Case 8:18-cv-01644-VAP-KES Document 27 Filed 11/30/18 Page 1 of 28 Page ID #:589

Case 8:18-cv-01644-VAP-KES Document 27 Filed 11/30/18 Page 1 of 28 Page ID #:589
UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION - SANTA ANA
) CASE NO: 8:18-CV-01644-VAP-KESx

IN RE: )
) CIVIL
)
EAGAN AVENATTI, LLP. ) Santa Ana, California
)
) Wednesday, November 28, 2018
) (10:01 a.m. to 10:41 a.m.)
HEARING RE: MOTION FOR PROTECTIVE ORDER
BEFORE THE HONORABLE KAREN E. SCOTT,

UNITED STATES MAGISTRATE JUDGE
APPEARANCES:
For Plaintiff: SCOTT H. SIMS, ESQ.

Frank Sims & Stolper
19800 MacArthur Blvd., Suite 855
Irvine, CA 92612
For Defendant: MICHAEL AVENATTI, ESQ. (via phone)
Court Reporter: Recorded; CourtSmart
Courtroom Deputy: Jazmin Dorado
Transcribed by: Exceptional Reporting Services, Inc.

P.O. Box 18668
Corpus Christi, TX 78480-8668
361 949-2988
Proceedings recorded by electronic sound recording;

transcript produced by transcription service.
EXCEPTIONAL REPORTING SERVICES, INC
2
1 Santa Ana, California; Wednesday, November 28, 2018; 10:01 a.m.
2 (Call to order)
3 THE CLERK: Please remain seated and come to order.
4 This United States District Court is now in session, the
5 Honorable Karen E. Scott, Magistrate Judge, presiding.
6 THE COURT: Good morning.
7 MR. SIMS: Good morning, your Honor, Scott Sims for
8 Jason Frank Law.
9 MR. AVENATTI: Good morning, your Honor, Michael
10 Avenatti by telephone. I appreciate the Court's indulgence in
11 allowing me to appear by phone.
12 THE COURT: Well I have seen the weather reports for
13 the east coast so I understand how that could happen.
14 MR. AVENATTI: Thank you, your Honor.
15 THE CLERK: Your Honor, for the record, this is Case
16 Number SA-CV-18-1644-VAP-KESx, In Re Eagan Avenatti, LLC.
17 THE COURT: All right, we are here on the motion of
18 the judgment debtor for a protective order asking to quash a
19 subpoena that was issued by the judgment creditor seeking
20 documents to aid in the collection of the underlying judgment.
21 I did receive and review the status report that was filed by
22 Jason Frank Law, and I see in there that despite our
23 discussions at the last hearing, the parties have not been able
24 to connect and have a meaningful discussion about the
25 production of documents and that in fact no documents have yet

3
1 been produced. Mr. Avenatti, can you tell me what happened
2 there?
3 MR. AVENATTI: Yes, your Honor, thank you. Your
4 Honor, we had a meet-and-confer scheduled for November 14th in
5 the afternoon. Unfortunately, about two hours before that
6 meet-and-confer, I was taken into custody, which Mr. Frank and
7 Mr. Sims well know and -- but did not alert the Court to in the
8 status report. I did not blow off the meet-and-confer.
9 Unfortunately, I was taken into custody on a suspicion of
10 domestic violence charge. No charges were ultimately filed.
11 In fact, the district attorney announced last week that no
12 charges would be filed. So that is why I was not able to meet
13 and confer as was scheduled on that Wednesday, I believe it was
14 the 14th of November.
15 Since then, of course, Mr. Frank has obtained a
16 variety of banking information from Eagan Avenatti's primary
17 bank relating to various transactions. He points to these
18 transactions in his status report but of course negates the
19 timing of these transactions, many of which predate his
20 judgment by many, many years and therefore don't have a lot of
21 relevance. But he's received a lot of information from that
22 subpoena directed at California Bank and Trust since we last
23 met, your Honor.
24 THE COURT: Have you had an opportunity to review the
25 status report that was filed and the suggestions that were
4
1 contained therein for limiting some of the categories of
2 documents requested by the subpoena?
3 MR. AVENATTI: Your Honor, not in great detail, but I
4 reviewed a number of them. And I think actually we could reach
5 agreement on a number of categories of documents set forth -- I
6 mean, this is a very broad subpoena as your Honor I think
7 remarked at the last conference that we had. And I think that
8 we could narrow down significantly the areas in dispute,
9 especially in light of what your Honor previously stated at the
10 last hearing.
11 THE COURT: If you were going to produce documents in
12 response to this subpoena, how long would it take you to
13 assemble those documents?
14 MR. AVENATTI: I think that we could have those
15 documents produced, your Honor, within the next probably 12
16 court days, so a little more than two weeks, probably by two
17 weeks from this Friday, at the latest.
18 THE COURT: All right, so let me ask the judgment
19 creditor who's here, what is your position on what would be the
20 best way to proceed at this point?
21 MR. SIMS: Your Honor, our position is that a motion
22 was filed. We've made numerous efforts to meet and confer.
23 The Court expressed tentative views last time. I don't want to
24 be stuck in another situation trying to go back and meet and
25 confer again. We've done our best. We reached out to him at

