Free Notice of Correction - District Court of Arizona - Arizona

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA _________________ MEADOWLARK LEMON, a married man,) et al., )

)
Plaintiffs, vs. ) ) ) ) ) CV 04-00299-PHX-DGC Phoenix, Arizona September 30, 2005

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BEFORE: HARLEM GLOBETROTTERS

INTERNATIONAL, INC., et al.,

)

) Defendants. ) ________________________________)

THE HONORABLE DAVID G. CAMPBELL, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS TELEPHONIC DISCOVERY DISPUTE

Official Court Reporter: Patricia Lyons, RPR, CRR Sandra Day O'Connor U.S. Courthouse, Suite 312 401 West Washington Street, Spc. 41 Phoenix, Arizona 85003-2150 (602) 322-7257 Proceedings Reported by Stenographic Court Reporter Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For Plaintiff Lemon:
Rosenquist & Associates By: ANDERS V. ROSENQUIST, JR., ESQ. (telephonically) 80 E. Columbus Phoenix, AZ 85012

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Law Office of Florence M. Breummer PC By: FLORENCE M. BREUMMER, ESQ. (telephonically) 3655 W. Anthem Wy., Ste A109 PMB290 Anthem, AZ 85086 For Plaintiffs Thornton, Neal, Sanders, Rivers, Haynes, Hall:
Morgan & Morgan PA By: CLAY M. TOWNSEND, ESQ. (telephonically) 20 N. Orange Ave., Ste 1600 Orlando, FL 32802

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For Defendants GTFM, LLC; FUBU The Collection:
Dreier LLP By: SAFIA A. ANAND, ESQ. (telephonically) 499 Park Ave., 20th Floor New York, NY 10022

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For Defendants Harlem Globetrotters International, Inc.; Harlem Globetrotters International Foundation, Inc.; Jacksons:
Garvey McNeil & McGillivray SC By: EDWARD R. GARVEY, ESQ. (telephonically) 634 W. Main St., Ste 101 Madison, WI 53703

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Fennemore Craig PC By: RAY K. HARRIS, ESQ. (telephonically) 3003 N. Central Ave., Ste 2600 Phoenix, AZ 85012.

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For defendants FUBU The Collection; GTFM, LLC; Harlem Globetrotters International Foundation, Inc.: Law Offices of Joel L. Herz By: JOEL L. HERZ, ESQ. (telephonically) 3573 E. Sunrise Dr., Ste 215 Tucson, AZ 85718

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1 2 3 4 THE CLERK:

P R O C E E D I N G S

This is civil case 04-299, Meadowlark

Lemon versus Harlem Globetrotters International, et al., on for discovery dispute. Counsel, please state your appearances for the record. MS. BREUMMER: Florence Breummer on behalf of

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plaintiff Meadowlark Lemon. MR. ROSENQUIST: Meadowlark Lemon. MR. TOWNSEND: Clay Townsend on behalf of Curly Neal Anders Rosenquist on behalf of

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and the other plaintiffs. MR. HARRIS: Ray Harris and Ed Garvey on behalf of

Globetrotter defendants. MS. ANAND: the Fubu defendants. THE COURT: Okay. Whose call is this? Saphia Anand and Joel Herz on behalf of

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MS. BREUMMER:

This is plaintiffs' call, Your Honor.

This is Florence Breummer. THE COURT: Okay. Okay. Would you like me to begin?

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MS. BREUMMER: THE COURT:

Yes, please. Your Honor, this is Florence Breummer,

MS. BREUMMER:

again, and this week the plaintiffs were shocked to discover

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an article in the USA Today, a little blip dated September 27 saying that an investment company controlled by Roy Disney has bought 80 percent of the Harlem Globetrotters and will help expand the basketball team's merchandising and licensing activities worldwide. Yesterday there was an additional article in the Arizona Republic stating there was a $70 million sale. We have not heard anything about this. And under

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rules 7.1, rules 25 and 26, this should have been disclosed to us. And it's brought up many new issues. We're dealing with

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a new company.

We don't know if there's going to be new We've had

counsel, if there's an indemnity agreement.

depositions and meetings for months in this case and no one has brought it up. And the other thing that's really important is that our whole -- the plaintiff's case is regarding merchandising and licensing activities. expanding that. And this sale is regarding

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There should be -- there's going to be

conversations with this new company and correspondence that will have to deal with our case and we're not hearing about it. We're hearing about it in the paper, and we just finished

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depositions. Again, this was not brought up to us in any fashion, and we have issues with successor corporate liability. In Ninth Circuit case law there's quite a few factors

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that come -- can come into play on why this can be important to us. If there's an express or implied agreement of If it's a

assumption of liability, we don't know about it.

transaction that amounts to consolidation or merger of two corporations, we don't know about it. If the purchasing

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corporation is a mere continuation of the seller, again, we have no information. And this may even be something that has

to do with transfer of assets to avoid litigation in this lawsuit. And this is all a problem. And you can ask any of

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the attorneys for the defendants and they provided us with no notice regarding this. THE COURT: So what are you proposing, Ms. Breummer? Relief we're asking for, Your Honor,

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MS. BREUMMER:

is disclosure and a chance to do discovery on this issue. Today is our last day, it's the close of discovery, but we've been blindsided by this. What we're -- the release we're

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asking for is for the Globetrotters to provide us with disclosure in 20 days; allow us to have additional 60 days to conduct discovery on this issue and to -- because this has changed the litigation, we would request a 90-day -- to put out the dispositive motions deadline, which is now October 14th, for another 90 days so we can conclude what's going on with this issue. THE COURT: of defendants? Okay. Who's going to respond on behalf

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MR. GARVEY: THE COURT: Mr. Garvey? MR. GARVEY:

Ed Garvey, Your Honor. Good afternoon.

