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No. COA- _______
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NORTH CAROLINA COURT OF APPEALS
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OUT OF THE BOX DEVELOPERS,
Appellee,
v.
LOGICBIT CORP., FRANCISCO
A. RIVERA, DOAN LAW LLP,
AND DOAN LAW FIRM LLP,
Appellants.
From Wake County (North
Carolina Business Court)
10 CVS 8327
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APPELLANTS' PETITION FOR WRIT OF SUPERSEDEAS PURSUANT
TO RULE 23 OF THE NORTH CAROLINA RULES OF APPELLATE
PROCEDURE AND MOTION FOR TEMPORARY STAY
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TABLE OF CONTENTS
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SUMMARY OF FACTS . . . . . . . . . . . 1-0
REASONS WHY WRIT SHOULD
ISSUE
. . . . . . . . . . 9-20
I. The Trial Court ignored procedural Due Process
protections contained in N.C. Gen. Stat. § 1A-1,
Rule 65, including by giving inadequate notice
and by denying any opportunity to be heard within
10 days as required by the Rule and the Due
Process protections secured by the Fourteenth
Amendment to the United States Constitution,
thereby affecting a substantial rights warranting
the Court of Appeals' immediate attention.
II. The Trial Court is ignoring the Due Process
protections of N.C. Gen. Stat § 5A-11, has
aligned itself with a party opponent to
investigate whether criminal contempt should be
imposed, and has done so before the contemnor
received an order to show cause or an opportunity
to be heard, again violating the Due Process
protections inherent in by North Carolina's
criminal contempt statute as well as the Fifth
and Fourteenth Amendments to the United States
Constitution, thereby affecting substantial
rights that merit the immediate attention of the
North Carolina Court of Appeals.
ATTACHMENTS . . . . . . . . . . . . 21
CERTIFICATE OF SERVICE . . . . . . . . . . . . 24
I. SUMMARY OF FACTS
1. Timeline of Events Leading to the Appealed Order
On 3 October 2013 at 12:01 AM, immediately after a
second failed second court-ordered mediation held just
days before trial, Out of the Box Developers
("Appellee") filed a Motion for Discovery Sanctions and
Contempt pursuant to Rule 37 of the North Carolina
Rules of Civil Procedure.
At or around 11:00 AM the same day, Appellants
received notice that the Trial Court was requesting a
telephone conference to discuss the possibility of a
hearing on Appellee's motion that afternoon.
Attachment 1. At 11:20 AM, Appellants' counsel
informed the parties and the Trial Court of the
following: "I can be available for a phone conference
after 12:15 [PM] but will be unavailable before then.
I would oppose a hearing this afternoon as I have no
idea what is going on and am not in a position to gain
more info until after 12:15 PM." Attachment 2. To
this, Appellee responded at 11:28 AM as follows:
-1-
With all respect to Mr. McKenzie, his
client is causing these problems and
is the reason an expedited hearing is
so urgently needed . . . I cannot
imagine anything more professionally
important than getting on the phone
immediately with a judge asking about
contempt charges against one's client—
unless the lawyer is on the phone to
the governor about another client with
a needle in his arm.
Attachment 3 (emphasis added).
The Trial Court then ordered counsel for the
parties to attend a telephonic hearing at 12:30 PM.
Attachment 4.
At 12:30 PM, Appellants' attorney pulled off the
Durham Freeway to attend this telephonic hearing. Hr'g
on Pl's Mot for Sanctions and Contempt Tr1 7:11-13
(Attachment 5). Appellants' attorney stressed that he
had little knowledge of "what was going on," that he
had not had the opportunity to speak with his client or
even read Appellee's filings, and that he needed more
1 There were really two hearings on 3 October 2013, one
on via telephone and one in person. However, the court
reporter consolidated both into one transcript.
-2-
time to prepare for proceedings that could ultimately
incarcerate and/or restrain his client.2 Id at 4:6-
5:17. Appellants' attorney questioned the urgency of
the motion and requested that any hearing be held the
next day, Friday, 4 October 2013. Id at 5:14-17, 6:15-
21. The Trial Court denied that request and ordered
the parties' attorneys to Greensboro for a hearing on
an hour and a half's notice.3 Id 10:23-25.
At or about 2:15 PM, the Trial Court convened to
address Appellee's motion for sanctions and contempt.
Id. Appellants, given the time limitations and travel
to Greensboro, had given only a cursory review of the
allegations contained in Appellee's motion and had not
completed any review some of the exhibits and
2 While Appellee may have filed its Motion for Sanctions
and Contempt in the early hours of 3 October 2013,
exhibits and affidavits trickled into the North
Carolina Business Court's online filing system over the
next 12 hours, ending at approximately 11:56 AM.
3 Appellants' attorney was in Durham at the time of this
telephonic hearing; as for Appellee's attorneys, one
was already in Greensboro and the other was on his way.
-3-
affidavits offered shortly before the afternoon
hearing. Id. at 4:6-5:17, 16:14.
However, Appellants were able to discern, as did
the Trial Court, that while the Appellees were moving
under the guise of a Motion to Compel under NC Gen Stat
§ 1A-1, Rule 37, the Appellees were really seeking
injunctive relief pursuant to NC Gen Stat § 1A-1, Rule
65, and criminal contempt pursuant to NC Gen Stat § 5A-
11. Id. at 5:24-25; 14:3-8; 16:23-25 ("This is a
temporary restraining [hearing] that is guised or at
least dressed up as some kind of contempt order or some
kind of violation of discovery."). (Appellees were
also seeking a second continuance of trial, on
basically the eve of trial (for a case 40 months old),
as well as a fourth amendment to its Complaint under NC
Gen Stat § 1A-1, Rule 15. The Trial Court granted the
continuance and stated it would allow leave to amend
Appellee's pleading. Id at 30:1-6.)
Appellants began the proceeding by orally moving to
dismiss the motion, which the Trial Court denied. Id at
-4-
6:10. The Trial Court then proceeded with what appears
to have been a hearing on a confused mixture of legal
grounds. The hearing was, at once, one for criminal
contempt, injunctive relief (on both a temporary and
preliminary basis), amendment to the pleadings, and
discovery sanctions. See, e.g., Id 40:20-47:6
(Appellee discussing the hearing as one for both a TRO
and preliminary injunction); 50:24-51:6 (Appellee
discussing hearing as one for a TRO); 68:6-11 (Appellee
discussing how the hearing is a combined or elongated
hearing for a TRO, contempt, "for Rule 15," and a
preliminary injunction); 80:24-84:22 (Trial Court's
discussion how its forthcoming order was a TRO, with no
expiration date, and how there was "nothing further in
terms of a preliminary").
Appellee's submitted to the Trial Court one piece
of evidence, to which the Appellants objected as "there
is no foundation for this document whatsoever." Id at
24:21-22.
Originally during the telephone conference,
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Appellants' attorney expressed a desire to have the
putative contemnor present given "the nature of this,"
However, Appellant's attorney later changed his mind
given the lack of information and following the Trial
Court's grave warnings to the putative contemnor
regarding alleged actions occurring outside the
courtroom a week prior. Id 9:6-16.
2. The Order
On 4 October 2013, the Trial Court entered an Order
that made a number of findings of facts and conclusions
of law, seemingly pursuant to Rule 65 but still
indirectly referencing a hodgepodge of other legal
grounds. Attachment 6. The Trial Court did not
reference any jurisdictional statute or Rule of Civil
Procedure in its Order. Inter alia, the Trial Court:
A. Immediately restrained the putative contemnor,
certainly on an temporary basis but likely on a
preliminary or even permanent basis as the
Trial Court did not set a duration or
subsequent hearing as required by NC Gen Stat §
1A-1, Rule 65. The trial court did so with
minimal notice or even no notice to the
Appellants, and clearly without hearing from
the putative contemnor.
-6-
B. Instead of setting a subsequent hearing "at the
earliest possible time" in a way that "takes
precedence over all matters except older
matters of the same subject matter," the Trial
Court did nothing of the sort. NC Gen Stat §
1A-1, Rule 65. Instead of bringing the
putative contemnor into Court or providing him
with an opportunity to be heard as provided by
NC R Civ P 65, or instead of issuing a show
cause order as required by NC Gen Stat § 5A-11
and then requiring the putative contemnor an
opportunity to be heard as to why he should not
be held in contempt, the Trial Court aligned
itself with a party opponent by ordering
discovery, including third party discovery,
that is tantamount to an criminal investigation
as to whether the putative contemnor violated
the Trial Court's order, which may lead to a
contempt finding (or more complete contempt
proceedings) or the imposition of severe
sanctions. Attachment 6, p. 4 ¶ C; see also
Hr'g on Pl's Mot for Sanctions and Contempt Tr
61:15-17, 70:24-71:2, 72:17-22, 78:15-17.
C. Finally, the Trial Court imposed a mandatory
injunction regarding speech, again without
hearing from the putative contemnor, and
without any date to review of such an
injunction as required by Rule 65. Attachment
6, p. 3 ¶ A.
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3. Notice of Appeal; Subsequent Emergency Motion for
Sanctions and Contempt; Motion to Stay at the Trial
Court; and Order Denying the Motion to Stay
On 4 October 2013, Appellants filed their Notice of
Appeal with the Business Court. On 7 October 2013,
Appellants filed the same with the Wake County Clerk of
Superior Court.
On 7 October 2013, Appellees filed yet another
emergency Motion for Sanctions and for Contempt
alleging the exact same wrongs that warranted the Trial
Court's immediate attention on 3 October 2013.
Strangely, this Motion has been entirely ignored by the
Trial Court, and likewise has not been pressed by the
Appellee, even though it far more serious given timing
of the Trial Court's order entered just three days
prior. (Appellants strongly believe that the failure
to address or press this second, more serious motion
for sanctions and contempt illustrates that the first,
filed only than four days before, was of no urgency at
all.)
-8-
On 25 October 2013, Appellants sought a stay of the
subject matter of the proceedings as required by NC R
App P 8. This Motion was denied 1 November 2013.
Attachment 7.
II. REASONS WHY WRIT SHOULD ISSUE
1. The Trial Court Has Ignored the Due Process
Protections of NC Gen Stat § 1A-1, Rule 65, in
Violation of the Rule and the Fourteenth
Amendment to the United States Constitution.
Rule 65 of the North Carolina Rules of Civil
Procedure provides for a two-step process in granting
injunctive relief on an emergency (or temporary) basis
and, then, on a preliminary basis. NC Gen Stat § 1A-1,
Rule 65. Upon good cause, a party may obtain temporary
relief not to "exceed 10 days"; then, after the
expiration of the 10 days, the moving party and the
person restrained must return to court for a hearing
"at the earliest possible time." Id.
-9-
Rule 65 has inherent protections— the whole purpose
of which is to provide for the elementary due process
requirements of notice and an opportunity to be heard.
United States Steel Corp. v. United Mine Workers of
Am., 519 F.2d 1236, 1246 (5th Cir. 1975), cert. denied,
428 U.S. 910 (1976) (examining the federal rule);
Thompson v. Ramirez, 597 F. Supp. 726, 726 (D.P.R.
1984) ("The requirements of Rule 65 . . . are not mere
technicalities, but establish minimum due process.");
State v. Byrd, 363 NC 214, 224 (2009) ("[T]he
opportunity to be heard and to challenge the truth of
the adversary's assertions is part and parcel of due
process.").
In fact, to allow for hearing "without any notice
of such intention until the conclusion of the
evidentiary hearing on the motion for a preliminary
injunction . . . comes perilously close to a violation
of due process." Gellman v. Maryland, 538 F.2d 603,
606 (4th Cir 1976).
-10-
Notably, in Perry v. Baxley Dev., Inc., 188 N.C.
App. 158 (2008), an adverse party sought and received a
preliminary injunction on 6 February 2006. The
Defendant was served with the Summons and Complaint,
which included a Motion for a Preliminary Injunction,
four days earlier on 2 February 2006 (via UPS) and then
again on 7 February 2006 (via USPS)— one day after the
hearing on the preliminary injunction. The Defendant
argued that it had a substantial right "to receive
notice of a hearing before a preliminary injunction is
granted," and the Court of Appeals agreed. Id. at 160–
61.
It is indisputable that the Trial Court entered a
mandatory injunction. The Trial Court instructed
Appellee's Counsel to follow the language of Rule 65
and even said that there was nothing "further in terms
of a preliminary injunction to be done in that regard."
Id 83:17-18, 85:17-18.
-11-
By all appearances, the Order, though silent on
jurisdictional rules or statutes as well as duration,
is both a temporary and preliminary injunction that was
entered with little notice (for the TRO) or even no
notice (for the preliminary injunction). See, e.g., Id
80:24-81:2 (Trial Court flatly acknowledging that there
is no need to return for a preliminary injunction,
which necessarily means that, given the absence of any
duration as required by Rule 65, the TRO also took the
form of a preliminary injunction.).
If the Order was a TRO, or a hearing on the same,
then Appellants had the right to return to Court "at
the earliest possible time" in a way that "takes
precedence over all matters except older matters of the
same subject matter," to present their side of the
case. NC Gen Stat § 1A-1, Rule 65. If the Order was a
preliminary injunction, or a hearing on the same, then
the Appellants deserved five days' notice as required
by NC Gen Stat § 1A-1, 6(d). Either way, the
substantial due process rights of notice and an
-12-
opportunity to be heard were (and are being) ignored.
The Trial Court itself came close to acknowledging as
much regarding notice. Hr'g on Pl's Mot for Sanctions
and Contempt Tr 27:21-23 ("[T]he question is, now much
advance notice I've got to give before I order?").
Substantial rights have been (and are being)
affected, and a Writ of Supersedeas should issue for
the Trial Court's failure to provide adequate notice
and an opportunity to be heard.
2. The Trial Court Is Ignoring the Due Process
Protections of North Carolina's Criminal Contempt
Statute, NC Gen Stat § 5A-11, Which Also Violates
the Due Process Protections of the Fifth and
Fourteenth Amendments to the United States
Constitution.
North Carolina's contempt statutes include
constitutional safeguards. See, e.g., NC Gen Stat
§§ 5A-15, 5A-23. The Trial Court and Appellees are
seeking to inquire into and punish prior acts;
therefore, the nature of the Motion for Contempt is
criminal. O'Briant v. O'Briant, 313 NC 432, 434 (1985)
("Criminal contempt is generally applied where the
judgment is in punishment of an act already
-13-
accomplished, tending to interfere with the
administration of justice. Civil contempt is a term
applied where the proceeding is had . . . to compel
obedience to orders and decrees made for the benefit of
such parties."); Atassi v. Atassi, 122 N.C. App. 356
(1996) (interfering with an order is criminal, not
civil, contempt); Lamm v. Lamm, 229 N.C. 248 (1948)
(contempt is criminal if defendant has the ability to
comply). Therefore, "[c]riminal contempts are crimes,
and accordingly, the accused is entitled to the
benefits of all constitutional safeguards." O'Briant,
313 NC at 435.
Summary Contempt Proceedings. Due process allows a
summary proceeding for contempt only when the contempt
occurred within the court's personal view. In re
Oliver, 333 US 257 (1948); Brandt v. Gooding, 636 F.3d
124 (4th Cir 2011). Still, the defendant, even in a
summary proceeding, must be told the basis for the
contempt and given an opportunity to respond. State v.
Randell, 152 NC App 469 (2002); State v. Johnson, 52 NC
-14-
App 592 (1981).
Plenary Contempt Proceedings. A plenary proceeding
is commenced by issuance of a show cause order.
O'Briant, 313 NC at 436; In re Board of Comm'rs, 4 NC
App 626, 630 (1969). The order must give adequate
notice of the acts considered being contemptuous. Id.
Notice and Parties in a Contempt Proceeding.
