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)

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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

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