Dahl v Bain Capital, Hearing Transcript Dec. 18, 2012

7/28/2019 Dahl v Bain Capital, Hearing Transcript Dec. 18, 2012

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1 UNI TED STATES DI STRI CT COURTDI STRI CT OF MASSACHUSETTS

2* * * * * * * * * * * * * * *

3 KLEI N, et al *Pl ai nt i f f s, *

4 *

vs. * CI VI L ACTI ON5 * No. 07- 12388- EFH

BAI N CAPI TAL PARTNERS, *6 LLC, et al *

Def endant s. *7 * * * * * * * * * * * * * * *

8 BEFORE THE HONORABLE EDWARD F. HARRI NGTONUNI TED STATES DI STRI CT SENI OR J UDGE

9 DAY ONEMOTI ON HEARI NG

10 A P P E A R A N C E S11

ROBI NS, KAPLAN, MI LLER & CI RESI LLP12 2800 LaSal l e Pl aza

800 LaSal l e Avenue13 Mi nneapol i s, Mi nnesot a 55402- 2015

f or Pl ai nt i f f s,14 By: K. Cr ai g Wi l df ang, Esq.

Geor ge D. Car r ol l , Esq.15

16 SCOTT & SCOTT LLP707 Br oadway, 10t h Fl oor

17 San Di ego, Cal i f or ni a 92101f or t he pl ai nt i f s

18 By: Chr i st opher M. Bur ke, Esq.

19

20

21Cour t r oom No. 13

22 J ohn J . Moakl ey Court house1 Cour t house Way

23 Bost on, Massachuset t s 02210December 18, 2012

24 9: 55 a. m.

25

Case 1:07-cv-12388-EFH Document 757 Filed 01/07/13 Page 1 of 234


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1 APPEARANCES, CONTI NUED

2

3 KI RKLAND & ELLI S LLP655 Fi f t eent h St r eet , N. W.

4 Washi ngt on, D. C. 20005

f or t he def endant s5 By: Cr ai g S. Pr i mi s, Esq.

Davi d R. Dempsey, Esq.6

7 SI MPSON THACHER & BARTLETT LLP425 Lexi ngt on Avenue

8 New Yor k, New Yor k 10017- 3954f or t he def endant s

9 By: J oseph F. Tr i ngal i , Esq.Ryan A. Kane, Esq.

1011 SI MPSON THACHER & BARTLETT LLP

1155 F St r eet , N. W.12 Washi ngt on, D. C. 20004

f or t he def endant s13 By: Pet er C. Thomas, Esq.

14

15 O' MELVENY & MYERS LLPTi mes Squar e Tower

16 7 Ti mes Squar eNew Yor k, New Yor k 10036

17 f or t he def endant sBy: J onathan Rosenberg, Esq.

18 Abby Rudzi n, Esq.

19

20

21

22 CAROL LYNN SCOTT, CSR, RMROf f i ci al Cour t Repor t er

23 One Cour t house Way, Sui t e 7204Bost on, Massachuset t s 02210

24 ( 617) 330- 1377

25



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1 P R O C E E D I N G S

2 THE CLERK: Al l r i se.

3 Cour t i s i n sessi on. Pl ease be seat ed.

4 Thi s i s ci vi l act i on No. 07- 12388, Kl ei n ver sus

5 Bai n Capi t al . Wi l l counsel i dent i f y t hemsel ves f or the

6 r ecor d.

7 MR. WI LDFANG: Cr ai g Wi l df ang, Your Honor , f or

8 t he pl ai nt i f f s.

9 MR. BURKE: On behal f of t he pl ai nt i f f s, Your

10 Honor , Chr i stopher Burke.11 MR. TRI NGALI : Your Honor , J oseph Tr i ngal i .

12 I ' l l be argui ng t he f i rs t par t of t he omni bus mot i on on

13 behal f of al l t he def endant s.

14 MR. KANE: Ryan Kane on behal f of al l

15 def endant s.

16 MR. PRI MI S: Cr ai g Pr i mi s f r om Ki r kl and &

17 El l i s on behal f of the def endants .

18 MR. DEMPSEY: Davi d Dempsey f r omKi r kl and &

19 El l i s on behal f of the def endants .

20 THE COURT: Who i s everybody el se?

21 ( Laught er . )

22 THE COURT: A pret t y good cr owd.

23 What i s t hi s, a sl i p and f al l case?

24 ( Laught er . )

25 THE COURT: Okay. I wi l l hear f r om t he



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1 def endant s on t he omni bus mot i on.

2 MR. TRI NGALI : Your Honor , t o begi n, may I

3 hand up t o you a bi nder . I t has been pr ovi ded t o t he

4 pl ai nt i f f s. Ther e ar e cer t ai n exhi bi t s t hat I wi l l be

5 ref er r i ng to dur i ng the argument .

6 ( Wher eupon, a bi nder was gi ven t o t he Cour t and t he

7 Law Cl er k. )

8 THE COURT: Thi s case i s compl ex f act ual l y but

9 l egal l y i t seems - - and I wi l l hear argument t o t he

10 cont r ar y - - but l egal l y we ar e concer ned wi t h Count 1, t he11 so- cal l ed over ar chi ng conspi r acy, and Count 2, a gar den

12 var i et y conspi r acy.

13 MR. TRI NGALI : That ' s absol ut el y cor r ect , Your

14 Honor .

15 THE COURT: That el ement seems t o be t he one

16 t hat has been pr i mar i l y argued.

17 MR. TRI NGALI : That i s absol ut el y r i ght , Your

18 Honor, because qui t e f rankl y t he i ssue f or you i s , as f ar as

19 we' re concerned, i f you agree as the pl ai nt i f f s have pl ed

20 t hat t hey ar e, i n Count 1 t hey ar e pl eadi ng one over ar chi ng

21 combi nat i on t o al l ocat e al l t hese t ransact i ons and t o r i g

22 al l t he bi ds on al l t hose t ransact i ons and t hey must t i e

23 t hat al l t oget her , one agr eement , Count 1, t her e i s no

24 evi dence of t hat .

25 Count 2 obvi ousl y deal s wi t h a separ at e i ssue and



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1 that wi l l be argued separatel y l ater t oday.

2 But Count 1, as you not ed i n your Oct ober 5

3 or der - - October 15t h or der , Your Honor , wher e you pose t he

4 t wo l egal quest i ons t hat Mr . Pr i mi s wi l l argue, t hat

5 al l eges, quot e, accor di ng t o Your Honor , one over ar chi ng

6 combi nat i on. What the pl ai nt i f f s cl ai mt here i s that the

7 el even def endant s agr eed t o al l ocat e or di vi de among

8 t hemsel ves and agr eed t o r i g t he pr i ces t o be pai d on 27

9 separat e t ransact i ons, i ncl udi ng, pr i nci pal l y what t hey seek

10 damages on, 17 l ever aged buyout s wher e a publ i c company i s11 taken pr i vate by def endants .

12 And t hose 17 LBOs, Your Honor , val ued, wer e val ued

13 at more t han 250 bi l l i on dol l ars . And i t ' s over a f i ve- year

14 per i od, 2003 t o 2007. That ' s t he massi ve scope of t he

15 conspi racy t hey' ve al l eged. 250 bi l l i on dol l ars wort h of

16 t r ansact i ons over a f i ve- year per i od.

17 For thei r own st rat egi c r easons, Your Honor , f or

18 one of t he r easons you suggest ed ear l y i n t hi s case whi ch

19 was how do you j oi n al l t hese di spar at e t r ansact i ons

20 t oget her , t hey deci ded t o swi ng f or t he f ences and t o go bi g

21 wi t h t he conspi r acy t hat t hey have cl ai med her e. But now,

22 Your Honor , on t hi s mot i on t hey must be hel d account abl e by

23 you f or t hat choi ce.

24 When t he pl ai nt i f f s f i r st descr i bed t he al l eged one

25 over ar chi ng combi nat i on t o Your Honor at t he mot i on t o



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1 di smi ss, your react i on was, and I ' m quot i ng, Your Honor,

2 "That you have never hear d or seen anyt hi ng l i ke i t . " And,

3 Your Honor, i t was f or good reason. I t ' s because i t di dn' t

4 happen and i t coul d not have happened. And di scover y over

5 t he year s, and we' ve had t hr ee phases, as you know, of

6 di scover y have shown t hat . We' ve had mor e t han t en mi l l i on

7 pages of document s pr oduced by t he def endant s. We' ve had

8 mor e t han 50 deposi t i ons. And i n none of t hat evi dence,

9 none of t hat evi dence, none of t he document s, none of t he

10 deposi t i ons do you see any evi dence of an over ar chi ng11 conspi racy t hat l i nks toget her t hese 27 t ransact i ons.

12 Ever y wi t ness who was quest i oned at a deposi t i on

13 about an over ar chi ng conspi r acy t est i f i ed t her e was no such

14 t hi ng and nor do any document s ment i on such an agr eement .

15 And t o f i nd ot her wi se, Your Honor , i n connect i on wi t h t hi s

16 mot i on r equi r es you t o f i nd i n t he absence of any evi dence

17 t o suppor t i t t hat t he def endant s expended enor mous t i me,

18 ef f or t and expense pur sui ng deal s t hat accor di ng t o t he

19 pl ai nt i f f s they al r eady knew t hey woul d not wi n and t hat

20 def endant s cont i nued t o submi t bi ds, bi ddi ng agai nst each

21 ot her and rai s i ng t he pr i ce t o ul t i mat el y be pai d by t he

22 wi nni ng bi dder , al l t he t i me knowi ng t hat i t was a sham and

23 t hat t hey woul dn' t wi n.

24 The pl ai nt i f f s have t o pr ove on Count 1, and t hat ' s

25 al l we' r e f ocusi ng on, t he one over ar chi ng combi nat i on, not



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1 what t hey al l eged happened on a si ngl e deal , not t i ed t o t he

2 ot her 27. And t hey ei t her have t o do t hat t hr ough di r ect

3 evi dence or ci r cumstant i al . And I submi t , Your Honor , t hey

4 have nei t her .

5 I am sur e t hey' re goi ng t o ar gue - -

6 THE COURT: Let me ask you t hi s one quest i on

7 and t hen go on.

8 MR. TRI NGALI : Absol ut el y, Your Honor .

9 THE COURT: Let ' s assume t hat t her e i s a

10 conspi racy on Count 1, HCA, Freescal e, Phi l i ps, t hrow11 anot her one i n t here, what i s the rul i ng i n t hat si t uat i on?

