Steinbuch v. Hachette Book Group

Filing 36

BRIEF IN OPPOSITION filed by Hachette Book Group re 31 Motion to Amend/Correct (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12)(Stone, Clayborne)

Exhibit 11

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF NEW YORK ROBERT V. STEINBUCH, Plaintiff, v. JESSICA CUTLER, Defendant. May 28, 2009 3:02 p.m.
.
.

Case No.

07-50064(MCR)

100 S. Clinton Street Syracuse, NY 13261

TRANSCRIPT OF HEARING BEFORE HONORABLE MARGARET CANGILOS-RUIZ UNITED STATES BANKRUPTCY COURT JUDGE

APPEARANCES: For the Plaintiff: For the Defendant: By: ROBERT V. STEINBUCH, Pro se

Billips & Benjamin, LLP By: MATTHEW C. BILLIPS, 567 Ladonna Drive Decatur, GA 30032 Harris Beach, PLLC By: LEE E. WOODARD, One Park Place 300 S. State Street Syracuse, NY 13202

ESQ.

For Chapter 7 Trustee:

ESQ.

Audio Operator:

Nicole Smith

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

transcript

J&J COURT TRANSCRIBERS, INC. 268 Evergreen Avenue Hamilton, New Jersey 08619 E-mail: [e-mail] (609)586--2311 Fax No. (609)587--3599

2 APPEAR1NCES Mediator: (Cont'd): Green Seifter Attorneys PLLC MICHAEL J. BALANOFF, ESQ. By: 110 West Fayette Street Syracuse, NY 13202

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3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE CLERK: THE COURT: THE CLERK: All rise. You may be seated. Today is Thursday, May 28th, 2009. It's

the three o'clock calendar and we're going to hear Steinbuch v. Cutler, 07-50064. Two items on the calendar; the order

scheduling the status conference, and the motion to dismiss adversary proceeding, motion for sanction and motion to compel. Will the parties note their appearances? MR. STEINBUCH: I'm Robert Steinbuch. I'm the

plaintiff pro se. MR. BILLIPS: Matthew Billips for the defendant. Your Honor, I'm not a party to the so Lee Woodward,

MR. WOODARD:

action, but I am a trustee in the case, trustee appearing. THE COURT: MR. WOODARD: MR. BALANOFF: in the case. THE COURT: Mr. Balanoff,

You're welcome, Mr. Woodard. Thank you.
And Michael Balanoff.

I'm a mediator

if I could please ask you. and

You were quite good in not notifying the Court of anything,

I had made perfectly clear that I didn't want to hear a thing about mediation because this Court is going to be the Article 1 Court that's going to deal with this matter until it's trial ready.
And so,

let me just ask whether the matter is still in if you can

mediation as far as you're concerned if you know,

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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

tell me that. MR. BALANOFF: I have not discontinued the mediation,

and I think (indiscernible), mediation, but at this point (indiscernible)
-

THE COURT: date
--

And so,

you do think that the August 1st

if I made a mistake in giving too much time I

apologize, but you think the August 1st date should still be held to? MR. BALANOFF: I never
--

Your Honor,

I never assumed and this

that I had to wait till August 1st to make a decision, should not continue to be mediated. unsuccessful. deadline Mediation would be

At one point I had tried to set an earlier events that had taken place to see

(indiscernible)

whether the parties THE COURT:

(indiscernible) Okay. Very good. Thank you. What has

prompted this Court to set this matter for a status conference today and to require, despite requests that anything be done is to address three letters,

telephonically, both parties here, initially,

that came into the Court that frankly in my 30 years I have never

of practice, and in my association with courts,

seen with civil litigation this type of drivel coming in. I am
--

was referred with these letters because our

chief district court judge was not pleased with these letters and said take care of them, and that's what we're doing today. So, I'm going to start with the first letter that was directed

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1 2 3 4 5 6 7 8 9 10
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to our district court judge that complains that there has been a violation of the professional code of responsibility and that, therefore, there is a duty on a part of an attorney to

complain that a publicly filed on the CMECF docket that shows certain information constitutes some inappropriate conduct by the other party that they looked at exactly what that information is. MR. podium? THE COURT: MR. We can hear you right where you are. Okay. Your Honor, I'm sorry that you Mr. Steinbuch, Yes. do you want to address that? Would you like me to take the

STEINBUCH:

STEINBUCH:

12 13 14 15 16 17 18 19 20 21 22 23 24 25

don't like the complaint.