Criminal contempt proceedings are entirely between the
Court and the contemnor. Private parties cannot
initiate criminal contempt proceedings; in fact, due
process requires that criminal contempt be initiated by
the court and that the court give adequate notice of
the acts considered being contemptuous. Brandt, 636
F.3d at 135; O'Briant, 313 NC at 441; In re Board of
Comm'rs, 4 NC App at 630. Additionally, NC Gen Stat
§ 5A-15 imposes on the Court a duty to "proceed by an
order directing the person to appear before a judge at
a reasonable time specified in the order and show cause
why he should not be held in contempt of court." Id. §
5A-15(a). Notably, this statute does not allow for
-15-
civil discovery to resolve factual issues; in fact, the
Court is the sole "trier of facts at the show cause
hearing." Id. § 5A-15(d).
Strict Construction. The criminal contempt statute
must be strictly construed since it is a penalty
statute. State v. Raines, 319 NC 258, 263 (1987)
(quoting State v. Glidden, 317 NC 557, 561 (1986))
("The object in construing penal, as well as other
statutes, is to ascertain the legislative
intent . . . . The words must not be narrowed to the
exclusion of what the legislature intended to
embrace.").
Self-Incrimination. "No person shall be compelled
in any criminal case to be a witness against himself,"
U.S. Const. Amend. V., and the right against self-
incrimination is specifically enumerated in North
Carolina's criminal contempt statute. NC Gen Stat §
5A-15(e).
-16-
The Trial Court claims that it has, or at least
will (or perhaps even is), providing all the
protections above because, put simply, it has not made
up its mind. Order on Mot to Stay, p. 2 ("[T]he court
reserved a determination of whether it should or would
initiate any contempt proceedings."); Hr'g on Pl's Mot
for Sanctions and Contempt Tr 15:18-19, 18:1-3, 70:24-
71:2, 75:22-25, 78:15-17.
Meanwhile, the putative contemnor is in the
perilous position of having to participate in what is
ultimately an investigation, conducted by an adverse
party with the Trial Court's approval, under the guise
of civil discovery. Order on Mot to Stay, p. 2 ("The
Court allowed for limited discovery . . . directed to
the appropriate course the court should take for
further proceedings related to Plaintiff's motion for
sanctions and contempt."); Hr'g on Pl's Mot for
Sanctions and Contempt Tr 72:17-22 (suggesting that the
Appellee's lawyer, "Mr. Sasser[,] could prosecute the
contempt charge, but I just simply make it
-17-
returnable."); 78:15-17 (noting that discovery should
be targeted and "related to the question of willfulness
as to whether it's for sanctions or whether it goes to
contempt."); 80:7-8 (stating that discovery should be
"limited to the question of what I should do in
response[,]" which clearly includes holding the
putative contemnor in contempt); 86:4-11 (discovery
should be on willfulness); 90:23-91:2 (again, discovery
on willfulness); see also NC Gen Stat 5A-11 (using the
word "willful" 13 times and establishing 10 different
criminal contempts for some kind of "willful"
behavior).
In other words, after the completion of an
investigation into the "intent and effect of actions
that may or may not have been taken in violation of
this court's Protective Order," the Court will then
make up its mind. Id.
Additionally, the Trial Court has impermissibly
aligned itself with the Appellee even though, as the
Trial Court acknowledges, contempt is a matter solely
-18-
between the Court and the contemnor. Hr'g on Pl's Mot
for Sanctions and Contempt Tr 58:4-6 (stating how
contempt matters are within the "eyes of the court");
60:10-11 (noting how contempt is "from the court's
perspective").
This approach entirely contravenes procedural due
process protections embedded in North Carolina's
criminal contempt statute and required by the United
States Constitution. Given this kind of bizarre
procedural uncertainty in the face of a step-by-step
statute that may be invoked to resolve this issue, it
is hard to imagine what discovery the putative
contemnor may offer given his statutory and
constitutional rights against self-incrimination. One
might easily imagine the putative offender repeatedly
invoking his Fifth Amendment rights, only to receive a
Motion to Compel for doing so.
Very substantial rights are being threatened, and,
respectfully, the North Carolina Court of Appeals
should issue Writ of Supersedeas Pursuant to Rule 23 of
-19-
the North Carolina Rules of Appellate Procedure.
III. REASONS WHY ORDER STAYING THE ACTION SHOULD ISSUE
Appellants respectfully applies to the Court for an
Order temporarily staying enforcement of the Order
which is the subject of this Petition for Writ of
Supersedeas. In support of this application,
Appellant-movant reiterates the good cause shown above,
including but not limited to the specifically
enumerated Due Process protections of NC Gen Stat § 1A-
1, Rule 65, and NC Gen Stat § 5A-11, which will be
imminently harmed if the Appellants must obey the
decree of the Trial Court during the interval before
decision by the Court of Appeals to issue a Writ of
Supersedeas.
IV. ATTACHMENTS
Attached to this Petition for consideration by the
Court are certified copies of the Order from which the
Appellants appeal, as well as emails from and to the
Trial Court that document the timeline discussed supra.
-20-
Specifically attached are:
Attachment 1: Electronic Mail from Court
Attachment 2: Electronic Mail from Appellant
Attachment 3: Electronic Mail from Appellee
Attachment 4: Electronic Mail from Court
Attachment 5: Transcript (relevant portions)
Attachment 6: Order on Plaintiff's Motion
Attachment 7: Order on Motion to Stay
V. CONCLUSION
WHEREFORE, Appellants respectfully pray that the
North Carolina Court of Appeals issue a WRIT OF
SUPERSEDEAS to the Superior Court of Wake County,
specifically the Superior Court for Complex Business,
staying enforcement of the order specified above,
pending the North Carolina Court of Appeals review and
determination of the Appellants' Notice of Appeal that
was timely filed on or about 7 October 2013. The
petitioners further and respectfully ask that they have
such other relief as the North Carolina Court of
Appeals finds just and proper.
-21-
Respectfully submitted November 6, 2013.
SANDS ANDERSON PC
Attorneys for the Appellants
/s/ David McKenzie
David McKenzie
NC State Bar No. 36376
4101 Lake Boone Trl Ste 100
Raleigh, NC 27607-7506
Phone: 919-706-4200
Fax: 919-706-4205
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VERIFICATION
David McKenzie, having been duly sworn, deposes and
says that he has read the foregoing Motion for Writ of
Supersedeas and Motion for Stay, and that the same is
true to the best of his knowledge.
This the 6th day of November 2013.
David McKenzie
Sworn and subscribed before me on this
the 6th day of November, 2013.
NOTARY PUBLIC
Commission Expires: [SEAL]
-23-
CERTIFICATE OF SERVICE
I certify that I served this MOTION by
electronically filing it with the North Carolina Court
of Appeals, which will send electronic notification to
all Counsel of Record. I also mailed the same and
filed the same with the North Carolina Business Court,
which will send electronic notification to:
Jonathan D. Sasser, Esq.
Attorney for the Plaintiff
ELLIS & WINTERS LLP
PO Box 33550
Raleigh, North Carolina 27636
This the 6th day of November 2013.
SANDS ANDERSON PC
Attorneys for the Appellants
/s/ David McKenzie
David McKenzie
-24-
1
McKenzie, David L.
From: Scoggan, Steven A. <[email protected]>
Sent: Thursday, October 03, 2013 10:45 AM
To: Scott Meyers; Jon Sasser; McKenzie, David L.
Cc: Gale, James L.
Subject: RE: OTB
Counselors: Judge Gale has finished his morning hearing. He would like to have a telephone conference of counsel ASAP, which can include whether to hold a hearing this afternoon. Best, Steven Scoggan Law Clerk to the Honorable James L. Gale Special Superior Court Judge for Complex Business Cases Telephone: (336) 334-5252 Facsimile: (336) 334-5162
From: Scott Meyers [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:00 AM
To: Gale, James L.; [email protected]; Jon Sasser Cc: Scoggan, Steven A.
Subject: RE: OTB Thank you Judge Gale.
My understanding from Mr. McKenzie’s email was that he was not available in person this morning, but he could be
available in the afternoon. If possible, Plaintiffs would prefer an in person hearing this afternoon, at the Court’s
convenience. Would it be possible to do the hearing in person this afternoon?
Best regards,
Scott
Scott Meyers Ellis & Winters LLP
[email protected] Direct: (336) 217-4085 Office: (336) 217-4193 Fax: (336) 217-4198 http://www.elliswinters.com/
CONFIDENTIALITY NOTICE: This e-mail message including attachments, if any, is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message.
From: Gale, James L. [mailto:[email protected]]
Sent: Thursday, October 03, 2013 9:53 AM
To: [email protected]; Scott Meyers
2
Cc: Scoggan, Steven A.
Subject: OTB
I have reviewed the materials filed overnight. I understand generally from calls to my law clerk yesterday as to the possibility of these filings that Mr. McKenzie is unable to appear in person today. I have a hearing in another matter starting at 10:00 a.m. which I expect not to exceed an hour. I would like to have a telephone call as soon thereafter as possible, limited to the question of how we might proceed. I do not expect to entertain substantive arguments on this call. Assuming that I am correct that Mr. McKenzie is not available today, my present inclination is to expedite any response to the motions and set an in-person hearing tomorrow in Greensboro. Again without accepting argument in response, the court may suggest issues to which the parties may wish to direct attention so as to be able to address them at the hearing. Please coordinate with Mr. Scoggan in setting the earliest possible telephone call today. James L. Gale Special Superior Court Judge for Complex Business Cases 211 N. Greene St. Greensboro, NC 27401 (336) 334-5252 facsimile (336) 334-5162 [email protected] www.ncbusinesscourt.net
E-mail correspondence to and from this address may be subject to the
North Carolina public records laws and if so, may be disclosed.
E-mail correspondence to and from this address may be subject to the
North Carolina public records laws and if so, may be disclosed.
1
McKenzie, David L.
From: McKenzie, David L.
Sent: Thursday, October 03, 2013 11:20 AM
To: Gale, James L.; Scott Meyers; Scoggan, Steven A.; Jon Sasser
Subject: RE: OTB
I can be available for a phone conference after 12 15 but will be unavailable before then. I would oppose a hearing this afternoon as I have no idea what is going on and am not in a position to gain more info until after 12 15. ________________________________________ From: Gale, James L. [[email protected]] Sent: Thursday, October 03, 2013 11:03 AM To: Scott Meyers; Scoggan, Steven A.; Jon Sasser; McKenzie, David L. Subject: RE: OTB I am available for a call as soon as Mr. McKenzie can be contacted. I am presently inclined to set a hearing at the Business Court in Greensboro for 2 p.m. today. I will wait until 11:30 before issuing a notice of such hearing. I continue to believe a short telephone conference before any such hearing would be useful. ________________________________ From: Scott Meyers [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:57 AM To: Scoggan, Steven A.; Jon Sasser; 'dmckenzie' Cc: Gale, James L. Subject: RE: OTB Thank you Mr. Scoggan. Counsel for Plaintiff is ready for a telephone conference immediately. We have tried to reach Mr. McKenzie, but as of right now we have not heard back from him. We think it is important to inform the Court that the conduct specified in our Motion filed last night continues unabated. The false information is still available on the internet, and Mr. Rivera has posted a new YouTube video just this morning. We strongly believe that we need an in-person hearing as soon as possible. If Mr. McKenzie responds, we can use this number for the telephone conference: Dial in # (866) 576-7975 Passcode 232907 Thank you, Scott Scott Meyers Ellis & Winters LLP [email protected]
2
Direct: (336) 217-4085 Office: (336) 217-4193 Fax: (336) 217-4198 http://www.elliswinters.com/ [Description: home_logo] CONFIDENTIALITY NOTICE: This e-mail message including attachments, if any, is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. From: Scoggan, Steven A. [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:45 AM To: Scott Meyers; Jon Sasser; 'dmckenzie' Cc: Gale, James L. Subject: RE: OTB Counselors: Judge Gale has finished his morning hearing. He would like to have a telephone conference of counsel ASAP, which can include whether to hold a hearing this afternoon. Best, Steven Scoggan Law Clerk to the Honorable James L. Gale Special Superior Court Judge for Complex Business Cases Telephone: (336) 334-5252 Facsimile: (336) 334-5162 ________________________________ From: Scott Meyers [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:00 AM To: Gale, James L.; [email protected]; Jon Sasser Cc: Scoggan, Steven A. Subject: RE: OTB Thank you Judge Gale. My understanding from Mr. McKenzie’s email was that he was not available in person this morning, but he could be available in the afternoon. If possible, Plaintiffs would prefer an in person hearing this afternoon, at the Court’s convenience. Would it be possible to do the hearing in person this afternoon? Best regards, Scott Scott Meyers Ellis & Winters LLP [email protected]<mailto:[email protected]>
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Direct: (336) 217-4085 Office: (336) 217-4193 Fax: (336) 217-4198 http://www.elliswinters.com/ [Description: home_logo] CONFIDENTIALITY NOTICE: This e-mail message including attachments, if any, is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. From: Gale, James L. [mailto:[email protected]] Sent: Thursday, October 03, 2013 9:53 AM To: [email protected]; Scott Meyers Cc: Scoggan, Steven A. Subject: OTB I have reviewed the materials filed overnight. I understand generally from calls to my law clerk yesterday as to the possibility of these filings that Mr. McKenzie is unable to appear in person today. I have a hearing in another matter starting at 10:00 a.m. which I expect not to exceed an hour. I would like to have a telephone call as soon thereafter as possible, limited to the question of how we might proceed. I do not expect to entertain substantive arguments on this call. Assuming that I am correct that Mr. McKenzie is not available today, my present inclination is to expedite any response to the motions and set an in-person hearing tomorrow in Greensboro. Again without accepting argument in response, the court may suggest issues to which the parties may wish to direct attention so as to be able to address them at the hearing. Please coordinate with Mr. Scoggan in setting the earliest possible telephone call today. James L. Gale Special Superior Court Judge for Complex Business Cases 211 N. Greene St. Greensboro, NC 27401 (336) 334-5252 facsimile (336) 334-5162 [email protected]<mailto:[email protected]> www.ncbusinesscourt.net<http://www.ncbusinesscourt.net/> E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed. E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed. E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed.
1
McKenzie, David L.
From: Jon Sasser <[email protected]>
Sent: Thursday, October 03, 2013 11:28 AM
To: McKenzie, David L.; Gale, James L.; Scott Meyers; Scoggan, Steven A.
Subject: RE: OTB
With all respect to Mr. McKenzie, his client is causing these problems and is the reason an expedited hearing is so urgently needed. My client's livelihood is being attacked every hour this drags on. Mr. McKenzie was aware of these issues -- which were discussed for more than eight hours yesterday -- before Mr. Meyers and I. I cannot imagine anything more professionally important than getting on the phone immediately with a judge asking about contempt charges against one's client -- unless the lawyer is on the phone to the governor about another client with a needle in his arm. -----Original Message----- From: McKenzie, David L. [mailto:[email protected]] Sent: Thursday, October 03, 2013 11:20 AM To: Gale, James L.; Scott Meyers; Scoggan, Steven A.; Jon Sasser Subject: RE: OTB I can be available for a phone conference after 12 15 but will be unavailable before then. I would oppose a hearing this afternoon as I have no idea what is going on and am not in a position to gain more info until after 12 15. ________________________________________ From: Gale, James L. [[email protected]] Sent: Thursday, October 03, 2013 11:03 AM To: Scott Meyers; Scoggan, Steven A.; Jon Sasser; McKenzie, David L. Subject: RE: OTB I am available for a call as soon as Mr. McKenzie can be contacted. I am presently inclined to set a hearing at the Business Court in Greensboro for 2 p.m. today. I will wait until 11:30 before issuing a notice of such hearing. I continue to believe a short telephone conference before any such hearing would be useful. ________________________________ From: Scott Meyers [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:57 AM To: Scoggan, Steven A.; Jon Sasser; 'dmckenzie' Cc: Gale, James L. Subject: RE: OTB Thank you Mr. Scoggan. Counsel for Plaintiff is ready for a telephone conference immediately. We have tried to reach Mr. McKenzie, but as of right now we have not heard back from him. We think it is important to inform the Court that the conduct specified in our Motion filed last night continues unabated. The false information is still available on the internet, and Mr. Rivera has posted a new YouTube video just this morning. We strongly believe that we need an in-person hearing as soon as possible.
