EFTA01157371.pdf

1 DRAFT DRAFT DRAFT DRAFT 2 THEREUPON, 3 (The following meeting took place): 4 SPECIAL MASTER CARNEY: A couple of things. In 5 light of some cases, and I think I sent everybody a case 6 yesterday which seems to be, at least looking through 7 Earhart -- You all I think have probably a lot easier 8 time researching than I do. I don't have the library 9 and I don't have Lexus or Westlaw anymore. I've got 10 Florida Law Weekly. It's hard to research. You've got 11 to do all your cross-cites on Florida Law Weekly to 12 research, but this case that I cited seems to be a 4th 13 District case that kind of addressed these issues. 14 So with that in mind, what I was saying is somewhat 15 of the following: I'll give you a quick overview first 16 and then we can hit some of the specifics and then open 17 up anything we want to open up. 18 Number one is: We need to address timeframes right 19 now. And so this is defense timeframes, plaintiff 20 timeframes. We need to address some broad areas in the 21 timeframes. If there are additional complaints, we've 22 already had complaints from the first privilege log 23 that was filed, if there are additional complaints on a 24 subsequent privilege log that is filed, again, we 25 need to block off times so we can address the EFTA01157371  2 1 complaints. 2 The hearing schedule, this case seems to outline 3 the procedures on that, although it doesn't mention a 4 privilege log. Reading the case, it looks like it's 5 pretty hard to go through that procedure without using a 6 privilege log. But once the log is filed, it looks 7 like then it switches over to a hearing where the 8 defense -- in this case the plaintiff were to 9 establish if plaintiff is seeking crime fraud, it's 10 crime fraud. 11 If it establishes the crime fraud, the next stage 12 would be an in-camera inspection. And what the court 13 would do is go through an in-camera inspection to see 14 whether or not it's applicable. 15 The second thing that I wanted to cover and Joe's 16 letter from last Friday, there was some issues. And 17 again, III not sure whether we have agreements on 18 anything at this point, but one of the issues that had 19 come up previously is a question: Who really is best 20 suited to rule on the objections? 21 I had given a number of reasons why I thought it was 22 really a State Court issue and it really needed to be 23 ruled on by Judge Crow. And I think Judge Crow's order 24 certainly indicated that if anyone ruled differently 25 than what he ever wanted, he wasn't bound by what anyone EFTA01157372 1 did, which seemed a pretty good reason to take it into 2 court. 3 And I think Joe had mentioned and very correctly 4 so, it requires a couple of things: First, Judge Rey 5 has to agree to it because we've got a Judge Rey order 6 that says that Judge Rey is going to do it and we've got 7 Judge Crow is going to have to agree to it. (A) I would 8 have to be appointed in front of Judge Crow, which if I 9 have to, and I have yet to see it. 10 MR. FARMER: Well, that motion will be filed 11 today. And Judge -- Ill sorry. 12 SPECIAL MASTER CARNEY: We're going to cover all 13 of this. ill just running over some of the topics and 14 then we'll take each one individually. 15 The next thing I wanted to cover is, basically, 16 what do we do about everything else? What §§§ referring 17 to here is we've got a lot of stuff that was submitted 18 by the Trustee that I think even Plaintiff is 19 indicating a lot of this is irrelevant stuff. What do 20 we do with that? 21 I know the defense has requested confidentiality 22 agreements on certain matters that may not be pertinent 23 to the litigation at all, but they would turn over to 24 the defense with confidentiality agreements with the 25 ability to object as such, but we probably need to EFTA01157373  4 1 address that. 2 The other thing that I want to do that may 3 eliminate some of the issues that we've already had crop 4 up in the past: One of the difficulties that I've seen 5 so far is, right now I seem to be the only one who's 6 citing cases. So, we put a stop to that. What MI kind 7 of like to do is see a briefing schedule. Let me 8 outline, well, what 'II going to do when we get to that 9 point is outline the procedure at least that ... seeing 10 right now in this American Tobacco Company case. What I 11 want to do is outline at least briefly what I think the 12 procedure should be. 13 What I would like to do is, if anyone is disagreeing 14 with it - anyone thinks that the standard is wrong, the 15 order is wrong, how we're doing it is wrong - is 16 establish a briefing schedule so that we can brief the 17 issue and resolve this stuff before we have a hearing. 18 Right now our latest situation, everyone is disagreeing 19 on how everything should go. And the thing is no one is 20 briefing it. All I'm essentially getting is we 21 disagree. And so this way, let's iron that stuff out 22 first and we'll get a decision first on that. And those 23 were the basic topics that I was really looking to cover 24 which I thought, if we did that, would get us very 25 smoothly back on track and get this going forward. EFTA01157374 1 And so, taking those one step at a time. After that 2 I'll open it up to anything else anyone wants to talk 3 about, but let's deal with the timeframes first. I 4 guess probably the best place is to start with the 5 defense. 