IN THE FOURTH JUDICIAL DISTRICT COURT IN AND FOR UTAH COUNTY, STATE OF UTAH ______________________ ) RALPH J. YARRO, ET AL., ) ) PLAINTIFF, ) ) VS. ) CASE NO. 050400205 CN ) VAL NOORDA KREIDEL, ET AL., ) ) DEFENDANT. ) _____________________________) BEFORE THE HONORABLE ANTHONY W. SCHOFIELD UTAH COUNTY FOURTH DISTRICT COURT 125 NORTH 100 WEST PROVO, UTAH 84606 REPORTER'S TRANSCRIPT OF PROCEEDINGS TEMPORARY RESTRAINING ORDER JANUARY 31, 2005 REPORTED BY: TASHA TAYLOR, RPR, CSR 1 A P P E A R A N C E S 2 3 FOR THE PLAINTIFF: 4 MICHAEL R. CARLSTON STANLEY J. PRESTON 5 MARALYN M. REGER MAX D. WHEELER 6 SNOW, CHRISTENSEN & MARTINEAU 10 EXCHANGE PLACE, 11TH FLOOR 7 SALT LAKE CITY, UTAH 84145 8 9 FOR THE DEFENDANT: 10 ANTHONY C. KAYE BOYD L. ROGERS 11 JAMES W. STEWART JASON D. BOREN 12 MATTHEW L. MONCUR BALLARD, SPAHR, ANDREWS & INGERSOLL 13 201 SOUTH MAIN STREET, #600 SALT LAKE CITY, UTAH 84111 14 JOHN MCDERMOTT 15 16 17 18 19 20 21 22 23 24 25 2 1 PROVO, UTAH; 2:00 P.M.; JANUARY 31, 2005 2 P R O C E E D I N G S 3 (THE FOLLOWING PROCEEDINGS WERE HELD IN CHAMBERS:) 4 THE COURT: I THINK MR. MCDERMOTT IS ON THE PHONE. 5 MR. MCDERMOTT? 6 MR. MCDERMOTT: YES. 7 THE COURT: YOU CAN HEAR US? YES? 8 MR. MCDERMOTT: YES. THIS IS JOHN MCDERMOTT. 9 THE COURT: THANK YOU. I HAVE IN MY CHAMBERS ALL OF 10 THE SAME INDIVIDUALS THAT WERE PRESENT THIS MORNING. I DO 11 HAVE A COURT REPORTER. THIS MORNING WE USED THE COURT'S AUDIO 12 RECORDING SYSTEM. AT THE PRESENT TIME, I HAVE A COURT 13 REPORTER. THIS MORNING WE HAD AS PRIMARY SPOKESPERSONS, 14 MR. PRESTON FOR THE PLAINTIFFS, AND MR. KAYE FOR THE 15 DEFENDANTS, AND MR. MCDERMOTT ON THE PHONE. I SAY ALL THAT SO 16 THAT MY COURT REPORTER KNOWS WHO IS TALKING WHEN SOMEBODY 17 NEEDS TO TALK. 18 I'M PREPARED TO ISSUE A RULING ON THE PLAINTIFFS' 19 REQUEST FOR A TEMPORARY RESTRAINING ORDER IN THIS MATTER. I 20 NOTE THAT AT ISSUE IN THIS TRO PROCEEDING IS WHO IS GOING TO 21 SERVE AS THE OFFICERS OF THE CANOPY GROUP, WHICH IS A CLOSELY 22 HELD CORPORATION. THE EVIDENCE THAT I'VE REVIEWED 23 DEMONSTRATES THAT PRIOR TO DECEMBER 17th OF LAST YEAR THE 24 MAJORITY OF THE VOTING STOCK OF CANOPY WAS HELD IN TWO EQUAL 25 GROUPS; ONE GROUP, THE NOORDA FAMILY TRUST REPRESENTED BY 3 1 MR. AND MRS. NOORDA; AND THE OTHER, MR. RALPH YARRO. 2 PRIOR TO THAT DATE, MR. YARRO HAD BEEN A LONG TIME 3 BUSINESS ASSOCIATE OF MR. NOORDA, AND HAD BEEN GROOMED BY 4 MR. NOORDA TO RUN CANOPY. PRIOR TO THAT DATE, MR. YARRO, IN 5 FACT, HAD RUN CANOPY FOR A NUMBER OF YEARS AS PRESIDENT AND 6 CEO. AND BEFORE THAT HAD BEEN -- AND SIMPLY MY MEMORY ESCAPES 7 ME WHICH PRIOR OFFICE HE HAD HELD, BUT HE HAD WORKED CLOSELY 8 WITH MR. NOORDA FOR APPROXIMATELY NINE YEARS AT THE CANOPY 9 GROUP. THE THREE DIRECTORS OF CANOPY ARE MR. NOORDA, 10 MS. LEWENA NOORDA, AND MR. YARRO. 11 THE EVIDENCE THAT I'VE REVIEWED DEMONSTRATES THAT ON 12 DECEMBER THE 9TH OF LAST YEAR MR. YARRO WAS SERVED WITH A 13 NOTICE OF A BOARD OF DIRECTORS MEETING THAT WAS SCHEDULED TO 14 TAKE PLACE ON DECEMBER THE 17th. AT THE APPOINTED HOUR FOR 15 THE MEETING, MR. YARRO WENT TO THE LOCATION WHERE IT WAS 16 SCHEDULED, WAS MET BY LAWYERS REPRESENTING THE NOORDAS WHO 17 ADVISED THEY WOULD BE PARTICIPATING BY TELEPHONE CONFERENCE, 18 AND THE MEETING WENT FORWARD WITH MR. YARRO AT ONE LOCATION 19 AND MR. AND MRS. NOORDA AT DIFFERENT LOCATION. 20 AN AGENDA FOR THE MEETING WAS DISTRIBUTED. IT 21 PROVIDED FOR DISCUSSION AND POTENTIAL ACTION ON THE GRANTING 22 OF CERTAIN OPTIONS TO MR. AND MRS. NOORDA, FOR THE TERMINATION 23 OF MR. YARRO; MR. MOTT, THE CFO; AND MR. CHRISTENSEN, THE 24 CORPORATE GENERAL COUNSEL. ULTIMATELY, A MOTION WAS MADE BY 25 MS. NOORDA TO APPROVE THE RESOLUTIONS AND THAT MOTION 4 1 ULTIMATELY WAS SECONDED BY MR. NOORDA. AFTER SOME FURTHER 2 DISCUSSION, A VOTE WAS TAKEN AND THE RESOLUTIONS PASSED WITH 3 MR. AND MRS. NOORDA VOTING AFFIRMATIVELY AND MR. YARRO VOTING 4 AGAINST. 5 I NOTE THAT THE MINUTE OF THE MEETING REFLECT THE 6 TWO-TO-ONE VOTE. THEN FOLLOWS A SENTENCE THAT MR. YARRO'S 7 VOTE WAS NOT DISINTERESTED AND THUS COULD NOT BE COUNTED. 