DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL 

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

Philip S. Van Der Weele, OSB #863650

Email: phil.vanderweele@klgates.com 

K&L GATES LLP

One SW Columbia Street, Suite 1900

Portland, OR 97258

Phone: 503-228-3200

Attorneys for Tonkon Torp LLP

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

LAWRENCE P. CIUFFITELLI, for himself 

and as Trustee of CIUFFITELLI 

REVOCABLE TRUST, et al.,

Plaintiffs,

v.

DELOITTE & TOUCHE LLP; 

EISNERAMPER LLP; SIDLEY AUSTIN 

LLP; TONKON TORP LLP; TD 

AMERITRADE, INC.; and INTEGRITY 

BANK & TRUST,

Defendants.

Case No. 3:16-cv-00580-AC

DEFENDANT TONKON TORP LLP’S 

OPPOSITION TO DEFENDANT 

SIDLEY AUSTIN LLP’S MOTION TO 

COMPEL 

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 1 of 15
PAGE i – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

TABLE OF CONTENTS

Page

I. INTRODUCTION ...............................................................................................................1

II. ARGUMENT.......................................................................................................................3

A. None of the three reasons Sidley has offered as to why it needs the 

discovery it seeks to compel is valid........................................................................3

1. Tonkon’s distributions of income to a subset of its partners are not 

relevant to whether Tonkon is “partially solvent.” ......................................3

2. ORS 67.615 is not relevant to Tonkon’s settlement, and Tonkon’s 

distributions to a subset of its partners are not relevant to whether 

Tonkon has distributed income in violation of ORS 67.615(1)...................4

3. Income Tonkon has distributed to a subset of its partners is not 

relevant to the adequacy of the settlement, and, in any event, 

Tonkon has produced information on the financial condition of 

three of its partners superior to the information Sidley seeks to 

compel..........................................................................................................6

B. The information Sidley seeks to compel would be subject to a 

confidentiality agreement that Sidley has already breached..................................10

III. CONCLUSION..................................................................................................................10

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 2 of 15
PAGE ii – DEFENDANT TONKON TORP’S OPPOSITION TO 

SIDLEY AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

TABLE OF AUTHORITIES

Page(s)

Cases

Brown v. Price, Case No. 3:17-cv-00869-HZ(D. Or. 2017)........................................................6, 7

Merrihew v. Schwab, et al., Multnomah Co. Cir. Ct. Case No. 0907-10596, 

Contribution Claims Bar Order dated August 11, 2010 ............................................................3

Ortiz v. Fibreboard Corp.,

527 U.S. 815, 119 S.Ct. 2295 (1999).........................................................................................7

Statutes

ORS 58.185......................................................................................................................................8

ORS 58.185(3).................................................................................................................................8

ORS 58.185(4).................................................................................................................................8

ORS 67.105(4).................................................................................................................................8

ORS 67.615......................................................................................................................................5

ORS 67.615(1).................................................................................................................................5

ORS 67.615(4).................................................................................................................................6

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 3 of 15
PAGE 1 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

I. INTRODUCTION

Tonkon recognizes that the conditional, dollar-for-dollar judgment reduction rule Tonkon 

is asking this Court to follow entitles the Non-Settling Defendants to discovery on Tonkon’s 

financial condition. Even before July 16, 2018, the date Plaintiffs filed the original Motion for 

Preliminary Approval of Class Settlement (Doc. 333), Tonkon had begun voluntarily producing 

documents regarding its finances to the Non-Settling Defendants. By the time of this Court’s 

August 31, 2018 order that permitted the parties to “immediately begin discovery on the pro 

tanto issue” (Doc. 360, point (5)), Tonkon had already voluntarily produced 244 pages of 

Tonkon’s financial information to the Non-Settling Defendants. Tonkon also fully responded to 

a letter from the Non-Settling Defendants dated August 24, 2018 requesting additional 

documents, producing an additional 62 pages on September 18, 2018. On September 18, 2018 

Tonkon also produced an additional 542 pages voluntarily - i.e., documents not even requested 

by the Non-Settling Defendants. Documents already produced include five year’s worth of 

Balance Sheets and Income Statements, multiple reports showing the aging of Accounts 

Receivable and Unbilled Work in Process, and budgets. Tonkon’s prompt, voluntary 

productions have already enabled the Non-Settling Defendants to invoke Tonkon’s financial 

information in making the same arguments Sidley is essentially repeating here: (1) Tonkon is not 

currently insolvent; and (2) Tonkon isn’t paying enough to settle this case. See Unredacted 

Version of Doc. 370, Non-Settling Defendants’ Response to Plaintiffs’ Amended Motion for 

Preliminary Approval of the Tonkon settlement (filed under seal), internal p. 29, and Exs. 36-41 

(filed under seal) to the Declaration of Gavin Masuda (Doc. 372). 

