FILED: NEW YORK COUNTY CLERK 12/07/2012 INDEX NO /2011 NYSCEF DOC. NO. 90 RECEIVED NYSCEF: 12/07/2012 EXHIBIT M

Transcription

1 FILED: NEW YORK COUNTY CLERK /0/0 INDEX NO. 0/0 NYSCEF DOC. NO. 0 RECEIVED NYSCEF: /0/0 EXHIBIT M

2 SUPREME COURT OF THE STATE OF NEW YORK COUNTY ~ OF NEW YORK - CIVIL TERM - PART: X CHINA PRIVATIZATION FUND -against- (DEL), L.P., Plaintiff l GALAXY ENTERTAINMENT GROUP LIMITED, Defendant. - X Index No. 0/ 0 Centre Street STATUS CONFERENCE and ORDER New York, N.Y. July 0 0 B E FOR E: HONORABLE JEFFREY K. OING Justice A P PEA RAN C E S: WElL, GOTSHAL & MANGES LLP Attorneys for the Plaintiff Fifth Avenue New York, N.Y. 0-0 BY: RICHARD L. LEVINE, ESQ. and ERIC C. HAWKINS, ESQ. 0 LINKLATERS LLP Attorneys for the Defendant Avenue of the Americas New York, N.Y. 00 BY: JAMES R. WARNOT, JR., ESQ. and BRENDA D. DiLUIGI, ESQ. ALAN F. BOWIN, CSR, RMR, Official Court Reporter CRR ALAN F. BOWIN, CSR, RMR, err

3 ( 0 0 THE COURT: The Court has before it the matter of China Privatization Fund versus Galaxy Entertainment Group, index No. 0 of 0. It's on for a status conference here. Hold on one second. I'm sorry. (Pause.) THE COURT: It's on for a status conference here. There are a number of discovery issues that were brought to the Court's attention. Will the parties enter their appearances for the record. For the' plaintiff? MR. LEVINE: Your Honor, my name is Richard Levine; with me is Eric Hawkins, of Weil, Gotshal, on behalf of the plaintiff, China Privatization Fund. Good morning, your Honor. THE COURT: Thank you. MR. WARNOT: James Warnot, your Honor, and Brenda DiLuigi, of Linklaters, for defendant, Galaxy Entertainment. Good morning, your Honor. THE COURT: Good morning. Okay. This is precipitated by a letter, starting off, on July th, 0, from defense counsel, so.why don't we -- there are -- ALAN F. BDWIN, CSR, RMR, CRR

4 0 0 I gather, there are three issues here,that need to be addressed. One is the claim of improper redaction, the second is undocumented privilege clqims, and the third -- I believe there was a third one, too, but we'll go through -- we'll go through each one as you raise them. So why don't we do the first one first! with respect to the excessive redaction of documents. MR. WARNOT: Sure, your Honor. There's also another application, with respect to deposition locations, and we'll get to that eventually. THE COURT: We'll get to that. MR. WARNOT: On this issue, there is some suggestion in plaintiff's papers that this isn't ripe yet, but we've been, you know, trying to get these things resolved since March. One of the privilege logs was promised back in February. We've been back and forth. So as far as I'm concerned, it's ripe for the Court to get involved. With respect to the redactions l there are THE COURT: Do you have a sample here? I don't recall seeing a sample. MR. WARNOT: Your Honor, if you will look in my letter, I think some good examples of the redactions ALAN F. BOWIN, CSR j RMR, err

5 ( 0 0 in question are Exhibits C and D. THE COURT: You know what? That I don't have. MR. WARNOT: Well, let me hand this (indicating) up. THE COURT: If you wouldn't mind handing that up and letting me take a look at it...? (Documents handed from Mr. Warnot to the Court. ) THE COURT: This (indicating), I definitely didn't have. MR. WARNOT: If you flip to the back THE COURT: Plaintiff's counsel, you got a copy of these sample redactions; don't you? MR. LEVINE: I do, your Honor. THE COURT: Okay, perfect. MR. WARNOT: So Exhibit C, Bates numbered, concerns Galaxy Entertainment. Well, first let me state, your Honor, that, like, half of plaintiff's production has been redacted, not for privilege but for nonresponsiveness; and while we accept the fact, in certain circumstances, it's okay to redact irrelevant material, you know, half the production -- THE COURT: It's not okay for ALAN F. BOWIN, CSR, RMR, CRR

6 ( 0 0 nonresponsiveness because it depends on in who~e mind it's nonresponsive. It may be nonresponsive according to them but, in your mind, it's very responsive to what we're looking for. MR. WARNOT: Depends on the document. THE COURT: Correct. And you're not going to be able to know that because it's been redacted. MR. WARNOT: Now, they've given us some categories and, on their face, we're having difficulty buying their explanation. Like on this one, the top, "Dear Jesus," they're clearly talking about the redemption and conversion of the Galaxy convertible bonds at issue in this case. To me, that doesn't seem to be an unrelated transaction or management fees, which is the explanation that we've got in plaintiff's papers on that issue. The next one I would direct the Court's attention to is Exhibit D, Bates numbered. THE COURT: I have. What are you looking at? MR. WARNOT: Exhibit B? THE COURT: Exhibit B. I'm on -- Oh, here it is (indicating). I got it. -- MR. WARNOT:. You got it? ALAN F. BOWIN, CSR, RMR, CRR

