Free Response to Cross Motion [Dispositive] - District Court of Federal Claims - federal

Case 1:05-cv-00999-MMS

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Exhibit

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1 2 3 UNITED 4 STATES

IN THE UNITED STATES DISTRICT COURT NO_THERNDISTRICT OF ILLINOIS EASTERN DIVISION

OF AMERICA, Petitioner _

)

)
) No. 03 C 9355 Chicago, Illinois April 15, 2004 ii:00 a.m.

5 v. 6 7 8 9 lO 11 12
13

>
) ) ) )

SIDLEY, AUSTIN, ._tC.,et al_,

BROWN

& WOOD,

)
Respondent s. )

BEFORE APP_CES: For the Petitioner_

TRANSCRIPT OF PROCEEDINGS THE HONORABLE MATTHEW F. KENNELLY

14 !5 For the Respondent: 16
!17

UNITED STATES DEPARTMENT OF JUSTICE, Tax Division PO Box 55 Ben Franklin Station Washington, DC 20044, by MR. JO_ A. LINDQUIST, III SIDLEY, AUSTIN, BROWN & WOOD, Bank One Plaza i0 South Dearborn Street Chicago, IL 606103, by MR. WILLIAM F_ CONLON MR_ MICHAEL J. SWEENEY LLP

18 19 20 21 22 23 24 25

MARTIN, BROWN & SULLIVAN, 321 South Plymouth Court lOth Floor Chicago, IL 60604, by MR_ DANIEL T. HARTNETT ARNSTEIN & LE_ 120 South Riverside Plaza Suite 1200 Chicago, IL 60606, by MR. RICHARD K. _LLERMAN MR. ROBERT E. MC KENZIE

LTD.

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WHITE & CASE 1155 Avenue of the Americas New York_ NY 10036_ by MS. KATHLEEN PAKE_ KATTEN, MUCHIN, ZAVIS, ROSENMAN 525 West Monroe Street Suite 1600 Chica_o, IL 60661, by MR. HARVEY M. SILETS F_BRIGHT & JAWORSKI 1301 McKinney Suite 5100 Houston, TX 77010, by MR. JASPER G. TAYLOR, III CHAMBERLAIN, H_DLICKA, WHITE, &MARTIN 1200 Smith Street Suite 1400 Houston, TX 77'002, by MR, JUAN F. VASQUEZ, JR. BAKER & MC KENZIE 130 East Randolph Drive Chicago, !L 60601_ by MR. THO_S V_ M. LINGUANTI WILLIAMS

5

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7 8 9 10 II 12 13 14 15 16 17 18

!9
2 0

21 22

23
,_OURTREPORTER24 25 LAURA M. BRENNAN 219 South Dearborn Street, Chicago, IL 60604 (312) 427-4393 Room 2102

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i

(The following THE CLERK: THE COURT:

proceedings

were

had in open

court:)

2 3

03 C 9355, USA v. Sidley Well, rather than writing

& Austin. everybody's name

_own, I am just going
5 6

to write r "cast of thousands," find a spot and stick wil! have to write

but find a The So

_pot. court

Normal

protocol, however,

in the spot. names down.

reporter,

your

we will 8 9 I0 ii Jaworski,

start on this side and go across. MR. TAYLOR: on behalf MR. SILETS: Jasper G. Tay!or, Ill, with Fulbright &

of the Fulbright Harvey

Does. of 27

Silets on behalf

intervenors. MS. PAK_: Case, also on behalf MR. VASQUEZ: Chamberlain Good morning. Kathleen Pakenham, White

12
13

of 27 intervenors. Juan F. Vasquez, Jr., on behalf of

14 15
16 17 18 19

DOes 1 and 2. Robert McKenzie of A_nstein & Lehr on

MR, MC KENZIE: behalf of Arnstein Does.

MR. HELLERMAN: 5ehr, also on behalf

Richard

Hell erman, Does_

also of Arnstein

&

of the Arnstein

20
21 22 23 Wood. United

MR. LINDQUIST: States
MR.

John Lindquist

on behalf

of petitionex

of America.
SWEENEY:

Michae!

