Post-Jury Evidentiary Hearing on Exhibit 5273
179 lines(JURY OUT AT 4:03 P.M.)
JUDGE DAVILA: PLEASE BE SEATED. THANK YOU. ALL RIGHT. THANK YOU. THE RECORD SHOULD REFLECT THAT THE JURY HAS LEFT FOR THE DAY AND MS. PETERSON HAS LEFT THE COURTROOM. ALL COUNSEL AND MS. HOLMES ARE PRESENT. ALL RIGHT. THANK YOU. THIS IS 5273. THIS IS WHAT WE DISCUSSED THIS MORNING I THINK AND --
MR. LEACH: YES, YOUR HONOR.
JUDGE DAVILA: -- MY QUESTIONS ARE THE INVESTMENT WAS IN 2014, I BELIEVE. IS THAT RIGHT?
MR. LEACH: YES, YOUR HONOR.
JUDGE DAVILA: AND SO WHAT IS THE RELEVANCE TIME-WISE ABOUT HER OPINIONS? AND I THINK WHAT WE'RE TALKING ABOUT IS EXPRESSED IN THE LAST PARAGRAPH ON THIS PAGE.
MR. WADE: THAT'S THE GIST OF IT, YOUR HONOR. AND IT RELATES TO -- YOU KNOW, THE GOVERNMENT OPENED THE DOOR ON THIS BY GOING INTO A NUMBER OF THESE INTERACTIONS AFTER THE INVESTMENT PERIOD. THEY WENT INTO BOTH THE REACTION TO THE CRAMER PIECE, AND THEY WENT INTO THE REACTION TO -- IN APRIL, THEY DECIDED THEY WANTED TO GO INTO THAT MEETING. I EXPLAINED -- I THINK AT THE OUTSET I OBJECTED TO THE ADMISSION OF EVIDENCE RELATING TO THAT. THIS FLOWS DIRECTLY OUT OF THAT APRIL MEETING. THEY HAD A MEETING TO TRY TO FIGURE OUT WHAT IS GOING ON, TO TRY TO UNDERSTAND THE TECHNOLOGY. SHE'S -- SHE CHARACTERIZED THAT MEETING IN HER TESTIMONY, AND THIS ACTUALLY REFLECTS HER ACTUAL CONTEMPORANEOUS UNDERSTANDING OF IT.
JUDGE DAVILA: WELL, THIS IS IN AUGUST, NOT APRIL.
MR. WADE: WELL, IT RELATES DIRECTLY TO THAT BECAUSE ONE OF THE THINGS THEY WANTED TO ASSESS, SHE SAID, WAS THE TECHNOLOGY AND THEY'RE TRYING TO FIGURE IT OUT AND THEY DID THAT AT THIS MEETING AND IT'S REFLECTED IN THIS, IN THIS MEMO. THERE'S A SIMILAR --
JUDGE DAVILA: SO WHAT -- I GUESS WHAT I'M -- AND HELP ME OUT HERE, MR. WADE. WHAT IS THE RELEVANCE OF THIS WITNESS'S OPINION ABOUT WHAT WAS GOING ON AT THERANOS AFTER THE, AFTER THE DEAL? WHAT IS THE RELEVANCE OF THAT?
MR. WADE: THAT'S WHY I OBJECTED TO THE EVIDENCE COMING IN, YOUR HONOR. THE GOVERNMENT OPENED THE DOOR.
JUDGE DAVILA: THAT CAME IN FOR A DIFFERENT PURPOSE. THOSE WERE STATEMENTS, I THINK, OF YOUR CLIENT THAT THE GOVERNMENT COULD GET IN. THAT'S WHAT YOU'RE TALKING ABOUT.
MR. WADE: NO, BUT THEY ALSO ASKED ABOUT THE MEETING THAT THEY HAD AND THEY TRIED TO CONTRAST THE INTERACTIONS IN THAT MEETING WITH THE STATEMENTS.
JUDGE DAVILA: THE APRIL MEETING?
MR. WADE: YEAH. AND PART OF THE INTERACTION, AND MY CLIENT'S GOOD FAITH INTERACTION WITH THAT SHAREHOLDER AT THAT TIME WAS TELLING THEM WHAT THEY WERE GOING TO DO TO TRY TO ADDRESS THE SITUATION, TO SAY THAT THEY BELIEVED IN THE TECHNOLOGY, THAT A LOT OF WHAT WAS BEING WRITTEN WAS NOT TRUE.
JUDGE DAVILA: OKAY.
MR. WADE: AND THIS SPECIFIC EVENT WAS REFERENCED AND THEY SAID SPECIFICALLY IN THAT MEETING THAT THEY WANTED TO COME AND SEE IT, AND THEY DID.
JUDGE DAVILA: WELL, THAT WAS RAISED BY YOU, I THINK, ON CROSS; RIGHT? I DON'T THINK MR. LEACH TOUCHED ON THAT. MAYBE HE DID.
MR. WADE: WELL, MR. LEACH WENT INTO THE MEETING. BUT ONCE -- HE GOES IN TO TRY TO CREATE A NEGATIVE IMPLICATION WITH RESPECT TO MS. HOLMES, OVER MY OBJECTION. SO ONCE HE GOES INTO THE MEETING AND THESE POST-INVESTMENT ACTIVITIES, THE DOOR HAS BEEN OPENED AND IT'S ONLY FAIR IF YOU GET THE FULL PICTURE OF HOW THIS INVESTOR FELT AFTER THE MEETING. RIGHT NOW THEY HAVE A PARTIAL PICTURE BASED UPON THE INTERACTIONS THAT MR. LEACH ELICITED IN CONNECTION WITH VIDEO CLIPS. I WOULD HAVE PREFERRED THAT NONE OF IT COME IN THROUGH THIS WITNESS, BUT IT HAS OVER OUR OBJECTION AND --
JUDGE DAVILA: WELL, LET ME HEAR FROM MR. LEACH AND THEN I'LL HAVE AN OBSERVATION.
MR. LEACH: YOUR HONOR, THE CRAMER PIECE WAS RELEVANT BECAUSE THE DEFENDANT IS ASKED POINT-BLANK, HOW MANY TESTS CAN YOUR EDISON RUN? AND HER STATEMENTS, WHETHER IT'S MS. PETERSON LISTENING TO IT OR SOMEBODY ELSE, ARE EVIDENCE OF THE DEFENDANT'S -- ADMISSIONS BY A DEFENDANT. I ASKED NO QUESTION OF THIS WITNESS WHAT SHE THOUGHT ABOUT THAT. THE "TODAY SHOW" INTERVIEW WAS RELEVANT BECAUSE THIS DEFENDANT, UNLIKE THE DEFENSE WE HEAR HERE THAT IT'S ALL THE LAB DIRECTOR'S FAULT, WAS SAYING, I'M THE CEO OF THE COMPANY, I'M RESPONSIBLE FOR THIS. I ASKED A SINGLE QUESTION ABOUT THE -- LIMITED QUESTIONS ABOUT THE APRIL MEETING 11 DAYS LATER ABOUT WHETHER OR NOT MS. HOLMES TRIVIALIZED THE CMS INSPECTION, YOU KNOW, DAYS AFTER SHE WAS SAYING, I FEEL DEVASTATED ABOUT THIS. THAT DOES NOT OPEN -- AND ALL OF THIS IS TIED TO WHAT THE DEFENDANT SAID. YOU KNOW, IF THE DEFENDANT WANTS TO SAY WHAT SHE SAID AT THE AACC CONFERENCE, SHE CAN TAKE THE STAND AND SAY ALL OF THOSE THINGS. ALL OF THIS IS ASKING FOR A REACTION TO SOMETHING THAT THE DEFENDANT SAID IN AUGUST OF 2016. AND IT'S ALL PREMISED ON HEARSAY, IT'S NOT RELEVANT. AND IT DOESN'T STOP THERE, YOUR HONOR, BECAUSE THERE ARE ADDITIONAL INTERACTIONS AFTERWARDS AND WE CAN ASK HER TODAY, HOW DO YOU FEEL ABOUT THE TECHNOLOGY, AND SHE'LL GIVE ANSWERS, YOU KNOW, I DON'T THINK MR. WADE WOULD LIKE. SO THERE HAS TO BE A CUTOFF. THE APRIL MEETING WAS RELEVANT BECAUSE IT'S 11 DAYS TIED TO A PUBLIC STATEMENT THAT I'M RESPONSIBLE FOR EVERYTHING IN THE LAB AND CMS -- WE TAKE CMS REALLY, REALLY SERIOUSLY, AND 11 DAYS LATER SHE'S TRIVIALIZING IT. THAT DOESN'T OPEN THE DOOR TO EVERY STATEMENT THAT MS. HOLMES MAKES AFTER THE FACT AND SOMEBODY'S REACTION TO IT.