2
If Mr. McKenzie responds, we can use this number for the telephone conference: Dial in # (866) 576-7975 Passcode 232907 Thank you, Scott Scott Meyers Ellis & Winters LLP [email protected] Direct: (336) 217-4085 Office: (336) 217-4193 Fax: (336) 217-4198 http://www.elliswinters.com/ [Description: home_logo] CONFIDENTIALITY NOTICE: This e-mail message including attachments, if any, is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. From: Scoggan, Steven A. [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:45 AM To: Scott Meyers; Jon Sasser; 'dmckenzie' Cc: Gale, James L. Subject: RE: OTB Counselors: Judge Gale has finished his morning hearing. He would like to have a telephone conference of counsel ASAP, which can include whether to hold a hearing this afternoon. Best, Steven Scoggan Law Clerk to the Honorable James L. Gale Special Superior Court Judge for Complex Business Cases Telephone: (336) 334-5252 Facsimile: (336) 334-5162 ________________________________ From: Scott Meyers [mailto:[email protected]] Sent: Thursday, October 03, 2013 10:00 AM To: Gale, James L.; [email protected]; Jon Sasser Cc: Scoggan, Steven A. Subject: RE: OTB Thank you Judge Gale.
3
My understanding from Mr. McKenzie's email was that he was not available in person this morning, but he could be available in the afternoon. If possible, Plaintiffs would prefer an in person hearing this afternoon, at the Court's convenience. Would it be possible to do the hearing in person this afternoon? Best regards, Scott Scott Meyers Ellis & Winters LLP [email protected]<mailto:[email protected]> Direct: (336) 217-4085 Office: (336) 217-4193 Fax: (336) 217-4198 http://www.elliswinters.com/ [Description: home_logo] CONFIDENTIALITY NOTICE: This e-mail message including attachments, if any, is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, please contact the sender by reply e-mail and destroy all copies of the original message. From: Gale, James L. [mailto:[email protected]] Sent: Thursday, October 03, 2013 9:53 AM To: [email protected]; Scott Meyers Cc: Scoggan, Steven A. Subject: OTB I have reviewed the materials filed overnight. I understand generally from calls to my law clerk yesterday as to the possibility of these filings that Mr. McKenzie is unable to appear in person today. I have a hearing in another matter starting at 10:00 a.m. which I expect not to exceed an hour. I would like to have a telephone call as soon thereafter as possible, limited to the question of how we might proceed. I do not expect to entertain substantive arguments on this call. Assuming that I am correct that Mr. McKenzie is not available today, my present inclination is to expedite any response to the motions and set an in-person hearing tomorrow in Greensboro. Again without accepting argument in response, the court may suggest issues to which the parties may wish to direct attention so as to be able to address them at the hearing. Please coordinate with Mr. Scoggan in setting the earliest possible telephone call today. James L. Gale Special Superior Court Judge for Complex Business Cases 211 N. Greene St. Greensboro, NC 27401 (336) 334-5252 facsimile (336) 334-5162
4
[email protected]<mailto:[email protected]> www.ncbusinesscourt.net<http://www.ncbusinesscourt.net/> E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed. E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed. E-mail correspondence to and from this address may be subject to the North Carolina public records laws and if so, may be disclosed.
(336) 558-3140
Jamestown, N. C. 27282
P. O. Box 190
Division V Rover
Official Court Reporter
PATRICIA JAEGER, RPR, CRR
--------------------------------------------------------
Raleigh, NC 27607-7506
4101 Lake Boone Trail, Suite 100
By: DAVID McKENZIE, Esq.
For the Defendants: SANDS ANDERSON, PC
Raleigh, NC 27636
PO Box 33550
SCOTT MEYERS, Esq.
By: JONATHAN D. SASSER, Esq.
For the Plaintiff: ELLIS & WINTERS, LLP
A P P E A R A N C E S
Gale, Judge Presiding.
Carolina Business Court, before the Honorable James L.
October, 2013, Special Civil Session of the North
County, Greensboro, North Carolina, on the 3rd day of
Court of Justice, Superior Court Division, Guilford
Transcript of proceedings taken in the General
Defendant. )
)
DOAN LAW FIRM, LLP, )
RIVERA, DOAN LAW, LLP, and THE )
LOGICBIT CORP., FRANCISCO A. )
)
v. ) TRANSCRIPT
) VOLUME I OF I
Plaintiff, )
)
d/b/a OTB CONSULTING, )
OUT OF THE BOX DEVELOPERS, LLC,)
FILE NO. 10 CvS 8327
WAKE COUNTY SUPERIOR COURT DIVISION
NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
her to be there, sir.
THE COURT: Okay. I certainly would be glad for
notes, if the Court so allows.
side of the road. And she's here on the phone to take
Kathleen Leszczynski. She is my paralegal. I'm off the
MR. McKENZIE: And I have with me, Your Honor,
THE COURT: Okay.
PC, for the defendant.
MR. McKENZIE: David McKenzie, Sands Anderson,
THE COURT: All right.
Winters, also for the plaintiff.
MR. MEYERS: Your Honor, Scott Meyers, Ellis &
Ellis & Winters, for the plaintiff.
MR. SASSER: That's correct, Your Honor. Jon,
So I think I heard you, Mr. Sasser?
that she can get that started.
let's just make sure that we announce who's speaking so
announce who's on the phone. And as we move forward,
So let me just start out by asking everyone to
have her information.
worked with before, Patricia Jaeger. And you probably
I have a court reporter here, who I think you-all have
THE COURT: Let me tell you-all in advance that
telephone conference call commencing at 12:31 p.m.:)
(The following proceedings took place by 1
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Official Court Reporter
Division V Rover
But, obviously, Mr. McKenzie, I want to give you the
reason not to, for us to get together in person today.
afternoon. And so I am inclined, absent some compelling
unavailable in the morning but available in the
altogether today. But I had understood now he was
day yesterday that Mr. McKenzie was unavailable
question is -- I had just kind of picked up during the
THE COURT: Okay. And I think the other
MR. McKENZIE: Yes, sir. And I have read it.
able to get that e-mail?
addressed when we got the hearing together. Were you
raising some questions that I thought would need to be
out an e-mail, I think maybe at 11:57 this morning, just
But within the last half hour, I suppose, I sent
out of pocket in terms of having access to e-mail.
immediacy. And I've understood that you've been a bit
But they are obviously raising questions of some
terms of -- in terms of what I think the merits are.
matters that need to be remedied, I'm being neutral in
an early hearing. In light of what they contend to be
fact that we -- the plaintiff was obviously pressing for
been a bit out of pocket. I sent -- in light of the
THE COURT: Okay. Mr. McKenzie, I know you've
MR. SASSER: Yes, sir.
And is that everyone? 1
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imminency question that I do not think rises to the
And then I think, Your Honor, we have an
violation of the Court's order.
there, we've got a question of whether we have a
I don't know. Maybe at this moment. If it's still up
I thought that that had been abated last night.
Specifically, on the Internet.
and used that in other -- in another location.
Mr. Rivera has taken information learned in discovery
on, there have been some -- there's an allegation that
were telling me. And from what I understand is going
from last night, I only took the words of what people
I also do not know if, looking -- I have -- even
verify the veracity of that with my client.
sort of erupted again. And I have not been able to
from a quick conversation with Mr. Meyers, that this has
last -- I think, still, 24 hours. And I understand,
became aware of something that had happened within the
on. And I understand -- even from last night. And I
come through, I do not have a fullness of what's going
had -- I mean, besides some of the allegations that have
MR. McKENZIE: Well, Your Honor, I, in part,
move it back?
So can we go forward at 2? Or do we need to
opportunity to get here. 1
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Official Court Reporter
Division V Rover
an immediate basis is more in the nature of a Rule 65
e-mail, I think more that the access to the audience in
audience. I do agree with you -- as I pointed out in my
have raised enough issues that -- to give them the
think the threshold question is whether the plaintiffs
you're right, as it gets to the merits of the matter. I
Mr. McKenzie, that's where -- in terms of maybe with me,
THE COURT: Right. I think that --
there.
client. I don't know. Because I don't know what's out
the matter; whether or not we have a true threat to his
So I have concerns about the real imminency of
matters your e-mail does contemplate.
contempt without going through any of the preliminary
else. The order that's been offered finds him in
which I did see this morning -- I haven't seen anything
It seems like the order that's been offered,
a contempt decision.
counsel on that. There are a lot of things that go into
right now -- and he needs to be advised of his rights to
all. And I do not think that the Court is in a position
I do not believe the plaintiff can properly move for at
talking about criminal contempt. That's something that
think I need to be more prepared. Especially if we're
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Official Court Reporter
Division V Rover
course, want you to get here. I would assume that
come down on that, Mr. McKenzie, is that -- I do, of
THE COURT: Yeah. I think where I'm going to
I'm sorry. Go ahead.
proceed.
minutes, Judge Gale, to be prepared and be ready to
Greensboro. Then that will give me, essentially, 20
literally -- it will take an hour for me to get to
get up to speed on what's going on. I mean, I
doing it first thing tomorrow morning, so I can at least
MR. McKENZIE: I'd ask the Court to entertain
where we need to go from here. So --
hearing to see what it is that we are dealing with and
hearing today, this afternoon. But I do want to have a
So I am not going to hold a criminal contempt
we are, as far as Monday is concerned.
immediate issue of how this affects the posture of where
And then, of course, we've got the relatively
standpoint.
issues raised from the Rule 56 -- excuse me -- Rule 65
THE COURT: But I do think that there are enough
strongly. I agree with that strongly.
MR. McKENZIE: That would be my agreement
we'll --
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Official Court Reporter
Division V Rover
MR. SASSER: Yes, sir. I don't have the answers
e-mail?
did you understand the questions that I was posing in my
And did all of you -- Mr. Sasser and Mr. Meyers,
then at 2:15 this afternoon.
THE COURT: All right. We will hold the hearing
make that. As long as there's no traffic difficulty.
Your Honor will be inclined to a 2:15 deadline, I can
mean, I think I can make the 2:00 or 2:15 deadline. If
MR. McKENZIE: I am probably -- it takes -- I
conveniently?
THE COURT: Well, when can you be here,
best to get there by 2:00.
Durham. And I'm not dressed for court. But I can do my
MR. McKENZIE: I'm off the side of the road in
Are you on your way now?
able to get here by then.
I'd like to do it at 2:00, but you may not be
can you get here?
THE COURT: So it's a question of how quickly
MR. McKENZIE: Yes, sir.
us together this afternoon.
need to have a further hearing. But I am going to get
will leave open the question of whether or not do we
Mr. Rivera would be available to you by telephone. I 1
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Official Court Reporter
Division V Rover
general principles.
any other orders of the Court, but in terms of just
not on the contempt part regarding discovery orders or
settlement judge. But I just need to make you aware --
confidentiality of what you-all did with him as a
and I have been very cautious to maintain the
terms of how the day went yesterday, because John Jolly
already may be inflamed. I don't have any idea, in
start out and inflame passions any more than they
just tell you, so that you know it. I don't want to
THE COURT: All right. Let me just -- let me
going to try my best to make that happen.
MR. McKENZIE: Given the nature of this, I'm
here in person?
THE COURT: Are you expecting Mr. Rivera to be
Yes, sir.
MR. McKENZIE: Yes, sir.
Oh. David? Mr. McKenzie?
2:15 then.
THE COURT: All right. I will see you-all at
MR. SASSER: Yes, sir.
you about at 2:15 today.
those. Those are matters that I will want to hear from
THE COURT: No. This call is not to address
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Official Court Reporter
Division V Rover
THE COURT: I have heard what he said to you
MR. McKENZIE: -- and what he said to me. So --
THE COURT: Yeah.
provided you with concerning me --
arises from what Elon Law School has probably already
And there's actually other information that
you're talking about.
source -- so we avoid that altogether. And I know what
don't know what's going on and I need an information
preference is not to have him there -- I just simply
MR. McKENZIE: And quite frankly, Your Honor, my
summarily.
nature of direct criminal contempt that I can deal with
him that he should not do that. Because that's in the
today's proceedings, if Mr. Rivera is there, to advise
So I think it's appropriate that I would start
been forewarned.
make sure that everyone is completely aware and have
able to have the predicate, as you well know, I have to
Court simply can't tolerate that. And so in order to be
in a loud voice with profanities on the phone. And the
interrupting classes and walking up and down the halls
out during the hearing on his cell phone and
sources at the Elon Law School about Mr. Rivera going
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Official Court Reporter
Division V Rover
(Open court. 2:15 p.m.)
concluded at 12:42 p.m.)
(Whereupon, the telephone conference call
MR. SASSER: Thank you, Your Honor.
THE COURT: All right. Bye-bye.
MR. McKENZIE: Thank you.
THE COURT: Thank you.
MR. McKENZIE: We shall see you at 2:15, sir.
assume to be outside of your personal control.
that there are a lot of things happening that I would
THE COURT: Mr. McKenzie, I fully understand
can, sir.
Honor, that I don't tolerate it either, as much as I
MR. McKENZIE: Well, I hope you understand, Your
him. But I'm going to cover that if he shows up.
about that so he doesn't just blow up when I talk to
to let you know, so you can give him some advance (sic)
Court is simply not going to tolerate that. I just want
warning, as well as the lady that is with him, that the
tell him -- if he's there, I'm going to give him that
don't want to inflame the hearing, but I do want to just
I simply can't let the Court not be respected. So I
But if he goes out in the hall and acts badly like that,
level of contempt. That's a relationship between you.
going out. I don't know that that would rise to the 1
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Official Court Reporter
Division V Rover
would do his best. So having no call at 2:15, I went
would be -- having to hustle to get here by 2:15, but
Mr. McKenzie alerted me to the fact that he
the hearing at 2:15.
go forward today. I then indicated that we would have
plaintiff, of course, had been insistent upon wanting to
that the hearing be postponed until tomorrow. The
call at 12:30; at which time, Mr. McKenzie had requested
conversation, through my clerk that set up a telephone
This morning, I was able to have a telephone
Rivera, requesting an expedited response.
and for contempt against Logicbit and Francisco A.
motion, along with a memorandum for discovery sanctions
filed. One of them, in particular, titled plaintiff's
shortly after 11:30, there were a series of papers
settlement conference was at an impasse, I understand
And then late in the evening, after the
al., 10 CvS 8327, from Wake County.
the Box Developers, et al., v. Logicbit Corporation, et
conference in this case yesterday. This being Out of
And that is that there was a settlement
for Mr. McKenzie.
to do a couple of things for the record here, as we wait
THE COURT: Madam Court Reporter, I'm just going
(Mr. Sasser and Mr. Meyers present) 1
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Official Court Reporter
Division V Rover
Ellis & Winters. Also, two principals of OTB, Mr. Tom
plaintiffs, Jonathan Sasser and Scott Meyers from
MR. SASSER: Your Honor, on behalf of the
introducing who is here for the plaintiffs.
So let us start, if we may, by just, Mr. Sasser,
So that's about as much as I said.
on time, but I expected you'd be along shortly.
2:15; and I wasn't upset that you hadn't made it right
would have to make extraordinary efforts to get here by
light of the plaintiffs; and that you had indicated you
until tomorrow, but I insisted it be heard today, in
that; that you had requested a hearing be postponed
a settlement conference yesterday; a motion filed after
open at a time, and I simply had recited that there was
late. I opened this morning just by saying I normally
THE COURT: Well, you're not really too much
MR. McKENZIE: Sorry I'm late, Judge.
THE COURT: Good afternoon, Mr. McKenzie.
(Mr. McKenzie present. 2:17 p.m.)
THE COURT: Here comes Mr. McKenzie now.
MR. SASSER: That is correct, Your Honor.
affidavit of Ms. Kaufman.
The last filing that I see, Mr. Sasser, was an
for a moment, waiting to see where we are.
ahead and opened court. And so we will just be at ease 1
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Official Court Reporter
Division V Rover
know about that is what I've seen in papers filed this
what was said to be postings on the Internet. All I
essence, for some sort of remedial action because of
elements attentive to them. One of them asked, in
different forms of relief which had different procedural
morning, saying that I thought that the motion raised
personal schedule kept us from talking early this
sent out an e-mail, recognizing that Mr. McKenzie's
had a record earlier, as I recall at 12:30. But I had
and reflect very briefly on the record -- because we had
THE COURT: Okay. What I also would go ahead
to be here.
