is no such thing as a Ponzi scheme cause of action, and Ms. Jenkins make no suggestion to the contrary. She uses the phrase Ponzi scheme to describe the nature of Visitalk's business. Ms. Jenkins sets forth the characteristics of a Ponzi scheme in her rebuttal report. Ex. C, pp. 10-26. Further, she acknowledges that she and Snell's expert agree on what a Ponzi scheme is--they disagree, however, on whether the Visitalk story fits the model. Her position on whether Visitalk fits into a Ponzi scheme model is laid out, based on record citations, in the report at the pages referenced above. Snell's expert's disagreement with Ms. Jenkins' analysis does not mean Ms. Jenkins' opinion is irrelevant or unreliable. Under Humetrix., Inc. v. Gemplus SCA, 268 F.3d 910, 919 (9th Cir. 2001), discussed above, disagreements between experts are to be resolved by a jury. B. Snell's Legal Arguments are Inapplicable.

Snell advances six arguments purporting to disqualify Ms. Jenkins from testifying under the teachings of the United States Supreme Court in Daubert. None carry weight. 1. Ms. Jenkins has the Requisite Expertise.

Snell contends that because Ms. Jenkins concedes she cannot opine on whether the releases were effective or whether there was a breach of fiduciary duty she is disqualified from rendering an opinion on Visitalk's insolvency. This argument is absurd. The effect of the releases and the question of breach of fiduciary duty are liability questions. Every

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damages expert in every case assumes liability in calculating damages. Of course, if there is no liability, a jury does not get to the question of damages. Snell cites no cases to the contrary. It relies on State Contracting & Engineering Corp. v. Condotte America, Inc., 346 F.3d 1057, 1073 (Fed. Cir. 2003), for the proposition that an expert opinion should be excluded where the expert lacks the proper background to render the opinion. As Snell points out in the portion of that case it quotes on pages 7-8 of its motion, the court there excluded an expert opinion about the value of a patent and related royalties because the expert conceded he had no background or experience in the value of patents or related royalties. Condotte, 346 F.3d at 1073. There the damages expert had no expertise in measuring the damages about which he was opining. That is not the case here. Ms. Jenkins is a CPA who has the training and expertise to render an opinion about a company's solvency. She has no qualifications to render an opinion about the legal effect of a release or the legal standard for breach of fiduciary duty, but she does not offer opinions on those issues. The other two cases on which Snell relies here do not advance Snell's cause. Konikov v. Orange County, Florida, 290 F.Supp.2d 1315, 1317 (M.D. Fla. 2003), stands for the general proposition that an expert must have specific skill, training or experience in the subject matter about which he or she will testify. There the court prohibited a lawyer who had expertise in zoning law from testifying about constitutional law for two reasons: 1) he had no expertise in constitutional law; and 2) it is for the court, not the expert, to instruct the jury on the law. Id. at 1318. Applying the holding in Konikov to this case, this Court can conclude that unlike the expert there, Ms. Jenkins is qualified to analyze corporate books and make a solvency determination. Indeed, under the teaching of Konikov, the expert opinions Snell demands Ms. Jenkins offer regarding the legal

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effectiveness of the releases and the standard for breach of fiduciary duty would rightfully be excluded as invading the province of this Court. Snell is equally incorrect to argue that Jones v. Lincoln Electric Co., 188 F.3d 709, 723 (7th Cir. 1999), supports its argument. In that case, the court prevented an expert in metallurgy and materials science from testifying as a medical doctor. Here, a CPA is testifying as a CPA. Jones just does not apply. 2. Jenkins Accounting Complies with Industry Standards.