JUDGE DAVILA: SO -- THANK YOU. SO THAT'S ONE OF THE CONCERNS THAT I HAVE AND IT IS -- I'M NOT CERTAIN OF THE RELEVANCE OF IT. I UNDERSTAND, MR. WADE, YOU'D LIKE TO GET A FULL PICTURE OF THIS AND HAVE THIS WITNESS OFFER THIS PARAGRAPH, OR HER MEMO, OBSERVATIONS IN 2016. I STILL DON'T KNOW WHAT THE RELEVANCE OF THAT IS, HER OPINION. THE INVESTMENT'S DONE. AS YOU POINT OUT, SHE WAS NOT -- SHE DIDN'T WRITE THE CHECK, SHE DIDN'T SIGN IT. YOU CROSS-EXAMINED HER ON WHAT HER DUTIES AND LIMITATIONS WERE. LET ME JUST MAKE AN OBSERVATION HERE. IF THIS COMES IN, IF SHE TESTIFIES ABOUT THIS, I'M GOING TO PERMIT THE GOVERNMENT, IF THEY WANT TO, TO REHABILITATE, IN ESSENCE TO BASICALLY GO THROUGH, THAT WAS YOUR OPINION THEN? AND WHAT IS YOUR OPINION TODAY? AND AS MR. LEACH POINTS OUT, SHE MIGHT SAY SOMETHING THAT, THAT MIGHT NOT BE HELPFUL, AND BECAUSE I THINK WHAT -- I'M JUST SAYING WE CAN EXPECT THAT SHE'S GOING TO DEFEND HERSELF IN THIS -- AS TO THIS STATEMENT. YOU HAVE TO DECIDE THE VALUE OF WHETHER THIS COMES IN OR NOT, AND THE COST/BENEFIT ANALYSIS FOR THIS, AND I'M NOT TRYING TO STAND WHERE YOU'RE STANDING AND TRY TO RUN THE CASE. IT'S YOUR CASE.
MR. WADE: I WISH YOU COULD SEE MY SMILE, YOUR HONOR. I DON'T THINK THIS -- I DON'T THINK THIS WITNESS HAS BEEN RESTRAINED IN OFFERING HER CURRENT VIEWS OF THINGS.
JUDGE DAVILA: WELL, THAT'S WHAT I'M SAYING.
JUDGE DAVILA: YOU'RE GOING TO GET THAT, AREN'T YOU?
MR. WADE: MY VIEW IS IT'S TUMBLED IN, WHETHER I'VE ASKED THE QUESTION OR NOT, REPEATEDLY, WHETHER IT'S RESPONSIVE OR NOT. IT DOESN'T ALIGN WITH WHAT SHE ACTUALLY SAID AT THE TIME IN NUMEROUS DOCUMENTS. THERE'S ANOTHER DOCUMENT THAT THE COURT WILL NOTE AT 14104 WHERE IT IS TOTALLY INCONSISTENT WITH, WITH THE CONCLUSIONS AND HER TAKE AWAYS HERE.
JUDGE DAVILA: IS 14104 IN EVIDENCE?
MR. WADE: IT'S NOT, BUT WE MIGHT AS WELL PREVIEW TOMORROW'S 8:30 GIVEN THIS DISCUSSION. AND I WASN'T NECESSARILY INTENDING TO OFFER THE DOCUMENT BECAUSE THEY'RE NOTES, BUT I WAS -- UNLIKE --
JUDGE DAVILA: THESE ARE HER NOTES ALSO?
MR. WADE: MY UNDERSTANDING IS THAT THESE ARE HER NOTES. THE OTHER, YOU'LL NOTE, IS A REPORT TO HER TWO SUPERVISORS, HER TWO SUPERIORS, RIGHT? SO THEY'RE NOT NOTES. IT'S A COMMUNICATION, A PRETTY LENGTHY ONE, TO HER TWO SUPERIORS. THIS IS A DIFFERENT ONE. BUT HER REACTION IN REALTIME PRIOR TO --
JUDGE DAVILA: IF YOU WANT TO TAKE YOUR MASK OFF, GO AHEAD.
MR. WADE: PRIOR TO EXTRAORDINARY AMOUNTS OF NEGATIVE PUBLICITY, WHICH IS WHAT WE SAW TODAY, WAS FUNDAMENTALLY DIFFERENT IN REALTIME. AND SO I KNOW THAT I'M GOING TO GET -- I APPRECIATE THE COURT'S CAUTION, BUT --
JUDGE DAVILA: I LOOK AT THIS AND I STILL HAVE SOME PROBLEMS WITH THE RELEVANCE OF HER OPINION IS AFTER THE INVESTMENT AND AFTER GOING AND HEARING A BUNCH OF HEARSAY. IT'S -- WHAT SHE'S GOING TO TESTIFY ABOUT IS HER, AND WHAT SHE TOLD US, I THINK, IS I DON'T REMEMBER THE PANEL, I DON'T REMEMBER Q AND A. I REMEMBER MS. HOLMES AND I REMEMBER WHAT SHE SAID. THAT'S REFLECTED IN THE LAST PARAGRAPH, APPARENTLY, IN THIS EMAIL. AND I'M, I'M STRUGGLING TO FIND THE RELEVANCE OF THAT. CONCURRENT WITH THAT, THOUGH, IF THIS COMES IN, I THINK IT'S -- I DON'T WANT TO GET INTO MINI TRIALS, BUT YOU'LL HAVE TO SIT ON YOUR HANDS WHILE I GIVE MR. LEACH LATITUDE TO REHABILITATE WITH THIS.
MR. WADE: NO, I UNDERSTAND, AND WE'LL TAKE THE COURT'S COMMENTS OVERNIGHT. I WILL NOTE, AGAIN, THE POST-INVESTMENT EVIDENCE CAME IN OVER MY OBJECTION, SO IT'S NOT -- I DIDN'T OPEN THE DOOR. I'M JUST HAVING TO DEAL WITH IT GIVEN THAT THIS WITNESS HAS OFFERED TESTIMONY ABOUT IT, AND, YOU KNOW, HAVING TO MEET THE OBLIGATIONS. THERE'S NO MAGIC TO APRIL. HOW IS IT THAT THE GOVERNMENT CAN PICK THE ONE INTERACTION AFTER THIS THAT THEY WANT TO OFFER, BUT WE CAN'T PROBE --
JUDGE DAVILA: I'M SORRY, APRIL? YOU MEAN THE MEETING IN PALO ALTO?
MR. WADE: NO, NO. THE GOVERNMENT HAS CHOSEN A POST-INVESTMENT INTERACTION TO QUESTION THE WITNESS ABOUT, APRIL 2016. THEY SHOWED VIDEO, I THINK THEY LIKED THE PROXIMITY OF THAT INTERACTION TO THE VIDEO, THEY WANTED TO SHOW IT, THEY WANTED TO PORTRAY MY CLIENT IN A CERTAIN LIGHT. IN OUR VIEW IT SHOULDN'T HAVE COME IN, IT WASN'T RELEVANT. IT'S COME IN. THERE'S NO MATERIAL DIFFERENCE BETWEEN AN APRIL POST-INVESTMENT INTERACTION AND AN AUGUST ONE OR A DECEMBER ONE. AND SO --
JUDGE DAVILA: BUT I THINK MR. LEACH WOULD TELL US HE INTRODUCED THOSE AND QUERIED WHETHER OR NOT THIS WAS THE WITNESS -- HE COULD HAVE GOT THIS IN THROUGH ANY WITNESS, CANDIDLY. ANY WITNESS COULD HAVE COME IN AND SAID, YEAH, I SAW IT, YEAH, THAT'S WHAT SHE SAID. IT'S A STATEMENT, RIGHT? IT'S HER STATEMENT.
MR. WADE: THE VIDEO, BUT NOT THE MEETING RELATED TO IT. HE DIDN'T JUST ASK ABOUT THE VIDEO. IT WOULD BE A DIFFERENT KETTLE OF FISH IF WE ASKED JUST ABOUT THE VIDEO.
JUDGE DAVILA: BUT HERE YOU'RE ASKING THIS WITNESS TO COMMENT ON HER OPINIONS OF YOUR CLIENT'S STATEMENTS SOME MONTHS AFTER THE INVESTMENT, AND I JUST -- WHAT IS THE RELEVANCE OF HER -- OF THAT NOW?
MR. WADE: WELL, IT, IT -- IT'S RELEVANT FOR THE REASONS THAT WE'VE BEEN DISCUSSING. I DON'T HAVE A LOT TO ADD ABOUT IT. AGAIN, IT'S -- WHAT MR. LEACH ASKED ABOUT WAS NOT RELEVANT, BUT IT'S AS RELEVANT AS HIS IRRELEVANT STUFF, AND SO AS A MATTER OF FAIRNESS AND TO NOT MISLEAD THE JURY, WE THINK WE SHOULD BE ABLE TO PROBE IT. I WOULD SAY THE OTHER POINT, YOUR HONOR, AS I NOTED I THINK THIS MORNING, MAYBE I DIDN'T, THE STATEMENT AT THE BOTTOM TIES THE OBSERVATIONS OF THE TECHNOLOGY AND ITS FUNCTIONALITY BACK TO THE OBSERVATIONS THAT WERE MADE AT THE TIME OF THE INVESTMENT.
