6/19 Hearing Transcript, Fairholme FNMA

1 UNI TED STATES COURT OF FEDERAL CLAI MS
2
3
4 FAI RHOLME FUNDS, I NC. , ET AL. , )
5 Pl ai nt i f f s, ) Case No.
6 vs. ) 13- 465C
7 THE UNI TED STATES OF AMERI CA, )
8 Def endant . )
9
10
11
12 Cour t r oom4
13 Howar d T. Mar key Nat i onal Cour t s Bui l di ng
14 717 Madi son Pl ace, N. W.
15 Washi ngt on, D. C.
16 Thur sday, J une 19, 2014
17 11: 00 a. m.
18 Def endant s Mot i on f or Pr ot ect i ve Or der
19
20
21 BEFORE: THE HONORABLE MARGARET M. SWEENEY
22
23
24
25 El i zabet h M. Far r el l , CERT, Di gi t al Tr anscr i ber
2
Fairholme Funds, Inc., et al. v. USA 6/19/2014
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For The Record, Inc.
1 APPEARANCES:
2 ON BEHALF OF THE PLAI NTI FFS:
3 CHARLES J . COOPER, ESQ.
4 VI NCENT J . COLATRI ANO, ESQ.
5 BRI AN BARNES, ESQ.
6 PETER PATTERSON, ESQ.
7 NI COLE J . MOSS, ESQ.
8 Cooper & Ki r k, PLLC
9 1523 New Hampshi r e, NW
10 Washi ngt on, DC 20036
11 ( 202) 220- 9600
12 ccooper @cooper ki r k. com
13
14 ON BEHALF OF THE DEFENDANT:
15 KENNETH MI CHAEL DI NTZER, ESQ.
16 GREGG M. SCHWI ND, ESQ.
17 ELI ZABETH M. HOSFORD, ESQ.
18 U. S. Depar t ment of J ust i ce
19 Post Of f i ce Box 480
20 Ben Fr ankl i n St at i on
21 Washi ngt on, DC 20044
22 ( 202) 616- 0385
23 kennet h. di nt zner @usdoj . gov
24
25
3
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1 P R O C E E D I N G S
2 - - - - -
3 ( Pr oceedi ngs cal l ed t o or der at 11: 01 a. m. )
4 LAWCLERK: The Uni t ed St at es Cour t of Feder al
5 Cl ai ms i s now i n sessi on. Fai r hol me Funds, I ncor por at ed vs.
6 t he Uni t ed St at es, Case Number 13- 465, t he Honor abl e Mar gar et
7 M. Sweeney pr esi di ng.
8 THE COURT: Good mor ni ng. Pl ease be seat ed.
9 ( Chor us of good mor ni ngs. )
10 THE COURT: Wi l l counsel i n t he cour t r oompl ease
11 i dent i f y t hemsel ves f or t he r ecor d?
12 MR. COOPER: Cer t ai nl y, Your Honor , Char l es Cooper
13 f or t he Pl ai nt i f f s. Wi t h me t oday ar e t wo of my col l eagues,
14 Br i an Bar nes and Vi nce Col at r i ano.
15 MR. COLATRI ANO: Good mor ni ng, Your Honor .
16 MR. COOPER: I d al so l i ke t o not e f or t he Cour t
17 t hat t wo of my col l eagues ar e j oi ni ng us by phone, Ni col e
18 Moss and Pet er Pat t er son. And, Your Honor , i f I may, I woul d
19 l i ke t o i nt r oduce t o t he Cour t one of my cl i ent s, Mr . Br uce
20 Ber kowi t z. He s t he pr esi dent of t he Fai r hol me Fund.
21 THE COURT: Thank you ver y much. Good mor ni ng t o
22 al l of you.
23 And f or t he Uni t ed St at es?
24 MR. DI NTZER: Good mor ni ng, Your Honor . Kennet h
25 Di nt zer f or t he Depar t ment of J ust i ce r epr esent i ng t he Uni t ed
4
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1 St at es. And wi t h me at counsel t abl e ar e El i zabet h Hosf or d
2 and Gr egor y Schwi nd.
3 MR. SCHWI ND: Good mor ni ng, Your Honor .
4 THE COURT: Good mor ni ng. Wel l , on t hi s mor ni ng s
5 agenda, we have Def endant s mot i on. Ar e you r eady t o begi n?
6 MR. DI NTZER: We ar e, Your Honor . Ms. Hosf or d wi l l
7 be speaki ng f or t he Uni t ed St at es.
8 THE COURT: Thank you.
9 MS. HOSFORD: Good mor ni ng, Your Honor , may i t
10 pl ease t he Cour t . We f i l ed our mot i on f or pr ot ect i ve or der
11 f or t wo r easons. Fi r st , we ve asked t he Cour t t o l i mi t t he
12 t i me f r ame of di scover y i nt o t he f ut ur e of t he ent er pr i ses t o
13 document s t hat pr edat e execut i on of t he t hi r d amendment .
14 Second, we woul d ask t he Cour t t o l i mi t t he scope
15 of di scover y t o t he i ssues t hat wer e act ual l y i dent i f i ed i n
16 t he Cour t s Febr uar y 26t h or der .
17 I l l f i r st addr ess t he i ssue of t he f ut ur e of t he
18 ent er pr i ses. Pl ai nt i f f s r equest s t hat ar e f ocused on t he
19 t er mi nat i on of t he conser vat or shi ps and f ut ur e pr of i t abi l i t y
20 seek vi r t ual l y al l i nt er nal Tr easur y and FHFA document s t hat
21 di scuss t he f ut ur e of Fanni e Mae and Fr eddi e Mac wi t h
22 vi r t ual l y no endi ng. I f Tr easur y and FHFA ar e r equi r ed t o
23 r espond t o t hese r equest s wi t hout a cut of f dat e, t he
24 Gover nment woul d suf f er subst ant i al and pot ent i al l y
25 i nsur mount abl e har mi n t hr ee ways.
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1 Fi r st , pot ent i al di scl osur e of i nt er nal di scussi ons
2 about t he f ut ur e of t he conser vat or shi ps woul d, t o quot e
3 Di r ect or Wat t s decl ar at i on, have ext r aor di nar i l y
4 del et er i ous consequences on t he conser vat or s conduct t o be
5 ongoi ng i n f ut ur e oper at i ons of t he conser vat or shi ps.
6 That s - -
7 THE COURT: Let me ask you t hi s, i f t her e s a
8 pr ot ect i ve or der i n pl ace whi ch pr ovi des f or t he seal i ng of
9 al l such document s, how i s t he conser vat or har med? Ther e
10 wi l l be no r el ease of document s.
11 MS. HOSFORD: Fi r st , Sect i on 4617( f ) , whi ch i s par t
12 of t he Housi ng and Economi c Recover y Act of 2008 - -
13 THE COURT: Yes, I don t agr ee. I know you r e
14 goi ng t o say t hat t he Cour t has no abi l i t y t o have any - - t o,
15 i n any way, i mpact FHFA, and I di sagr ee wi t h t hat . I don t
16 bel i eve t hat i s a bl anket i nsul at i on. I f FHFA ent er s i nt o
17 cont r act s and t her e s a di sput e and t her e s a br each of
18 cont r act - - and t he agency br eaches t he cont r act , I don t
19 t hi nk t hey can i nvoke t hat - - t he agency can i nvoke t hat
20 pr ovi si on t o i nsul at e i t sel f . And, al so, I t hi nk her e - - I m
21 not t r yi ng t o cont r ol t he conser vat or shi p, I mnot t r yi ng t o
22 i nf l uence i t i n any way, I mj ust t r yi ng t o al l ow ci t i zens t o
23 have ever y oppor t uni t y t o meet t he j ur i sdi ct i onal hur dl e t hat
24 t he Pl ai nt i f f - - excuse me, t hat t he Gover nment has asser t ed.
25 The Gover nment has sai d t hat t he conser vat or s ar e
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1 not par t of t he Uni t ed St at es and, t her ef or e, t he Def endant
2 i s not i mpl i cat ed her e. Now, on t he ot her hand, by
3 r equest i ng t hese document s, t he Gover nment i s sayi ng, no, I m
4 sor r y, you r e not ent i t l ed t o any of t hese document s because
5 t he conser vat or s ar e par t of t he Uni t ed St at es. So, i t s a
6 gover nment ent i t y and, t her ef or e, you r e aski ng f or
7 del i ber at i ve pr ocess document s.
8 So, i t seems t o me t he Gover nment i s t r yi ng t o have
9 i t bot h ways and, so, I don t accept t hat ar gument . And as I
10 sai d, you know, I under st and and can appr eci at e t he bar of - -
11 or t he - - not t he bar , but t he - - t hat Congr ess i nt ended t hat
12 cour t s do not meddl e i n t he busi ness of t he conser vat or s.
13 That s not my goal or desi r e. I have enough on my pl at e
14 wi t hout t r yi ng t o r un t he conser vat or shi ps. But I do want
15 t he Pl ai nt i f f s t o have an oppor t uni t y t o meet t he
16 j ur i sdi ct i onal chal l enge t hat s been r ai sed by t he
17 Gover nment .
18 MS. HOSFORD: Your Honor , we ar e not aski ng t he
19 Cour t t o bar al l di scover y i n t hi s case. We ar e mer el y
20 aski ng f or a cut of f dat e f or t he i ssue of whet her t he - - when
21 and how t he conser vat or shi ps wi l l end and what t hei r f ut ur e
22 pr of i t abi l i t y wi l l be. And t her e ar e ver y ser i ous pol i cy and
23 oper at i onal concer ns f or t he conser vat or shi ps t hat ar e at
24 r i sk her e, as our - - as t he Gover nment of f i ci al s who pr ovi ded
25 t he decl ar at i ons i n t hi s case poi nt ed out , i f i nt er nal
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1 di scussi ons about t he f ut ur e of Fanni e Mae and Fr eddi e Mac,
2 bot h ongoi ng and i n r ecent t i mes, ar e di vul ged t o t he publ i c
3 or even i n adver t ent l y di scl osed under a pr ot ect i ve or der , i t
4 coul d l i t er al l y af f ect i nt er est r at es. I t coul d have an
5 ef f ect on t he mar ket and t he economy.
6 THE COURT: And I t ook t hat ver y ser i ousl y. Those
7 woul d be gr ave and di r e consequences. And I know i n J udge
8 Wheel er s AI G case, t her e was a l eak, and I bel i eve - - not t o
9 i mpl y t hat Mr . Di nt zer was t he l eak or - - cer t ai nl y woul d not
10 be, I j ust - - so, he s awar e of t hat case and I bel i eve i s
11 heavi l y i nvol ved i n t hat case as one of t he l i t i gat or s on
12 behal f of t he Gover nment . But - - and no j udge want s a l eak.
13 But I t hi nk I ve been abl e t o come up wi t h some j udi ci al
14 caul k t hat I woul d put i n pl ace i n t he case and i t woul d be
15 t hi s. We d have a pr ot ect i ve or der . Document s woul d be
16 pr oduced t o Pl ai nt i f f s, and i f any por t i on of a document i s
17 l eaked, t hat document woul d not be abl e t o be used i n t hi s
18 l i t i gat i on, per i od. That s ver y ser i ous f or t hese Pl ai nt i f f s
19 i n t hi s case.
20 I doubt t hat t he Gover nment woul d t r y t o sabot age
21 t he Pl ai nt i f f s case because i f t he Gover nment l eaks t he
22 document s, t hen i t woul d have t o go back t o Mr . Wat t and t he
23 ot her conser vat or s and expl ai n why i t deci ded t o do t hat
24 whi ch t he conser vat or s wer e most concer ned wi t h, whi ch was
25 pr ot ect i ng t hi s i nt er nal i nf or mat i on.
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1 I t hi nk havi ng such a sever e sanct i on woul d i nspi r e
2 t he Pl ai nt i f f s, i f t hey ar en t al r eady i nspi r ed, t o make sur e
3 t hat not hi ng was di vul ged, because i f t hey di d, t hei r
4 cl i ent s case woul d go r i ght down t he t ubes and t hey woul d
5 have ver y angr y co- counsel , t hey woul d have ver y angr y
6 cl i ent s, and t hat i s one opt i on t hat I mconsi der i ng, i n
7 addi t i on t o t hei r bar l i cense bei ng - - agai n, t hey d have t o
8 be i dent i f i ed. But i n addi t i on t o l osi ng t hei r bar l i cense
9 because I cer t ai nl y woul d r ef er t hi s i nt er nal l y i n t hi s Cour t
10 and t hen make a r ef er r al - - I mean, once i t was i dent i f i ed
11 who t he i ndi vi dual was, make a r ef er r al t o wher ever t hey r e
12 bar r ed t o begi n di sbar ment pr oceedi ngs.
13 MS. HOSFORD: Your Honor , we don t have any doubt
14 t hat Pl ai nt i f f s counsel wi l l make ever y ef f or t under a
15 pr ot ect i ve or der t o pr ot ect t he document s t hat we r e t al ki ng
16 about . But what we r e t al ki ng about her e i s good f ai t h
17 i nadver t ent di scl osur e. These t hi ngs do happen. We ci t ed
18 f our di f f er ent cases i n our br i ef , i n our r epl y br i ef ,
19 set t i ng f or t h wher e despi t e counsel s best ef f or t s, l eaks
20 wer e made.
21 You have t o r emember t hat her e, we r e not
22 t al ki ng - - i n AI G, what we r e t al ki ng about i s past event s,
23 document s r ef er r i ng t o t he past . Her e, we r e t al ki ng about
24 ongoi ng housi ng r ef or m, ongoi ng oper at i on and management of
25 t he conser vat or shi ps. Under no ci r cumst ances shoul d t hose
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1 document s be di scl osed and under no ci r cumst ances shoul d t he
2 Gover nment have t o even r espond t o r equest s t hat ar e aski ng
3 f or not hi ng mor e t han del i ber at i ve pr ocess and document s t hat
4 r est r ai n t he conser vat or s abi l i t y t o r un t he
5 conser vat or shi ps.
