Roger Parloff Interview Designation Hearings and Rulings
215 linesSAN JOSE, CALIFORNIA NOVEMBER 18, 2021 P R O C E E D I N G S
(COURT CONVENED AT 8:07 A.M.)
(JURY OUT AT 8:07 A.M.)
JUDGE DAVILA: WE ARE ON THE RECORD IN THE HOLMES MATTER OUTSIDE OF THE PRESENCE OF THE JURY. ALL COUNSEL ARE PRESENT. MS. HOLMES IS PRESENT. MR. CLINE, GOOD MORNING.
MR. CLINE: GOOD MORNING, YOUR HONOR.
JUDGE DAVILA: AND, MR. BOSTIC, GOOD MORNING.
MR. BOSTIC: GOOD MORNING, YOUR HONOR.
JUDGE DAVILA: FIRST OF ALL, TELL ME ABOUT YOUR CONTINUED COOPERATIVE DISCUSSIONS OVER THE LAST DAY.
MR. CLINE: WE MADE FURTHER PROGRESS.
JUDGE DAVILA: GREAT.
MR. CLINE: DESIGNATION ONE IS RESOLVED. WE'VE COMPROMISED ON THAT ONE. SO IT'S DESIGNATIONS TWO AND FOUR THAT REMAIN.
JUDGE DAVILA: OKAY.
MR. CLINE: FOR DESIGNATION TWO, WITH YOUR HONOR'S PERMISSION, I'M GOING TO ASK MR. LOOBY TO ADDRESS IT. THAT ONE IS NOT IN THE TRANSCRIPT AND HE HAS LISTENED TO THE RECORDING MORE RECENTLY THAN I HAVE AND IS LESS LIKELY TO GET IT WRONG. AND THEN ON FOUR, I'M HAPPY TO TAKE THAT.
JUDGE DAVILA: THAT'S FINE. IS THIS THE DESIGNATION REGARDING THE --
MR. CLINE: THE BRINGING -- MAY I TAKE THIS OFF?
JUDGE DAVILA: PLEASE. PLEASE.
MR. CLINE: SORRY. THE BRINGING UP OF THE TESTS. AND IT FALLS BETWEEN TWO GOVERNMENT DESIGNATED PORTIONS, AND WE'RE JUST ASKING THEM TO PLAY THE WHOLE THING.
MR. BOSTIC: THAT'S NUMBER FOUR.
MR. CLINE: THAT'S NUMBER FOUR.
JUDGE DAVILA: WHICH EXHIBIT IS THIS, 1648 OR 2580?
MR. CLINE: THIS IS 2580, AND IT'S DOCUMENT 1146-4.
JUDGE DAVILA: AND I HAVE IT IN YOUR SUBMISSIONS. THANK YOU FOR DOING THE COLOR CODING HERE.
MR. CLINE: I WISH I COULD CLAIM CREDIT, YOUR HONOR, BUT THAT WAS SOMEONE ELSE.
JUDGE DAVILA: WELL, THEY DID AN EXCELLENT JOB HERE. IT TOOK LIKE PAGE 17 OF THE TRANSCRIPT, LINE 22, THROUGH PAGE 18 -- 19, PARDON ME, LINE 17 IS WHAT YOU'RE ASKING TO BE INCLUDED. IS THAT RIGHT?
MR. CLINE: YES.
JUDGE DAVILA: MR. BOSTIC, IS THAT YOUR UNDERSTANDING?
MR. BOSTIC: WAS THIS FILED AS 1146-4?
MR. CLINE: YES.
MR. BOSTIC: I THOUGHT THE DEFENSE WAS SEEKING TO INCLUDE -- APOLOGIES, YES, BEGINNING ON PAGE 17 AS NUMBERED IN THE PDF.
JUDGE DAVILA: I'M SORRY. THE DOCUMENT 17.
MR. BOSTIC: MY FAULT. AGREED, YOUR HONOR.
MR. CLINE: WE THINK THIS IS UNDER 106 PRIMARILY. THEY'RE HAVING A DISCUSSION HERE ABOUT TESTING AND WHAT TESTING IS AVAILABLE AND WHERE IT'S AVAILABLE. I THINK TO PUT THAT DISCUSSION IN CONTEXT AND MAKE IT COMPLETE, TO USE THE LANGUAGE OF THE RULE, WE OUGHT TO INCLUDE THAT MIDDLE PORTION. THIS ON EXACTLY THE SAME TOPIC, AND IN IT MS. HOLMES IS TALKING ABOUT THE PROCESS OF BRINGING UP TESTS, MOVING THEM FROM THE R&D LAB -- I DON'T KNOW IF SHE USES THAT TERM, BUT THAT'S THE PROCESS THAT SHE'S DESCRIBING -- OVER TO THE CLIA LAB AND THEN VALIDATING THEM FOR USE IN THE CLINICAL SETTING.
JUDGE DAVILA: AND JUST TO BE CLEAR, THESE ARE THE PORTIONS OF THE INTERVIEW FROM MR. PARLOFF WITH MS. HOLMES.
MR. CLINE: THAT'S RIGHT.
JUDGE DAVILA: AND YOU TELL ME ABOUT IT'S IMPORTANT FOR THE CONTEXT OF THESE THINGS. WE'VE HEARD THAT WORD BEFORE IN REGARDS TO THIS INTERVIEW, HAVEN'T WE? I THINK THE GOVERNMENT SUGGESTED CONTEXT WAS IMPORTANT.
MR. CLINE: SOMETIMES CONTEXT IS AND SOMETIMES IT'S NOT. IT DEPENDS A LOT ON THE CONTEXT.
(LAUGHTER.)
JUDGE DAVILA: IT DEPENDS ON THE CONTEXT.
MR. CLINE: IN THIS SETTING WE'RE TALKING ABOUT THE CONTEXT IN THE SENSE OF RULE 106, AND I THINK IT IS IMPORTANT TO INCLUDE THAT.
JUDGE DAVILA: HOW DOES THE GREEN PORTION, HOW IS THAT IMPORTANT TO CONTINUE THE CONVERSATION IN THE YELLOW PORTION, PARDON ME?
MR. CLINE: WELL, IT'S IMPORTANT BECAUSE MS. HOLMES IS EXPLAINING SORT OF THE PROCESS BY WHICH TESTS ARE MOVED FROM -- UP INTO THE CLIA LAB. SHE'S TALKING ABOUT THE VALIDATION REPORT PROCESS AND HOW A TEST IS MOVED UP FROM THE R&D PROCESS TO THE CLIA LAB AND PUT ON THE MACHINE. AND THAT'S BASICALLY THE SUBJECT. IT'S SORT OF LIKE A LOT OF THESE EXCERPTS, IT'S KIND OF A RAMBLING CONVERSATION, BUT IT'S I THINK VERY MUCH GERMANE TO WHAT THEY'RE TALKING ABOUT. THEY'RE TALKING ABOUT HAVING A REFERENCE LAB AND WHAT SORTS OF TESTS ARE AVAILABLE, AND SHE'S CONTINUING TO DESCRIBE THAT PROCESS. AND THEN THEY PICK UP THE CONVERSATION AGAIN OVER ON PAGE 19 OF THE TRANSCRIPT, AND MR. PARLOFF IS ASKING ABOUT VENIPUNCTURE AND USING YOUR SYSTEM AND SO ON. AND MS. HOLMES HAS BEEN JUST EXPLAINING HOW TESTS ARE BROUGHT UP ON THE THERANOS SYSTEM.
JUDGE DAVILA: SO LET ME -- AND I'LL HEAR FROM MR. BOSTIC HERE. LET ME SAY I'VE LOOKED AT THIS, AND MAYBE I'M BEING TOO CRITICAL OR SOMETHING, BUT I LOOKED AT THIS AND I THOUGHT, IS THIS -- DOES THIS IN ANY WAY RELATE TO THE LIS DISCUSSION? AND IS THIS, IS THIS AN ENTRE TO LIS IN THIS CASE, THAT IS THE -- WE -- ONE OF THE TESTS -- WE HAVE A LOT OF TESTS AND WE VALIDATED ON OUR SYSTEMS A LONG TIME AGO. DOES THIS IMPLICATE THAT AT ALL?
MR. CLINE: TO MY MIND, NO. AND, IN FACT, YOUR QUESTION IS THE FIRST TIME THAT I'VE EVER ASSOCIATED THIS WITH LIS. I DON'T THINK THAT'S WHAT SHE'D TALKING ABOUT.