JUDGE DAVILA: YOU KNOW, LET ME JUST BE CANDID SINCE WE'RE DEAR FRIENDS HERE, ALL OF US, SINCE WE HAVE SPENT SOME TIME TOGETHER. SHE'S GOT -- TOMORROW SHE MAY VERY WELL, AND NOBODY IS TALKING TO HER OF COURSE IN THE INTERIM, BUT SHE COULD COME IN AND SHE COULD SAY SOMETHING, YEAH, I WAS FOOLED AGAIN, AND ARE YOU GOING TO LIVE WITH THAT ANSWER? YOU KNOW, PARDON ME, I DON'T MEAN TO BE FLIP HERE, BUT I'M JUST -- YOU KNOW, YOU'RE EXPERIENCED TRIAL LAWYERS AND THERE'S A RISK THERE.
MR. WADE: AGAIN, I WOULD ANTICIPATE THAT, NOTWITHSTANDING THE CONTEMPORANEOUS DOCUMENTS, I HAVE A SENSE OF WHAT THE WITNESS IS GOING TO SAY. I'VE HAD TO USE THE CONTEMPORANEOUS DOCUMENTS TO DEAL WITH THAT, AND SO THAT'S THE NATURE OF THE JOB.
JUDGE DAVILA: OKAY.
MR. LEACH: I JUST WANT TO SAY ONE MORE THING ABOUT OPENING THE DOOR, YOUR HONOR. MY QUESTIONS TO THIS WITNESS WERE, WHAT DID THE DEFENDANT SAY TO YOU ON THESE DATES? THAT DOESN'T OPEN THE DOOR TO EVERY OTHER THING THAT THE DEFENDANT SAID IN EVERY OTHER UNIVERSE. I DID NOT ASK THE WITNESS, WHAT DID YOU THINK ABOUT THAT? I DID NOT ASK THE WITNESS, WHAT WAS YOUR STATE OF MIND? THEY WANT TO USE LISA PETERSON'S STATE OF MIND YEARS AFTER THE INVESTMENT AS A SPRINGBOARD TO GET ALL OF THE DEFENDANT'S HEARSAY STATEMENTS INTO EVIDENCE, AND IT MAY FEEL LIKE A ONE-WAY STREET TO THE DEFENSE, BUT THAT'S BECAUSE OF THE HEARSAY RULE. AND SIMPLY BY ASKING, WHAT DID MS. HOLMES SAY ON APRIL 28TH, 2016, DOESN'T MEAN THAT YOU GET TO ASK, WHAT DID MS. HOLMES SAY AT THE AACC CONFERENCE AND WHAT DID YOU THINK ABOUT THAT AFTER THE FACT, WITNESS? AND IT IS NOT JUST A MINI TRIAL ON MS. PETERSON'S STATE OF MIND, YOUR HONOR. THERE'S TWO YEARS AFTER THIS OF RDV TRYING TO GET INFORMATION FROM THE DEFENDANT, TRYING TO FIGURE OUT WHAT IS GOING ON, LEARNING ABOUT LAWSUITS, S.E.C. INVESTIGATIONS, DOJ INVESTIGATIONS, AND IF HER STATE OF MIND REALLY MATTERS IN THIS TRIAL, WE'RE GOING TO HAVE TO EXPLORE THAT. AND I JUST DON'T THINK THAT YOU CAN USE THE DEFENDANT'S HEARSAY OUT OF COURT STATEMENTS AS A SPRINGBOARD TO ASK ABOUT A WITNESS'S STATE OF MIND YEARS AFTER THE INVESTMENT.
MR. WADE: ONE FINAL POINT, YOUR HONOR. THE GOVERNMENT WANTS TO HAVE THEIR CAKE AND EAT IT, TOO. THEY WANT TO GET IN ALL OF THE POST "WALL STREET JOURNAL" NEGATIVE EVIDENCE THAT THEY LIKE, ALL OF THE WAY THROUGH TO MR. EDLIN OFFERING HIS VIEW OF THE TECHNOLOGY AT THE END OF 2016, BUT THEY DON'T WANT US TO HAVE ANY OF THE EVIDENCE THAT IS ACTUALLY FAVORABLE AND CONSISTENT WITH THE CLIENT'S GOOD FAITH AND INTENT. SO IT'S NOT --
JUDGE DAVILA: YOU WILL HAVE A TIME TO PUT THAT ON IF YOU WANT.
MR. WADE: SURE. BUT I THINK THIS WITNESS IS HERE AND IT RELATES TO THE MEETING THAT SHE TALKED ABOUT. THERE'S A DIRECT LINE --
JUDGE DAVILA: LET ME ASK YOU THIS. WHAT ABOUT -- IN HER MEMO SHE'S QUOTING YOUR CLIENT. ARE YOU ASKING THAT YOUR CLIENT'S STATEMENTS BE ADMITTED AS WELL, OR JUST THIS WITNESS'S OBSERVATION AND EVALUATION? I THINK THOSE ARE TWO DIFFERENT THINGS.
JUDGE DAVILA: RIGHT. SO I THINK WE WILL CONTINUE OUR CONVERSATION ON THIS TOMORROW MORNING, BUT THOSE ARE THE -- AND WE HAD A DISCUSSION ABOUT WHETHER OR NOT A DEFENDANT CAN INTRODUCE STATEMENTS, UNLIKE THE PROSECUTION CAN, AND I THINK THERE'S AN ISSUE HERE WITH THAT AS WELL, IF THAT'S WHAT YOU'RE TRYING TO GET IN. IF YOU WANT TO GET IN THE QUOTES HERE -- I TOOK SOME TIME READING THIS WHEN IT WAS OFFERED IN, AND MAYBE WE'LL READ IT AGAIN TONIGHT A LITTLE CLOSER. BUT THERE CERTAINLY SEEM TO BE SOME QUOTES HERE THAT I DON'T THINK WOULD COME IN. YOU MIGHT HAVE TO ASK YOUR I.T. SPECIALIST TO DO SOME REDACTION IF THIS COMES IN AGAIN.
MR. WADE: HE CAN WORK WONDERS. SO WE'LL CONSIDER THE COURT'S COMMENTS AND MAYBE WE'LL COME BACK AT 8:30 TOMORROW TO ADDRESS THIS, OR WHENEVER THE COURT WOULD LIKE.
JUDGE DAVILA: I THINK SO. I'LL DEFER THE 5:00 A.M. START MY COURT REPORTER LIKES. WE'LL STICK TO 8:00, 8:15, SOMETHING LIKE THAT.
JUDGE DAVILA: ANYTHING YOU WANT TO SAY, MR. LEACH, BEFORE WE END FOR THE DAY?
MR. LEACH: NO, THANK YOU.
JUDGE DAVILA: AND FOR THE DEFENSE?
MR. WADE: NO. AND I DON'T THINK WE'LL BE MUCH LONGER WITH THIS WITNESS. I DON'T KNOW IF -- THERE WERE SOME ISSUES AT THE BEGINNING OF THE DAY WITH RESPECT TO MR. EISENMAN. I DON'T KNOW IF --
MR. DOWNEY: YOUR HONOR, I THINK IF I CAN IDENTIFY THE ISSUES?
JUDGE DAVILA: SURE. LET'S TALK ABOUT THOSE. ANYTHING FURTHER, MR. WADE, ON THIS? WE'LL CONTINUE OUR CONVERSATION ABOUT THIS TOMORROW, MR. LEACH?
MR. DOWNEY: LET ME JUST SAY THEM BY CATEGORY, AND MR. BOSTIC AND I HAVE DISCUSSED THESE, AND IF I MISSTATE ANYTHING HE'S SAID, I'M SURE HE'LL LET US KNOW. I THINK THERE ARE REALLY BASICALLY A COUPLE OF ISSUES, AND THEY MAY AFFECT BOTH THE TESTIMONY AND A FEW OF THE EXHIBITS THAT THE GOVERNMENT INTENDS TO PROFFER WITH ALAN EISENMAN, WHO IS AN INVESTOR WHOSE INVESTMENT DATE IS IN LATE 2013. MR. EISENMAN HAS REALLY, THROUGHOUT THE 302'S, THROUGHOUT THOSE INTERVIEWS WITH THE GOVERNMENT HAS MADE STATEMENTS ABOUT THE EFFECT OF THE LOSS OF THE INVESTMENT ON HIS RETIREMENT, ON HIS GRANDCHILDREN, ET CETERA. HE DID SO IN REALTIME WHEN HE WAS UNABLE TO LIQUIDATE THE INVESTMENT IN 2014 AND 2015 IN CONTEMPORANEOUS DOCUMENTS. EVIDENCE ABOUT THE EFFECT OF THE INVESTMENT LOSS ON HIM IS NOT RELEVANT TO WHAT WE'RE TRYING, AND IT MAY INDEED INTRODUCE A SUBSTANTIAL AMOUNT OF PREJUDICE TO THE DEFENDANT. THERE'S ALSO THE PROSPECT THAT IT WOULD INTRODUCE UNPLEASANT AND IRRELEVANT MINI TRIALS.