7 ( 0 0 THE COURT: Well, I got attached.to Exhibit B. MR. WARNOT: Hang on a second, your Honor. THE COURT: I appreciate the double-sidedness, but... MR. WARNOT: Yeah; that's my copy only. THE COURT: Okay. (Pause. ) MR. WARNOT: Yeah, it is Exhibit D; D as in dog, your Honor. THE COURT: D, as in dog. Hold on a second. I'm looking at A; that's why. All right, I'm at Exhibit D.. Got it. MR. WARNOT: Again, your Honor, the explanation we got is, "Management of fund unrelated to the issues in this case." Well, this, again, is clearly about the conversion of Galaxy shares: "Dear Jesus and Tom" -- so this is Mr. Bakal, the head guy of the plaintiff, writing to CaIPERS, one of his main investors -- "I've read with great. annoyance the s from the lawyers, which they are sending back and forth." They're obviously not agreeing on this issue. "Unfortunately, they are destroying the good relationship between CalPERS and Crimson to work ALAN F. BOWIN, CSR, RMR,CRR

8 0 0 'together to maximize, the profit of our investment in Galaxy. Let's get the lawyers to be supportive, to help work with us.," blank, " and distribute the large profit." So, you know, maybe not every document is so bad, but to our mind, we're entitled to see what's in there, especially if it's on relevance grounds. So I'm not sure what the right solution is: give us everything unredacted, give us a log, something other than what we've got. THE COURT: Well, my -- my -- All righ:t I Before I say anything, okay, what's your position on the redaction issue? Hold on to the other stuff. We'll go back and forth on these issues. Go ahead. MR. LEVINE: Thank you, your Honor. First of all, they raised this issue, maybe, in March; we responded and then let it -- and our response was that: "Here are the seven categories of things we've redacted. We believe, number one, they're not responsive to any of your document requests and, two, they're not materially necessary; they have nothing to do with this case." And then we didn't hear from them for two months. Okay? And then, after two ALAN F. BOWIN i CSR, RMR,. CRR

9 ( 0 0 ' months, they wrote another letter. But on each of the seven categories, we have said, in three different letters, we believe these are not -- these categories were not responsive and these categories are not materially necessary. We can meet and confer; we're willing to discuss each one of these. We don't think they have a right to go to the Court before we have discussion as to whether or not they object to -- they have a dispute as to -- the categories. THE COURT: I can understand that argument and I always encourage parties, with resp~ct to these business transactions, to meet and confer. But the fact of the matter is, I think they stand on a little bit firmer ground in the sense that discovery in state court, at least to my mind and from my experience, is pretty broad. But in terms of what is material and necessary and what is relevant, you know, what is each person sees it in different ways. MR. LEVINE: I understand, but we -- they may be able to convince us on something. It's also an issue of responsiveness. THE COURT: See, that's the -- MR. LEVINE:. If they never sent us a document ALAN F. BOWIN, CSR, RMR, err

10 request for it, then it doesn I t even matter whe,ther it's relevant. THE COURT: MR. LEVINE: THE COURT: But-- I'm sorry. Just hold your thought for a second. MR. LEVINE: Um-hrom. THE COURT: But their position is that -- I 0 understand what they're doing -- is, they don't have to meet and confer and convince you of anything, because they're taking the position, when I get to these letters: "We're entitled to this. Why do we have to sit down and chat about it? Give it all to us and then we'll talk afterwards." I understand what you're saying: "We should meet and confer," because ultimately, when you meet and confer, you're going to say: "No, that's not materially necessary; we're not going to turn it over, so you're 0 still back at square one." It's not -- they want it, and they want it bad enough to send letters to me saying, "We want it, Judge, and they can't keep redacting stuff and saying it's not responsive." Because it's akin, to me, of saying it's not relevant. And relevancy, it was taught to me a long ALAN F. BOWIN, CSR, RMR, err

11 0 ( time ago, has no play in terms of discovery unless it's clearly afield. I mean, it's like a personal injury casei someone gets a broken bone and all of a sudden they're looking into a contract for a purchase of a home that has nothing to do -- I mean, it's far afield. But MR. LEVINE: Well, your Honor, we gave them seven categories and we think each one of them is far 0 afield and each one of them was not something they requested. I don't think they have any basis to come here and say "They have to turn it over" if they never requested it. The law is clear -- we cited cases to your Honor -- that redactions are allowed. Let me -- THE COURT: Redactions are allowed - MR. LEVINE: Let me look at the example, okay? The example -- this, I think, is Exhibit D and 0 it was the last one Mr. Warnot referred us to, page (indicating). Okay? There was a dispute going on between China Fund and one of the major investors in the fund, unrelated to Galaxy; it had to do with management fees. THE COURT: Right. MR. LEVINE: Okay? And that's what this ALAN F. BOWIN, CSR, RMR, err