JUDGE DAVILA: MY -- I'M SORRY TO CUT YOU OFF, MR. CLINE, BUT WE'VE HAD -- THE LIS HAS BEEN A TOPIC OF DISCUSSION HERE, AND CONCERN. AND I LOOK AT THIS, AND MAYBE THAT'S WHY I'M LOOKING AT THIS WITH A DISCERNING EYE, IS THIS SOMETHING THAT WOULD ALLOW THEN A DISCUSSION OF LIS?
MR. CLINE: I DON'T THINK SO AT ALL. I THINK THIS IS BASICALLY THE PROCESS THAT WAS TALKED ABOUT WITH DR. ROSENDORFF, WITH DR. GANGAKHEDKAR, WITH -- ALL OF THE LAB PEOPLE HAVE SORT OF DESCRIBED THIS PROCESS OF BRINGING UP TESTS ON TO THE MACHINE, AND THAT'S WHAT MS. HOLMES IS DOING. THE LIS REALLY DOESN'T TOUCH THIS AT ALL AS FAR AS I'M CONCERNED.
JUDGE DAVILA: OKAY. ALL RIGHT. THANK YOU. MR. BOSTIC?
MR. BOSTIC: THANK YOU, YOUR HONOR. FIRST OF ALL, I AGREE WITH MR. CLINE THAT THIS SPECIFIC LANGUAGE DOES NOT IMPLICATE THE LIS. THAT'S NOT THE SOURCE OF THE GOVERNMENT'S CONCERN HERE. THIS JUST IS NOT ADMISSIBLE UNDER THE HEARSAY RULES, AND 106 DOESN'T CHANGE THAT. FIRST OF ALL, THE FACT THAT THIS IS A SEGMENT THAT IS IN BETWEEN TWO SEGMENTS THAT THE GOVERNMENT HAS DESIGNATED SHOULDN'T BEAR A LOT OF WEIGHT, OR SHOULDN'T CARRY A LOT OF WEIGHT FOR THE COURT. AS MR. CLINE NOTED, THESE CONVERSATIONS WERE SOMEWHAT RAMBLING AT TIMES. THEY DID KIND OF HEAD IN DIFFERENT DIRECTIONS ORGANICALLY AND THERE WERE DETOURS AND ASIDES, AND THIS IS NOT A CRITICISM OF THE DEFENDANT. BUT THE PORTION THAT IS NOT INCLUDED IN THE GOVERNMENT'S DESIGNATIONS DOESN'T REALLY BEAR A STRONG RELATIONSHIP TO THE PORTIONS THAT ARE DESIGNATED BY THE GOVERNMENT. THIS WAS A -- THIS WAS AN ASIDE. THIS WAS SOME INFORMATION PROVIDED BY MS.
HOLMES ON A DIFFERENT TOPIC FROM THE ADJOINING PORTIONS OF THE CONVERSATION, AND THOSE TWO PORTIONS OF THE CONVERSATION ARE DIFFERENT FROM EACH OTHER. THE REASON THAT THE GOVERNMENT IS OPPOSING, AND THE REASON THAT THE COURT SHOULD NOT ADMIT THIS, IS THAT THIS IS HEARSAY, AND IT'S ACTUALLY MULTIPLE LAYERS OF HEARSAY. IN THE GREEN PORTION, THE COURT CAN SEE THAT MS. HOLMES IS TALKING ABOUT VALIDATION REPORTS THAT SHE SAID SHE'S GOING TO PROVIDE TO MR. PARLOFF. SHE'S CHARACTERIZING THE CONTENT AND THE SIGNIFICANCE OF THOSE VALIDATION REPORTS. SO, YOU KNOW, NOT ONLY IS THIS REFERENCING A DOCUMENT AND THE CONTENTS AND MEANING OF THE DOCUMENT, BUT THIS IS GIVING MS. HOLMES'S VIEW OF THAT DOCUMENT, AND THAT'S AN OUT-OF-COURT STATEMENT THAT IT SEEMS THE DEFENSE IS SEEKING TO ADMIT SO THAT THE JURY CAN RELY ON MS. HOLMES'S REPRESENTATIONS ABOUT THE ROBUSTNESS, THE THOROUGHNESS, AND THE IMPRESSIVENESS OF THERANOS'S PREVIOUS VALIDATION ACTIVITY. SO THAT CAN'T COME IN FOR ITS TRUTH OBVIOUSLY.
THIS CANNOT COME IN FOR THE PURPOSE OF THE JURY MAKING CONCLUSIONS ABOUT HOW GOOD A JOB THERANOS DID INVALIDATING ITS TESTS. ALTERNATIVELY, IF THE DEFENSE IS SEEKING TO ADMIT THIS TO SHOW MS. HOLMES'S BELIEF OR HER OPINIONS ABOUT HOW GOOD A JOB THERANOS DID VALIDATING ITS TESTS, IT ALSO CAN'T COME IN FOR THE SAME REASON. IF MS. HOLMES WANTS THE JURY TO KNOW, YOU KNOW, IN HER WORDS HOW SHE FELT ABOUT THE WORK THAT THERANOS HAD DONE, SHE NEEDS TO TAKE THE STAND AND TESTIFY. THAT NEEDS TO BE TESTED BY CROSS-EXAMINATION. THE FACT THAT THERE HAPPENS TO BE A RECORDING OF HER PROVIDING HER VIEWS ON THESE THINGS YEARS AGO DOESN'T CREATE AN END RUN AROUND THOSE BASIC HEARSAY RULES.
JUDGE DAVILA: THAT'S AN INTERESTING QUESTION, THRESHOLD QUESTION, ISN'T IT, WHERE -- AND WE KNOW WHAT ORTEGA, THE ORTEGA CASE, THE NINTH CIRCUIT ORTEGA CASE TALKS ABOUT, THE INABILITY OF THE DEFENDANT TO GET EXCULPATORY STATEMENTS IN ON CROSS-EXAMINATION. I LOOK AT THIS AND I WONDER, IS THE SAME THEORY -- DOES THAT THEORY APPLY HERE? I UNDERSTAND YOU'RE NOT OFFERING THESE FOR THE TRUTH OF THE MATTER ASSERTED IN THE STATEMENT, BUT ISN'T THERE SOME INHERENT TRUTHFUL RELIANCE THAT YOU'RE ASKING THE JURY TO, THE JURY TO ASSUME REGARDING THE STATEMENTS AND --
MR. CLINE: NO.
JUDGE DAVILA: AND DON'T THESE STATEMENTS THEN GO TO A DEFENSE, I THINK YOU TALKED ABOUT, TO MEET THE CHALLENGE OF THE INDICTMENT? ISN'T THAT, ISN'T THAT -- AREN'T THESE A CHALLENGE TO ONE OF THE ELEMENTS OF THE OFFENSE?
MR. CLINE: THE SHORT ANSWER IS NO, BUT LET ME EXPLAIN.
JUDGE DAVILA: OKAY.
MR. CLINE: THIS SECTION IS BEING OFFERED FOR TWO NONHEARSAY PURPOSES, AND WE'RE FINE IF THE COURT INSTRUCTS THE JURY TO THAT EFFECT. THE NONHEARSAY PURPOSES IS ONE OF COMPLETENESS, AND IN THE LOPEZ CASE, THE NINTH CIRCUIT SAYS THAT WHAT WOULD OTHERWISE BE HEARSAY IF IT IS OFFERED UNDER 106 AND COMES IN UNDER 106 AND IS NECESSARY TO COMPLETE A STATEMENT, IT'S NONHEARSAY. SO THIS IS NONHEARSAY FOR THAT REASON. IT IS ALSO NONHEARSAY BECAUSE IT SHOWS MS. HOLMES'S STATE OF MIND.
JUDGE DAVILA: AS TO WHAT?
MR. CLINE: I'M SORRY?
JUDGE DAVILA: A STATE OF MIND AS TO WHAT?
MR. CLINE: AS TO THE CONDITION -- THE CIRCUMSTANCES UNDER WHICH THESE TESTS ARE BEING BROUGHT UP.
JUDGE DAVILA: AND WHAT IS THE RELEVANCE OF THAT? I'M SORRY.
MR. CLINE: THE RELEVANCE OF THAT IS THAT SHE'S NOT TRYING TO DECEIVE MR. PARLOFF. SHE'S NOT TRYING TO DECEIVE INVESTORS. SHE'S DESCRIBING THIS PROCESS BY WHICH --
JUDGE DAVILA: SO ONE OF THE COUNTS -- AND I'M SORRY TO INTERRUPT YOU, BUT I'LL LOSE IT IF I DON'T CONTINUE, MR. CLINE.
