EFTA00788010.pdf

l'ac I 1 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA 2 3 4 IN RE: CASE NO. 09-34791-RBR 5 ROTHSTEIN ROSENFELDT ADLER, PA, 6 7 Debtor. 8 9 ECF #6418, 6421 10 August 17, 2018 11 12 The above-entitled cause came on for hearing 13 before the Honorable RAYMOND B. RAY, one of the Judges in 14 the UNITED STATES BANKRUPTCY COURT, in and for the 15 SOUTHERN DISTRICT OF FLORIDA, at 299 E. Broward Blvd., 16 Fort Lauderdale, Broward County, Florida on August 17, 17 2018, commencing at or about 10:30 a.m., and the following 18 proceedings were had. 19 20 21 22 23 Transcribed from a digital recording by: Cheryl L. Jenkins, RPR, RMR 24 25 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788010  P:.tle 2 1 2 APPEARANCES: 3 4 SEARCY DENNY SCAROLA BARNHART & SHIPLEY, by JACK SCAROLA, Esquire (via telephone) 5 DAVID VITALE, Esquire (via telephone) On behalf of Bradley J. Edwards 6 7 EDWARDS POTTINGER, by BRITTANY N. HENDERSON, Esquire 8 On behalf of Farmer Jaffe Weissing 9 LINK & ROCKENBACH, by 10 SCOTT LINK, Esquire and 11 RICE PUGATCH ROBINSON STORFER & COHEN, by CHAD P. PUGATCH, Esquire 12 On behalf of Jeffrey Epstein 13 CARLTON FIELDS, BY 14 NIALL McLACHLAN, Esquire On behalf of Fowler White Barnett, P.A. 15 16 PAUL G. CASSELL, Esquire (via telephone) On behalf of LM, EW and Jane Doe 17 18 ALSO PRESENT 19 ECRO - Electronic Court Reporting Operator 20 21 22 23 24 25 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788011  Page 3 1 THE COURT: Good morning. Please be seated. 2 Rothstein Rosenfeldt & Adler. 3 MR. McLACHLAN: Good morning, your Honor. 4 Niall McLachlan of Carlton Fields on behalf of Fowler 5 White Burnett, P.A. 6 MR. PUGATCH: Good morning, your Honor. 7 Chad Pugatch, P-u-g-a-t-c-h, here as co-counsel on behalf 8 of Jeffrey Epstein. Mr. Scott Link, L-i-n-k, my 9 co-counsel is also here in Court. 10 MR. LINK: Good morning, your Honor. 11 MS. HENDERSON: Good morning, your Honor. 12 Brittany Henderson on behalf of Farmer Jaffe Weissing. 13 MR. VITALE: Good morning, your Honor. 14 David Vitale on behalf of Bradley Edwards. 15 MR. SCAROLA: And Jack Scarola by telephone, 16 also on behalf of Bradley Edwards, your Honor. Good 17 morning. 18 MR. CASSELL: And good morning, your Honor. 19 On the telephone this is Paul Cassell for LM, EW and 20 Jane Doe. 21 THE COURT: Hang on. Let me finish my notes 22 here. 23 All right. Motion to reschedule, Docket 24 Entry 6418, motion for protective order, Docket 25 Entry 6421. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788012  Page 4 1 MR. McLACHLAN: Yes, Judge. 2 THE COURT: All right. State your name for 3 the record before you address the Court. 4 MR. PUGATCH: Judge, if I may? Chad 5 Pugatch. 6 I think that it may depend on which matter 7 you may want to take first. 8 THE COURT: All right. We'll do the motion 9 to reschedule the show cause hearing. 10 MR. PUGATCH: I don't think anybody on our 11 side has opposed that. We expressed -- including 12 Mr. Edwards -- medical issues. We do not oppose a 13 continuance of the matter. 14 THE COURT: What's the status of discovery? 15 MR. PUGATCH: Discovery has really not 16 occurred yet. The depositions have been rescheduled 17 several times for various reasons, and there is an 18 objection on our part, and a motion for protective order 19 on Mr. McLachlan's part to the written discovery that's 20 been requested. 21 THE COURT: Well, that will be heard in a 22 minute. 23 MR. PUGATCH: Yes. 24 THE COURT: How long should I reschedule the 25 show cause hearing out, how far in advance, 60 days? OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788013  Page 5 1 MR. PUGATCH: I think the parties are 2 requesting either late September or early October, Judge, 3 if possible. 4 MR. McLACHLAN: Judge, Niall McLachlan for 5 Fowler White. 6 I think Fowler White would prefer around 7 mid-October, only because our client representative is 8 going to be -- it's going to be very difficult for him to 9 schedule anything during much of September. So we don't 10 want to get up against the date of the hearing and still 11 be having problems with discovery. So we'd prefer 12 mid-October, if that's possible. 