The Facebook, Inc. v. Connectu, Inc et al
Filing
797
Transcript of Proceedings held on November 28, 2011, before Judge James Ware. Court Reporter/Transcriber Joan Marie Columbini, Telephone number 415-255-6842. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Redaction Request due 12/22/2011. Redacted Transcript Deadline set for 1/3/2012. Release of Transcript Restriction set for 2/29/2012. (Columbini, Joan) (Filed on 12/1/2011)
PAGES 1 - 49
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
BEFORE THE HONORABLE JAMES WARE
FACEBOOK, INC., AND MARK
ZUCKERBERG,
)
)
)
PLAINTIFFS,
)
)
VS.
) NO. C 07-1389 JW
)
CONNECTU, INC., (F.K.A.CONNECTU,
)
LLC); PACIFIC NORTHWEST SOFTWARE, )
INC., WINSTON WILLIAMS; AND WAYNE )
CHANG,
)
) SAN FRANCISCO, CALIFORNIA
DEFENDANTS.
) MONDAY,
) NOVEMBER 28, 2011
___________________________________)
TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFFS
BY:
ORRICK, HERRINGTON & SUTCLIFFE
1000 MARSH ROAD
MENLO PARK, CALIFORNIA 94025
INDRA NEEL CHATTERJEE, ESQUIRE
(FURTHER APPEARANCES ON FOLLOWING PAGE)
REPORTED BY:
JOAN MARIE COLUMBINI, CSR 5435, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
APPEARANCES (CONTINUED):
FOR CAMERON WINKLEVOSS
TYLER WINKLEVOSS AND
DIVYA NARENDRA
BY:
MEADE & SCHRAG, LLP
1816 FIFTH STREET
BERKELEY, CALIFORNIA 94710
TYLER R. MEADE, ESQUIRE
BY:
IRELL & MANELLA
1800 AVENUE OF THE STARS
SUITE 900
LOS ANGELES, CALIFORNIA 90067
GREGORY B. KLEIN, ESQUIRE
BY:
QUINN EMANUEL URQUHART & SULLIVAN
865 SOUTH FIGUEROA STREET, 10TH FLOOR
LOS ANGELES, CALIFORNIA 90017
ADAM B. WOLFSON, ESQUIRE
BY:
CHAPMAN, POPIK & WHITE
650 CALIFORNIA STREET
19TH FLOOR
SAN FRANCISCO, CALIFORNIA
JOHN C. HELLER, ESQUIRE
BY:
ZUCKERMAN SPAEDER
1800 M STREET NW
WASHINGTON, DC 20036
THOMAS B. MASON, ESQUIRE
BY:
BOIES, SCHILLER & FLEXNER LLP
575 LEXINGTON AVENUE
NEW YORK, NY 10022
DAVID A. BARRETT, ESQUIRE
FOR QUINN EMANUEL
FOR FINNEGAN
HENDERSON
AS TRUSTEE
94108
3
1
PROCEEDINGS; MONDAY, NOVEMBER 28, 2011
2
3
4
THE CLERK:
VERSUS CONNECTU, INC.
5
6
CALLING CASE C 07-1389, FACEBOOK, INC.
COUNSEL, PLEASE COME FORWARD AND STATE YOUR NAME FOR
THE RECORD.
7
MR. MEADE:
GOOD MORNING, YOUR HONOR.
TYLER MEADE,
8
MEADE & SCHRAG FOR CAMERON AND TYLER WINKLEVOSS AND DIVYA
9
NARENDRA.
10
I HAVE MICHAEL SCHRAG OF MY OFFICE HERE.
AND GREG
KLEIN OF IRELL & MANELLA.
11
MR. KLEIN:
12
MR. HELLER:
13
FOR DEFENDANT HENDERSON GROUP.
14
MR. MASON:
15
GREGORY KLEIN.
GOOD MORNING, YOUR HONOR.
GOOD MORNING, YOUR HONOR.
TOM MASON FOR
FINNEGAN HENDERSON.
16
THE COURT:
17
MR. CHATTERJEE:
18
JOHN HELLER
MR. MASON.
GOOD MORNING, YOUR HONOR.
NEEL
CHATTERJEE ON BEHALF OF FACEBOOK AND MARK ZUCKERBERG.
19
I ALSO RECEIVED AN E-MAIL FROM MR. WOLFSON AT QUINN
20
EMANUEL.
21
MORNING, AND HE IS ON HIS WAY HERE.
22
23
24
25
APPARENTLY, HE WENT TO THE SAN JOSE COURTHOUSE THIS
THE COURT:
ON THE PHONE.
OH, TOO BAD.
WE COULD HAVE TIED HIM IN
SO WHAT TIME DO YOU EXPECT HIM?
MR. CHATTERJEE:
I DON'T KNOW.
I JUST SAW AN E-MAIL,
AND HE INFORMED ME OF THAT.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
4
1
THE COURT:
IS MR. BARRETT HERE?
2
MR. BARRETT:
I AM, YOUR HONOR.
DAVID BARRETT.
I WAS ABOUT TO
3
INTRODUCE MYSELF.
4
REPRESENTATIVE OF BOIES, SCHILLER & FLEXNER AS THE TRUSTEE FOR
5
THE SETTLEMENT PROCEEDS.
6
THE COURT:
7
MR. CHATTERJEE:
8
AND MR. WILSON REPRESENTS --
YOUR HONOR, I THINK HE'S AN ATTORNEY
AT QUINN EMANUEL.
9
10
ALL RIGHT.
I AM HERE SOLELY AS
MS. BUCHANAN:
AND ALISON BUCHANAN FOR CONNECTU, YOUR
HONOR.
11
THE COURT:
WITH ALL DUE RESPECT TO MR. WOLFSON'S
12
DESIRE TO BE HERE, I THINK I'LL GET STARTED AND SEE WHERE THIS
13
TAKES US.
14
POSTURE THAT BRINGS YOU ALL HERE.
LET ME GIVE YOU MY UNDERSTANDING OF THE PROCEDURAL
15
MR. MEADE:
YOUR HONOR?
16
THE COURT:
YES.
17
MR. MEADE:
MAY I INTERRUPT AND JUST ADDRESS THE
18
QUESTION OF SEALING OF THE TRANSCRIPT?
19
A DISCUSSION ABOUT WHETHER TO GRANT SOME SORT OF RELIEF, IT CAN
20
BE HAD IN OPEN COURT.
21
CROSSES OVER TO WHAT RELIEF TO GRANT, WHAT THE NUMBERS ARE.
22
THINK AT THAT POINT, WE SHOULD SEAL THE HEARING.
23
OUR REQUEST.
24
25
I THINK AT THE MOMENT, THE DISCUSSION
MR. CHATTERJEE:
THIS IS:
I THINK THAT IF THERE'S
I
THAT WOULD BE
YOUR HONOR, I THINK THE WAY TO GO ON
IN THE PAST WHEN WE HAVE HAD HEARINGS RELATED TO
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
5
1
ISSUES WHERE THERE MIGHT BE CONFIDENTIALITY, WE'LL
2
PRELIMINARILY SEAL THE TRANSCRIPT AND THEN FIGURE OUT WHAT
3
REDACTIONS SHOULD OCCUR AND THE REMAINDER WILL BE PUT INTO THE
4
OPEN RECORD.
5
THE COURT:
I DON'T KNOW WHERE THOSE LINES ARE DRAWN.
6
IS THERE ANYONE HERE YOU RECOGNIZE IN THE AUDIENCE THAT YOU
7
WOULD BE CONCERNED ABOUT HEARING THESE MATTERS?
8
9
10
11
12
13
14
15
16
17
18
MR. MEADE:
I DON'T KNOW WHETHER THERE'S ANYONE HERE
THAT'S NOT AFFILIATED WITH THE CASE AS A PARTY.
THERE ARE A
FEW PEOPLE I DON'T RECOGNIZE, YOUR HONOR.
AND MR. CHATTERJEE'S PROPOSAL IS ACCEPTABLE TO US, TO
SEAL AND THEN REVISIT OPENING PART OF THE TRANSCRIPT LATER.
THE COURT:
ARE YOU ALL CONNECTED IN ANY WAY WITH
THIS CASE, OR JUST INTERESTED MEMBERS OF THE PUBLIC?
UNIDENTIFIED SPEAKER:
I'M JUST HERE TO LISTEN.
THAT'S ABOUT IT.
UNIDENTIFIED SPEAKER:
A STUDENT DOING A COURT
OBSERVATION.
19
UNIDENTIFIED SPEAKER:
20
THE COURT:
I'M WITH FACEBOOK, YOUR HONOR.
WELL, I THINK THAT I CAN HANDLE THIS ON
21
AN OPEN RECORD, I PREFER TO, AND LEAVE THE DETAILS OF THE
22
CONSIDERATION, WHATEVER THAT IS, TO SIMPLY SAY "THE
23
CONSIDERATION," WITHOUT GOING INTO THE DETAILS, BECAUSE I'M NOT
24
SURE THAT THE DETAILS MATTER TO WHAT I UNDERSTAND TO BE THE
25
PROBLEM HERE.
AND SO I WON'T PRELIMINARILY SEAL IT, AND IF
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
6
1
YOU -- IF I START TO SAY SOMETHING TO WHICH YOU HAVE AN
2
OBJECTION, BECAUSE IT GETS INTO CONFIDENTIAL MATTERS, STATE
3
YOUR OBJECTION QUICKLY AND THEN I'LL RECONSIDER WHETHER OR NOT
4
TO ALLOW THE PEOPLE SITTING IN THE AUDIENCE TO REMAIN.
5
OTHERWISE, YOU CAN REMAIN.
6
HERE'S MY UNDERSTANDING OF THE PROCEDURAL POSTURE:
7
THE PROCEEDS OF THE SETTLEMENT IN THIS CASE HAVE NOW BEEN HELD
8
BY A TRUSTEE, AND THE TRUSTEE, SO FAR AS THE COURT IS
9
CONCERNED, IS EMPOWERED TO DISBURSE THOSE PROCEEDS IN
10
ACCORDANCE WITH THE TERMS OF THE SETTLEMENT BUT HAS CHOSEN TO
11
SEEK THIS COURT'S APPROVAL.
12
AND GIVEN THE FACT THAT THE COURT -- THIS CASE
13
CARRIES SOME CONTROVERSY, THE COURT IS DISPOSED TO LEND ITS EAR
14
TO HEARING THE REQUEST OF THE PARTIES WITH RESPECT TO WHAT
15
OTHERWISE APPEARS TO ME TO BE SOMETHING THAT THE TRUSTEE CAN DO
16
WITHIN ITS POWERS.
17
IN OTHER WORDS, THERE'S NO OUTSTANDING ORDER THAT
18
REQUIRES THE TRUSTEE TO HOLD THE MONEY FURTHER IN TRUST, SO FAR
19
AS THE COURT IS CONCERNED.
20
AND LET ME PAUSE AT THIS MOMENT AND HAVE ANYONE WHO
21
BELIEVES THERE IS AN OUTSTANDING ORDER OF THE COURT THAT
22
INTERFERES WITH THE TRUSTEE MAKING A DISBURSAL OF THE
23
SETTLEMENT PROCEEDS --
24
25
MR. CHATTERJEE:
YOUR HONOR, IF I COULD BE HEARD ON
ONE ISSUE RELATED TO THAT?
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
7
1
2
FUNDAMENTALLY -- AND THIS IS, JUST FOR THE RECORD,
NEEL CHATTERJEE FOR FACEBOOK AND MARK ZUCKERBERG.
3
WE HAVE THESE COLLATERAL ATTACKS UPON YOUR JUDGMENT
4
GOING ON IN MASSACHUSETTS THAT THE WINKLEVOSS BROTHERS AND
5
DIVYA NARENDRA HAVE FILED.
6
JUDGMENT THAT ENFORCES THE SETTLEMENT AGREEMENT AND THEN PUT
7
THE MONEY INTO THE ESCROW.
8
9
THEY ARE REFUSING TO HONOR YOUR
WE ARE NOT GETTING THE PEACE THAT WE BARGAINED FOR.
THREE YEARS AND 20 DAYS AGO YOUR HONOR ISSUED AN AMENDED
10
JUDGMENT.
11
NINTH CIRCUIT, BACK AT THIS COURT, AND EVEN AFTER THE CASES
12
WERE DISMISSED WITH PREJUDICE AND YOUR JUDGMENT WAS AFFIRMED
13
WHERE THE PARTIES WERE GRANTED RELEASES AS BROAD AS POSSIBLE.
14
THAT'S THE LANGUAGE FROM YOUR AMENDED JUDGMENT.
15
WE HAVE SINCE BEEN SUCKED INTO LITIGATION AT THE
THE WINKLEVOSS BROTHERS AND NARENDRA ARE SEEKING TO
16
COLLATERALLY ATTACK THE DISMISSAL WITH PREJUDICE IN
17
MASSACHUSETTS.
18
AS THEY ARE NOT HONORING YOUR JUDGMENT, I DO NOT BELIEVE THAT
19
THE ESCROW AGENT IS AUTHORIZED TO RELEASE THE PROCEEDINGS.
20
THEY ARE NOT HONORING YOUR JUDGMENT.
AS LONG
THEY WANT TO GET THE BENEFITS OF THE BARGAIN THEY
21
STRUCK, BUT THEY DON'T WANT TO GIVE US THE BENEFITS OF WHAT WE
22
STRUCK.
23
CASE TO BE OVER.
24
2008.
25
RELEASE THOSE FUNDS NOW SO LONG AS THE CASES ARE NOT DISMISSED
THREE YEARS, 20 DAYS WE HAVE BEEN WAITING FOR THIS
WE NEGOTIATED A PEACE TREATY IN FEBRUARY OF
IT IS NOT WITHIN THE JURISDICTION OF THE ESCROW AGENT TO
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
8
1
WITH PREJUDICE, AND THERE STILL REMAINS COLLATERAL LITIGATION.
2
3
THE COURT:
ALL RIGHT.
AND YOU'VE INSTRUCTED THE
ESCROW AGENT IN THAT REGARD?
