DS9 Document EFTA00788010

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 l'ac I UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA IN RE: CASE NO. 09-34791-RBR ROTHSTEIN ROSENFELDT ADLER, PA, Debtor. ECF #6418, 6421 August 17, 2018 The above-entitled cause came on for hearing before the Honorable RAYMOND B. RAY, one of the Judges in the UNITED STATES BANKRUPTCY COURT, in and for the SOUTHERN DISTRICT OF FLORIDA, at 299 E. Broward Blvd., Fort Lauderdale, Broward County, Florida on August 17, 2018, commencing at or about 10:30 a.m., and the following proceedings were had. Transcribed from a digital recording by: Cheryl L. Jenkins, RPR, RMR OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788010 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 P:.tle 2 APPEARANCES: SEARCY DENNY SCAROLA BARNHART & SHIPLEY, by JACK SCAROLA, Esquire (via telephone) DAVID VITALE, Esquire (via telephone) On behalf of Bradley J. Edwards EDWARDS POTTINGER, by BRITTANY N. HENDERSON, Esquire On behalf of Farmer Jaffe Weissing LINK & ROCKENBACH, by SCOTT LINK, Esquire and RICE PUGATCH ROBINSON STORFER & COHEN, by CHAD P. PUGATCH, Esquire On behalf of Jeffrey Epstein CARLTON FIELDS, BY NIALL McLACHLAN, Esquire On behalf of Fowler White Barnett, P.A. PAUL G. CASSELL, Esquire (via telephone) On behalf of LM, EW and Jane Doe ALSO PRESENT ECRO - Electronic Court Reporting Operator OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788011 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 Page 3 THE COURT: Good morning. Please be seated. Rothstein Rosenfeldt & Adler. MR. McLACHLAN: Good morning, your Honor. Niall McLachlan of Carlton Fields on behalf of Fowler White Burnett, P.A. MR. PUGATCH: Good morning, your Honor. Chad Pugatch, P-u-g-a-t-c-h, here as co-counsel on behalf of Jeffrey Epstein. Mr. Scott Link, L-i-n-k, my co-counsel is also here in Court. MR. LINK: Good morning, your Honor. MS. HENDERSON: Good morning, your Honor. Brittany Henderson on behalf of Farmer Jaffe Weissing. MR. VITALE: Good morning, your Honor. David Vitale on behalf of Bradley Edwards. MR. SCAROLA: And Jack Scarola by telephone, also on behalf of Bradley Edwards, your Honor. Good morning. MR. CASSELL: And good morning, your Honor. On the telephone this is Paul Cassell for LM, EW and Jane Doe. THE COURT: Hang on. Let me finish my notes here. All right. Motion to reschedule, Docket Entry 6418, motion for protective order, Docket Entry 6421. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788012 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 Page 4 MR. McLACHLAN: Yes, Judge. THE COURT: All right. State your name for the record before you address the Court. MR. PUGATCH: Judge, if I may? Chad Pugatch. I think that it may depend on which matter you may want to take first. THE COURT: All right. We'll do the motion to reschedule the show cause hearing. MR. PUGATCH: I don't think anybody on our side has opposed that. We expressed -- including Mr. Edwards -- medical issues. We do not oppose a continuance of the matter. THE COURT: What's the status of discovery? MR. PUGATCH: Discovery has really not occurred yet. The depositions have been rescheduled several times for various reasons, and there is an objection on our part, and a motion for protective order on Mr. McLachlan's part to the written discovery that's been requested. THE COURT: Well, that will be heard in a minute. MR. PUGATCH: Yes. THE COURT: How long should I reschedule the show cause hearing out, how far in advance, 60 days? OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788013 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 Page 5 MR. PUGATCH: I think the parties are requesting either late September or early October, Judge, if possible. MR. McLACHLAN: Judge, Niall McLachlan for Fowler White. I think Fowler White would prefer around mid-October, only because our client representative is going to be -- it's going to be very difficult for him to schedule anything during much of September. So we don't want to get up against the date of the hearing and still be having problems with discovery. So we'd prefer mid-October, if that's possible. MR. PUGATCH: On our end, Judge, whatever accommodates -- MR. VITALE: Your Honor? MR. PUGATCH: -- the parties. THE COURT: Yes. MR. VITALE: David Vitale. We are also fine with mid-October, your Honor, based on those concerns raised. THE COURT: All right. It will be late October. Mr. McLachlan, get ahold of my staff. THE CLERK: I'll do the order continuing. THE COURT: All right. We'll do the order continuing. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788014 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 Page 6 MR. McLACHLAN: Thank you, your Honor. THE COURT: All right. Motion for protective order. MR. McLACHLAN: Thank you, Judge. Niall McLachlan again for Fowler White. You'll remember what this case is about, Judge. There was discovery in late December. Fowler White printed the documents, had them Bates numbered pursuant to the agreement of the parties and this Court's order. About seven and a half years later Mr. Epstein's new counsel -- Fowler White had represented Epstein back in 2010, through early 2012. In early 2018 Mr. Epstein's new counsel came and said I need to see your files. There were certain documents that were copied, and then Mr. Epstein's new counsel, Link & Rockenbach, said just send us all the documents. Fowler White sent the boxes, and apparently in one of those boxes, according at least to the motion for order to show cause, there was a --- THE COURT: When the boxes were sent, there was no inventory, just 26 boxes? MR. McLACHLAN: I don't think -- no, an inventory I don't believe was taken at the time the boxes were sent. