Burch v. Burch: Hearing Transcript

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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE T. CHRISTOPHER BURCH, JCB INVESTMENTS : LLC, and C. WONDER LLC, :

: Plaintiffs, :

: v : Civil Act ion : No. 7921- CS TORY BURCH, EDUARDO HOLSCHNEIDER, : JOHN S. HAMLIN, GLEN SENK, ERNESTO : ZEPEDA, MARIA ASUNCION ARAMBURUZABALA : LARREGUI, ISLA CORAL, S.A. DE C.V., : and TORY BURCH LLC, :

: Defendants. :

: - - -

Chancery Courtroom No. 12A

New Castle County Courthous e 500 North King Street Wilmington, Delaware Thursday, November 1, 2012 2:06 p.m.

- - - BEFORE: HON. LEO E. STRINE, JR., Chancellor. - - -

IN-COURTROOM SCHEDULING CONFERENCE

- - -

--------------------------------------------------- --- CHANCERY COURT REPORTERS

New Castle County Courthouse 500 North King Street - Suite 11400

Wilmington, Delaware 19801 (302) 255-0524

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CHANCERY COURT REPORTERS

APPEARANCES:

KEVIN G. ABRAMS, ESQ.Abrams & Bayliss LLP -and-ANDREW J. ROSSMAN, ESQ.

of the New York Bar Quinn, Emanuel, Urquhart & Sull ivan, LLP for Plaintiffs

WILLIAM M. LAFFERTY, ESQ.Morris, Nichols, Arsht & Tunnell LLP -and-MARC WOLINSKY, ESQ.STEPHEN R. DiPRIMA, ESQ.S. CHRISTOPHER SZCZERBAN, ESQ.

of the New York Bar Wachtell, Lipton, Rosen & Katz LLP

-and- ROBERT ISEN, ESQ.Chief Legal Officer

Tory Burch for Defendants Tory Burch and Tory Burch LLC

WILLIAM B. CHANDLER III, ESQ.Wilson, Sonsini, Goodrich & Rosati, P.C. -and-MICHAEL S. SOMMER, ESQ.

of the New York Bar Wilson, Sonsini, Goodrich & Rosati, P.C. for Defendants John S. Hamlin and Glen Senk

GREGORY P. WILLIAMS, ESQ.Richards, Layton & Finger, P.A. -and-ROBERT H. BARON, ESQ.

of the New York Bar Cravath, Swaine & Moore LLP for Defendants Eduardo Holschneider and Maria

Asuncion Aramburuzabala Larregui

- - -

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MR. ABRAMS: Your Honor, I appreciate

the time taken by the Court to address the plaintif fs'

motion to expedite. Andrew Rossman from Quinn Eman uel

has joined us from New York and, with Your Honor's

permission, he'l l speak on behalf of the plaintiffs .

He has been admitted pro hac vice.

THE COURT: You know, why don't we

just talk about whether we have much of a disagreem ent

left.

MR. LAFFERTY: Mr. Wolinsky is going

to speak on behalf of --

THE COURT: Yeah. I mean, what's -- I

don't want -- I don't want to spoil the drama of th e

trial.

Sit down.

MR. LAFFERTY: Sure.

THE COURT: This is l ike a scheduling

conference. That's all it is. It 's just in a -- y ou

know, it 's a grander room because of the things tha t

hang on the wall. Otherwise it 's like a Hechinger

test kitchen, the different colors that -- none tha t I

would ever select but were selected for us.

I don't -- I didn't see any reason to

burden anyone's Hanukkah, New Year's, Christmas,

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Kwanzaa, Festivus with this preppy clothing dispute .

I don't know why -- I guess I did this to myself, b ut

somebody in the room started the other tradition of

giving -- where, for some reason, I get all the pre ppy

clothier cases, because I've had J. Crew. I 've had --

I think because I 'm culturally steeped in it since I

was nine years old and learned what was hard for a kid

from Baltimore, duck shoes? What's a duck shoe? Y ou

know, and then you see all these freaks wearing thi s

really ugly -- I like L. L. Bean, but those duck sh oes

are ugly. I mean, there's no way around it.