12 0. is about: "I've read with great annoyance the s from the lawyers, which they have been sending back and forth." On something unrelated to the dispute with unrelated to the investment with Galaxy. "Unfortunately, they are destroying the good relationship between CalPERS and Crimson" - Crimson is the manager of China Fund. THE COURT: Right. MR. LEVINE: -- "to work together to maximize the profits from our investment in Galaxy. If That's why we produced it, because what. Mr. Bakal is saying is, If Why are we letting this side dispute kind of get in the way of dealing with our business?" So it refers to Galaxy but that's not what the dispute is about. "Let's get the lawyers to be supportive and help work with us," and that's where he explains 0 where he refers to -- this unrelated dispute. It doesn't have anything to do with whether China Fund is entitled to more shares from Galaxy. It doesn't have anything to do with how the indentures should be interpreted. It doesn't have anything to do with who negotiated what. It's an unrelated dispute where Mr. Bakal is bringing in the fact that he thinks ALAN F. BOWIN, CSR, RMR, CRR

13 ( this dispute is a distraction. So the document got produced but there's nothing in there that's going to move this case ahead. THE COURT: You know, you're going to be noticed for a deposition. Are you testifying as a fact witness? You know exactly what these guys were talking about? Because you just told me exactly what's behind this . So are you prepared to get on the witness 0 stand or get before a deposition and have them question you on this document here? Because, from what I gather, you know a lot about this e-maii. But you weren't even on this transaction. How can you stand there right now and represent to me, this is exactly what they were talking about, it has nothing to do with this transaction, when the only people that should know, or could possibly know, are these individuals, Mr. Brakovich (phonetic), Mr. -- I'm sorry; I can't even pronounce his name -- 0 and Mr. Bakal? I mean, these are the guys who were involved in this. But you're telling me, this is what this says, this is what they were doing, and it sounds really close to being a fact witness. MR. LEVINE: Well, your Honor, I am making a representation based on having seen the other s ALAN F. ROWIN, CSR, RMR, err

14 and discussing it with the people involved, but. there are going to be fact witnesses in this case. THE COURT: Right. MR. LEVINE: They're going to take the deposition of Mr. Bakal. THE COURT: Hopefully, you won't be one of them. MR. LEVINE: Absolutely true, your Honor, 0 because I would be a terrible witness, like many lawyers. THE COURT: Yes. MR. LEVINE: But, your Honor, again, it seems to me that they have to make -- we've listed the cat They've never once said, "Of these seven categories, we actually requested that information." They haventt said that. They haven't made an argument as to the seven categories that is responsive. All they said is, "We don't trust their explanation." 0 THE COURT: Right. MR. LEVINE: Well, I mean, maybe we'll be willing to show it to them in camera and they can see what they're about. THE COURT: You know, that's the -- Right now -- MR. LEVINE: That's, kind of, the way thing~ ALAN F. BOWIN, CSR, RMR, err

15 i ( 0 0 work out. THE COURT: I'm just focusing on a ~ingular issue right now. MR. LEVINE: Um-hmm. THE COURT: And unless I'm mistaken, from what counsel's t~lling me, they are taking a position that the redactions were not proper in a sense that they're not getting to -- they're not able to see exactly what's behind these items that have been produced because they've been redacted: "We don't know what's there, Judge, because they took it out and they're saying it's nonresponsive." So the fact of the matter is, I believe, at this juncture, they're entitled to see Unless it falls under a confidentiality, I understand, in the sense of what you're going to upload on the system. Those can be redacted so you don't have the outside world seeing what you are putting on the system. But between the parties, there is no confidentiality; I mean, they show everything to everybody. In terms of the redactions, the redactions come into play when there's a privilege issue, like an attorney-client privilege or a statutory privilege or a privilege by way of contract, where, you know, this ALAN F. BONIN, CSR, RMR, CRR

16 i 0 0 stuff is never to be seen by anybody else; "FOL your eyes only." I don't see where, you know, you can take the position and say, you know, "We'll produce this but it's not we'll redact it; it's nonresponsive." I'm not SO sure MR. LEVINE: Well, your Honor, there are cases we cited to you saying that is permissible in New York. THE COURT: I know it's permissible but I don't every trial court does their own thing in terms of "responsive." MR. LEVINE: I'm not saying your Honor can't order me to do it. THE COURT: Thank you. MR. LEVINE: I'm just saying that I have law; I have law supporting me. THE COURT: Thank you. But those cases that have the -- Well, before I say anything, I'll let counsel respond and then I'll... MR. WARNOT: I'll quit while I'm ahead, other than to note that there's a very' strong confidentiality order in place in this case. THE COURT: Right. So I mean, stuff that ALAN F. BOWIN, CSR, RMR, CRR

17 l ( goes online is redacted. I mean, that stuff, there is no quibble there that other people sho~ld have - should not be prying -- there should be no prying eyes with respect to that. MR. WARNOT: If there's something that's got 0 to be sealed or whatever, of course. MR. LEVINE: Well, your Honor, could I just, then, ask that to the. extent that we are ordered to produce these documents in unredacted form, to the extent they ultimately are going to put them in the public record, they have to confer with us before they use the unredacted version? THE COURT: Oh, absolutely. I think, right now, my directive is to produce those documents that have already been produced, that have been redacted, but now produce them unredacted. Once defendant gets those documents, they 0 are to confer with plaintiff or the Court or with the Court's assistant before they release it to anybody. That is a lockdown ih the sense that I'm making this absolutely clear: you get those documents, they're not to be seen by anybody. And if it gets out to the public domain, that's not a good thing. You understand my directive there? ". MR. WARNOT: I understand the public domain. ALAN F. BOWIN, CSR, RMR, err