13 MR. PUGATCH: On our end, Judge, whatever 14 accommodates -- 15 MR. VITALE: Your Honor? 16 MR. PUGATCH: -- the parties. 17 THE COURT: Yes. 18 MR. VITALE: David Vitale. We are also fine 19 with mid-October, your Honor, based on those concerns 20 raised. 21 THE COURT: All right. It will be late 22 October. Mr. McLachlan, get ahold of my staff. 23 THE CLERK: I'll do the order continuing. 24 THE COURT: All right. We'll do the order 25 continuing. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788014  Page 6 1 MR. McLACHLAN: Thank you, your Honor. 2 THE COURT: All right. Motion for 3 protective order. 4 MR. McLACHLAN: Thank you, Judge. 5 Niall McLachlan again for Fowler White. 6 You'll remember what this case is about, 7 Judge. There was discovery in late December. Fowler 8 White printed the documents, had them Bates numbered 9 pursuant to the agreement of the parties and this Court's 10 order. 11 About seven and a half years later 12 Mr. Epstein's new counsel -- Fowler White had represented 13 Epstein back in 2010, through early 2012. In early 2018 14 Mr. Epstein's new counsel came and said I need to see your 15 files. There were certain documents that were copied, and 16 then Mr. Epstein's new counsel, Link & Rockenbach, said 17 just send us all the documents. 18 Fowler White sent the boxes, and apparently 19 in one of those boxes, according at least to the motion 20 for order to show cause, there was a --- 21 THE COURT: When the boxes were sent, there 22 was no inventory, just 26 boxes? 23 MR. McLACHLAN: I don't think -- no, an 24 inventory I don't believe was taken at the time the boxes 25 were sent. OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788015  l'ac 7 1 THE COURT: Okay. 2 MR. McLACHLAN: I'm not entirely sure about 3 that, but that's my understanding at this point, Judge. 4 So we appeared before your Honor on the 5 Farmer Jaffe and Edwards, and the intervenor's motion for 6 entry of an order to show cause. They were contending 7 that in one of those boxes was a CD of the documents, and 8 that Fowler White was not supposed to retain an image of 9 the documents on their copier or otherwise. 10 THE COURT: Or a list, and apparently all 11 27,500 pages were copied on the disk. 12 MR. McLACHLAN: Well, yes, Judge, in order 13 to print the documents, and in response to -- as we've 14 said in our response for -- motion for order to show 15 cause, they had to put the documents on to a new disk to 16 put the Bates numbers on them. So that's what was done. 17 THE COURT: And so it was done after the 18 discovery was completed -- 19 MR. McLACHLAN: No. 20 THE COURT: -- because it was Bates -- the 21 Bates number was on them. 22 MR. McLACHLAN: Well, the documents were 23 turned over by the trustee to the Special Master. Then 24 Farmer Jaffe and Fowler White agreed that the Special 25 Master would give the disk to Fowler White. Fowler White OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788016  Page 8 1 would then print and Bates number the documents. 2 So in order to do that you have to create 3 the CD that superimposes the Bates number over the 4 documents. They were then printed and sent in seven boxes 5 to Farmer Jaffe two days after we received the CD. 6 There was no -- from what we've seen, 7 certainly no copy of the CD was kept, or was copied after 8 that date. 9 THE COURT: All right. 10 MR. McLACHLAN: So anyway, the contention 11 is, as I'm sure your court -- as your Honor remembers, 12 that Farmer -- that Fowler White somehow had a copy of the 13 CD in its files when it delivered the 17 or 18 boxes to 14 Mr. Epstein's new counsel. The CD was in the box. 15 Now, we appeared before your Honor on 16 April 13th. All of the moving parties, Mr. Edwards, 17 Farmer Jaffe and the intervenors were seeking voluminous 18 paper discovery, and your Honor said, we're not having 19 that, you can have two depositions, you can depose a 20 representative of Fowler White and you can depose 21 Mr. Epstein, and a representative of Link & Rockenbach, 22 Mr. Epstein's new counsel. 23 There was no reference to paper -- there was 24 no -- your Honor basically said we're not having paper 25 discovery. That's certainly the way the transcript reads, OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788017  Page 9 1 and that's what he understood at the hearing. 