drummond v collingsworth transcript may 21 2015

1 UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA

2 SOUTHERN DIVISION

3

4 DRUMMOND COMPANY, INC., *

5 Plaintiff, * 2:11-cv-3695-RDP-TMP

6 vs. * May 21, 2015 10:00 a.m.

7 TERRENCE P. COLLINGSWORTH, *et al., Birmingham, Alabama

8 * Defendants.

9

10 * * * * * * * * * * * * * * * * * * * * * * * * * *

11 R E D A C T E D 12 TRANSCRIPT OF HEARING

BEFORE THE HONORABLE R. DAVID PROCTOR 13 UNITED STATES DISTRICT JUDGE

14 * * * * * * * * * * * * * * * * * * * * * * * * * *

15For the Plaintiff: William Anthony Davis, III

16 H. Thomas Wells, III Benjamin T. Presley

17

18 For the Defendants: Kenneth E. McNeil Linda Eccles

19 Robert K. Spotswood Christopher S. Niewoehner

20 William Thomas Paulk, II

21Also Present: T. Michael Brown

22 Special Master

23Court Reporter: Leah S. Turner, RMR, CRR

24 Federal Official Court Reporter

25

1 FILED 2015 Sep-14 PM 02:51U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:11-cv-03695-RDP-TMP Document 371 Filed 09/14/15 Page 1 of 63

1 This cause came to be heard and was heard on the 21st day of May 2015, before the Honorable R. David Proctor,

2 United States District Judge, holding court for United States District Court, Northern District of Alabama, Southern

3 Division, in Birmingham, Alabama.

4 Proceedings continued as follows:

5 P R O C E E D I N G S

6 (The following occured in chambers.)

7 THE COURT: Are you ready?

8 MR. DAVIS: Ready.

9 THE COURT: Probably a little bit of free flow in

10 there, but I have a few things I want to walk through with you

11 I'll ask you about and then we will go from there.

12 MR. DAVIS: All right.

13 THE COURT: Any concerns you have? Is there anybody

14 in the courtroom that you're concerned about?

15 MR. DAVIS: We are not.

16 MR. McNEIL: It's fine with us.

17 THE COURT: We may have some court staff in because

18 word is out this is an interesting case.

19 MR. McNEIL: It is.

20 THE COURT: But they are in a code of silence.

21 MR. DAVIS: We think everything should be public.

22 That's fine with us.

23 THE COURT: What I want to hear about is security

24 concerns they have and how you would address those with

25 respect to those witnesses in South America. So I figured you

2Case 2:11-cv-03695-RDP-TMP Document 371 Filed 09/14/15 Page 2 of 63

1 already knew that.

2 MR. DAVIS: Right. Thank you, Judge.

3 (In open court.)

4 THE COURT: Good morning. We are here in Drummond

5 versus Conrad & Scherer and Collingsworth, case 11-CV-3695.

6 The Court asked the parties to come in. We had scheduled an

7 evidentiary hearing for today.

8 After reviewing the submissions, I came to the

9 conclusion that we weren't going to be able to conduct the

10 necessary aspects of an evidentiary hearing in the short time

11 frame that I was able to set aside this morning for that.

12 Therefore, I asked everyone to come in so we could discuss

13 exactly how we ought to proceed, get some preliminary rulings

14 and/or agreements if necessary.

15 Also, at 11:00 or so I did call our Special Master

16 and ask him to come visit with us today to maybe work on some

17 of the things that are progressing with the Special Master as

18 relates to confidentiality orders, protective orders, and the

19 like.

20 Obviously, I have some pretty great concerns about

21 where we are in this case right now. I guess the first order

22 of business would be just to pick up with the discussion we 23 had yesterday on the phone with counsel, and that is my sense

24 is that we should have a briefing schedule in advance of an

25 evidentiary hearing which essentially tracks a hybrid version


1 of my summary judgment procedures and/or my bench trial 2 procedures.

3 Essentially what I had asked the parties to do is

4 propose findings of fact and conclusions of law, focusing more

5 on the findings of fact, the factual matters that -- we will

6 start off with the plaintiff -- that the plaintiff thinks are

7 relevant to the issue we have to undertake with respect to the

8 motion for sanctions.

9 Then we would allow a time period in which the

10 defendants would be allowed to respond to those findings,

11 proposed findings, as to whether they dispute or do not

12 dispute them. The defendants would then be able to propose

13 any additional facts that they believe are relevant to the

14 motion, and then that baton would pass back across the aisle

15 to the plaintiff to indicate whether they agree or disagree

16 with respect to those particular proposed findings.

17 I think when we are done with that process, we would

18 have things more narrowed down in terms of exactly what we

19 have in dispute and exactly what we need to do in terms of an

20 evidentiary hearing.

21 My sense is that we will do that, and once we see

22 where we are, we will set a date for the evidentiary hearing

23 at that point. So the first order of business is to say your

24 respective positions about how that ought to take place as far

25 as timing.


1 Tony, when do you think you can have a first salvo

2 for me on that?

3 MR. DAVIS: We could do that certainly within 21

4 days and maybe sooner.

5 THE COURT: Why don't we say three weeks from

6 tomorrow.

7 MR. DAVIS: That would be good.

8 THE COURT: That would be June 12th, and then we

9 will allow three weeks beyond that, which would be July --

10 that's a holiday. We would give you all until July 6th, and

11 then three weeks beyond that would be July 27th, Tony.

12 Kevin, does that work for you?

13 MR. McNEIL: Your Honor, I have a good staff of

14 people here that keep me on track and they point out that we

15 have a response due on July 8 to this new RICO action. I

16 don't want to jam it up too tight. 17 THE COURT: That's a response or motion, an answer

18 on motion due?

19 MR. McNEIL: Yes. Our initial response --

20 THE COURT: I think we can relax that deadline.

21 Don't you think, Mr. Davis?

22 MR. DAVIS: We can, Your Honor.

23 THE COURT: I think this is a more critical thing;

24 right?

25 MR. DAVIS: It is.


1 THE COURT: So why don't we give you another 21 days

2 beyond that to respond to the RICO complaint.

3 MR. McNEIL: All right. Thank you.

4 THE COURT: That way you are taking on one task at a

5 time. That means if you take three weeks to respond, you just 6 get those three weeks back in terms of time to respond to

7 RICO.

8 MR. McNEIL: That's fair. Thank you.

9 THE COURT: So that means we will enter an order

10 that July 29 is the date now for them to respond to -- July 29

11 would be the date to respond to the RICO complaint. I'm

12 sorry; July 27th.

13 Let's say July 29. That way you're not having an

14 associate work over the weekend. I used to be one of those.

15 All right. And then what we will do shortly after

16 that last deadline in late July, we will consult probably by

17 phone and set a date for an evidentiary hearing on this.

18 Now, what I want you to do as you go about that

19 process is think of short, simple assertions of fact, not

20 three facts in one enumerated paragraph. One fact in each

21 enumerated paragraph.

22 What I want to avoid is, well, we disagree -- it's

23 compound factual assertion. We disagree with one-third of one

24 of three, so we're going to deny it.

25 Keep it simple. Each enumerated fact that you are


1 wanting to propose should contain only one simple and plainly

2 stated assertion of fact. We're going to avoid color words,

3 legal jargon. We're going to put it in terms that you would 4 put it to a jury. Okay? I think that will advance the ball 5 substantially down the field in terms of where we need to be.

6 I kind of answered my second question to a degree

7 already and that is how does what we're doing affect the RICO

8 action. Let's start with the plaintiffs. You filed both

9 these actions. What is your take on whether they need to run

10 somewhat parallel on at least some aspects of the litigation?

11 It seems like there's some common nucleus of

12 operative fact that are shared by the two different actions.

13 MR. DAVIS: Your Honor, we would agree that there

14 are some common areas, common facts. We concede that the

15 cases would lend themselves to a joint discovery, certainly. 16 At this point in time, though, we have not seen who is

17 appearing for the defendants and we're not sure exactly --

18 THE COURT: You haven't had a chance to do any type

19 of preliminary discussions leading up to a Rule 26 conference

20 in the RICO action?

