eBay Inc. v. Digital Point Solutions, Inc. et al

Filing 188

Transcript of Proceedings held on 01/29/2010, before Judge Jeremy Fogel. Court Reporter/Transcriber Summer Clanton, Telephone number 408-288-6150. 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. Release of Transcript Restriction set for 5/10/2010. (Clanton, Summer) (Filed on 2/8/2010)

1 2 3 4

IN T H E U N I T E D S T A T E S DISTRICT COURT FOR T H E N O R T H E R N D I S T R I C T O F CALIFORNIA SAN JOSE DIVISION EBAY, INC ., ) ) ) ) ) ) ) ) ) ) CV -08 -4052- JF SAN JOSE , CALIFORNIA JANUARY 29, 2010 PAGES 1- 20

5 PLAINTIFF, 6 VS . 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FOR THE DEFENDANT : DIGITAL POINT SOLUTIONS, HOGAN A P P E A R A N C E S: FOR THE PLAINTIFF : EBAY DIGITAL POINT SOLUTIONS, INC . E T A L, DEFENDANT.

TRANSCRIPT O F PROCEEDINGS BEFORE THE HONORABLE JEREMY FOGEL UNITED STATES DISTRICT JUDGE

O' MELVENY & MYERS L L P BY : DAVID EBERHART SHARON BUNZEL T W O E M B A R C A D E R O C T R, 28 TH FL S A N FRANCISCO, CA 94111

COAST LAW GROUP , L L P BY : ROSS C A M P B E L L 1 6 9 S A X O N Y RD, S T E2 0 4 ENCINITAS, CA 92024

(APPEARANCES CONTINUED O N T H E NEXT PAGE )

OFFICIAL COURT REPORTER : S U M M E R CLANTON, CSR , CERTIFICATE NUMBER 13185
1

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

A P P E A R A N C E S, (CONT. )

FOR THE DEFENDANT : BRIAN DUNNING, BRIANDUNNING.C O M, THUNDERWOOD KESSLER' S FLYING CIRCUS FOR THE DEFENDANT : TODD DUNNING, DUNNING ENTERPRISE

R U S, MILIBAND & S M I T H, APC BY : LEO PRESIADO 2211 MICHELSON DR , 7 TH FL I R V I N E, CA 92612

FREELAND COOPER & FOREMAN, LLP BY : STEWART FOREMAN 1 5 0 S P E A R S T., STE 1800 S A N FRANCISCO, CA 94105

2

1 2 3 4
09:49AM 09:49AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM 09:50AM

SAN JOSE , CALIFORNIA

JANUARY 29, 2010

PROCEEDINGS (WHEREUPON, COURT CONVENED A N D T H E FOLLOWING PROCEEDINGS WERE HELD: ) T H E C O U R T: SOLUTIONS CASE . MS . B U N Z E L: GOOD MORNING, YOUR HONOR. EB A Y VERSUS DIGITAL POINT

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

S H A R O N B U N Z E L AND DAVID EBERHART OF O' MELVENY & MYERS ON B E H A L F O F T H E PLAINTIFF , E BAY . MR . C A M P B E L L: GOOD MORNING, YOUR H O N O R.

ROSS CAMPBELL ON BEHALF OF DEFENDANTS SHAWN HOGAN A N D DIGITAL POINT SOLUTIONS I N C. MR . P R E S I A D O: GOOD MORNING, YOUR H O N O R.

L E O P R E S I A D O, RUS , M U L I B A N D & SMITH , F O R DEFENDANT S BRIAN DUNNING, BRIAN DUNNING.C O M, THUNDERWOOD HOLDINGS A N D SPECIALLY APPEARING F O R KESSLER 'S FLYING CIRCUS. MR . FOREMAN : GOOD MORNING , YOUR HONOR .

STEWART FOREMAN F O R DEFENDANTS TODD D U NNING AND DUNNING ENTERPRISES. T H E C O U R T: GOOD MORNING.

I HAVE A COUPLE O F QUESTIONS THAT ARE REALLY OUTSIDE THE MOVING PAPERS . T H E C O U R T'S ORDER ON EB A Y' S OBJECTIONS TO JUDGE TRUMBULL 'S ORDER WAS I S S U E D ONLY A COUPLE OF
3

09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:51AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM

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

WEEKS A G O.

