Defense Motion 1163, Balwani Excerpts, and Cross-Examination Scope
164 linesSAN JOSE, CALIFORNIA NOVEMBER 30, 2021 P R O C E E D I N G S
(COURT CONVENED AT 8:31 A.M.)
(JURY OUT AT 8:31 A.M.)
JUDGE DAVILA: WE'RE ON THE RECORD IN THE HOLMES MATTER. ALL COUNSEL ARE PRESENT. MS. HOLMES IS PRESENT. WE'RE OUTSIDE OF THE PRESENCE OF THE JURY. MR. LEACH IS NOT PRESENT. OKAY. WE'RE ON THE RECORD OUTSIDE OF THE PRESENCE OF THE JURY. WE WERE GOING TO HAVE A HEARING THIS MORNING ABOUT THE DEFENSE CONTINUED MOTION 1163, DOCUMENT 1163. BUT I JUST WANTED TO ASK -- MR. FLEURMONT, I SEE YOU HERE. THANK YOU FOR COMING IN THIS MORNING, SIR. I HAD CONVERSATION WITH YOUR COLLEAGUES YESTERDAY, AND THEY SUGGESTED THAT WE WAIT UNTIL YOU COME IN. I JUST WANTED TO ASK MS. VOLKAR, IS THIS A GOOD TIME TO DO THIS NOW, OR SHOULD WE WAIT?
MS. VOLKAR: THANK YOU, YOUR HONOR. I'M HAPPY TO -- SO THE GOVERNMENT HAS NOT HAD THE TIME TO COMPLETE THE RULE 106 REVIEW. WE HAVE STARTED IT. IT IS ABOUT 1300 PAGES OF TRANSCRIPT. SO I HAVE NOT, CANDIDLY, COMPLETED IT. THAT BEING SAID, I AM MORE THAN HAPPY TO PICK UP THE CONVERSATION WE ENDED WITH YESTERDAY, WHICH IS WHETHER SOME PARTS ARE EITHER MOOT OR CUMULATIVE, AND I THINK THAT THAT WOULD ACTUALLY HELP NARROW, EVEN IF YOUR HONOR WOULD BE WILLING TO GIVE A TENTATIVE, OR WHICH SECTIONS YOU MIGHT PERMIT OR GRANT OR DENY, IT WOULD, OF COURSE, NARROW THE WORK FOR THE RULE 106 PURPOSES. SO THAT DISCUSSION COULD BE HELPFUL THIS MORNING. BUT I MOSTLY WANTED TO LET THE COURT KNOW THAT I DID NOT OVERNIGHT GET ALL OF THE RULE 106 COMPLETENESS WORK DONE.
JUDGE DAVILA: ALL RIGHT. THANK YOU FOR THAT. THE QUESTIONS THAT WE DISCUSSED IN YOUR ABSENCE, MR. FLEURMONT, WERE QUESTIONS THAT I HAD ABOUT THE EXHIBITS AND THE STATEMENTS IN THE EXHIBITS. PLEASE RECALL THAT MY CONCERNS WERE TWO. ONE, I THINK WE TALKED ABOUT WHETHER OR NOT UNAVAILABILITY HAS BEEN SHOWN. WE TALKED ABOUT YOUR COLLEAGUE'S DECLARATION. I THINK I TOLD YOU I WANT SOMETHING MORE THAN THAT. SO THAT WILL GIVE YOU -- YOU CAN TAKE YOUR MASKS OFF IF YOU'RE COMFORTABLE WITH THAT.
MS. VOLKAR: THANK YOU, YOUR HONOR.
MR. FLEURMONT: THANK YOU, YOUR HONOR.
JUDGE DAVILA: SO THAT WAS THE ONE QUESTION ON THE UNAVAILABILITY. THE OTHER QUESTION THAT IS PERHAPS MOST PRESSING IS AS TO THE EXHIBITS AND THE STATEMENTS, PLEASE RECALL THAT I WAS SAYING, WELL, SHOULDN'T I KNOW THE QUESTION SO I CAN KNOW WHAT THE CONTEXT IS. I GUESS WHAT I NEED TO KNOW IS WHAT IS, AS TO EACH OF THESE EXHIBITS AND THE COLLOQUIES THAT ARE CONTAINED IN THEM, WHERE IS THE -- I JUST -- I DON'T SEE, AND I NEED SOME HELP AS TO WHAT IS THE STATEMENT AGAINST INTEREST? I DON'T SEE IT. I THINK WHAT I'M SEEING HERE, AND I'M GIVING YOU THE BENEFIT SO YOU CAN HELP, WHAT I SEE IS A FACT WITNESS. I DON'T SEE ANY PARTICULAR PENAL OR PECUNIARY INTEREST OR A STATEMENT AGAINST AN INTEREST. IT JUST -- I DON'T SEE IT. SO THAT'S WHAT I NEED SOME HELP ON.
MR. FLEURMONT: ABSOLUTELY, YOUR HONOR. OKAY. SO I THINK IT'S PROBABLY BEST IF WE JUST WALK THROUGH EACH OF THE EXHIBITS.
JUDGE DAVILA: SURE.
MR. FLEURMONT: AND I CAN POINT TO THE COURT STATEMENTS AGAINST INTEREST.
JUDGE DAVILA: SURE. THANK YOU.