4
MR. CHATTERJEE:
WE -- YOUR HONOR, WE HAVE NOT TOLD
5
THE ESCROW AGENT THAT, BUT THEY ARE AWARE OF THE CONTROVERSY,
6
AND WE HAVE IDENTIFIED THE CONTROVERSY TO THEM.
7
IN ADDITION, WAYNE CHANG'S COUNSEL, I UNDERSTAND,
8
SENT A LETTER, BUT WE ARE NOT HERE REPRESENTING WAYNE CHANG,
9
AND WE DON'T REALLY HAVE INVOLVEMENT IN THAT CASE, ASKING FOR
10
SOME KIND OF NOTICE BEFORE THE FUNDS ARE RELEASED, BECAUSE
11
THERE'S ANOTHER COLLATERAL LITIGATION IN MASSACHUSETTS SUPERIOR
12
COURT.
13
THE COURT:
THE REASON I ASK WHETHER OR NOT THERE
14
WERE -- ONE OF THE REASONS ESCROW AGENTS OR TRUSTEES HOLD ON TO
15
MONEY IS BECAUSE THEY HAVE CONFLICTING INSTRUCTIONS FROM
16
INDIVIDUALS OR ENTITIES FOR WHOM THEY MIGHT RECOGNIZE A
17
RESPONSIBILITY, AND SO ALTHOUGH YOU'RE TELLING ME, AS I
18
UNDERSTAND IT, THAT PARTIES TO THE SETTLEMENT ARE NOT COMPLYING
19
WITH THE TERMS OF THE SETTLEMENT OR THE JUDGMENT, THAT DOESN'T
20
NECESSARILY MEAN THAT THE TRUSTEE ISN'T FREE TO MAKE A
21
DISBURSAL, UNLESS THE COURT ORDERS THE FUNDS HELD SPECIFIC TO
22
THIS NEW CONTROVERSY.
23
I JUST WANTED TO CLARIFY WHETHER ANYONE WAS TAKING
24
THE POSITION THAT THE TRUSTEE RIGHT NOW HAS ANY IMPEDIMENT TO
25
DISBURSING THE PROCEEDINGS.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
9
1
MR. CHATTERJEE:
YOUR HONOR, WE DO NOT BELIEVE THE
2
TRUSTEE IS AUTHORIZED TO RELEASE THE PROCEEDS, AND WE HAVE
3
SERVED THEM WITH OUR PAPERS.
4
THE COURT:
BECAUSE OF THE REASON YOU JUST STATED,
5
BECAUSE YOU BELIEVE THAT THE WINKLEVOSS BROTHERS OR NARENDRA
6
ARE THEMSELVES IN BREACH OF THE SETTLEMENT AGREEMENT AND THE
7
RELEASE.
8
9
10
11
MR. CHATTERJEE:
YOUR HONOR, MORE THAN THAT.
THEY
ARE REFUSING TO HONOR THE JUDGMENT THAT YOUR COURT ORDERED.
THEY ARE IN VIOLATION OF THE COURT'S JUDGMENT.
THE COURT:
ALL RIGHT.
NOW, IT DOES SEEM TO ME THAT
12
THAT DOES ARGUE FOR A PROCESS THAT THE COURT HAS IF PARTIES
13
INVOKE IT; NAMELY, THE CONTEMPT POWER OR A NEW LAWSUIT FOR
14
BREACH THAT CAN BE BROUGHT.
15
SO AT THIS POINT THERE IS NO MOTION ASKING THE COURT
16
TO HOLD THE PARTY IN CONTEMPT OF ITS ORDER, NOR IS THERE, AS I
17
UNDERSTAND IT, ANY NEW LITIGATION CLAIMING A BREACH OF THE
18
RELEASE OR THE SETTLEMENT AGREEMENT.
19
BE THE AVENUE TAKEN IF THE COURT -- WELL, IF YOUR CLIENTS WISH
20
TO HAVE THE FUNDS HELD FURTHER BY THE TRUSTEE?
21
MR. CHATTERJEE:
AND SO WHY SHOULDN'T THAT
SO, YOUR HONOR, IF THAT'S THE WAY
22
YOUR HONOR VIEWS AS THE APPROPRIATE WAY TO GO, WE'D ASK YOUR
23
HONOR ISSUE AN ORDER TO SHOW CAUSE WHY THE WINKLEVOSS BROTHERS
24
AND NARENDRA SHOULD NOT BE HELD IN CONTEMPT OR WHY THE COURT
25
SHOULD NOT ENFORCE THE JUDGMENT REQUIRING, BASICALLY,
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
10
1
WITHDRAWAL OF THE MOTIONS IN MASSACHUSETTS PRIOR TO THE ESCROW
2
FUNDS BEING RELEASED, BECAUSE THAT IS LIVING UP TO THE SPIRIT
3
OF THE AGREEMENT.
4
5
THE COURT:
MASSACHUSETTS.
6
7
SO TELL ME WHAT HAS HAPPENED IN
MR. CHATTERJEE:
YES, YOUR HONOR.
WHAT'S HAPPENED IN
MASSACHUSETTS IS WHEN THE NINTH CIRCUIT ISSUED ITS --
8
THE COURT:
9
MR. WOLFSON:
10
THE COURT:
ARE YOU MR. WOLFSON?
YES, YOUR HONOR.
COME FORWARD.
WE WERE STARTING WITHOUT
11
YOU, KNOWING YOU HAD GONE TO SAN JOSE, BUT I DIDN'T THINK THAT
12
YOU WOULD MISS OUT ON ANYTHING IF WE GOT STARTED.
13
MR. WOLFSON:
I APOLOGIZE, AND THANK YOU, YOUR HONOR.
14
THE COURT:
15
WHAT HAPPENED?
16
MR. CHATTERJEE:
HAVE A SEAT.
FOLLOWING ISSUANCE OF THE MANDATE,
17
YOUR HONOR, THE -- ESSENTIALLY, THE WINKLEVOSS BROTHERS AND
18
NARENDRA WITHDREW THEIR EFFORTS TO SEEK CERTIORARI AT THE
19
SUPREME COURT, THE MANDATE ISSUED, AND MOTIONS TO DISMISS WITH
20
PREJUDICE WERE FILED, BOTH HERE AND IN THE DISTRICT OF
21
MASSACHUSETTS, WHICH WAS WHAT THE SETTLEMENT AGREEMENT
22
REQUIRED.
23
ONCE THAT HAPPENED, FOLLOWING THAT, DIVYA NARENDRA
24
AND THE WINKLEVOSS BROTHERS FILED SEVERAL MOTIONS.
THE TWO
25
MOTIONS THAT I THINK ARE REALLY THE RELEVANT ONES HERE ARE -JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
11
1
THERE WAS ONE WHERE THE PROTECTIVE ORDER IN MASSACHUSETTS AND
2
CALIFORNIA REQUIRES PEOPLE TO ESSENTIALLY DESTROY DOCUMENTS IN
3
PRODUCTION, JUST KIND OF A STANDARD PROTECTIVE ORDER PROVISION.
4
THEY FILED A MOTION TO ENSURE THAT ALL DOCUMENTS THAT
5
HAVE BEEN PRODUCED IN DISCOVERY WERE PRESERVED, NOTWITHSTANDING
6
THE PROTECTIVE ORDER THAT INVOKED DESTRUCTION OF DOCUMENTS ONCE
7
THE CASES WERE TERMINATED.
8
9
THEY ALSO FILED A MOTION FOR DISCOVERY IN ORDER TO
FILE A 60(B) MOTION TO TRY AND SET ASIDE THE DISMISSAL IN
10
BOSTON THAT WAS INCIDENT TO THE SETTLEMENT AGREEMENT AND YOUR
11
HONOR'S JUDGMENT IN ORDER TO INVESTIGATE -- THAT WAS THE TERM
12
THEY USED -- WHETHER THERE WAS SOME SORT OF DISCOVERY
13
MISCONDUCT PRIOR TO THE SETTLEMENT, AND THEY PUT IT UNDER THE
14
GUISE OF HAVING AN ARTICLE FROM THE FACEBOOK BOARD MEMBER IN
15
THE NEW YORKER MAGAZINE.
16
ALL THE ISSUES ABOUT DISCOVERY DISPUTES, WHETHER
17
DOCUMENTS WERE PRODUCED, NOT PRODUCED, WHETHER THEY WERE
18
REQUIRED TO BE PRODUCED WERE PRESENTED TO YOUR HONOR.
19
HONOR REJECTED THEM.
20
THEY DID NOT APPEAL THE DISCOVERY ISSUES.
21
CONTINUING TO COLLATERALLY ATTACK THE JUDGMENT THAT YOUR HONOR
22
ISSUED THAT GRANTED RELEASES AS BROAD AS POSSIBLE AND REQUIRED
23
DISMISSAL OF THE BOSTON CASE, AND THEY'RE SEEKING TO REOPEN THE
24
BOSTON CASE.
25
YOUR
THEY ENFORCED THE SETTLEMENT AGREEMENT.
YET THEY'RE STILL
THAT'S THE PROCEDURAL POSTURE OF WHAT'S GOING ON.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
I
12
1
2
3
4
DON'T THINK THEY'RE ALLOWED TO DO IT, YOUR HONOR.
THE COURT:
LET ME HEAR WHETHER THERE'S A DENIAL OF
THAT STATEMENT OF WHAT IS GOING ON IN MASSACHUSETTS.
MR. MEADE:
THANK YOU, YOUR HONOR.
I APPRECIATE THE
5
OPPORTUNITY TO ADDRESS A LOT OF GROUND THAT WAS COVERED.
I
6
THINK YOUR HONOR STARTED OUT CORRECTLY TO SORT OF SKETCH OUT
7
THE LAY OF THE LAND AND GIVE US AN INDICATION OF WHAT YOUR
8
HONOR WAS THINKING.
9
WE'VE NOW JUMPED FORWARD TO THE NOTION THAT THE
10
WINKLEVOSS BROTHERS AND MR. NARENDRA HAVE DISHONORED YOUR
11
HONOR'S JUDGMENT OR SOMEHOW VIOLATED AN ORDER OF THIS COURT,
12
AND I THINK BEFORE WE DO ANYTHING ELSE, WE NEED TO PUT THAT
13
ALLEGATION IN CONTEXT.
14
YOUR HONOR.
15
I DON'T THINK IT'S A FAIR ALLEGATION,
THE FEDERAL RULES OF CIVIL PROCEDURE GRANT CERTAIN
16
RIGHTS TO ALL LITIGANTS, AND MY CLIENTS ARE AVAILING THEMSELVES
17
OF THOSE RIGHTS.
18
MASSACHUSETTS, BECAUSE I THINK DISHONORING AN ORDER OF THIS
19
COURT IS THE FURTHEST THING FROM THE TRUTH.
20
THAT'S A STATEMENT THAT'S BEEN MADE HERE IN THIS COURT.
21
I'LL SKETCH OUT WHAT IS HAPPENING IN
I'M SHOCKED THAT
BEFORE I OUTLINE WHAT IS HAPPENING IN MASSACHUSETTS,
22
I'D LIKE TO DIRECT YOUR HONOR'S ATTENTION TO FOOTNOTE TWO OF
23
OUR MOVING PAPERS.
24
EVERYTHING THAT WE FILED IN MASSACHUSETTS WE BROUGHT TO YOUR
25
HONOR'S ALLEGATION.
WE HAVE THE DOCKET NUMBERS THERE.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
13
1
AT THE TIME THIS COURT ENFORCED THE SETTLEMENT, THERE
2
WAS A GARDEN-VARIETY DISCOVERY DISPUTE WHICH WAS, IN FACT,
3
BROUGHT TO YOUR HONOR'S ATTENTION.
4
A BASIS TO SET ASIDE THIS SETTLEMENT, AND I'M GOING TO ORDER IT
5
ENFORCED.
6
ANALYSIS IN THAT.
YOUR HONOR SAID THAT'S NOT
I DON'T THINK THERE'S ANY PROBLEM WITH THE COURT'S
7
WHAT HAPPENED IS THAT WHILE THE ISSUE ABOUT
8
SECURITIES FRAUD WAS WENDING ITS WAY THROUGH THE NINTH CIRCUIT,
9
THERE WAS A RATHER STARTLING REVELATION IN THE NEW YORKER.
10
THE TIMELINE HERE IS CRITICAL.
IN 2005, MY CLIENTS
11
ASKED FOR ALL COMMUNICATIONS RELATING TO CONNECTU AND FACEBOOK.
12
IN JANUARY 2006, ACCORDING TO THE NEW YORKER, SOMETHING WE
13
DIDN'T KNOW DURING EARLIER PROCEEDINGS IN THIS COURT, THERE WAS
14
A MEETING BETWEEN FACEBOOK EXECUTIVES AND FACEBOOK COUNSEL, AT
15
WHICH TIME THEY DISCUSSED CERTAIN TEXT MESSAGES THAT WERE
16
RESPONSIVE TO OUR REQUEST FOR DISCOVERY BUT NOT PRODUCED.
17
DIDN'T SURFACE, YOUR HONOR, UNTIL THEY WERE LEAKED IN THE
18
ONLINE PRESS AFTER THE NINTH CIRCUIT BRIEFING WAS COMPLETED.
19
SO WHY IS THAT IMPORTANT, YOUR HONOR?
THEY
THE REASON IS
20
IS THAT WHAT WE THOUGHT WAS A GARDEN VARIETY DISCOVERY DISPUTE
21
DURING PROCEEDINGS IN 2008 TO ENFORCE THE SETTLEMENT ACTUALLY
22
WAS SOMETHING MUCH BIGGER.
23
ARTICLE IS ACCURATE, BUT IF IT IS, WHAT IT TELLS US IS THAT
24
FACEBOOK AND ITS COUNSEL SAT ON AND SUPPRESSED CASE-WINNING
25
EVIDENCE FOR TWO YEARS.
I DON'T KNOW IF THAT NEW YORKER
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
14
1
NOW WHAT WE'VE ASKED THE MASSACHUSETTS COURT TO DO IS
2
GRANT US SOME DISCOVERY.
