EFTA00787717.pdf

I 1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA 2 3 4 IN RE: CASE NO. 09-34791-RBR 5 ROTHSTEIN ROSENFELDT ADLER, PA, 6 7 Debtor. 8 9 ECF # 6325, 6326, 6344, 6345, 10 April 13, 2018 11 12 The above-entitled cause came on for hearing 13 before the Honorable RAYMOND B. RAY, one of the Judges in 14 the UNITED STATES BANKRUPTCY COURT, in and for the 15 SOUTHERN DISTRICT OF FLORIDA, at 299 E. Broward Blvd., 16 Fort Lauderdale, Broward County, Florida on April 13, 17 2018, commencing at or about 1:30 p.m., and the following 18 proceedings were had. 19 20 21 22 23 Transcribed from a digital recording by: Cheryl L. Jenkins, RPR, RMR 24 25 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00787717  l' ,,e. 2 1 2 APPEARANCES: 3 4 SEARCY DENNY SCAROLA BARNHART & SHIPLEY, by JACK SCAROLA, Esquire 5 On behalf of Bradley J. Edwards 6 EDWARDS POTTINGER, by 7 BRADLEY J. EDWARDS, Esquire BRITTANY N. HENDERSON, Esquire 8 On behalf of Farmer Jaffe 9 SCOTT LINK, Esquire 10 and RICE PUGATCH ROBINSON STORFER & COHEN, by 11 CHAD P. PUGATCH, Esquire On behalf of Jeffrey Epstein 12 13 CARLTON FIELDS, BY NIALL McLAUCHLAN, Esquire 14 JOSEPH IANNO, Esquire On behalf of Fowler White 15 16 AKERMAN, LLP, by JOAN LEVIT, Esquire 17 On behalf of Michael Goldberg 18 PAUL G. CASSELL, Esquire (via telephone) 19 On behalf of LM, EW and Jane Doe 20 ALSO PRESENT 21 EDWARD BRISCO 22 ECRO - Electronic Court Reporting Operator 23 24 25 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00787718  Page 3 1 ECRO: All rise. 2 THE COURT: Good afternoon. Please be 3 seated. 4 MR. SCAROLA: Good afternoon. 5 MR. EDWARDS: Good afternoon, your Honor. 6 THE COURT: All right. Court calls the 7 matter of Rothstein Rosenfeldt & Adler. May I have 8 appearances for the record? 9 MR. SCAROLA: Good afternoon, your Honor. 10 My name -- excuse me. 11 THE COURT: We have an antiquated sound 12 system in this courtroom. 13 MR. SCAROLA: And I have a booming voice, 14 sir, so I don't think it will be a problem, but my name is 15 Jack Scarola. I am counsel on behalf of Bradley Edwards. 16 Mr. Edwards is here in a dual capacity. He has joined in 17 the motion on behalf of his law firm, Farmer Jaffe, and is 18 also representing Farmer Jaffe. With us also at counsel 19 table is Brittany Henderson, and we are the moving parties 20 in this matter, your Honor. 21 THE COURT: All right. 22 MR. SCAROLA: And I'm just reminded by the 23 sign that I'm supposed to -- I don't need to spell my 24 first and last name. 25 Okay. Thank you. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787719  Page 4 1 THE COURT: Step aside so the other parties 2 can come up to the mic. 3 MR. SCAROLA: Yes, excuse me. 4 MR. EDWARDS: I was just introduced by 5 Mr. Scarola. Brad Edwards on behalf of Farmer Jaffe. 6 MR. McLAUCHLAN: Good afternoon, your Honor. 7 Niall McLauchlan on behalf of Fowler White. I'm here with 8 my partner, Joseph Ianno, at the table, and Ed Brisco, who 9 is a managing partner of Fowler White. He's here because 10 of his obvious concern about the allegations in the 11 motion. 12 MR. PUGATCH: Good afternoon, your Honor. 13 Chad Pugatch, P-u-g-a-t-c-h, here as co-counsel for 14 Jeffrey Epstein, along with Mr. Scott Link, who will 15 introduce himself. 16 MR. LINK: Good morning, Judge. Do you need 17 me to spell -- L-i-n-k, first name is Scott, S-c-o-t-t. 18 Thank you, ma'am. Thank you, Judge. 19 MS. LEVIT: Good afternoon, your Honor. 20 Joan Levit for the liquidating trustee, Michael Goldberg. 21 We are not participating in this 22 disagreement. However, we just wanted -- the liquidating 23 trustee just wanted to state on the record that there is 24 no longer a bankruptcy case, as your Honor is aware. The 25 case has been confirmed, and there is a liquidating trust, OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787720  Page 5 1 which we are resolving, and that this Court is aware that 2 its authority is based on what powers were granted in the 3 liquidating plan. 4 So, we're just monitoring the hearing, and 5 unless your Honor needs us, we're going to be quiet for 6 the rest of the case. 7 THE COURT: Thank you. Thank you. 8 All right. We have three matters on the 9 Court's calendar today, motion for order to show cause and 10 the responses thereto, joinder, filed by interested party 11 Bradley Edwards, motion to intervene, motion for joinder. 12 Turning to the motion to intervene, is 13 Peter Shapiro present in the courtroom? 14 MR. EDWARDS: Your Honor, I was informed 15 that Mr. Paul Cassell was to call into this hearing on 16 behalf of L.M., E.W. and S.R. 17 THE COURT: I don't 18 MR. EDWARDS: I don't know what arrangements 19 he made. 20 THE COURT: No such arrangements were made. 21 So, we'll just -- on the motion to intervene, that will be 22 continued. It won't be heard. 23 MR. EDWARDS: Thank you, your Honor. 