A N D I 'M NOT SURE WHAT T H E IMPACT OF

THAT RULING IS ON T H E MATTERS THAT ARE ON CALENDAR TODAY . THE COURT CONCLUDED THAT THE CORPORATE DEFENDANTS COULD AND S H O U L D RESPOND TO DISCOVERY AND I THINK THAT RULING WOULD APPLY WITH EQUAL FORCE TO T H E PLEADINGS. A N D T H E COURT LAID O U T, A N D I THINK EB A Y ACTUALLY ADDRESSES I T I N ITS MOVING PAPERS HERE , THAT THERE ARE MEANS THAT THAT C O U L D B E DONE WITHOUT IMPLICATING THE FIFTH AMENDMENT R I G H T S OF THE INDIVIDUAL DEFENDANTS. SO I GUESS MY FIRST QUESTION REALLY WOULD BE FROM DEFENSE COUNSEL . RULING? HAVE YOU DIGESTED THAT

WHAT IMPACT , I F A N Y, DOES IT HAVE O N YOUR

STAY MOTION A N D YOUR OPPOSITION TO THE M O T I O N T O STRIKE T O D A Y? MR . C A M P B E L L: THANK Y O U, YOUR H O N O R.

FROM THE DP S DEFENDANT' S STANDPOINT A STAY CONTINUES TO BE ABSOLUTELY WARRANTED A N D NECESSARY I N THIS CASE. WITH RESPECT T O T H E IMPLICATIONS OF T H E COURT 'S RECENT ORDER ON T H E DISCOVERY ISSUES , T H E JANUARY 12T H O R D E R, I T H I N K A S A STARTING POINT , ALTHOUGH THE CONSTITUTION DOES NOT REQUIRE A S A
4

09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:52AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM

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

M A T T E R O F L A W THAT A STAY BE ISSUED , T H E COURTS HAVE RECOGNIZED THAT TO PRESERVE T H E INTEGRITY OF T H E F I F T H AMENDMENT, STAYS A R E A P P R O P R I A T E; AND THIS IS ONE OF THOSE INSTANCES. AND S O I N THAT RESPECT, STAYS ARE INTENDED TO T H E PREVENT T H E DEFENDANT FROM C H O O S I N G BETWEEN ASSERTING T H E F I F T H AMENDMENT IN WHICH A NEGATIVE INFERENCE C A N BE DRAWN AND WE COULD LOSE THE CIVIL CASE , O R NOT ASSERTING THE FIFTH AMENDMENT A N D HAVING THAT TESTIMONY LATER U S ED IN A CRIMINAL MATTER. THOSE CONCERNS AND THE REASON S FOR A STAY CONTINUE TO DIRECTLY APPLY A N D WILL CONTINUE TO DIRECTLY APPLY IN THIS CASE. THAT INCLUDES MATTERS

OUTSIDE THE JANUARY 12T H O R D E R. SO AT A MINIMUM W E W O U L D REQUEST T H E STAY IS CERTAINLY R E L E V A N T A S T O MATTERS N O T E N C O M P A S S E D IN T H E JANUARY 12 TH ORDER. N O W, HOWEVER, WITH RESPECT TO T H E SOME OF T H E G L O B A L STAY C A S E S THAT WE CITED WITH RESPECT T O T H E PRESENT M O T I O N I T APPEARS SOME OF THOSE AUTHORITIES WERE NOT FULLY CONSIDERED WITH RESPECT TO T H E I S S U A N C E O F JANUARY 12 TH ORDER BECAUSE T H E M O T I O N F O R STAY W A S NOT B E F O R E J U D G E T R U M B U L L. PLAINTIFF ARGUED THAT THOSE STAY CASES
5

09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:53AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM

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

WERE SIMPLY NOT RELEVANT T O ITS MOTION S T O COMPEL A N D T H E COURT SEEMED TO AGREE . AND T O THE EXTENT THOSE AUTHORITIES WERE NOT CONSIDERED , THEY ARE FULLY RIPE FOR CONSIDERATION NOW . AND SIGNIFICANTLY, THOSE CASES

