EXHIBIT A 

Case 2:17-cv-04140-DWL Document 185-1 Filed 08/05/19 Page 1 of 51
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

_________________

Wells Fargo Bank NA, )

) No. CV-17-4140-PHX-DWL

Plaintiff, )

)

vs. ) Phoenix, Arizona

) May 29, 2019

Wyo Tech Investment ) 2:59 p.m.

Group LLC, et al., ) 

)

Defendants. )

_____________________________ )

BEFORE: THE HONORABLE DOMINIC W. LANZA, JUDGE

REPORTER'S TRANSCRIPT OF PROCEEDINGS

ORDER TO SHOW CAUSE

Official Court Reporter:

Candy L. Potter, RMR, CRR

Sandra Day O'Connor U.S. Courthouse, Suite 312

401 West Washington Street, Spc 36

Phoenix, Arizona 85003-2151

(602) 322-7246

Proceedings Reported by Stenographic Court Reporter

Transcript Prepared by Computer-Aided Transcription

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A P P E A R A N C E S

For Defendant Wyo Tech:

Wilenchik & Bartness 

By: Dennis Ira Wilenchik, Esq.

Tyler Swensen, Esq.

Chris Meyers, Esq.

2810 North 3rd Street, Suite 103

Phoenix, Arizona 85004 

For Defendants CWT Canada, Resources Recovery Corporation and 

Jean Noelting: 

Ryan Rapp & Underwood 

By: James Hendrik Taylor, Esq.

3200 North Central Avenue, Suite 2250 

Phoenix, Arizona 85012 

Schlam Stone & Dolan 

By: Joshua Wurtzel, Esq. (Telephonically)

26 Broadway, Suite 1900

New York, New York 10004 

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(Proceedings begin at 2:59 p.m.)

THE CLERK: Civil case 17-4140, Wells Fargo Bank NA

versus Wyo Tech Investment Group, LLC and others. Time set for 

order to show cause hearing. 

Counsel, please announce your presence for the record. 

MR. SWENSEN: Good afternoon, Your Honor, Tyler 

Swensen, Dennis Wilenchik and Chris Meyers on behalf of 

Wyo Tech. 

THE COURT: Good afternoon. 

MR. TAYLOR: Good afternoon, Your Honor, Henk Taylor, 

local counsel for the CWT parties. 

THE COURT: Good afternoon. 

MR. WURTZEL: Good afternoon, Your Honor, this is 

Joshua Wurtzel from Schlam Stone for the CWT parties. 

Thank you for accommodating me by phone. 

THE COURT: Of course. Good afternoon. 

All right. So we are here on -- for the following 

matter: On May 16th, in response to the CWT parties' amended 

motion for an order to show cause, the Court issued a 

seven-page order outlining its preliminary thoughts, and then 

inviting further briefing from the parties. 

Since then the Wilenchik parties filed a response to 

the order, which is at docket number 140. The CWT parties then 

filed a reply yesterday, which ultimately got docketed at 

docket 153. And earlier today the Wilenchik parties filed a 

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court-authorized surreply at 152. 

I've reviewed all of that, so I feel like I have a 

pretty good handle on the issues. 

In a moment I will start with the Wilenchik parties to 

address some of the issues. But before we get into the merits, 

I just wanted to personally let Mr. Wilenchik know that I read 

the motion, and I heard about your son's news, and I'm very 

sorry to hear about that. 

Mr. Wurtzel, I've had cases with Mr. Wilenchik before, 

and I know him and his son, and I just wanted to express how 

truly my condolences go out to your family. That's awful news. 

MR. WILENCHIK: Thank you. 

THE COURT: All right. Mr. Swensen, will you be 

addressing the Court? 

MR. SWENSEN: Yes, I will, Your Honor. 

THE COURT: Okay. 

MR. SWENSEN: Yes. Thank you, Your Honor. 

Not to belabor any point, but I want to start off by 

first saying, I apologize for my handling of this situation. I 

am primarily if not exclusively responsible for the situation 

that we find ourselves in here today. And I don't try to 

excuse or justify what happened. I just want the Court to 

understand, as I stated in my declaration, that there was no 

intent to flout a court order or to behave in a contemptuous 

manner on my part. I may have been negligent or derelict in 

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what I was doing, but I definitely did not intentionally or 

willfully try to disregard a court order. 

What happened in short was, as the movie title A 

Series of Unfortunate Incidents. Starting with the fact that, 

as the Court has pointed out, Mr. Wilenchik's son was diagnosed 

with cancer in late March. We also lost two attorneys from the 

firm, one with notice, one without notice. During that same 

two-week period Mr. Wilenchik was on vacation in the 

Mediterranean and basically out of touch for most of the time. 

As a result of those events, a lot of responsibility 

fell on me to take over a number of cases. I tried to get 

others involved in that, including one of the younger 

associates, Mr. Turrentine, who handled the oral argument 

before the Court on the motions that were pending at the time. 

I believe that was at or around April 9th. 

After the Court ruled on that, and I spoke to 

Mr. Turrentine, I was under the impression, based on his 

recitation of what had happened, that the Court had ruled -- 

and I believe Mr. Wurtzel stated something to this effect in 

one of his emails, that the Court had said we're entitled to 

discovery. And that was the impression I got from 

Mr. Turrentine, that CWT was entitled to continue on with its 

discovery. 

Based on that I made the -- my first mistake, I 

assumed that we still had the right to make objections, and 

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that we were not being required to drop all objections and 

answer everything as written. But that the Court had ruled, 

yes -- that -- my understanding of our motions was, we're 

saying they shouldn't be entitled to any of this --

THE COURT: Right. 

MR. SWENSEN: -- discovery. And my understanding of 

the Court's ruling was the Court said, yes, they are entitled 

to some of this discovery, so you need to respond. 

And in my looking at the issue, I came to the 

erroneous conclusion that we were still entitled to make an 

objection as to the expansive time frame. 

And my understanding was that Beus Gilbert had not 

received any payments within that -- what I defined as being 

the shorter time frame. And I created a declaration or a 

response to the subpoena for Mr. Beus based on that

understanding. And he reviewed it and signed it. And his 

statement was perfectly accurate, insofar as it went. 

THE COURT: Right. 

MR. SWENSEN: That was true. 

But I should have followed up and read the order 

myself in more detail and understood that. I did not. 

THE COURT: And let me just interject on that. I 

understand your point. 

And I will say at the outset, I appreciated the tone 

that you took in your subsequent briefs with the Court. And 

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it's hard when mistakes get made to own up to them, so I 

appreciate the fact that you've been trying to do that. 

With respect to the date limitation, I guess my 

concern with it was more that we didn't -- I don't recall us 

getting into one way or another at all during the hearing 

whether -- you know, I officially ruled that you couldn't, 

therefore, make a time limitation objection. 