The fact is that New York State

Ethics Opinion makes it clear that you cannot use metadata to determine authorship of documents as an attorney. If I can

just go back a moment historically, Your Honor may recall that on a telephone conference when Mr. Carroll was my attorney, Mr.

Billips said something to the effect of me writing a document, and Mr. Carroll quickly interceded and said that's not true, and Mr. Billips said, oh, I didn't mean to suggest that. So,

we backed away from that. He made the very same claim, mediation, however, in the
--

that I wrote the complaint in this case So,

in this and

bankruptcy case.

I challenged him again at that point,

he said repeatedly that he was basing this on metadata, a term I was not particularly familiar with, frankly.

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6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 states
--

Thereafter,

after the mediation session, we had and I challenged him to

exchanged e-mails on various things,

produce the evidence that there was inetadata demonstrating that I wrote the complaints in this case. with any metadata regarding this case should say
--

He came back to me not
--

the bankruptcy case I

but regarding one of the underlying cases in the

District of Columbia and cited to the ECF filing report. You are right that it clearly
--

it's not that he

used some sort of computer software to dig into that metadata, but New York City
-

NYCLA Ethics Opinion 738 from just last

year says that you can't use metadata that's even clearly showing. call it
--

In that case it talks in part about

--

what do you

THE COURT:

Track changes that appear in an e-mail

when they're sent so that you can track who has been making comments on a document, and therefore go underneath the attorney/client privilege and issues of confidentiality. MR. STEINBtJCH: Exactly.
And indeed the opinion

Ethics Opinion 738 states,

"If a lawyer sends the recipient

material clearly showing this tracking changes,

will have to determine whether the sender intended that," and goes on to say, "And without such a prior understanding there

is a presumption that disclosure of metadata is inadvertent and would be unethical to view." THE COURT: Mr. Steinbuch, do you expect that there

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7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that, and 749, Honor, MR. STEINBUCH: No, no, no, no, no. I'm sorry, Your should be a recall of a publicly filed document?

if I'm not being clear.

Let me go back to Ethics "It's improper to

Opinion 738. both access"

Ethics Opinion 738 says that,
--

THE COURT: which I have. MR.

I can assume that I have read both 738

STEINBUCH:

I'm sure.

It says,

"It's improper to

access metadata or to try to determine the authorship of documents between an attorney and a client." we're talking about here. It's that Mr. That's the part

Billips has attempted

to use this data that you could see that was as 738 says, clearly showing to determine the authorship of documents. violates the attorney/client privilege. THE COURT: It says R. Steinbuch, and he pointed That

"I have no idea how this shakes out in terms of the But,

substantive issues that are in this pending litigation." what I am saying is that this is not akin,

and you cite the New

York State Bar Association and the Committee on Professional Ethics and those opinions for the formulation of these rules when I was very involved with the New York State Bar Association, went to each committee, helped review them. The clear, intent of these are not to infringe on the and I was on a panel that

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8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 myself. confidentiality and the attorney/client relationship. It does

go to the type of e-mails that inadvertently have the track changes or the bugs that can be put in track e-mails to see what was sent to, who responded later, and glean information that would be clearly violative of the attorney/client privilege. We do not have this here. This level of what has been filed in this court I never want to see again. do not want you, And I'm rejecting it out of hand.

and neither does the district court want to

hear any further letters of this type that purport to be holding up and keeping us to a higher standard of practice. will monitor the rules and the code as the attorneys appear before us, but I want to get back to the focus of this litigation and move it through because I see this as this
-

We

something that's dragging terribly this process which should have been moved along in a much more civil fashion than that. That's the first letter that went out. Let me address the second letter. The first paragraph
--