5
1 the time that was set; took multiple efforts to even get that
2 set. I sent him an email after I couldn't get in touch with
3 him. I appreciate that he was in custody, but no effort was
4 made by him thereafter to reach out. So we would like an order
5 today on the documents that need to be produced. If he has
6 problems with some of the requests, he should have raised those
7 problems before. If the Court wants to hear his objections on
8 some of the requests today, it can certainly do so. But we'd
9 like an order today on what needs to be produced.
10 With respect to timing, two weeks from Friday is
11 acceptable for production of whatever documents the Court
12 orders. We'd also like an order that Mr. Avenatti be compelled
13 to reappear for the deposition, the ORAP, by December 20 of
14 this year, as was noted in the status report.
15 THE COURT: With regard to the production of
16 documents, is there any order that was already put in place by
17 the Bankruptcy Court that would allow the judgment debtor to
18 label things "confidential" and there be restrictions about how
19 those documents would be used, they couldn't be posted on the
20 internet and so forth?
21 MR. SIMS: There's been nothing along those lines but
22 we're certainly amenable to a reasonable confidentiality order.
23 MR. AVENATTI: And, your Honor, in that regard, we --
24 there's a standard protective order that is entered I believe
25 by many judges within the Central District and we would ask

6
1 that that protective order or something similar be submitted to
2 the Court to make it clear that this information is not to be
3 disseminated. In fact, we believe that some of the banking
4 information that was already obtained by Mr. Frank has been
5 disseminated to others. That's highly confidential information
6 and, in our view, that would not be proper.
7 THE COURT: Well, the Court agrees that based on the
8 fact that this discovery is going to involve bank account
9 numbers and probably financial information, Social Security
10 numbers possibly, that that kind of a standard order would be
11 appropriate. The Court does have on its schedules and
12 procedures website a form that is typically modified by
13 litigants and submitted to the Court as a proposed order. And
14 so I would I guess charge the parties, if judgment creditor
15 wants to take a first stab at modifying that form to customize
16 it for this particular case and then submitting it. I believe
17 that that form permits two different levels of protection and
18 that there's a confidentiality designation and an attorney's
19 eyes only designation. The attorney's eyes only designation is
20 typically when there's a technology, a very secret technology
21 in place and the two parties may be competitors in the
22 marketplace. It doesn't seem to me that this kind of financial
23 documents would necessarily ever merit a attorney's eyes only
24 provision, and so the Court's suggestion would be that you can
25 modify it in a way that allows for a confidentiality

7
1 designation.
2 MR. SIMS: We'd be happy to do that, your Honor. My
3 only request is that I don't want the confidentiality order to
4 delay the production, so if we could set a timeframe by which
5 the parties should try to accomplish that, and to the extent
6 for some reason we can't -- and on this one, I think we
7 probably actually can agree for a change, but you never know,
8 so I would like to be able to submit, you know, dueling briefs
9 or something to the Court by a date certain in advance of the
10 production so that we can get an order from the Court in time
11 in the event that there is a dispute.
12 THE COURT: Well, how long will it take you to modify
13 the existing form and send a draft to Mr. Avenatti?
14 MR. SIMS: We should be able to do that by the close
15 of business tomorrow.
16 THE COURT: Okay. And then, Mr. Avenatti, once you
17 receive that, can you either say yes or no within two business
18 days?
19 MR. AVENATTI: Absolutely, your Honor.
20 THE COURT: Okay. And so once you get a response, if
21 it's "yes," then you can submit it as a stipulated protective
22 order. If it's "no," then you can submit it as a proposed
23 order and summarize whatever the objections might be, and the
24 Court will rule on it from there.
25 MR. SIMS: Thank you, your Honor. And I just didn't