12 MR. TRI NGALI : The r ul i ng i s you deny - - you

13 gr ant our mot i on f or summar y j udgment as t o Count 1, Your

14 Honor , because t hat ' s not t he conspi r acy t hey' ve al l eged i n

15 Count 1.

16 The Count 1 conspi r acy t hat t hey have al l eged i s

17 al l 27 t ransact i ons, al l of t hose LBOs agreed t o, al l ocat ed

18 by t hose 27 def endant s. That ' s not t he cl ai m t hey have

19 al l eged. Mr . Pr i mi s wi l l address thi s i n f ur t her detai l but

20 t hey have a separ at e HCA cl ai m. For what ever r easons t hey

21 deci ded not t o i ncl ude Fr eescal e and NXP, f or exampl e. As

22 Your Honor j ust suggested, i t coul d have pot ent i al l y

23 happened; but , i n any event , t he cl ai m we have her e i n

24 Count 1 and t he cl ai m t hat t hey have t ol d you f r om day one

25 t hey wer e al l egi ng was a 27- deal , al l l ar ge LBOs, 250



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1 bi l l i on dol l ars ' wort h of LBOs over a 5- year per i od. That ' s

2 what t hey want ed, t hat ' s what t hey must be hel d t o, Your

3 Honor .

4 And i f you, and i f you - - wel l , t he pl ai nt i f f s wi l l

5 ar gue t oday I ' m sur e t hat t her e ar e cer t ai n document s t hat

6 t hey' l l say are suf f i ci ent t o def eat t he mot i on on Count 1

7 as the overarchi ng combi nat i on - -

8 THE COURT: I mi ssed t hat l ast phr ase.

9 MR. TRI NGALI : I ' msor ry?

10 THE COURT: You sai d t he pl ai nt i f f s wi l l ar gue11 what ?

12 MR. TRI NGALI : I ' m sur e t hey' r e goi ng t o ar gue

13 t o you t oday t hat t hey do have cer t ai n document s t hat wi l l

14 show t he over ar chi ng combi nat i on. What I ' m submi t t i ng t o

15 Your Honor i s t hat t hey do not . That t he t est wi l l be not

16 what an i ndi vi dual deal - - what happened on an i ndi vi dual

17 deal but what happened wi t h r egar d - - whet her t hey have any

18 evi dence t hat t i es t oget her al l of t hese t ransact i ons i n t he

19 combi nat i on t hat t hey al l ege f or you, whi ch i s not - - whi ch

20 was an al l egat i on of an over ar chi ng conspi r acy t o r i g bi ds

21 and al l ocat e al l deal s. And t hat ' s wher e I say, Your Honor ,

22 that t hey wi l l not have the proof .

23 And l et ' s l ook at some of t he evi dence, Your Honor .

24 Fi r s t t hey tel l that you there i s no overarchi ng

25 conspi racy - - t hey t el l you t hat t here i s no overarchi ng



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1 conspi r acy t o al l ocat e t he deal s, okay. Look, Your Honor ,

2 i f Your Honor wi l l l ook at t ab one of t he bi nder .

3 I f you l ook at tab one, Your Honor , you wi l l see a

4 document wr i t t en cont empor aneousl y by one of t he l oser s i n

5 t he Nei man Mar cus t r ansact i on. What do t hey wr i t e? "We

6 l ost , very depressi ng, don' t know pr i ce. "

7 I f you t ur n t o t ab t wo, Your Honor , you wi l l f i nd

8 what t he l osers wr i t e, t hi s i s i n t he Susquehanna

9 t ransact i on. "Very di sappoi nt i ng. Gave i t our absol ut e

10 best shot . "11 I f you t ur n t o t ab t hr ee, Your Honor , t hi s i s t he

12 Cl ear Channel t r ansact i on, what do you see t he l oser sayi ng?

13 "Rai sed bi d t o, quot e, absol ut e st ret ch. Very, very

14 di sappoi nt i ng out come. "

15 Your Honor , none of t hat ar e t he wor ds of

16 conspi r at or s who agr eed not t o compet e or conspi r at or s who

17 deci ded t o di vi de t he LBOs among t hemsel ves. These ar e t he

18 wor ds of compet i t ors , not conspi rat ors. Conspi rat ors

19 woul dn' t be sayi ng i t ' s di sappoi nt i ng t o have l ost . They

20 gave i t t hei r best shot . The conspi rat or s under thei r

21 t heor y of an over ar chi ng conspi r acy t o al l ocat e t hese

22 t r ansacti ons woul d al r eady have known t hat t hey wer en' t

23 goi ng - - whi ch ones t hey woul d wi n, whi ch ones t hey woul d

24 l ose. They woul dn' t be compet i ng, gi vi ng i t t hei r best shot

25 and t hen expr essi ng di sappoi nt ment when t hey l ose.



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1 The ot her t hi ng t hey cl ai m, Your Honor , as par t of

2 t hi s overarchi ng conspi racy as to al l 27 t ransact i ons i s

3 t hat i t was an overarchi ng conspi racy t o r i g bi ds. "Ri ggi ng

4 bi ds, " Your Honor , means t hat t hey knew each ot her s pr i ces

5 and we del i ber at el y bi d bel ow wi t h some agr eement as t o us

6 comi ng i n.

7 I f you l ook at t ab 4, Your Honor , t hi s i s wr i t t en

8 by a l oser i n t he Nei man Marcus t ransact i on. Fi rst of al l ,

9 what i s thei r sour ce of i nf or mat i on as to what t he wi nni ng

10 pr i ce was f or Nei man Marcus? I t ' s t he Wal l St r eet J our nal .11 And what i s t hei r r eact i on t o t hat pr i ce? "Wow, i f we wer e

12 goi ng t o l ose, I ' m gl ad i t i s by a l ot . "

13 Tur n t o t ab 6, Your Honor . Thi s i s t he r eact i on of

14 a l osi ng bi dder i n t he Toys "R" Us t r ansact i on. What ' s t he

15 source of thei r i nf ormat i on? The New Yor k Post . And what ' s

16 t he r eact i on of t he l osi ng bi dder ? " I f , i f , i f t hi s i s

17 t r ue, what ar e t hey t hi nki ng?" No i ndi cat i on of knowl edge

18 of pr i ce and, i n f act , surpr i se i n l earni ng the pr i ce, as

19 i t ' s r ecor ded i n t he paper s.

20 And a f i nal exampl e, Your Honor , i n t ab 7, agai n,

21 t he react i on of t he l osi ng bi dder i n t he Mi chael s

22 t ransact i on. "Gi vi ng i t everyt hi ng and more. I f t hey beat

23 me, t hey have crossed i nt o st upi d t er r i t ory. "

24 What you see i n ever y one of t hese document s, Your

25 Honor , i s no agr eement t o r i g bi ds, t he l osi ng bi dder not



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1 knowi ng t he pr i ce of t he wi nni ng bi d, and expr essi ng

2 sur pr i se at how hi gh t he wi nni ng bi d was.

3 That i s consi st ent i n al l t he document s I j ust

4 showed you and t hose ar e al l cont empor aneous document s and

5 al l of whi ch di spr ove any i dea t hat t her e has been an

6 al l ocat i on. Agai n, t hose are al l t he wor ds of compet i t ors ,

7 not conspi r at or s, as t o any over ar chi ng agr eement t o

8 al l ocat e and r i g bi ds.

9 Now, Your Honor , t he i ssue, anot her i ssue t hat

10 we' ve r ai sed wi t h r egar d t o t hi s over ar chi ng combi nat i on,11 Your Honor sai d you had never hear d or seen anyt hi ng l i ke

12 i t , i s i t s i mpl ausi bi l i t y, the f act t hat how coul d you

13 di vi de up 250 bi l l i on dol l ars wort h of t r ansact i ons over a

14 f i ve- year per i od?

15 And i f you t ur n t o t ab ei ght - -

16 THE COURT: Let ask me ask you t hi s quest i on.

17 MR. TRI NGALI : Yes, Your Honor .

18 THE COURT: Assume f or t he sake of t he

19 questi on t hat you have - - and, agai n, I am not sayi ng t her e

20 i s any evi dence - - but assume, so I am cl ar i f yi ng my

21 t hi nki ng, t hat s i x of t he def endant s were i nvol ved i n 20

22 t ransact i ons. Woul d t hat or woul d i t not const i t ut e an

23 over ar chi ng conspi r acy?

24 MR. TRI NGALI : Your Honor , i t woul d - - agai n,

25 thi s i s goi ng to be - - these are the quest i ons - -



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1 THE COURT: I f , i n f act , t her e wer e.

2 MR. TRI NGALI : I know t hese ar e t he quest i ons

3 you posed and t hey wi l l be addr essed by Mr . Pr i mi s.

4 The answer i s i t woul d i nvol ve a conspi r acy ot her

5 t han t he conspi r acy al l eged i n Count 1. The conspi r acy

6 al l eged i n Count 1 i s very speci f i c. I t ' s al l LBOs were

7 di vi ded and as soon as you move away f r om t hat you have a

8 di f f erent conspi racy. And Mr . Pr i mi s wi l l expl ai n the

9 i ssues t hat ar i se as a r esul t of t hat .

10 Ther e ar e di f f er ent i ssues i n t er ms of how exact11 pl ausi bl e, as you star t t aki ng away t ransact i ons, as you

12 start t aki ng away def endant s, so i t i s a very di f f erent

13 conspi racy. I t i s not t he conspi racy t hey have al l eged.

14 And i t c reat es di f f erent i ssues t hat , agai n, Mr . Pr i mi s wi l l

15 expl ai n t o you as t o why i t woul d, i t f undament al l y changes

16 t he case.

17 THE COURT: Al l r i ght .

18 MR. TRI NGALI : I f you t ur n t o t ab ei ght , Your

19 Honor , what we posed ar e some pr acti cal quest i ons, pr acti cal

20 quest i ons as t o why t he over ar chi ng conspi r acy t hat t hey

21 al l ege si mpl y coul d not have t aken pl ace. And t hese ar e,

22 f i r s t of al l , we are t al ki ng about t hei r i dea i s that we' ve

23 di vi ded up al l t ransact i ons that are goi ng t o occur over a

24 f i ve- year per i od. They used t o say al l LBOs above 2. 5

25 bi l l i on. Now t hey say t he LBOs i n t hi s case. Compl et el y



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1 ger rymandered but , i n any event , t hat ' s what i t i s .

2 But what t hey f ai l ed t o r ecogni ze, what t hey f ai l ed

3 t o expl ai n t o you, even t hough we' ve r ai sed t hi s now

4 count l ess t i mes, i s i t i s i mpl ausi bl e t o have such a

5 conspi r acy when none of t he def endant s woul d know i n 2003

6 whi ch t r ansacti ons wer e goi ng t o occur , when t hey woul d

7 occur, i n whi ch i ndustr y and t he s i ze of t he t ransact i on.