8 THAT IS, IN MY MIND, A CONCLUSIONARY STATEMENT WHICH PROBABLY 9 HAS NO PLACE IN PROPERLY DRAFTED MINUTES. IT SEEMS TO ME 10 WHOEVER ASSISTED IN THE DRAFTING OF THE MINUTES TRIED TO 11 BUTTRESS THEM BY WHAT IS CLEARLY A CONCLUSIONARY STATEMENT. 12 FURTHER, IT'S CLEAR THAT THE VOTES OF MR. AND MRS. NOORDA ALSO 13 MAY NOT HAVE BEEN DISINTERESTED, AS THEY EACH VOTE IN ONE VOTE 14 TO ACCOMPLISH APPROVAL OF ALL THE RESOLUTIONS, INCLUDING THE 15 RESOLUTION TO GRANT EACH OF THE TWO OF THEM MORE STOCK. 16 I DON'T THINK THAT AT THIS JUNCTURE I HAVE TO AND I 17 DO DECLINE TO MAKE A DETERMINATION ON THE RIGHTS OF ANY OF THE 18 THREE DIRECTORS TO HAVE VOTED ON ANY OF THE SIX RESOLUTIONS, 19 BUT I NOTE THAT THE DISINTEREST OF EACH IS IN QUESTION. NOW, 20 YARRO AND THE OTHER PLAINTIFFS ASSERT THAT MR. NOORDA IS 21 SUFFERING FROM ALZHEIMERS, A CLAIM THAT THE DEFENDANTS HAVE 22 CONCEITED HERE THIS MORNING. PLAINTIFFS ASSERT THAT HE, 23 MR. NOORDA, APPEARED TO HAVE BEEN COACHED AT THE TIME THAT HE 24 SECONDED THE MOTION AT THE DIRECTOR'S MEETING, AND THEY 25 BELIEVE HIS ACTION MAY NOT HAVE BEEN WITH CAPACITY. THEY 5 1 SUPPORT THIS CLAIM WITH THE AFFIDAVITS OF A NUMBER OF PRESENT 2 OR FORMER CANOPY EMPLOYEES AND OTHERS DESCRIBING THEIR 3 OBSERVATIONS OF AND APPARENT MARKED DECREASE IN MR. NOORDA'S 4 MENTAL FUNCTIONING. 5 LET ME JUST NOTE PARENTHETICALLY, THIS MORNING I SAID 6 I HAD READ THE MEMORANDUM BUT NOT THE AFFIDAVITS. I HAVE 7 SINCE THIS MORNING READ ALL OF THE AFFIDAVITS CAREFULLY. I'VE 8 ALSO READ PARTS OF THE MEMORANDA AGAIN. AND I'VE READ MOST 9 OF -- WHAT IN MY MIND WAS ALL THE WAS NECESSARY -- BUT MOST OF 10 THE ATTACHMENTS TO THE AFFIDAVITS. THERE ARE SOME THAT I 11 DIDN'T THINK I NEEDED TO READ ALL OF THEM TO REACH THE 12 DECISIONS THAT I'M REACHING TODAY, BUT I HAVE READ WITH CARE 13 ALL OF THE AFFIDAVITS. 14 IN NOVEMBER OF 2000, AT A TIME THAT ALL SEEM TO AGREE 15 THAT MR. NOORDA WAS WELL IN CONTROL OF ALL OF HIS FACULTIES, 16 MR. AND MRS. NOORDA AND MR. YARRO ENTERED INTO A SHAREHOLDER 17 AGREEMENT BY WHICH THEY AGREED THAT THE DIRECTORSHIPS OF 18 CANOPY WOULD BE HELD BY THE THREE OF THEM. THAT AGREEMENT IS 19 ATTACHED AS EXHIBIT D TO THE YARRO AFFIDAVIT, AND I'VE READ 20 THAT AGREEMENT WITH CARE. IT'S ALSO ATTACHED AS EXHIBIT J TO 21 MR. MUSTARD'S AFFIDAVIT. 22 THAT AGREEMENT PROVIDES THAT IN THE EVENT OF DEATH OR 23 INCAPACITY OF EITHER OF THE NOORDAS, THE REMAINING ONE OF THE 24 TWO OF THEM WOULD APPOINT ONE DIRECTOR, MR. YARRO WOULD 25 APPOINT ONE DIRECTOR, AND THOSE TWO DIRECTORS WOULD MUTUALLY 6 1 AGREE ON THE APPOINTMENT OF THE THIRD DIRECTOR. IT SEEMS THIS 2 PROVISION HAS THE PURPOSE OF PROVIDING A VEHICLE FOR 3 CONTINUING THE PREEXISTING GOVERNANCE OF THE CORPORATION BY 4 THE MUTUAL ASSENT BY THE NOORDAS AND YARRO. AND IT SEEMS THAT 5 IT MIGHT BE APPROPRIATE AT SOME POINT IN TIME FOR FOLKS TO 6 LOOK AT THE ISSUE OF MR. NOORDA'S CAPACITY, OR LACK THEREOF, 7 AND SEE WHETHER IT'S APPROPRIATE FOR THE APPLICATION OF THAT 8 PROVISION. 9 I THINK THOSE ARE THE PRIMARY FACTS THAT ARE 10 NECESSARY TO REACH THE ISSUE THAT I'M REQUIRED TO ADDRESS 11 TODAY. I PROBABLY WILL REFER TO OTHER FACTS BUT THOSE ARE THE 12 PRIMARY FACTS. I'M PREACHING TO THE CHOIR WHEN I TELL YOU 13 THAT THE LEGAL STANDARD FOR THE ISSUANCE OF A TRO IS AS SET 14 FORTH IN RULE 65A OF THE UTAH RULES OF CIVIL PROCEDURE. 15 SUBSECTION (E) PROVIDES THE GROUNDS WHICH MUST BE ESTABLISHED 16 BEFORE THE COURT MAY ISSUE A TRO OR PRELIMINARY INJUNCTION: 17 FIRST, THAT THE APPLICANT SUFFER IRREPARABLE HARM, 18 UNLESS THE INJUNCTION ISSUES; 19 SECOND, THAT THE THREATENED INJURY TO THE APPLICANT 20 OUTWEIGHS WHATEVER DAMAGE THE PROPOSED ORDER MAY CAUSE THE 21 RESTRAINED PARTY; 22 THIRD, THE ORDER, IF ISSUED, MUST NOT BE ADVERSE TO 23 THE PUBLIC INTEREST; 24 AND, FOURTH, THERE MUST BE A SUBSTANTIAL LIKELIHOOD 25 THAT THE APPLICANT WILL PREVAIL ON THE MERITS OF THE 7 1 UNDERLYING CLAIM OR THE CASE PRESENTS SERIOUS ISSUES ON THE 2 MERITS WHICH SHOULD BE THE SUBJECT OF FURTHER LITIGATION. 