8
1 want it to go unresponded to. We haven't disseminated these
2 bank statements. In fact, the Court will note in the status
3 report, we went out of our way not to attach the bank
4 statements. So I don't -- just didn't want that to go on the
5 record without any response.
6 THE COURT: I understand. All right, with --
7 MR. AVENATTI: Your Honor, if I could just be heard
8 briefly on this issue of the production of the documents?
9 THE COURT: Okay.
10 MR. AVENATTI: As you might imagine, your Honor, in
11 light of the events of November 14th, you know, that has
12 obviously delayed a number of things that I have otherwise been
13 involved in and that I have been very focused on issues
14 surrounding my detention, especially up through last Wednesday
15 when the District Attorney made their announcement relating to
16 that. That was immediately followed of course by Thanksgiving.
17 So I do think frankly that a lot could be accomplished if the
18 parties did meet and confer within the next 48 hours relating
19 to the production of these documents and we could narrow the
20 issues significantly for the Court with the understanding that
21 we can even come back and have a telephonic conference on
22 Monday of next week as it related to any remaining issues. I'm
23 sure there'll be remaining issues. But I think that the field
24 of play, if you will, your Honor, would be severely narrowed.
25 Ultimately there's no prejudice to Mr. Frank relating to this

9
1 schedule because according to what we just heard, they want me
2 to return on December 20th. So there's no delay with that
3 potential date by way of this production schedule that I've
4 just laid out.
5 THE COURT: Would you be available for a continued
6 judgment debtor exam on December 20th?
7 MR. AVENATTI: Let me check my schedule, your Honor.
8 The Court's indulgence just one moment.
9 THE COURT: That's fine.
10 MR. AVENATTI: I am not available on the 20th, your
11 Honor, but I'm available on the 21st.
12 MR. SIMS: The 21st does not work for us, your Honor;
13 the 19th would.
14 THE COURT: What about the 19th, Mr. Avenatti?
15 MR. AVENATTI: Yeah, unfortunately I am not available
16 on the 19th. I would even be willing to do it on the 24th,
17 your Honor. I can do it on the 21st, the 24th, the 26th, the
18 27th, or the 28th.
19 MR. SIMS: Between the 21st and the end of the year
20 is not going to work for us.
21 THE COURT: Okay.
22 MR. SIMS: So it's -- we would request the 20th or
23 earlier. Any date before that we'd be happy to take.
24 Obviously we want the documents in advance would be the only
25 issue there.
10
1 THE COURT: Right, right.
2 MR. AVENATTI: I mean, your Honor, I'm available the
3 -- again, I'm available the 21st, the 24th, the 26th, the 27th,
4 the 28th, the 2nd, 3rd, or the 4th of January. I'm just not
5 available earlier that week, your Honor, between the 17th and
6 the 20th unfortunately.
7 THE COURT: All right, --
8 MR. SIMS: One moment, your Honor.
9 THE COURT: That's fine.
10 (Mr. Sims/Mr. Speaker confer)
11 MR. SIMS: Your Honor, we can just try to do it in
12 the first week of the new year. I didn't catch all the dates
13 that he said but --
14 THE COURT: I believe it was the 2nd, the 3rd, or the
15 4th.
16 MR. SIMS: The 4th would be the best, your Honor,
17 thank you.
18 THE COURT: Okay, so we can set that up then for
19 January 4th, and that'll be here in this court. Do you have a
20 preference as to the starting time at 9:00 or at 10:00? I
21 don't know if traffic if it matters.
22 MR. SIMS: Ten a.m. if that works for Mr. Avenatti.
23 THE COURT: Will 10:00 a.m. work for you, sir?
24 MR. AVENATTI: Yes, your Honor, thank you.
25 THE COURT: Okay.

11
1 MR. SIMS: And, your Honor, I would like to be heard
2 on the document issue.
3 THE COURT: Yes, we haven't resolved that yet. I
4 understand the proposal from Mr. Avenatti is to have the Court
5 delay entering an order, give the parties an opportunity to
6 meet and confer and to have another -- essentially revisit this
7 hearing telephonically on next Monday and see what has been
8 resolved or not. On the other hand, if the Court does enter an
9 order with a deadline that's out to the point where the parties
10 have agreed in any event, it may not -- it may be half a dozen
11 of one and six of the other. So I'll let you address that,
12 though.
13 MR. SIMS: Yes, your Honor. My issue is this: this
14 motion was filed on July 9th; we've made numerous efforts to
15 meet and confer, not just since the last hearing in which we
16 sent Mr. Avenatti an email as soon as your Honor issued the
17 order that we needed to meet and confer. He didn't respond.
18 He chose to wait until the last minute. That was his decision
19 to wait until the last minute. The fact that some other
20 circumstances intervened, he still could have reached out to us
21 since those circumstances intervened and we could have met and
22 conferred before today. But even beyond that, after July 9th,
23 he didn't meet -- he didn't make any effort to meet and confer
24 before we were here with your Honor. So enough with the meet
25 and confer. We're here. He has the status report. It sets