MR. McKENZIE: I've actually instructed him not
THE COURT: Do you expect Mr. Rivera to be here?
MR. McKENZIE: We hope so.
THE COURT: I hope everything is okay.
morning.
MR. McKENZIE: I was in for medical tests this
everything is okay.
were in for medical tests this morning. I hope
THE COURT: I took it from your e-mail that you
PC, Wake County Bar, for the defendant.
MR. McKENZIE: Dave McKenzie, Sands Anderson,
THE COURT: Good to see you.
Rowe and Mr. Bob McNeill. 1
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dealing with the inherent powers of the Court.
of case law that we looked up this morning, as well,
given to the Court under Rule 41, and there's a series
But then I noted separately there's authority
applies.
caution in my e-mail about how the language of Rule 37
We're dealing with a protective order. And so I raised
here -- that's really not what we're dealing with here.
with -- it dealt with a failure to make discovery. And
I had entered in the case earlier, because it deals
the basis of a sanctions motion -- a sanction order that
the motion was premised on Rule 37. Rule 37 was that
The second issue is an issue for sanctions. And
needed to, in essence, remedy what's currently existing.
together in terms of whether there's immediate action
certainly, that was in part and parcel of getting
that you can accelerate notice and to be heard. So I --
nature of a Rule 65 order where issues can be raised
circumstances, I felt like this one fell within the
normally one has to give advance notice. But under the
mandatory injunction. And so I certainly recognize that
it's more -- it's a combination of prohibitory and
under Rule 65, but it's in the nature of an action, and
And that's in the nature of -- it's not couched
morning. 1
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gets to go first; who gets to go last. And I recognize
get here. I'm not going to stand on formalities: who
So that's the package of things that I wanted to
Monday.
impacts our position of readiness to go to trial next
And I'm very interested in knowing whether any of this
would process the contempt if that's what we need to do.
first two sections. I'm open to thinking about how we
So I think primarily we're here today on the
we're dealing with here.
basis for things in its presence, but that's not what
So the Court can do certain things on a summary
issued here.
a show cause order, which, of course, has not been
consideration based on what is included specifically in
and that the Court is limited to making its
be there is a show cause order that the party is given,
contempt. And that the normal process on that one would
be in the nature of criminal contempt and not civil
contempt. And I had indicated that I believe this would
And then the third element was to find him in
the sanctions be made.
those and ask you to respond because of the severity of
address the question of what notice has to go along with
So sanctions may or may not -- I'll let you 1
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temporary restraining order. This is a temporary
moved under Rule 65 properly. This is essentially a
is talking defamation, and the like. They have not
was really that somebody's feelings were hurt. Somebody
necessarily a violation of this Court's order, but it
based on contempt. And the remedy was seeking not
today, Your Honor, that was based on contempt. It was
well as contempt. They provided an order, a remedy
They're sort of seeking a hodgepodge of sanctions, as
not given proper notice of what they're seeking.
of the pleadings this morning, under Rule 8, they have
based on my limited review, and literally I-40 review,
essentially what I believe they're arguing, Your Honor,
extraordinary relief under Rule 37 to compel. And
the record, this entire proceeding. They are seeking
Honor, I would like to move to dismiss orally, just for
MR. McKENZIE: As a preliminary matter, Your
I'll certainly give you that permission.
Mr. McKenzie, looks like you want to speak.
of why we're here.
So that's kind of the Court's opening statement
evidence.
in place. And I'm open-minded to what I hear about the
notice. Because of the gravity of the harm that's put
it's on short notice. But that's why I did it on short 1
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THE COURT: That's the way I read the motion.
MR. McKENZIE: But that's --
violation of the Rule 26 order.
for competitive purposes, and that that's a direct
the Court's settlement conference and the eve of trial
of discovery, and that he undertook action on the eve of
used materials that he had knowledge of solely by reason
maintained or not. But the assertion is that Mr. Rivera
assertion -- we'll wait and see whether the assertion is
prohibited its use for commercial purposes. And the
purposes other than this litigation, and expressly
prohibited the use of materials in discovery for
which is a protective order under Rule 26(c), which
that there was an order, which was entered by consent,
The violation, the way I read the motion, was
the nature of a scheduling order.
make discovery or to abide by Rule 26(f), which is in
about Rule 37(b) is Rule 37(b) deals with a failure to
to me specifically -- and the question I was raising
Mr. McKenzie, in terms of what you may want to address
THE COURT: Let me say, in that regard,
that.
of discovery. Simply put, Rule 37 does not provide for
as some kind of contempt order or some kind of violation
restraining order that is guised or at least dressed up 1
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Division V Rover
THE COURT: Again, I want to make sure both of
the fifth one he's offered -- from Mr. Rowe --
ugly words that are out there, we've got an affidavit --
affidavit from a paralegal who says that there are some
is -- and God knows, I don't know what it is -- is an
all this, in supporting their motion for whatever it
no emergency. So what's going on here, as a basis of
substantial allegations and demonstrated no immediacy or
here before in a TRO situation where they have made
alleged, Your Honor, in this motion -- and we've been
MR. McKENZIE: Well, what they've essentially
motion?
THE COURT: How did I pick it up by reading the
alleged that, Your Honor.
MR. McKENZIE: Well, they have not properly
don't believe the Court is powerless to react.
order, which I'm waiting to hear. But if there is, I
Rule 65, if, in fact, there's a violation of a court
cast as -- under Rule 26, or whether it's cast under
immediate and continuing harm, and whether or not it's
violated, was it violated in such a way as to cause
But what I'm very interested in is, was Rule 26
far as criminal contempt is concerned.
about whether we're close to being ready to proceed, as
I've already told you that I've got concerns 1
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Official Court Reporter
Division V Rover
this time, he doesn't claim that OTB, his attorney. He
evidence, what Mr. Rowe, in his fifth affidavit -- which
And then secondly, at least in the supporting
MR. McKENZIE: -- to Steve Stockstill.
THE COURT: That's part of what I want to hear.
third-party --
necessarily only accessible through discovery as to a
MR. McKENZIE: Well, first, Your Honor, it's not
court order.
need to convince me as to why that's not a violation of
specifically by consent that you'll not do that, you
through discovery, and the protective order says
purposes an e-mail that they would only have access to
false -- that they post on the Internet for commercial
or not false. But certainly aggravated, if it's
discovery and put out there with the assertion -- false
that where the posting of an e-mail that was taken from
But to the extent that what we've got here is
claims, or whatever, like that.
are ways to deal with it: amending the Complaint, adding
simply talking about something that is defamatory, there
There may be a separate way to do it. But if we're
issuing injunctions to take care of a defamatory case.
be defamatory -- I'm not generally in the role of
you understand. I make a distinction between what may 1
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Official Court Reporter
Division V Rover
that I've not really been involved in in the commercial
are the battles that you-all have been having all along
conviction beyond the truth, I'll listen to that. Those
that's true. If he goes farther and says criminal
he's claimed that he has been disbarred. If, in fact,
discovery. I'm not here talking about whether or not
a contract that Mr. Doan had access to independent of
Doan Law Firm that talks about protecting data. That's
there's a provision in the contract between OTB and the
question of whether or not he said on the Internet that
want to address most immediately today, is not the
got the Court's most immediate attention, and what I
THE COURT: What I read in the motion and what
MR. McKENZIE: Yes, sir.
ask me a question; now allow me to answer it.
THE COURT: I'm going to -- I've allowed you to
you but not to me.
would ask that the Court tell him that he can talk to
MR. McKENZIE: He can talk to you, not to me. I
THE COURT: Again, let me try to answer it.
MR. McKENZIE: So where is the emergency?
THE COURT: Now, again --
this is about.
posts by Logicbit and Francisco Rivera. That's what
just says that there are various defamatory web site 1
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Division V Rover
would suggest to you that the harm of going and posting
and could have only access to through Rule 26? And I
posted on the Internet material that he could only do
THE COURT: I think the question becomes, has he
MR. McKENZIE: Well, even then, Your Honor --
the motion.
I picked that up in the first five minutes of reading
THE COURT: I'm just telling you what I read --
MR. McKENZIE: Is it a sua sponte motion?
THE COURT: I just made it up then; right?
think they sufficiently allege that in their motion.
MR. McKENZIE: I agree, Your Honor. I don't
better attorney.
defamation and who likes who and which of you is the
want to hear about. I'm not here to talk about the
that except what he got in discovery, then that's what I
violation of a Rule 26 order, he has no basis to know
out to all the competitors each of you deal with, in
and goes out and posts e-mails to do that, and sends it
of or the confidentiality of the Doan Law Firm's data,
Internet sites to say that OTB has compromised secrecy
result of -- which your client posted on multiple
e-mail that is available only through discovery as a
What's got my attention here is if there is an
fights. 1
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Division V Rover
THE COURT: Mr. McKenzie, if there's something
addressing these things?
emergency basis on the eve of trial -- I mean --
true. Why is it that we are sitting here in an
said that, Your Honor -- let's assume all this stuff is
MR. McKENZIE: Well, how you use it. But having
possession of e-mails. The question is how you use it.
THE COURT: There's nothing wrong with
this e-mail for years.
first started unraveling. So he's had possession of
early on in this process, as in 2010, when this thing
Bates number that indicates it would have been provided
in discovery -- which, by the way, this e-mail is a
that he disclosed an e-mail that has been provided for
In terms of -- in terms of there's a suggestion
that.
haven't gotten there. There are no facts to suggest
part, in terms of everything else, Your Honor, that we
terms of all those links, in terms of the competitive
MR. McKENZIE: Well, I would say, Your Honor, in
much showing needed to talk about harm.
attorneys -- two of you -- I don't know if there's very
settlement conference, targeted towards the competitive
do, and intentionally this close to the eve of trial and
something from the discovery that he's not authorized to 1
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Official Court Reporter
Division V Rover
MR. SASSER: Your Honor, Mr. McKenzie used the
I'm going to do anything. I agree with you.
harm is something that I need to be concerned with if
speak to that. But I agree with you that irreparable
THE COURT: Well, I'm going to let the plaintiff
other than somebody saying, "I don't like this"?
Do we have any suggestion of that whatsoever,
That's the question.
MR. McKENZIE: Irreparable harm, Your Honor.
foul, or would he say take it down?
would Mr. Rivera say there's no emergency, no harm, no
was prohibited from being disclosed on the eve of trial,
was -- from the respect of Mr. Rivera, something that
to post on 1200 sites on the Internet something that
honesty -- all right, sir -- if Mr. Sasser's client were
THE COURT: Mr. McKenzie, let me ask you, in all
Where is that?
They've got to show ongoing irreparable harm by that.
is the emergency? Where is the imminency of harm?
MR. McKENZIE: My question, Your Honor, is where
is pointed at you.
here, or is it you? I suggest to you that the question
it me that ought to be asked the question why we're
the eve of the settlement conference, eve of trial, is
you've had for all this time and you turn it loose on 1
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PATRICIA JAEGER, RPR, CRR
Official Court Reporter
Division V Rover
for the record the objection is made.
There's no foundation for this document. Just
Mr. Rivera said."
document whatsoever. He just held it up: "This is what
MR. McKENZIE: There's no foundation for this
isn't it?
THE COURT: A statement by a party opponent,
MR. SASSER: Your Honor --
record. Hearsay.
MR. McKENZIE: Just a general objection for the
THE COURT: I'll let you respond later.
reported by Frank Rivera --
It says -- at the top of the same page, it says
conclusive.
That's an admission. That's it. I mean, that's
discovery."
to me, Tom Rowe gave it to yesterday, outside of
to say, "Oh, no. I got it -- Steve Stockstill gave it
That's his admission. He's not up on that witness stand
That's an admission. That ain't a suggestion.
tried in North Carolina Business Court."
e-mail that was found during discovery of a case being
Attorney General: "Included in this document, is the
Here's what Mr. Rivera told the California
word "suggestion" that it came from discovery. 1
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Official Court Reporter
Division V Rover
And again, I haven't reviewed the materials that
are.
"YouTube Private." So I don't know what the contents
it's in the affidavit, takes you to a point that says
saying it was posted. The link, at least to the extent
being posted this morning, all I have is an affidavit
THE COURT: As to what the affidavit talks about
question --
morning, here comes another one. So there's no
night, all of these sites were taken down; and then this
that -- about whether it was inadvertent. As of last
this particular defendant. And there's no question
Court's order. I mean, this is the second time from
Counterclaim stricken, because of the abuse of the
But we would like to have the Answer and
it is going to be deferred to another day, if at all.
65, Rule 37, I understand that the contempt aspects of
in the nature of a Rule 65 and a sanctions motion. Rule
short amount of time that we had available. And it is
mediation conference. So we put it together in the
written during a conference yesterday -- in the
apologize if I didn't use Rule 65. This was actually
What we're asking for today is the -- I
it through Mr. Rivera, but he's not here.
MR. SASSER: Well, I'll be happy to authenticate 1
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Official Court Reporter
Division V Rover
out yet. If week after next, two of OTB's clients fire
following reasons: the damages haven't sorted themselves
don't think that that can occur immediately. For the
are stricken, to move to a trial on damages. And I
We would like, after the Answer and Counterclaim
authenticate it before it was removed.
lot like James Doan. But obviously, I was unable to
had it. There's another voice on there that sounds a
the Internet, but it could have been more secure than we
MR. SASSER: Oh. Yes. Maybe it wasn't out on
it does tie the e-mail.
THE COURT: The title of it is suggestive that
okay, maybe it was --
was Mr. Rivera going through it and explaining well,
now after we complained of it. But the summary of it
MR. SASSER: They've actually taken that down
morning violates Rule 26 or not.
this confidence affidavit, as to what was posted this
parts of it that are not. I can't tell, based solely on
be subject to a Rule 26 protective order and there are
But there are parts of those postings that might
authentication question you raised.
postings. We'll come back in a minute to the
being the affidavit, and A through D being what are the
were in Exhibits A through F -- E being your e-mail, F 1
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Official Court Reporter
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To the extent you're not satisfied with that, because of
MR. SASSER: And he's got a Supreme Court case.
notice I've got to give before I order?
authority to do it. The question is, how much advance
THE COURT: I'm satisfied that I've got the
MR. SASSER: Yes. On this --
THE COURT: On this short of notice.
got a case that says you can.
issue mandatory relief in this context? I think he's
of your questions. One of the questions is, can you
Mr. Meyers is going to address all of your order -- all
With regard to the temporary restraining order,
version.
other voices heard on the Internet. On the YouTube
by himself. And I don't think it was him. There were
also to find out who was involved other than Mr. Rivera
the extent of the publication. We want some discovery
We also want some brief discovery to discover
address that in a minute.
Assuming that there are no more actions. I'm going to
for the ripple effect of his actions to get through.
there's going to be -- needs to be a little bit of time
And I can't do that next week if it doesn't happen. So
Mr. Rivera posted, I need the opportunity to prove that.
them because of something they read on the Internet that 1
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raises the question of what opportunity is there for us
hear that. But if that is where we are, that then
from Mr. McKenzie if he insists on going forward. I'll
taken off the calendar for Monday -- and I haven't heard
THE COURT: And so if the trial is going to be
MR. SASSER: Yes, sir.
do it once.
the Lord knows, whatever I do, I'd like to, if possible,
Doans and Rivera in terms of a go-forward basis. And
situations that create conflicts of interest between the
underlies the motion. So I don't know whether there are
was either aware of or participated in whatever
and there's been no suggestion to me that Mr. McKenzie
delay between the sanctions and trial, I don't know --
In addition to your question about having to
thoughts out loud.
THE COURT: Let me respond to what you said with
this should not have happened.
would then use that order to advise these folks that
thing to do because of the following reasons. And we
gives us the opportunity to -- and that was the wrong
adduced at the hearing, findings about what he did, and
based on the preliminary evidence -- or the evidence
that says what he did, and have some findings of fact
its age, or whatever, we could be satisfied with a TRO 1
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Official Court Reporter
Division V Rover
trial, Mr. McKenzie?