THE GRANDCHILD THAT HE'S WORRYING ABOUT IS THE GRANDDAUGHTER OF A BILLIONAIRE AND I THINK SOME OF THE CONCERNS MAY HAVE LESS MERIT THAN HE ARTICULATES. I DON'T WANT TO GET INTO THAT. I JUST WANT TO KEEP THAT OUT OF THE CASE. IT OCCURS -- COMMENTARY TO THAT EFFECT OCCURS IN THREE DOCUMENTS IN A LIMITED WAY. I THINK THE GOVERNMENT INTENDS TO OFFER THOSE DOCUMENTS. BUT I PROPOSE THAT THOSE BE REDACTED, AND I HAVE THE PLACES WHERE IT WOULD GET REDACTED, AND I CAN GIVE YOUR HONOR A COPY OF THAT AND MR. BOSTIC A COPY OF THAT TO LOOK AT OVERNIGHT. SO THAT'S ISSUE NUMBER ONE. ISSUE NUMBER TWO IS THAT MR. EISENMAN HAS DISCUSSED, IN HIS MOST RECENT 302 WITH THE GOVERNMENT, A NARRATIVE ABOUT HAVING SEVERAL CONVERSATIONS WITH MS. HOLMES IN THE TIME PERIOD BETWEEN 2006 AND 2010, THE POTENTIAL FOR AN INITIAL PUBLIC OFFERING OF THERANOS STOCK. TO BE CLEAR, I MENTIONED HIS 2013 INVESTMENT. HE ALSO HAD MADE AN INVESTMENT NEAR THE BIRTH OF THE COMPANY IN 2006.
SO HE WAS AN INVESTOR IN THAT PERIOD, BUT OUTSIDE THE CONSPIRACY PERIOD AND NOT THE SUBJECT OF THE COUNT IN THE INDICTMENT. THE GIST OF HIS TESTIMONY IS, I KEPT BEING PUT OFF ABOUT WHEN THERE WOULD BE AN IPO. THAT UNTO ITSELF IS A LENGTHY SUBJECT FOR EXPLORATION. THE TRUTH IS, AFTER HAVING ALL OF THOSE CONVERSATIONS AND BEING FRUSTRATED THAT THERE WASN'T AN IPO, HE CHOSE TO INVEST AGAIN IN 2013. SO IT'S OF LIMITED RELEVANCE IN THE CASE. IT, TOO, IS THE SUBJECT OF DISCUSSION IN SOME OF THE DOCUMENTS, AGAIN, IN A VERY LIMITED WAY AND I THINK IT COULD BE REDACTED -- YOU KNOW, THE DOCUMENTS COULD BE REDACTED TO CURE THAT PROBLEM. THE THIRD ISSUE IS ONE THAT MR. BOSTIC AND I HAVE TALKED ABOUT. I DON'T ANTICIPATE ISSUES WITH THIS, BUT JUST TO FLAG IT FOR THE GOVERNMENT. THERE'S A LONG COMPOSITE EXHIBIT OF EMAILS AND NOTES AND SO FORTH THAT IS EXHIBIT 14. I DON'T THINK MR.
BOSTIC INTENDS TO OFFER THAT TO BE ADMITTED IN THE CASE, AND I WOULD JUST ASK THAT IF THAT IS ADMITTED, THAT HE CARVE THAT UP INTO SUBEXHIBITS BECAUSE IT'S AN AGGREGATION OF MATERIAL THAT DOESN'T GO TOGETHER. I'M ACTUALLY NOT SURE WHY IT'S AGGREGATED IN THE WAY THAT IT IS. BUT FOR PURPOSES OF THE RECORD, THE DOCUMENTS THAT RELATE TO THE PERSONAL FINANCIAL SITUATION OF MR. EISENMAN ARE EXHIBIT 2216, 2468, AND IN A LIMITED WAY 1371. AND MY REQUEST, I SHOULD SAY, IN CONNECTION WITH THAT, YOUR HONOR, IS NOT ONLY THAT THAT BE ADJUDGED NOT TESTIMONY OR AN EXHIBIT THAT SHOULD COME IN, BUT ALSO THAT THE WITNESS BE SPECIFICALLY ADMONISHED BECAUSE I THINK THERE'S A REAL DANGER OF IT BASED ON WHAT IT APPEARS TO BE HIS BEHAVIOR IN THE CASE TO DATE.
JUDGE DAVILA: THAT'S JUST RELATED TO NUMBER THREE, YOUR --
MR. DOWNEY: WELL, THAT RELATES TO NUMBERS ONE AND TWO.
JUDGE DAVILA: I SEE, OKAY.
MR. DOWNEY: THOSE ARE JUST TOPICS THAT HE HAS BROUGHT UP WITH SOME FREQUENCY, AND I'LL LEAVE IT THAT.
JUDGE DAVILA: OKAY. THANK YOU.
MR. DOWNEY: SO I CAN HAND UP HOW THE EXHIBITS, WHICH I THINK WOULD OTHERWISE BE ADMITTED, WOULD BE AFFECTED.
JUDGE DAVILA: MR. BOSTIC?
MR. DOWNEY: AND I'LL GIVE MR. BOSTIC A COPY OF THE SAME. THAT'S FOR YOU (HANDING). AND THIS IS WHAT THE DOCUMENT WOULD LOOK LIKE REDACTED. DO YOU HAVE THE UNREDACTED VERSION? THAT'S 2216, AND THIS IS 2468, AND THEN THERE IS 1371.
JUDGE DAVILA: THE HIGHLIGHTED PORTION, WHAT IS THAT?
MR. DOWNEY: YEAH, THAT'S THE PROPOSED REDACTION.
JUDGE DAVILA: I SEE.
MR. DOWNEY: I SHOULD SAY, I THINK ON 1371, THE REDACTION MAY NOT BE NECESSARY BECAUSE MR. BOSTIC HAD INFORMED ME THAT HE ONLY INTENDS TO OFFER REALLY THE FIRST FIVE PAGES, SO IT MAY BE THAT OVERNIGHT HE CAN DIVIDE THAT EXHIBIT AND WE'LL BE ABLE TO DO IT THAT WAY.
JUDGE DAVILA: OKAY. THANK YOU. MR. BOSTIC?
MR. BOSTIC: YOUR HONOR, I'LL TRY TO TAKE THE ISSUES FROM SIMPLEST TO MOST COMPLICATED. FIRST, WHEN IT COMES TO EXHIBIT 14, WHICH IS MENTIONED THIRD BY MR. DOWNEY, HE'S CORRECT THAT THE GOVERNMENT CURRENTLY DOESN'T PLAN TO OFFER THAT INTO EVIDENCE. IF IT DOES BECOME APPROPRIATE TO OFFER IT AT SOME POINT, EITHER TO REPLACE THE WITNESS'S RECOLLECTION UNDER 803 OR FOR SOME OTHER APPROPRIATE PURPOSE, THE GOVERNMENT WILL ATTEMPT TO DO THAT IN A WAY THAT DOESN'T CREATE CONFUSION OR BURDEN THE EVIDENCE RECORD. BUT I THINK THAT IS A MOOT POINT.
JUDGE DAVILA: OKAY. THANK YOU.
MR. BOSTIC: ON POINT NUMBER ONE, I THINK THERE'S NO DISAGREEMENT OVER THE PRINCIPLE THAT THE COURT HAS RULED ON THE ADMISSIBILITY OF DOWNSTREAM EFFECTS, FINANCIAL EMOTIONAL HARM SUFFERED BY VICTIMS IN THIS CASE. THE GOVERNMENT HAS REVIEWED THAT ORDER, UNDERSTANDS IT. I WILL REVIEW IT AGAIN BEFORE MR. EISENMAN'S TESTIMONY TO MAKE SURE WE COMPLY WITH IT IN ELICITING TESTIMONY FROM HIM, AND IT'S ALSO OUR PRACTICE TO HAVE CONVERSATIONS WITH WITNESSES ABOUT AREAS THAT NEED TO BE AVOIDED IN ORDER TO COMPLY WITH THE COURT'S ORDERS. BUT I WANT TO MAKE SURE THAT WE'RE ON THE SAME PAGE, BECAUSE THE DEFENSE AND THE PROSECUTION DON'T ALWAYS AGREE ON WHERE THE LINE IS WHEN IT COMES TO THAT DOWNSTREAM EFFECT TESTIMONY. I JUST RECEIVED DEFENSE COUNSEL'S PROPOSED REDACTIONS. I WOULD LIKE THE EVENING TO LOOK AT THOSE IF I COULD AND THEN PERHAPS WE CAN FINISH THIS CONVERSATION TOMORROW MORNING IF THE COURT IS AMENABLE. FOR NOW I'LL JUST SAY THAT PART OF MR.
