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8272 (RPP) (JCF) - against WILLIAM MORRIS AGENCY, INC., et al., Defendants.


RUBINBAUM LLP Attorneys for Plaintiffs 30 Rockefeller Plaza, 29th Floor New York, NY 10112 (212) 698-7700 @.

Table of Contents Preliminary Statement ............................................... i ...................................1 One Email Produced By CAA Has Led To Direct Evidence of An Anti-Competitive Agreement Between CAA and SFX Regarding Horizontal Allocation Of Markets And Price-Fixing ................................................................ : .............................. 4 7 Mr. Embrees Testimony ................................................................................ 9 The 1998 Janet Jackson Tour ........................................................................... ARGUMENT I. II. WMA, SFX And Monterey Waived Any Objections They Had To Production Of Their EMail Communications ..................... , ................ 10 The Courts Resolution Of Its "Factor-Based" Inquiry Is Clearly 12 Erroneous As a Factual And Legal Matter ........................................ 13 Specificity Of Requests ..................................................... 14 Likelihood Of A Successful Search ........................................ 15 Total Costs/Ability To Control Costs ..................................... 16 The Parties Relative Resources ............................................ CONCLUSION ........................................... i .............................................17


PLAINTIFFS REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF THEIR OBJECTIONS TO THE JANUARY 15, 2002 ORDER OF U.S. MAGISTRATE JUDGE FRANCIS WITH RESPECT TO EMAIL COMMUNICATIONS Plaintiffs submit this reply memorandum of law, together with the accompanying Reply Declaration of Richard G. Primoff dated March 7, 2002 ("Primoff Reply Dec.") and the Declaration of Rickey Ivie, Esq, dated March 6, 2002, in further support of their motion pursuant to Rule 72(a) of the Federal Rules of Civil Procedure to reverse that portion of the January 15, 2002 order of U.S. Magistrate Judge Francis that requires plaintiffs to pay for the costs of production of defendants own email communications (the "Order"). Preliminary Statement William Morris Agency ("WMA"), Creative Artists Agency ("CAA"), the SFX defendants ("SFX") and Monterey Peninsula Artists ("Monterey") do not dispute that with the exception of CAA, none of them raised any objection to plaintiffs request for email communications at any time, even though they were aware that those email communications were called for in plaintiffs document requests, and by plaintiffs motion to compel filed in November 2001 -- a fact that is clear from the record: Defendant William Morris Agency ("WMA"), in a letter sent to all counsel before plaintiffs filed their motion to compel, expressly acknowledged that its email communications fell

within the scope of plaintiffs requests (Pits. Obj. 14, Exh. 2E); All defendants negotiated a Confidentiality Order entered by the Court that expressly acknowledged the production of the parties electronic documents (Pits. Obj. 14, Exh. 2- B); and CAAs request to exclude email communications from its separate, negotiated agreement with plaintiffs (to which no other defendant was a party or beneficiary) makes crystal clear that defendants well understood that absent an agreement to the contrary, their email communications were the subject of plaintiffs document requests and motion to compel.

Nor do these defendants dispute, as they cannot, that in granting plaintiffs motion to compel, this Court expressly ruled that to the extent defendants failed to raise an objection to plaintiffs document requests (or to the extent that the Court sustained an objection), those objections were waived, plaintiffs motion was granted in full and the material must be produced. Plaintiffs Objections dated February 4, 2002 ("Pits. Obj.") 13, 23-26, Exh. 2-D. This record was presented to U.S. Magis.trate Judge Francis in response to defendants motion for a protective order, and was uniformly ignored by defendants either in their initial motion papers, or on reply -- and was nowhere mentioned in the Order. Despite the fact that under settled law and this Courts express rulings, defendants clearly waived any objection to production of these discovery materials, the moving defendants now have the temerity to argue that plaintiffs waived their right to oppose defendants motion for a protective order on this ground because they did not assert any objections to U.S. Magistrate Judge Francis July 2, 2001 order -- an interim order that even defendants do not argue made any determination as to their waiver on this issue before this Court. The July 2 order merely provided that defendants could present their arguments regarding production of these materials via formal motion, rather than through correspondence.

