Asia Economic Institute et al v. Xcentric Ventures LLC et al

Filing 162

DECLARATION of Lisa J. Borodkin in opposition to MOTION for Summary Judgment as to Entire Case 145 filed by Plaintiffs Asia Economic Institute, Iliana Llaneras, Raymond Mobrez. (Attachments: # 1 Exhibit 1 (Transcript of June 2 2010 Deposition of Xcentric), # 2 Exhibit 2 (Transcript of 6 8 10 Deposition of Edward Magedson), # 3 Exhibit 3 (Transcript of August 6 2010 Proceedings on Order of Preservation of ESI))(Borodkin, Lisa)

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Asia Economic Institute et al v. Xcentric Ventures LLC et al Doc. 162 Att. 3 Case 2:10-cv-01360-SVW -PJW Document 112 #:3370 Filed 08/13/10 Page 1 of 25 Page ID UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ASIA ECONOMIC INSTITUTE, Plaintiff, vs. XCENTRIC VENTURES, LLC, ET AL., Defendants. ) ) ) ) ) ) ) ) ) ) CASE NO: 2:10-CV-1360-SVW-PJW CIVIL Los Angeles, California Friday, August 6, 2010 (2:09 p.m. to 2:38 p.m.) TELEPHONIC HEARING RE EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER AND PROTECTIVE ORDER (DOCUMENT #101) BEFORE THE HONORABLE PATRICK J. WALSH, UNITED STATES MAGISTRATE JUDGE Appearances: Court Reporter: Deputy Clerk: Transcriber: See Next Page Recorded; CourtSmart Celia Anglon-Reed Exceptional Reporting Services, Inc. 14493 S. Padre Island Drive Suite A-400 Corpus Christi, TX 78418 361 949-2988 Proceedings recorded by electronic sound recording; transcript produced by transcription service. EXCEPTIONAL REPORTING SERVICES Dockets.Justia.com Case 2:10-cv-01360-SVW -PJW Document 112 #:3371 Filed 08/13/10 Page 2 of 25 Page ID 2 APPEARANCES FOR: Plaintiff: LISA J. BORODKIN, ESQ. DANIEL F. BLACKERT, ESQ. Asia Economic Institute 11766 Wilshire Blvd., Suite 260 Los Angeles, CA 90025 DAVID SCOTT GINGRAS, ESQ. Gingras Law Office 4072 E. Mountain Vista Drive Phoenix, AZ 85048 MARIA CRIMI SPETH, ESQ. Jaburg & Wilk 3200 N. Central Avenue Suite 2000 Phoenix, AZ 85012 Defendants: EXCEPTIONAL REPORTING SERVICES Case 2:10-cv-01360-SVW -PJW Document 112 #:3372 Filed 08/13/10 Page 3 of 25 Page ID 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 Los Angeles, California; Friday, August 6, 2010; 2:09 p.m. (Telephonic Hearing) (Call to Order) THE CLERK: Okay. Calling Case Number CV-10-1360- SVW(PJWx), Asia Economic versus Xcentric Ventures, et al. Counsel, please state your appearances for the record. MR. BLACKERT: representing Plaintiffs. MS. BORODKIN: Plaintiff. MS. SPETH: MR. GINGRAS: Maria Speth for Defendants. And David Gingras for Defendants. I'm Good afternoon. Lisa Borodkin for Hi. This is Daniel Blackert not sure if anyone else can hear that echo on the line. THE COURT: I can kind of hear it but I don't know if it's going to interfere. How about anybody else? MR. BLACKERT: though. I'm okay with it. I can't hear it, This is Mr. Blackert speaking. MS. SPEAKER: Mr. Blackert's echo is the worst of all it seems. Are you on speaker? MR. BLACKERT: I am on speaker. Would you like me to transfer to non? MS. SPEAKER: THE COURT: It might help. Yeah. Okay. Let me try it. MR. BLACKERT: THE COURT: Okay. It's out there for everybody. EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3373 Filed 08/13/10 Page 4 of 25 Page ID 4 I transferred to non-speaker 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 -now. phone now. MR. BLACKERT: Okay. THE COURT: I'm sorry? I transferred to non-speaker phone MR. BLACKERT: MS. SPEAKER: MR. SPEAKER: THE COURT: There's still a bad echo. I think the echo is getting worse. Okay. I'm having trouble hearing it MR. BLACKERT: another line? Would you like me to call back in on Would that be easier? Yeah, why don't you do that? Why don't THE COURT: you call in on another line and we'll wait for you. MR. BLACKERT: MS. SPEAKER: MR. SPEAKER: THE COURT: Okay. I apologize, your Honor. It actually just got way better. It got way better. Okay. Yeah, it did. So stick on and let's everybody concentrate on talking into the mouthpiece or whatever you have there so that we can try and make sure we don't miss anything. MR. SPEAKER: THE COURT: Okay, your Honor. All right. The motion before the Court The Court has is a motion for a temporary restraining order. interpreted it as a motion for a protective order, which is why the magistrate judge is going to rule on it as opposed to the district judge. I did run it past Judge Wilson and he agrees. EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3374 Filed 08/13/10 Page 5 of 25 Page ID 5 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 There are several things that the Plaintiffs are requesting. They want a protective order to prevent Defendant's counsel from interfering with Plaintiffs' witnesses and I get -- what's that? (Pause) And I guess