18 . ( order. Within the constraints of the confidentiality So -- I mean, we can show them to our client; 0 0 right? THE COURT: Yes. Outside the universe that we have here and clients, I don't think anybody needs to know what's going on. All right? So, in terms of the redactions here, I'm going to direct the plaintiff to turn over to reproduce -- those documents in unredacted form, of course, subject to any' privileges that they believe exist: if you go through those documents again and you say, "Okay, this is attorney-client privilege, no; this is a statutory privilege, no; this is part of a pending investigation, no." All right? So you have that kind of -- you have that work to do in terms of going through those documents. And, of course, when you get those documents, if you believe that the items that are being -- that privilege is asserted upon and you believe you still should see them, then I'll take a look at them in camera and then I'll give you a further ruling on it. MR. WARNOT: Thank you, your Honor. THE COURT: Okay. MR. WARNOT: Perhaps THE COURT: Yes? ALAN F. BDWIN, CSR, RMR, CRR

19 i ( 0 0 MR. WARNOT: -- that then gets to the, privilege log issue? THE COURT: Right. MR. WARNOT: Okay. So I mean, nobody's disputing that there should be privilege logs here; the question is when. THE COURT: Right. MR. WARNOT: And we've been asking them for them for a long time. They actually made a proposal to us, you know, by -- I forget the date -- August th, I think, for the last one, kind of on a rolling basis. You know, we think it needs to be done as quickly as possible. It seems like a long time, given how long we've been asking for them, but whatever the Court's discretion is on that.~. You know, we do have another concern with respect to one third party, the accountant for the fund, as to which -- you know, we've been informed by their counsel that plaintiff's counsel's having a look at the documents first and, maybe, will try to assert privilege over those. We would -- we think it's highly doubtful there will be grounds for such privilege, but we want to move that along so we can get to the depositions here. THE COURT: It's summer, folks. Take it ALAN F. BOWIN, CSR, RMR, CRR

20 i ( easy. But, okay. Having said that, counsel, w.hat's your response to the privilege log issue? MR. LEVINE: Yeah. Well, we've never disputed that the parties should exchange privilege logs. Until we got the reply letter to your Honor, we never knew they were ready to produce their privilege log. ' We have offered to produce the three 0 different privilege logs we're working on. We've given them three dates by which we'll get them done, which I haven't heard them object to, the last one being August th. I don't think there's an issue. In terms of the accountants, if privilege is declared, they'll be on the privilege log; and they'll dispute them, if they do. But we're not there yet. MR.WARNOT: Will we be there on the same schedule as the other privilege logs, I guess, would be my question. 0 THE COURT: Well, I don't know. You know, when you're dealing with a third party, in terms of what their dynamics are, I don't know. But in terms of this dynamic, between plaintiff and defendant, I mean, it's safe to say that it seems like August th seems to be a date, a target date, to have these privilege logs produced for both ALAN F. EOWIN, CSR, RMR, CRR

21 0 ( sides, I would gather, and that any other privilege logs that you will need with respect to that third-party accounting -- or accountant -- I mean, we'll take care of that in due course. MR. WARNOT: Well, your Honor, I mean, they've now got the documents, I'm told, by -- THE COURT: "They" being who? MR. WARNOT: Plaintiffs now have the 0 documents that the accountant is proposing to ~roduce. THE COURT: Okay. MR. WARNOT: I am told that; they can tell you whether that's correct or not. THE COURT: All right. MR. WARNOT: Assuming that that is correct, we can get those privilege logs on the same schedule. MR. LEVINE: Your Honor, to th~ extent that they are our documents that we're withholding, and I don't know if there are any that fall under this 0 category, they'll be in our log. To the extent that they're a third party's documents, they'll have the log. I have no idea what the schedule is. It is the summer but I don't think we're talking about a lot of documents. THE COURT: They provide it to you; they're the ones that hold the privilege. I mean, they're ALAN F. BOWIN, CSR, RMR, CRR

22 (' 0 0 giving it to you to look at. MR. LEVINE: Well, it's our privilege but it's their documents. I don't think we have a right to do a log for them. It's our client's privilege -- THE COURT: Okay. MR. LEVINE: -- to the extent there is one. THE COURT: Okay, I got it. MR. LEVINE: And it's mostly work product. In other words, they were consulting with the accountants about the calculation of the number of shares. THE COURT: When do you think you're going to have an opportunity for the accountants to give you I this information, or this privilege log? MR. LEVINE: I don't -- we told them some time ago -- I mean, we're not the cause of the current delay. this point. I wasn't even aware that there was a delay at We told them some time ago -- and, you know, two, three weeks ago -- which of the documents we believe our client has a privilege claim on, and I have no reason to think they can't get a privilege log done quickly but I have not asked them that question. THE COURT: August th is the date; I'm going to give them until September th, another couple weeks, because I think it's a dynamic situation. What ALAN F. BOWIN, CSR, RMR, CRR