Sweeney_

Sidley,

Austin,

Brown

&

24
25

MR. CONLON: also on behalf

Good morning,

your Honor;

Bill Conlon

of the respondent.

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4 1 2 3 4 5 6 7 8 Does. MR. LINGUANTI: Baker Does. THE COURT: there was one motion the Baker & McKenzie First of all, as a preliminary up matter, by And Thomas Linguanti on hehalf of the MR. HARTNETT: Dan Hartnett on behalf of the Mar_in

that was noticed people.

for this morning motion

It is called This

to withdraw, of the Baker

_otion to intervene, llDoes 1 and 2.

et cetera.

is on behalf

10
II 12

Were

there more Baker

Does

than 1 and 2? Honor_

MR. LINGUANTI: THE COURT:

Just the two, your

Just the two. that? Okay. So that motion motion is to

13
14 granted:

Did we deal with

So that is called motion by Baker Does I have 1 and 2.

to withdraw That

15, interv@ne

is granted,

okay. that

16
17 18 19 20 21 22 23 comment

got the ruling.

That big pile

of paper

the person ruling,

over

a_ the side of the room is holding she passes it out, there

is the _-

but before

was one thing

(Brief interruption.) THE COURT: There was one thing that I wanted to filed -- and by

on, and that is in the supplemental the other something day. The contention

memorandum is made

the government this addresses wh_re

that had come up

I think

in our last

24 25

session

I had -- really not on anything I should suspend

on the merits, the statute of

but on the issue of whether

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5

limitations, 2
3

a request

that at that point I wil!

I was given

no

authority i been same

on, although

say parenthetically a different Friendly_

I have now on that I had made the amount

given some authority issue, an opinion in that it had.

about

context I think.

4 5 6 7

by Judge

some comments of time that

about why the case had taken

In any event, -- well,

the government's

supplemental say. opposed

memorandum that

8. essentially 9 10 I! 12 13 the January

it doesn't

essentially

It says

12th order,

that the government

the motion case

for notification established

on the grounds

that the BDO Seidman had no right

that members

of the class

to intervene of the United it also,

and that I granted States. susgested because,

the motion about

over the opposition that because,

I was concerned to me that

first,

14
15 16 17

I may have misspoken

before with

and,

quite frankly,

it wasn't consistent

my memory. for order o:f

So I went back and looked at the motion sctificatlon that was filed by Mr. Conlon back to that that was filed

on the 8th of

18. January, 19

the response

-- here we go-of

by the go_ernmen_ 12th.

on the 9th of January,

and the transcript I think is what

9.0 January 21 22 23

And with all due respect_ memorandum

that what you ! would the first for Drder

have said charitably opening

in the supplemental

refer to as a revisionist the January

hlstory

because To Motion

lineof

9th ,Opposition

2-4 of Notification"

says as follows: States of America hereby opposes Sidley,

2S

"The United

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6 1 2 3 4 5 6 7 8 same Austin, summons Brown & Wood's motion for order of notification it provides for in the

enforcement

action

to the extent

intervention class." And thing,

in this proceeding

by members

of the John Doe

the final that

line, the conclusion,

says precisely it

the

I should deny the motion in the proceeding words,

to the extent by members oppose

provides John other

for intervention In other just

of the

Doe class. grounds,

it doesn't

it on any for on January

to the extent

that it provides

10 !i
_2

intervention, the 12th.

and I dealt with

that in the colloquy

I, first of all, said ! don't read anybody a right to intervene, "This order

the order

as giving

13 14 15 16

but then I suggested not be construed "That solvesyour

the addition as creating problem." five or that So

of a sentence:

shall I said,

a right" to intervention." I looked six pages

and I !ooked real hard for anything

in the ensuing that suggested

17
18 19 20

of the transcript had other

the gevernment

objections, order

and there

were none.

_hen I said that an agreed what happened.

is entered, was entered.

that

is exactly

An agreed order

21
22 23 24 zoncluded

All right,

we have got an opinion is a basis a single

here.

What

I have

is that there to address

for intervention I regard have

on the part as fairly

of the Does narrow

and what

issue and this will be It is going

--you

don't

to all write You can

25

this down.

to be clear

in the opinion.