MR. FLEURMONT: SO LET'S START WITH EXHIBIT A. OKAY. STARTING, YOUR HONOR, WITH EXHIBIT A, THE FIRST QUESTION AND ANSWER, THIS IS STARTING AT PAGE 3 TO PAGE 4, RELATES TO THE WALGREENS AND SAFEWAY RELATIONSHIP.
JUDGE DAVILA: RIGHT.
MR. FLEURMONT: IF YOU LOOK AT PAGE 4, LINES 3 AND 4.
JUDGE DAVILA: THIS IS ECF PAGE 4?
MR. FLEURMONT: YES, YOUR HONOR.
JUDGE DAVILA: RIGHT.
MR. FLEURMONT: "I TOOK THE LEADERSHIP ROLE THERE IN NEGOTIATIONS AND CONTRACTS." AND THAT'S A STATEMENT SAYING HE TOOK A LEADERSHIP ROLE IN REGARDS TO THE SAFEWAY AND WALGREENS CONTRACTS. AND WALGREENS, AS YOU KNOW, IS ALLEGED IN PARAGRAPH 12(D) OF THE INDICTMENT. OKAY. HE CONTINUES AND HE GETS ASKED A QUESTION "WHAT ABOUT SAFEWAY?" THAT'S AT LINE 12. AT LINE 13, "YES, YEAH, SAME THING ON SAFEWAY."
JUDGE DAVILA: OKAY. HOW DOES THAT -- TELL ME ABOUT THAT. SO HE'S SAYING IN LINES 2 -- LET'S GO BACK. THE START OF THIS WAS ON LINE -- PAGE 3, "YOU MENTIONED OVER TIME YOUR RESPONSIBILITIES GREW. CAN YOU BRIEFLY EXPLAIN WHAT GOT ADDED TO YOUR PORTFOLIO?" THAT'S ON PAGE ECF 3. AND THAT GOES DOWN. HE STARTS TALKING ABOUT HARDWARE, AND HE LEARNED ABOUT THE BUSINESS, HE WAS ON THE ROAD MEETING WITH THE RETAIL BUSINESS. "AND AS THAT EVOLVED, I TOOK THE LEADERSHIP ROLE THERE IN NEGOTIATIONS AND CONTRACTS." AND THAT STATEMENT, I GUESS, IS WHAT YOU'RE SAYING EXPOSES HIM TO SOME LIABILITY AGAINST HIS INTEREST BECAUSE.
MR. FLEURMONT: BECAUSE, YOUR HONOR, AS WE MENTIONED YESTERDAY, WHEN RECEIVING THE SUBPOENAS FROM THE S.E.C. AND THE SUBPOENAS FROM THE GRAND JURY, THERE WERE REQUESTS IN THERE ABOUT THE ROLE IN THE RETAIL PARTNERSHIPS. AND THE GOVERNMENT HAS ALLEGED, AS YOU KNOW, THAT, YOU KNOW, WALGREENS, SAFEWAY ARE BOTH INVESTORS IN THIS CASE THROUGH MISREPRESENTATIONS MADE TO WALGREENS AND SAFEWAY. AND HE IS SAYING THAT HE TOOK A LEADERSHIP ROLE IN NEGOTIATIONS IN THE CONTRACTS, AND IN NEGOTIATIONS OBVIOUSLY STATEMENTS WERE MADE.
JUDGE DAVILA: AND BECAUSE OF THAT HIS LIABILITY IS -- A JURY COULD FIND THAT HE MADE MISREPRESENTATIONS TO WALGREENS IN THE CONTEXT OF THOSE NEGOTIATIONS AND CONTRACTS?
MR. FLEURMONT: YES, YOUR HONOR. HE COULD FACE CIVIL LIABILITY UNDER THE S.E.C.
JUDGE DAVILA: I SEE. OKAY. AND THEN THE QUESTION IS, I GUESS PHARMACIES, DO YOU MEAN WALGREENS PRIMARILY? YES. AND THEN HE TALKS ABOUT SAFEWAY.
MR. FLEURMONT: YES, YOUR HONOR. THAT'S WHY WE INCLUDED THE FULL CONTEXT AGENCY BECAUSE YOU CAN SEE EXACTLY WHAT RETAIL PARTNERSHIPS HE'S DISCUSSING AND JUST TO GIVE THE COURT FULL CONTEXT FOR THE STATEMENTS.
JUDGE DAVILA: RIGHT. AND THEN HE SAYS HE TOOK RESPONSES -- THIS IS ON PAGE 5. "YOU TOOK OVER RESPONSIBILITY FOR THE SAFEWAY RELATIONSHIP MORE SO AFTER MR. BURD LEFT SAFEWAY?"
MR. FLEURMONT: YES, YOUR HONOR.
JUDGE DAVILA: AND HE SAYS, "PRETTY MUCH RIGHT AFTER THAT." SO THAT WOULD BE AFTER THAT CONTRACT RELATIONSHIP WAS COMPLETED; RIGHT?
MR. FLEURMONT: I DON'T THINK SO, YOUR HONOR. THERE WERE DEALINGS WITH SAFEWAY AFTER MR. BURD LEFT.
JUDGE DAVILA: BUT THE CONTRACT WAS COMPLETED. WASN'T THERE EVIDENCE -- ISN'T THERE EVIDENCE THAT YOUR CLIENT NEGOTIATED THE CONTRACT WITH MR. BURD?