2 The order to show cause also says their 3 discovery will be depositions of Epstein, Link & 4 Rockenbach and Fowler White concerning the CD. No 5 reference to paper discovery being allowed. 6 What we now have received is this subpoena 7 that's duces tecum that contains an incredibly broad scope 8 of documents. 9 Now, we believe that --- 10 THE COURT: And who issued the subpoena? 11 MR. McLACHLAN: That was issued by Farmer 12 Jaffe, and the document request, which is attached to our 13 motion for protective order, is extraordinarily broad. 14 First, I think it's pretty clear from 15 your Honor's rulings orally and in the order to show 16 cause, this is not a paper discovery case. They get to 17 take the depositions to see if we can say what happened to 18 the disk. 19 If your Honor decides that that is not 20 correct, I think the requests as drafted are incredibly 21 overbroad. I can address that now, or I can hold until 22 your Honor decides the initial issue. 23 THE COURT: Well, the boxes were in storage 24 from May 2012 until March 2018. 25 MR. McLACHLAN: January 2018 when they were OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788018  Page 10 1 pulled from storage for Link & Rockenbach to come and look 2 at them. 3 THE COURT: So is there any evidence, any 4 indication, any claim that during that time period the 5 information contained on the disk was used by anyone? 6 MR. McLACHLAN: Absolutely none, Judge. 7 Absolutely none. 8 THE COURT: Not that I've seen in the case 9 so far. 10 MR. McLACHLAN: Correct. 11 THE COURT: So, the question then comes in, 12 how did the disk get in the box, and what happened to the 13 disk after the boxes were delivered. 14 MR. McLACHLAN: After the boxes were 15 delivered from Fowler White to Link & Rockenbach? 16 THE COURT: Yes. 17 MR. McLACHLAN: Well, yes, Judge, that's 18 kind of --- 19 THE COURT: They were apparently used in the 20 state court litigation, the information was, which was 21 brought to the state court judge's attention and he has 22 dealt with it. 23 MR. McLACHLAN: He is dealing with that, 24 correct. That's correct, Judge, yes. 25 THE COURT: So it's dealt with. So the OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788019  Page 11 1 question that remains in front of me is, was there a 2 violation of the order, my order, was it a knowing and 3 intentional violation and, if so, what damages were 4 arising from it. 5 MR. McLACHLAN: Yes, Judge, I agree with 6 that. 7 THE COURT: Okay. All right. Let me hear 8 from the party requesting the discovery. 9 MR. PUGATCH: Judge, Chad Pugatch, again. 10 If I may just add, so the Court has a complete picture on 11 this. 12 On behalf of Mr. Epstein, we did not move 13 for a protective order, but we got a very similar 14 discovery request, in the form of the notice of taking 15 deposition duces tecum. 16 It was actually issued by Searcy Denny, on 17 behalf of Mr. Edwards, and we made an appropriate written 18 objection. That written objection is at ECF Number 6388. 19 It's not set for hearing today, but it's the exact same 20 issue concerning the exact same discovery, and you 21 specifically in the transcript of the hearing, as the 22 discovery request was sought to be expanded, said I'm not 23 dealing with the state court issues, don't bring the state 24 court issues here. I'm paraphrasing. 25 So, we had the same objection, and your OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788020  Page 12 1 ruling on this would effect us exactly the same way. 2 THE COURT: All right. Let me hear from the 3 party seeking the discovery. 4 MR. VITALE: Good morning, your Honor. 5 David Vitale on behalf of Mr. Edwards. 6 Your Honor, in the show cause order that 7 your Honor issued, you did allow for three depositions, 8 the deposition of Mr. Epstein, the deposition of the 9 corporate representative of both Link & Rockenbach and 10 Fowler White. 