24 ECRO: (Inaudible) -- an e-mail. He was 25 right. Let's call CourtCall. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787721  Page 6 1 THE CLERK: Okay. 2 ECRO: Do you want me to print you a 3 calendar that shows his name? 4 THE COURT: Can you print it here? 5 ECRO: I can. 6 (Thereupon, CourtCall was connected.) 7 RECORDING: Thank you for making a 8 telephonic court appearance. Your CourtCall or Court 9 Conference operator will be with you momentarily. 10 OPERATOR: Thank you for standing by. May I 11 have the name of your Court, please? 12 ECRO: U.S. Bankruptcy Court, 13 Judge Raymond B. Ray. 14 OPERATOR: Thank you. One moment and your 15 operator will be right with you. 16 ECRO: Thank you. 17 OPERATOR: Good afternoon. My name is 18 Karina with CourtCall. I'll be assisting you today. 19 ECRO: Thank you. We are ready for the 20 call. 21 OPERATOR: Thank you, ma'am. I'll go ahead 22 and join counsel through. 23 THE COURT: Mr. Cassell, are you on the 24 phone? 25 MR. CASSELL: Yes. Hi, this is OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787722  Page 7 1 Paul Cassell. 2 THE COURT: Spell your last name for the 3 court reporter. 4 MR. CASSELL: Cassell is C-a-s-s-e-1-1. 5 THE COURT: And who are you representing in 6 this matter? 7 MR. CASSELL: I represent putative 8 intervenors L.M., E.W. and Jane Doe, who have a pending 9 motion for leave to intervene. 10 THE COURT: All right. Let me ask, is there 11 any opposition to the motion to intervene? 12 MR. SCAROLA: Not on behalf of the moving 13 party, your Honor. 14 MR. McLAUCHLAN: Judge, we do have some 15 opposition. 16 It appears that E.W. and Jane Doe weren't 17 even clients, weren't even part of the litigation for 18 which the subpoena was issued. So I think the motion to 19 intervene as to those two parties should be denied. The 20 only one, even according to the victim's reply, they say 21 the client refers to L.M. So that's only one of the three 22 putative intervenors. For that reason I think the motion 23 should be denied as to E.W. and Jane Doe. 24 MR. PUGATCH: Your Honor, on behalf of 25 Mr. Epstein, we would join in that objection, that limited OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787723  Page 8 1 objection. 2 THE COURT: Mr. Cassell. 3 MR. CASSELL: Yes. L.M., it appears, has 4 not been contested. With regard to E.W. and Jane Doe, the 5 e-mails in question pertain to all three victims. 6 Therefore, all three victims should be allowed to 7 intervene. 8 Mr. Epstein had an opportunity to file a 9 written response where we could have provided a reply in 10 more detail. He did not do so. Fowler White filed a 11 response, and only dropped a footnote raising a different 12 kind of argument in opposition. So these are new 13 arguments that are being advanced. 14 I think it's quite clear that the victims 15 have significant and compelling interest at stake, and 16 they should be allowed to intervene. 17 THE COURT: Is there any dispute that the 18 e-mails in question refer to L.M. and E.W.? 19 MR. SCAROLA: Your Honor, our position is 20 that the e-mails refer to all three of the putative 21 intervenors. 22 MR. MCLAUCHLAN: And, Judge, just for the 23 record, Fowler White, we haven't seen the CD, so we don't 24 know who is on there, but I do note that Mr. Cassell is 25 technically wrong, because Mr. Epstein, in his response, OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787724  Page 9 1 specifically said on Page 3 of his response, that two of 2 the three intervenors, E.W. and Jane Doe, were not parties 3 during the litigation and the 2010 order. 4 MR. LINK: Your Honor, may I be heard? 5 THE COURT: Yes. 6 MR. LINK: (Inaudible) -- objection. The 7 three -- oh, sorry. 8 Those three intervenors who are seeking to 9 intervene in this Court have been allowed to intervene 10 without objection in the state court proceeding, so that 11 they can protect their attorney/client privileges if such 12 exist. 13 So as far as their being able to protect the 14 e-mails, and whether they're going to be admissible, and 15 whether they're confidential, the state court judge has 16 that issue, and they are participating in that proceeding, 17 Judge. 18 THE COURT: So I'll grant that motion. 19 Mr. Cassell, see to the order. 20 MR. CASSELL: Thank you. 21 THE COURT: All right. Let's describe, 22 before we get started, just what we're talking about. Is 23 it one disk, two disks? Is it boxes of goods? 24 MR. SCAROLA: Your Honor, the --- 25 THE COURT: I just want the record to be OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787725  Page 10 1 clear. 2 MR. SCAROLA: Yes, sir. 3 The origin of the information in dispute, we 4 understand is a single compact disk that contains a very 5 large number of e-mails. 