So I think for both sides, it might

come as news, you know, there's really nothing all

that new about bright clothing and all that kind of

stuff. So the novelty of any of this may be someth ing

that I have to discover for myself, although I do

think the juxtaposition of Two Fat Guys and Talbot' s

in Greenville is just a beautiful thing.

So I guess what I 'd l ike to understand

from the defendants is what's really wrong with the

revised proposal from the plaintiffs, if any, given

that -- and I think the papers have been a l itt le b it

vague because I 'm not sure anybody showed me exactl y

what the consent right is. But my understanding is

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that the consent right is a right belonging to Tory

Burch LLC?

MR. WOLINSKY: No, no. The -- I --

Your Honor, the -- the dispute right now is about 1 0

weeks, mid-March versus -- excuse me; end of March

versus the beginning -- the middle of June. That's

the bid-and-ask spread.

THE COURT: But -- but what I 'm trying

to get at is --

MR. WOLINSKY: Yeah.

THE COURT: -- there's some --

MR. WOLINSKY: No.

THE COURT: There's a reason why

Mr. Burch --

MR. WOLINSKY: Right.

THE COURT: -- can't sell.

MR. WOLINSKY: There are two reasons,

in essence. The bidders all came in -- and this is

the -- the reason that counts is this one: There w ere

three bidders at the end of the process that had

submitted term sheets. They all required amendment s

to the LLC agreement. Amendments to the LLC agreem ent

require the consent of Tory Burch, as the person, a nd

Isla Coral, the member. Those -- those are their

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equity interests. They also require board approval .

So assuming, which obviously we

completely dispute, that the board was just on a

personal vendetta, had no justification whatsoever,

Isla Coral and Ms. Burch, in their individual

capacities, have the right to say "Look, we just" - -

"there's not going to be a deal here." In fact, th ey

have the right to say "If you want" -- "If you want to

exit, you have to shut down C. Wonder."

THE COURT: Right. To the extent --

what I 'm getting at now is if Mr. Burch just went o ut

and found somebody --


THE COURT: -- who did not demand any

change to the LLC agreement --

MR. WOLINSKY: Then they sti l l need

board approval.

THE COURT: Okay.

MR. WOLINSKY: There's a board consent

right that expires in July -- I think July 2014.

July 2014, then the board can't unreasonably withho ld

consent. Prior to July 2014 the board has -- the

directors, in their sole and absolute discretion, h ave

the right to agree -- to approve or disapprove a sa le.

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So there's board-level approval --

MR. LAFFERTY: And member level.

MR. WOLINSKY: -- and member-level

approval. Member-level approval at this point is a

block, given the way that the bidders have structur ed

the --

THE COURT: Right. What I'm saying --

I 'm not trying to get into the -- look, I believe i t 's

hotly contested between the parties about why some of

these demands are being made. So today is not the day

to resolve the why. It 's just to observe that, you

know, there's a dispute about that.

We're now at what I guess -- what I 'm

saying is ... I don't really understand, given --

what -- why can't we go to trial in the first week in

April, last week in March?

MR. WOLINSKY: We don't -- we just

don't think there's enough time to get done what we

have to do and --

THE COURT: Why? Because that really

makes no sense to me. I mean, I'm sorry, but --

MR. WOLINSKY: Here's the why. I

mean, I' l l give you the why. The why is this is no t

just a case about what f ive directors did and why t hey

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voted the way they did and why three -- three bidde rs

structured their bids the way they did. It 's also --

we're going to be asserting counterclaims. And

everyone agrees the counterclaims should be tried w ith

the -- with the affirmative claims. And they're

essentially mirror images of each other. And we wa nt

to prove -- and we expect to prove -- that Mr. Burc h

intentionally copied the company's intellectual

property. And that proof is not going to be

developed -- we can put a shoe next to -- their sho e

next to our shoe. We can put a picture of our stor e

next to our store, but the ult imate proof under -- one

of the ult imate elements of proof in an unfair

competit ion claim is intent. And we want to prove

that he intentionally copied our styles and store

design. And that --

THE COURT: And, again --

MR. WOLINSKY: And that --

THE COURT: -- I'm sorry, but this

is -- this is not a case about intercontinental

ball istic missiles.

MR. WOLINSKY: The copying --

THE COURT: And ...

