1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

1

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

In Re:

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representatives of

THE COMMONWEALTH OF PUERTO RICO,

et al.,

Debtors

)

)

)

)

)

)

)

)

)

)

)

)

No. 17 BK 3283-LTS

Pages 1 - 79

HEARING

BEFORE THE HONORABLE JUDITH GAIL DEIN

UNITED STATES MAGISTRATE JUDGE

United States District Court

1 Courthouse Way, Courtroom 18

Boston, Massachusetts 02210

May 21, 2018

1:39 p.m.

KELLY MORTELLITE, RMR, CRR

United States District Court

1 Courthouse Way, Room 7200

Boston, Massachusetts 02210

mortellite@gmail.com

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 1 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

2

A P P E A R A N C E S:

KATHERYN ZECCA, ESQ. and DONALD BURKE, ESQ., Robbins

Russell, for GO Bondholders

ELIZABETH L. MCKEEN, ESQ., and ASHLEY PAVEL, ESQ.,

O'Melveny & Myers, for AAFAF

ELLEN HALSTEAD, ESQ. and ELLEN HOLLOMAN, ESQ., Cadwalader,

Wickersham & Taft, for Assured

TIMOTHY W. MUNGOVAN, ESQ. and GREGG MASHBERG, ESQ.,

Proskauer Rose, for the Financial Oversight and Management

Board for Puerto Rico (FOMB)

GRANT R. MAINLAND, ESQ., Milbank, Tweed, Hadle & McCloy

LLP, for Ambac Assurance Corp.

GREG HOROWITZ, ESQ. and ALICE J. BYOWITZ, Kramer Levin

Naftails & Frankel, for The Mutual Fund Group

ADAM BOOKMAN, ESQ., Weil, Gotshal & Manges, for National

Public Finance

JOSEPH P. DAVIS, III, ESQ., Greenberg Traurig, LLP, for

FOMB as Rep of PREPA and AFAAF

NICHOLAS BASSETT, ESQ., Paul Hastings LLP, for Interested

Party, Unsecured Creditors

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 2 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

3

P R O C E E D I N G S

COURTROOM CLERK: The United States District Court for

the District of Puerto Rico is now in session on May 21, the

year 2018, in the matter of the Financial Oversight and

Management Board for Puerto Rico as representative of the

Commonwealth of Puerto Rico, et al. Case number 17-BK-3283.

The Honorable Judge Dein presiding.

THE COURT: Good afternoon, everyone. I'm here in

Boston. To the attorneys, representatives of the party, I

don't know if anyone of the public has made it into the

courthouse as opposed to outside, but welcome here, welcome in

Puerto Rico and welcome in New York. Hopefully we're going to

accomplish a lot today. That's my goal, all right? Don't make

me a liar first thing on a Monday.

So what I'd like to do today is I want to start off

with the motion to compel compliance with the order. And we'll

start off with the moving parties and then the joined parties,

and then we'll deal with the issues on remand, okay? Does that

work for everybody?

All right. Who is starting on the motion to compel?

MS. ZECCA: Good afternoon, Your Honor. Katheryn

Zecca on behalf of the Ad Hoc Group of GO bondholders. I'll be

taking the lead on the Commonwealth's motion to compel.

THE COURT: All right. What I'd like to do is not

spend a whole lot of time on dissecting the words of the order,

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 3 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

4

okay? I think the ultimate goal of the order was that there

would be a specific identification of certain documents, and

then the fight would center on those documents; you know,

should they be removed from the room; should they be

privileged, whatever that process is. So I think we're there.

I mean, I think we sort of have -- the moving parties have

identified a group of documents that I think are the key issues

right now, and let's assume that that is the documents that

you're seeking to have removed from the room and disclosed and

proceed with that.

MS. ZECCA: Would you like me here or at the podium?

THE COURT: I think it's probably easier if you go to

the podium just for recording purposes.

MS. ZECCA: Is that microphone working?

So I'm actually happy to report that what I was

originally going to talk about last was the protective order.

Shortly before the hearing I believe we've mostly resolved our

differences on that, and we'll be able to submit a stipulated

protective order to the court hopefully within a week.

What the parties have discussed, I'll just put it on

the record, and if I've gotten anything here wrong, other

co-movants or respondents will let me know. We are effectively

going to do the protective order that was entered in the PREPA

case. There's a stipulated order in connection with the motion

for financing that this court had a little involvement in and

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 4 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

5

was argued in front of Judge Swain. I think in all material

respects it is identical to the protective orders that each

side produced, but it has a Paragraph 8, which I think was the

one paragraph we were disputing. We are going to use Paragraph

8 in the PREPA order with two changes, one of which I think we

all agreed to. There's a sentence at the last paragraph of

Paragraph 8 that says, "Respondents may designate any material

in the data room as confidential material subject to this order

by written notice to the movants without the need to affix any

additional marking or designation."

As a prefatory clause to that sentence in the PREPA

order, we've agreed to add this language, "If any data room

material is made subject to this protective order, whether by

agreement of the parties or by court order, respondents may

designate," and so on. The only thing we have left to work out

is in the PREPA order there's no time within which --

THE COURT: I'm going to ask you to hold for a minute.

I understand that Puerto Rico cannot hear. Are they on?

LAW CLERK: They are on but had some issues so we need

to reconnect them.

THE COURT: Okay. We need to reconnect.

(Pause.)

I'm going to step down until this gets straightened

out. I apologize.

COURTROOM CLERK: All rise.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 5 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

6

(Recess taken 1:43 p.m. - 2:02 p.m.)

THE COURT: All right. So now that I've given you an

opportunity to resolve all outstanding issues --

MS. ZECCA: You know, we tried. I don't know if we

made any progress.

I believe where we left off was I was explaining where

we are in the protective order.

THE COURT: Yes.

MS. ZECCA: I think there's one thing we have left to

discuss, which is in Paragraph 8, in the last sentence, it says

that, "Respondents may designate any material in the data room

as confidential material subject to this order by written

notice to the movants." We would like a time period upon which

that written notice must be given. We had proposed five days.

Respondents have told me that's too fast. That's fine. We can

negotiate.

We're happy to try to agree on a reasonable time

period, but from the movants' side we do not want it to be

indefinite. That's the one thing we were not able to resolve

in the courtroom today, but I think we're committed to try to

talk about it in the next few days, get something, and get the

court a stipulated protective order.

THE COURT: Okay. Why don't you do that. And then if

you can't resolve it, if you submit a status report with your

different positions, I'll probably split the difference.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 6 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

7

MR. MASHBERG: Your Honor, Gregg Mashberg from

Proskauer Rose on behalf of the Oversight Board. Ms. Zecca

accurately accounted for our conversations. I just wanted to

add we need to go back to our client and confirm that, but I

think we're certainly in the right direction here, and

hopefully we'll have a resolution.

THE COURT: Great.

MS. ZECCA: Okay. So Your Honor, what respondents --

we are movants -- what movants are looking for is an order

stating that documents, what we've called fiscal plan

development materials, but they're documents responsive to

Requests 8, 16 and 17, are to be produced in discovery as

opposed to subject to I believe what the parties are calling

data room restrictions.

And we'd like an order with respect to the documents

in the data room now and any documents that may be produced in

the future because what we'd like is an orderly process by

which, when documents come in, we know they're discovery, we

know who we can use them with, we know who we can show them to

and under what circumstances.

I want to be clear on the narrow scope of what we're

looking for here. It will be under a protective order, so

respondents will have a chance, obviously, to designate them as

confidential, and there will be a procedure where, if we don't

agree with the confidentiality designation, we can try to meet

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 7 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

8

and confer and come to the court.

We also don't think that producing it in discovery

means it necessarily is admissible or usable in a court

proceeding. Just like discovery in every litigation I've done,

producing it in discovery is one thing. If you want to use it

in a court proceeding, the other side always has the chance to

say, No, it's not relevant; no, it's hearsay; no, the standard

for a plan adjustment should be X, not Y, and therefore it's

not relevant.

But what we movants feel is necessary here is a broad

order governing what's been produced and anything that will be

produced in the future going forward so we don't have to

constantly keep coming back to the court. Even since we filed

our motion, new fiscal plan development materials have been

posted to the data room. I saw an announcement this morning

that there's going to be revisions to the fiscal plan and it's

going to be recertified. There will be, I assume, a new model

and maybe other materials underlying that plan, so we need an

order to let this proceed in an orderly way.

I don't think we've had too much trouble with the

other side about what the fiscal plan development material is.

We just think these are discovery materials, and we need an

order, broad order so we're not fighting document-by-document

all the time, because that's just not workable in this

litigation.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 8 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

9

THE COURT: Let me ask you this, though. Because you

did come up with this Exhibit B, which had 47 documents, which

seemed to me -- now, I have never seen the data room,

obviously.

MS. ZECCA: Correct.

THE COURT: So I don't really have a sense of whether

these are clearly documents that you would have agreed upon or

not. I felt that it was helpful for me at least to have you

identify the documents that you thought were at issue and then

be able to have a conversation with the other side to say, how

are these going to be designated with the burden being -- let's

assume for now that the burden would be on the respondents to

say, I'm designating them confidential or not.

Is it helpful, though, to have you identify what

documents you're talking about so that we don't get up in this

cycle of talking past each other about some of the documents?

MS. ZECCA: Perhaps, but I want to step back with what

I think the court -- I'm just not sure I follow the court's

question.

THE COURT: You're saying you want a blanket order

that says everything comes out of the room, subject to the

protective order.

MS. ZECCA: Correct.

THE COURT: But it seemed to me that part of the way

this whole thing started was there were groups of documents

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 9 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

10

that went in that were for mediation only, which are covered by

the protective order as mediation only, but that there was a

broader range of documents in the data room that went beyond

the fiscal plan material, and that it was helpful, I thought,

to have you identify specifically what you were talking about

so that we at least eliminated that initial dispute as to what

documents do we mean.

MS. ZECCA: So I think a little bit of yes and no.

There's four categories of documents in the data room, to my

mind, but they're not filed by these four categories. So there

are things that I think the parties can and have agreed are

factual data information, things like that that they have

already told us, We will deem these produced under 2004 once we

get a protective order. We're all good there.

There's documents that have been produced in other

litigation, in other adversary proceedings, COFINA proceedings,

et cetera. Those are actually in one place in the mediation

room again produced here. There's the fiscal plan development

materials, and then there are mediation materials.

Part of the -- one of the issues, though, is within

the mediation folder of the data room, they have filed things

that are fiscal plan development materials, not say a deck

created for a mediation session. So that makes it a little bit

confusing.

So the way Exhibit B came up is, because we went

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 10 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

11

through the data room after your order and said, Here is what

we think has been ordered produced, could be considered a

fiscal plan development material. A chunk of that they said,

Actually, we consider that factual information and data, so

there's no dispute here. I think a little bit of it they said,

That actually isn't a Commonwealth document. That's a

different Title III, so it's not covered by the 2004 order. We

agree with that.