6 THE COURT: And is that the disk that was 7 referred to as -- it was in one of the pleadings, was 8 found in a box? 9 MR. SCAROLA: That's what we have been told, 10 your Honor. We don't have, obviously, direct information 11 of that, but we have been informed that that disk was 12 included in one of 36 boxes that were reviewed by the law 13 firm of Link & Sartory, obtained from the Fowler White law 14 firm, who were predecessor counsel to Mr. Epstein, and 15 were the direct object of this Court's order prohibiting 16 retention of that specific information. 17 MR. LINK: So the record is clear, it's Link 18 & Rockenbach. 19 MR. SCAROLA: Link & Rockenbach, not Link & 20 Sartory, excuse me, old firm name. 21 MR. McLAUCHLAN: Judge, yes, the motion 22 alleges that there was a single -- I'm sorry? 23 ECRO: If you're going to speak from 24 there --- 25 MR. McLAUCHLAN: Judge, the motion refers to OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787726  Pagell 1 the single CD that was supposedly in Fowler White's files, 2 that's correct. There was originally, my understanding 3 is, two CDs that were delivered to Fowler White for 4 printing. Those documents were then put onto one CD, with 5 Bates numbers, and the documents were printed. So we now 6 have a single CD, that's correct. 7 THE COURT: And is the information contained 8 on this disputed CD anywhere else in the state court file? 9 MR. McLAUCHLAN: I'm not aware of the state 10 court file. 11 MR. SCAROLA: Your Honor, the information 12 contained on the compact disk included both privileged and 13 non-privileged information. 14 THE COURT: But it wasn't subject to 15 disclosure, so it didn't go to the special master and 16 privilege log? 17 MR. SCAROLA: If I could, perhaps it would 18 be helpful if I briefly trace the history for the Court. 19 THE COURT: Okay. 20 MR. SCAROLA: Your Honor may recall that the 21 law firm of Rothstein Rosenfeldt & Adler imploded as a 22 consequence of Scott Rothstein's involvement in a massive 23 Ponzi scheme. 24 That firm became the subject of bankruptcy 25 proceedings. A special master was appointed. The special OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787727  Page 12 1 master took control of the records of the law firm, 2 including the law firm's electronic records. At the time 3 that that occurred, litigation was pending between 4 Mr. Epstein and Bradley Edwards. 5 Mr. Epstein issued a subpoena in that state 6 court proceeding seeking information from the electronic 7 files of the bankrupt law firm, and the determination was 8 made that in order to deal with privilege assertions of 9 all of the e-mail records of the law firm, that, over 10 Mr. Edwards' objection, and the objection of the law firm, 11 the electronic documents were to be turned over to Fowler 12 White so that Fowler White could print out a hard copy of 13 Bates stamped, numbered e-mails extracted from those 14 multiple compact disks. 15 This Court entered an order on November 30, 16 2010, recognizing the fact that Fowler White was at that 17 time representing Mr. Epstein, an adversary of Mr. Edwards 18 in the state court proceeding, and that order expressly 19 prohibited Fowler White from retaining any copy, 20 electronic or otherwise, of the information that was 21 turned over to them solely for purposes of performing the 22 administrative task of Bates stamping and printing out 23 copies, one to be delivered to Judge Carney, serving as 24 Special Master on behalf of the bankruptcy trustee, and a 25 second copy to go to the Farmer Jaffe law firm, so that a OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787728  Page 13 1 privilege log could be prepared. All of that related to 2 the subpoena that was issued in the state court 3 proceedings. 4 Your Honor's order reads, in relevant part, 5 Fowler White will not retain any copies of the documents 6 contained on the disks provided to it, nor shall any 7 imagines or copies of said documents be retained in the 8 memory of Fowler White's copiers. 9 Should it be determined that Fowler White or 10 Epstein retained images or copies of the subject documents 11 on its computer or otherwise, the Court retains 12 jurisdiction to award sanctions in favor of Farmer, 13 Brad Edwards, or his client. That order was entered in 14 November of 2010. 15 As far as any of the interested, protected 16 parties, that is Farmer Jaffe, Brad Edwards and his 17 clients were concerned, that order was complied with. 18 We did not learn otherwise until on the eve 19 of the trial of the circuit court case that has been 20 pending since before 2010, just a matter of a few weeks 21 ago. A supplemental exhibit list was filed by the law 22 firm of Link & Rockenbach listing documents on the 23 privilege log that was constructed by the Farmer Jaffe law 24 firm in accordance with this Court's order, listing 25 documents and identifying them by the same Bates stamp OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787729  Page 14 1 numbers that had been placed on those documents by Fowler 2 White. 