Good afternoon.

You represent who,

I represent the Globetrotters

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defendants, along with Ray Harris, who's on the line as well. Is there an echo in this call or can you hear all right? THE COURT: MR. GARVEY: There's a bit of one, but I can hear you. Okay, fine. Your Honor, first off, we

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looked to your order of October 4th in which you said deadlines are real, and paragraph number 11, communications of counsel should be certainly high priority. With respect to discovery disputes in 6(b) you said parties shall not contact the Court unless first seeking to resolve the matter through personal consultation and sincere effort as required by local Rule 110(j). We have done everything we could to find out why plaintiffs actually asked for this conference. After seven

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phone calls, I did talk to Mr. Townsend who said I should contact Anders Rosenquist. Anders Rosenquist, who requested

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the conference, said I should only deal with Mr. Townsend. And so we have not known even as we speak here what the issues are for this conference. With respect to the issue raised by Ms. Breummer, first off, every corporation in America that sells stocks may

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do so.

This is a simple equity transaction.

It has no impact

whatsoever on this lawsuit. operating officer.

Manny Jackson is the CEO and

The offices remain exactly where they are. This is not an asset sale. And

There's no change whatsoever.

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we assured Mr. Townsend of that, asked him if there was any law that he had that he could show us that somehow or other this was relevant to the matters before us, and he has failed to do so. So we think this is totally irrelevant, Your Honor. If I may, Your Honor, Clay Townsend.

MR. TOWNSEND: THE COURT:

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Hold on a minute, Mr. Townsend. Yes, sir.

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MR. TOWNSEND: THE COURT: defendants? MR. HERZ:

Does anybody want to speak for the Fubu

Your Honor, we have nothing to add on that Nobody

point other than what has been said by Mr. Garvey. contacted us, either, to discuss this issue. concerns us. THE COURT: MR. HERZ: defendants. THE COURT: Okay. Mr. Townsend. Who is this speaking?

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Not even that it

This is Joel Herz on behalf of Fubu

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MR. TOWNSEND: something coming on.

Yes, sir.

Pardon me, I've got

Bad weather here.

Your Honor, I endeavored to inform Mr. Garvey what the issues were and they -- he may be right. There may not be

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an issue.

Unfortunately, the Court ordered at the inception

of this case Interested Persons Order for civil cases. Mr. Garvey, on behalf of Harlem Globetrotters Corporation, in conforming with Rule 7.1, filed a Certificate of Interested Persons and Corporate Disclosure Statement. These filings in the rule require supplementation promptly upon any change, and I quote, in the information that the statement requires. And the rule goes on to say, you know, Or information regarding

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changes in ownership, et cetera.

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subsidiaries, affiliates, et cetera, that own 10 percent or more of a party's stock. Without disclosure, as required, and I believe Rule 26 similarly requires it, you know, we're in the dark here. If this transaction had anything to do with the relative rights of our clients under their old player contracts, which are at the heart of this litigation, we think we're entitled to know about it. And it's pretty simple. Without a

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disclosure, we can only take Mr. Garvey's good word that it is totally irrelevant to this lawsuit. And I believe his word, We have

while it may be good, the rules require disclosure. not received it.

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First notice we got was in the newspaper. Your Honor, this is Ed Garvey. If I

MR. GARVEY: may. THE COURT:

Hold on, Mr. Garvey.

Mr. Townsend, and I'll let Ms. Breummer address this

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as well, help me understand how this could be relevant to the issues in the lawsuit. MR. TOWNSEND: THE COURT: relevant. MR. TOWNSEND: One of the issues in this case is what Give me an example. The newspaper -- I'm sorry?

Give me an example how it could be

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HGI and Manny Jackson, who are defendants, purchased in 1993. Some of our clients hadn't played for the Globetrotters in 30 years, Your Honor. And Mr. Jackson's position in entering

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into the Fubu licensing deal was that he had the right to use their name and likenesses in perpetuity. of this litigation. If -- if Mr. Disney and the Shamrock Group have, as part of their purchase, done due diligence and communications relative to these claims and status of these contracts, it's discoverable. important. In fact, it could be admissions. Could be very That's at the heart

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They may have been disclosed additional documents. They -- in fact, they

They may have agreed to indemnify.

could be required to be joined as a party under the rules. But it could be a requirement that they are a necessary party. We have no idea. THE COURT: Mr. Garvey. Let me come back to you for a minute,

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Let's assume hypothetically for a minute that

there were negotiations that preceded this deal, that as part of the negotiations the buyer group inquired about the lawsuit

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and the sellers, Mr. Jackson and HGI, made disclosures about the lawsuit. Isn't there potentially discoverable and

relevant information in those communications? MR. GARVEY: Your Honor, Manny Jackson remains as the

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shareholder of Harlem Globetrotters and he remains as the chief executive officer. In looking through the discovery,

not one question was raised with respect to who the shareholders are. We still end up -- Your Honor, you asked Mr. Townsend what could be relevant to the issues in this lawsuit. didn't hear an answer because the fact is that the Globetrotters are exactly where they were. They're the same I

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organization, same officers, same shareholders we had last week and six months ago and 18 months ago. And so if the --

if for some reason the Court were to find liability, obviously the Harlem Globetrotters International would be found to be liable. Last week what we heard from Mr. Townsend -- rather Mr. Rosenquist, is perhaps the Harlem Globetrotters are insolvent. This week we hear they are too solvent.