MR. FLEURMONT: I'D HAVE TO LOOK BACK AT THE RECORD JUST TO CONFIRM THAT, YOUR HONOR, BUT THERE WAS EVIDENCE IN THE TRIAL ABOUT MS. HOLMES AND MR. BURD AND THEIR DISCUSSIONS DURING THE CONTRACT.
JUDGE DAVILA: RIGHT. IT SOUNDS LIKE THIS COLLOQUY IS HE'S SAYING I TOOK OVER RESPONSIBILITIES OR INCREASED MY RESPONSIBILITIES WITH SAFEWAY AT SOME POINT IN TIME. BUT WHAT I'M CURIOUS ABOUT, IT SEEMS AT THAT POINT IN TIME IS SUBSEQUENT TO THE ACTUAL FORMATION OF THE CONTRACT, THE CONSUMMATION OF THE DEAL. AND IF THAT'S THE CASE, THEN IF THE LIABILITY IS THE NEGOTIATION OF THE CONTRACT LIKE WE WERE TALKING ABOUT WITH WALGREENS, THEN THIS IS POST THAT, AND IT'S NOT PARTICULARLY RELEVANT TO HIS -- AGAINST HIS INTEREST.
MR. FLEURMONT: WELL, THEY'RE STATEMENTS MADE AFTER THE CONTRACT, AND THERE WAS STILL A RELATIONSHIP AFTER THE CONTRACT. SO I DON'T -- I PUSH BACK A LITTLE BIT THAT AFTER THE CONTRACT WAS SIGNED THAT ALL LIABILITY CEASES.
JUDGE DAVILA: ALL RIGHT. YOU'RE SAYING THAT HIS CONTINUED COMMUNICATIONS WITH SAFEWAY WERE -- IT'S A LITTLE ODD BECAUSE IT'S ALMOST LIKE SAYING, WELL, IT'S AGAINST HIS INTEREST BECAUSE, JUDGE, THAT'S EVIDENCE THAT -- YOU'RE NOT SAYING THIS, THERE'S NO ADMISSION HERE. LET ME BE STRAIGHT ABOUT THIS. BUT THAT COULD BE VIEWED BY THE JURY AS COCONSPIRATOR CONDUCT IN THAT HE KEPT TALKING TO THEM, SAFEWAY, TO KEEP THEM FOOLED -- I'LL JUST USE THAT WORD AS PART OF THE CRIMINAL INTENT OF THAT -- AND HE WAS PART OF IT. IS THAT WHAT YOU'RE SAYING?
MR. FLEURMONT: NOT AT ALL, YOUR HONOR. FIRST, THE PERSPECTIVE THAT WE'RE LOOKING AT HERE IS THE PERSPECTIVE OF THE DECLARANT. AND SO THE QUESTION IS WHETHER A REASONABLE PERSON IN DECLARANT'S POSITION BELIEVED THAT STATEMENTS WERE MADE THAT WERE SUBJECT TO EITHER CIVIL OR CRIMINAL LIABILITY. AND THEY CAN BE BOTH CIVIL OR CRIMINAL LIABILITY. SO WE'RE NOT JUST TALKING ABOUT WHAT A JURY WOULD THINK IN A CRIMINAL CASE.
JUDGE DAVILA: SO HIS WORRY WOULD NOT BE IF THIS COMES OUT, THEN I COULD BE FOUND AS A COCONSPIRATOR BECAUSE I WAS CONTINUING THE RUSE, IF YOU WILL?
MR. FLEURMONT: EXACTLY. I DON'T THINK THAT THE CONCERN. IT'S KIND OF AN OBJECTIVE INQUIRY ABOUT WHETHER A PERSON IN HIS POSITION IN AN S.E.C. DEPOSITION WHERE HE'S GOTTEN SUBPOENAS ABOUT THIS TOPIC WOULD SAY SOMETHING THAT WOULD -- HE SAID IT TRUTHFULLY.
JUDGE DAVILA: OKAY.
MS. VOLKAR: YOUR HONOR, MAY I BE HEARD ABOUT THIS PORTION BEFORE WE MOVE ON TO THE NEXT PORTION?
JUDGE DAVILA: YES. LET ME LET MR. FLEURMONT FINISH HIS COMMENT, AND THEN WE'LL DO THIS BACK AND FORTH. MR. FLEURMONT, DO YOU WANT TO FINISH YOUR THOUGHT?
MR. FLEURMONT: THAT IS IT. THAT IS WHAT I HAVE TO SAY ON THAT TOPIC.
JUDGE DAVILA: OKAY.
MS. VOLKAR: THANK YOU, YOUR HONOR. SO JUST FOCUSSING ON PAGES 3 TO 5 BECAUSE I THOUGHT IT WOULD BE EASIEST TO DO IT IN CHUNKS, WHICH IS WHAT I BELIEVE ALSO IS WHAT MR. FLEURMONT INTENDS TO DO.
JUDGE DAVILA: RIGHT.