6 Even i f we had t hi s pr ot ect i ve or der i n pl ace, we d
7 have t o deal wi t h seal ed document s, wi t h r edact i ons. I t s
8 possi bl e t hat Pl ai nt i f f s cl i ent s, who ar e ver y act i ve
9 par t i ci pant s i n t he mar ket f or Fanni e Mae and Fr eddi e Mac
10 st ock, woul d t r y t o r ead i nf er ences i nt o ( i naudi bl e)
11 not wi t hst andi ng Pl ai nt i f f s counsel s best ef f or t s t o r edact .
12 Ther e i s absol ut el y no way t hat we can guar ant ee t hat t hese
13 document s t hat can have a devast at i ng ef f ect on our economy
14 and on t he housi ng r ef or mef f or t wi l l not be di scl osed. And
15 f or t hat r eason, we r e onl y aski ng f or a cut of f dat e of t he
16 t hi r d amendment , whi ch i s August 17t h, 2012, whi ch i s - -
17 THE COURT: Wel l , t her e ar e t hr ee di f f er ent dat es
18 you ve gi ven. I mean, yes, or I t hi nk i t s 1A and f or
19 r equest s - - i s i t 6 t hr ough 10?
20 MS. HOSFORD: Ri ght , we r e onl y t al ki ng about 6
21 t hr ough 10 and 1A on our cut of f dat e. The ot her - -
22 THE COURT: That s cor r ect . The ot her dat es you
23 have - -
24 MS. HOSFORD: The ot her days have t o do wi t h scope.
25 The ot her days have t o do wi t h what we per cei ve t o be t he
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1 Cour t s - - t he scope of t he di scover y t hat t he Cour t or der ed.
2 Wi t h r espect t o 1A and 6 t hr ough 10, we r ecogni ze t hat t he
3 Cour t or der ed di scover y wi t hi n t he dat es t hat we r e aski ng
4 f or t he cut of f on, but what we r e aski ng f or i s a pr ot ect i ve
5 or der r el i evi ng us f r omr espondi ng f r omAugust 17t h, 2012 on,
6 because of t he ext r eme har mt hat i t woul d do t o our economy
7 and t o t he conser vat or .
8 THE COURT: Wel l , what I wi l l - - what I mgoi ng t o
9 - - what I mi ncl i ned t o do at t he moment i s t o al l ow waves of
10 di scover y and, per haps, adopt some of t he dat es t hat you ve
11 pr oposed. And i f t hat wi l l pr ovi de Pl ai nt i f f - - af t er
12 t hey ve r evi ewed t hose document s t hat t hey r ecei ve, i f t her e
13 ar e ot her document s t hat t hey bel i eve t hat t hey need, we can
14 go back and r evi si t di scover y. But I want , at l east , an
15 i ni t i al wave of di scover y t o go f or war d.
16 MS. HOSFORD: Wel l , j ust bear i n mi nd, Your Honor ,
17 t hat even i f an i ni t i al wave of di scover y goes f or war d, most
18 of t hese document s ar e not goi ng t o be pr oduced nonet hel ess.
19 The onl y r eason we asked f or t he pr ot ect i ve or der was so t hat
20 we woul dn t have t o r espond at al l j ust i n case t her e was
21 some sor t of i nadver t ent di scl osur e. So, t her e s - - i t s not
22 - - Pl ai nt i f f s ar e not goi ng t o r ecei ve most of t he document s
23 t hat woul d be r esponsi ve t o t he i ssue of when and how t he
24 conser vat or shi ps wi l l end because t hey ar e cat egor i cal l y
25 del i ber at i ve under del i ber at i ve pr ocess pr i vi l ege and t he
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1 conser vat or wi l l i nvoke 4617( f ) t o say t hat t hey shoul dn t
2 have t o pr oduce any document s t hat wi l l i nt er f er e wi t h t hei r
3 abi l i t y t o manage conser vat or shi ps.
4 So, i t s not a mat t er of pr oduci ng t he document s
5 and t hen ent r ust i ng a pr ot ect i ve or der t o pr ot ect t hem.
6 Ther e s nonet hel ess, goi ng t o be asser t i ons of pr i vi l ege
7 and - -
8 THE COURT: No, I under st and t hat .
9 MS. HOSFORD: Okay.
10 THE COURT: And t hen we l l have - - you l l pr oduce a
11 pr i vi l ege l og and - -
12 MS. HOSFORD: But I woul d al so l i ke t o make t he
13 poi nt t hat what we r e t al ki ng about her e ar e ongoi ng
14 oper at i ons and del i ber at i ons i n housi ng r ef or m. We r e not
15 t al ki ng about a deci si on t hat t ook pl ace i n t he past and
16 t her e s j ust a gener i c concer n t hat i t wi l l - - t hat , you
17 know, r el ease of del i ber at i ons and f r ank di scussi ons and
18 pr oposal s wi l l somehow chi l l f ut ur e del i ber at i ons. We r e
19 t al ki ng about ongoi ng cur r ent del i ber at i ons.
20 Tr easur y i s cur r ent l y del i ber at i ng, FHFA i s
21 cur r ent l y oper at i ng t he conser vat or shi ps and, r i ght now,
22 Pl ai nt i f f s r equest s have absol ut el y no end dat e. So, t he
23 obl i gat i on of t hese t wo agenci es i s t o pr eser ve and
24 pot ent i al l y di scl ose ever y si ngl e document r el at i ng t o
25 housi ng r ef or mand f ut ur e of t he conser vat or shi ps f r omnow
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1 unt i l no - - absol ut el y no endi ng.
2 THE COURT: Wel l , t hat s not goi ng t o happen. I
3 mean, I have no i nt ent i on of or der i ng t hat . I under st and
4 t hat .
5 MS. HOSFORD: Wel l , I mean, obvi ousl y, we woul d ask
6 t hat t he cut of f dat e be t he August 17t h, 2012 dat e because
7 not wi t hst andi ng t he f act t hat t he r i peness i ssue i s out
8 t her e, as we expl ai ned i n our br i ef s, i t s cl ear j ust by
9 pi cki ng up t he newspaper t hat t her e has been no deci si on made
10 about t he f ut ur e of t he conser vat or shi ps. So, t her ef or e, t he
11 quest i on of r i peness can be deci ded on t he br i ef s wi t hout
12 havi ng di scover y.
13 But t hat sai d, i f t he Cour t t hi nks di scover y i s
14 war r ant ed, we r eal l y do have t o have t hat cut of f dat e. And
15 t he cut of f dat e i s not unpr ecedent ed. Ther e have been cour t s
16 who have i mposed cut of f dat es i n cases i nvol vi ng at t or ney-
17 cl i ent wor k pr oduct wher e t hey say, you know what , i t s f i ne
18 t o have t o l og t hose document s up t o a cer t ai n dat e, but
19 af t er t hat dat e i t s r i di cul ous t o have a chi l l i ng ef f ect on
20 ever y si ngl e deci si on or di scussi on t hat s had wi t hi n counsel
21 - - or i n t hi s case, wi t hi n t he Gover nment .
22 THE COURT: I ndeed. That s why I sai d t her e woul d
23 be a cut of f dat e.
24 MS. HOSFORD: Okay. Wel l , we woul d suggest t hat
25 t he cut of f dat e be August 17t h, 2012.
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1 THE COURT: The dat e of t he t hi r d amendment ?
2 MS. HOSFORD: Yes.
3 Movi ng on t o t he second i ssue t hat we r ai sed i n our
4 mot i on, we woul d ask t hat t he Cour t l i mi t t he pr oposed scope
5 of di scover y t o t he i ssues t hat wer e act ual l y r ai sed i n t he
6 Febr uar y 26t h or der . And as we ve set f or t h i n our mot i on
7 and i n t he char t t hat we at t ached t o our r epl y, we have
8 agr eed t o pr ovi de document s on whet her FHFA was an agent and
9 ar mof t he Tr easur y i n r esponse t o r equest s 1, 11, 14 and 16.
10 But t he ot her r equest s t hat ar e gr ouped under r equest s
11 r el at i ng t o whet her FHFA i s t he Uni t ed St at es vast l y exceed
12 t he scope of t hat i ssue.
13 Li ke we ar e wi l l i ng t o pr oduce anyt hi ng t hat bear s
14 on t he r el at i onshi p bet ween t he t wo agenci es, but we ar e not
15 goi ng t o r espond t o any and al l document s r ef l ect i ng
16 communi cat i ons bet ween Tr easur y and t he J ust i ce Depar t ment ,
17 whi ch has no r el evance t o t hat i ssue, or document s r el at i ng
18 t o whet her - - FHFA s det er mi nat i on t hat i t s obl i gat ed t o
19 maxi mi ze Tr easur y s r et ur n on i t s i nvest ment .
20 Obvi ousl y, many of t hose document s ar e al so goi ng
21 t o be pr i vi l eged, but t hey r e not even r esponsi ve t o t he
22 Cour t s or der , whi ch was a pr e - - you know, t he Cour t or der ed
23 t hi s di scover y, as t he Cour t knows, i n advance of a mot i on t o
24 di smi ss. And by def i ni t i on, i n advance of a mot i on t o
25 di smi ss, di scover y shoul d be l i mi t ed t o t he nar r ow scope of
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1 t he i ssues on whi ch t he di scover y i s r equi r ed. Thi s i s not
2 t he nor mal si t uat i on under Rul e 26 wher e you - - you know, al l
3 r el evant document s t o t he case shoul d be pr oduced.
4 So, t her ef or e, we ve suggest ed t hat we wi l l r espond
5 t o r equest 1A and r equest 4 and f or t he dat e r ange of J ul y 1
6 t o December 31st , 2008.
7 The quest i on about whet her FHFA - - I msor r y. On
8 t he quest i on of t he sol vency of t he ent er pr i ses and
9 expect at i ons of pr of i t abi l i t y at t he t i me of t he
10 conser vat or shi p, we woul d r espond t o r equest s 1A and 4
11 because t hey r e di r ect l y r esponsi ve t o t he Cour t s or der .
12 The f i r st one i s f i nanci al pr oj ect i ons i n t he possessi on of
13 FHFA and/ or Tr easur y i n connect i on wi t h t he conser vat or shi p,
14 and t he second one i s document s r el at i ng t o t he deci si on t o
15 l eave t he GSE s exi st i ng capi t al st r uct ur e i n pl ace. That s
16 exact l y what t he Cour t or der ed i n t he or der and t hat s
17 exact l y what we r e wi l l i ng t o pr oduce document s on, and
18 wi t hi n a r easonabl e t i me f r ame, J ul y 1st t o December 31st ,
19 2008.
20 Now, i n t hei r opposi t i on br i ef , Pl ai nt i f f s cl ai m
21 t hat t hey had act ual l y suggest ed t hat t hey wer e l ooki ng f or
22 document s r egar di ng t he sol vency of t he ent er pr i ses, not onl y
23 i n 2008, but t hr oughout basi cal l y t he conser vat or shi ps and
24 f ocusi ng on 2012. But i f you r ead t hei r mot i on f or di scover y
25 and t he decl ar at i on at t ached t her et o, t her e was no ment i on of
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1 any dat es ot her t han t he t i me t hat t he conser vat or shi ps wer e
2 ent er ed i nt o. Pl ai nt i f f s have i ndi cat ed t hat t hey ment i oned
3 i t i n t hei r r epl y br i ef , but i t di d not appear i n t he Cour t s
4 or der and we had no chance t o r espond t o dat es set f or t h t he
5 f i r st t i me i n Pl ai nt i f f s r epl y br i ef .
6 So, on t he i ssue of t he sol vency of Fanni e Mae and
7 Fr eddi e Mac, l i ke I sai d, we r e okay wi t h r equest 1A and
8 r equest 4, but r equest s 2, 3 and 5 go f ar beyond t hat t opi c.
9 Two goes t o t he deci si on t o compensat e Tr easur y t hr ough 79. 9
10 per cent war r ant s. That doesn t r eal l y go t o pr of i t abi l i t y,
11 and i f i t does, i t s sat i sf i ed by 1A. Thr ee goes t o t he
12 val uat i on of t he war r ant s f r om2008 t o 2013. As I ment i oned,
13 t hat s not wi t hi n t he scope of t he dat es. And f i ve, wer e
14 t hey ask about gover nment st ock di vi dends, t hat s not even
15 r el at ed t o pr of i t because t he di vi dends wer e f i xed at 10
16 per cent .
17 So, Pl ai nt i f f s ar e essent i al l y t r yi ng t o use t hi s
18 pr e- mot i on t o di smi ss deci si on di scover y t o get f ul l - bl own
19 di scover y, and we t hi nk t hat i s not war r ant ed under t he
20 ci r cumst ances of t he case and not war r ant ed i n l i ght of t he
21 subst ant i al har ms and t he st at ut e t hat we - - t hat I made
22 r ef er ence t o ear l i er .
23 J ust get t i ng back t o t he st at ut e, agai n, br i ef l y,
24 t her e i s pr ecedent f or cour t s t o f i nd t hat di scover y shoul d
25 not be pr oduced i n r el i ance on 4617( f ) . Li ke I sai d, we r e
16
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1 not aski ng t he Cour t not t o exer ci se j ur i sdi ct i on over t he
2 case except i n t he cont ext f or a mot i on t o di smi ss, whi ch we
3 under st and i s def er r ed. But 4617( f ) i s an i mpor t ant t ool t o
4 pr ot ect t he conser vat or f r omt he t ype of second guessi ng and
5 i nvasi ve, i nt r usi ve di scover y t hat wi l l have a del et er i ous
6 ef f ect on i t s abi l i t y t o manage t he ent er pr i ses.