8 That ' s al l l ai d out , Your Honor , i n tab ei ght .

9 And al l of t hose quest i ons ar e ver y i mpor t ant

10 because how do you al l ocat e, how do you say that Your Honor11 get s t r ansact i on A and someone el se get s t r ansact i on B when

12 you don' t know when t her e wi l l be a t r ansact i on B. You

13 don' t know whet her you' l l want t r ansact i on B. You don' t

14 know whet her you' l l be abl e t o bi d f or t r ansact i on B. And

15 you don' t know t he pr i ce of t r ansacti on B. How do you t r ade

16 up al l t hese t r ansact i ons wi t hout knowi ng what t he

17 t ransact i ons are even goi ng t o be?

18 And I ' m goi ng t o show you a l i t t l e l at er , Your

19 Honor, a chart t hat wi l l show you over t hi s f i ve- year

20 per i od, t hi s 250 bi l l i on dol l ars of deal s , and we wi l l show

21 you who won and who l ost . And Your Honor wi l l f i nd zer o

22 pat t er n, zer o pat t er n. Peopl e wi n once, twi ce. Ot her

23 peopl e wi n t en t i mes. Peopl e wi n 12 per cent of t he deal s.

24 Somebody el se wi ns 50 per cent of t he deal s. Ther e i s zer o

25 pat t er n.



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1 The second i ssue, Your Honor , i s i n t er ms of t he

2 i mpl ausi bi l i t y of t hi s conspi r acy and why you' ve never hear d

3 or seen anyt hi ng l i ke i t i s t here i s no knowi ng whi ch t hi rd

4 par t i es mi ght submi t bi ds and at what pr i ce. How coul d we

5 have agr eed among our sel ves as t o whi ch t r ansact i ons each of

6 us ar e goi ng t o get when ot her peopl e ar e bi ddi ng? And t he

7 pl ai nt i f f s want t o downpl ay st rat egi c bi dders . And a

8 str at egi c bi dder, Your Honor, i s s i mpl y a compet i t or ,

9 someone who i s al r eady i n t he i ndust r y as opposed t o t hese

10 def endant s who ar e what ar e cal l ed pr i vat e equi t y f i r ms who11 take the company pr i vate.

12 And i n numer ous t r ansact i ons you have st rat egi c

13 bi dder s. And you actual l y have st r at egi c bi dder s who end up

14 bei ng successf ul l i ke, f or exampl e, i n t he Cl ear Channel

15 si t uat i on where Cumul us, a radi o stat i on, wi ns the

16 t r ansact i on. But i n numer ous t r ansact i ons, Your Honor , you

17 have compet i t ors l ooki ng at t he busi ness.

18 THE COURT: Do t hese compet i t ors, have t hey

19 t he f i nanci al wher ewi t hal ?

20 MR. TRI NGALI : Absol ut el y, Your Honor . We' r e

21 t al ki ng about compani es, Ver i zon f or exampl e, t he phone,

22 t hey l ooked at Al l t el l whi ch was one of t he t ransact i ons i n

23 t hi s case. There i s no cl ai m ever made by t he pl ai nt i f f s

24 t hat t he st r at egi cs who l ooked wer e unabl e t o make t hese

25 t r ansact i ons. Ar amar k, Sodexo ( ph. ) whi ch i s a maj or



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1 company, publ i c company, maj or compet i t or of Ar amar k, t hey

2 l ooked at t hat t r ansact i on.

3 I n each of t hese cases - - and t he ot her t hi ng, Your

4 Honor , we f i nd, f or exampl e, i n TXU, Tenaska, whi ch i s a

5 compet i t or of TXU i n t he ut i l i t y busi ness, t hey went out and

6 got part ners . There i s not hi ng - - t here are smal l er pr i vat e

7 equi t y f i r ms and t her e ar e a number of pr i vat e equi t y f i r ms

8 as l ar ge as some of t he def endant s her e who ar e not

9 def endant s. And l o and behol d, t hose peopl e al l end up

10 bi ddi ng i n t hese si t uat i ons.11 So not onl y i s i t ot her st rat egi c compani es, Your

12 Honor , but i n each of t hese t r ansact i ons what you f i nd i s

13 nondef endant s bi ddi ng, somet i mes wi t h def endant s, somet i mes

14 not wi t h def endant s. Somet i mes wi t h st r at egi cs, somet i mes

15 wi t h st r at egi cs l ooki ng at i t al one.

16 So how do we di vi de t hi s mar ket when i t ' s not - -

17 t hese t r ansact i ons when i t ' s not onl y our s t o have? How

18 does that gi ve you any cer t ai nt y i f you passed on

19 t ransact i on A t hi nki ng you' re goi ng t o get t ransact i on B

20 when you don' t know who i s goi ng t o be t he bi dder s i n

21 t ransact i on B?

22 And, f i nal l y, Your Honor , and ver y si gni f i cant l y i n

23 t erms of t he i mpl ausi bi l i t y of t he conspi racy, t here i s no

24 knowi ng who - - i t i s t he t ar get company and i t s advi ser s who

25 ar e goi ng t o make t he deci si on as t o who wi l l be al l owed t o



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1 compet e and whet her i t wi l l be what ' s cal l ed an auct i on or a

2 propr i et ary t ransact i on. Let me expl ai n t hat .

3 I n sever al si t uat i ons - -

4 THE COURT: What i s t he di f f er ence?

5 MR. TRI NGALI : Yeah, I ' m goi ng t o expl ai n

6 t hat , Your Honor .

7 An auct i on means t hat t he company has deci ded we' r e

8 goi ng t o pur sue a t r ansacti on wher e we go pr i vat e, wher e t he

9 publ i c shar ehol der s ar e al l pai d out and we become a pr i vat e

10 company. And we' r e goi ng t o do i t by an aucti on. We' r e11 goi ng to tel l peopl e i t ' s publ i c, i t ' s goi ng to be publ i cl y

12 announced and we' r e goi ng t o ei t her l et ever yone bi d or

13 we' r e goi ng t o sel ect and say you can bi d, you can' t bi d f or

14 what ever reason. That ' s an auct i on.

15 A pr opr i et ar y t ransact i on, Your Honor , t hi nk of i t

16 as excl usi ve, whi ch i s t hat somet i mes t ar get compani es don' t

17 want i t to be publ i c, that they' re thi nki ng of goi ng

18 pr i vat el y.

19 Wel l , Your Honor woul d pr obabl y i magi ne what

20 happens i s as soon as ther e i s a pr ess r el ease t he st ock

21 pr i ce j umps up because t he shar ehol der s t hi nk they' r e goi ng

22 t o get some pr emi um as they do, and, t her ef or e, t he pr i ce

23 r i ses and that creates an ar t i f i ci al di stor t i on of the

24 mar ket .

25 I t ' s al so a pr obl em f or t ar get compani es once t hey



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1 announce t hey' r e goi ng t o go pr i vat e because t her e i s an

2 i ssue of an empl oyee di sr upt i on. Empl oyees may t hi nk my j ob

3 i s not secur e, I don' t know what ' s goi ng t o happen wi t h new

4 management , I don' t know whet her I ' m goi ng t o be abl e t o

5 have a j ob, so t hey may st ar t l eavi ng t he company.

6 Al so t her e i s a di sr upt i on i n t er ms of your

7 cust omer s. Cust omer s may not want t o deal wi t h you and

8 ent er i nt o a l ong- t erm cont ract wi t h you, f or exampl e, i f

9 t hey al so ar e uncer t ai n as t o what your f ut ur e i s. So what

10 t hey do t her e i n t hat si t uat i on wher e t hey don' t want t o be11 publ i c about i t and l et al l t hese pot ent i al harms happen i s

12 t hey j ust deal - - t hey go out and ei t her t hey' re cont act ed

13 by a pr i vat e equi t y f i rm or t hey cont act t hrough t hei r

14 advi sor and i nvest ment banker one or t wo pr i vat e equi t y

15 f i r ms and say we want t o expl or e an LBO, a pr i vat e t r ans- - -

16 goi ng pr i vat e but we want t o do i t secr et l y, j ust wi t h you.

17 We want t o get t o a pr i ce t hat i s accept abl e t o us. And i f

18 we do, t hen we wi l l s i gn a deal wi t h you. And t hat ' s a

19 propr i et ary t ransact i on. Everybody el se i s not bi ddi ng.

20 Ever ybody el se doesn' t have knowl edge of t he t r ansacti on.

21 And, Your Honor , i n t hose si t uat i ons, t he

22 pr opr i et ar y t r ansact i on, i n exampl e af t er exampl e even

23 t hough i t ' s a propr i et ary t ransact i on - - and t hi s get s t o

24 the i ssue of the l ack of cont r ol and the l ack of abi l i ty to

25 have t hi s conspi r acy - - what you f i nd i s t he t ar get company,



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1 t he company who i s goi ng t o do a pr opr i et ar y t r ansact i on

2 consi st ent l y rej ect i ng t he pr i ce t hat t he group t hey' ve

3 reached out t o f or a propr i et ary t ransact i on i s of f er i ng

4 t hem unt i l t hey get t o t he pr i ce t hat i s accept abl e t o t hem.

5 So even t hough t her e i s nobody el se bi ddi ng, what

6 you have i s the board sayi ng no, no, no, no, and f i nal l y

7 t hey get t o t he pr i ce wher e t he boar d says yes.

8 So, agai n, t he i nabi l i t y t o i mpl ement t hi s

9 conspi r acy and t o agr ee among our sel ves who i s goi ng t o get

10 whi ch t r ansact i on i s f r ustr at ed by t he poi nt t hat we don' t11 cont r ol t he pr ocess. The t ar get company, even i n a bi d

12 si t uat i on, of t en deci des who t hey' re goi ng t o al l ow t o bi d

13 and who t hey' re not goi ng t o al l ow t o bi d.

14 I n a pr opr i et ar y t r ansact i on t hey sel ect who

15 t hey' r e goi ng t o have - -

16 THE COURT: How many of t hese t r ansact i ons

17 wer e auct i ons and how many wer e pr opr i et ar y?

18 MR. TRI NGALI : Your Honor, I have a char t t hat

19 i s goi ng t o show you t hat .

20 THE COURT: Okay.

21 MR. TRI NGALI : Pr obabl y the easi est way i s t o

22 gi ve you t hat .


24 MR. TRI NGALI : Let me addr ess, Your Honor, i n

25 a moment t he ci r cumst ant i al evi dence. And I want t o set up



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1 by gi vi ng you t he l egal standard. And t hi s i s behi nd t ab

2 ni ne. I t ' s r eal l y t he Mat sushi t a case by t he Supr eme Cour t

3 because t here are speci f i c rul es that even t he pl ai nt i f f s

4 acknowl edge exi st i n an ant i t r ust conspi r acy case such as

5 t hi s under Sect i on 1 al l egi ng a conspi racy t o al l ocat e and

6 r i g bi ds. And i t ' s not t he t ypi cal summary j udgment i s

7 t here any genui ne i ssue of f act . There are l i mi t at i ons.