it's Mr. Hutcherson (phonetic) that focused on -- is it a Mr. or a Mrs.? MS. SPEAKER: THE COURT: Mister. Yeah, Mr. Hutcherson. I'm sorry. And apparently issued a press release saying that -- involved in litigation and Defendants are demanding that he retract the press release, and Plaintiffs believe that that's infringing on opportunity to present the case. Am I right, Ms. Borodkin? MS. BORODKIN: Your Honor, there's a little nuance. I think we were mostly focusing on their demand that he correct and submit to this Court another declaration. THE COURT: Okay. And I do understand that as well. If he submits another But I'm going to deny that request. declaration, you can point it out and we'll see where that's going to go, okay? First of all, I don't really consider him He's just a witness. your witness or the Defendants' witness. You're alleging that he's been subject to improper influence by the Defendants. I don't know if that's true. We're going to wait and let's see how it plays out and see if anything comes EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3375 Filed 08/13/10 Page 6 of 25 Page ID 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 up, and you present that evidence either to me or Judge Wilson at a later time. Go ahead, Ms. Borodkin. MS. BORODKIN: fine. If that's the Court's ruling, that's We understand The We made our arguments in our papers. there are important First Amendment considerations here. thing that we found to be of concern was this follow-up email that Defendants did not respond to of threatening to put him in the hall of shame, which seemed very clearly calculated to try to pressure him further. And we just wanted to understand that we have currently a certain status where discovery is not proceeding. Defendants can take discovery, they can make requests; but for them to demand that he do one thing or another and then also put in their papers that they plan to file a lawsuit against him, you know, to me the demand to make him file a new declaration with the Court seemed a little over zealous. THE COURT: position. I understand. I understand your If he does file a new declaration and you feel that it was obtained improperly, you raise those issues then, all right? MS. BORODKIN: THE COURT: Sure, your Honor. The next issue is about the You were concerned that Okay. overwriting of the old website pages. it was going to be lost forever when they changed their website EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3376 Filed 08/13/10 Page 7 of 25 Page ID 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 pages. But what they're saying is their new system keeps a backup in place, so all these cases are going to be preserved, correct? MS. BORODKIN: details here. Your Honor, there's some technical I don't agree 100 percent with the analysis of There's a the presentation that was put into the record. couple of issues here. I'm reading the declaration that was It provided by Defendants' expert, Justin Crossman (phonetic). says they are currently not preserving systematically the static portions of the web page and they're working on it. In Paragraph 10 it says they're working on a system to do that. What they are saying in the declaration is that they generally take copies. But that's not quite the same, because And we'd that has been an issue since we filed the action. like them to make sure that they're doing it systematically. And we'd like to know if there have been pages that are lost and haven't been saved. We'd like to know what that is and not knock ourselves out trying to take discovery of something that no longer exists. THE COURT: do you respond? All right. Mr. Gingras, Ms. Speth, how How are you maintaining these copies of the web pages when you've changed to a new web page? MS. SPETH: Yes. I think that Ms. Borodkin is not paying any attention to the provision in Mr. Crossman's declaration where he says that he's been instructed that if EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3377 Filed 08/13/10 Page 8 of 25 Page ID 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 there's any changes to the static pages he is to keep a full copy as well as the source code. And also, as we pointed out in our response, Ms. Borodkin can herself simply print out the pages that she wants, as well as the source code. THE COURT: Right. Okay. Ms. Borodkin, I'm satisfied with the Defendants' representations that they're preserving it, and I do agree with them that you can copy those. You can print out those pages and I'm sure your tech guy can copy those pages. MS. BORODKIN: Your Honor, if I could be heard. I'm proceeding on that That is true as of today, August 6th. representation. However, for portions of the web page between