But it was just more broadly, from my experience, we 

had already had a big series of briefing that the Court put a 

lot of resources into it addressing your objections to the 

subpoena. It just seemed fairly self-evident to me that if you 

have a full round of briefing and hearings on one set of 

objections to discovery and the Court rules against you, you 

then don't get to start Ground Hog Day and come up with a third 

set of objections 30 days later and start the whole process 

again. 

MR. SWENSEN: Right. And I did not understand the 

full history. Had I been here at the oral argument -- like I 

said, I did not jump into this case until probably about April 

13th. And that's when it started going round about, you know, 

what do we do in this case, what do we do in that case? 

By that point Mr. Wilenchik was back in town, but also 

dealing with his son's condition and situation and was relying 

heavily on me to carry the weight of multiple cases, actually, 

one of which has been in litigation for ten years now, and it 

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is very complex. And so I'm trying to get my arms around all 

of that. 

And to be honest, I mean, I basically took what I 

thought would be kind of a shortcut or approach to say, all 

right, let's just hold on to this one objection. And as far as 

I knew we hadn't received any payments up to that date, and 

that Beus Gilbert hadn't. And I said, let's do that as our 

initial response. If we get pushed back, then we'll talk about 

it. 

Didn't hear anything from opposing counsel afterwards. 

Had many email exchanges about other discovery issues and other 

issues with Mr. Wurtzel in the subsequent week -- or actually 

almost three weeks, including, as the Court knows, we went into 

this whole thing about the objections to the discovery requests 

on Wyo Tech. 

THE COURT: Right. 

MR. SWENSEN: And we had a May 1st teleconference. 

And nothing ever came up about the subpoena on Wilenchik & 

Bartness or Beus Gilbert at any time in any of that. 

And so what I was thinking was, well, Mr. Wurtzel has 

kind of let that go. Because he had a -- at that point I 

realized he was very tenacious about saying, you know, I'm 

not -- I'm not happy with this, or I'm not happy with that, I 

think you need to do more, or I object, or whatever. So the 

fact that I hadn't heard anything from him led me to believe 

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we're okay. 

I had no idea that those responses on April 26th never 

went out. The first time I realized that was when we received 

his initial motion for order to show cause. And I immediately 

went to our senior paralegal, Miss Stevens, and said, I thought 

those went out. Tell me before I respond back to him and say, 

what are you talking about. 

Because I could tell from reading that he was acting 

like we hadn't responded at all. 

THE COURT: Right. 

MR. SWENSEN: And I went to her. And we went back and 

checked our emails. And she actually found emails where she 

had told -- I belive it was Jack Wilenchik had asked her, is 

this taken care of? And she said, yes, it's been sent to 

opposing counsel. But for whatever reason, it wasn't. She 

thought she had done it. I thought she'd done it. 

And that's when we said, oh, whoops. Okay. Here's

what we filed. And immediately Mr. Wurtzel came back and said, 

no, that's not acceptable. And after going back and forth, and 

I went back and looked at the Court's ruling, I said, yeah, I 

can see where you have an objection. Let's get you the 

documents. 

And I immediately on May 14th started that process of 

trying to collate the documents and get them together, and be 

responsive. Both -- and I contacted Beus Gilbert and said, we 

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need to have anything you have, any payments. 

And so we immediately started trying to address the

situation as best we could. And so now we find ourselves here, 

again, still at loggerheads over whether or not we've complied 

with the subpoena. 

I don't believe there's an issue as to Beus Gilbert

anymore. I believe that Mr. Wurtzel has conceded that Beus 

Gilbert is in compliance and did turn over everything that they 

had. 

So I'm not going to address that. Just to reiterate 

and say that Mr. Beus at no time -- he was relying solely on 

me, and at no time did he ever make any misrepresentations to 

the Court insofar as I know. So I don't believe there's any 

sanctions warranted against him or his firm. 

As to where we are right now, I have been out of the 

state for the last week, so if it's -- if the Court does not 

mind, I would at a certain point here turn it over to 

Mr. Meyers, who has been dealing with the ongoing objections to 

our responses and our supplemental responses, et cetera, 

because I'm not as aware of those -- all of those facts. 

I will say though, I do know that everyone at 

Wilenchik & Bartness has been trying since May 13th to fully 

comply with the subpoena and produce everything in our records. 

What I think opposing counsel fails to understand is, 

with our particular system of bookkeeping, which I didn't 

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understand until I spoke to Miss Loftis, who handles all those 

matters and all the banking, does not track payments coming in 

by client matter unless the payment comes from that client on 

that matter. 

Here we have a situation where we have third parties, 

Wyo Tech and Inductance, depositing funds into our trust 

account for use on a variety of cases. So those funds are not 

tracked at that stage by matter, they're tracked by payor. 

Which is, you know, the money came from Inductance and/or 

Wyo Tech, or it came from Danzik Applied Sciences. 

And so that maybe, I think, is part of what 

Mr. Wurtzel is having difficulty with in trying to understand 

our system. 

So what we've given is everything we have in our 

records. The only thing that I believe he had an issue with 

is -- well, there's a couple of things. 

But one was, he took issue with us not providing the 

account numbers for certain checks. Well, we told him multiple 

times, we don't keep those checks, we don't keep copies of 

those checks in house. We got copies of the checks from 

Wyo Tech and Inductance, and the ones we got from them had that 

information blanked out. 

The only way we can get that information is to go to 

our bank and specifically designate which checks we want copies 

of. We don't have online banking, we don't have an electronic 

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access. That would require Miss Loftis to go in and look at 

the bank statements, look at her ledgers, line up deposits with 

checks, and then tell the bank, I want this check, this check, 

this check, this -- which she has done. But now they're 

telling us, what, two weeks -- three weeks? 

Yeah, they have to physically like go in and pull -- 

THE COURT: What bank is this? 

MR. MEYERS: Northern Bank & Trust. 

MR. SWENSEN: Northern Bank & Trust.

THE COURT: Okay. 

MR. SWENSEN: So it's not like Wells Fargo or B of A 

and Chase. I guess they have to physically go find these 

records, or however they're stored, and get us copies of those. 

But we have asked for them so we can provide that 

information. 

But that I think is a far cry from the case that 

Mr. Wurtzel cited, holding that having online access means your 

bank records are within your possession, custody and control. 

I would agree with him with respect to like my own banking. I 

do bank with Chase, I can get my phone and pull up images of 

checks in a matter of seconds. 

Northern Bank & Trust, that's not possible. So I 

don't think we have a real apples to apples comparison there. 

Ultimately, yeah, they might be in our control, but it 

takes time to track them down and find them, they're not just 

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readily available. 

So we are trying to comply to the best of our ability. 

The other issue, though, that Mr. Wurtzel has raised 

is with regard to these Danzik payments. Well, that kind of 

comes under the heading of no good deed goes unpunished, where 

we inadvertently included in our production some deposit slips 

and other information that showed payments from, quote, Danzik. 