MR. WOLINSKY: Yeah.

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THE COURT: What you also have to

explain is how you get to hold him hostage with a

self-imposed setoff and then dictate a schedule. N ow,

you're looking quizzically at me, Mr. Wolinsky, but

you're too bright to look at me quizzically. You k now

exactly what I mean --

MR. WOLINSKY: Yeah.

THE COURT: -- by "self-imposed

setoff," which is you have all the time in your wor ld

to go hammer and tong after Mr. Burch at your leisu re.

But you bound up claims you have not proven in a

consent right in a situation where the LLC agreemen t

allows competit ion.

So the mere fact they're competing and

the mere fact -- again, honestly, there are hundred s

of people in New Castle County who could make a bun ch

of clothes if you gave them the catalogs. I 'm not

saying Mr. Burch -- it 's going to be interesting,

because there's what Tory Burch was before she met

Christopher Burch, and there's what Christopher Bur ch

was after Tory Burch became the Tory Burch in The N ew

York Times, and there's maybe influences that go in a

lot of directions here. There probably are lots of

catalogs people could see. There are all kinds of

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dream images of the world. The WASPs; right? The

Lifschitz world, do we know that one?

MR. WOLINSKY: I don't know that one.

MR. CHANDLER: Ralph Lauren.

THE COURT: Ralph Lauren's original

name.

MR. WOLINSKY: Oh, okay. Somebody

whispered it to me.

THE COURT: Yeah. That's, you know --

I mean, again somebody in the room knows that there

was -- in Sussex County, Delaware, for years you co uld

go on the Boardwalk and go to Gershman's. And you

know what Gershman's had on the Boardwalk? Anybody

remember that, Mr. Will iams?

MR. WILLIAMS: I think they had, l ike,

slightly irregular all igator shirts.

THE COURT: Exactly, Izods and Polos.

They were right from the factory. Frankly, anybody

who was a real WASP would shop at Gershman's becaus e

real WASPs actually don't go and pay full Polo pric e;

right, Mr. Abrams? They don't pay full Polo price at

Macy's. No way. They actually will f ind a bargain .

That's how they got to be, you know, WASPs. But yo u

went to Gershman's. And there were l itt le -- there

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was Lilly Pulitzer, there was Talbot's.

I'm just saying I don't really get

that. And I know that you want -- you've been prov ing

up this case against Mr. Burch for awhile now. How do

I know that? Just so -- no, I 'm not going to recus e,

but I 'm actually -- you know, I subscribe to The

Atlantic, The New Yorker, The New Republic, The Sun day

Times, other things. I 'm not unaware of the world.

So, you know, no one -- when Tory

Burch became popular, no one said "Oh, my gosh, thi s

is the newest thing that ever happened." There's t hat

LP person; right? Do we know that one?

MR. WOLINSKY: You've got to help me.

THE COURT: Lil ly --

MR. WOLINSKY: Lil ly Pulitzer, yeah.

THE COURT: Right. I mean, some of

these things go around that the people who were

wearing the originals, you know, I mean, with all t he

drugs and all; but they're, l ike -- they're going t o

be on Willard Scott, but they're -- they're tied

around the halls finding each other but very -- it ' s

easier with the bright -- you know, you need the

brightly colored clothes the older you get because you

can't -- you need to see your target, maybe. It ca n

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be just a smear, like Easter egg colors, and you ju st

know I'm in the right genre.

But my point is if that's all you've

got, then we're going to go on their schedule

because -- no. You're going to. So it's not -- I ' ve

listened to your arguments. You're going to.

MR. WOLINSKY: I wasn't going to argue

on that one.

THE COURT: What I 'm saying is you can

figure it out. You can get going.


THE COURT: There's obvious choice for

the plaintiffs here. I mean, the counterclaimants

here.


THE COURT: Which is it's -- it 's not

exactly clear why one would want a competitor ownin g a

substantial equity stake in perpetuity. It may be

nice to have leverage, but -- and you get to exert it.