EISENMAN'S TESTIMONY IS GOING TO INVOLVE EFFORTS THAT HE MADE TO GET INFORMATION FROM MS. HOLMES BEFORE AND AFTER HIS 2013 INVESTMENT. THE WILLINGNESS OF AN ALLEGED FRAUDSTER TO PROVIDE INFORMATION TO A VICTIM IS RELEVANT IN A CASE LIKE THIS. TO THE EXTENT THAT SOMEONE WHO HAS DECEIVED SOMEONE PREVIOUSLY IS WILLING TO PROVIDE ADDITIONAL INFORMATION OR STONEWALLS THAT PERSON, REFUSING TO PROVIDE THEM DETAIL IS RELEVANT TO THAT INDIVIDUAL'S INTENT AND KNOWLEDGE. IN THIS CASE, ONE OF THE TOPICS THAT MR. EISENMAN WAS SEEKING INFORMATION ON WAS THE POTENTIAL FOR A LIQUIDITY EVENT RELATING TO THERANOS, WHETHER THAT WAS AN IPO OR SOMETHING ELSE. SO WE SEE IN THE CONVERSATION BETWEEN MR. EISENMAN AND MS. HOLMES THAT HE'S ASKING HER QUESTIONS ABOUT A POTENTIAL LIQUIDITY EVENT, THE POSSIBILITY OF SELLING HIS SHARES EITHER TO THERANOS OR TO A THIRD PARTY, AND IN CONNECTION WITH THAT, HE EXPLAINS SOME LIFE CIRCUMSTANCES THAT CREATE, IN HIS MIND, HIS NEED TO HAVE THAT INFORMATION IN ORDER TO WEIGH THINGS FOR HIS RETIREMENT OR FAMILY OBLIGATIONS. THOSE ARE THERE, IN MY VIEW, FOR CONTEXT RELATING TO HIS REQUEST FOR MORE INFORMATION. THEY'RE NOT CENTRAL TO HIS TESTIMONY. WE DON'T PLAN TO HIGHLIGHT THEM. AND I DON'T BELIEVE THAT THE INFORMATION THAT HE DISCLOSES IN THESE EXHIBITS RUNS AFOUL OF THE COURT'S ORDER, BUT I'M SENSITIVE TO MR. DOWNEY'S CONCERNS, SO I WILL TAKE A CLOSER LOOK.
JUDGE DAVILA: WELL, IF HE'S GOING TO TESTIFY IN THE BROAD SCHEME, THIS WAS IMPORTANT TO MY FINANCIAL PLANNING, MY RETIREMENT, MY WHATEVER IT IS, THAT GENERAL TYPE OF DESCRIPTION I THINK IS APPROPRIATE. IT'S PART OF HIS PLANNING, AND HE CAN TALK ABOUT THAT. IF HE -- AND I THINK WE START TO GET INTO GRAVEL WHEN HE SAYS, WELL, THIS WAS CRITICAL FOR WHATEVER REASON AND GETS TESTIMONY IN ABOUT, YOU KNOW, PERSONAL FEELINGS AND THOSE TYPES OF THINGS, THAT'S WHERE WE'LL GET INTO THE WEEDS A LITTLE BIT I THINK. BUT GENERAL TOPICS ABOUT, WELL, IT'S IMPORTANT FOR MY FINANCIAL PLANNING AND MY HEIRS, THOSE TYPES OF THING, AND GENERALLY, I DON'T KNOW IF THAT'S WHAT HE'S GOING TO TALK ABOUT, I DON'T HAVE A PROBLEM WITH THAT, AND I DON'T THINK MR. DOWNEY WOULD EITHER, IF IT'S GENERAL ESTATE PLANNING AND THE REASON AND THE IMPORTANCE OF IT, TO CARE FOR YOUR FAMILY OR WHATEVER. AND WHAT EXHIBIT GOES TO NUMBER ONE? WHICH ONE OF THESE?
MR. DOWNEY: IT'S THREE EXHIBITS. IT'S 2468, 2216, AND 1371.
JUDGE DAVILA: OH, ALL OF THESE WOULD GO TO --
MR. DOWNEY: YEAH, THEY WILL ALL BE -- AND YOU'LL SEE THE PROPOSED TEXT.
JUDGE DAVILA: OKAY.
MR. DOWNEY: YOUR HONOR, I'M TEMPTED TO SAY I'M GLAD THAT WE HAD THIS CONVERSATION, BECAUSE SOMETHING THAT MR. BOSTIC SAID MADE ME WANT TO COMMENT. THE PURPOSE FOR WHICH HE INTENDS TO PROFFER THAT EVIDENCE IS TOTALLY INAPPROPRIATE. THIS IS A SHAREHOLDER PROCEEDING PURSUANT TO A SHAREHOLDER AGREEMENT WHICH DEFINES THE RIGHTS OF HIM AND EVERY OTHER SHAREHOLDER. HIS REQUEST FOR INFORMATION OR REQUEST FOR UNIQUE INFORMATION THAT NO OTHER SHAREHOLDER HAD, TO PUT IN FRONT OF THE JURY THAT THAT IS SOME OBFUSCATION BY THE DEFENDANT TO INSIST THAT THE SHARING OF INFORMATION BE UNIFORM ACROSS ALL SHAREHOLDERS AND TO IMPLY THAT THAT IS SOME FORM OF OBFUSCATION IS TOTALLY INAPPROPRIATE.
MR. BOSTIC: YOUR HONOR, HERE'S ANOTHER SITUATION WHERE THE TWO PARTIES VIEW THE FACTS DIFFERENTLY. THAT'S CERTAINLY NOT HOW I WOULD DESCRIBE WHAT HAPPENED HERE. MR. EISENMAN HAD A HISTORY OF QUARTERLY CALLS WITH MS. HOLMES FOR A WHILE. AT A CERTAIN POINT THOSE CALLS STOPPED. MR. EISENMAN WAS -- I THINK IN HIS COMMUNICATIONS AND IN HIS TESTIMONY, IT WILL BE CLEAR THAT HE WAS NOT NECESSARILY ASKING FOR INFORMATION BEYOND WHAT OTHER INVESTORS WERE RECEIVING. HE WANTED INFORMATION. FULL STOP. AND IF THAT MEANT THAT MS. HOLMES WOULD ENGAGE MORE WITH ALL INVESTORS, THEN THAT WOULD HAVE SATISFIED HIM. HE WASN'T ASKING FOR SPECIAL TREATMENT PER SE. HE WANTED TO KNOW WHAT WAS HAPPENING WITH THE COMPANY. HE FELT THAT HIS MILLION DOLLAR-PLUS INVESTMENT ENTITLED HIM -- ALTHOUGH HE UNDERSTANDS THE LIMITATIONS TO HIS RIGHTS TO INFORMATION, HE FELT THAT IT WAS APPROPRIATE FOR MS. HOLMES TO TELL HIM MORE ABOUT WHAT WAS GOING ON WITH THE COMPANY SO THAT HE COULD DECIDE WHAT TO DO WITH HIS INVESTMENT.
MR. DOWNEY: IT'S TRUE THAT HE HAD A QUARTERLY MEETING WITH MS. HOLMES FOR A PERIOD. HE WAS UNIQUE IN THAT REGARD AMONGST THE SCORES OF SHAREHOLDERS THAT ARE AT ISSUE HERE. IT'S CLEAR FROM WHAT MR. BOSTIC SAID THAT THEY WANT TO CREATE AN IMPRESSION THAT EITHER WHAT MS. HOLMES SAID TURNED OUT NOT TO EVENTUATE OR THAT BY FAILING TO PROVIDE COMPARABLE INFORMATION LATER, THAT EVIDENCE IS SOME INTENT OF A CRIME. UNDER THE DOCUMENTS THAT HE SIGNED, PLAIN AND SIMPLE ON THE FACE OF THE AGREEMENT, HE AGREES THAT HE HAS NO ACCESS TO DATA WHATSOEVER; AND, SECOND, ANY PLANNING THAT THE COMPANY PROVIDES TO HIM IS CONDITIONAL SUBJECT TO CHANGE AND NOT SOMETHING ON WHICH HE IS GOING TO RELY. THE NOTION THAT DECLINING TO GIVE HIM THAT INFORMATION DEMONSTRATES, YOU KNOW, GUILTY INTENT IN CONNECTION WITH CHARGES LIKE THESE IS, I THINK, A TERRIBLE, UNFAIR, AND PREJUDICIAL IMPLICATION TO CREATE IN FRONT OF THE JURY.
JUDGE DAVILA: IS IT, IS IT APPROPRIATE FOR THE JURY TO LEARN THAT THERE WAS A HISTORY OF QUARTERLY MEETINGS THAT WAS AFFORDED THIS INVESTOR AND THAT THEY STOPPED SOMEHOW? I DON'T KNOW WHO STOPPED IT, BUT THEY STOPPED. SHOULDN'T THEY KNOW THAT?
MR. DOWNEY: I THINK WITHOUT GOING INTO THE CONTENT OF THOSE MEETINGS TO IMPLY THAT EITHER NOT GETTING COMPARABLE INFORMATION IS SOMEHOW SUSPICIOUS OR THAT, YOU KNOW, THEY PROJECTED THERE WOULD BE AN IPO AT SOME POINT AND THEY DECIDED TO REMAIN A PRIVATE COMPANY THEREAFTER, YOU KNOW, THE FACT THAT THERE WERE QUARTERLY MEETINGS ALONE MIGHT BE CAPABLE OF BEING ADMITTED, AS WOULD BE THE FACT THAT HE WAS UNIQUE WITH RESPECT TO GETTING THESE QUARTERLY MEETINGS.
JUDGE DAVILA: WELL, IF HE HAD ACCESS TO A QUARTERLY MEETING THAT NO ONE ELSE HAD, THAT MUST HAVE BEEN A MUTUAL DECISION. I DON'T KNOW.