Defendants belated argument -- which they failed to raise at any time before U.S. Magistrate Judge Francis -- is absurd, as is their attempt to contend that their email communications were not the subject of plaintiffs motion to compel. WMA, SFX and Monterey clearly waived any objections they purportedly had with respect to their email communications, and it is time, approximately one year after this Court ordered that these defendants produce this material, that they actually begin complying with their discovery obligations. Moreover, defendants have refused to grapple with the essence of plaintiffs objections to the Order and the manner in which it prejudices plaintiffs in this case. The Order, which U.S. Magistrate Judge Francis rendered without any oral argument, clearly erred by disregarding the uniform case law that has rejected cost-shifting motions by defendants in connection with email discovery and, instead, fashioned its own list of factors that it then proceeded to determine in a manner completely contradicted by the record. These factors include: (1) a requirement -- unsupported by the case law -- that plaintiffs in effect establish in advance an overwhelming likelihood that defendants email communications will yield a "gold mine" of important information (to use the exact words of the Order); (2) a determination that a comparison of the plaintiffs financial resources on the one hand with the financial resources of the corporate conglomerate Clear Channel Entertainment, Inc. (i.e., SFX), and three of the top talent agencies in the United States (WMA, CAA and Monterey) on the other hand is "neutral" as to the outcome of defendants cost-shifting request; and (3) a determination that plaintiffs requests regarding defendants email production were "broad" and "nebulous" by reference not to plaintiffs actual requests for that material, but to plaintiffs initial document requests that were no longer on the table.

The irony of the Orders erroneous determinations on those and the other factors discussed in plaintiffs opening papers is that if any plaintiffs in any case were in a position of demonstrating that these factors tipped heavily in their favor, it is the plaintiffs in this case. Plaintiffs initial papers describe some of the evidence from defendants that, to date, points to concerted discriminatory and anti-competitive behavior on the part of defendants. This evidence largely consists of precisely the type of informal communications that are routinely captured in email communications -- and, indeed, in one instance was an email. One Email Produced By CAA Has Led To Direct Evidence of An Anti-Competitive Agreement Between CAA and SFX Regarding Horizontal Allocation Of Markets And Price-Fixing The email in question (Pits. Obj. Exh. 5) led to testimony by Mr. Light of CAA that plaintiffs likely would not have obtained otherwise. That testimony establishes the existence of an anti-competitive agreement between CAA and SFX arranged in early 1999 after CAA engineered the departure of Mr. Lights predecessor, Tom Ross, late the prior year. CAA had been concerned that SFX would cut CAA out of the picture entirely and deal directly with its artists and managers, something that CAA actually concedes in its opposition papers and which SFX had and has the capability of doing easily. (CAA Mem. at 11). The agreement reached at the meeting in New York between CAA and SFX put those concerns of CAA to rest, as SFX agreed at CAAs request essentially to refrain from dealing directly with artists and managers. CAA in return agreed to do business with SFX on a significant and regular basis, something that had not been the case during the reign of Mr. Lights predecessor, Tom Ross: Q. Do you recall what Mr. Lovett [CAAs President] said at that meeting? A. I think he echoed a lot of the same sentiments, that there was huge distrust between the two companies, and that with the change

of leadership at the music department, he thought it was a good time for us to sit down and try to take us to a situation where it wasnt so acrimonious. Q. What did Mr. Rubel [CAAs General Counsel] say at that meeting? A. I think Mr. Rubel really was just an observer. Q. And Mr. Slater [SFX], what did he say? A. Mr. Slater parroted a lot of what Mr. Sillerman [SFX] said and wanted to try to patch up again what was an acrimonious relationship. Q. Once everybody had said that -- once everyone had acknowledged that the relationship had become acrimonious, was there any further discussion.? A. Just conversation about flow of information, who would talk to who to avoid us getting back to that Def Con 5 sort of situation. Q. Do you recall anything specific about what was said?. A. The 6pecifics were that they were going to basically do their best to avoid talking directly to artists, although they acknowledged that they couldnt control all their people doing what they were doing, as they have a number of loose cannons who are out running around the streets, and that Mitch Slater and I as the heads of our respective divisions would communicate on a more regular basis to discuss what tours were going out and who in their company would be handling it if they were going to make a national offer. Light Dep. 302-303 (Primoff Reply Dec. Exh. A) (emphasis added). CAA also confirmed this agreement by subsequent conduct. Mr. Light acknowledged that when he later learned that SFX had acquired one of CAAs competitors, agency defendant QBQ, conduct Mr. Light considered to be inconsistent with the agreement reached earlier in New York, he complained to M~:. Slater of SFX, and SFX shortly thereafter disposed of QBQ. Light Dep. [Primoff Reply Dec. Exh. A] 307-10. Recently examined SFX witnesses, moreover, have confirmed that similar accommodations and discussions were held and reached between SFX and