But what I mean about in terms of

setting a schedule, you don't get to exert it and t hen

have your own schedule based on your setoff, when

you've taken your setoff -- you've taken it. And s o

you already have obviously a head start on it becau se

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you've concluded that someone else's legal rights

should be influenced by your determination. And we

say this a lot of t imes in takeover cases, right,

which I've done on each side with everybody in the

room, right. Like, if you want to get out of a mer ger

agreement, you're kind of supposed to know the reas ons

why you're getting out of the merger agreement --


THE COURT: -- and the discovery

process is not allowed -- is not a chance for you t o

search for your material adverse effect or your bre ach

of rep and warranty. You're supposed to know it.

No one knows more in the world about

who knew what -- Ms. Burch knows just as much as

Mr. Burch and vice versa. If she believes it 's an

infringement --


THE COURT: -- she's the best person

in the world to explain the uniqueness of her desig n,

why -- again, I think, on both sides, all these

things, right, there's a level of no one who's in a ny

form of art, including if you call this art, can cl aim

entire originality to anything. You're always

inspired. And the least original people are the

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people who will, you know, claim, you know -- I don 't

think there's any way that you would hear Bob Dillo n

or Paul McCartney or someone like that say "Well, I

had no influences."

So -- especially in this area. Again,

we can just have a fashion show from our own

community. I can send Mr. Abrams, Mr. Will iams out in

the -- in the time of the trial and have -- and jus t,

kind of, bring people in. I can watch the pull-up at

my kids' school which is just -- I got a kid who

bought topsiders. I 'm like, what is this? I mean,

you know, how do you actually want to wear these

things?

So I'm sorry if you don't think you

can prove up that world. You can allocate time. I

think there's another solution, you know; but I thi nk

that the proposal on the defense side is a reasonab le

compromise. I think the three-day proposal, that

probably seems a little lean. Just looking at the

lawyers in the room, there's no way that's going to

happen. But -- and, again, I 'm not wed to the firs t

week of April versus the second week of April versu s

the third week of April versus the fourth week of

March. But that time frame.

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MR. WOLINSKY: Okay.

THE COURT: What else do we need to

decide today?

MR. WOLINSKY: One other thing. We've

been asking the other side to commit to make their

China-based witnesses available for deposition in H ong

Kong or in a jurisdiction where we can take those

depositions, and we haven't gotten that commitment

yet.

MR. ROSSMAN: I can address that, Your

Honor. And thank you for taking the time --

THE COURT: Could you identify

yourself just in case --

MR. ABRAMS: Yes. It 's Andrew Rossman

with Quinn Emanuel for the plaintiffs.

What I told Mr. Wolinsky and I' l l tell

the Court is we're happy to discuss that issue. An d

we're open to doing everything that we can do to tr y

to make discovery go as quickly as we can. Our -- my

very considerable concern there is expense and time .

I'm informed that you can't take depositions in Chi na

-- it 's actually il legal -- even if the parties agr ee

to take depositions in China. So it wil l necessita te

getting parties to leave the country and go to Hong

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Kong, Macao, or come to the United States for the

deposition.

THE COURT: I think Mr. Wolinsky said

he could go to Hong Kong.

MR. ROSSMAN: Right. I understand

that. What I don't know is, if we're talking about

three witnesses, two witnesses, I don't see us havi ng

any issue at all. If we're talking about 20

witnesses, then I think we're talking about a very

considerable expense.

And, you know, one thing that I asked

Mr. Wolinsky, which he has consistently refused to

tell me, is what exactly are his counterclaims so I

can get a sense of what they're trying to understan d

in China so I can participate in a constructive way in

that conversation and tell him, you know, who I thi nk

is knowledgeable and --

THE COURT: Well, what's the bid

and -- what's the bid and -- excuse me. Sorry for

talking over you. What's the bid-and-ask on an

answer?

MR. WOLINSKY: I'm sorry. On?

THE COURT: When are you proposing to

fi le your answer?

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MR. WOLINSKY: I'm going to file it

Friday or Monday.

THE COURT: And how many depositions

are you seeking?

MR. WOLINSKY: I can -- there are two

names I know today. Nick Matfus and Gao Jing, but

there may be others. And I can't really tell that

there aren't others unti l either they answer the

interrogatories or produce some documents.

MR. ROSSMAN: Mr. Matfus I've spoken

to. I can tell you, the Court now that I 'm sure th at

we'l l make him available for deposition. I have no t

spoken with Mr. Jing. I don't know what subjects t hey

want to explore, but I 'm happy to take that up and

give him an answer next week after seeing their

counterclaim.