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788015 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 l' ac 7 THE COURT: Okay. MR. McLACHLAN: I'm not entirely sure about that, but that's my understanding at this point, Judge. So we appeared before your Honor on the Farmer Jaffe and Edwards, and the intervenor's motion for entry of an order to show cause. They were contending that in one of those boxes was a CD of the documents, and that Fowler White was not supposed to retain an image of the documents on their copier or otherwise. THE COURT: Or a list, and apparently all 27,500 pages were copied on the disk. MR. McLACHLAN: Well, yes, Judge, in order to print the documents, and in response to -- as we've said in our response for -- motion for order to show cause, they had to put the documents on to a new disk to put the Bates numbers on them. So that's what was done. THE COURT: And so it was done after the discovery was completed -- MR. McLACHLAN: No. THE COURT: -- because it was Bates -- the Bates number was on them. MR. McLACHLAN: Well, the documents were turned over by the trustee to the Special Master. Then Farmer Jaffe and Fowler White agreed that the Special Master would give the disk to Fowler White. Fowler White OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788016 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 Page 8 would then print and Bates number the documents. So in order to do that you have to create the CD that superimposes the Bates number over the documents. They were then printed and sent in seven boxes to Farmer Jaffe two days after we received the CD. There was no -- from what we've seen, certainly no copy of the CD was kept, or was copied after that date. THE COURT: All right. MR. McLACHLAN: So anyway, the contention is, as I'm sure your court -- as your Honor remembers, that Farmer -- that Fowler White somehow had a copy of the CD in its files when it delivered the 17 or 18 boxes to Mr. Epstein's new counsel. The CD was in the box. Now, we appeared before your Honor on April 13th. All of the moving parties, Mr. Edwards, Farmer Jaffe and the intervenors were seeking voluminous paper discovery, and your Honor said, we're not having that, you can have two depositions, you can depose a representative of Fowler White and you can depose Mr. Epstein, and a representative of Link & Rockenbach, Mr. Epstein's new counsel. There was no reference to paper -- there was no -- your Honor basically said we're not having paper discovery. That's certainly the way the transcript reads, OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788017 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 Page 9 and that's what he understood at the hearing. The order to show cause also says their discovery will be depositions of Epstein, Link & Rockenbach and Fowler White concerning the CD. No reference to paper discovery being allowed. What we now have received is this subpoena that's duces tecum that contains an incredibly broad scope of documents. Now, we believe that --- THE COURT: And who issued the subpoena? MR. McLACHLAN: That was issued by Farmer Jaffe, and the document request, which is attached to our motion for protective order, is extraordinarily broad. First, your Honor's rulings cause, this is not a I think it's pretty clear from orally and in the order to show paper discovery case. They get to take the depositions to see if we can say what happened to the disk. If your Honor decides that that is not correct, I think the requests as drafted are incredibly overbroad. I can address that now, or I can hold until your Honor decides the initial issue. THE COURT: Well, the boxes were in storage from May 2012 until March 2018. MR. McLACHLAN: January 2018 when they were OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788018 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 Page 10 pulled from storage for Link & Rockenbach to come and look at them. THE COURT: So is there any evidence, any indication, any claim that during that time period the information contained on the disk was used by anyone? MR. McLACHLAN: Absolutely none, Judge. Absolutely none. THE COURT: Not that I've seen in the case so far. MR. McLACHLAN: Correct. THE COURT: So, the question then comes in, how did the disk get in the box, and what happened to the disk after the boxes were delivered. MR. McLACHLAN: After the boxes were delivered from Fowler White to Link & Rockenbach? THE COURT: Yes. MR. McLACHLAN: Well, yes, Judge, that's kind of --- THE COURT: They were apparently used in the state court litigation, the information was, which was brought to the