The Federal Deposit Insurance Corporation, et al v. Killinger et al

Filing 59

JOINT STATUS REPORT signed by all parties estimated Trial Days: 32. Filed by Plaintiff The Federal Deposit Insurance Corporation. (Attachments: # 1 Exhibit A)(Barton, Walter)

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The Honorable Marsha J. Pechman

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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THE FEDERAL DEPOSIT INSURANCE
CORPORATION, as RECEIVER of
WASHINGTON MUTUAL BANK,

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Plaintiff,

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v.

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KERRY K. KILLINGER, STEPHEN J.
ROTELLA, DAVID C. SCHNEIDER,
LINDA C. KILLINGER, and ESTHER T.
ROTELLA,

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Defendants.

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) NO. 11-459 MJP
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) REVISED JOINT STATUS REPORT
) AND DISCOVERY PLAN
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Pursuant to this Court’s Orders dated April 18, 2011, and July 8, 2011, and Federal

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Rule of Civil Procedure 26(f), counsel for Plaintiff, Federal Deposit Insurance Corporation, as

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Receiver of Washington Mutual Bank (“FDIC” or “Plaintiff’) and counsel for Defendants,

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Kerry K. Killinger, Stephen J. Rotella, David C. Schneider, Linda C. Killinger and Esther T.
Rotella (collectively, “Defendants”) submit this Revised Joint Status Report and Discovery
Plan.

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REVISED JOINT STATUS REPORT
AND DISCOVERY PLAN - 1
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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1.

The FDIC has sued Defendants Kerry K. Killinger, Stephen J. Rotella, and

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David C. Schneider for gross negligence (Count I), ordinary negligence (Count II) and breach

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of fiduciary duty (Count III), including for, inter alia, allegedly failing to properly manage risk

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in WaMu’s home loans portfolio. In addition to these three causes of action, the FDIC also

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claims that Kerry Killinger and his wife, Linda Killinger, and Stephen Rotella and his wife,

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Esther Rotella, engaged in fraudulent conveyances under Washington Revised Code §

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19.40.041 (Counts IV and V). Count VI requests that, pursuant to the powers given to the

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FDIC under 18 U.S.C. § 1821(d)(18)-(19), this Court should freeze the Defendants’ alleged

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fraudulently transferred real estate assets and impose a notice requirement to guard against

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fraudulent transfers during the pendency of this litigation. The Defendants deny the FDIC’s

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allegations against them, and dispute the appropriateness of the entry of any freezing order.

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This is a complex case potentially involving millions of pages of documents, dozens of

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depositions and the likely need for multiple expert witnesses. The parties also anticipate

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significant motion practice during the course of the litigation. Defendants have filed motions to

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dismiss along with supporting memoranda on July 1, 2011. On June 16, 2011, the Court

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approved the following stipulated briefing schedule for the motions to dismiss: the FDIC shall

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file its opposition to the motions on or before August 22, 2011, and Defendants shall file their

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replies on or before September 15, 2011. (See Dkt. No. 50.)

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2.

The parties have engaged former federal Judge Layn Phillips in an effort to

mediate this dispute.

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3.

Mediation efforts have been unsuccessful.

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4.

The parties propose June 1, 2012, as the deadline for joining additional parties to

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this action.
5.

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The parties propose the following discovery plan:
A.

The initial FRCP 26(f) conference was held by telephone on May 16,

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2011. FRCP 26(a) initial disclosures were exchanged on June 6, 2011.

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A Joint Status Report and Discovery Plan was submitted to the Court on

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REVISED JOINT STATUS REPORT
AND DISCOVERY PLAN - 2
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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June 13, 2011 (Dkt. No. 47.) On July 6, 2011, this Court held an initial

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status conference and ordered the parties to submit a revised Joint Status

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Report and Discovery Plan on or before July 20, 2011. (Dkt. Nos. 57,

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58.) Subsequently, counsel for all parties met and conferred by email

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and telephone on numerous occasions, including on July 13, 15, 19 and

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20, 2011. This Revised Joint Status Report and Discovery Plan is the

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result of those conferences and emails.