other agency defendants. This is not surprising in view of Mr. Lights testimony that the agencies concerns for their own position in the market place was a matter of discussion on the part of all agencies and promoters at the time. Light Dep. 258-260. The January 29, 2002 deposition testimony of Mr. Lights predecessor, Tom Ross, sheds further light on the accommodation reached between CAA and SFX to allocate markets between themselves, and adds another dimension to that anti-competitive agreement. Mr. Ross had been an outspoken critic of SFXs business practices, in particular its insistence on a policy of paying a pre-performance deposit of only 10% to the artists it promoted, rather than the industry standard at that time of 50%. While Mr. Ross was still employed at CAA, he had been able temporarily to maintain the deposit level at 50% with SFX on a company-wide basis. Ross Dep. 55-70 (Primoff Reply Dec. Exh. B). SFXs deposit policy was the subject of at least two meetings among certain of the agency defendants in this case. Ross Dep. 71-74. After CAA forced Mr. Ross out (largely because CAA wished to reach an accommodation with SFX), SFX was able to obtain an agreement from CAA to accept a 10% deposit across the board, part of what plaintiffs contend was CAAs quidpro quo for obtaining an agreement from SFX to refrain from competing directly with CAA. Light Dep.263-66. CAAs counsel believes there is nothing wrong with CAAs efforts to protect its own competitive position in the industry by arranging for SFX not to compete with it, or to fix prices with SFX with respect to its client roster, as it not only does not dispute that. this was the essence of CAAs meeting with SFX, but expressly acknowledges it to be so. CAA Mere. at 11. Plaintiffs disagree. Plaintiffs contend that agreements by competitors to allocate markets horizontally among themselves and/or to fix prices (both of which have now been established) constitute per se violations of the antitrust laws. What is significant about the foregoing for

purposes of this motion is that the bulk of this testimony was triggered by just one email communication produced by CAA. These extensive and important discussions were not set forth in any other paper documents produced by CAA. In view of the fact that at least one email on the subject exists, it is inconceivable that far more communications on this subject are not to be found from this source. Mr. Embrees Testimony Defendants appear equally unable to come to terms with the significance of the testimony of Mr. Quinton Embree in connection with this motion. Plaintiffs did not introduce his testimony to suggest he had been discriminated against by CAA, whatever his or plaintiffs; suspicions may be on that subject. What CAA omits from its supplemental memorandum is that Mr. Embree testified (1) to numerous incidents of racially hostile conduct and discrimination within CAA itself over a period of time, only one of which is discussed in CAAs papers (Embree Dep. [Primoff Reply Dec. Exh. C] 10-23, 26-28, 41, 46-49, 65-68, 77, 168-173, 198200, 208-11), (2) that he sent CAAs President, Richard Lovett, a memorandum (not produced by CAA) criticizing CAA for its failure to hire or promote virtually any African-American agents during his ten-year employment at the company, or otherwise do anything more than pay lip service to principles of equal opportunity (Primoff Reply Dec. Exh. D; Embree Dep. 49-50), and (3) specifically referred to emai! communications regarding that memorandum, and to meetings at CAA that specifically discussed the plaintiffs and African-American concert promoters who were engaged in public protests against CAA. Embree Dep. 28-30, 50. CAAs counsel instead chooses to belittle the qualifications of its client, Mr. Embree, either to be an agent at CAA or even simply to remain employed there. In doing so, CAA only serves to underscore the relevance of his testimony. CAA congratulates itself for h.aving finally acted after a particularly egregious example of racially hostile conduct by its mail room