Letter 2 to

and by the way, Mr. Steinbuch,

you say plaintiff pro Se.

i follow the district court and the

Judge Halloran who said that when a pro se party is a New York attorney, they're going to be held to the level of what we Now, I don't know whether you're sir?

expect of New York attorneys.

admitted to the bar in New York, MR. STEINBUCH: Yes.

are you,

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9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 anymore, Honor? THE COURT: You're not going to be on the telephone THE COURT: Well, then, you better be present for Mr. Steinbuch. Your THE COURT: Okay. Then I'm going to hold you with and

your Columbia degree to a full knowledge of New York law,

you are going to be held to the same standard that every other attorney does even though you're pro Se. letter to say, You proceed in this

and the first paragraph has a statement,

"Plaintiff consented to mediation and the defendant did not." I can say for my own sitting here on the bench that this was a consensual mediation. consented to mediation. Mr. Ribarovski on behalf of Ms. So, Cutler

I start by saying that from my own It's

knowledge the first part of your allegation is frivolous. not true. MR. STEINBUCH: Just a comment, Your Honor.

I was on but

the telephone as you know.

I didn't hear Mr.

Ribarovski,

every single hearing in this court from now on, MR. STEINBUCH:

If I can just make a comment,

just so you know. MR. STEINBUCH: Okay. Mr. Billips said he needed to

check with his client before agreeing to the mediation. Your Honor said that notwithstanding, That's all that says THE COURT:
--

And

I'm going to order.

Mr.

Ribarovski at my instance consented

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10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 process? to the mediation. MR. He was present in the courtroom and did so. I apologize.

STEINBUCH:

THE COURT:

You proceed to request that I put a stop
And let me tell you,

to defendant counsel's improper behavior. Mr. Steinbuch,

that there is no one who will be more vigorous

in fighting discrimination and uphold the constitutional protection of religious beliefs. as vigorous as anyone. What I wholly oppose, and I think it's a disgrace to the Jewish people to have it referred to when you say it's the Jewish holiday of Passover, Passover began this year. the 15th. and I know perfectly well when It was April the 8th through April At least I would hope to be

And you would have this Court infer from the letter

you went on that there has been a belittlement of Jewish people, and you've used other extraneous information that has to then suggest that there has

nothing to do with discovery,

been harassment and abuse of the rules. May I respond by saying I think you are abusing the I think you are invoking something that is totally

inappropriate when there are many reasons and times that it should be.
And you make little of it as a result because I am

perfectly aware of when Passover was this year. MR. STEINBUCH: Your Honor, if I may comment. Mr.

Billips contacted me,

said, we're going to have a deposition.

Notwithstanding that the mediator said let's hold off on

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11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 letter. THE COURT: No, I don't think so. This was a discovery. THE COURT: Okay.

Let's talk about that Columbia

J.D. and let's talk about the fact that you're a New York attorney. this case? MR. STEINBUCH: Your Honor, my understanding is that Who is the one who is able to suspend discovery in

you empowered a mediator to control what was going on. THE COURT: Well, your
--

if you will go back to the

transcript of August the 21st when I talked about suspending the scheduling order that talked about discovery proceeding, that was the time that I suspended the May 8th, order. 2008 scheduling

And it was very clear on the record when I reviewed my

own comments that there was no doubt that discovery was proceeding. I looked at the further order that I entered when I permitted Mr. proceed. Carroll to withdraw, and I permitted mediation to Now, you are a

And I said nothing about discovery. Mr. Steinbuch,

very intelligent man,

I will give you that. And if there was any

There is no basis to infer what you did.

question you know where to go to get clarification. MR. STEINBUCH: To Your Honor.

THE COURT: MR.

To the Court. Right. That's why I wrote the

STEINBUCH:

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12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. scheduled deposition that was to take place. You wrote a It's called

letter that was received by this Court April 27th. a protective order.