MR. CLINE: SURE.
JUDGE DAVILA: ISN'T THE THRESHOLD -- ONE OF THE THRESHOLD COUNTS IS FRAUD.
MR. CLINE: UH-HUH.
JUDGE DAVILA: AND YOU JUST TOLD ME THAT THIS WOULD GO AS TO -- THIS WOULD SHOW THAT SHE DOESN'T HAVE THE INTENT TO DEFRAUD.
MR. CLINE: RIGHT.
JUDGE DAVILA: ISN'T THAT A DIRECT CHALLENGE TO THE ELEMENT OF THE OFFENSE AND DOES THAT REQUIRED TESTIMONY?
MR. CLINE: WELL, IT IS, IT IS RELEVANT EVIDENCE. IT IS RELEVANT, THOUGH, FOR A NONHEARSAY PURPOSE TO SHOW HER STATE OF MIND. AND HERE'S WHAT I MEAN. WE WOULD, WE WOULD NOT BE ARGUING BASED ON THIS STATEMENT THAT WHAT MS. HOLMES IS SAYING HERE IS CORRECT. SHE COULD BE TOTALLY MISTAKEN ABOUT EVERYTHING SHE IS SAYING AND THIS WOULD BE JUST AS ADMISSIBLE FOR THE SAME REASON. AND THE REASON IS TO SHOW HER STATE OF MIND, THAT SHE IS INFORMING MR. PARLOFF, SHE'S NOT TRYING TO DECEIVE HIM, SHE'S DESCRIBING TO HIM IN THE CONTEXT OF THIS WHOLE CONVERSATION HOW TESTS ARE BROUGHT UP FROM THIS SORT OF R&D STAGE UP INTO THE CLIA LAB AND THEN MADE AVAILABLE TO PATIENTS. SO IT'S -- SHE COULD BE TOTALLY WRONG ABOUT THAT AND THIS WOULD STILL BE RELEVANT FOR EXACTLY THE SAME REASONS, TO SHOW HER STATE OF MIND, AND ALSO FOR COMPLETENESS.
JUDGE DAVILA: WELL, WE'LL TALK ABOUT COMPLETENESS IN JUST A MOMENT. I DO SEE THAT THERE'S A BIT OF A TRANSITION BETWEEN THE PRIOR -- BETWEEN THE YELLOW AND THE GREEN, LET ME PUT IT THAT WAY. IT SEEMS TO BE A DIFFERENT CONTEXT, TO USE THAT WORD AGAIN. BUT ISN'T, ISN'T PART OF THE ALLEGATIONS IN THE SCHEME TO DEFRAUD AN ALLEGATION THAT THE DEFENDANT USED -- I THINK IT'S PARAGRAPH 15, ISN'T IT? A SCHEME TO DEFRAUD THROUGH ADVERTISEMENTS AND MARKETING MATERIALS?
MR. CLINE: WELL, THERE IS THAT ALLEGATION. I THINK THE ALLEGATION THAT IS PROBABLY MORE RELEVANT HERE, I THINK IT'S IN PARAGRAPH 12, THAT SHE USED THE MEDIA TO DISSEMINATE FALSE INFORMATION AND TO DECEIVE PEOPLE. AND I THINK THE GOVERNMENT'S THEORY IS THAT SHE'S DECEIVING MR. PARLOFF, AND SHE'S DECEIVING MR. PARLOFF FOR THE PURPOSE OF HAVING HIM ACT AS AN UNWITTING CONDUIT FOR THE INFORMATION. I THINK THAT'S THE THEORY.
JUDGE DAVILA: RIGHT.
MR. CLINE: WHAT WE WANT TO SHOW IS THAT THAT GOES TO HER STATE OF MIND, HER INTENT TO DEFRAUD, AND THE FACT THAT SHE'S DISCLOSING TO MR. PARLOFF THE PROCESS BY WHICH TESTS ARE BROUGHT UP NEGATES THAT STATE OF MIND, AND IT NEGATES THAT STATE OF MIND WHETHER WHAT SHE'S SAYING IS ACCURATE OR NOT.
JUDGE DAVILA: MR. BOSTIC?
MR. BOSTIC: I DON'T SEE IT THAT WAY, YOUR HONOR. I THINK THAT THE MAJORITY OF THE PORTION HIGHLIGHTED IN GREEN IS TALKING ABOUT THE COMPANY'S HISTORICAL WORK, AND I THINK IT'S MS. HOLMES PRESENTING, FRANKLY, A FAVORABLE VIEW ON THE COMPANY'S ACHIEVEMENTS TO DATE. IT'S MS. HOLMES SAYING, WE'RE GOING TO SEND YOU THESE REPORTS, YOU'RE GOING TO BE IMPRESSED BECAUSE THEY'LL SHOW -- AND, FOR EXAMPLE, THE PHARMACEUTICAL STUDIES AS WELL WILL SHOW THAT THE COMPANY HAD THESE CAPABILITIES TO PERFORM REALLY SOPHISTICATED ESOTERIC TESTS ON SYSTEMS THAT WERE RUNNING IN PEOPLE'S HOMES. THERE WERE A LOT OF FACTUAL REPRESENTATIONS ABOUT THE PROGRESS THAT THE COMPANY HAD MADE, ITS VALIDATION WORK. SO IF THAT'S NOT COMING IN FOR ITS TRUTH, AND IF IT'S NOT COMING IN TO SHOW THAT MS. HOLMES BELIEVED THAT, BECAUSE THAT'S NOT -- THAT'S NOT AN ACCEPTABLE NONHEARSAY PURPOSE BY THE WAY. THE DEFENDANT CANNOT INTRODUCE HER OWN STATEMENTS OF HER CONTEMPORANEOUS BELIEF AS I UNDERSTAND THE LAW. SO THAT'S NOT A PERMISSIBLE PURPOSE. I DON'T SEE WHY THIS IS PERMISSIBLE. IT DOESN'T TEND TO NEGATE AN ALLEGATION OF A SPECIFIC FALSE STATEMENT IN THIS CASE. I DON'T THINK THERE IS ANY ALLEGATION THAT MS. HOLMES AT SOME OTHER POINT SAID THE OPPOSITE OF WHAT IS IN THE HIGHLIGHTED PORTION IN GREEN.
MR. CLINE: IF YOU'RE CONCENTRATING THERE -- I DON'T MEAN TO INTERRUPT YOU.
JUDGE DAVILA: NO. I WAS JUST READING AGAIN.
MR. CLINE: ALL RIGHT. BUT IF YOU LOOK AT WHERE THIS PICKS UP ON PAGE 17 OF THE TRANSCRIPT, MS. HOLMES IS IN THE MIDDLE OF AN ANSWER. HE'S ASKED HER SOME QUESTIONS, AND SHE'S GIVING A DESCRIPTION OF, OF TESTING AND GETTING MORE TESTS UP. AND THE GREEN PORTION IS JUST A CONTINUATION OF THAT ANSWER. SHE, SHE SAYS, I MEAN, AS A COMPANY OBVIOUSLY OUR BUSINESS AND WHAT WE DO HERE IN 1701 EVERY DAY IS WORK TO GET MORE AND MORE AND MORE TESTS RUNNING ON CAPILLARY SAMPLES. AND THEN SHE GOES ON. SO SHE IS CONTINUING HER ANSWER, WHICH IS -- NOW, THIS IS THE COMPLETENESS POINT. THIS IS ALL ESSENTIALLY ONE ANSWER, ONE DESCRIPTION THAT SHE'S OFFERING IN RESPONSE TO HIS QUESTION. SO I THINK FOR COMPLETENESS PURPOSES, IT'S JUST VERY DIFFICULT TO TAKE THAT OUT AND ALLOW A PARTIAL ANSWER TO STAND AS IF THAT WERE THE WHOLE EVERYTHING THAT SHE HAD SAID IN RESPONSE TO MR. PARLOFF'S QUESTIONS ON THIS POINT. ON THE STATE OF MIND, AGAIN, SHE IS GIVING MR. PARLOFF A DESCRIPTION OF WHAT GOES ON, A FULSOME DESCRIPTION. SHE IS NOT TRYING TO DECEIVE HIM. SHE IS DESCRIBING THE PROCESS. IF SHE GETS IT WRONG, IF SHE GETS IT RIGHT, IT DOESN'T MAKE ANY DIFFERENCE FOR THESE PURPOSES. THE POINT IS, AND THIS GOES TO HER STATE OF MIND, SHE IS DESCRIBING TO HIM WHAT -- THE PROCESS. SHE'S ANSWERING HIS QUESTIONS. SHE'S GIVING HIM DETAIL IN RESPONSE TO HIS QUESTIONS. SO BOTH FOR COMPLETENESS PURPOSES AND FOR STATE OF MIND, NOT FOR THE TRUTH PURPOSES, WE THINK THIS IS ADMISSIBLE.