January 28th, 2009 when the action was filed and today I would request that we get some clarity on did they save or should we just assume that was lost unless we took copies of it. Because what I'm reading from this declaration is that he's been instructed now but he hasn't made any representations and counsel hasn't put in any declaration about what steps were taken in the past. THE COURT: Ms. Speth, what happened between today and January 28th of '09? MS. SPETH: A couple of things, your Honor. First of all, there was a preservation of a complete -- in Paragraph 5 of this declaration he points out that before the migration to the new software he did a preservation of the complete website EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 #:3378 Filed 08/13/10 Page 9 of 25 Page ID 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 as it existed. And he has that and that is preserved. Secondly, when he made changes -- what he said to me and the way his declaration reads, generally, when he makes changes to the static pages he says that he does keep a copy. What he couldn't feel like -- he says I can't say 100 percent for sure that I kept every single one. For instance, if I went in and changed a tiny little word, I might not have done a full, you know, source code copy before I did that. want to say absolutely positively. So I don't He said but any time I've made substantive changes I've done that. So not only do we have printouts of what you can see but of the source code. He's done his backups of the source He code when he's gone in and made changes to the home page. didn't feel comfortable to say every single time, because he said there might have been like a minor change that he just didn't think to do the source code. I said going forward I don't care if it is of the word "and," make sure you copy it. So that's kind of where we're at. THE COURT: Okay. Ms. Borodkin, I'm satisfied. It appears to me that the vast majority of everything has been saved. When discovery is re-instituted you can depose him and find out what, if anything, is missing or what he thinks is missing and we're going to go from there. MS. BORODKIN: Your Honor, can I address another As far as technical subject that came up in their declaration? EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 10 of 25 Page ID #:3379 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 backups, it looks like from their declaration at Paragraph 17 they have a third-party vendor that overwrites -- or sorry. They make backups that are good for 30 days. And my previous experience in these Texas cases is that unless the vendor's instructed to set aside the backup tapes, these 30-day backup tapes get put back into the rotation where they're overwritten and recycled again. And we would like the Defendants to let us know if they're doing more than what's in this declaration. Because it looks like that they're just recycling it every 30 days. THE COURT: MS. SPETH: after 30 days. Ms. Speth? Yes. The backup is probably overwritten They charge $2,000 It is a third-party vendor. a month to do backups. At the end of 30 days they very likely First of all, that's only a backup start over with a new tape. and that's why Mr. Crossman was trying to differentiate between preserving as we do it and the backup. is a disaster. The backup is if there The preservation is going on every day; every But -- minute it's being preserved. THE COURT: MS. SPETH: THE COURT: MS. SPETH: THE COURT: MS. SPETH: By you. I'm sorry? By you. By us, correct. By Mr. Crossman. Right. There's a third-party vendor And there's -- EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 11 of 25 Page ID #:3380 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 doing the 30-day thing. The only other thing I would say -- and I'm not agreeing to this -- but if the Court was inclined to say, "Okay, you've got to tell your third-party vendor to back up for more than 30 days," there's going to be an enormous cost involved in that, and I don't know why we should bear the cost. I don't think it should have to be done at all because we are already preserving it. But I mean I think she's completely not keeping in mind that that $2,000 a month would go, you know, exponentially up if we said to the vendor: know, keep it forever kind of thing. THE COURT: Ms. Borodkin, I agree with Ms. Speth. They're not preserving two. You have to, you They are preserving a copy. MS. BORODKIN: Your Honor, my experience from speaking with experts is the tapes cost about $60 for them to put it on the shelf. THE COURT: You can pay it. If you want to call up Ms. Speth and work on -- you write a check, you can pay for it, okay? If you want a second copy, it's your dime. And, Ms. Speth, if