6 Obviously, what the objection has been in the 7 past - we really haven't actually had a hearing on this 8 since you filed the original privilege log, but I know 9 this has gone back and forth in e-mails - is that the 10 purpose of the log is to provide at least some 11 indication of what e-mail we're talking about. Having a 12 Bates Stamp doesn't do that. It doesn't help at all. 13 MR. FARMER: We're pass that, Judge. As we've 14 said repeatedly and two weeks ago we offered some 15 concessions; they were not readily accepted. We went 16 forward. We have completed the review. We have 17 completed the -- we have assigned the additional 18 information for all items in the log. Right now, we 19 have clerical people typing, literally, just taking what 20 has been written out and putting it into a Word Document 21 in the column. 22 SPECIAL MASTER CARNEY: How long are we talking 23 about before it gets to the plaintiff? 24 MR. FARMER: Well, I think that it will be done 25 probably by Monday or Tuesday I think. But, Judge, if EFTA01157375 1 I may, I think that we -- I would suggest that we 2 discuss the relevancy, confidentiality issues first 3 because I think we need to get a handle on the scope of 4 what it is we're doing, because I think that's going to 5 effect the timeframes. 6 Part of the reason we offered the confidentiality 7 and the attorney's-eyes only was to speed this thing 8 along. 9 MRS. SANCHEZ: And we agreed to it 10 days ago. 10 MR. FARMER: You did. You agreed verbally and then 11 I sent three e-mails, Lilly, and nobody wrote me back 12 until last Friday. That was two weeks after it was 13 originally proposed. 14 MRS. SANCHEZ: Right, but it was a week later and 15 we agreed to it then. And the only thing that put a 16 stop to it was Judge Carney's e-mails regarding this 17 crime fraud issue and this hearing. 18 MR. FARMER: No. No. That's not what put it stop 19 to it. What put a stop to it was you guys would not 20 confirm in writing all of the terms, because we needed 21 an agreement there would no waiver of priviledge, we 22 needed an agreement on the attorney's-eyes only and we 23 needed an agreement on the confidentiality. 24 MRS. SANCHEZ: That was another -- 25 MR. FARMER: Well, that was Friday. Since then, we EFTA01157376 1 went ahead and did what you've asked us to do. 2 SPECIAL MASTER CARNEY: If we're going to confirm 3 the agreement in writing, how soon can we confirm the 4 agreement in writing? 5 MR. FARMER: Frankly, Judge, we don't think there 6 is any reason to do the agreement now because we've 7 done -- The whole point of the agreement was to get them 8 stuff quicker so they could look at it. 9 MR. KNIGHT: Judge, may I make a suggestion? I 10 think Your Honor, obviously, from the e-mails that I 11 went through, et cetera, the procedure through the case 12 law is: We need this log first. 13 SPECIAL MASTER CARNEY: Right. 14 MR. KNIGHT: The agreement other than some little 15 ticks and tacks back and forth look like a framework to 16 speed this along. If we get back into these arguments 17 about relevance, confidentiality, et cetera, we're going 18 to get nowhere again. 19 SPECIAL MASTER CARNEY: I agree. 20 MR. KNIGHT: I would like to move this along and I 21 think you're on the right track. Let's get the log 22 out. Obviously, it was due a long time ago. That's why 23 we have a motion for sanctions in, but if we can get 24 the log out and put these timeframes. I think the 25 briefing schedule is a good idea, although we may EFTA01157377 1 disagree on some of the procedures, but at least get 2 something out there so we just don't have back and forth 3 e-mails. But we need the log first and I think the case 4 law supports that. 5 SPECIAL MASTER CARNEY: Let's go back to my 6 original question then on the timeframe for getting the 7 log. How quickly can we get a timeframe? Again, I'm 8 assuming at this point, as I pointed out before, in 9 spite of back and forth, we are not going to get 10 agreements. We spend all sorts of time and we don't get 11 agreements. 12 MR. FARMER: The log will be ready by the end of 13 the business day Tuesday. 14 SPECIAL MASTER CARNEY: Now, if we have that, if 15 we have the log delivered Wednesday the defense, excuse 16 me, the plaintiff has requested at this point at least 17 10 days to look at the log. What I would like to do is 18 add something else into that right now, and that is, if 19 we have problems that there are complaints that it's 20 still TIG compliant, we still have issues, a mechanism 21 to immediately trigger that. Immediately. 22 It seems to me that we can do that by Thursday. I 23 mean, the second you look at the log you're going to be 24 able to say that it's TIG compliant or it's not. If 25 it's not, I'm not saying there aught be any reason of EFTA01157378 1 any kind for a delay on that in getting that resolved. 2 The resolution of whether the -- and probably we 3 aught to address a little bit on the sanctions motion, 4 but the resolution of whether the log is TIG compliant 5 or whether TIG applies ultimately has been handed down 6 from the bankruptcy judge to me. And so, it's pretty 7 much my issue at this point. 