3 THE COURT: And submitted to the Special 4 Master -- 5 MR. SCAROLA: And sub --- 6 THE COURT: -- and to Farmer Jaffe. 7 MR. SCAROLA: That's correct, sir. One copy 8 went to Farmer Jaffe, one copy went to the Special Master. 9 The --- 10 THE COURT: And apparently one copy was 11 retained. 12 MR. SCAROLA: The electronic records were 13 supposed to have been destroyed. All that was to remain 14 were the hard copies, with the electronic disks having 15 been returned to Farmer Jaffe. 16 So, there should have been no retention of 17 anything by Fowler White. Mr. Link, in representations to 18 the state trial court, after issues were raised with 19 regard to how he came to be in possession of documents 20 that he clearly was not supposed to have, represented to 21 the trial court that he had obtained the disk containing 22 the information that was listed as potential trial 23 exhibits from the Fowler White law firm inside one of 24 36 boxes that he has told the Court he recently obtained 25 possession of from Fowler White. We have no direct OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787730  Page 15 1 knowledge with regard to those matters, but that's what 2 the representation is that has been made. 3 One thing that is absolutely clear, no one, 4 other than Judge Carney and Farmer Jaffe is supposed to 5 have any copy of that privileged material. It was 6 specifically prohibited from being retained by the Fowler 7 White law firm. It contains both attorney work product 8 and attorney/client privileged information, and we are 9 here today to ask your Honor to do five things. 10 We would like a rule to show cause issued so 11 that a determination can be made as to the full 12 circumstances under which this Court's clear and 13 unambiguous order has most obviously been violated. 14 We would like a direction from this Court 15 that Fowler White, Jeffrey Epstein, and Link & Rockenbach 16 will submit to deposition so that sworn testimony with 17 regard to the clear violation of the Court's order can be 18 taken. 19 We would like a final hearing scheduled on 20 the order to show cause. 21 We would like this Court, in the interim, to 22 prohibit any further dissemination of any information 23 derived from that improperly possessed privileged 24 information, and we would like Link & Rockenbach directed 25 to withdraw all filings that have been made in any court OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787731  Page 16 1 referencing the contents of these documents. 2 So those are the five things that we would 3 hope to accomplish. 4 I recognize the fact that at least on the 5 Court's calendar, we were informed this was to be a 6 10-minute hearing. We thank your Honor for allowing us 7 any time on short notice, and we need some guidance from 8 your Honor as to the extent to which you want us to get 9 into any further detail beyond that which I have presented 10 to the Court, and we're fully prepared to do that, but 11 those are the five things we hope to see accomplished, and 12 we hope to see accomplished expeditiously, issuance of the 13 order to show cause, a direction with regard to 14 pre-hearing discovery, the scheduling of a final hearing, 15 a prohibition against further dissemination in violation 16 of this Court's order, and the withdrawal of all 17 references in previously filed documents to this 18 unlawfully possessed information. 19 THE COURT: All right. 20 MR. SCAROLA: And I'm happy to answer any 21 other questions your Honor may have. I hope I have, 22 although I've probably taken more time than you've wanted 23 me to, responded to the inquiry the Court had. 24 THE COURT: No, so Farmer Jaffe and 25 Bradley Edwards want to take the deposition of Fowler OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787732  Page 17 1 White, Epstein and Link? 2 MR. SCAROLA: That's correct, your Honor. 3 MR. LINK: Yes, your Honor. 4 MR. SCAROLA: And with regard -- with regard 5 to Fowler White, it would be the corporate representative 6 with the most knowledge with regard to these matters, the 7 same with regard to Link & Rockenbach, and as far as 8 Jeffrey Epstein is concerned, obviously he was personally 9 prohibited by the express language of the Court's order 10 from possessing or accessing any of this information, and 11 we would certainly want to take Mr. Epstein's deposition. 12 While representations have been made with 13 regard to the extent that Mr. Epstein has been in 14 possession of, or had access to this privileged 15 information, the record is completely devoid of any sworn 16 representation by Mr. Epstein, and clearly that is 17 essential in terms of this Court fashioning, or first of 18 all determining who is responsible for these very serious 19 violations, and in fashioning an appropriate response. 