Snell captions its second argument as addressing Ms. Jenkins' accounting principles and then, for the most part, attacks her Ponzi scheme analysis. contentions on both arguments are specious. As for Ms. Jenkins' accounting, Snell complains only that she assumed "that all shareholders would be held to have claims at trial." Snell's motion at p. 8. As discussed above, every damages expert assumes the viability of the underlying liability claim and calculates damages from that predicate. Snell's criticism that Ms. Jenkins assumes Snell's

liability in her damages analysis is callow, and it is not a Daubert issue. Snell attacks Ms. Jenkins' conclusion that Visitalk was a Ponzi scheme by contending that she failed to rely on any authoritative texts or treatises in reaching her conclusion. Snell's allegation is flatly untrue. In deposition, Ms. Jenkins could not recall a specific treatise on which she based her opinion, but that does not mean she did not rely on any. She said there were many sources and that she had lectured on the issue in reliance on these sources. Ex. G, Jenkins Deposition, 106:6-107:7. In fact, Snell's expert reviewed and relied on the very Ponzi scheme authorities Ms. Jenkins provided: Q: Mr. Weekly, I have given you what has been marked as Exhibit No. 5 [the Securities Division's Definition of Ponzi Scheme]. Can you tell me what Exhibit 5 is? A. Yes. This is a copy of the document that was actually provided by Ms. Jenkins, but it's also one of the documents that was referenced in my working papers for my report.
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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 26 Q. And what were those? Q. Now, aside from your review of Exhibit 5, did you review any other documents, treatises, authoritative materials regarding Ponzi schemes in connection with the formulation of the opinions expressed in your report? A. Yes.

A. There were other documents produced by Ms. Jenkins that related to this issue [Ponzi schemes] that I looked at that were part of her working papers. Ex. F, 111:22-112:12. Not only did Ms. Jenkins rely on authorities, but she disclosed them and Snell's expert himself used those authorities to prepare his opposing opinion. Snell's attempt to mislead this Court by clipping snippets of testimony is, at best, insincere. Neither of the cases to which Snell cites, Zenith Electronics Corp. v. WH-TV Broadcasting Corp., 395 F.3d 416 (7th Cir. 2005) nor Byrne v. Liquid Asphalt Systems, Inc., 238 F.Supp.2d 491 (E.D.N.Y. 2002) support excluding Ms. Jenkins' opinions. Zenith Electronics involved an expert who proffered sales projections but did not employ any accepted methodology for preparing those projections. The Seventh Circuit rejected the expert opinion as "intuition." Zenith Electronics Corp. v. WH-TV

Broadcasting Corp., 395 F.3d at 418. In Byrne, the New York federal district court rejected expert testimony on design and manufacturing defects and inadequate warnings from a purported expert who conceded he had no expertise in design or manufacture of the products involved, nor in warning labels. Byrne v. Liquid Asphalt Systems, Inc., 238 F.Supp.2d at 494-495. These cases have nothing to do with the matter before this Court. 3. Jenkins Offers an Admissible Damages Opinion.

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calculating insolvency, and we dealt with that question above. The shareholder claims arise from the bad actions Snell facilitated. That serves as causation. Snell's argument that the Ponzi scheme theory is "unmoored" to any issue in the case reflects a misunderstanding of plaintiff's suit. Plaintiff claims that Visitalk

breached fiduciary duties and violated the securities laws. It seeks to hold both Snell and the Visitalk founders liable for this malfeasance. An analysis of the nature of the business, explaining that it was a Ponzi scheme, describes for the jury Visitalk's unlawful practices which the founders advanced and Snell facilitated. The wrongful nature of Visitalk's business is at the core of this suit. It too, goes to causation. Snell's arguments to the contrary are unfounded. Moreover, Snell gains no benefit from its reliance on Microstrategy Inc. v. Business Objects, S.A., 429 F.3d 1344 (Fed. Cir. 2005). There a company had a myriad of problems, including an SEC investigation, class action suits, accounting errors that led to layoffs, and the "dot.com" bubble burst. The expert attributed all of the

company's financial woes to tortuous conduct. The Court of Appeals for the Federal Circuit Court rejected the expert because he ignored all of the other prominent issues. Id. at 1354-56. Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48 (2d Cir. 2002) does not help Snell either. There, plaintiff claimed defendant destroyed its

business through a disparagement campaign. Plaintiff's expert offered an opinion as to the value of the business. The Second Circuit excluded the valuation opinion because there "was no evidence" of a disparagement campaign. Id. at 60. Without evidence of the disparagement policy, the damages opinion was irrelevant. In this case, in contrast, there is evidence of breach of fiduciary duty and securities fraud--indeed, as the Court is aware, there are admissions of these bad acts in letters Snell itself authored. This case is not Fashion Boutique.