And then there's the middle piece which are the fiscal

plan development materials. That's what's here. They didn't

agree to produce any of it pursuant to Rule 2004. But our

problem is, even since this, new materials are being posted to

the data room constantly. So we want a process -- so I think

we tried to do this to be helpful as to what was there in that

snapshot in time, but it's a growing room. They add documents

to the Commonwealth piece of it on a regular basis, and it's

unworkable for us to have to come to them every time something

gets posted and say, Will you agree to let us use this in

discovery or not?

We don't -- we haven't had trouble agreeing what

rubric it falls under; is it factual data, fiscal plan

development material, and we can say to them, This has been

posted, we think it's a factual, we think it's fiscal plan

development material, we think we should use it. But we do

need, we think, guidance from this court if it is a fiscal plan

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 11 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

12

development material, it falls within discovery and not under

the NDA or mediation instructions, or else we're going to be

constantly disagreeing and constantly back before you. I know

that in every fiscal plan development material we asked them to

produce, they said no.

I think that's going to be the case in the future,

with the one exception that they have told us that with respect

to the model underlying the certified fiscal plan, they'll

produce that in discovery. Although I will say that model is

currently sitting in a mediation folder, and without an order

of this court or consent from them, we can't use it in

discovery.

THE COURT: Is the dispute, though, whether or not

documents that are fiscal plan material documents need to be

produced absent a showing of good cause or -- I guess good

cause, or is the dispute that these are materials that are not

fiscal plan development materials?

MS. ZECCA: I think, unless there's an exception that

I'm not recalling, we agree that what's on Exhibit B are fiscal

plan development materials, and we also agree that, for

example, the model that's been posted to the data room, since

we filed, is also a fiscal plan development material.

I think the central question and the way the parties

each read the court's order differently is if it's a fiscal

plan development material, is it in discovery, subject to

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 12 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

13

protective order, you can designate it confidential, and

whether it gets used in court is different, you always have

your right to object to that, or whether, as they say, we have

to go to them on each material every time and ask if they'll

produce it and then when we disagree, come to the court,

because we're going to be back here and back here and back here

if that's the case.

THE COURT: Well, I don't know whether you'll be back

here or back here. I don't know whether or not designating the

materials gives you a concrete basis for discussion or not.

But go ahead.

MS. ZECCA: So as we see it, the Board has announced

that it wants to propose a plan adjustment for the Commonwealth

in 2019. I've read many government parties saying they want to

have the plan confirmed quickly. And that's why we're saying

we want a court-supervised process whereby these materials are

in discovery, and we can be working now to understand these

materials, to work with our own experts on these materials, and

to have a process whereby, instead of under the NDA where

everything is presumptively confidential and we have no ability

to challenge that, there's a dialogue, iterative process where

they designate and we can challenge.

I don't know if the court needs me to -- I'll start

with this. In respondents', I believe it's AAFAF's response,

they say that they've provided many materials to us and they

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 13 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

14

say that's basically the same as -- they intimate that's the

same as discovery, and it's not, for two really big reasons in

our mind.

One is, the use in litigation, and the NDA and the

mediation agreement are pretty clear. You can't use these in

discovery. You can't even attempt to use them in litigation.

So if it's sitting under the data room restrictions, as I'll

call it, the NDA or the mediation agreement, it's in a sealed

box as far as we're concerned. I can't even come to this court

and say, I think we should be able to use this and have them

say, We object, we think it's not admissible. It's just in a

black box. We think in a protective order situation, if it's

under the 2004 order, it's in discovery. We can attempt to use

it; they can object.

And second is the confidentiality designation process.

The court knows what a protective order does. Under the NDA

and the mediation agreement, it is confidential, and I have no

ability to challenge that confidentiality. Movants have no

ability to bring any issues about confidentiality to the court.

So it's exceptionally restrictive, and as we see it, it's

unnecessary.

We haven't heard any coherent -- any legal rationale

or any policy rationale for saying, This should not be subject

to discovery. Remember, there is a protective order. That

doesn't mean it's showing up publicly if they've designated it

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 14 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

15

confidential. Just because it's produced in discovery, that

doesn't mean it's admissible. But we do think we need a

process whereby it's in discovery.

THE COURT: In the process that you envision, would

they make the designation before they put it in the room or

after? When does that happen if you don't actually designate

the information that you're asking about?

MS. ZECCA: Designate it as a fiscal plan development

material?

THE COURT: Right.

MS. ZECCA: I think in my ideal world, if the court

ordered fiscal plan development materials produced under 2004,

there would be a folder in the data room for that production,

and they'd put it up in that folder so I'd know by virtue of

where they post it, that's how they see it. And that would

also, I suppose, allow if they put something instead in a

mediation folder that we think wasn't fairly mediation

material, we can have a meet-and-confer about that. But it

hasn't really -- that's not really been what the fight has been

about. The fight has been about are these discovery or not.

One thing we wanted to say, Your Honor, is that in

this case we've already seen multiple expedited proceedings.

The PREPA proceeding was one such proceeding. The movants --

not the movants. The Board originally asked for $1.3 billion

of financing, I believe. The hearing was supposed to be just a

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 15 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

16

little bit, a week or two later. That eventually stretched out

to three or four weeks after the initial motion. I'm looking

at Mr. Horowitz because he has a more vivid memory of this than

I do. But it was a super-expedited discovery process and

deposition process, and I believe we did have one telephonic

motion with this court in the middle of a deposition.

The reason that worked is because those documents on

PREPA were all produced pursuant to a protective order. If

they had just been sitting in the black box of the data room, I

don't know how any of that works. And that's why in this case

where expedited proceedings happen, and they're going to pop

up, and they are going to need to be quick, we can't be

fighting about pulling fiscal plan development materials out of

the black box and into discovery. They need to be in discovery

so that we can have an orderly process to handle the expedited

proceeding and to prepare for the confirmation proceeding.

I think the confirmation proceeding may come upon us

very quickly. And when it does, right now, I'm not sure

whether under the black box restrictions it's okay to share a

fiscal plan development material, such as a model underlying a

draft plan or the old fiscal plan, the prior certified fiscal

plan, with a testifying expert because my testifying experts of

course are there for litigation. And the NDA says you can't

even attempt to use it for litigation. So that creates a

problem for movants as we try to prepare our case going

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 16 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

17

forward. And that's why we want it in discovery.

Another thing we set out in our brief is if we have

to, as they say, go to them on a case-by-case,

document-by-document basis, we're giving them some insight into

our internal deliberations and thought processes about what we

think is important. That's not normally your setup in

litigation. Normally the documents are produced and you don't

have to provide -- you don't have to provide a justification or

anything like that to your opposing party about why it comes in

in discovery.

THE COURT: As of the procedure that you're using now,

how do you know when something new is added to the room?

MS. ZECCA: There is an email alert that comes out

every time I think a document is added or once a day. It's one

of the two. I think that's what I had on why we want this

order, and I had a lot to tell you about the protective order

but now I don't have to.

What I do want to say, add one more thing, this is

just to be clear with the court. In the court's February 26

order, the court said -- I want to get your words right, it's

at page 7 -- the court assumed that production of 2018 fiscal

plan materials to the data room will mirror the types of

documents produced regarding the 2017 plan and that the

production will be sufficient to respond to the outstanding

request in the renewed motion.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 17 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

18

At the time we were filing these papers, we had not

had a chance to fully study the models underlying the 2018

plan. We've done that. We are compiling, in consultation with

our financial advisors and our co-movants, we're compiling a

list of additional materials we think we need. We're obviously

going to get that to respondents and meet and confer with them

before bringing any disputes before the court. I hope we don't

have any. But I did want to let the court know that currently

we believe there are materials outstanding, but we haven't had

a chance to make that complete list and get that to respondents

to meet and confer about that yet.

THE COURT: Okay.

MR. HOROWITZ: Good afternoon, Your Honor. Gregory

Horowitz from Kramer Levin. I'm getting up today on behalf of

the PREPA movants on what was captioned a motion for joinder,

but I think Your Honor very appropriately and pragmatically

recharacterized it as a motion to compel. I think Your Honor

recognized we were just looking for the most judicially

efficient way of presenting essentially the same issue with

regard to the PREPA movants in the PREPA case.

I think just for context, Your Honor, so you

understand, the PREPA creditors sought 2004 discovery and

negotiated with the PREPA debtor a consensual stipulation and

order authorizing the 2004 discovery which Your Honor entered

on January 17 of this year. That order, that stipulation and

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 18 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

19

order contemplated a similar procedure to what was followed in

the Commonwealth case. We were allowed to serve discovery, our

document requests, and there was to be a meet-and-confer,

discussion of what disputes would be presented to Your Honor.

When we actually had the meet-and-confer scheduled,

the day I think we had the meet-and-confer scheduled was when

the debtors filed -- the PREPA debtor filed its urgent DIP

motion, and everything got sidetracked, Your Honor, in the DIP

discovery. And a substantial amount of material was produced

in connection with that contested matter. But as a result, we

are only just now revisiting the meet-and-confer process on the

2004 discovery, and to date in the PREPA case, there has been

no production pursuant to 2004.

We are negotiating with the debtors' counsel, and I'm

hopeful that we will resolve most, if not all, of our issues on

that, but it's possible we will be back before this court on

that.

In the meantime, we filed what was originally

captioned the Motion For Joinder so that we could get the same

material, which was a subset of the material we sought in our

2004 requests, the fiscal plan development material with regard

to the PREPA fiscal plan. I don't believe, Your Honor, there's

any dispute about what constitutes fiscal plan development

material, at least with regard to what has been posted in the

data room.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 19 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

20

I think one dispute that I hope we can move past is

over the argument that creditors should have no need for 2004

discovery of these materials at this time because they've

received similar materials in the mediation in the data room.

I hoped that was a contention and an issue that had been

resolved when the mediators in connection with the Commonwealth

2004 motion issued their notice of breach of mediation

confidentiality, basically saying it's inappropriate to refer

to material, to refer to disclosure that's occurred in

connection with the mediation and that whatever is going on in

mediation, that's no substitute for the parties' rights in the

litigation and in the bankruptcy process. In other words,

mediation disclosure is not a substitute for 2004 discovery.

So in a way, the fact that there is material that's

been posted in the data room while, you know, in one respect

it's been very helpful, in another respect it's very confusing

because it should be irrelevant to whether or not the debtor

has complied with its obligations under 2004 or whether the

creditors have received the information that they're entitled

to under 2004.