MS. VOLKAR: SO WHAT WAS SKIPPED OVER WAS ON PAGE 3 THERE'S A LOT OF DISCUSSION ABOUT THE SUPPLY CHAIN AND HOW MR. BALWANI CAME TO LEARN MORE ABOUT THE SUPPLY CHAIN DURING HIS EARLIER YEARS WITH THE COMPANY. FIRST OF ALL, I'M NOT ENTIRELY SURE IF THAT IS DIRECTLY INCULPATORY. HE'S NOT SAYING I CREATED THE DEVICE. IT COULD CERTAINLY BE A PIECE IN THE PUZZLE ON THE WAY THERE. SO I TAKE COUNSEL'S POINT THAT MAYBE THIS IS A PIECE IN THE PUZZLE, BUT I REPRESENT THAT THE GOVERNMENT HAS NOT COMPLETED ITS RULE 106 REVIEW YET. I HAVE GOTTEN THROUGH SOME PORTIONS RELATED TO THIS SECTION. AND LATER ON IN THE SAME TESTIMONY MR. BALWANI TALKS ABOUT HOW MS. HOLMES HAD CREATED THE INTERNAL WORKINGS OF THE TSPU BEFORE HE EVEN JOINED THE COMPANY AND WAS USING IT FOR PHARMA COMPANIES. ALSO RIGHT AFTER TALKING -- LITERALLY THE NEXT ANSWER ON PAGE 5 TALKING ABOUT WALGREENS AND SAFEWAY, THE QUESTIONER ASKS WHAT ABOUT OTHER PHARMACIES? AND HE SAID, I HAD NO ROLE IN THAT, MS. HOLMES HANDLED THOSE.
SO IN TERMS OF WHEN WE GET TO RULE 106, ONE OF THE THINGS THAT I REALIZED VERY QUICKLY IS THAT WE CAN GET INTO CONFRONTATION CLAUSE ISSUES WHERE HE IS SAYING I HAD THESE RESPONSIBILITIES AND SHE HAD THOSE RESPONSIBILITIES, AND, OF COURSE, THAT'S CONSISTENT WITH THE GOVERNMENT'S THEORY WHICH IS THAT THEY WERE COCONSPIRATORS AND THEY BOTH HAD ROLES REVOLVING AROUND DIFFERENT PIECES. TO GET TO THE SPECIFIC INCULPATORY STATEMENT THAT I HEARD MR. FLEURMONT SAY ON PAGE 4, THE "I TOOK LEADERSHIP ROLE IN THE NEGOTIATIONS AND CONTRACTS FOR WALGREENS," THIS IS PART OF WHY I WANTED TO POINT OUT THE SORT OF CUMULATIVE NATURE TO THE LIMITED BENEFIT THAT THIS TESTIMONY MIGHT BRING. THEY'RE BOTH WALGREENS WITNESSES. MR. MIQUELON AND MR. JHAVERI, I THINK, TESTIFIED THAT MOST OF THEIR CONVERSATIONS WERE WITH MR. BALWANI. THEY ALSO TESTIFIED THAT THEY HAD SOME CONVERSATIONS WITH MS. HOLMES.
WE'LL GET TO PFM AND BRIAN GROSSMAN LATER, BUT WE'LL HAVE THE SAME SITUATION THERE WHERE SOMETIMES SOME OF THE INVESTORS SPOKE MORE WITH ONE OF THE COCONSPIRATORS, AND OTHER INVESTORS LIKE SAFEWAY SPOKE WITH THE OTHER COCONSPIRATOR. THAT'S ALL CONSISTENT WITH THE TESTIMONY TO DATE. AGAIN, I GET BACK TO THE POINT THAT YOUR HONOR WAS TALKING ABOUT WITH RESPECT TO SAFEWAY. HE'S SAYING THAT THEY BOTH HAD THE RELATIONSHIP AND THE KEY PART OF THE RELATIONSHIP, WHEN THE STATEMENTS WERE MADE THAT INDUCED THE POTENTIAL INVESTOR TO RELY AND PART WITH MONEY WHEN SAFEWAY PAID THE MONEY IN THE CONTRACT, THAT RELATIONSHIP WAS OWNED BY MS. HOLMES. SO I DO THINK THAT YOUR HONOR IS PICKING UP ON A KEY DISTINCTION. MR. BALWANI IS SAYING THAT HE TOOK OVER THE RELATIONSHIP AT A LATER PERIOD OF TIME. THAT'S NOT NECESSARILY THE CORE PERIOD OF TIME WHEN STATEMENTS WERE MADE THAT WOULD INDUCE AN INVESTOR OR A POTENTIAL INVESTOR TO PART WITH MONEY.
JUDGE DAVILA: OKAY. THANK YOU.
MR. FLEURMONT: JUST A BRIEF RESPONSE.
JUDGE DAVILA: SURE.
MR. FLEURMONT: I THINK THAT'S A BIT OF TWO SHIPS IN THE NIGHT PASSING RIGHT HERE. WE'VE INCLUDED THE FULL QUESTION AND ANSWER SO THE COURT COULD HAVE CONTEXT. SO THE STATEMENTS ABOUT MANUFACTURING AND PRODUCTION IN THE BEGINNING, THAT'S JUST PART OF HIS ANSWER TO THE QUESTION, AND WE THINK IT WOULD BE INAPPROPRIATE FOR RULE 106 DESIGNATIONS AS TO PORTIONS OF THE QUESTION AND ANSWER THEY'RE NOT EVEN SAYING ARE INCULPATORY. SO I JUST WANT TO CLARIFY THAT.