THE COURT: Do you oppose a continuance of the
Answer if they're involved in any of this stuff.
well, because we may be making a motion to strike their
would be appropriate to postpone the trial with Doan as
As far as that's concerned, we would think it
MR. SASSER: That's correct, Your Honor.
damages today.
Internet marketplace. I don't have to try the case for
need to do as far as the whole question about the
that opens the in-between ground in terms of what do we
about whether we're going to get to that or not. So
response. And then the contempt, we've already talked
have to be done today. And there can be an adequate
the question of whether to impose sanctions does not
If we don't have the trial starting on Monday,
deserves short notice.
that can be remedied, then that's something I think
occurring on the commercial marketplace on the Internet
drove me here today is to the extent that there is harm
So again, what we've got most -- the thing that
impose the sanction of striking pleadings.
Mr. McKenzie more of an opportunity to respond before I
down on an immediate basis, et cetera, and give
on an immediate basis -- to see what needs to be taken 1
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Official Court Reporter
Division V Rover
date. We also had dates go -- coming past that were
60 days after. Then we had a trial -- an actual trial
management orders where it was going to be set for trial
at least two or three times. We've had two case
MR. McKENZIE: This has been set for trial now
THE COURT: Go ahead.
continuance?
Honor will hear me about the basis for why I oppose this
didn't even hear me before you reconsidered. If Your
MR. McKENZIE: Respectfully, Your Honor, you
that I will continue the trial.
THE COURT: I just reconsidered and reaffirmed
trial --
to reconsider that. This has been scheduled for
MR. McKENZIE: I'd ask Your Honor for the record
the trial for next Monday.
THE COURT: I am, on my own order, continuing
here -- we are now over three years old on this.
MR. McKENZIE: Bring another action. We are
they want to do, I'm going to allow it.
THE COURT: Which I'm going -- if that's what
supplemental claims --
motion. They're seeking to amend their pleadings to add
I think we see just now that this is also a Rule 15
MR. McKENZIE: I absolutely do, Your Honor. And 1
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listened to the question that I asked, why your client
THE COURT: Mr. McKenzie, you have not yet
come Monday, that seems to me to be due process.
case; where if we were able to proceed and wrap this up
problems that they have that may conflict me out of this
given how difficult that they are, and given the new
to these clients. Especially, if Your Honor noted,
I beg to differ, Your Honor. That is not fair
true or not. Three years into it.
claims that they don't know -- we don't know if it's
somebody that they don't like, who has allegedly made
trade secret that doesn't even exist, and we have
absolute end when this case is nothing about more than a
this year. That was moved. So we get down to the
elected -- we had an absolute date for a trial in May of
could even depose LexisNexis. We tried -- we had
We had to move for summary judgment before we
Your Honor.
MR. McKENZIE: You're not letting me finish,
THE COURT: That is a misstatement.
MR. McKENZIE: -- or do anything --
THE COURT: That is a misstatement.
judgment --
weren't allowed to move for -- to move for summary
absolutely drop-dead dates, as Your Honor knows. We 1
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they're embarrassing to me. But at the same time, I
control these people. And if the allegations are true,
MR. McKENZIE: Your Honor, I wish I could
fairness to anyone?
can I hear a trial with all of this going on, in
with some level of dignity to it, Mr. McKenzie. And how
in the middle of a trial. We're going to try a case
THE COURT: Well -- but I'm not going to do it
new claims.
Let's do it right. But let's not get in the back door
Give him the due process to come here; show cause.
Chapter 5 thing, I'm all in favor of that, Your Honor.
make this a Rule 26 thing, or if you want to make this a
in contempt for violating your order, if you want to
MR. McKENZIE: I agree. If you want to hold him
he can't post all of this and set loose --
THE COURT: I agree he's a worthy client. But
but he's also a worthy client. I will tell you that.
been a hard client. And maybe he's a difficult client,
the blame for my client's conduct like this. This has
MR. McKENZIE: Your Honor, I'm not going to take
court. I'm not going to take it, sir.
that's happened and you want to blame it on me and the
seem to disregard that that is what's triggering all
made these postings on the Internet, first. And you 1
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lawsuit -- that really should be the subject of this
data that's in there that is the subject of this entire
specifically that data that's in there -- the client
than the actual content of the e-mail, named
only the e-mail, Your Honor, which is sort of separate
of this now of Mr. Rivera disclosing this e-mail, not
there, whatever. If Mr. -- if we make such an issue out
disclosure of -- I don't know who put this data up
claims of defamation that are based on allegedly some
of -- basically, we're talking about defamation. New
MR. McKENZIE: Because if we add new claims
what you just said?
don't go forward on Monday? I'm not sure I understand
represent them on Monday if you've got a conflict if we
THE COURT: Well, how can you continue to
them.
They no longer have -- I cannot continue to represent
Monday -- we have diverging issues -- they're split.
MR. McKENZIE: If we don't move forward on
THE COURT: Pardon me?
forward on Monday. Because if we don't, they're split.
his interest, as well as the Doans' interest, is to go
either, I have a duty to advocate for his interest. And
embarrasses me, and they don't like him, and you don't
have a duty to advocate -- even if he is a jerk and 1
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It's not necessarily just been Mr. Rivera, who is
who's been pearly white and who's been an angel in this?
production. Because in terms of the Court's order,
And I want to mention one thing about document
of their document production.
I had to do discovery without the benefit of any
New dates to do more discovery.
dates for opportunities to move for summary judgment.
entire clock should be reset. Entire clock. And new
If Your Honor is inclined to do that, then the
it? 40 months? -- and let's just start over again.
us stop this thing that's been going on for -- what is
feelings are hurt, we don't like what's being said, let
as the plaintiff is now using it, to say that my
woodshed on. But it's not necessarily an opportunity,
that is an issue for Your Honor to take him to the
mentioned in any way, and it had a competitive purpose,
way, it was learned in discovery, and then it was
probably to the fact that, if it was produced in any
Internet, and even though there's a lot of truth
aren't the ones who exposed this information to the
And the Doans have -- even though the Doans
Logicbit.
Logicbit. The Doans have a theoretical claim against
lawsuit, the trade secret -- the Doans are adverse to 1
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Mr. Sasser may have not had a claim against Mr. Rivera,
may have not had a claim against Mr. Rivera -- OTB and
MR. McKENZIE: Before last night's mediation, he
that?
THE COURT: I'm sorry? I didn't understand
sure does now.
had a claim against him before that mediation, but he
And as Mr. Sasser told me last night, he may not have
this lawsuit for 40 months for no purpose whatsoever.
guy to go forward and clear his name. He has been in
hijacked this situation, and they have not allowed this
This has been -- they've turned this and
himself.
LexisNexis, which has been seen before, or by Mr. Rivera
"attorney's eyes only" is belonging to either
some claim to "attorney's eyes only," when the
excluded from almost every single deposition because of
deleteriously in this lawsuit. Mr. Rivera has been
it's derived from those scripts. They have used that so
including -- most of it belongs to my client, because
all of which belongs to Time Matters, all of it is just
"attorney's eyes only," none of which belongs to them,
Court's orders to the tune of 16,000 pages marked
about the plaintiff in this case that has abused the
cantankerous and uncontrollable as all. We're talking 1
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a limit on it, in terms of the misuse of that. That
"attorney's eyes only," the protective order itself has
As to the question of the abuse of the
or not.
before me as to whether what they have is a trade secret
could rule on it fairly. But it has never been put
You told me later you did it because you didn't think I
secret. You decided that -- you elected not to file it.
motion for summary judgment claiming it was not a trade
judgment. I expressly gave you the right to file a
from the Court's perspective as to -- not the summary
that out. But again, I want you to understand, however,
know the emotion is running high. I want you to get all
appreciate -- and I've given you the liberty -- and I
I will simply say this, Mr. McKenzie. I
there.
THE COURT: No. Rule 48 keeps us from going
mediation, I have a couple I can hand up as well.
MR. SASSER: If we get into comments relating to
there is certainly no basis against Logicbit.
see at the end of this there is no trade secret and
months with no basis whatsoever. And Your Honor will
going on. Because they held this suit hostage for
And that right there, Your Honor, is what's
as Mr. Sasser told me last night, but they sure do now. 1
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Internet service provider, an IT provider, and has
gone out and breached fundamental duties owned by an
out and says, "Let me prove to you how my competitor has
trial, on the eve of the settlement conference, and goes
time -- that he goes to the Internet on the eve of
that -- admittedly, he's had it for a long period of
you've got is an e-mail that was produced in discovery
What I'm most concerned about is that what
lot that you can say.
motion solely on the basis of that, I think you've got a
That's been around. And if they tried to make a Rule 15
disbarred, whether or not -- any of that is trade libel.
not he's been a convicted felon, whether or not
that was out there generally, the stuff about whether or
bring forward and interject something of that nature
the extent that all they were trying to do now was to
I've heard about it indirectly; never directly. And to
something that in the background has been out there --
and defamatory trade libel, various other things, is
Mr. McKenzie, that the whole question about defamation
situation -- and it's not that -- it's my understanding,
conference, on the eve of the trial, we've got a
situation of -- where on the eve of the settlement
And where we are right now is we've got a
motion has never been put before me. 1
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am absolutely hacked off of the fact that we are going
So we do -- I do have respect for this Court. I
I told them to get the heck out of here.
there and they disrespected you, I got in their face and
And you will notice, the last time we were in
the fire. That's what a Superior Court Judge does.
not to. I have no problem with you holding his feet to
and we can correct the record on some things. I elect
forward on that issue, Your Honor. And I can go back
MR. McKENZIE: I have no problem with going
THE COURT: -- and you start all over different.
forward on that issue.
MR. McKENZIE: I have no problem with going
out --
issues, all sorts of things, that lets some people
THE COURT: But there are certainly other
MR. McKENZIE: Let's go forward on that issue.
day before trial. I'm not the one that created that.
Now, I'm not the one that created that issue the
violated my court order?
used discovery materials for competitive purposes and
statement itself is false. But the question is, has he
whether it is accurate or not. They claim that that
Now, I don't even have to get to the question of
breached confidentiality." 1
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That's what they came in here -- going into Wake County
end of the day, this is about what the trade secret is.
Honor, because they do not have a trade secret. At the
MR. McKENZIE: That's what they want, Your
strike an Answer, that affects the trial, doesn't it?
to whether or not I should strike an Answer. And if I
open mind, but I've got to take a very serious look as
honestly have to take a very serious look -- I've got an
Court's order would cause concern. In light of that, I
Court's order, and said any further violations of the
had concern about the ability of them to comply with the
directed at the clients and not at you. But I said I
And I made a point -- as you and I discussed, it was
my error was more targeted at Mr. Doan than Mr. Rivera.
went back and read the order before, while, admittedly,
not the first time that we had a discovery issue. And I
have to look seriously -- remember, again, that this is
that I think it's tied into the trial. I do think I
THE COURT: Mr. McKenzie, here is the reason
not the grant.
Mr. Rivera. That's between you and Mr. Rivera. It is
Well, Your Honor, that's between you and
violated the Court's order.
case that they have to add a new claim is that they
into a fourth year of this litigation. And the best 1
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remedy here is one for contempt. He's violated the
you -- if Your Honor wants to admonish him, I think the
MR. McKENZIE: Your Honor, I'd simply ask that
stricken. Do you want time to respond, or not?
believe that you are at risk of having your Answer
THE COURT: Well, I'll tell you right now, I
all of this is about.
course I don't. But that's what they want. That's what
MR. McKENZIE: Absolutely not, Your Honor. Of
with your Answer stricken?
THE COURT: You want to go to trial on Monday
got my client on the plane with less than 48 hours --
We've done everything Your Honor has requested of us. I
will keep this trial from moving forward on Monday.
hold me hostage because of that. There is nothing that
hold either one of us hostage because of that. Don't
MR. McKENZIE: And what I want to say is, don't
October, Mr. McKenzie. And you're not either.
the one that created the circumstances on the 1st of
they can prove they have a trade secret. But I'm not
an issue is going to be interesting, as well as whether
THE COURT: And if you'll remember, I told you
None of which was true.
selling a parasitic version; that they took everything.
Courthouse saying they were going to -- they were 1
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there are counterclaims that are affirmative defenses,
I, frankly, would want to consider, Mr. McKenzie, is
THE COURT: I consider it -- one of the things
or anybody else.
to enable this client and his conduct towards this Court
nothing that Sands Anderson, or anybody else, has done
anything to do with that is completely false. There's
reprehensible. And any suggestion that his counsel had
record. But what he's done is -- if he's done it -- is
you. I probably shouldn't have stated that on the
frankly, if the allegations are true, I wouldn't blame
contempt, we'll do so. And if Your Honor -- quite
And if Your Honor wants to hold them in
germane to what's supposed to happen on Monday.
about it, that doesn't necessarily affect the issues
that kind of stuff is, we don't like it, they're lying
defamation? And then after they've submitted it and all
It's all about, do we have trade rights? Do we have a
other distractions -- with their supporting documents.
the contempt. We make it about that -- not all these
conclusory fashion. And all of this, we make it about
this to be something OTB has completely jumped over in a
point. He is entitled to rights of counsel. I assume
for Your Honor to read him his rights to counsel on that
order, if the allegations are true. I'm perfectly happy 1
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going on there? I just saw this stuff about you on the
been hurt. It seems to me, my guy is going, "What's
potential customer in this entire industry. People have
is stuff that went directly to our customers and every
75 claim just based on what was on the Internet. This
MR. SASSER: Your Honor, my client has a Chapter
wait.
that seems to me what's going on. Everything else can
Court to make it between you and Mr. Rivera, because
MR. McKENZIE: Well, Your Honor, I urge the
genuinely trying to do the right thing.
try this case correctly in the meantime. And I'm
created an environment that makes it very difficult to
your client has let loose on the 1st of October has
But I'm just very concerned that the circumstances that
that's where we were. And I agree we need to get it on.
to prove a trade secret before, but there wasn't. So
there wasn't more motion practice attacking the ability
say -- and I told you before, I wasn't exactly sure why
I appreciate where you're coming from as to
is here.
trade secret. I don't know what the right thing to do
other than the defense that they can't prove it's a
part. It's possible that I can strike every defense
their responses -- I can strike an Answer in whole or in 1
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if she's involved. So I'd like the opportunity to do
this case. And there may be a third defendant to add,
Doans may get their -- some sanctions against them in
there may be other defendants. There may be -- the
Frank Rivera. Because when we amend our pleadings,
involved, if Yuying Zhang was involved, or if it's just
can be imaged; so that we can find out if the Doans were
I want them to produce them to the Court so that they
preserve evidence. And that is, I want their laptops.
to issue, along with a TRO, an order requiring them to
discovery on that. And I'd ask the Court at this point
this, we would like the opportunity to take some
With regard to the issue of who was involved in
think you're in a good opportunity to do so.
so far, and based on the violations of court order, I
MR. SASSER: Your Honor, based on what he's done
anitdefamatory TRO.
overreaching when you're asking me to give an
THE COURT: I'm not so sure you're not
reason for them to be talking about us.
client: good, bad, or otherwise. I mean, there's no
them to be ordered not to say a doggone thing about my
them ordered to clean up this business. I'd also like
Well, here's what I want in a TRO. I would like
Internet." 1
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they want it, we have feared, and Judge Tennille feared,
They wanted his laptop from day one. And the reason why
this has been before this Court now for 40 plus months.
In terms of this laptop business, Your Honor,
claim.
entertain that. But again, that's a whole separate
In terms of -- so I would ask Your Honor to not
enough to enjoin him.
got to show an ongoing harm, irreparable harm, ongoing
evidence before this Court to say it's false -- you've
communication is false. Not yet. We don't have any
demonstrating that the evidence -- that the
position in, because we don't have any evidence
evidence demonstrating the same -- which we're not in a
Now, to retract comments that are false after
happening.
to say nice things about OTB. That just can't be
So this Court cannot enter an order telling Mr. Rivera
bring a new case. Strike this. Something like that.
negative speech. If defamation is continuing harm,
This Court can't enter a prior restraint on
that?