Well, that's not what the subpoena asked for, it asked 

payments from Wyo Tech and Inductance. These Danzik payments, 

as far as I'm aware, came from Danzik Applied Sciences, and 

they're not responsive to the subpoena. 

Yet Mr. Wurtzel wants us to now prove a negative and 

prove that those funds didn't come from Wyo Tech or Inductance. 

And we've already told him, no, those are payments that came 

from Danzik. We inadvertently disclosed that, but -- and we 

don't have copies of those checks either. And we're not trying 

to hide anything, but honestly it's not part of what the 

subpoena asked for. 

So we think we're going kind of far afield here to 

have to respond to that demand. 

THE COURT: Okay. 

MR. SWENSEN: So beyond that, I don't have a whole lot 

more to add, other than to say, again, there was no intention 

to flout a court order. I've been practicing for over 25 

years, I've never been held in contempt, never even been 

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threatened with a contempt citation until this instance. And I 

certainly do not want to see that record changed in this 

situation. And I certainly don't want Mr. Wilenchik or the 

firm to have to suffer because of my failure to dot all my Is 

and cross all my Ts back in April 22nd -- or April 26th, excuse 

me. 

THE COURT: Let me -- a question I have on my mind is, 

fundamentally my overall objective here is I just want to make 

sure all the discovery gets provided and the case gets back on 

track. 

But, a different issue here is, I think that the CWT 

parties have had to incur some expense in filing motions and 

bringing issues to the Court's attention. I recognize your 

position that at least some of these things in your view could 

have been avoided through better meeting and conferring, and 

possibly the Court didn't need to get burdened with it. 

But nevertheless, you know -- let me say, you know, I 

take everything you're saying in full -- give full credit to 

the idea that this was not an intent to mislead, it was 

negligence, it was a mistake. I appreciate all of that. 

But from the other side's perspective, it doesn't 

really matter why it happened, it happened, and they've had to 

really spin their wheels and file a bunch of briefs. 

I think one of the arguments that Mr. Wurtzel might

make is, I understand that your accounting system in your firm 

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is difficult to figure out, and that explains why your initial 

production, you missed some of these checks that they pointed 

out. 

But you shouldn't wait until after the compliance 

deadline in a case where I already -- when we had the hearing, 

I asked Mr. Turrentine, how long do you guys need? I'll give 

it to you. He said, three weeks. We gave him three weeks. 

And only after that deadline passes and the errors start 

manifesting do you even start trying to figure out how the 

accounting system works. 

So I guess from their perspective, they've had to 

spend money filing briefs that truly they probably shouldn't 

have needed to file because this stuff just should have -- you 

know, had these negligent mistakes not been made, it never 

would have come to this. 

What am I supposed to do with an aggrieved party like 

the CWT parties that have had to burn some money on filing on 

motions that it's not really their fault that it had to happen? 

MR. SWENSEN: Well -- and I understand the Court's 

position on that. I guess I would, again, respectfully say 

that I'm not sure that they had to file those motions. I don't 

think they had to file their reply. I don't think they had 

to -- it feels like piling on after a certain point. Okay? 

Because I don't think that Mr. Wurtzel's objections at this 

stage are well taken as to what's been produced. And it does 

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feel like piling on, to a certain extent. 

Also, the fact that, you know, he was well aware that 

he hadn't received anything from us and he waited 

three -- almost three weeks, and didn't even bother to put an 

email, where's your response? Or pick up a phone or anything. 

That kind of feels like, you know, lying in wait to pounce on 

us. And I understand -- 

THE COURT: You know, when I've tried to think it 

through, I think that there's an argument that the first motion 

for an order to show cause they filed could have been avoided 

through more meeting and conferring. 

MR. SWENSEN: Right. 

THE COURT: But then when you belatedly forwarded the 

discovery that you thought had been sent a couple weeks 

earlier, at that point they discovered that you had

unilaterally imposed this date limitation that shouldn't have 

been in there. 

And it strikes me that that was invariably going to

involve the Court at that point, because I think it's unlikely 

that, had the CWT parties received your discovery responses on 

April, and they started screaming bloody murder because you put 

in this 2017 limitation that wasn't imposed, had they brought 

that up to you privately instead of filing a motion, you would 

have said, you know what, you're right, here's everything. 

Just what I know about this case thus far is, that 

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strikes me as that one way or another was heading down the pike 

for more litigation before the Court. And, therefore, that 

amended motion to compel they filed was something that it's 

hard to blame them for filing it. 

MR. SWENSEN: Well, I can only ask the Court to take 

my word for it, sincerely, that I would have done exactly what 

I did had he called me and explained the situation after 

reading our April 26 responses, I would have done exactly the 

same thing I did, which was to immediately go and find all the 

checks and documents that I could possibly find through the 

entire date range. 

The only reason I didn't look at those first was 

because I was told -- I did go and talk to Miss Loftis about 

all this, I said, did we receive any payments prior to this? 

And she told me no. That turned out to be incorrect. There 

was the one check for $10,000. Which was a real problem 

because we had a tough time figuring out where that check came 

in and where it was accounted for. 

But, yes, so there was -- there's not an effort on my 

part to just, you know, say I'm not going to even bother with 

this until they complain about it. I thought I had a 

legitimate objection to the scope. 

And all I can tell -- ask the Court to do is believe 

me when I say, if I had been told on April 27th, no, you're 

wrong, look at the order it says this, I would have said, oh, 

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man, my bad, we'll get you that stuff immediately. And I would 

have gone and done exactly what I did on May 13th and 14th and 

pulled those documents, and we would have had this 

conversation. 

And maybe -- would he have ultimately filed that 

motion, after waiting a couple of days and not getting 

everything that he thought he wanted? Perhaps. I don't know. 

But I know what I would have done. And that's all I can tell 

the Court, is what I would have done in that situation. 

And yeah, it's unfortunate. I feel bad for what 

happened. And I understand the Court's position, that we 

definitely messed up and should be perhaps something that has 

to be done to pay for that. 

THE COURT: I guess a question I have on that, and I'm 

still working this through, and I want to hear from Mr. Wurtzel 

as well, but are you aware of any mechanism that would enable 

the Court to order you to compensate the CWT parties for their 

reasonable costs they've incurred in filing some of the motions 

without making a formal contempt finding? 

MR. SWENSEN: You know, if the Court were to treat 

this rather -- instead of a motion -- or contempt order, and 

instead as a motion to compel, then I believe that would be a 

possibility to say that the Court is -- 

THE COURT: My concern -- 

MR. SWENSEN: -- entitled to compel this and, 

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therefore, some fees are allowed. 

THE COURT: One of the cases that was cited in my 

order -- the order setting the order to show cause -- hearing 

to show cause was Sali versus Corona Regional Medical Center, 

884 f.3d 1218. That's a recent Ninth Circuit case where the 

Ninth Circuit said that none of the sanctions available under 

Rule 37 are available against nonparties. 