21 MR. DAVIS: Right.

22 THE COURT: Well, one of the things I would task you

23 to do is once that appearance is made -- and I'll tell you

24 what. Why don't we go ahead and make an appearance and just 25 let them know who is going to be involved in the RICO action,


1 and then start some informal discussions along the way about

2 how we want to treat the two actions. Are they going to be

3 consolidated for purposes of discovery and motion practice?

4 Are they going to be on somewhat separate tracks? Should we

5 plan on a joint trial? 6 Discuss some of those things. I will wait, though,

7 to get your final conclusions and positions about that when

8 you do eventually make it to the Rule 26 planning conference

9 and I get your proposed Rule 16 report.

10 MR. SPOTSWOOD: Your Honor, Bob Spotswood. We

11 didn't fill in the blank on a couple of the deadlines. Once

12 we have the two major 21-day submissions, we were going to 13 have a response and then defendants' proposed additional facts

14 and then the plaintiffs responding to that, and I don't know

15 if you would want to have 10-day periods or two-week periods.

16 THE COURT: I thought about giving three consecutive

17 three-week gaps there.

18 MR. SPOTSWOOD: Three?

19 THE COURT: Yes. 21 days from tomorrow is the

20 initial plaintiff's proposed facts. I gave you a little bit

21 more than 21 days, I think, over the Fourth of July weekend,

22 maybe 24 days, for you to respond to those and propose your

23 own facts.

24 Hint: You can start working on your own facts now,

25 just in case they don't have them. And then about 23 days


1 beyond that, that Wednesday, the last Wednesday in July, for

2 them to respond to your facts.

3 Mr. Davis, is that what you understood?

4 MR. DAVIS: It is, Your Honor.

5 THE COURT: It seems to me that we ought to have

6 some discussions today -- and, again, without making any type

7 of rulings, but I'm trying to get my hands around some of the

8 issues while they are fresh on my mind, having read through

9 the submissions.

10 And when the Special Master gets here in about a

11 half hour or so, we will be able to pick this up in terms of

12 the context of what he is doing with respect to possible

13 protective orders and/or confidentiality.

14 How public was the testimony letters rogatory that

15 took place in Colombia? And by background, I'm asking

16 basically this question. My understanding was that that was

17 going to be in a tribunal in a courthouse. I don't know how

18 open to the public the courthouse was. I do know there were

19 security measures because that's one of the things we

20 discussed back a couple, three years ago in terms of

21 Mr. Jeffers' security going in there, Mr. Collingsworth's

22 security going in there, but how open to the public or

23 available to the public were either the live testimony or

24 record of the testimony in Colombia?

25 MR. WELLS: They were completely open. It was


1 actually -- in at least one of the depositions, a person from

2 the media -- I think there were several depositions. People

3 from the media came and sat in, and Mr. Collingsworth argued

4 in favor of that.

5 THE COURT: Is that your understanding on the

6 defendants' side?

7 MR. McNEIL: That's what I'm told.

8 THE COURT: Are there any witnesses that we're

9 concerned about in terms of security from the defendants'

10 standpoint that did not participate in that public process?

11 In other words, is there anyone who is a potential witness

12 that you're concerned about the security of that individual

13 who would not be at least in Colombia known to have provided

14 testimony in this case down there through the letters rogatory

15 process or otherwise? That was a question for the defendants.

16 MR. McNEIL: There are two categories, it seems to

17 me. We've got the witnesses themselves who have already made

18 declarations at one time.

19 THE COURT: And the family members of those

20 witnesses?

21 MR. McNEIL: Yes. We are concerned about -- yes.

22 THE COURT: I'm going to get to them. But let's

23 stick only with the witness themselves, the identity of the

24 witnesses.

25 MR. McNEIL: Those that have already testified and


1 would retestify in this case, I think we're fine.

2 No. 2 is there is a second group that we have not

3 yet identified of additional witnesses who may testify, and I

4 have not come to a conclusion yet as to whether safety is an

5 issue.

6 THE COURT: Let's back up. I'm not worried about

7 anyone who has not testified yet. What I'm asking is this:

8 With respect to those who have testified, were each one of

9 those, based on your current knowledge, given some type of

10 security payment?

11 MR. McNEIL: The families of --

12 THE COURT: Directly or indirectly.

13 MR. McNEIL: If you will let me make that

14 qualification, Charris, Halvez, Duarte, (REDACTED).

15 THE COURT: And what about Halcon?

16 MR. McNEIL: Halcon was paid -- he did not testify.

17 He did not testify.

18 THE COURT: So there were five persons who testified

19 for whom some form of security payment was made to a family

20 member or through a conduit?

21 MR. McNEIL: That's right. (START REDACTION)

22

23 (END REDACTION)

24 THE COURT: How about persons who were provided

25 security payments who are not public? I'm not going to ask


1 you to identify them at this point, but are there any of

2 those?

3 MR. McNEIL: We have listed on a series of

4 supplementary interrogatories in this case several other

5 people who received -- I think it's mainly just minor 6 payments, but there were a few others. Those are in the

7 interrogatories. We would be glad to provide a summary to the

8 Court.

9 THE COURT: Maybe you can have someone find that for

10 you and give me those names.

11 MR. McNEIL: We will do that.

12 THE COURT: I think I saw that, but I would like to

13 have those names.

14 I guess here is what I'm getting at. Is there a

15 distinction to be made as we advance toward confidentiality

16 for safety and security reasons between a discussion in public

17 about the witness himself versus any discussion about the

18 identity or circumstances of that witness's family?

19 MR. McNEIL: I think that is a very appropriate

20 protection.

21 THE COURT: Mr. Davis, what is your take on that?

22 Just so you will understand, Mr. McNeil, what I'm

23 saying there is the fact of payment and the identity of the

24 person who directly or indirectly as far as a witness

25 benefited from the payment or their family would be fair game,


1 but the circumstances of the payment to the family or the

2 identity or location of the family would not be fair game in

3 terms of public record in this case.

4 MR. DAVIS: Your Honor, we think the fact that

5 payment should not be confidential. The location of where the

6 family member can remain confidential.

7 THE COURT: There's no reason that that's an issue

8 in this case except maybe testing their theory as to whether

9 this is really a security payment?

10 MR. DAVIS: That's correct.

11 THE COURT: And we can do that under seal; right?

12 MR. DAVIS: We would agree to that, yes, sir.

13 THE COURT: Mr. McNeil?

14 MR. McNEIL: Two quick comments. I always try to

15 think from what the goal is back to the answer. The goal here

16 is that we're dealing with a law firm that -- almost

17 everything is confidential in a law firm. No. 2 is that

18 there's also, confounding that, a security issue for these

19 folks and the potential intimidation of getting documents all

20 over the street out of this courtroom; we want everything

21 totally disclosed in this.

22 And so I do have a concern that the fact that

23 payment documents, it appears to me, as long as they're used

24 in discovery in this case, they're fine; but to say that they

25 are public and therefore would go into the press or the media


1 or anything, it seems to me that's not really fair, given the

2 intimidation atmosphere that exists in Colombia.

3 THE COURT: Well, look, here is the non sequitur to

4 your argument, I think. These people are already testifying.

5 They are known. They have testified. They are out there. It

6 is reasonably anticipated by anybody who understands the legal

7 process that they are potential witnesses at a trial in this

8 case. They've given testimony as part of the discovery in

9 this case.

10 So when it comes to those six names that you

11 provided me before who have testified, I don't understand how

12 you can argue that further discussion of them in this case

13 would in any way intimidate them. There's nothing that's

14 going to occur discussing them in the context of these issues

15 that hasn't already occurred. What is wrong with that logic?

16 MR. McNEIL: Your Honor, I'm here to help. I'm not

17 here to tell you how to make that choice. I will just tell 18 you my own concern in the four months I've been in this case.