12
1 forth the documents. What I would ask is that let's go through
2 them. We went through them last time, let's go through them.
3 And we'd like an order today. I have other clients, I have
4 other matters. If you need to do it next Monday, of course
5 I'll be here, I'm available. But we're here so I don't see the
6 need to waste the parties' time or the Court's time coming back
7 next Monday when there's been plenty of time to meet and confer
8 and it's just never happened.
9 MR. AVENATTI: And, your Honor, I don't want to
10 belabor this point, but the firm's prior bankruptcy counsel did
11 meet and confer extensively on some of these categories and it
12 actually resulted in some of them, not all of them but some of
13 them, being there. That's number one. Number two, you'll
14 recall that there was a whole jurisdictional issue that was
15 teed up for the Bankruptcy Court previously back in I believe
16 it was in July and August and September so, you know, we can't
17 lose track of that. I mean, there was a significant
18 jurisdictional question well before this Court even got this
19 matter. So that accounts for some of the delay. Again,
20 Mr. Frank served a number of third party subpoenas. He's
21 obtained extensive bank records relating to the firm going back
22 many, many years which have little relevance to his ability to
23 collect this judgment against the firm at this point. You
24 know, I don't think a two-day delay to see if we can narrow the
25 playing field is unreasonable under the circumstances.

13
1 THE COURT: If the Court were to issue a ruling that
2 would affect the categories of documents that have been
3 requested, are there any that you're prepared to comment on
4 here that you would have something to add beyond what was in
5 the original protective order or anything in response to the
6 status report that was filed that does narrow some of those
7 requests?
8 MR. AVENATTI: Yes, your Honor, we would. I don't
9 know if that's something that -- if the Court would allow, what
10 I would prefer to do is to go through the -- to submit
11 something brief in writing in response to the status report by
12 category so that you would have Mr. Frank's position and our
13 position side-by-side before the Court issued a final ruling.
14 And we could submit that by the close of business on Friday.
15 MR. SIMS: Your Honor, if I may?
16 THE COURT: Uh-huh.
17 MR. SIMS: Here's the problem. There was a
18 compliance date. He filed the motion for protective order.
19 The time to raise new objections has passed. We've made
20 extensive efforts to narrow the subpoena, notwithstanding the
21 fact that we didn't have an obligation to do so. We took under
22 consideration all of your Court's comments. We went through
23 basically every category last time. Mr. Avenatti had an
24 opportunity to comment to the extent he wanted to. So this is
25 just more delay, it's just delay, delay, delay. There's

14
1 nothing else to do. He raised his objections in his motion and
2 we think the Court should go ahead and rule, especially in
3 light of the fact that we believe we've been extremely
4 reasonable. In fact, we've narrowed the request again since
5 last time even. So there's -- we've been negotiating against
6 ourselves essentially and we've done so in a reasonable manner.
7 And we just think it's time to rule, we don't think that
8 there's any need to waste the parties' or the Court's time any
9 further. We think the time is now. Or if the Court wants to
10 take it under consideration and issue an order, of course we'd
11 be comfortable with that as well.
12 MR. AVENATTI: Your Honor, this subpoena is
13 incredibly broad. It's far expansive. You're talking about
14 collecting a $4.85 million judgment against a law firm.
15 They're seeking records going back five, six years of no
16 relevance to the ability to collect that judgment. There's
17 multiple entities now that they want documents from. I mean,
18 mainly these categories are overly broad by any stretch of the
19 imagination, okay? There are some categories that we don't
20 have an issue with producing the documents. And, again, 48
21 hours or 72 hours or 96 hours isn't going to make a difference
22 when we're talking about they need the documents in order to
23 prepare for this examination which has now been set on January
24 4. I mean, two, three, four days is not going to make a
25 difference in the grand scheme of things as it relates to it

15
1 because it's not going to change the production date.
2 MR. SIMS: So, your Honor, if I may, the problem is
3 it's not just the two days. It's the additional time. I mean,
4 am I going to get paid my time in terms of sanctions for that
5 time? I mean, he's had his chance. He could have filed
6 something in advance of today. He could have filed something
7 since the status report. He chose not to do it, so we think
8 the time is now.
9 THE COURT: All right, Mr. Avenatti, it's your motion
10 so I'll give you the last word.
11 MR. AVENATTI: Well, again, your Honor, I think that
12 the most efficient way to do this is for -- if the Court would
13 like our specific -- first of all, I believe it would be better
14 served -- everybody would be better served by a meet-and-confer
15 within the next 48 hours to narrow the playing field, that's
16 number one. Number two, if the Court's not inclined to do
17 that, then I believe what should happen is we should submit
18 something, the Court can take it under submission, we can --
19 first of all, we already raised the objections, by the way. We
20 did raise the objections by way of the motion. So from a
21 procedural standpoint, that's effective, so that's number one.
22 Number two, now that we've had the benefit of the status report
23 and the further narrowing, I think we ought to be permitted an
24 opportunity to submit something in writing in response to that
25 status report for the Court's consideration before the Court