8 I don't think we -- I'm raising this because it 9 raises some questions. Well, what I would like to do is 10 get that resolved immediately. 11 So, can we by next Friday - this would be a week 12 from today - if there are going to be objections that we 13 have TIG issues, at least get those objections on the 14 table? 15 MR. ACKERMAN: Just in case there's some delay, can 16 we have 48 hours or two business days from the date that 17 we receive it to lodge any tig objections? 18 SPECIAL MASTER CARNEY: How much time? 19 MR. ACKERMAN: 48 hours, two business days. So, 20 that's basically Friday. 21 SPECIAL MASTER CARNEY: By the close of the 22 workday Friday if you can let us know if we've got TIG 23 objections. 24 MR. ACKERMAN: I assume we're going to get it 25 first thing Wednesday. EFTA01157379  10 1 SPECIAL MASTER CARNEY: Assuming you get it the 2 last thing Wednesday; you would have all day Thursday, 3 all day Friday. 4 MR. ACKERMAN: That would be fine. 5 SPECIAL MASTER CARNEY: So we get tig objections 6 on Friday. What seems to me at this point you're 7 requesting at least 10 days to look at the log. I'm 8 going to actually suggest surprisingly a fraction longer 9 than that, and I'll tell you why and I'll put this open 10 for discussion, too. 11 What I'm saying, and let me go a little bit out of 12 turn, when I'm looking at the American Tobacco case at 13 least kind of a first-blush reading of American Tobacco, 14 what I'm kind of saying is that it's an evidentiary 15 hearing; cross-examination at the hearing, the plaintiff 16 probably needs to establish at first at least a prima 17 facie case before we trigger a burden shift over to the 18 defense to show *request not. It looks like the 19 ultimate decision by the judge becomes a preponderance 20 of the evidence is the ultimate call by the judge. 21 MR. FARMER: Well you only get to preponderance if 22 they meet the burden and they've got to show it outside 23 of the sought discovery. 24 SPECIAL MASTER CARNEY: Absolutely. They show it 25 outside of the sought discovery, and an evidentiary EFTA01157380  11 1 hearing is prima facie at least initially. What I'm 2 getting at is that because we have a right of 3 cross-examination and because there is 4 cross-examination, it seems to me that there probably, 5 in terms of fairness to both sides to make it a lot 6 easier on this one, it's probably going to be a little 7 easier if each sides let's the other side know who 8 they're going to call; no one is surprised at the 9 hearing; everyone knows who is going to be called. It 10 will be similar to a trial, but everybody is upfront 11 about it. 12 So it seems to me the timeframes that I'm 13 suggesting at this point is: We certainly would have at 14 least 10 days for the plaintiff to look at the log, 10 15 days for the plaintiff to make a decision of what you're 16 going to do, whether you're going to raise the 17 objections or whether you're not going to raise the 18 objections, but probably at the end of 10 days would be 19 to provide these, the specific items we are seeking and 20 these are the witnesses we intend to call at the 21 hearing. 22 With the defense within a period of time, I'll 23 suggest once again I'm not looking for necessarily full 24 trial times, because I think what I'm doing is I'm 25 really adding on to this case. I don't think this case EFTA01157381  12 1 actually envisions what I'm doing. I'm just trying to 2 make it easier for both sides so that everyone gets 3 prepared for the hearing, everyone knows what's on the 4 table. Say 5 days for the defense if you're calling 5 witnesses. 6 MR. FARMER: I'm sorry. Not a 5-day hearing. 7 SPECIAL MASTER CARNEY: No. What I'm talking 8 about is once the log comes in, plaintiff looks at it; 9 they've got 10 days to look at the log and see what they 10 want to do. Within the first couple of days they have 11 to tell us if we've got a tig problem with it. Assuming 12 we don't have a tig problem, within 10 days they say 13 we're objecting to Items 1, 5 and 6 We want a hearing 14 on 1, 5 and 6 on crime fraud. So the defense let's us 15 know what you're actually seeking to -- how you're 16 seeking to breach the privilege. Everyone is aware of 17 that and what witnesses they're planning on calling, 18 because it's an evidentiary hearing. 19 At this point then, this occurs 10 days. In 20 another 5 days what the defense does is say, Fine, we 21 are going to fight you on that point and here are our 22 witnesses. And then what I'm saying at this point, 23 within 30 days we have actually had the hearing. 24 MR. KNIGHT: Your Honor, two thoughts. One, you 25 were saying you wanted some briefing. And just so we're EFTA01157382  13 1 all on the same playing field, do you want a briefing in 2 the beginning which I think will be helpful on 3 procedures itself under tig because you said you had 4 your own wrinkles to it. 5 SPECIAL MASTER CARNEY: Actually, what I would, 6 what I'm looking at is actually the procedure for the 7 hearing. There are certain things that not every one is 8 going to agree with. Let me just fast-forward to that 9 for a second. 