19 This is a strange situation down there in Colombia. There's a

20 lot of intimidation.

21 THE COURT: It's a strange situation in Birmingham

22 right now, too.

23 MR. McNEIL: I can't agree more. We are both

24 together on that.

25 The question is whether the best way to try a


1 lawsuit is within the confines of this or to have fact-of-

2 payment documents floating around in public.

3 THE COURT: There's three considerations. You've

4 made two of them. Confidentiality about the firm's business.

5 I understand that. That may not weigh as heavily on the scale

6 as protection of innocence down in Colombia who may be

7 involved in this.

8 There's a third very compelling factor, though, and

9 that is we start with the proposition that when we litigate in

10 a tribunal such as the United States District Court, we don't

11 seal things. That's very disfavored. There has to be strong

12 reasons why we would keep something under seal.

13 Now, my take on that up to this point is if in

14 doubt, let's temporarily seal it and then make a judgment when 15 we have more information about whether that's properly sealed

16 or not, because we can always take the information from the

17 category of sealed and unseal it.

18 MR. McNEIL: Right. It easier to open it later than

19 to put it back in.

20 THE COURT: Exactly. So against that backdrop, with

21 the understanding that generally we do not want to seal things

22 that are litigated in open court -- and the public owns this

23 court. This is not the litigant's court. It's not the

24 judiciary's court. This is the people's court. 25 So with that proposition, I'm wondering why fact of


1 payment is really confidential, why the timing of what someone

2 said before payment or after payment should be confidential.

3 I fully understand why -- and I think Mr. Davis

4 concedes this even -- why specific information about family

5 members, whereabouts, identities, should remain confidential

6 because there's a threat to health and security there. But

7 with respect to the other issues, those are issues that are

8 going to be submitted to a jury in this case if this case gets 9 to a jury. The plaintiffs are going to have a full 10 opportunity to make their case that witnesses were influenced

11 by these payments; right?

12 MR. McNEIL: And should have that opportunity.

13 THE COURT: So if that's the case, why should the

14 fact of payment and the dealings with the witness himself be

15 confidential?

16 MR. McNEIL: I'm struggling, and I'm not trying to

17 be -- and I greatly appreciate the Court thinking through this

18 because we are both thinking through it.

19 My concern -- and I leave that choice to you.

20 That's the great advantage of my job, just to help you get the 21 facts. It's a judgment call. And what I'm suggesting is that 22 timing, as you mentioned, is a critical factor in this.

23 THE COURT: Timing of what?

24 MR. McNEIL: Timing of disclosure of details.

25 I mean, big stacks of paper. These are in monthly invoices of


1 what payments were made. That could be done as we approach

2 trial.

3 What I'm saying, the fact of payment is already

4 clear, as the fact that these witnesses are paid; that's open.

5 It's really a question of the degree of detail. And I'm

6 saying the timing --

7 THE COURT: What details do you think should remain

8 confidential? Amounts paid?

9 MR. McNEIL: The amounts paid I'm not as concerned

10 with as the paperwork being spread around that shows --

11 THE COURT: What is the paperwork you're referring

12 to?

13 MR. McNEIL: The documents, the discovery.

14 THE COURT: Emails?

15 MR. McNEIL: Emails, invoices.

16 THE COURT: Ledgers?

17 MR. McNEIL: Ledgers, that kind of thing.

18 THE COURT: Why are those things, if we redact out

19 anything from those documents that could potentially disclose

20 the whereabouts of a family member or the identities of a

21 family member, not the witness, but family members, why would

22 those fall in the category of something that should continue

23 to be sealed?

24 MR. McNEIL: Again, the goal is to make sure that's

25 disclosed at trial and will be. The goal is also to allow it


1 to be used in discovery. The only thing --

2 THE COURT: But doesn't the public also have the

3 right to know before even trial? How would that affect the

4 jury pool or any other work that's being done in this case? 5 MR. McNEIL: My general view is that information

6 which is, again, personal names, generally confidential stuff;

7 law firm is confidential; expense information and records --

8 THE COURT: Put aside the law firm. I'm talking

9 about health and welfare of innocence.

10 MR. McNEIL: It's just my personal concern given 11 that I know enough to be worried that a detailed paper trail

12 might help find somebody. I'm not saying it will. And I

13 understand the judgment call can go either way. And I'm 14 leaving that to Your Honor to make it. I'm just trying to -- 15 THE COURT: Couldn't we simply work that through the

16 Special Master with objections to me saying if you think some 17 aspect of the paper trail could lead to the identity or

18 location of a family member, then you have the right to

19 propose to the Special Master that that be redacted and why;

20 the Special Master, which we have retained him to do, would

21 make a report and recommendation to me about how he thinks we

22 ought to deal with those documents, and then I will exercise

23 my discretion in terms of how to resolve that issue, balancing

24 out the factors?

25 MR. McNEIL: I think that is a perfect solution to


1 my concern.

2 THE COURT: So we would start off -- so the next

3 question becomes -- so we're talking about two of the three

4 factors, the public policy saying these things should be

5 disclosed publicly as a general rule, the concern of health,

6 welfare, and safety of family members of these witnesses down

7 in Colombia. The third that you've kind of advanced is the

8 confidentiality of the law firm as it relates to its practice

9 of law and work with others including other law firms, I take

10 it, potential work product with these potential witnesses. I

11 take it you would throw a lot of things under that umbrella?

12 MR. McNEIL: Well, I am concerned. You know, I

13 think sort of in Venn diagrams. The problem is that for the

14 average party that comes into this courtroom, everything is

15 public eye. I take that position, too.

16 A law firm is a rather unusual situation, and in

17 this particular situation it's even more unusual because the

18 information relates to data which was being used in litigation

19 which in some part, however limited, is still ongoing, and I

20 just -- I feel like that just like -- I'm not saying it is the 21 level of a patent or anything, but it is -- there is a need to

22 protect that. And I think --

23 THE COURT: How does crime fraud exception work in

24 all that?

25 MR. McNEIL: The crime fraud exception --


1 THE COURT: The question is this. Is it

2 discoverable as to the defendants? From the defendants to the

3 plaintiffs, I should say. And if it is, if it fits within a

4 crime fraud exception, for example, that wipes out any work

5 product and/or attorney/client privilege protection, the next

6 question is: Well, if it's discoverable in this case, why

7 shouldn't it be a matter of public information in this case?

8 So I have two questions for you. First, how does

9 the crime fraud exception work? Second, assuming for purposes

10 of the next question that the crime fraud exception would

11 render some things discoverable that are not otherwise

12 discoverable, why aren't those fair game for public

13 information in the case so long as they don't deal with

14 health, welfare, safety of family members in Colombia?

15 MR. McNEIL: The first question, crime fraud. In

16 the abstract level, 30,000-foot level, if indeed crime fraud

17 exception were invoked, that obviously makes the material

18 discoverable. We, however, in this case have done extensive

19 briefing on the fact that that legal barrier or that high

20 legal threshold has not been met.

21 THE COURT: That briefing was done before these

22 revelations, though, most recent revelations?

23 MR. McNEIL: Yes, sir. And I am totally -- I would

24 be happy to further supplement our briefing to account for

25 anything that has been done. There has --


1 THE COURT: I'm sure you will get a chance to do

2 that.

3 MR. McNEIL: So I'm saying that your proposition

4 that crime fraud exception, if invoked, would make it

5 discoverable, you're right. And I appreciate your offer to

6 let us continue to brief it.

7 THE COURT: All right. For example, taking it out

8 of the 30,000-foot view and giving a specific example of

9 something that we might have to tackle, Mr. Collingsworth told

10 me in a hearing that -- other than Halcon, putting Halcon

11 aside, and I understand he didn't have direct dealing with

12 Halcon, didn't know the full details of that, that the only

13 persons who received these security payments were Charris,

14 Halvez, and Duarte.

15 He said that, I think -- as I review the records, he

16 said on the occasion sitting over here to my right in my

17 courtroom in a previous hearing. It looks like he has taken

18 that position under oath in a declaration. It looks like he

19 has taken that position on other occasions.