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B.

The parties anticipate that extensive discovery will be required by both

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sides. The parties do not see any need at this time for a phased fact

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discovery approach; however, Defendants have raised with Plaintiff the

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possibility of bifurcating certain issues. Such bifurcation may include

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phasing of discovery.

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discussing this issue, and Plaintiff intends to make a written proposal to

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Defendants that may obviate the dispute. If the parties do not reach

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resolution of the matter, they will advise the Court.

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C.

See paragraph 8.

The parties have been

Pursuant to Fed. R. Civ. P. 30(a)(2), the parties stipulate or request leave

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of Court to allow up to 140 fact witness depositions collectively. This

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number is 40 less than the previously proposed figure of 180 total

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depositions, and is the result of further discussions among counsel

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regarding the potential overlap in witnesses by both sides. The FDIC has

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identified approximately 57 witnesses who it may wish to depose in this

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matter in addition to the dozens of witnesses it previously interviewed to

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ensure their testimony is available for trial. Taking into account that

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additional depositions may be necessary as discovery progresses, the

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FDIC believes that a total of 70 depositions would be appropriate from

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its standpoint. Defendants have disclosed over 100 witnesses in their

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initial disclosures and believe that many of the individuals they wish to

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REVISED JOINT STATUS REPORT
AND DISCOVERY PLAN - 3
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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depose will overlap with those the FDIC wishes to depose. Thus, the

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parties arrived at a total of 140 potential deponents. Counsel for the

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parties also have agreed to cooperate in the deposition scheduling

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process, including (i) the use of deposition “phases,” (ii) sharing allotted

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deposition time, and (iii) selecting certain depositions for extended

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examination time beyond the seven hours normally permitted under Fed.

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R. Civ. P. 30(d)(1). The parties are currently working in good faith to

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reach a more detailed deposition protocol consistent with these

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parameters. The FDIC further requests, pursuant to Fed. R. Civ. P.

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30(d)(1), that the depositions of Defendants Kerry Killinger, Stephen

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Rotella, and David Schneider each last up to three days with a maximum

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of seven hours of examination time per day. The FDIC believes that this

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extended time is necessary to fully question the Defendants about their

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alleged misconduct, their communications with WaMu risk managers

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and other persons, and the numerous documents and presentations

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authored and reviewed by them over the four-year period discussed in

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the complaint. Defendants do not believe that three days of questioning

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is a reasonable amount of time for these witnesses.

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progresses, the parties will continue to meet and confer to determine if

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they can reach agreement on an appropriate time limit for these three

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depositions.

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D.

Documents Produced in the MDL.

As discovery

The parties have had several

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conversations about how they can minimize the expense of discovery in

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this case. In their initial Discovery Plan, the parties informed the Court

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that they planned to seek the Court’s assistance in modifying the

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protective order in the WaMu MDL to provide the parties access to

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documents produced in that matter.

To avoid unnecessary motion

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AND DISCOVERY PLAN - 4
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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practice, the parties have decided instead to contact the parties/non-

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parties that produced documents in the MDL that are relevant to this

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action (by subpoena, to the extent necessary), and ask the producing

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parties in the MDL to provide the parties and their counsel in this action

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access to the already-produced documents in lieu of making a second

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production of those same documents, subject to the protective order in

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this case that the parties will be proposing to the Court forthwith. (The

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parties in this action will likely also need to seek some additional

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documents from some of those third parties that were not produced in the

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MDL.)

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E.

Party Productions.

The FDIC has preliminarily agreed to provide

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Defendants load files for certain documents processed to date by its

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outside vendor.

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provide the FDIC with load files for certain documents that were

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produced in the MDL, subject to the FDIC’s obtaining permission from,

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or enforcing a subpoena against, the person or entity who originally

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produced those documents in the MDL. The FDIC has informed the

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Defendants that it has a significant volume of additional forensically-

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collected raw data that has not yet been electronically processed. The

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parties have agreed to work together to identify the portion of that data

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that may need to be processed and produced. If the parties are unable to

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agree on the custodians and/or search terms for the additional processing

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of data or on who will pay the costs of any such production, they will

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inform the Court.