MR. DOWNEY: IT WAS PURSUANT TO HIS REQUEST AND IT WAS STOPPED BECAUSE OF THE FEROCITY WITH WHICH HE WAS -- ON SOME OCCASIONS, THE DOCUMENTS REFLECT DAILY CALLING THE COMPANY AND ASKING FOR INFORMATION NOT IN THE PERIOD THAT IS THE CONSPIRACY PERIOD THAT WE'RE DEALING WITH, AS BROAD AS THAT PERIOD IS, NOT IN THE PERIOD AROUND HIS 2013 INVESTMENT, BUT FOR THE ENTIRETY OF HIS INVOLVEMENT WITH THIS COMPANY AND THEREAFTER. SO I JUST -- I THINK IT'S AN IMPRESSION THAT -- THE GOVERNMENT KNOWS THE RECORD. THE GOVERNMENT, YOU KNOW, TO -- THERE'S PLENTY THAT THEY COULD DO WITH THIS WITNESS THAT DOESN'T RELATE TO TRYING TO CREATE THAT IMPRESSION, WHICH IS FALSE.
JUDGE DAVILA: MR. BOSTIC?
MR. BOSTIC: YOUR HONOR, I THINK THE DEFENSE CAN EXPLORE THIS IN CROSS-EXAMINATION TO THE EXTENT THAT THEY NEED TO. THE RECORD AND THE EVIDENCE REFLECT THE TRUTH HERE. I THINK THE PARTIES JUST SEE IT DIFFERENTLY. WHEN IT COMES TO THE HISTORY OF COMMUNICATION HERE, I THINK THE DEFENSE HAS ITS ARGUMENTS ABOUT WHAT THE CONTRACTS REQUIRE. BUT THIS WITNESS SHOULD BE ALLOWED TO EXPLAIN WHY HE TOOK THE ACTIONS HE DID, WHY HE SOUGHT MORE INFORMATION FROM MS. HOLMES AND FROM THERANOS, AND HIS EXPERIENCE, HIS FUTILE EXPERIENCE IN MAKING THOSE ATTEMPTS TO TRY TO GET THAT INFORMATION AND GET ANSWERS TO HIS QUESTIONS, SOME OF WHICH BEAR -- OR MANY OF WHICH BEAR DIRECTLY ON THE SUBJECTS THAT MS. HOLMES WAS DECEPTIVE ABOUT IN CONNECTION WITH NEWS ARTICLES AND IN THE OTHER INVESTOR CONVERSATIONS THAT WE HAVE HEARD ABOUT SO FAR IN TRIAL.
JUDGE DAVILA: AND ALL OF THIS WAS WITHIN THE CHARGED PERIOD OF TIME?
MR. BOSTIC: IT INCLUDES CONVERSATIONS DURING THE CHARGED PERIOD OF TIME, YOUR HONOR. THE HISTORY OF COMMUNICATION THAT WE'RE TALKING ABOUT EXTENDS TO THE PAST ALSO. AS WAS THE CASE WITH MR. TOLBERT'S TESTIMONY, WHICH I BELIEVE ALSO COVERED SOME INTERACTION IN A PRE-2010 TIME PERIOD, THE FACT THAT THE GOVERNMENT CHARGES A FRAUD SPANNING FROM 2010 ON DOESN'T ERASE HISTORY BEFORE THAT. I THINK THERE'S NOTHING WRONG WITH GIVING THE JURY THE THREAD OF A CONVERSATION THAT CONTINUES INTO THE PAST, BUT THEN HAS RELEVANT PORTIONS DURING THE TIME PERIOD ALLEGED IN THE INDICTMENT. AND I HAVEN'T ADDRESSED THE ISSUE OF THE IPO YET, BUT THAT'S RELEVANT FOR SIMILAR REASONS. IT'S PART OF MR. EISENMAN'S CONVERSATIONS WITH THE DEFENDANT ABOUT WHETHER THERE WAS GOING TO BE A LIQUIDITY EVENT OR NOT. IN PARTICULAR, THAT CONVERSATION CONTINUED INTO THE POST-2010 TIME PERIOD. AND I SHOULD POINT OUT, THIS ISN'T JUST, YOU KNOW, AN UNRELATED TOPIC HERE. AS MR. EISENMAN UNDERSTOOD IT, I EXPECT THAT HE'LL TESTIFY THAT THERANOS'S WILLINGNESS OR INTENTION TO MOVE FORWARD WITH AN IPO TOLD HIM SOMETHING ABOUT THE STATE OF THE COMPANY'S FINANCIAL HEALTH, AND THE STATE OF THE TECHNOLOGY AS WELL. SO REPRESENTATIONS MADE BY HOLMES TO HIM ABOUT THE LIKELIHOOD OR THE TIMING OF AN IPO WERE NOT JUST ABOUT A LIQUIDITY EVENT FOR HIM AND A CHANCE TO REALIZE GAIN ON HIS INVESTMENT, BUT WERE ALSO IMPLICIT, CLEAR REPRESENTATIONS ABOUT WHERE THE COMPANY STOOD IN TERMS OF ITS FINANCIAL GROWTH, COMMERCIAL SUCCESS, AND THE DEVELOPMENT OF ITS TECHNOLOGY, AND THAT'S WHY IT'S RELEVANT.
MR. DOWNEY: WELL, TO BE CLEAR, YOUR HONOR, THIS IS AN EFFORT TO INJECT ESSENTIALLY A DIFFERENT CONSPIRACY INTO THIS CASE, AN UNCHARGED, UNNOTICED CONSPIRACY THAT THERE WERE LIES ABOUT WHETHER OR NOT THE COMPANY COMMITTED TO CONDUCTING AN IPO KNOWING IT WAS NOT GOING TO CONDUCT AN IPO, WHICH IN AND OF ITSELF, IF THAT WERE CHARGED AND THAT'S WHAT WE WERE DEBATING ABOUT, I WOULD BE QUITE COMFORTABLE WITH THAT CASE. THE ISSUE IS THAT I SHOULD NOT HAVE TO TRY THAT CASE, AND I PARTICULARLY SHOULD NOT HAVE TO TRY IT WHEN, AS THE GOVERNMENT KNOWS, THIS DEFENDANT REPRESENTED THAT HE UNDERSTOOD THERE WAS NOT A PUBLIC MARKET, HE UNDERSTOOD THAT THERE MAY NEVER BE A PUBLIC MARKET, HE UNDERSTOOD THAT ANY PROJECTION OR ESTIMATE OF THE COMPANY AS TO WHAT MIGHT HAPPEN IN THE FUTURE WAS NOT RELIABLE. I MEAN, THAT'S THE FRAMEWORK UNDER WHICH ALL OF THESE INTERACTIONS THAT HE'S CHARACTERIZING HAPPENED.
THERE'S A SIGNIFICANCE DISPUTE BETWEEN THE PARTIES IN REALTIME AS TO WHO SAID WHAT, AND I THINK TO THROW THAT INTO THIS TRIAL WHEN ALL OF THAT WITH MS. HOLMES IS YEARS BEFORE THE INVESTMENT DECISION IN 2013. THE PROBLEM THE GOVERNMENT HAS HERE IS THE OFFER TO MR. EISENMAN TO INVEST IN 2013 IS IN A LIMITED WINDOW BETWEEN DECEMBER 15TH AND DECEMBER 31ST. MR. EISENMAN DOESN'T SPEAK TO MS. HOLMES DURING THAT PERIOD. HE HAS NOT SPOKEN TO HER FOR A SUBSTANTIAL PERIOD PRIOR TO THAT TIME. HE'S TAKEN NO REPRESENTATIONS FROM HER ABOUT THIS PARTICULAR INVESTMENT OPPORTUNITY OTHER THAN WHAT IS GENERALLY AVAILABLE TO SHAREHOLDERS. THEY, THEREFORE, WANT TO IMPORT ALL OF THESE PAST INTERACTIONS FOR PURPOSES OF BOLSTERING, YOU KNOW, THE CLAIM THAT SOMEHOW THE INVESTMENT LOSS OF MR. EISENMAN RELATES TO THE DEFENDANT. HE DOES HAVE INTERACTIONS WITH MR. BALWANI AND THEY CAN -- YOU KNOW, I UNDERSTAND MR. BALWANI IS ALLEGED TO BE A COCONSPIRATOR AND THAT CAN COME IN. BUT I'M NOT CONCERNED ABOUT THAT. THAT'S FAIR GAME.
MR. BOSTIC: YOUR HONOR, JUST A COUPLE OF POINTS ON THAT. THE FACT IS THE STORY OF MR. EISENMAN'S INTERACTIONS WITH THERANOS AND MS. HOLMES DID NOT START IN 2010. IT WOULD BE DECEPTIVE AND PRESENTING AN INCOMPLETE PICTURE TO THE JURY TO BEGIN HIS TESTIMONY THERE WITHOUT, AGAIN, ALLOWING THE JURY TO UNDERSTAND THE CONTEXT OF THOSE LATER INTERACTIONS, TO UNDERSTAND WHAT MR. EISENMAN HAD PREVIOUSLY BEEN TOLD, AND WHAT INFORMATION WAS AVAILABLE TO HIM IN FULL AT THE TIME THAT HE MADE HIS DECISION TO INVEST IN 2013.