23 ( you guys come up with may affect what they're thinking because, in terms of discovery, whatever is produced, they always -- don't produce more than what you have to produce, as the old saying goes. If you don't ask for it, don't give it. So we'll see where it goes in terms of what you put down and what defense counsel puts down. MR. LEVINE: Okay. Thank you, your Honor. 0 MR. WARNOT: Your Honor, there was a proposal that they would do this on a rolling basis; the th would be the last date. THE COURT: Right. MR. WARNOT: Ours is ready now. I would ask them to -- you know, hold them to that, with the th being the last date and the other ones being on the dates they indicated. THE COURT: I don't see any representation that there's going to be a problem. If there's a 0 problem, I'm here; call me. But I don't think there's going to be a problem or an issue. Discovery appears to be moving well, except for little bumps in the road, but we'll see where it goes. MR.. WARNOT: Thank you, your Honor. else? THE COURT: What's the next issue? Anything ALAN F. BOWIN, CSR, RMR, err

24 ( 0 0 MR. WARNOT: The next issue has to do.with the missing laptop of Mr. Bakal, who is China. Privatization Fund, basically. THE COURT: Right. MR. WARNOT: He is the general partner. THE COURT: "The guy." MR. WARNOT: Yeah. I mean, this is his business. Supposedly, he does his business on the laptop. You know, he's got millions of dollars of investors' funds; this is just one investment that they have. How can it be that that stuff disappeared and didn't find its way onto the new laptop? And now they're saying, "Oh, we'll look again.". I mean, where is it; under his bed? I mean, we're very skeptical of all of this and therefore, you know, we'd like to see some sort of written representation, sworn affidavit, something that explains this situation. You know, I know we can ask him about it at his deposition, but I don't want to wait until then. THE COURT: Okay. He's lost his laptop. MR. LEVINE: No. Unfortunately, on this issue, Mr. Warnot is just making things up. Not surprisingly, this businessman, who lives in Canada but does business out of Beijing, has a ALAN F. BOWIN, CSR, RMR, err

25 ( 0 0 laptop. Six years ago, when we did this -- when he did this deal, he had one laptop; today he has a different laptop. THE COUR~: Well, yeah, because things technology -- change. It's too slow for him. MR. LEVINE: We did tell them that he could not find his old laptop; we told them he'll go look for it again, but we never told them that the stuff on the old laptop was not copied onto the new laptop. THE COURT: Yeah, that wouldn't make any sense. MR. LEVINE: It was. I mean, that's something -- he just came to some conclusion without ever asking us. So we don't have the old laptop. So he's going to look for it. He thinks it may be"in Canada. He's in Beijing right now but he's going to have his wife look for it. And he'll send it to us. If there's anything on the old laptop that wasn't [sic] on the new laptop, we'll produce it. THE COURT: AI-l right. MR. LEVINE: But it's a nonissue here. They're making noise over nothing here. THE COURT: The fact of the matter is ALAN F. BOWIN, CSR, RMR, CRR

26 0 0 Mr. Bakal, is it? MR. LEVINE: Yes, your Honor. THE COURT: -- has not been deposed, right? MR. LEVINE: Right. THE COURT: You know what? Those questions with respect to the allegedly missing laptop can be posed to him at his deposition and he can explain or he can tell you what's going on, and, you know, we'll cross that bridge when we get to it. Because at this juncture, I think the issue of the laptop, while it may be an issue, right now, is not ripe for me to address at this point. We'll see -- I mean, that goes to your issue here, on this letter, with respect to -- You're requesting me to order CPF to submit a sworn statement of its explanation for the disappearance of the business records? Is that it? MR. WARNOT: That's correct, your Honor. THE COURT: Okay. MR. WARNOT: And specifically, if in fact I'm being told that everything from the old laptop was put on the new laptop, then maybe it is a nonissue. THE COURT: I don't know. Ask him at the EBT; we'll see what he says. MR. LEVINE: And, your Honor, if we find the ALAN F. BOWIN, CSR, RMR, CRR

27 ( 0 0 old laptop, we're going to have our technology people look at it and see if there's anything there. THE COURT: Yeah. I mean, if you find the old laptop, we'll have a forensic examination of it. Just make sure that your client then -- I would put in this directive that if the old laptop is found, I would request ~- direct counsel to secure the laptop and put it in escrow, in your custody, for safekeeping. MR. LEVINE: That's fine. We're immediately going to have our e-discovery vendor, our outside technology consultant, take a look at it. If there's anything there, we'll take a look at it, but I don't think there's going to be anything there that's not on the new laptop. THE COURT: I'm not a computer maven but I was told a long time ago, a delete key is not a delete key. Next. MR. WARNOT: Thank you, your Honor. We'll later explore the issue of whether the old stuff is on the new laptop. We don't have more s from the relevant time period. THE COURT: You don't. ALAN F. BOWIN, CSR, RMR, err <.