Ms. Borodkin calls you and sends you a check, you can preserve two copies of it. MS. BORODKIN: raise that we -THE COURT: Well, let's get back to the first issue. Okay, Ms. Borodkin? There's another issue I wanted to You want two copies; you need to pay for it if you want two EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 12 of 25 Page ID #:3381 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 copies. MS. BORODKIN: If they are saying they're preserving it with respect to the 58 web pages that are at issue right now and relevant and that they are already preserving it, then we will rely on that. THE COURT: Okay. Next issue. MS. BORODKIN: The next issue has to do with our Our expert concerns about the server directory structure. witness has described that the URL, which is basically the address -THE COURT: Yeah. -- that goes along with each MS. BORODKIN: individual web page of the -- you know, over 600,000; each one has a different address. And what goes into determine what It used to be a makes up that address has changed over time. much more sort of bland vanilla URL address consisting of the website's name; then there was a folder that just said "report" and then a report number. And then some time between January of 2009 and May 2010 they changed -- the Defendants changed the way that structure was set up. And that has to do with, according to our expert, the way that the directories and subdirectories on their server are organized and how those are named. And what they're talking about with preserving the data in the database just doesn't address that change. What I'm trying to EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 13 of 25 Page ID #:3382 13 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 understand from the declaration of Justin Crossman that they put in -- because they didn't say anything about it in their brief at all -- is that in August of 2009 they just migrated the whole server somewhere else. And it sounds to me like she's saying, well that's when they changed their system to program different names into the URL. Now, your Honor, what happens under the current system is it looks like whereas before there was a domain name, it just said report, a report number; it now has key words that are the names of the subject of the report, repeatedly; and that enhances some of the search algorithms behavior to sort of prefer that search result because the URL or domain name address is one of the factors that's known to influence search results. And we'd kind of like to know when they took that proactive step to actually purposely enhance the URL -THE COURT: You're going to be able to do that. When discovery is re-ignited you can depose the 30(b)(6) person. You can ask all these questions, okay? You can learn everything you want to learn about their computer system and when they changed and how they changed it. What we're looking at right now is a protective order in which you want to maintain the status quo on certain things. This is not open discovery, okay? And I don't know if it's ever going to get to open discovery, because the Court may rule against you and the case may be dismissed. But I'm not going EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 14 of 25 Page ID #:3383 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 to deal with the minutia of when may change certain things and how they changed the URL address, all right? MS. BORODKIN: more discrete issue. Okay, your Honor. There's only one I just want to get clarity because we've Your Honor, we've noted incidents asked for this in the past. where Defendants have told us that, unfortunately, they have been subject to hacking attacks or denial of service attacks. And it seems that in other cases they've been unable to retrieve emails. And so this case I would just suggest maybe as a way to give us some comfort, if we were to provide some search terms and provide, you know, a very limited set of what pages to just say: Hey, would the Defendants be willing to just back up what they have now on, you know, something like a disk; just something simple, inexpensive, and just put that aside for now just in case they have some system-wide crash so it doesn't become this, you know, complex disaster recovery procedure. THE COURT: for. I just don't think that's what this is Ms. Speth, what do you have to say? MS. SPETH: I'm confused. I don't know if she -She Ms. Borodkin seems to be mixing up emails with the server. put in a declaration about something that Mr. Hutcherson provided to her about an email problem that we had a couple of years ago with Mr. Magedson losing some emails. Nothing whatsoever to do with the sequel server; very, very misleading EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 