JUDGE DAVILA: SURE.
MR. FLEURMONT: AND I THINK PART OF THIS EXERCISE IS BECAUSE THE COURT WANTS TO KNOW EXACTLY WHAT THEY THINK IS A STATEMENT AGAINST INTEREST, AND WE'D HAVE TO REVIEW THE 106 DESIGNATIONS BASED ON -- I DON'T WANT TO PROLONG TIME BUT THE POINT --
JUDGE DAVILA: NO, NO, NO. I'M SMILING BECAUSE I SEE A TENNIS MATCH HERE. WE'RE GOING TO GO BACK AND FORTH WITH THIS, WHICH WE'LL HAVE TO DO. LET ME JUST -- LET ME BE SERIOUS. IT'S AN IMPORTANT POINT TO YOUR CASE AND THE GOVERNMENT'S AS WELL. I DO THINK THERE ARE SOME 106 ISSUES THAT PROBABLY NEED TO BE FLESHED OUT, AND THE TWO OF YOU ARE GOING TO HAVE TO MEET AND CONFER AND LOOK AT THOSE, AND THEN WE'RE GOING TO HAVE ANOTHER CONVERSATION ABOUT THAT AT SOME POINT.
MR. FLEURMONT: ABSOLUTELY, YOUR HONOR. I JUST WANT TO CLARIFY THAT JUST BECAUSE THERE'S A PORTION IN A QUESTION AND AN ANSWER THAT SPEAKS TO AN ISSUE THAT WE'RE NOT SAYING IS INCULPATORY DOES NOT MEAN THAT, ONE, THE GOVERNMENT SHOULD BE ABLE TO DESIGNATE UNDER RULE 106 OTHER, BECAUSE THAT IS KIND OF NOT REALLY AN ISSUE, BUT ALSO PART OF THIS EXERCISE, I BELIEVE, IS TO KIND OF FIGURE OUT WHAT WE'RE POINTING AT. AND IF IT BECOMES A CASE THAT THE COURT THINKS THAT WE SHOULD JUST INCLUDE EXACTLY WHAT WE'RE SAYING IS EXCULPATORY AND SOME LANGUAGE AROUND FOR CONTEXT, THEN THAT MIGHT BE THE DIRECTION THAT WE GO.
JUDGE DAVILA: RIGHT.
MR. FLEURMONT: BUT I JUST WANT TO MAKE VERY CLEAR THAT JUST BECAUSE THERE ARE OTHER STATEMENTS ABOUT OTHER TOPICS THAT ARE RELATED IN THE QUESTION AND ANSWER THAT WERE -- IT'S FINE FOR THE GOVERNMENT TO DESIGNATE 106 ON THAT ISSUE, AND ALSO THAT WE, THAT WE -- IT'S NECESSARY FOR US TO GET THAT PORTION OF THE STATEMENT.
JUDGE DAVILA: OKAY. IT SOUNDS LIKE WE'RE GOING TO DO SOME MORE WORK ON THAT WITH YOUR HELP, WITH YOUR HELP. IT SOUNDS THAT WAY. AND 106, THE COMPANY'S FINANCIALS AND YOUR ROLE?
MR. FLEURMONT: YES, YOUR HONOR. I HAVE THAT PAGE IN MY BAG ACTUALLY.
MS. VOLKAR: YOUR HONOR, MAY I BE HEARD BRIEFLY FOR THE RECORD BEFORE WE MOVE ON?
JUDGE DAVILA: SURE.
MS. VOLKAR: I RESPECTFULLY DISAGREE WITH MY COLLEAGUE'S STATEMENT ABOUT RULE 106. MY UNDERSTANDING OF RULE 106 IS TO MAKE A COMPLETE ANSWER OR PICTURE SO THAT TESTIMONY WON'T BE CONFUSING TO THE JURY. I DON'T BELIEVE THAT THEY CAN CHERRY PICK CERTAIN ANSWERS IF THEY'RE GOING TO READ THE FULL PORTION. EVEN IF THEY CONCLUDED -- OR EVEN IF THEY INCLUDED THE WHOLE ANSWER SO AS TO GIVE A FULSOME ANSWER, THAT MEANS RULE 106 APPLIES TO ANY PARTS OF THAT ANSWER OR WHAT THEY WOULD READ OUT LOUD TO THE JURY. SO I JUST WANTED TO MAKE SURE THE RECORD IS CLEAR FROM THE GOVERNMENT'S POSITION ON THAT.
JUDGE DAVILA: THANK YOU.