20 Now we find out that others received security

21 payments. And I use security payments in quotes because I

22 think the plaintiffs take issue with that characterization of

23 payments. Putting that issue aside, it seems that (START

24 REDACTION) (END REDACTION), depending on the

25 characterization there, received them. Now I find out there's


1 others who may not have testified that have received them.

2 Why wouldn't that be a fraud on the Court?

3 I think Mr. Collingsworth's position right now, as

4 best I can tell it is, I caught him off guard with the

5 question, he cut it too closely, dog ate his homework, bad

6 day. But as you remember, reviewing the transcript of that

7 hearing, I was very careful not to direct questions to him. I

8 was directing them to Mr. Smith, and Mr. Smith and

9 Mr. Collingsworth volunteered Mr. Collingsworth to answer the

10 question. And he began the answer by saying the quickest path

11 to the truth is just ask me directly. He took on voluntarily 12 the answer to that.

13 The second thing I would say is that I even traced

14 back at the end of that line of questioning to make sure there

15 were only three payments, and he affirmed that there were.

16 Why isn't that in and of itself enough to say we are

17 dealing with crime fraud exception here?

18 MR. McNEIL: Two reasons, and then I can elaborate

19 on each. And the first is a technical one, one which I don't

20 like to rely upon but it is there, and that is that mere

21 disclosure of discovery violations --

22 THE COURT: We're not dealing with mere discovery

23 violation. We're talking about a representation to a Court in

24 an open tribunal by a lawyer who appeared before me pro hac

25 vice in three cases, two or three cases, and in front of Judge


1 Bowdre in the third I guess.

2 MR. McNEIL: Your Honor, I have not had a chance to

3 lay out all the evidence, and I will in the evidentiary

4 hearing, but I will say this right now. I'm not here to

5 defend a bad error of judgment and a bad mistake. I don't 6 think that rises to the level of fraud and I don't think it

7 rises to the level of bad faith.

8 I have some materials that I could present to you as

9 to why that is, but I understand the concern is --

10 THE COURT: What about the redaction in the

11 privilege log and in some emails of the payments made to

12 others which would be additional information to suggest that

13 the Court was being misled?

14 MR. McNEIL: That, again, I want to and will address

15 for you in that evidentiary hearing. There are reasons that

16 occurred such as blanket wiping out of things related to

17 expenses, but I want to lay that record out --

18 THE COURT: Let me explain something. One of the

19 things -- the reason I'm not setting a hearing today and the

20 reason I'm letting you all brief this to see where we are is I

21 could foresee a circumstance where we need to do some

22 prehearing discoveries targeted to this. My understanding is

23 Mr. Collingsworth's deposition has not been taken on this

24 issue yet?

25 MR. McNEIL: That's correct.


1 THE COURT: Conrad & Scherer's deposition has not

2 been taken on this yet?

3 MR. McNEIL: That's correct.

4 THE COURT: So one of the things that we will need

5 to consider is would it aide the Court in efficiently and

6 accurately handling these motions if there's limited

7 deposition discovery that's needed once I figure out what the

8 disputed issues of fact are prehearing.

9 That means I may have to make a decision about crime

10 fraud before the hearing itself.

11 MR. McNEIL: As to that particular issue.

12 THE COURT: Yes.

13 MR. McNEIL: Not general, but as to that particular

14 issue.

15 THE COURT: Sure. But it may have some implications

16 for this same issue playing out in other aspects of this case.

17 MR. McNEIL: Again -- this is just the way I 18 think -- I'll go back to the general principle. The general

19 principle that I want: This was a very bad mistake that was

20 made. I don't think it rises to the level of bad faith.

21 That's your call; not mine. My job is to get the facts out to 22 you; assist this Court in getting there. I was also going to

23 suggest that they have some more witnesses they may like to

24 introduce that they mentioned to add to the evidentiary

25 hearing, and in light of your concerns, we may too.


1 But I think the issue of working out some discovery

2 is fair. So, yes, what aides this Court while protecting the

3 legal rights is a proper balance, because I really understand

4 what you're grappling with with these folks.

5 And let me just say one other thing. When I came 6 in, we have done a Herculean effort in a short amount of time

7 to clean up whatever mistakes may have been made and at a

8 great cost, and I'm not -- I'm not asking for points for that.

9 I'm saying it needed to be done. But my point is that there's

10 a lot I want to say at some point about why I don't think this

11 rises to the level of --

12 THE COURT: Well, your task has been to clean up the

13 pasture, but it's hard to get the cow back in the barn; right?

14 MR. McNEIL: Yes, sir, except the following.

15 Fortunately I grew up in west Texas and had that experience a

16 couple of times. I'm not very good at it, but I have been put

17 in that position. And what I find out is I think this cow

18 will go back in the barn. We're about a year or two,

19 hopefully no more than a year, before trial. I really think

20 getting this to trial is the Colonel Sanders recipe for

21 solving a lot of problems.

22 So I want to work with the Court to do that quickly,

23 efficiently, and properly. But I do believe that we can

24 demonstrate that we can get this cow back in, and in light of

25 the fact that it's ironic that Drummond itself didn't respond


1 to a lot of discovery until the end of last year.

2 THE COURT: Well, there's no question I have it on

3 both sides about a lackadaisical approach to discovery.

4 MR. McNEIL: This doesn't excuse my side, but I'm

5 saying that there is a record that I think I can show you, but

6 as to what's appropriate to help you make that decision, Your

7 Honor, I'm for helping. That's my goal.

8 THE COURT: Your take is that these are security

9 payments. You have given me expert testimony from a current

10 or former DEA agent in Houston saying that this is the law of

11 the jungle down there; right? 12 MR. McNEIL: It is brutal. I had no idea. By the

13 way, you will find this gentleman very interesting.

14 THE COURT: I already do.

15 MR. McNEIL: He is one of those Americans that you

16 don't meet very often. But, yes, absolutely. And as we all

17 know, even in the U.S., under the -- you can just look at the 18 U.S. Marshal's website. They have all kinds of witness

19 protection procedures and others, and I'm not -- I won't make

20 that argument right now, but I will tell you that --

21 THE COURT: Let me ask you this. How many times

22 does the United States give a witness protection until they

23 have testified?

24 MR. McNEIL: A good bit. I think it says 2500 --

25 THE COURT: No. You are missing the import of the


1 question.

2 MR. McNEIL: I'm sorry.

3 THE COURT: How many times has the United States

4 agreed among themselves we need to give this witness testimony

5 (REDACTED)?

6 MR. McNEIL: I wish I could give you a number right

7 now, but I will get that number to you as part of this

8 discovery. I will.

9 THE COURT: My question really goes to this. (START

10 REDACTION)

11 (END REDACTION).

12 That doesn't sound like security. That sounds like ensuring a

13 certain version of testimony. Am I missing the mark there?

14 MR. McNEIL: Let me say yes for the following

15 reason. We all miss the mark when we read one document out of

16 context. That's one of the great wonders of the courtroom.

17 Both sides are paid by good lawyers to fight that out.

18 I think -- just give one example and that's it, and 19 that is, for example, declarations -- and, look, I don't have

20 this firsthand knowledge. This is just a general 21 understanding. Declarations were provided. Immediately at

22 that point in Colombia, threats were made. Those can be

23 documented. And the threat was that those people need some

24 protection while -- before depositions occur. I think that

25 has a certain moral need, but you're the one that makes that


1 ultimate judgment. 2 I think just taking that one quote out of context is 3 the problem. One of the real problems, Your Honor, is -- I'm

4 sorry to comment, but one of the real problems here that I've

5 been struggling with, legal problem, is when you sue a law

6 firm and then somebody inadvertently produces a handful of

7 documents, how do you defend yourself without dumping the rest

8 of them in and waiving the rest of your privilege. It's a

9 catch-22. I've been struggling with that issue. But I think

10 we can give you an explanation and will at the hearing.