11 Your Honor also ordered that the parties are 12 to exchange exhibit binders a week before the show cause 13 hearing. So your Honor's written order does contemplate 14 that there would be discovery taken in the case, but the 15 issue of --- 16 THE COURT: We use the standard evidentiary 17 hearing order. It's the standard order that I use. 18 MR. VITALE: Yes. 19 THE COURT: My question is, is that 20 MR. VITALE: Understood. 21 THE COURT: There are claims for damages by 22 the law firm, by Mr. Thompson, is it -- 23 MR. McLACHLAN: Edwards, Judge. 24 THE COURT: Edwards. 25 MR. McLACHLAN: Yes, Edwards. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788021  Page 13 1 MR. VITALE: Edwards. 2 THE COURT: -- and the three Jane Does. 3 MR. VITALE: Yes, sir. 4 THE COURT: So those damages would arise out 5 of the issue of the box, the disk being in the box in the 6 basement for six or seven years, and once the boxes got 7 out of the basement and got into the hands of the current 8 lawyers. 9 MR. VITALE: Two points on that, your Honor. 10 The first one is that the issue of the location of the 11 box, we have not yet taken discovery on that. So we've 12 been told that the chain of custody of the disk, in 13 unverified pleadings, is that the disk was put in a box, 14 kept in storage for eight years, and was not discovered 15 until the Link 6 Rockenbach law firm received the disk, I 16 believe in February of this year. 17 However, our duces tecum request, in part, 18 your Honor will see Numbers 2, 3 and 4, played out by 19 timeframe whether or not Fowler White exchanged any 20 communications regarding the subject disk, or any 21 documents derived from the subject disk from December 22 of 2010 through today. 23 One of the issues they raised in their 24 motion for protective order is that we are seeking 25 privileged documents because it's attorney/client OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788022  Page 14 1 communication. 2 Well, two issues. The first is we're 3 entitled to a privilege log. The second more important 4 issue, your Honor, is that if there are responsive 5 documents where Fowler White is discussing the disk or the 6 contents of the disk between December 2010 and 7 February 2018, that would suggest that some of the 8 representations being made as to where the location of the 9 disk was for the last eight years are not correct. 10 The second point I would make, your Honor, 11 is that although we are entitled to take the deposition of 12 a corporate representative of Fowler White in this case 13 regarding the chain of custody of the disk, and the 14 documents derived from the disk, we should not be limited 15 to the testimony given. We should have the ability to 16 take limited written discovery to allow us to challenge 17 the credibility of the testimony of Fowler White's 18 corporate representative. 19 So, to just limit discovery (sound cut out) 20 -- ability --- 21 THE COURT: You're not present in the 22 courtroom, so you're fading out and I'm not hearing you. 23 MR. VITALE: I apologize, your Honor. Are 24 you able to hear me a little better now? 25 THE COURT: Yes. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788023  Page 15 1 MR. VITALE: Thank you, sir. 2 So my second point that I was making, in 3 addition to the fact that if there are (inaudible) they 4 raise an attorney/client privilege objection, that tells 5 me there are documents that are responsive to Requests 2 6 through 4, that would suggest that some of the 7 representations being made regarding the location of the 8 disk in storage in a box for eight years may not be 9 100 percent correct. 10 The second point I was making, your Honor, 11 is that in a show cause evidentiary hearing, where we have 12 the burden of proof, Mr. Edwards, as well as Farmer Jaffe 13 and the interpleaders, should have the ability to take 14 limited document discovery as well so that when a 15 corporate representative of Fowler White is testifying as 16 to the chain of custody, for example, we have the ability 17 to seek documentary evidence that could perhaps impeach or 18 contradict the sworn testimony that we've received. 19 And so from a standpoint of whether or not 20 the discovery for an order to show cause, where 21 Mr. Edwards is going to have the burden of proof in this 22 case, to --- 23 THE COURT: But you haven't taken a 24 deposition yet that tells you where Fowler White is coming 25 from. You haven't taken their depo. Why not take their OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788024  Page 16 1 depo and seek further discovery? 