JUDGE DAVILA: WELL, IT SEEMS LIKE -- AND I DON'T THINK, MR. DOWNEY, YOU ARE OBJECTING TO THE JURY KNOWING ABOUT THE DURATION OF THE RELATIONSHIP.
MR. DOWNEY: NO, I DON'T OBJECT TO THAT, AND I DON'T OBJECT TO THE FACT THAT THEY KNOW THAT HE WAS AN INVESTOR. BUT I DON'T SEE WHAT ELSE ABOUT THAT PERIOD -- IF THERE'S ANYTHING, YOU KNOW, THAT IS DIRECTLY RELEVANT TO THE CONSPIRACY ALLEGATIONS THAT HE WANTS TO TESTIFY TO THAT HE THINKS HE KNEW ABOUT THE COMPANY, FOR EXAMPLE, HE MAKES SOME STATEMENTS ABOUT WHAT HE THINKS HE KNEW ABOUT THE RELATIONSHIP BETWEEN THERANOS AND PHARMACEUTICAL COMPANIES, I THINK THAT'S, YOU KNOW, FAIR GAME. THIS IS A DIFFERENT ISSUE. THIS IS INJECTING A WHOLE NEW THEORY OF LIABILITY INTO THE CASE. WE'VE GOT PLENTY HERE TO DEAL WITH.
MR. BOSTIC: YOUR HONOR, JUST ONE FINAL POINT. MR. DOWNEY HAS REFERENCED SEVERAL TIMES LANGUAGE IN THE STOCK PURCHASE AGREEMENT, A LEGAL DOCUMENT ENTERED INTO BETWEEN MR. EISENMAN AND THERANOS. LANGUAGE IN THAT CONTRACT WHERE THE INVESTOR SAID THAT THEY HAVE ACCESS TO ALL OF THE INFORMATION THAT THEY NEED, WHERE THEY SAY THAT THEY UNDERSTAND THE COMPANY'S HIGH RISK, PROVISIONS LIKE THAT MIGHT HAVE A GREATER EFFECT WERE THIS A CIVIL CASE BROUGHT BY THE INVESTOR AGAINST THE COMPANY WHERE THE DECISION MIGHT TURN ON WHETHER THE INVESTOR HAD WAIVED CERTAIN RIGHTS BY MAKING THOSE STATEMENTS. THEY DO NOT, HOWEVER, RENDER INADMISSIBLE A VICTIM'S STATEMENTS OR TESTIMONY ABOUT MISREPRESENTATIONS THAT A FRAUDSTER MADE TO HIM BEFORE THE SIGNING OF THAT CONTRACT. THEY CANNOT BE USED AS A SHIELD TO KEEP OUT TESTIMONY ABOUT PREVIOUS MISREPRESENTATIONS.
JUDGE DAVILA: OKAY.
MR. DOWNEY: YOUR HONOR, ONE OTHER THING. I JUST WANTED TO COMMENT ON YOUR HONOR'S COMMENT ABOUT TO CONSIDER, NOT TO BELABOR THE COURT FOR THE COURT, BUT JUST WITH RESPECT TO THE SCOPE ON THE EFFECT OF THE INVESTMENT ON HIS RETIREMENT PLANNING AND SO FORTH, WITH RESPECT, I DISAGREE THAT COMMENTS ABOUT HERE'S WHAT I WAS THINKING IN TERMS OF WHAT I WOULD DO WITH THE MONEY, THAT HAS TO DO WITH HIS STATE OF MIND IF HE REALIZES A RETURN. IT DOESN'T HAVE TO DEAL -- IT HAS NOTHING TO DO WITH WHAT IS MATERIAL IN HIS MAKING THE INVESTMENT DECISION OR THE STATE OF MIND OF THE DEFENDANT. THOSE ARE THE RELEVANT ISSUES. SO HOW MONEY IS GOING TO BE USED, WHETHER IT'S LOST OR REPRESENTS A SUBSTANTIAL GAIN, THAT'S NOT RELEVANT IN THE CASE. SO I THINK THE SCOPE OF THE ADMONITION, YOU KNOW, SHOULD INCLUDE THOSE ISSUES, AND I THINK THAT'S THE -- I THINK IT'S A HELPFUL CONVERSATION. THAT'S THE NUM OF OUR DISAGREEMENT.
JUDGE DAVILA: WELL, I THINK IT'S -- WHEN I SAID I THINK HE CAN SAY, THIS IS PART OF MY PLANNING --
MR. DOWNEY: YEAH.
JUDGE DAVILA: -- I DON'T SEE ANY HARM IN THAT. THAT'S COMMON KNOWLEDGE. PEOPLE DO THAT. AND THIS IS WHAT HE WAS DOING AS PART OF HIS FINANCIAL PLANNING. AND IT'S AN INVESTMENT. WHATEVER IT IS, THAT'S FINE.
MR. DOWNEY: I THINK THAT FAR IS FINE. IT'S GOING BEYOND THAT.
JUDGE DAVILA: WELL, I THINK THAT'S WHAT WE'RE TALKING ABOUT, TOO. IF HE TALKS ABOUT SOMETHING THAT IS REAL OR NOT THAT SEEKS TO INJECT SYMPATHY OR SOMETHING LIKE THAT, IT MIGHT NOT BE APPROPRIATE FOR THAT. THAT'S WHAT I'M THINKING ABOUT. THAT'S WHAT I HEARD. BUT GENERAL TERMS ABOUT FINANCIAL PLANNING, I THINK THAT'S -- WHY ELSE WOULD HE INVEST? WHY DO PEOPLE DO THAT?
MR. DOWNEY: HE HARDLY NEEDS TO SAY IT.
MR. BOSTIC: YOUR HONOR, JUST ON THAT POINT, THE LANGUAGE THAT WE'RE TALKING ABOUT -- AND I EXPECT THE LANGUAGE THAT IS REDACTED IN THESE EMAILS -- IT ALL OCCURS BEFORE THE ACTUAL LOSS IN THIS CASE, SO NONE OF IT IS OF THE SORT THAT I THINK THE COURT WAS TARGETING IN ITS MOTION IN LIMINE ORDER --
JUDGE DAVILA: RIGHT.
MR. BOSTIC: -- RELATING TO THE HARM AND THE DOWNSTREAM EFFECTS THAT MIGHT HAVE FLOWED FROM THE LOSS.
JUDGE DAVILA: WELL, WE'LL ALL LOOK AT THIS. SO WHAT IS THE SCHEDULE THEN? WE'LL FINISH MS. PETERSON, I THINK MR. WADE HAS ABOUT SEVEN MINUTES LEFT, AND THEN SOME REDIRECT?
MR. DOWNEY: I THINK DR. CULLEN, IT SOUNDS LIKE SHE'LL BE AN HOUR IN TOTAL PERHAPS.
JUDGE DAVILA: AND THEN WE'RE GOING TO CALL THE DOCTOR I GUESS; IS THAT RIGHT?
MR. SCHENK: YOUR HONOR, I NEED TO SPEAK WITH THE AGENTS. THE DEFENSE ASKED US A COUPLE OF DAYS AGO FOR NAMES OF WITNESSES AND WITNESS ORDER TODAY. THEY ASKED FOR THREE NAMES THAT DAY, INCLUDING MS. PETERSON. SO WE WERE UNDER THE IMPRESSION THAT WE COULD ACCOMPLISH MS. PETERSON'S TESTIMONY AND TWO OTHER WITNESSES TODAY.
JUDGE DAVILA: TODAY.
MR. SCHENK: AGAIN, THAT WAS BASED ON ASKING FOR ADDITIONAL NAMES, REQUESTS FROM THE DEFENSE FOR ADDITIONAL NAMES. WE HAD TO TAKE A WITNESS OUT OF ORDER. WE CALLED MS. PETERSON FIRST BECAUSE DR. CULLEN HAD TRAVEL ISSUES PREVENTING HER FROM FLYING IN YESTERDAY. SHE ARRIVED THIS MORNING, AND SO WE PUT MS. PETERSON ON THE STAND FIRST. I DO NOT KNOW -- MS. -- DR. CULLEN HAD A FLIGHT OUT TONIGHT. I TOLD HER SHE WOULD GET ON THE STAND TODAY AND SHE WOULD GET OFF THE STAND TODAY BECAUSE THAT'S THE IMPRESSION I WAS UNDER. I DON'T KNOW WHETHER SHE'S GOING TO GET ON THAT FLIGHT AND FLY HOME TONIGHT AND WE WILL BRING HER BACK NEXT WEEK OR AT SOME OTHER POINT BECAUSE WE THOUGHT SHE WOULD FINISH TODAY. SO I DON'T KNOW WHO THE NEXT WITNESS IS. I'D LIKE TO SPEND SOME TIME THIS EVENING INQUIRING ABOUT THAT.
JUDGE DAVILA: SURE.
MR. SCHENK: IT WOULD BE VERY HELPFUL IF WE COULD GET A REALISTIC ESTIMATE FROM THE DEFENSE ON THE LENGTH OF CROSS REMAINING FOR PETERSON, AS WELL AS EISENMAN, BECAUSE SOMETIMES WE'VE BROUGHT TOO MANY WITNESSES BECAUSE WE THOUGHT THAT THE CROSSES WOULD END IN TIME, AND IT WOULD BE HELPFUL TO PROVIDE ESTIMATES THAT WERE MORE REALISTIC.