11 THE COURT: (START REDACTION)

12

13

14

15

16 (END REDACTION). Am I missing something

17 there?

18 MR. McNEIL: I can't agree more that I totally

19 understand your frustration and candidly anger about it. I'm

20 telling you that it was a -- judgment was made. It will be 21 explained at the hearing. And I do not think it rose to the

22 bad faith. But that's a fair question to ask and it's a fair

23 question to give you the information you need to answer.

24 THE COURT: Yesterday we talked on the phone and I

25 asked you to examine where we are with respect to your


1 representation of the firm and Mr. Collingsworth. It seems

2 like the firm's position at least from some things I've seen

3 is that, for example, Mr. Scherer wasn't aware of some of

4 these things until the supplements to discovery had to occur.

5 And this may be a better question for the plaintiffs, but

6 since I've been throwing you some curveballs and fastballs,

7 I'm going to throw you a softball.

8 Why shouldn't we default the firm at this point,

9 assuming that default is even on the table?

10 MR. McNEIL: Here is my position on that. No. 1,

11 this is a libel case. It has to do with their suing us. It's

12 not we're suing them. That's a real important distinction.

13 We're the ones that are being attacked here. They didn't have

14 to bring this lawsuit, but they did. So we have a right in

15 this courtroom to defend ourselves. I had a father who was a

16 criminal lawyer in the early part of his career in west Texas,

17 and that's a tough tour de. We have a right to defend

18 ourselves.

19 Beyond that, our position is that this -- as to the

20 sanctions motion, as in the libel case, that there was no

21 libel either by Terry Collingsworth or the firm. And our

22 second position as to the sanctions motion is that neither

23 should be sanctioned for throwing out their case when they're

24 trying just to defend it. 25 Our position is, third, that whether or not


1 Mr. Collingsworth did something absolutely incorrect, even

2 though it wouldn't go to bad faith, absolutely incorrect, we

3 should have -- that is not the determining fact in the libel

4 lawsuit. The libel lawsuit has to do with the truth as to

5 whether these gentlemen did it.

6 You have a wonderful quote that -- I just love it. 7 It was in the April 2014 transcript. It said some of these

8 people may be -- all of them may be guilty, none of them may

9 be guilty, there may be a rogue lawyer or two; I don't know;

10 but we're going to get to the bottom of it so we can get it to

11 the jury. And that is the goal of me and Your Honor. 12 THE COURT: All right. Mr. Davis, why are you

13 moving for a default as to the law firm?

14 MR. DAVIS: Well, Your Honor, at this time, the

15 evidence is clear that we would present to the Court that at

16 all times relevant to the claims being made in this case,

17 Mr. Collingsworth is a partner of Conrad & Scherer. He is the

18 manager partner of the District of Colombia office. He is

19 today ostensibly in good standing with that firm. They have

20 done nothing to separate him from the firm under the law of

21 agency or otherwise. They have not taken the position in

22 any --

23 THE COURT: Isn't that a question for the jury? 24 That's one of the arguments you will make to the jury and that 25 is that you -- the actions of Collingsworth are attributable


1 to the firm?

2 MR. DAVIS: That could be an issue if they were

3 going to raise that, that he was a rogue lawyer, he was acting

4 ultra vires or something like that. They haven't raised that.

5 We haven't seen it.

6 Secondly, it's very important, Judge, that with

7 regard to the sanction issues that key members of the Conrad &

8 Scherer Florida office, Mr. Scherer and other people, were

9 privy and on the email traffic involving, for instance,

10 (REDACTED). So they knew the money emanated from

11 Conrad & Scherer. The monthly payments would come from Conrad

12 & Scherer. For a while they went directly to Colombia. And

13 then we don't know exactly why, but the money would go to

14 Washington to International Rights Advocates and that money

15 would then be separated and go back to Colombia. Why they

16 were doing it that way, I don't know. I don't know. It

17 raises certain inferences.

18 But the law firm itself at this point in time stands

19 exactly as we see it with the same footing as

20 Mr. Collingsworth.

21 THE COURT: Mr. McNeil?

22 MR. McNEIL: Your Honor raises an interesting point

23 about agency theory, and without going into the discussion

24 earlier today, when I was briefing in a law firm in

25 Washington, D.C. many years ago, my task was to look at


1 whether we could get summary judgment on agency, and the team 2 there wanted us to find it, but there is no law that -- it's

3 extremely difficult to get summary judgment on agency. It's 4 inherently a fact issue.

5 That also brings up what Your Honor has said and

6 that is when it's a fact issue, it really needs to be a trial

7 issue.

8 THE COURT: So one of the freeing aspects of this

9 case for you, Mr. McNeil, is that you're dealing with enough

10 problems right now that you're willing to make certain

11 concessions about what really ought to go to a jury here. I 12 find that refreshing.

13 MR. McNEIL: You know --

14 THE COURT: Because most defense lawyers might argue

15 it the other way.

16 MR. McNEIL: Did you know that about half of my

17 practice is plaintiff and half defense, and I've just been in 18 Australia. I hate to wander. Representing a big energy

19 company, some huge cases there, some just recently we've 20 gotten rid of. But the more I go to different forums I

21 love --

22 THE COURT: I don't want to interrupt you, but I

23 just got a funny thought as to Alexander and the No Good, 24 Horrible, Very Bad Day and I want to go to Australia. Maybe

25 you'll want to go to Australia after this case.


1 MR. McNEIL: Well, I will tell you something. What

2 I was going to say is that the more I see -- they really have

3 this rigidly in their mind. We are officers of the court.

4 All we do is to get the facts so these folks decide. And how

5 many clients have we all said, look, our job is to get the 6 facts to them. What you think and believe may not be what the

7 jury thinks. But that's it. 8 And, Your Honor, I don't think that's confined to

9 this case. It's confined to any case. And I candidly think

10 it's the most persuasive way to try a case.

11 THE COURT: Well, obviously one of the things you

12 need to start thinking about with your clients and the same

13 thing with Mr. Davis and his clients is this: If default is

14 not the appropriate sanction, in the event I agree that this

15 is bad faith and that some sanction is due, what are the

16 appropriate level of sanctions that ought to be considered?

17 At the end of their brief on the renewed motion for

18 sanctions, I think page 30 of the brief, they laid several

19 other options. It seems to me that you might want to have

20 some discussions with your clients about where you could end

21 up if things don't go your way on the motion short of default.

22 MR. McNEIL: Your Honor, that brings an idea to my

23 head and that is it probably -- given that this initial stage

24 of briefing triggered a number of new questions for you, that

25 we may need to do some supplemental briefing, and I would --


1 again, applying my principal, we're here to help you make this

2 decision. We're happy to do that.

3 I'm just thinking. Some briefing schedule on some 4 of these issues might be appropriate, or --

5 THE COURT: All right. We will take that up. What

6 about the use -- and now that Mr. Brown is here, we can get a

7 little bit more into these issues.

8 Mr. Brown, what we've discussed is I had said

9 there's three factors that go into this whole keeping things

10 confidential, it seems to me. Two of them have been raised by

11 the defendants. One has been raised by the Court. But the

12 two raised by the defendants are that there may be some help,

13 welfare, and safety issues related to not the witnesses

14 themselves, so the issues may be health, safety, and welfare

15 of family members of these witnesses, not the witnesses

16 themselves.

17 And the second consideration raised by the

18 defendants is the confidentiality that they assert would

19 normally attach to these type of communications as they go

20 about litigating cases on behalf of their clients. That may

21 be work product. That may be attorney/client privilege. That

22 may be just kind of a business's right to keep its private 23 affairs private. Again, I'm not trying to characterize. I'm

24 trying to list those out.

25 The one I raised is more of a fundamental starting


1 point and that is we begin with the idea that litigation in

2 this court is open and available to the public. The public

3 has the right to know what is going on in the United States

4 courts. The courts aren't owned by the litigants or the

5 judiciary. They are owned by the people. 6 So what I've tasked them to do is to be thinking

7 about how all those three factors apply.