Tonkon has also responded comprehensively and in good faith to Sidley’s extensive 

written discovery requests, which consist of fifteen Requests for Admission, fifteen Requests for 

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 4 of 15
PAGE 2 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

Production of Documents, and seven Interrogatories. Although Sidley’s email requesting a 

meet-and-confer broadly criticized Tonkon’s “deficient responses” to the written discovery 

(Templeton Decl., Ex. C, Doc. 407-3, p. 2), Sidley sought to confer on only two of the seven 

interrogatory responses, one of the fifteen document requests, and none of the responses to the 

fifteen RFAs. The Motion to Compel is narrower still, addressing only one interrogatory 

(Interrogatory #2) and a request for production of documents (Request #7) that Sidley narrowed 

unilaterally after the meet and confer.1 Finally, after seeing Sidley’s Motion, Tonkon produced 

the personal Balance Sheets of three of its partners, even though they are not documents that 

Sidley requested, let alone moved to compel production of. 

Having already provided extensive discovery, Tonkon has drawn the line at the 

information Interrogatory #2 and Document Request #7 now coextensively seek: the income that 

Tonkon has distributed to a subset of its equity partners since October 1, 2015.2

 This 

information is not relevant. Moreover, given the reasons Sidley has given for relevance, the 

information Sidley seeks is inferior to information Tonkon has already produced. That produced 

information includes Tonkon’s Balance Sheets, which show the distributions of income to all 

Tonkon partners in the aggregate, and the personal Balance Sheets of the Tonkon partners who 

were most closely involved in the securities offerings at issue, which show their (lack of) ability 

to pay a meaningful amount in connection with a judgment or future contribution claim in the 

hypothetical world in which there is no settlement.

 1 Following the meet and confer, Sidley narrowed the scope of Document Request No. 7 to make 

it co-extensive with the subset of partners covered by Interrogatory 2, and shortened the time 

period covered by Interrogatory 2 to October 1, 2015. Motion, Doc. 406, p. 6 (internal page 5), 

footnote 1 and accompanying text.

2 Sidley presumably picked October 2015 because that is the month in which Tonkon withdrew 

from representing any Aequitas entity.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 5 of 15
PAGE 3 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

II. ARGUMENT

Sidley offers three reasons as to why Tonkon should be compelled to specify how much 

income it has distributed to a subset of its equity partners. None of those three reasons is valid. 

Moreover, Sidley has already breached a confidentiality agreement to which this extremely 

confidential and competitively sensitive information of Tonkon would be subject.

A. None of the three reasons Sidley has offered as to why it needs the discovery 

it seeks to compel is valid.

1. Tonkon’s distributions of income to a subset of its partners are not 

relevant to whether Tonkon is “partially solvent.” 

First, Sidley says it needs to know how much income Tonkon distributed to certain of its 

partners in order to challenge Tonkon’s claim of “partial insolvency” (or, equivalently, “partial 

solvency,” to use the terminology of Judge Rees in Merrihew).3 (Doc. 406 at 8-9.) Whether 

Tonkon is “partially solvent,” as that term is used in Merrihew, is relevant because partial 

solvency is an element of the judgment reduction rule Tonkon has asked this Court to follow. 

But distributions of income Tonkon has made to only a subset of its equity partners are not 

relevant to whether Tonkon is partially solvent. As used in Merrihew, “partially solvent” refers 

to the inability of a settling defendant to satisfy a judgment against it in the hypothetical world in 

which there is no settlement. (Tonkon Reply Memo In Support of Amended Motion, Doc. 385, 

pp. 29-31.) Income distributed to only a subset of partners bears no connection to Tonkon’s 

inability to pay. Tonkon’s assets are certainly relevant, but Tonkon has already produced 

numerous Balance Sheets, Accounts Receivable Reports, and Unbilled Work in Process Reports. 

Tonkon’s income may be relevant, but Tonkon has already produced its Income Statements. 