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The simple fact of the matter as we look at it, the sale of stock is not relevant to the issues in this lawsuit which deal with the question of what happened in 1993, what the contracts say that were signed by the plaintiffs, and all of the discovery that's taken place over the last 18 months.

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THE COURT:

Tell me again what the nature of this

transaction was, Mr. Garvey. MR. GARVEY: The nature of the transaction was

purchase of some stock by a private company from Manny Jackson and perhaps other shareholders I'm not privy to. THE COURT: MR. GARVEY: What percentage of the stock? According to the newspapers,

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approximately 80 percent. THE COURT: the company? MR. GARVEY: THE COURT: Yes, Your Honor. But it's your understanding they're So there are new majority shareholders in

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leaving Mr. Jackson in place? MR. GARVEY: Yes. In fact, I talked with Manny

Jackson and also the chief financial officer, and the current officers that have been part of this litigation remain in place and will be in place. THE COURT: MR. GARVEY: THE COURT: New directors? Not that I know of, Your Honor. I'd be surprised if somebody bought 80

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percent of a company and didn't put some of their own directors in. MR. GARVEY: I'm not aware of it. THE COURT: When did this deal close? I would too, but all I can tell you is

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MR. GARVEY:

The newspapers, and that's what I'm

going on, announced it on the 28th or 29th of September. THE COURT: MR. GARVEY: Was there any change to the corporation? None whatsoever, Your Honor. It's still

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exactly the same as it was. THE COURT: Do you anticipate asserting any positions

in motion practice that are in any way related to this change? MR. GARVEY: No, Your Honor. And Mr. Townsend had

raised the question with me by e-mail this morning if we contemplated a change in parties, and we do not. change in counsel or any other motions. THE COURT: Okay. Hold on just a minute. Nor any

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Mr. Garvey, let's -- if this happened six months ago and there were still six months left in the discovery period and you received a document production request seeking production of all transaction-related documents, would you have some basis for objecting? MR. GARVEY: I don't know the answer to that

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question, Your Honor, because I was not involved in the actual negotiations, nor did I know about it until actually the same newspaper articles appeared. I have subsequently checked with Mr. Jackson and Mr. Syracuse and Ms. Linahan (phonetic) to find out exactly what the status of the entity is, and it's exactly the same. Our objection would be that corporations that are

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sued are often selling stock all the time and every time someone buys stock doesn't mean there has to be a material change in the parties or counsel or anything else. would object on the grounds it's irrelevant. THE COURT: Let's assume that instead of a document So we

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production request you received -- well, it was narrower and it asked you to produce any and all documents generated in connection with the transaction or its negotiation that referred to or related in any way to this litigation or the claims in the litigation. I think you'd have a tougher time

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with the relevancy objection there, wouldn't you? MR. GARVEY: THE COURT: Yes, Your Honor, I would. Here's -- here is my thought, and I'm

going to let you all comment briefly on it when I'm done. Taking Mr. Garvey at his word, and I understand the plaintiffs might want some confirmation of this, that this was a stock purchase, that the corporation remains in place, that the named defendants remained in place -- remain in place, that there's not going to be a substitution of parties or of counsel, I have a hard time seeing how this transaction affects the lawsuit or the issues in the lawsuit. I do understand why there may be relevant evidence if, as part of the negotiations or transaction there were things said about this lawsuit that might constitute admissions or otherwise be relevant to the issues in the case.

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But it seems to me whether or not those exist is something that could be taken care of in fairly short order. And so my inclination is, because this comes literally two or three days before the close of discovery, to permit -- to require a production of any documents related to the transaction that refer or relate in any way to the issues in this lawsuit. And also require the defendants to provide to

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the plaintiffs, in an affidavit or an answer, a sworn answer to an interrogatory, a confirmation of what Mr. Garvey has said about the nature of the transaction. To allow that much and get on with the dispositive motions. And if, in the dispositive motions, it's the view of

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the plaintiffs that the information they receive in this form is somehow relevant and opens up additional doors, we can talk at that time about whether any additional discovery would be permitted. But my inclination would be to require all of this

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to happen literally in about two weeks, push the dispositive motion date back about two weeks so that it can happen, and not otherwise adjust the schedule. Now, I'll start with plaintiffs. thoughts on what's wrong with that. I want to hear your

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And I'm happy to have you

criticize it, I just want to understand your position. MS. BREUMMER: MR. TOWNSEND: Clay, do you want to go? I've got a brief comment. I think

it's an order that we would appreciate and agree with, Your

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Honor. I respect Mr. Garvey. He's saying -you asked him

when did the transaction take place and he said what was reported in the newspaper. If the transaction was closed

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weeks and weeks ago and we were not provided with what I believe is a required amendment, a required amendment under 7.1 and 26 and the order issued initially in this case, I would be kind of perturbed about it, quite frankly. And theoretically the transaction could have importance other than the discovery issues. If the $70

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million was paid for 80 percent of the stock and the money was paid directly to Mr. Jackson, as opposed to the corporation, and there were further considerations, for instance the Shamrock's agreement to indemnify or condemn the suit, these are really things that change the landscape and should be disclosed. But we're grabbing in the dark here. Ms. Breummer. I'm a little nervous about the I guess my -- why I'm nervous about it

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THE COURT:

MS. BREUMMER: two-week requirement.

is that it basically is having the defendants provide us basically with what they see fit to be relevant to what are issues in the lawsuit. And obviously if you have an $80 And nothing was

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million sale, it's been going on for a while. provided to us.