8 It seems to me -- and, again, without ruling; this

9 is an inclination -- the fact of payments, the witness's

10 identity who received payments is not going to be

11 confidential. It seems to me that the identity or location of

12 family members clearly should remain confidential.

13 What I have a question about is where we stand with

14 respect to the second factor raised by the defendants and that

15 is the privacy rights that otherwise might attach, the

16 privilege rights that otherwise might attach to their conduct

17 of business as a law firm. And I wonder if what I've seen so

18 far on behalf of Mr. Collingsworth and the firm overtakes

19 their expectation of any privacy or privilege with respect to

20 their business practices here, their attorney/client

21 privileged relationships with other lawyers or clients

22 regarding the fact of payments and the circumstances of

23 payments, not -- again, we would redact out anything that

24 relates to the family members and also communications with

25 other law firms that might otherwise be work product or that


1 internally would otherwise be work product.

2 The process I kind of proposed before you got here

3 is that if those things are discoverable and publicly

4 available, before they become publicly available both sides

5 ought to be able to give comment or objection to you which 6 would be designed to protect the location, identity of family

7 members, for example. You could take that into account and do

8 an R&R to me in terms of how these documents and/or subject 9 matters ought to be redacted and/or still under seal, and then

10 after appropriate opportunities to object to your 11 recommendation to me, we could make a final decision about

12 that. The Court could make a final decision about that.

13 That's the process I kind of laid out to the parties

14 earlier. Do you have any thoughts on that for us?

15 MR. BROWN: Well, the thing that kept coming up

16 during our discussions of these issues -- and we tried to work

17 through the issues with both sides trying to negotiate a

18 confidentiality order and they worked to try and do that, but

19 we kept coming back to these issues. We had determined that

20 the fact of the witness payments was not going to be

21 confidential.

22 The question then became what happens with people

23 under -- with family members, in other words, payments that

24 were made to those family members. So that issue was of

25 concern to me and had not addressed that.


1 The other issue that I had concerns about was sort

2 of the third issue that you've identified, which is what I

3 would call sort of confidential within the realm of this

4 litigation information, that it should not be generally posted

5 on the Internet or otherwise because you do have a trial --

6 discovery is discovery. A trial becomes a trial at the end of

7 the day. And there are certain information that may be

8 discoverable within the confines of this case that may or may

9 not end up in the trial of this case. And that was a concern

10 that I had, how that got used, how that information was used,

11 but I understood the need to use the information.

12 And I had thought through potentially a process

13 whereby the parties could use it and keep control of it, but

14 if they had to leave it with a third party, which I understood

15 might, in fact, happen, that they would identify to the Court,

16 either through me or however you wanted to handle that, that

17 in this particular instance we're going to have to leave

18 certain documents with an entity or person. That would be a

19 very rare -- I would assume very rare circumstances.

20 But that's the only thing I thought of, but I don't

21 know if that's even necessary. That's really the issue, as I

22 saw it.

23 THE COURT: Well, a couple of things on that.

24 First, I think our local rules certainly are consistent with

25 that in that the parties are the custodian of discovery


1 documents, not the Court. You don't file your discovery in

2 with the Court. So in the normal case, just based on not 3 intended ruling or policy, it's just the fact of the matter 4 that discovery is not available or readily available through

5 the court's old file system or current electronic system.

6 Again, that's just because of the way we handle discovery for 7 efficiency and recordkeeping space here.

8 I understand what you're saying about at trial,

9 certainly things will have to come out. What about a hearing?

10 I take it the hearing on motion for sanctions would be a

11 public hearing. So other than maybe dealing with the concept

12 of protecting family members -- and that is really more a

13 question for the parties -- why wouldn't that be open to the

14 public?

15 Mr. McNeil?

16 MR. McNEIL: This is what I like about this case.

17 It's interesting, has got so many twists. That is handled in

18 various courts when something is sealed -- and I hate to even

19 mention -- over in Australia, for instance, if something comes

20 up that's sealed, you refer to it as Exhibit X. It's not

21 shown to the public. You can discuss it generally. The Court

22 in this case, it's not the jury seeing it, it's just you, so 23 it's easy to do. We can provide the information to you.

24 General statements can be --

25 THE COURT: But again, courts are open to the


1 public. What is the legal reason for doing it that way other

2 than that's the way they do it in Australia?

3 MR. McNEIL: As I understand it, the First

4 Amendment, obviously, and freedom of speech is one of the

5 great things we have in this country. Dumping data out for

6 specific purposes to get outside the courtroom and use it for

7 extracurricular activities is not -- so the issue is how to

8 divide the good from the bad, because every time we try to do

9 something good in this country, there's a little bad that

10 comes along with it. That's part of the court system, to kind

11 of work that through.

12 So my feeling is that there are two ways to do it.

13 Option one is applying the Pandora's box principle, that once

14 it's out, you can't put it back. And that would dictate in

15 favor of having the transcript temporarily closed and then

16 opened up later if it turned out it was fine or fine except

17 for 15 minutes of Mr. McNeil making an argument or Mr. Wells

18 making an argument. That's one approach.

19 The second one I was suggesting was -- because it

20 does involve you, and some of this is sensitive. And it's not

21 only sensitive, but it deals with this lawsuit involving

22 Drummond -- is that we have a procedure. If you're using a

23 confidential document that you see it, we mark it, but it

24 isn't thrown into the public record. That's all.

25 THE COURT: Mr. Wells?


1 MR. WELLS: Your Honor, bringing this out from the

2 abstract to what we're actually talking about in this

3 sanctions hearing, the representations that were made to this

4 court are public. Except for the few representations that

5 were made to Mr. Brown in briefing that has all been under

6 seal, those are all public.

7 The proof that those representations are false is

8 what is being tried to be confidential, and that is something

9 that needs to be public. It's not confidential in the first

10 place, but to go to your point of the public nature of courts,

11 the function of the court system and the operation of the

12 court system is even more of public interest than just the 13 general rule. And in this case, there is an issue of whether

14 a fraud has been practiced on this court. And that, we feel,

15 would merit an even higher need for nonconfidentiality.

16 MR. McNEIL: One quick comment. That triggered an

17 idea. A third way to do it is if we get to some confidential

18 information or introduce an exhibit, at that point we could

19 raise the issue of this should be protected or not, and you

20 can make that call at that point. But it may end up that a

21 lot of this is just hypotheticals. And I will say -- 22 THE COURT: For some reason, I don't think that's

23 going to turn out to be the case, but we'll see.

24 MR. McNEIL: It may or may not. I'm just trying to 25 think, Your Honor. Another approach is to put on a list


1 beforehand of some things that we think should be protected.

2 It's not really totally right to say that a fraud is being

3 committed, making that predicate assumption, and, therefore,

4 anything in the defense against that claim becomes public.

5 It seems to me that -- we could have a trade secret

6 and fraud. You don't give away the trade secret while

7 debating whether there was a fraud. There's ways to protect

8 it.

9 So I think we're talking about a limited amount of

10 information here. And I really think -- the more I think

11 about it, Your Honor, I think we ought to maybe put it on a

12 list ahead of time if we're concerned about it so that it's

13 not a matter of interrupting the flow of the hearing, which I

14 don't like either.

15 MR. DAVIS: May it please the Court, just to answer 16 the question the Court posed as what is the basis for doing

17 this, and the answer is there is no legal basis.

18 There is no legal basis to make this hearing

19 confidential and private, to exclude -- if the press wanted to

20 come here and they raise the issue, I think they would have

21 the right to be here. If there is no legal basis -- there can

22 be some legal bases to have matters in private settings. I

23 think if you had a 4-year-old child of child abuse, something

24 like that, then the Court can in looking at the interest, but

25 here there is no legal basis.


1 This hearing on sanctions on issues that were

2 committed to the court is part and parcel of the overall

3 trial, which is also public.

4 MR. McNEIL: One final point. If he is raising a

5 legal basis, I would just -- one thought the Court might 6 consider is maybe a two or three-page bullet point brief on

7 whether that's indeed true.