3
THE FACTUAL --
4
5
THE COURT:
WE NEED TO KNOW WHETHER THAT'S REALLY
WHY DID YOU GO THERE?
WHY DIDN'T YOU
COME HERE?
6
MR. MURRAY:
WE THOUGHT ABOUT IT, YOUR HONOR.
THE
7
REASON WHY WE WENT THERE, IT WAS THE DISCOVERY REQUEST IN THE
8
MASSACHUSETTS COURT, AND IF THE CORE ALLEGATION IS CORRECT --
9
AND I DON'T KNOW, YOUR HONOR, AS I SIT HERE NOW.
10
TO SAY THEY DID THIS.
11
I'M NOT GOING
WHAT I'M GOING TO SAY IS WE HAVE A
REASONABLE SUSPICION.
12
IF I AM CORRECT, THERE WERE MISREPRESENTATIONS MADE
13
TO THE MASSACHUSETTS JUDGE, AND THE DISCOVERY AT ISSUE WAS IN
14
THE MASSACHUSETTS PROCEEDING, AND WE FELT IT BEST TO BRING IT
15
TO THE MASSACHUSETTS COURT'S ATTENTION.
16
NEVER FACED THIS SITUATION BEFORE.
17
THE COURT:
IT WAS TOUGH.
SO TAKE ME DOWN THAT ROAD.
I'VE
IF THE
18
MASSACHUSETTS COURT REOPENS THE LITIGATION THAT WAS PENDING
19
THERE, WHAT HAPPENS?
20
21
MR. MURRAY:
MOMENT.
OKAY.
I'LL ANSWER THAT QUESTION IN A
I'D LIKE TO POINT OUT --
22
THE COURT:
ANSWER IT NOW.
23
MR. MEADE:
OKAY.
24
SO IF THAT HAPPENS -- AND MANY THINGS WOULD HAVE TO
25
HAPPEN BETWEEN NOW AND THAT POINT, I'M NOT SURE THAT THAT POINT
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
15
1
WILL EVER COME, YOUR HONOR.
2
THE COURT:
I AGREE.
BUT WHAT HAPPENS?
3
MR. MEADE:
SO AT THAT POINT, IF THE MASSACHUSETTS
4
COURT SAYS THERE WAS DISCOVERY MISCONDUCT IN THIS CASE
5
SUFFICIENTLY EGREGIOUS TO REINSTATE THAT LITIGATION, THEN I
6
THINK WHAT HAPPENS IS THAT THEY CAN COME HERE UNDER 12(B) --
7
THE COURT:
"THEY" WHO?
8
MR. MEADE:
FACEBOOK CAN COME TO THIS COURT UNDER
9
RULE 60(B), AND THERE'S A SUBDIVISION, SORT OF A CATCHALL
10
SUBDIVISION, AND I THINK WHAT THEY WOULD SAY TO YOUR HONOR IS:
11
WE PAID SETTLEMENT CONSIDERATION TO GET PEACE, WE DIDN'T GET
12
IT, THEREFORE, THIS COURT'S JUDGMENT SHOULD BE SET ASIDE AS
13
WELL, SO THEN BOTH CASES ARE REOPENED.
14
AND QUITE FRANKLY --
15
THE COURT:
THAT'S ONE POSSIBILITY.
THE OTHER IS TO
16
COME HERE AND ASK THAT THE COURT ENFORCE THE SETTLEMENT.
17
OTHER WORDS, SETTING IT ASIDE SAYS THE SETTLEMENT GOES AWAY.
18
ENFORCING IT SAYS WE WANT THE SETTLEMENT.
19
THAT AMONG THE THINGS THAT NEED TO HAPPEN IF THE MASSACHUSETTS
20
STATE COURT LITIGATION IS REINSTITUTED IS YOU NEED TO GET
21
RELIEF FROM MY JUDGMENT, AND HOW DO YOU GET THAT IN
22
MASSACHUSETTS?
23
MR. MEADE:
IN
IT DOES SEEM TO ME
WELL, YOUR HONOR, I THINK THE THRESHOLD
24
QUESTION IS WHETHER RELIEF FROM YOUR HONOR'S JUDGMENT IS
25
NECESSARY, AND I'M NOT SURE WE GET THERE.
FOR EXAMPLE --
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
16
1
2
THE COURT:
IN OTHER WORDS, YOU BELIEVE THAT YOU
COULD LITIGATE IN MASSACHUSETTS IN THE FACE OF MY JUDGMENT?
3
MR. MEADE:
OUR BELIEF IS THAT THE MASSACHUSETTS
4
COURT HAS JURISDICTION TO FIGURE OUT WHETHER THERE WAS
5
MISCONDUCT IN DISCOVERY IN THAT COURT, AND THAT'S ALL WE'VE
6
ASKED FOR AT THIS POINT, YOUR HONOR.
7
THE COURT:
THAT'S NOT MY QUESTION, THOUGH.
IN OTHER
8
WORDS, YOU'RE CHARACTERIZING IT AS A LIMITED REQUEST; IN OTHER
9
WORDS, GIVE US DISCOVERY, AND IF WE FIND THAT THE DISCOVERY
10
DOESN'T CARRY US ANYWHERE, WE JUST WASTED EVERYBODY'S TIME WITH
11
DISCOVERY, BUT IF WE FIND IT SHOWS US -- FRAUD WAS THE WORD
12
THAT YOU USED, THEN YOU WOULD, AS I UNDERSTOOD YOUR
13
PRESENTATION TO THE COURT, SEEK THE AID OF THE MASSACHUSETTS
14
COURT TO PROCEED TO JUDGMENT IN THE MASSACHUSETTS ACTION AND
15
MAYBE EVEN STATE A NEW CLAIM OF MISABUSE OF PROCESS AND GRANT
16
YOU JUDGMENT ON THAT IN THE MASSACHUSETTS CASE.
17
18
19
THAT'S HOW I SEE THE SCENARIO FROM WHAT YOU PRESENTED
TO ME.
DO YOU DISAGREE?
MR. MEADE:
I SEE IT A LITTLE BIT DIFFERENTLY.
20
ONE, YOUR HONOR, IS TO FIGURE OUT WHAT HAPPENED.
21
WHAT HAPPENED.
22
ABUSE OF DISCOVERY IN THE MASSACHUSETTS COURT.
23
STEP
THAT IS VERY CONCERNING TO ME.
24
25
WE DON'T KNOW
I CAN'T TELL YOU, YOUR HONOR, THAT THERE WAS AN
I SEE SOMETHING
I THINK STEP ONE IS TO FIGURE OUT WHAT HAPPENED,
THUS, THE MOTION FOR AN INQUIRY.
THAT'S ALL WE'VE ASKED FOR.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
17
1
2
THE COURT:
IS YOUR POSITION THAT WHAT'S GOING ON IN
MASSACHUSETTS IS NOT COVERED BY THE RELEASE?
3
MR. MEADE:
THAT IS MY POSITION.
4
THE COURT:
WHAT'S YOUR BASIS FOR THAT?
5
MR. MEADE:
MY BASIS FOR THAT, YOUR HONOR, IS THAT
6
FEDERAL RULE OF CIVIL PROCEDURE 60(B) IS A RIGHT THAT LITIGANTS
7
HAVE, AND I DON'T INTERPRET THE RELEASE IN THIS CASE AS
8
BARRING -- NOW, THAT IS AN ISSUE THAT HAS BEEN RAISED BY
9
FACEBOOK, AND THEY RAISED IT TO THE MASSACHUSETTS COURT.
10
MAY BE, YOUR HONOR, THAT THAT'S A GATEWAY ISSUE, AND THE
11
MASSACHUSETTS COURT IS PERSUADED THAT BARS A 60(B) ACTION IN
12
MASSACHUSETTS.
13
14
15
IT
I HAVEN'T SEEN ANY AUTHORITY TO THAT EFFECT, YOUR
HONOR.
THEY CITED NONE.
THE COURT:
I HAVEN'T FOUND ANY.
WELL, I KNOW THAT THE ANTIINJUNCTION ACT
16
TEACHES ME NOT TO USE IT TO ENJOIN STATE COURT PROCEEDINGS, BUT
17
THERE IS AN EXCEPTION THAT IS WHERE IT'S IN PROTECTION OF THE
18
FEDERAL COURT'S JURISDICTION.
19
WHAT IS YOUR RESPONSE TO THE COURT'S CONCERN THAT IF
20
I SIT IDLE AND ALLOW THIS ACTION TO PROCEED, I AM DOING
21
VIOLENCE TO THE JURISDICTION OF FEDERAL COURTS TO ENFORCE THEIR
22
JUDGMENTS?
23
MR. MEADE:
I VIEW IT DIFFERENTLY, YOUR HONOR,
24
BECAUSE OUR MOTION IS BROUGHT IN FEDERAL COURT IN
25
MASSACHUSETTS, AND I THINK THE FIRST QUESTION WE HAVE -JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
18
1
2
THE COURT:
THE MASSACHUSETTS ACTION IS A FEDERAL
COURT ACTION?
3
MR. MEADE:
ABSOLUTELY, YOUR HONOR.
4
THE COURT:
I'M SORRY.
5
6
I UNDERSTOOD IT TO BE A STATE
COURT ACTION.
MR. MEADE:
NO.
FURTHERMORE, YOUR HONOR, THE FIRST
7
QUESTION IS WHETHER ORDERS OF A MASSACHUSETTS FEDERAL JUDGE
8
WERE VIOLATED.
9
PROCEDURAL ISSUES LATER.
10
LET'S FIGURE THAT OUT FIRST AND THEN THE
THE COURT:
BUT DON'T I RISK A CIRCUMSTANCE WHERE
11
BETWEEN ME AND THE JUDGE IN MASSACHUSETTS, THAT JUDGE HAS TO
12
IGNORE MY ORDER?
13
14
15
16
17
MR. MEADE:
I DON'T BELIEVE THERE'S ANY POSSIBILITY
OF JUDGE WOODLOCK IGNORING THIS COURT'S ORDER.
THE COURT:
MY ORDER IS TO DISMISS THAT CASE.
HOW DO
YOU PROCEED WITH A CASE IN THE FACE OF MY ORDER OF DISMISSAL?
MR. MEADE:
YOUR HONOR, 60(B) NEVER COMES INTO PLAY
18
UNLESS THERE'S AN ORDER OF DISMISSAL OR A JUDGMENT.
19
DEFINITION 60(B) IS THE MECHANISM BY WHICH A FEDERAL JUDGE CAN
20
SAY SOMETHING HAPPENED BEFORE JUDGMENT, BEFORE DISMISSAL, THAT
21
I NEED TO LOOK AT.
22
PERSPECTIVE --
23
24
25
BY
AND, YOUR HONOR, FROM THE COURT'S
THE COURT:
WASN'T THE DISMISSAL AT MY AUSPICES, AS
OPPOSED TO THE FEDERAL JUDGE IN MASSACHUSETTS' AUSPICES?
MR. MEADE:
SO THE WAY IT WORKS, YOUR COURT'S
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
19
1
JUDGMENT REQUIRED THAT A JUDGMENT OF DISMISSAL BE ENTERED IN
2
MASSACHUSETTS, AND THEN AN ORDER OF DISMISSAL WAS ENTERED IN
3
MASSACHUSETTS.
4
THE COURT:
BY THE JUDGE THERE.
5
MR. MEADE:
BY THE FEDERAL JUDGE IN MASSACHUSETTS.
6
YOUR HONOR, LET ME MAKE SOMETHING CLEAR HERE, BECAUSE
7
IT MAY HELP.
8
9
I DON'T WANT THERE TO BE ANY SUGGESTION THAT THERE
WAS A STRATEGIC CHOICE TO RAISE THESE ISSUES IN MASSACHUSETTS
10
BECAUSE THERE'S SOME ADVANTAGE TO BE GAINED BY DOING SO.
11
FACT, I WILL TELL YOUR HONOR RIGHT NOW THAT IF THIS COURT OR
12
THAT COURT SAYS, I WANT YOU TO RAISE THOSE ISSUES HERE, I'M
13
MORE THAN HAPPY TO DO SO.
14
THE COURT:
NO, THAT ISN'T MY SUGGESTION.
IN
I'M IN A
15
CIRCUMSTANCE WHERE I'M TRYING TO BE CAREFUL TO RESPECT TWO
16
THINGS:
17
TO SEEK TO GET OUT OF A JUDGMENT OF THE COURT.
18
ME THAT HAVING GONE THROUGH THE PROCEDURAL PROCESS OF AN APPEAL
19
THAT FAILED, I RISK A CIRCUMSTANCE WHERE IT APPEARS THAT THE
20
JUDGMENT IS BEING IGNORED, AND I DON'T TAKE THAT PERSONALLY.
THE JUDGMENT OF THE COURT AND THE POWER OF A LITIGANT
IT DOES SEEM TO
21
WHAT I HAVE TO DO IS TO SAY IF I WERE TO BE RUN OVER
22
BY A TRUCK TOMORROW AND SOMEONE ELSE IS SITTING IN THIS CHAIR,
23
WOULD THE COURT FIND THAT IT'S APPROPRIATE TO HAVE A LITIGANT
24
WHO DISMISSED A LAWSUIT IN ONE JURISDICTION AS A RESULT OF A
25
SETTLEMENT AND ORDER OF COURT BE ABLE TO GO TO THAT OTHER FORUM
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
20
1
AND REOPEN THAT CASE WITHOUT COMING TO THE COURT THAT ORDERED
2
IT DISMISSED?
3
NOW, I DON'T HAVE JURISDICTION NECESSARILY OVER THE
4
COURT, BUT I DO OVER THE PARTIES, AND IT SEEMS TO ME THAT'S WHY
5
I RAISE THE QUESTION AS TO WHETHER OR NOT IT SHOULD BE A
6
CONTEMPT PROCEEDING, BECAUSE THE COURT DIDN'T INITIATE THIS,
7
THE PARTIES DID, AND IF PARTIES TO AN ORDER THAT I MADE IGNORE
8
THAT AND START SOME OTHER PROCEEDING, IT SEEMS TO ME I NEED TO
9
BRING THEM BEFORE THE COURT AND HAVE THEM SHOW CAUSE WHY THEY
10
SHOULDN'T BE PUNISHED FOR THAT.