28 MR. LEVINE: Actually, your Honor, the reason we were here today -- And the stipulation expressly contemplated the issues we were raising, and the letter they sent was a surprise'to us because it was not covered by the stipulation. The reason we're here today is that we had sought the deposition, originally, for Galaxy witnesses, the executives who were primarily -- I guess, it was five people -- who were the primary people, who were the senior executives, who negotiated this contract which your Honor, and now the Appellate Division, has said is capable of two reasonable interpretations. So at least two. (Sound made by Court.) THE COORT: I'll take the affirmance. MR. LEVINE: Right. Always better than the other. THE COORT: MR. LEVINE: It's okay. The other's okay, but it's better to be affirmed. So, obviously, there's going to be -- have to be -- testimony about what the parties intended; parol evidence, because it's been found, effectively, to be ambiguous. ALAN F. BDWIN, esr, RMR, err

29 ( So we have sought the deposition of the four 0 people at Galaxy who, it's our understanding, were most involved in the negotiations of the deal and then carrying out the deal. One of them, we had understood some time ago -- the chairman, they told Us has no knowledge. And we've accepted that. I mean, obviously, in depositions, if it comes up that that's not the case, we'll renew it. But at this point, we've accepted counsel's representation that he has nothing to add, so we have not pushed his deposition. THE COURT: MR. LEVINE: Hold that thought. So there were four people left, one of whom, we understand, is retired, so we're 'not contending that she is under Galaxy's control. But there are three others. These are senior executives. THE COURT: MR. LEVINE: You got their names? Yes, your Honor. 0 It is Francis Lui, L-u-i; second name, Roland To, T-o; and a third one, Anthony Carter. Of those three individuals, they were the senior executives who negotiated this deal; they were the ones who approved the deal, which included a consent to New York jurisdiction and a waiver of objections based on convenience. THE COURT: These guys are the guys who '. ALAN F. BOWIN, CSR, RMR, err

30 (" 0 0 talked to your guy? MR. LEVINE: Absolutely, and our position is that they should come to Manhattan to be deposed. THE COURT: Where are they all located now? MR. LEVINE: Well, until today -- until we got Mr. Warnot's most recent letter -- we had understood that all three were in Hong Kong or Macao. We just found out that one of them is now in France, which they never revealed to us before. They've offered to make him available in London. We're willing to travel to London because that can be done in a couple days, back and forth to London. But the other two, who were senior executives of this company, who sold a quarter-billion dollars of notes to largely American investors, who agreed to New York jurisdiction, we think they should have to come here or their depositions. It is possible that we will do some depositions in Hong Kong. They have asserted that the deposition of our client will be in Hong Kong. It won't; he'll be deposed here in New York. He is -- as I said, his residence is in Canada. He does have an office in Beijing, but it's not even as if Beijing is next door to Hong Kong; it's about 00 miles. But he -- ALAN F. EOWIN, CSR, RMR, CRR

31 0 ( THE COURT: I'm sold. I'm sold in the sense that these three individuals have to be deposed; the only question is when and where. Unless you're going to tell me they shouldn't be deposed. MR. WARNOT: No. We agree that they're relevant witnesses, your Honor. THE COURT: Right. So where are they going 0 to be? I mean, one is already -- we agreed that one of them would be in London. MR. WARNOT: One is London, so I guess that's resolved. Then the issue is, where do we do the others? THE COURT: Mr. To and Mr. Lui. MR. WARNOT: Mr. To and Mr. Lui. Mr. To is just recovering from legionnaires' disease; he can't really travel for quite some time, and -- 0 MR. LEVINE: We've said, "Look, if there's a health issue, that's anothar story." THE COURT: You wouldn't want to depose a person who has -- MR. LEVINE:. Right. So, to the extent he has health issues, we're okay. MR. WARNOT: So we're going to have to go to ALAN F. BOWIN, CSR, RMR, CRR

32 Hong Kong, anyway, for certain of the other witnesses. One of the.options that we have presented to them is to do this by an advanced form of video conferencing that makes it like you're in the same room. So it's like you and I are life~size, talking to each other; no delay like you have in normal video conferencing. That's a possibility. THE COURT: You know, that's, in a sense -- 0 So you're telling me that the witness will be somewhere else but -- the questioner would not be in the room with them but the questioner will be on video, going back and forth? MR. WARNOT: But it's like you're in the same room. But, you know, again, our view is, based upon the case law -- I mean, think about what the Commercial Division is for. It's to make this court a favored 0 forum for complex international commercial disputes. THE COURT: I full well know what the purpose of this part is. My only questiori is, from experience, depositions are better when they're live, face to face, rather than a video going -- a video feed. I don't mind a deposition being videotaped for purposes of ALAN F. BOWIN, CSR, RMR, err

33 ( 0 0 preservation of the deposition; that is absolutely okay. But if the suggestion is, "Judge, we can do" or the witness is in Hong Kong but where the questioner or the person questioning will be in New York, that's not okay. Unless the plaintiff's counsel is going to agree to that, I'm not so sure I'd like that kind of setup. MR. WARNOT: Your Honor, we were actually just trying to work out a compromise on that. We have pointed out in our papers that there are cases that acknowledge that; the CPLR acknowledges that as well. THE COURT: But I'm still not There's a funny word [sic] in the CPLR that usually throws in the word "discretion," which is beautiful, I think. MR.. WARNOT: Your Honor has all kinds of discretion here. THE COURT: And it's just -- call me crazy, but having that experience in terms of depositions, there's nothing like a live person in front of you, making the other person think about what questions are coming, rather than a video coming across. MR. WARNOT: We don't disagree, your Honor. So then the question is where. I mean, as ALAN F. BOWIN, CSR, RMR, CRR