8 For exampl e, Mat sushi t a says that i t l i mi t s , ant i t rust l aw

9 l i mi t s t he r ange of per mi ssi bl e i nf er ences f r om ambi guous

10 evi dence. Conduct as consi stent wi t h per mi ssi bl e11 compet i t i on as wi t h i l l egal conspi r acy does not st andi ng

12 al one support an i nf er ence of ant i t rust conspi racy.

13 THE COURT: Say t hat agai n.

14 MR. TRI NGALI : Okay. Thi s i s t he t op quot e,

15 Your Honor . And what i t says i s t hat conduct , i f you have

16 conduct t hat ' s al l eged by t he pl ai nt i f f s, f or exampl e, j oi nt

17 bi ddi ng i s one of t he conduct , one of t he i ssues of conduct

18 that they al l ege, i f j oi nt bi ddi ng i s as consi stent wi th

19 per mi ssi bl e compet i t i on as wi t h i l l egal conspi r acy, we wi n.

20 And t her e ar e numer ous reasons, and t he pl ai nt i f f s don' t

21 deny t hi s, why j oi nt bi ddi ng i s compl et el y i n somebody' s

22 i ndependent i nt er est s.

23 I t al l ows you t o pool capi t al , di ver si f y your r i sk,

24 al l t hi ngs t hat are i n your i ndependent i nt erest . And so

25 l ong as you have an i ndependent r eason t o suppor t your



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1 conduct , as l ong as there i s a permi ssi bl e i nf erence wi t h

2 regard t o permi ssi bl e - - sor r y - - i nf erence wi t h regard t o

3 per mi ssi bl e compet i t i on as opposed t o i l l egal conspi r acy,

4 t hen t hey l ose, we wi n.

5 And t hat real l y get s t o t he next poi nt , Your Honor ,

6 and t hat ' s al so i n t he Mat sushi t a case whi ch i s t hat t hey

7 must pr esent evi dence, t he pl ai nt i f f seeki ng damages must

8 pr esent evi dence t o sur vi ve a mot i on f or summar y j udgment ,

9 quot e, t hat t ends t o excl ude t he possi bi l i t y t hat t he

10 al l eged conspi rat ors act ed i ndependent l y.11 So i f we act , i f we can show t he possi bi l i t y t hat

12 we wer e act i ng i ndependent l y so when we submi t t ed j oi nt bi ds

13 i t was because we want ed t o pool capi t al , we want ed t o

14 di ver si f y r i sk or , Your Honor , when we don' t j ump a bi d

15 because we - - and I ' l l show you exampl es of t hi s - - had

16 i ndi vi dual l y deci ded we' re goi ng t o l ose or t hat t he pr i ce

17 i s t oo hi gh. That ' s t he i ndependent act i on t hat Mat sushi t a

18 says i f you have t hat i ndependent - - i f you have t he

19 possi bi l i t y t hat t he conspi rat ors act ed i ndependent l y, t he

20 pl ai nt i f f s l ose.

21 And, Your Honor , t her e i s t wo ot her cases t hat we

22 ci t e i n the next two pages that I ' l l j ust br i ng to your

23 at t ent i on, whi ch i s si mpl y i f t here i s a j ump bal l , we

24 wi n - -

25 THE COURT: So what you are sayi ng i s t hat no



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1 mat t er what t he f ormal reci t at i on of t he pr i nci pl es of

2 summar y j udgment , i n an ant i t r ust case t he pl ai nt i f f must

3 present evi dence t hat t ends to excl ude t he possi bi l i t y - -

4 MR. TRI NGALI : Of i ndependent - -

5 THE COURT: - - t he conspi r at or s acted

6 i ndependent l y?

7 MR. TRI NGALI : Absol ut el y, Your Honor . And

8 t hat i s di f f er ent , obvi ousl y, t han any summar y j udgment

9 case, not ant i t r ust, t hat Your Honor woul d deci de. Your

10 Honor t ypi cal l y i n an ant i t rust case obvi ousl y i s goi ng t o11 see i s ther e any genui ne i ssue of f act , di sput ed i ssue of

12 f act , mat er i al i ssue of f act .

13 But i n an ant i t rust case under the Supr eme Cour t

14 t he pl ai nt i f f s have t hi s added burden. And t hat ' s

15 consi st ent i n t he Supr eme Cour t cases of havi ng t o excl ude

16 t he possi bi l i t y of i ndependent act i on. And, Your Honor ,

17 her e t he ci r cumst ant i al evi dence bot h demonst r at es

18 compet i t i on, and you saw t hat i n t he var i ous document s t hat

19 I pr esent ed t o you, because t her e you saw t he wor ds of

20 compet i t ors , not conspi rat ors. But i t al so doesn' t meet t he

21 Mat sushi t a t est of t endi ng t o excl ude t he possi bi l i t y of

22 i ndependent act i on.

23 Remember , Your Honor , f i r st t he t ar get compani es

24 cont r ol t he LBO sal e and t hey deci de who woul d be i nvi t ed t o

25 bi d and t he composi t i on and si ze of t hose gr oups. And I



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1 ment i oned - -


3 MR. TRI NGALI : The t arget compani es, i n other

4 wor ds, t he compani es t hat ar e goi ng t o be t he subj ect of

5 t hi s supposed conspi r acy, t hey' r e t he ones who cont r ol t he

6 sal e. They deci de who i s goi ng t o bi d, who t hey' r e goi ng t o

7 al l ow t o bi d, who t hey' re not goi ng t o al l ow t o.

8 THE COURT: I n al l cases or j ust auct i on and

9 pr opr i et ar y?

10 MR. TRI NGALI : Wel l , t hose are t he onl y t wo we11 have, Your Honor . Ever y t r ansact i on i s ei t her auct i on or

12 pr opr i et ar y.

13 THE COURT: Ever y one of t hem?

14 MR. TRI NGALI : Ever y one of t hem, exact l y,

15 Your Honor .


17 MR. TRI NGALI : Of t he LBOs t hat ar e at i ssue

18 i n t hi s case t hat t hey seek damages on, ever y one.

19 So i f you l ook, Your Honor , what you' r e goi ng t o

20 f i nd i s, f or exampl e, i f you l ook at t ab 11, j ust t o show

21 you some exampl es wher e i t i s t he company, not def endant s,

22 who ar e deci di ng who can bi d or who cannot bi d. I n Al l t el ,

23 Bai n, f or exampl e, one of t he def endant s, i t was tol d no by

24 Al l t el ' s f i nanci al advi sor Merr i l l Lynch when i t want ed t o

25 par t i ci pat e i n t he auct i on.



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1 Quot e, Mer r i l l Lynch not budgi ng on l et t i ng us i n

2 now. Quot e, Al r eady have a compet i t i ve pr ocess.

3 So t hat was Mer r i l l Lynch, Al l t el ' s f i nanci al

4 advi sor , not t he def endant s, sayi ng Bai n, you can' t

5 par t i ci pat e.

6 So t hi nk, Your Honor , how coul d we have an

7 agreement that al l ocat ed Al l tel to Bai n i f Al l tel won' t l et

8 Bai n even par t i ci pat e?

9 We al so have t hi s f act , and t hi s happens i n t he

10 Cl ear Channel si t uat i on, t hat we can' t even cont r ol whet her11 i t ' s goi ng t o be a propr i et ary or an auct i on t ransact i on.

12 What happened i n Cl ear Channel , i t st ar t ed as a pr opr i et ar y

13 t r ansact i on. They wer e j ust deal i ng wi t h Pr ovi dence and

14 KKR, t wo of t he def endant s i n t hi s case. But t he Al l t el - -

15 I ' m sorr y - - t he Cl ear Channel board rej ect ed t he pr i ce,

16 $35. You' l l see i n t ab 12, "Rej ect ed 35, boar d not happy.

17 Penci l s down. "

18 So you know what happens, Your Honor ? I t goes f r om

19 a pr opr i et ar y t r ansact i on t hat t he boar d was pur sui ng t o t he

20 boar d deci di ng t o do a publ i c aucti on. And guess what

21 happens i n t he publ i c aucti on? The t wo peopl e t hat wer e

22 sel ect ed by Cl ear Channel t o do t he pr opr i et ar y deal , t hey

23 l ose because somebody el se bi ds agai nst t hem and bi ds a

24 hi gher pr i ce. That agai n, Your Honor , shows you t he

25 i mpl ausi bi l i t y of t he conspi r acy.



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1 And t hen i n Al l t el , anot her exampl e of how we

2 cannot even possi bl y i mpl ement t hi s conspi r acy because we

3 don' t cont r ol who get s whi ch deal . I n Al l t el what happens

4 i s there i s a bi d deadl i ne. Thi s i s an auct i on si tuat i on

5 and t here i s a bi d deadl i ne. Let ' s say i t was J une 15t h.

6 And t wo of t he def endant s deci de we' r e goi ng t o do what t hey

7 cal l ed i nt ernal l y i n t hei r document s a "dawn rai d. " So t hey

8 put i n what t hey consi der ed t o be a pr eempt i ve bi d, a pr i ce

9 hi gh enough t hat t hey t hi nk no one i s goi ng t o t r y t o beat

10 i t bef or e t he bi d deadl i ne.11 And what does Al l t el and i t s f i nanci al advi sor do?

12 Al l t el deci des to accept t hat pr i ce and shut down t he

13 pr ocess. And t hen, so what you f i nd t hen i s t he peopl e who

14 ar e about t o bi d, do t hey say we had an agr eement , we

15 di vi ded i t up and we agree t hat Al l t el wi l l go t o t hose

16 peopl e who di d what t hey cal l t he "dawn r ai d"? No, what

17 t hey do i nst ead, Your Honor , i s expr ess once agai n sur pr i se

18 and di sappoi nt ment . I t ' s t he wor ds of compet i t or s, not

19 conspi r at or s.

20 I f you l ook at t ab 13, t hi s i s one of t he l osi ng,

21 one of t he peopl e who was shut out , shut out of t he Al l t el

22 auct i on because of what Al l t el di d. And what t hey say i s,

23 "We ar e sur pr i sed and di sappoi nt ed t hat t he company woul d

24 shut down a process wi t h so l i t t l e t i me l ef t t o go. "

25 They al so wr i t e, "My t eam spent a l ot of t i me, a



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1 l ot of pr eci ous t i me and money on t hi s and want ed t o at

2 l east get t o t he f i ni sh l i ne and put our best f oot f orward.