10 MR. KNIGHT: Let me tell you my second point, 11 though. My second point is: If you're saying call 12 witnesses on various issues way beyond this crime fraud 13 there are other waivers that can be -- we're in the 14 process of and it was an investor deposition taken the 15 other day, we're trying to work with schedules, because 16 these are out-of-state people, we have lawyers saying 17 the 4th works, the 18th doesn't, we're trying to 18 coordinate with everybody and we'll do our best, but we 19 don't want to prejudice our clients by not getting 20 certain witnesses that are out of town or we need -- we 21 need those witnesses. 22 MR. FARMER: Hold on. 23 SPECIAL MASTER CARNEY: Fast-forward for just a 24 second. What I'm saying, basically, the procedure and 25 the thing is: If you disagree with any of the points on EFTA01157383  14 1 the procedure, this is what I'm saying I want to know 2 before we have the hearing where our disagreements 3 are. 4 MR. KNIGHT: So we will brief. 5 SPECIAL MASTER CARNEY: So we can research. So it 6 seems to me, number one, on crime fraud it's, the 7 plaintiff can't simply show that Brad Edwards committed 8 a crime, not crime fraud. A crime fraud requires that 9 the client - M.S.L., or whatever her name is, the 10 juvenile - went to Brad Edwards to have Brad Edwards 11 assist her in committing the crime. That's crime fraud. 12 MR. KNIGHT: We could ask to brief that because we 13 don't agree with that position. 14 SPECIAL MASTER CARNEY: If there is 15 disagreement -- 16 MR. KNIGHT: There is. 17 SPECIAL MASTER CARNEY: I need a briefing up 18 front on that. I need to know beforehand because it's 19 absolutely critical to the hearing. 20 The second issue, at least on a brief examination 21 of this case, it seems to me that the threshold 22 question, of course, the hearing I'm traveling that the 23 hearing becomes after the production but before any 24 inspection by the court and by any inspection other than 25 the privilege log by the defense. EFTA01157384  15 1 Now, you don't get to see -- there are no documents 2 that are displayed and the court doesn't look at the 3 documents before the hearing. And so with the hearing, 4 what the plaintiff initially has to establish is at 5 least a prima facie case. If the plaintiff can't 6 establish that, hearing ends and we're done. There is 7 no breach of the privilege and there is no in-camera 8 inspection. We're ended. Hold on. 9 If the plaintiff establishes a prima facie case 10 then the next stage is the defense has to establish 11 reasons why they think the plaintiff is wrong or why it 12 is not applying in this particular case. And then the 13 court at the end - well, a Special Master - makes a 14 determination by a preponderance of the evidence whether 15 or not the crime fraud exception applies. 16 If the court makes a determination that the 17 plaintiff has established by a preponderance of the 18 evidence a crime fraud that triggers then an in-camera 19 inspection by the court, then and only then does the 20 court do the in-camera inspection. 21 Another issue that becomes an important one and 22 needs to be briefed because I think, again, in listening 23 to the plaintiff, plaintiff may well dispute this issue. 24 The way I'm reading this case here, each individual 25 communication has to be looked at individually. If Brad EFTA01157385  16 1 Edwards commits crime fraud with his client on 2 communication "A," it doesn't open the entire file up. 3 It only opens up communication "A." That's the way I'm 4 reading that case. 5 The remainder of the attorney-client privilege is 6 left intact. And so we'll need to be clear on that one 7 also as what does crime fraud do. Does crime fraud 8 eliminate the entire privilege or does it only eliminate 9 the offending issues. 10 So, again, what I'm looking at is procedurally that 11 every one is in agreement procedurally that that's how 12 it should be done or if we have disagreements 13 procedurally how it should be done, let me know what the 14 disagreements are and what your authorities are. 15 MR. KNIGHT: Your Honor, how are you addressing 16 arguments against privilege beyond crime fraud because 17 there's more than crime fraud -- 18 MR. ACKERMAN: I have a suggestion on that. 19 SPECIAL MASTER CARNEY: That's the other thing I'm 20 looking at because crime fraud has been suggested and 21 it's not the only one. 22 MR. KNIGHT: And it's probably not the primary 23 one. I don't want to get off track -- 24 MR. FARMER: We agree they have a right to 25 challenge if we designate a document as privileged in EFTA01157386  17 1 the log and you look in the description and you don't 2 think it's privilege; you have a right to challenge 3 that. However, Judge, this is why relevancy is so 4 important. How big is this log going to be? Because 5 you have to determine what is the relevant response. 