MR. FLEURMONT: I THINK YOU UNDERSTAND OUR POSITION SO I WON'T BELABOR THAT. SO ON TO PAGE 6 OF EXHIBIT A. THE PORTION THAT WE'RE POINTING TO AND THAT SHOWS ONE RESPONSIBILITY OVER A RELEVANT ALLEGATION IS THE FINANCIAL MODEL, AND I'M LOOKING AT PAGE 6, LINES 17 THROUGH 20. AND AS YOU CAN SEE THERE, THEY'RE TALKING ABOUT THE FINANCIAL MODEL, HOW HE BUILT IT. AND THEN HE SAYS, HE SAYS HE OWNED THE FINANCIAL MODEL. AND THEN THERE'S A QUESTION ABOUT "BY SAYING YOU OWNED, YOU MEAN YOU WERE THE PERSON RESPONSIBLE FOR THE COMPANY'S FINANCIAL PROJECTIONS AS YOU'VE JUST DESCRIBED?" HE SAYS, "FINANCIAL MODEL. "QUESTION: FINANCIAL MODEL? "ANSWER: YES." AND THEN ON PAGE 7, LINES 18 THROUGH 21. "SO I WAS USING THIS AS A PLANNING TOOL AND SOME OF THE TABS IN THE MODEL WOULD SPIT OUT AS THE END RESULTS OR, YOU KNOW, CHANGING ANY ASSUMPTIONS IN THE MODEL," SHOWING THAT HE WAS THE ONE USING THE MODEL AS A FINANCIAL TOOL. WE'VE HEARD TESTIMONY ABOUT THE FINANCIAL MODEL REFERRED TO BY MR. GROSSMAN. THE PROJECTIONS IN THE MODEL ARE ESSENTIALLY ONE AND THE SAME BECAUSE MANY OF THE PROJECTIONS AND THE NUMBERS IN THE PROJECTIONS ARE ACTUALLY IN THE FINANCIAL MODEL, AND THIS PORTION HERE SHOWS THAT HE'S A PERSON WHO OWNS THE MODEL, HE'S A PERSON THAT WORKS WITH THE ASSUMPTIONS, AND TAKES RESPONSIBILITY FOR THAT MODEL. AND GOING BACK TO THE POINT I MADE EARLIER ABOUT THE SUBPOENAS HE RECEIVED FROM THE S.E.C., THOSE ASKED ABOUT QUESTIONS ABOUT THE COMPANY'S FINANCIALS.
JUDGE DAVILA: AND BECAUSE HE CREATED THE MODEL, THAT EXPOSES HIM -- THAT'S AGAINST HIS INTEREST BECAUSE?
MR. FLEURMONT: SURE. I GUESS FOR TWO REASONS, YOUR HONOR. ONE, A REASONABLE PERSON WHO CREATED A FINANCIAL MODEL AND GAVE THAT MODEL TO INVESTORS KNOWING THAT THE INVESTORS WERE USING THE MODEL AND SOME OF THEIR DECISIONS AND WOULD NOT SAY AND KNOWING THAT THEY'RE IN AN S.E.C. DEPOSITION FACED WITH LIABILITY ABOUT THE FINANCES OF THE COMPANY, WOULD NOT OUTRIGHT SAY, "I OWN THIS, THIS WAS MINE, I'M THE PERSON WHO DID THE ASSUMPTIONS," WITHOUT KNOWING THAT THEY COULD PUT THEM AT CIVIL LIABILITY.
JUDGE DAVILA: DO WE NEED TO LOOK AT THE RECORD TO SEE WHETHER OR NOT THERE'S A DISTINCTION BETWEEN THE MODEL BEING SENT TO INVESTORS AS OPPOSED TO PROJECTIONS?
MR. FLEURMONT: I DON'T THINK SO, YOUR HONOR. I THINK THAT BECAUSE THE MODEL HAS THE SAME -- SOME OF THE SAME NUMBERS AS THE PROJECTIONS, THAT ESSENTIALLY, PARTICULARLY FOR THIS PART, THEY'RE ONE AND THE SAME. BUT HE TAKES OWNERSHIP OVER THE MODEL, AND THAT'S THE QUESTION THAT WE'RE CONCERNED WITH HERE.
JUDGE DAVILA: SO THE MODEL IS A PREDECESSOR IN TIME TO THE PROJECTIONS AND THEN THE PROJECTIONS ARE WHAT WAS SENT TO THE INVESTORS BY YOUR CLIENT? IS THAT HOW THAT WORKED?
MR. FLEURMONT: I DON'T THINK SO, YOUR HONOR. I THINK THAT HE'S SAYING THAT HE MADE THE MODEL VERY EARLY ON, AND PART OF THE MODEL IS LOOKING AT THE PROJECTIONS.
JUDGE DAVILA: OKAY.
MR. FLEURMONT: SO I DON'T THINK THAT THAT'S ENTIRELY RIGHT. I THINK THAT THE FOCUS IS ON THE FACT THAT THE MODEL WAS SENT TO INVESTORS, PARTICULARLY MR. GROSSMAN, AND THE FACT THAT MR. BALWANI IS CLAIMING OWNERSHIP OVER THAT MODEL.
JUDGE DAVILA: OKAY.
MS. VOLKAR: THANK YOU, YOUR HONOR. I THINK THERE ARE TWO KEY ISSUES WITH RESPECT TO 804(B)(3). WHEN IT COMES TO THE MODEL INSTRUCTION, AND THERE'S ONE PAGE IN A LATER EXHIBIT THAT ALSO TOUCHES ON THIS TOPIC. SO IN MY MIND I'M GOING TO GROUP THEM TOGETHER FOR A MOMENT. FIRST, THE MODEL VERSUS PROJECTIONS IS KEY BECAUSE THE WORD "PROJECTIONS" MEANT SOMETHING TO THE INVESTORS. IT WAS PROJECTED REVENUE. THAT WAS THE TITLE OF THE SLIDE THAT MOST REVENUES, THAT MOST INVESTORS, RDV, MR. MOSLEY, I BELIEVE -- I'M FORGETTING THE THIRD INVESTOR THAT SPECIFICALLY TALKED ABOUT THE SLIDE, BUT MULTIPLE INVESTORS TALKED ABOUT -- AND I'LL PUT PFM AND MR. GROSSMAN IN A SEPARATE CATEGORY BECAUSE THEY BUILT THEIR OWN MODEL AND THAT WAS SLIGHTLY DIFFERENT SO I WILL COME BACK TO THAT. BUT MOST INVESTORS SAW FINANCIAL PROJECTIONS, AND THAT MEANT SOMETHING. THAT WAS NOT "THIS IS A THEORETICAL WORLD THAT COULD EXIST IF A BUNCH OF ASSUMPTIONS ARE MET."