JUDGE DAVILA: SO THE ORIGINAL QUESTION IS ON PAGE 15, ISN'T IT, LINE 24. "OKAY. NOW, I THOUGHT ALL OF YOUR TESTS WERE SORT OF CONSIDERED LAB DEVELOPED TESTS?" IS THAT THE ORIGINAL QUESTION? AND THEN WHAT WE SEE IN THE FOLLOWING TRANSCRIPT ARE MS. HOLMES'S ANSWERS AND EVERY FEW LINES THERE'S MR. PARLOFF SAYING UH-HUH, AND MS. HOLMES CONTINUES WITH THE ANSWER. AND THEN IT CARRIES OVER. AND THAT WAS HIS ORIGINAL QUESTION ON PAGE 15, AND MS. HOLMES CONTINUED TO PERHAPS ANSWER THE QUESTION AS YOU SUGGEST. HIS NEXT QUESTION WAS FOUND ON PAGE 19 AT LINE 20, I THINK. AND SHE CONTINUES THROUGH PAGE 17. AND IT -- I SUPPOSE YOU COULD LOOK AT IT AND SAY, WELL, SHE DOES MORE THAN ANSWER THAT QUESTION ON PAGE 15, AND THEN SHE GOES IN TO KEEP TALKING ABOUT OTHER MATTERS. I UNDERSTAND THE 106 ISSUE, BUT SHE ANSWERS THE QUESTION WELL BEFORE PAGE 17 AND 18.
MR. CLINE: BUT WHAT SHE IS DOING IS THEN GIVING HIM -- IT'S NOT AN -- IT'S NOT LIKE SHE GOES OFF IN SOME OTHER DIRECTION AND STARTS TALKING ABOUT WHAT SHE HAD FOR DINNER. SHE'S DESCRIBING THE PROCESS OF GETTING THESE TESTS UP AND RUNNING, WHICH IS WHAT HE ASKED ABOUT. HE ASKED ABOUT LAB DEVELOPED TESTS, AND SHE'S GIVING HIM A FULSOME ANSWER TO THAT QUESTION. AND I DON'T THINK IT IS FAIR, TO USE ANOTHER ONE OF 106'S TERMS, TO CUT OFF THE ANSWER SORT OF MIDSTREAM AND THEN PICK UP AGAIN AFTER SHE'S FINISHED ANSWERING WITH ANOTHER QUESTION FROM MR. PARLOFF.
JUDGE DAVILA: WELL, SHE DOES -- SHE TALKS ABOUT LAB TESTS, AND THEN SHE TALKS ABOUT COSTS AND PRICE TAG AND PRICING, AND SHE TALKS ABOUT HER MISSION AND MISSION ACCESS AND PRICING OF DIFFERENT TESTS. SO THERE'S A LOT OF TOPICS BEING DISCUSSED HERE THAT WOULD SEEM TO BE IN EXCESS OF THE -- I THOUGHT YOUR TESTS WERE SORT OF CONSIDERED LAB DEVELOPED TESTS. I DON'T KNOW WHAT PRICING HAS TO DO WITH THAT. DO YOU SEE WHAT I'M TALKING ABOUT THERE? SO THAT'S EVIDENCE OF, AS I THINK YOU SUGGESTED, IT SOUNDS LIKE THESE CONVERSATIONS, SOME OF THEM WERE OVER MEALS. IT SOUNDS LIKE -- I RECALL HEARING SOMETHING ABOUT --
MR. CLINE: YES.
JUDGE DAVILA: -- DINNER OR SOMETHING.
MR. CLINE: THIS, I BELIEVE, IS NOT ONE OF THOSE.
MR. BOSTIC: I DON'T BELIEVE SO. AT LEAST THIS ONE IS NOT AT A RESTAURANT.
JUDGE DAVILA: RIGHT. RIGHT. I SAY THAT BECAUSE THIS IS THE NATURE OF -- THIS WAS A MANY DAY CONVERSATION, I THINK, WASN'T IT? IT WAS A CONTINUED CONVERSATION? NOT JUST THIS, BUT I MEAN THE ENTIRETY OF THE CONVERSATION.
MR. CLINE: IT DID. IT COVERED A COUPLE OF MONTHS.
MR. BOSTIC: AND FAR LESS STRUCTURED THAN THE CONVERSATIONS WE'VE BEEN HAVING WITH WITNESSES IN THIS CASE, YOUR HONOR, WHERE THERE'S A CLEAR QUESTION AND ANSWER AND THE ANSWER NEEDS TO BE RESPONSIVE TO THE QUESTION. THIS WAS FAR MORE ORGANIC. SO I THINK THE COURT IS CORRECT THAT THE CONTENT NEEDS TO CONTROL FOR 106 PURPOSES, AND THE QUESTION FOR 106 IS, WOULD IT BE UNFAIR TO EXCLUDE THIS PORTION OF HEARSAY FROM THE CLIPS THAT THE GOVERNMENT IS PLAYING? AND I DON'T SEE THE UNFAIRNESS HERE. THE CLIPS THAT THE GOVERNMENT IS PLAYING ALREADY INCLUDE MS. HOLMES'S STATEMENT THAT THE COMPANY IS WORKING EVERY DAY IN 1701 TO GET MORE AND MORE AND MORE TESTS RUNNING ON CAPILLARY SAMPLES. SO THERE'S NO FALSE IMPRESSION CREATED HERE THAT MS. HOLMES IS HIDING THE FACT THAT WORK IS ONGOING. THE PORTION IN GREEN IS REALLY, IT'S LIKE A FLASHBACK IN A MOVIE. IT IS A STEPPING AWAY FROM THE THREAD OF THE CONVERSATION FOR A MOMENT TO TALK ABOUT THE HISTORICAL ACTIVITIES OF THE COMPANY AND MAKES SOME FACTUAL CHARACTERIZATIONS THERE, AND THAT'S WHY IT'S NOT ADMISSIBLE OR NECESSARY UNDER RULE 106.
MR. CLINE: BUT IT'S NOT REALLY A FLASHBACK IN A MOVIE. SHE SAYS IN THE FIRST PART OF HER ANSWER, WHICH THE GOVERNMENT PLANS TO PLAY ON 17, "I MEAN, AS A COMPANY, OBVIOUSLY OUR BUSINESS AND WHAT WE DO HERE IN 1701 EVERY DAY IS WORK TO GET MORE AND MORE TESTS RUNNING ON CAPILLARY SAMPLES." BUT THEN SHE GOES ON TO EXPLAIN THAT PROCESS TO HIM. AGAIN, WHETHER SHE'S RIGHT OR WRONG IN EXPLAINING THE PROCESS, HER STATE OF MIND IS THAT SHE WANTS HIM TO UNDERSTAND WHAT IS GOING ON HERE. SHE'S NOT TRYING TO DECEIVE HIM OR PULL THE WOOL OVER HIS EYES. SHE'S DESCRIBING THE PROCESS, WHICH AGAIN, I THINK GOES BOTH TO COMPLETENESS AND TO THE NONHEARSAY PURPOSE FOR THIS.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: I CAPTURE YOUR POINT, BUT I THINK SOME OF THIS IS NOT NECESSARY FOR THAT, SOME OF THE GREEN. IT -- I DON'T MEAN TO SIT HERE AS AN EDITOR, BUT I DON'T THINK THIS REALLY ANSWERS THE QUESTION THAT MR. PARLOFF PUT ON. I'M LOOKING AT PAGE 18, AND IN LINE 11 THAT ANSWER THAT CONTINUES. I COULD SEE HOW AN ARGUMENT COULD BE MADE FOR LINE 22, PAGE 17, THROUGH LINE 9 ON PAGE 18.
MR. CLINE: WELL, WHAT I'LL SAY, YOUR HONOR, IS THAT WE WILL TAKE AS MUCH OF THIS AS WE CAN GET, BUT WE BELIEVE THE WHOLE THING OUGHT TO COME IN.
JUDGE DAVILA: SURE. I UNDERSTAND.
MR. BOSTIC: AND, YOUR HONOR, AS TO THE PORTION ON 18, I THINK THE COURT SAID 18 THROUGH LINE 9?