You know how you have to move under the There was an outstanding

federal rules of civil procedure.

notice of deposition that was to take place in Georgia when you were there. MR. STEINBUCH: No, ma'am. No, ma'am. I

THE COURT:

Well,

I would be very surprised.

recognized your ability to redact private information from the Court, but if you're going to represent to our chief judge of

the district court that you are going to be in Georgia until May 15th at a certain address, then if there is a deposition I don't see any

notice that is served for that period of time,

basis unless you seek a protective order when you've been properly served that you shouldn't have been there. MR. STEINBUCH: Your Honor, at the end of the letter

I said I wasn't familiar with the practice within a bankruptcy court, but
--

THE COURT: are federal.

It's federal rules, Mr. Steinbuch.

They

They are uniform.

There are uniform rules of

procedure and discovery. MR. STEINBUCH: I don't practice in bankruptcy court.

Carroll, when he handled this case, wrote letters before and I tried to follow his form. In fact,

filing any motion,

right after I mailed the letter I called the Court and spoke to

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a clerk to say, you know, motion. But,

I'm not familiar if I should file a could I just speak to one more

in any event, please?

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

issue, Your Honor,

I was not scheduled to be in Georgia at that time. Indeed, on or about the date that Mr. Billips scheduled a I had a meeting of a commission that I serve on in Now, the date that Mr. Billips refers to and the

deposition, Arkansas.

date on the letter refers to the fact that we don't know exactly when the last day of classes are in the beginning or the middle of a semester because we don't know when they're weather days and we don't know if we have makeup days. So,

what we routinely do in Macadamia is we mark the semester from the beginning of the semester where we know till on or about the day of graduation. THE COURT: Is there any question as to when you were

served with the notice of deposition? MR. STEINBUCH: THE COURT: MR. No.

And where were you served? In Georgia, yes. So, you received the notice of the

STEINBUCH:

THE COURT: deposition. MR.

Okay.

You were served. STEINBUCH: Yes. I appreciate that you were I assume that

THE COURT:

Mr. Steinbuch,

paid $70,000 for teaching legal profession.

means that was one of the two courses that you were teaching in

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14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 standard. deposition? MR. STEINBUCH: Yes. Georgia? MR. STEINBUCH: Yes. I don't know about the $70,000,

but I was teaching two courses in Georgia, yes. THE COURT: MR. Okay. At the law school?

STEINBUCH: So,

Right. I am going to not only hold you
-*

THE COURT:

I'm going to hold you to your specialized knowledge of what it means, whatever the legal profession
-

what does the legal

profession course syllable include? MR. STEINBUCH: The rules I was referring to, the

professional conduct rules. THE COURT: I'm going to hold you to that legal

You admit that you were served with the notice of

THE COURT:

There has been no stay of discovery. And I am not only going to

There was no protective order.

direct you to a cure for a deposition, but whatever additional costs are incurred as a result of scheduling now that you were not in Georgia and ignored it, you. So, I'm taxing costs. are going to be born and paid by Billips to

I'm going to ask Mr.

submit what the costs are.

He had to file a motion today,

presumably because of the history of this case that has bogged down, here. and he incurred
--

he alleges $1,000 for having to be

And that is part of the costs of what it costs because

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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 told you, you didn't show up at your deposition and if not, can see, cooperate with discovery going on here. MR. STEINBUCH: Your Honor, if I may comment, and if from what I

I may ask you to reconsider. I want to have a deposition.

Mr. Billips contacted me and said If you look at the e-mails I said

I don't think we have discovery right now. THE COURT: Mr.
-

I don't look at the e-mails because I had and made it very clear, and you were

Steinbuch,
-

on the phone MR.

STEINBtJCH:
--

Mm-mm. that I didn't want anything pertaining this Court. As soon as I saw things

THE COURT: to mediation to, about mediation, MR.

in fact,

frankly I was not able to review them. Okay. in my

STEINBUCH:

THE COURT: own opinion,

And that was inappropriate of you,

to file them.
--

To put before me matters that I

said I was not

should not be a party or privy to as to

whatever was going on with respect to the mediation. MR. STEINBUCH: Fair enough, Your Honor. There is a

THE COURT:

There are formal pleadings.

way of protecting yourself against a notice that was served. You did not follow the rules. And I hold you to that standard.