So the way I read that, it seems like when you're 

dealing with noncompliance with a Rule 45 subpoena, the usual 

palette of options under Rule 37 aren't available, you're 

really limited to contempt sanctions under Rule 45. 

MR. SWENSEN: Well, possibly. But I don't believe 

that it still requires a finding of contempt, because I believe 

the Court is entitled -- the cases that I recall seeing talk 

about using the $500 a day type sanction or other things to 

purge the contempt, to get rid of the contempt. 

And I think if the Court believes that the contempt

has been purged, by our actions and our payment, then I don't 

believe that it's necessary to actually find us in contempt, 

but rather say, contempt's been purged because you stepped up 

and did this and you paid their costs. And that's -- that was 

your consequence for what happened. 

THE COURT: Okay. 

MR. SWENSEN: All right. 

THE COURT: Thank you. 

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Mr. Wurtzel, Mr. Meyers is coming to the podium right 

now, so I'm still hearing from the Wilenchik parties.

MR. MEYERS: Thank you, Your Honor. 

MR. WURTZEL: Thank you, Your Honor. 

MR. MEYERS: So I got pulled on this case on May 17th 

as the ship was sinking or had almost fully sunk. 

THE COURT: Welcome. 

MR. MEYERS: So, yeah, I parachuted in last minute. 

Since that time I just -- and Tyler covered a majority 

of what I was going to say, so I won't reiterate that. But 

I'll just say, basically from the moment that this thing whole 

got started, from the moment -- especially since I got 

involved, we've done everything in our firm to get into 

compliance as soon as humanly possible. We've pulled every 

shred of every paper that could possibly be responsive and 

produced it. 

To date we've produced 325 pages of documents, which I 

think you've seen in maybe multiple filings now. And let me be 

clear, that's all we have, that's all we got. 

We -- following our filing on the 22nd and our final 

production on the 21st, we engaged in several more 

communications with Mr. Wurtzel over the week. And I think 

largely those communications were like two ships passing in the 

night. We were just talking around each other. I couldn't 

figure out what he was trying to get at -- 

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THE COURT: Let me ask you to slow down. I'm a fast 

talker as well. But for the court reporter's benefit.

MR. MEYERS: I apologize. 

Yeah, so essentially after the 22nd, or maybe on that 

same date, we had several communications back and forth with 

Mr. Wurtzel. Frankly we've been confused for the large part at 

what he's still getting at. Whatever it is, it's not in 

documentation in our possession. 

As Mr. Swensen indicated, our firm has a little bit of 

an antiquated bookkeeping system. We don't have online banking 

access set up. As a matter of fact, I was told that for a good 

portion of this case we did something called mail -- banking by 

mail, which is that our bookkeeper didn't actually set foot in 

a bank. 

So we're a little bit behind the times on that. And I 

think that's caused some of the issues that are still 

lingering. 

I just want to say to the Court, you know, from our

perspective, when it comes to production of documents -- 

because that's what a subpoena is at the end of the day, 

response -- produce all responsive documents -- we've given 

everything in our immediate possession. And we're trying to 

work with Mr. Wurtzel to figure out exactly what he wants. 

He's produced this little grid document that I think 

he attached in his appendix to the latest filing. He sent that 

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to me on Friday the 24th, about five or ten minutes before we 

spoke. Frankly, it's still taking me time to figure out what 

exactly that means. 

But I just want to assure the Court that we've 

produced everything in our possession. We are working in good 

faith with Mr. Wurtzel to try to come to a resolution on all 

these issues as soon as possible. 

And frankly, at this point we're going above and 

beyond what we need to to technically be in compliance with the 

subpoena. 

THE COURT: Let me -- just on the grid. 

MR. MEYERS: Yeah. 

THE COURT: It seems pretty straightforward to me. I 

mean, he wants the account numbers that the checks from 

Wyo Tech and Inductance were drawn from, and he wants the 

documentation showing which client accounts and client matters 

those funds were applied to once they got inside the Wilenchik 

firm. 

Is there some level of complexity I'm not 

understanding? 

MR. MEYERS: Well, the first issue is, is we weren't 

really sure what he meant by source account. And I think we've 

had several back and forth about exactly what that means. 

We figured out that -- and I think he can correct me 

if I'm wrong -- but that is the account from which the check 

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itself was drawn, presuming that Wyo Tech or Inductance at some 

point had more than one bank account from which they were 

drawing checks and paying us. So I think we've resolved that 

issue. 

At this point, to get the information that he's 

requesting on this grid, like I said, we don't have it, but 

we're working on getting it. And to get that, we're going to 

have to pull the checks, which we've instructed our bookkeeper 

to do, to just flat out get it. 

Because when it was provided to us, these documents

were -- our clients redacted the -- effectively the source 

account number on the check. So we're going to have to go back 

and kind of redo that. But we're in the process of doing that. 

Again, we're above and beyond what I think we're 

technically required to do in compliance with the subpoena. 

But in good faith cooperation and trying to remediate what has 

happened here, we're willing to take that extra step to make 

sure that happens. 

That's about all I have. 

I'd just like to say, I'd like to continue to talk to 

Mr. Wurtzel to try and sort out all of these issues. He raised 

four new issues in the -- in his reply brief, which we 

addressed in the surreply, where I think we screamed, we don't 

have those checks with us right now and we can't get them. 

So from that perspective I just want to reiterate to 

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the Court, we're technically in full compliance with the 

subpoena. And we're working with Mr. Wurtzel and I want to 

continue to do so to get this ironed out as soon as humanly 

possible. 

THE COURT: Okay. Thank you. 

MR. MEYERS: Thank you. 

THE COURT: All right. Mr. Wurtzel. 

MR. WURTZEL: Thank you, Your Honor. 

First of all, as a threshold matter I just want to say 

that none of this -- there was some suggestion in the Wilenchik 

& Bartness' surreply that this was -- I think the word they 

used was a vendetta, that it's personal. I want to assure the 

Court that none of it is. 

And we've had multiple matters in Federal Court and in 

State Court with Wilenchik & Bartness, and I felt that we've 

always exchanged professional courtesies that have gone both 

ways, and we've always worked cooperatively, to the extent 

possible. 

And none of this is personal, and none of this is a

vendetta or anything like that. What it is is that I have two 

clients that are very, very unhappy because they've had to 

spend a lot of money to get not even all the documents that 

were requested in a very simple and short four requests 

sufficient to show subpoena that we served almost four months 

ago at this point. And that the Court ordered compliance with 

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two months ago. And that was required to be complied with one 

month ago. 

I understand everything that my adversaries have said 

regarding what led to the production being done in the way that 

it was. You know, I think the record speaks for itself. I'm 

happy to address any specific issues that the Court has. But I 

don't need to dwell on that. And I think the Court can draw 

its own conclusions and can take the explanations for what 

they're worth. 