3 HAVING REVIEWED THE SHAREHOLDER AGREEMENT CAREFULLY, 4 AND HAVING CONSIDERED THE ACTIONS TAKEN BY THE DIRECTORS AT 5 THE MEETING HELD DECEMBER 17th OF LAST YEAR, AND HAVING READ 6 ALL OF THE AFFIDAVITS IN THIS MATTER, I'M OF THE VIEW: 7 FIRST, THE REQUESTED TRO WOULD NOT BE ADVERSE TO THE 8 PUBLIC INTEREST, WHICH IS PARAGRAPH NUMBER (E)(3). 9 AS TO PARAGRAPH NUMBER (E)(2), I'M CERTAIN I CAN'T 10 FULLY APPRECIATE AT THIS JUNCTURE THE POTENTIAL DAMAGE TO 11 EITHER CANOPY OR THE NOORDAS IF THIS TRO IS ISSUED, BUT I'M 12 CERTAIN THAT GRANTING A TRO WOULD HAVE AN IMPACT. CLEARLY 13 SOME OF THAT IMPACT COULD BE MITIGATING BY ORDERS CONCERNING 14 PAYMENT OF ANY INCENTIVE AWARDS TO ANYONE. THAT'S SOMETHING 15 THAT THE PLAINTIFFS HAVE OFFERED IN THIS CASE. APPARENTLY, 16 ONE OF THE UNDERLYING ISSUES IN THIS CASE IS THE INCENTIVE 17 AWARDS WHICH PREVIOUSLY HAVE BEEN ISSUED. 18 I'VE BEEN PRESENTED BY AFFIDAVIT MANY DOCUMENTS WHICH 19 INDICATE INCENTIVE AWARDS HAVE BEEN MADE. A NUMBER OF THOSE 20 HAVE BEEN -- HAVE THE APPARENT APPROVAL OF MR. NOORDA ON THE 21 DOCUMENTS, AND OTHER GROUPS HAVE THE APPARENT APPROVAL OF 22 MR. YARRO ON THEM, BUT THE MAJORITY OF THEM APPEAR TO HAVE 23 BEEN MADE AT A TIME THAT MR. NOORDA'S CAPACITY WAS NOT AT 24 ISSUE. I NOTE THAT THERE IS IN THE EXHIBITS TO MR. MUSTARD'S 25 AFFIDAVIT BOARD ACTION INDICATING THAT PRIOR ACTIONS OF THE 8 1 OFFICERS WERE APPROVED, AND SO I ASSUME THAT MOST OF THOSE 2 INCENTIVE AWARDS, AT LEAST FOR PURPOSES OF TODAY'S HEARING, 3 WERE APPROVED BY MR. NOORDA AT A TIME WHEN HIS CAPACITY WAS 4 NOT AT ISSUE. ALTHOUGH, CLEARLY, SOME OF THEM MAY NOT HAVE 5 BEEN. 6 ULTIMATELY, IN ORDER TO DETERMINE WHETHER THE 7 WEIGHING OF THE POTENTIAL DAMAGE TO CANOPY AND NOORDAS IS 8 GREATER THAN, OR IS OFFSET BY, OR THE POTENTIAL DAMAGE TO 9 MR. YARRO, MR. MOTT, AND MR. CHRISTENSEN, I HAVE TO WEIGH THE 10 RESPECTIVE INJURIES TO THE PLAINTIFFS. THAT TAKES ME TO 11 PARAGRAPH (1)(E)(1) WHICH IS THAT THE APPLICANT WILL SUFFER 12 IRREPARABLE INJURY UNLESS AN INJUNCTION ISSUES. I NOTE THAT 13 IN STATE LIKE UTAH, YARRO DOES NOT HAVE A RIGHT TO CONTINUE 14 EMPLOYMENT AS PRESIDENT AND CEO. 15 HE WAS EMPLOYED AT WILL. IN MY VIEW, A TRO MAY NOT 16 BE USED AS A VEHICLE TO MAINTAIN EMPLOYMENT AT WILL. SINCE HE 17 DID NOT HAVE AN EMPLOYMENT CONTRACT, I DON'T THINK HE HAS A 18 RIGHT BY TRO TO COMPEL HIS CONTINUED EMPLOYMENT. I THINK THE 19 SAME APPLIES TO MOTT AND TO CHRISTENSEN. I NOTE FURTHER THAT 20 NEITHER MOTT NOR CHRISTENSEN ASSERT ANY OTHER PREJUDICE TO 21 THEM IF THEY DO NOT RETURN TO EMPLOYMENT AT CANOPY, OTHER THAN 22 THE LOSS OF THEIR EMPLOYMENT, AND THEIR EMPLOYMENT WAS AT 23 WILL. 24 IT'S MY VIEW THAT NONE OF YARRO, MOTT, OR CHRISTENSEN 25 HAVE STANDING TO ASSERT THE IMPACT, IF ANY, TO THE PORTFOLIO 9 1 COMPANIES. THE RIGHT TO ASSERT IMPACT TO THEM, AND ANY 2 ADVERSE IMPACT TO THEM -- WHICH IS ALLEGED IN MANY OF 3 PLAINTIFFS' AFFIDAVITS, INCLUDING AN AFFIDAVIT FROM OFFICERS 4 OR PRINCIPAL FIGURES IN SEVERAL OF THE PORTFOLIO COMPANIES -- 5 IS NOT SOMETHING THAT I THINK PLAINTIFFS HAVE STANDING TO 6 RAISE, NOR SINCE THOSE FOLKS ARE NOT PARTIES DO I THINK I CAN 7 LEGITIMATELY CONSIDER ANY POTENTIAL IMPACT TO THEM BY THE 8 ACTION THAT TOOK PLACE ON DECEMBER THE 17th. 9 THAT BRINGS ME SQUARELY TO WHAT I THINK IS THE ISSUE 10 HERE TODAY: DOES YARRO, MR. YARRO, HAVE A POTENTIAL INJURY IF 11 CANOPY IS MISMANAGED BY MR. MUSTARD? THERE IS CLEAR 12 ALLEGATIONS THAT MR. MUSTARD HAS OPERATED WITH A HEAVY HAND 13 AND OTHERWISE HAS CAUSED A GREAT DEAL OF FRUSTRATION WITH 14 PRIOR EMPLOYEES, A NUMBER OF WHOM HAVE TERMINATED EMPLOYMENT. 15 I'VE READ THEIR AFFIDAVITS. I THINK THERE HAS CERTAINLY 16 EVIDENCE BEEN ESTABLISHED BY THE PLAINTIFFS THAT THEY WILL 17 SUFFER AN INJURY, OR THAT MR. YARRO MAY SUFFER AN INJURY IF HE 18 IS -- AS A SHAREHOLDER -- IF HE IS NOT ALLOWED TO REMAIN IN 19 CONTROL BECAUSE IT APPEARS THAT CANOPY WAS MAKING A LOT OF 20 MONEY WHEN HE WAS RUNNING IT, AND THERE IS AT LEAST SOME 21 REASON TO QUESTION WHETHER IT WILL DO AS WELL UNDER 22 MR. MUSTARD'S MANAGEMENT. 23 BUT THE QUESTION IS, IS THAT AN IRREPARABLE INJURY? 