7 THE COURT: Was t her e anyt hi ng el se?
8 MS. HOSFORD: Not hi ng el se, Your Honor .
9 THE COURT: I j ust have a quest i on f or you. Coul d
10 you pl ease expl ai n t he l i t i gat i on posi t i on or what I see as a
11 conf l i ct wi t h - - or an i nconsi st ency wi t h, on t he one hand,
12 t he Gover nment ar e sayi ng Pl ai nt i f f s l ack st andi ng, t hi s
13 Cour t l acks j ur i sdi ct i on because t he conser vat or shi p i s not
14 par t of t he Gover nment , i t s not a Gover nment ent i t y. And,
15 yet , when Pl ai nt i f f s seek di scover y, i t s t he posi t i on of t he
16 Uni t ed St at es t hat any document s gener at ed by t he
17 conser vat or shi p ar e subj ect t o t he del i ber at i ve pr ocess
18 pr i vi l ege?
19 MS. HOSFORD: Yes, Your Honor . Fi r st of al l , t her e
20 i s case l aw out t her e, and we ci t e i t i n our br i ef ,
21 acknowl edgi ng t hat FHFA does enj oy t he del i ber at i ve pr ocess
22 pr i vi l ege even when i t s act i ng as conser vat or . Even set t i ng
23 t hat asi de, i n t he cont ext of t hi s case, i t s ver y i mpor t ant .
24 I f t he Cour t wer e ul t i mat el y t o f i nd t hat t he FHFA i s t he
25 Uni t ed St at es - - or i s not t he Uni t ed St at es, I msor r y, and
17
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1 pr evi ousl y t hey had had t o di scl ose document s t hat woul d have
2 been subj ect t o del i ber at i ve pr ocess pr i vi l ege, we have a
3 pot ent i al wai ver si t uat i on t her e and we have di scl osur e of a
4 l ot of document s t hat can be ver y har mf ul t o t he agency under
5 t he assumpt i on t hat t hey ar e t he Uni t ed St at es when i t coul d
6 ul t i mat el y be det er mi ned t hat t hey ar e not t he Uni t ed St at es.
7 So, FHFA i s mer el y t r yi ng t o pr ot ect i t s r i ght s at
8 t hi s poi nt . Because t he i ssue i s st i l l open, t hey ar e not
9 wi l l i ng t o j ust gi ve up on t he del i ber at i ve pr ocess
10 pr i vi l ege. So, t hat s t he si t uat i on.
11 THE COURT: No, I - - I - - okay. Thank you.
12 MS. HOSFORD: Okay. Thank you, Your Honor .
13 MR. COOPER: Good mor ni ng agai n, J udge Sweeney.
14 THE COURT: Good mor ni ng.
15 MR. COOPER: Your Honor , l et me j ust pr ef ace t he
16 poi nt s I pl an t o make i n r esponse t o counsel s pr esent at i on.
17 Cont r ar y t o counsel s cl ai m, we have at t empt ed t r ul y t o
18 t et her ver y t i ght l y t o t hi s Cour t s Febr uar y di scover y or der
19 and t he Cour t s ar t i cul at i on of t he i ssues t hat have been
20 pl aced i n di sput e by t he Gover nment , j ur i sdi ct i onal , r i peness
21 and r easonabl e expect - - i nvest ment - backed expect at i on
22 i ssues, car ef ul l y t r i ed t o t et her t hemt o t hose i ssues. And
23 we bel i eve t hat ever y one of t he r equest s t hat we ve made i s
24 car ef ul l y and t i ght l y t et her ed t o t hose i ssues.
25 Let me f i r st addr ess t he bl anket exempt i ons or
18
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1 pr i vi l ege or r el i ef t hat counsel seeks f or pr oduci ng a
2 par t i cul ar r ange of document s, not j ust t i me- l i mi t ed, but i n
3 t er ms of subj ect mat t er . Thei r f i r st poi nt , Your Honor , i s
4 t hat f or t he Cour t s t o or der t hi s di scover y, i t woul d
5 i nevi t abl y i mpact and af f ect - - r est r ai n and af f ect t he
6 exer ci se of t he power s or f unct i ons of t he conser vat or . As
7 t he Cour t ment i oned, t he pr ovi si on, i n and of i t sel f on i t s
8 f ace, doesn t r each somet hi ng l i ke di scover y i n a l awsui t
9 br ought f or damages i n t he Cour t of Feder al Cl ai ms. Ther e s
10 pr ecedent on t hi s subj ect , as t he Cour t knows, f r omt he
11 FI RREA exampl e whi ch pr ovi ded t he pr eci se model f or t hi s
12 pr ovi si on.
13 But , Your Honor , mor e i mpor t ant l y, t he l anguage of
14 t he st at ut e i t sel f makes cl ear t hat what i s cont empl at ed
15 t her e i s some t ype of j udi ci al or der t hat woul d r est r ai n t he
16 abi l i t y - - t he abi l i t y of t he conser vat or t o exer ci se i t s
17 di scr et i onar y power s and f unct i ons. Ther e i s - - i t s
18 i nconcei vabl e t hat a di scover y or der coul d af f ect t he abi l i t y
19 of t he conser vat or t o exer ci se hi s power s. To be sur e, i t s
20 concei vabl e t hat i t coul d af f ect or i nf l uence how t he
21 conser vat or exer ci sed hi s di scr et i on wi t h r espect t o t hose
22 power s. That i s concei vabl e. But t hat s not what t he
23 st at ut e i s desi gned, by any means, t o r each.
24 But t he Cour t has cut t hr ough al l of t hi s wi t h t he
25 obvi ous and compl et e cur e or pr ot ect i on f or al l of t he
19
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1 Gover nment s concer ns, whi ch i s a pr ot ect i ve or der . And Your
2 Honor has i dent i f i ed and we wel come t he sanct i on t hat t he
3 Cour t has suggest ed and we don t need i t because we r e
4 of f i cer s of t he cour t . We ve done t hi s many, many t i mes, as
5 has t he Gover nment . I t has engaged i n pr ot ect i ve or der s i n
6 count l ess cases. Count l ess cases, Your Honor .
7 THE COURT: I t hought i t woul d - - I t hought a bi t
8 of i ncr eased secur i t y by f ashi oni ng what I ment i oned a f ew
9 mi nut es ago, because of t he l eak t hat occur r ed i n J udge
10 Wheel er s case - - we handl e bi d pr ot est cases i nvol vi ng
11 mi l l i ons and mi l l i ons of dol l ar s ever y day and we don t have
12 l eaks. And at t or neys r epr esent i ng a Pl ai nt i f f have di r ect
13 access t o t he opposi ng cl i ent s , t he Def endant / I nt er venor s,
14 pr opr i et ar y i nf or mat i on, i nf or mat i on t hat i s so sensi t i ve i t
15 coul d make or br eak a cor por at i on and we don t have l eaks.
16 But t her e was a l eak i n J udge Wheel er s case and i t seemed t o
17 me t hat i nst ead of per haps economi cs dr i vi ng i t , i t coul d
18 have been ei t her somewhat pol i t i cal l y mot i vat ed or - - I mean,
19 I don t know. I mj ust specul at i ng and j udges shoul dn t
20 specul at e.
21 But i t occur r ed t o me t hat i f I had t hi s caul k i n
22 pl ace, t hi s sever e sanct i on l oomi ng, t hat when counsel i s
23 t appi ng var i ous associ at es or par al egal s or whomever t o
24 assi st i n a r evi ew of document s, t he f ear of God woul d be put
25 i n t hat i ndi vi dual t hat t her e woul d not be a l eak because i t
20
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1 wi l l be so - - t he sanct i on wi l l be swi f t and so sever e t hat
2 t hat per son woul d l ose t hei r j ob and i n addi t i on t o f aci ng
3 ot her sanct i ons t hat I coul d f ashi on, t hat , you know, t hei r
4 di r ect empl oyer , Pl ai nt i f f s counsel , woul d come down on t hem
5 l i ke a t on of br i cks and t hat you woul d j ust emphasi ze t he
6 i mpor t ance of - - whi ch I msur e you do i n ever y case, but you
7 woul d emphasi ze t he i mpor t ance of t he sanct i t y of t hat
8 pr ot ect i ve or der .
9 MR. COOPER: To be sur e, Your Honor .
10 THE COURT: And I have no doubt al l of t he counsel
11 i n t hi s r oom, i n f r ont of t he bar , f or t hat mat t er behi nd t he
12 bar , woul d never do anyt hi ng t o vi ol at e a pr ot ect i ve or der .
13 But i n case someone on Pl ai nt i f f s si de mi ght be so
14 sympat het i c f or t he Pl ai nt i f f t hat t hei r hear t woul d over come
15 common sense and t hey woul d do somet hi ng unpr i nci pl ed, t hey
16 woul d t hi nk t wi ce bef or e t hey di d i t .
17 MR. COOPER: Yes, Your Honor . But , of cour se - -
18 and, Your Honor , t hat i s a compl et e pr ot ect i on f or t he
19 i nt er est t he Gover nment has advanced and t hat i t has
20 suppor t ed wi t h i t s decl ar at i ons. That i nt er est i s f ounded on
21 one concer n. One concer n. Publ i c di scl osur e. Publ i c
22 di scl osur e of t he i nf or mat i on t hat i s exchanged i n di scover y.
23 That i s what i t f ound - - i t bases i t s r equest f or t hi s
24 sweepi ng exempt i on essent i al l y f r omdi scover y and what i t
25 bases i t s r equest f or t hese t i me l i mi t at i ons. Publ i c
21
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1 di scl osur e. The pr ot ect i ve or der compl et el y pr ot ect s agai nst
2 t hat - - agai nst t hat possi bi l i t y, Your Honor .
3 Let s r eal l y j ust pause f or a moment and consi der
4 what i t i s t he Gover nment i s cl ai mi ng her e. They r e cl ai mi ng
5 a pr i vi l ege - - a sweepi ng and bl anket pr i vi l ege t hat f l ows,
6 t hey say, f r omt hi s st at ut or y pr ovi si on t hat j ust doesn t
7 exi st , one t hat basi cal l y says, i n di scover y, i n a case
8 pr oper l y br ought bef or e t hi s Cour t f or money damages, not f or
9 equi t abl e i nj unct i on t ype r el i ef , but f or money damages,
10 t her e can be no di scover y, per i od. I t s a new pr i vi l ege
11 essent i al l y, gover nment al pr i vi l ege t hat t hey r e i nvent i ng.
12 And i t , Your Honor , j ust doesn t exi st . But even i f i t di d,
13 i t woul d be compl et el y addr essed by t he pr ot ect i ve or der .
14 Let me move t o t he del i ber at i ve pr ocess pr i vi l ege
15 cl ai mt hat counsel makes, and i t di r ect s t hi s cl ai mas wel l
16 t o t he di scover y r equest ed wi t h r espect t o pr of i t abi l i t y i n
17 r equest s 1 t hr ough 5, and t he r equest s made wi t h r espect t o
18 when, whet her and how t he conser vat or shi ps may be t er mi nat ed,
19 r equest s 6 t hr ough 10. I want t o make t wo t hr eshol d poi nt s
20 on t hat .
21 Fi r st , t her e i s no bl anket cat egor i cal pr i vi l ege
22 f or del i ber at i ve pr ocess or any ot her pr i vi l ege. Document s
23 ar e pr i vi l eged st andi ng i n t hei r own shoes, each document .
24 I n a cl ai mof pr i vi l ege, t he bur den i s on t he par t y asser t i ng
25 a pr i vi l ege t o est abl i sh t hat a document or i nf or mat i on or ,
22
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1 you know, t he answer t o a deposi t i on quest i on, what ever i t
2 may be, i s pr i vi l eged i nf or mat i on. And t hat s t r ue of t he
3 del i ber at i ve pr ocess pr i vi l ege. I t s t r ue of t he execut i ve
4 pr i vi l ege. I t s t r ue of ever y pr i vi l ege. And, so, t her e s
5 no bl anket - - t her e s no bl anket exempt i on f r omhavi ng t o go
6 t hr ough t he document - by- document pr ocess and t o pr ovi de a l og
7 t o t he ot her si de so t hose cl ai ms can - - can at l east , at
8 t hat l evel , be ver i f i ed as bei ng r easonabl e.
9 Now, t he second poi nt , Your Honor , t he Cour t put
10 your f i nger on i t , i s t hat t he Gover nment , f i r st , concedes - -
11 and t her e s cer t ai nl y no di sput e bet ween t he par t i es her e - -
12 t hat Fanni e and Fr eddi e ar e pr i vat e cor por at i ons. So, no
13 mat t er what el se t hey may cl ai m, t hey r e not cl ai mi ng t hat
14 document s i n Fanni e and Fr eddi e s possessi on ar e pr i vi l eged,
15 and i t s obvi ous t hat t hey can t be. But t hey r e goi ng
16 f ar t her and t hey r e sayi ng speci f i cal l y t hat FHFA, as
17 conser vat or f or Fanni e and Fr eddi e, and t hey say t hi s i n
18 t er ms, i s not t he Uni t ed St at es, i t i s Fanni e and Fr eddi e.
19 I t i s as t hough we ar e seeki ng r el i ef i n t hi s case and
20 seeki ng di scover y f r omt he management of pr i vat e
21 cor por at i ons. That s t hei r ar gument , Your Honor , as t he
22 Cour t poi nt s out .
23 And, Your Honor , we ve sai d t o be sur e, no, FHFA i s
24 a Gover nment agency, t hi s Cour t has got Tucker Act
25 j ur i sdi ct i on over our cl ai magai nst t he Gover nment f or t he
23
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1 conduct of Tr easur y and FHFA t oget her i n i mposi ng t he t hi r d
2 amendment , t he Net Wor t h Sweep. And i n r esponse t o t hei r
3 cl ai mt hat t hat s not t r ue, of cour se, we asked f or
4 di scover y. Wel l , we t hi nk i t s t r ue. We t hi nk your publ i c
5 st at ement s essent i al l y make t hat t r ue and our di scover y
6 r equest ci t es speci f i c publ i c document s t hat - - you know,
7 t hr ough our di scover y r equest s. We gi ve an exampl e of a
8 publ i c document t hat i s of t he i l k t hat we r e r equest i ng.