16
1 issues a final ruling. Again, two or three days isn't going to
2 make a difference because it's not going to change the
3 production date.
4 THE COURT: All right, I appreciate the arguments
5 that I have heard from counsel. And the Court's inclination is
6 to do as follows. We talked about the fact that the judgment
7 creditor was going to take a first stab at modifying the form
8 protective order and get that over to judgment debtor and try
9 and see if there's a basis that a stipulation can be reached
10 and ultimately either submit that as a stipulated protective
11 order or as a request for a protective order with a summary of
12 whatever the objections are. Once that has been entered, and
13 the Court recognizes that that will take a couple of days, it
14 seems like a deadline for production consistent with that would
15 be I'll say -- well, I guess it would be ten court days, so two
16 weeks after the entry of that protective order that there would
17 -- that that would be the time that the judgment debtor would
18 produce documents.
19 With regard to the specific objections to the
20 specific categories, the Court does have in its notes all 37
21 categories and the proposals for narrowing that were submitted
22 in the status report, and also has gone back and pulled out of
23 the briefing that was in the original motion for protective
24 order what the objections were as to the particular categories,
25 and so the Court does feel like it has sufficient information

17
1 in front of it to understand what the objections were and to
2 issue an order addressing those objections.
3 With regard to the objection that the document
4 requests are overbroad because they go back to 2013, the Court
5 finds that the judgment creditor has explained sufficiently the
6 relevance of those documents in attempting to follow the money
7 and the financial transactions given the circumstances of this
8 case and given the legal standard here that a judgment debtor
9 examination does permit a wide scope of inquiry consistent with
10 the purpose of allowing the judgment creditor to enforce the
11 judgment.
12 With regard to the objection that the document
13 requests are burdensome, that seemed largely to be linked to
14 the scope and relevancy objection. There weren't any other
15 arguments that were raised regarding things like, you know,
16 having to go and look at computer backup tapes or the sort of
17 things that the Court normally sees as a burden argument.
18 These particular documents are largely financial records or
19 they're very specific kinds of records like agreements or tax
20 returns or things that would be able to be found by someone
21 without having to, for example, you know, draft complicated
22 searches and apply them to a large email database. And so the
23 Court is not persuaded by the unduly burdensome argument.
24 The Court similarly is not persuaded by the argument
25 that the California consumer notice statute would apply here.

18
1 The briefing that was provided on that does demonstrate that
2 that statute applies to subpoenas that are issued pursuant to
3 the California law, and that wasn't the case here and so those
4 are simply not applicable.
5 With regard to the objections that forcing the
6 judgment debtor to reveal the identity of clients could
7 compromise the clients' ability to serve as whistleblowers,
8 particularly when they haven't yet filed their lawsuit, it does
9 seem that those privacy concerns are adequately addressed by
10 the limitations that were set forth in the status report that
11 provided that those names could be redacted and substituted
12 with a John Doe or some other name that would protect the
13 anonymity of those particular kinds of clients.
14 There were objections raised based on the financial
15 privacy of employees, but I did note that there was a agreement
16 by judgment creditor to withdraw its request for payroll
17 records and that other types of financial interests that might
18 be implicated here are of the kind that are routinely protected
19 in court by the entry of a protective order that allows
20 production under a confidentiality designation. And as we've
21 discussed, that will be in place here before the documents are
22 produced.
23 With regard to the IOLTA accounts, there was an
24 argument that discovery on those accounts is irrelevant because
25 the money is not the property of the judgment debtor. But

19
1 again here I believe that the judgment creditor has given us
2 information that the IOLTA accounts may be being used to
3 facility financial transactions that do involve assets of the
4 judgment debtor, and so understanding the other financial
5 records that may be produced, that this may provide a missing
6 piece of the picture. And even if there's not -- you know this
7 is not necessarily an allegation of any wrongdoing as to the
8 use of the IOLTA account, but just in order to understand and
9 be able to follow the trails of funds as they are being
10 transferred between certain accounts without kind of being like
11 a bloodhound coming up at the end of the stream and losing the
12 trail, that that's a sufficient relevancy to be able to
13 investigate and conduct discovery into those particular
14 accounts.
15 With regard to the other privileges that have been
16 asserted, the Court is persuaded by the briefing that was in
17 the opposition to the motion for protective order that
18 established that the Federal privilege law would apply here.
19 This is ultimately a proceeding to enforce the judgment that
20 was entered in Federal Court in a bankruptcy proceeding that
21 was in Federal Court because of the exclusive jurisdiction of
22 the Bankruptcy Court over bankruptcy matters. And so the Court
23 would apply Federal privilege law in deciding whether certain
24 matters were privileged and therefore excluded from the scope
25 of what was discoverable. Under Federal privilege law, there's