supervisors could no longer be disregarded, but it ignores the vast majority of numerous prior incidents discussed by Mr. Embree, not to mention Mr. Embrees testimony about his wellfounded concern for the failure of CAA to have hired or promoted virtually any AfricanAmerican agents. Similarly, CAA misrepresents the substance of the email communications Mr. Embree recalls seeing (and which of course have not been produced): As noted above, contrary to its counsels assertions, these emails concerned plaintiffs and other African-American concert promoters, and his October 1997 memorandum to Mr. Lovett. CAA, in any event, has implicitly conceded the relevance of Mr. Embrees testimony by its own curious conduct both before and after his deposition. Mr. Embrees deposition was noticed in November 2001, for mid-December. Primoff Reply Dec. Exh. E. Plaintiffs counsel were then advised by CAAs counsel that his deposition could not proceed on the dates noticed. Primoff Reply Dec. Exh. F. P~ecisely why that was so was cleared up by Mr. Embree, who testified that he was not informed that his deposition had been requested until January 2002, and that in mid-December, he received --for the first time after ten years of consistently negative performance reviews -- a sudden and unexpected favorable change in his evaluation, and a signal of a potential promotion in the future (Embree Dep. 57, 238-40 (Primoff Reply Dec. Exh. C)). If CAA genuinely believed Mr. Embrees testimony were irrelevant, why did CAA suddenly offer an unprecedented favorable evaluation, and hint of a promotion, to an employee whose own counsel describes him as having "a weak performance record" and a "lack of credentials" -- but whose deposition had just been noticed by plaintiffs (something not then disclosed to Mr. Embree)? CAA Mem. at 8. It does not require an extraordinary leap of faith to conclude that CAA was concerned about Mr. Embrees testimony, and sought to influence his outlook regarding his formerly critical employer.

After Mr. Embrees deposition, CAA has desperately sought to uncover the circumstances by which plaintiffs came into possession of Mr. Embrees October 8, 1997 memorandum, by serving interrogatories regarding same (Primoff Reply Dec. Exh. G). If that memorandum and Mr. Embrees testimony were irrelevant, why is CAA so concerned about uncovering the source of its disclosure to plaintiffs? The 1998 Janet Jackson Tour CAA, through the Declaration of Rob Light, deliberately sought to convey to U.S. Magistrate Judge Francis the impression that in faxing to Mr. Rowe on March 4, 1998 the financial requirements of a 50% deposit, and a letter of credit to secure the balance of the guarantee for the 1998 Janet Jackson tour, he was simultaneously conveying the same purported requirements of Janet Jacksons manager to "all other interested promoters." Pits. Obj. 3-4. The actual documents (not annexed to Mr. Lights declaration) and Mr. Lights own testimony reveal quite clearly that he was deliberately deceiving Mr. Rowe at the time, just as he was deliberately deceiving U.S. Magistrate Judge Francis in connection with the email motion. He was doing so with respect to an African-American concert promoter whom Mr. Light conceded at his deposition had submitted the highest per-show offer of a guarantee on that tour, an offer that Mr. Ross latest conceded at his own deposition was "the biggest offer Ive ever seen." Ross Dep. 181 (Reply Dec. Exh. B) (emphasis added). CAA seeks to take refuge in the written explanations by Mr. Light and Ms. Kinzel as to the several documents reflecting highly revelatory internal communications that substantiate a deceptive, discriminatory and anti-competitive course of dealing with African-American concert promoters. These explanations have already been proven false (in the case of Mr. Light) or are inherently incredible (in the case of Ms. Kinzel). These informal communications regarding this