JUDGE DAVILA: YES, YES.
MR. BOSTIC: THAT INCLUDES -- SO, AGAIN, I THINK THE PROBLEM THERE IS HISTORICAL REPRESENTATIONS ABOUT THINGS THAT THE COMPANY HAS ACHIEVED, YOU KNOW, "AND WE HAVE A LOT OF TESTS THAT WE HAVE VALIDATED ON OUR SYSTEMS A LONG TIME AGO." I'M NOT SURE WHY THAT IS RESPONSIVE TO THE CONVERSATION, WHY THAT IS REQUIRED UNDER 106 OR WHETHER THERE WOULD BE -- OR WHAT APPROPRIATE NONHEARSAY PURPOSE THERE WOULD BE FOR SOMETHING LIKE THAT.
MR. CLINE: WHICH I THINK, IN RESPONSE TO MR. BOSTIC'S COMMENT, I THINK IS WHY THE REST OF THAT PAGE IS ALSO NECESSARY, BECAUSE SHE GOES ON TO DESCRIBE WHAT THE PROCESS IS FOR GETTING THESE TESTS UP AND RUNNING.
(PAUSE IN PROCEEDINGS.)
JUDGE DAVILA: ALL RIGHT. THANK YOU. DO YOU WANT TO HAVE MR. LOOBY SPEAK ON THIS OTHER TOPIC NOW?
MR. CLINE: THAT'S FINE, YOUR HONOR.
JUDGE DAVILA: OKAY. LET'S DO THAT. WHAT IS THE SCHEDULE ABOUT -- I HESITATE TO EVEN ASK. WHAT IS OUR SCHEDULE WITH -- WE HAVE A WITNESS ON NOW, MS. TOMPKINS. SHE'S ON CROSS. AND THEN YOU HAVE ANOTHER, IS IT ANOTHER WITNESS WHO WILL TESTIFY, A BRIEF WITNESS?
MR. BOSTIC: OUR NEXT WITNESS IS A SIMILARLY BRIEF WITNESS, YES, YOUR HONOR.
JUDGE DAVILA: OKAY.
MR. BOSTIC: WE HAVE WITNESSES PLANNED FOR TODAY, YES.
JUDGE DAVILA: OKAY. ALL RIGHT. THANK YOU.
MR. CLINE: I'M HAPPY TO HAVE MR. LOOBY COME UP.
JUDGE DAVILA: WELL, THAT'S WHY YOU'RE STILL HERE. LET ME JUST TELL YOU MY THOUGHTS AND THEN WE'LL MOVE TO MR. LOOBY.
MR. CLINE: SURE.
JUDGE DAVILA: THANK YOU FOR THE COMMENTS THIS MORNING. I DO SEE THAT UNDER COMPLETENESS, AND I'M GOING TO -- CANDIDLY, I'M GOING TO -- I HAVE SOME DOUBTS ABOUT IT, BUT THIS IS A CRIMINAL CASE AND I UNDERSTAND THE IMPORTANCE OF THIS TO YOUR ARGUMENT. I DO THINK IT STRETCHES THINGS A BIT UNDER 106, BUT I'LL GIVE YOU THE BENEFIT OF THE DOUBT, YOUR TEAM, MR. CLINE, IN THAT REGARD, BUT I DO SEE SOME LIMITATIONS TO THIS. I'LL ALLOW LINE 22 -- THIS IS PAGE 17 OF THE DOCUMENT, LINE 22, DOWN TO PAGE 18, LINE 22 ENDING AT THE WORD "TESTS." DO YOU SEE THAT?
MR. CLINE: YES, YOUR HONOR.
JUDGE DAVILA: EVERYTHING ELSE, INCLUDING PAGE 19, AND EVERYTHING ELSE ON PAGE 18 WILL NOT BE PERMITTED. I DON'T THINK THAT'S CONTEXTUALLY RELEVANT FOR 106. I'LL ALLOW THIS UNDER 106. AND IT IS OFFERED NOT FOR THE TRUTH OF ANYTHING ASSERTED HERE, BUT ONLY TO THE STATE OF MIND OF MS. HOLMES AS TO THE ISSUES OF -- MR. CLINE?
MR. CLINE: AS TO THE ISSUES OF -- WELL, HER STATE OF MIND REALLY GOES TO WHETHER SHE'S INTENDING TO DECEIVE ANYBODY, BUT IT GOES TO HER STATE OF MIND AS TO THE PROCESS OF BRINGING UP TESTS.
JUDGE DAVILA: IS THAT RELATED TO INTENT?
MR. CLINE: YES.
JUDGE DAVILA: MAY I TELL THE JURY THAT?
MR. CLINE: YES.
JUDGE DAVILA: ALL RIGHT. THANK YOU. I'LL OTHERWISE SUSTAIN THE OBJECTION.
MR. CLINE: ALL RIGHT. WELL, I THINK WHILE I'M BATTING 500 AT LEAST, I WILL SIT DOWN AND LET MR. LOOBY TALK. BEFORE I FORGET, I THINK MS. TREFZ HAD ONE OTHER ISSUE SHE WANTS TO BRING UP WITH YOU BEFORE YOU --
JUDGE DAVILA: OKAY. SURE. THANK YOU. MR. BOSTIC, YOU'RE STAYING ON THE PITCHER'S MOUND, AND WE HAVE A NEW BATTER.
MR. BOSTIC: I'LL STAY HERE, YOUR HONOR. I GET THAT REFERENCE.
(LAUGHTER.)
MR. LOOBY: GOOD MORNING, YOUR HONOR. SO THIS IS DEFENSE DESIGNATION TWO.
JUDGE DAVILA: YES.
MR. LOOBY: AND THIS IS THE EXCHANGE BETWEEN MR. PARLOFF AND MS. HOLMES ABOUT THE COMPANY'S -- THE DIFFERENT TYPES OF IP THAT THE COMPANY HOLDS AND WHETHER OR NOT IT'S STRICTLY PATENTS OR WHETHER OR NOT IT INCLUDES TRADE SECRET PROTECTED PRACTICES. AND MS. HOLMES'S ANSWER IS THAT IT'S BOTH, AND THEN THERE'S A LITTLE BIT OF ELABORATION, BUT THERE'S ABOUT A MINUTE AND CHANGE EXCHANGE.
JUDGE DAVILA: NOW, THIS IS ONE WE DON'T HAVE A TRANSCRIPT; IS THAT RIGHT?
MR. LOOBY: THAT'S RIGHT, THAT'S RIGHT. THE GOVERNMENT HAD TRANSCRIBED CERTAIN PORTIONS THAT WE WERE ABLE TO MARKUP IN TRANSCRIPTS, BUT NOT OTHER PORTIONS. SO THIS -- WE HAVE THE AUDIOTAPE THAT WE SUBMITTED TO THE COURT. THERE IS NONHEARSAY PURPOSES, AND THEN THERE IS A 106 PURPOSE. I THINK EITHER ONE OF THEM IS SUFFICIENT TO ADMIT THIS PORTION OF THE TAPE. THE NONHEARSAY PURPOSE IS IT'S RELEVANT TO MS. HOLMES'S KNOWLEDGE AND STATE OF MIND AS TO WHAT TYPES OF IP PROTECTION THE COMPANY HELD. THAT'S TRUE WHETHER OR NOT ANY OF THE UNDERLYING PRACTICES ARE, IN FACT, TRADE SECRETS, WHICH WOULD BE THE TRUTH OF THE MATTER ASSERTED IN THE STATEMENT. WE HAVE TRADE SECRETS. WE'RE NOT ADMITTING IT FOR THAT PURPOSE. WE'RE PROPOSING TO ADMIT IT TO SHOW THAT MS. HOLMES WAS AWARE OF AND UNDERSTOOD THAT THERE WERE TRADE SECRET PRACTICES, SHE BELIEVED IT TO BE TRUE IN -- OR AT LEAST REPRESENTED THAT TO MR. PARLOFF IN THE SPRING OF 2014. AND THE REASON WHY THAT IS RELEVANT TO THE CASE IS TWO-FOLD, ONE OF WHICH IS THAT MR. PARLOFF'S ARTICLE REPRESENTS THAT THE COMPANY DOES HOLD TRADE SECRETS, AND SO IT'S PART OF, KIND OF PART OF THE EXCHANGE THAT DOES MAKE IT INTO THE ARTICLE. BUT IT ALSO -- WE EXPECT THE GOVERNMENT TO ARGUE THAT THE COMPANY'S INVOCATION OF TRADE SECRETS AT OTHER POINTS IN TIME WERE, WERE PART OF THE SCHEME TO DEFRAUD. AND SO THE IDEA THAT MS. HOLMES IS AWARE OF TRADE SECRETS AND IS TALKING ABOUT TRADE SECRETS PUBLICLY AND WITH MR. PARLOFF WITH THE IDEA THAT IT WOULD BE RELAYED TO OTHER PEOPLE IS EVIDENCE THAT THIS BELIEF EXISTED IN EARLY 2014.