9 But , Your Honor , our poi nt i s t he Gover nment can t
10 bot h say our cl i ent , FHFA, i s not t he Uni t ed St at es; i t s not
11 an ar mor an agent of Tr easur y; i t wasn t act i ng f or t he
12 benef i t of t he t axpayer s. Al l of t he met r i cs t hat t he Cour t
13 i t sel f i dent i f i ed i n t he di scover y or der don t exi st as a
14 mat t er of f act . They can t say t hat on t he one hand and t hen
15 say, but we can t - - we r e not goi ng t o gi ve you t he
16 i nf or mat i on goi ng t o t hat i ssue because we r e r el yi ng on a
17 uni quel y gover nment pr i vi l ege t hat t hey ve j ust excl uded
18 t hei r cl i ent f r omcl ai mi ng wi t h t hei r own posi t i on. They
19 can t do bot h of t hose - -
20 THE COURT: And so f ar , I haven t got t en - - I
21 haven t r ecei ved a good answer f r omt he Gover nment . Counsel
22 i s ver y abl e. But counsel has expr essed concer n of what
23 coul d happen i f cer t ai n document s ar e r el eased, whi ch I do
24 not want t o see happen, but counsel di dn t answer t o my
25 sat i sf act i on t he di scr epancy bet ween sor t of usi ng t he
24
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1 del i ber at i ve pr ocess as swor d and shi el d. On one hand, FHFA
2 i s a gover nment ent i t y, you know, f or pur poses of boot i ng t he
3 Pl ai nt i f f s out of cour t and not par t of t he Gover nment , but
4 f or pur poses of f or war di ng di scover y, al l of a sudden
5 del i ber at i ve pr ocess i s appr opr i at e because t hey ar e par t of
6 t he Gover nment . So, i t s a schi zophr eni c appr oach and I m
7 j ust wai t i ng t o hear a r easonabl e expl anat i on.
8 MR. COOPER: Wel l , Your Honor , I don t t hi nk you l l
9 f i nd one, par t i cul ar l y i n l i ght of t he f act t hat , as I
10 ment i oned, i t i s t he Gover nment s bur den t o est abl i sh i t s
11 ent i t l ement t o t he pr i vi l ege. And out of i t s own mout h, i t
12 di squal i f i es i t - - di squal i f i es i t sel f f r omt he ver y
13 pr i vi l ege t hat t hey seek, t hat uni quel y gover nment al
14 pr i vi l ege not avai l abl e t o pr i vat e par t i es and cer t ai nl y not
15 avai l abl e t o t he conser vat or i f t he conser vat or i s not t he
16 Uni t ed St at es as t hey mai nt ai n.
17 The ot her t hi ng I d l i ke t o addr ess on t hi s i s
18 counsel s cl ai ms made i n t hei r br i ef i ng t o t he Cour t and her e
19 agai n and emphasi zed her e, t hat what we r e seeki ng i s
20 i nf or mat i on r el at i ng t o ongoi ng del i ber at i ons wi t hi n t he
21 agenci es wi t h r espect t o how, whet her and when t he
22 conser vat or shi ps wi l l be t er mi nat ed. That s - -
23 THE COURT: Wel l , I do have a - - I do have a
24 concer n about t hat . Her e s why and why I d l i ke t o see
25 di scover y i n waves. I - - r i ght now, at t hi s j unct ur e, we r e
25
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1 not her e t o det er mi ne whet her or not a t aki ng occur r ed. What
2 we ar e det er mi ni ng i s whet her t he Pl ai nt i f f s can meet t he
3 Uni t ed St at es j ur i sdi ct i onal chal l enge, whi ch i s t hese - -
4 t he conser vat or s, t he conser vat or shi p, i s not par t of t he
5 Uni t ed St at es. I t s not a gover nment agency, excuse me.
6 I t s not a gover nment agency. Ther ef or e, t he Pl ai nt i f f s ar e
7 not pr oper l y bef or e t hi s Cour t because i n t hi s Cour t , t he
8 onl y ent i t y t hat can be sued i s t he Uni t ed St at es Gover nment .
9 MR. COOPER: Your Honor , t hat - -
10 THE COURT: So, some of t he r equest s seemt o get
11 i nt o mer i t s ar gument s.
12 MR. COOPER: Yes.
13 THE COURT: And t hat concer ns me because I mnot
14 al l owi ng, I t hi nk - - as t he br eadt h of di scover y t hat
15 Pl ai nt i f f seeks, I t hi nk, and I under st and why advocat es do
16 i t , t hey r e l ooki ng f or t oo much. But I t hi nk t he Gover nment
17 i s of f er i ng t oo l i t t l e.
18 MR. COOPER: Wel l , Your Honor , on t hat poi nt , I
19 want t o - - f i r st of al l , I want t o agr ee wi t h t he Cour t s
20 poi nt , but t o add t hi s, and t hat s t hei r j ur i sdi ct i onal
21 cl ai m, i sn t onl y t hat FHFA i s not t he Uni t ed St at es; i t i s
22 al so t hat t hi s case i s not r i pe f or your consi der at i on. And
23 t hat i s t he cl ai munder whi ch t hey seek t o shi el d and t o
24 pr event di scover y wi t h r espect t o pr of i t abi l i t y, t hese
25 pr of i t abi l i t y pr oj ect i ons t hat we have sought and t hey ve
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1 agr eed t o pr ovi de, at l east wi t h r espect t o t hose nar r ow t i me
2 r anges and - - and on t hat , l et me j ust go ahead and make t he
3 poi nt bef or e I l ose i t , whi ch i s t hat t hey ve basi cal l y sai d,
4 okay, we l l gi ve you t hi s i nf or mat i on, t he i nf or mat i on
5 r el at i ng t o pr of i t abi l i t y pr oj ect i ons and when, whet her and
6 how t he conser vat or shi ps wi l l be t er mi nat ed, we l l gi ve you
7 t hat f or t wo nar r ow t i me r anges.
8 One, t he seven- and- a- hal f mont hs bef or e t he t hi r d
9 amendment , t hat i s f r om, I t hi nk, J anuar y 1st , 2012 t o August
10 17t h, 2012, when t he Net Wor t h Sweep was adopt ed. Those
11 seven- and- a- hal f mont hs, we l l gi ve you t hat . And we l l gi ve
12 you t hat i nf or mat i on wi t h r espect t o t he per i od of t i me when
13 t he conser vat or shi ps wer e put i n pl ace. And, agai n, t hei r
14 cl ai mf or not gi vi ng us any of t he i nf or mat i on r el at i ng t o
15 t hose t wo r i peness i ssues i n bet ween i s - - i t s not cl ear .
16 I mnot sur e what i t i s.
17 Because, Your Honor , how i s i t goi ng t o be - - how
18 do t hey suppor t t he pr oposi t i on t hat t hi s i s - - what t hey r e
19 wi l l i ng t o gi ve us i s del i ber at i ve pr ocess - - i s not
20 del i ber at i ve pr ocess and i s not a t hr eat t o t he ongoi ng
21 management of conser vat or shi ps, but what t hey r e not wi l l i ng
22 t o gi ve us bet ween t hose t wo dat es somehow i s. The onl y
23 possi bl e cl ai mhas t o be t hat i t s j ust t oo bur densome, and
24 t hey haven t made t hat cl ai m. They haven t made t hat
25 ar gument .
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1 But , Your Honor , on t he r i peness i ssue, t he i ssue
2 her e i s not - - or at l east l et me put i t t hi s way. Counsel
3 ar gues emphat i cal l y t hat t hi s r el at es t o ongoi ng
4 del i ber at i ons wi t hi n t he Gover nment , wi t hi n t he agenci es
5 about how, whet her and when t he conser vat or shi ps wi l l
6 t er mi nat e. And t hey say t hat i sn t and can t be known
7 because i t wi l l be Congr ess t hat t er mi nat es t hose - -
8 t er mi nat es t hose conser vat or shi ps i f and when t hey ever ar e
9 t er mi nat ed.
10 Your Honor , t he i ssue i sn t bef or e t hi s Cour t ,
11 i sn t what deci si on i s Congr ess goi ng t o make. I f t hat wer e
12 t he quest i on, t her e woul d never be a r i pe case bef or e t hi s
13 Cour t , because ever y case t hat i s br ought bef or e t hi s Cour t ,
14 Congr ess can change i t l i ke t hat wi t h l egi sl at i on. I t can - -
15 i f Congr ess enact ed a measur e t hat woul d appeal t he Net Wor t h
16 Sweep, whi ch t hey coul d cer t ai nl y do, wel l , my case woul d be
17 t r ansf or med subst ant i al l y i n t hi s cour t r oom. I t coul d do
18 t hat . I t coul d do any number of t hi ngs.
19 But what Congr ess may or may not do i s not t he
20 quest i on her e. I t s whet her or not t he Gover nment has made a
21 pol i cy deci si on wi t h r espect t o when, whet her and how t he
22 conser vat or shi ps wi l l t er mi nat e, and i t cl ear l y has, or at
23 l east our poi nt i s t hat t her e s a weal t h of publ i c
24 i nf or mat i on and st at ement s t o suppor t t he pr oposi t i on t hat i t
25 has. And i n t he f ace of t hei r deni al t hat i t has, we r e
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1 ent i t l ed t o di scover y t o br i ng i nf or mat i on t o t hi s Cour t t o
2 pr ove t hat t hi s case i s r i pe. I t i s r i pe.
3 The Gover nment has basi cal l y made t he deci si on - -
4 t he pol i cy deci si on t hat t he Gover nment , t he FHFA, wi l l never
5 end t he conser vat or shi ps. They have sai d - - and t hey wi l l
6 not be ended unl ess and unt i l Congr ess does so, and t hey say
7 t hat i n t hei r paper s. We ant i ci pat e, t hey say over and over ,
8 t hat Congr essi onal act i on wi l l be what ul t i mat el y r esol ves
9 t he quest i on about Fanni e and Fr eddi e and t he
11 And, so, t hey ve made t he deci si on t hat t he
12 conser vat or shi ps wi l l cont i nue i n ki nd of a st at e of
13 per pet ual ser vi t ude, Fanni e and Fr eddi e, t o t he Gover nment as
14 t he Gover nment ext r act s f r omFanni e and Fr eddi e al l of t hei r
15 ear ni ngs and t he OMB, and a document at t ached t o our appendi x
16 pr oj ect s pr of i t abi l i t y pr oj ect i on. And by t he way, I asked
17 my col l eagues t o f i nd out how many publ i c r epor t s t he
18 Gover nment , FHFA, Tr easur y, OMB have publ i shed t hat i ncl ude
19 pr oj ect i ons of t he pr of i t abi l i t y of t he f ut ur e f i nanci al
20 per f or mance of Fanni e and Fr eddi e. We ve been abl e t o come
21 up wi t h 83. That s t hat st ack r i ght t her e, ar e publ i c
22 pr of i t abi l i t y r epor t s, Your Honor .
23 The not i on t hat i nf or mat i on wi t h r espect t o
24 pr of i t abi l i t y i s so sensi t i ve i s di f f i cul t t o t ake i n t he
25 l i ght of t hat . But - -
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1 THE COURT: Then do you have what you need?
2 MR. COOPER: Your Honor , not - -
3 THE COURT: Ther e s al ways mor e, i s t hat what
4 you r e goi ng t o t el l me?
5 MR. COOPER: I n t he l i ght of t hei r r i peness
6 ar gument , no, I don t . Thei r r i peness ar gument - -
7 THE COURT: You don t t hi nk you have enough t o meet
8 t hei r r i peness ar gument wi t h t hose 83 document s?
9 MR. COOPER: Your Honor , I do bel i eve, Your Honor ,
10 t hat t hei r cl ai mabout t he - - about t he conj ect ur al
11 specul at i ve nat ur e of Fanni e and Fr eddi e s f ut ur e
12 pr of i t abi l i t y i s bel i ed by what t hey t ol d t he publ i c. I do
13 bel i eve t hat , yes. But , st i l l , t hey do mai nt ai n what t hey r e
14 sayi ng about t hi s Cour t s j ur i sdi ct i on and r i peness. And
15 t hey ve pl aced t hat i ssue i nt o di sput e and, Your Honor , I
16 bel i eve t hat we r e ent i t l ed t o t ake di scover y as t he Cour t - -
17 as t he Cour t speci f i cal l y hel d i n i t s Febr uar y or der on t hat .
18 And on t he t er mi nat i on of t he conser vat or shi ps, t he
19 Gover nment has sai d i t wi l l not - - t hat Fanni e and Fr eddi e
20 wi l l not be al l owed t o r ebui l d capi t al and t o r et ur n t o t hei r
21 f or mer st at us - - f or mer cor por at e st at us, sai d t hat t he
22 Gover nment has basi cal l y made t he deci si on or has a
23 commi t ment t o wi nd t hemdown, has made cl ear t hat ever y
24 dol l ar of ear ni ngs wi l l be used f or t he benef i t of t axpayer s,
25 has made cl ear t hat i t has a commi t ment - - i n an i nt er nal
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1 document , by t he way, pr oduced el sewher e - - t hat - - pr oduced
2 i n 2010 - - I mean, wr i t t en i n 2010, t hat t he agenci es - - t he
3 Gover nment has a commi t ment t hat t he pr i vat e equi t y wi l l
4 never be al l owed access t o posi t i ve ear ni ngs - -
5 THE COURT: Wel l , l et me ask you t hi s, wi t h t he
6 document s, what about j ust t aki ng t he deposi t i ons of
7 conser vat or s?
8 MR. COOPER: Wel l , we ar e l ooki ng f or war d t o doi ng
9 - -
10 THE COURT: Woul dn t t hat j ust r esol ve i t ? You
11 woul dn t have t o t hen ask f or any i nt er nal document s?