34 far back as -- THE COURT: Well, unless you consent to having this kind of video deposition where you're on one side of the world and the other guy's on the other side of the world. MR. LEVINE: Your Honor, not for the primary witnesses. It's possible that there might be some peripheral witness where there's some expense 0 cost -- benefit that makes sense THE COURT: Yeah. MR. LEVINE: -- but not for these key people. THE COURT: We're not talking about the janitor here. MR. WARNOT: Right. They are important witnesses. I'm not denying that. THE COURT: Yeah. MR. WARNOT: So I mean, as far back as, the First Department acknowledged, in the Ascona case, 0 even where you had plaintiff -- that where you're talking about corporate employees as opposed to actual parties, that the lawyers should go where the witnesses are. I mean, that's how it's worked in every case r've done in this court. THE COURT: Right. MR. WARNOT: You have a complex international ALAN F. BOWIN, CSR, RMR, err

35 ( case, you depose the witness whe~e he is. THE COURT: Right. MR. WARNOT:. That's just how it works. And there -- and there -- THE COURT: So that's what I'm saying, though. You're saying otherwise? MR. WARNOT: No, I'm not arguing. I'm saying they should come to Hong Kong; we're happy to have 0 them, because we have to do other depositions there, anyway. THE COURT: Manhattan is a beautiful place to visit, too. I mean, come on. Don't sell us short. MR. WARNOT: They'll come here for trial, the ones that end up being trial witnesses. But, you know, given the case law, given that Mr. To can't travel for awhile, given that we're going to have to be there for other witnesses, we should go to Hong Kong. And, you know, there is a concern about the 0 inconvenience to counsel? Well, you know, that's our job. We.'re lawyers; ~e travel; clients pay us. THE COURT: That's fine. MR. LEVINE: Your Honor, we think these two witnesses -- and putting aside the health issue, which I think takes us to a whole different thing -- THE COURT: Right. ALAN F. BOWIN, CSR, RMR, CRR

36 ( 0 0 MR. LEVINE: The health issue says he. shouldn't travel for a few months. So, you know, he may be fine, depending on what his doctor says, later in the year. So, depending on what his doctor says... But we don't think there's any reason these two witnesses, who are the senior executives -- I mean, they talk about a "common practice" in the Commercial Division. I don't think there's any such common practice. They quoted -- THE COURT: Oh, you're saying that you want them here (indicating) to be deposed. MR. LEVINE: Right. They should come to New York. They signed an agreement governed by New York law. They signed an agreement which said, "We consent to New York jurisdiction." They signed an agreement saying, "We waive any argument as to inconvenience." They should come here; they should be in Manhattan to be deposed. These are executives of a huge company which sold notes to American investors, agreed to New York jurisdiction. And we're willing to compromise. They want to come to London, meet us halfway, that's fine. But there's no reason that they should be able to demand - these are -- The cases they're citing are usually like ALAN F. BOWIN, CSR, RMR, CRR

37 ( 0 0 rank-and-file employees. Like, there's a Nissan case where the court didn't want to make the little employees come to New York. These are the senior executives; they fly all the time. THE COURT: But why did you agree to go to London and not force that individual to come to New York, and now you're forcing the individuals from Hong Kong to come to New York? What's the difference? MR. LEVINE: Only because we thought it was a reasonable compromise. THE COURT: A reasonable compromise? I mean, you told -- I mean, I can understand where you said, "No, Judge, I want all three guys here in New York. II And you know what? I would say, "Okay, fine. II But when you split the baby like this and say, "Okay, we'll go to London for the other guy" -- MR. LEVINE: We'd rather have the other guy come here. We're just trying to be reasonable about, like Flying to London, which is a five-hour flight and it's only five hours off, is a lot different - THE COURT: Than hours. MR. LEVINE:-- than an IS-hour flight. It's a whole different -- I mean, it takes weeks to go to Hong Kong and do this. I can go to London -- ALAN F. BOWIN, CSR, RMR, CRR

38 THE COURT: What's the flight from Hong Kong to California? MR.. LEVINE: I don't know, but we'd even compromise there. The only reason we agreed to London or even suggested -- we actually first suggested it without knowing the gentleman was in France. We just, in general, suggested London because we thought, "Maybe 0 they Ire m.aking business trips to London but not New York, so we'll compromise; we'll meet them halfway." THE COURT: Five hours -- MR. LEVINE: But there's a big, big, big difference between Hong Kong and London. We think all three should be here in New York; we've agreed to a compromise on London. THE COURT: My directive is that -- You've already said that you'll go to London to do that, so the two individuals, Mr. To and 0 Mr. Lui -- When Mr. To gets better, and you guys have to think about that because, you know -- and I don't want to say this but, you know, these -- with health issues, they can always, you know, turn on a dime and you're concerned and worried about those things. I just wanted to put that out there for you guys to think ALAN F. BOWIN, CSR, RMR, CRR