JUDGE DAVILA: WELL, WHAT SHE'S -- THANK YOU. WHAT SHE SAYS IN THE TAPE, I THINK -- I DON'T HAVE A TRANSCRIPT OF IT, I LISTENED TO IT SEVERAL TIMES -- SHE EXPRESSES HER BELIEF IN THE PATENT SYSTEM AND THE IMPORTANCE OF THE PATENT SYSTEM. AND I THINK SHE SAID SOMETHING ABOUT, YES, WE DO HAVE PATENTS, IT'S IMPORTANT, BUT WE ALSO FEEL THAT WE COULD PROTECT -- OUTSIDE OF THE PATENT SYSTEM, WE CAN PROTECT OUR TRADE SECRETS INTERNALLY, AND SHE EXPRESSES SOME STRONG BELIEF IN THAT. IS THAT WHAT YOU WANT TO GET IN HERE, THAT PIECE?
MR. LOOBY: YES. AND THEN THE CLIP ENDS WITH "AND THE COMPANY IS ALWAYS CONTINUALLY INNOVATING" BECAUSE IT'S A DISCUSSION ABOUT WHAT TYPES OF IP DO THEY HAVE, AND WHICH WE HAVE PATENTS THAT ARE KIND OF ON THE RECORD, AND WE HAVE TRADE SECRETS THAT ARE AN ADDITIONAL LAYER OF SUPPORT KIND OF AROUND THAT.
JUDGE DAVILA: SO WHY IS THAT IMPORTANT? I JUST -- SO WHAT?
MR. LOOBY: THE SO WHAT, YOUR HONOR, IS THAT WHEN THE COMPANY IS TALKING ABOUT TRADE SECRET PROTECTIONS IN 2015, WE EXPECT THE GOVERNMENT TO ARGUE THAT THOSE INVOCATIONS OF THAT IP PROTECTION ARE IN BAD FAITH. IN FACT, THEY HAVE ALLEGED THAT IN THEIR 404(B) NOTICE. THIS EXCHANGE WITH MR. PARLOFF IS WELL BEFORE ANY WHIFF OF THAT LATER CONTROVERSY ARISES. IT IS EVIDENCE THAT MS. HOLMES BELIEVED THAT THERE WERE TRADE SECRETS PROTECTIONS GENERALLY AT THAT TIME, AND IT MAKES IT MORE PROBATIVE AND IT UNDERMINES THE GOVERNMENT'S INFERENCE THAT THEY WOULD HAVE THE JURY DRAW THAT THOSE LATER INVOCATION OF TRADE SECRETS IS ESSENTIALLY MADE UP. WELL, THEY'D BEEN TALKING ABOUT TRADE SECRETS FOR A LONG TIME. IT'S BEEN MS. HOLMES ON THE RECORD WITH A REPORTER IN AN INTERVIEW FOR A PROFILE. "WE HAVE TRADE SECRET PROTECTIONS AND WE BELIEVE IN PROTECTING OUR IP THROUGH THAT MECHANISM."
JUDGE DAVILA: OKAY. MR. BOSTIC?
MR. BOSTIC: SO I THINK THE CONCERN HERE, YOUR HONOR, IS AGAIN A HEARSAY ONE. THE HEARSAY RULE DOES NOT ALLOW A PARTY TO INTRODUCE ITS OWN STATEMENTS AS EVIDENCE OF THAT PARTY'S BELIEF. AND I THINK JUST ON THE FACE OF THIS CLIP, THIS PORTION -- AND BASED ON DEFENSE COUNSEL'S DESCRIPTION, IT'S CLEAR THAT THAT'S WHAT THIS IS. THIS IS A STATEMENT BY MS. HOLMES ABOUT HER BELIEF AT THE TIME, OR AT LEAST HER PURPORTED BELIEF ABOUT THE STATE OF THE COMPANY'S IP PROTECTION, THE -- I SUPPOSE THE VALIDITY OF THE COMPANY'S TRADE SECRECY PRACTICES, AND HER STATEMENT AT THAT TIME CAN'T BE INTRODUCED BY HER TO SHOW THAT THAT'S WHAT SHE BELIEVED. THAT CONFLICTS WITH THE HEARSAY RULE. IT'S COMPOUNDED IN THIS CASE BY THE FACT THAT THIS DEALS WITH A LEGAL ISSUE AND THE VALIDITY OR NONVALIDITY OF A TRADE SECRET, THE EXISTENCE OR NONEXISTENCE OF A TRADE SECRET IS A LEGAL QUESTION. SO I THINK THAT THAT'S JUST ANOTHER COMPOUNDING FACTOR THAT MAKES THIS MORE PROBLEMATIC TO LET IN AN OUT-OF-COURT HEARSAY STATEMENT FROM THE DEFENDANT ABOUT THE EXISTENCE OF THE COMPANY'S TRADE SECRET IP AT THE TIME.
MR. LOOBY: RIGHT. AND MS. HOLMES'S OUT-OF-COURT STATEMENTS ARE SUBJECT TO THE SAME HEARSAY RESTRICTIONS AS ANY OTHER OUT-OF-COURT STATEMENT. WE ARE NOT OFFERING IT FOR THE TRUTH ABOUT WHETHER OR NOT THESE TRADE -- THESE PRACTICES WERE TRADE SECRETS OR WHETHER OR NOT THE COMPANY ACTUALLY HAD TRADE SECRET PROTECTIONS OR THAT MS. HOLMES UNDERSTOOD THEM TO BE THAT WAY. IT'S A DISCLOSURE THAT THE COMPANY DOES KEEP THESE TYPES OF IP, OR AT LEAST THAT WAS ITS POSITION AT THE TIME, AND THAT'S RELEVANT TO MS. HOLMES'S KNOWLEDGE ABOUT KIND OF WHAT IP WAS AT ISSUE, WHICH --
JUDGE DAVILA: ISN'T THAT IN EVIDENCE ALREADY? DIDN'T CERTAIN WITNESSES TESTIFY THAT THERE WERE TRADE SECRET PROTECTIONS AT THE COMPANY?
MR. LOOBY: OFF THE TOP OF MY HEAD, I CAN'T RECALL EXACTLY. I KNOW THAT IT'S IN MR. PARLOFF'S ARTICLE, WHICH IS IN EVIDENCE, WHICH LEADS ME TO THE 106 REASON, WHICH IF IT WAS ADMITTED UNDER 106, THERE WOULDN'T BE A HEARSAY ISSUES.
JUDGE DAVILA: SHOULD WE ADMIT IT UNDER THAT SAME THEORY, THE SECOND ARTICLE?
MR. LOOBY: NO, YOUR HONOR. THIS WOULD BE CONTEXT TO THE CONVERSATIONS THAT THE GOVERNMENT HAS PROPOSED TO PLAY WHICH CENTER AROUND, PRINCIPALLY AROUND THE 2014 REPORTING THAT LEADS TO THE JUNE 2014 ARTICLE, WHICH THE ARTICLE, OF COURSE, IS IN EVIDENCE AND SAYS THAT THERE ARE TRADE SECRET PROTECTIONS. SO THIS IS PROVIDING CONTEXT TO KIND OF HOW THAT, HOW THAT REPRESENTATION WOUND UP IN THE ARTICLE, AND IT ALSO PROVIDES CONTEXT TO OTHER CLIPS THAT THE GOVERNMENT WOULD PLAY AND ABOUT KIND OF WHAT, WHAT WOULD BE ON THE RECORD AND WHAT WOULD BE OFF THE RECORD IN TERMS OF THE PUBLIC DESCRIPTION OF THE COMPANY'S TECHNOLOGIES. SO THE IDEA THAT THERE ARE TRADE SECRET ISSUES IS KIND OF HANGING OVER A LOT OF THE EXCHANGES BETWEEN MR. PARLOFF AND MS. HOLMES THAT THE JURY WILL HEAR TODAY. SO UNDER RULE 106, THIS IS, THIS COMES IN FOR CONTEXT OF TABLE SETTING OF -- THEY HAD DISCUSSED EARLY ON IN THEIR EXCHANGES, YEAH, WE HAVE TRADE SECRETS. SO THEN LATER WHEN THEY'RE TALKING ABOUT, WELL, HOW SHOULD WE DESCRIBE THIS OR THAT IN THE ARTICLE, IT'S AGAINST THE BACKDROP OF WHAT WE DO CONSIDER ASPECTS OF OUR TECHNOLOGY AND PROCESSES TO BE TRADE SECRET PROTECTION PROTECTED, AND WE'RE HAVING THAT CONVERSATION IN THAT CONTEXT. SO WE SUBMIT THAT IT'S KIND OF A 106 CONTEXT RATIONALE.