You should've known that if you are a party to a federal proceeding and you are a law professor that you know that you are supposed to come to the Court for protection from that if

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16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so I think it. MR. the same day. STEINBUCH: Actually, 28th. THE COURT: send by regular mail MR. Well,
--

there's any question. MR. letter, STEINBUCH:

And that's what I did with the

Your Honor. THE COURT: This is not a motion. This is not a

protective order. MR.

When was the deposition scheduled? I don't remember the day. Billips? my recollection is April

STEINBUCH: Mr.

THE COURT: MR. BILLIPS:

Your Honor,

an April 20

--

a letter that you

STEINBUCH:

No,

I sent it priority or one of

these more rapid mails. day. THE COURT; office April the 27th. MR. STEINBUCH:

Your Honor got it the next business

It was received in the bankruptcy clerk's

Okay.

THE COURT:

They received something before we receive

And I called the clerk of the Court
I called the clerk when I sent it, and

then I called the clerk when it was received. THE COURT: MR.
--

When were you noticed for the deposition? It's in the letter. It's the 6th or

STEINBUCH: 6th or 8th.

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17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. Well If I just may comment, Your Honor. I

STEINBUCH:
--

Mr. Billips asked me

he said when you take a deposition?

said I don't think we have discovery here, but let's talk about taking reciprocal depositions because, 1) I do know that the
--

rules require a discussion about these things that a party

if a party serves a deposition notice on another party and the other party hasn't been conferred with, that is not in spirit or, indeed, probably language of the rule. And also I said, I said when can we Your Honor, to Mr.

do reciprocal depositions. Billips,

if you think discovery's still going on,

then I would

like to discuss the discovery that Mr. THE COURT: Mr. Steinbuch,

Carroll served on you.

it's not typical that

these discussions aren't worked out. MR. STEINBUCH: I know, but
--

THE COURT:

And if there was a notice of a I'm going to hear from Mr. Billips. Mm-mm. I find your attitude and your

deposition, presumably, MR. STEINBUCH:

THE COURT:

But,

approach and the way you're trying to pull down and bring the Court into all of these little matters that should civilly be worked out in litigation entirely inappropriate. This is not There

the type of matter that the Court should be focused on. are
--

I think it's abundantly clear the way the rules are there should be a

written that there should be open discovery,

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free flow of information,

and we had this discussion and I put Carroll

it all on the record about discovery when you had Mr. present and when you were also present, telephonically. MR. STEINBUCH: Mm-mm. at least

6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do.

THE COURT:

The whole import of what I stated,

I

find, has not been followed. discovery here.

There has not been appropriate
--

It seems that the

I will remain objective,

but I'm saying what I saw,

it looks particularly that someone

is just trying to derail the process of having this proceed. MR. STEINBUCH: I apologize, Your Honor. I sincerely

My understanding was that there was no discovery. THE COURT: I don't know how as a lawyer you would

arrive on that and be satisfied and not seek some clarification, but that's what you have said, that's the case. You are wrong, so I accept that

and as a result there are

going to be costs taxed.

I'm going to have Mr. Billips file

and direct him to file whatever costs are related to the failure to appear for that deposition, and that includes the rescheduling and where it's going to have to be and where it's
--

and what costs are going to be involved to take the
And he's going to

deposition now that you are somewhere else. have to travel there, presumably,

unless there's some

consensual agreement that there's a cheaper way to do it that you both agree to which I doubt there's going to be agreement

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here. MR. STEINBUCH: Can I ask Your Honor, the point that

I was bringing out was, depositions, conversation. THE COURT: MR. point is,

I had asked to do reciprocal Billips stopped the

and at that point Mr.

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Listen

--

STEINBUCH:
-

I'm sorry,
-

Your Honor.

Just,

the

going forward THE COURT:

There's discovery.

I'm not going to You're going to

direct discovery. follow the rules. the case,

You know,

you're big boys.

You're going to notice depositions if that's and you're going to work it out. I don't expect the

interrogatories,

And that's the way I expect it to be done.