6 What happened here is the trustee dumped documents 7 that are not responsive, but yet we're forced to protect 8 other people to include them in the log. 9 SPECIAL MASTER CARNEY: Let me answer your 10 question. Again, this is in a vacuum at the moment, 11 because I'm not necessarily having to rule specifically, 12 but realistically the defendant kind of made its bed and 13 has to lie in it. 14 Under 1.351, once that third party subpoena was 15 issued, you have 10 days to raise objections of 16 overbroad. I will agree with you it is grossly 17 overbroad. 18 MR. FARMER: We raised those objections. 19 SPECIAL MASTER CARNEY: Not within with the 10 day 20 period. Not an overbroad objection. Because if it was 21 raised as an overbroad objection, we should never be in 22 bankruptcy court at all. We've got major problems 23 because grossly instantly kicks in and there is no 24 requirement of a privileged log until the overbroad 25 objection is ruled on. It's my understanding that has EFTA01157387  18 1 never been raised certainly never timely been raised. 2 MR. FARMER: It's been raised. It was argued to 3 Judge Rey. Candidly, I don't believe he understood what 4 he was dealing with and the fact that this is not your 5 ordinary production scenario where a different entity 6 had the physical possession of the documents, but we 7 were the ones that have been sued and are responding. 8 But we did timely file motion for protective order 9 in State and Federal court. 10 SPECIAL MASTER CARNEY: Let me give you a way to 11 handle that that I think will be easy to do, not today 12 but in the future. Right now, as long as I've been 13 appointed to handle these issues, schedule a hearing in 14 front of me on these issues. 15 What I've said all along is that, and no one has 16 provided any case law to the contrary nor do I think 17 there is a scintilla of case law to the contrary, this 18 is a State Court issue, State law applies. It is not 19 Federal law. It is a State law with respect to the 20 privileged log and, ultimately, what we are dealing with 21 under State Court law, Grossman, which is out of the 22 4th, Grossman is applicable. 23 So far as far as I'm aware, I'm the only one whose 24 raised Grossman. No one is raising Grossman. No one 25 has brought it up. The thing is, what we've had is EFTA01157388 1 we've had, as I understand it - and again we can 2 schedule this all at a hearing specifically on these 3 issues later, but when that subpoena was issued under 4 Rule 1.351, there was 10 days to object. There was no 5 objection. The subpoena is ultimately served. Arguably 6 under the rules you waive the objection at that point. 7 Just a second. 8 I think there can be some arguments that are made 9 that because the documents, because you can't see the 10 documents and the documents aren't in your control, you 11 don't know what the scope of the documents are; that 12 there may be some latitude in providing a later 13 opportunity to object, but the objections have all been 14 the protective order objections and they generally have 15 not been overbroad objections. They've all been 16 objections as a protective order. The protective order 17 is the gray area. There is case law that goes both 18 ways. 19 I can point to Earhart. There are probably 15 days 20 cases that say once that protective order is filed 21 everything stops until the court rules on the protective 22 order. We still don't have a ruling on the protective 23 order. That's a problem that's sort of sitting there 24 any way. 25 But there is some confusion on some of the cases EFTA01157389  20 1 again as to where the privileged log comes in in the 2 face of a protective order. But what I'm trying to do 3 is resolve and do it in a fashion where everybody gets 4 notice and everyone is aware of what's going on so that, 5 as I say, what happens is the log is filed. Once the 6 log is filed, we have a fixed period of time to raise 7 objections to the form of the log. If we have 8 objections to the form of the log, we'll schedule an 9 immediate hearing and I'll rule on the objections on the 10 form of the log. 11 If we don't have objections on the form of the log 12 then what I'm looking at is the plaintiff then has, 13 basically, 10 days to say: Out of the log we're 14 objecting to 1, 3 and 5, and here's why. Whether it's 15 crime fraud, whether it's been prior disclosure, whether 16 it's been -- whatever the situation, whatever the 17 plaintiff is raising as an objection so that you're 18 aware of what the objection is. 19 And -- 20 MR. FARMER: I just -- 21 SPECIAL MASTER CARNEY: Hold on just a second. And 22 we get some notice of who they're planning on calling as 23 witnesses. Now, if they're giving you notice, they're 24 entitled to notice too, which means within 5 days if 25 you've got a contrary witness, if there is someone EFTA01157390  21 1 you're calling, let them know. So that now by the time 2 we get into a hearing everyone knows what the issue is, 3 everyone knows what the witnesses are, we have a 4 briefing period of time so that we're very clear on what 5 the procedure is. 6 What my inclination right now is to treat whatever 7 the objection is exactly the same as I treat crime 8 fraud, which means the objection would require the 9 plaintiff to come in and establish crime fraud or 10 establish prior disclosure or establish something. Once 11 they have done so and established a prima facie case, it 12 switches over. The defense has to establish why it's 13 not so and, ultimately, the court makes a ruling. All 14 of that is done before there is an in-camera inspection 15 by the court, and this would go to anything that the 16 plaintiff is arguing as a reason to get around a 17 privilege. 