15 of 25 Page ID #:3384 15 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 to present it to this Court as if it had something to do with the database because it didn't. So I don't know if she's asking about emails right now or the server. But we talked about the server at length, As far as and that's already being completely preserved. emails, emails are also being preserved. The idea that we would just sort of put them on a disk and give them to her it's ludicrous in light of the fact that she's asked that discovery be stayed and there is no discovery right now. My client has thousands, probably tens of thousands if not hundreds of thousands, of emails. little disk he would be putting it on. thing. And so it's not a It would be a major And, of course, there's no discovery right now so it's just not worth it. MS. BORODKIN: to give us those emails. confused. Your Honor, we are not asking for her And I will clarify so that nobody is This is a TRO regarding preservation of ESI. We discovered and in March of 2009 We are just pointing ESI includes emails. Defendants had trouble producing emails. that out so that this problem producing emails should discovery reopen doesn't occur. THE COURT: Ms. Speth, she wants you to preserve Can you do that? emails, make another copy of them. MS. SPETH: THE COURT: Yes, your Honor. And how much is it going to cost you? EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 16 of 25 Page ID #:3385 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 possible. crash. MS. SPETH: No, it happens automatically. My client preserves all emails all the time. My client is on a constant litigation hold because he's constantly in litigation. THE COURT: MS. SPETH: THE COURT: MS. SPETH: Okay. So it's already happening. All right. Ms. Borodkin -- You know, I can't say the system won't What happened in 2009 is he went to search for an email We didn't know if it was a search and he couldn't find it. function issue, one that he knew existed; we didn't know if it was a search function issue or if it was that some emails had gotten lost. was. We never did find out, by the way, which one it But absent something that goes wrong everything is always preserved. THE COURT: Okay. Ms. Borodkin? MS. BORODKIN: Well, the two things that are still sort of outstanding today are that, you know, there isn't 100 percent complete history that can be guaranteed. that now. THE COURT: Nothing is -- Ms. Borodkin, that's not We know MS. BORODKIN: THE COURT: Right. So that's One hundred And you don't do it either. not what we're searching for; that's not our goal. percent guarantee you don't get that in anything in life and EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 17 of 25 Page ID #:3386 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 you're not going to get that in discovery. best they can. They're doing the They're taking steps that other companies don't do, and I just don't think that they're out there shredding documents or destroying data. So when you say, "Well, nothing's a 100 percent guarantee," you can't get that from me. MS. BORODKIN: THE COURT: Oh, your Honor -- You're shooting too high. I misspoke, your Honor. What I meant MS. BORODKIN: was we've narrowed it down to the fact that we do see that they're not saving the static web pages but they are going forward and that they have had email problems in the past. And, you know, that's very helpful for us to clarify that. we'll do the best we can, and I appreciate that. THE COURT: All right. So the statement under oath And as to what steps they've taken to preserve their -- again, go with the 30(b)(6) -- discovery starts up again. The last thing that I think you're searching for is you want them to change the meta tabs, the metadata so your name won't show up so quickly, it won't show up at all when someone does a Google search; am I right? MS. BORODKIN: Your Honor, yes. The reason is, as we were talking about earlier, they changed the URLs in the past in a way that optimizes search. If they're going to change it again, you know, to further optimize the search, that's going to change things for our client. They're going to continue to EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 18 of 25 Page ID #:3387 18 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 suffer harm. They've demonstrated they're able to manually change -- they claim that they're able to manually change HTML and that -THE COURT: This is the whole point of your lawsuit isn't it, to get off of the Google search so when someone puts in your client's name and searches in Google, this Ripoff Report doesn't show up? get this done. discovery. MS. BORODKIN: Your Honor, what protection do we have You would