Here again, Your Honor, I say I don't believe there's

any dispute as to what is fiscal plan material with regard to

the PREPA side. We're just asking in this regard, I simply

join in Ms. Zecca's arguments. We're just asking that that

material be ordered to be produced, not to be -- I don't like

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 20 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

21

the expression, with all due respect, Your Honor, released from

the room. It's being produced in the case pursuant to 2004.

It's just that, as a logistical matter, releasing it from the

room, de-designating it might be an easier way of doing it, but

I think as a logical matter, we should pretend that that room

doesn't exist and just say this material needs to be produced.

And we already have a protective order in place, Your

Honor, our protective order. I think all of the language that

was negotiated with regard to the Commonwealth order is simply

a clarification of what was always intended in our protective

order. I'm perfectly happy to have that clarification deemed

to be a gloss on the protective order that's already been

entered by Your Honor in the PREPA matter.

THE COURT: In the PREPA, though, why do you think

materials haven't been produced?

MR. HOROWITZ: There hasn't been any 2004 production.

THE COURT: You've got everything in connection with

the disputed motion?

MR. HOROWITZ: Well, we got a significant amount of

material in connection with the contested matter, the DIP

matter. We're still seeking -- and some of it, I think we

should be able to resolve a lot of it -- some other material

that we need in connection with our 2004 requests. That hasn't

been produced yet, but that hasn't been produced outside of the

data room, outside of mediation yet, but I'm hopeful that we'll

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 21 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

22

be able to resolve those issues.

The DIP motion was decided, it all feels like one long

day to me, Your Honor, but a couple of months ago at least.

And there's been some significant new material, including a new

PREPA fiscal plan. So there is more material out there that

has not been produced, except to the extent that it's been

provided in mediation, which again I submit is not production.

THE COURT: Under your confidentiality agreement, if

it's in the mediation folder, you have the right to contest

that?

MR. HOROWITZ: No, Your Honor. If it's in the

mediation folder, it's been produced in connection with

mediation.

THE COURT: And you don't have the opportunity then to

say it shouldn't be limited to that, or you do have the --

MR. HOROWITZ: Well, the only opportunity we have is

the opportunity we're taking advantage of today, Your Honor,

which is moving to compel the production of that material or

some subset of that material in 2004.

THE COURT: Right. But your confidentiality agreement

allows for that? The PREPA is the one that allowed to contest

the designations, correct?

MR. HOROWITZ: The PREPA protective order, which Your

Honor has entered, does not address and does not cover material

that's been produced in connection with the mediation.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 22 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

23

THE COURT: Period, the end. And you don't have the

right in that one to either challenge that or not?

MR. HOROWITZ: No. That's simply a mediation

confidentiality. As far as I'm concerned, that is, to use

Ms. Zecca's phrase, a black box.

The only reason -- I shouldn't say the only reason, I

don't want to speak for the debtor, for the PREPA debtor. The

PREPA debtor has not gotten out ahead of the Commonwealth and

the Oversight Board and AAFAF on producing fiscal plan

development material pursuant to 2004 in our case, and I

believe they will not do so until Your Honor orders it in

connection with these motions.

THE COURT: Okay.

MR. HOROWITZ: Thank you, Your Honor.

THE COURT: Who is next? Who is opposing this,

anybody?

MS. McKEEN: Good afternoon, Your Honor. Liz McKeen

on behalf of AAFAF and respondents. I think in thinking about

these issues today, it's appropriate to focus on several

things. One is the good cause framework that your February 26

order teed up with respect to the fiscal plan development

materials.

Another thing I would like to focus on is the fact

that the way these conversations have developed, they've been

focused on the specific set of documents that were identified

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 23 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

24

in the motion to compel. And so in response to the question

that you posed of Ms. Zecca earlier, I think we view the

analysis and the question of whether it makes sense to continue

to have a document-by-document framework for these

conversations as being very helpful.

I think for a lot of the reasons you identified in

your original order, it helps to be granular and specific about

what documents are we talking about and what purpose they're

being used for and in what context. And so to the extent today

movants are talking about seeking a broad order with respect to

three really potentially large categories as opposed to

focussing on the 40 or so documents that are at issue in their

motion, I think it makes sense to resist that approach and to

really focus on what are the actual documents that we thought

we were coming here to talk about today.

And I think that I would agree that we share the

movants' view that these are in fact fiscal plan development

materials. I disagree that there haven't been any other fiscal

plan development materials produced. And in fact, part of what

we did after the court referenced the February 26 order as

Ms. Zecca referenced, we met and conferred and identified a

host of materials that we did agree to make available under the

protective order that were fiscal plan development materials,

including various models, debt slides, reconciliations of

expenditures, revenue comparisons, expense reports and the

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 24 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

25

like, and as we have just reconfirmed today, in connection with

the new plan that the Board recently certified and with any

plans that are certified in the future, have agreed to make

available all the models and data supporting those plans, not

only in the data room but subject to the terms of the

protective order so that they can be used in litigation and for

litigation purposes.

And I appreciate Ms. Zecca's observation that nothing

about producing something pursuant to a protective order would

waive our right to do things like challenge admissibility down

the road, but that doesn't really help us with respect to some

of the burden that would be associated with too broadly

interpreting what there has been good cause to conclude should

come under the protective order rather than being in the data

room.

And with respect to these 40 documents, I think what's

important is the extent to which these documents relate

exclusively to fiscal plans that are obsolete and no longer

operative. I think that is a big part of how we look at this

issue and the reason why we don't believe the movants have

demonstrated good cause at this point in the proceeding.

And let me say something about that. I think the way

we look at these documents, about 32 of the 40 or so relate

exclusively to what I'll call fiscal plan 1.0, which was the

version that was certified prior to the hurricanes. The other

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 25 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

eight or so support interim drafts of the post-hurricane fiscal

plans that were never certified. And from our perspective,

whatever else you think about these documents, which have been

made available to the movants under the data room restrictions,

we don't see that at this point in time when there hasn't been

a plan of adjustment proposed. And when there isn't any

pending litigation to which these old and obsolete materials

relate, that there really isn't good cause to take them out of

these restrictions.

And part of that is because of the burden that would

be associated with having to do things like prepare our own

witnesses and experts to then deal with how to explain these

documents when I think what we believe everybody ought to be

focused on is what is the fiscal plan that's actually going to

form the basis for the plan of adjustment. And it's a question

in our minds of where you draw that line in terms of allowing

this discovery to proceed. Because one thing that one could

very reasonably conclude is that at the time a plan of

adjustment is proposed, the movants may be able to come in and

say, Aha, there's something about the fiscal plan 1.0 material

that we think actually is relevant to an issue that's going to

be litigated here. It ties into this specific reason. But we

don't have that right now because plan adjustment is not on the

table, and we're sort of in the hypothetical universe of this

old obsolete stuff might be relevant in the future to some

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 26 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

27

unspecified litigation that's not happening right now. So we

don't think that constitutes the kind of good cause you were

contemplating under the order.

THE COURT: Let me just -- help me out here, okay?

Because I think when you first came in first couple of times --

and it's wonderful that some things get resolved by

stipulation, but that takes me out of the discussion, so I tend

to get this in bits and pieces.

At the beginning it seemed like we were talking about

an unbelievable burden of endless kinds of documents, all

right? So it made a lot of sense to me to say, Let's not waste

time with trying to sort through all of these documents and

figure out where they're going if most people aren't going to

be using them, right? That was my very practical thought

process. Here, though, I'm dealing with a list, which is down

to 40 documents, that everybody -- I think it's 40 by the time

you're done with the mediation room.

MS. McKEEN: Given or take.

THE COURT: Or even if I take 47, I'm talking about 47

documents out of a much larger group. To the extent that

they're historical, this is the world, right? I mean, this is

the 47 documents. From now on we're not dealing with the

historical 1.0 model. We're dealing with what happens in the

future. So why is it important to have this fight over these

47 documents and to not let them be part of the

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 27 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

28

confidentiality, if you believe they're confidential, not have

them be part of the production?

MS. McKEEN: Well, it's a good question, and I think

it's for precisely the reason you identified, which is, we do

want to be focused on, moving forward, what the actual fiscal

plan is and not what was underlying fiscal plan 1.0 because I

think if you were to conclude that good cause existed to

release, for example, the 32 documents that relate exclusively

to fiscal plan 1.0 from the data room restrictions, the

question would be okay, what other documents in the data room

might one make the same argument about.

I don't know that this fight would be happening if

anybody thought it was really just about these 40 documents and

then we're done. I think it's a question of are we going to

decide that even if something relates exclusively to a fiscal

plan that has been long since obsolete, is it fair game every

time an expert or a financial advisor is going to get deposed

in this case to have to ask that witness questions about that

document to prep the person to be deposed about those

documents. When we're in a universe where we're trying to

allocate scarce resources and there is no plan of adjustment on

the table, I think you could say, Look, without prejudice to

you raising this later, the good cause for these old documents

isn't here today, you have the backup for the current fiscal

plan, you will have the backup for any future certified fiscal

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 28 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

29

plan, why can't we focus on that for now, instead of hopping in

the Wayback Machine to fiscal plan 1.0. That's how we view it.

THE COURT: So it seems to me, since I don't know what

these documents are, other than their category number, there

certainly is an argument that says there's information there

that gives the movants information that they feel they can

compare, contrast, things change, whatever, but it did relate

to the fiscal condition of the Commonwealth. It's not like

they're irrelevant documents.

The way I'm kind of seeing it is if these 47 documents

are the world of historical documents that are in dispute, and

it seems to me that that's been the representation to me in

these pleadings, is that these are the world that we're

fighting about right now, if we deal with those as the

historical and say, Produce those as of 2004, and then in the

future documents are put in, I like that suggestion that the

documents be put in a folder that says fiscal plan development,

which gives you the right, the control over what documents you

believe are fiscal plan development documents. It gives the

movants here the right to challenge that in some form later,

and it seems to me a very practical way of moving forward while

you have control over where the documents go.

MS. McKEEN: I certainly think that's workable

prospectively. I don't think it alleviates our concern over

opening the door to discovery and sort of needless work around

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 29 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

30

old versions of the plan that are obsolete because the kinds of

-- I think one of the things that's important to recognize is

to the extent the plans and the models are based on things like

historical data and just, for an example, what were toll

revenues back in 2009, how does that work into the model. That

historical data is going to roll up to the current version of

the model and the current version of the plan. So it's not

like the old fiscal plan 1.0 documents are going to be

necessary to capture that same information.

It's not like there is historical data that's going to

be lost to the sands of time because we're not focused on the

other aspects of the plan that have been superseded, for

example, things like how we've changed our assumptions about

growth and out-migration as a result of the hurricane. That's

not about historical data. The historical data that forms the

basis of the plan is still going to be there. It's more about

how have our assumptions changed in light of all of the

developments. And that's not the same thing as hard data, like

what actually happened five years ago.