 3 A copy of Judge Rees’ Contribution Claims Bar Order dated August 11, 2010 in Merrihew v. 

Schwab, et al., Multnomah Co. Cir. Ct. Case No. 0907-10596, is attached as Exhibit B to the 

Declaration of Philip Van Der Weele in Support of Class Representatives Amended Motion for 

Preliminary Approval of Partial Settlement, Doc. 386-2.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 6 of 15
PAGE 4 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

And if the portion of its annual income that Tonkon, as a pass-through entity for tax purposes, 

pays out to its equity partners is relevant, then it is Tonkon’s distributions to all equity partners in 

the aggregate that are relevant. Those aggregate payments are shown on Tonkon’s Balance 

Sheets, which Tonkon had already produced months before Sidley even made its written 

discovery requests.4

 

Not surprisingly, the Non-Settling Defendants had already figured out Tonkon’s 

distributions to its equity partners from Tonkon’s Balance Sheets even before Sidley served its 

written discovery requests on Tonkon. The Response of the Non-Settling Defendants to 

Amended Motion for Preliminary Approval of Class Settlements stated: “Since this lawsuit was 

filed in 2016, Tonkon has distributed more than [actual number contained in unredacted 

version] to its individual partners - including partners who performed the work for which 

Tonkon has been sued” (emphasis in original; citing to Tonkon Balance Sheets). (Internal page 

29 of Unredacted Response; Redacted Response is Doc. 370, and the quoted sentence is at page 

34 of Doc. 370.) Thus, Tonkon has already produced information sufficient for Sidley to 

challenge Tonkon’s claim that Tonkon is “partially solvent” as that term is used in Merrihew, 

and the information Sidley seeks is not relevant to that challenge.

2. ORS 67.615 is not relevant to Tonkon’s settlement, and Tonkon’s

distributions to a subset of its partners are not relevant to whether 

Tonkon has distributed income in violation of ORS 67.615(1).

The second argument Sidley offers for the relevance of the information it seeks to compel 

is that that information “relates to the validity of Tonkon’s distributions to its partners” under 

 4

 In the “Partners’ Equity” portion of each of these Balance Sheets, distributions of income to 

equity partners are shown in two line items, “Bonus’s Paid January” and “Partners’ Draws.” The 

Partners’ Equity portion of the Balance Sheet also shows, on an aggregate basis, the capital 

payments made by equity partners and capital payments received by retiring equity partners, but 

those numbers are not significant, so we will just refer to the distributions of income, which 

include Draws and Bonuses.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 7 of 15
PAGE 5 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

ORS 67.615 (Doc. 406, p. 3, last paragraph; pp. 9-10) This argument fails for two reasons. 

First, ORS 67.615 is not relevant in this settlement to any element of Merrihew’s conditional, 

dollar-for-dollar judgment rule. Merrihew requires insolvency or partial solvency. Tonkon 

acknowledges (happily) that it is not insolvent, and Tonkon cited ORS 67.615(1) in connection 

with that acknowledgement. (Doc. 385, p. 29) The Non-Settling Defendants, including Sidley, 

agree, having already told this Court that Tonkon “is in fact comfortably solvent and financially 

successful.” (Doc. 370, p. 34, first paragraph) Because Tonkon is not relying on “insolvency” to 

satisfy any element of Merrihew, ORS 67.615 is not relevant.5 Second, even if ORS 67.615 was 

relevant - and it is not - distributions to a subset of equity partners would not be relevant to the 

“validity” of distributions under ORS 67.615. Payments made to a subset of partners are 

irrelevant to the issue of whether Tonkon distributed “too much” to its equity partners. If 

Tonkon’s distributions to its partners were problematic (and they are not, because Tonkon is not 

currently insolvent), it would be because those distributions, in the aggregate, had exceeded 

some amount. As explained in subsection 1 above, Tonkon has already produced documents - its 

Balance Sheets - showing how much income, in the aggregate, Tonkon has distributed to its 

equity partner each year. Therefore, Sidley already has all the information it 

needs for its (misguided) challenge to the “validity” of Tonkon’s distributions to its equity 

partners.6

 

 5 As Tonkon explained in its Reply Memo, a consequence of the undisputed fact that Tonkon is 

not currently insolvent is that Tonkon’s distributions to its equity partners have been perfectly 

legal under ORS 67.615. (Doc. 385, p. 29, n. 13.) This consequence does not somehow put 

Tonkon’s distributions to its partners at issue as Sidley contends at Doc. 406, pp. 9-10. Those 

distributions would be at issue if Tonkon were claiming, or if Sidley were claiming, that Tonkon 

is currently insolvent. But neither Tonkon nor Sidley is so claiming.