24 I DON'T REALLY THINK SO. I DON'T THINK SO BECAUSE, FIRST, I 25 THINK IT CAN BE RESOLVED OR COMPENSATED BY A MONEY JUDGMENT 10 1 AFTER THE FACT. AND, SECOND, I DON'T THINK I HAVE THE 2 ABILITY, ON THE EVIDENCE THAT I HAVE TODAY, TO DETERMINE THE 3 EXTENT OF ANY POTENTIAL INJURY TO MR. YARRO AS A SHAREHOLDER. 4 I THINK THAT'S THE ONLY POTENTIAL INJURY THAT THIS COURT CAN 5 LOOK AT BECAUSE I DON'T THINK THAT HE CAN ASSERT CLAIMS ON 6 BEHALF OF THE PORTFOLIO COMPANIES, AND I DON'T THINK HE CAN 7 ASSERT CLAIMS ON BEHALF OF OTHER EMPLOYEES. HE CAN ONLY 8 ASSERT CLAIMS ON HIS OWN BEHALF, AND THOSE ARE HIS EMPLOYMENT, 9 WHICH WAS EMPLOYMENT AT WILL, AND HIS SHAREHOLDER STATUS UNDER 10 THE SHAREHOLDER AGREEMENT. 11 PARAGRAPH (E)(4) REQUIRES THE PLAINTIFFS TO ESTABLISH 12 A SUBSTANTIAL LIKELIHOOD OF PREVAILING ON THE MERITS. THAT 13 REALLY GETS TO THE QUESTION OF WHAT WAS MR. NOORDA'S CAPACITY 14 OR PHYSICAL OR MENTAL CONDITION ON 12/17. I'M CERTAIN 15 SOMEBODY KNOWS WHAT IT WAS, BUT I DON'T KNOW WHO KNOWS, AND I 16 DON'T KNOW WHO CAN PROVE WHAT HIS CAPACITY WAS AT THAT TIME. 17 IT CERTAINLY SEEMS TO ME IT'S A PRETTY TOUGH HILL THAT THE 18 PLAINTIFFS HAVE TO SLED UP TO PROVE THAT AT THAT DATE HE HAD 19 SUCH SIGNIFICANT INCAPACITY THAT HE WAS UNABLE TO VOTE OR ACT 20 IN THAT SHAREHOLDERS' -- OR DIRECTOR'S MEETING. 21 FURTHER, I THINK THAT FOR PURPOSE OF TODAY'S HEARING, 22 I'M PERSUADED THAT THE STANDARD OF PROOF ON THE ISSUE OF HIS 23 CAPACITY IS CLEAR AND CONVINCING EVIDENCE. I DON'T THINK THE 24 PLAINTIFFS HAVE ESTABLISH BY CLEAR AND CONVINCING EVIDENCE 25 THAT THERE'S A LIKELIHOOD HE WAS INCAPACITATED ON THAT DAY. I 11 1 DON'T SEE HOW IT CAN BE EASILY ESTABLISHED. I'M NOT SURE IT 2 CAN BE ESTABLISHED BY AFTER-THE-FACT MEDICAL EVIDENCE. IT'S 3 CLEAR THE VARIOUS AFFIDAVITS RAISE THE ISSUE, BUT NON ALONE, 4 NEITHER ALTOGETHER, DO I BELIEVE THEY ARE DISPOSITIVE OR 5 PROVIDE ADEQUATE EVIDENCE. 6 WITHOUT EVIDENCE OF HIS STATUS ON THE 17th OF 7 DECEMBER, THERE ARE THREE DIRECTORS. IF HE HAS CAPACITY, IF 8 HE HAD CAPACITY ON THAT DATE, THE ACTIONS OF THE BOARD 9 REMOVING THE THREE OFFICERS MUST STAND BECAUSE IT WOULD BE THE 10 VOTE OF TWO-TO-ONE. IF HE DOES NOT -- DID NOT HAVE CAPACITY, 11 THE ACTIONS OF THE BOARD MUST FAIL, AS THERE WOULD BE AT BEST 12 A ONE-TO-ONE TIE. AND THAT MEANS THAT UNDER THE SHAREHOLDER 13 AGREEMENT, WHICH REQUIRED A SIMPLE MAJORITY VOTE, TIES -- A 14 TIE IS A LOSS. A TIE IS NOT A VICTORY. 15 IT SEEM THAT WHAT IS THE CRITICAL ISSUE IS WHAT WAS 16 THE CAPACITY OF MR. NOORDA ON THE 17th OF DECEMBER. I 17 CERTAINLY DON'T BELIEVE THAT I HAVE ADEQUATE EVIDENCE TO 18 ESTABLISH OR DETERMINE THAT AT THIS JUNCTURE. THIS BRINGS ME 19 TO THE SECOND LEG OF SUBSECTION (4)(E) THAT THE CASE PRESENTS 20 SERIOUS ISSUES. WELL, IT DOES. SEEMS TO ME IT'S A VERY 21 SERIOUS ISSUE WHEN PEOPLE COME TO COURT TODAY AND SAY, ONE 22 SIDE SAYS "JUDGE, WE WANT OUR MAN IN RUNNING THE COMPANY." 23 THE OTHER MAN SAYS, "JUDGE, WE WANT OUR MAN IN 24 RUNNING THE COMPANY." 25 WHAT WE HAVE IS COMPETING CLAIMS TO MANAGE THE 12 1 CORPORATION. THE QUESTION IS: SHOULD I PUT MR. MUSTARD OUT 2 AND MR. YARRO BACK IN, ONLY TO HAVE A HEARING IN THE NEXT 10 3 TO 30 DAYS ON A PRELIMINARY INJUNCTION, THEN PUT, POTENTIALLY, 4 MUSTARD BACK IN AND YARRO BACK OUT? THAT SEEMS ILL ADVISED TO 5 ME. I'VE GIVEN CAREFUL CONSIDERATION, MR. PRESTON, OTHERS, I 6 SIMPLY DON'T BELIEVE ON THE EVIDENCE THAT I HAVE HERE THAT I'M 7 PREPARED TO COMPEL A CHANGE IN MANAGEMENT. I DON'T BELIEVE 8 THAT THE PLAINTIFFS HAVE ESTABLISHED IRREPARABLE INJURY, OR 9 THE SUBSTANTIAL LIKELIHOOD OF PREVAILING ON THE MERITS 10 SUFFICIENT FOR ME TO GRANT A TEMPORARY RESTRAINING ORDER. 11 I RECOGNIZE THIS RAISES SERIOUS ISSUES. I RECOGNIZE 12 THAT THERE IS A CLAIM, AND IT APPEARS IT MAY BE MORE THAN A 13 CLAIM, THAT A NUMBER OF FOLKS ARE SERIOUSLY CONCERNED ABOUT 14 THE CURRENT DIRECTION OF CANOPY, MEANING, THE CURRENT 15 DIRECTION MANAGEMENT IS TAKING IT. BUT I DON'T BELIEVE UNDER 16 THESE CIRCUMSTANCES THAT I'VE REVIEWED WITH A WHOLE DAY'S 17 WORTH OF REVIEW, A BETTER PART OF A DAY'S WORTH OF REVIEW, 18 THAT I -- THAT THE STANDARD HAS BEEN MET TO A POINT THAT I'M 19 PREPARED TO CHANGE MANAGEMENT. 