And now within two weeks for them to provide

it to us, I guess I'm just a little bit nervous that it's not

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going to be enough time, and then if the answer is there is nothing or it's one or two sheets of paper, which wouldn't make sense in a big transaction such as this, that we're not going to have a chance to do any sort of discovery on the issues or conduct any depositions to inquire further about it. MR. ROSENQUIST: is Anders Rosenquist. agreement. Your Honor, if I may be heard. This

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We have in place a confidentiality

It would seem that if the Court ordered the

production of all of the relevant documents involved in the transaction and we could decide ourselves what is important and isn't important, that would seem like something that would be more appropriate. My second concern is that in that case that Ms. Breummer referred to, if there is a substitution of defendants, which could occur, it could actually extinguish this present case, as I understand it. Is that true, Florence? THE COURT: Mr. Rosenquist? MR. ROSENQUIST: please. MS. BREUMMER: Well, I don't know about extinguish Florence, could you fill in here, What do you mean extinguish this case,

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the case, but if -- I guess the -- the fear that we have is that as we move along, the defendants would say, hey, we're not the party on the line any more, there's another party

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involved.

And through discovery, I mean, we can determine if So I agree with Mr. Rosenquist that

that's true or not.

receiving disclosure regarding the whole transaction, as opposed to what the defendants just think is relevant and what they want to us see, is the more appropriate way to go. THE COURT: comments. MR. GARVEY: Your Honor, this is Ed Garvey. Your order Okay. Let's hear the defendants'

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Part of the problem as I see it is this:

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said that the parties shall not contact the Court without first trying to resolve the matter through personal consultation. And Mr. Rosenquist would not talk to me about I

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these issues and he told me to just talk with Mr. Townsend.

told Mr. Townsend -- after seven calls I got through to him -that if he needed a statement from counsel that there would be no change in parties, no change in counsel, it's the same organization, I would provide that to him. rather just bring this up to the Court. other issues were there. Our problem, Your Honor, is that this discovery has gone on for 18 months. We see no -- we agree with you that He said he would

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He wasn't sure what

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the transaction, assuming no change in parties or counsel or whatever, is not relevant, and we would like to say that two weeks is too long because we can get documents to them with respect to what Your Honor has suggested that any

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representations concerning this litigation be provided, that there be an affidavit from Mr. Jackson that there's no change in the status of the corporation, that he is the officer and so on. We have been fighting to try to follow the Court's guideline that there would be no change in the timeline and we, of course, have been depending on those timelines. So we

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think this matter should be done in the next 72 hours or so. THE COURT: defendants? MS. ANAND: Your Honor, we agree with Mr. Garvey and All right. Anything from the Fubu

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we just would say that we would rather the date -- the dates for dispositive motions not be pushed back. THE COURT: MS. ANAND: THE COURT: And that was Ms. Anand? Yes. I'm sorry. Hold on just a second.

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All right.

By the way -- hold on just one minute -(The Court and courtroom clerk confer.) THE COURT: September 30th. right? MR. GARVEY: Your Honor. 23rd, Your Honor. We went to the 23rd You mentioned discovery ending on

Fact discovery ended on September 16th,

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This is Ed Garvey. Did I extend it to the 23rd? It was five days before the end of

THE COURT: MR. GARVEY:

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today's date, as I recall. THE COURT: The order that I was looking back at that

the clerk just handed me set the fact discovery deadline for September 16th. Expert deadlines -I think it was experts. This is

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MS. BREUMMER: Florence Breummer. THE COURT: I've got here.

-- September 30th expert report deadline,

Expert deposition deadline. There's another order, Your Honor -Here it is.

MR. ROSENQUIST: THE COURT:

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I see.

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MR. ROSENQUIST: THE COURT:

-- that says September 30th. Our docket sheet is wrong. I

Okay.

Here's what we're going to do with this issue. agree, Mr. Garvey, there should be better communications between parties before a conference call is held.

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And Mr. Rosenquist, next time I would ask you speak directly with Mr. Garvey if there's such an issue. sound as though -MR. ROSENQUIST: THE COURT: I did. I apologize but I did. It does

It does sound as though there was at

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least an e-mail that you got, Mr. Garvey, and the issue didn't catch you completely by surprise. MR. GARVEY: Well, he said that I should contact

Mr. Townsend but Mr. Rosenquist wasn't going to talk to me. MR. ROSENQUIST: Your Honor --

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THE COURT:

Hold on.

Mr. Rosenquist, hold on.