20
1 not an absolute privilege for fee agreements or retainer
2 agreements or tax returns but rather there's a balancing that
3 the Court engages in in order to serve some of the public
4 interests that are served by affording those kinds of documents
5 some protection and yet still serving the public interests that
6 are at stake here in this judgment collection proceeding. When
7 the Court considers the nature of the relationship of the
8 parties, the nature of this particular dispute, and the fact
9 that documents can be produced here on a confidential basis, it
10 seems that that's a sufficient tipping of the scales in favor
11 of production, again with the understanding that those
12 documents can be labeled as confidential in the discovery
13 process.
14 So with that, it appears to the Court that the
15 appropriate production would be to respond to each of the
16 categories in the subpoena consistent with the limitations that
17 are stated in the judgment creditor's status report filed on
18 11/26, and that if there are any documents that are going to be
19 either redacted or withheld on the basis of a privilege, then
20 the judgment debtor would need to provide a privilege log
21 describing what was redacted or withheld and the particular
22 privilege that was asserted as the basis for that; recognizing
23 again that the privilege log would be subject to the
24 limitations described in the judgment creditor's status report
25 because there were certain matters that the judgment creditor

21
1 recognized was not going to be productive or helpful to have a
2 full-blown privilege log concerning.
3 That's the Court's ruling with regard to the
4 documents. I'll ask the parties, because it's always better to
5 try and clarify things while we're all together rather than to
6 let people leave in confusion, if there are any matters that
7 you think the Court has overlooked or anything that you -- that
8 I've said that you think is unclear.
9 MR. SIMS: I have two logistical questions, your
10 Honor, and then one third issue I'd like to raise.
11 THE COURT: Okay.
12 MR. SIMS: First, logistically, in the hopefully
13 unlikely event that we cannot reach agreement on a
14 confidentiality order and I need to file a proposed order,
15 should I do that with a noticed motion or can I file it
16 standalone or should I file it ex parte or just -- how should I
17 get it to you?
18 THE COURT: I think it would be fine to file it ex
19 parte and then in the supporting declaration, if you can just
20 describe for me what happened in your meet-and-confer efforts
21 and if Mr. Avenatti expressed to you what it was that he
22 objected to and why he wasn't willing to stipulate to the order
23 as drafted, then that would be helpful to the Court.
24 MR. SIMS: Thank you. Second logistical question,
25 will the Court be issuing a written order consistent with what

22
1 you just stated from the bench or would you like us to prepare
2 something or are we just going to waive notice and take what's
3 on the record or what's the further form going to be?
4 THE COURT: What the Court typically does in
5 proceedings like this is issue a minute order that says that
6 the Court ruled as stated on the record, and then permits the
7 parties to order a copy of the transcript and to take the
8 ruling from that.
9 MR. SIMS: That's perfect, your Honor.
10 THE COURT: Okay.
11 MR. SIMS: The third issue --
12 MR. AVENATTI: And, your Honor, I just wanted to be
13 heard on the first item. In the unlikely event that we're not
14 able to agree on the scope of the protective order, what I
15 would ask is that both versions of the protective order be
16 submitted by Mr. Sims, their version and our version in
17 redline, so that the Court can see what the areas of
18 disagreement are. And hopefully there won't be any.
19 THE COURT: That's fine. If you want to provide the
20 other side with a redline, that's a very specific way of
21 communicating what your objections are and then he can attach
22 that and then the Court can consider both requested wordings.
23 MR. AVENATTI: That's exactly what we'll do, your
24 Honor.
25 THE COURT: Okay.