3 The Car l yl e, Bl ackst one, Pr ovi dence guys ar e even mor e

4 f ur i ous and cr yi ng f oul . "

5 I f you t ur n t o t ab 14 you have t he wor ds of

6 Provi dence and t hei r react i on t o bei ng shut out i n Al l t el .

7 "Very st r ange and di sappoi nt i ng. "

8 And i n t ab 15 you see Car l yl e' s r eact i on. "We f eel

9 qui t e mi st r eat ed her e. "

10 So what you f i nd, Your Honor , i s t hat i t i s t he11 company who deci des who i s goi ng t o bi d, i t i s t he company

12 deci des whi ch pr i ce t hey' re goi ng t o accept , and i t ' s the

13 company who' s goi ng t o deci de how t hey' r e goi ng t o conduct

14 t hat process, whet her t hey' re goi ng t o al l ow i t , t hey' re

15 goi ng t o do i t pr opr i et ar y and sel ect who t hey want t o deal

16 wi t h, whet her t hey' r e goi ng t o have an auct i on, and i f t hey

17 have an aucti on, who t hey' r e goi ng t o l et t eam wi t h whom.

18 So how do we cont r ol how t o di vi de i t up?

19 Ar amar k i s anot her si t uat i on, Your Honor , wher e

20 what you f i nd i s management cont r ol l i ng t he pr ocess.

21 Somet i mes what you have i s management t hemsel ves, i n t hi s,

22 i n Ar amar k you have t he CEO of Ar amar k, chi ef execut i ve

23 of f i cer , Mr . Neubauer , who deci des he want s t o t ake t he

24 company pr i vat e so he r eaches out t o t wo of t he def endant s

25 her e - - actual l y t o one def endant and one nondef endant whi ch



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1 agai n shows you t hat we can' t cont r ol who i s goi ng t o even

2 bi d because Neubauer i n t hi s case goes out not onl y t o T. H.

3 Lee who i s one of t he def endant s but War bur g who i s not one

4 of t he def endant s, and because of hi s rel at i onshi ps wi t h

5 t hem f rom pr i or t ransact i ons and pr i or deal i ngs, t hose are

6 t he t wo peopl e he deci des he' s goi ng t o wor k wi t h.

7 So we can' t al l ocat e t he t ransact i on and say Your

8 Honor get s Ar amar k when Ar amar k' s CEO i s l eadi ng t he pr ocess

9 and he' s deci di ng who he i s goi ng t o do a deal wi t h.

10 The ot her thi ng, Your Honor , i s t hey al l ege t hi s11 bi d- r i ggi ng conspi r acy t hat we, you know, we got t oget her ,

12 we agr eed t o submi t sham bi ds to keep t he pr i ces l ow,

13 compl et el y i nconsi st ent wi t h t he document s, cont empor aneous

14 document s, Your Honor , whi ch show t hat we di dn' t know what

15 ot her f i r ms wer e payi ng and we expr essed sur pr i se and

16 di sappoi nt ment and say we coul dn' t even get t o t hat pr i ce.

17 Agai n, t he words of compet i t ors , not conspi rat ors.

18 So, f or exampl e, i f you l ook at t ab 16, you f i nd

19 one of t he l osi ng bi dders sayi ng - - t hi s i s wi t h regard t o

20 t he Mi chael s t r ansact i on. "Whi l e we ar e di sappoi nt ed t o

21 have l ost out , t he deal t eam f el t t hat we ul t i mat el y

22 str et ched as f ar as we coul d. Di sappoi nt i ng but I f eel as

23 i f we put a huge pr i ce on t he t abl e - - wel l above wher e we

24 woul d have ' l i ked' t o buy i t . "

25 Not e t hat t wo of t he f i r ms i n t he consor t i um and



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1 one i n our s dr opped al ong t he way. How does t hat i ndi cat e

2 pr i ce r i ggi ng, Your Honor? I t doesn' t . What i t shows i s

3 peopl e payi ng as much as t hey t hi nk t hey can and peopl e

4 dr oppi ng out , peopl e dr oppi ng out , even f r om t he wi nni ng bi d

5 because t hey t hi nk t he pr i ce got t oo hi gh.

6 Tur n t o t ab 17, Your Honor , and t hi s i s t he

7 r eact i on of anot her def endant . They say, "They pai d a huge

8 f r i cki ng spread t o t he rest of t he f i el d. " How does t hat

9 i ndi cat e t hat t her e was pr i ce f i xi ng and knowl edge of t hat ?

10 Tur n t o t ab 18, Your Honor . " I f eel l i ke t hey' r e11 crazy. " Thi s, agai n, i s when they get i t f romt he Wal l

12 St r eet J our nal . The Wal l St r eet J our nal r epor t i ng, "Went

13 f or a hundr ed bucks to TPG and War bur g. " And t he r eact i on?

14 " I f eel l i ke t hey' r e cr azy. "

15 I f you t ur n, Your Honor , t o t ab 19, what I ' ve t r i ed

16 to show Your Honor , and, f i r st of al l , t hi s f i r st of al l

17 i ndi cat es t o Your Honor , i n r esponse t o your quest i on when

18 you had - - whi ch wer e pr opr i et ar y and whi ch wer e aucti ons,

19 and you wi l l see, Your Honor , t hat what we have done i s i f

20 i t i s bl ue, i t i s a pr opr i et ar y t r ansact i on. I f i t ' s

21 or ange, i t ' s an auct i on.

22 THE COURT: Why are ther e j ust 17 and not 27?

23 MR. TRI NGALI : Because, Your Honor, t he

24 pl ai nt i f f s wi l l agree wi t h t hi s, t hat t here are onl y 17 LBOs

25 f or whi ch t hey' r e seeki ng damages whi ch t hey have st andi ng



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1 so t he ot her s ar e t hi ngs that t hey sai d we al so conspi r ed

2 about but t hey' re not part of t hei r cl ai m f or damages and

3 t hey don' t have standi ng t o chal l enge t hose.

4 But what ' s i nt er est i ng about thi s char t , Your

5 Honor , t hi s i s one of t he char t s I want ed t o show you. Thi s

6 shows t hat t her e i s no pat t er n. Look, f or exampl e, at

7 Apol l o, one of t he def endant s. I t wi ns a propr i et ary

8 t r ansacti on f or AMC whi ch i s a movi e t heat er company i n J ul y

9 of 2004. I t doesn' t wi n agai n unt i l December of 2006 when

10 i t wi ns Har r ah' s, t he gambl i ng company.11 And i f you l ook at al l of t he ot her def endant s, you

12 wi l l see zer o pat t er n. Nobody i s wi nni ng and l osi ng at any

13 concei vabl e r at e. Nobody i s wi nni ng pr opr i et ar y deal s

14 ver sus auct i ons. They' r e i nvol ved i n bot h. And no one i s

15 cont r ol l i ng when t hey wi n, when t hey l ose.

16 I f you l ook at t ab 20, Your Honor , t hat , agai n,

17 shows you whi ch ones ar e pr opr i et ar y and whi ch ones ar e

18 auct i on wi t h a P and an A. I t ' s probabl y a l i t t l e si mpl er

19 than col or codi ng - - sor r y, Your Honor .

20 THE COURT: Okay. Go ahead, I have got i t .

21 MR. TRI NGALI : Okay. And what t ab 20 shows

22 you i s t he var i et y among t he def endant s i n t er ms of t hese 17

23 LBOs, i n t er ms of how many t hey wi n and l ose. Apol l o wi ns

24 t wo. Somebody el se wi ns f i ve, f our , t wo, seven, t wo, f i ve,

25 t hr ee, t wo, ni ne, t hr ee. Wher e i s t he pat t er n? Wher e i s



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1 t her e some equi t abl e di st r i but i on among t hese def endant s to

2 al l ocat e when t hey' r e al l wi nni ng di f f er ent number s of

3 t r ansact i ons?

4 And t he ot her t hi ng I want ed t o poi nt out , Your

5 Honor , i n t er ms of t he nondef endant s and t he i nabi l i t y t o do

6 t hi s t ransact i on, i n ei ght of t he t ransact i ons you have

7 nondef endant s as par t of t he wi nni ng consor t i um.

8 And i f you l ook at tab 21, al l we at tempt ed t o do

9 was gi ve you - -

10 THE COURT: Let me ask you t hi s:11 Wi t h r espect t o t hose nondef endant s - -

12 MR. TRI NGALI : Yes.

13 THE COURT: - - ar e t hey gr ouped or desi gnat ed

14 as part of t he so- cal l ed al l eged co- conspi rat ors or no?

15 MR. TRI NGALI : The pl ai nt i f f s say t hey' r e

16 ot her unnamed co- conspi r at or s. They don' t say who t hey ar e

17 or not . But mor e i mpor t ant l y, Your Honor , t hey have gi ven

18 you no evi dence on t hi s mot i on t hat any of t hese supposed

19 co- conspi rat ors were co- conspi rat ors .

20 So, f or exampl e, at one poi nt t hey sai d t o you i n

21 an ear l i er compl ai nt t hat management of t hese t ar get

22 compani es was f undament al t o t he conspi r acy and t hey wer e

23 co- conspi r at or s. No evi dence wi t h r egar d t o management .

24 They don' t even make t hat cl ai m anymor e. They sai d t he

25 i nvest ment banker s who advi sed t he compani es wer e



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1 co- conspi r at or s. They say ot her pr i vat e equi t y f i r ms wer e

2 co- conspi rat ors . But i t ' s an al l egat i on i n t he compl ai nt .

3 Ther e i s no evi dence on t hi s mot i on as t o any of t hat .

4 I f you t ur n t o t ab 21, Your Honor , what we have

5 at t empt ed t o do, agai n, t o show you t he i mpl ausi bi l i t y of

6 t he conspi r acy i s do somet hi ng ver y si mpl e. The number of

7 t he, t he 17 t r ansact i ons and how many each def endant won of

8 t hose 17, and you wi l l see t he per cent age var i es f r om 12 t o

9 53 per cent and ever yt hi ng i n bet ween.

10 THE COURT: J ust one quest i on.11 MR. TRI NGALI : Yes.

12 THE COURT: You ar e on 21 now; i s t hat r i ght ?

13 MR. TRI NGALI : 21, I ' m sor r y, Your Honor .

14 THE COURT: I j ust want t o l ook cl osel y.

15 Ther e i s onl y 10 def endant s r at her t han 11. I s t her e any

16 reason f or t hat or am I mi scount i ng?

17 MR. TRI NGALI : Oh, J . P. Mor gan, Your Honor , i s

18 not a, di d not - - J . P. Morgan i s onl y i nvol ved as a

19 def endant as a bank, not as a pr i vat e equi t y ar m, so i t di d

20 not acqui re any of t hese t ransact i ons.