And to us, the comprehensive nature of the information

that's going to be in the model that supports the current

certified version of the fiscal plan I think warrants

continuing to place the burden on movants to say, Look, if you

have identified something specific that underlies this old

fiscal plan stuff that you do think you need, come forward,

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 30 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

31

let's talk about it in the context of the plan of adjustment

when we can be concrete about why you think it's necessary, as

opposed to the sort of hypothetical inchoate conversation

about, Oh, in theory it's all numbers, and maybe there's

something in here that's relevant, let's throw it in the pile

and see what happens. We don't think that constitutes good

cause just because it's another version of something that

happened a while ago.

THE COURT: No, but I feel like you're asking me to

make a distinction and I'm missing some nuances. There's going

to be a lot of facts out here. Some are going to be more

relevant than others. There will be fights over different

things. If we really are talking about 47 documents, do they

really change the presentation so dramatically?

MS. McKEEN: Well, some of the documents are in and of

themselves one document, the entire fiscal plan model, so it's

not like a document equals a sheet of paper in this. One

document could represent an Excel spreadsheet with 500 tabs.

So I think to call them 47 documents is to narrow the universe

and be specific about what we're talking about, but I would not

want you to get the impression that we're talking about a

necessarily narrow set of data information because some of

these documents themselves are extremely voluminous.

And to be fair, I think if we were really just talking

about these 47 documents, Ms. Zecca wouldn't have been so

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 31 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

32

careful to insist that she really doesn't want to talk about

the 47 documents, she really wants an order from of you as to

these three specific categories of discovery, which is the

first thing she brought up today. So I wish I could believe

that that fight is about 40 documents, but I think we're all

worried that it's not, on this side of the table.

THE COURT: Okay. What if it was, though, these 47

documents were the historical information and that in the

future you have the right to designate things that go into the

fiscal plan development folder, which would automatically be

subject to the protective order? And then I understand that

the movants would be able -- they have information about what

else you're putting in the data room, right? So there can be a

mechanism where that designation is challenged, right? You're

not including enough or whatever, and then we're fighting over

specific documents. Does that sound workable?

MS. McKEEN: So here is what I'll say about that. I

think on a prospective basis it sounds workable. Obviously,

subject to the views of my co-counsel on that, I think it

doesn't alleviate my concern about having potentially

unnecessary litigation and discovery around completely

superseded models. Again, the 47 documents, to the extent they

include voluminous models, it would be our preference to not

have those come out from under the restrictions at this time

without the kind of showing of good cause that the court

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 32 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

33

previously held was lacking, but I certainly think if movants

would say there is nothing related to a prior or now no longer

operative version of an old fiscal plan that we're going to

seek besides the 47 documents that we've already sought in this

motion, we could have a conversation about that, but I don't

think they've made any such representation. And I think what's

clear is that the set will only become larger and larger and

larger as we move forward.

I think if we were to start thinking about the

universe in terms of what's currently certified and what will

be certified in the future and let's focus on that rather than

focusing on the past, that would be the most helpful framework

subject to movants' ability to always come in and say, There is

something in these documents that relates to an old fiscal plan

that there is good cause for us to use, here is what it is, as

opposed to saying it relates to fiscal plan stuff, because

that's all we have now.

THE COURT: So I think things have changed, and I

think that given the unpredictability of the way issues arise

that things have changed about whether there's good cause to

have these documents produced under 2004, okay? I do think

that we're now in the 2004 world of production. And I do have

a better sense, maybe, that we're talking about at least a

category of documents that the parties can generally agree upon

and that you've been able to work together to identify those

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 33 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

34

documents at least from the present moving forward. So I am

prepared to order that the fiscal plan development documents at

least in the future, or present to the future, plan are being

produced under 2004 but subject to the protective order.

MS. McKEEN: Your Honor, as part of that ruling, I

think what we would want, if it makes sense to you in terms of

trying to be practical, is some mechanism by which we can then

seek a protective order or some other form of relief. For

example, if some of these old fiscal plan materials seem like

they're being used in a way that isn't relevant, isn't

constructive, isn't within the bounds of appropriate

discovery --

THE COURT: Let me just put those aside for the

minute. Let's deal with the new, moving forward.

MS. McKEEN: Okay.

THE COURT: Okay. If we create a system where you

have control over what you designate as fiscal plan

development, recognizing that if you so designated it, it will

be produced under 2004 subject to the confidentiality

agreement, your agreement provides for a mechanism where the

movants can challenge whether other materials should also be

included, and we can have that on a more specific basis. Does

that work? And then set up a time period where you can

designate the level of restriction of the fiscal plan

development documents, right, because some of those will be

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 34 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

35

confidential and some won't.

MS. McKEEN: I think that's right, Your Honor.

THE COURT: So if we set up a period of time for you

to be able to do that, does that take care of the future?

MS. McKEEN: I think that takes care of the future.

THE COURT: Okay. So then I'll hear from other

people, but I'm sort of getting -- nobody's throwing anything,

so I'm sort of assuming that people are generally on the same

wavelength. So let's assume that's going on in the future.

Now let me hear from Mrs. Zecca on -- I'm going to

call them the 47 historical documents. And I do think that it

may be appropriate -- okay. Maybe not you?

MR. MASHBERG: Can I just go? I'm going to be very

brief, Your Honor.

THE COURT: I do think it may be appropriate for us to

think about, once depositions happen, if there's a way to make

sure that we're going forward efficiently on those. Maybe

there's a way to predesignate documents and have a fight about

it in that way. We've certainly done than in a number of

cases.

I don't know because I don't really have a sense of

how the depositions are going to come up because I don't know

if they're going to come up in the context of a specific fight

over a motion or if they're going to come up with the plan. I

just don't have that sense. Sir.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 35 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

36

MR. MASHBERG: Your Honor, again, Gregg Mashberg from

Proskauer on behalf of the Oversight Board. I'm not going to

repeat anything Ms. McKeen said, which I agree and adopt. I

want to make a couple of points. First of all, on the issue of

the applicability of Rule 2004, the fiscal plan development

documents, Your Honor of course already ruled on that on

February 26 on page 7 of your order, and you made it very

clear, and that is that matter is behind us.

THE COURT: I thought I made it clear but nobody

agrees on what I said.

MR. MASHBERG: Well, we actually did, Your Honor. I

think we agreed, but there was also a caveat in your order

which Ms. McKeen discussed and I think we're moving beyond a

bit and I'm not going to reiterate that. But in terms of going

forward, we are in the context of a motion to compel that was

pretty narrowly focused on the Exhibit B to 47, 46, 30, we have

a lot of ways of slicing and dicing the number of documents,

those are the documents that are before the court in this

motion to compel.

And now I'm hearing movants wanting this much broader

order covering the universe of documents without even

mentioning the 47. That's fine. And I understand the point

that Your Honor is making, is that we really should -- things

have changed, the world is moving on, and we should find a

mechanism to avoid having to come back in a piecemeal fashion,

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 36 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

37

but I think the parties should now be put in the position of

negotiating that in the first instance, that we should be

meeting and conferring on how to go forward.

I want it to be clear that the fiscal plan for 2018,

the certified fiscal plan is public, the model is in the data

room, all the tabs are there, and those will all be made

available pursuant to the protective order. That's really

going to be the nuts and the bolts of the 2018 fiscal plan

materials, the development materials. It's going to be there.

The questions are going to be answered by what is going to be

now subject to the protective order once we have that entered.

To the extent that we have other issues, I don't think

they're properly before the court. I think they're amorphous,

and I think the parties should have the opportunity for us to

sit down between ourselves and come up with a proposal for the

court, and to the extent we can agree, we'll do that; and where

we can't agree, then we'll let the court know, but I feel I'm

in kind of like in an ether here as to exactly what the court

is being asked to do beyond this motion to compel.

THE COURT: Well, the way I read the motion to compel

was these 47 documents but a request for a broader order for

the future. But I read it as the 47 were the extent of the

historical information. Maybe I'm wrong. Sir.

MR. DAVIS: Good afternoon. Joe Davis of Greenberg

Traurig on behalf of AAFAF --

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 37 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

38

THE COURT: I'm sorry?

MR. DAVIS: It's a pleasure to be able to walk to

court instead of getting on an airplane.

Your Honor, we hear you as to how you would like to

handle the existing documents, the historical documents if you

will. With regard to PREPA, I believe it was seven documents.

It was approximately 40 with regard to the Commonwealth. But

to reiterate something that Mr. Mashberg raised and Ms. McKeen

was alluding to, we've gotten through the portion of the motion

that was articulated with some level of specificity so we would

know what we are doing. If I were in your shoes, what I would

be wondering is what is it that people want next.

The February 26 order is a prospective order. It sets

forth a process by which documents are to be evaluated for

purposes of whether they should be produced, and there's no

reason to suggest that that mechanism is working wrong.

There's certainly no evidence before you that it's working

improperly. We have a motion here of 47 documents. We're

dealing with that. There's a protective order in the PREPA

case already in place. It's functioning just fine with regard

to the existing Rule 2004s that were referenced by

Mr. Horowitz. An enormous amount of material was produced in

connection with the DIP fight. The Rule 2004 request largely

focused on the anticipated DIP fight because we all knew that

PREPA was going to at some point run out of money for all the

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 38 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

39

obvious reasons. I typically teach my associates to use

metaphors in their arguments, but the thing about the PREPA

situation, Puerto Rico in general and PREPA particularly is

there is no metaphor that is more dramatic or compelling than

what happened with the hurricanes. So everybody knew PREPA was

going to run out of money. And we produced documents

consistent with that.

Approximately a week ago we received a letter that has

started up the balance of the Rule 2004 process, so there's no

suggestion that isn't working the way it should. And I'm

worried now that there's some request for some sort of

broad-based relief from you that is in the absence of the

parties' experience and certainly in the absence of any

meet-and-confer. If you look carefully at the motion papers

with regard to PREPA, the only meet-and-confer that we had was

over the procedural mechanism to get this before you. We

didn't have a substantive meet-and-confer even though it was

seven documents. So I'm okay with dealing with the seven

documents in the context of the existing protective order, and

my prediction is we will all be back in front of you to deal

with whether they're confidential, but hopefully that doesn't

turn out to be the case.

THE COURT: But why are you here at all? Just because

you can walk over. Because on the one hand you tell me that

you have a process that's working, and then I get a filing that

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 39 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

40

says nothing has been produced. So there's a disconnect here

that has a nuance to it that I'm not picking up. I apologize.

MR. DAVIS: We didn't draft the motions.

THE COURT: It got filed, so not everybody thinks it's

working.

MR. DAVIS: But it's not as if there's a lack of

documentation that's been provided. In fact, in terms of

transparency, because of the data room process, all of the

movants have the information. In the ordinary course there is

a motion to compel filed because there's a body of documents

out there nobody has seen.

