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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

ZHU ZHAI HOLDINGS LIMITED and

PETER PUI TAK LEE,

Plaintiffs,

-vsSTEVEN IVANKOVICH,

Defendant.

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Case No. 20 CV 4985

Chicago, Illinois

April 20, 2021

9:29 a.m.

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE SUSAN E. COX, Magistrate Judge

TELEPHONIC APPEARANCES:

For the Plaintiffs: QUINN EMANUEL URQUHART & SULLIVAN LLP

BY: MR. ROBERT JOYNT

MR. TYLER WHITMER

865 South Figueroa Street

10th Floor

Los Angeles, CA 90017

For the Defendant: KOPECKY SCHUMACHER ROSENBURG PC

BY: MR. DARYL M. SCHUMACHER

120 North LaSalle Street

Suite 2000

Chicago, IL 60602

Court Reporter: AMY M. SPEE, CSR, RPR, CRR

Federal Official Court Reporter

United States District Court

219 South Dearborn Street, Room 2318A

Chicago, Illinois 60604

Telephone: (312) 818-6531

amy_spee@ilnd.uscourts.gov
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(Proceedings heard via telephone:)

THE CLERK: Case No. 20 CV 4985, Zhu Zhai versus

Ivankovich.

THE COURT: Good morning. If you could state your

appearances, starting with the plaintiff, please.

MR. JOYNT: Good morning, Your Honor.

This is Robert Joynt, J-o-y-n-t, from Quinn Emanuel

for the plaintiffs.

THE COURT: Good morning.

MR. WHITMER: And good morning, Your Honor.

This is Tyler Whitmer, also from Quinn Emanuel, for

the plaintiffs.

THE COURT: Good morning.

MR. SCHUMACHER: Good morning, Your Honor.

Daryl Schumacher on behalf of defendant.

THE COURT: Good morning to you as well.

So we have everyone, correct?

MR. JOYNT: That's correct.

THE COURT: All right. So, first of all, let me just

say that I appreciate that you have narrowed your conflict

down to this single issue and that discovery is -- it seems

like it's now on track.

My question about the personal financials -- I mean,

as I understand it, the dispute is essentially the defendant

has produced this personal financial statement in response to
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the request to produce No. 20, and the plaintiff wants

basically the backup, the source documents.

Is that essentially what you're fighting about right

now?

MR. SCHUMACHER: Yes, Your Honor.

THE COURT: Okay.

THE COURT REPORTER: I'm sorry, who was that?

THE COURT: I'm sorry? I thought I heard something.

THE COURT REPORTER: This is the court reporter. I

didn't get who that was that spoke.

THE COURT: Oh, please tell me -- yeah, tell me who

you are, yeah.

MR. SCHUMACHER: That was Daryl Schumacher.

THE COURT: Okay. Why isn't the personal financial

statement verified? Why isn't a sworn financial statement?

MR. SCHUMACHER: Your Honor, this was a financial

statement that Mr. Ivankovich has submitted in prior

commercial transactions, but --

THE COURT: Uh-huh.

MR. SCHUMACHER: -- it was not required to be

verified at that point. There's nothing in the documents

that -- you know, he obviously has this obligation to provide

a financial statement. It didn't require it to be verified or

audited, and that's why it's not.

THE COURT: Mm-hmm. And -- and who was just
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speaking, just so we're clear.

MR. SCHUMACHER: That was Daryl Schumacher -- I

apologize -- on behalf of defendant.

THE COURT: Okay. And you -- but you -- but you

produced this in response to a request to produce specifically

about the defendant's finances, right?

MR. SCHUMACHER: We did, Your Honor. And I would

also point out that this wasn't something that had been

produced prior to this loan that they could've relied on.

THE COURT: Mm-hmm.

MR. SCHUMACHER: This is something that we're

producing after the fact in the context of discovery. And --

THE COURT: Well -- go ahead. I'm sorry.

MR. SCHUMACHER: The plaintiff is entitled to it

under the loan documents as well.

THE COURT: Could I hear from the plaintiff, please.

MR. JOYNT: Yes, Your Honor.

On the last point, the -- about the plaintiffs being

entitled under the loan documents, it's true they are entitled

under the loan documents to a financial statement, but we also

did make a specific discovery request for --

THE COURT: Mm-hmm.

MR. JOYNT: -- financial doc- -- or documents

concerning the defendant's financial situation.

THE COURT: Mm-hmm. Mm-hmm. Okay. And in response
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to that, you got this financial statement unverified?

MR. JOYNT: That is correct, Your Honor.

THE COURT: All right. And what you want now, it

seems to me, is to, like, check the math of the source

documents to further your allegations, correct?

MR. JOYNT: That's correct, Your Honor.

THE COURT: All right. So it seems to me one way to

solve this problem is to require the defendant to verify the

information in the financial statement, to sign it -- not

just, you know, sign your name, but sign it -- attest to it

because -- because maybe that makes it more meaningful as a --

as a statement of the defendant.