18 MR. FARMER: We are fine with that, but I want to, 19 Judge, we -- delay is not our friend here and I 20 appreciate what you're saying and the notice and due 21 process. We do not anticipate calling any witnesses. 22 We have no burden of proof. They're never going to make 23 their prima facie showing. 24 Secondly, Judge, though, this case has been going 25 on for a year. What I'm hearing in suggestion of time EFTA01157391  22 1 delay because they are now subpoenaing investors for 2 depositions, parenthetically I would tell you the only 3 investor deposed so far didn't know who Brad Edwards 4 was, never saw him before in his life and never saw any 5 of the plaintiffs. That's going to be the presentation 6 evidence you're going to get, and I don't want to argue 7 it, but we do not want to lose our trial date in front 8 of Judge Crow and that's what they're going to do. 9 They're going to go back if this procedure drags on. 10 SPECIAL MASTER CARNEY: When is your trial date? 11 MR. FARMER: March 24th. 12 MR. KNIGHT: That's not going to go forward by 13 what Judge Crow has said. Any delay has been the delay 14 since Judge Rey ordered this. 15 MR. FARMER: We can argue that in front of Judge 16 Crow. 17 SPECIAL MASTER CARNEY: What I don't want to get 18 into is who is at fault. I want to -- 19 MR. joofs: Let's have the hearing in 20 days. We 20 don't need to depose anybody. We want the hearing in 20 21 days Your Honor. 22 MR. KNIGHT: Mr. Ackerman is trying to give a 23 suggestion here. 24 MR. FARMER: Excuse me. They've had a year to get 25 their witnesses together. They should have them within EFTA01157392  23 1 20 days, ready to go. That will give them plenty of 2 time -- that will give them two weeks to review the log, 3 prepare their objections. We can all brief these issues 4 for Your Honor. You've given us an outline of the case 5 law. We will have our brief done in time, that's plenty 6 of time for them. 7 But, Judge, let's set the hearing now and get all 8 the briefs in and they can bring whatever witnesses they 9 want and let's get this thing going. We'll have the log 10 in. You can review it. They can review it. You can 11 look at other documents. We will file the motion with 12 Judge Crow to get you appointed. You will be appointed 13 in both courts so that we have a dual track. We can 14 deal with Judge Rey later. Judge Rey has not said Judge 15 Crow can't do anything. Judge Crow has said he will 16 make the decision for the case for which the subpoena 17 was issued. I'm just begging you for a hearing in 20 18 days. 19 MR. ACKERMAN: Your Honor, I want to be heard, I 20 want to have a moment. 21 SPECIAL MASTER CARNEY: What I'm looking at, 22 because once again I'm not sure that we're sitting in 23 agreement on this thing, let's do -- 24 MR. FARMER: Maybe you have to order it. 25 SPECIAL MASTER CARNEY: Let's see what we can EFTA01157393  24 1 agree on. 2 MR. ACKERMAN: I think I have a suggestion that 3 will facilitate this. With regard to the subpoena that 4 we sent out, there is only one category there that may 5 ask for privileged documents and that's the purpose of a 6 log. Every other request related to documents with this 7 firm and third parties. 8 Now, they have filed motions for protective order 9 claiming that the entire subpoena is privileged which is 10 why we're in this position. We're prepared to make an 11 agreement to keep the documents that they think are 12 irrelevant, confidential, which is what we said before, 13 subject to that other agreement. 14 But in terms of the briefing schedule this is what 15 I would suggest: We have a number of proof procedures 16 that need to be done with different privileges. For 17 example, work product maybe doesn't belong to the 18 client, it belongs to the lawyer. 19 MR. FARMER: That's not true. 20 MR. ACKERMAN: Excuse me. If we can show, we 21 can't get the information in some other way and need 22 then we may be entitled to. That's a for example. I'm 23 not here to argue law on that. They have raised joint 24 defense or joint plaintiff privilege. That privilege 25 has a certain standard of proof and procedure to follow EFTA01157394  25 1 to establish it or to determine whether it applies. We 2 have an attorney-client privilege which may not apply if 3 their people got the documents. 4 So my suggestion is that we may need to adjust the 5 timeframe to maybe 15 days. I'm just thinking out loud. 6 But when we get the privilege log within the timeframe 7 you established, we would identify -- and we're pass the 8 tig issues, okay, we would then say we believe documents 9 1 through 10 are not subject to the attorney-client 10 privilege, here is the briefing law we believe that Your 11 Honor should follow in resolving the issues with regard 12 to that issue. 13 With documents 50 through 100 which there is a 14 joint defense privilege claim, we do not believe that's 15 the case. Here is the procedure the court needs to 16 follow in adjudicating that privilege. We do the same 17 thing with the documents for which we claim crime fraud. 