8 THE COURT: Here is one thought I have, that prior

9 to a hearing we get everybody in the same room with the

10 Special Master with an advanced list from the Special Master

11 what in the exhibits and witness list you expect should be

12 confidential and why; let him do an R&R to me in advance of

13 the hearing; I will make a ruling before the hearing.

14 That gives you a chance to make your arguments. It

15 gives you a chance perhaps to position your arguments to the

16 special master outside of my hearing at least initially. It

17 gives an opportunity for there to be agreement about certain

18 things. And then I will be able to cut to the quick a little

19 bit that way and deal with what's really going to be at issue

20 at my hearing.

21 MR. DAVIS: We are in agreement with that, Your

22 Honor.

23 THE COURT: What about the issue of investigations?

24 My understanding is there may be some bodies investigating

25 some aspects of this case. Why would there be any


1 confidentiality with respect to providing those agencies

2 information, including as I told you yesterday my concern that

3 it may be appropriate for me to provide information in this

4 case related to the United States Attorney's Office and/or any

5 Bar Associations that licensed the lawyer in this case?

6 MR. McNEIL: Your Honor, given that hypothetical,

7 I -- there are rules. I will quickly try to familiarize

8 myself with them as to what can and should be produced to an

9 investigative agency, by us against them or them against us.

10 My only request is if that referral is made, to let

11 us know so that we at least have some sense of what to do.

12 I'm glad to work it at that point and seeing what needs to be

13 done.

14 THE COURT: Well, let's back up to the first part of

15 the question. What about the current investigations that may

16 be ongoing?

17 Why would there be any limitation with either party

18 providing to law enforcement any of these records, maybe with

19 the understanding from law enforcement that they're not really

20 after the identities or location of family members down in

21 South America?

22 MR. McNEIL: Your Honor, it's always easiest to

23 answer a question when you know the least about it and that's

24 me right here. I will say that I have always tried to find

25 someone smarter than I am to accompany me for that reason, and


1 Chris Niewoehner of Steptoe is with us. Chris is a former

2 U.S. Attorney who put the Governor of Illinois in jail, 3 Blagojevich, and also knows a lot about these issues, and so 4 if I might defer to him.

5 THE COURT: You can defer to him, sure. Welcome.

6 MR. NIEWOEHNER: Thank you, Your Honor. Chris

7 Niewoehner.

8 THE COURT: Were you the U.S. Attorney, Assistant?

9 MR. NIEWOEHNER: I was an Assistant U.S. Attorney

10 for 12 years.

11 MR. McNEIL: Who put Gov. Blagojevich in jail. 12 MR. NIEWOEHNER: The great state of Illinois

13 produces its share of corruption, Your Honor.

14 THE COURT: Well, they are not alone. They have

15 company in that department.

16 MR. NIEWOEHNER: Your Honor, one of the things,

17 speaking from my former hat as a prosecutor, is that there's

18 always a concern about obtaining things that were privileged

19 or confidential for some reason that you didn't even fully

20 understand. It has a potentially crippling effect. If you

21 get something that is privileged in an investigation and you

22 want to go forward with it, it can actually be a fatal flaw

23 that might get excluded down the road. It is the reason that

24 U.S. Attorney's offices that I've worked for always try to be

25 very careful before walking into -- getting into the affairs


1 of potential work product of an attorney or law firm.

2 And so from the perspective of what bodies might be

3 investigating this, it's always dangerous for one side or the

4 other to be presenting the information. I think we've been

5 trying to stress in oral presentation. Special Master Brown

6 had talked about a process before something that was disclosed

7 to a third party there would be some notice, and --

8 MR. BROWN: That wasn't exactly what I said. I

9 said -- what my thought was and my concern was that no one

10 hamper each other in their investigation. For example, my

11 concern was this. There were statements made perhaps to an

12 investigator by one side that X was true. The other side

13 needs to be able to say here is why X is not true.

14 And what I was stating only had to do with retention

15 of a piece of paper, basically, not with sharing of the

16 information. That was what I was trying to make clear.

17 MR. NIEWOEHNER: And I apologize if I had not fully

18 understood Special Master Brown's thoughts, but I think the

19 fundamental notion --

20 THE COURT: Let me take you back a couple of steps

21 and make sure I understand the process that we're asking about

22 there. There's some investigation going on. Let's

23 hypothetically say that the Justice Department and United

24 States Attorney's Office, some other investigative agency,

25 whether it's one of the alphabet agencies that appears in this


1 court from time to time, is looking into Drummond's practices

2 as it relates to some of the allegations in the previous

3 cases. All right? And Drummond wants to make sure that the

4 investigating body understands that, yes, witnesses have given

5 sworn testimony that we were involved with and complicit with

6 AUC in some of these extra-judicial dealings, but you need to 7 understand these witnesses have received payment from the

8 lawyer who was prosecuting those earlier actions. Why isn't

9 that fair game?

10 MR. NIEWOEHNER: I think a couple of thoughts here,

11 Your Honor. And, again, this is a very interesting exercise

12 in competing legal rights here. The governing body itself, of

13 course, always has the right to subpoena directly. So, for

14 example, for Drummond to point to the fact that I can't

15 disclose information for other reasons but if you were to go

16 to Conrad & Scherer and subpoena this, obviously the

17 Government is perfectly capable of getting whatever

18 information it needs from whichever party it wishes to. So

19 there is another mechanism by which this could be done.

20 There's also protection in there because, remember,

21 we're in this unusual situation of the underlying cases for

22 all the sanctions and issues we're addressing. Nobody has

23 suggested that the plaintiffs in the underlying cases bear any

24 responsibility. And the consequences in this defamation case

25 we have suggested repeatedly have to be looked at with the


1 consequence to the innocent plaintiffs in the underlying case,

2 and a disclosure of information --

3 THE COURT: Well, with respect to them as of right

4 now at least -- and I'm not sure a mandate is issued -- there

5 are no plaintiffs in any underlying cases, are there? At

6 least that have claims before this court?

7 MR. NIEWOEHNER: My understanding is that the Melo

8 case is still --

9 THE COURT: I'm going to talk about the Melo case

10 before we get out of here. I hear Mr. Collingsworth telling

11 me Melo is not due to be dismissed on the same ground as these

12 other cases were. We'll talk about that.

13 MR. NIEWOEHNER: And I believe there are some common

14 law claims, and obviously these matters are still up on

15 appeal. We don't know what is goes to happen. We obviously

16 recognize what the Eleventh Circuit has spoken.

17 THE COURT: There has been a petition for rehearing.

18 MR. NIEWOEHNER: That's my understanding.

19 THE COURT: You know, I sit with the Eleventh

20 Circuit. I don't fully understand Eleventh Circuit in terms

21 of some of their internal operating procedures. The ones I

22 know of are very sound. It seems to me, reading the tea

23 leaves, that I have two cases go up on appeal and we state

24 Melo pending those appeals. The first case we got an opinion,

25 some last year, affirming dismissal of the case. There's a


1 second case in front of a second panel. Plaintiffs, as best I

2 can tell, petition for rehearing on Bach with respect to the

3 Eleventh Circuit's first decision. It looks like there was

4 some type of hold on that motion. In the meantime, several

5 months later a second opinion comes out, a different panel,

6 affirming dismissal of that case.

7 Now, there may be some more litigation, mandate

8 hasn't issued. The way I read that is more than likely one

9 panel wanted to hold off on a decision as to the first panel's

10 decision until it had a chance to assess its appeal and make a

11 decision. Now we have both decisions. Once mandate issues,

12 unless there's a petition for cert by the Supreme Court and a

13 granting of that cert, those cases are over. Right?

14 MR. NIEWOEHNER: I'm going to have to defer -- my

15 understanding is that -- Mr. McNeil perhaps could answer this

16 better.

17 MR. McNEIL: He's third-hand. I'm second-hand.

18 THE COURT: I'm not going to ask the first-hand.

19 MR. McNEIL: I believe that there are common law

20 tort claims still alive in Melo. There are various -- there

21 may be certain affirmative defenses.