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1 2 3
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_ass it out. pass it down. That focused to

Just give the pile

to the end and tell them tO

is the single

and what

I believe

to be. narrow

and

issue of whether

the summons

is too vague

and ambiguous of trying or

be enforced.

I do not believe Sidley Austin

that the question is actually were

6 7 8

to litigate seller

whether

an organizer actually

or whether

particular

transactions

abuse basis think

of tax shelters for intervention,

or listed

transactions

is an appropriate that. I don't by the are a

9
io
I

and the order grounds

explains

that any of the other intervenors, proposed bases,

that were stated

intervenors,

for intervention that there

12 appropriate
13 14 15 16 17 that potentially

but I believe argument

is at least

colorable

that

the summons

-, and this is please, and I

not to be construed am not-tryins There

as a decision anything

on the merits,

to amend

I said in the opinion. colorable argument clear

is at least

the potentially enough_

the summons

is not definite

and it is fairly

18 to me from the opposition
19 20 21 22 23 24 25 _xtremely Lave been schedule firm that

or from the response motion

that the Sidley enforcement that issue.

filed to the government's

for summary

they don't have any intention that that is a basis to decide that

of liti_a_ins for enforcement.

So I believe

We are going expedited

this matter

on the same that I

basis

_ have done everything

asked to do in this case at the tail end of this.

so far, and I give you a I, again, want one brief

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i

from the intervenors, so three business government believe days

which

I believe

is due on next Tuesday, a brief from the and I

2 3 4 5 6 7 8
9,

from now. that, date

I want that

three days after

is the 23rd,

I have set a ruling · MR. HELLERMAN: THE COURT:

of the 27th or something.

29th. which is two weeMs from

The 29th of April,

today for me to rule on that. So that is the ruling. been these most. whether granted briefs So the motion to intervene And I want at of some hat

in part as it relates to be very short,

to that only. six,

10

you know,

seven

pages

ii

It is a focused the thing

issue, and it goes enough.

to the question have made

12

is definite

I could

13 decisions
14 didn't being

about that on my own or at least had really

attempted it.

to., but I I am not an

think the government critical, but I wanted

addressed

15
16 17 18

the government detail

to have

opportunity intervenors

to address because,

that in more

as well as the it was: one of a perhaps not as

with

the intervenors,

bunch of things.

So it is addressed

although

1.9 much as you wanted. 20 21 22 23 24 2S course -THE COURT: MR. SILETS:_ Right. -- it strikes me, though, that there So anything Ir............ MR, SILETS: Your Honor, not having read this, of anybodyneeds to or wants to bring up?

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I
2

might be factual

disputes

that will believe

touch

upon

the -It is a

THE COURT: question presume standards of whether

_ don_t

so, Mr. Silets.

3 4 5 6 7 8 9 I0 Ii

a subpoena

is too vague

or not, and what

I

that you are going mean

to argue

to me about mean

these it leaves of

and what they don't

and how much

to the imagination thesummons

and how much it leaves

to the discretion disputes. quite

respondent If I thought

and so on, not factual it involved factual

disputes,

frankly, reasons because

I would have denied that I stated think

the petition

to intervene factual

for the issue

with regard that that

to the other

I donlt

is what

a summons

enforcement

12
13 14 15 16

_roceeding

is about. it is just a question. have to deal with too va_ue It is the kind of

So I think thing that civil regardto

lawyers

all the time with

discovery Okay,

requests,

and ambiguous°

anybody

else want Your Honor

to say anything? --

!7
18 19

MR_ VASQUEZ: THE COURT: MR. VASQDEZ:

Say your name again. Juan Vasquez. be given the opportunity for a

20
21 22 23 24 25 reply --

Can intervenors

THE COURT: MR. VASQUEZ: THR COURT: in some way°

NO. -, on the 21s=? No, because it has already getting been addressed at it.

So you are actually

two cracks

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MR. LINDQUIST: THE COURT: Yes,

Your Honor,

John

Lindquist.