HOLD THAT T O T H E EXTENT T H E STAY IS OTHERWISE APPROPRIATE IT S H O U L D A P P L Y G L O B A L L Y A N D IT SHOULD INCLUDE ALL PARTIES IN DISCOVERY . A N D T H E REASONS F O R THOSE RATIONAL IS WELL SUPPORTED IN TERMS OF JUDICIAL ECONOMY NOT PROCEEDING WITH LITIGATION ON PIECEMEAL O R SEGMENTED BASIS I N TERM S O F DISCOVERY. IN TERMS OF T H E CORPORATE DEFENDANT N O T BE ING ADEQUATELY ABLE T O D E F E N D ITSELF GIVEN T H E INDIVIDUAL DEFENDANT 'S ASSERTION OF T H E F I F T H AMENDMENT. A N D PRESERVING T H E INTEGRITY OF THE CRIMINAL M A T T E R A N D ALLOWING CIVIL DISCOVERY TO MOVE FORWARD I N FULL ONCE THE PREDICATE F O R ASSERTING F I F T H AMENDMENT IS NO LONGER IN PLAY. SO WE WOULD ALSO ESSENTIALLY REQUEST THAT THE STAY SHOULD B E ISSUED. W E W O U L D SUGGEST IT BE

F I N I T E A N D FOR AN IN DEFINITE PERIOD THROUGH APRIL T H E C O U R T: APRIL . IS THAT B A S E D O N SOME

N E W INFORMATION Y O U HAVE FROM T H E U .S. ATTORNEY 'S
6

09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:54AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM

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

OFFICE? MR . C A M P B E L L: THE INFORMATION I S BASED

ON T H E MOST R E C E N T S U B S T A N T I V E I N F O R M A T I O N W E HAVE FROM THE U. S. ATTORNEY' S O F F I C E WHICH IS THAT THEY INTENDED TO P U R S U E A N D HAVE A N INDICTMENT RETURNED AFTER T H E COMMENCEMENT OF THE N E W YEAR . AND THAT

WOULD ALLOW THAT TO FULLY PLAY O U T AND WE NARROWLY TAYLOR T O THAT INFORMATION . I THINK THAT I S A N A P P R O P R I A T E W A Y TO LOOK AT THIS M A T T E R IN TERMS OF THAT KIND OF A STAY WOULD CERTAINLY N O T PREJUDICE TO EB A Y' S R I G H T S, A N D THAT' S SORT OF GETTING INTO O N E OF THE KEATING FACTORS WHICH I WOULD B E HAPPY T O ADDRESS . T H E C O U R T: THAT' S OKAY . I WAS REALLY

A S K I N G F O R YOUR I N T E G R A T I O N, IF YOU WILL, OF T H E JANUARY 12T H ARGUMENTS THAT A R E BEFORE T H E C O U R T. Y O U HAVE NOTHING NEW ON T H E T I M I N G OF ANY INDICTMENT BEYOND WHAT' S I N YOUR PAPERS? MR . C A M P B E L L: T H E C O U R T: DEFENDANTS? MR . P R E S I A D O: INDICTMENT, THE TIMING? T H E C O U R T: BOTH QUESTIONS . THE WITH RESPECT T O THE THAT' S CORRECT .

IS THAT TRUE F O R ALL T H E

IMPLICATIONS O F T H E JANUARY 1 2TH DISCOVERY O R D E R
7

09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:55AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM

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

A N D T H E TIMING OF T H E INDICTMENT . MR . P R E S I A D O: WITH RESPECT T O THE TIMING

OF T H E INDICTMENT , THAT IS CORRECT, WITH RESPECT T O MY CLIENTS AS WELL, YOUR H O N O R. I WOULD LIKE T O A D D HOW T H E O R D E R FITS INTO THE M O T I O N T O STAY OTHER THAN WHAT W A S STATED BY MR . CAMP BELL. I THINK, IF ANYTHING , I T HIGHLIGHTS T H E NEED FOR A STAY PRIMARILY BECAUSE I T'S N O W S E T UP THAT THERE WILL B E PIECEMEAL LITIGATION T O THE EXTENT THIS CASE PROCEEDS, PARTICULARLY WITH RESPECT TO THE DISCOVERY W H E R E I T'S UNDERSTOOD AND AGREED THAT THE INDIVIDUALS D O NOT HAVE T O PARTICIPATE IN DISCOVERY W H I L E T H E COURT HAS ORDERED THAT T H E CORPORATE DEFENDANTS DO. THINK THAT PLAYS INTO A STAY. IT ALSO AFFIRMED THAT T H E R E'S NO QUESTION THAT THE PARALLEL PROCEEDINGS , T H E CRIMINAL PROCEEDING AND T H E C I V I L PROCEEDING , A R E BASED ON THE SAME ALLEGED WRONG AGAINST THE DEFENDANTS. THERE 'S NO QUESTION ABOUT THAT N O W AFTER THE ORDER . SO I THINK THOSE TWO FACTS PLAY INTO T H E APPLICATION . T H E C O U R T: THANK Y O U. SO I

MR . FOREMAN , D O Y O U HAVE A N Y T H I N G T O A D D
8

09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:56AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM

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

BEFORE I HEAR FROM COUNSEL ? MR . FOREMAN : MR. FOREMAN: YOUR HONOR ,

AS F A R A S YOUR DISCOVERY O R D E R, I D O N' T T H I N K I T H A D, AS I READ IT , U N L E S S I'M READING IT WRONG, PARTICULARLY I M P A C T ON MR. DUNNING OR DEI . WE A R E I N T H E PROCESS O F COMPLYING WITH JUDGE TRUMBULL 'S ORDER WITH RESPECT TO T H E T W O ELEMENTS THAT SHE IDENTIFIED THAT A F F E C T E D M Y CLIENTS, A N D I HAVE BEEN TALKING WITH EB A Y'S COUNSEL TO COMPLY WITH THAT O R D E R. T H E C O U R T: OKAY. T H A N K Y O U.

MR . C A M P B E L L:

I WOULD POINT OUT ON T H E

QUESTION OF THIS INFORMATION FROM T HE U.S . ATTORNEY , I AGREE WITH WHAT M Y C O-COUNSEL HAVE SAID, B U T I BELIEVE THAT D PS' S COUNSEL SUBMITT E D A L E T T E R, I T H I N K I T W A S TO JUDGE TRUMBULL, B U T A N YW A Y, INDICATING THAT T H E U .S. ATTORNEY H A D SUBSEQUENTLY REFUSED TO HAVE ANY FURTHER DISCUSSION WITH DPS 'S COUNSEL A B O U T TIMING. A N D I THINK WHILE THAT' S N O T SUBSTANTIVE INFORMATION , I THINK IT SUPPORTS EVEN IF YOU RECOLLECT T H E FACT A S T O WHAT T H E U .S. ATTORNEY H A D EARLIER SAID ABOUT THE EMINENT PROSPECT O F A N INDICTMENT, BECAUSE BASICALLY T H E U .S. ATTORNEY N O W IS CLAMMING UP .
9

09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:57AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM

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

AND I THINK THE REASONABLE INFERENCE FROM THAT IS THAT THEY A R E D O I N G EXACTLY WHAT THEY ORIGINALLY SAID A N D THEY A R E GETTING R E A D Y F O R AN INDICTMENT SOMETIME EARLY THIS YEAR . T H E C O U R T: A L L R I G H T. MS . B U N Z E L: T H A N K Y O U, YOUR HONOR. OKAY. T H A N K Y O U.

I THINK THE COURT 'S QUESTION IS EXACTLY T H E R I G H T O N E TO BEGIN WITH. T H E C O U R T'S RULING O N

EB A Y' S MOTIONS TO C O M P E L E S S E N T I A L L Y E S T A B L I S H E S THAT SUBSTANTIAL DISCOVERY CAN NOW PROCEED WITHOUT IMPLICATING ANYONE'S FIFTH AMENDMENT RIGHTS. A N D U N D E R KEATING , THAT 'S THE THRESHOLD ARE THERE FIFTH AMENDMENT R I G H T S THAT A R E