11
NOW, THE PUNISHMENT COULD REACH AS FAR AS
12
SURRENDERING CONSIDERATION, BECAUSE THAT IS WHY THE ORDER WAS
13
MADE IN THEIR FAVOR.
14
SETTLEMENT.
15
DIDN'T MAKE UP THE EXCHANGES; THE PARTIES DID.
16
THEY SETTLED THIS.
IT WAS A MUTUAL
AND I DIDN'T PUT IT TOGETHER; THE PARTIES DID.
I
SO IF I SAY, OKAY, YOU GET THE EXCHANGE THAT YOU
17
BARGAINED FOR, YOU GET THE BARGAIN, AND THE OTHER SIDE VIOLATES
18
THAT, IT SEEMS TO ME THEY COULD FORFEIT THE RIGHT AS A CONTEMPT
19
OF COURT, BECAUSE THAT WOULD CERTAINLY BRING TO THEIR MINDS I
20
CAN'T IGNORE THE COURT'S ORDER.
21
BUT I DON'T HAVE THAT PROCEDURAL POSTURE BEFORE ME.
22
THE INVITATION IS THAT PERHAPS I SHOULD ISSUE SUCH AN ORDER, SO
23
ADDRESS THAT.
24
MR. MEADE:
CERTAINLY, YOUR HONOR.
25
I THINK THAT THE PROCEEDINGS IN MASSACHUSETTS ARE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
21
1
VERY DIFFERENT FROM HOW THEY HAVE BEEN CHARACTERIZED HERE.
2
HAVE NOT SAID TO THE MASSACHUSETTS COURT, YOU SHOULD VACATE THE
3
JUDGMENT IN THIS CASE.
4
THE COURT:
WE
WHAT WE HAVE DONE IS OUTLINED --
THE ARGUMENT IS YOU SHOULDN'T BE TALKING
5
AT ALL.
6
COURT IF MY ORDER SAYS DISMISS THAT CASE, GIVE A FULL RELEASE,
7
AND NOW I'VE ENFORCED IT WITH MY JUDGMENT.
I'VE SUBSTITUTED
8
THE AGREEMENT OF RELEASE WITH A JUDGMENT.
IT SEEMS TO ME THAT
9
TO ARGUE THAT WHAT WE'RE DOING IN MASSACHUSETTS IN THAT
10
11
IT DOESN'T MATTER WHAT YOU SAY TO THE MASSACHUSETTS
LITIGATION BECOMES IRRELEVANT AS LONG AS YOU'RE DOING ANYTHING.
MR. MEADE:
YOUR HONOR, ALL I CAN SAY IN RESPONSE TO
12
THAT -- AND I'M NOT SURE IT'S A COMPLETE ANSWER TO YOUR HONOR'S
13
QUESTION, I THINK YOUR HONOR'S QUESTION IS TELEGRAPHING A WAY
14
OF ANALYZING THIS SITUATION.
15
LET ME SAY THIS IN RESPONSE:
I DON'T KNOW WHY IT'S
16
CONTROVERSIAL THAT PARTIES WHO HAVE EVIDENCE OF A VERY SERIOUS
17
DISCOVERY VIOLATION, NOT A RUN-OF-THE-MILL DISPUTE OVER TIMING
18
OF WHEN SOMETHING HAS BEEN DISCLOSED, BUT SOMETHING VERY
19
SERIOUS THAT, IN MY MIND, SULLIES THE COURT.
20
IT'S SURPRISING TO ME THAT IT'S CONTROVERSIAL THAT WE
21
BROUGHT THAT TO THE FEDERAL JUDGE'S ATTENTION WHO WAS PRESIDING
22
OVER THE MATTER AT THE TIME.
23
THE COURT:
IF --
WHAT YOU HAVE TO ARGUE IS THAT THE
24
RELEASE IS NO GOOD.
IN OTHER WORDS, PARTIES WHO GIVE A
25
RELEASE, IS WHAT YOU'RE SAYING, WHO SUBSEQUENTLY DISCOVER
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
22
1
INFORMATION THAT WOULD HAVE AFFECTED THEIR GIVING A RELEASE
2
SHOULD BE ABLE TO GET OUT OF THE RELEASE.
3
BECAUSE AS LONG AS THE RELEASE IS IN PLACE, THERE SHOULD BE NO
4
CLAIM, AND THE DISCOVERY THAT YOU'RE SEEKING IS IN AID OF A
5
CLAIM.
6
THAT'S THE ARGUMENT.
SO YOU'VE GOT TO GET RID OF THE RELEASE BEFORE -- AND
7
THERE ARE CIRCUMSTANCES WHERE PARTIES CAN BE RELIEVED OF A
8
RELEASE AND RE -- LIKE THE PHOENIX, THEIR CLAIM ARISES AGAIN,
9
BUT UNTIL THAT HAPPENS -- NOW, I'M NOT SURE THAT IN SAYING THAT
10
THERE IS AN OPPORTUNITY FOR THESE LITIGANTS TO REVIVE THE
11
CLAIMS THAT OTHERWISE THEY HAVE RELEASED, BUT THAT'S THE PROPER
12
QUESTION.
13
MR. MEADE:
YEAH.
LET ME SAY THIS, YOUR HONOR:
YOUR
14
HONOR'S COMMENTS SUGGEST THE COURT VIEWS THE RELEASE AS BARRING
15
A PROCEEDING UNDER 60(B).
AS I'VE INDICATED, I'VE SEEN NO
16
AUTHORITY TO THAT EFFECT.
IT'S AN ARGUMENT THAT THEY RAISED IN
17
MASSACHUSETTS AND JUDGE WOODLOOK HAS NOT YET RULED ON THAT
18
MOTION.
19
20
21
22
23
24
25
IF YOUR HONOR'S VIEW IS THAT YOUR HONOR -- IS THAT
THE RELEASE -THE COURT:
WHAT WOULD BE -- WHAT WOULD KEEP THEM
FROM FILING A NEW ACTION IN MASSACHUSETTS?
MR. MEADE:
I THINK THAT 60(B) IS A VERY CABINED
PROCEDURE.
THE COURT:
I KNOW.
BUT WHAT WOULD BE THE IMPEDIMENT
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
23
1
TO FILING A NEW ACTION ANYWHERE HAVING TO DO WITH THIS CLAIM?
2
MR. MEADE:
YOUR RELEASE.
3
THE COURT:
SO WHY DOESN'T THE RELEASE REACH THE
4
MASSACHUSETTS ACTION?
5
MR. MEADE:
WELL, YOUR HONOR, I BELIEVE THAT THE
6
COURT IN MASSACHUSETTS HAS THE AUTHORITY TO DETERMINE WHETHER
7
THERE WAS A SERIOUS DISCOVERY VIOLATION WITHIN ITS COURT.
8
I KNOW YOUR HONOR'S APPROACHING IT FROM THE PERSPECTIVE OF THE
9
RELEASE, ARE WE BARRED, ESTOPPED FROM RAISING THAT IN THAT
10
AND
COURT.
11
YOUR HONOR, I HAVE TO TELL YOU I KNOW OF NO AUTHORITY
12
ONE WAY OR THE OTHER ON THAT QUESTION.
13
OF FIRST IMPRESSION.
14
I THINK IT'S A QUESTION
I WILL SAY THAT -- AND MAYBE I CAN SHORTCIRCUIT THE
15
DISCUSSION HERE.
16
US FROM RAISING FACTS IN THE MASSACHUSETTS COURT THAT SUGGEST A
17
VERY SERIOUS DISCOVERY VIOLATION, WE HAVE TO STOP UNLESS WE CAN
18
HAVE THAT DETERMINATION BY YOUR HONOR REVERSED BY A HIGHER
19
COURT.
20
IF YOUR HONOR'S VIEW IS THAT THE RELEASE BARS
THE REASON WHY I'M RAISING THIS, YOUR HONOR, IS THAT
21
THERE'S -- WE ARE HEMMED IN HERE, AND I THINK IT'S IMPORTANT TO
22
INTRODUCE ANOTHER CONCEPT HERE.
23
WE HAVE LAWYERS WHO REPRESENTED MY CURRENT CLIENTS,
24
THEIR FORMER CLIENTS.
ONE OF THEM HAS A JUDGMENT FOR
25
ORIGINALLY 13 MILLION DOLLARS THAT HAS NOW GROWN TO MORE.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
24
1
THEY'RE GOING TO COLLECT ON THAT JUDGMENT.
2
THEY'RE PAID OUT OF THE ESCROW.
3
TO MEAN THAT WE HAVE TO ABANDON WHAT WE'RE DOING IN
4
MASSACHUSETTS.
5
AND IF -- UNLESS
AND, IN EFFECT, THAT'S GOING
IF THE PROCEEDINGS IN MASSACHUSETTS WHEREBY WE
6
BROUGHT TO THE FEDERAL COURT'S ATTENTION VERY SERIOUS DISCOVERY
7
MISCONDUCT, OR WHAT APPEARED TO BE -- WE NEED INQUIRY TO FIND
8
OUT -- IF THAT HOLDS UP PAYING THE LAWYERS, WE HAVE TO SAY
9
UNCLE, WE CAN'T CONTINUE IN MASSACHUSETTS, YOUR HONOR, BECAUSE
10
WHAT'S GOING TO HAPPEN IS THE PARTY WITH THE JUDGMENT IS GOING
11
TO TAKE THAT JUDGMENT AND COLLECT ON IT.
12
AND THEY POINTED OUT THERE'S A BOND THAT'S BEEN
13
POSTED, AND THEY'LL COLLECT ON THE BOND, WHICH MEANS THE
14
BONDING COMPANY WILL TRY TO COLLECT AGAINST MY CLIENTS, WHICH
15
MEANS THERE WILL BE A NEW ROUND OF LITIGATION.
16
SO PERHAPS I CAN SHORTCIRCUIT THIS DISCUSSION AND
17
TELL YOUR HONOR THAT IF YOUR HONOR'S VIEW IS THAT WE VIOLATED
18
THE RELEASE AND YOUR HONOR INTENDS TO ENJOIN US FROM PURSUING
19
THIS QUESTION IN MASSACHUSETTS, WE HAVE TO STOP THE EFFORT
20
RIGHT NOW BECAUSE WE SIMPLY CANNOT --
21
THE COURT:
WELL, ACTUALLY, I'M NOT PREPARED TO SAY
22
YOU VIOLATED THE RELEASE, BECAUSE THAT SEEMS TO BE A QUESTION
23
OF FACT THAT WOULD REQUIRE A HEARING.
24
AN ORDER TO SHOW CAUSE WHY THE WINKLEVOSS PARTIES, NARENDRA,
25
AREN'T IN CONTEMPT OF COURT BECAUSE OF THE CONTINUING
I AM PREPARED TO ISSUE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
25
1
LITIGATION THERE WHICH WOULD ALLOW ME IN THE CONTEXT OF THAT TO
2
DECIDE WHETHER OR NOT THERE HAS BEEN A VIOLATION OF MY JUDGMENT
3
AND THE UNDERLYING DOCUMENTS, AND, IF SO, TO DETERMINE AN
4
APPROPRIATE CIVIL REMEDY.
5
I DON'T WANT TO GO DOWN THAT ROAD.
THIS IS, AS I STARTED OUT, A CIRCUMSTANCE WHERE I'M
6
STILL WAITING FOR SOMEONE TO EXPLAIN TO ME WHY THE ESCROW CAN'T
7
SIMPLY CLOSE.
THE PARTIES PAID THEIR RESPECTIVE CONSIDERATION.
8
LET ME HEAR FROM MR. BARRETT.
9
MR. BARRETT, IS THERE, TO YOUR MIND, ANY CONFLICTING
10
INSTRUCTIONS THAT YOU HAVE RECEIVED WITH RESPECT TO CLOSING THE
11
TRUST AND DISBURSING THE PROCEEDINGS?
12
MR. BARRETT:
IF YOUR HONOR RECALLS THE ORDER, I
13
BELIEVE IT WAS NOVEMBER 21ST, 2008, THAT THE COURT ENTERED,
14
WHICH CREATED THE TRUST PROVIDED THAT BOIES, SCHILLER & FLEXNER
15
SHOULD HOLD THE SETTLEMENT PROCEEDINGS IN TRUST FOR, AS WE
16
CALLED THEM, THE FOUNDERS, THE WINKLEVOSSES AND MR. NARENDRA,
17
OR -- I'M NOT SURE IF IT'S "OR" -- OR AND ANY LAWFUL CLAIMANT.
18
FRANKLY, YOUR HONOR, I THINK THE REASON THAT WE'RE
19
HERE IS BECAUSE -- PERHAPS, AND I APOLOGIZE, WE SHOULD HAVE
20
BEEN MAKING A MOTION OURSELVES FOR CLARIFICATION OF THAT
21
JUDGMENT.
22
COURT HAS POINTED OUT IN THE MOTION PAPERS CERTAINLY INDICATES
23
INCLUDES THE QUINN LAW FIRM, AND PERHAPS THE OTHER LAW FIRM
24
THAT HAS THE ATTORNEYS' LIEN, WHETHER THAT PHRASE, "ANY LAWFUL
25
CLAIMANT" EXTENDS ANY FARTHER.
BUT THOSE WORDS, "ANY LAWFUL CLAIMANT," WHICH THE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
26
1
CERTAINLY BASED ON WHAT MR. CHATTERJEE HAS FILED
2
BEFORE THE COURT AND SAID IN HIS ARGUMENT THIS MORNING SUGGESTS
3
THAT FACEBOOK CONSIDERS THAT IT MAY BE A LAWFUL CLAIMANT
4
BECAUSE IT SAYS IT MAY HAVE A RIGHT TO RESCISSION OF THE
5
SETTLEMENT AGREEMENT, FOR EXAMPLE.