tour alone demonstrate the utmost importance of defendants email communications to plaintiffs ability to build their conspiracy case. Defendants complain that plaintiffs have not uncovered evidence to demonstrate "an " .... CAA Mem. at 1. If defendants industry-wide racial and anti-trust conspiracy against them are referring to the certified copy of the formal written agreement among the defendants in this case, they are of course correct. But the plaintiffs in this case, as plaintiffs attempt to do in every anti-trust and civil rights conspiracy case, will prove their claims through the mounting tide of direct and circumstantial evidence, only a small portion of which has been discussed in these motion papers. The Orders effect as a practical matter, however, is to shield defendants email communications -- an undeniably important source of revelatory, informal communications -from review by plaintiffs. ARGUMENT I. WMA, SFX AND MONTEREY WAIVED ANY OBJECTIONS THEY HAD TO PRODUCTION OF THEIR EMAIL COMMUNICATIONS WMA, SFX and Monterey quite obviously have nothing to say in response to the undisputed point that they knew plaintiffs document requests called for the production of their email at all times before plaintiffs filed their motion to compel, and while it was pending before the Court. Nor have they anything to say in response to the undisputed point that this Court expressly ruled that in the event that defendants did not raise objections to plaintiffs requests, those objections were waived and they were required to produce the information requested. These defendants waiver of any objections to production of their email communications was thoroughly presented as a legal and factual matter to U.S. Magistrate Judge Francis, who did not grant oral argument, on defendants motion, and ignored this evidence entirely in the Order.

In view of this Courts explicit rulings and these defendants knowing and intentional waiver, it was clearly erroneous for this reason alone for the Order to have granted defendants motion in any respect. Indeed, WMAs reference to its counsels October 23, 2000 letter (Declaration of Sandra McCallion, Esq. dated February 25, 2002 ("McCallion Dec.") 5) only underscores its waiver of any objection with respect to email communications. WMA argues that it expressly reserved its rights with respect to email communications in its October 23, 2000 letter, omitting to mention that this letter was sent before plaintiffs motion to compel responses to their discovery requests. As this Court noted at oral argument on that motion, defendants were required to raise any objections to plaintiffs requests if they wished to rely on them. Absent such action, defendants waived any rights with respect thereto. Pits. Obj. 21-26, Exhs. 2-B, 2-D, 2-E. It is not surprising that defendants have raised essentially two argument~, both of which bespeak a desperate attempt to avoid the effect of their own waiver, and both of which are specious. WMA, SFX and Monterey, first, seek to have this Court believe that although they were aware plaintiffs motion to compel included their requests for defendants email communications, plaintiffs motion nonetheless excluded all defendants email communications because their counsel verbally confirmed the same to Beverly Frank, Esq., counsel for CAA. Defendants Memorandum ("Defs. Mem.") at 22. As confirmed in the accompanying declaration of Rickey Ivie, Esq., dated March 6, 2002, this unsupported and bizarre assertion is an utter fabrication. What CAAs counsel is referring to and shamelessly distorting is a communication made in connection with plaintiffs negotiation of a side agreement between and unique to plaintiffs and CAA, in which, after CAAs counsel made unsupported and generalized assertions regarding


the expense of producing CAAs email communications, plaintiffs agreed as partial consideration for the agreement with CAA to remove that aspect from plaintiffs requests against CAA, and CAA alone. To suggest that plaintiffs advised CAAs counsel that defendants email communications were not the subject of plaintiffs motion against the remaining defendants who were not beneficiaries of plaintiffs agreement with CAA is absurd. Indeed, that CAA saw fit to exclude plaintiffs email communications from plaintiffs motion against it only serves to underscore that defendants were well aware that plaintiffs motion otherwise encompassed that information. Nor may defendants place reliance on their assertion that plaintiffs are not entitled to raise defendants waiver of objections to production of their email because plaintiffs did not seek to challenge U.S. Magistrate Judge Francis interim July 2 order, the effect of which was merely to require an additional "meet and confer" procedure before permitting defendants to proceed by formal motion with respect to their email communications. As defendants concede, that order contained no decision with respect to plaintiffs waiver point, but rather merely referred that issue, and all others regarding production of defendants email, to a later determination. It is, in fact, defendants who have waived their right to contest this point, as they failed to raise any opposition with respect to these points in either their initial or reply papers submitted to U.S. Magistrate Judge Francis. 1I. THE COURTS RESOLUTION OF ITS "FACTOR-BASED" INQUIRY IS CLEARLY ERRONEOUS AS A FACTUAL AND LEGAL MATTER Apart from citing two recent decisions that rely on the Order itself as authority for the proposition, defendants, once again, have identified no case law supporting the notion that plaintiffs should be required to pay defendants for the cost of obtaining defendants own email