20 I AM PREPARED TO GIVE YOU A HEARING DATE IN A 21 REASONABLY SHORT TIME, AND UNDER THE RULES TO MOVE OTHER CASES 22 TO FIND YOU A HEARING DATE ON AN APPLICATION FOR A PRELIMINARY 23 INJUNCTION, AND I'M HAPPY TO TALK ABOUT SCHEDULING, ABOUT 24 DISCOVERY, AND ANY OTHER ISSUES YOU WANT TO TALK ABOUT, OR I'M 25 HAPPY TO LET YOU STEP OUT, ALL OF YOU, AND CONFER FOR A FEW 13 1 MINUTES TOGETHER, OR IN GROUPS, AND FIGURE OUT WHICH WAY YOU 2 WANT TO GO, AND THEN MEET BACK HERE. 3 MR. KAYE: YOUR HONOR -- 4 THE COURT: JUST A MOMENT. 5 (COUNSEL CONFER OFF THE RECORD.) 6 MR. PRESTON: YOUR HONOR, IF I CAN JUST ASK ONE 7 CLARIFICATION? 8 THE COURT: YOU MAY. 9 MR. PRESTON: I DIDN'T UNDERSTAND FROM THE COURT'S 10 RULING THAT ANY -- THAT THE COURT HAD ADDRESSED OUR ARGUMENT 11 ABOUT THE FACT THAT IT WAS A BREACH OF THE AGREEMENT TO ENGAGE 12 IN THESE EXTRAORDINARY MATTERS WITHOUT A UNANIMOUS VOTE OF THE 13 SHAREHOLDERS, WHICH I THINK IS REALLY ONE OF THE PRIMARY 14 BASIS -- 15 MR. MCDERMOTT: CAN YOU PLEASE SPEAK UP A LITTLE, 16 PLEASE? 17 MR. PRESTON: I'M SORRY. I WAS ASKING THE JUDGE SOME 18 CLARIFICATION ON THE SHAREHOLDERS AGREEMENT, WHETHER THE -- 19 BECAUSE I DIDN'T HEAR THE COURT ADDRESS THE ISSUE AS TO THE 20 FACT THAT THE VOTE WAS NOT A UNANIMOUS VOTE, AND THAT THAT WAS 21 A BREACH, AND, THEREFORE, AN UNAUTHORIZED ACTION. 22 THE COURT: I'M NOT CONVINCED THAT I READ THE 23 SHAREHOLDER AGREEMENT THAT WAY. 24 MR. PRESTON: OKAY. 25 THE COURT: I MAY MISUNDERSTOOD THE SHAREHOLDER 14 1 AGREEMENT, BUT I'M NOT SURE I READ IT THAT WAY. 2 NOW, MR. KAYE, YOU HAD A QUESTION? 3 MR. KAYE: WELL, WHAT I WAS GOING TO SUGGEST, AND WE 4 CAN TALK ABOUT IT, WOULD BE THAT WE CONDUCT DISCOVERY ON A 5 REASONABLY EXPEDITED BASIS, AND RECONVENE IN A MONTH AND A 6 HALF, TWO MONTHS FOR OUR HEARING ON A PRELIMINARY INJUNCTION. 7 I HAD, JUST AS A MATTER OF SCHEDULING, DAVID WATKISS IS LEAD 8 COUNSEL ON THIS, AND HE IS OUT OF THE COUNTRY UNTIL THE 8TH. 9 I HAVE SUMMARY JUDGMENTS HEARING ON ANOTHER SIGNIFICANT CASE 10 ON THE 9TH, SO THE NEXT TEN DAYS WERE SOMEWHAT TIED UP. 11 THAT'S NOT THAT OTHERS CAN'T PARTICIPATE IN 12 DISCOVERY, BUT I'M THINKING THERE'S A LOT OF WITNESSES, 13 OBVIOUSLY, AND THERE WERE AN EXTREMELY LARGE NUMBER OF 14 AFFIDAVITS SUBMITTED. ALL THOSE PEOPLE ARE GOING TO BE 15 DEPOSED. I'M SURE THERE'S GOING TO BE PLENTY OF DEPOSITIONS 16 ON THE OTHER SIDE. AS A MATTER OF COORDINATING ALL THAT 17 DISCOVERY, WE WOULD BE HAPPY TO WORK IT, YOU KNOW, AS QUICKLY 18 AS POSSIBLE, BUT THEN WE'D WANT ANOTHER OPPORTUNITY TO BRIEF 19 THE ISSUE, AND GET BACK. I DON'T SEE HOW THIS ALL CAN BE 20 ACCOMPLISHED AT ANY TIME BEFORE EARLY MID MARCH REASONABLY. 21 MR. PRESTON: YOUR HONOR -- 22 MR. KAYE: LET ME ADD ONE MORE THING, AN 23 AFTERTHOUGHT, I'M NOT SURE THAT MS. KREIDEL HAS BEEN EVEN 24 SERVED YET, OR RETAINED COUNSEL, AND YOU HAVE OTHER PARTIES 25 THAT HAVEN'T EVEN SEEN THE PAPERS YET OR HAVEN'T HAD THEIR 15 1 COUNSEL SEE THE PAPERS. 2 MR. PRESTON: WELL, WE'RE VERY CONCERNED ABOUT GOING 3 OUT A LONG TIME, THAT LONG. THE RULES PROVIDE FOR A VERY 4 QUICK HEARING. THE COURT'S HEARD US TALK ABOUT WHAT WE THINK 5 THE DAMAGE IS. I'M NOT SURE IT'S NECESSARY TO CONDUCT THAT 6 SORT OF FULL BLOWN DISCOVERY, THE DISCOVERY OF THE CASE BEFORE 7 WE HAVE THIS HEARING. 8 THE COURT: WELL, ANYTHING YOU WANT TO SAY IN THAT 9 REGARD, MR. MCDERMOTT? 10 MR. MCDERMOTT: NO. MY INITIAL REACTION IS THAT 11 THERE'S GOING TO HAVE TO BE SOME DISCOVERY HERE, SO I WOULD 12 HOPE THAT THIS ISN'T SOMETHING THAT NEEDS TO BE SET IN THE 13 NEXT 10 OR 15 DAYS. 14 THE COURT: I DON'T THINK IT'S GOING TO BE SET IN THE 15 NEXT 10 OR 15 DAYS. THE QUESTION IS IT'S GOING TO BE SET IN 16 30, OR 60, OR 90 DAYS. I THINK THAT'S REALLY WHERE WE'RE AT. 17 I HEAR MR. PRESTON SAYING THEY ARE LOOKING AT 30 DAYS. AND I 18 HEAR MR. KAYE SAYING 60. 19 MR. PRESTON: WE WOULD LIKE IT SOONER THAN 30, 20 ACTUALLY, YOUR HONOR. 21 THE COURT: WELL, LET ME LOOK AT MY BOOK FOR A MINUTE 22 AND AT LEAST SEE WHAT MAY BE DOABLE. 