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Court pursuant to Rule 26(c) of the Federal Rules of Civil Procedure and

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Local Rule 5(g).

Likewise, Defendants have preliminarily agreed to

A draft Protective Order will be submitted to the

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AND DISCOVERY PLAN - 5
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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6.

The parties propose a deadline of December 1, 2011, for the substantial

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completion of document production in this matter, and a deadline of August 31, 2012, for the

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close of all fact discovery. After the Initial Status Conference on July 6, 2011, counsel for the

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parties met and conferred to determine whether to shorten these dates based on the reduced

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number of depositions discussed above or other factors that could reduce the length of

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discovery in general. After revisiting this issue, counsel continue to believe that it would be

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difficult to shorten the proposed schedule given the substantial document production that has

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yet to begin.

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scheduling challenges, counsel believe the eight-month time frame set forth in the attached

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Scheduling Order at Exhibit A (from January 9, 2012 to August 31, 2012) is necessary, if not

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ambitious. Counsel have also taken into consideration that at least some of the witnesses who

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were deposed in the MDL case will need to be re-deposed in this action because this case

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implicates various issues not raised by the allegations in the MDL. The parties also anticipate

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substantial expert discovery after the close of fact discovery and have allotted what they believe

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to be sufficient time for such expert discovery. For all these reasons, counsel believe the

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proposed schedule at Exhibit A is appropriate for the complexity of this case. Finally, when

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initially submitting this proposed schedule, counsel based the proposal partly on the schedule

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previously approved by this Court in the WaMu MDL.

Further, given the number of anticipated depositions and the associated

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7.

The parties do not consent to the referral of this case to the Magistrate Judge.

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8.

The parties agree that the trial should not be bifurcated between liability and

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damages issues. However, the Defendants propose to bifurcate the gross negligence, ordinary

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negligence and breach of fiduciary duty claims (Counts I, II and III) from the fraudulent

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conveyance and asset freeze claims (Counts IV, V and VI) so that liability on Counts I, II or III

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must first be established before trying the fraudulent conveyance claims. The FDIC continues

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to disagree with the proposed bifurcation of these claims. Nonetheless, as set forth above, the

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parties are working to resolve this issue. If the parties cannot reach agreement through further

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meet-and-confer conferences, they will brief the issue for the Court at an appropriate time.

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AND DISCOVERY PLAN - 6
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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9.

At this time, counsel for the parties do not see any need to modify the pretrial

statements and pretrial order requirements in Local Rules 16 and 16.1.

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10.

See paragraph 5 above.

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The parties anticipate that the case will be ready for trial on September 16, 2013.

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However, this is subject to change based on the course of motion practice, fact discovery and

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expert discovery.

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12.

The FDIC has demanded a jury trial.

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13.

The parties anticipate an eight week trial.

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14.

Trial counsel for the FDIC:

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Barry S. Rosen
Duane F. Sigelko
Mark S. Hersh
Henry Pietrkowski
James A. Rolfes
REED SMITH LLP
10 South Wacker Drive, Suite 4000
Chicago, IL 60606
Telephone: [phone]

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Bruce E. Larson
Walter E. Barton
Dennis H. Walters
KARR TUTTLE CAMPBELL
1201 Third Avenue, Suite 2900
Seattle, WA 98101
Telephone: [phone]

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Leonard J. DePasquale
Counsel
Federal Deposit Insurance Corporation
3501 North Fairfax Drive, VS-B-7058
Arlington, VA 22226
Telephone: [phone]

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AND DISCOVERY PLAN - 7
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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Trial counsel for Kerry Killinger and Linda Killinger:

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Brenda V. Sullivan, Jr.
David D. Aufhauser
Tobin J. Romero
Beth A. Stewart
Steven M. Cady
George W. Hicks
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
Telephone: [phone]

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Barry M. Kaplan
Wilson Sonsini Goodrich & Rosati
Professional Corporation
701 Fifth Avenue, Suite 5100
Seattle, WA 98104-7036|
Telephone: [phone]

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Trial counsel for Stephen Rotella, Esther Rotella and David Schneider:

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Barry R. Ostrager
Mary Kay Vyskocil
Deborah L. Stein
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3954
Telephone: [phone]

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Stephen M. Rummage
Steven P. Caplow
Davis Wright Tremaine LLP
1201 Third Avenue, Suite 2200
Seattle, Washington 98101-3045
Telephone: [phone]

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15.