2 MR. VITALE: Well, your Honor, I think that 3 the discovery that we're seeking in regards to the 4 deposition as part of our duces tecum is very limited to 5 the topics that your Honor delineated we are allowed to 6 inquire into during the deposition. 7 Now, the deposition itself, and the answers 8 we receive, as well as the documents that are produced in 9 connection with that limited deposition you're allowing 10 could require us perhaps to come before the Court again to 11 take additional discovery, but as your Honor reviews the 12 four very targeted requests that we have in our duces 13 tecum request, the first one is limited to the chain of 14 custody of the disk, and that is clearly relevant and 15 contemplated based on your Honor's order, and the next 16 three are just broken up by timeframe, did Fowler White 17 exchange any communications to any third parties, 18 Mr. Epstein or Link & Rockenbach, concerning the subject 19 disk or the documents derived (inaudible) eight year 20 period that they say the disk was sitting in a box in 21 storage. If the answer is, yes, there are responsive 22 documents, then your Honor is correct, we may want to take 23 some additional discovery, but we won't know that until we 24 take what we believe is a limited form of discovery 25 consistent with your Honor's show cause order. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788025  Page 17 1 THE COURT: All right. Mr. Vitale, did you 2 file a written response to the motion for protective 3 order? 4 MR. VITALE: No, your Honor, we did not, and 5 the reason, very briefly, is initially Fowler White's 6 motion for protective order was combined with an objection 7 to the duces tecum request. 8 We reached out to your JA, I believe on 9 Monday, and the JA requested Fowler White to break out 10 those two issues, and Fowler White filed their motion for 11 protective order separately, I believe perhaps on Tuesday, 12 and it was immediately set for hearing, and we did not 13 have time to prepare --- 14 THE COURT: All right. I'm going to 15 continue the hearing on the motion for protective order to 16 give you time to file a written response. 17 MR. VITALE: Yes, sir, and when would you 18 like us to file that by, your Honor? 19 THE COURT: A written response --- 20 MR. VITALE: Yes, sir. 21 THE COURT: Hold on. Ten days, two weeks? 22 MR. VITALE: Ten days is fine, your Honor. 23 THE COURT: And a written reply, if there is 24 going to be one, within ten days, order continuing the 25 hearing for some 30 days. OUELLETTE & NIAULDIN COURT REPORTERS, INC. EFTA00788026  Page 18 1 MR. VITALE: Yes, sir. 2 THE COURT: That order by Mr. McLachlan. 3 MR. McLACHLAN: I will prepare and circulate 4 it, Judge. 5 THE COURT: Now, once again, remember it's a 6 narrow issue before me. The question of, was there a 7 knowing breach of the order, and what are the actual 8 damages resulting from that breach. This isn't an open 9 hunting season. 10 MR. VITALE: Yes, sir. 11 THE COURT: All right. See to the orders. 12 MR. McLACHLAN: Thank you, your Honor. 13 MR. PUGATCH: Thank you, Judge. Have a good 14 weekend. 15 MR. VITALE: Thank you very much, 16 your Honor. 17 18 19 20 (Thereupon, the hearing was concluded.) 21 22 23 24 25 OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00788027  l'ac I9 1 2 3 CERTIFICATION 4 5 STATE OF FLORIDA 6 COUNTY OF MIAMI-DADE : 7 8 I, Cheryl L. Jenkins, RPR, RMR, Shorthand 9 Reporter and Notary Public in and for the State of Florida 10 at Large, do hereby certify that the foregoing proceedings 11 were transcribed by me from a digital recording held on 12 the date and from the place as stated in the caption 13 hereto on Page 1 to the best of my ability. 14 WITNESS my hand this 21st day of 15 August, 2018. 16 17 18 19 CHERYL L. JENKINS, RPR, RMR 20 Court Reporter and Notary Public in and for the State of Florida at Large 21 Commission #GG 138863 December 27, 2021 22 23 24 25 OUELLETTE & MAULDIN COURT REPORTERS. INC. EFTA00788028