state court judge's attention and he has dealt with it. MR. McLACHLAN: He is dealing with that, correct. That's correct, Judge, yes. THE COURT: So it's dealt with. So the OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788019 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 Page 11 question that remains in front of me is, was there a violation of the order, my order, was it a knowing and intentional violation and, if so, what damages were arising from it. MR. McLACHLAN: Yes, Judge, I agree with that. THE COURT: Okay. All right. Let me hear from the party requesting the discovery. MR. PUGATCH: Judge, Chad Pugatch, again. If I may just add, so the Court has a complete picture on this. On behalf of Mr. Epstein, we did not move for a protective order, but we got a very similar discovery request, in the form of the notice of taking deposition duces tecum. It was actually issued by Searcy Denny, on behalf of Mr. Edwards, and we made an appropriate written objection. That written objection is at ECF Number 6388. It's not set for hearing today, but it's the exact same issue concerning the exact same discovery, and you specifically in the transcript of the hearing, as the discovery request was sought to be expanded, said I'm not dealing with the state court issues, don't bring the state court issues here. I'm paraphrasing. So, we had the same objection, and your OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788020 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 Page 12 ruling on this would effect us exactly the same way. THE COURT: All right. Let me hear from the party seeking the discovery. MR. VITALE: Good morning, your Honor. David Vitale on behalf of Mr. Edwards. Your Honor, in the show cause order that your Honor issued, you did allow for three depositions, the deposition of Mr. Epstein, the deposition of the corporate representative of both Link & Rockenbach and Fowler White. Your Honor also ordered that the parties are to exchange exhibit binders a week before the show cause hearing. So your Honor's written order does contemplate that there would be discovery taken in the case, but the issue of --- THE COURT: We use the standard evidentiary hearing order. It's the standard order that I use. MR. VITALE: Yes. THE COURT: My question is, is that MR. VITALE: Understood. THE COURT: There are claims for damages by the law firm, by Mr. Thompson, is it -- MR. McLACHLAN: Edwards, Judge. THE COURT: Edwards. MR. McLACHLAN: Yes, Edwards. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788021 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 Page 13 MR. VITALE: Edwards. THE COURT: -- and the three Jane Does. MR. VITALE: Yes, sir. THE COURT: So those damages would arise out of the issue of the box, the disk being in the box in the basement for six or seven years, and once the boxes got out of the basement and got into the hands of the current lawyers. MR. VITALE: Two points on that, your Honor. The first one is that the issue of the location of the box, we have not yet taken discovery on that. So we've been told that the chain of custody of the disk, in unverified pleadings, is that the disk was put in a box, kept in storage for eight years, and was not discovered until the Link 6 Rockenbach law firm received the disk, I believe in February of this year. However, our duces tecum request, in part, your Honor will see Numbers 2, 3 and 4, played out by timeframe whether or not Fowler White exchanged any communications regarding the subject disk, or any documents derived from the subject disk from December of 2010 through today. One of the issues they raised in their motion for protective order is that we are seeking privileged documents because it's attorney/client OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788022 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 Page 14 communication. Well, two issues. The first is we're entitled to a privilege log. The second more important issue, your Honor, is that if there are responsive documents where Fowler White is discussing the disk or the contents of the disk between December 2010 and February 2018, that would suggest that some of the representations being made as to where the location of the disk was for the last eight years are not correct. The second point I would make, your Honor, is that although we are entitled to take the deposition of a corporate representative of Fowler White in this case regarding the chain of custody of the disk, and the documents derived from the disk, we should not be limited to the testimony given. We should have the ability to take limited written discovery to allow us to challenge the credibility of the testimony of Fowler White's corporate representative. So, to just limit discovery (sound cut out) -- ability --- THE COURT: You're not present in the courtroom, so you're fading out and I'm not hearing you. MR. VITALE: I apologize, your Honor. Are you able to hear me a little better now? THE COURT: Yes. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788023 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 Page 15 addition raise an me there MR. VITALE: Thank you, sir. So my second point that I was making, in to the fact that if there are (inaudible) they attorney/client privilege objection, that tells are documents that are responsive to Requests 2 through 4, that would suggest that some of the representations being made regarding the location of the disk in storage in a box for eight years may not be 100 percent correct. The second point I was making, your Honor, is that in a show cause evidentiary hearing, where we have the burden of proof, Mr. Edwards, as well as Farmer Jaffe and the interpleaders, should have limited document discovery as well corporate representative of Fowler the ability to take so that when a White is testifying as to the chain of custody, for example, we have the ability to seek documentary evidence that could perhaps impeach or contradict the sworn testimony that we've received. And so from a standpoint of whether or not the discovery for an order to show cause, where Mr. Edwards is going to have the burden of proof in this case, to --- THE COURT: But you haven't taken a deposition yet that tells you where Fowler White is coming from. You haven't taken their depo. Why not take their OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788024 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 Page 16 depo and seek further discovery? MR. VITALE: Well, your Honor, I think that the discovery that we're seeking in regards to the deposition as part of our duces tecum is very limited to the topics that your Honor delineated we are allowed to inquire into during the deposition. Now, the deposition itself, and the answers we receive, as well as the documents that are produced in connection with that limited deposition you're allowing could require us perhaps to come before the Court again to take additional discovery, but as your Honor reviews the four very targeted requests that we have in our duces tecum request, the first one is limited to the chain of custody of the disk, and that is clearly relevant and contemplated based on your Honor's order, and the next three are just broken up by timeframe, did Fowler White exchange any communications to any third parties, Mr. Epstein or Link & Rockenbach, concerning the subject disk or the documents derived (inaudible) eight year period that they say the disk was sitting in a box in storage. If the answer is, yes, there are responsive documents, then your Honor is correct, we may want to take some additional discovery, but we won't know that until we take what we believe is a limited form of discovery consistent with your Honor's show cause order. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788025 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 Page 17 THE COURT: All right. Mr. Vitale, did you file a written response to the motion for protective order? MR. VITALE: No, your Honor, we did not, and the reason, very briefly, is initially Fowler White's motion for protective order was combined with an objection to the duces tecum request. We reached out to your JA, I believe on Monday, and the JA requested Fowler White to break out those two issues, and Fowler White filed their motion for protective order separately, I believe perhaps on Tuesday, and it was immediately set for hearing, and we did not have time to prepare --- THE COURT: All right. I'm going to continue the hearing on the motion for protective order to give you time to file a written response. MR. VITALE: Yes, sir, and when would you like us to file that by, your Honor? THE COURT: A written response --- MR. VITALE: Yes, sir. THE COURT: Hold on. Ten days, two weeks? MR. VITALE: Ten days is fine, your Honor. THE COURT: And a written reply, if there is going to be one, within ten days, order continuing the hearing for some 30 days. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788026 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 Page 18 MR. VITALE: Yes, sir. THE COURT: That order by Mr. McLachlan. MR. McLACHLAN: I will prepare and circulate it, Judge. THE COURT: Now, once again, remember it's a narrow issue before me. The question of, was there a knowing breach of the order, and what are the actual damages resulting from that breach. This isn't an open hunting season. MR. VITALE: Yes, sir. THE COURT: All right. See to the orders. MR. McLACHLAN: Thank you, your Honor. MR. PUGATCH: Thank you, Judge. Have a good weekend. your Honor. MR. VITALE: Thank you very much, (Thereupon, the hearing was concluded.) OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788027 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 l'ac I9 CERTIFICATION STATE OF FLORIDA COUNTY OF MIAMI-DADE : I, Cheryl L. Jenkins, RPR, RMR, Shorthand Reporter and Notary Public in and for the State of Florida at Large, do hereby certify that the foregoing proceedings were transcribed by me from a digital recording held on the date and from the place as stated in the caption hereto on Page 1 to the best of my ability. WITNESS my hand this 21st day of August, 2018. CHERYL L. JENKINS, RPR, RMR Court Reporter and Notary Public in and for the State of Florida at Large Commission #GG 138863 December 27, 2021 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788028