MR. McKENZIE: Your Honor, may I respond to
TRO.
all of that, as well, and have it all wrapped up in the 1
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going to be now in a defamation case is whether the
this guy going out and being naughty. And the issue is
the matter. They've got images galore, it appears, of
overreaching. It's unnecessary. Get to the heart of
So in the same way, the laptop is just
give it to you."
BKExpress, they're "Absolutely not. We don't want to
laptop and Time Matters 9.0 on another laptop with
Your Honor, BKExpress -- or Time Matters 9.0 on one
trade secret. In the same way, when I asked for trial,
laptops, we're going exactly to what they claim as their
same way, Judge Tennille thought that if we go to the
So that's just an overreaching thing. In the
exchanges.
attorney/client privilege data probably from e-mail
which would capture all sorts of other things, including
within that -- the hard drive that they want to image,
for defamation. They're not going to need anything more
them, they have what they need. That's the publication
produced these things on the Internet and distributed
exhibit, if what they say is true, that Mr. Rivera
product. They have -- they've already produced an
which is a very complicated and sophisticated software
he builds his source code, how he creates HoudiniEsq,
is that it has -- that's how he builds his products, how 1
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can put this in a TRO, an order to show cause, or
whether somebody is going to be held in contempt. You
relief, whether there's going to be an Answer stricken,
whether there's going to be preliminary injunctive
come back for further hearing in ten days to determine
granted. Along with the opportunity, if we want, to
And we'd ask that that be part of the relief
just this week.
Ms. Zhang -- about their involvement and what happened
depose all three of them -- Mr. Doan, Mr. Rivera, and
another defendant. I'd like to have the opportunity to
probably in this up to her ears, and so she needs to be
without consulting his fiancee, and I think she's
Internet this morning. I don't think he does anything
in discussions and because of what we saw on the
Doans may be involved in this because of things we heard
this. But we suspect that Mr. Doan may be -- one of the
Court do it in camera to see who all is involved in
fact, I'll be glad to have an outside consultant or the
portion of their laptop other than their e-mail. In
obtaining their e-mails -- and I don't need to see any
MR. SASSER: Your Honor, in addition to
question of overreaching and grabbing their laptops.
true. So that seems to me to be irrelevant to the
issues are true or not -- whether the assertions are 1
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obviously, I'm concerned about the Court's inherent
MR. McKENZIE: Specifically, Your Honor,
considered to be a violation of a protective order.
what may be considered to be defamatory and what may be
again, there's a distinction I make very clearly between
occurrence of the decision made in the last -- and
make sure that we've got access to whatever was the
I understood his request to be limited to, we want to
well-taken in terms of predicting materials that -- and
anything at all about the laptops, your point is
THE COURT: I will say, if I were to consider
effect some of the relief of the question.
tell you just which tools are necessary to be able to
MR. SASSER: If Mr. McKenzie -- we'll be glad to
get past the immediacy.
here that I'd like to better fully elaborate, once we
some things, he can't do. But there are some issues
has done a very effective job on very short notice -- on
THE COURT: I can put it this way. Mr. McKenzie
injunction. But Mr. Meyers --
here. It could be in the form of a preliminary
parte. I mean, this is a hearing in which everybody is
than ten days at this stage, although -- this is not ex
obviously, you can't order somebody to do something more
however the Court's creativity is working here. But, 1
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goodness.
you meet Ms. Zhang as a defendant. And as a client. My
MR. McKENZIE: -- Mr. Rivera is tough, wait till
THE COURT: Let me --
think --
discovery, we're adding new parties. And if you
we're handing over laptops, we're doing additional
expedition where it just gets out of control, where
should not turn -- or divulge into some kind of fishing
doesn't, you know, affect his interest at all. This
was up and published on the Internet? I mean, that
involved in publishing the fact that his clients' data
that Mr. Doan was involved in the -- why would he be
I mean, we don't have a scintilla of evidence to suggest
the sense of the laptops, but going after other parties.
Mr. Sasser is overreaching tremendously. Not only in
further discovery, Your Honor, I respectfully think that
In terms of the additional claims, all this
we're not doing that.
issues, quite frankly. And I want to make sure that
MR. McKENZIE: Actually, they're conflating the
THE COURT: That's a separate --
defamation and everything else --
violated the Court's order. All this question about
authority today, and my client -- whether or not he's 1
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THE COURT: Don't know where I am on that.
control. I feel like it already has.
to lose on that. But not let this thing spin out of
continuance thing. I'm going to accept that. I'm going
thing degenerate -- I know that I'm losing on the
So I would ask that Your Honor just not let this
defamation.
the kind that they're talking about, which is, per se,
things -- the damages are presumed. Especially if it's
case law -- I've done a couple of defenses on those
into another case where defamation, as I remember the
we're talking about no damages. None. And then we get
his Answer and just focusing on the case that's at hand,
about a situation -- if we move forward with striking
But even if you did, Your Honor, you're talking
which I ask that Your Honor not do.
terms of if it was violative, of striking his Answer,
under a Rule 15 analysis, as well as -- as well as, in
defamatory. That should be the narrow issue, at least
he did this knucklehead move and it may have been
mediation not telling his attorney or anybody else that
allegations are true -- one knucklehead on the eve of
narrow issue of one knucklehead -- assuming that the
do not think is necessary. Seems like we've got a
So that's the kind of thing that I just frankly 1
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could -- we would also be happy with a TRO relief making
But Your Honor, again, as Mr. Sasser said, if we
order to restore the status quo to where it was.
And it's really mandatory relief that we need in
He's now gone out there and upset the apple cart.
Mr. Rivera decided to post all this on the Internet.
at least, on September 30th, a few days ago, before
litigation was what was existing, as far as we know now
And the issue is here, the status quo pending
status quo pending the litigation.
of apparent necessity for the purpose of restoring the
issue on an ex parte application except when in the case
injunction -- that usually mandatory injunctions won't
In there it talks about the fact the mandatory
N.C. 88.
237 N.C. 88, where it talks about -- I'm sorry. 237
Carolina Supreme Court, Seaboard v. Atlantic Coastline,
relief. There is a case from the Supreme Court -- North
power to enter mandatory temporary restraining order
And turning first to whether the Court has the
notes -- your questions posed to us by e-mail today.
address the -- I just wanted to address kind of the
MR. MEYERS: Well, Your Honor, just trying to
address?
Mr. Meyers, the points that you wanted to 1
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already said in this very case, in your sanctions order,
Court. You know. As you mentioned, Your Honor, you've
it under that rule, as well as the inherent power of the
37(b) to use the whole panoply of sanctions available to
believe that the Court has that authority both under
inherent power of the Court together. We obviously
And I'll kind of address the 37(b) and the
you had.
So Your Honor, that -- that's the TRO question
seriously when it happened.
that's why we're here today and why we took this so
need for the urgency, that's the need for the immediacy,
right that apple cart now. Not later. And that's the
out to everybody. And we need something to be able to
customers. This is their current customers. It's gone
that's -- we talked about harm? This is their potential
bankruptcy firms. This is OTB's business. And
Mr. Rowe's affidavit said, to thousands and thousands of
But the issue is, this has gone out there, as
That's another way to do it.
injunction hearing later on about mandatory relief.
then if we need -- then we can have a preliminary
can tell everybody what has actually happened here. And
we can respond immediately on the Internet. So that we
findings of what had happened -- what's happened so that 1
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Your Honor, that's what we ask you to do.
authority to right the wrong that was done here. And
and under 37, the Court has all the powers -- has the
So I think that all of those, both under 41(b)
the parties for contempt."
circumstances from dealing with attorneys to punishing
"Inherent powers cover a wide range of
N.C. 84.
talks about -- Alamance County Court Facilities, 329
And the related case, I think, cited in Beard
justice."
reasonably necessary for the proper administration of
Court has the authority to do all things that are
There, it says, "Through its inherent power, the
N.C. 126.
good quote from the case Beard v. N.C. State Bar, 320
Rule 37. They -- and I think there's a good -- a really
just -- that the -- about why -- the power granted in
As for -- there are some other cases about
further comply with the Court's directives.
This is, you know -- and he had failed to
That's where we are.
this Court's directives."
issue, should the defendants fail further to comply with
"...provided, however, that the Court will revisit this 1
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cases beforehand. Those are probably dealing with the
those cases. Didn't have the privilege of reading those
mean, I have a feeling, Your Honor -- I haven't read
In terms of the cases that Mr. Meyers cited -- I
quo.
know; false, we don't know -- and that's been the status
badmouthing or saying other things -- truthful, we don't
several months. So that -- the status quo is Mr. Rivera
been up for over a year. So to -- or for several,
One of the blogs that they mentioned is -- has
one it's in. It's in one of today's filings.
mentioned that I believe is in -- and I don't know which
fact, we're talking about one of the blogs that they
So we're at status quo, as far as I'm concerned. In
about Your Honor. It's been going on this whole time.
popping off about Mr. Sasser; he's been popping off
popping off throughout this whole lawsuit. He's been
leaving out, Your Honor, is that Mr. Rivera has been
Restoring status quo -- one of the things OTB is
briefly?
MR. McKENZIE: Your Honor, if I may respond
address those.
e-mail. If there's other ones I've missed, I'm happy to
addressed a different question that you had in your
If there's any other question -- I think I've 1
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failure to make discovery.
refer to 26 in general. It refers to 26(f) and the
doesn't refer to 26(c). It refers to 26(f). It doesn't
It is peculiar the way Rule 37 is worded. It
between the lines. I look at black and white lines.
import, and therefore I don't look at a lot of stuff in
the finding of contempt to be a matter of very serious
the imposition of sanctions, the striking of pleadings,
et cetera, then I think Rule 37 is clear. I consider
discovery or violation of the case management order,
the extent we're talking about the failure to make
Again, the reason I raise caution about 37, to
inherent with the Court under Rule 41.
THE COURT: They deal with the authority is
question --
MR. McKENZIE: Well, it seems to me the
the pleadings and the imposition of sanctions.
don't deal with the State Bar. They deal with striking
spelled S-W-E-A-T-T -- 146 N.C. App. 351. And they
Smith, 132 N.C. App. 569; and Patterson v. Sweatt --
Company, which is 320 N.C. 669; Cloer -- C-L-O-E-R -- v.
want to look at Daniels v. Montgomery Mutual Insurance
THE COURT: Well, I will tell you that you may
Court to discipline attorneys with the State Bar.
power of the concurrent jurisdiction of the Superior 1
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They say that the whole question about whether
is to say they didn't protect your information.
fundamental thing that you can hurt an IT provider with,
is, and accuses of what is in essence the most
is what the e-mail says, here is what the import of it
tell you about an e-mail that I got in discovery, this
calculated -- as to go to an audience, to say, Let me
1st of October, was that Mr. Rivera went out and
different and what happened for the first time on the
What's different, and what I understand was
some time.
may be what you're talking about has been going on for
That's a matter that's been going on. And that
Mr. Allen when they weren't authorized to do it.
and took our material; because they worked with
OTB played above board, because we believe they came in
that goes along with that. The fact that we don't think
he's been disbarred for 20 years; and all this stuff
claims to be a lawyer when he's not a lawyer anymore;
the fact that Mr. McNeill shouldn't be trusted; he
What's different is not a general posting about
the pleadings.
understand, Mr. McKenzie. I'll tell you what I read in
so -- and where I consider -- again, let me make sure I
This is not a failure to make discovery, and 1
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I'm not inclined to order a prior restraint type TRO.
That's not where I am. I may or may not have authority.
about Mr. McNeill and whether he's a lawyer or not.
other words, I'm not going to get into a TRO talking
limited to the question -- solely -- of the e-mail -- in
know what is still up on the Internet that's solely
So I think right now the question becomes, do we
do on a more study basis than a hip-shooting basis.
going to exercise that authority is one that I prefer to
authority under Rule 41(b). Now, whether or not I'm
authority generally, and I do believe I have the
THE COURT: I do believe I have the inherent
applies at all.
getting into Rule 15. And I do not think Rule 37
about today. And that's why I'm a little confused we're
that's where -- I mean -- I agree. That's what it's all
MR. McKENZIE: I would agree, Your Honor. And
using. That's what's clear.
he used an item from discovery that he's prohibited from
whether or not that posting could be made solely because
But the thing that I'm concerned about is
client and theirs.
issue that is probably a factual dispute between your
security or whether it was not security, that that's an
that's right or wrong, as to whether it was -- had 1
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Because --
Anybody who participated in the publication of that?
MR. McKENZIE: So anybody -- let me make sure.
made up. It's an order that was in there by consent.
violation of the Court's order. It's not an order I
But to do that. Because that's just straight-out a
the decision to do that. Not the general defamation.
people -- I am interested in knowing who participated in
and whether or not he's in complicit with some other
by the protective order that Mr. Rivera decided to use,
fact, there was an e-mail that was protected -- governed
Mr. McKenzie, I need for you to understand that if, in
we're getting to the point of where -- and frankly,
is that we're doing. And I also, to the extent -- if
agree with you that we need to put parameters on what it
general culture of discovery, and stuff like this, I
Then the question becomes, if we get into the
we narrowed down the issue to that.
take that down or respond to it? That, to me -- I think
in the nature of the appropriate corrective activity to
this case? How much of that is out there? And what is
prove because of this e-mail that I got in discovery in
of the information as to the Doan Law Firm that I can
there as it relates to there's been a breach of security
The question becomes, do we know what's out 1
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as the settlement judge separate. We haven't talked
to keep my function as the trial judge and his function
understand, Judge Jolly and I have gone at great lengths
I'm not going -- I have no idea -- I want you-all to
about whether or not Mr. McNeill has been disbarred.
done exactly that. I'm not going off on the question
preliminary -- at least a prima facie showing that he's
discovery for commercial reasons. To me, there's been a
have a protective order that says you will not use
eyes. All right? From the standpoint of you had -- you
appropriate action. I'm looking at it from the Court's
out that you participated in it, I would take
THE COURT: You know, Mr. McKenzie, if I find
Mr. Rivera?
first on the hook of the court order? Was it
contributory liability theory, but who did it? Who is
MR. McKENZIE: Isn't the ultimate question not a
eyes of your profession.
looking at that from the eyes of the Court. Not the
THE COURT: In violation of a court order. I'm
MR. McKENZIE: But ultimately --
"Let's go ahead and do this and let's stick to it"?
THE COURT: I mean, who made up their mind,
MR. McKENZIE: Or the decision to do it. Right.
THE COURT: Or the decision to do it. 1
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pleadings. And I did not do it, because I had a concern
Mr. Sasser asked me at that time to strike the
time when I talked about sanctions, whatever.
am very concerned, just like I was concerned the last
Even if it was an unwise move on your client's part, I
it -- and I'm being very cautious here, Mr. McKenzie.
And so I don't know whether I'm going to try
to do something to get Mr. Rivera's attention.
should be stricken or modified as a sanction. I've got
raises the question of whether or not the pleadings
order and dealing with the issue -- and that itself
put in place the 1st of October dealing with the Court's
But I do believe that circumstances that were
nowhere close to being ready. All right?
I've got to go through a Rule 15 analysis, and I'm
amending the Complaint to bring a defamation action,
whether or not then there is a separate question of
Now, to the extent we want to get to discovery,
court order. If it has occurred.
very concerned that there's been a second violation of a
That was my source of information. And so -- but I am
because each of you talked to my law clerk yesterday.
said yesterday. I knew about the situation coming up,
record. I do not know -- don't want to know -- what was
about what's said in the courtroom here except on the 1
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point in time no evidentiary demonstration that anybody
I've come to the proposition that there has been at this
I think we're clear about the fact -- at least,
apologize. Mr. Rivera.
THE COURT: Did I say "McKenzie"? If I did, I
MR. McKENZIE: Not that I've unleashed?
THE COURT: Yes.
MR. McKENZIE: That Mr. Rivera has unleashed?
THE COURT: Pardon?