Each of the Defendants agreed to waive service of the FDIC’s Complaint and to

answer or otherwise plead on or before July 1, 2011, which they have done.
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The parties do not request a scheduling conference prior to entry of the

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scheduling order, unless the Court desires such a conference. The parties have attached as

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Exhibit A hereto a draft agreed Scheduling Order for the Court’s convenience.

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AND DISCOVERY PLAN - 8
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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Dated: July 20, 2011

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Respectfully submitted,

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FEDERAL DEPOSIT INSURANCE
CORPORATION, as Receiver for
WASHINGTON MUTUAL BANK, Plaintiff

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By: s/Walter E. Barton
One of Its Attorneys

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Barry S. Rosen
Duane F. Sigelko
Mark S. Hersh
Henry Pietrkowski
James A. Rolfes
REED SMITH LLP
10 South Wacker Drive
Suite 4000
Chicago, IL 60606
[phone]

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Bruce E. Larson
Walter E. Barton
Dennis H. Walters
KARR TUTTLE CAMPBELL
1201 Third Avenue, Suite 2900
Seattle, WA 98101
Telephone: [phone]
[e-mail]

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Leonard J. DePasquale
Counsel, Federal Deposit Insurance
Corporation
3501 North Fairfax Drive, VS-B-7058
Arlington, VA 22226
[phone]

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AND DISCOVERY PLAN - 9
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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KERRY AND LINDA KILLINGER,
Defendants:

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By:

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s/ David D. Aufhauser
One of Their Attorneys

Barry M. Kaplan
Wilson Sonsini Goodrich & Rosati
Professional Corporation
701 Fifth Avenue, Suite 5100
Seattle, WA 98104-7036
Telephone: [phone]
[e-mail]

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Brenda V. Sullivan, Jr.
David D. Aufhauser
Tobin J. Romero
Beth A. Stewart
Steven M. Cady
George W. Hicks
Williams & Connolly LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
Telephone: [phone]

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STEPHEN AND ESTHER ROTELLA AND
DAVID C. SCHNEIDER, Defendants

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By: s/Steven P. Caplow
One of Their Attorneys

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Stephen M. Rummage
Steven P. Caplow
Davis Wright Tremaine LLP
1201 Third Avenue, Suite 2200
Seattle, Washington 98101-3045
Telephone: [phone]
[e-mail]

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Barry R. Ostrager
Mary Kay Vyskocil
Deborah L. Stein
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017-3954
Telephone: [phone]

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AND DISCOVERY PLAN - 10
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]

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DECLARATION OF SERVICE

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I hereby certify that on July 20, 2011, the foregoing was electronically filed with the

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Clerk of the Court using the CM/ECF system which will send notification of such filing to all

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counsel of record who receive CM/ECF notification, and that the remaining parties shall be

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served in accordance with the Federal Rules of Civil Procedure.

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/s Walter E. Barton
State Bar Number 26408
KARR TUTTLE CAMPBELL
Of Attorneys for Plaintiff
1201 Third Avenue, Ste. 2900
Seattle WA 98101
Telephone: [phone]
Fax: [phone]
E-mail: [e-mail]

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REVISED JOINT STATUS REPORT
AND DISCOVERY PLAN - 11
No. 11-459MJP
#808363 v1 / 44469-001

Law Offices

KARR TUTTLE CAMPBELL
A Professional Service Corporation
1201 Third Avenue, Suite 2900, Seattle, Washington 98101-3028
Telephone [phone], Facsimile [phone]