6
OTHER PARTIES WHO ADMITTEDLY HAVE NOT APPEARED BEFORE YOUR
7
COURT -- BEFORE THE COURT, BUT WHO HAVE SUGGESTED THAT THEY MAY
8
HAVE CLAIMS TO THESE PROCEEDINGS AS WELL.
9
AND THERE ALSO ARE THESE
AND, YOUR HONOR, I JUST -- AS THE TRUSTEE, WE JUST
10
WANT TO DO WHAT THE COURT BELIEVES IS APPROPRIATE, WHAT THE
11
COURT INTENDED BY THAT "ANY LAWFUL CLAIMANT" LANGUAGE.
12
THE REASON I SAY PERHAPS WE SHOULD HAVE TECHNICALLY
13
MADE A MOTION IS, REALLY, IT'S ALMOST KIND OF AN INTERPLEADER
14
SITUATION.
15
BE IN THE MIDDLE OF THIS.
16
DISTRIBUTE THE ASSETS, THAT WE HAVE DONE SO IN ACCORDANCE WITH
17
THAT ORDER, WHICH APPEARS TO GIVE CERTAIN RIGHTS TO ANY LAWFUL
18
CLAIMANT, AND WE WERE AWARE OF THESE OTHER PARTIES THAT
19
CONCEIVABLY MIGHT BE COVERED BY THAT LANGUAGE.
WE'RE HOLDING THESE ASSETS.
WE WOULD LOVE NOT TO
BUT WE WANT TO BE SURE THAT IF WE
20
SO, THAT'S REALLY THE SITUATION WE FIND OURSELVES IN.
21
THE COURT:
22
DO YOU HAVE AN INTEREST IN THE
PROCEEDINGS AS WELL, OR NOT?
23
MR. BARRETT:
24
THE COURT:
25
MR. BARRETT:
I DO NOT, YOUR HONOR.
YOUR FIRM DOES NOT?
OUR FIRM DOES NOT.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
27
1
2
THE COURT:
VERY WELL.
ANYONE ELSE WANT TO SPEAK TO
MR. MASON:
GOOD MORNING, YOUR HONOR.
THIS?
3
THOMAS MASON
4
FOR FINNEGAN HENDERSON.
5
LAWYERS WHO HAVE IMPOSED AN ATTORNEYS' LIEN AND FILED A MOTION
6
CONSISTENT WITH YOUR COURT'S NOVEMBER 1ST, 2011 ORDER SEEKING
7
DISBURSEMENT OF A PORTION OF THE CASH PROCEEDINGS BEING HELD BY
8
BOIES, SCHILLER TO FINNEGAN HENDERSON IN SATISFACTION OF THAT
9
LIEN.
10
NOW.
11
WE'RE ONE OF THE SETS OF FORMER
THE AMOUNT IS UNDER SEAL.
I DON'T NEED TO MENTION IT
THERE'S NO DISPUTE THAT FINNEGAN HENDERSON
12
REPRESENTED THE FOUNDERS BEFORE THIS COURT.
13
THAT FINNEGAN HENDERSON REPRESENTED THE FOUNDERS FOR YEARS IN
14
THE DISTRICT OF MASSACHUSETTS ACTION.
15
REPRESENTATION, ALONG WITH THE WORK OF OTHER COUNSEL, PRODUCED
16
A SETTLEMENT UNDER WHICH THEY'RE NOW ASSERTING THE LIEN.
17
THERE'S NO DISPUTE
THE RESULT OF THEIR
THERE'S NO DISPUTE THAT FINNEGAN HENDERSON HAS A LIEN
18
AGAINST THESE SETTLEMENT PROCEEDS.
AND AT THIS POINT THERE'S
19
NOT EVEN A DISPUTE ABOUT THE AMOUNT OF THE SETTLEMENT PROCEEDS,
20
THE AMOUNT OF THE LIEN THAT FINNEGAN HENDERSON HAS.
21
THE ONLY ISSUE IS WHETHER TO DISBURSE IT NOW.
WE
22
THINK THAT, GIVEN, IN FAIRNESS AND EQUITY, FINNEGAN AND
23
HENDERSON HAS HAD TO WAIT FOR, AS I SAID, FOUR YEARS,
24
DELIVERING SERVICES STARTING IN 2004, TO TAKE THE CASH
25
PROCEEDS, A PORTION OF THE CASH PROCEEDS AND PAY THEM OUT.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
28
1
REGARDLESS OF HOW THE COURT HANDLES THE OTHER
2
MATTERS, I THINK IT'S -- THE ATTORNEYS HAVE A SPECIAL SITUATION
3
WITH RESPECT TO A CORPUS THAT THEIR WORK SERVES TO PRODUCE.
4
OTHER THAN THE QUINN EMANUEL WHICH HAS COME IN AND IS IN A
5
SIMILAR, ALBEIT NOT IDENTICAL SITUATION, THOSE ARE THE ONLY
6
CLAIMANTS THAT ARE BEFORE THIS COURT.
7
PARTIES THAT FILED A MOTION CONSISTENT WITH THIS COURT'S ORDER
8
SAYING, PLEASE DISBURSE THE PROCEEDINGS TO US, IN ADDITION TO
9
MR. MEADE'S CLIENTS, THE FOUNDERS.
10
THEY ARE THE ONLY
THERE ARE NO OTHER CLAIMANTS BEFORE THE COURT, AND I
11
THINK THE COURT NEED NOT WAIT AND SORT OF REISSUE ITS ORDER AND
12
SEE IF OTHER PEOPLE COME IN AND ASSERT CLAIMS.
13
WITH RESPECT TO THE DISTRICT OF MASSACHUSETTS FEDERAL
14
COURT PROCEEDINGS, FINNEGAN HENDERSON IS NOT REPRESENTING THE
15
FOUNDERS IN THOSE PROCEEDINGS.
16
THE SETTLEMENT AS IT STANDS TODAY, I THINK THE COURT
17
IS RIGHT, HAD IT CAME IN AND SAID, YOU KNOW, WHAT'S -- I
18
THOUGHT THE SETTLEMENT HAS BEEN IMPLEMENTED AND EXECUTED,
19
WHAT'S TO PREVENT THE ESCROW AGENT FROM SIMPLY DISBURSING THE
20
FUNDS?
21
THIS COURT WAS ASKED REPEATEDLY BY THE FOUNDERS AS
22
THE SETTLEMENT LITIGATION PROCEEDED IN THE SUMMER AND THE FALL
23
OF 2008 TO STAY EXECUTION OF THE SETTLEMENT.
24
TO DO THAT.
25
ENFORCEABLE, AND IT SHOULD BE IMPLEMENTED.
THE COURT REFUSED
THE COURT SAID THE SETTLEMENT IS VALID, IT IS
THE FOUNDERS WENT
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
29
1
TO NINTH CIRCUIT, ASKED FOR A STAY.
2
THEY DIDN'T GET A STAY.
SO AS WE SIT HERE TODAY, THE SETTLEMENT WAS -- IS
3
FULLY IN FORCE.
4
THE PROCEEDS SIMPLY OUTRIGHT TO THE FOUNDERS?
5
OCCURRED IS BECAUSE THERE WAS A DISPUTE BETWEEN QUINN EMANUEL
6
AND THE FOUNDERS OVER QUINN EMANUEL'S ATTORNEYS' LIEN AT THAT
7
POINT.
8
9
THE ISSUE IS WHY THE TRUST DID NOT DISTRIBUTE
THE REASON THAT
SO THE COURT, RATHER THAN MAKING THE SETTLEMENT
TENTATIVE OR NOT ENFORCING IT, THE COURT SAID, WELL, I'M --
10
SINCE YOU ALL CAN'T AGREE ON HOW TO HANDLE THESE MONIES, QUINN
11
EMANUEL AND THE FOUNDERS, I'M JUST GOING TO HAVE BOIES SCHILLER
12
HOLD IT.
13
NOW THE FOUNDERS AND QUINN EMANUEL HAVE AGREED ABOUT
14
HOW TO HANDLE THE FUNDS.
15
AN ATTORNEYS' LIEN AS WELL, BUT DIDN'T -- AND HAS ALSO NOW
16
AGREED ON HOW THE FUNDS SOMEBODY HANDLED.
17
FINNEGAN HENDERSON, WHICH ALWAYS HAD
SO, YOUR HONOR, I'M HERE, I GUESS RATHER THAN WHAT
18
THE COURT SAID AT THE BEGINNING IN YOUR ADMISSION CEREMONY,
19
RATHER THAN KILL THE LAWYERS, I'M HERE TO MAKE A PLEA TO PLEASE
20
PAY THE FORMER LAWYERS WHO HAVE WORKED LONG AND HARD TO PRODUCE
21
THESE RESULTS, AND THE PARTIES, IF THEY NEED TO LITIGATE
22
FURTHER, LITIGATE FURTHER.
23
I THINK MR. MEADE PUT IT VERY WELL IN HIS -- ONE OF
24
HIS PLEADINGS WHERE HE SAID IF THE DISTRICT OF MASSACHUSETTS
25
PROCEEDINGS, IT TURNS OUT THAT THE FOUNDERS ARE UNABLE TO, FOR
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
30
1
WHATEVER REASON, RESTORE THE STATUS QUO ANTE IN THEIR EFFORT TO
2
ATTACK AND LITIGATE AGAINST THE JUDGMENT, THAT MAY BE HELD
3
AGAINST THEM.
4
SO I DON'T THINK THE DISTRICT OF MASSACHUSETTS
5
PROCEEDINGS REALLY POSES ANY IMPEDIMENT TO PAYING FINNEGAN
6
HENDERSON FOR ITS YEARS OF WORK.
7
SPEAK FOR QUINN EMANUEL.
8
THE COURT:
9
MR. WOLFSON:
AND I'LL LET MR. WOLFSON
MR. WOLFSON.
GOOD MORNING, YOUR HONOR.
MR. MASON, I
10
THINK, ADDRESSED THE ISSUE WITH LAWFUL CLAIMANTS, JUST THAT
11
FINNEGAN HENDERSON AND QUINN EMANUEL ARE THE ONLY LAWFUL
12
CLAIMANTS HERE.
13
QUINN EMANUEL, WE HAVE A FINAL JUDGMENT AND CONFIRMED
14
ARBITRATION AWARD FOR OUR FEE.
15
BOTH HAVE ATTORNEYS' LIENS.
IN THE CASE OF
THE WINKLEVOSSES AND MR. NARENDRA AGREED TO THE
16
AMOUNT OF OUR ATTORNEYS' LIEN, AND IT HAS BEEN ENFORCED.
17
WITH RESPECT TO WHETHER THERE ARE ANY OTHER LAWFUL CLAIMANTS,
18
ACCORDING TO YOUR HONOR'S OWN DEFINITION FROM YEARS AGO, WE
19
SUBMIT THERE ARE NONE.
20
SO
I'D LIKE TO ADDRESS, THOUGH, THE ISSUE OF THE RULE
21
60(B) MOTION.
BACK WHEN YOUR HONOR FIRST ENTERED AN ORDER TO
22
SHOW CAUSE TO SPECIFICALLY ENFORCE THE SETTLEMENT AGREEMENT IN
23
2008, FACEBOOK RESPONDED TO THAT BY SAYING THAT IT BELIEVED THE
24
SETTLEMENT, DESPITE THE EXISTENCE OF THE NINTH CIRCUIT APPEAL
25
SHOULD NEVERTHELESS BE SPECIFICALLY ENFORCED, SPECIFICALLY
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
31
1
2
PERFORMED, AND THAT THE PARTIES SHOULD EXCHANGE CONSIDERATION.
YOUR HONOR ENTERED THAT ORDER.
FACEBOOK NOW OWNS ALL
3
OF THE SHARES OF CONNECTU, INC. AND EFFECTIVELY CONTROLS
4
CONNECTU, INC.
5
INDICATION THAT THEY WOULD WANT TO RETURN THOSE SHARES TO AN
6
ESCROW SITUATION OR ANY INDICATION THAT THEY WOULD LIKE TO GIVE
7
BACK THE CONSIDERATION THAT THEY HAVE NOW RECEIVED.
8
9
WHAT I DID NOT SEE IN THEIR PAPERS IS ANY
NOW THAT IT'S TWO YEARS LATER OR -- EXCUSE ME -THREE YEARS LATER, THEY HAVE A DIFFERENT SITUATION WHERE
10
THEY'RE ARGUING, WELL, DESPITE THE SAME TYPE OF ARGUMENT WITH
11
RESPECT TO THE NINTH CIRCUIT APPEAL THAT IT MIGHT UNDO THE
12
SETTLEMENT, THIS RULE 60(B) MOTION MIGHT IN SOME HYPOTHETICAL
13
SCENARIO UNDO THE SETTLEMENT, SO NOW THE SETTLEMENT PROCEEDS
14
SHOULD NOT BE DISTRIBUTED.
15
WE FAIL TO SEE THE CONSISTENCY IN THOSE ARGUMENTS.
16
FRANKLY, QUINN EMANUEL FACED SIMILAR ARGUMENTS FROM THE FORMER
17
CLIENTS IN BOTH OUR ARBITRATION AGAINST THEM AND IN OUR MOTION
18
TO CONFIRM THE ARBITRATION AWARD IN NEW YORK STATE COURT.
19
TIMES THEY FAILED, OR -- WELL, IN THE ARBITRATION IT WAS
20
SEVERAL TIMES THEY FAILED.
21
EMANUEL NEVERTHELESS RECEIVED ITS FINAL JUDGMENT.
22
FINAL JUDGMENT NOW.
23
BOTH
DESPITE THOSE ARGUMENTS, QUINN
IT HOLDS A
AND IT'S UNCLEAR TO US WHY EXACTLY FACEBOOK'S
24
ARGUMENTS NOW WITH RESPECT TO THE RULE 60(B) MOTION, ESPECIALLY
25
CONSIDERING THE PROCEDURAL HURDLES, SHOULD NEVERTHELESS RULE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
32
1
THE DAY WHEN THOSE SAME TYPES OF ARGUMENTS WERE DEFEATED
2
PREVIOUSLY.