You know, the one thing on that point is that, you 

know, to hear that responses to -- that objections are being 

drafted without having read the Court's order, you know, that's 

particularly problematic to me, because then we get those 

objections and we react in a certain way, acting under the 

assumption that everyone involved in the case has read the 

order that the Court has required them to comply with. But 

I'll leave it at that. 

In terms of where we are at the moment with document 

production, I agree that the Beus Gilbert firm has fully 

complied. And I think we put in our reply that they've fully 

complied as of May 17th of 2019. 

As far as Wilenchik & Bartness goes, there were 

several things that we identified in our reply. And they 

weren't immediately raised in the reply, they were things that 

we identified and we did have a meet and confer, and an 

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extensive phone call last week and a lot of emails, as the 

Court has seen. And I agree with the Court that what we've 

identified as missing is actually very simple, and it's 

reflected in the chart. 

And I hear what opposing counsel is saying that they 

don't have the documents in their possession, but that doesn't 

mean that they don't have them in their control. And if I 

understand opposing counsel correctly, they didn't even try to 

get these documents from their bank until a couple days ago, 

which is already a month after the Court ordered them to comply 

with the subpoena. 

So to hear -- to hear that they didn't intend to 

violate the order is fine. It's fine for them to say that. 

And, you know, the Court will take that for what it's worth. 

But at a certain point the buck has to stop somewhere. 

And we're in a situation where it's literally over a month 

since the deadline for compliance and, you know, they just now 

went to the bank to get the documents that are required to be 

produced under the subpoena. 

And respectfully, Your Honor, I do think that 

documents that are in the possession of your bank, whether you 

have online access or you have to go to the bank or call the 

bank to send them to you, those are considered within your 

control. And then I think the case law supports that. And it 

doesn't even sound like the Wilenchik firm is substantively 

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disagreeing with that. 

And then the second issue that we have, the second 

real issue we have is that in this production the Wilenchik 

firm produced a number of payments, you know, at least a dozen 

if not more, that are labeled, you know, Danzik retainer 

payments or Danzik payments. 

I asked them last week, I said, who made these 

payments to you? If these payments were made by Wyo Tech or 

Inductance, which is all the subpoena required, then you have 

to also give me the source account, the client, and the matter 

for each payment. If these payments were made by someone other 

than Wyo Tech or Inductance, there's nothing further required, 

you just included it in the production by mistake or 

additionally, that's fine. 

And the answer I got back was, we don't know who made 

these payments. I said, well, you have to know, you have to 

figure it out. Because if they were made by Wyo Tech or 

Inductance, then you're missing information. And you have to 

be able to say one way or the other. 

Mr. Swensen said this afternoon that those -- that he 

believes those payments were made by Danzik Applied Sciences. 

That's the first time that I'm hearing that. What I heard from 

Mr. Meyers last week was that they don't know who made those 

payments. The only way to know would be to look at the checks, 

which I understand they're now doing. 

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So from our perspective, until they can tell us one

way or another whether these were made by Wyo Tech or 

Inductance, in which case they have to produce this additional 

information for each payment, or they can say these payments 

were not made by Wyo Tech or Inductance. Until one of those 

two things happen, then the subpoena is not fully complied 

with. Because as far as I understood it -- and notwithstanding 

Mr. Swanson's statement this afternoon, as far as I understood 

from last week with emails and the long call that Mr. Meyers 

and I had, they did not know one way or the other whether these 

payments came from Wyo Tech or Inductance. 

I think Mr. Wilenchik had even indicated in an email 

that he thought they came from Wyo Tech or Inductance. I don't 

know if he was speaking from having knowledge or if he's just 

making an assumption. 

But I think the subpoena requires them to find out,

what payments did we get from these two entities, and for each 

payment provide this very limited information. And to this 

point we haven't gotten that. 

So, you know, I think based on the record, you know, 

it is clear that the subpoena for the Wilenchik firm has not 

been complied with to date. 

THE COURT: You know, the way I understand things, I 

think that there's two different categories of possibly still 

outstanding discovery. 

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One has to do with the checks from the bank that have 

not yet been recovered, that it sounds to me that Wilenchik has 

agreed to go get. Even though I know your position is that 

they should have got them a long time ago. Nevertheless, it 

sounds like we're on a track to getting those within the next 

couple of weeks. 

The other category of discovery that is arguably still 

outstanding has to do with internal invoices and documents from 

within the Wilenchik firm showing how the money was applied and 

what clients and client matters it was applied to. 

And I guess I want to hear more from you on that, 

because as I read in the surreply they filed today, essentially 

we've given you everything that's responsive, and to the extent 

you may be frustrated that the documents we've given you aren't 

clearer or more comprehensive, a Rule 45 subpoena just requires 

us to give you what we've got. It doesn't require us to create 

previously nonexistent records that will help you understand 

the flow of things better. We've given you everything we've 

got, and it's your burden now to figure out what they mean. 

And they're the ones who would know what documents 

they have and don't have showing how client payments were made. 

So to me -- at least as to that latter issue, the documents 

showing how the client funds were used, I'm struggling to 

understand how I could find them still not to be in compliance 

when they're representing that they've now given you 

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everything. 

MR. WURTZEL: Yes, Your Honor. 

So I agree, they're not required to create documents 

that don't exist. 

What I said to opposing counsel when we met and 

conferred on this is that when a check comes in from Inductance 

or Wyo Tech, it goes into their attorney escrow account. And I 

believe I heard Mr. Swensen say earlier this afternoon that the 

account -- that the check would go to cover any one of several 

matters. And I said, that's fine. If that's how you did it, 

then produce a document that shows that that's what you were 

doing. Tell me what those five or ten or 20 matters were. 

Obviously when they got a check, when it came into 

their escrow, it didn't just go into the pot of all escrow 

funds and -- without any further tracking. It had to have 

been -- there has to be a document -- there has to be some type 

of tracking that shows this $100,000 check from Wyo Tech or 

from Inductance just came in, and this will be applied to any 

one of these, quote, Wyo Tech or, quote, Danzik matters. 

That's all I'm looking for. A document that shows 

which matters and which clients it would be permissible to use 

that retainer check for. They haven't produced something like 

that. 

But obviously the bookkeeper, or whoever does the 

billing, knows to apply it to certain matters. And this is 

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relevant to the case because our argument is that these checks 

from, you know, Inductance and Wyo Tech came in, and they're 

being used in part for this matter, but they're also being 

used, in part, for Danzik and labeled as Danzik crony or Danzik 

family matters. And if that's the case, then I want to know 

that. 

And what we've -- and I actually explained this to 

Mr. Meyers when we spoke last week, I gave him an example of, 

you know, payments in which they had produced all of the 

relevant documents. And I think I gave him the example of 

either the January 22nd or the August 17th, and one of those 

two, I walked him through and I explained how they had given 

everything that shows -- you know, that shows the payment 

coming in, it showed who made the payment and what account it 

came from, it shows the amount of the payment. 