communications. Nonetheless, the Order disregarded the uniform case law holding to the contrary, fashioned its own list of relevant factors, and then proceeded to resolve all but one of these factors against plaintiffs, in a manner that is utterly contradicted by the record.~ Specificity Of Requests It would be difficult to imagine a manner in which a discovery order could more plainly commit error than by simply misidentifying the actual discovery requests under consideration. This unfortunately is one of the principal errors in the Order. The declaration of plaintiffs counsel and the two affidavits of their consultants, Charles Kellner of EED and Andrew Rosen of ASR Data Acquisition and Analysis, made clear that plaintiffs had made drastic restrictions on the scope of the electronic discovery sought, in a manner that brought their costs well within line of the amounts consistently held to be reasonable. The Order, although it discussed those proposals at some length, analyzed this factor as if these specific proposals did not exist, and concluded plaintiffs requests were "broad" and "nebulous," by reference to plaintiffs initial document requests. In a desperate attempt to justify this plainly incorrect determination, defendants have concluded that the Order must have been referring to the fact that plaintiffs proposals were made "without prejudice" to plaintiffs right to seek additional email information at a later time if warranted. Defs. Mere. at 1 1. Even if the Order had justified its determination on this basis -- and the Order makes no mention of this point -- the argument is plainly specious. In the event that further or broader email production were later warranted, that would by definition have to be preceded by negotiations with defendants counsel, who would almost certainly oppose it, and require a subsequent judicial

~Plaintiffs do not address specifically in this reply memorandum all of the factors discussed in the Order, which discussed at length in plaintiffs February 4, 2002 written objections, because with respect to certain of them (e.g., purposes of retention, benefit to the parties) defendants raised no arguments that were not already addressed in plaintiffs prior papers.


order permitting such disclosure under appropriate circumstances, including an adequate showing by plaintiffs that further discovery were warranted. In view of the fact that the parties have now been litigating the subject of email communications on an initial basis for almost a year, that is a sufficiently high threshold for defendants protection. Defendants in any event are certainly in no position to suggest this places no meaningful restriction on plaintiffs discovery requests, as this is precisely the protocol suggested in McPeek v. Ashcroft, 202 F.R.D. 31, 34-35 (D. D.C. 2001), a decision on which defendants and the Order place heavy reliance. Likelihood Of A Successful Search On this factor also, the Order placed mistaken reliance on McPeek. Contrary to defendants disingenuous suggestions, McPeek did not shift the costs of producing email to the requesting party, but rather ordered a protocol based on a narrowing of the requests -- precisely what plaintiffs did in the instant case. Using McPeeks invention of a "marginal utility" analysis, the Order nonetheless essentially concluded that plaintiffs would have to establish that email would be a "gold mine" of information, presumably through a witness insufficiently prepared by defense counsel who would be willing to come forth and testify voluntarily as to the existence of a damaging email communication that otherwise would go undiscovered. Order at 20. If this were the appropriate standard, there would be little need for an extended, factorbased analysis in any complex conspiracy case such as the instant one, as this threshold amounts in effect to a determination that absent an extraordinary stroke of luck, plaintiffs will never be able to meet such a high threshold. Here, of course, plaintiffs have been fortunate to gather the evidence described above even without access to defendants unprinted email, evidence that now, through the testimony of Mr. Embree, includes testimony of a witness as to relevant email communications. Plaintiffs are mystified as to how much more plaintiffs in this case, or plaintiffs in any case, could be expected