23
1 MR. SIMS: That's acceptable, your Honor. So I guess
2 actually two more issues. First, your Honor may remember that
3 last time there was a stipulation that the order entered by the
4 Bankruptcy Court would remain in effect whereby EA was to give
5 notice of any monies that came in by the 15th of every month,
6 as well as expenses. We have not gotten that for the month of
7 November so I wanted to raise that with the Court.
8 Second issue is -- and final issue I think -- is the
9 logistical issue for the court reporter and everyone else for
10 January 4th, which is I assume since it's the -- a judgment
11 debtor examination, that that will take place in this
12 courtroom.
13 THE COURT: Yes, with regard to logistics for the
14 judgment debtor examination, typically how we do that is folks
15 arrive at court, we go briefly on the record to just confirm
16 that everyone has arrived who was supposed to arrive and that
17 everybody is comfortable with the proceedings, and then adjourn
18 court and let the parties go with their privately retained
19 court reporter back to one of the conference rooms that is
20 adjacent to the entrance to the courtroom here and conduct the
21 exam there. If there's disputes that arise over the course of
22 questioning, the parties collect those to the end and then I'll
23 try and address those if the parties are unable to work them
24 out, and then we will go back on the record. Often times, if
25 there has been a dispute, discuss what that dispute was and
24
1 what the ruling was. If there's no disputes, then the parties
2 simply conclude the exam and leave.
3 MR. SIMS: Your Honor, we will bring our own court
4 reporter but I did want to alert the court that at the first
5 judgment debtor examination, an issue came up raised by the
6 press, the press contending that it was a court proceeding that
7 had to take place in open court and it couldn't take place in a
8 conference room. There's some press here today. I suspect
9 that you're going to get somebody representing AP or NBC or
10 somebody coming in and taking that position. We didn't take
11 any position ourselves last time, I don't believe. I wasn't
12 there. But I wanted to alert the Court to the fact that it's
13 probably going to be an issue and so if you have other
14 hearings, etcetera going on on January 4th, were you to agree
15 with the press, you're going to have a logistical problem where
16 you can only do one thing in your courtroom at one time.
17 THE COURT: I --
18 MR. AVENATTI: Your Honor, this is much to do about
19 nothing right now. There's nothing before the Court relating
20 to January 4. We've set the exam for January 4. We're all,
21 you know, big boys and girls, we can figure it out. If there's
22 some issue relating to access or confidentiality, the proper
23 course of action is for people to file papers with the Court.
24 But to just have this done on an ad hoc basis, you know, is not
25 -- there's really nothing before the Court relating to this.

25
1 As it relates to the income and expenses, this is the
2 first time that we've heard any objection or anything from
3 Mr. Frank relating to this issue. I thought it had been
4 submitted. If it hasn't been submitted, and I don't know if it
5 has or has not, but if it has not, we will cure it forthwith.
6 So, you know, I think that that should probably do it.
7 MR. SIMS: Your Honor, --
8 THE COURT: Let me just address the -- with regard to
9 the judgment debtor exam, I take the judgment creditor raising
10 it at this point as simply issue-spotting and not as a request
11 for any sort of a ruling, and so I appreciate it in that vein.
12 With regard to the November 5th statement, I hear
13 you, Mr. Avenatti, saying that you're going to investigate and
14 if you determine that it wasn't sent as you expected, that
15 you'll have that sent. Do you anticipate when you are going to
16 be able to do that based on where you're located and who you
17 would need to check with?
18 MR. AVENATTI: We can do it by the close of business
19 Monday if that's acceptable, your Honor.
20 MR. SIMS: That's acceptable, your Honor. But we
21 would like compliance with the order in the future by the date
22 certain.
23 And if I could be heard just briefly again on the
24 issue that may be raised by the press, we're not asking for any
25 ruling today. We never filed any motion. It was by the press.

26
1 What we don't want to happen is my understanding of what
2 happened last time, which is about two hours were spent with
3 the press arguing it should be an open proceeding, Mr. Avenatti
4 arguing it shouldn't be, and the examination got delayed. So
5 we would like to start at 10:00 and so that's the reason I flag
6 this. I don't -- I just don't want to get sidetracked by that
7 issue. So there's some press here today. Hopefully if they
8 want to file something, they can file it and have it heard in
9 advance so that we can move on at 10:00 o'clock. But that was
10 my concern is I just don't want to waste time debating that
11 issue which we haven't raised and don't intend to raise but I
12 do expect to be raised by someone in the press.
13 THE COURT: Well, to the --
14 MR. AVENATTI: And, your Honor, just so the Court is
15 aware, a big reason why the press is in your courtroom and a
16 big reason why the press was at the last hearing and -- as well
17 as the exam was because Mr. Frank and his lawyers had purposely
18 solicited the press to attend these events because they believe
19 that it is a leverage point, a pressure point, and because they
20 want to seek to embarrass me and the firm. Let's be clear
21 about that. So it's a little disingenuous for Mr. Sims to
22 stand up before the Court and raise these issues "issue-spot"
23 relating to the press and not be forthwith to the Court or with
24 the Court as to the efforts that he and his client have taken
25 relating to the press. If the press wishes to observe these