And then I showed him another document that Wilenchik 

& Bartness produced that showed that payment on their accounts 

receivable ledger applied to a particular matter, or a 

particular client, or maybe -- you know, I think the example 

was the January 22nd one was for Danzik slash ADZ CWT, which I 

said to him I thought that was acceptable, because in that 

instance I can see who the client is and who the matter is. 

And maybe it's the case that I think Danzik ADZ, which 

I'm assuming means against or adverse, to CWT, maybe that means 

one matter, maybe it means multiple matters, and that's 

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something that can be clarified in a deposition or otherwise.

But for purposes of the subpoena, I explained that 

that satisfies it. 

But for some of these other payments, when the 

only -- when the only documents related to some of these other 

payments are documents that were produced by Wyo Tech, for 

example, the April 9th, 2018 payment, or the August 21st, 2018 

payment -- I'm looking at the appendix A, which is docket 

number 153 at page 10 of 11. 

You know, these are payments that Wilenchik & Bartness 

didn't produce any documents for. The only reason we know 

about these are, A, because we had checks, you know, from other 

postjudgment discovery that showed them. And when we 

asked -- after we attached them to our motion papers, Wyo Tech 

produced some version of these checks. 

And then Wilenchik & Bartness, in its supplemental 

written responses, cited those documents in the Wyo Tech 

production and said, here are additional documents that we 

don't have, that we got from our client that are responsive. 

So my followup is, well, for other payments for which 

you had responsive documents, you did in many instances give me 

documents that showed where these payments -- how these 

payments were applied, or at the very least how they were 

earmarked in the escrow account. But for these other payments, 

you know, we didn't get that. 

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So I understand they're saying we don't have anything 

more. They said that before and it turned out that they did. 

And now they're saying that again. And I'm pushing back 

because I just can't understand how a law firm could accept 

payments into its escrow account without having a single piece 

of paper or document that says, this $100,000 escrow payment is 

to be used for this client or for these ten clients or these 

ten matters. 

THE COURT: Okay. I want to ask you a couple of 

questions related to the one I asked earlier about -- so first, 

what is your estimate, if there were some sort of an award, for 

the briefing costs that you've had to incur because of the 

things that have gone on here? Do you have any even rough 

sense of that? 

MR. WURTZEL: Without -- I would have to look. I 

mean, probably in the neighborhood of $25,000. Maybe a little 

less, a little more. 

THE COURT: And a different question I have is the 

question I asked earlier, are you -- you know, I am struggling 

with whether or not there's a evidentiary foundation to make 

all the findings that will be required for contempt. And 

I'm -- the question I have to you is, outside of a 

filing -- finding of civil contempt under Rule 45, are you 

aware of any other legal mechanisms that would authorize me to 

award you the reasonable costs you incurred in briefing some of 

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these things? 

MR. WURTZEL: You know, I think the Court could 

probably impose sanctions. It wouldn't be Rule 37 sanctions, 

but there are other -- the Court has inherent authority to 

impose sanctions. I haven't researched, at least not recently, 

whether that applies to nonparties. But from what I recall, 

that is very broad, the Court's inherent authority. 

So if the Court was reluctant to impose -- to make a 

contempt finding, but wanted to award some type of sanctions, 

which, you know, again, we're not looking -- you know, if the 

answer is that we get our attorney's fees and some type 

of -- something to compensate my clients for what we've had to 

go through, whether it's a contempt finding or not, is less 

significant to me. 

I think the Court probably could do it using its 

inherent authority to control discovery and its inherent 

authority to sanction parties before it for discovery conduct. 

THE COURT: All right. And then, you know, a 

different matter that's pending out there is, one of the 

requests that you had made as part of the civil contempt 

finding was a requirement of a $500 daily fine starting on 

April 27th until compliance has been completed. I guess I want 

to hear more from you on that. 

I will let you know my tentative view is that doesn't 

strike me as something that's appropriate here. Because my 

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reading of the papers that have been presented and the argument 

here in court today is that the Wilenchik firm is -- although 

they made a lot of mistakes earlier, they're scrambling in good 

faith to try to comply right now. And it's not clear to me why 

daily sanctions are needed on top of that, given what appears 

to be me to be belated but good faith attempts to comply. 

MR. WURTZEL: Well, Your Honor, I appreciate that. I 

mean, you know, the issue that I have is that we're going to be 

getting -- you know, it's a month after the production 

deadline. It sounds like we're not going to get a full 

production for another few weeks. You know, so I'm not sure 

that a -- some incentive to do this faster, you know, would 

not, A, encourage it to get done faster, and B, you know, 

impose some type of penalty for waiting until a month after the 

production deadline to first go out and get the documents from 

the bank. 

You know, that being said, ultimately, you know, we're 

not looking to cause pain here. I mean, Wilenchik is a law 

firm for a party, but ultimately a nonparty. I think we would 

be satisfied if we were able to get our attorney's fees 

incurred in having to, you know, engage in all the motion 

practice related to the contempt and to do this hearing, and 

then the back and forth with opposing counsel, you know, since 

we filed the contempt motion. 

If the Court is struggling with, you know, whether to 

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impose the daily fine, given the belated good faith, it would 

have been nice to see the good faith earlier on rather than 

just sending out discovery responses and seeing whether I 

complained about them, and only after I complained about them, 

you know, making an effort. To me that actually is a reason to 

impose some additional sanction.

But ultimately we're not -- the amount in 

sanctions that are -- what I'd like be able to tell my clients 

is that you're being made whole for having to go through this 

process. 

THE COURT: All right. Thank you. 

Is there anything else you'd like to add? 

MR. WURTZEL: No, Your Honor. 

THE COURT: All right. Mr. Swensen? 

MR. SWENSEN: Thank you, Your Honor. 

I'd just like to point out, the core issue in this 

case, and I think we've got pretty far afield from it, is the 

$600,000 that -- or approximately $600,000 that were interpled, 

and whether or not CWT as a judgment creditor has any kind of a 

claim to those funds. 

What Wyo Tech or Inductance may have paid to Wilenchik 

& Bartness is at best conditionally relevant, assuming several 

dots can be connected. 

This is not information that is just absolutely core 

and crucial. I think the Court actually recognized that. 

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THE COURT: I'll keep hearing you out on that but, I 

mean -- 

MR. SWENSEN: I just want to make that clear. 

And we have provided already -- or our clients have

provided some 30 plus affidavits or declarations from the 

various investors in these companies stating unequivocally that 

that money that they've invested in the Wyo Tech and Inductance 

is their money, has nothing to do with Dennis Danzik or RDX, 

the judgment debtors. 

We are trying to address the core issue in this case. 

And we understand we messed up, and we need to fix it. But we 

do take issue with the statement by Mr. Wurtzel that, A, we 

haven't complied, because we have. B, that we have control 

over bank records that have to be physically located and 

retrieved by the bank once we give them the information that 

we're looking for. We don't have very much control over that 

or how long that process takes. 