Court to be dragged in to trying to resolve this type of he said/she said and then get the types of pleadings and drivel that I've been getting here. letter. But, This is not a pleading there, a

let me address the third letter.

The third letter then proceeds back again to the district court chief judge, but now there's been some improper request that it be withdrawn and pushing the issue once again. I've already ruled as to what my impression is on the first charge. The third is bothering the Court. MR. STEINBUCH: I didn't
--

Your Honor,

I didn't have
And so,

the Court's order before I sent the third letter. sent the third letter without
--

I

I would've directed the third

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20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 letter if at all to
--

I probably would've just waited for this

hearing, but I didn't have the Court's order. THE COURT: Well, I suggest that you don't proceed in if it does, before

this fashion again until it goes to trial, the district court.

Everything should be directed to this

Court, not to the district court. MR. STEINBUCH: Your Honor, the reason I sent that to rules and so

the district court,

if I just may put it on the record,

say that you must inform the district court chief judge, that's
--

THE COURT:

We're not tattletaling about violations We are trying to go to trial

of ethical rules in this court. if need be, and if possible,

resolve it.

MR. STEINBUCH: THE COURT:

Agreed.

And resolve it only on a way that is
--

ethical so that there should not be a

and this was mentioned

at a hearing before this even went into mediation about trying to obtain some type of testimony so that you would be successful in another lawsuit as a release to dismiss a lawsuit.
And if you ask me if we want to get
--

review the

ethical rules,

that could be entirely sanctionable. I am only right now

So, Mr. Steinbuch, take warning.

addressing the fact that you didn't show up for your deposition as a party. subpoena. You were required to. There didn't need to be a

You're right about the law that all you have to do

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21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is give a notice to a party. You never appeared, and you're

going to pay the costs as a result. If, and I'm forewarning you, breach and there own, you know,
--

if there is any further

what I sense is you're trying to for your
--

using this to

using this proceeding and this

Court to try to extract some benefit in another piece of litigation, there could be sanctions and other consequences.

And I warn you as a professor of law and as a practicing attorney who has
--

doesn't have complaints,

that I have done

it in the past and I am not reluctant to refer conduct that I see to be appropriate reviewing body. MR. STEINBUCH: I fully understand that I and Your Honor, the thing about the

appreciate that, Your Honor. statement wasn't even my idea. representing me. THE COURT: conference. Well,

This was when Mr. Carroll was

that concludes the status

I want to hear from Mr. Billips if I can because and I have a couple of

now we have a motion before us, statements about that. But,

this equally strikes me as

something that is kitchen sink and everything is thrown into it. It starts out by saying it's a motion. I've never seen a

motion in federal court that isn't numbered with paragraphs. It doesn't at one reference the 12 civil procedure,
---

any point in that motion
--

reference the federal

civil rule of

and then it proceeds right on the second page,

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22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you talk about a memorandum and goes into being a memo and throws lots of things in there in terms of alternative relief being sought. So, it may have been utter frustration, and I

would understand it if that's what it was, but let me hear you articulate if you can what it is that you want from the Court today. MR. BILLIPS: Your Honor, may it please the Court.

The motion for judgment on the pleadings ask that the complaint
--

the adversary proceeding be dismissed because it

fails to allege a central element of non-dischargeability as if there is a wilful and malicious injury meaning that there was an intent to injure. The complaint alleges that there was wilful and malicious conduct causing injury, and the supreme court has The Court as well

made it very clear that those are different.

in two decisions that post-date the district court's decision in the D.C. case, the supreme court has heightened the pleading factual

rule requiring much more in the way of specificity, specificity to show intent.