20 Thank you, sir. 21 THE COURT: All right. Response? 22 MR. LINK: Thank you. 23 MR. CASSELL: This is Mr. Cassell, and the 24 intervenors join in all those motions as well. 25 THE COURT: Thank you. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787733  Page 18 1 MR. LINK: Judge, if I can just respond 2 briefly on behalf of Mr. Epstein. 3 First, notwithstanding what Mr. Scarola 4 said, there is no factual issue. There has never been an 5 allegation that Mr. Epstein has ever had the disk. He's 6 never said it, Fowler White has never said it. He never 7 had the disk. 8 THE COURT: Well, they're going to ask him 9 that question. 10 MR. LINK: I can make that representation to 11 the Court. I can provide a sworn affidavit that he's 12 never had it. He's never had the disk, plain and simple. 13 So, if that's what the Court is interested 14 in, I can represent that to this Court, and I believe 15 Fowler White will stipulate to that, and I don't believe 16 Mr. Scarola has any information or evidence that would 17 suggest Mr. Epstein ever held this disk. So that's point 18 one. 19 Two --- 20 MR. SCAROLA: May I respond? 21 MR. LINK: I did not interrupt you, 22 Mr. Scarola. 23 MR. SCAROLA: I'm sorry. It's not our 24 contention Mr. Epstein has the disk, your Honor. 25 It is our contention that Mr. Epstein has OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787734  Page 19 1 had access to the privileged information contained with-on 2 the disk -- on the disk, and that simply is a distinction 3 without a difference. Whether he received printed copies, 4 whether he received information without getting printed 5 copies really makes no difference. The point of 6 your Honor's order was to prohibit access to privileged 7 information. 8 And I'm sorry to have interrupted, but I 9 think it's important to clarify that point. 10 THE COURT: Proceed, Mr. Link. 11 MR. LINK: Thank you, Judge. 12 So we now all understand that Mr. Epstein 13 never had the disk. 14 The only information Mr. Epstein ever 15 received was from my law firm when I provided him select 16 e-mails when we reviewed the disk, my law firm, in 2018. 17 So Mr. Epstein has not had one piece of 18 paper that they're claiming he shouldn't have, and I want 19 to make sure the Court understands what this disk is. 20 This is not a disk of privileged information. It's a disk 21 of 27,000 pages of which they claim some of them are 22 privileged. They submitted a privilege log, Mr. Scarola 23 said it was for this Court. It wasn't. The privilege log 24 is in Judge Hafele's court, in the 15th Judicial Circuit 25 in Palm Beach County. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787735  Page 20 1 Judge Hafele had --- 2 THE COURT: Filled with these 27,000 pages? 3 MR. LINK: Pardon me? 4 THE COURT: And that privilege list deals 5 with these 27,000 pages? 6 MR. LINK: It does, sir, and Judge Hafele 7 has before him, as he should, since the privilege list, 8 and the privileged documents, if they are privileged, are 9 going to be presented to him hopefully in camera, that's 10 the motion we have filed. I've asked for it in camera. 11 Mr. Scarola has asked for it in camera in front of the 12 state court judge. 13 Why? Because the only thing that your Honor 14 was involved with related to the cancellation of a 15 hearing, and an agreed order, and I'm going to let Fowler 16 White talk about Fowler White's issues from 2010, but I 17 want to be very clear, so there is no mistake, I never had 18 the disk, my law firm, Link & Rockenbach, until 2018. 19 When we received the disk, which was part of 20 a box delivered by Fowler White, we looked at it. It was 21 sequentially numbered from 1 through 27,000. We looked at 22 about 5,000 of those e-mails, Judge, before we were 23 notified that there was a problem with our having the 24 disk, and then we stopped looking. 25 Of the 5,000 we looked at, your Honor, the OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787736  Page 21 1 vast majority of them had to do with things like, what are 2 you going to do Friday night? Are you going to this 3 concert at the Broward Civic Center? Are you going down 4 to the Marlins game? Where should we go for lunch today? 5 There were 47 documents, 47 that I listed on 6 a supplemental exhibit list and put those in front of 7 Judge Hafele. Those documents are now sealed, the disk is 8 sealed pursuant to Judge Hafele's order. I have had my 9 client and his general counsel remove all reference to the 10 documents that I've e-mailed to them. I have wiped my 11 computers clean of all of the documents. This issue is 12 sitting before Judge Hafele. 