MR. WOLINSKY: Your Honor, there's a

substantive issue here on the foreign witnesses. A nd

it shouldn't be -- I 'm sure it 's not lost on you.

What happens in the world is that

Chinese manufacturers knock off American

manufacturers, and you can't get them because of th e

lack of process in China.

THE COURT: Oh, no, no. I get it.

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MR. WOLINSKY: And, you know, a litt le

bit of what we've -- what I think is going on here is

that. And the essence of the counterclaim here is not

lost on Mr. -- Mr. Burch. He knows it. The claim is

that he took --

THE COURT: Again --

MR. WOLINSKY: Okay.

THE COURT: You-all wish to have more

time to -- as I recall i t, they wanted your answer by

now, or they were hoping.

MR. WOLINSKY: So were we.

THE COURT: You were hoping to have

your answer by now?

MR. WOLINSKY: Yeah.

THE COURT: Okay. I got to -- I got

some proposal to extend time.

MR. WOLINSKY: Yeah. The hurricane

got in the way.

THE COURT: I think they get that.

There's a difference between -- I didn't hear --

that's what I said. I know you guys get all feisty

for a living --

MR. WOLINSKY: Yeah.

THE COURT: -- and ... is I didn't

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hear -- what I heard from Mr. Rossman was no

resistance to some reasonable production of witness es

but a concern about overkil l and wanting to underst and

what you're looking at; that the name -- the one

person that they've already talked to. I am sensit ive

to costs. We're not going to take -- and, you know ,

this -- we're going to size what is at stake. You

know, I don't know. How many stores are there for --

what is this? --Wonder Bread, C. Wonder?

MR. ROSSMAN: C. Wonder, Your Honor.

THE COURT: C. Wonder.

MR. ROSSMAN: I believe there are

about 12 stores in existence right now.

THE COURT: Okay. And how many Tory

Burch establishments are there?

MR. WOLINSKY: 85 stores, a thousand

department store outlets.

THE COURT: So, you know, nice-growing

enterprises, not yet Amazon, not Wal-Mart.

So I think the parties need to discuss

things. That's all I heard. I don't have a disput e.

I mean, I -- what I 'm saying is I -- I think the fa ct

that somebody's manufacturing in China does not exe mpt

them from anything, and I -- you know, this Court i s

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pretty good at asking, l ike -- remember, there used to

be a time period where people's investment banks wo uld

refuse to testify, the sell-side advisor around the --

"Well, I won't testify without a commission," you

know. Fine. Then you just say to defendants, "Oka y.

So you have no reliance on a banker defense or

anything l ike that. We just take it out of the

process."

I'm assuming Mr. Burch, who controls

this enterprise, if he's got people working in Chin a,

is going to make a reasonable number of them availa ble

if their testimony is relevant.

MR. WOLINSKY: That's all we need.

THE COURT: What you need to do is

proceed incrementally, you know. And be sensitive to

the goose-and-gander rule. But I think now you hav e a

schedule. You can talk about that.

And, you know, in terms of people in

China never leaving China, they do leave China.

That's how they get these deals. They also leave t o

gamble. They leave to have fun. And so, you know,

you might even be able to do some of these in New

York. And they could have personal shoppers at

Bergdorf Goodman who are specially trained to speak

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their dialect. Which dialect does Mr. Matfus speak ?

MR. ROSSMAN: English.

THE COURT: He doesn't -- he's not --

I only know restaurant Chinese like Szechwan,

Cantonese, Mandarin. But talk to each other about

that.

Is there anything else we really need

to do today if we've got that established?

MR. LAFFERTY: Your Honor, should we

just coordinate with Your Honor's assistant about a n

exact week for the trial?

THE COURT: Yeah. But what I want

before you -- you know, one is I'm assuming we're

going to trial.


THE COURT: We're not doing

dispositive motions; right, both people?

MR. WOLINSKY: Yes, correct.