21 THE COURT: Okay.

22 MR. TRI NGALI : Your Honor, l et me j ust ,

23 because I ' m r unni ng l at e her e, wi t h r egar d t o t he r ul es and

24 what t he pl ai nt i f f s do i s t hey say, t hey t ry t o, i nst ead of

25 comi ng up wi t h any evi dence of an over ar chi ng conspi r acy,



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1 t hey say we had some r ul es. And, by t he way, t hey say what

2 can be t hought of as r ul es.

3 THE COURT: That i s, I woul d t hi nk t hey ar gue

4 mot i ve, opport uni t y, expert t est i mony but t he t hrust i t

5 woul d appear of thei r case ei ther l i es or i t doesn' t l i e

6 wi t h r espect t o t he so- cal l ed cour t esy or what ever , how do

7 you descr i be i t ?

8 MR. TRI NGALI : Qui d pr o quos.

9 THE COURT: Yes, or "cl ub cour t esy. "

10 MR. TRI NGALI : Yeah. And, Your Honor, t he11 answer i s that i t doesn' t wor k, okay, because t hese r ul es

12 t hat t hey say whi ch i s cl ub et i quet t e or cl ub court esy - -

13 THE COURT: Cl ub et i quet t e, yes.

14 MR. TRI NGALI : Al l t hey' r e descr i bi ng i s

15 behavi or t hat has taken pl ace i n cer t ai n of t he

16 t r ansact i ons. I t doesn' t go t o t he over ar chi ng combi nat i on.

17 What i t - - what you f i nd i n ever y one of t hese 27

18 t ransact i ons and part i cul ar l y t he 17 LBOs t hat are t he

19 subj ect of damages i s compet i t i on and we' ve shown you t hat

20 now i n numer ous exampl es.

21 So when t hey say t her e i s cl ub et i quet t e, i t ' s

22 meani ngl ess. So, f or exampl e, t hey say t o you one of t he

23 t hi ngs i n t he rul es, one of t hi s cl ub et i quet t e i s t hat we

24 do cl ub bi ds, we do j oi nt bi ds.

25 Fi r st of al l , t hey' ve t ol d you, and Your Honor has



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1 r ecogni zed i n your own or der t hat t he shar ehol der s don' t ,

2 t hat t hey don' t cont est the l egal i t y of c l ub deal s. So t hey

3 make a bi g deal about t he f act t hat we do cl ub bi ds, t hat we

4 j oi ned t oget her .

5 THE COURT: Ar e you sayi ng t hat i s par t of t he

6 pr act i ce of t hi s - -

7 MR. TRI NGALI : They' r e sayi ng i t . I ' m not .

8 They' re sayi ng t hat ' s one of t he rul es. That ' s one of t hei r

9 cl ai ms.

10 THE COURT: No, my quest i on t o you i s i s t he11 f act t hat pr i vat e equi t y f i rms as a mat t er of pract i ce have,

12 i n other words, i t i s par t of the t r adi t i on that t hey do

13 j oi n t oget her , t he j oi ni ng t oget her i s normal or

14 t radi t i onal ; i s i t not or i sn' t i t ?

15 MR. TRI NGALI : I t i s, Your Honor . I t ' s nor mal

16 and t r adi t i onal . And, most i mpor t ant l y f or Your Honor ,

17 wel l , t her e' s pr obabl y a f ew t hi ngs that ar e most i mpor t ant

18 on t hi s i ssue. But f i rs t and f oremost , i t has not hi ng t o do

19 wi t h t he over ar chi ng combi nat i on because i f you have t hr ee

20 gr oups, t hr ee bi ddi ng gr oups, whi ch you of t en have, and

21 t hey' r e bi ddi ng agai nst each ot her , how does t hat t r ansl at e

22 t o what t he pl ai nt i f f s' cl ai m i s, whi ch i s an al l ocat i on

23 agr eement t hat we' r e not goi ng t o compet e agai nst each

24 ot her .

25 So t he mer e f act t hat you have t hr ee bi ddi ng gr oups



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1 as opposed t o t hr ee or s i x i ndi vi dual bi dder s i s meani ngl ess

2 i n t er ms of whet her or not t he def endant s have agr eed t o

3 di vi de up t he t r ansact i ons among t hemsel ves. Thr ee bi ddi ng

4 groups are st i l l bi ddi ng agai nst each ot her and t he pr i ce i s

5 st i l l goi ng up. So what does t hat have t o do wi t h t he

6 over ar chi ng combi nat i on? That ' s t he pr obl em t hey have.

7 That ' s No. one.

8 The second pr obl em t hey have i s under that

9 Mat sushi t a t est t hat Your Honor r ecogni zed wi t h r egar d t o

10 summar y j udgment , t hey can' t excl ude t he possi bi l i t y of11 i ndependent acti on because f i r ms do have an i ncent i ve, an

12 i ndependent i ncent i ve t o j oi n t oget her, t o pool t hei r

13 capi tal and di vers i f y thei r r i sk. I t ' s t he same thi ng as

14 Your Honor deci di ng r at her t han put t i ng al l your money i n

15 one st ock, i n one company, you' r e goi ng t o go i nt o a mut ual

16 f und and di ver si f y your r i sk so your savi ngs ar e not goi ng

17 t o be dependent on how one st ock per f or ms but , i n f act, how

18 30, 40 st ocks per f or m.

19 And i t ' s no di f f er ent when t he pr i vat e equi t y

20 f i r ms, because t hey have i nvest or s, t hey have peopl e who ar e

21 l i ke you, a shar e - - you know, someone who owns a mut ual

22 f und and t hose peopl e want r et ur ns. And by di ver si f yi ng

23 t hei r r i sk, by havi ng more t ransact i ons t hat t hey' ve

24 par t i ci pated i n, not at t he f ul l l evel but as par t ners , by

25 t aki ng 20 percent of i t or what ever, t hey are di vers i f yi ng



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1 t hei r r i sk so i f one t r ansact i on goes bad, t hey may have

2 anot her t ransact i on t hat act ual l y goes wel l .

3 But so, anyway, t he whol e t hi ng about cl ub bi ddi ng,

4 Your Honor , No. one, t hey don' t chal l enge i t .

5 No. t wo, i t has not hi ng t o do wi t h t he over ar chi ng

6 combi nat i on because t he cl ubs, t he j oi nt bi ds are st i l l

7 compet i ng agai nst each ot her .

8 And, No. 3, i t f ai l s under t he Mat sushi t a test of

9 i ndependent act i on.

10 The ot her two I want t o j ust j ump, go t o ver y, ver y11 qui ckl y i s t he no j umpi ng and t he qui d pr o quo. On no

12 j umpi ng, Your Honor , t here agai n i t f ai l s.

13 THE COURT: Expl ai n t hat agai n.

14 MR. TRI NGALI : I ' msor ry?

15 THE COURT: No j umpi ng.

16 MR. TRI NGALI : Oh, I ' m sor r y, Your Honor , I

17 shoul d have done t hat . I ' m j ust t r yi ng t o go qui ckl y,

18 t hat ' s t he onl y pr obl em.

19 "No j umpi ng" means t hey' r e sayi ng t hat we don' t t op

20 somebody el se' s bi d. The pr obl em i s we t op each ot her ' s

21 bi ds al l t he t i me. So t he - - and, so what you see i s

22 successi ve round, mul t i pl e rounds of bi ddi ng. Cl ear

23 Channel , Mi chael s, Nei man, Sabr e, Susquehanna, Texas Genco,

24 Toys "R" Us, any of t hose t r ansact i ons you' r e goi ng t o see

25 mul t i pl e r ounds of bi ddi ng.



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1 So t he f act t hat i n an auct i on si t uat i on we' r e not

2 bi ddi ng agai nst each ot her , we ar e not havi ng mul t i pl e

3 r ounds of bi ddi ng and not i ncr easi ng t he pr i ce each t i me,

4 t hat ' s j ust pr epost er ous.

5 And i n t he pr opr i et ar y t ransact i ons I ment i oned t o

6 you, Your Honor , t he pr i ce i s cont i nual l y goi ng up even when

7 t hey' re deal i ng wi t h j ust one bi ddi ng group.

8 The ot her i ssue i s i t f ai l s t he Mat sushi t a test,

9 Your Honor , because t her e i s a r eason why peopl e don' t bi d,

10 why peopl e deci de at some poi nt not t o keep bi ddi ng. I can11 deci de t hat i t ' s wort h i t f or me at $50 but I can al so

12 deci de t hat when i t goes up t o $55 i t ' s too hi gh a pr i ce.

13 And i f you l ook at t he t abs st ar t i ng at t ab 22,

14 what you wi l l see, Your Honor , i s these def endant s al l

15 showi ng t hei r i ndependent r easons why t hey deci ded not t o

16 j ump, not t o pursue a t ransact i on af t er a cert ai n poi nt .

17 I n Ar amar k Apol l o says, " We pr obabl y spend money

18 and t i me and pi ss of f f r i ends and t hey pay a f ew bucks mor e

19 and we get not hi ng. " How, Your Honor , i s t hat i nconsi st ent

20 wi t h t he Mat sushi t a t est excl udi ng t he possi bi l i t y of

21 i ndependent act i on?

22 I n Ar amar k, t hi s i s t ab 23, Bl ackst one says, " But

23 even i f we can of f er somet hi ng a l i t t l e mor e f or Ar amar k,

24 Neubauer , " t hat ' s t he CEO, "and hi s gr oup woul d l i kel y bump

25 t hei r of f er . " Agai n, i t s own i ndependent act i on.



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1 To speed t hi s al ong, Your Honor , i f you t ur n t o t ab

2 26.

3 THE COURT: 26?

4 MR. TRI NGALI : 26, Your Honor . Thi s i s wi t h

5 r egar d t o t he Ki nder Mor gan t r ansact i on. Car l yl e deci des

6 not t o compet e, not t o bi d, obser vi ng t hat wi t h Ki nder , and

7 t hi s i s Ri ch Ki nder who' s t he CEO, wi t h hi m owni ng so much

8 stock, and he' s al i gned wi t h anot her group, i t ' s hard f or

9 anyone el se t o get t hi s done. Al so he i s the guy you want

10 t o back.11 And, f i nal l y, Your Honor , t hi s i s wi t h r egar d t o

12 TXU, thi s i s t ab, the l ast t ab, t ab 27, thi s i s Car l yl e.

13 What di d t hey say i n t he TXU t r ansact i on?

14 " I t hi nk we ar e a day l at e and a dol l ar shor t on

15 thi s deal and t r yi ng t o top i t i s onl y goi ng to resul t i n

16 our spendi ng a l ot of money t o l ose. "

17 Your Honor , t hat i s t he cl assi c exampl e of what

18 Mat sushi t a says def eats any at t empt - - def eat s t he

19 pl ai nt i f f s ' burden her e, because t hi s i s cl ear evi dence of

20 i ndependent r eason why a def endant deci des not t o cont i nue

21 t o compet e f or a t ransact i on. They' re a dol l ar - - a day

22 l at e, a dol l ar shor t . They' r e goi ng t o spend a l ot of money

23 t o l ose. Not hi ng under t he ant i t rust l aws requi res you t o

24 cont i nue t o bi d when you t hi nk you' r e goi ng t o l ose and

25 you' r e goi ng t o waste your money.