18 There may be some we won't make any objections on, but I 19 think our initial response out of the box when we get a 20 tig-compliant privilege log would be to tell the court 21 these documents we think are not privileged on these 22 grounds and here is the law that says how you, 23 respectfully, should go about adjudicating that. 24 SPECIAL MASTER CARNEY: You're looking at 15 days 25 on that? I don't think 15 days is unreasonable at all. EFTA01157395  26 1 MR. ACKERMAN: Just because I don't the -- Then 2 they would have five, 10 days whatever you feel is 3 appropriate, to respond to us in terms of the procedures 4 that this court should follow. 5 SPECIAL MASTER CARNEY: If they're disagreeing 6 with the procedure. 7 MR. ACKERMAN: And if we don't have a disagreement 8 you can conduct a hearing to determine the procedural 9 issues and then at that point set down the manner in 10 which you will conduct hearings on these various 11 issues. 12 SPECIAL MASTER CARNEY: I actually agree with that 13 completely because the advantage that I see, and I 14 understand you're going to be complaining that it's 15 long, but the advantage that I see is this: Nobody 16 should go into a hearing not knowing what the rules are. 17 Which means that we have to make sure that we are all on 18 the same page. Whether you agree or disagree, everyone 19 knows the ground rules when we walk into a hearing. We 20 know what standards I'm using. We know what the orders 21 of proof are. So, again, these things need to be 22 hatched out before we get to the hearings. 23 MR. FARMER: Except the fact that this all could 24 have been raise with Judge Rey when he set the 25 procedure. We're operating under an order EFTA01157396  2'/ 1 SPECIAL MASTER CARNEY: Hold on. What I'm looking 2 to do right now, because we're going to need to request 3 Judge Rey to amend the order, and what I'm doing right 4 now is get an amendment in place that's going to 5 facilitate what 6 MR. FARMER: We don't agree to that. 7 SPECIAL MASTER CARNEY: I agree with what Joe's 8 doing. I think that's the smoothest way to work it 9 out. 10 MR. FARMER: I tell you what, we'll agree to that 11 if it's under Crow's -- Judge Rey should not be involved 12 in this any more. The trustee has turned it over. It's 13 done. 14 MR. ACKERMAN: I disagree. 15 MR. KNIGHT: We disagree and there's an order from 16 the judge. Part of our -- 17 MR. FARMER: Don't say wait. 18 MR. KNIGHT: Part of -- If I may. We've listened 19 to you a lot. One of our frustrations in this 20 obviously with an order which we thought was going to 21 get us a log early in the summer or late summer and you 22 said we may be calling witnesses. We don't know some of 23 the witnesses we may be calling until we get the 24 documents. 25 What has constantly happened is this we're ready to EFTA01157397  :2e, 1 go to trial tomorrow, which of course, because they had 2 held back everything. There is no way that every 3 document in these files si privileged. There's just no 4 way. It's impossible. If there is any delay, it's been 5 on the other side. So our client shouldn't be 6 prejudiced. 7 The system that Joe just outlined I think is very 8 logical. 9 SPECIAL MASTER CARNEY: I do, too. 10 MR. KNIGHT: If not, we're just going to get into 11 these back-and-forth arguments which wastes e-mail 12 time. I can't even keep up with the e-mail back and 13 forths. 14 SPECIAL MASTER CARNEY: At the moment you're 15 preaching to the choir. I agree. This is what I'm 16 trying to suggest all along is a nice, organized way of 17 handling this so that we do it in a logical sequence so 18 that nobody is surprised and caught flat footed on what 19 we're doing, but I like the suggestion. 20 What I would like to do on that one is basically, 21 if we can, is write that one up because it's going to 22 require a modification from Judge Rey. 23 Now, second issue -- 24 MR. FARMER: Judge, just for the record, we cannot 25 agree to that. He may order it but we can't agree to EFTA01157398  29 1 that. 2 SPECIAL MASTER CARNEY: I understand. Actually, I 3 can't order it. I can make a recommendation. That's my 4 recommendation to Judge Rey. The recommendation can 5 note that not all sides are in agreement with the 6 recommendation, but this is the Special Master's 7 recommendation. 8 Now, the second thing that I want to address, 9 maybe we can agree, maybe we can't, and that is: What 10 my suggestion would be, and this is in line with what 11 Gary is saying, certainly Judge Rey is going to want to 12 be apprised of these issues, but the reality is he's the 13 presiding judge, these are State Court evidentiary 14 issues. These are all purely State Court issues. And 15 we've got a presiding State Court judge who's already 16 said, I don't care what the bankruptcy judge does. 17 They're my issues, I'm going to rule on it. And then 18 dodged it and said I'm not going to rule on it for the 19 time being and let the bankruptcy judge do it first. 