have to win your lawsuit to You can't do this is a protective order and if they decide to reconfigure their database -THE COURT: None. Okay. You don't have protection from -- MS. BORODKIN: THE COURT: None. you're not getting protection from me for the Defendants or any other company out there. In fact, the Court is -- the district judge has not looked with favor on your pleading as it is. And, alternately, if your case gets dismissed you're going to have the same protection you're getting now, none. You're saying what they're doing is wrong and they shouldn't be allowed to do it. That's your allegation. And it has not been resolved in your favor. getting kick started here. In fact, we're just Somewhere down the road if this thing goes to trial and you win on appeal years from now, you may be able to prevent companies like Defendants from putting EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 19 of 25 Page ID #:3388 19 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 your name -- saying bad things about your company on the web. But right now not only is there anything that says they can't do it, everything says they can do it. MS. BORODKIN: Your Honor, I appreciate it and we're I very grateful for the time the Court has spent on this. don't want to create the misimpression we're trying to restrain their speech. I think what it is, is what they're doing -- maybe it's wrong; maybe it's right; it's part of the point of the lawsuit -- but to the extent they're saying what they're doing in the HTML it's third-party conduct and they're not responsible for it, that may be the issue what we're going to look into. THE COURT: what the answer is. I understand. Ms. Borodkin, I don't know I'm not saying you're wrong and that, you know, I'm not here to tell you that you're not allowed to bring this lawsuit and you're not allowed to stop them from saying bad things about you. But I don't know that now and it's not And right now they get to say bad my decision to make anyway. things about you and people get to type your name in on Google and hear bad things from Ripoff Report on you. prevail that may change. Now, if you But until you do it's going to be that way and I don't think it's appropriate for me to tell the Defendant that you have to stop what you're doing because the Plaintiffs allege that it's improper. MS. BORODKIN: I see. Well, thank you for EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 20 of 25 Page ID #:3389 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 considering, your Honor. We do think it's something that's in the HTML and they put in a declaration they don't have the ability to change that except at tremendous expense to them. And if that's the representation, then we understand better. THE COURT: Okay. Is there anything I've overlooked? MS. BORODKIN: anything? MR. BLACKERT: Daniel, did you want to argue I don't believe so. I think we both pretty much covered everything. MS. BORODKIN: One thing I would, your Honor, like to respond to is the Defendants have asked for sanctions for us to even bring this motion. And I would like to just say that some of the information that we're getting about what their actual procedures are in this motion have been tremendously helpful to Plaintiffs. application. We're only able to get that by bringing this It's very useful to Plaintiffs to analyze and evaluate the case for settlement or for further proceedings. And we had asked for many, many times simply the information they have now given us. application. THE COURT: MS. SPETH: Okay. Ms. Speth, what do you say? It is only possible by bringing this Your Honor, we'll put our Rule 11 motion We served it, on the calendar 21 days from when we served it. I believe, four or five days ago; so I think it's premature to argue it at this point. But we will be filing that Rule 11 EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 21 of 25 Page ID #:3390 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 motion and that's the appropriate time to talk about whether or not their pleading was grounded in good faith and whether or not it was for improper purpose and whether there should be sanction. THE COURT: comes in, all right? Okay. I'll take a look at that when it And if I'm going to order sanctions, we'll get everybody on the phone and I'll do a tentative before I do it. MS. BORODKIN: Your Honor, I just wanted to make sure we are responding to any questions your Honor has about the purpose of this application or some of the information that we've gotten in it. THE COURT: have. MS. BORODKIN: THE COURT: All right. Thank you, your Honor. I want to give both You have responded to the things that I Okay? All right. sides a chance to tell me anything they want me to