22 THE COURT: Based upon Colombia law?

23 MR. McNEIL: My understanding is that it is Colombia

24 law. That means that that hasn't been disposed of at this

25 point. If you ask me any more about Melo, I can't tell you.


1 THE COURT: Let's say under 1367 those are due to be

2 filed somewhere else, or some other ruling like that. Putting

3 Melo aside, I guess my question is this: What client

4 interests are still up there?

5 MR. McNEIL: Well, I was just thinking about it. 6 The client, if they want to relitigate or take up the case

7 elsewhere, that they shouldn't have to waive various interests

8 or their prejudice and their interests. They either have a 9 cause of action or they don't. If they indeed do, you

10 shouldn't throw the baby out with the bathwater by giving them

11 all the discovery, whatever, in the previous case. I think

12 that -- I apologize that I cannot speak --

13 THE COURT: Well, it is more complex than we're

14 going to be able to resolve today. I'm raising the questions.

15 MR. McNEIL: We haven't mentioned this factor today

16 and I won't go into it, but there are these cases -- there are

17 other cases out here, other human rights cases, and they may

18 have some impact on that.

19 THE COURT: What other human rights cases?

20 Involving my current or former plaintiffs in these cases?

21 MR. McNEIL: No. No, they are different. You are

22 right.

23 THE COURT: So like Chiquita?

24 MR. McNEIL: That's right, Dole.

25 MR. WELLS: Judge, if I can comment just on the


1 investigation aspect. This whole discussion got started as

2 why can, say, the Colombian fiscalia, who Mr. Collingsworth

3 has testified he has sat down and talked to and provided them

4 the testimony of these individuals, why should they be

5 prevented or us be prevented from telling the Colombian

6 fiscalia, you know, those witness statements you got, they all

7 received payments. That has nothing to do with client

8 interests. These witnesses supposedly killed these clients'

9 relatives. They have no interest in the Government not

10 knowing these witnesses were paid.

11 THE COURT: Wouldn't that simple issue be resolved

12 simply by if the fact of payment is discoverable in public,

13 then you can provide information about that?

14 MR. WELLS: It would.

15 THE COURT: Any disagreement from you, Mr. McNeil?

16 MR. McNEIL: But it raises an interesting question.

17 I just want to throw it out, because we're here to help you. 18 And the more you know, the better you can make a choice.

19 I don't know what's -- not only am I concerned about

20 the territory of Colombia and its culture or its problems with

21 intimidation of witnesses, but just as a matter of practice, I 22 try to figure out -- I don't have an answer, but there is a

23 procedural issue here in the court system. The law partner of

24 the Attorney General is Drummond's counsel down there. And

25 it's a small world in every town, but I think we need some --


1 think through some safeguards here, and I haven't any to

2 propose right now. I just throw that out as an issue. 3 THE COURT: All right. Wrap-up time. We have a

4 plan for briefing in advance of the hearing. We have a plan

5 for dealing with confidential information that could be used

6 at the hearing. And we have a plan for getting to the facts

7 that are really at dispute that could come up at a hearing.

8 Anything else that either side thinks we need to do

9 with respect to preparation for the hearing?

10 Mr. Davis?

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16 THE COURT: All right. Well, it sounds like I'm not

17 going to be able to get in the weeds on that today.

18 Mr. McNeil, when does John Grisham show up?

19 MR. McNEIL: Your Honor, this is too good for him.

20 I will tell you in our --

21 THE COURT: I'm not going to ask you to comment on

22 this.

23 MR. McNEIL: But I do want to say --

24 THE COURT: No. I want to say something.

25 MR. McNEIL: I want to say, if I could, just real


1 quickly, when we began finding that there might be some gaps,

2 we hired the former head of the computer division of the FBI

3 in Washington who also ran the FBI Enron task force, turned it

4 over to him. He is a testified expert. He is not a

5 consulting expert. We presented report one to Mike Brown.

6 They had some further questions. Mike had other questions.

7 And the gentleman went back and did a further report. His

8 report makes the conclusion that there wasn't any intentional

9 deletion. And those are detailed reports by one of the best

10 guys in the country that has literally -- they are getting his

11 documents.

12 So I feel we've really tried to get to the heart of

13 it. I've never designated an expert before his report was in.

14 But that's what they've got. I'm happy to have any of that

15 litigated before the Court in whatever proceeding it wants to.

16 THE COURT: All right. Well, you told me on a

17 couple of different occasions that you're here to help me.

18 MR. McNEIL: I'm trying.

19 THE COURT: It will help me if you do a thorough

20 investigation in terms of what's missing, why it's missing,

21 and when we'll get it back.

22 MR. McNEIL: Yes, sir. And I think most all that

23 are in those reports, but we will see what else we can put

24 together. I mean, it is very detailed. In fact, the

25 expert -- and don't hold me to this -- concludes that there


1 were other sources of a lot of this. We filled in a number of

2 gaps. A lot of this just relates to the difficulties of a law 3 firm finding stuff that's years old.

4 THE COURT: Well, eventually we're going to get to

5 who is responsible for it missing. But right now I want you

6 to figure out what is missing, why it's missing, and how we

7 get it back.

8 MR. McNEIL: Yes, sir.

9 THE COURT: And I want a report from the Special

10 Master, to the extent you haven't already given that, within

11 two weeks.

12 MR. McNEIL: All right.

13 THE COURT: Based on your current set of knowledge

14 on those three questions at that point.

15 MR. McNEIL: All right, sir. We'll do it.

16 THE COURT: Any other factoids I should know about?

17 MR. McNEIL: Your Honor, thank you. You seem to be

18 well in control of the situation.

19 THE COURT: If I was more in control of the

20 situation, maybe we wouldn't be here, because if I had

21 control, we would just be litigating, not off on these 22 fortuitous or problematic frolics and detours.

23 All right. I've got one final question. I'm just 24 curious. Are there still payments being made to any persons

25 in Colombia with respect to what the defendants would


1 characterize as security payments or otherwise?

2 MR. McNEIL: Subject to our objections as to the 3 discovery cutting off on October of 2013 --

4 THE COURT: Discovery cutoff in your case, in this

5 defamation case, does not affect my taking up a motion for

6 sanctions.

7 MR. McNEIL: I just put that in the record, Your 8 Honor.

9 THE COURT: You didn't need to.

10 MR. McNEIL: Having said that, there are continuing

11 payments, and I'm not sure -- (START REDACTION)

12 (END REDACTION). I think that's right.

13 THE COURT: I've heard only three before. We're

14 sure of that?

15 MR. McNEIL: Your Honor, to the best of my

16 knowledge, but I will -- as Your Honor knows, we have

17 continued to supplement as we go along, but those are the ones

18 we have uncovered.

19 THE COURT: All right. What else do we need to take

20 up for right now?

21 MR. SPOTSWOOD: Your Honor, we had filed a motion

22 for reconsideration of financial and public figure discovery,

23 and that's something that we could address today if you have

24 any questions about that. That has been fully briefed.

25 THE COURT: Give me your overview of that.


1 MR. SPOTSWOOD: Your Honor, let me hand out a --

2 this won't take a few minutes here. I would like to start by

3 noting that the Court denied the motion to compel on the

4 assumption that Drummond would be making certain stipulations

5 that would moot the need for financial and public figure

6 discovery. It turned out that those stipulations were not

7 made.

8 At the October 3 hearing on page 3 of this

9 presentation, you will see excerpts from what Drummond was

10 saying, and I think you will also see there what the Court was

11 understanding at the time, which was that this was a case

12 involving nominal damages and punitive damages only.

13 Some nine or 10 weeks later Drummond stipulated that

14 it was seeking presumed compensatory damages, not merely

15 nominal damages. They did that in their reply brief filed in

16 December of 2013. Those are two very different things.

17 Nominal damages would be $1. Presumed damages can be 18 millions. The presumed damage

drummond v collingsworth transcript may 21 2015

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