This is an unusual situation. They've got the

documents. We have all seen the documents. The question is

whether they're now being produced. And Your Honor has been

very clear that you wouldn't treat those under the terms of the

protective order at which point they will be deemed produced,

is my expectation of your order. And if we're talking about

the 47 documents in question, that's something all of us can

handle.

I am concerned that there is now an abstraction being

introduced into the proceeding that is not so precise because

it hasn't been dealt with. That's my concern, is that whatever

we're going to do hereafter in this hearing, it's going to be

going down the path of some sort of an order that's divorced,

if you will, from the actual litigation. Because as Your Honor

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 40 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

41

knows, this is an unusual state in that among other things

there's no contested matter pending, there's no adversary

proceeding that this emanates out of. There's no plan of

arrangement on file. We're dealing with this somewhat in the

abstract. And it would be a preference of the respondents that

we not have to deal with orders that produce -- that provide or

require further behavioral limitations that are also going to

be issued in the abstract.

THE COURT: So under the PREPA order, how do you

handle the new documents that are going in the room? Where do

they fall into the disclosure?

MR. DAVIS: We're literally dealing with it for the

first time, in that -- well, actually PREPA is a good example

because PREPA is an operating entity in addition to being a

governmental entity. So PREPA has weekly reporting under the

DIP order that goes into the data room. So there's a constant

flow of data in the data room.

The first time we were asked to deal with any

documents outside the mediation and NDAs that are attendant to

the data room are the seven documents that we're fighting about

now, except back in February. And back in February we worked

it all out. Evidence was put on. Depositions took place. It

worked pretty seamlessly. There were not motions to compel

additional documents or designation fights.

THE COURT: How did it work?

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 41 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

42

MR. DAVIS: How did it work in February?

THE COURT: Yes.

MR. DAVIS: Very pragmatically. I would receive

requests from movants that they want to produce a certain

amount of documents. We would make them available as fast as

we could to the extent they weren't already available, but

obviously there were additional documents that were produced.

They were then used under a confidentiality designation --

confidential designation in the various depositions and at the

hearing. And I honestly don't remember anybody calling and

fighting over the designation of any document.

THE COURT: All right. So what the movants are saying

to me now is that when things like this happen, it's too

compressed and too crazy to be doing it on an item-by-item

basis because they can't predict when the next motion is coming

or when the next analysis needs to be done. I think that's

what I'm hearing. So they're saying, Can we come up with a

process that makes it go more smoothly. It seems to me

everybody is sort of past the fight of are these documents

appropriate in the 2004 context now that we're dealing with the

certified plans. So we're past that.

My concern in February was that I didn't know if we

were talking about rooms full of documents or categorized

documents. The process that I had envisioned is actually what

happened, which was, you know, the movants say these are the 47

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 42 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

43

we're talking about, what's the fight? So that all worked. I

know we're still talking about the 47, but those worked. But I

think it's legitimate, and I'm not prepared to -- I'm prepared

to give you the opportunity to work on the way it should

happen. But conceptually, if we agree that these documents are

appropriately 2004 documents, if there are -- I like the idea

and you all need to think about it more, but I think the idea

of having the initial designation come from the respondents to

say, We're all agreeing that these are the fiscal plan

development documents and they're going to be subject to the

protective order. I like the idea of it being a separate

folder where you don't need my involvement in that. That

happens. All right? So I certainly will give you an

opportunity to work out the details of that, but I'm not sure

we're really fighting about a whole lot here.

MR. DAVIS: I would hope that we're not. But as I

said, movants have made comments in this hearing that would

indicate that they're looking for something more, and it's the

more that we are concerned about. Managing the existing data,

if you will, is something we can all get our arms around

because we know what it is.

Here is an example, Your Honor. Emergencies happen in

bankruptcies. They happen in every one. Sometimes you can

anticipate it coming up. Sometimes you can't. It's like

injunctions, very much like injunctions. Sometimes you can see

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 43 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

44

it coming, but oftentimes you can't. And so there's a flurry

of activity. The nature of restructurings is filled with

emergencies because everyone shows up harmed. Everybody is in

an impaired state in a bankruptcy. So in the context of trying

to avoid rapid activity, if you will, and quick e-discovery,

you can only anticipate what is obvious, which is to say yes,

at some point a planned arrangement will be filed. Clearly

that's going to happen. And so if we're talking about

discovery that ultimately related to that process, at least we

as the parties understand then roughly at least what the

parameters of that would look like.

But in terms of anticipating fights that we cannot

project, whether it's a financing fight, whether it's some sort

of regulatory -- whatever it is, we're not soothsayers, and

discovery wasn't set forth for situations where there isn't a

definitive structure in place, a procedure in place in order to

go forward.

THE COURT: So do you agree or not that the fiscal

plan development documents that are being generated I guess now

and for the plan that will be certified are producible under

2004?

MR. DAVIS: Going forward?

THE COURT: Yes.

MR. DAVIS: I can only speak for PREPA. And in terms

of certified fiscal plans, it's always our intention to be

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 44 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

45

transparent and produce those, so yes would be the answer.

THE COURT: Is there any problem for them to be

produced sooner rather than later? Because I just remember

from the first hearing us having a discussion that said we

don't want to end up at the end and starting all over with

discovery.

MR. DAVIS: To be fair, Your Honor, first of all, just

in full disclosure, PREPA wasn't a party to the first hearing.

THE COURT: I'm not holding you to -- it wasn't a

court ruling. It was just a sense of, if everybody is working

together to make sure that appropriate things are disclosed.

MR. DAVIS: Correct. We think it's a manageable

process. We are certainly committed to being transparent about

it. And I don't think we will have fights over that part of

it, which is why I don't think there's a necessity for any

additional orders with regard to them because I think everybody

knows how to act, other than the protective order, but again in

the PREPA case, we already have the protective order and

there's about to be one in the Commonwealth case. It's the

past part that we have a discussion today about, and again,

that's a classic discovery dispute, and that was one that we

could articulate.

THE COURT: All right. So for the seven documents,

what's your position?

MR. DAVIS: We would prefer that they not be deemed

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 45 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

46

producible now. We hear Your Honor's message, and I'm not

going to swim against the stream if I don't have to. We have a

protective order in place, and we will treat them in accordance

with the protective order.

THE COURT: Thank you. I think it's back in your

court, Ms. Zecca.

MS. ZECCA: So going forward, I think we understand

what the court is inclined to do as a process. And I just

wanted to note that the fiscal plan development materials,

that's a shorthand the parties developed for documents

responsive to requests 8, 16 and 17 of our initial requests, so

that's what we're talking about. And if there are responsive

documents, they go in that folder. And if it is something

created especially for mediation, it's a mediation material. I

think that's the dynamic.

THE COURT: And the process that you will develop will

allow for a challenge to specific documents, and the court can

resolve that?

This is my problem. This is why I don't want to write

the words as to say which are the fiscal plan development

documents because everybody nods at me and everybody says they

agree on the words and then they don't all agree on a specific

document. So I'm envisioning a process where that happens,

where you're able to eliminate the ones that are just not in

dispute. You know, the producing party has so designated them,

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 46 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

47

it moves forward. And then there's a mechanism when you turn

around and if you say, Look, I think this should fall into that

category and they say no, there's a way to resolve that.

MS. ZECCA: We agree with that, Your Honor. I was

just pointing out that's a shorthand for three specific

document requests, so it's not a -- it's not a limitless

conceptual concept. We have three requests. That was our

shorthand description for those three requests. That's what

we're talking about.

THE COURT: Okay.

MS. ZECCA: I think that takes care of going forward.

Historical, I can represent that the 47 documents in our motion

were everything in the data room that movants considered a

fiscal plan development material as of the date we filed, which

is I think April 9. So we're not going to go back and say, Oh,

there's this other thing that went up last August that --

that's our list of what was there as of the time of the motion.

I think there's a couple of documents that have been

posted in the interim, and my recollection is they are only

models, certainly the model underlying the current certified

fiscal plan, which respondents I think agree to produce

pursuant to Rule 2004. There might be one other model that was

posted for one of the Commonwealth draft fiscal plans, but

that's it. But it's not -- Your Honor, the court is right this

is not a huge volume of documents of what's in the data room.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 47 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

48

As for the 47, we think those should be produced.

It's not a lot of documents. In fact, I think six or seven of

them they said in their opposition are factual materials and

will be produced anyway. And we don't believe we should have

to make the kind of specialized good cause showing that I heard

respondents' counsel articulate. That essentially requires us

to say why we need to use the documents or why they're relevant

to this specific time. That's really revealing our litigation

strategy.

The fact is the court has already found, correctly so,

these display the historical, present and future financial

condition of the debtor. Therefore, that should be sufficient

for them to be produced under Rule 2004. It's not that many

documents. The only burden argument I heard is them saying we

don't want to have to prepare witnesses on these because we

think the only thing that's relevant is the certified plan

going forward.

I think the court actually articulated our position,

which is, the certified plan, you have a certified plan. You

might want to compare and contrast what was done in the past.

That is something parties typically do in discovery. That's

something we may want to do here. And that's why the

historical documents need to be shown in discovery and analyzed

for these purposes, and it's really, we're talking about the 40

to 47 documents. It's not that many documents.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 48 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

49

And I would say respondents may not think that's

important or where they want to focus, but it's relevant to the

financial condition of the debtor. And movants may think it's

important to focus on that. Movants' plan of adjustment may

want to say we need to look back at what happened in the 2017

certified fiscal plan because there's an important element of

that that's been jettisoned here that shouldn't have been.

Respondents may not want to do that but movants may, and that

should be our choice to do it. And given the limited number of

documents, there's no reason not to enter that order now.

I will also say I heard Ms. McKeen say that you don't

need to produce the old documents because some of that same

information is getting rolled up into newer documents. Then

fine, that just reduces the burden on them. If they're going

to be preparing their witnesses on new documents anyway, then

they'll be comparing them on the same materials. But for 40

documents that are clearly relevant to the financial condition

of the debtor, we think there's no reason not to have those

produced right now.

THE COURT: So Ms. McKeen, let me just confirm,

though, we all agree that these documents do relate to the

financial condition of the debtor. It's just a question of

whether it's relevant data because the certified plan is no

longer operative? Are there documents within these that you

want to challenge as being covered by 2004, or is it just

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 49 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

50

easier to say, we'll live with 47, but we hear that this is the

end of the historical data?

MS. McKEEN: Like Mr. Davis said, I don't want to swim

upstream here. I think that sort of intellectual tussle we

have with it is the idea that these old historical plans and

models I think don't necessarily shed light on the current

financial condition of the debtor. Of course when movants

filed their 2004 papers, what they represented that they were

seeking was information that they said was directly relevant to

the current and projected financial condition of the

Commonwealth. And now what I hear is sneaking in this word

"historical" when of course that's not actually the purpose of

Rule 2004 discovery. But again, we just have kind of a tussle

over the relevance of things that are now obsolete.