But you did understand, Mr. Garvey, I think, that the call concerned this recent transaction. surprise. MR. GARVEY: did. Your Honor, as of today at about 3:30 I When this conference was set That's not a

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Prior to that I did not.

up we had no idea what issues were to be discussed. THE COURT: being unprepared. All right. I'm not faulting you for

I'm just explaining why I haven't

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terminated this call. This is, I think, an unusual turn of events near the end of the case. It does bear at least the potential that

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there are matters out there that could bear upon the case. I'm not going to extend the discovery deadline for all of the reasons we've talked about in the past, but I am going to require the following disclosures from the defendant, the Harlem Globetrotters, to be made to the plaintiffs: going to require that you submit to the plaintiffs, Mr. Garvey, an affidavit confirming that the corporate status of Harlem Globetrotters International, Inc., has not changed; that the officers who are defendants in this case have not changed; that there will be no assertion of a defense, in motion practice or at trial, based upon this transaction or the change in the transaction; that there will be no change or attempted change in the parties in the litigation as a result I'm

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of this transaction; and that there will be no change in counsel as a result of this transaction. And I'm going to direct you to get that affidavit to them no later than October 14th, 2005. In addition, and it's important that your clients understand, Mr. Garvey, that this is in the form of a court order. I'm going to require them to give two kinds of The first is they are to produce

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documents to the plaintiffs.

under the protective order the, what I'll call the transactional document. My guess is there's one or a group of

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documents that are purchase agreements or, you know, management agreements. I'm talking about the contracts that

are in place between the buyers and the sellers, and I'm going to require that those operative transactional documents, all of them, be produced under the protective order. Secondly, I'm going to require that the defendant -defendants produce any documents created in connection with this transaction that refer, relate, or in any way bear upon this litigation or the claims in the litigation or indemnification for the litigation. And I'm going to require

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that those documents be produced as well by October 14th, 2005. And then we're going to go ahead and go forward with motion practice. The current date for the filing of

dispositive motions is October 14th, and I think the parties

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can already, to the extent you're going to file any, you can be working on those motions. But obviously I want to give the

plaintiffs time to digest what they receive, and so I'm going to extend the motion deadline two weeks to October 28th, 2005. MR. GARVEY: ask a question? THE COURT: MR. GARVEY: You may. When you say an affidavit, are you This is Ed Garvey, Your Honor. May I

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talking about an officer from the corporation, namely Manny Jackson, or myself or how would you prefer? THE COURT: be from Mr. Jackson. It needs to be from the party, needs to The same party that would sign under

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oath an interrogatory answer. MR. GARVEY: THE COURT: Sure. Okay. No problem. And if

That's going to be my resolution.

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plaintiffs, when you get things, you think, you know, there's a genuine, a genuine need for something more, you can call me. But it's going to have to be something that is truly germane to this case and not just a wish to get more information, because in general I don't see that this transaction does affect the issues in the case. But that door is open if you

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conclude there truly is something germane that needs to be addressed. And I will get an order out that says this. I'm sorry, we can't hear you, Your

MR. GARVEY: Honor.

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THE COURT:

Sounds like somebody's dragging their

cell phone across the ground. MR. TOWNSEND: THE COURT: out on this. Somebody's moving around. I'll get an order

Let me say it again.

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And I think you all heard me say if there's an

additional issue raised, it's going to have to truly be germane. MR. TOWNSEND: THE COURT: up? MR. TOWNSEND: Yes, sir. There is a different issue Yes, sir.

Is there anything else we need to take

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if we're finished with this one. THE COURT: Who is this? This is, I'm sorry, Clay Townsend.

MR. TOWNSEND: THE COURT:

Is this an issue you've previously

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discussed with defense counsel, Mr. Townsend? MR. TOWNSEND: THE COURT: It is, Your Honor. Tell me briefly what it is.

All right.

MR. TOWNSEND:

Before I start, one of the attorneys

involved in this call, someone is moving around and moving the phone and it is horrible. THE COURT: I suspect it's a speakerphone and So everybody sit

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someone's shuffling papers or something. still for a moment. Go ahead, Mr. Townsend.

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MR. TOWNSEND:

Thank you.

Your Honor, respectful of

the deadline being 9/30, and we certainly have no desire to drag discovery out, 6(c) does provide for some exceptional circumstances, and I think we have two. is pretty simple. The first one I think

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We had set the deposition of Lou Dunbar for We were going to take his deposition We were going to take It was going to be Court reporters

the 23rd of September. by telephone.

All counsel was agreed.

it from Mr. Garvey's office in Madison. through Houston. evacuated. 9/23.

The hurricane blew through.

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And I think you know what happened on 9/22 and

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Mr. Dunbar has said he would be available on the 4th of October to do that deposition. two hours. months ago. We don't expect more than

You may hear that, gosh, why didn't we do him 18 We received Mr. Jackson's asset purchase

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agreement when he bought the Globetrotters in 1993, we received that document on 7/15/05. Mr. Garvey -THE COURT: Mr. Townsend. -- in documents. It lists the player It was produced by

MR. TOWNSEND: personnel contracts -THE COURT:

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Mr. Townsend. -- bought by Mr. Jackson. One of

MR. TOWNSEND: those is Mr. Dunbar. on Fubu clothing.

Mr. Dunbar's name and number also appear

And we also found out just a few weeks ago

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Mr. Dunbar is still a full-time employee of Mr. Jackson. THE COURT: Mr. Townsend. Yes, sir.

MR. TOWNSEND: THE COURT:

Hold on just a minute.