In the labal case just in the last few weeks the Court held that it is not simply enough to generally allege that there is the intent using the language of the cause of action. That there has to be some underlying factual basis and

alleged in the complaint for showing the requisite intent, this complaint doesn't have it. That, in a nutshell,

is the

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23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 motion for judgment on the pleading. Frankly, I have never seen anything in this case, that would

either in the pleadings or in a discovery response,

indicate that Ms. Cutler in any way intended to harm Mr. Steinbuch. Let me also say in fairness, Your Honor, the
--

because of some difficulty that I had with the ECF system and getting this thing filed, there was a
--

some of the exhibits

that were initially going to be attached were too long and couldn't be filed. They were supposed to be filed on the 8th. It was

They did not end up getting filed until the 11th.

mailed to Mr. Steinbuch on the 8th because I thought it had been filed. So, using the 11th, if the 11th is the service date, I believe his response would

or for purposes of his response, be due today. So,

he was served a copy that was slightly He

different because of changes to incorporation of exhibits. was served that on the 8th. But
--

which would make his

response due prior to today, but based on the filing date his response would be due today. Otherwise, I would contend it's

unopposed because no response had been submitted. As to the motion to compel and motion for sanctions for failure to provide discovery, large part of that, Your Honor's addressed a I thought
-

and frankly Mr. Carroll and I,

were working toward a process to try to resolve the

where we

are and why we're at loggerheads in exchanging discovery.

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24

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
19

When Mr. case, know,

Carroll was

--

when he withdrew from the

at that point the Court had sent it to mediation and, you hope springing eternal, I was
--

decided that I would

wait before doing anything in terms of dealing with Mr. Steinbuch on discovery issues until after that happened and see if the process was at all successful. Without going into what I've heard there, having

concluded that that process was not going to be successful, and also in frustration at the inability to get written discovery responses, that, that's when we got the
--

my decision tactically demonstrate the

just go ahead and take his deposition,

absence of merit in the case,

and move on without doing the

whole suspenders and belt thing with requiring written responses and production of all Then when the
---

whatever documents he has. I

he refused to come to the deposition either,

felt that I didn't have any choice but to present the matter to the Court partly in response to the allegations that he was making in these letters so that Your Honor would know where
how we got to the point we are
---

where we are today.

20 21 22 23 24 25

THE COURT:

One of your complaints is that you are

not getting served with copies of notices that are being generated for discovery. MR. BILLIPS: Is that one of your complaints? Your Honor, that had been an issue with

respect to subpoenas that were served on the United States senate.
And that is an issue that came up,

and I've checked

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25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with Mr. Ribarovski again today as he had gone back and checked his file and we were never served with those subpoenas when they were served on the senate. THE COURT: MR. BILLIPS: And these were served by whom? Mr. Carroll said in the hearing that he and he had a process server To my knowledge nothing was Carroll. He represented

is the one who issued the subpoena, serve them. The senate objected.

ever produced by the senate to Mr.

that it was simply an oversight, and I accept that representation.
THE COURT:

In looking at the complaint I agree with

the Geiger analysis that in terms of what has to be proved for 523(a) (6) that it's the intent to cause the injury. What I do

see kind of bare bones hanging in here is Paragraph 25 of the complaint. "Cutler wilfully and maliciously transformed her

blog into a book for her own profit at the intentional expense of plaintiff." It's very broad, but it seems to intend to hurt him. I don't know whether that's a fair reading or not. But, rather

than dismiss the complaint I would think alternatively we would let a one-time amendment to permit the proper pleading of the cause of action.
And I will say that this is not the typical

way that we see a 523 (a) (6)

complaint.

I'm not going to spell it out, but there's a reference to other actions and then the summary conclusions and

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26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 also. MR. BILLIPS: THE COURT: MR. research it, Thank you, Your Honor. apologize. I think you really need to tie it in to properly alleging elements of a non-dischargeable debt for wilful and malicious injury under 523(a) (6). things up or not, I don't know if that's going to hold

but rather than dismiss I will give you a

one-time chance to re-plead your complaint which means there'll be an answer. MR. BILLIPS: Yes, Your Honor. What else an

THE COURT: did you mention here?

What else can I address today? I need to have, Mr. Billips,

affidavit of your costs. MR. Is BILLIPS:
--

Yes,

Your Honor.

Your Honor,

I

for purposes of this proceeding does costs

include fees? THE COURT: MR. BILLIPS: I'm sorry? For purposes of this proceeding to this
--

affidavit would costs include fees spent for traveling THE COURT:

I think attorneys fees are part of it

Is there any question about that? I think there is, but I'd have to

STEINBUCH: Your Honor.