3
WE AGREE THAT REALLY THE ESCROW ACCOUNT SHOULD JUST
4
BE DISTRIBUTED TO THE LAWYERS.
5
WOULD LIKE TO LEAVE THIS LITIGATION BEHIND AND MOVE ON WITH OUR
6
LIVES.
7
THE COURT:
WE, LIKE FINNEGAN HENDERSON,
LET ME GIVE YOU MY TAKE ON THIS.
8
ALSO WANT TO SPEAK TO THIS MATTER?
9
MR. CHATTERJEE:
ANYONE
10
YOUR HONOR, IF I COULD JUST RESPOND
TO TWO ISSUES?
11
THE COURT:
BRIEFLY.
12
MR. CHATTERJEE:
THE FIRST ISSUE I WANT TO ADDRESS IS
13
RELATED TO YOUR VERY FIRST QUESTION ABOUT BOIES, SCHILLER &
14
FLEXNER ESSENTIALLY AS THE ESCROW AGENT RELEASING THE FUNDS.
15
YOU JUST HEARD A LOT OF ARGUMENT FROM FINNEGAN
16
HENDERSON AND QUINN EMANUEL WHY THEY THINK THEY'RE ENTITLED TO
17
MONEY FROM THE ESCROW.
18
PARTIES CITED, THE BROWN CASE, THE WALTER CASE, SEVERAL OTHERS,
19
ALL OF THEM SAY THAT THE LAW FIRMS CAN FILE NOTICE OF A LIEN,
20
BUT THAT IS NOT THE LIEN ITSELF.
21
IF YOU LOOK AT THE CASES THAT THE
THEY ARE NOT INTERVENORS IN THIS CASE.
THEY ARE NOT
22
ALLOWED TO FILE A COMPLAINT IN INTERVENTION.
23
ISSUE FOR THIS COURT TO DECIDE, AND THERE'S NO JURISDICTION FOR
24
THIS COURT TO DECIDE THAT.
25
THAT IS NOT AN
I THINK YOUR HONOR'S INITIAL QUESTION OF SHOULDN'T IT
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
33
1
BE LEFT TO THE ESCROW AGENT TO DECIDE IS PROBABLY THE RIGHT
2
ONE.
3
WHEREVER THEIR DISPUTES MAY LIE.
IT MIGHT BE BETTER FOR THE COURT TO DECIDE AS FAR AS
4
BUT THERE IS ONE FUNDAMENTAL ISSUE BETWEEN THE PEOPLE
5
WHO ARE PARTIES TO THIS LITIGATION, FACEBOOK AND MARK
6
ZUCKERBERG, THE WINKLEVOSS BROTHERS AND NARENDRA; THAT IS,
7
SHOULD THE ESCROW BE RELEASED WHILE THERE IS A COLLATERAL
8
ATTACK GOING ON ON THIS COURT'S JUDGMENT.
9
AND I THINK YOUR HONOR HIT THE NAIL ON THE HEAD.
10
THEY ARE ATTACKING THE DISMISSAL THAT YOUR HONOR ORDERED.
11
ARE ATTACKING THE RELEASE THAT YOUR HONOR GRANTED US WHEN YOU
12
ENFORCED THE JUDGMENT ON NOVEMBER 21ST, 2008, AND WE ARE STILL
13
EMBROILED IN THE LITIGATION THAT WE NEGOTIATED A PEACE TREATY
14
ON THREE YEARS AND -- I SAID 28 DAYS BEFORE, I MEANT EIGHT
15
DAYS -- THREE YEARS AND EIGHT DAYS AGO.
16
THEY
IT IS THE RIGHT DECISION TO ISSUE AN ORDER TO SHOW
17
CAUSE.
18
BROTHERS AND NARENDRA TO WITHDRAW THE MOTIONS THEY FILED IN
19
MASSACHUSETTS, BECAUSE THOSE ARE A COLLATERAL ATTACK ON THIS
20
COURT'S JUDGMENT.
21
AND I ALSO ASK THAT YOUR HONOR ORDER THE WINKLEVOSS
THE FINAL ISSUE I WANTED TO RAISE JUST VERY BRIEFLY
22
IS MR. SCHRAG MADE A NUMBER OF ARGUMENTS ABOUT SO-CALLED
23
DISCOVERY MISCONDUCT, BEING SURPRISED, AND THE LIKE.
24
SUGGEST TO YOUR HONOR YOU LOOK AT DOCUMENT NUMBER 729.
25
A SERIES OF DOCUMENTS THAT WERE SUBMITTED TO THIS COURT
I'LL
THAT IS
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
34
1
ASSOCIATED WITH THE QUINN EMANUEL DISPUTE WITH THE WINKLEVOSS
2
BROTHERS AND NARENDRA.
3
THOSE DOCUMENTS DESCRIBE IN GREAT DETAIL HOW THE
4
WINKLEVOSS BROTHERS KNEW A LOT.
5
REFERRED TO AS DEEP THROAT PROVIDING THEM WITH INFORMATION THAT
6
NO ONE THOUGHT THAT THEY SHOULD HAVE.
7
VIOLATION OF A PROTECTIVE ORDER.
8
9
THEY HAD SOMEONE THAT THEY
IN FACT, IT WAS A
PRIOR TO ENFORCEMENT OF THE SETTLEMENT AGREEMENT THEY
LODGED ANOTHER COLLATERAL ATTACK.
10
THE COURT:
I DON'T WANT TO GO THERE AT THIS POINT.
11
IT SEEMS TO ME THAT -- HAVE A SEAT.
12
MR. CHATTERJEE:
13
THE COURT:
THANK YOU, YOUR HONOR.
HERE'S WHAT I HAVE IN MIND:
I PUT THE
14
TRUSTEE IN A POSITION OF NEEDING TO BE PROTECTED.
15
WANT THERE TO BE A LITIGATION AGAINST THE TRUSTEE FOR DOING
16
ANYTHING THAT GREW OUT OF THIS COURT'S ORDER, AND SO I REALLY
17
APPRECIATE THE PREDICAMENT OF BEING -- HOLDING THE FUNDS AND
18
WANTING TO HAVE A COURT ORDER PRIOR TO DISBURSAL.
19
IN AID OF MY JURISDICTION, ASSIST THE TRUSTEE IN THAT REGARD
20
AND WILL MAKE AN ORDER OF DISBURSAL.
21
I DIDN'T
SO I WILL,
WHAT I INSTRUCT THE TRUSTEE TO DO IS TO PROVIDE TO ME
22
AND THE PARTIES, BASED UPON WHAT HAS OCCURRED UP TO NOW, A
23
PROPOSED ORDER OF DISBURSAL SAYING WHERE THE FUNDS WOULD GO,
24
AND BECAUSE IT IS A SENSITIVE NATURE, FILE THAT UNDER SEAL WITH
25
THE COURT.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
35
1
AT THE SAME TIME, IT DOES OCCUR TO ME THAT PART OF
2
THE -- PART OF THE COURT'S CONCERN IS TO HAVE THE WINKLEVOSS
3
BROTHERS AND NARENDRA ENGAGED IN CONDUCT WHICH IS POTENTIALLY
4
IN VIOLATION OF THE JUDGMENT OF THE COURT AND INCORPORATED BY
5
REFERENCES IS THE RELEASE THAT WAS GIVEN.
6
NOW, ORDINARILY, MY ATTITUDE IS THOSE ARE
7
POST-JUDGMENT KIND OF PROCEEDINGS AND CAN BE THE SUBJECT OF A
8
LAWSUIT FOR BREACH OF CONTRACT.
9
A NEW LAWSUIT COULD BE BROUGHT CLAIMING DAMAGES FOR THAT, AND
THE RELEASE IS A CONTRACT, AND
10
THAT'S WHY I ASKED THE QUESTION, WHAT IF SOME SUBSEQUENT
11
LITIGATION IS BROUGHT IN VIOLATION OF THE RELEASE.
12
SO THAT ORDINARILY CAN BE HANDLED BY A DAMAGES ACTION.
13
IT HAPPENS.
BUT BECAUSE OF THE PROCEDURAL POSTURE OF THE CASE
14
WHERE THIS COURT IS SORT OF -- THE CASE ISN'T QUITE OVER YET,
15
I'M GOING TO CONSIDER THAT I HAVE THAT MATTER BEFORE ME.
16
DON'T HAVE A REQUEST, BUT IT DOES SEEM TO ME THAT UNDER THESE
17
CIRCUMSTANCES I WILL ORDER THE WINKLEVOSS BROTHERS AND NARENDRA
18
TO SHOW CAUSE WHY THE COURT SHOULD NOT IMPOSE SANCTIONS FOR
19
THEIR CONTINUING LITIGATION IN THE MASSACHUSETTS COURT.
20
I
NOW, THAT DOESN'T MEAN THEY CAN'T GIVE ME AN
21
EXPLANATION AND I SAY, FINE, YOU MAY GO AHEAD, SUBJECT TO SOME
22
COLLATERAL PROCEEDING.
23
THAT I WILL FIND THAT IT IS IN DIRECT VIOLATION, ORDER THAT
24
THEY CEASE, AND UPON PAIN OF NOT CEASING, IMPOSE SOME KIND OF A
25
SANCTION, WHICH COULD INCLUDE THE VERY REWARD THAT THEY
BUT IT DOES ALSO RAISE THE POSSIBILITY
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
36
1
RECEIVED IN THE COURSE OF THE SETTLEMENT, FORFEITURE OF THAT.
2
I ONLY SAY THAT BECAUSE THAT, TO ME, SEEMS TO ME TO
3
BE -- TO GET THEIR ATTENTION AS THE MOST FORCEFUL THING THAT
4
THE COURT COULD DO UNDER THESE CIRCUMSTANCES, AND I WANT THEM
5
TO UNDERSTAND THE SERIOUSNESS THAT THE COURT TAKES OF THIS
6
MATTER.
7
AGAIN, IT COULD BE THAT THEY WILL CONVINCE ME THAT
8
THEY ARE ABLE TO PROCEED, BUT I NEED TO HAVE THAT FORMALLY
9
BEFORE ME, AND IN THE RESPONSE TO THE SHOW CAUSE ORDER TO
10
EXPLAIN TO ME WHY THEIR CONDUCT IS NOT IN CONTRAVENTION OF THE
11
RELEASE AND NOT A VIOLATION OF THE COURT'S JUDGMENT.
12
I WANT TO BRING THOSE TWO THINGS TOGETHER.
IN OTHER
13
WORDS, IT SEEMS TO ME THAT IN FAIRLY SHORT ORDER I SHOULD BE
14
ABLE TO HAVE THEIR RESPONSE TO THAT ORDER, AND IF I'M
15
CONVINCED, IT COULD BE THAT I WILL ORDER THE TRUSTEE TO
16
DISBURSE TO THE LAW FIRMS AND HOLD SOME OTHER PART PENDING
17
THESE PROCEEDINGS, MAKE A FULL DISBURSAL OF THE WHOLE THING.
18
IF YOU TELL ME THERE ARE RIGHTS TO APPEAL, AS YOU HAVE, I WON'T
19
HAVE ANYTHING TO SAY ABOUT THAT; YOU CAN HAVE YOUR RIGHTS TO
20
APPEAL.
21
I AM SOMEWHAT CONCERNED ABOUT THE PARTIAL
22
DISTRIBUTION, ONLY BECAUSE IT SEEMS TO ME THAT WHAT THE LAW
23
FIRMS ARE CLAIMING ARE A DERIVATIVE OF THE WINKLEVOSSES'
24
REWARD.
25
EVERYTHING, THERE'S NOTHING FOR THE LAW FIRMS TO RECEIVE.
IF THEY DON'T RECEIVE ANYTHING BECAUSE THEY FORFEITED
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
37
1
AGAIN, I DON'T SAY THAT BECAUSE I THINK THAT'S WHAT
2
IS LIKELY TO HAPPEN, BUT IT DOES SEEM TO ME THEIR CLAIM IS
3
DERIVATIVE OF THE WINKLEVOSSES' REWARD, AS OPPOSED TO
4
INDEPENDENT -- THEY HAVE A LIEN AGAINST WHATEVER THE
5
WINKLEVOSSES RECEIVE.
6
IS WORTHLESS.
IF THEY DON'T RECEIVE ANYTHING, THE LIEN
7
BUT I DO RESPECT THE FACT THAT THERE HAVE BEEN THESE
8
COLLATERAL PROCEEDINGS TO REDUCE THOSE CLAIMS TO JUDGMENT, AND
9
I'M HOPEFUL THAT ALL OF THIS CAN BE ACTUALLY RESOLVED BY THE
10
PARTIES BETWEEN NOW AND WHATEVER PROCEEDING I SET UP FOR THESE
11
PURPOSES.
12
I DO TAKE THE FACEBOOK REQUEST TO ALSO INCLUDE WHY
13
THEY SHOULD NOT BE ORDERED TO DISMISS THE MASSACHUSETTS
14
PROCEEDING AND TO NOT FILE SIMILAR KINDS OF PROCEEDINGS, BUT I
15
DON'T WANT TO GO IN EXCESS OF MY ENFORCING MY JUDGMENT.
16
AS I SAID, I DO CONTEMPLATE THAT THE PARTIES, AFTER A
17
PERIOD OF TIME, CAN FILE AGAINST ONE ANOTHER AND MAKE CLAIMS
18
THEY ARE NOT COVERED BY THE RELEASE, BUT THIS ONE I'M NOT SURE
19
I UNDERSTAND HOW THAT CASE CAN PROCEED IN THE FACE OF THE
20
RELEASE THAT HAS BEEN GIVEN IN THIS CASE AND THE COURT'S
21
JUDGMENT.
22
23
24
25
SO THE QUESTION THAT REMAINS IS HOW MUCH TIME DO YOU
ALL WANT TO PUT THIS TOGETHER?
LET ME START WITH THE EASIER ONE.
MR. BARRETT, HOW
LONG WOULD IT TAKE FOR YOU TO TENDER TO THE COURT YOUR PROPOSED
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
38
1
ORDER OF DISBURSEMENT?