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Mr. Garvey and Ms. Anand, you agree that this deposition was set to go on the 23rd and all were going to participate? MR. GARVEY: No, Your Honor. No? It was going to be

MR. TOWNSEND: MR. GARVEY:

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The answer is no.

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the week of the 19th of September, just before the end of the fact depositions. THE COURT: MR. GARVEY: Okay. But you agree --

Could have been taken any one of those And Mr. Townsend

days and we scheduled it for the 22nd.

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canceled that because he wanted to fly to Madison for his other depositions. And as of that date he did not indicate

that he was going to even ask for the deposition of Mr. Dunbar since the date was finished for fact depositions. THE COURT: Well, are you saying, Mr. Garvey, that

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it's your view that this deposition wasn't going to occur? MR. GARVEY: Well, there was discussion about it.

But it could have taken place any one of the days of the 19th through the 23rd. THE COURT: Well, okay, let me pin it down in this

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way:

You agree, Mr. Garvey, that there were discussions about

the deposition occurring, it didn't get pinned down, and that a hurricane arrived. MR. GARVEY: THE COURT: Right? Yes, I understand that. All right. I'm going to allow this

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deposition to occur on October 4th. MR. GARVEY: We would just ask this, Your Honor.

Since Mr. Townsend told us it would be one hour when we were talking, now he's saying two hours, we have some limitation placed on this. THE COURT: MR. GARVEY: THE COURT: other issue? MR. TOWNSEND: Yes. And I thank you. The limit will be two hours. Thank you. All right, Mr. Townsend, you had one

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Mr. Garvey, we'll send you an email confirming that date. Your Honor, the other -- this echos awful, but I'm going to do my best. The other extraordinary circumstance has to do with some additional Fubu discovery. We were trying to resolve it We have

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at the eleventh hour, the last production from Fubu.

received even today additional production and a series of supplemental productions that, by their own cover letter, state they're responsive to previous requests.

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In late August we took the depositions -- I'm sorry, early August, of the Fubu represents. We have been Our first

consistently told there were no foreign sales.

request concerning foreign manufacturing and sales was produced to the defendants on 12/10/04. For the first time on

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8/24/05 we received some foreign orders from Korea and China. And for the first time on 9/17/05 it was disclosed to us sales took place in Europe. Well, during this concern period of ours in late August, we engaged a private investigator who confirmed that sales had taken place in the Philippines. This private

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investigator purchased two Fubu garments bearing the hang tags with our clients' names and likenesses. Manila said Fubu The Collection. The receipt issued in

The tag said Fubu The

Collection on the bar codes, and the bag said Fubu The Collection and the signs in the store said Fubu The Collection. To preserve the chain of custody, we flew this investigator to Madison, Wisconsin, for the 23rd of September. Same day as the other deposition including Dunbar. there all day. We were

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And they testified and presented the evidence.

We're extremely concerned that we still have not received full disclosure about the foreign sales and we have tried to operate with good faith with defense counsel, but I think the funny business is on the part of their client.

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Their clients have testified under oath there are no foreign sales and here we are determining foreign sales. Mr. Ira Sacks just recently suggested, in an attempt to resolve this, they could be sales that were illegal or transhipped from the United States. The relief we ask for is either some additional very limited paper discovery to ask them to admit or deny once again in writing that there are foreign sales. Or,

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alternatively, we could do some more discovery or file a motion to compel or sanctions, but these sales were from a licensee of the Fubu company operating in Manila called Pack Sports (phonetic) and we have the information about the company. So it's troubling and we hate that it's coming this late hour, but we have relied to date on their representation that there are no foreign sales. Japan was disclosed finally Europe came out on

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a couple -- maybe a month and a half ago.

9/17 for the first time and now we've got the Philippines. THE COURT: MS. ANAND: All right. Yes. Ms. Anand.

Well, first at the deposition of

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Larry London he testified there were Japan sales, Europe sales, and maybe some other sales, he wasn't sure. We

produced all the materials for the Japan sales and the Europe sales. Two weeks before the close of discovery, Mr. Townsend

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brings up this information about the Philippines. Our client -- well, first, these files did not deal with the plaintiffs, they dealt with Harlem Globetrotters in general. But having said that, our clients were never paid

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any royalties, never -- no sales were ever reported from the Philippines to our clients. going on. There is a Fubu license -- there was, I might say. There was a Fubu licensee in the Philippines, but as far as our clients knew, the licensee had closed all the Fubu stores in the Philippines and they had no knowledge that this Fubu licensee in the Philippines was making -- manufacturing and/or selling styles with Harlem Globetrotters on them. weren't authorized to be doing this. knowledge about this. And Mr. Townsend has requested purchase orders from or documentation from the Philippines. That doesn't exist. So they They had no idea that this was

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Our clients had no

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Our clients didn't even know this was going on. And the way that licensees work is that they see samples from GTFM LLC and if they like those samples they go and they manufacture those samples and they sell those samples and they pay a royalty to Fubu. no purchase orders. There's no paperwork, there's

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And because we didn't even -- our clients

didn't know that this was going on, they had no knowledge about this, there's nothing for them to -- to do any discovery

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about. They also brought up Thailand in their investigator's reports. And we -- Fubu GTFM LLC has been investigating

Thailand for months because of the unauthorized sales and possible counterfeit sales going on there. Both in the

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Philippines and Thailand our clients had no idea this was going on. So there's really no discovery to be done because

we haven't been paid on any of it, and it's unauthorized. THE COURT: So your position -May I -Hold on Mr. Garvey -- or

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MR. TOWNSEND: THE COURT: Mr. Townsend.