IMPLICATED? A N D A T THIS POINT IN THESE PROCEEDINGS , R E A L L Y LOOKING AT WHERE WE A R E R I G H T N O W, WHAT DISCOVERY I S O U TSTANDING, WHAT T H E DEFENDANTS HAVE BEEN ORDERED T O PRODUCE , T H E ANSWER TO THAT IS SIMPLY N O. T H E C O U R T H A S ORDERED DISCOVERY TO PROCEED IN THE WAYS THAT I T H A S ORDERED, NO FIFTH AMENDMENT R I G H T S ARE IMPLICATED. T H E C O U R T: THAT COULD ALSO APPLY T O

ANSWERING THE COMPLAINT .
10

09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:58AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM

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

MS . B U N Z E L: YOUR HONOR.

THAT 'S EXACTLY R I G H T,

A N D WITH RESPECT TO THE INDICTMENT, N O W WE 'VE P U S H E D I T T O A P R I L. WE HAVE BEEN HEARING F O R

OVER A YEAR N O W, IN THIS CASE ALONE , L O N G E R THAN THAT IF YOU LOOK AT THE COMMISSION JUNCTION CASE, THAT THIS INDICTMENT IS C O M I N G, COMING A R O U N D T H E C O R N E R EVEN AS WE SPEAK . T H E FACT OF T H E M A T T E R IS WE JUST C A N' T KNOW WHETHER A N INDICTMENT IS C O M I N G O R N O T. AND I

WOULD URGE THE COURT TO LOOK AT THE DECLARATIONS THAT HAVE BEEN SUBMITTED. FRANKLY, THERE 'S ONLY O N E OF OUR EIGHT DEFENDANTS, I THINK WE HAVE, THAT'S EVEN BEEN IDENTIFIED AS A T A R G E T. A N D THE REST OF THE

INDIVIDUALS A R E, AT MOST, SUBJECTS. A L L THEY HAVE BEEN ABLE TO R E P O R T I S THAT AUSA WALDINGER H A S SAID THAT HE WILL SEEK AN INDICTMENT. THAT 'S THE SAME STATEMENTS THAT A R E

MADE IN MANY O T H E R S T A T E C A S E S INCLUDING APPLIED MATERIALS FROM JUDGE WHYTE. THERE THEY HAD A DECLARATION SAYING PRECISELY T H E SAME T H I N G. AN INDICTMENT. UNTIL WE ACTUALLY S E E A N INDICTMENT , W E
11

T H E AUSA WILL BE SEEKI N G

09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 09:59AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM

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

D O N'T KNOW WHO WILL BE CHARGED, WE DON 'T KNOW WHAT WILL BE CHARGED, WE DON 'T KNOW WHETHER SOME DEFENDANTS ARE COOPERATING OR WILL BE OFFERED IMMUNITY . CONCERNS . T H E C O U R T: A N D T H E R E M A Y BE EITHER A THEY W O N' T HAVE A N Y F I F T H AMENDMENT

DISCRETIONARY BASIS OR REQUIREMENT FOR A STAY ONCE AN INDICTMENT ISSUES . MS . B U N Z E L: YOUR HONOR , I THINK ONCE AN

INDICTMENT ISSUES THEN WE WILL A L L LOOK A T I T. THEN WE WILL KNOW W H O I S CHARGED A N D WHAT THEY ARE CHARGED WITH. WE WILL KNOW WHAT S T A T U S THIS CASE

IS IN , H A S DISCOVERY BEEN ABLE T O PROCEED , A R E WE C L O S E R T O MEDIATION OR SETTLEMENT. FRANKLY, T H E PARTIES MIGHT BE IN A POSITION AT THAT POINT TO AGREE UPON SOME FORM OF STAY IF ONE IS APPROPRIATE . THERE ARE LOTS OF

CASES WHERE AN INDICTMENT ISSUES A N D S T I L L N O STAY IS GRANTED. SO I THINK WE JUST C A N' T A S S E S S IT UNTIL THAT POINT. T H E C O U R T: A N D THEN I HAD O N E O T H E R WHAT O NGOING HARM IS

QUESTION F O R E BAY WHICH IS : THERE ?