12 MR. COOPER: Wi t h r espect t o - -
13 THE COURT: I mean, do you get what you need t o
14 meet t he r i peness ar gument ?
15 MR. COOPER: Wi t h r espect t o pr of i t abi l i t y or wi t h
16 r espect t o t er mi nat i ng t he - -
17 THE COURT: Bot h.
18 MR. COOPER: Wel l , Your Honor - -
19 THE COURT: And t ake one at a t i me, your choi ce.
20 MR. COOPER: Yes. But , Your Honor , we do
21 ant i ci pat e t aki ng deposi t i ons and we r e - - and we ve
22 i dent i f i ed and t he Gover nment has i dent i f i ed i ndi vi dual s t o
23 us who have t he r el evant i nf or mat i on i n t hei r possessi on.
24 Bef or e we t ake a deposi t i on, you know, we bel i eve t hat t he
25 di scover y t hat t he Cour t has aut hor i zed i s a necessar y
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1 el ement of t hat .
2 THE COURT: Wel l , di scover y - - obvi ousl y, i t
3 i ncl udes t he deposi t i ons. But what I want t o - - what I m
4 t r yi ng t o par e down i s t he br eadt h of t he di scover y f or a
5 j ur i sdi ct i onal det er mi nat i on, t he t wo el ement s. I s t he case
6 r i pe? Do you - - i s t hi s ent i t y - - i s FHFA an ent i t y wi t hi n
7 t he Uni t ed St at es?
8 MR. COOPER: Yes, Your Honor , t hose t wo
9 j ur i sdi ct i onal i ssues.
10 THE COURT: So, coul dn t - - so, t hose - - i f you - -
11 once you - - i f you est abl i sh t hat , t hen we get i nt o t he
12 mer i t s of t he case.
13 MR. COOPER: Wel l , Your Honor , what t he publ i c
14 i nf or mat i on t hat we have ci t ed t o t he Cour t does i s r ai se t he
15 f act ual i ssue bet ween t he par t i es wi t h r espect t o t he t r ut h
16 of t hat mat t er . I t cast s i nt o quest i on t he accur acy of t he
17 cl ai mt he Gover nment has made t hat t he agenci es and t he
18 Gover nment has made no deci si on wi t h r espect t o t he
19 conser vat or shi p. I t may wel l be t hat t hey wi l l - - t hey wi l l
20 r et ur n t hemt o pr i vat e - - t o pr i vat e cont r ol . Your Honor , we
21 don t - - we t hi nk t hat t he i nf or mat i on t hat we r e ent i t l ed t o
22 have wi l l demonst r at e t hat t hat i sn t t he case and t hat t hey
23 have made a deci si on, a f i nal deci si on t hat s not subj ect t o
24 t he i nf or mat i on about whi ch i s subj ect t o di scover y because
25 i t i s not , as t he Gover nment cl ai ms, an ongoi ng del i ber at i on
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1 pr e- deci si onal . They say ever yt hi ng - -
2 THE COURT: But t he best per son t o ask woul d be t he
3 conser vat or s.
4 MR. COOPER: Yes, Your Honor , and we wi l l want t o
5 do t hat , cer t ai nl y.
6 THE COURT: So, why - -
7 MR. COOPER: But we woul d l i ke t o have i nf or mat i on
8 i n our hands t hat i s pr oduced t hr ough t hi s - - under t hi s
9 Cour t s or der , t o subst ant i at e and t o ask t hose quest i ons
10 about .
11 THE COURT: I t seems mor e mer i t s di scover y t o me at
12 t hi s st age t han i t i s di scover y i n ai d of j ur i sdi ct i on - - of
13 est abl i shi ng t he Cour t s j ur i sdi ct i on.
14 MR. COOPER: Wel l , Your Honor , cer t ai nl y t he par t
15 of t he pr of i t abi l i t y i ssue t hat goes t o t he r easonabl eness of
16 t he Pl ai nt i f f s and ot her i nvest or s expect at i ons - -
17 THE COURT: Expect at i ons - - and best expect at i ons.
18 MR. COOPER: - - t hat does go t o t he mer i t s,
19 absol ut el y. And, i n t hat sense, over l aps wi t h t he
20 j ur i sdi ct i onal i ssues. And, i n f act , t he Gover nment , i n i t s
21 char t , says t hat wi t h r espect t o i nf or mat i on t hat woul d be
22 r esponsi ve t o r equest 1A, t hat i nf or mat i on r el at es bot h t o
23 t he j ur i sdi ct i onal i ssues, t hat i s t he r i peness i ssue, and
24 t he mer i t s i ssue r egar di ng r easonabl eness of our i nvest ment -
25 backed expect at i ons.
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1 But , Your Honor , as t he Cour t s or der i s cl ear , t he
2 r i peness quest i on i s bef or e t he Cour t because t he Gover nment
3 has cont r adi ct ed al l egat i ons i n our compl ai nt suppor t ed by at
4 l east some i nf or mat i on publ i cl y avai l abl e t hat t he
5 Gover nment s f ul l y assessi ng Fanni e and Fr eddi e s f ut ur e
6 pr of i t abi l i t y as ver y br i ght as f ar as t he eye can see. As I
7 ment i oned, OMB says t hey expect t hese ent i t i es t o gener at e
8 over $210 bi l l i on i n r evenue f or t he Tr easur y over t he cour se
9 of t he next 10 year s, on t op of t he over $200 bi l l i on t hat
10 Fanni e and Fr eddi e has al r eady r epai d t o t he Gover nment .
11 So, Your Honor , agai n, I woul d ur ge t he Cour t t o
12 hol d t o i t s di scover y or der and per mi t t he di scover y or der
13 we r e seeki ng t o go f or war d, even i n t hi s l ayer ed appr oach
14 t hat t he Cour t i s suggest i ng.
15 I f I coul d addr ess counsel s ar gument wi t h r espect
16 t o t he cl ai mt hat our di scover y r equest s ar e out si de of t he
17 scope - - t he l egi t i mat e scope of t hi s Cour t s or der . Counsel
18 has f ocused, f or exampl e, on our r equest s 2, 3 and 5, and
19 t hose r equest s, Your Honor , do go t o pr of i t abi l i t y. Request
20 number 2, f or exampl e, asks f or any and al l document s
21 r el at i ng t o t he deci si on t o compensat e Tr easur y f or i t s
22 f i nanci al commi t ment by awar di ng war r ant s t o pur chase 79. 9
23 per cent of t he company s common st ock.
24 Your Honor , we t hi nk t hat goes di r ect l y t o t he
25 Gover nment s assessment of pr of i t abi l i t y because t he
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1 Gover nment was, at t hat poi nt , t aki ng an 80 per cent st ake i n
2 t he f ut ur e pr of i t s of t hese ent i t i es. And subsequent
3 val uat i ons by Tr easur y of t he val ue of t hose war r ant s ar e, by
4 def i ni t i on, a st at ement wi t h r espect t o pr of i t abi l i t y.
5 Agai n, our r equest , Your Honor , we have at t empt ed
6 t o cue ver y car ef ul l y and t i ght l y t o t he scope of t he i ssues
7 t hat t he Cour t has per mi t t ed di scover y on. And, Your Honor ,
8 I bel i eve I ve made t he poi nt s I d l i ke t o make i n r esponse
9 t o counsel s pr esent at i on. I f t he Cour t has any addi t i onal
10 quest i ons, I d be happy t o addr ess t hem.
11 THE COURT: No, t hank you. Thank you, Mr . Cooper .
12 MR. COOPER: Thank you, Your Honor .
13 MS. HOSFORD: May I appr oach, Your Honor ?
14 THE COURT: Cer t ai nl y.
15 MS. HOSFORD: Thank you.
16 Your Honor , I d f i r st l i ke t o addr ess t he
17 i nconsi st ency i ssue, whet her FHFA i s ent i t l ed t o asser t t he
18 del i ber at i ve pr ocess pr i vi l ege i n l i ght of t he Gover nment s
19 ar gument t hat i t i s not t he Uni t ed St at es. I woul d f i r st
20 poi nt out t hat t he i nconsi st ency was or i gi nal l y cr eat ed by
21 t he Pl ai nt i f f s. They r e t he ones who, i n f i l i ng t hei r
22 compl ai nt , al l eged t hat FHFA i s t he Uni t ed St at es. Now, when
23 we r e embar ki ng on di scover y i n advance of a deci si on on our
24 mot i on t o di smi ss, t hey r e sayi ng, no, si nce FHFA i s not t he
25 Uni t ed St at es, you shoul d not be abl e t o asser t t he
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1 del i ber at i ve pr ocess pr i vi l ege. So, t her e s been
2 i nconsi st ency on t he Pl ai nt i f f s par t .
3 And even set t i ng t hat si de, i f we r e r i ght and FHFA
4 i s not t he Uni t ed St at es and t he Cour t doesn t have
5 j ur i sdi ct i on, t hen t hey r e not - - t hey r e absol ut el y not
6 ent i t l ed t o any mat er i al s of any ki nd i n t he cont ext of t hi s
7 act i on. I f we r e wr ong and FHFA i s t he Uni t ed St at es, and
8 t hat has not yet been deci ded, t hen FHFA i s ent i t l ed t o
9 del i ber at i ve pr ocess pr i vi l ege.
10 So, by wai vi ng t he pr i vi l ege at t hi s t i me, t he FHFA
11 put s i t i n an unt enabl e posi t i on - - i t sel f i n an unt enabl e
12 posi t i on. I t ei t her - - i t woul d be di scl osi ng document s t hat
13 woul d never have been di scl osed i f t he Cour t f i nds i t s not
14 t he Uni t ed St at es or i t coul d be di scl osi ng document s t hat
15 woul d be subj ect t o del i ber at i ve pr ocess pr i vi l ege i f t he
16 Cour t f i nds t hat i t i s t he Unt i ed St at es. So, FHFA j ust
17 cannot wai ve t he del i ber at i ve pr ocess pr i vi l ege at t hat t i me.
18 I t j ust cannot happen.
19 Movi ng on t o some of Fai r hol me s counsel s
20 comment s, i n t hei r r epl y, and agai n t oday, Pl ai nt i f f s cl ai m
21 t hat t he Gover nment i s l ooki ng f or bl anket r el i ef and t hat
22 t her e i s absol ut el y no way t hat t hat r el i ef i s wi t hi n t he
23 scope of Sect i on 4617( f ) . I woul d j ust poi nt out t hat t he
24 pl ai n l anguage of 4617( f ) i s ver y br oad and i t s wi t hi n t he
25 cont ext of ver y compr ehensi ve aut hor i t y and excl usi ve
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1 aut hor i t y t hat s pr ovi ded t o t he conser vat or when t he
2 ent er pr i ses ar e i n conser vat or shi p.
3 Once t he ent er pr i se - - i f t he ent er pr i ses wer e t o
4 be put i n r ecei ver shi p - - and, obvi ousl y, no deci si on has
5 been made on t hat and t hat s down t he r oad - - t her e may be
6 cer t ai n r i ght s t hat t he r ecei ver - - t hat t he shar ehol der s
7 woul d have t o l ook f or - - t o seek a l i qui dat i on pr ef er ence or
8 some sor t of cl ai m. At t hi s poi nt , t hey have no r i ght s under
9 4617( b) ( 2) , and t hat i s one basi s f or our mot i on t o di smi ss,
10 obvi ousl y. But you can t di vor ce 4617( f ) f r omt he t ot al i t y
11 of t he st at ut e whi ch put s excl usi ve aut hor i t y on t he
12 conser vat or and pr event s any sor t of second guessi ng or
13 i nt er f er ence wi t h conser vat or s oper at i on of t he
15 I n f act , t he Ei ght h Ci r cui t i n t he Di t t mer case has
16 sai d t hat wi t h r espect t o an anal ogous pr ovi si on i n FI RREA,
17 i t s al most i dent i cal , t hat t he pr ovi si ons t o pr ohi bi t any
18 i nt er f er ence, di r ect or i ndi r ect , t he f unct i ons of a
19 conser vat or or a r ecei ver . Ther e, what had happened was FDI C
20 had sol d a not e t o anot her ent i t y and t hen t her e was a sui t
21 on t hat not e, and t hat sui t was pr ecl uded because i t woul d
22 have an i ndi r ect ef f ect on FDI C.
23 So, we f eel st r ongl y t hat 4617( f ) i s appl i cabl e t o
24 t hi s case, and i n l i ght of t he ser i ous har ms t hat wer e
25 out l i ned i n t he decl ar ant s - - decl ar at i ons, t hat Pl ai nt i f f s
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1 shoul d not be abl e t o seek di scover y f r omAugust 17t h, 2012
2 on f or 1A and 6 t hr ough 10. And I woul d j ust poi nt out t hat
3 t he t i t l e of 6 t hr ough 10 of t he r equest s f or document s i s
4 t er mi nat i on of t he conser vat or shi ps. Al l t hey ar e l ooki ng
5 f or i s ongoi ng t hi nki ng about what wi l l happen t o t he
7 And j ust get t i ng t o - - t hen movi ng on t o counsel s
8 poi nt s about whet her or not a deci si on has been made wi t h
9 r espect t o t he f ut ur e of t he conser vat or shi ps and whet her or
10 not t her e shoul d be deposi t i ons her e, we have t hr ee swor n
11 st at ement s by gover nment of f i ci al s, i ncl udi ng t he di r ect or of
12 t he FHFA and counsel or t o t he Secr et ar y of t he Tr easur y f or
13 housi ng f i nance who have sai d def i ni t i vel y, we have not made
14 a deci si on yet . Ther e has been no deci si on made. Congr ess
15 wi l l ul t i mat el y have t o t ake some sor t of act i on.