THE COURT: So I'm not -- you may be 100 percent right

that they're irrelevant, but I'm not prepared to make that

ruling in an abstract. So I think it is fair to say that we

have a representation that is binding that these 47 documents

are the remaining documents that the movants believe are fiscal

plan development documents through April 8 or --

MS. ZECCA: I think 9th is the date we filed, Your

Honor.

THE COURT: -- April 9 of what has been produced

that's in the data room. All right. Those will be deemed

produced subject to the protective order that you're all about

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 50 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

51

to agree on. And if you don't agree it on it, you'll let me

know. Sir?

MR. HOROWITZ: Thank you, Your Honor. Greg Horowitz

on behalf of the PREPA movants again. Just closing the loop,

I'm hoping that the court is ready to also give an order with

regard to the seven PREPA documents.

THE COURT: Yes.

MR. HOROWITZ: What we didn't hear or address and get

is a commitment along the lines of the Commonwealth commitment

to produce future fiscal plan development materials with regard

to PREPA in a PREPA folder along the same lines. There are

subsequent materials, there's a new model in connection with

the new PREPA plan that's not included, for example, in those

seven documents to my understanding.

THE COURT: So the only disconnect I'm hearing is

whether or not you need that order or whether you believe it's

covered by your confidentiality agreement already. Like, if

I'm hearing that it's working --

MR. HOROWITZ: Your Honor, I think I need to be a

little clearer on this. There has been material produced in

several different contexts. One is that material was produced

into a data room. "Data room" is unfortunately an ambiguous

term in this case. It's used for a lot of different things.

In connection with the DIP motion as a contested matter, that

was real produced material, and it was produced subject to a

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 51 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

52

protective order like ordinary litigation. There was also, as

Mr. Davis correctly referred to, when there was a final

conceptual DIP order entered, there were certain reporting

requirements that were imposed on that, that material had to be

produced, which would be available to the PREPA creditors. And

that has also been produced, I believe in the data room. That

is not -- that's not produced in mediation. That's not subject

to the mediation confidentiality agreement, so that's a

separate set of information.

And then there is material that has been produced only

in connection with mediation, the material that I said people

really shouldn't be properly be referring to. The seven PREPA

fiscal plan development materials we referenced in the letter

have been produced, have been put into a mediation data room in

that context, and that's what we're seeking an order that they

will be deemed produced on. That was lousy syntax, but I think

you understood what I was saying.

THE COURT: So was the concern again on the number,

that it was opening the door, or is this -- this is the

swimming upstream. Can we just say that these seven documents

are produced subject to 2004, subject to the confidentiality

agreement?

MR. DAVIS: Subject to the protective order, yes, Your

Honor.

THE COURT: Yes. I'm sorry. Subject to the

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 52 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

53

protective order.

MR. HOROWITZ: I was just extending that, Your Honor.

There has subsequently been additional information, a model

supporting the new PREPA fiscal plan that's also been produced

in the context of mediation we need to also have included in

that commitment and then --

THE COURT: So I'm not going to do that, right? I'm

going to do this is historical as of April 10 or 8 or whatever

date it is as of the filing of the motions. I think I need to

give you all a little time to come up with what happens in the

future, but the expectation is that what you come up with is a

way to get these types of financial plan development material

put into a format without me having to vote on every document,

where they will be produced subject to the protective orders

that you've agreed on both in PREPA and otherwise, and that

there be a mechanism for disputing of whether additional

material should be put into that category. And there needs to

be -- do I need to rule on when it gets designated? I leave it

to you. See if you can work out at what point the designation

of confidential or not --

MR. HOROWITZ: I think the parties were going to pick

out --

THE COURT: The expectation is it would be sooner

rather than later.

MR. DAVIS: Yes, Your Honor.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 53 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

54

THE COURT: So if I say -- how much time do you think

it will take, reasonably?

MR. HOROWITZ: To work out a mechanism for the parties

to agree?

THE COURT: To move forward.

MS. McKEEN: Two weeks.

MS. ZECCA: Two weeks.

THE COURT: Two days? Oh, two weeks. I thought you

said two days. Two weeks. You have two weeks. All right. So

that's both PREPA and other. Okay?

MR. HOROWITZ: To be clear, Your Honor, that's two

weeks for the mechanism going forward, not for the material

that's already been identified?

THE COURT: Well, you're still -- I'm expecting within

the two weeks -- I don't see that there's a crisis within these

two weeks to have these documents, is there, that I'm missing?

MR. DAVIS: No, Your Honor.

THE COURT: Because you still have to finalize the

confidentiality agreement, right? There is, I guess my order

will say that I've accepted and is binding absent an act of God

that these are the documents that are in dispute historically,

have been identified in connection with these motions, all

right, and that going forward that's the mechanism that you'll

come up with.

I keep thinking I'm really clear, and then everybody

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 54 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

55

tells me that I say things differently, so I don't know. Okay?

MR. HOROWITZ: Thank you.

THE COURT: Everybody is sort of nodding at me. All

right. Sir?

MR. BASSETT: Very briefly, Your Honor. Nicholas

Bassett from Paul Hastings on behalf of unsecured creditors.

We did not file a motion to compel today, but we did file

joinders in the original Rule 2004 motion and the renewed

motion. And I would just like to say that as a joinder in

those motions, we would expect to have the benefit of the

court's ruling today and have access to any information that is

produced, and of course we are willing to sign any protective

order that the parties agree to. Thank you, Your Honor.

THE COURT: Does that raise any issues that anybody

needs to respond to?

MR. DAVIS: No, Your Honor.

THE COURT: Okay. So you have two weeks to come up

with the future. In the past, what I've ruled on is that these

documents will be subject -- will be deemed produced subject to

the protective orders that you're negotiating. And that's the

47 and 7 or 40 and 7. I don't even know how many I should say.

Whatever has been identified in your motions.

MR. HOROWITZ: Just for clarity for the record, Your

Honor, in PREPA we actually do have an agreed and entered

protective order.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 55 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

56

THE COURT: Right. But I thought you were going to

change some of the words to make them consistent?

MR. HOROWITZ: I don't know that anybody thought there

was any need for that, Your Honor.

THE COURT: Okay. So then you're subject to it. And

you know which seven documents you're talking about? Everybody

knows which ones you're talking about?

MR. DAVIS: Yes, Your Honor.

THE COURT: Everybody but me. There you go. Okay.

Does that deal with the motion to compel? Good.

Now my favorite subject, the motion to remand. Here

you are back at where I thought you would be without a detour.

Welcome.

MS. HALSTEAD: Thank you. Good afternoon, Your Honor.

Ellen Halstead of Cadwalader, Wickersham & Taft, for Assured

Guaranty. I guess, Your Honor, you can let me know how you

want to proceed. I was planning just to go through the issues

of the parties and identify in joinder for threshold legal

issues.

THE COURT: So part of my issue with your threshold

legal issues is they're very fact-specific, so I think that we

need to deal with those kind of issues in the context of the

chart, the privilege log. Like, how do -- I'm not sure how

these issues get presented to me in the context of the log, but

I'm hoping it's easier.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 56 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

57

I mean, I'm hoping, like when you say to me there are

differences between, if it goes to the Oversight Board, that's

a waiver of privilege. Can we do that sort of categorically

based on the descriptions in the log? I'm open to suggestions.

MS. HALSTEAD: Well, quite frankly, Your Honor, the

movants' thinking was that we would select documents for in

camera review to you. And the protocol that we proposed was

taking about approximately 12 categories on the logs, having

the respondents collect those documents from those categories

and submitting those documents to you in camera. Then Your

Honor can decide if you want to view two documents in a

category or 50. It would certainly be up to the court.

When we brought that proposal to the other side, they

said they couldn't do that because they had never collected the

documents. And so having identified the documents, having

reviewed the documents and don't have them in some sort of data

room where you could easily say, if we cited 12 categories for

in camera review, they apparently can't do that right now. So

I think that's a problem.

And we do, we do recognize that the threshold legal

issues must might be easier to resolve if you are able to see

the documents. We think that the court, though, could also

give guidance on legal issues that may allow us to move forward

on disputing various categories in the logs.

THE COURT: I'm happy to talk about it in that

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 57 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

58

context, but it seems to me that everybody sort of knows the

law, and you're all citing the same cases about the law. So it

really does become a very practical ruling, you know. Maybe.

I guess the ruling is maybe, sometimes, it depends. You know,

there is an issue on sort of should there be a universal ruling

that nothing should be privileged because of the balance --

MS. HALSTEAD: Yes, yes, that is an issue, yes.

THE COURT: And maybe that we need to set up a process

for how do we show that. But my guess is that there's a more

practical argument because even that's going to come out as

sometimes. My guess is that there are some documents that

maybe really are privileged that really shouldn't be disclosed.

I don't know. I want the case where there's only one document,

and then the judges get to write a decision about the one

document on whether it's privileged or not. I can do that.

So I'm trying to figure out really what the most

efficient way is forward with this. I do think that it is

problematic that there aren't folders of documents. I mean, it

does alter the discussion.

MS. HALSTEAD: Yes.

THE COURT: I don't have an easy answer. But when you

say 12 categories, maybe that's the beginning of your

conversation with the other side that says these are really the

categories that we're looking at. You know, how do we go

forward with that? It seems to me some of these are more

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 58 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

59

clearly privileged than others. Some of your concerns maybe

need to be refined. Are there specific consultants that you're

really challenging?

MS. HALSTEAD: Well, that is one issue with the

consultants. Part of what I wanted to say today is they do

list about 20 consultants, and all they say is they played the

same role as the Commonwealth or the Oversight Board. That's

all they say. I don't even know what roles these various

consultants did. And to essentially assert a blanket privilege

in all the communications, and in some cases there are

categories in the log where just the consultants -- there's no

officials from the Commonwealth or AAFAF or the Board. And

also when we were meeting and conferring regarding the

privilege logs, even in the categories where there are people

from the Commonwealth listed or the Board listed, if DEFTEC is

also listed, there may be communications with DEFTEC, which is

one of the consultants, just internal communications.

So there probably are a lot of communications like

that, and I would submit, Your Honor, that is a really far

extension of the deliberative process privilege. The

deliberative process privilege is supposed to cover policy

decisions of the government. It's not supposed to cover, you

know, communications regarding advisors and, you know,

discussions about models and what projects and assumptions and

inputs to put in. It shouldn't even be covering even drafts of

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 59 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

60

models.

Yes, we just had a long time discussing that there's

models in the data room, but they were likely exchanging

several versions of the model in these communications. I think

if you asked them they would say that's clearly covered by the

deliberative process privilege. I would say it's clearly not.