OTHER THAN T H E DESIRE TO G E T T H E CASE OVER

WITH AND TO G E T C O M P E N S A T E D F O R THE HARM THAT W A S
12

10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:00AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM

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

DONE, FROM WHAT I C A N TELL THERE 'S NO ONG O I N G HARM HERE. SO T H E ONLY PREJUDICE THAT EB A Y WOULD S U F F E R FROM A STAY I S I T W O U L D HAVE TO WAIT TO GET THE SIMPLE REMEDY . MS . B U N Z E L: WELL , YOUR HONOR , I THINK

T H E PREJUDICE ANALYSIS WITH RESPECT TO EB A Y HAS T W O FACTORS TO IT. FIRST , I T'S WITH RESPECT T O O U R DAMAGES CLAIM . AND THERE A R E SEVERAL CASES IN WHICH T H E

COURTS HAVE SAID THAT DELAYING ESPECIALLY A FRAUD V I C T I M'S PURSUIT OF DAMAGES DISCOVERY WHILE THE DEFENDANTS DEPLETE T H E I R RESOURCES IN DEFENDING AGAINST A C R I M I N A L CASE OR FIGHTING AGAINST A CRIMINAL INVESTIGATION, THAT IS PREJUDICE . THAT' S PRECISELY THE BASIS OF T H E R U L I N G IN APPLIED MATERIALS . PREJUDICE T O E BAY . T H E O T H E R T H I N G THAT 'S IMPORTANT TO REMEMBER IS THAT WE HAVE ALSO REQUESTED INJUNCTIVE RELIEF HERE . AND T H E C A S E S ALSO MAKE CLEAR THAT SO THAT I S O N E ASPECT OF T H E AND

WHEN A PLAINTIFF IS SEEKING INJUNCTIVE R E L I E F THERE 'S SIMPLY NO BASIS TO POSTPONE THAT KIND O F RECOVERY . ACTUALLY , S I N C E W E D O N' T HAVE DISCOVERY
13

10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:01AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM

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

Y E T, WE DON 'T REALLY KNOW IF THERE' S O NGOING HARM. WE D O N'T KNOW WHAT T H E DEFENDANTS HAVE DONE WITH THEIR NEFARIOUS CODE . ARE AFFILIATING WITH . WE DON 'T KNOW W H O ELSE THEY WE JUST S I M P L Y DON 'T KNOW.

SO I DON 'T THINK THERE' S A BASIS TO POSTPONE THAT DISCOVERY TO EB A Y. WE COULD BE

PREJUDICED IN THE MEANWHILE FROM GETTING THE REMEDIES THAT WE ARE SEEKING. A N D SINCE THERE' S N O

BASIS F O R A STAY THERE' S JUST NO POINT IN DENYING US THOSE REMEDIES . T H E C O U R T: OKAY. A L L RIGHT.

COUNSEL, HERE' S WHAT I' M G O I N G T O D O - I' M S O R R Y, DO YOU HAVE SOMETHING TO S A Y? MR . C A M P B E L L: OF PREJUDICE. IN TERMS OF T H E E X P E N D I T U R E O F FUND S I N TERMS OF A DEFENSE COUNSEL DEFENDING T H E CASE, A STAY WOULD ACTUALLY ALLOW FUNDS NOT TO BE EXPENDED IN THIS CASE. A N D S O, SUBSTANTIAL -RIGHT . SO I DON 'T THINK THAT'S AN JUST ADDRESSING THE ISSUES

T H E C O U R T:

MR . C A M P B E L L: ISSUE .

IN TERMS OF T H E INJUNCTIVE R E L I E F C L A I M, THERE 'S NO QUESTION THE DEFENDANTS WERE TERMINATED FROM THE PROGRAM. A S S E T FORTH IN PLAINTIFF 'S OWN
14

10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:02AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM 10:03AM

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

COMPLAINT, THAT H A P P E N E D I N JUNE OF 2007. SO IN TERMS OF ON GOING HARM, THAT D O E S N'T SEEM TO HAVE A N Y BASIS. T H E C O U R T: S I R? AND JUST QUICKLY,

MR . P R E S I A D O:

YOUR HONOR, I THINK WHAT M A Y BE OVERL O O K E D HERE IS T H E RELATIONSHIP BETWEEN E BAY A N D T H E UNITED S T A T E S ATTORNEY . AS WE DOCUMENT IN O U R P A P E R S, IT 'S THE S T A T E D MOTIVATION OF T H E U N I T E D STATES ATTORNEY , PARTICULARLY T H E CHIP UNIT , T H E STATE OF MODE O F OPERATION T O WORK SYMBIOTICALLY WITH THE TECH COMMUNITY, SUCH A S E BAY , WITH RESPECT TO THESE ALLEGED CYBER CRIMES . SO IT 'S NOT A TYPICAL SITUATION WHERE THE DEFENDANT C O M E S I N A N D SAYS, I'M BEING INVESTIGATE D BY T H E GOVERNMENT . I THINK I F YOU LOOK A T THE

PARTICULAR ASPECT S O F THIS CASE IT SEEMS TO ME, A N D JUST BASED ON THE FACT THAT E BAY 'S INVESTIGATION ENDED WHEN THE ATTORNEY GENERAL STEPPED I N A N D BEGAN H I S INVESTIGATION , I THINK THAT SHOWS, AS THEY STATED ON THEIR W E BSITE, THAT THE GOVERNMENT IS ATTEMPTING TO WORK HAND -IN -HAND WITH T H E TECH COMMUNITY O N THESE ISSUES. SO IT SEEMS TO ME THAT WHAT C A N' T B E
15

10:03AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:04AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM

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

OVERL O O K E D IS THAT T H E POTENTIAL PREJUDICE I S GREATER HERE BECAUSE T H E SHARING OF INFORMATION , A S IS S T A T E D O N T H E I R WEBSITE . T H E C O U R T: OKAY. G O T IT.

L E T'S DO THIS.

I 'M GOING TO GIVE Y O U A

C M C DATE , F E B R U A R Y 2 6TH , S O FOUR WEEKS FROM TODAY. L E T'S S E E WHAT HAPPENS. I' LL ISSUE ORDERS ON T H E PENDING MOTIONS B U T WHAT I WANT T O D O I S KEEP A CLOSE EYE ON WHAT' S GOING WITH REGARD TO T H E P R O S E C U T I O N. AND IF YOU IF

HEAR ANYTHING IN THE MEANTIME , L E T ME KNOW.

THERE 'S NOTHING N E W ON THE 26 TH OF FEBRUARY WE CAN CONTINUE T H E DATE ANOTHER 30 DAYS O R S O. I WILL TELL YOU M Y INCLINATION. SET O N THIS . I WILL THINK ABOUT IT , B U T MY I AM NOT

INCLINATION IS TO ALLOW T H E S T A T U S QUO TO CONTINUE , G E T SOME ANSWERS FROM T H E CORPORATE DEFENDANTS AND THEN SEE WHAT HAPPENS WITH T H E P R O S E C U T I O N. B U T I 'M GOING TO THINK THAT THROUGH BEFORE I MAKE A FINAL ORDER I N THAT REGARD. W A N T E D T O GIVE Y O U A HEADS UP ABOUT IT . MS . B U N Z E L: YOUR HONOR , A S A POINT OF BUT I

CLARIFICATION, WHEN YOU S A Y YOUR INCLINATION IS TO ALLOW T H E S T A T U S QUO TO CONTINUE , DOES THAT MEAN INCLUDING THE STATUS QUO O F YOUR ORDER WITH RESPECT
16

10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:05AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM

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

TO DISCOVERY? T H E C O U R T: T H E DISCOVERY ORDER, A N D I

THINK IT 'S IMPLICIT IN THAT THAT I WOULD GRANT YOUR M O T I O N T O S T R I K E AND D I R E C T T H E CORPORATE DEFENDANTS TO FILE ANSWERS THAT COMPLY WITH THE RULES . B U T THAT 'S TENTATIVE . THE MATTER SOME FURTHER THOUGHT. THERE WILL BE A WRITTEN ORDER . I'M I A M GOING T O GIVE