39 ( about. But I'm going to have them either -- go to London, if they are able to do that. But the other thing is, instead, why don't they go to California? Go to California. Coming in from Hong Kong to California, they can take a flight into California. MR. WARNOT: difference between Your Honor, it's not that much I know it looks like it on a map, 0 but if you look at the flights to get from Hong Kong to California, it's only a couple hours less than going to New York. There's a direct flighti Cathay Pacific gets here in and a half hours. To go to California -- THE COURT: How about Hawaii? less. MR. WARNOT: It's like. It's probably But Mr. To can't do any of that right now. THE COURT: I know Mr. To can't do any of that. But I understand, and I'm not unsympathetic, that these are business folks and they've got a lot to 0 do. Let's put it this way: If I can have the CEO of Macy's appear for a deposition, I can have Martha Stewart appear for a deposition, I can make these guys come up, too. It is what it is. But in terms of convenience, I understand the convenience factor and I understand what's going on: that they need to be in that, sort of, part of the ALAN F. BOWIN, CSR, RMR, CRR

40 world to get things done. You know, Hawaii might be another location, too. They can hop a plane from Hong Kong to Hawaii. It's done rather quickly; you know, the hours that they spend on the plane is not going to be that long. And then you folks go to Hawaii and just do the. depositions there. I'll just You know, if they're accommodating you, for 0 one side, for London, then I'm going to make the accommodation for the other side, and just go to Hawaii and do the other depositions there. And unless you guys figure out what you're doing, my directive is going to be to have one individual deposed in London and then the other two individuals hopefully, the second one getting better health-wise will be deposed in Hawaii. You guys figure out what you want to do. 0 That's my directive. If you want to change my directive and agree amongst yourselves to change that sort of lineup, you're free to do that; but at this point, one's in London and one's in Hawaii, and you take care of it. Okay? Didn't see that coming, right? MR. WARNOT: No, I definitely did not see that coming, your Honor. ALAN F. EOWIN, CSR, RMR, err

41 0 ( THE 'COURT: It's usually -- it's usual.ly my -- that's my knuckle ball. MR. WARNOT: It's still going to drag these guys away from their business for days and days. THE COURT: That's okay. It won't be days and days. Hawaii's a nice place to be in the Pacific Rim. MR. LEVINE: And do you think the court 0 reporter will be availabl~ to come to Hawaii? THE COURT: Whatever my court reporter wants to do, it's fine with me. But I'm going to try to accommodate the defendants as much as I can whi'le, at the same time, accommodating the plaintiffs, and this is what it comes down to~ Anything else that I've got to resolve? MR. WARNOT: Your Honor, there is one inquiry that I would like to make of the Court. 0 THE COURT: Sure. MR. WARNOT: with respect to a couple of these other witnesses in Hong Kong, they're third parties; we're going to need to go through The Hague Convention to get their depositions THE COURT: Right. MR. WARNOT: -- so we're going to need ALAN F. BOWIN,CSR, RMR, CRR

42 letters of request from the Court. Normally, I -- it!s a discovery issue. Normally, I would proceed by an order to show cause to get a letter of request, but given the Courtrs procedures on letters, it would be a lot easier if we just sent you a letter with three letters of request attached. THE COURT: If plaintiff's counsel has no 0 objection to ~hese -- II MR. LEVINE: Your Honor, as long as it goes poth ways. As long as each side is going to consent to ~he other siders letters -- THE COURT: I'll say this for the record: If you guys ~an consent and agree, I will do what you need me to do that's absolutely necessary to conduct this discovery. I don't -- you know, far be it for me to interject myself in terms of what counsel wants to do. If you guys can agree on these third 0 parti~s that nobody has control over -- I would gather, that's why we have this issue here -- just get me the documentation that you're going to need, I'll sign off on it and you're good to go. You don't need to make a motion; no need to make an order to show cause. MR. WARNOT: Just send a letter. THE COURT: Just send a letter with the ALAN F. BOWIN, CSR, RMR, CRR

43 Proceedi.ngs appropriate documentation. I don't know -- I' v,e seen these come in. I don't know what needs to be done in terms of the form. You guys have to check with the back office. MR. WARNOT: Yeah. There's a form, your Honor, that -- I mean~ much of it is determined by what the court in Hong Kong needs to see and then you put it into the court in Hong Kong and, you know, if you have 0 a solicitor out there, it gets signed in a few weeks, hopefully. THE COURT: I'll do whatever you need me to do, but I'll rely on counsel to give me the proper documents that I need to sign. As long as I'm not giving up my apartment, home, I'm okay. MR. WARNOT: We'll consult with counsel and see what we can work out. THE COURT: Absolutely. MR. LEVINE: I don't see any issues because I 0 think both sides have the same needs. THE COURT: Anything else that I need to resolve? I think I covered most of it. MR. LEVINE: You covered a lot. THE COURT: Okay, folks. This is sort of a dual-discovery thing; please order the transcript, both of you; share the costs. I'll so-order it so you have ALAN F. BOWIN, CSR, RMR, CRR

44 that as an order now -- as a directive as well as an order -- and then you have that for your records. Okay, folks? 0 MR. LEVINE: MR. WARNOT: THE COURT: Thank you very much, your Honor. Thank you, your Honor. Have a good afternoon. MR. LEVINE: Good afternoon. * * * CERTIFIED to be a true and accurate transcript of the proceedings. 0 ALAN F. BOWIN, CSR, RMR, Official Court Reporter err ALAN F. BOWIN, CSR, RMR, CRR

45