THAT WAS, "THIS IS WHAT WE PROJECT THE REVENUE OF THE COMPANY TO BE." NOW, THAT DISTINCTION IS KEY, BECAUSE WHAT MR. BALWANI IS SAYING HERE IS ACTUALLY THAT HE HAD NOTHING TO DO WITH PROJECTIONS, AND HE'S NOT EVEN SURE WHO CHANGED THE WORD OR THE TITLE OF THE SLIDE TO BE PROJECTIONS, RATHER HE BUILT A MODEL THAT HAD A BUNCH OF ASSUMPTIONS, AND HE'S NOT EVEN SAYING IN THE LINES THAT MR. FLEURMONT READ, HE'S NOT EVEN SAYING HE HIMSELF ENTIRELY BUILT THE MODEL. HE'S SHARING BLAME WITH MULTIPLE INVESTORS, WALGREENS, SAFEWAY, EVEN DANISE YAM. AND LATER HE TALKS ABOUT HOW BDT FOLKS MADE EDITS, AND HE'S NOT SURE WHO CHANGED THE NAME AT SOME POINT TO PROJECTIONS, BUT AGAIN, THAT IS A BIG DISTINCTION TO PEOPLE WITH FINANCIAL BACKGROUND. SO FIRST AND FOREMOST ON THE PENAL INTEREST, THERE'S NOT NECESSARILY ANY DIRECT INCULPATORY STATEMENTS HERE, RATHER THERE'S DEFLECTING AND SHARING BLAME THAT WE KNOW FROM GADSON IS INAPPROPRIATE.
NOW, I WANT TO TALK ABOUT PFM BRIEFLY BEFORE WE MOVE -- BEFORE I MOVE TO THE SECOND POINT. SO WITH PFM THAT ONE SPECIFIC INVESTOR, I KNOW MR. FLEURMONT KEEPS REFERENCING THEM, BUT IT WAS ONE INVESTOR. THEY WORKED WITH MR. BALWANI TO TAKE SOME OF THOSE BASE ASSUMPTIONS AND BUILD THEIR OWN MODEL, WHICH AGAIN, WAS WHAT IS THE RESPONSIBILITIES FOR THIS COMPANY. AND THAT IS NOT WHAT IS THE COMPANY PROJECTING ITS REVENUE TO BE. THAT'S GIVEN THE FIELD AND THE SPACE THAT THEY'RE ENTERING, IF WE BUILT -- AND I THINK MR. GROSSMAN TESTIFIED ABOUT THREE DIFFERENT SCENARIOS THAT THEY BUILT OUT IN TERMS OF WHAT POSSIBLE GROWTH THERE WAS FOR THIS COMPANY. AND MAYBE BECAUSE I MYSELF AM NOT A FINANCIER, I'M NOT NECESSARILY SEPARATING THE TWO VERY WELL.
BUT ONE IS HERE IS EXPECTED PROJECTED REVENUE, MAYBE WE'LL FALL SHORT, BUT WE'RE NOT GOING TO FALL A BILLION DOLLARS SHORT, AND HERE'S A MODEL WHICH IS JUST ABOUT WHAT IS THE SPHERE, WHAT IS THE SPACE IN THE MARKET THAT THIS COMPANY IS IN, AND, THEREFORE, WHAT IS THE FULLEST POTENTIAL? NOT WHAT DO WE EXPECT, BUT WHAT IS POSSIBLE? AND THAT'S KIND OF ONE OF THE KEY DIFFERENCES BETWEEN THE TWO OF THEM. AND PFM DID WORK WITH MR. BALWANI ON THAT. WE HEARD MR. GROSSMAN'S TESTIMONY ABOUT THAT. AGAIN, I DON'T KNOW IF THAT IS PER SE IN DISPUTE AND THERE IS ALREADY TESTIMONY ON THAT TOPIC. THE SECOND POINT THAT I WANTED TO MAKE THAT CAUSES MORE CONCERN ABOUT THIS PARTICULAR TOPIC IS THAT THIS PART, AND THE KEY PART THAT I THINK THEY WANT, I BELIEVE IT IS EXHIBIT B. I KNOW WE HAVE NOT GOTTEN THERE YET, BUT I BELIEVE IT'S PORTIONS OF EXHIBIT B. 426 IS THE PART WHERE IT SAYS THAT MS. HOLMES DIDN'T HAVE ANY KNOWLEDGE OF THE PROJECTIONS OR THE MODEL, OR DIDN'T ADD ANY EDITS TO IT.