6 Sidley says it needs discovery on Tonkon’s attempt “to justify these distributions by asserting 

that they are permitted by Oregon’s LLP statute, ORS 67.615(4). (Doc. 406, bottom of p. 9). 

Tonkon had cited ORS 67.615(4) as a second, independently sufficient, reason as to why 

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 8 of 15
PAGE 6 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

3. Income Tonkon has distributed to a subset of its partners is not 

relevant to the adequacy of the settlement, and, in any event, Tonkon 

has produced information on the financial condition of three of its 

partners superior to the information Sidley seeks to compel.

Third, Sidley says that it needs to know the income Tonkon has distributed to a subset of 

its equity partners in order to assess the adequacy of the settlement payment. Sidley’s argument 

of how distributions to partners are relevant to the adequacy of the settlement payment to the 

Class has two prongs, which correspond to two perspectives: that of the payor (Tonkon); and that 

of the payees (the subset of Tonkon’s equity partners). In evaluating the distributions from the 

perspective of payor Tonkon, Sidley argues that if Tonkon has income to distribute to partners, it 

should be reserving some (unspecified) portion of that income to pay to the plaintiffs. And, in 

evaluating the distributions from the perspective of the subset of payee partners, Sidley argues 

that if those partners are earning income, they can contribute some (unspecified) portion of that 

income to the settlement payment.

Sidley’s argument fails for three reasons. First, the argument rests on an incorrect 

premise. That incorrect premise is that, in order to approve the settlement, the Court must find 

that it the settlement payment represents some theoretical maximum payment possible. That 

premise comes from Brown v. Price, on which Sidley relies (Doc. 406, p. 8), but the premise is 

incorrect, because Brown v. Price does not apply to this settlement. For starters, unlike the 

partial settlement before this Court, Brown v. Price was a settlement with all defendants, so the 

Amended Judgment of Dismissal did not address a bar of contribution claims or the method of 

 

Tonkon’s distributions have been legal, with the first reason being that Tonkon is not insolvent. 

Reply Memo, Doc. 385, p. 29, n. 13. This citation does not put distributions made to a subset of 

partners at issue, because (1) everyone agrees that Tonkon is not insolvent; and (2) even if any 

distributions were relevant under ORS 67.615(4), it would be distributions in the aggregate, 

which Tonkon has already disclosed. Finally, the Income Statements Tonkon has produced 

demonstrate that Tonkon generates revenue by providing legal services, not by engaging in other 

lines of business that might render ORS 67.615(4) inapplicable.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 9 of 15
PAGE 7 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

judgment reduction flowing from such a bar. Declaration of Philip Van Der Weele filed 

herewith (“Van Der Weele Decl.”), ¶ 3, Ex. 1, p. 2. 

A further distinguishing fact is that the settlement in Brown v. Price, unlike Tonkon’s 

settlement, did not permit opt-outs.7 Consequently, that settlement was subject to a different 

legal standard than the Merrihew standard for a settlement that permits opt outs. For a settlement 

that does not allow opt-outs, the Supreme Court has held that district courts must determine that 

the settlement fund (referred to in this context as a “limited fund”) is set at the maximum 

amount: “The first and most distinctive characteristic [of a limited fund class action settlement] 

is that the totals of the aggregated liquidated claims and the fund available for satisfying them, 

set definitively at their maximums, demonstrate the inadequacy of the fund to pay all claims.” 

Ortiz v. Fibreboard Corp., 527 U.S. 815, 838, 119 S.Ct. 2295, 2311 (1999) (emphasis added). 

That requirement of a maximum payment does not exist for an opt-out settlement, and with good 

reason. If investors determine that the settlement payment is inadequate, they can opt-out. The 

plaintiffs here do not need Sidley, who has motives for blowing up the settlement contrary to the 

best interests of the plaintiffs, to protect their economic interests.8

 

 7 Brown v. Price, Amended Order Approving Class Action Settlement, Templeton Dec., Ex. D, 

Doc. 407-4, top of p. 7: “Only a Rule 23(b)(1)(B) non-opt out class would prevent individuals 

from disproportionately depleting defendants’ assets (and insurance) by prosecuting separate 

cases” (emphasis added).