JUDGE DAVILA: AND IT'S NOT HEARSAY.
MR. LOOBY: AND THEN THE HEARSAY QUESTION WOULD BE, WOULD BE MOOT AT THAT POINT? BUT WE ALSO WOULD NOT BE OFFERING IT FOR THE TRUTH OF THE MATTER ASSERTED. AND SO EVEN IF IT CAME IN FOR 106, I MEAN, WE WOULDN'T BE ARGUING THAT, AND WE WOULDN'T BE OFFERING IT THAT WAY ANYWAY. SO IF THE COURT WANTED TO INSTRUCT THAT THAT QUESTION AND ANSWER, EVEN IF IT CAME IN UNDER RULE 106, WAS TO BE CONSIDERED FOR A LIMITED PURPOSE --
JUDGE DAVILA: AND THAT LIMITED PURPOSE WOULD BE?
MR. LOOBY: THAT WOULD BE MS. HOLMES'S KNOWLEDGE ABOUT THE COMPANY'S IP PORTFOLIO, WHAT TYPES OF IP THE COMPANY HELD IN JUNE OR MAY OF 2014.
JUDGE DAVILA: WHAT TYPES? I DON'T THINK IT'S THAT DESCRIPTIVE, IS IT?
MR. LOOBY: WELL, IT'S DIFFERENT CATEGORIES. IT'S PATENT AND TRADE SECRET.
JUDGE DAVILA: SHE SAYS, WE BELIEVE IN THE PATENT SYSTEM.
MR. LOOBY: RIGHT.
JUDGE DAVILA: AND WE HAVE PATENTS.
MR. LOOBY: YES.
JUDGE DAVILA: AND THEN SHE SAYS BUT WE ALSO OUTSIDE OF THAT, I DON'T REMEMBER IF SHE USED THE PHRASE INTERNALLY, BUT WE HAVE TRADE SECRET PROTECTION.
MR. LOOBY: RIGHT.
JUDGE DAVILA: AND THAT'S REALLY THE PORTION YOU WANT, THOSE TWO STATEMENTS I WOULD THINK.
MR. LOOBY: CORRECT. AND I THINK THE TAPE ONLY CONTINUES FOR A SHORT WHILE AFTER WHERE SHE MAKES THE STATEMENT, AND, OF COURSE, WE CONTINUE INNOVATING. BUT IT'S REALLY THE PORTIONS THAT YOUR HONOR RECALLS THAT WE'RE TALKING ABOUT.
MR. BOSTIC: I'M NOT SURE I SEE THE 106 CONNECTION. USUALLY WITH 106 IT'S EASIER, OR THERE'S A MORE CONCRETE CONNECTION BETWEEN THE PORTION THAT A PARTY IS SEEKING TO ADD AND ANOTHER PORTION THAT WOULD CREATE AN UNFAIR IMPRESSION --
JUDGE DAVILA: CONTEXT. CONTEXT, MR. BOSTIC.
MR. BOSTIC: CONTEXT. I'M TRYING TO GET THROUGH THIS WHOLE ARGUMENT WITHOUT USING THAT WORD.
(LAUGHTER.)
MR. BOSTIC: BUT I DON'T SEE, I DON'T SEE OTHER CONTENT IN THE GOVERNMENT'S IDENTIFIED CLIPS THAT WOULD CREATE AN UNBALANCED OR MISLEADING IMPRESSION WERE IT NOT FOR GIVING MS. HOLMES A CHANCE TO JUSTIFY WITHHOLDING INFORMATION, YOU KNOW, THROUGH HER STATEMENT AT THE TIME ABOUT HER BELIEF THAT THE COMPANY HAD TRADE SECRET PROTECTION. I THINK -- AND I THINK TO THE EXTENT IT WOULD HAVE THAT FUNCTION, I THINK THEN IT IS IN VIOLATION OF THE HEARSAY RULES IF IT'S SERVING THAT PURPOSE TO FILL IN THAT GAP FOR THE JURY AND TELL THEM EITHER WHAT THE STATE OF THERANOS'S IP PORTFOLIO WAS AT THE TIME OR WHAT MS. HOLMES BELIEVED ABOUT IT. I THINK THOSE ARE BOTH IMPROPER HEARSAY PURPOSES.
MR. LOOBY: JUST ONE FINAL WORD.
JUDGE DAVILA: SURE.
MR. LOOBY: WHICH IS IF WE ZOOM OUT A LITTLE BIT, WHAT THE GOVERNMENT IS GOING TO DO TODAY IS PLAY A CERTAIN SERIES OF CLIPS AND EXCHANGES WITH MR. PARLOFF AND MS. HOLMES, AND THEY'RE GOING TO THEN ARGUE TO THE JURY THAT THESE ARE EITHER MISLEADING OR THEY HAVE OMISSIONS IN THEM. THE CONTEXT THAT THIS IS BEING DISCUSSED ABOUT THE TECHNOLOGY AGAINST THE BACKDROP OF A DISCLOSURE THAT THE COMPANY MAINTAINS TRADE SECRETS AND TAKES THAT SERIOUSLY I THINK IS IMPORTANT AND NECESSARY TO NOT HAVE THE ISOLATED CLIPS BE MISLEADING IN THAT REGARD.
JUDGE DAVILA: I SEE. OKAY. ALL RIGHT. THANK YOU. I THINK THE 106 CONNECTION HERE, AS I SEE IT, IS A LITTLE TENUOUS, MR. LOOBY. I'M JUST NOT, I'M NOT -- I UNDERSTAND THE REASON THAT YOU WANT IT IN, TO CAPTURE THE TRADE SECRET IN THE PATENT AND MR. HOLMES BELIEF IN BOTH OF THOSE, AND HER OVERT ASSERTION THAT THE COMPANY DOES OTHER THINGS TO PROTECT ITS TRADE SECRETS AND THE VALUE FOR THAT IN YOUR CASE. I DO NOT THINK IT MEETS THE 106 AND I DO THINK IT'S IMPROPER HEARSAY, AT LEAST AS IT'S PRESENTED TODAY. LET'S SEE WHEN THE TAPE IS PLAYED AND SEE WHAT -- I'M PAUSING BECAUSE I DON'T WANT TO USE THE WORD CONTEXT, BUT LET'S SEE WHAT DEVELOPS IN RELATION TO THAT AND SEE WHERE IT TAKES US. THEY MAY DECIDE NOT TO PLAY THE TAPE.
MR. LOOBY: THAT WOULD BE A SURPRISE.
JUDGE DAVILA: ALL RIGHT. MS. TREFZ, YOU WANTED TO SAY SOMETHING?
MS. TREFZ: VERY BRIEFLY, YOUR HONOR. GOOD MORNING, YOUR HONOR.
JUDGE DAVILA: GOOD MORNING. AND MR. BOSTIC REMAINS ON THE MOUND.
MS. TREFZ: HE IS. AND I AM A NEW BATTER.
MR. BOSTIC: IS THREE ON ONE ALLOWED IN SPORTS, YOUR HONOR?
MS. TREFZ: IT DEPENDS ON WHAT SPORT. JUST BRIEFLY, YOUR HONOR. THIS IS WITH RESPECT TO DR. ASIN WHO IS THE DOCTOR OF THE WITNESS ON THE STAND. I THINK THERE IS STILL A QUESTION AS TO WHETHER THE GOVERNMENT WILL CALL HIM. LAST NIGHT THEY TOLD US THAT THEY WERE NOT SURE. I DID JUST WANT TO FLAG FOR THE COURT THAT WE HAD SOUGHT AND RECEIVED FROM JUDGE COUSINS A SUBPOENA FOR RECORDS RELATED TO THIS PATIENT. I UNDERSTAND FROM THE CORRESPONDENCE WITH THE DOCTOR LAST NIGHT THAT HE IS OR WILL BE HERE AT THE COURTHOUSE TODAY AND WOULD BE ABLE TO PRODUCE THOSE DOCUMENTS, AND BECAUSE THEY'RE PRODUCIBLE TO THE COURT, I JUST WANTED TO FLAG THAT WE WOULD LIKE TO BE ABLE TO TENDER THEM TO THE COURT AND JUST ASK THAT HE BE REQUESTED TO STAY WHILE WE REVIEW THEM AS THEY RELATE TO THIS PARTICULAR WITNESS.