I mean, an unverified financial statement in response

to an interrogatory asking about financial information is

essentially worthless. I mean, it just -- you know, it

doesn't bind the defendant to any particular position. It's

just -- you know, it's basically what's on the paper.

On the other hand, if the defendants have to swear to

the information in the financial statement, they're -- the

defendant is going to be careful to make sure that financial

statement is true, and that obviates the need for backups.

You know, and it seems to me that the plaintiff has

already raised problems with the veracity of that statement,

at least in the position paper that you filed.

So I think that might be the best way to do this.
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Instead of requiring the defendant to basically produce every

single document that's referred to or alluded to in the

financial statement, just make the financial statement be

verified under oath so that it's accurate.

MR. SCHUMACHER: Judge, Daryl Schumacher on behalf of

defendant.

If I could raise one issue.

THE COURT: Mm-hmm.

MR. SCHUMACHER: Plaintiffs have criticized the

personal financial statement for not disclosing pending

litigation. There was --

THE COURT: Mm-hmm.

MR. SCHUMACHER: -- no framework -- there was no

framework or requirements for this personal financial

statement. And, again, it is a statement that was used in a

commercial transaction.

I don't know that it's fair to point out . . .

THE COURT: Go ahead.

MR. SCHUMACHER: I don't know if it's fair to point

out that, you know, litigation wasn't identified in the

personal financial statement when, you know, there were no

parameters for this personal financial statement. This was a

document getting used in commerce.

THE COURT: Mm-hmm.

MR. SCHUMACHER: You know --
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THE COURT: Yes, but you chose to produce it in

response to a specific request for production in this case.

I understand what its use was generally for the

defendant, but this was produced by your client to respond

specifically to a request to produce. And so instead of

doing, you know, one kind of production, you said here's my

financial statement, take a look, see where I am. The problem

with that is, it's really not a response at all because it's

not under verification. It's meaningless.

You know, I mean, you -- you know, the parties can

quibble about what should, you know -- or, frankly, negotiate

what should be on that statement, but -- and whether

litigation is truly something that should be disclosed on a

personal financial statement and what its potential impact is

on a party.

I'm just -- I'm not going to weigh into it today, but

I can tell you that since you chose to produce it as a

document in discovery, it should be verified; otherwise,

it's -- it's -- it's really as if you haven't produced

anything at all, frankly, in my mind.

But the idea that we should just open up every single

document that might back up that -- that -- that statement

seems to be kind of overly broad at this point. Why not just

have your client verify it?

MR. SCHUMACHER: I can do that, Your Honor. We --
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THE COURT: Yeah.

MR. SCHUMACHER: We followed your directives and

guidance on all of the other requests.

THE COURT: You did, yes.

MR. SCHUMACHER: And if that's Your Honor's ruling,

we will obviously honor it.

THE COURT: Well, I'd rather do that than order you

to produce all these source documents. It seems to me that,

you know, your client ought to be willing to stand by what he

said. It doesn't seem to me to be much of a burden.

MR. SCHUMACHER: Understood.

THE COURT: Yeah. So that's -- that's how I'm going

to -- that's how I'm going to resolve this issue. The

defendant will be ordered to resubmit this statement in

response to request for production No. 20, but the statement

will be under oath so that he can be cross-examined about it

when the time comes. And that, I think -- that will make it a

more serious endeavor for him, I think, than simply producing

something that had been used in a commercial transaction.

It's, frankly -- I mean, the plaintiff is

challenging, you know, the accuracy of those kinds of

disclosures generally in this case, so I think that's the best

way around this for now. So that's the Court's order for

today.

Is there anything further we need to take up?
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MR. SCHUMACHER: Not from defendant.

THE COURT: Plaintiff?

MR. JOYNT: This is Robert Joynt.

Just to clarify, Your Honor, defendant, in response

to the same request for production, also offered to produce

any money judgments against the defendant and any bankruptcy

filings.

To clarify, Your Honor's ruling just address -- in

addition to the financial statement --

THE COURT: I'm just -- I'm addressing the issue that

you put in front of me collectively, which is the one that I

put on the record a few minutes ago, whether or not the

defendant should be required to produce the source documents

behind the financial statement that he produced in response to

the request for production.

My ruling is just that, that he does not have to do

that, but he does have to verify the personal statement.

Whatever commitments that he or his counsel has made in an

additional response to that request for production are not

before me, and I'm not making any comment on them one way or

the other.

MR. JOYNT: Understood, Your Honor. And thank you --

THE COURT: Okay?

MR. JOYNT: -- for the clarification.

THE COURT: Okay. Thank you. All right. Thank you,
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guys. Have a good day. Bye-bye.

(Which were all the proceedings heard.)

* * * * * *

C E R T I F I C A T E

I certify that the foregoing is a correct transcript, to

the extent possible, of the record of proceedings in the

above-entitled matter, given the limitations of conducting

proceedings via telephone.

/s/ Amy M. Spee 4/21/2021

__________________________ _____________

AMY M. SPEE, CSR, RPR, CRR Date

Official Court Reporter