MR. McKENZIE: That I've unleashed?
appropriate.
continuance something that I need to -- that I think is
unleashed a set of circumstances that makes a
But I think you've unleashed -- your client has
Court's perspective, not Mr. Sasser over Mr. Rivera.
not crippling reflection. That's why it's from the
to do that under the crucible of considered reflection,
that they can't prove and you can defend this. I want
still left with their burden of proving the trade secret
it may very well be I can strike pleadings, and they're
of mine. So as we're talking about striking pleadings,
secret was a concern of mine, and it remains a concern
relief without having to prove that they had a trade
related. But ultimately to give someone trade secret
about the fact that you had matters that were discovery 1
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asked, in terms of discovery, amendments, and all that.
going all the way with Mr. Sasser, in terms of what he's
get to the bottom of that, that doesn't mean that I'm
when I talk about I may want to put a continuance in to
THE COURT: And I'm open-minded in terms of --
disputing with you on that. But what --
that's obvious. That's correct, Your Honor. I'm not
MR. McKENZIE: I think, as a matter of law,
than contempt.
question implicit in the sanctions even if it's lesser
THE COURT: And I think there's a willfulness
analysis. We also have, though, Your Honor --
willfully trespassed on this Court in a contempt
again. And then we have the issue of whether they
or not these people have trespassed upon this Court
One, we've got the issue of obviously addressing whether
that there are two things that are ongoing right now.
MR. McKENZIE: What I would say, Your Honor, is
communication.
me that that rises pretty close to a level of self-
and the web site is maintained by Logicbit, it seems to
name referencing discovery that only he would know about
to me that a posting on the web page under Mr. Rivera's
in terms of the authentication. But it certainly seems
other than Mr. Rivera -- and I've got to think through 1
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actually remaining up.
we don't have anything of it actually being down -- of
we do is -- we do have evidence of it once being up, but
an ongoing harm? If it's actually down? I mean, what
So as a matter of a Rule 65 analysis, do we have
he pulled that stuff down.
record. And this issue -- then my understanding is that
client, and I said something that I can't say on the
to me right then for the first time. And I looked at my
this -- we were at this mediation for 15 hours. It came
circumstances. My understanding was yesterday during
make that representation to the Court, given these
the materials are off the Internet. I'm not going to
haven't noticed any representation from me stating that
I mean, the only thing -- no. And not to my -- I also
MR. McKENZIE: Not to my knowledge, Your Honor.
it hasn't been complained about."
He's been violating the protective order all along and
taking something from the discovery and violated it.
once say, "Your Honor, this is not new. He's been
they've been doing all this. But I haven't heard you
told me that this defamation has been going on and
there's been -- and perhaps you can tell me -- you've
But the question right now, in terms of whether
I've got issues that are on multiple planes. 1
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Now, to the extent you can tell me it's down --
and only to that, then the Court needs to do something.
been violated, and there's statements made tied directly
matter that was protected by the protective order that's
out there and there was a posting that dealt with a
But I do think, from the standpoint of if it's
part of that sort of order.
loves them and really hates Rivera. I don't want any
seen, and the Court wants to hereby declare he really
seen, and Frank Rivera is the worst person I've ever
Rob McNeill are the most wonderful people I've ever
talking about writing an order that I think Tom Rowe and
defamation. I'm not talking about all this. I'm not
But I'm not talking about the whole course of
the right thing to do.
down the middle as a neutral referee. I'm looking for
And again, I'm trying to call this one straight
what is the corrective measure that's appropriate to do?
longer on the Internet; and with it having been there,
not be used under Rule 26, and get where that's no
posting related to that e-mail, which is -- which could
want to look at is, what do we need to do to get a
narrow issue that I want to look at. The narrow issue I
just a moment. Let's look -- in order to find the
THE COURT: Let's get to a separate issue for 1
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what's out there. We've got to prove to the Court it's
MR. SASSER: Your Honor, we're referring to
bit.
which is notice of hearing; preliminary hearing. That
not go the contempt route until we do it by the book,
THE COURT: But I can tell you right now, I will
me say I like the contempt part.
and hold him in contempt. I hope Your Honor is hearing
strike his Complaint, the inherent powers of the Court,
ultimately the issue Your Honor has, it seems to me, to
MR. McKENZIE: Well, I agree. I think that's
not if I'm going to do.
with him, and I'm only considering what I'm going to do,
for commercial reasons, I'm not in the least bit happy
that's his sole source of information, and he used that
an e-mail that was subject to the protective order, and
Mr. Rivera -- he needs to understand that if he's posted
THE COURT: Because I want you to know, for
MR. SASSER: Your Honor, we --
straight down the middle.
and amended pleadings, and all that. Straight down --
that narrow issue before we get into all this discovery
terms of restorative activity. I'd like to talk about
down -- then we get into the question of what do I do in
or perhaps I can just simply order that it has to be 1
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come from that. But there is an e-mail from Mr. Rowe
conclude that, Your Honor. I mean, that logic doesn't
MR. SASSER: There's no basis for you to
e-mail that's protected by the claim?
a breach of the Doans' deal, is necessarily tied to that
Internet without protection, that therefore constituted
posted something out on a commercial web site on the
that says that the sole basis for him to claim that you
give me your -- the summary of your logical deduction
that you put forward to say what you said so far. But
issue at all about the authentication of the evidence
I'm going to make sure that we don't have any
right thing. I'd like to think they are co-existent.
the Court of Appeals would consider to have been the
right thing and I'm interested in doing something that
issues are the same. But I'm interested in doing the
to the factual question. I'm interested in -- these
THE COURT: All right. First of all, let me get
to be a bit of an issue.
publication and his use of that e-mail. So that's going
there. But it's all stuff that came from his
actually quotes the e-mail or flashes that e-mail up
stuff was protected or not. Not every one of his posts
off, and then he goes on to what we did, whether our
an intrigue issue. He cites the e-mail, then he goes 1
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way.
the statement that he couldn't have gotten it any other
got it through discovery in the case. But you've made
posting -- assuming that there is a posting -- that he
mean, I agree. He made the statement in his own
THE COURT: In terms of your assertion that -- I
MR. SASSER: Right.
THE COURT: I saw Mr. Rivera's quote.
MR. SASSER: The quote that Mr. Rivera --
Is that a statement Mr. Sasser made?
that e-mail, et cetera, is that in Mr. Rowe's affidavit?
would not be accessible except through someone having
THE COURT: And the statement you made that they
authentication I need. I mean, he made that admission.
through discovery in this case." That's all the
through discovery in this case. And he says, "I got it
guy's e-mails or unless they got one of those e-mails
those hyperlinks unless they hacked into one of those
MR. SASSER: -- hyperlinks. Nobody could see
THE COURT: Links.
of Steve Stockstill. And it had on it --
MR. SASSER: And it was to a fella by the name
seal.
THE COURT: That's Exhibit E that's filed under
who is -- 1
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THE COURT: You may approach.
MR. McKENZIE: Yes, I have, Your Honor.
seen this before.
language for the retraction. I know Mr. McKenzie has
looking for, one is a retraction. And I have proposed
With regard to the mandatory activities we're
in discovery.
MR. SASSER: He posted the one that we produced
THE COURT: Which one did he post?
admission.
internally. So we knew that before we found his
in discovery with the OTB Bates number is the one we got
internal, it would say TLR. So the version we produced
[email protected]. But if it was something that was
gotten it from Steve Stockstill, it would have said
IT person figured out. That if it had been -- if he had
MR. SASSER: That's something, Your Honor, our
what that means?
would say Tom Rowe; other times, it says TLR. Tell me
you're talking about -- if you have certain ways, it
THE COURT: So what is all this, in terms of
them.
hacked it. Those are the only ways he could have gotten
Mr. Stockstill or from Mr. Rowe. Or he could have
MR. SASSER: He could have got it from 1
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already concerned we had 50 issues I was supposed to
THE COURT: Well, I can tell you right now I was
claim.
statements to our customers, also to be a Chapter 75
But that would seem to be -- in addition to the
have to go to California to assert something like that.
we have standing under those circumstances, whether we
statements to the California Attorney General, whether
there is some sort of civil action permitted for false
We have not researched the issue as to whether
my existing Chapter 75 claim.
75 too. It may be this is just additional damages for
Everyone keeps talking about defamation. It's Chapter
One other thing about the supplemental pleading.
injunction.
a Rule 15 issue, a contempt hearing, or a preliminary
place, and maybe setting a schedule for an issue -- for
further hearing and requiring that certain things take
cause, whether it is combined, putting this on for a
sort of order, whether it's a TRO or an order to show
And then I guess what we're looking for is some
But that's what we would propose.
particular language.
determine from him whether he has any objections to that
MR. SASSER: I'm not sure -- you can ask to 1
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parties, and do all this, and get this case out of
the issue of I'd like to bring in new claims, multiple
an existing Chapter 75 claim rings more true to me than
assertion that these are additional facts that go into
contained notebook. And I am -- I am -- I have -- the
terms of that, I'm trying to keep this within the
THE COURT: Well, I can tell you right now, in
75, all this other kind of stuff, when we --
California asserting certain California claims, Chapter
control. Now we're talking about going out to
Again, Your Honor, we're spiraling out of
that.
MR. McKENZIE: Scott, I'd like to hear about
and how many he ended up with, so --
experience with me in terms of how many he started with
THE COURT: Mr. Meyers has already had one
which I had --
MR. McKENZIE: Well -- yeah. I mean, that --
sheet.
THE COURT: I was just talking about the issues
76 pages of jury instructions. I mean --
exactly, is that, again -- there wasn't 50. It was like
MR. McKENZIE: Your Honor, that's my concern
Yes, sir, Mr. McKenzie?
submit to the jury. I'm not interested in more than 75. 1
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will give serious consideration as to whether the way to
THE COURT: So you'll understand, too, is that I
control in this case.
remedy for that. That seems to me to be where we can
I'm going to lose that. To me, the issue, there's a
My contention is, I'm trying to get to trial on Monday.
to answer the question, "Has it changed the landscape?"
MR. McKENZIE: To me, the issue -- I don't want
try not to make a volcano out of it.
THE COURT: I'm not trying to -- I'm going to
It seems -- well, I believe that --
MR. McKENZIE: I'm not denying that, Your Honor.
nature of the landscape.
the 1st of October, which I do believe changed the
circumstances that you didn't create but were created on
some -- so I'm just going to have to deal with
pocketbook. And I'm not unmindful of that. But at
of your heart as opposed to the fatness of your
appears to be that you're doing it out of the goodness
ask you to answer this question. But every indication
well, you're fighting on short notice. I'm not going to
compliment -- is that you're fighting hard, fighting
Mr. McKenzie -- and I want to pay you a professional
And I -- you know, I fully recognize,
issue. 1
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when the case is tried, that all parties would feel as
I've been very sensitive that, to the extent possible,
involved in expressions of opinions, et cetera. And
indirectly about -- that several of us have been
And so the point of all that is, I am aware
changed the landscape here.
going to take the responsibility for being the one that
of control. But by the same token, the Court is not
And I'm not interested in making it spiral even more out
THE COURT: So this is not at all a usual case.
he's ever done it.
MR. McKENZIE: He says it's only the second time
going to happen very frequently.
got the Court to do a free mediation, because it ain't
certainly don't want you-all to advertise that you-all
Talking about all this sort of routine like this. So I
your client couldn't pay a $36-thousand sanction.
would be very unusual, but I was mindful of the fact
without paying for him. And it's not something that
the very best mediators in the state of North Carolina
hope everyone appreciates the fact that you got one of
met with Judge Jolly till almost midnight last night. I
certainly have great concern now, recognizing that you
reasons that -- I had great concern beforehand, I
handle the contempt, in light of -- I mean, one of the 1
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I'm going to try this case -- if anybody is going to try
THE COURT: But I also consider -- in fact, if
MR. McKENZIE: Your Honor --
due process clause of the constitution is applicable.
contempt is a matter where you play by the book and the
going to go on that. But I do consider that criminal
simply may make it returnable. I don't know where I'm
could prosecute the contempt show cause, but I just
THE COURT: It may very well be that Mr. Sasser
MR. McKENZIE: Either one.
to another judge.
THE COURT: Either that. Or make it returnable
attorney.
approach, that would be the preference of his present
I would actually ask Your Honor, if that is your
in this courtroom that have not been on the record. And
point, Your Honor, given some of the things we've seen
MR. McKENZIE: And I think you make an excellent
authority of the Superior Court Division.
That is a procedure that is recognized by the
attorney to prosecute it, not me.
contempt route, I may simply refer it to the district
not that's possible. So if I decide to go to the
best they could do. And frankly, I wonder whether or
if they got a neutral person on the bench who did the 1
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This is the business you've got as to you and John
THE COURT: Again, this is none of my business.
the issues, get them out of them, it seems to me --
So my concern is, is there a way to bifurcate
another year.
stuck in litigation that is probably going to go on for
took their data with them. Now they're going to be
cabinet to another. They switched programs. And they
truly in this lawsuit because they moved from one file
But we're talking about this law firm that is
involved in this.
supporting that -- why I do not think that they're
I can explain off the record even better
They are out in California.
in this. I cannot imagine them being involved in this.
any facts to support -- that they are somehow involved
I know Mr. Sasser has suggested -- he hasn't given me
They're collateral damage in this, as I can see.
because I represent Mr. Rivera too.
been -- and I've got to be careful with my words here,
haven't talked about, and that's the Doans. They have
and I appreciate that, Your Honor. We have one thing we
MR. McKENZIE: As I understand, Your Honor --
chance to have order at trial.
this case civilly, he needs to be able to have some fair 1
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assertion is that, "I learned this through an e-mail in
said -- and he has cited as his basis of making the
THE COURT: -- without that e-mail, and he has
MR. McKENZIE: That is derivative --
known --
THE COURT: -- that he simply could not have
MR. McKENZIE: Bingo.
and posted information --
THE COURT: What I understand is, he's issued
quoted in rants or --
What I think is that parts of the e-mail has either been
that the actual physical e-mail has ever been published.
knowledge, assuming the facts are true, I don't think
contents -- I don't think that the -- in my -- to my
Honor, you want to know, establishing that the e-mail or
MR. McKENZIE: So I can be clear with Your
concerned.
as to what I've got to do as far as the sanctions are
I do know I've still got the motion to rule on
surprised that you didn't. But I'll leave it with that.
from making peace as between the Doans and OTB, but I'm
of this came up, I'm not exactly sure what kept you-all
in Raleigh at the settlement conference -- and when all
not having any information about what happened yesterday
Jolly. I will simply tell you, as a trial lawyer, and 1
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sanctions basis. And I want to consider it.
cause order for contempt or just deal with it on a
haven't made up my mind as to whether to issue a show
regard? And I'm inclined right now to think -- I still
believe this language is sufficiently limited in that
THE COURT: So with that limited -- do you
issue, so --
just making sure that you didn't want briefing on that
MR. McKENZIE: For clarity, Your Honor, I was
world what somebody may consider defamatory or not.
needs to occur. I'm not trying to deal with the whole
attention it is, some form of retraction or remediation
and it seems to me with it going out with as much
protective order, it seems to me it needs to come down,
necessarily are tied to that e-mail governed by the
As it relates to postings on the Internet that
I've seen no suggestion of that.
of it."
didn't depend on that e-mail; I can say that independent
opportunity today, and he hadn't done it, to say, "Oh, I
Mr. Rivera can demonstrate information that he had
THE COURT: It seems to me that -- unless
know what the right thing to do in this instance is?
MR. McKENZIE: And your question is, you want to
discovery." 1
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THE COURT: In either event, that -- I feel a
do that.
MR. McKENZIE: Obviously, I'm not asking you to
That's right.
THE COURT: Or I can do sanctions and contempt.
tremendous powers.
MR. McKENZIE: Or it can go both. You've got
to me that needs to be returnable to me.
to another Judge. If I go the sanctions route, it seems
contempt route, that may be something that's returnable
the allegations. And it seems to me if we go the
want you to have had an opportunity to respond fully to
And then I want, in terms of -- Mr. McKenzie, I
general.
protective order. Not as relates to defamation in
of October, as relates to the violation of the
now, that we need to undo what Mr. Rivera did on the 1st
But I do believe that what's out there right
a practical standpoint whether to do that.
stuff to do. The sanctions. So I just don't know from
disbarred, et cetera. It unleashes all sorts of other
already got one round of whether there was or was not
et cetera, simply unleashes a whole potential -- we've
things, proceeding under the criminal contempt route,
Because, Lord knows, in addition to other 1
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apologize tremendously.