JUDGE DAVILA: OKAY.
MR. BOSTIC: DR. ASIN IS MR. LEACH'S WITNESS. IF I MIGHT CALL ON HIM OR CONFER WITH HIM?
JUDGE DAVILA: SURE. THIS IS CALLED A PITCHING CHANGE, MR. BOSTIC.
(LAUGHTER.)
MR. LEACH: THANK YOU, YOUR HONOR. I'M GOING TO PITCH HIT. WE'RE HAPPY TO WORK OUT THE DOCUMENTS WITH DR. ASIN. WE INTERFERED WITH HIS PRACTICE THIS WEEK ON A NUMBER OF DAYS, SO I WOULD HATE TO HAVE HIM STAY LONGER THAN REQUIRED BECAUSE WE'RE HAPPY TO GET THE DOCUMENTS TO THE DEFENSE, AND I DON'T THINK THERE WOULD BE AN ISSUE THERE.
JUDGE DAVILA: OKAY. ALL RIGHT.
MS. TREFZ: WE WOULD LIKE TO TENDER THEM TO THE COURT SO THAT WE COULD REVIEW THEM.
JUDGE DAVILA: SHOULD WE DO THAT WITH GREAT FLOURISH OR CAN WE HAVE HIM COME IN SOME TIME WHEN WE ARE OUTSIDE OF THE PRESENCE OF THE JURY.
MS. TREFZ: THAT'S WHY I WAS RAISING IT NOW.
MR. LEACH: I THINK IT BE MORE APPROPRIATE TO DO IT OUTSIDE OF THE PRESENCE OF THE JURY.
JUDGE DAVILA: WELL, LET'S DO THAT. OKAY. THANK YOU. THEN DO WE NEED TO TALK ABOUT THE DOCTOR ANYMORE, POTENTIAL TESTIMONY OR ANYTHING LIKE THAT? IS THAT ALL RESOLVED?
MS. TREFZ: I THINK THE COURT IS AWARE OF OUR POSITION THAT WE STATED YESTERDAY. I DON'T WANT TO REHASH THOSE ARGUMENTS.
JUDGE DAVILA: SURE. OKAY.
MS. TREFZ: BUT I UNDERSTAND THE GOVERNMENT IS NOT SURE IF THEY'RE GOING TO CALL HIM. YOU KNOW, WE HAVE A SUBPOENA THAT WE CAN SERVE ON HIM, AND WE CAN CALL HIM IF OUR CASE BEGINS TODAY --
JUDGE DAVILA: YEAH.
MS. TREFZ: -- IF THEY CHOOSE NOT TO, AND IF WE CHOOSE TO PUT ON A CASE. SO I JUST, I JUST -- I DON'T THINK IT'S NECESSARY TO RESOLVE. THE GOVERNMENT SAID IT WASN'T SURE WHETHER IT WAS GOING TO CALL HIM STILL, AND SO WE WILL HAVE WAIT TO SEE.
JUDGE DAVILA: OKAY. SO IS IT -- MS. TOMPKINS IS IT?
MR. LEACH: YES.
MS. TREFZ: CORRECT.
JUDGE DAVILA: SHE IS ON THE STAND NOW. YOU HAVE HER ON CROSS. I'LL DRAW YOUR ATTENTION TO 789 FED.2D 1315 IN REGARDS TO QUESTIONS REGARDING THE PHYSICIAN. LET ME JUST SAY, YOU CAN ASK HER ABOUT -- UNDER THE EXCEPTION SHE CAN SAY WHAT SHE TOLD THE PHYSICIAN, BUT SHE CAN'T TELL YOU WHAT THE PHYSICIAN TOLD HER. YOU UNDERSTAND THAT?
MS. TREFZ: I UNDERSTAND THE COURT'S RULING. I BELIEVE THAT I HAVE HAD THE CHANCE TO REFRAME MY QUESTIONS SO THAT THEY WILL BE IN COMPLIANCE, BUT WE WILL SEE I SUPPOSE.
JUDGE DAVILA: GREAT. OKAY. ANYTHING FURTHER?
MS. TREFZ: THANK YOU, YOUR HONOR.
MR. LEACH: NO, YOUR HONOR. THANK YOU, YOUR HONOR.
JUDGE DAVILA: OKAY. THANK YOU. WE MIGHT GET STARTED ON TIME TODAY.
MR. LEACH: WONDERFUL.
JUDGE DAVILA: GREAT. THANK YOU.
(RECESS FROM 8:52 A.M. UNTIL 9:06 A.M.)
(JURY OUT AT 9:06 A.M.)
JUDGE DAVILA: PLEASE BE SEATED. THANK YOU FOR YOUR COURTESY. WE'RE BACK ON THE RECORD. ALL PARTIES PREVIOUSLY PRESENT ARE PRESENT ONCE AGAIN. WE'RE OUTSIDE OF THE PRESENCE OF THE JURY. MR. LEACH, DO YOU HAVE A COMMENT ABOUT THE RECORDS, I THINK?
MR. LEACH: I DO, YOUR HONOR. I'M ADVISED BY THE DEFENSE THAT THEY HAVE SUBPOENAED CERTAIN RECORDS FROM DR. ASIN AND WANTED THEM RETURNED TO THE CLERK. HE'S HERE IN THE COURTROOM AND PREPARED TO DO THAT RIGHT NOW.
JUDGE DAVILA: ALL RIGHT. THANK YOU. DR. ASIN, ARE YOU HERE, SIR? YES. THANK YOU. COME FORWARD. LET ME ASK YOU TO STATE YOUR NAME AND THEN SPELL IT, PLEASE.
JUDGE DAVILA: THANK YOU. AND YOU'VE BROUGHT SOME -- IT LOOKS LIKE YOU HAVE A MANILA FOLDER OF RECORDS.
JUDGE DAVILA: AND THOSE ARE HERE PURSUANT TO A SUBPOENA THAT YOU RECEIVED FROM THE DEFENSE?
JUDGE DAVILA: ALL RIGHT. WOULD YOU LIKE TO LODGE THOSE WITH THE COURT AT THIS TIME?
JUDGE DAVILA: YOU CAN HAND THEM AROUND THE GLASS THERE AND OUR COURTROOM DEPUTY WILL RECEIVE THOSE. WE'LL KEEP THEM HERE UNDER PROTECTION, AND WE'LL RETURN THEM TO YOU WHEN THEY HAVE CONCLUDED THEIR SERVICE TO THIS CASE. IS THAT ALL RIGHT WITH YOU?
(HANDING.)
JUDGE DAVILA: ALL RIGHT. ANYTHING FURTHER, MR. LEACH?
MR. LEACH: NO, YOUR HONOR.
JUDGE DAVILA: ALL RIGHT. THANK YOU, SIR. ALL RIGHT. THANK YOU.
COURT CLERK: COURT IS IN RECESS.
(RECESS FROM 9:07 A.M. UNTIL 9:15 A.M.)
(JURY IN AT 9:15 A.M.)
JUDGE DAVILA: THANK YOU. GOOD MORNING. WE ARE ON THE RECORD IN THE HOLMES MATTER. ALL COUNSEL ARE PRESENT, MS. HOLMES IS PRESENT. OUR JURY IS PRESENT. GOOD MORNING, LADIES AND GENTLEMEN. BEFORE WE START, LET ME ASK YOU THAT QUESTION AGAIN, AND I APPRECIATE YOUR PATIENCE WITH ME ASKING THIS QUESTION. DURING THE BREAK, DID ANY OF YOU HAVE CAUSE TO COME ACROSS ANY INFORMATION, SPEAK TO ANYONE OR DO ANY INVESTIGATION ABOUT ANYTHING TO DO WITH THIS CASE? IF SO, PLEASE RAISE YOUR HAND. AGAIN, I SEE NO HANDS. THANK YOU VERY MUCH, LADIES AND GENTLEMEN. MS. TOMPKINS IS ON THE STAND; IS THAT RIGHT?
MR. BOSTIC: YES, YOUR HONOR.