16 What Pl ai nt i f f s seemt o be i mpl yi ng i s t hat t her e
17 i s some sor t of bad f ai t h on t he f act of t hese decl ar ant s who
18 ar e sayi ng t hi s unequi vocal l y and we absol ut el y woul d not
19 agr ee t o deposi t i ons of t hese hi gh of f i ci al s at t hi s poi nt i n
20 t he case, par t i cul ar l y si nce t hei r decl ar at i ons ar e so cl ear .
21 Ther e s no quest i on about t he f act t hat t her e s been no
22 deci si on made. Ther ef or e, t he Pl ai nt i f f s cl ai mi s not
23 r i ght . I f , however , a deci si on has been made, as t he
24 Pl ai nt i f f s al l ege, t hen t hey don t need di scover y, t hey have
25 t hi s weal t h of publ i c i nf or mat i on t hat t hey ve made r ef er ence
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1 t o, and t he Cour t can j ust deci de t he i ssue.
2 I woul d al so poi nt out t hat Pl ai nt i f f s cl ai mt hat
3 t he secr et pl an i s t hat FHFA and t he Gover nment wi l l never
4 end t he conser vat or shi ps. FHFA doesn t even have aut hor i t y
5 t o mai nt ai n Fanni e Mae and Fr eddi e Mac i n conser vat or shi p i n
6 per pet ui t y. I mean, i t s an i ndef i ni t e, but not a per manent
7 st at e t hat t hey r e i n now. The aut hor i t y of t he conser vat or
8 i s t o r eor gani ze or r ehabi l i t at e or wi nd up t he ent er pr i ses.
9 I t does not have aut hor i t y t o j ust keep i t i n conser vat or shi p
10 st at e f or ever . And, so, Pl ai nt i f f s st at ement i n t hei r br i ef
11 and t hei r st at ement s t oday t o t hat ef f ect ar e j ust f l at out
12 wr ong. And t he decl ar at i ons back t hat up and we don t need
13 any f ur t her di scover y on t he quest i on of whet her t he - - what
14 wi l l happen t o t he conser vat or shi ps. We know t hat nobody
15 knows at t hi s poi nt what wi l l happen.
16 Pl ai nt i f f s sai d, wel l , t he deci si on i s t hat
17 Congr ess has t o make t hat deci si on. Wel l , t hat s not a
18 deci si on. Congr ess hasn t made a deci si on. Theor et i cal l y,
19 FHFA coul d put t he ent er pr i ses i n r ecei ver shi p i f t hey - - i f
20 t hei r f i nanci al condi t i on det er i or at es subst ant i al l y,
21 r egar dl ess of whet her Congr ess makes a deci si on. At t hi s
22 poi nt i n t i me, i t s t hought t hat Congr ess may t ake act i on
23 f i r st , but nobody knows f or sur e what i s goi ng t o happen, and
24 t hat i s t he poi nt of t hi s whol e housi ng r ef or mef f or t .
25 Get t i ng t o t he i ssue of scope and Pl ai nt i f f s say,
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1 wel l , you know, you can t have a bl anket cat egor i cal
2 pr i vi l ege. Wel l , as I ment i oned ear l i er , yes, you can have a
3 bl anket cat egor i cal pr i vi l ege when i t r el at es t o ongoi ng
4 document s and f ut ur e document s t hat ar e subj ect t o, i n t hi s
5 case, t he del i ber at i ve pr ocess pr i vi l ege or t he pr ot ect i on
6 under 4617( f ) . A cut of f dat e i s per f ect l y appr opr i at e and
7 t he cut of f dat e t hat we have pr oposed her e i s per f ect l y
8 appr opr i at e and we cannot over st at e t he har ms t hat wi l l occur
9 i f - - t hr ough deposi t i on t r anscr i pt s or document s get t i ng out
10 about t he f ut ur e of t he conser vat or shi ps t hat somehow
11 i nt er est r at es spi ked or some ot her economi c har mt ook pl ace.
12 THE COURT: I do have a quest i on f or you. Wi t h t he
13 document s t hat you ar e wi l l i ng t o pr oduce - -
14 MS. HOSFORD: Mm- hmm.
15 THE COURT: - - as set f or t h i n your char t , Document
16 60 - - I guess i t s page 22 of 23 - - ar e any of t hese
17 document s - - do you want any of t hese document s subj ect t o a
18 pr ot ect i ve or der ? Do we need t he pr ot ect i ve or der i n pl ace
19 so t hat al l t hese document s ar e under seal ?
20 MS. HOSFORD: Yes, we do need a pr ot ect i ve or der
21 and we have been wor ki ng on a dr af t pr ot ect i ve or der and we
22 wer e hopi ng t o pr esent i t t o t he Pl ai nt i f f s wi t hi n t he next
23 f ew days. But t he pr ot ect i ve or der we r e t al ki ng about i s
24 not t he same t ype of pr ot ect i ve or der t hat we r e aski ng t he
25 Cour t t o gr ant . I t s t he mor e t ypi cal pr ot ect i ve or der .
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1 THE COURT: Of cour se, yes. That was my quest i on,
2 yes. I under st and t hat t he pr ot ect i ve or der t hat you ve
3 moved f or i n your mot i on i s t o be r el i eved of t he obl i gat i on
4 t o r espond t o di scover y. That di dn t escape my not i ce.
6 THE COURT: My quest i on was - - my quest i on was - -
7 and you ve act ual l y - - I want ed t o know i f you wer e goi ng t o
8 need a pr ot ect i ve or der , t he t r adi t i onal t ype you woul d f i nd
9 i n For m- - I t hi nk i t s 8, of our r ul es. Do you t hi nk you
10 can get a pr oposed f or mor der f i l ed by next Tuesday by 5: 00
11 p. m. ?
12 MS. HOSFORD: Your Honor - -
13 THE COURT: That obvi ousl y i s a quest i on. I t i sn t
14 a di r ect i ve. Do you t hi nk t hat s possi bl e? I mean, i s t hat
15 possi bl e?
16 MS. HOSFORD: We woul d make ever y ef f or t t o do so.
17 Obvi ousl y, I can t make t he deci si on mysel f , but we woul d
18 wor k as har d as we coul d t o meet t hat deadl i ne. But I can t
19 - - I can t st and her e and say, yes, we - -
20 THE COURT: Okay. Wel l , I mgoi ng t o gi ve t hat as
21 a deadl i ne. I f you need t o enl ar ge t he deadl i ne, I wi l l
22 gr ant i t . But I - - t he way I r un my cases and keep t hi ngs on
23 t r ack i s I have deadl i nes i n pl ace, and t hen I can - - you
24 wi l l t el l me i f you can meet i t . I f you can, gr eat . I f you
25 need mor e t i me because you r e negot i at i ng t er ms, t hat s f i ne,
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1 t oo. But I l i ke t o have deadl i nes i n pl ace.
3 THE COURT: I t s my housekeepi ng met hod.
4 MS. HOSFORD: And, Your Honor , we woul d j ust not e
5 t hat t o t he ext ent t hat Cour t - - I t hi nk t he Cour t made
6 r ef er ence t o waves of di scover y and t hat a cut of f dat e woul d
7 be i mposed, we woul d r espect f ul l y ask, i f t he Cour t was
8 wi l l i ng t o do so, t hat t he Cour t al l ow us t o comment on a
9 dr af t of t he or der bef or e i t s act ual l y i ssued and
10 pot ent i al l y, you know, pr ovi de f ur t her j ust i f i cat i on f or
11 di f f er ent dat es and - -
12 THE COURT: No, I won t do t hat , but what I wi l l do
13 i s when I - - I wi l l - - I don t have a dat e cer t ai n, but I
14 wi l l be ent er i ng an or der somet i me i n t he near f ut ur e, I l l
15 put i t t hat way, and you can - - what I wi l l say i s i t wi l l
16 not go i nt o - - t hat you wi l l have, say, 10 days t o f i l e
17 f or r econsi der at i on and expl ai n - - and t hi s goes f or bot h
18 si des - - why you need mor e t i me or - - why mor e t i me i s
19 appr opr i at e or why l ess t i me i s appr opr i at e.
20 MS. HOSFORD: Okay. J ust one l ast t hi ng,
21 Pl ai nt i f f s counsel , i n r espondi ng t o our char t , r eal l y di d
22 seemt o onl y t ake i ssue wi t h one r equest and t hat i s - -
23 THE COURT: I t was my i mpr essi on he was - - t hat
24 wasn t my i mpr essi on of what - -
25 MS. HOSFORD: Wel l , I obvi ousl y t hi nk t hat t hey
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1 expect r esponses t o 6 t hr ough 10, but i n t al ki ng about t he
2 scope i ssues, whet her or not t he di scover y i s wi t hi n t he
3 scope of what t he Cour t or der ed, whi ch i s a separ at e i ssue
4 f r om6 t o 10. I t s def i ni t el y wi t hi n t he scope, but we say
5 t hat because i t f or ces t hemt o ( i naudi bl e) pr i vi l ege, i t
6 shoul dn t be pr oduced.
7 But he ment i ons number 2, deci si on t o compensat e
8 Tr easur y t hr ough 79. 9 per cent war r ant s. As I sai d ear l i er ,
9 t hat war r ant i ssue i s not - - does not go di r ect l y t o t he
10 sol vency of t he ent er pr i ses i n 2008, and as we sai d, i t woul d
11 be capt ur ed by 1A. So, unl ess t he Cour t has ot her
12 quest i ons. . .
13 THE COURT: No, t hank you ver y much.
14 MR. COOPER: Your Honor , woul d t he Cour t i ndul ge me
15 j ust f or a moment ?
16 THE COURT: Pl ease.
17 MR. COOPER: Thank you. The f i r st poi nt I want t o
18 make i s t hat counsel hasn t i n any way expl ai ned why a
19 pr ot ect i ve or der , one even i ncl udi ng t he caul ki ng t hat t he
20 Cour t has ment i oned, i s adequat el y pr ot ect i ve of t he
21 document s t hat ar e of t he same i l k as t he document s t hat t hey
22 want a bl anket , essent i al l y, pr i vi l ege f r omt hi s Cour t , t o
23 keep f r ompr oduci ng i t al l , why i t s good enough f or t he
24 document s t hat t hey say t hey ar e wi l l i ng and agr eed t o
25 pr oduce, but i t i sn t good enough t o pr ot ect t hei r i nt er est
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1 wi t h r espect t o t he document s t hat t hey want you t o si mpl y
2 gr ant t hema pass on.
3 The ot her t hi ng I d l i ke t o qui ckl y do i s j ust
4 t o - -
5 THE COURT: Wel l , I t hi nk i t goes t o t he magni t ude
6 of t he damage t hat can be - - or havoc t hat can be wr eaked i f
7 cer t ai n document s ar e r el eased t o t he publ i c. So, I
8 under st ood - - I msur e Def ense counsel wi l l t el l me what ever
9 she want s t o t el l me. And i f I have mi sunder st ood her
10 posi t i on, she can set me r i ght , but I t hi nk i t goes t o t he
11 magni t ude of har m.
12 So, I t hi nk i t goes t o damage cont r ol , f r ankl y. I
13 t hi nk t hat s what i t - -
14 MR. COOPER: Not t he - -
15 THE COURT: - - not damage cont r ol i n t er ms of
16 l i abi l i t y, but damage cont r ol i n t er ms of i f cer t ai n
17 document s ar e r el eased t o t he publ i c, i t coul d cr eat e, as t he
18 af f i ant s expl ai ned, wr eak havoc i n t he mar ket , i t coul d cause
19 i nt er est r at es t o spi ke. And t hat cer t ai nl y i s not t he
20 r eason we r e goi ng t hr ough t hi s exer ci se.
21 MR. COOPER: Your Honor , t he ot her poi nt I d l i ke
22 t o - - I d l i ke t o emphasi ze i s t hat my r ef er ence t o r equest
23 number s t wo and t hr ee speci f i cal l y was t o i l l ust r at e my poi nt
24 t hat ever y one of our r equest s ar e t i ght l y t et her ed t o t he
25 subj ect s, t he speci f i c subj ect s, t hat t he Cour t or der ed t hat
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1 we r e ent i t l ed t o di scover y on. And I don t want my - - and I
2 can t r udge t hr ough ever y one of t hemi f t he Cour t woul d l i ke
3 me t o.
4 THE COURT: No, no. I di d not const r ue your
5 si l ence wi t h r espect t o ot her r equest s as a wai ver of t he
6 necessi t y f or di scover y. I under st ood t hat .
7 MR. COOPER: And, so, we do not agr ee wi t h t he
8 l i mi t at i ons t hat counsel f or t he Gover nment has i dent i f i ed i n
9 t hi s char t . We don t agr ee wi t h t he t i me f r ames and
10 cer t ai nl y not wi t h t he l i mi t s, f or exampl e, on t he r equest s
11 11 t hr ough 18 t hat go di r ect l y t o t hi s quest i on whet her or
12 not FHFA i s t he Uni t ed St at es or i t was act i ng f or t he
13 benef i t of t he Uni t ed St at es i n t he Net Wor t h Sweep. Ever y
14 one of t hose r equest s, we woul d submi t t o you, i s t i ght l y
15 t et her ed t o t hat quest i on and t o t he quest i ons, whi ch t he
16 Cour t cor r ect l y not ed ar e di r ect l y r el evant t o t hat , t hat
17 i ssue i s a cont ext - speci f i c i ssue, as t he Cour t cor r ect l y
18 r el i ed on Sl at t er y, bi ndi ng aut hor i t y f r omt he Feder al
19 Ci r cui t , t o hol d.
20 And i t r equi r es i nqui r y i nt o t he pur poses, FHFA s
21 pur poses i n ent er i ng t he Net Wor t h Sweep, as whet her
22 i nf or mat i on concer ni ng whet her Tr easur y or any ot her
23 Gover nment agency was exer ci si ng some t ype of undue i nf l uence
24 and i t was act i ng, t her ef or e, at t he behest of t hose
25 agenci es. So, we bel i eve t hose r equest s ar e ver y t i ght l y
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1 t et her ed t o t hose i nqui r i es. And t he r el evance appear s on
2 t he f ace of t he r equest s, we woul d submi t , Your Honor . So,
3 t hank you.