You know, I don't have a case citation to that point, 

but I think it's pretty far afield from the case that they 

cited where Vince McMahon had online banking and all he had to 

do was push a couple of buttons and bring his records up. 

THE COURT: Well, that issue isn't fully briefed. I 

haven't done any independent research. But my initial thought 

when I read it is, it makes 100 percent sense to me that you 

have control over your bank records, even if they happen to be 

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at the bank, in the same way that subpoenaed documents, if you 

happen to be storing them at lawyer's office, you still have 

control over them. 

So I'm not that persuaded by your argument you don't 

have control over your own financial documents at your bank. 

MR. SWENSEN: Well, maybe I'm not expressing it 

clearly enough. But the point I'm trying to make is, we don't 

have control over how long that process takes. We can't go 

down to the bank and say, just let me in your back room and 

I'll go through the files myself, in that sense of control. 

And it goes to the issue of the $500 a day sanctions. 

But I believe the Court's already kind of resolved that's not 

going to be a motivator to get things moving any faster, 

because we don't have any control over how long it takes the 

bank to pull these things.

THE COURT: Right. 

MR. SWENSEN: Okay? 

And the last point is that, you know, we have complied 

to the best of our ability to date on these things. And we've 

given everything in our possession and control, other than 

those checks. 

THE COURT: So the question I have -- I think that I 

have a pretty good understanding of the checks. With respect 

to the internal documents within your firm showing how Wyo Tech 

or Inductance funds were applied to different client matters, I 

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don't know, you guys are the only ones that have personal 

knowledge of how your internal accounting processes are set up. 

But I will say, I tend to share Mr. Wurtzel's skepticism of the 

idea that a $100,000 retainer check could come into your firm 

and there could be zero paperwork anywhere showing who gets 

credit for that or what client matters it subsequently got 

applied to when you were working on it. 

MR. SWENSEN: And, you know, I had my own skepticism 

about that until I had it explained to me by Miss Loftis. And 

she does keep track of all this. And she has a way -- I even 

asked her, I said, okay, so what happens if a client calls up 

and says, how much money do I have left in my retainer account 

in your trust account? 

And the way she does that is to go and take the 

documents that we supplied, and to subtract amounts paid to 

other slips of paper or ledgers that she has that shows money 

coming in, and says, okay, based on these two figures this is 

what you've got left. She literally goes through that process. 

It's not written down anywhere. 

And as much as Mr. Wurtzel doesn't accept that, the

offer was made by Mr. Wilenchik to him to say, look, I'll have 

Miss Loftis speak to you directly, and she can explain it to 

you and answer your questions. 

But that's the way it is. 

And so there's nothing more we can say, other than 

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we've given him all the documentation that's out there. And if 

he wants to depose Miss Loftis and ask her those questions, 

fine. But we've offered to actually try to fill in the blanks 

and say, let me try to explain this to you, this goes here and 

this goes here. And it's like it's -- there's no pleasing him 

at certain point. He just insists that there must be more. 

There isn't. 

That's all we can say, there isn't anymore. 

THE COURT: Do you think -- do you agree with 

Mr. Wurtzel's view that outside of Rule 45 I have inherent 

authority to order reasonable compensation for attorney's fees 

here without making a contempt finding? 

MR. SWENSEN: Yes, I believe the Court has inherent

power to -- yeah, to hold a party responsible for costs 

incurred by another -- or a nonparty, hold a nonparty 

responsible for costs incurred by a party in this situation. 

THE COURT: All right. Is there anything else you'd 

like to add? 

MR. SWENSEN: Anything else? 

No. 

THE COURT: All right. I'm going to take five minutes 

to go back in chambers and think about this, and then I'm going 

to come out and make a ruling. 

So we're temporarily adjourned. 

(Recess at 3:54 p.m., until 4:05 p.m.) 

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THE COURT: All right. Mr. Wurtzel, are you still 

there? 

MR. WURTZEL: Yes, Your Honor. 

THE COURT: Okay. I've considered all of the argument 

and the briefing that's been provided in this case, and I make 

the following rulings: 

The first matter to address is whether the Wilenchik 

firm and Beus Gilbert should be held in civil contempt based on 

the matters that are before the Court. 

Everybody agrees that Beus Gilbert shouldn't.

With respect to the Wilenchik firm, I decline to make 

a contempt finding. Even though, as the reasons I'll get into 

in more detail in a little bit, I find that a lot of the 

conduct here was negligent and there are a lot of mistakes that 

could have been avoided, ultimately I'm in agreement with and 

I'm persuaded by the statements that were made in Mr. Swensen's 

brief that was filed last week and in court here today, that 

what occurred here was the product of negligence coupled with 

several unusual factors that were unanticipated; the loss of 

two associates from the firm, and the terrible personal news 

that Mr. Wilenchik's family has gone through. 

And those things, rather than any bad faith or intent 

to mislead, explain what has occurred here. 

So, I do not find that a contempt finding is warranted 

here. 

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My principal concern is what to do to make sure that 

this subpoena is now complied with so we can move forward in 

the case. 

There are two categories of discovery that are 

outstanding here, or at least in dispute. One are the checks, 

and two are the client records showing where the money went. 

With respect to the checks, I am persuaded by 

the -- on the one hand, I'm persuaded by the CWT parties that 

these are things that should have been provided all along, they 

are in the control of the Wilenchik firm. But that's sort of a 

moot issue because the Wilenchik firm has agreed to provide all 

these things. 

And again, my principal concern here is just making

sure that the discovery gets provided, not casting blame at why 

the process has broken down earlier. 

The Wilenchik firm has represented that they think 

they can have all the checks within three weeks. I don't want 

to cut it too close, so I'm going to order that within a month 

all of these checks get obtained and provided. 

And I just want to be as clear as possible, that if

they are not provided in a month, the CWT parties are free to 

file further motions, and I will look upon those motions 

favorably. Because this has already gone on way too long, 

these things should have been provided a long time ago. 

With respect to the accounting records, at the end of 

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the day -- you know, Mr. Wurtzel expressed skepticism that 

there are no records showing where six figure retainers went 

after they came into the firm. I then expressed that 

skepticism -- 

Mr. Wilenchik. 

MR. WILENCHIK: I just want to be clear on this, if

there's some misunderstanding. When you say "where they went," 

the client would direct that money to be placed into a trust 

account that's maintained by the firm. So we do know where it 

went. I just want to be clear on that. 

THE COURT: Right. I understood that. 

MR. WILENCHIK: There's no designation by that client 

when they send that money in, other than it will be applied to 

all outstanding matters.

That's all I wanted to say.

THE COURT: Thank you for the clarification. 

I guess, like Mr. Wurtzel, I was initially skeptical 

that a firm wouldn't have more documented paperwork internally 

showing after the money comes in how it gets allocated between 

those accounts, and documentation in a form that could be 

provide as discovery. 

Mr. Wilenchik. 