to demonstrate before being permitted access to a concededly large and important source of discovery information. Total Costs/Ability To Control Costs As noted in plaintiffs prior papers, the specific proposals and estimates achieved by plaintiffs consultants -- which they detailed and committed to in sworn affidavits -- resulted in cost reductions that brought the cost for defendants of producing their email communications well within the guidelines established in numerous prior decisions on the subject. Plts. Obj. I 49-51. The Order disregarded this consistent case law, and simply determined that these costs were too high for the wealthy corporate defendants at issue here. To this erroneous conclusion, defendants now add the specious defense that plaintiffs proposals were not firm estimates from consultants willing to undertake the tasks outlined. Defendants argument is ironic, to say the least, given that they submitted unsworn estimates from outside vendors that were so absurdly inflated that even U.S. Magistrate Judge Francis rejected the approaches -- in particular, TIFF conversion -- that were common to almost all of them. Order at 28. Defendants argument, in any event, is a disturbing misrepresentation of the record. Contrary to defendants position, both EED and ASR Data made specific proposals they explicitly stated in sworn affidavits they were willing to undertake for the amounts discussed. Affidavit of Charles R. Kellner [Pits. Obj. Exh. 6] 11 19, 43 62; Affidavit of Andrew Rosen [Pits. Obj. Exh. 8] I 10-14; October 26, 2001 Declaration of Richard G. Primoff [Pits. Obj. Exh. 2] I 34.~

2 Defendants, finally, contend that by plaintiffs "silence," they have conceded the Order was correct in determining that plaintiffs are in the best position to "control costs," and that this tips in favor of requiring plaintiffs to pay for production of their email. Plaintiffs do not understand how defendants can contend plaintiffs conceded this point, especially since it is defendants who are in direct control and possession of the information in question, including, in


The Parties Relative Resources Plaintiffs believe it is now appropriate for defendants to get their stories straight regarding plaintiffs financial condition. Up to this point, they have delighted in arguing to U.S. Magistrate Judge Francis and this Court that plaintiffs are essentially lacking in any discernible assets or income, and are therefore incapable of promoting concerts or maintaining claims against defendants -- an argument they only recently vigorously advanced to this Court with respect to the motion by Mr. Bailey to withdraw from the case. Apparently, now that they believe it is in their interests to contend the opposite, defendants seek to convey the impression to the Court that plaintiffs are financially comfortable, and have the resources to reimburse the multi-billion dollar conglomerate Clear Channel E~tertainment (SFX), and the top talent agencies in the country for their costs in making concededly relevant material available to plaintiffs in discovery. Presumably, once this motion practice is concluded, defendants will flip-flop again with straight faces, and contend that plaintiffs lack the financial resources to compete in the marketplace. Enough is enough: However much defendants might wish to quibble about the exact level of plaintiffs collective net worth, they cannot seriously contend in view of their own prior arguments to this Court and to U.S. Magistrate Judge Francis that it is equivalent, or ex~en close, to the financial resources available to the publicly-held corporate conglomerate Clear Channel, Inc., and the three top talent agencies in the United States. This is precisely the analysis that the Order recognized to be relevant to the determination of this discovery matter. Order at 25 (citing Bills v. Kennecott Corp., 108 F.R.D. 459, 464 (D. Utah 1985), which recognized as a relevant

the case of SFX and Monterey, active email stored directly on desktops and servers that can readily be obtained and produced without restoration of backup tapes.


factor whether the "relative expense and burden in obtaining the data would be substantially greater to the requesting party as compared with the responding party"). The Order identified this precise analysis as a relevant factor, and was therefore by its own internal logic bound to resolve it correctly. However, by simultaneously recognizing and then dismissing the relevance of the parties relative financial condition, the Order plainly erred, and in doing so worked a substantial injustice on plaintiffs, who face a far heavier and likely insurmountable burden in connection with this important category of discovery material than do defendants, who likely would barely notice the expense of this production. CONCLUSION For the foregoing reasons, as well as those set forth in plaintiffs February 4, 2002 written objections, the reply declarations submitted herewith, and in the exhibits annexed thereto, plaintiffs respectfully request that the Court reverse that portion of the January 15, 2002 order that requires plaintiffs to pay for the costs of producing defendants email.communications. Dated: New York, New York March 7, 2002

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