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Finally, Snell's reliance on Sunward Corp. v. Dunn & Bradstreet, Inc., 811 F.2d 511 (10th Cir. 1987), is profoundly misplaced. There, the Tenth Circuit addressed, in part, whether there was sufficient evidence to create a jury question about whether creditors and customers understood credit reports as defamatory. The court found that the record was "devoid" of evidence that the credit reports were understood in the defamatory manner plaintiff inferred. Id. at 521. The case did not even involve Daubert. 3. Ms. Jenkins does not Offer Credibility Opinions.

Snell claims that Ms. Jenkins offers opinions on witness credibility and therefore she must be excluded. This, again, is a gross overstatement. Ms. Jenkins was asked in deposition the bases for her opinion and she provided those. When asked about Mr. Thimmesch's testimony, she explained she opted for an alternative view of the facts based on alternative evidence. She is not offering an expert opinion on which facts are correct; she is merely explaining the facts on which she relied and her reasons for that reliance. While it is true that it is for the jury, not the experts, to decide witness credibility, experts are free to rely on competing facts. It is the jury, not this Court, that decides which set of facts, and accordingly which expert, to believe. This is clear from both Rule 702 and case law. The Advisory Committee notes to Rule 702 provide that "When facts are in dispute, experts sometimes reach different conclusions based on competing versions of the facts." Fed. R. Evid. 702 Adv. Comm. Note. That is what happened here, and it is perfectly acceptable under the Federal Rules of Evidence. Moreover, simply because experts rely on competing facts does not give a court power under Daubert to exclude the expert. In Micro Chemical, Inc. v. Lextron, Inc., 317 F.3d 1387, 1392, (Fed. Cir. 2003) the court held that "When, as here, the parties' experts rely on conflicting sets of facts, it is not the role of the trial court to evaluate the correctness of facts underlying

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one expert's testimony." This Court must permit the jury to decide whether it accepts the factual underpinnings of Ms. Jenkins' opinions. Snell provides no case law to the contrary. In SEC v. Lipson, 46 F. Supp.2d 758, (N.D. Ill. 1999), the Illinois court rejected proffered expert testimony about what other people believed regarding the reliability of a company's internal financial reports. Id. 46 F.Supp.2d at 763. That expert's theory about what others believed was expressly one of his two proposed expert opinions. That is not this case. Here, Ms. Jenkins does not tell the jury what to believe--she merely answered a question about how she interpreted the evidence. The same analysis applies to De Jager Construction, Inc. v. Schleininger, 938 F.Supp. 446 (W.D. Mich. 1996). In that case, a damages expert improperly opined about the liability aspects of the case. The damages expert intended to testify about what the defendants actually did. This was well beyond the scope of his damages analysis, and the Michigan court rejected his testimony. Id. at 449. Ironically, in this case Snell attacks Ms. Jenkins for not doing what the expert in De Jager did. Ms. Jenkins does not opine on liability. She presumes it for her damages analysis. This is appropriate under Rule 702 and Daubert. 5. Ms. Jenkins Considered the Relevant Facts.

Here Snell contends that Ms. Jenkins failed to consider the releases, the disclosures and the lack of a suit. We have addressed these issues earlier in this

memorandum and will not repeat those arguments again here. Snell also contends that she failed to consider evidence it claims suggest there was no Ponzi scheme. Again, this is untrue. Ms. Jenkins considered all of these issues. She expressly addresses them in her supplemental report, which Snell failed to provide to the Court. See Ex. C, pp. 10 26.

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Once again, this issue involves experts fighting about competing facts. It is not a Daubert issue for the Court but rather a question of weight for the jury. Snell's case law, therefore, does not apply to the issues in this case. For support, Snell turns to an Eighth Circuit case that cites to General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512 (1997) for the conclusion that there is too great an analytical gap between the evidence and the expert analysis. Joiner provides a good example of what the Supreme Court means when it demands that expert opinions fit the evidence, and the case is instructive here. Joiner concerned the admissibility under Daubert of expert opinion based on studies that did not establish a causal link between the plaintiff's cancer and his exposure to PCB's and derivatives. The Court examined, and rejected as unreliable, each of the studies on which plaintiff's expert relied. Regarding studies based on animal testing, it found the unreliable because they involved injecting massive doses of PCB's into infant