8 This discovery motion is not the place to address the merits of the settlement agreement. 

Nevertheless, because Sidley insinuates that the plaintiffs’ attorneys gave away the store in 

settlement with Tonkon, leaving it up to Sidley to protect the interests of the Class, it is worth 

noting that Sidley has misstated or ignored critical features of the Tonkon’s Stipulation and 

Agreement of Settlement with the Class (the “Stipulation”), thereby masking the significant 

financial risks Tonkon faces, even assuming that Tonkon obtains court approvals of all 

settlements. Sidley asserts that “Tonkon proposes to pay the remaining limits on its professional 

liability policy, which will be split between the Class and individuals who have sued Tonkon in 

separate lawsuits.” (Motion to Compel, Doc. 406, p. 4.) 

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 10 of 15
PAGE 8 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

Second, if Tonkon’s ability to pay more in settlement were relevant (which it is not), then 

at most, Tonkon’s distributions of income in the aggregate would be relevant, not a subset of 

those distributions. As explained above, Tonkon has already produced its Balance Sheets, which 

show its aggregate distributions, and its Income Statements, which show its aggregate income.

Third, to the extent that the financial condition of certain individual partners is relevant 

under Merrihew, Tonkon has already provided the personal balance sheets for those partners, and 

that information is superior to the information Sidley seeks to compel. Under Merrihew, Tonkon 

must show that the $18.5 million it is paying in settlement now is more than what those who 

would be subject to contribution claims in the hypothetical world in which there was no 

 

Not so. Tonkon has agreed to pay a minimum of $18.5 million, plus a supplemental 

payment of Remaining Policy Limits if that number is greater than $0. Stipulation, Doc. 355-1, 

p. 7 ¶ 2 (allocation of $18.5 million settlement payment between Class Action and Individual 

Actions) p. 6, ¶ 1-(y) (definition of “Remaining Policy Limits”); p. 8, ¶ 5 (payment of Remaining 

Policy Limits, if any, for the benefit of the Class). 

Because Tonkon’s total insurance started at $20.35 million ($350,000 PLF plus $20 

million excess), $1.85 million represents the portion of Tonkon’s total insurance not committed 

to the $18.5 million minimum settlement payment. Therefore, Tonkon bears the risk of having 

to make substantial payments itself that are not covered by insurance. These payments, which in 

effect come out of the pockets of Tonkon’s equity partners, fall into two categories. The first 

category is litigation expenses (costs and attorneys fees). Tonkon will have to pay litigation 

expenses out of pocket to the extent those expenses, from the very beginning of this case in April 

2016 through the final approval of settlements for all cases, exceed, in the aggregate for all seven 

cases, $1.85 million. (In the meantime, as long as Remaining Policy Limits is greater than $0, 

every dollar Tonkon spends fighting with Sidley to get this settlement approved is one less dollar 

available to the Class.) The second category of payments Tonkon is obligated to make out of its 

own pocket are payments to defend itself or to settle with plaintiffs who opt-out of the 

settlement, as long as the Opt-Out Threshold is not reached. If the Opt-Out Threshold is 

reached, then Tonkon must choose whether to pay out of its own pocket to deal with all the optouts or forego the settlement. Stipulation (Doc. 355-1), pp. 19-20, ¶ 38.

Finally, Sidley ignores the fact that any claims against Tonkon partners arising under 

ORS 58.185 (which applies to limited partners in an LLP by operation of ORS 67.105(4), see 

Doc. 406, p. 7) are claims belonging to the persons receiving Tonkon’s services, i.e., the 

Receivership Entity. See ORS 58.185(3) and (4). The Receivership Entity is not a member of 

the Settlement Class or a plaintiff in any of the Individual Actions. Therefore, Tonkon and its 

partners must address potential claims of the Receivership Entity apart from the $18.5 million 

aggregate settlement payment for investor lawsuits.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 11 of 15
PAGE 9 – DEFENDANT TONKON TORP’S OPPOSITION TO SIDLEY 

AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

settlement could be expected to pay after judgments in favor of plaintiffs. Tonkon will assume, 

for purposes of this motion only, that three of its individual partners would be subject to 

contribution claims in the hypothetical world of no settlement, thereby potentially making their 

ability to pay relevant.9 

But the “income distributed” information Sidley seeks to compel is not relevant to ability 

to pay. Income distributed to a partner does not equate to personal assets of that partner 

available to satisfy a judgment. In essence, Sidley is confusing an Income Statement - inflows 

and outflows over time - with a Balance Sheet, a snapshot of what a person owns and owes at a 

given point in time. Income that Tonkon’s partners have earned can be spent (e.g., on taxes, 

mortgage payments, and food) or saved. Only if income is saved does it become an asset that is 

potentially available to creditors. Assets are reflected on Balance Sheets, not Income Statements. 