I'm not sure that when costs are but I couldn't say for sure. to the extent it allows it I'm
--

imposed it includes fees, THE COURT: going to permit it.

Well, And so

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27
1

MR. BILLIPS: 37.

Clearly,

they're permitted under Rule

2 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

I just wasn't clear as to what Your Honor intended. THE COURT: These are reasonable expenses including
--

attorneys fees incurred in making Now,

I'm going to permit them. I

it you want to object to the quantity of it you can.

will allow you within ten days to do so, but I suggest instead that the focus be on seeing where this is going because this seems to be an enormous involvement of judicial time, and

certainly of the caliber of the people that are sitting in front of me. There are very important things to be done.

I'm not belittling the fact that you have a right to be in federal court, but I think the focus should be, are truly bringing an action to prosecute here, if you

that you either

proceed promptly and efficiently and get to the issues or consider whether or not there is still room for settlement. Until I hear from Mr. Balanoff as to whether or not there is a mediation, successfully included or not, But, I'm reluctant to enter

a scheduling order.

in the interim we're going to have an

amended complaint filed within 20 days of today's date and the answer within 20 days after that. Is there anything else that either party wants to bring to the Court's attention that you both in the same room,
--

and somehow while I have

facilitate something that's going to Mr.

be helpful or moving this beyond where it's been? Steinbuch?

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28
1 2 MR. STEINBUCH:

Just a minor thing.

The brief which
but the brief

I think we've resolved,

so it's not a time issue,

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24

that I received,

it was the May 11th brief not the May 8th
--

brief, but I never received any THE COURT: MR.

What brief are we referring to? Oh, I'm sorry. The motion
--

STEINBUCH:

--

defendant's motion.

And I don't have any So,

but I never

received any exhibits. those exhibits. MR. BILLIPS: new set. THE COURT: what the answer. respond.
--

I was wondering if I could just get

Your Honor, we'll send out an entire

Okay. I'm not

So,
--

you can study them and see

I mean,

I wondered why there was no

I think I have my response today as to why you didn't I understand. But, I think that it is something

that's going to cause the Court to permit you to file an amended complaint and
-

is there anything else? No, not for me. I trust that this is going to and that you are going to

MR. STEINBUCH: THE COURT:

Well,

proceed in an efficient,

civil way,

proceed through this process without being bogged down on discovery disputes. And if it is that the evidence is going to

come before the Court in terms of trying personal injury
action, then so be it.

But,

there is no reason to have a

25

debtor wait as long as this case has been pending to have this

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29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
24

kind of a case come to trial and resolution. that it proceeds. MR. STEINBUCH:
--

So,

I would hope

Could I ask the Court a question? has the Court decided if it's its

If

the case proceeds is it

intention to send the case to the district court? THE COURT: about that, Well, you've also made some statements that this case will

and let me make that clear,

stay with the Court until it's trial-ready. MR. STEINBUCH: I'm sorry?

THE COURT: MR.

Until it is trial-ready. Okay.

STEINBUCH:

THE COURT: upstairs,

And at the point it's trial-ready it goes and it comes back to this Court

there's a decision,

for then the ultimate determination of dischargeability because that's where this jurisdiction lies. So, unless I hear

something otherwise from the district court that's how it's going to proceed. That's
--

they're very busy upstairs and we

try to assist the Court as much as we can given our limited Article 1 powers, but
--

so,

with those words of caution I just Thank you.

trust that this will proceed on track. MR. MR. BILLIPS: STEINBUCH: Thank you,

Your Honor. Your Honor.

Thank you,

THE CLERK:

All rise.
* * * * *

25

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30
CERTIFICATION I, KATHLEEN BETZ,

court approved transcriber,

certify that the foregoing is a correct transcript from the official electronic sound recording of the proceedings in the above-entitled matter, and to the best of my ability.

Is!

Kathleen Betz

DATE;

June 2,

2009

KATHLEEN BETZ J&J COURT TRANSCRIBERS, INC.

J&J COURT TRANSCRIBERS,

INC.