THE COURT: (Continuing) -- is f lesh

out your briefing schedule and then contact

Ms. Boulden. Everybody's been telling us, l ike, wh en

do we want things. Never. I mean, the reality is you

get to a point in l i fe -- and it's been at least a

decade or more now when do you want something? I

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really don't need any of it. I mean, probably l ike

you guys in the room, I mean, once your bil lables f or

the year fil l up a certain amount and you're past t hat

anxiety stage, it 's pretty cool if i t just goes awa y.

So the question for me is not when do

we want it. The question is when are you ready for it

to happen so that we can, you know -- I think we ca n

try to do is aim for being ready by that -- you kno w,

the, sort of, middle of the third week of March. I

think for some of you in the room and some of your

team, the last two weeks of March are not a very sm art

time to do a trial unless you want to have your

domestic relations situation altered, so that it mi ght

be better to go into April. I 'm thinking -- I'm

looking at Mr. Lafferty, but he's probably not the

only one in that situation.

So why don't you think about --

MR. WOLINSKY: Yeah.

THE COURT: -- that, if that makes

sense.

MR. LAFFERTY: And, Your Honor, is it

your preference to have two pretrial briefs from ea ch

side or is one acceptable?

THE COURT: Again, I don't really

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care. My sense is I don't want any more than four

briefs. It's been my experience that, especially i n a

case like this, where everybody is playing offense and

defense, that it 's a lot easier to put together the

schedule in a compact way if everybody -- if there' s a

two-brief sequence rather than a three-brief sequen ce.

If we -- I really give -- and, you know -- so my --

typically that works for me, if i t works for everyb ody

else. I have plaintiffs say "No. I want the three

brief." Then it 's their obligation, if they want

that, to go a lot earlier than everybody else

because -- but I think when you both have claims

against each other, a two-brief sequence wil l allow

you to do what you need to do with a l itt le more

breathing room. But if that works for Mr. Abrams a nd

Mr. Rossman.

MR. ABRAMS: Your Honor, do you happen

to know the Court's availabil i ty in the third week of

March or fourth week of March?

THE COURT: What I would say is I

would tend to stay away from those two weeks.

MR. ABRAMS: Well, any two weeks. I

was using that by way --

THE COURT: What I 'm saying is I wil l

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figure out a way to make you -- to get you a trial in

April, l ike beginning -- and as early in April as I

can.

MR. WOLINSKY: Okay.

THE COURT: Until you-all do all the

building blocks, though -- and they have to work --

and I think they wil l work -- then I can talk to

Ms. Boulden. I also wil l tell you I reserve the ri ght

to double-book you, which is to give you two start

dates or three start dates in that month, realizing

that, you know -- I mean, we once had one thing las t

year where we had eight preliminary injunction

hearings scheduled in six days. And I think it was

something like that. Elane said to me, you know,

"You're going to die if it happens." And I said, " I

don't think it's going to happen. I think what the

world is going to get is just more high-quality

disclosure." And darn, if it didn't just go down l ike

bowling pins have never gone down for me in a bowli ng

ally. It just all went away, and people learned mu ch

more about the comparable companies in small cap

deals.

So what I'm saying is you might get a

couple dates that you'l l have to hold, but we'l l ge t

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you in in April.

MR. CHANDLER: Your Honor, can I

interrupt and ask for a clarif ication on one point of

your schedule?

THE COURT: Sure.

MR. CHANDLER: And I apologize. I

have to introduce my partner from the New York offi ce,

Michael Sommer, who has the question.

MR. SOMMER: Yes, Your Honor. The

scheduling order proposed by plaintiffs -- we

represent two of the directors, Mr. Hamlin and

Mr. Senk.

THE COURT: Uh-huh.

MR. SOMMER: The proposed scheduling

order has Mr. Hamlin's answer due today. Mr. Senk' s

is due November 15th. We're not f il ing any

counterclaim. So my request is that the Hamlin dat e

be made the same as the Senk date, or if that's

objectionable -- if there's no objection, then I 'l l

sit down.

MR. ABRAMS: I advised Mr. Sommer's

partner earlier this week that we would discuss the

appropriate date for their answer at the conclusion of

this conference.

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MR. SOMMER: Oh. I'm uninformed.

That's f ine. I ' l l sit down.

THE COURT: Okay. But you're not

going to file counterclaims. That may simplify the

discussion.

MR. SOMMER: Right.