23 ARE WE LOOKING AT MORE THAN THREE OR FOUR DAYS FOR 24 THE HEARING WE'RE THINKING ABOUT? 25 MR. PRESTON: I DON'T THINK SO. 16 1 MR. KAYE: YEAH. WE'RE ANTICIPATING PLAINTIFFS ARE 2 GOING TO PUT ON AN ONSLAUGHT OF WITNESSES, SO I THINK THREE OR 3 FOUR DAYS AT THE MINIMUM, MORE LIKELY A WEEK, IF I HAD TO 4 GUESS. I THINK, YOU KNOW, UNDER REASONABLE CIRCUMSTANCES IT 5 COULD BE DONE FASTER THAN THAT. WE HAD NO IDEA THAT WE WOULD 6 BE DEALING WITH THIS MANY AFFIDAVITS. 7 THE COURT: WELL, I DON'T NEED TO HEAR -- A LOT OF 8 THE EVIDENCE I DON'T NEED TO HEAR TWO AND THREE TIMES. THE 9 DISCUSSION OF WHAT HAPPENED -- FOR EXAMPLE, THE DISCUSSION OF 10 WHAT HAPPENED ON THE 17th WHEN MANAGEMENT CHANGED, I DON'T 11 THINK I NEED TO HEAR FIVE DIFFERENT WITNESSES ALL GET UP AND 12 TELL ME THAT SAME STORY, AND I DID GET FIVE DIFFERENT 13 AFFIDAVITS TELLING ME THAT SAME STORY, AT LEAST FROM THE 14 EMPLOYEES. 15 CERTAINLY, I'M GOING TO HAVE TO HEAR FROM MR. YARRO, 16 AND LIKELY MR. MOTT, LIKELY MR. CHRISTENSEN. ALL OF THOSE 17 WITNESSES' AFFIDAVITS, I DON'T KNOW THAT I NEED TO HEAR ALL OF 18 THEM TELL WHAT IS ESSENTIALLY THE SAME EXACT STORY. I NEED TO 19 HEAR IT, BUT I DON'T KNOW THAT I NEED TO HEAR IT FIVE TIMES. 20 MR. PRESTON: WE'D AGREE WITH THAT, YOUR HONOR. 21 THE COURT: I WILL TELL YOU THAT THE WEEK OF THE 22 27th, 28th OF FEBRUARY, LEADING INTO THE 4TH OF MARCH, I'M 23 GOING TO BE GONE THAT WEEK. THE FOLLOWING WEEK I'M HAPPY -- 24 THE 7TH, I CAN'T MOVE A MATTER ON THE 7TH, BUT I CAN MOVE ALL 25 OF THE STUFF ON THE 8TH, 9TH, 10TH, AND 11TH. 17 1 THAT IS THE LAST COUPLE DAYS OF THE MID-YEAR BAR 2 CONFERENCE IN ST. GEORGE, BUT I WASN'T PLANNING TO GO THERE. 3 THAT'S ONE CHOICE. THE NEXT BEST CHOICE IS THE 21st THROUGH 4 THE 25th OF MARCH, BUT THAT'S STARTING TO BE FARTHER OUT 5 THAN PLAINTIFFS WANT TO GO, AND I'M INCLINED TO TRY TO BE 6 REASONABLY ACCOMMODATING TO THE PLAINTIFFS IN THIS CASE. 7 MR. MCDERMOTT: YOUR HONOR, THIS IS JOHN MCDERMOTT IN 8 DENVER, IS THERE ANY POSSIBILITY OF SLIPPING THE WEEK OF THE 9 4TH TO THE WEEK OF THE 11th? 10 THE COURT: OF WHICH MONTH? 11 MR. MCDERMOTT: I BELIEVE YOU JUST MENTIONED THE WEEK 12 STARTING APRIL 4th. 13 THE COURT: NO, I'M LOOKING AT MARCH. 14 MR. MCDERMOTT: WHAT WAS THE FIRST SET OF DATES YOU 15 MENTIONED? 16 THE COURT: I SAID I'M GOING TO BE GONE THE WEEK OF 17 FEBRUARY THE 28th THROUGH MARCH THE 4TH, BUT I WILL BE 18 AVAILABLE MARCH THE 8TH THROUGH MARCH THE 11th. THE NEXT 19 BEST TIME WOULD BE MARCH THE 21st, THAT WEEK. I'M GOING TO 20 HAVE TO -- EVERY ONE OF THESE I WILL BE MOVING SOMETHING, BUT 21 I WILL MOVE -- THOSE WEEKS ARE THE BEST SHOTS AT MOVING. 22 MR. PRESTON: THOSE DATES ARE FINE WITH US. THE 23 EARLIER DATES IS WHAT WE WOULD LIKE. IS THERE ANY TIME BEFORE 24 THAT, YOUR HONOR, THE COURT WOULD LOOK AT IT? 25 THE COURT: WELL, THREE WEEKS OUT IS PRESIDENT'S DAY, 18 1 AND THOSE THREE WEEKS -- THOSE FOUR DAYS THEREAFTER -- 2 MR. KAYE: I'M ON VACATION. 3 THE COURT: I THINK THAT'S PROBABLY EARLIER THAN WE 4 REALISTICALLY CAN HOPE FOR, BUT I THINK SOME DISCOVERY IS 5 NEEDED. I DON'T KNOW THAT WE NEED TO TAKE EVERYBODY'S 6 DEPOSITIONS, BUT CLEARLY SOME DEPOSITIONS ARE GOING TO BE 7 TAKEN, AT LEAST IF I'M A BETTING MAN. IF I WERE CHOOSING, I'D 8 THINK MARCH THE 8TH IS THE BEST SHOT. 9 MR. KAYE: WE WOULD DO MARCH 8th THROUGH THE 10 11th. THAT WORKS. 11 THE COURT: MR. MCDERMOTT? 12 MR. MCDERMOTT: MARCH 8th, WE CAN MAKE THAT WORK 13 HERE. 14 THE COURT: I'M PREPARED TO GIVE YOU ALL DAY THOSE 15 FOUR DAYS, THE 8TH, 9TH, 10TH, 11TH. WE CAN BEGIN AT 8:30 16 EVERYDAY. I WILL MOVE WHAT I ALREADY HAVE SCHEDULED THOSE 17 FOUR DAYS. 18 MR. PRESTON: WE'D APPRECIATE THAT, YOUR HONOR. 19 THE COURT: WHAT ORDERS DO YOU WANT ME TO MAKE WITH 20 RESPECT TO DISCOVERY? OTHER THAN, YOU KNOW, COOPERATION WITH 21 COUNSEL IS WHAT'S GOING TO GET IT DONE WITHOUT A LOT OF 22 HEADACHE BETWEEN NOW AND THEN. 23 MR. PRESTON: YOUR HONOR, I HAVE TWO ISSUES. ONE, WE 24 ARE CONCERNED ABOUT THE CONTINUED REMOVAL OF MY CLIENT ON 25 THESE PORTFOLIO COMPANIES. THERE'S -- THAT IS SERIOUS DAMAGE 19 1 THAT THEY ARE FACING. IS THAT -- I'D LIKE TO KNOW WHETHER THE 2 COURT IS -- WOULD BE WILLING TO CONSIDER THAT THAT BE HELD IN 3 ABEYANCE UNTIL WE HAVE THIS PRELIMINARY INJUNCTION HEARING? 