2
MR. BARRETT:
WE COULD CERTAINLY DO IT BY THE END OF
3
THE WEEK, YOUR HONOR.
4
THE AMOUNTS THAT THE LAW FIRMS ARE SEEKING ARE CLEAR.
5
THERE WILL BE A FINAL PARAGRAPH WHICH PROVIDES FOR THE
6
DISTRIBUTION TO THE FOUNDERS, WHICH I TAKE FROM YOUR HONOR'S
7
OTHER COMMENTS, THE COURT WILL MAKE A DECISION ON WHETHER WE'RE
8
DIRECTED TO DO THAT OR NOT, BUT WE CAN CERTAINLY GIVE YOU THE
9
NUMBERS THAT WE BELIEVE WOULD BE APPROPRIATE IF THE COURT SO
10
11
I THINK THE -- WHAT WE WILL -- I THINK
I THINK
ORDERS.
THE COURT:
ALL RIGHT.
HOW LONG WOULD IT TAKE THE
12
WINKLEVOSS AND NARENDRA PARTIES TO GIVE ME A RESPONSE TO MY
13
CONTEMPLATED ORDER TO SHOW CAUSE?
14
MR. MEADE:
WELL, YOUR HONOR, QUITE FRANKLY, I THINK
15
THAT YOUR HONOR WILL SEE A CHANGE IN POSITION IN TERMS OF
16
MASSACHUSETTS.
17
ANY AUTHORITY THAT SAYS THE RELEASE -- A RELEASE OF THE NATURE
18
IN THIS CASE WOULD BAR THE 60(B) ACTION.
19
LOUD AND CLEAR THAT YOUR HONOR'S CONCERNED ABOUT THAT, AND I
20
GUESS I HAVE THE FOLLOWING QUESTION:
21
I INDICATED TO YOUR HONOR THAT WE HAVE NOT SEEN
I'VE HEARD YOUR HONOR
IF TOMORROW MY CLIENTS SAY, WELL, THERE'S A BELIEF
22
THAT THE RELEASE BARS US FROM RAISING THIS MATTER IN THE
23
MASSACHUSETTS COURT, IF THEY SAY, WELL, WE RESPECT THAT, WE
24
HADN'T ANTICIPATED THAT, WHICH IS TRUE, BUT WE RESPECT IT AND,
25
THEREFORE, WE ARE GOING TO WITHDRAW PROCEEDINGS IN
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
39
1
MASSACHUSETTS; IN FACT, ALL PROCEEDINGS BASED ON THIS, QUITE
2
FRANKLY, UNANTICIPATED ISSUE, WHETHER THAT CHANGES YOUR HONOR'S
3
VIEW AS TO WHETHER AN OSC IS NECESSARY.
4
THE COURT:
WELL, IT COULD.
I ONLY SUGGEST IT
5
BECAUSE IT WOULD PROCEDURALLY PUT ME IN THE RIGHT POSITION,
6
GIVEN THE FACEBOOK POSITION HERE THAT IT CONSIDERS THAT THERE
7
WOULD BE A VIOLATION OF THE COURT'S JUDGMENT AND THE RELEASE TO
8
RELEASE THE FUNDS AND TO ALLOW THAT LITIGATION TO BE EXISTENT
9
WHILE THE RELEASE TAKES PLACE.
10
IF THAT IS WITHDRAWN, THAT WOULD AT LEAST PRESENT
11
CHANGED CIRCUMSTANCES WHERE IN MY FUTURE PROCEEDING, WHERE I'M
12
ABOUT TO DISBURSE AND I'M TOLD THAT THERE IS NO OTHER
13
IMPEDIMENT -- AND SO IF YOU WANT A PERIOD OF TIME BEFORE THE --
14
WHERE I STAY MY ISSUANCE OF THE ORDER TO SHOW CAUSE SO YOU CAN
15
CONFER WITH YOUR CLIENTS AND DECIDE WHETHER OR NOT YOU'LL
16
VOLUNTARILY TERMINATE THE MASSACHUSETTS PROCEEDINGS, I'M
17
WILLING TO CONSIDER THAT.
18
MR. MEADE:
YOUR HONOR, THE REASON WHY I RAISE IT IS
19
I WOULDN'T WANT A DECISION TO WITHDRAW IT THIS AFTERNOON OR
20
TOMORROW MORNING INTERPRETED AS A CONCESSION THAT WE
21
INTENTIONALLY VIOLATED THE JUDGMENT OF THIS COURT.
22
I THINK THAT, YOU KNOW, IF WE GOT TO BRIEFING ON THAT
23
SUBJECT, I THINK WHAT WE WOULD FIND IS IT'S A GRAY AREA.
I,
24
QUITE FRANKLY, HAD NOT ANTICIPATED A CONTENTION THAT RAISING
25
THE MATTER THAT WE DID IN MASSACHUSETTS WAS A VIOLATION OF THE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
40
1
2
RELEASE, SO WE'RE IN A BIT OF A DISADVANTAGE HERE.
I HEAR YOUR HONOR LOUD AND CLEAR.
I THINK IT WILL
3
PRODUCE A FAIRLY SIGNIFICANT CHANGE.
I KNOW WHAT MY
4
RECOMMENDATIONS WILL BE, YOUR HONOR.
BUT I HAVE TO BE CAREFUL
5
THAT I DON'T DO THAT AND THEN THAT'S A CONCESSION THAT WE DID
6
SOMETHING THAT'S OFFENSIVE TO YOUR HONOR'S JUDGMENT.
7
IT'S AN OPEN QUESTION.
8
9
I THINK
BUT THE BIGGER POINT IS I DON'T THINK IT'S SOMETHING
WE WANT TO FIGHT ABOUT.
I NEED DIRECTIONS FROM MY CLIENTS.
SO
10
WHAT I WOULD PROPOSE, YOUR HONOR, IS THAT THE OSC NOT ISSUE
11
UNTIL THE CLOSE OF BUSINESS TOMORROW, AND I THINK IT'S
12
CERTAINLY POSSIBLE, PERHAPS LIKELY, YOUR HONOR, THAT A LOT OF
13
THESE ISSUES THAT WE WOULD HAVE TO FLUSH OUT CAN BE WITHDRAWN,
14
AND SO THAT THE ONLY QUESTION THAT REMAINS IS THE MECHANICS OF
15
THE DISTRIBUTION.
16
STRATEGIC DECISIONS THAT THE CLIENT HAS TO MAKE.
17
CAN BE MADE IN SHORT ORDER.
18
I CAN'T SAY THAT -- YOU KNOW, THESE ARE
THE COURT:
I THINK THEY
LET ME SUGGEST A DATE THEN, BECAUSE I
19
THINK EVEN AN ORDER TO SHOW CAUSE CARRIES WITH IT A STIGMA, AND
20
SO I WILL GIVE YOU THE TIME TO SPEAK WITH YOUR CLIENTS BEFORE
21
MAKING MY JUDGMENT.
22
SO THE FIRST THING I'LL DO IS SET A HEARING FURTHER
23
TO THESE MOTIONS, AND THEN I CAN ALWAYS INCLUDE THE LANGUAGE AS
24
TO OTHER PROCEDURAL THINGS WITH THAT.
25
IF I HAVE THE TRUSTEE'S REPORT BY THE END OF THE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
41
1
WEEK, PROBABLY -- I KNOW THAT THE INTEREST ALONE IS RUNNING
2
LIKE THE MCDONALD'S HOW MANY HAMBURGERS ARE SERVED.
3
SOMEWHAT CONCERNED ABOUT TOO MUCH DELAY.
4
NEXT MONDAY -- DO I HAVE A CALENDAR NEXT MONDAY?
SO I'M
I COULD HAVE US BACK
5
THE CLERK:
YES, YOU DO.
6
THE COURT:
I CAN HAVE US BACK NEXT MONDAY, OR I CAN
7
DROP DOWN TO ANOTHER WEEK FROM THAT.
8
WILL TAKE YOU ALL TO SORT YOURSELVES OUT.
9
MR. MASON:
IT DEPENDS HOW LONG IT
SPEAKING FOR FINNEGAN HENDERSON, THE
10
SOONER THE BETTER, YOUR HONOR, EVEN THOUGH I THINK THE HARDER
11
WORK IS ON MR. MEADE'S SIDE.
12
THE COURT:
I UNDERSTAND THAT, BUT I'LL KNOW IN TWO
13
DAYS WHETHER OR NOT THAT PROCEEDING WILL BE ONE WHERE I HAVE TO
14
GO THROUGH SOME EVIDENTIARY PROCESS, AND I'VE GOT THE TIME TO
15
DO THAT.
16
TRIAL, SO I'M A LITTLE LONELY UP HERE.
17
SINCE I MOVED TO SAN FRANCISCO, I HAVEN'T HAD BUT ONE
MR. MEADE:
YOUR HONOR, WE WILL TELL YOU OUR INTENDED
18
COURSE OF ACTION IN A STATUS REPORT TO BE FILED AT THE CLOSE OF
19
BUSINESS TOMORROW.
20
MASSACHUSETTS ARE WITHDRAWN, WE CAN CERTAINLY FILE THAT
21
TOMORROW.
22
IF THE DECISION IS THAT PROCEEDINGS IN
I DON'T SEE ANY PROBLEM WITH THAT.
THE QUESTION OF HOW YOU DO THE DISTRIBUTION HAS
23
ACTUALLY BEEN FULLY BRIEFED.
I THINK THAT YOUR HONOR PROBABLY
24
HAS EVERYTHING IN THESE PLEADINGS IT NEEDS.
25
BIT OF DISAGREEMENT ON A FEW MATTERS.
THERE IS A LITTLE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
42
1
THE COURT:
WELL, I DON'T NEED TO HAVE YOU HERE.
IN
2
OTHER WORDS, I'LL CALL THE MATTER ON WHATEVER CALENDAR WE AGREE
3
TO.
4
LOOKED AT WHAT THE TRUSTEE PROPOSES AS TO WHERE THE MONEY GOES,
5
I'LL JUST SIGN THE ORDER.
IF THERE'S NO ONE HERE WHO HAS ANY CONTEST AND YOU ALL
6
BUT IF THERE ARE PEOPLE HERE THAT WANT TO TALK TO ME
7
ABOUT ANYTHING LEFT, DEPENDING ON WHAT YOU DO IN THE NEXT
8
COUPLE OF DAYS, THEN I'LL HAVE A HEARING.
9
MR. MEADE:
ANY OBJECTIONS?
WELL, THE PROBLEM IS THE NAME OF THE
10
STOCK -- THE CERTIFICATES ARE BOIES, SCHILLER IN TRUST FOR MY
11
THREE CLIENTS AND HOWARD WINKLEVOSS.
12
STOCK NEEDS TO RESIDE IN THE APPROPRIATE ENTITY.
13
THE BIG ISSUE IS THAT
IN OUR MOVING PAPERS WE INDICATED THE APPROPRIATE
14
ENTITIES.
15
WINKLEVOSS BROTHERS WOULD LIKE THE STOCK TO BE HELD BY LLCS SET
16
UP FOR ESTATE PLANNING PURPOSES.
17
ABOUT THAT.
18
THERE IS SOME DISPUTE.
MR. NARENDRA AND THE
THERE'S BEEN A DISAGREEMENT
THE NUMBERS -- THE MATH HAS ALL BEEN CALCULATED.
19
ONLY REMAINING ISSUE IS WHETHER MY CLIENTS CAN DESIGNATE AN
20
ENTITY TO RECEIVE THE STOCK.
21
THE
VIOLENCE TO THE AGREEMENT THAT THE PARTIES BARGAINED FOR.
22
THE COURT:
23
MR. CHATTERJEE:
I DON'T THINK IT DOES ANY
WHAT'S THE OBJECTION?
YOUR HONOR, WE SETTLED THE CASE WITH
24
THE WINKLEVOSS BROTHERS AND NARENDRA, AND THOSE ARE THE PEOPLE
25
WHO ARE SUPPOSED TO GET THE STOCK.
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
43
1
THE BIG ISSUE WITH THE LLCS, FOR EXAMPLE, IS THAT
2
MEMBERSHIP IN THE LLC CAN CHANGE AT ANY MOMENT IN TIME.
3
CAN BE DIFFERENT PEOPLE THAT ARE DIFFERENT OWNERS OF IT.
4
THERE
WE HAVE A SUBSTANTIAL CONCERN -- AGAIN, THAT DOCKET
5
NUMBER, 729 THAT I REFERRED TO -- THERE ARE A NUMBER OF TAX
6
GAMES THAT THE WINKLEVOSS BROTHERS AND NARENDRA ARE ENGAGING
7
IN.
8
PLANNING PURPOSES.
9
PLANNING PURPOSES.
10
THE STATEMENT FROM MR. SCHRAG INDICATES IT'S FOR ESTATE
THEY SAID IT'S FOR SOME SORT OF TAX
THAT IS NOT WHAT THE AGREEMENT SAYS.
THE AGREEMENT
11
SAYS THE INDIVIDUALS GET THE STOCK.
12
IT AFTERWARDS, THAT'S THEIR PREROGATIVE.
13
THE ESCROW, IT SHOULD GO TO THE PEOPLE THAT THE AGREEMENT
14
INDICATES.
15
THE COURT:
IF THEY WANT TO TRANSFER
BUT IN COMING OUT OF
THAT IS THE KIND OF THING THAT MAY BE
16
BEYOND MY JURISDICTION, BECAUSE I WOULD ENFORCE THE SETTLEMENT
17
AND THE AGREEMENT AS IT STANDS.
18
YOU CAN, IN A SINGLE TRANSACTION OR IN A TWO-STEP TRANSACTION,
19
ACCOMMODATE BOTH INTERESTS.
20
AND IT DOES SEEM TO ME THAT
IF THERE'S A DISPUTE ABOUT THAT AND I AM CONVINCED
21
IT'S THE KIND OF THING I CAN WEIGH IN ON, I'M HAPPY TO DO IT.