MR. LINDQUIST: of the statute

I would

like to again inte_ention.

request

a stay note

given this limited Sanders

I would

5_ that 6 7 8 9 i0 11
12

Judge Barefoot in Texas

in the case involving his ruling grant

the Baker on their on the

Does

did grant

a stay pending Hedid

motion to enjoin !2th.

enforcement.

enforcement

THE COURT: question --

I _derstand

what you are saying,

The

Let me ask you this. is you are asking statute me to impose

Is what you are asking a stay on the running

me to do of the

13 14 15 16 17

from todaythrough MR. LINDQU!ST: THE CO_T:

the date of my ruling? Yes, you_ Honor. Address that, whoever wants to

Okay.

_ddress

it_ I am just not relying on what Judge context. Sanders did in a

slightly 19 20 21 22
23

or maybe somewhat right?

different

It was Judge for some Friendly, appeal, its

Friendly,

It was a fairly old,

old case,

at least Judge

us of considered as part

from the_60s,

in which

of a granting

of a stay of enforcement of limitationsor that

pending

essentially running;

cut off the statute

suspended

and so that is the authority

I was looking about that.?

for, I will

24

So who would like to say anything !ire anybody a chance to talko

25

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Baker given

MR, L!NGUANTI: Does have moved that Barefoot THE COURT:

Your Monor, to withdraw, is --

despite

the fact that it

perhaps

we can address

Sanders

No, because at this end.

you are out of the case.

5
6 7 8 allowed

Let's

start

MR. VASQUEZ:

Your Honor,

under

7609 now you have -- the statute is

us to intervene. tolled. Well,

We automatically

automatically

9
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THE COURT: both a belt

maybe

Mr. Lindquist

wants

to wear

and suspenders anyway,

at the same time.

So if it is goins and make it

to be tolled

why shouldn't

I just go ahead

13 14 15
i[

MR. SILETS: do it. MR. LINGUANTI:

I don't think

you have

the authority

to

Brockamp,

your Honor.

It is a Supreme tolling. recent

16 IICourt case which says there 17 18 19 20 21 22 In that

is no basis

for equitable

case, it was a refund suit,

but it is the most specifically

=aBe from 1997, if you are addressing 3f equitable tolling. tolling

the questior

Equitable

is not necessa_here

because

as I

_ointed out in the John Doe -THE COURT_ Statutory tolling.

23
24 25 statutory

MR. LINGUANTI: THE COURT: tolling,

Precisely. is any doubt about

Do you think there Mr. Lindquist?

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MR. LINDQUIST: 2 3 4 5 6 7 8
9

Yes,

I do

think

that

there

is

doubt

about

statutory

tolling. could construe the motions to intervene as

The Court motions granting extension. us under

7609(a)

such that the granting automatically

of -- the partial an (e)(1)

of that motion But the

triggers

(e) (2) -- the

(e) (2) stay

is not protecting

adequately. MR. VASQUEZ: The (e) (2) stay also initially filed comes their into effect initial into

today because motions

the government 15th,

10 ii 12 13 14 15 16 17 18
19

on October

so that the is today. else?

(e) (2) stay

comes

llace on April

15th,

which

THE COURT:

Anybody

You don't need Does anybody The statute I rule, okay. granted.
may be

to say anything

else. Fine° until

else want to say anything? of limitations is tolled ora! request

from today

So the government's

for that is and it

It may be that it is completely
it is completely illegal. So

superfluous,
be it.

that

All right, Thanks.

I will see you two weeks

from today.

20
21

MR. LINDQUIST: MR. CONLON: MR. HARTNETT: MR. VASQUEZ: MR° SILETS=

Thank you, Thank

your Honor. Honor.

22 23 24 25

you, your you°

Thank

Thank you. Thank you, your Honor.

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1 2 3 4

MR. SWEENEY:

Thank

you. had in the above entitled

(Which were all the proceedings _ause on the day and date aforesaid.) certify that the foregoing pro_dings

is a correct

transcript matter.

from the

5 _rd-5of 6
7_

in the above.entitled Date

££u£a_-M. Brennan ...... official Court Reporter Northern District of Illinois

.....................

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