13 Mr. Scarola and Mr. Edwards asked the 14 appellate court, we have two appeals pending in the 15 4th DCA, one a writ of mandamus, and one a petition for 16 cert. They asked the appellate court to strike every 17 reference to -- generally that we've made to these 18 documents. Without even requiring us to respond, the 19 appellate court denied their motion. They've asked the 20 appellate court to do what they're asking you to do. 21 And with all due respect, I'm not sure how 22 this Court can tell the 4th DCA what to do with its 23 pleadings, but -- I honestly don't know how that would 24 work. 25 So, Judge what I want to make sure is clear OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787737  Page 22 1 as it relates to Mr. Epstein is this, that this Court 2 understands, he's never had the disk, never. He has never 3 had any of the documents, the 47 that they claim are 4 privileged, that no one has looked at, no in camera yet, 5 we're working on that, I sent him those materials, not 6 Fowler White. He did not get them in 2010. He received 7 them in 2018, and he no longer has them. 8 So, every single thing they're asking for 9 has happened by agreement. We did an agreed order to seal 10 the disk. We did an agreed order to take the disk that we 11 had from Fowler White and it's in a sealed envelope. 12 We've taken that disk and put it with the Clerk of the 13 Court in state court. We have taken all of the exhibits, 14 sealed them, numbered them, pursuant to Judge Hafele's 15 order, and placed them in the Clerk's file. There has 16 been no further dissemination. 17 Until Judge Hafele removes the seal, if he 18 does, those documents are going nowhere. The e-mails are 19 going nowhere. The exhibits are going nowhere. Nobody 20 has them. 21 So, what is the one issue that I think is 22 outstanding for this Court? I think there is only one 23 issue, and I don't know, your Honor, that any discovery 24 from my firm can tell you, or from Mr. Epstein can tell 25 where the disk came from that ended up in Fowler White's OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787738  Page 23 1 box. Only Fowler White can answer that question, if it 2 can be answered. I don't know that they can tell you. It 3 was 2010. Maybe somebody will be able to figure that out 4 and they can address that, but the only issue, the only 5 fact that we all don't know is, why is that disk in a box 6 at Fowler White? 7 Was it inadvertently kept? Was it given to 8 them by the Special Master? I have no idea. I wasn't 9 around here in 2010 doing this work, but I know this, 10 without any hesitation, the 47 e-mails that are sealed and 11 waiting for Judge Hafele to look at are not being 12 disseminated anywhere. The disk that they're concerned 13 about is sealed. There are no copies. It's not going 14 anywhere. The appellate court has told them, no, we're 15 not striking references to it, and they've asked 16 Judge Hafele to do the same thing. He hasn't ruled on it. 17 So, to ask this Court to instruct 18 Judge Hafele what to do in his Chambers, and the 4th DCA 19 what to do in their Chambers, I don't think makes sense, 20 but I do think your Honor has the jurisdiction to look at 21 your order and determine if the simple retention by Fowler 22 White somehow is a violation of that order, and what's the 23 consequence, if any. 24 But to ask my law firm where it got the 25 disk, when they know where we get the disk, I've OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787739  Page 24 1 represented to Mr. Scarola. Mr. Scarola told Judge Hafele 2 he accepted my representation. Maybe he's changed his 3 mind, and he thinks I've teleported back to 2010, but we 4 did not have the disk, your Honor. We've submitted an 5 affidavit, we did not receive the disk until 2018. 6 So what information through discovery I 7 could provide, or my client could provide, who they've 8 admitted didn't have the disk, is beyond me, Judge. 9 THE COURT: Thank you. 10 MR. LINK: Thank you. 11 MR. McLACHLAN: Thank you, Judge. 12 Niall McLachlan for Fowler White. 13 A couple of just points of clarification 14 from Mr. Scarola's presentation, and I think it's -- one 15 of them is probably very obvious to the Court. 16 Mr. Scarola suggested that upon the bankruptcy the Special 17 Master took possession of all of the records of Rothstein. 18 Of course what he meant by that was the bankruptcy 19 trustee. 20 MR. SCAROLA: Yes, I'm sorry, the Special 21 Master had them as an agent of the bankruptcy trustee. 22 THE COURT: Well, the chain of pleadings in 23 the Rothstein main case starts with Docket Entry 617, 672, 24 807, 888, 1068, 1120 and 1194, which is the order . 25 MR. McLACHLAN: That's correct, Judge, and OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787740  Page 25 1 so here is the way it came about, there was litigation 2 pending in the state circuit court in Palm Beach County. 