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No.

Ms. Anand, you're saying that this is -- there are no documents, there's no additional discovery in your client's possession -MS. ANAND: THE COURT: Yes. -- relating to foreign sales other than

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what you have disclosed? MS. ANAND: Yes. As far as our clients know, there

is no additional information. THE COURT: discovery response? MS. ANAND: Well, no because Mr. Townsend just told But we've told them that Have you said that in an appropriate

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us about this a couple days ago.

we -- that we've given them all of the information in e-mails,

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various e-mails. THE COURT: All right. Go ahead, Mr. Townsend. At the depositions

MR. TOWNSEND:

Yes, Your Honor.

of the Fubu CEO and attorney and also the CEO of Fubu The Collection, LLC, testimony was given the they are -- they do have purchase orders which are issued to the various factories, and there are 13 around the world, 13 different countries, that would show the quantity of clothes made, style made, and where they were shipped to. Mr. Sacks, in our attempt to resolve this issue after those depositions, says the stack could be three feet tall. I

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told him I don't care if it's five feet tall, I'll pay for the paper if those will disclose what was made by what factories and where it was shipped. That's an easy answer to us,

hopefully, about the Philippines and whether clothes were sent there illicitly or properly. Our investigator has confirmed that this -- these appear to be, and counsel looked at them, legitimate garments bearing all the proper tags issued on a receipt. This is not

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a guy in Battery Park in Manhattan selling knockoffs of Louis Vuitton handbags. It's a legitimate store, two of them, in

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Manila operating, and they've already admitted they were licensees. Sir, they are still licensees, they were selling

clothes just a few days ago. MS. ANAND: We --

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THE COURT:

Hold on.

Hold on, Ms. Anand.

Mr. Garvey, you said you were going to get a stack of purchase orders. Did you get them? That was Mr. Sacks said they were

MR. TOWNSEND: available. THE COURT:

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Did you request them? Yes, sir.

MR. TOWNSEND: THE COURT:

Did you get them? No.

MR. TOWNSEND: THE COURT:

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Why? We received a sampling, and Saphia can

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MR. TOWNSEND:

say, I think the date was the 17th of September that they called a sampling of purchase orders that involved some from Korea and some from China. countries. shipped to. But there were 13 different

And they will also show where the stuff was They have it. We'll pay for the copying if they

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will just send it to us. THE COURT: Did you agree to receive a sampling? I did not, Your Honor.

MR. TOWNSEND: THE COURT:

So your position is that you have asked

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for and they have failed to produce this three- to five-foot stack of purchase orders. MR. TOWNSEND: I can produce e-mails to Mr. Sacks At one point in There

saying we would like the purchase orders.

early -- well, in mid-August I offered an alternative.

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was a database showing the same information. offered, hey, let's just give you a sampling.

Instead, he And while we

appreciate the efforts at economy, when we continue to find things like this Philippines example, it's just not reliable discovery production. THE COURT: Did you serve a document production

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request that sought the purchase orders? MR. TOWNSEND: Mr. Sacks actually e-mailed us and The efforts

said a supplemental request is not necessary.

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were in good faith to try to get the material to us, so he said it's not necessary. When we saw that we were not going to get it, we did file an additional request for production and interrogatories. And unfortunately our paralegal misread the deadline and they were actually sent out two days late, on the 18th of August. But we had the discussions for them to produce them, and they had them available. And they are still pursuant to

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our first request for production of 12/10/04, they were responsive to that very first request. THE COURT: MS. ANAND: All right. Yes. Ms. Anand.

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First of all, Ms. Breummer also

sent the same exact requests in a timely fashion and we responded to that and we objected. Second, Mr. Townsend is misunderstanding the entire -- the entire purchase order. The purchase orders are

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only for GTFM, LLC, which was men's and boys clothing.

They

license out the rights for the women's clothing, the Japanese sales and shoes. When a licensee -- a licensee, as I said

earlier, goes and sees the samples and they manufacture the garments on their own. licensees. The Philippines is a former licensee of Fubu that was not authorized to sell Harlem Globetrotters apparel. are no purchase orders that exist for these overseas licensees. And they're getting confused because the garments So there So there are no purchase orders for

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were made in various countries but they're not the same garments that would have been sold in the Philippines store if they were authorized, which they weren't. thing. That's the first They're just

I guess that's the most important issue.

misunderstanding it. But we sent them responses to their document requests and there was an agreement, even though Mr. Townsend is saying there wasn't. Mr. Sacks and I met with Ms. Breummer,

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Mr. Townsend, and Mr. Rosenquist, and their expert after the Fubu depositions to discuss all the outstanding discovery issues and they agreed at that meeting that a sampling would be fine. We've got e-mails that discuss that. And in fact, I

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sent a letter asking plaintiff to confirm that our agreement was still on that nobody ever responded to, yet we continued to send them information.