22
SO YOU CAN TENDER THAT UP TO ME AS WELL FOR THIS PROCEEDING
23
THAT WE'RE TALKING ABOUT.
24
25
AS I HEAR IT, I TEND TO AGREE WITH MR. CHATTERJEE
THAT IT WOULD BE MORE IN KEEPING WITH THE RELEASE TO HAVE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
44
1
THE -- AND THE JUDGMENT TO HAVE THE STOCK IN THE NAMES OF THE
2
PARTIES WHO WERE SIGNATORIES TO THE RELEASE AND THEY CAN
3
CONTRIBUTE IT IMMEDIATELY, IF THEY WISH, TO WHATEVER ENTITY
4
THEY WISH SO AS THEY -- THE ENTITY IS SEPARATE FROM THEM, AND
5
IF THEY WERE TO COME TO COURT AT SOME POINT AND SAY, I NEVER
6
GOT WHAT I AGREED TO, IT WOULD BE TRUE BECAUSE THERE'S NO
7
TRANSFER.
8
LAWYERS AS YOU ARE, WILL SATISFY THAT CONCERN.
9
SO YOU CAN SET IT UP IN A WAY THAT I'M SURE, SMART
MR. MEADE:
THE ONLY THING I'LL SAY, YOUR HONOR, AND
10
I THINK THIS AFFECTS THE TIMELINE, IF THERE'S AN AGREEMENT THAT
11
THE STOCK CAN BE RELEASED TO MY CLIENTS, THAT THEY CAN THEN
12
TRANSFER IT TO THE APPROPRIATE ENTITY WITHOUT ANY INTERFERENCE,
13
BECAUSE THERE ARE CERTAIN STEPS RELATING TO, YOU KNOW, FACEBOOK
14
REPORTING THE APPROPRIATE OWNER OF RECORD.
15
AS LONG AS -- IF THERE'S AN ASSURANCE HERE IT CAN GO
16
TO MY CLIENTS AND THERE WON'T BE AN INTERFERENCE WITH THEM
17
TRANSFERRING IT AS APPROPRIATE, I DON'T THINK THERE'S ANYTHING
18
WE NEED TO FIGHT ABOUT ON A LATER DAY.
19
I THINK THAT, QUITE FRANKLY, MY PROPOSED ORDER, WITH
20
SOME MODIFICATIONS, WILL SATISFY WHAT YOUR HONOR EXPECTS
21
MR. BARRETT TO PROVIDE, AND WE CAN DO IT IN A MATTER OF DAYS.
22
23
24
25
MR. CHATTERJEE:
SO, YOUR HONOR, I THINK WE HAVE TO
UNPACK ALL OF THESE ISSUES.
IF THEY ARE GOING TO WITHDRAW WHAT THEY'RE DOING IN
MASSACHUSETTS AND WE'RE GOING TO HAVE THE CONTEMPT ISSUES
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
45
1
RESOLVE, AND THEY WANT TO DO THE DISTRIBUTION, WE CAN DEAL WITH
2
ALL OF THAT TOGETHER.
3
MY BIGGEST CONCERN AT THE MOMENT IS IF YOUR HONOR IS
4
GOING TO PROCEED WITH THE CONTEMPT PROCEEDING AND THEY DON'T --
5
AND THEY WANT TO STILL HAVE THE STOCK AND TRANSFER IT TO SOME
6
OTHER KIND OF SHELL ENTITIES, AGAIN THAT'S GIVING THEM THE
7
BENEFIT OF THE CONSIDERATION IN THE SAME WAY THAT YOU'RE
8
WORRIED ABOUT THE CONSIDERATION GOING TO FINNEGAN HENDERSON OR
9
QUINN EMANUEL.
IT IS OUT OF THE WINKLEVOSS BROTHERS AND
10
NARENDRA'S HANDS.
11
HAVE.
12
IT'S NOW AN OPERATING COMPANY THAT THEY
SO I THINK THE BOTTOM LINE IS WE HAVE TO WORK ALL OF
13
THAT OUT TOGETHER.
14
ARE GOING TO DO WITH RESPECT TO THE ORDER TO SHOW CAUSE.
15
FIRST STEP IS FOR THEM TO DECIDE WHAT THEY
THE COURT:
WELL, I'M SUGGESTING THAT.
IN OTHER
16
WORDS, THE TRUSTEE IS GOING TO PUT TOGETHER A DOCUMENT, ADVICE
17
AND CONSENT FROM BOTH SIDES, AS TO THE LANGUAGE OF THE
18
TRANSFER, CLOSING THE ESCROW, AS IT WERE, AND WHERE THE FUNDS
19
GO.
20
ONE PARTY, THEY SIGN OFF OF IT, IT GOES TO ANOTHER.
AND THAT CAN INCLUDE AN INTERMEDIATE STEP WHERE IT GOES TO
21
I WANT RECEIPTS SIGNED OF SOME SORT SO THE PARTIES
22
ARE NOT ABLE TO CLAIM THEY DID NOT RECEIVE THE CONSIDERATION
23
THEY BARGAINED FOR.
24
25
IF THEY WANT TO REQUEST THAT IT BE TRANSFERRED
FURTHER, I'M SURE WE CAN ACCOMMODATE ALL OF THAT IN THIS SINGLE
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
46
1
PROCEEDING.
2
THIS CAN'T BE DONE NEXT MONDAY.
3
NEED ANOTHER WEEK BEYOND THAT BECAUSE OF THESE COMPLICATIONS?
4
I HAVEN'T HEARD ANYTHING THAT CONVINCES ME THAT
MR. MEADE:
OR WHAT I'M ASKING IS:
NO, YOUR HONOR.
DO YOU
WE WILL MAKE OUR
5
ELECTION BY THE CLOSE OF BUSINESS TOMORROW.
6
CAN HAVE AN ORDER IN HAND AS TO PROPOSED DISTRIBUTION ON
7
WEDNESDAY MORNING.
8
COME BACK ON MONDAY.
9
DISCUSSION, IT SOUNDS LIKE WE'RE IN AGREEMENT AND WE WON'T HAVE
10
11
I THINK YOUR HONOR
AND I THINK IF THERE'S A DISPUTE, WE CAN
AND, QUITE FRANKLY, BASED ON THIS
TO COME BACK ON MONDAY.
MR. CHATTERJEE:
SO, YOUR HONOR, THE ONE ISSUE WITH
12
RESPECT TO THE ORDER TO SHOW CAUSE IS WE WOULD LIKE TO NOTIFY
13
THE MASSACHUSETTS COURT IN SOME WAY THAT THESE PROCEEDINGS ARE
14
GOING ON, BECAUSE WHAT WE DON'T WANT TO DO IS RUN INTO A
15
SITUATION WHERE WE HAVE A LOT OF COLLATERAL FOOD FIGHTS BECAUSE
16
THE MASSACHUSETTS COURT DECIDES TO DO SOMETHING.
17
THE COURT:
WHO IS THE "WE"?
18
MR. CHATTERJEE:
19
THE COURT:
THIS IS FACEBOOK AND ZUCKERBERG.
I THINK YOU MIGHT EXACERBATE THE
20
CIRCUMSTANCE IF YOU START TAKING A POSITION IN A CASE WHERE IT
21
COULD BE WITHDRAWN, BECAUSE SOMETIMES COURTS LIKE TO HEAR
22
FURTHER IF -- BECAUSE PEOPLE WHO VOLUNTARILY FILE THINGS CAN
23
VOLUNTARILY WITHDRAW.
24
ADVERSARY, WILL WANT TO WAIT.
25
PERHAPS, BY DOING THAT.
OFTEN COURTS, ONCE THEY HEAR FROM AN
SO YOU ACT AT YOUR PERIL,
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
47
1
MR. CHATTERJEE:
2
THE COURT:
FAIR POINT, YOUR HONOR.
SO I WON'T DO ANYTHING TO INTERFERE WITH
3
WHATEVER YOU DO, BUT IT DOES SEEM TO ME IT'S UNNECESSARY FOR
4
YOU TO TAKE ANY ACTION IF IN THE NEXT COUPLE OF DAYS THE WHOLE
5
THING IS WITHDRAWN, WHICH IS WHAT I UNDERSTOOD TO BE YOUR ONLY
6
CONCERN.
7
AS I SAY, LATER ON DOWN THE ROAD, YOU MAY END UP
8
HAVING TO FILE SOMETHING, BUT I'M ONLY CONCERNED WITH WHAT IS
9
EXISTENT AT THE TIME OF THE CLOSE OF THIS TRUST.
10
ONE OF MY ASTUTE LAW CLERKS WANTED ME TO MAKE SURE
11
YOU ARE BEING PAID AS A TRUSTEE AND ANYTHING YOU DO IN THE
12
COURSE OF THIS TAKES INTO CONSIDERATION, SO THAT WHEN THE MONEY
13
IS GONE, THE MONEY IS GONE AND THERE'S NO FURTHER BILLS OF ANY
14
KIND.
15
16
MR. BARRETT:
YOUR HONOR, WE ARE SERVING AS TRUSTEE
AT THE MOMENT PRO BONO.
17
THE COURT:
IS THAT MY ORDER?
18
MR. BARRETT:
YOUR HONOR, YOUR ORDER DIDN'T PROVIDE
19
FOR IT.
AT THE TIME YOUR HONOR ISSUED THE ORDER, YOU MAY
20
RECALL, OUR FIRM WAS REPRESENTING THE FOUNDERS, AND AS WELL AS,
21
I GUESS, CONNECTU.
22
SAYING THAT BECAUSE THE CONNECTU STOCK HAD GONE OVER TO THE
23
FACEBOOK SIDE, WE COULD NO LONGER REPRESENT THE FOUNDERS.
SUBSEQUENTLY, THE COURT ENTERED AN ORDER
24
THE COURT:
I RECALL THAT.
25
MR. BARRETT:
AND, ACCORDINGLY, WE HAVE NOT
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
48
1
REPRESENTED THE FOUNDERS OR ANY PARTY IN THIS LITIGATION SINCE
2
THAT TIME, AND, THEREFORE, I DON'T HAVE A MECHANISM TO GET PAID
3
FOR OUR SERVICES AS TRUSTEE EITHER.
4
THE COURT:
WELL, I DIDN'T WANT TO IMPOSE UPON YOU OR
5
YOUR FIRM.
6
CLAIMS NEED TO BE COMPENSATED, YOU SHOULD INCLUDE THAT IN YOUR
7
CONVERSATION WITH THE PARTIES, BECAUSE IT'S NOT PART OF MY
8
ORDER THAT YOU SERVED EXTRAORDINARILY.
9
CONVENIENCE.
10
SO IF YOU BELIEVE THAT COURT APPEARANCES OR OTHER
IT WAS ONLY A
IF IT'S GONE BEYOND CONVENIENCE, FEEL FREE TO
INCLUDE THAT IN THE CLAIM.
11
MR. BARRETT:
THANK YOU, YOUR HONOR.
12
IN THAT REGARD, COULD I JUST MAKE AN ADMINISTRATIVE
13
REQUEST, THAT IN THE EVENT -- I GUESS WE ALL HOPE IT'S NOT
14
NECESSARY -- THERE IS A HEARING ON THIS NEXT MONDAY, THAT THE
15
TRUSTEE COULD APPEAR AT THAT HEARING BY TELEPHONE RATHER THAN
16
IN PERSON?
17
THE COURT:
YES, YES.
AS LONG AS I HAVE YOU AS THE
18
PERSON, SINCE I WANT TO TAKE ADVANTAGE OF THIS, AND I WANTED TO
19
MAKE SURE WE WERE CONFIRMED -- WHAT IS THAT DATE?
20
THE CLERK:
IT IS THE 5TH, DECEMBER 5.
21
THE COURT:
DECEMBER 5TH AT 9:00 O'CLOCK, FURTHER
22
PROCEEDINGS.
23
ANYTHING ELSE?
24
MR. BARRETT:
25
THE COURT:
THANK YOU, YOUR HONOR.
ANYTHING ELSE?
VERY WELL.
MEET AND
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
49
1
CONFER.
AS TO THE -- SINCE THIS NOTICE HAVING TO DO WITH THE
2
POSITION, I WANT THAT AS A -- SORT OF A PLEADING.
3
WORDS, YOU NEED FILE SOMETHING ON THE DOCKET SAYING, WITH
4
RESPECT TO THE MASSACHUSETTS ACTIONS, THOSE ARE VOLUNTARILY
5
DISMISSED SO THAT THERE'S SOME JUDICIAL RECORD OF THIS, AS
6
OPPOSED TO SIMPLY CALLING ME UP, UNLESS THE PARTIES STIPULATE
7
OTHERWISE.
IN OTHER
ALL RIGHT?
8
MR. MEADE:
THANK YOU, YOUR HONOR.
9
MR. MASON:
THANK YOU, YOUR HONOR.
10
(PROCEEDINGS ADJOURNED.)
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
CERTIFICATE OF REPORTER
I, JOAN MARIE COLUMBINI, OFFICIAL REPORTER FOR THE
UNITED STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY
CERTIFY THAT THE FOREGOING PROCEEDINGS IN C 07-1389 JW,
FACEBOOK, INC. V. CONNECTU, INC., ET AL., WERE REPORTED BY ME,
A CERTIFIED SHORTHAND REPORTER, AND WERE THEREAFTER TRANSCRIBED
UNDER MY DIRECTION INTO TYPEWRITING; THAT THE FOREGOING IS A
FULL, COMPLETE AND TRUE RECORD OF SAID PROCEEDINGS AS BOUND BY
ME AT THE TIME OF FILING.
THE VALIDITY OF THE REPORTER'S CERTIFICATION OF SAID
TRANSCRIPT MAY BE VOID UPON DISASSEMBLY AND/OR REMOVAL
FROM THE COURT FILE.
________________________________________
JOAN MARIE COLUMBINI, CSR 5435, RPR
THURSDAY, DECEMBER 1, 2011
JOAN MARIE COLUMBINI, CSR, RPR
OFFICIAL COURT REPORTER, U.S. DISTRICT COURT
415-255-6842
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?