Honor, there is no dispute on that. If it does, I
MR. McKENZIE: If the allegations are true, Your
grease on the fire.
thinking about what I'm doing, he's simply throwing
still up, notwithstanding where I am even when I'm
violation of the protective order. If any of that is
what it is that got the Court's attention. And that is
retraction, I hope you're able to explain to Mr. Rivera
But I can tell you right now, without regard to the
All right. Now, I'll look at this language.
we can try once.
try this case, I want an orderly case and I want a case
I continue the case, I'm continuing it because when we
I'm not continuing the case to penalize Mr. Rivera. If
that has something to do with my decision to continue.
fully-developed record on that before I respond, and
But I'd, frankly, just as soon have a
one you've given me."
trial on Monday. That's a better poison pill than the
Even if it means that you strike the Answer, I'll go to
do with that. And I recognize that you said, "Go ahead.
respond than you've been given. That has something to
without more opportunity for you to be informed and
bit uncomfortable taking Draconian action against you 1
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the protective order, I'm not really all that interested
ever heard anything bad said about them?" unrelated to
of going out and deposing five or six people, "Have you
So I think -- but in terms of general discovery
remedy.
through this route before. But I consider it an extreme
attention comes to mind simply because we've had to go
you that the idea of striking the pleadings just to get
or whether it goes to contempt. I have to simply tell
question of willfulness as to whether it's for sanctions
circumstances and how it goes, it does relate to the
But I do think, knowing exactly the
defamatory. I think it needs to be a targeted matter.
is concerned, as opposed to who decided to be generally
to be tied to what happened, as far as protective order
to put up an e-mail they got in discovery, and it ought
least I think, focused in on the element of who decided
additional discovery. The discovery ought to be, at
Then the question of whether or not to grant any
it.
language. I may just take a break shortly and look at
the next stage I've got to do. I'll look at this
whether I'm going to put up in response to it. That's
given that needs to come down. Now I've got to decide
THE COURT: I'm just saying, right now, it's a 1
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So what I think I'm going to do right now is, is
forwards.
think I can do better to look at that one backwards than
about severance? I think so. But I swear to you, I
it, at that point in time, does it make sense to think
protective order and Mr. Doan was totally innocent of
Mr. Rivera was fully involved and violated the
don't know that we know that yet. If it turns out that
against Doan separately from the case against Rivera? I
Should I sever the cases and try the cases
there, I recognize the practicality.
course of widespread discovery when he's already out
36-thousand dollar fine. So making him go through the
ongoing law firm that says I can't pay a 35-,
you've got a law firm -- which I find you've got an
statement that he can't even pay the sanction. Because
about it because you said -- you know, you've made the
in it, I obviously have less concern. And I'm concerned
him -- to this allegation. If he, in fact, was involved
Mr. Doan, if there's no legitimate basis to tie it to
about -- I am concerned about collateral damage to
And so I don't know -- and I am concerned
worms.
understand Mr. Sasser to ask for that broad can of
in opening up that can of worms. I didn't really 1
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have preliminary injunction later, if all we're talking
along. And as a part of return, as far as whether we
THE COURT: We'll do what we can to move it
parties.
that's been raised. And that requires consent of all
our preference to waive jury requirements, now that
MR. McKENZIE: I'll tell Your Honor that it is
couldn't do anything about it.
Continued the first case because I was in trial. So I
was because I couldn't try two cases simultaneously.
than I want. As you well know, the first continuance
Wake County. It takes longer to get on the calendar
purposes. I do have to deal with the practicalities in
continue the trial for 12 months for general discovery
But that doesn't mean, Mr. McKenzie, that I
trial.
within the parameters. I am going to continue the
response to what happened? And I do want to contain it
that's limited the question of what I should do in
of response, and what do I do in terms of discovery
what shouldn't have been put up, what do I do in terms
focus on today's hearing being what do I do to get down
broad concept of the amendment today. And I want to
language. And I don't know that I have to deal with a
I want to take a short break, and I want to read this 1
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(Recess. 3:41 p.m.)
4:00. 4:00 on this clock.
Okay. Let me take -- let's come back here at
where we are.
to prove a trade secret? In that light, I want to know
straight to the issue of damages, or do they still have
counterclaims, does it give them a free pass to move
interested in knowing if I were to strike answers or
there to be full opportunity. And frankly, I am
we've got the question of what we want to do -- I want
sure we've got that preliminary injunction left. Then
about is take down and post some retraction, I'm not 1
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not for commercial purposes; that there were postings on
materials would be used solely for the litigation and
the case; the protective order in the case provides that
that finds that there was a protective order entered in
But it seems to me that you would have an order
something together for my approval.
going to ask the plaintiff to take a stab at getting
seems to me that something of this nature -- and I'm
the Court order to have used the e-mail. And so it
or not. What I can say is that it was a violation of
a dispute between the two of you as to whether it's true
statements were true or not. I certainly noted there's
before me at this stage to adjudicate whether the
So I think -- I don't know that it's properly
yes.
THE COURT: I would be surprised if you said
Honor.
MR. McKENZIE: I cannot at this stage, Your
he agrees to this statement?
Mr. McKenzie, is that -- can you represent that
him to make this statement if he doesn't agree to it.
what Mr. Rivera agrees to. I don't think I can order
seems to me I can only deal with this language if that's
THE COURT: As to this particular language, it
(Open court resumed. 4:00 p.m.) 1
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is the fruit of the poisonous tree thing that Jon
MR. McKENZIE: There's only one thing. And that
24 hours? You think that would give you enough time?
THE COURT: I will order Mr. Rivera, within --
if we're doing so ourselves.
he published these things so that we can address them,
MR. SASSER: Your Honor, we need to know where
injunction to be done in that regard.
think there's anything further in terms of a preliminary
compliance, and there's not -- tell me not. But I don't
would be an ordering that there be a certificate of
done, the only preliminary injunction to be returned
for a later day. Seems to me that if I order that to be
who's wrong as to what you did or did not do. That's
I do not believe I can adjudicate who's right or
protective order be taken down.
statements tied to that e-mail in violation of the
the assertions. And that the Court has ordered that the
protective order. That the defendants vehemently deny
to the extent based on the matter protected by the
was improper for him to make the statements based on --
may continue to maintain the truth of the assertions, it
violation of the Court's order. That, while Mr. Rivera
produced in discovery, which the Court finds to be a
the Internet that were necessarily based on material 1
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You-all can work on the precise language. You
this temporary restraining order had been made.
best-efforts representation of where posts subject to
time certain. But a time certain to provide to OTB a
client, Mr. Rivera, to give by -- well, I'll ask about a
is -- what I'm going to do is to impose upon you, your
THE COURT: Right. So where we're right now
because --
This is the McKenzie version of the poisonous tree,
MR. McKENZIE: Okay. Well, that's different.
fruit of the poisonous tree to be.
approach it directly. That's what I had understood the
gotten there but the e-mail, even though he didn't
reference to the e-mail. And that is, he couldn't have
breach of confidential security without making specific
He may later have posted a general discussion about the
he said, I've got an e-mail that did this, et cetera.
the poisonous tree argument to be that in one instance
THE COURT: Yeah. I had understood his fruit of
publication, that would be picked up somewhere else.
where there's been a publication, assuming he had done a
little bit about it. But there may be some instances
works, Your Honor. And there may be -- I do know a
There may be -- I don't know how the Internet
mentioned earlier -- Mr. Sasser mentioned earlier. 1
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violation. I'm not going to impose upon him the
actions that cause it to be posted. That would be a
within his scope, agency, control, et cetera, takes
we're talking about is, if Mr. Rivera, or anyone that's
republish it, because that would be an indirect. What
to say someone else has picked it up and they want to
and indirectly, it's -- I don't want it to be so far as
language of Rule 65. That whole question of directly
THE COURT: Yeah. I don't mind you using the
would take the form of the prior restraint.
MR. McKENZIE: Your Honor, I contend that still
post -- re-post this?
that prohibits him from indirectly having someone else
MR. SASSER: Your Honor, can there be something
question of defamation. Okay?
protective order. I am not dealing with the general
narrowed to the e-mail that was subject to the
But I again want you to understand me. This is
something posted corrective, sooner rather than later.
they can be supplemented -- they need to go out and get
It seems to me, in terms of that best efforts,
not impose an impossible burden on you.
responsive to the urgency that they've raised but does
But -- and I want to have -- pick a time that is
know what I'm trying to get to. 1
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I'm not opening it up to that degree. This is
what else you're defamatory for."
"Okay. Well, tell me what else you've done. Tell me
that is -- but I don't want this to just be a broad,
there. Recognizing the parameters of where you go with
of this order. And then we'll see where we go from
to the question of whether there's a willful violation
amendment that you may or may not get. This is limited
deposition looking for future support for a broader
That is to say, that this is not an -- this is not a
post the e-mail in violation of the protective order.
depositions. Limited to the issue of the decision to
further leave of the Court, not more than three
And in that regard, then, I will allow, without
willful violation.
question of whether there should be a finding of a
date. It doesn't -- for briefing and hearing on the
that's relevant there. So I think we can pick a hearing
the question of willfulness I think is a subject matter
rather than the contempt route. But in either event,
inclination is to address this via the sanctions route
As far as discovery is concerned, right now, my
I'm trying to do.
order for something he can't control. So you know what
obligation to again be accountable for another court 1
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with regard to some of the language, all the --
MR. SASSER: Do you want a draft order from us
the trial.
And I would separately enter an order continuing
doesn't seem to me it has to be on a 10-day basis.
filed after the depositions as opposed to before. It
entered. It seems to me you want those briefs to be
willful violation so that there should be sanctions
like to have the briefs due as to whether there was a
some time talking with each other as to when you would
And I'm going to let Mr. McKenzie and you spend
think.
much. But I'm not talking about full days, I don't
limited duration. I'm not inclined to say exactly how
depositions should be targeted and ought to be of a
just open this up generally. My thinking is that these
of something you've got, fine. But I do not want to
can come back. If you've got leave of the Court because
three depositions, that gets you started. And then you
accountable for that inquiry. But if I give you the
participation by multiple people, that he should be
I do believe, to the extent to which there was
be entered.
there was a willful violation and what sanction should
depositions that are tied to the question of whether 1
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if there's relevant information on the laptop, there's a
because they had -- Mr. McKenzie, like you raised, even
There's one where the parties got through,
M-A-R-C-H-A-N-T (sic).
put in place in a case called ABS v. Machent.
would encourage you-all to look at a protocol that was
And to the extent that we have to get there, I
forensic examination and all that goes with that.
think we're at the point of submitting laptops for
entitled to production of those documents. I don't yet
the depositions on, that I would say that you're
that deals with the limited issue that I've given you
is discoverable documentation of a non-privileged nature
place. And so I do think that to the extent that there
duty of preventing spoliation of evidence is already in
circumstances have already been such that the common law
spoliation is concerned, is already in place. I mean,
It's my view that the obligation, as far as
to do about discovery documents.
THE COURT: The question has been put as to what
(Off the record)
Let me go off the record for a moment.
issue other than the continuance of the trial.
Mr. McKenzie's opportunity to review it, as to every
THE COURT: I want a draft order from you, with 1
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Don't know that we're there yet.
expense related to that type of forensic examination.
protocol. But there's clearly a very significant
not the expert for either side that came up with the
the forensic examination -- there was a party that was
neutral -- and the -- as I recall, the party that did
there was mutual benefit to be gained from having a
themselves also had prejudice information in it, so
the former employer, clear evidence that the computers
clear evidence of things that had been downloaded from
Because in that case, there was some pretty
split fifty-fifty.
to direct that the cost of the forensic examination be
going to -- in that case, the ABS v. Machent case, going
But ultimately what I told them was that I was
in the Analog Devices case sometime ago.
Judge Tennille had looked at that a little bit
of things like that.
matter where I could write an order; couldn't do a lot
a 12-hour basis so they could go ahead. So it wasn't a
they gave me the determination to allocate the costs on
open the sole question of how to allocate costs. And
the table. They worked out a protocol to do it, leaving
laptop. The case was of greater volume of dollars on
whole lot of other stuff they shouldn't see on the 1
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to the sanction to be a pretty targeted discovery as to
targeted discovery. I do want discovery as it relates
I do think we have spoliation. We can have
issues, we can deal with that.
the first crunch of discovery and that opens up other
curtain to see what's there. And to the extent you get
October that they fairly decided to look behind the
token, I think enough was let loose on the 1st of
I don't want a fishing expedition. But at the same
come up with your language that satisfies where you are.
THE COURT: Let me put it this way. You-all
we're not going to be able to --
through e-mail or through some conduit on line that
the harm that we're talking about would have been
up -- I mean, it seems like any kind of transmission of
to just e-mail correspondence. I don't want to open
would ask Your Honor to limit the documents in discovery
MR. McKENZIE: I would agree, Your Honor. I
disastrous.
a third violation of an order would be pretty
Mr. Rivera certainly well should understand that
we're to the point of submitting and impounding laptops.
obligation to preserve evidence. But I don't know that
entitled to document discovery. You can recite the
So probably put in your order that you're 1
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certain things you already told me you know where it
posted, to your own customers, et cetera. There are
posting it on places you know where it needs to be
around the order very quickly, and you-all can start
THE COURT: In terms of the order, we can turn
don't want the --
information. There's some time sensitivity to that. I
initially said 24 hours -- that we need to get the
24-hour -- we talked about a time certain -- you
and he has to prepare it. And meanwhile, we have this
order to draft and we have to run it by Mr. McKenzie,
Oh. The -- we've got this -- we've got the
I've forgotten what it was.
MR. MEYERS: And -- I had one other issue. Now
schedule, yes, they are.
THE COURT: I think with the trial off the
tomorrow. Are all those off the table for now?
up with the case tomorrow. I think trial briefs are due
matters. One, I believe there are some deadlines coming
MR. MEYERS: Your Honor, two maybe housekeeping
don't -- I want to keep all those issues separate.
generally, we can deal with that when the time comes. I
an amendment to the pleadings and reopen discovery
pass. If we get to the point later of where you've got
the willfulness of the violation and how it came to 1
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4:22 p.m.)
(Whereupon the proceedings concluded at
minute.
THE COURT: Let's go off the record for just a
MR. McKENZIE: Yes, sir.
suit?
THE COURT: Did you have to go home and get a
MR. McKENZIE: Thank you, sir.
today.
Mr. McKenzie, I appreciate you coming over here
to have it to start.
you've covered all the bases. I don't believe you have
got to get from Mr. McKenzie is just to make sure that
THE COURT: I consider the listing that you've
MR. MEYERS: Thank you, Your Honor.
place, sooner rather than later.
I'm prepared to sign an order that puts the mechanism in
cleanup to make sure you've covered all the bases. So
went. So you don't need anything from him. This is the 1
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(336) 558-3140
Jamestown, NC 27282
PO Box 190
Division V Rover
Official Court Reporter
PATRICIA JAEGER, RPR, CRR
________________________________
2013.
Given under my hand this 4th day of November,
proceedings.
constitutes a true and correct transcript of the said
knowledge and belief, the foregoing transcript
I further certify that to the best of my
Honorable James L. Gale, Judge Presiding.
Session of the North Carolina Business Court, before the
North Carolina, at the October 3, 2013, Special Civil
Superior Court Division, Guilford County, Greensboro,
captioned cause, taken in the General Court of Justice,
recorded by stenotype the transcript of proceedings in
I, Patricia Jaeger, RPR, CRR, certify that I
COURT REPORTER'S CERTIFICATE 1
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![INDEX [] Bank/Briefs/Brown, Latius Tirrell.doc · Web viewno. coa12-952 twelfth district. north carolina court of appeals ***** state of north carolina )](https://img.pdfslide.us/doc/110x75/60a06dbd1f4835082270680b/index-bankbriefsbrown-latius-web-view-no-coa12-952-twelfth-district.jpg)