hear before I say goodbye. Ms. Borodkin, you go first. Well, we think that under the standard MS. BORODKIN: for seeking an order of preservation, which is Capricorn Power (phonetic), the three factors: Number one, the level of concern; number two, the irreparable harm; and number three, the capability of the party to preserve it; we reasonably ask for this Court to apply that and issue an order of preservation. EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 22 of 25 Page ID #:3391 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 It seems to me that after today's argument and after the representations of Defendants' counsel and also the declaration put into the record and the follow-up questions that the Court seems to have determined that that suffices; so that in itself as the representation is going to be the basis for preservation and that the Court is not satisfied. We've requested that they take the modest step of manually backing up emails that are relevant, and Defendants seem to have agreed to that. We wanted some clarity on what might have been lost between January 2008 and August 2009 -- or rather, sorry, August 2010. And there was some equivocation where they don't want to be 100 percent; but going forward, in any event, they're going to be more complete and systematic in taking backups; and they feel that their own preservation procedures are sufficient even though they're constantly, you know, in pretty frequent litigation they feel it's appropriate for the vendor to continue to recycle. And Plaintiffs don't have the wherewithal to, you know, write a check to make two copies, so you know that's just going to be what we rely on. And that if there are further discovery issues with overwriting in the future, we'll just proceed by discovery. As far as the protective order, you know, we understand there's a concern. Just as we would respond to any declaration that was put into the Court that was procured, you know, we wanted to see if there was a concern from the Court EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 23 of 25 Page ID #:3392 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 about what was being asked and what was being demanded. And, you know, as far as that goes I think Daniel had argument on that. But, you know, we're satisfied that it would be within the confines of discovery. THE COURT: add? MS. SPETH: THE COURT: as soon as I can. No, your Honor. Okay. I'm going to issue a minute order Okay. Ms. Speth, anything you want to And, basically, it's going to provide that Plaintiffs brought a motion for a temporary restraining order and protective order. The Court has interpreted it as a motion for a protective order and that the motion was denied for the reasons set forth at the hearing. And if anybody wants to challenge my ruling, you can get a copy of the transcript and go see Judge Wilson and see what he has to say. MS. BORODKIN: Your Honor, could I -- if you would You know, there was one argument bear with me for one minute. that I wanted to respond to that they have made in their opposition. They seem to present this as a motion for a temporary restraining order using the standard under preliminary injunction. And to the extent it just sought an order of preservation for electronically stored information, you know, that was based on -- that request was based on the Court's inherent power as articulated in Trepple (phonetic) and Pueblo of Laguna (phonetic) -- Laguna versus United States, EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 24 of 25 Page ID #:3393 24 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 which we cited in the application. It was just a suspend So policy relating to deleting or destroying files. technically I would suppose we would have submitted that as a request for a order of preservation under that line of case law. THE COURT: add? MS. SPETH: THE COURT: No, your Honor. Okay. All right. And, you know, we'll They filed a Rule 11 Okay. Ms. Speth, anything you want to deal with the sanctions at a later time. motion. All right? MS. SPETH: MR. SPEAKER: MS. BORODKIN: THE COURT: weekend. Yes, your Honor. Thank you. Thank you. Thank you. Have a nice Yes, your Honor. Yes, your Honor. All right. Okay, folks. Thanks for your time tonight. MS. BORODKIN: MR. SPEAKER: Thank you. Thank you, your Honor. We appreciate it. Bye-bye. THE COURT: Okay. Bye-bye. (This proceeding was adjourned at 2:38 p.m.) EXCEPTIONAL REPORTING SERVICES, INC Case 2:10-cv-01360-SVW -PJW Document 112 Filed 08/13/10 Page 25 of 25 Page ID #:3394 CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter. August 13, 2010 _ TONI HUDSON, TRANSCRIBER EXCEPTIONAL REPORTING SERVICES, INC

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