Accordingly, Tonkon has produced personal Balance Sheets (ex retirement accounts, which are 

exempt from creditors) of three individual partners, even though Sidley has not asked for them, 

let alone moved to compel their production.10

 9 This assumption raises the question of whether the plaintiffs and Sidley would have been better 

off if the plaintiffs had named certain individual partners of Tonkon as defendants as well. The 

answer to that question is a resounding “no.” Naming individuals as defendants would have 

been counterproductive because each individual would have been entitled separate defense 

counsel as to the “participate or materially aid” element of secondary liability, and the statutory 

affirmative defense. Multiple law firms and pursuing multiple defenses would have simply 

resulted in a much more rapid dissipation of the insurance policy, leaving less for the plaintiffs in 

settlement, and less for Sidley in a judgment reduction.

10 In connection with this voluntary production, Tonkon did not request a personal Balance Sheet 

from a former Tonkon partner who worked on some Aequitas securities offerings, because she is 

the sole breadwinner in a family with two young children, and her husband has stage 4 colon 

cancer.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 12 of 15
PAGE 10 – DEFENDANT TONKON TORP’S OPPOSITION TO 

SIDLEY AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

B. The information Sidley seeks to compel would be subject to a confidentiality 

agreement that Sidley has already breached. 

Sidley’s Motion should be denied for the independent reason that Sidley has already 

breached the confidentiality agreement regarding Tonkon’s financial information. Tonkon has 

been producing its financial information, which is highly confidential and competitively 

sensitive, subject not only the Protective Order in this case, but also to a bilateral confidentiality 

agreement with each Non-Settling Defendant, including Sidley. That confidentiality agreement, 

entered into on behalf of Sidley by Munger Tolles, gives attorneys at Munger Tolles, client reps 

at Sidley, and consulting experts access to Tonkon’s financial information. The agreement does 

not, however, permit Sidley’s Oregon lawyers (or the Oregon lawyers of any other Non-Settling 

Defendant) to have access to that information. Van Der Weele Decl., ¶ 4, Ex. 2. As explained in 

Tonkon’s responses to Interrogatory #2 and Document Request #7, Sidley/Munger Tolles 

breached this confidentiality agreement. (Templeton Dec., Ex. A, Doc. 407-1, pp. 3-4; Ex. B, 

Doc. 407-2, pp. 3-4.)11 The information that Sidley seeks to compel - the amount of income 

Tonkon has distributed to certain of its partners each year - is extremely competitively sensitive, 

and Sidley cannot be counted on to keep it shielded from Oregon law firms.

III. CONCLUSION

For the foregoing reasons, Tonkon respectfully requests that the Court deny Sidley’s 

Motion to Compel.

 11 These written responses also refer to breaches of a confidentiality agreement by Deloitte’s 

counsel, Latham & Watkins. Unlike Sidley’s counsel, however, Latham & Watkins apologized 

and promptly took extensive remedial steps to try to prevent unauthorized persons from seeing 

Tonkon’s financial information.

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 13 of 15
PAGE 11 – DEFENDANT TONKON TORP’S OPPOSITION TO 

SIDLEY AUSTIN’S MOTION TO COMPEL

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

Dated this 30th day of November, 2018.

K&L GATES LLP

By: s/Philip Van Der Weele

Philip Van Der Weele, OSB #863650

phil.vanderweele@klgates.com 

503-228-3200

Attorneys for Tonkon Torp LLP

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 14 of 15
CERTIFICATE OF SERVICE

K&L GATES LLP

ONE SW COLUMBIA STREET

SUITE 1900

PORTLAND, OR 97258

TELEPHONE: (503) 228-3200

CERTIFICATE OF SERVICE

I hereby certify that I caused a true and correct copy of DEFENDANT TONKON TORP 

LLP’S OPPOSITION TO DEFENDANT SIDLEY AUSTIN’S MOTION TO COMPEL to be 

served upon all counsel of record to this matter on this 30th day of November, 2018 via the 

Court’s CM/ECF System.

DATED this 30th day of November, 2018.

s/Philip Van Der Weele

Philip Van Der Weele, OSB #863650

Case 3:16-cv-00580-AC Document 419 Filed 11/30/18 Page 15 of 15