3 Mr. Epstein filed a subpoena from the state court to get 4 copies of the Rothstein records. 5 THE COURT: From Judge Stettin? 6 MR. McLAUCHLAN: No, they filed it -- yes, 7 from Judge Stettin as the trustee, that's correct. 8 THE COURT: The trustee. 9 MR. McLACHLAN: Yes, that's correct. 10 There was a dispute about how that would be 11 done That's when those orders started to be entered. I 12 think the first one is probably the subpoena, and then the 13 orders, which ended up with the order that we're talking 14 about today. 15 Another point of clarification, Mr. Scarola 16 says that the order was entered over Farmer Jaffe's 17 objection. He may have had some -- the law firm may have 18 had some concerns, but it's very clear it's an agreed 19 order. I don't know that that makes a lot of difference 20 to the analysis, but I just want to be very clear, that 21 was an agreed order, that's at 1194. 22 So, that's why the state court is so 23 involved here, because it was a subpoena from that court. 24 That court was ruling on the objections. The only 25 involvement of this Court was you set the protocol by OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787741  Page 26 1 which the documents would be produced by the trustee, and 2 then you entered the order, 1194, that's at issue here 3 today, and that order said Fowler White shall not retain 4 copies. We didn't, we sent them all to Farmer Jaffe in 5 seven banker's boxes on November 10, 2010, and that e-mail 6 is attached to our response. 7 We sent a CD to Farmer Jaffe. We also sent 8 a CD with the Bates numbers to Special Master Carney, who 9 was to review the documents and go over the privilege log. 10 When your Honor indicated -- Mr. Scarola 11 indicated that one copy went to Farmer Jaffe, one copy 12 went to Special Master Carney, and your Honor stated, and 13 one copy was retained. We don't know that. We don't know 14 how the CD was in our files. 15 What's very possible, because our records 16 indicate we didn't keep it. Our records indicate -- well, 17 I told you, that they went to Farmer Jaffe and to Special 18 Master Carney. We have no idea. What's quite possible, 19 and the only way we could ever determine this would be to 20 get access to the CD and have it evaluated by an IT 21 specialist, which I don't think will be necessary for the 22 reasons I'll discuss in a minute. We think it's quite 23 possible either that Special Master Carney, when he 24 finished his work on the case a couple of years later, 25 said, oh, there is a CD, here is a CD that was sent to me OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787742  Page 27 1 by Fowler White, I'm going to return it to Fowler White, 2 and someone at the firm opened it and said, oh, this is 3 Epstein, and just threw it in the box. 4 The other possibility is that Farmer Jaffe, 5 when they printed five boxes of allegedly non-privileged 6 documents and sent them back to us, one of their 7 paralegals may have dropped the box (sic) in the file. 8 What's very, very clear is that from 9 whenever it was received, in 2010, '11, maybe '12, through 10 March of 2018, no one made any reference to the CD, the 11 privileged materials, no one tried to use the CD. It sort 12 of defies belief that Fowler White would have some sort of 13 conspiracy to get a CD, according to the motion at least, 14 to have retained a CD, have just thrown it in the box and 15 then done nothing with it, of course, for eight years, and 16 then all of a sudden when we turn over 36 bankers boxes to 17 the new lawyer, when the client asks for his files, which 18 he was entitled to, they asked, just send all the boxes, 19 and that's what we did. 20 Now, if the disk somehow got back into our 21 file, which apparently it did, we don't know how, assuming 22 it is the disk, but I have no reason to controvert that at 23 this point, it's clear now that we don't have the disk. 24 If it was in our files, we turned over 36 boxes, which 25 included the disk, according to the affidavits filed. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787743  Page 28 1 Okay. So, the facts as they exist now don't 2 justify sanctions, and they don't justify discovery for 3 the following reasons: I've already indicated what our 4 investigation shows happened with the disks, and the 5 e-mails are attached to our response. 6 It's not entirely clear, and of course for a 7 sanctions motion the order needs to be completely 8 unambiguous, it's not entirely clear to me when I read 9 that order that it's -- it certainly doesn't direct us 10 what to do with the CD. It says you don't retain copies, 11 all the copies were sent to Farmer Jaffe. We don't retain 12 images on our copy machine, clearly didn't do that. 13 If we later obtained a CD back, whether 14 that's -- whether that's in violation of the order, I'm 15 not sure. I don't think the order is that particularly 16 clear, but that's not really the main point as to our 17 response. 