THE COURT: Okay. You guys can use

the room. If you want to have a mock trial, have M r.

Szczerban show his stuff, see whether Sallie's boys --

you know, what he's learned at Wachtell. He's grow n

up so much. Is it -- how many bearded partners do you

have, Mr. Wolinsky?

MR. WOLINSKY: Wow. Well, our

managing partner is bearded.

THE COURT: Who's that?

MR. WOLINSKY: Meyer Koplow. And

Mirvis, of course, has the Samson, you know, look b ut

...

THE COURT: Yeah. You call that a

beard? Like, you're just trying to figure out how

that is. It 's a Hasidic rattail, I mean, or someth ing

like that.

MR. WOLINSKY: If it 's dreadlocks,

we'l l all be in trouble.

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THE COURT: Well, you know, I mean,

who knows what he does really in the Hamptons. He

hasn't ever shared it fully. We should have a

video -- a Ted cam, and then we can tell whether he

does some sort of combination Maimonides/Marley Fes t

together and ...

So we got -- is there anything else

that you -- but, again, you can all talk to each

other.

Any other questions about the

schedule?

(No response)

THE COURT: So, again, I wasn't

really -- to be honest and just so -- not that

Mr. Abrams or Mr. Rossman would. When I was saying

looking at the schedule, when I leave the room and

you-all talk about this, I wasn't talking about any

particulars. I was talking my sense of what was at

stake -- and I was fully aware of the coming

infringement claim -- is the general t ime frame of the

trial. I wasn't wed to any of these particular dat es.

I figured that's something you-all could work out.

MR. WOLINSKY: Just to throw out the

things on the table, they proposed a hundred-hour

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limitation of depositions on each side. Is that

something -- we would object to that.

THE COURT: A hundred hours for -- for

the entirety of depositions?

MR. WOLINSKY: Yeah, for each side.

THE COURT: You know, again, I don't

have -- I think that's where you-all have to be

sensible. I mean ... you know, I don't see -- that

doesn't logically -- I mean, I could see how each s ide

could get done with fewer than a hundred hours; but I

could also see, you know -- if everybody needed 15 --

if you had 15 deponents on a side, that could be

tight, depending on who the witness is. I wouldn't be

encouraging much more than that. I mean, there oug ht

to be a blend. And there ought to be things like, you

know, if China -- I take it you can't even video a

deposition because that would be i llegal? Is that

right? Someone would be killed; right? One of our

Internet providers would report the name, and someo ne

would be executed? All in the name of commerce.

But there are ways to do things

efficiently. I mean, it 's a shame that that's --

l ike, for example, the ideal thing to do with some of

the Chinese witnesses would have been if you had a

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couple you need to do in Hong Kong, but there might be

a couple you do telephonically.

So I 'm not hep to a hundred hours.

What I am here to do, though, is if, frankly, someb ody

on either side proposes 19 deponents where it seems

clear that it 's more of an economic leverage strate gy

than a discovery strategic, I ' l l shut that down.

MR. WOLINSKY: I hope you don't have

the impression that that's -- that we're trying to use

litigation -- the costs of li t igation as a weapon.

THE COURT: I 'm not asking -- I 'm not

asking anybody to reveal any guilt or anything --

betray any sense of guilt.

MR. WOLINSKY: I have none on that

point.

THE COURT: Okay. Then don't -- then

don't worry. What I 'm saying is it could be -- if you

can all get the depositions done in 62.3 hours on e ach

side, you should. But a hundred hours is just an

artif icial thing.

I also don't know -- for example,

depositions are often longer than they should be, n ot

because the person is taking a long time asking

questions, because somebody says "Objection."

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Mr. Abrams knows that the real reasons why the boar d

did this were blank and blank and blank. And it 's

distracting the witness from the fact that they're

blank and blank and blank, and the witness' inabil i ty

to answer for himself blank and blank and blank and

blank has now been corrected by me, indicating that

the real reasons he did what he did is blank and

blank. I mean, I 've seen plenty -- everybody in

Chancery has seen plenty of transcripts -- and you' ve

been at those depositions -- where, frankly, it 's m uch

more from the obstreperous defense side than there is

from the asking side.