4 THE COURT: Thank you, Mr . Cooper .
5 Counsel ?
6 MS. HOSFORD: I f I can j ust make one comment , Your
7 Honor .
9 MS. HOSFORD: Your Honor , you cor r ect l y st at ed one
10 of t he concer ns t hat t he Gover nment has about r espondi ng t o
11 t he di scover y r equest s number s 6 t hr ough 10, whi ch had t o do
12 wi t h t er mi nat i on of conser vat or shi ps, t he f ut ur e of Fanni e
13 Mae and Fr eddi e Mac and f ut ur e pr of i t abi l i t y. But anot her
14 equal l y i mpor t ant - - i t s not j ust about whet her document s
15 wi l l be di scl osed. I t s al so about t he spect er of
16 di scl osur es ef f ect on t he ongoi ng housi ng r ef or mef f or t .
17 As Dr . St egman i ndi cat ed i n hi s decl ar at i on, i f
18 t her e i s t he possi bi l i t y t hat ongoi ng di scussi ons - - f r ank
19 di scussi ons, maybe r adi cal pr oposal s, al l of whi ch ar e
20 pr edeci si onal and not di scl osed - - not subj ect t o di scover y,
21 i f t her e s some possi bi l i t y t hat i n t he f ut ur e t hey may be
22 di scl osed, t hen t hat s goi ng t o st ymi e t he housi ng r ef or m
23 ef f or t t hat s under way. I mean, i n t he decl ar at i on, i t
24 st at es Tr easur y per sonnel ar e unl i kel y t o f eel at l i ber t y t o
25 of f er t hei r opi ni ons. Ot her agenci es may cease communi cat i ng
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1 f r eel y wi t h Tr easur y.
2 And, you know, r at i onal es f or Tr easur y pol i ci es and
3 deci si ons wi l l sor t of - - t he whol e pr ocess of comi ng up wi t h
4 pol i cy coul d be sever el y i mpai r ed. And t he same t hi ng
5 appl i es t o FHFA. I f t her e - - i f t her e s t he t hr eat t hat any
6 deci si on t hey make about t he f ut ur e of t he conser vat or shi ps
7 coul d be subj ect t o pot ent i al di scl osur e, t hen t hey won t be
8 abl e t o ef f ect i vel y make t hose deci si ons and br i ng about t he
9 t ype of housi ng r ef or mt hat wi l l hel p us over come t he
10 f i nanci al cr i si s t hat we - - t hat happened i n 2008 and t hat we
11 want t o avoi d i n t he f ut ur e.
12 THE COURT: Thank you.
13 MR. COOPER: For gi ve me, Your Honor , wi t h t hi s
14 f oot not e. I t hi nk i t s i mpor t ant not t o l ose si ght of t he
15 f act t hat t hei r r equest f or t hi s bl anket except i on under
16 del i ber at i ve pr ocess pr i vi l ege r ubr i c f or pr oduci ng any
17 i nf or mat i on, f or exampl e, af t er August 17t h, 2012, cl ear l y
18 can t st and up t o t he si mpl e r eal i t y t hat t her e ar e many
19 document s i n t hat - - undoubt edl y i n t he Gover nment s f i l es
20 t hat ar e not pr i vi l eged at al l by def i ni t i on, document s t hat
21 t hey - - t he Gover nment has exchanged i n communi cat i ons wi t h,
22 f or exampl e, Congr ess, out si de - - out si de - - of t he Execut i ve
23 Br anch ar e - - accor di ng t o l ongst andi ng pr ecedent i n t hi s
24 Cour t and i n t he DC Ci r cui t and any ot her communi cat i ons wi t h
25 t hi r d par t i es out si de t he agency or out si de t he Execut i ve
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1 Br anch ar e cl ear l y not pr i vi l eged, so t hey woul d have t o
2 i dent i f y - - pr oduce t hose document s i n any event .
3 I nf or mat i on t hat goes t o t he subj ect i ve mot i vat i ons of FHFA
4 i n ent er i ng i nt o t he Net Wor t h Sweep, t hey put t hat i nt o - -
5 i nt o i ssue.
6 And, Your Honor , t he cases ar e cl ear t hat t hat
7 el i mi nat es t hei r abi l i t y t o t hen cl ai ma pr i vi l ege t o pr event
8 i nqui r y i nt o t hose subj ect i ve mot i vat i ons, t he quest i on t hat
9 t hi s Cour t i dent i f i ed. Pur pose. What - - was FHFA act i ng,
10 you know, under t he i nf l uence and dur ess of anot her
11 Gover nment agency. These t hi ngs ar e si mpl y not pr i vi l eged at
12 al l , and t he Gover nment can t - - t hey can t r ef use t o pr oduce
13 t hem. Thank you.
14 THE COURT: Thank you. And i t l ooks l i ke t her e s
15 one mor e not e comi ng f r omMr . Dr i sser ( phonet i c) .
16 I wi l l say t hi s, gi ven ever yt hi ng t hat s been sai d
17 t oday - - of cour se I haven t hear d any evi dence as yet , but
18 j ust based upon counsel s ar gument s, what I ve hear d so f ar
19 t ends t o suggest t hat FHFA i s - - I don t want t o say j oi ned
20 at t he hi p wi t h Tr easur y - - but i t doesn t sound l i ke t hey r e
21 necessar i l y an i ndependent ent i t y t hat s j ust not - - has no
22 connect i on t o t he Gover nment . But havi ng sai d t hat , I m
23 keenl y sensi t i ve t o t he del i ber at i ve par t , because t hat
24 woul d, t hen, cl ear l y br i ng i nt o pl ay l egi t i mat el y t he
25 del i ber at i ve pr ocess.
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1 And I amver y sensi t i ve t o t he t er r i bl e
2 r ami f i cat i ons t hat wi l l f l ow f r omt he di scl osur e of sensi t i ve
3 document s. So, I mver y sensi t i ve t o t hat , and t hat s
4 because I , agai n, j ust f r omt he ar gument s t hat have been
5 made, i t cer t ai nl y t ends t o suggest t hat - - haven t t aken
6 evi dence yet - - but t hat FHFA i s, i n f act - - coul d be
7 const r ued as a Execut i ve agency f or pur poses of maki ng t he
8 Uni t ed St at es l i abl e - - i f , i n f act , a t aki ng has occur r ed.
9 But , you know, I haven t made a deci si on on t hat .
10 I mj ust sayi ng based upon counsel s - - Gover nment counsel s
11 ar gument s t hat have been t r emendous advocacy on t he par t of
12 t he Gover nment , but , agai n, i f you r e sayi ng t hat FHFA i s
13 deal i ng di r ect l y and i s t aki ng gui dance f r omor wor ki ng hand
14 and gl ove wi t h Tr easur y, t hat - - and t hey r e hel pi ng - -
15 assi st i ng wi t h set t i ng pol i cy, t hat t ends t o show t hat t hey
16 ar e, i n f act , an ent i t y of t he Uni t ed St at es. And I see Mr .
17 Dr i sser get t i ng out hi s pen, so t her e may be t wo, whi ch i s
18 per f ect l y f i ne. I l l l et you f i ni sh wr i t i ng your not e t o
19 your co- counsel , and t hen you can ask me what ever you l i ke.
20 MS. HOSFORD: Your Honor , i n r esponse t o t he
21 st at ement you j ust made, we woul d j ust make t he poi nt t hat
22 FHFA does not act i n j ust one capaci t y. Ther e s FHFA act i ng
23 as r egul at or , and t hen t her e i s FHFA act i ng as a conser vat or .
24 We have ar gued t hat FHFA act i ng as t he conser vat or i s not t he
25 Uni t ed St at es, and t her e i s ampl e case l aw t o suppor t t hat
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1 posi t i on, but we do not - - we r e not i mpl y - - we don t mean
2 t o i mpl y or st at e t hat FHFA never act s as t he Uni t ed St at es.
3 THE COURT: I r eal l y - - t hank you f or t hat
4 cl ar i f i cat i on, because t hat cer t ai nl y wasn t comi ng t hr ough.
5 And I under st and t he di st i nct i on. I don t know i f i t wi l l
6 necessar i l y car r y t he day. I haven t deci ded i t yet . But
7 t hank you, because t hat poi nt was not comi ng t hr ough at al l .
8 MR. COOPER: Thank you, Your Honor .
9 THE COURT: Thank you. I mal so cur i ous bef or e
10 counsel - - i f you woul dn t mi nd comi ng back. You ve
11 suggest ed t he cut of f dat e - - wel l , act ual l y, t her e ar e t hr ee
12 cut of f dat es f or t he di scover y t hat - - i n your char t . What
13 ar e t he begi nni ng dat es of di scover y? Do you accept
14 Pl ai nt i f f s - -
15 MS. HOSFORD: Those ar e al so i n t he char t .
16 THE COURT: Par don?
17 MS. HOSFORD: They r e ar e al so i n t he char t .
18 THE COURT: Oh, I apol ogi ze.
19 MS. HOSFORD: That s okay.
20 THE COURT: Let me - - I shoul d have l ooked at i t
21 bef or e. I t hought I had - - oh, t hank you ver y much.
22 Oh, yes, I msor r y. I s t her e any - - woul d you
23 agr ee t o t he enl ar gement of any of t hese dat es?
24 MS. HOSFORD: I can t st and her e and say t hat we
25 woul d agr ee t o enl ar gement of t he dat es. Wi t h r espect t o t he
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1 Gover nment s cur r ent assessment of f ut ur e pr of i t abi l i t y, no,
2 t hat s our - - t hat s wher e we say t hat t he - - at 4617( f ) and
3 t he del i ber at i ve pr ocess pr i vi l ege pr ecl ude anyt hi ng af t er
4 August 17t h, 2012. I t hi nk t her e has been some negot i at i on
5 on t he ot her - - on t he ot her dat es, and i t may be subj ect t o
6 f ur t her negot i at i on.
7 THE COURT: Wel l , I don t - - I don t want t o
8 l ook - - wel l - -
9 MS. HOSFORD: We r e not negot i at i ng any f ur t her on
10 t hose dat es. I msor r y.
11 THE COURT: Al l r i ght . The ot her i ssue t hat I do
12 r ecal l , t her e was some i ssue wi t h r egar d t o sear ch t er ms.
13 Have you al l r eached agr eement ? And I r eal i ze your col l eague
14 may have - -
15 MS. HOSFORD: Ask Mr . Schwi nd t o addr ess t hat .
16 THE COURT: Mr . Schwi nd, woul d you l i ke t o - -
17 MR. SCHWI ND: Yes.
18 THE COURT: Have you r eached agr eement on - - wi t h
19 r egar d t o sear ch t er ms?
20 MR. SCHWI ND: Wel l , t hank you, Your Honor . And,
21 no, I mhappy t o r epor t we have r eached agr eement on sear ch
22 t er ms - -
23 THE COURT: Congr at ul at i ons. Good.
24 MR. SCHWI ND: - - and cust odi ans. The one aspect of
25 t he sear ch t hat we have not been abl e t o r each agr eement on
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1 i s wi t h r espect t o t he dat e r ange.
2 THE COURT: Sur e.
3 MR. SCHWI ND: And t hat s why we pr oposed t he dat e
4 r anges i n our mot i on t hat we have, and we t hi nk t hose r anges
5 ar e appr opr i at e f or t he subj ect s t hat t he Cour t has
6 i dent i f i ed i n i t s or der .
7 THE COURT: Ver y good. And I mgoi ng t o ask Mr .
8 Cooper , wi t h r egar d t o - - l et s say t hat I accept t he end
9 dat es, j ust hypot het i cal l y, t hat t he Gover nment pr oposes. Do
10 you agr ee wi t h t he st ar t dat es? I t l ooked f r omyour
11 di scover y r equest s i t woul d pr ecede - - j ust l ooki ng at t he
12 col umns, t he J ul y 1st of 2008 and t he J anuar y 1st of 2012 f or
13 t he l at t er t wo boxes, or amI mi st aken?
14 MR. COOPER: Your Honor , we - - i n t he di scussi ons
15 t hat Mr . Col at r i ano has headed up f or our t eamwi t h t he
16 Gover nment , we have not agr eed t o t hese dat e r anges, no.
17 THE COURT: Ver y good.
18 MR. COOPER: And - -
19 THE COURT: Wi t h r egar d t o t he dat e r anges, wi t h
20 r egar d t o when t he sear ch woul d begi n, l et s say I accept t he
21 end dat e pr oposed by t he Gover nment . What does t he Pl ai nt i f f
22 suggest f or t he st ar t dat es?
23 MR. COOPER: May I - -
24 THE COURT: And t hen you have your col l eague - -
25 MR. COOPER: Yeah, may I ask Mr . Col at r i ano t o
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1 addr ess t hat ?
3 MR. COLATRI ANO: Good af t er noon, Your Honor , may i t
4 pl ease t he Cour t .
5 THE COURT: Yes.
6 MR. COLATRI ANO: We have - - Mr . Schwi nd i s cor r ect .
7 As of yest er day, we have agr eement on sear ch t er ms and
8 cust odi ans, but we don t have agr eement on t he ent i r e dat e
9 r anges. Wi t h r espect - - we ve t aken a somewhat di f f er ent
10 appr oach t han t he Gover nment has i n i t s char t wher e t hey l i st
11 i t by t opi c. What we have done i s we have pr oposed wi t h
12 r espect t o di f f er ent sear ch t er ms have di f f er ent dat e r anges.