4 MR. KAYE: DO I NEED TO RESPOND TO THAT? 5 THE COURT: YES. GO AHEAD. 6 MR. KAYE: THEN THAT WOULD AFFECTIVELY BE DEPRIVING 7 CURRENT MANAGEMENT OF CONTROL OF CANOPY. THE BOARD MEMBERS OF 8 CANOPY CAN EXERCISE ITS INTEREST IN COMPANIES TO REMOVE BOARD 9 MEMBERS. IT OUGHT TO BE ABLE TO DO THAT. AND THERE'S -- THIS 10 GETS BACK TO THE ISSUE OF WHETHER OR NOT THE PORTFOLIOS ARE 11 SUFFERING IRREPARABLE INJURY BY HAVING A CHANGE IN THE STATUS 12 OF THEIR CONTROL. 13 IF MR. PRESTON AND HIS CLIENTS PREVAIL IN SIX WEEKS, 14 THEY CAN GO BACK AND RE-ESTABLISH THEMSELVES ON THE BOARDS OF 15 THOSE COMPANIES. IN THE MEANTIME, IF YOU ARE NOT ISSUING A 16 TRO, IT SEEMS TO ME IMPLICIT IN THAT DENIAL THAT YOU ARE NOT 17 PLACING RESTRAINTS ON THE ABILITY OF CANOPY TO BE MANAGED BY 18 ITS CURRENT MANAGERS IN THE MANNER BEST DEEMED FIT BY ITS 19 CURRENT MANAGER. 20 THE COURT: WELL, IT'S MY VIEW, MR. PRESTON, THAT I 21 DON'T THINK I'M -- IN HAVING DENIED YOUR REQUEST FOR TRO, I 22 DON'T THINK I'M IN A POSITION TO NOW SAY, "WELL, MR. MUSTARD 23 DO THIS OR DON'T DO THAT." AND I REALLY AM DISINCLINED TO DO 24 SO. IF THERE'S A LEGITIMATE REASON TO REMOVE HIM, I SUPPOSE 25 HE MAY MAKE THAT DECISION. IT CERTAINLY SEEMS TO MAKE SENSE 20 1 THAT IF THERE'S NOT A LEGITIMATE REASON TO REMOVE HIM, WE 2 OUGHT TO LEAVE AS MUCH AS THE STATUS QUO SIMPLY BECAUSE IT MAY 3 PRESERVE MORE AMICABLE WORKING RELATIONSHIPS, BUT I AM NOT 4 GOING TO SIMPLY ENTER AN ORDER THAT MANAGEMENT MUST DO THIS, 5 THAT, OR THE OTHER. I THINK THAT MANAGEMENT IS WHO MANAGEMENT 6 IS. 7 IN THAT SENSE, I'VE RULED AGAINST YOU, AND I'M NOT -- 8 REALLY NOT CHANGING MY MIND. SO THAT WAS ONE. I THINK YOU 9 SAID YOU HAVE ANOTHER ONE, I'M CERTAINLY -- YOU SAID YOU HAD A 10 COUPLE -- 11 MR. PRESTON: YES. WE ARE INTERESTED ABOUT WHETHER 12 OR NOT MR. NOORDA WILL BE REQUIRED TO ATTEND THIS HEARING. 13 WITH THE ISSUES THAT HAVE BEEN RAISED, WHETHER WE NEED TO DO 14 AN IME OR A COMPETENCY EXAMINATION, THOSE ARE ISSUES WHICH I'M 15 NOT SURE WE'LL BE ABLE TO REACH AN AGREEMENT AT. I WOULD LIKE 16 THE COURT'S INPUT ON THAT. 17 THE COURT: UNLESS YOU WANT TO SAY SOMETHING, I WILL 18 SIMPLY SAY, IT'S MY VIEW THAT THIS STARTED OUT ON DECEMBER THE 19 17th AS A SQUABBLE, OR A FIGHT, OR A DISAGREEMENT BETWEEN 20 MR. AND MRS. NOORDA OSTENSIVELY ON ONE SIDE, AND MR. YARRO ON 21 THE OTHER. I AM GOING TO REQUIRE THAT MR. NOORDA, IF 22 REQUESTED, SUBMIT TO ANY -- TO A REASONABLE EXAMINATION BY THE 23 PLAINTIFFS. THERE'S CLEARLY ENOUGH IN THE AFFIDAVITS TO MAKE 24 ONE WONDER ABOUT HIS COMPETENCE. I THINK THAT'S A CRITICAL 25 ISSUE. I THINK THEY ARE ENTITLED TO DISCOVERY ON THAT ISSUE, 21 1 INCLUDING APPROPRIATE MEDICAL EXAMINATION. 2 OTHER ISSUES? 3 I WILL TELL YOU THAT -- GO AHEAD. 4 MR. KAYE: I WAS GOING TO SAY, I WOULD PROPOSE WE TRY 5 TO WORK OUT A DISCOVERY SCHEDULE, AND IF WE CAN'T THAT MAYBE 6 WE CAN GET YOU ON THE PHONE AND -- 7 THE COURT: I AM GOING TO BE OUT OF THE OFFICE ON THE 8 15TH AND 16th, BUT WILL BE REACHABLE BY PHONE ON THAT DATE. 9 I'M EXPECTING TO BE OUT OF TOWN THE 28th OF FEBRUARY THROUGH 10 THE 4TH OF MARCH, AND MY CLERK WILL BE ABLE TO REACH ME, BUT I 11 WON'T BE IMMEDIATELY AVAILABLE BY PHONE. IT'S SOMEWHERE I 12 WILL HAVE TO CALL YOU BACK. 13 OTHER THAN THOSE TWO LITTLE CHUNKS OF TIME, ONE IS 14 HOW DO I SAY THIS, PLEASURE; THE OTHER IS BUSINESS, I AM GOING 15 TO BE AVAILABLE. I WOULD URGE YOU TO DO YOUR BEST. YOU'RE 16 ALL PROFESSIONALS. IF YOU REACH A SPOT WHERE YOU JUST CAN'T 17 AGREE, GET ME ON THE PHONE. I WILL BE HERE OTHER THAN THOSE 18 COUPLE TIMES, AND I WILL BE REACHABLE BUT THOSE TIMES. I WILL 19 BE AVAILABLE. 20 MR. KAYE: BASED ON THE DISCUSSIONS THIS MORNING, ONE 21 CONCERN I HAVE IS A MOTION TO DISQUALIFY COUNSEL. 22 THE COURT: I EXPECT THAT'S LIKELY COMING. 