So I don't really know enough about

the case. I wil l say this -- and part of my instin ct

about it is I really don't think you're going to ha ve

a ginormous number of key witnesses. I think you k now

who a lot of the key witnesses are. There's going to

be a group of people who Ms. Burch knows Mr. Burch

started this business with, and you're going to wan t

to focus on them and how they created the stores in

the way they did and the products they did. Mr. Bu rch

certainly knows who he's suing. And so if you

actually focus in a real way on what your core thin gs

are, you'll probably get there.

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And I'm always going to be available

to talk about it. As I said, if you want to have a

extended conference -- if you want to have a

conference that's more focused after you-all talk

about it. But I think you should exchange lists an d

those -- and those sorts of things. And -- and the n

just let me know. But otherwise, we'l l talk about

April. It 's actually a very good time of year for

this kind of clothing. I mean, it 's not a real

January-February line in either store, is it?

MR. WOLINSKY: I'm looking to my

client.

MR. ISEN: We do have a good holiday

line as well.

THE COURT: You have a good holiday

line? I was talking about January-February. I 'm n ot

sure that's holiday.

MR. ISEN: Resort.

THE COURT: Resort. Ah. Never heard.

Lilly Pulitzer never did that, though. It is all

unprecedented.

You know, I 've actually -- totally

unrelated to this case, I've been deep in it, in an

autumnal Cheever phase. And so I 've been reading a ll

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kinds of Cheever. So I ' l l have to just keep that u p

through the -- through the case. Have you read you r

Cheever lately? You know who he is? I mean, it 's --

you know, and Mad Men will be coming back at some

point in t ime. So I think if you read Cheever, go see

the new Virginia Woolf revival and watch Mad Men.

We'll be all geared up and in the mood for this sor t

of drunken WASP fest. Are they WASPs? Are the

Burches WASPs? Do we know?

MR. ISEN: I don't know how to answer

that question.

THE COURT: Well, it 's some sort of --

it 's not -- I mean, it 's nothing wrong -- it 's call ed

White Anglo-Saxon Protestant. So you don't know.

MR. ISEN: No --

THE COURT: So, I mean --

MR. ISEN: -- I mean, Tory Burch is

Jewish and Chris is not Jewish.

THE COURT: Okay. But not Jewish

doesn't make you a WASP, because it could make you an

equally excluded faith l ike Catholic; right? I mea n,

that's not a WASP. You know, a WASP is a WASP. So ,

you know -- I think you're going to have to have

interrogatories about who's a WASP. And I' l l

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certainly be attacked as anti-WASP, probably, and t hen

I love all WASPs. I 'm bringing actually Rodman War d,

Jr. in as my expert because I always used to tell R od

that he actually had a l ineage chart in his basemen t

which had all of the DuPont family trees on it. It

was l ike some people have war rooms. He had that t o

determine how they were actually related to the DuP ont

family. So I think we might be able to have some

unique experts in Delaware. And I think Mr. Willia ms

is bringing some of his former partners back.

MR. WILLIAMS: (Inaudible)

THE COURT: Morris Nichols was more of

an upstart f irm, but I think they had -- they did h ave

some -- some people who would claim that; right?

So I won't say anything more on the --

on the transcript. I'm going to go off the transcr ipt

and then talk about which former partners we actual ly

want to have come back. Thank you.

ALL COUNSEL: Thank you, Your Honor.

(Discussion off the stenographic

record from 2:47 p.m. unti l 2:49 p.m.)

THE COURT: Have a good day.

(The proceedings concluded at 2:49 p.m.)

- - -

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34


CERTIFICATE

I, NEITH D. ECKER, Official Court

Reporter for the Court of Chancery of the State of

Delaware, do hereby certify that the foregoing page s

numbered 3 through 33 contain a true and correct

transcription of the proceedings as stenographicall y

reported by me at the hearing in the above cause

before the Chancellor of the State of Delaware, on the

date therein indicated.

IN WITNESS WHEREOF I have hereunto set

my hand at Wilmington, this 2nd day of November 201 2.

/s/ Neith D. Ecker

---------------------------- Official Court Reporte r of the Chancery Court State of Delaware Certif icate Number: 113-PS Expiration: Permanent

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Documents

Burch v. Burch: Hearing Transcript