Message-ID: <2118176.1075858676530.JavaMail.evans@thyme>
Date: Tue, 16 Oct 2001 11:49:02 -0700 (PDT)
From: dschultz@hollandhart.com
To: andrew.edison@enron.com
Subject: Yesterday's Hearing in Kansas
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X-From: "Don Schultz" <DSCHULTZ@HOLLANDHART.COM>@ENRON
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Privileged and Confidential Joint Defense Communication
 
From:  Don Schultz
To:      Kansas JDT Participants
Re:      10/15/01 motion hearing
           A  transcript has been ordered.   Below is my recap. I  encourage other attendees to reply with  corrections or additions you think  would be helpful to folks who did not attend.
           1.   Overall Impressions
           Rex  Sharp's arguments were unclear, complicated, and at times  inconsistent.   I think plaintiffs' lawyers left the Court with  the impression that they are in disarray, not well organized, and  not ready to proceed with a workable approach to the  case.    
         Dave Rebein did an  excellent job of illustrating how bizaare this case is in scope  and substance - you'll want to read the "motorcycle story" he told Judge  Smith at the start of his argument to illustrate this.  His  creative approach struck a chord; Judge Smith put his hands in  front of his face in order not to laugh so obviously, but laugh he  did.
          Jim Griffin showed  the Judge that the defendants have invested thousands of  hours collectively to produce the information on their Kansas contacts, and  ably reviewed the case law which frowns on allowing discovery into either p.jd.  or merits where a conspiracy has been pleaded only in conclusory  terms.
         Jim and Dave  presented coordinated, clear arguments and presented  them persuasively.   Their hard preparation work, and that of the  Akin Gump team and many other volunteers, seemed to me to pay off in a  very strong showing.
          Smith listened  to the arguments without saying much or asking questions.   My  sense at the conclusion of the arguments was that the Judge had not read much of  the defendants' briefs, but that Messrs. Rebein and Griffin had  made compelling arguments in line with those in the briefs, whereas Sharp's  arguments remained muddled.  Smith's comments and decisions on the  motions, thus far are summarized as follows.
           2.   Sharp's Pseudo Motion to Compel.  
          Judge Smith  will review the interrogs and requests for production which Sharp  served as "personal jurisdiction" discovery.  He will issue some form of  order or statement - he said by this Friday - which identifies those questions  which go too far - are outside what he contemplated in the case management order  as "limited" personal jurisdiction discovery, versus those questions he  thinks defendants should answer because they bear on personal  jurisdiction.  This will not constitute a ruling on any  objections.   
            The  defendants will have ten days to further answer or object to any of the  discovery which the Court finds is within the intent of the case management  order as to the scope of personal jurisdiction issues.    Judge  Smith said that he wants future discovery objections to be filed with/sent to  him immediately so he can get a response from the other side and rule on  objections quickly - he wants to know about discovery objections  "before God hears the news" (something like that).
         Judge Smith gave a  brief overview of the parties' opposing  positions on the scope of  permissible jurisdiction discovery - the defendants limiting that scope to  "contacts" and the plaintiffs treating it as tantamount to merits  discovery.  He did not seem prepared to agree with either party  completely.  He said that it was his intent from the outset to spare  the defendants from full merits discovery until he determined the scope of  the court's jurisdiction, and it seemed that he intends to continue to draw  a distinction between limited and full discovery.  Pointing to a blow-up  which Messrs. Rebein and Griffin used, he indicated that some of the requests do  appear to go well beyond personal jurisdiction  issues.   He also said, though, that the jurisdictional  issues may not be limited to "contacts" as the defendants contend.   
           I left the  courtroom unsure how Smith will decide which questions he thinks are within  and without the limited personal jurisdiction discovery the CMO allows.  It  is not clear whether he will look at the law on the sufficiency of pleading  a conspiracy, or whether he will look at the case law on whether or  not pleading a conspiracy can extend the scope of  personal jursdiction to reach "no-contacts" alleged conspirators.    Neither side really pushed him to decide those legal points now.   He  left himself all options as still open.   I had  the impression that the Judge had not read the discovery requests at  all - even though defendants had attached them as an exhibit - and that  he expects (perhaps naively) that the boundary between limited  personal jurisdiction and merits discovery to be clear to him as he  looks at the questions one at a time.  
       Sharp tendered to the Judge a copy of  the Tejas defendants objections and answers.  Other defense counsel  requested leave to submit their defendants' responses and  objections.   The Court finally realized that the defendants were  concerned he would be ruling to compel discovery without having considered the  various objections, and so made clear he is only going to now evaluate Sharp's  questions, give some guidance on which questions seem within the scope of the  order, and the defendants can make objections as needed.
       The Judge seemed frustrated that  Sharp had not provided him the discovery questions with his motion, and  also seemed perturbed by the form of the motion.  He said "I don't  know what this motion is . . . there is no such motion . . .  Plaintiffs are just making stuff up . . . I don't like it when parties make  stuff up, because then I don't know what to do."
             3.  PSCo - Colorado and KCS motions to compel.   Jim  Eisenbrandt and Jim Flaherty argued persuasively that Plaintiffs should have to  respond to the personal jurisdiction discovery they had submitted, even if the  answers are that the plaintiffs don't have evidence to support jurisdiction over  individual defendants.   Judge Smith denied Sharp's motion for a  protective order that plaintiffs not have to respond to that  discovery.   He rejected Sharp's argument that it is not "fair"  for plaintiffs to have to respond when the defendants have asserted  objections.   As with Sharp's questions, Judge Smith will review  the questions submitted by KCS and PSCo and identify those which the plaintiffs  must answer.   Dan Church will submit his separate discovery  served on the plaintiffs, since he asked some additional and different  questions.  
           4.   Discussion of Case Management Order
          In arguing  his motion, Sharp emphasized that with the passage of time and lack of  discovery he does not believe the CMO deadlines on the personal  jurisdiction motion can be met.  Later, off the record, after the  arguments, Sharp and Kerry McQueen "apprised" the Court that Mike Moore  cannot attend to this case due to the illness of his office manager, that Moore  cannot be deposed for the foreseeable future as a class representative, and that  Moore may have to reevaluate in about a month whether he even wants to  participate in this case (McQueen said if Moore does not want to participate  then he and Sharp will face some "hard decisions"). 
         Though Sharp  reiterated, at points in his arguments, that he thinks the class certification  should proceed ahead of the personal jurisdiction factual motions because  the latter require discovery tantamount to merits discovery, he also seems  to want to delay class certification, but has been unclear in that respect.  
        There were no formal  proposals made to change the CMO, and no rulings to do so.  The Judge  indicated that if the parties agree to change the CMO deadlines and schedule, he  will not have a problem doing so, subject to him deciding the hearing  dates.  He wants the events calendared at all times to give him  management control over the case, but he is amenable to changing the time  lines. 
        I think both sides  will wait to see what the Judge says about the scope of "limited personal  jurisdiction discovery," then re-evaluate how to proceed with CMO  negotiations.  It seems likely to me that we will get to the  hearing on the initial motion to dismiss without the discovery having  progressed far in substance.  It is not at all clear whether the  defendants will still want to, or be able to, continue pressing forward  with the personal jurisdiction motion (including undertaking needed discovery),  and a decision on same, before class certification.  Judge Smith still  seems to think that is the correct logical sequence for the case, but his  guidance on the discovery scope will be pivotal.  
            Don.  