MR. WILENCHIK: We do. And we had provided that a 

long time ago. What it is, very quickly, is -- and I don't 

think it was explained very well. She sent, and they have 

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copies of all invoices. On those invoices for the matter it 

shows how the money was applied. And it can be easily 

calculated. So I'm not sure what the issue here is. 

THE COURT: Okay. 

MR. WILENCHIK: Thank you. 

THE COURT: I understand. 

And that, I guess, goes to the bottom line point I was 

going to reach on this issue, is at the end of the day there's 

only one party that has the foundation to make a representation 

on whether it's complied with the subpoena, and that's the 

Wilenchik firm, because they're the ones who are familiar with 

their accounting systems and how they track funds internally. 

They've represented that they've complied with the subpoena. I 

accept that representation. 

I just will further note that, again, I see a world

where in later stages of this case there might be depositions 

from folks within the firm about how the accounting system 

works. So, this record should be crystal clear that I'm making 

rulings made on point-blank representations to me how the 

accounting system works. If these representations turn out to 

be inaccurate, that will be a big problem. But I accept what 

you've said. And given that, I don't think that there's 

anything else for me to compel with respect to these accounting 

issues. 

MR. WILENCHIK: I've offered to have my assistant, 

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without a deposition, speak with Mr. Wurtzel previously. 

THE COURT: I appreciate that. 

So what I've covered thus far is, I don't find there's 

a need for a contempt finding. 

I think that we've cleared up prospectively what needs 

to be done to ensure that the subpoena is complied with. 

And so in my mind the remaining issue that needs to be 

resolved is what happens to -- for purposes of sanctions or 

otherwise to compensate the CWT parties for what they've gone 

through thus far. 

And before I get into that, I guess I want to make 

crystal clear that I do find that CWT is the aggrieved party 

here who rightfully came to the Court for relief. They 

shouldn't have to wait this long for the discovery. They 

shouldn't be having to wait another four weeks for the checks. 

They shouldn't have been the ones that received the unilateral 

date limitation and had to come -- and had to address it. 

So even though, as I stated earlier, perhaps not all 

of the motions needed to be filed right away, there could have 

been better meet and confer efforts, I don't want those 

statements to detract from the bottom line conclusion that the 

reason we're here -- and again, the Wilenchik firm has 

admirably taken responsibility and accountability for the 

mistakes. 

Mr. Swensen, I know that writing that brief last week 

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and coming up here in court today, it's not fun. No lawyer 

wants to do that. And I appreciate that. 

But nevertheless, the fact that I'm ruling the way I'm 

ruling shouldn't in any way suggest that CWT did something 

wrong here. They're the ones that were entitled to this 

discovery a long time ago, and I'm just trying to make sure 

they get it. 

Because -- so the two forms of sanctions -- or civil 

contempt sanctions that were previously discussed were daily 

fines and compensation for attorney's fees. 

I don't find that daily fines are appropriate here. 

The law is very clear that daily fines are not meant to be 

punitive, they're meant to prompt the noncompliant party to 

come into compliance. 

I don't find that further prompting is necessary here, 

because the Wilenchik firm has been adequately prompted, and it 

strikes me that they're doing everything they can now to get 

into compliance. 

But with respect to the fees that the CWT parties have 

been required to incur, I find that that's something that I 

need to pay closer attention to. 

I discussed on the record earlier what basis I might 

have to impose sanctions. And everybody agreed that even 

though I haven't made a civil contempt finding, I have the 

inherent authority to award sanctions under these 

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circumstances. 

The question then comes, how much of a sanction? 

Mr. Wurtzel, I know it wouldn't be fair to you to have 

a precise number on the tip of your tongue, because this is 

just coming up. You had given an estimate of $25,000. That 

seemed high to me. I recognize that you've had to put in 

significant work on this. But $25,000 for this dispute seems 

excessive, particularly because, as I mentioned earlier, I 

think that perhaps some but not all of the motions practice 

could have been avoided. 

Where I'm at is ultimately this: My rough sense is

that sanctions of no more than $10,000 would be appropriate 

here to provide reasonable compensation for the fees that CWT 

has incurred. However, I can't -- as I'm sitting here right 

now I don't feel comfortable picking a number out of the air 

and imposing it, because I don't have the documents before me. 

So how I'd like to proceed it this: I would like the 

parties to meet and confer before filing further briefing with 

the Court about the amount of fees that ought to be awarded, 

taking into account the comment I just made that I view $10,000 

as the ceiling of what would be reasonable here. 

If you can work it out without requiring further 

briefing, that's fine, you can work it out and I don't need to 

see anything further. If you can't work it out, then CWT 

parties are invited, after the meet and confer process, to file 

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a motion seeking sanctions on the basis that I just stated. 

For purposes of how such a motion should look, my 

standard case management order is available on the Court's 

website. I believe I also issued in this case -- in this case 

after it was reassigned to me by Judge Tuchi, but I just am not 

certain, but in any event that lays out some procedural 

requirements on how a motion seeking attorney's fees should be 

structured. 

Again, I am hopeful that we won't even need to get to 

that point, because after the parties meet and confer they can 

work it out. But in case it needs to go there, the process is 

laid out. 

I think that's everything I needed to address. 

From the Wilenchik parties' perspective, is there 

anything I haven't addressed yet? 

MR. WILENCHIK: No. And thank you for the sympathy. 

THE COURT: Thank you.

Mr. Wurtzel? 

MR. WURTZEL: No, Your Honor. Thank you. 

THE COURT: All right. Thank you very much. This 

hearing is adjourned. 

MR. TAYLOR: Your Honor, just one quick question.

THE COURT: Yes.

MR. TAYLOR: Assuming we do work it out with the 

Wilenchik firm, how should we notify the Court of that? 

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THE COURT: I don't think you need to notify me. 

MR. TAYLOR: I understand. 

THE COURT: If you'd like to, you can file a notice, 

but I don't even feel the need necessary that there needs to be 

a notice. 

MR. TAYLOR: I understand, Your Honor. Thank you. 

THE COURT: All right. This hearing is adjourned. 

(Proceedings concluded at 4:15 p.m.)

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CV-17-4140-PHX-DWL - May 29, 2019

UNITED STATES DISTRICT COURT

50

C E R T I F I C A T E

I, CANDY L. POTTER, do hereby certify that I am duly 

appointed and qualified to act as Official Court Reporter for 

the United States District Court for the District of Arizona.

I FURTHER CERTIFY that the foregoing pages constitute 

a full, true, and accurate transcript of all of that portion of 

the proceedings contained herein, had in the above-entitled 

cause on the date specified therein, and that said transcript 

was prepared under my direction and control.

DATED at Phoenix, Arizona, this 3rd day of June, 

2019.

s/Candy L. Potter________

Candy L. Potter, RMR, CRR

Case 2:17-cv-04140-DWL Document 185-1 Filed 08/05/19 Page 51 of 51