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Everything that we didn't produce was because we properly objected to it. The purchase -- Mr. Townsend is Documents

admitting it is three to five feet of documents.

which GTFM, LLC, doesn't even have, that none of the Fubu entities have, that Samsung has. GTFM, LLC. Samsung is a shareholder of So to

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They're the ones that keep the documents.

get those documents we have to -- our clients would have to go to -- to ask Samsung to produce three to five feet of documents which are two to three years old. THE COURT: relevant to? Mr. Townsend, what are these documents

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What issue? They are relevant to the very earliest

MR. TOWNSEND:

request for information regarding the manufacture and sale of allegedly infringing garments internationally. THE COURT: I understand that. What issue in the

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case are they relevant? MR. TOWNSEND: infringements. THE COURT: Damages. Yes, sir. Yes, sir. Absolutely. They're relevant to the number of

MR. TOWNSEND: THE COURT:

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We had a conference call about this on

August 16th, about documents that were related to damages, as I recall, and that you placed expressing concerned that without them you didn't know whether to -- well, I think your thought was that either the damages expert report ought to be

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extended beyond August 19th or that you should be allowed to supplement it. And as I recall my ruling, I ruled that you

started it too late and therefore I didn't move the expert deadline or allow the supplementation. MR. TOWNSEND: MR. GARVEY: That's correct. May I be heard? Just one second,

16:57:30

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This is Ed Garvey.

MR. TOWNSEND:

He's addressing me.

MR. GARVEY:

I'm sorry. Were you finished, Your Honor?

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MR. TOWNSEND: THE COURT:

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I want to hear your response to that. We understand we cannot supplement the

MR. TOWNSEND: expert's report.

We still think they are highly relevant on

several points, including damages, notwithstanding the expert's report, but also credibility of these defendants and issues such as that. The request that we take the word of Mr. Sacks that these were illicit sales in the Philippines, I would challenge Ms. Saphia Anand to see if that licensee would be willing to sign an affidavit to say, "I'm operating illegally, I have no right to sell these Harlem Globetrotters Fubu garments." think she'd be hard pressed to get it. shocked to hear it. I think they'd be I

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Pack Sports is a licensee selling Harlem They're a retailer. And the sales We

Globetrotter garments.

have never been disclosed.

We requested them timely.

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discovered the discovery abuse, for lack of a better word, toward the tail end of the discovery period. THE COURT: MR. GARVEY: All right. Mr. Garvey.

Your Honor, the fact discovery ended on

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23rd of September and that was the day that Mr. Townsend chose to come to Madison with two investigators. THE COURT: Mr. Garvey. MR. GARVEY: In terms of taking depositions. The It actually ended on the 30th,

16:59:03 10

parties have operated under the 23rd with respect to fact witnesses. THE COURT: Okay. My order of April 5th extended the

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fact discovery deadline to September 30th. MR. GARVEY: I'm sorry, Your Honor, we've all

operated under the 23rd deadline -THE COURT: MR. GARVEY: Okay. -- which is the date Mr. Townsend

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brought people to our office to testify. THE COURT: MR. GARVEY: Okay. And we just feel after 18 months of an

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opportunity, if he wanted to look for this material, he had plenty of time to do it, and not to extend this case would just be, as far as we're concerned, very prejudicial to all of the defendants. THE COURT: Okay. I think --

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MS. ANAND: THE COURT:

Your Honor, may I -- I'm sorry. I think we've tilled this ground enough. I don't think the documents, the

Here's my ruling.

document production, is going to be required on damages for the same reasons that I set forth in my order of August 18th, 2005, on the credibility issue. I'm not going to require the

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production for that reason, either. I think, Mr. Townsend, you've got evidence with which to make your credibility argument. investigator's discoveries. You've got your

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You've got, apparently, the

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deposition testimony from defendants that they weren't selling overseas. You are going to be able to use that to attack

their credibility. Discovery is closed. I'm not going to require any

additional discovery on this issue. All right, are there any other issues we're going to take up? MR. GARVEY: I may. THE COURT: MR. GARVEY: THE COURT: MR. GARVEY: THE COURT: MR. GARVEY: How many more do you have, Mr. Garvey? This is our first one. How many do you have? Just one. Okay. Go ahead. Yes, Your Honor. This is Ed Garvey. If

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It's a question related to document

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production, which was the reason we asked for this conference yesterday in the first place. Mr. Townsend still hasn't forwarded documents since the deadline has been extended. May we assume that when we

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have a response, for example, from Marques Haynes that he will forward the documents as soon as possible or that when he has an opportunity that Mr. Townsend is under an obligation to provide those documents? THE COURT: Well, if -- if any party before today's

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deadline said that they would respond to a discovery request and they have not, the fact that this date passes doesn't relieve them of that obligation. MR. GARVEY: THE COURT: this. Thank you, Your Honor. All right. I will get an order out on

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You all have a nice weekend.
(End of transcript.) * * * * *

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C E R T I F I C A T E

I, PATRICIA LYONS, do hereby certify that I am duly appointed and qualified to act as Official Court Reporter for the United States District Court for the District of Arizona.

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I FURTHER CERTIFY that the foregoing pages constitute a full, true, and accurate transcript of all of that portion of the proceedings contained herein, had in the above-entitled cause on the date specified therein, and that said transcript was prepared under my direction and control, and to the best of my ability.

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DATED at Phoenix, Arizona, this 18th day of November, 2006.

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________________________________ Patricia Lyons, RPR, CRR

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Case 2:04-cv-00299-DGC

Document 555

Filed 11/29/2006

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