14 15 16 17 18 19 20 21 22 23 24 25 26 fourth study noted that its participants were exposed to numerous potential carcinogens, including ingested toxic rice oil. It was not probative either. See Joiner, 522 U.S. at 51819, citations omitted. This case is not Joiner. Snell claims that Ms. Jenkins did not consider the "dot.com" bust in her damages calculations. It has nothing to do with her damages calculations. The issue in this case is the effect of the founders warrants, and their 13 Filed 07/19/2007 mice which ultimately developed cancer, but a different kind of cancer than did plaintiff. Regarding the four studies on humans, the one study expressly concluded that "`there were apparently no grounds for associating lung cancer deaths . . . and [PCP] exposure at the plant.'" A second study found that any increase in lung cancer due to exposure was not statistically significant. A third study involved mineral oil exposure, not PCB's. The

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attendant dilution of company stock, impacted other shareholders. Snell's argument on this issue must be rejected. 6. Ms. Jenkins' Analysis Involves More than Addition.

Snell argues that Ms. Jenkins' insolvency analysis is simply grade school addition for which expert testimony is unnecessary. This argument is so beyond credible or sincere that it does not warrant much space in this response. Ms. Jenkins performed an accounting function. She analyzed Visitalk's total assets and liabilities, and she condensed that analysis into a short table. Ex. C, p. 10. While it is true that Ms. Jenkins' analysis did include addition, the scope of her work is beyond the ken of the average juror. Moreover, had plaintiff submitted only the end product of Ms. Jenkins' insolvency analysis, a table showing addition, Snell would be here arguing that expert testimony is necessary to present that table to the jury. III. CONCLUSION For the foregoing reasons, plaintiff respectfully urges this Court to deny Snell's motion to exclude the testimony of Renee Jenkins. Dated this 19th day of July, 2007. TIFFANY & BOSCO, P.A.

By:

/s/ C.R.K. #014820 Christopher R. Kaup Camelback Esplanade II, Third Floor 2525 E. Camelback Road Phoenix, AZ 85016-4237 Counsel for Biltmore Associates, Trustee Of the Visitalk.com creditors' trust

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CERTIFICATE OF SERVICE I hereby certify that on July 19, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Gary L. Birnbaum Charles S. Price Timothy J. Thomason Scot L. Claus MARISCAL WEEKS MCINTYRE & FRIEDLANDER PA 2901 North Central Avenue, Suite 200 Phoenix, AZ 85012-2705 Attorneys for Defendant Snell & Wilmer, LLP Joseph E. Mais PERKINS COIE BROWN & BAIN, P.A. 2901 N. Central Avenue P.O. Box 400 Phoenix, AZ 85001-0400 Attorneys for Defendant Michael and Marcia O'Donnell David Rosenbaum Maureen Beyers Warren John Stapleton OSBORN MALEDON 2929 N. Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Attorneys for Defendants Michael Cardwell and Margaret Mahoney David P. Brooks BROOKS & AFFILIATES, PLC 1930 N. Ardoleda, Suite 217 Mesa, AZ 85213 Attorneys for Defendants Robert and Carla Corry Donald F. Behn Brian N. Spector JENNINGS STROUSS & SALMON PLC 201 E. Washington, Suite 1100 Phoenix, AZ 85004 Attorneys for Defendant MP3.com, Inc.

I herby certify that on July 19, 2007, I caused the attached document to be served by Federal Express on: Honorable H. Russell Holland United States District Court
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222 West 7th Avenue ­ No. 54 Anchorage, Alaska 99513 (Telephone: 907-677-6252) I hereby certify that on July 19, 2007, I caused the attached document to be served by first class mail on the following, who are not registered participants of the CM/ECF System: Cynthia Thimmesch 5512 N. 6th Street Phoenix, Az 85012 Defendant Pro Se Peter Thimmesch 11329 Stonehouse Place Potomac Falls, Virginia 20165-5123 Defendant Pro Se Raymond F. Gaston Betty B. Gaston 5313 E. Pinchot Avenue Phoenix, AZ 85018-8039 Defendants Pro Se Mark J. Giunta 845 North Third Avenue Phoenix, AZ 85003-1408 Defendant Pro Se By /s/Sara Lovato___________ Sara Lovato

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