An Excel sheet with numbers and assumptions and some formulas,

that's not what the deliberative process is supposed to cover.

In Bhatia, Bhatia found a draft budget, just data and numbers.

And both the Supreme Court of Puerto Rico and then the superior

court addressing that specific document found that that was not

covered by the deliberative process privilege.

THE COURT: But "draft," I think there, was used in a

different way than creating the document that was being

submitted. I mean, I think the court used "draft" there as it

hadn't been adopted by the Oversight Board, but it was the

final version of what went to the Oversight Board.

MS. HALSTEAD: Yeah, but I think that -- it's true

that that's a document they were looking at. But why is the

last version -- that's the version that's not protected by

deliberative process and version 5 is protected. I mean, it

just seems like data and numbers and projections and

assumptions, this is not the stuff that the deliberative

process privilege was intended to protect. And if you look at

their privilege log, it looks to me they're withholding a lot

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 60 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

61

of documents on this basis, a lot. And we really question how

they're not properly withholding these documents based on

Bhatia.

THE COURT: So how -- do you have a suggestion as to

the most efficient way to present that to the court?

MS. HALSTEAD: Well, we thought our suggestion was

that the court would address these threshold legal issues, and

we thought that that would provide guidance going forward. It

seems to me from Your Honor's questions that you think that you

may need some more context from going beyond the legal issues,

perhaps additional briefing -- if any co-counsel want to speak

up -- perhaps additional briefing with us discussing the

various categories of documents. Perhaps that might put some

context on these legal issues.

Again, I will say, though, we do have concerns with

the logs, we do. And I just don't understand how they were

able to come up with these logs without reviewing any

documents. That just sort of boggles our minds, that they've

really -- they could very well be withholding documents that

are not privileged at all, but they don't know because they

haven't looked.

THE COURT: Let's address how the log was made first.

I think this is going to have to unfortunately take a multistep

process.

MS. McKEEN: Your Honor, Liz McKeen for AAFAF. I

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 61 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

62

think Your Honor is kind of keying in on what we think some of

the key issues are and how we think it makes sense to move

forward here.

With respect to the log itself, the movants actually

referenced these apparently 12 categories that they take issue

with in a meet-and-confer call with us on May 10 that we

conducted in preparation to file the joint report with the

court. And we said to them, Okay, will you tell us what the 12

categories are so we can talk about it? And it's now almost --

you know, it's over ten days later, and we're still waiting for

them to even identify those 12 categories.

I don't think the idea of an in camera review makes

any sense, precisely because part of the point of the

categorical log is to avoid the burden of having to go collect

every single document in a particular category, which we have

not done and which we specifically advised the movants that we

had not done in our transmittal letter that we sent back on, I

believe it was April 6.

THE COURT: But how did you do the log?

MS. McKEEN: How we did the log, I'm glad you asked.

They characterized it as it's a hypothetical process that we

sat around thinking of communications that occurred. Nothing

could be farther from the truth. There were detailed

conversations -- and I want to be careful about work product

issues and waiver issues. But there were detailed

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 62 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

63

conversations that occurred between and among AAFAF, its

lawyers, its financial advisors and all of the various

custodians that are listed on this log to identify, Okay, who

did you talk to about particular issues. We see these

categories of work streams relating to buckets in the fiscal

plan. Who was involved in those conversations? Were they just

internal, or did they involve external people? Was it just,

for example, within DEFTEC, or was it between and among DEFTEC,

AAFAF and other advisors?

So there were very granular conversations. This is

not a hypothetical exercise. It was not a document-by-document

exercise, but it was highly fact-intensive and involved

hundreds of hours of attorney time and I think produced what

was lodged with the court, which is a very detailed document.

And I think that document should be the touchstone of how we

move forward. I think they need to look at specific

categories. And for example, if there's a category where they

think the privilege isn't properly being asserted because it

includes the Board and they think that's just legally not

appropriate, we should be talking about that category. And if

there are other categories where they think we haven't given

them enough information to substantiate the claim of privilege,

an in camera review I think is a wrong tool to solve that

problem.

I think the appropriate tool to solve that problem

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 63 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

64

would be for us to provide declarations that would substantiate

why the privilege is being claimed with respect to that

category of information. Here is what these advisors were

doing. Here is what they were talking about. Here is why that

was important to the process of developing the fiscal plan and

why, under the case law, that means the deliberative process

privilege should apply to these conversations. And I think

that specificity would allow you to make a ruling.

But right now we're in this vacuum, where we've done

all this work and created the log. They've said they have

issues and won't tell us what they are, and they've agreed to a

protocol where they were supposed to give us objections within

seven days and they're silent for over a month.

So I think the ball is kind of in their court to

respond with some specificity to our log, and I think that's

the right way to move forward here.

MR. MASHBERG: Again, Your Honor, Gregg Mashberg on

behalf of the Oversight Board. Very briefly, on behalf of the

Oversight Board, we conducted a very similar process with our

clients, with our colleagues and with our financial advisors in

order to come up with a categorical log that we presented and

is actually being updated again today pursuant to agreement.

There was a very significant back and forth on a daily

basis. There were times when our advisors actually had a

document in front of them when they were explaining to us and

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 64 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

65

answering our questions regarding the establishment of these

categories and whose communications would fit within those

categories. So I can tell you, as Ms. McKeen has just done,

that there was a very extensive process we went through. We

did not go document by document. We never thought that we had

to do that or that that made sense in the context of what we

were doing, including within the language of Your Honor's

February 26 order in terms of what we understood the

categorical log to be.

To go document by document, if that's what movants are

requesting, would cast this into an entirely different domain

and it would cost an absolute fortune, and it would take a

great, great deal of time and resources. And I certainly

didn't read Your Honor's prior order to require that, nor do I

hope that Your Honor will order that at this point.

THE COURT: No. I agree that document by document is

not what I ordered and I am not ordering it. But I want to

make sure -- I think that it's fair to have a question as to

whether you've covered all of the categories of documents, and

if they don't fit within this category, are the documents being

produced. And I'm not sure how you do that without having

actually put your hands on a group of documents.

MR. MASHBERG: Well, the client and the advisors did

have documents and their notes in front of them. They didn't

go through all the documents, that's for sure, but they

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 65 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

66

understood and they discussed what it was that they were --

what documents that they did exchange with each other and with

their clients. So this wasn't just done sitting around in a

room. I mean, this was done with people looking at their

computers, looking at their notes, looking at their documents.

MS. McKEEN: Just on behalf of AAFAF, with respect to

the same question because we did create our logs separately on

behalf of each of our own clients, because we were engaged in

this categorical process, rather than the process being about,

okay, let's look at individual documents and make sure we've

gotten them all, the process was focused on the categories of

activity that had been and the tasks that had been performed by

each of the relevant entities in terms of the creation of the

fiscal plan. When we're talking about these deliberations that

are the very reason we're invoking the privilege and these

conversations with interim drafts and development of these

models, part of the touchstone of the analysis was what were

you doing, why were you doing it, who were you doing it with,

who did you talk to about it, and what documents would you have

exchanged as part of that process.

And so the effort was to be as comprehensive as

possible, precisely to make sure there weren't categories of

documents or things we were missing. Of course we don't want

there to be an argument that we waived something because we

missed it. Every effort was made to be as comprehensive as

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 66 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

67

possible as part of this process.

MS. HALSTEAD: Just to address a few things they said,

then I have a suggestion of perhaps a way to resolve this

without discussing with the other counsel.

But one thing is, if you look at their cover letters,

they do not disclose this. We learned how they put these logs

together for the first time on May 10. We also aren't trying

to hide objections we have with the logs. We didn't talk to

them -- after we raised the 12 categories, on the same call we

learned how they prepared their logs. And quite frankly, that

really threw us for a loop, and we realized we had to go back

to the basics, that we had some real issues with how they put

the logs together, and it really didn't make sense for us to

identify 12 categories where we had some far more basic

concerns about the logs. That's why we didn't do it.

We do -- just to be clear, we do have other objections

with the logs. We weren't trying to delay or anything like

that. It's just that these deliberative process privilege

issues were being briefed. We put in the papers that we've

reserved all of our objections regarding the logs. And quite

frankly, Your Honor, every single entry in the log has a claim

of deliberative process privilege, every single one.

THE COURT: Well, I think that was the point of the

log.

MS. HALSTEAD: Right, yeah. But other objections, for

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 67 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

68

instance, they assert common interest privilege between the

Board and the Commonwealth. You know, I think there are some

questions whether the common interest privilege exists when

they're having disputes regarding the fiscal plans. So there

are other issues we have with the logs. We also have issues

with the descriptions. A lot of them are very general.

But putting all that aside, I think, you know, they're

saying there's this massive burden for them to, you know,

review documents and that sort of thing. I think we could come

to an agreement for them to search specific custodians for a

certain date range with certain search terms and we could come

up with a narrow universe, and then that universe could

either -- could be submitted to Your Honor for in camera

review. I think that's the way to go about it. And again, you

know, they have produced emails in other cases in the

Commonwealth/COFINA adversary, they produced 40,000 documents.

I mean, it's not unusual.

THE COURT: The question is whether I'm doing that in

in camera review.

MS. HALSTEAD: I'm not suggesting that at all, Your

Honor, but I'm suggesting a more limited subset that I think we

could come up with something, some limited universe for an in

camera review.

THE COURT: Let's try that second, all right? And

mostly because I have found that even in cases that are much

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 68 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

69

more finite, an in camera review by the court that doesn't

really know all the players and all the intricacies makes it

difficult to come up with a fair ruling. So I'm not ducking

the work. I'm just not sure it's the most efficient use of

everybody's time. But I do think the burden is on the party

claiming the privilege, and they have to justify it.

MS. HALSTEAD: Yes.

THE COURT: And I do think that the idea of an

affidavit or declaration by someone with knowledge makes sense.

I do think linking it to the privilege log at least to start

makes sense. Maybe this is where you start with categories.

Do you say, Look, we're not buying all of these consultants, or

we don't know, we don't know, and if you're going to claim

privilege on -- and you don't need to give them every single

document in here, but you can give them categories and say, I'm

having a real hard time figuring out how these people can all

be privileged; you need to prove it to me. Or you can say to

them, Look, on this date, you submitted a draft to the

Oversight Board. After that date, you know, I don't see how

you claim a privilege. I mean, is 12 really a number, or is

everybody just --

MS. HALSTEAD: That was -- we just -- again, it was

supposed to be, intended to be a sample of categories that we

saw as problematic as we saw that didn't appear to have a real

basis, but it was just supposed to be a kind of a sampling. It

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 69 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

70

wasn't supposed to be all of our objections, absolutely not.

It was sort of to try to narrow the universe to try to agree on

something to submit for an in camera review when we suggested

that.