18 The movants are asking for a finding of 19 civil contempt, criminal contempt, and extensive 20 discovery. 21 Civil concept -- as your Honor probably 22 knows, there are two sources of contempt powers, one is 23 the Court's inherent power to enforce its orders. The 24 other is, where applicable, Section 105(a) of the Code, 25 where necessary to -- necessary and appropriate to enforce OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787744  Page 29 1 provisions of Title 11. 2 Courts have held, and we've cited them in 3 our motion, that Bankruptcy Courts don't have the inherent 4 power to find criminal contempt. 5 Now based on the facts that I just laid out, 6 I don't think there could ever be a basis for it, but this 7 also gets to the discovery point, and even though the 8 11th Circuit in In Re: McClean, they affirm a finding of 9 punitive damages, which are by definition criminal, 10 because it's punishment, as opposed to purely compensatory 11 damages, they did so specifically under Section 105(a), 12 and that Court actually said the powers -- the court's 13 power to find contempt comes under 105(a). 14 I think that was possibly a little 15 over-broad, because other courts have found inherent power 16 to enforce courts' orders, but what's very clear here is 17 that 105(a) can have no application in this case. The 18 movants are not seeking to enforce any provision or rights 19 under Title 11. All of the cases that I found where 20 they're talking about putative sanctions, they're all for 21 violations of the automatic stay, willful violations, for 22 violations of discharge orders, as in In Re: McClean. 23 So, there is that issue. 24 Now, civil contempt, there are two purposes. 25 One, purely compensatory, a flat amount is by definition OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787745  Page 30 1 punitive, and that's criminal contempt. Civil contempt, 2 it only deals with future conduct, not anything that's 3 happened in the past, and what it says is, there are two 4 purposes, to coerce compliance with the order that was 5 allegedly violated. Well, you've heard we sent 36 boxes 6 to Epstein, Epstein's counsel. We don't have the boxes. 7 We don't have a disk. 8 The other is to award fees that were 9 incurred to obtain compliance. There is compliance. Even 10 if there was a violation at some point when we received 11 the disk back, there is no question there is compliance at 12 this point. 13 There is also -- you can get fees for 14 damages as a result, but they haven't proven any damages. 15 There is no damages alleged here. Their motion is 16 interestingly devoid of any allegation of compensatory 17 damages. What they say is they need discovery to 18 determine the amount of their damages, which is kind of a 19 remarkable proposition. If they've been damaged, they 20 know it. They don't need us to prove their damages. I've 21 never heard of that sort of thing in a discovery 22 procedure. 23 The other reason for contempt is they say we 24 want to discover the extent of the complicity, and the 25 appropriate punishment for a violation of this Court's OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00787746  Page 3I 1 order. That is by definition in the In Re: McClean case, 2 and countless other 11th Circuit cases, and lower court 3 cases, that's seeking criminal contempt sanctions, which 4 I've already discussed I don't believe are before the 5 Court. 6 So, I don't believe, Fowler White does not 7 believe that discovery is appropriate here. If your Honor 8 finds there is some limited discovery, we've cited the 9 pertinent 11th Circuit cases, and I noticed Mr. Scarola 10 didn't ask for access to Fowler White's computer records, 11 but I want to be very clear, there is no basis for that 12 under 11th Circuit precedent, we've cited in our case, so 13 I don't want, if your Honor says the motion is granted, I 14 don't want Mr. Scarola to say, oh, well, then we get 15 access to Fowler White's computer records. 16 In order to justify that, you would have to 17 they would have to show that they've served discovery 18 on Fowler White, and that they believe Fowler White is 19 destroying the evidence, or hasn't produced evidence. 20 We're certainly nowhere near that point yet. 21 Which gets us to another issue on the 22 requested discovery, if your Honor is inclined to grant 23 any, and that is discovery should be in the normal course, 24 send out a request for production, there is an opportunity 25 to respond, object where necessary, and have the Court OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00787747  Page 32 1 rule on objections. There shouldn't just be a carte 2 blanche order saying they get to depose people -- everyone 3 in the possible c