27
1 proceedings consistent with the law and the First Amendment,
2 they should have every right to do so, every right to do so.
3 And we don't -- I don't object to them exercising their rights
4 under the First Amendment. I'm a firm believer in the First
5 Amendment.
6 THE COURT: All right, I appreciate those statements.
7 And certainly to the extent that there are representatives of
8 the press here today and if they're able to file anything that
9 they -- obviously they don't have to file anything but if
10 they're intending to file something, if they can file that in
11 advance and give us all a little bit of a chance to digest that
12 and research whatever points and respond to whatever points
13 they may be raising, that would certainly help in the
14 efficiency of these proceedings.
15 MR. SIMS: Thank you, your Honor.
16 MR. AVENATTI: And, your Honor, thank you again for
17 allowing me to participate by phone. I sincerely appreciate
18 it.
19 THE COURT: All right, well we wish you safe travels.
20 MR. AVENATTI: Thank you.
21 THE CLERK: This Court is now adjourned.
22 (This proceeding was adjourned at 10:41 a.m.)
23
24
25
28
CERTIFICATION
I certify that the foregoing is a correct transcript from the
electronic sound recording of the proceedings in the above-
entitled matter.
November 30, 2018
Signed Dated
TONI HUDSON, TRANSCRIBER

Case 8:18-cv-01644-VAP-KES Document 27 Filed 11/30/18 Page 1 of 28 Page ID #:589

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UNITED STATES DISTRICT COURT

) CASE NO: 8:18-CV-01644-VAP-KESx

HEARING RE: MOTION FOR PROTECTIVE ORDER

BEFORE THE HONORABLE KAREN E. SCOTT,

For Plaintiff: SCOTT H. SIMS, ESQ.

For Defendant: MICHAEL AVENATTI, ESQ. (via phone)

Court Reporter: Recorded; CourtSmart

Courtroom Deputy: Jazmin Dorado

Transcribed by: Exceptional Reporting Services, Inc.

Proceedings recorded by electronic sound recording;

1 Santa Ana, California; Wednesday, November 28, 2018; 10:01 a.m.

3 THE CLERK: Please remain seated and come to order.

4 This United States District Court is now in session, the

5 Honorable Karen E. Scott, Magistrate Judge, presiding.

6 THE COURT: Good morning.

7 MR. SIMS: Good morning, your Honor, Scott Sims for

8 Jason Frank Law.

9 MR. AVENATTI: Good morning, your Honor, Michael

10 Avenatti by telephone. I appreciate the Court's indulgence in

11 allowing me to appear by phone.

12 THE COURT: Well I have seen the weather reports for

13 the east coast so I understand how that could happen.

14 MR. AVENATTI: Thank you, your Honor.

15 THE CLERK: Your Honor, for the record, this is Case

16 Number SA-CV-18-1644-VAP-KESx, In Re Eagan Avenatti, LLC.

17 THE COURT: All right, we are here on the motion of

18 the judgment debtor for a protective order asking to quash a

19 subpoena that was issued by the judgment creditor seeking

20 documents to aid in the collection of the underlying judgment.

22 Jason Frank Law, and I see in there that despite our

24 to connect and have a meaningful discussion about the

25 production of documents and that in fact no documents have yet

1 been produced. Mr. Avenatti, can you tell me what happened

3 MR. AVENATTI: Yes, your Honor, thank you. Your

4 Honor, we had a meet-and-confer scheduled for November 14th in

5 the afternoon. Unfortunately, about two hours before that

6 meet-and-confer, I was taken into custody, which Mr. Frank and

8 status report. I did not blow off the meet-and-confer.

9 Unfortunately, I was taken into custody on a suspicion of

10 domestic violence charge. No charges were ultimately filed.

11 In fact, the district attorney announced last week that no

12 charges would be filed. So that is why I was not able to meet

13 and confer as was scheduled on that Wednesday, I believe it was

14 the 14th of November.

15 Since then, of course, Mr. Frank has obtained a

16 variety of banking information from Eagan Avenatti's primary

17 bank relating to various transactions. He points to these

18 transactions in his status report but of course negates the

19 timing of these transactions, many of which predate his

20 judgment by many, many years and therefore don't have a lot of

21 relevance. But he's received a lot of information from that

22 subpoena directed at California Bank and Trust since we last

23 met, your Honor.

24 THE COURT: Have you had an opportunity to review the

1 contained therein for limiting some of the categories of

2 documents requested by the subpoena?

3 MR. AVENATTI: Your Honor, not in great detail, but I

4 reviewed a number of them. And I think actually we could reach

5 agreement on a number of categories of documents set forth -- I

6 mean, this is a very broad subpoena as your Honor I think

7 remarked at the last conference that we had. And I think that

8 we could narrow down significantly the areas in dispute,

9 especially in light of what your Honor previously stated at the