THE COURT: So instead of doing that as in camera

review as the next step -- and maybe it's not 12, maybe we try

it with five and see how that works -- but that you submit

those objections, those categories to whichever entity is

claiming the privilege, have them have the burden of arguing

why they think it is privileged. And then if that's not

persuasive to you, then it comes to me in a context that I can

look at.

I'm happy to do it sooner rather than later, but I

think I need to at least give it a shot to see if that kind of

process will work here. I don't have a whole lot of creative

ideas at the moment. If I sit here long enough, God knows what

I'll come up with, but I think something like that.

MS. HALSTEAD: Are you envisioning, Your Honor, like

we would do this in letters first and then if we were unable to

resolve the disputes, then we would bring them before Your

Honor?

THE COURT: Yes. Then I will have a sense of what it

looks like. I will have a sense of what they're claiming as

the privilege. And I assume it's going -- they have to

convince you that it's privileged. And if they haven't, then

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 70 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

71

you should be able to identify what component part -- which of

their arguments are you not buying? Are you not buying the

factual argument, or you're not buying a legal argument, and

that way I can make a ruling. I think something like that

would at least give us something more concrete to talk about.

I don't want this to drag on for the entire history of PROMESA,

but I feel like if there are certain very clear categories that

you think will generate that issue of law that you want me to

decide, that's a way to crystalize it.

MS. HALSTEAD: Yeah. I think one suggestion in order

not to drag this on, I think you suggested five categories.

Quite frankly, I think we should bring as many objections as we

can as part of this. Otherwise, we're just doing it piecemeal,

and I'm afraid the process will drag out.

THE COURT: I'm okay if you're okay. I think they

wrote a book like that. I'm just trying to figure out how to

see if the process is working. So why don't I not set the

limit. Why don't you see if you can agree on it. But the idea

would be that it's without waiver. And what I would like to

see is a way to determine whether this type of process where

the party claiming the privilege has the burden, if producing

those types of declarations are a good way to crystalize the

issue that the court needs to decide.

If you think doing 12 or however many you want, I'm

not intending to limit your claims of objections. I'm trying

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 71 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

72

to develop, if we try it that way and it's not working that way

but maybe one deposition will solve the problem.

MS. HALSTEAD: I was going to suggest if they're

putting in declarations, we may need some way to rebut that

testimony, and we're obviously --

THE COURT: They need to present -- they need to

convince you. I mean, that's the point, right? They're

claiming a privilege. You need to look at it and say, I'm

either accepting it, it's either persuasive, or I need more

information. You can try to work it out. Or we're just not

accepting this as true, or we have a legal issue that says you

can declare this all you want, we've now got the facts, but we

don't agree with you as a matter of law.

But you're all quoting me the same cases on what the

standards are. We're not fighting on the standards of

deliberative process. What we're fighting on is how does that

relate to what's actually going on in this case. And I'm just

trying to figure out the most efficient way to get to that very

concrete ruling. I think the questions that you phrased in the

joint status report were too general for me to rule on anything

other than saying maybe, sometimes. That doesn't move it

forward.

So I'm going to let you work on a process that you

identify the categories, the parties claiming the privilege

need to submit a declaration to you, and you then, if that

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 72 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

73

doesn't work, present it to the court. You can talk about how

to present it. If you can't agree on how to present it, file a

status report that tells me these are the different options

that we're proposing, or we need another hearing, you know, we

just need to talk about this. But I think we need to anchor

the legal issues into some facts.

MS. HALSTEAD: Okay.

MR. MUNGOVAN: Your Honor, Timothy Mungovan for the

Oversight Board. Could I be heard just briefly?

THE COURT: Yes.

MR. MUNGOVAN: Thank you. Again, Timothy Mungovan for

the Oversight Board, Your Honor. Just briefly, the Oversight

Board's privilege log currently has 59 categories, the copy

that I have in front of me, that's as of today, so this is an

updated version of it. It's not the version that was filed

with the court.

The Oversight Board is fine in working through a

process with the claimholders, and we think you're right, Your

Honor, that there seems to be some type of fundamental

disagreement between the parties as to what is privileged.

What I want to address is what I think is the most efficient

path forward to get to a resolution from the court. What I

would say is if we leave it to the claimholders to designate X

number, 12, 15, 20 of these separate categories, it will create

a lot of work potentially and needlessly.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 73 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

74

What I might suggest is they pick their top five or

six, the ones that they think they doubt the most, and we can

then be put to the test of establishing the applicability of

the privilege that we have asserted. And the process may drive

a resolution more efficiently. If the parties have a

fundamental disagreement about the interpretation of the

relevant case law, which I think we may, once we get a decision

from the court, it may resolve the remaining 30, 40, 50

some-odd categories, rather than to force the parties to go

through the effort of defending a position on an evidentiary

basis, if you will, and then have the court decide one or two

or three, which ultimately ends up resolving all 30 or 40

challenged categories.

THE COURT: So where do you think -- let me ask you,

do you agree that we need more facts for these legal issues?

MR. MUNGOVAN: I do. And I agree with the court that

having a process whereby the claimholders identify specific

categories that they want to challenge makes sense. I agree

that the burden should then shift to the Oversight Board and

AAFAF and the instrumentalities to establish the validity of

the privilege that they're asserting.

What I would like to do, though, Your Honor, is to

focus on test cases. Let's have five, let's have six, pick a

number of test cases. Rationally the claimholders should pick

what they perceive to be the most important categories that

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 74 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

75

they believe we are weakest on, and then let's tee those up and

make the respondents be put to the proof of demonstrating the

applicability of the privilege. And then if we can't

demonstrate it to the movants' satisfaction, then we have a

live issue that the court can join and adjudicate. Thank you.

THE COURT: So I think it shouldn't be an endless

number. It should be somewhere between one and 12. I don't

know if you want me to designate a number. I agree that I

think we need to do it in a test case just to see if the

process works.

MS. HALSTEAD: Yes, yeah, yes.

THE COURT: Can you live with six?

MS. HALSTEAD: We would prefer 12.

THE COURT: Why don't I say not to exceed 12, all

right?

MS. HALSTEAD: Okay.

THE COURT: But you need to -- you're not waiving

anything.

MS. HALSTEAD: Yeah, just so we're clear.

THE COURT: You really want to deal with it in a

fashion so we can at least see if the process is going to work.

MS. HALSTEAD: Yes.

THE COURT: I'm not leaving out the ultimate question

of whether there should be any claim, but I also don't know how

to do that on an abstract basis. So that's sort of in the back

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 75 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

76

scene and you can bring it up where you think it's appropriate.

I think it's easier to bring it up in a concrete manner if you

want to take a blanket argument that says, Okay, we see

everything that they've given us but the bottom line, the

balancing comes out to disclosure no matter what, you can argue

that.

MS. HALSTEAD: Thank you, Your Honor. Can we propose

some sort of schedule while we're all here?

MS. McKEEN: Before we do that, one thing that might

make sense in terms of teeing up, as Mr. Mungovan said, test

cases and ways to sort of crystalize the issues. To the extent

the court is willing to hear argument and consider the law and

facts as to 12 different categories, it might make sense to

have the movants select the six categories as to which they

feel they're strongest, best exemplify where the privilege

shouldn't apply and that we pick six categories as to which we

think the case for the privilege is obviously the strongest to

help, again, kind of get some test case rulings that will be as

broadly applicable to all the remaining categories moving

forward. I think that might be the best way to divide up the

12 test cases so that you're getting the most illustrative

cross-section of what's in the logs.

MS. HALSTEAD: I object to that. I mean, every

document they're withholding should be privileged. That's

their burden. Like, we're just trying to contest what we're

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 76 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

77

seeing as not privileged documents. For them to say, to show

their best cases, I don't see where that gets us anywhere.

Because quite frankly, all the documents -- they should all

have a basis for withholding documents as privileged.

THE COURT: I think I'd like to leave that to the

second round. I think maybe once we've come up with these sort

of parameters on some concrete documents there may be

categories that easily get knocked out, which I think is what

you're saying, right? There are categories that you feel are

so obviously privileged that you shouldn't have to do anything.

MS. McKEEN: That's right, Your Honor. There are some

categories that are so core that I think your consideration of

both the law and maybe a declaration around that category would

not only tend to knock out that category but might give a

useful framework for other categories as well.

THE COURT: I'm going to have the movants be able to

designate up to 12. If you think I'm missing something, when

you see those categories, if you think that there are other

issues that really need to be decided first or whatever, I

mean, you need to start this conversation somewhere, right? So

if the movants start with the 12, you take a look at it. If

you think this is missing something, if you think this is

really not a smart way to do it, just file a motion. Come

back, we'll talk about it, we'll figure it out. But I think we

need to do this in a test-case scenario. I ask you also to

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 77 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

78

think about whether you need all 12.

MS. HALSTEAD: Yes, Your Honor.

THE COURT: Because if you do 12, they're going to

spend time coming up with the declarations, and it's going to

be delayed.

MS. HALSTEAD: Yes.

THE COURT: All right. So it's going to be up to 12

categories. See if it works. If you don't think it's working,

just ask for a conference and we'll come back in and we'll

figure out why it's not working. All right? But I think those

were good suggestions of ways to deal with at least getting to

crystalize what the issues are that you need me to decide, and

I can't do it without some factual basis, okay? And I don't

speak Spanish, so if the documents are all going to have to be

translated, we have another issue. All right?

MS. HALSTEAD: I assume we can work out a schedule.

THE COURT: Do you want to do that now? Do you want

to take a minute?

MS. McKEEN: I think it would be best if we met and

conferred and maybe file something with the court.

THE COURT: You need to report to me within a week

what your schedule is going to be. How is that?

MS. HALSTEAD: Thank you. That works. Thank you.

THE COURT: Should I ask my favorite, is there

anything else, or should I just excuse you all? All right.

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 78 of 79
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

79

There's nothing else. I don't see anybody jumping up and down.

Thank you, all.

COURTROOM CLERK: Court is in recess.

(Adjourned, 3:56 p.m.)

CERTIFICATE OF OFFICIAL REPORTER

I, Kelly Mortellite, Registered Merit Reporter and

Certified Realtime Reporter, in and for the United States

District Court for the District of Massachusetts, do hereby

certify that pursuant to Section 753, Title 28, United States

Code that the foregoing is a true and correct transcript of the

stenographically reported proceedings held in the

above-entitled matter and that the transcript page format is in

conformance with the regulations of the Judicial Conference of

the United States.

Dated this 24th day of May, 2018.

/s/ Kelly Mortellite

_______________________________

Kelly Mortellite, RMR, CRR

Official Court Reporter

Case:17-03283-LTS Doc#:3143 Filed:05/24/18 Entered:05/24/18 15:54:18 Desc: Main

Document Page 79 of 79