JUDGE DAVILA: WELL, I'M SURE -- THANK YOU. I'M SURE MR. WADE HAS MORE THAN SEVEN MINUTES TOMORROW.
JUDGE DAVILA: WHAT I'VE LEARNED IS THAT THOSE TERMS ARE QUITE RELATIVE IN THIS TRIAL.
JUDGE DAVILA: SO WHAT DO YOU THINK? CAN WE FINISH TWO WITNESSES? CAN WE FINISH MS. PETERSON AND A WITNESS TOMORROW?
MR. DOWNEY: I THINK CERTAINLY DR. CULLEN. MY IMPRESSION IS THAT THAT'S A BRIEF WITNESS.
MR. SCHENK: I DON'T THINK THERE'S ANY QUESTION THAT DR. CULLEN WOULD FINISH IF SHE'S STILL IN TOWN. I'M WONDERING IF EISENMAN, WHO IS IN TOWN, IF EISENMAN FOLLOWS PETERSON, CAN -- WILL THE GOVERNMENT NEED A WITNESS AFTER EISENMAN OR WILL EISENMAN NOT FINISH TOMORROW?
MR. DOWNEY: THAT I DON'T KNOW, YOUR HONOR. SOME OF IT RELATES TO THE RULINGS ON THESE ISSUES BECAUSE THEY TAKE US INTO COMPLEX AREAS. BUT I WOULD -- I WOULD THINK WE WOULD GET VERY CLOSE WITH EISENMAN IF NOT FINISH TOMORROW.
JUDGE DAVILA: DIRECT IS GOING TO BE AN HOUR OR SO WITH HIM MAYBE?
MR. BOSTIC: I'D ESTIMATE BETWEEN 60 AND 90 MINUTES, YOUR HONOR.
MR. DOWNEY: YEAH. SO IT SOUNDS LIKE -- WELL, IT SOUNDS LIKE WE WOULD ONLY HAVE ABOUT 90 MINUTES THEN. I'M NOT SURE WE WOULD FINISH THAT.
JUDGE DAVILA: YEAH. MR. WADE HAS SOME TIME TO GO IN HIS REDIRECT AND THERE'S RECROSS, AND THAT'S TWO HOURS RIGHT THERE I'M SURE.
MR. DOWNEY: I'M SURE THAT'S TWO HOURS.
MR. SCHENK: FOR PETERSON?
MR. WADE: I WOULDN'T ANTICIPATE IT'S GOING TO BE TWO HOURS, YOUR HONOR. MY HOPE IS IT WOULD BE AN HOUR MAX.
JUDGE DAVILA: IN TOTAL?
JUDGE DAVILA: YOU'RE GOING TO BE LESS THAN AN HOUR YOU THINK?
JUDGE DAVILA: OKAY. WELL, I DON'T KNOW IF THAT'S HELPFUL TO YOU.
MR. SCHENK: IF I COULD JUST CLARIFY? IT SOUNDED LIKE MR. DOWNEY WAS SAYING, EVEN WITH SIX HOURS REMAINING IN THE DAY, IF PETERSON, LET'S SAY, TAKES TWO HOURS OR SO, MAYBE AN HOUR, IF WE GO UNTIL 4:00, WE STILL MIGHT NOT FINISH AND THE GOVERNMENT'S --
MR. DOWNEY: I THOUGHT YOU WERE SAYING WITH CULLEN IN BETWEEN.
MR. SCHENK: CULLEN MAY GET ON A PLANE AND LEAVE TONIGHT. WE MAY HAVE TO GO DIRECTLY TO EISENMAN TOMORROW. I NEED TO WORK ON THAT WHEN WE LEAVE.
JUDGE DAVILA: RIGHT.
MR. SCHENK: WHAT I'M WONDERING IS, CAN I TELL CULLEN, YOU'RE GUARANTEED TO FINISH TOMORROW? OR NOT? AND I HAVE SOME CONCERN.
MR. CLINE: CULLEN OR EISENMAN?
JUDGE DAVILA: THIS IS CULLEN TOMORROW.
MR. DOWNEY: GOING AFTER PETERSON?
MR. SCHENK: GOING AFTER PETERSON OR GOING AFTER EISENMAN DEPENDING ON THE LENGTH.
MR. CLINE: I'M DOING CULLEN, DR. CULLEN. I'M NOT SURE HOW LONG THE DIRECT WILL BE, BUT MY CROSS WON'T BE MORE THAN 20 MINUTES. AND LET'S JUST SAY 30 TO BE ABSOLUTELY SAFE. DEFINITELY NOT MORE THAN 30 MINUTES.
JUDGE DAVILA: CULLEN'S DIRECT I CAN'T IMAGINE WILL BE MORE THAN AN HOUR.
MR. SCHENK: CULLEN, IT SOUNDS LIKE, WILL CERTAINLY FINISH AFTER PETERSON IF SHE STAYS IN TOWN. JUST ONE MOMENT.
JUDGE DAVILA: SURE.
(DISCUSSION AMONGST GOVERNMENT COUNSEL OFF THE RECORD.)
MR. SCHENK: SO FAR WHAT I WAS SUGGESTING IS EISENMAN ALSO HAS TO FINISH. HE HAS COMMITMENTS, AND WE'RE DARK THURSDAY, FRIDAY. HE CAN'T BE HERE NEXT WEEK.
JUDGE DAVILA: RIGHT.
MR. SCHENK: SO I WAS TRYING TO FIGURE OUT IF CULLEN STAYS, DOES SHE TESTIFY BEFORE OR AFTER EISENMAN? BECAUSE WE NEED TO FINISH BOTH OF THEM. AND IF CULLEN JUST LEAVES TONIGHT AND WE PUT EISENMAN ON TOMORROW AND HE'S DONE AND WE DON'T HAVE A CARRY-OVER PROBLEM WITH CULLEN, OR IS THERE A CHANCE THEY BOTH FINISH SO WE DON'T HAVE TO CONCERN OURSELVES WITH THE ORDER?
JUDGE DAVILA: IT SOUNDS TO ME LIKE IT'S GOING TO BE VERY DIFFICULT, IF NOT IMPOSSIBLE, TO FINISH TWO WITNESSES, TWO ADDITIONAL WITNESSES FROM MS. PETERSON'S FINISHING. SO IS THIS THEN A CHOICE -- IS IT EISENMAN? IS THAT HIS NAME?
MR. SCHENK: EISENMAN.
JUDGE DAVILA: HE'S NOT AVAILABLE NEXT WEEK?
MR. SCHENK: CORRECT.
JUDGE DAVILA: SO MAYBE THAT'S -- WE NEED TO FOCUS ON HIM FOR TOMORROW AND HOPE THAT HE FINISHES TOMORROW.
MR. SCHENK: THAT'S WHAT IT IS SOUNDING LIKE TO ME.
JUDGE DAVILA: YEAH. SORRY, MR. CLINE. WE'LL HAVE TO DEFER.
MR. CLINE: I WAS SO READY FOR DR. CULLEN TO COME.
JUDGE DAVILA: SHARPENING YOUR KNIVES ALL WEEKEND.
MR. DOWNEY: AND IT MAY EVENTUALLY. WE'LL SEE WHAT HAPPENS. YOU'RE SENDING DR. CULLEN HOME THEN?
MR. SCHENK: I WOULD LIKE TO SPEND SOME TIME THIS EVENING FIGURING THAT OUT.
MR. DOWNEY: I WOULD SAY THERE'S A DIFFERENCE BETWEEN A BOSTIC HOUR AND A BOSTIC HOUR AND A HALF, TOO. SO I APPRECIATE YOUR COMMENTS ON THE CROSSES, BUT I -- AND WE'RE DOING THE BEST WE CAN.
JUDGE DAVILA: BOTH SIDES, EVERYONE IS. THAT INCLUDES ME, TOO.
MR. DOWNEY: I KNOW THAT. AND MR. SCHENK IS RIGHT, WE ARE TRYING TO WORK WITH HIM SO THAT HE CAN BE PREDICTIVE AS TO WHAT HAPPENS.
JUDGE DAVILA: ALL RIGHT. WELL, IT SOUNDS LIKE -- IT SOUNDS LIKE EISENMAN, MR. EISENMAN, WE NEED TO GET HIM DONE. OTHERWISE HE'S GOING TO BE DRAGGED BACK IN WEEKS AFTER.
MR. SCHENK: RIGHT.
JUDGE DAVILA: WELL, ALL RIGHT. WE'LL LET YOU DISCUSS, AND WE'LL LOOK AT THIS, AND WE'LL SEE YOU TOMORROW ABOUT 8:15.
MR. DOWNEY: GREAT. THANKS, JUDGE.
JUDGE DAVILA: THANK YOU.
MR. SCHENK: THANK YOU.
JUDGE DAVILA: ALL RIGHT.
COURT CLERK: COURT IS ADJOURNED.
(COURT ADJOURNED AT 4:52 P.M.)