20 Cutting straight to the chase on this, the logical 21 one to actually rule on objections I think is Judge 22 Crow. I think the report can go to both sides, but I 23 think we run into a huge problem if we have both judges 24 ruling on the objections. There is very little reason 25 for Judge Rey to rule on the objections, because he's EFTA01157399  30 1 not presiding over any of the State Court actions. 2 There's no concurrent Federal court action involved. 3 It's not a Federal court case issue, it's not any issue 4 that's directly in front of him other than just how do 5 we get these documents distributed without getting the 6 trustee into a problem. That's his only interest in it. 7 And so, let him take a look at the report. He's 8 copied on everything. Ultimately, because he's got 9 control of the documents, he's going to have to 10 facilitate and he's going to have to enter his own 11 orders arguably to the trustee. He's going to have to 12 tell the trustee, do this, do that. And so we can't cut 13 Judge Rey out of the loop. I mean, Judge Rey has to 14 stay in the loop. 15 MR. FARMER: Not really, because we have the 16 documents. The only reason Judge Rey was there -- 17 MR. ACKERMAN: You don't have control of the 18 documents. 19 SPECIAL MASTER CARNEY: No. You've got the 20 documents under an order from Judge Rey that's extremely 21 specific. Before ultimately there can be any handover 22 to them, Judge Rey has to approve. No matter what Judge 23 Crow rules, Judge Rey still has to approve also because 24 the documents are ultimately under Judge Rey's control. 25 But what I'm trying to say, we've got an EFTA01157400  31 1 interesting division of labor. But for the evidentiary 2 issue of does the privilege apply, does the privilege 3 not apply, there's very little reason to have Judge Rey 4 rule on that. It's not his issue. And no matter what 5 happens, Judge Crow wasn't bound by it. 6 That's a clean one to have Judge Crow rule on. The 7 objections I think aught to all be ruled on by Judge 8 Crow. And then if Judge Crow says I'm overruling any of 9 the attorney-client objections, what we need then is an 10 order from Judge Rey, the enabling order, which says 11 give it all to the plaintiff. And that's what I think 12 the way it should be done. 13 So should copies go to both? 14 MRS. SANCHEZ: Yes. 15 SPECIAL MASTER CARNEY: But only one judge rules on 16 it. And the only one who legitimately I think aught to 17 rule on it is Judge Crow. Now, if that's the case, then 18 what we also have to put in our recommendations is that: 19 That Judge Rey relinquishes his jurisdiction, if you 20 will, to rule on the evidentiary issue of does the 21 privilege apply and leave that to Judge Crow, but retain 22 jurisdiction for what whatever enabling orders he may 23 have to enter to ensure a smooth transition of documents 24 in the possession of the trustee and bankruptcy. 25 The alternative, and I mean we can do it the long EFTA01157401  32 1 way and the hard way, the alternative, leave it just the 2 way it is. Ultimately, what's going to happen if we do 3 that I see realistically, probably, not a darn thing. 4 Because realistically what Judge Crow will probably do 5 is just sign off on it, and then that's it. 6 MR. ACKERMAN: Judge Rey will have ruled on it and 7 Judge Crow will have signed off on it. 8 SPECIAL MASTER CARNEY: Unless we went completely 9 out in left field and unless my recommendations were 10 totally at odds or Judge Rey's decision was completely 11 at odds, I wouldn't see any reason why Judge Crow 12 wouldn't simply sign off and say, that's fine, I'll 13 accept those recommendations. 14 MR. FARMER: Judge Rey is never going to have 15 anywhere close to the appreciation of the nature of the 16 case. 17 SPECIAL MASTER CARNEY: I agree, that's why -- 18 Absolutely. My recommendation, I really think it aught 19 to be Judge Crow, but I'm opening it up having said 20 that, whether we can get any agreement on that. I know 21 the defense agrees. The question is: Does the 22 plaintiff agree? 23 MR. ACKERMAN: The confidentiality order that we 24 had talked about, that's what Mrs. Sanchez was asking 25 me, related to eyes-only on work-product and the EFTA01157402 1 non-relevant documents. 2 I think Judge Crow should be the one to conduct the 3 rulings on the privilege and any objections to your 4 report. I think that Judge Rey needs to keep 5 jurisdiction because we still need to get additional 6 documents from him. He still needs to keep jurisdiction 7 at least to the point of ensuring compliance with his 8 orders that presently exists or that may be entered in 9 relation to these recommendations. 10 SPECIAL MASTER CARNEY: I agree. We'll talk about 11 the request for sanctions later. I'm seeing a few 12 problems with that, but we will discuss that kind of at 13 the end of this. But it sounds like, let's present it 14 this way then in our recommendations for a change with 15 Judge Crow just what we've outlined that the difference 16 is going to be that in terms of the ruling on the 17 objections, if there are objections or an order 18 entered -- if I write -- Once again, every one is on the 19 same page with how this Special Master situation 20 actually works. 21 I write my recommendations. There is 10 days to 22 raise an objection. If the 10 days there is no 23 objecti