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1 And, f i nal l y, Your Honor , t he qui d pr o quos t hat

2 wer e ment i oned, t her e agai n, no evi dence of mar ket

3 al l ocat i on. I n no way do t hey t i e anybody sayi ng I got you

4 i n on t hi s deal so you get me i n on t hat deal t o t hi s

5 27- deal over ar chi ng combi nat i on. That ' s No. one.

6 No. t wo, we poi nt out i n our br i ef i ng, and I ' m not

7 goi ng t o go t hr ough t hem her e, t her e ar e numer ous cases t hat

8 say ref err al s are per f ect l y proper . They don' t vi ol at e t he

9 ant i t r ust l aws.

10 No. t hr ee, agai n, t he Mat sushi t a t est , Your Honor ,11 ref err al s are perf ect l y wi t hi n your i ndependent i nt erests .

12 Why i s i t not i n my i ndependent i nt erest at a l aw f i rm i f I

13 get a ref er r al f roma f i rm i n the Uni ted Ki ngdom, f or

14 exampl e, f or a t ransact i on i n t he Uni t ed St at es, i f I t hen

15 have a t r ansact i on i n t he Uni t ed Ki ngdom, t o go t o t hat l aw

16 f i rm and gi ve thema ref er r al so that they wi l l cont i nue to

17 r ef er busi ness t o me? Absol ut el y compl et e busi ness sense,

18 sat i sf yi ng t he Mat sushi t a t est of i ndependent r eason, not a

19 conspi r at or i al r eason.

20 And I woul d f i nal l y add, Your Honor , j ust f or a

21 second t hat most of t he qui d pr o quos t hey ment i oned t o you

22 don' t even make any sense. So, f or exampl e, t hey say i n

23 Cl ear Channel , Bl ackst one, KKR t o come t o i t s gr oup. What

24 they don' t t el l you i s they l ost so i t ' s a great qui d pro

25 quo t hat I say, Your Honor , j oi n me i n t hi s bi d and we can



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1 l ose t oget her .

2 I n Communi t y Heal t h Car l yl e t hey say went to

3 Gol dman Sachs. What t hey don' t t el l you i s t he Communi t y

4 Heal t h deal never happened.

5 I n Educat i on Management Car l yl e t hey say br i ngs i n

6 Bai n. What they don' t tel l you i s that Bai n l oses. I n

7 Mi chael s stores Bai n t hey say gi ves i t t o Car l yl e but

8 Car l yl e - - l et ' s Car l yl e come i n but what t hey don' t t el l

9 you i s Car l yl e dr ops out because Car l yl e t hought t he pr i ce

10 was t oo hi gh.11 And i n Nei man, Your Honor , supposedl y t hey say

12 Gol dman Sachs of f er ed t hat oppor t uni t y to T. H. Lee but what

13 t hey don' t t el l you i s that T. H. Lee l ost Nei man Mar cus.

14 So t hey gi ve you gr eat exampl es, Your Honor , of

15 peopl e doi ng nor mal busi ness behavi or , of l et t i ng someone

16 come i n t o a deal when t hey ask but t hey al so l eave out al l

17 t he t i mes when peopl e asked t o come i nt o a deal and ar e

18 r ef used.

19 HCA, f or exampl e, Gol dman Sachs, Car l yl e and TPG

20 al l want ed KKR, Bai n and Merr i l l t o l et t hem i n at t he end

21 and t hey sai d no. I n TXU Bai n and Car l yl e want ed t o come

22 i nt o t hat t r ansacti on and KKR and TPG sai d no. So you can

23 poi nt t o exampl es - -

24 THE COURT: Let me ask you t hi s quest i on:

25 You have made a st r ong ar gument but at summar y



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1 j udgment we do have pl ai nt i f f s' exper t s who opi ne t hat t her e

2 i s, I don' t t hi nk they use the term "an overarchi ng

3 conspi r acy" but basi cal l y some t ype of a conspi r acy or some

4 t ype of ant i compet i t i ve conduct . What am I goi ng t o do wi t h

5 t hat ? Does t hat pr esent a - - wel l - -

6 MR. TRI NGALI : What i t does - -

7 THE COURT: - - subst ant i ve cont r over sy?

8 MR. TRI NGALI : No, Your Honor , i t doesn' t f or

9 t hi s reason. What i t doesn' t present t o you i s a mat er i al

10 f act as t o t he exi stence of t he over ar chi ng conspi r acy. And11 that i s the i ssue f or Your Honor .


13 MR. TRI NGALI : I t doesn' t pr esent t o you a

14 mat er i al f act as to t he exi stence of an overarchi ng

15 conspi r acy because what t he pl ai nt i f f s ' exper t s do i s one of

16 t hei r exper t s says not hi ng mor e t han t her e ar e al l t hese

17 t hi ngs that go on i n t he i ndustr y t hat coul d, coul d, and he

18 act ual l y uses the words " i t woul dn' t surpr i se me, " t hat ' s

19 what he says, " i t woul dn' t sur pr i se me" i f t he pr i ces wer e

20 depr essed because t her e ar e t hese f act or s t hat woul d

21 f aci l i t at e col l usi on.

22 He doesn' t say t hat t her e was t hi s over ar chi ng

23 agr eement , whi ch i s what t hey - - what you need on t hi s

24 mot i on.

25 And t he ot her t wo exper ts t hat submi t t ed a j oi nt



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1 r epor t t o Your Honor , what t hey do i s they say t her e ar e al l

2 t hese f act s out t her e t hat make us thi nk t her e i s somet hi ng

3 wr ong her e. But , agai n, t hey, A, don' t deal wi t h any of t he

4 t hi ngs I j ust ment i oned t o you t oday whi ch Your Honor has t o

5 deal wi t h under Mat sushi t a because you have a - - you have - -

6 you can' t j ust have t hem sayi ng t her e ar e t hese f act or s that

7 mi ght i ndi cat e somet hi ng i s wr ong and t hen have us show you

8 al l t he r easons, al l t he i ndependent r easons and say t hat

9 def eat s i t .

10 But t he t hi ngs t hat t hey r ai se wi t h Your Honor ar e11 compl et e r ed her r i ngs. I ' l l j ust gi ve you a f ew exampl es.

12 THE COURT: Assume i t i s. Assume t hat - - i t

13 i s ki nd of a ver y gener al i zed opi ni on, assume t hat , and t hat

14 i t s connect i on wi t h t he f act s i s somewhat t enuous. I t i s

15 t ough t o get r i d of , i f I were t endi ng t hat way, expert

16 t est i mony because i t may wel l i n an or di nar y case pr esent a

17 genui ne di sput e of f act .

18 MR. TRI NGALI : Wel l , but , Your Honor , i t

19 doesn' t - - but t he way you do get r i d of i t here i s i t

20 doesn' t pr esent t o you a genui ne i ssue of mat er i al f act as

21 t o t he exi st ence of an over ar chi ng agr eement t o al l ocat e

22 t hose 27 t r ansact i ons.

23 What t hey do i s say t o you t her e ar e t hese var i ous

24 f actor s that coul d have l et t hi s happen but what t hey don' t

25 do i s, f i r st of al l , deal wi t h al l t he st uf f t hat di d, i n



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1 f act , happen, al l t he compet i t i on, or pr esent any evi dence

2 t o Your Honor t o subst i t ut e f or - - t o rai se t he mat er i al

3 i ssue of f act .

4 So t he f act that you get a pr of essor who ci t es t o

5 you economi c, you know, an ar t i cl e, economi c ar t i cl e does

6 not hi ng t o creat e f or you t he mat er i al i ssue of f act you

7 need under Mat sushi t a t hat says i t wasn' t i n our i ndependent

8 i nt erest , No. one, t he conduct . No. t wo, t hat the

9 conspi racy i s pl ausi bl e. And qui t e f rankl y, t he t hi ngs t hat

10 t hey' ve done si mpl y make no sense.11 THE COURT: Let me ask you t hi s:

12 Assume f or t he sake of thi s quest i on t hat t he

13 exper t t esti mony, assume t hat i t i s not t hat per suasi ve t o

14 me, a j udge. Assume t hat . I s t hat my pr er ogat i ve or i s i t

15 a quest i on and shoul d i t go t o t he j ury f or t he j ury t o

16 eval uat e t hi s so- cal l ed, not so- cal l ed but expert t est i mony?

17 MR. TRI NGALI : Your Honor , i t ' s f or you and

18 t he reason why i t ' s f or you i s because i f you f i nd t hat t hat

19 exper t opi ni on does not pr esent a mat er i al i ssue of f act as

20 t o t he exi st ence of t he over ar chi ng conspi r acy, and I submi t

21 i t does not , nei t her of t hose report s do, and, i n f act , t hey

22 don' t even pr et end t o do because t hose r epor t s qui t e f r ankl y

23 don' t di st i ngui sh whet her t hose supposed, t he supposed

24 behavi or - - t hose report s coul d be i dent i cal i f t hey were

25 t al ki ng about an i ndi vi dual deal , whi ch t he pl ai nt i f f s say



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1 t hey' re not doi ng here, t hey' re not doi ng deal - by- deal

2 al l egat i ons or t he overarchi ng conspi racy. And t hose

3 r epor t s do not , Your Honor , do not pr ovi de t o you any basi s

4 f or f i ndi ng a mater i al f act as to the exi stence of the

5 over ar chi ng combi nat i on. And t hat , Your Honor , i s your r ol e

6 and sol el y your r ol e at t hi s mot i on.

7 I t i s not f or a j ur y t o deci de i f Your Honor

8 doesn' t f i nd t hat t he exper t evi dence has pr ovi ded you wi t h

9 a mat er i al i ssue of f act as t o t he exi st ence of t he

10 over ar chi ng conspi r acy. And t hei r exper t s mer el y sayi ng11 t hat you have mot i ve, you have oppor t uni t y, you have t hese

12 pl us f act ors, you have s i t uat i ons, none of whi ch t hey t i e

13 t oget her t o al l 27 t ransact i ons, none - - t hey can' t

14 subst i t ut e, t he expert opi ni ons can' t subst i t ut e f or t he

15 l ack of proof of t he overarchi ng conspi racy. That at t he

16 end of t he day i s the i ssue f or Your Honor , i s do you have

17 evi dence of an over ar chi ng conspi r acy as al l eged by t he

18 pl ai nt i f f s to al l ocate the 27 t r ansact i ons? And thei r

19 exper t sayi ng we t hi nk t he pr i ces shoul d have been hi gher ,

20 t hat doesn' t do anyt hi ng f or Your Honor because t her e ar e

21 one hundr ed r easons why and t hat ' s, agai n, br i ngs you back

22 t o t he Mat sushi t a t est whi ch i s i f t her e ar e a hundr ed

23 r easons why and some of t hose r easons ar e compl et el y

24 consi st ent wi t h i ndependent act i on and not wi t h conspi r acy,

25 t hen t hey don' t sat i sf y, t hose expert opi ni ons don' t sat i sf y



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1 t he Mat sushi t a t est f or you.