13 And f or most of t hose sear ch t er ms, we have st ar t ed
14 a f ew mont hs ear l i er t han t he Gover nment di d i n 2008. They
15 say J ul y 1; we have suggest ed t o t hemApr i l 1, 2008, t hr ough
16 December 31, 2008, f or cer t ai n t er ms. And t hen we have
17 pr oposed a second per i od wi t h r espect t o t hose sear ch t er ms,
18 a second dat e r ange t hat agai n begi ns a f ew mont hs bef or e t he
19 J anuar y 1, 2012 dat e t hat t hey ve pr oposed. And act ual l y i t
20 goes beyond by a f ew mont hs t he Sept ember 30t h dat e. I don t
21 t hi nk we r e t al ki ng about huge di f f er ences t her e, but we ar e
22 t al ki ng about some di f f er ences of a f ew mont hs.
23 And t hen wi t h r espect t o t he t hi r d cat egor y, we do
24 - - do not agr ee wi t h ei t her t he begi nni ng dat e or t he end - -
25 THE COURT: Cer t ai nl y t he end dat e, yes.
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1 MR. COLATRI ANO: And, so, i t mi ght be because we ve
2 t aken a somewhat di f f er ent appr oach, because way - - i t mi ght
3 be t hat i t mi ght make sense f or us t o maybe expl ai n our
4 r easoni ng f or t hi s. We coul d do a shor t - - submi t a shor t
5 f i l i ng descr i bi ng our pr oposed dat e r anges and t he r at i onal e
6 behi nd t hem. And t hen t hat woul d be t he onl y out st andi ng
7 t hi ng r el at i ng t o ESI because we have come t o an agr eement on
8 t he cust odi ans and t he sear ch t er ms, but we can expl ai n some
9 of our r easoni ng her e.
10 One concer n t hat we do have i s t hat , you know, i t s
11 i mpor t ant t o keep i n mi nd t hat our pr oposal i s not pr emi sed
12 on t he not i on t hat onl y document s i n t hose dat e r anges ar e
13 t he onl y r el evant document s. I nst ead, what we ve t r i ed t o do
14 i s r educe t he bur den on t he Gover nment by f ocusi ng i n on some
15 dat e r anges t hat ar e pr obabl e - - pr obabl y wi l l have t he
16 hi ghest concent r at i on of r el evant document s. But t o gi ve an
17 exampl e, under t he Gover nment s appr oach, as I under st and i t ,
18 t her e s a document t hat s r el evant t o t he sol vency of t he
19 ent er pr i ses at t he t i me of conser vat or shi p, as of 2008, but
20 t hat document was i t sel f cr eat ed i n 2012, i t s sor t of
21 r ecount i ng, f or exampl e, what t he sol vency was and t he
22 expect at i ons wer e t hen. Then t he Gover nment woul dn t pr oduce
23 t hat t o us because i t wasn t cr eat ed dur i ng t he r el evant t i me
24 per i od, even t hough i t s di r ect l y r el evant t o t hat t i me
25 per i od.
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1 We t hi nk t hat t hat s not t he pr oper appr oach her e.
2 Once you do t he sear ches wi t h t hese dat e r anges, i f i t s
3 r el evant t o t hese i ssues, as t he Cour t has deci ded or wi l l
4 deci de what t he scope of di scover y wi l l be, i t shoul d be
5 pr oduced r egar dl ess of when i t was cr eat ed i f i t t ur ns up i n
6 one of t hese sear ches. So, t hat s somewhat of a nuance on
7 t he pr oposal s her e, but what I woul d pr opose i s i f you woul d
8 l i ke us t o sor t of wal k t hr ough t he dat e r anges t hat we t hi nk
9 ar e mor e appr opr i at e and t he r at i onal e f or t hem, we d be
10 happy t o submi t a shor t f i l i ng i n t he comi ng days t o do t hat
11 - - j ust t hat .
12 THE COURT: Wel l , coul d you do t hat by Monday?
13 MR. COLATRI ANO: Yes.
14 THE COURT: Gr eat , Monday at 9: 00 a. m. I s t hat - -
15 okay.
16 MR. COLATRI ANO: Yes.
17 THE COURT: Monday. Al l r i ght . What t i me on
18 Monday can you get i t t o me?
19 MR. COLATRI ANO: We l l t r y t o get i t done by
20 9: 00 a. m. We l l cer t ai nl y get i t done bef or e noon, but
21 cer t ai nl y - -
22 THE COURT: Okay. Wel l , l et s say noon. Let s say
23 noon on Monday.
24 MR. COLATRI ANO: Okay.
25 THE COURT: That s f i ne.
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1 MR. COOPER: Your Honor , i f I may, I j ust want t o
2 make sur e t hat ever yt hi ng i s cl ear i n t er ms of t he r ecor d
3 wi t h Mr . Col at r i ano s poi nt her e. The dat e r anges f or
4 sear ches t hat we r e negot i at i ng over i s di f f er ent f r omt he
5 dat e r anges t hat t hey ar e pr oposi ng t o t he Cour t t hat t hey
6 want pr ot ect i on - -
7 THE COURT: No, I do - -
8 MR. COOPER: - - wi t h r espect t o - - okay. So, one
9 i s her e s t he dat e r ange t hat you can l i mi t your sear ch t o,
10 but anyt hi ng t hat i s r et ur ned by t hat sear ch t hat woul d be
11 r el evant , we get . They r e sayi ng no, t hat s not t he case.
12 I f i t was a document t hat s r et ur ned by t he sear ch but i t
13 f al l s out si de of t he dat e r ange t hat t hey r e aski ng f or
14 pr ot ect i on f or .
15 THE COURT: Under st ood.
16 MR. COOPER: Okay. Al l r i ght . Thank you.
17 MR. SCHWI ND: Your Honor , j ust t o t r y t o si mpl i f y
18 t hi s, we appr eci at e Pl ai nt i f f s of f er t o f i l e yet anot her
19 submi ssi on on t hi s, but I d j ust poi nt out t hat t he par t i es
20 have agr eed t o sear ch t er ms and t o cust odi ans. And, so, i f
21 t he Cour t pr ovi des t he l ast pi ece of t hat , what dat e r anges,
22 t hen, essent i al l y, we have a st ack of document s on t he t abl e
23 t hat we r e goi ng t o r evi ew f or pr i vi l ege and r esponsi veness.
24 Okay, i t s j ust r eal l y how t o gener at e t hat st ack of
25 document s.
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1 Pl ai nt i f f s have had t hi s compl i cat ed - - and I mnot
2 t r yi ng t o be di spar agi ng - - but t hey have a di f f er ent vi ew of
3 how t o r each t hat st ack, and t hey say, wel l - -
4 THE COURT: That usual l y happens i n di scover y, but
5 - - t hi s i s not uncommon.
6 MR. SCHWI ND: I t j ust r eal l y get s i nt o t he weeds,
7 Your Honor , when t hey say, wel l , f or t hi s sear ch t er mwe want
8 t hi s dat e r ange, but f or t hi s sear ch t er m, we want t hat dat e
9 r ange. I t al most becomes, i n our vi ew, unwor kabl e. For t hi s
10 nuance t hat counsel r ai sed, I suspect we can r esol ve t hat . I
11 act ual l y don t r ecal l hear i ng t hat . Maybe I di dn t - - maybe
12 I di dn t under st and cor r ect l y, but I t hi nk we can pr obabl y
13 r esol ve t hat nuance as f ar as, you know, i f t he document
14 comes up i n 2012 t hat has t o do wi t h sol vency back i n 2008 i s
15 t he Gover nment goi ng t o pr oduce i t . I mean, I t hi nk we can
16 pr obabl y r each agr eement on t hat .
17 THE COURT: I f you do, I d ask you t o do t he same
18 t hi ng by noon on Monday, f i l e a st at us r epor t , pl ease,
19 Def endant s st at us r epor t , and j ust l et me know i f , i n f act ,
20 you have been abl e t o r esol ve t he sear ch t er ms and t hi s
21 par t i cul ar nuance wi t h r egar d t o when - - what s goi ng t o be
22 caught when you r un t he sear ch.
23 MR. SCHWI ND: Ri ght . And, agai n, we have r eached
24 agr eement on sear ch t er ms. That s why I ma l i t t l e conf used
25 by what Pl ai nt i f f has pr oposed t o f i l e on Monday, because,
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1 agai n, t he onl y pi ece of t he sear ch t hat s l ef t out t her e i s
2 t he dat e r anges t hat we r e goi ng t o appl y t he sear ch t er ms
3 and t he cust odi ans t o. So, t hey r e sayi ng, wel l , maybe t hi s
4 sear ch t er mi n t hi s dat e r ange, and we - - or t hi s sear ch t er m
5 - - and, I mean, agai n, t o us, i t j ust seems unnecessar y when
6 t he onl y t hi ng t hat s out t her e i s t he dat e r anges t hat we r e
7 goi ng t o sear ch. I hope t hat makes sense.
8 MR. COOPER: And I appr eci at e Counsel s suggest i on
9 her e. I mi sunder st ood per haps counsel ear l i er t o have sai d
10 t hat wi t h r espect t o t hese dat es t her e s no mor e negot i at i on.
11 And per haps you wer en t t al ki ng about t he dat e r anges f or t he
12 sear ch t er ms.
13 MR. SCHWI ND: Ri ght .
14 MR. COOPER: Okay.
15 MR. SCHWI ND: One - - no, we f eel l i ke we ar e at
16 i mpasse on t he dat e r anges t hemsel ves, but what Mr .
17 Col at r i ano br ought up was, wel l , what i f one document comes
18 up i n t hi s second r ange t hat l ooks l i ke i t s r esponsi bl e t o
19 an i ssue t hat s f or anot her dat e r ange. That s a di f f er ent
20 i ssue. We do bel i eve and we woul d r espect f ul l y r equest t hat
21 t he Cour t pr ovi de us gui dance on what dat e r anges t he Cour t
22 f eel s i s appr opr i at e t o be sear ched. That wi l l gr eat l y
23 assi st t he par t i es.
24 THE COURT: Oh, I cer t ai nl y wi l l do t hat . I mean,
25 i t s my - - t he i mpr essi on t hat I have, and I d appr eci at e
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1 i t i f Pl ai nt i f f s counsel wi l l cor r ect me on t hi s - - i s
2 t hat l et s say j ust hypot het i cal l y I woul d accept t he
3 par t i cul ar - - f or par t i cul ar t er ms t he dat e r ange of J ul y 1st
4 t hr ough December 31st of 2008, what t he Def endant has
5 suggest ed. And what I under st and Pl ai nt i f f s counsel t o say
6 i s t hat a document gener at ed dur i ng t hat par t i cul ar t i me span
7 coul d have been di scussed i n l at er document s and expounded
8 upon i n a document cr eat ed i n J anuar y 2014 and Pl ai nt i f f
9 woul d want t hat document . I s t hat what I under st and you t o
10 say?
11 MR. COLATRI ANO: That i s basi cal l y r i ght . I f we
12 have - - i f t her e s sear ch t er ms t hat ar e r un agai nst agr eed
13 dat es or Cour t - or der ed dat es, i f i t s - - i f t hat gener at es
14 any document t hat s r el evant t o any of t hese i ssues, even i f
15 i t s an i ssue t hat f ocuses on somet hi ng t hat happened i n
16 2008, i f t hat document i s r el evant t o t hat , we woul d expect
17 i t t o be pr oduced, even i f i t was cr eat ed l at er . That s t he
18 i ssue.
19 THE COURT: And I wi l l t el l you now, I mgoi ng t o
20 gi ve - - I t hi nk I have a cl ear gr asp of t he nat ur e of t he
21 di sput e t hat we have r i ght now, and i t s t he Pl ai nt i f f s
22 abi l i t y t o meet t he j ur i sdi ct i onal chal l enge br ought by t he
23 Def endant . And t her e s goi ng t o be mor e - - a mor e nar r ow
24 dat e r ange. I don t t hi nk i f a document was cr eat ed on J ul y
25 1st of 2008, you know, what you al l have agr eed t o her e or
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1 pr oposed, and t he f act t hat t hat same document was l at er
2 di scussed on May 20t h, 2014, t he May 20t h, 2014 document i s
3 not goi ng t o be pr oduced.
4 I mean, t her e s got t o be - - f or pur poses of t he
5 nat ur e of t hi s i nqui r y and t hi s di scover y r equest , i t s goi ng
6 t o be mor e nar r owl y f ocused. We r e t aki ng a sur gi cal
7 appr oach. But I want t he Pl ai nt i f f s t o have - - I mean, t hei r
8 day i n cour t may be t hat t hey d pr evai l al l t he way t o t he
9 Supr eme Cour t . I mnot comi ng down one way or t he ot her , but
10 i t s i mpor t ant f or t he Pl ai nt i f f s t o have access t o
11 i nf or mat i on so t hat t hey have t he abi l i t y, i f possi bl e, t o
12 est abl i sh t hi s Cour t s j ur i sdi ct i on. And t hat s al l I m
13 deal i ng wi t h at t he moment .
14 Mer i t s f r omt he Gover nment - - Pl ai nt i f f s
15 per spect i ve wi l l come l at er ; f r omt he Gover nment s
16 per spect i ve, we won t need t o go t her e. So, we l l j ust have
17 t o see who pr evai l s. But t he Pl ai nt i f f s wi l l have t he
18 abi l i t y t o make t he best case t hey can t o est abl i sh t he
19 Cour t s j ur i sdi ct i on. And wi t h t hat , I l l say good
20 af t er noon. Thank you.
21 ALL: Thank you, Your Honor .
22 ( Wher eupon, at 12: 41 p. m. , t he hear i ng was
23 adj our ned. )
24
25
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1 CERTI FI CATE OF TRANSCRI BER
2
3 I , El i zabet h M. Far r el l , cour t - appr oved
4 t r anscr i ber , cer t i f y t hat t he f or egoi ng i s a cor r ect
5 t r anscr i pt f r omt he of f i ci al el ect r oni c sound r ecor di ng of
6 t he pr oceedi ngs i n t he above- t i t l ed mat t er .
7
8
9 DATE: 6/ 20/ 14
10 ELI ZABETH M. FARRELL, CERT
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6/19 Hearing Transcript, Fairholme FNMA

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