23 MR. KAYE: AND THAT WOULD -- ASSUMING THAT GETS 24 GRANTED, WHILE WE'RE IN THE MIDDLE OF DISCOVERY PREPARING FOR 25 HEARING ON THE 9TH, THAT WOULD OBVIOUSLY PREJUDICE OUR 22 1 CLIENTS' RIGHTS TO PUT ON THEIR CASE. 2 THE COURT: I UNDERSTAND. WE'LL DEAL WITH WHATEVER 3 COMES WHEN IT COMES. I DON'T KNOW HOW I CAN FORECAST EITHER 4 HOW I'M GOING TO RULE BECAUSE I DON'T HAVE ANY IDEA ON HOW I 5 WOULD RULE ON SUCH A MOTION, BUT I DO UNDERSTAND THAT IT MAY 6 HAVE A POTENTIAL IMPACT. WE'LL JUST DEAL WITH IT. 7 MR. KAYE: THANK YOU. 8 THE COURT: I DO THINK, MR. KAYE, IT'S YOUR 9 ASSIGNMENT TO PREPARE AN APPROPRIATE ORDER. I'M GOING TO ASK 10 THAT YOU DO SO, AND MAKE SURE IT'S SUBMITTED TO COUNSEL. MAKE 11 SURE COPIES ARE ALSO FAXED OVER TO MR. MCDERMOTT SO HE CAN 12 REVIEW IT UNDER OUR RULES AS WELL. 13 BY THE WAY, MR. MCDERMOTT, YOU ARE GOING TO HAVE TO 14 LOCAL COUNSEL HERE. I'M SURE YOU UNDERSTAND THAT REQUIREMENT. 15 MAYBE IT'S YOUR LOCAL OFFICE HERE, BUT, ANYWAY, I'M GLAD YOU 16 WERE ON THE PHONE TODAY. 17 MR. MCDERMOTT: THANK YOU, YOUR HONOR. COULD I ASK 18 ONE OTHER QUESTION? YOU MAY HAVE ADDRESSED THIS. I HAVE A 19 LITTLE BIT TROUBLE HEARING. WAS THERE ANY DISCUSSION OF A 20 BRIEFING SCHEDULE? 21 THE COURT: THERE WAS NOT ANY DISCUSSION OF A 22 BRIEFING SCHEDULE OTHER THAN I DIRECTED THAT COUNSEL BE 23 COOPERATIVE IN DISCOVERY, AND I DIDN'T ESTABLISH ANY BRIEFING 24 SCHEDULE. AND I'M REALLY DISINCLINED. I WILL TELL YOU THAT 25 MY PRACTICE IS TO READ EVERYTHING BEFORE WE HAVE A HEARING. I 23 1 MEAN THAT'S ALWAYS BEEN MY PRACTICE. I INTEND TO CONTINUE IT. 2 IT SURE MAKES IT EASIER IF I HAVE A FEW DAYS TO DO THAT. BUT 3 I ALSO RECOGNIZE YOU ARE ON A RELATIVELY SHORT LEASH, SO I'M 4 SIMPLY GOING TO EXPECT THAT YOU WILL ALL UNDERSTAND THAT I CAN 5 ONLY GO SO FAR SO FAST. AND TREAT THE COURT WITH RESPECT, AND 6 I'LL GIVE -- EXPECT THAT YOU WILL TREAT EACH OTHER WITH 7 RESPECT, AND WE'LL MOVE FORWARD. 8 MR. MCDERMOTT: ALL RIGHT. THANK YOU. 9 THE COURT: ANYTHING ELSE? 10 MR. MCDERMOTT: NOTHING ON THIS END. 11 MR. KAYE: AT THE RISK OF WEARING YOUR PATIENCE -- 12 THE COURT: YOU'RE ALL RIGHT. 13 MR. KAYE: ONE DISCOVERY ISSUE THAT MAY COME UP 14 BECAUSE I THINK THIS DISQUALIFICATION ISSUE COULD BE SOMEWHAT 15 MORE OF A BATTLE THAN YOU ARE PROBABLY HOPING FOR. 16 THE COURT: NO. I -- 17 MR. KAYE: ONE OF THE THINGS WE'RE GOING TO ASK FOR 18 DISCLOSURE FROM SNOW, CHRISTENSEN IS THEIR PRIOR 19 REPRESENTATION OF CANOPY AND ANY PORTFOLIO COMPANIES BECAUSE 20 WE ARE AWARE OF THEIR HAVING REPRESENTED BOTH IN PREVIOUS 21 ACTIONS, AND THEIR KNOWLEDGE THAT THEY GAINED OF CANOPY 22 MANAGEMENT, AND THEIR, YOU KNOW, MENTAL FACULTIES, WHICH ARE 23 ISSUES IN THIS CASE, WOULD ALL BE CLEARLY RELEVANT. 24 SO THAT'S SOMETHING, IF WE'RE GOING TO GO DOWN THIS 25 DISQUALIFICATION ROUTE, I WOULD LIKE TO ASK FOR A QUICK TURN 24 1 AROUND, IF WE PUT A REQUEST TO SNOW, CHRISTENSEN OF THAT 2 INFORMATION. 3 THE COURT: I SIMPLY AM NOT -- ALL I'M ASKING AND 4 DIRECTING IS THAT COUNSEL BE PROFESSIONAL AND COOPERATIVE. 5 AND PAST THAT, I THINK WE'VE GOT TO SEE WHERE EACH SIDES 6 DECIDES IT WANTS TO GO IN THE NEXT WHILE. 7 MR. KAYE: ALL RIGHT. 8 THE COURT: THANK YOU, ALL. 9 (PROCEEDINGS IN THE ABOVE-ENTITLED 10 MATTER WERE CONCLUDED.) 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25 1 REPORTER'S CERTIFICATE 2 STATE OF UTAH ) : SS. 3 COUNTY OF UTAH ) 4 I, TASHA TAYLOR, DO CERTIFY THAT I AM AN OFFICIAL 5 COURT REPORTER IN AND FOR THE STATE OF UTAH. 6 THAT AS SUCH REPORTER, I REPORTED THE OCCASION OF THE 7 PROCEEDINGS OF THE ABOVE-ENTITLED MATTER AT THE AFORESAID TIME 8 AND PLACE. 9 THAT THE PROCEEDING WAS REPORTED BY ME IN STENOTYPE 10 USING COMPUTER-AIDED TRANSCRIPTION CONSISTING OF PAGES 3 11 THROUGH 25 INCLUSIVE; 12 THAT THE SAME CONSTITUTES A TRUE AND CORRECT 13 TRANSCRIPTION OF THE SAID PROCEEDINGS; 14 THAT I AM NOT OF KIN OR OTHERWISE ASSOCIATED WITH ANY 15 OF THE PARTIES HEREIN OR THEIR COUNSEL, AND THAT I AM NOT 16 INTERESTED IN THE EVENTS THEREOF. 17 WITNESS MY HAND AT PROVO, UTAH, THIS ________ DAY OF 18 ______________, 2005. 19 20 21 22 _______________________________ TASHA TAYLOR, RPR, CSR 23 24 25 26