2 And t hey wi l l t al k, f or exampl e, about how some of

3 t hese t r ansact i ons, t he hi ghest, t he per son who had t he

4 hi ghest val uat i on di dn' t wi n. What t hey f orget t o t el l you

5 i s t hey use, f or exampl e, i n Fr eescal e t hey use t he exampl e

6 t hat KKR had t he hi ghest val uat i on. Wel l , what t hey don' t

7 t el l you i s t hat was when KKR di dn' t do any di l i gence. And

8 when KKR di d i t s di l i gence, i t ' s uncont radi ct ed t hat KKR

9 sai d i t coul dn' t get t o t hat amount anymore.

10 The ot her t hi ng i s t hat they act ual l y show you t hat11 i n vi r t ual l y t he maj or i t y of t he ci rcumstances the person

12 who had t he hi ghest val uat i on act ual l y was i n t he wi nni ng

13 gr oup and t hei r onl y compl ai nt i s t hat t hat per son al so had

14 some of t he - - peopl e had l ower val uat i ons. What does t hat

15 show, Your Honor ? I t shows t hat peopl e who ar en' t wi l l i ng

16 t o pay as much ul t i mat el y wer e f or ced t o pay mor e money

17 because a wi nni ng bi dder pai d t hat much money and pai d what

18 i t s eval uat i on showed.

19 So how does t hat cr eat e a mat er i al i ssue of f act

20 f or you? I t doesn' t , Your Honor. And t hen j ust t hrowi ng

21 out economi c l i t er at ur e and economi st s to say t her e coul d be

22 somet hi ng her e, t hat coul dn' t be. That ' s not what t hey get

23 on summary j udgment . On summary j udgment Your Honor has t o

24 f i nd t hat t here i s a mat er i al i ssue of f act , t hat t here was

25 an over ar chi ng conspi r acy. And I submi t t o Your Honor



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1 ever yt hi ng I have j ust gone t hr ough wi t h you says ther e

2 i sn' t and says that t hey f ai l under t he Supr eme Cour t t est

3 t hat you have t o deci de t hi s mot i on under .

4 And now, Your Honor , I want t o def er obvi ousl y t o

5 Mr . Pr i mi s so he can r espond t o t he t wo quest i ons you posed.

6 THE COURT: We wi l l t ake a br eak af t er . How

7 l ong do you expect t o go?

8 MR. PRI MI S: I was pl anni ng to go about 15

9 mi nut es, Your Honor , unl ess ther e ar e some quest i ons t hat

10 ext end i t .11 THE COURT: Okay.

12 MR. PRI MI S: J udge, i f I may, can I al so hand

13 out a f ew demonst r at i ves that wi l l assi st t he ar gument ?

14 THE COURT: Sur e.

15 MR. PRI MI S: J udge, my name i s Cr ai g Pr i mi s

16 and wi t h t he consent of al l t he def endant s I am her e t o

17 answer t he Cour t ' s two quest i ons i n t he or der of October 15,

18 2012 whi ch Your Honor has al r eady pr evi ewed wi t h

19 Mr . Tr i ngal i . I ' d l i ke to proceed wi th real l y three poi nts .

20 The f i r st i s I want t o car ef ul l y def i ne t he

21 conspi racy that the pl ai nt i f f s have al l eged.

22 Second, I want to wal k t he Cour t t hr ough t he

23 consi stent str at egi c deci s i on t hroughout t hi s case t o pl ead

24 i t i n a very speci f i c way, t hat bei ng an overarchi ng

25 conspi r acy.



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1 And t hen t he t hi r d t hi ng I ' d l i ke t o do i s t ur n t o

2 t he l aw because t he Cour t asked what ar e t he l egal

3 consequences of a f i ndi ng of some ot her conspi r acy t han t he

4 one t hat ' s been al l eged. And I have pr ovi ded t he Cour t wi t h

5 a spi r al bound book of 11 cases. And I don' t i nt end t o go

6 t hr ough al l of t hose cases wi t h Your Honor but I want ed t he

7 Cour t and t he chamber s t o have t hose because t her e hasn' t

8 been br i ef i ng on t hese i ssues. And what we f ound i s t hat

9 t her e i s a ver y consi stent and str ong body of case l aw i n

10 t he Fi rs t Ci rcui t and t hi s di st r i ct whi ch woul d counsel i n11 f avor of summar y j udgment on Count 1 and t he br i ngi ng of

12 Count 1 t o a cl ose.

13 Wi t h t hat i nt roduct i on, J udge, I want to r espond t o

14 t he quest i on you asked Mr . Tr i ngal i . You posed t wo

15 di f f er ent hypot het i cal conspi r aci es. One wher e you t ake

16 away seven deal s and f i ve def endant s and t hen a di f f er ent

17 one wher e you maybe j ust have HCA and Freescal e and Phi l i ps.

18 But nei t her of t hose scenar i os real l y changes t he concl usi on

19 t hat t he def endant s ar e ent i t l ed t o summar y j udgment on

20 Count 1 and Count 1 shoul d be di smi ssed at t hi s stage

21 because of t he way t he pl ai nt i f f s have ver y cl ear l y and

22 consi st ent l y pl ed Count 1 i n t hei r compl ai nt .

23 The pl ace I want t o st ar t , and i t ' s not i n t he

24 handout t her e, but t he pl ace I want t o star t i s i n par agr aph

25 t wo i n t he i nt r oduct i on of t he f i f t h amended compl ai nt .



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1 What t he pl ai nt i f f s al l ege t her e - -

2 THE COURT: Paragr aph t wo?

3 MR. PRI MI S: Par agr aph two of t he compl ai nt .

4 I t ' s not i n t he handout I j ust gave you. I ' l l r ead i t , i t ' s

5 ver y shor t . I ' l l r ead i t t o Your Honor .


7 MR. PRI MI S: And obvi ousl y paragr aph t wo of

8 t he i nt roduct i on i s the pl ace where a pl ai nt i f f woul d want

9 t o make cl ear what t hei r case i s about . Ther e t hey sai d,

10 and I ' m quot i ng, "Def endant s' conspi r acy i nvol ves 19 LBOs of11 l ar ge publ i cl y- hel d compani es and ei ght r el at ed

12 t r ansact i ons, f or a t ot al of 27. "

13 They t hen l i st al l 27 of t he deal s and t hen t hey

14 say, "These LBOs and t r ansacti ons wer e not separ at e,

15 i sol at ed event s. Rat her , t hey wer e i nt er connect ed deal s

16 t hat def endant s car ef ul l y pl anned, coor di nat ed and t r acked

17 as par t of thei r ongoi ng conspi racy. "

18 That i s t he over ar chi ng conspi r acy t hat has been

19 pl ed. And as i t ' s been pl ed i n t he f i f t h amended compl ai nt ,

20 al l of t hese deal s ar e i nt er connect ed. They' r e not separ at e

21 i sol at ed event s.

22 And so t o t ake t hr ee or f our t r ansact i ons or t o

23 t ake si x def endant s wi t h some subset of t r ansact i ons, t he

24 i nt er connect ed nat ur e of t hi s gl obal over ar chi ng conspi r acy

25 t hat ' s been al l eged goes away.



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1 THE COURT: Let ' s t ake HCA.

2 MR. PRI MI S: Yes, Your Honor .

3 THE COURT: I n Count 1. Agai n, assume f or t he

4 sake of t hi s questi on, not i ndi cat i ng anyt hi ng, assume t hat

5 t her e i s some evi dence of conspi r acy wi t h r espect t o HCA,

6 assume t hat . Shoul d I - - and t hat i s al l t here i s. Shoul d

7 I gr ant a mot i on f or summar y j udgment i n t he ent i r et y or

8 gr ant i t but excl ude HCA?

9 MR. PRI MI S: Wel l , Your Honor , actual l y t hat ' s

10 t he easi est scenar i o because we have Count 2 - -11 THE COURT: Wel l , I know t hat but t hi s i s j ust

12 i l l ust r at i ve.

13 MR. PRI MI S: Okay. Yes, t ake any - -

14 THE COURT: Assume that t her e i s some evi dence

15 on HCA but on not hi ng el se. And, agai n, t hat i s j ust f or

16 t he sake of t hi s quest i on so I can under st and t he pur por t of

17 your ar gument . Do I gr ant def endant s' mot i on i n i t s

18 ent i r et y because, not wi t hst andi ng HCA, t hat does not

19 const i t ut e an overarchi ng conspi racy or do I grant i t wi t h

20 respect t o al l t he def endant s and al l t he t ransact i ons

21 except f or t hat one?

22 MR. PRI MI S: Wel l , Your Honor , or a t hi r d

23 opt i on whi ch i s gi ven t hat t hey have made t he consi st ent

24 str at egi c deci si on t o pl ead a gl obal over ar chi ng conspi r acy

25 whi ch i ncor por at es al l 27 of t hese t r ansact i ons whi ch as



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1 t hey' ve al l eged wer e not separ at e and i sol at ed, wer e par t of

2 an i ntegrated whol e, t hat cl ai mby def i ni t i on i s over .

3 There i s no mat er i al f act ual di sput e t hat t here i s no

4 27- deal overarchi ng conspi racy.

5 So Count 1 we shoul d get summar y j udgment on under

6 t he hypot het i cal posed by Your Honor . That l eaves a

7 separ at e quest i on of what - - whet her some case can go

8 f or ward t hat has thi s HCA f ocused t ransact i on but f or , f rom

9 t he def endant s - -

10 THE COURT: But not i n Count 1.11 MR. PRI MI S: But t hat ' s not Count 1. Count 1,

12 and we can now - - and, besi des, I shoul d j ust make t he poi nt

13 t hat i n t he hypot het i cal t hat Your Honor posi t ed, pi ck any

14 t r ansact i on, i t coul d be HCA, pi ck some ot her t r ansact i on

15 wher e you t hi nk t her e may be a f actual di sput e j ust about

16 t hat deal . Obvi ousl y at t hat poi nt t he many def endant s who

17 had not hi ng t o do wi t h t hat t r ansact i on, t hey shoul d cl ear l y

18 be out of

Documents

Dahl v Bain Capital, Hearing Transcript Dec. 18, 2012