TELLING YOU THIS BECAUSE I D O N'T WANT PEOPLE TO BE GUESSING WHAT I'M THINKING . BUT UNTIL Y O U G E T THE

WRITTEN ORDER, D O N'T ASSUME A N Y T H I N G. MR . C A M P B E L L: POINT . WITH RESPECT T O CONSIDERING THESE MATTERS, IT MIGHT MAKE SENSE FROM O U R STANDPOINT TO , I N O R D E R T O P R E S E R V E T H E RELIEF WE A R E REQUESTING BY WAY OF M O T I O N, TO HAVE T H E EFFECT OF T H E JANUARY 12 TH ORDER NOT TAKE EFFECT UNTIL T H E ORDER ON T H E PRESENT ISSUE F O R STAY . T H E C O U R T: COMMENT I D I D. I THINK THAT'S W H Y I MADE THE YOUR HONOR, O N E F I N A L

A T THE MOMENT , YOU SHOULD ASSUME

T H E JANUARY 12 TH ORDER IS IN EFFECT . I DO NOT KNOW WHAT T H E DEADLINE DATES ARE F O R COMPLIANCE , A N D PERHAPS Y O U CAN TALK WITH
17

10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:06AM 10:07AM 10:07AM 10:07AM 10:07AM 10:07AM 10:07AM

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

COUNSEL ABOUT THAT. WHAT I M E A N T B Y KEEPING S T A T U S Q U O IS WHERE WE A R E N O W IN TERMS OF THIS CASE IS I MADE A N ORDER ON JANUARY 12T H W H I C H REFLECTED MY VIEW O F T H E 2 5TH AMENDMENT A S I T W A S TEED U P B Y THAT DISPUTE. THAT' S T H E OPERATIVE VIEW AND THAT' S W H Y I' M I N C L I N E D T O G R A N T E BAY 'S MOTION TO S T R I K E WITH , OBVIOUSLY, LEAVE TO FILE A N AMENDED A N S W E R. A N D I 'M NOT INCLINED TO STAY THE M A T T E R AT THIS POINT, B U T I DO WANT TO KEEP A CLOSE E Y E O N IT BECAUSE THINGS C A N H A P P E N. I DON 'T WANT ANYBODY TO G E T C A U G H T IN A SITUATION WHERE NINE MONTHS FROM NOW W E ARE STILL WAITING FOR T H E U .S. ATTORNEY . ACCEPTABLE SITUATION . I KNOW THAT UNIT PRETTY WELL. IN THIS COURT ALL T H E TIME . I SEE THEM THAT'S N O T A N

IF THEY'R E INDICATING

THAT THEY A R E GOING TO BE BRINGING DOWN A N INDICTMENT SOON, I T H I N K I T'S LIKELY THEY WILL. A N D I WOULD LIKE TO KEEP A CLOSE E Y E O N THINGS. IF THERE 'S AN INDICTMENT, THEN W E HAVE TO

RECALIBRATE T H E ENTIRE CASE. A L L R I G H T. THANK Y O U.

MATTER SUBMITTED.
18

10:07AM 10:07AM 10:07AM

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

MS . B U N Z E L: MR . C A M P B E L L:

T H A N K Y O U, YOUR HONOR. THANK Y O U, YOUR H O N O R.

(WHEREUPON, T H E PROCEEDINGS I N THIS MATTER WERE CONCLUDED.)

19

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

CERTIFICATE OF REPORTER

I, T H E UNDERSIGNED O F F I C I A L C O U R T REPORTER OF T H E U N I T E D STATES DISTRICT COURT F O R THE NORTHERN DISTRICT O F CALIFORNIA , 280 SOUTH FIRST S T R E E T, SAN JOSE, CALIFORNIA, DO H E R E B Y CERTIFY: THAT THE FOREGOING TRANSCRIPT , CERTIFICATE INCLUSIVE, CONSTITUTES A TRUE , FULL AND CORRECT TRANSCRIPT O F M Y SHORTHAND NOTES TAKEN AS SUCH OFFICIAL COURT REPORTER OF THE PROCEEDINGS HEREINBEFORE E N T I T L E D A N D REDUCED B Y C O M P U T E R-A I D E D TRANSCRIPTION TO THE BEST OF MY ABILITY.

__ ___ ___ ___ ___ ___ ___ ___ ___ SUMMER A . CLANTON , C S R, C R R CERTIFICATE NUMBER 13185