AND THE PART OF 804(B)(3) THAT REQUIRES TRUSTWORTHINESS OR CORROBORATION, THAT PART IS PARTICULARLY CONCERNING TO THE GOVERNMENT BECAUSE WE HAVE TEXT MESSAGES WHERE MR. BALWANI IS ASKING MS. HOLMES ABOUT THE SAME PROJECTION, THE SAME MODEL, AND THEY'RE TALKING TO EACH OTHER, AND SHE SAYS, I CAN GET COMFORTABLE WITH IT AND I CAN ESSENTIALLY UNDERSTAND IT AND REPEAT IT TO INVESTORS. AND THERE'S NO TESTIMONY FROM MR. GROSSMAN. THERE'S NO TESTIMONY FROM ANY OTHER INVESTOR THAT MS. HOLMES DIDN'T UNDERSTAND OR KNOW HOW TO TALK ABOUT THIS MODEL. SO THERE'S SIMPLY NOTHING TO CORROBORATE OR INDICATE TRUSTWORTHINESS OF WHAT I WOULD IMAGINE IS THE KEY PART ABOUT THE FINANCIAL STUFF THAT THEY WANT.
MS. VOLKAR: SO, AGAIN, I KNOW IT'S TWO SLIGHTLY DIFFERENT THINGS. BUT THERE'S THE PART WHERE IT'S FINANCIAL PROJECTIONS VERSUS MODELS AND MR. BALWANI IS DEFLECTING BLAME THERE, NOT ACTUALLY OWNING THAT HE IS THE ONE WHO CREATED PROJECTIONS PER SE. HE'S TALKING ABOUT HIS PART IN CREATING A MODEL, THAT'S NOT WHAT WAS SAID TO INVESTORS, THAT'S NOT ABOUT THE STATEMENTS THAT WERE MADE, AND THEN THERE'S THE LATER PART WHERE IT SAYS MS. HOLMES HAD NO KNOWLEDGE IN IT, AND THAT PART SIMPLY DOESN'T HAVE ANY CORROBORATION.
JUDGE DAVILA: OKAY. THANK YOU.
MR. FLEURMONT: JUST A COUPLE OF POINTS. ON THE FINANCIAL MODEL, THE FINANCIAL MODEL AS MR. GROSSMAN CAME -- AS CAME OUT DURING MR. GROSSMAN'S TESTIMONY, THAT DROVE THE VALUATION, RIGHT? AND SO THAT WAS SOMETHING THAT WAS IMPORTANT. IN MR. GROSSMAN'S MODEL, THERE IS A TAB THAT HAS MR. BALWANI'S FINANCIAL MODEL IN IT, SO IT'S PART OF HIS MODEL AS WELL. ON CORROBORATION, THE RULE REQUIRES CORROBORATING CIRCUMSTANCES THAT INDICATE TRUSTWORTHINESS. ON MS. VOLKAR'S LAST POINT, WE HAVE TESTIMONY FROM GENERAL MATTIS THAT WHEN THE MODEL WAS DISCUSSED IN THE MEETINGS, IT WAS DISCUSSED BY MR. BALWANI, NOT MS. HOLMES. AND WE HAVE THAT SAME EXACT TESTIMONY IN MR. BALWANI'S S.E.C. DEPOSITION THAT SAYS THAT WHEN HE WENT TO THE BOARD, I BELIEVE ON THE VERY NEXT PAGE -- YES, THE VERY NEXT PAGE -- I'M LOOKING AT PAGE 8, LINES 1 THROUGH 6 WHERE HE DISCUSSES WHEN HE'S AT THE BOARD SHARING THE FINANCIAL MODEL WITH THE BOARD ANY ASSUMPTIONS, NOT MS. HOLMES. AND I THINK WE SHOULD ALSO -- I NEGLECTED TO SAY, OR I'M NEGLECTING TO SAY THAT WHEN LOOKING FOR CORROBORATING CIRCUMSTANCES THAT INDICATE TRUSTWORTHINESS, TYPICALLY IN CASES WHERE YOU HAVE THE STATEMENT AGAINST INTEREST EXCEPTION, WE'RE TALKING ABOUT STATEMENTS MADE TO OTHER WITNESSES, STATEMENTS MADE TO LAWYERS SOMETIMES, AND STATEMENTS MADE SOMETIMES TO POLICE OFFICERS. THESE ARE STATEMENTS MADE IN THE SWORN TESTIMONY. AND THERE'S ACTUALLY ANOTHER EXCEPTION ABOUT STATEMENTS MADE AND IT DOESN'T REQUIRE CORROBORATION BECAUSE I THINK THAT'S JUST A REFLECTION OF THE FACT THAT WHEN YOU'RE MAKING A STATEMENT IN SWORN TESTIMONY, IT'S KIND OF PRESUMED TO BE TRUSTWORTHY BECAUSE YOU HAVE ALL OF THE OTHER PENALTIES. SO THAT'S ON THE CORROBORATION POINT AND THE FINANCIAL AUDIT POINT.
JUDGE DAVILA: OKAY. ANYTHING FURTHER ON THIS, MS. VOLKAR?
MS. VOLKAR: ONLY THAT 804(B)(3) AND THE NINTH CIRCUIT IS CLEAR WHAT THE THREE REQUIREMENTS ARE, AND ONE OF THEM IS CORROBORATION AND TRUSTWORTHINESS. AND I DON'T THINK IT'S AN ACCIDENT THAT A LOT OF THE CASE LAW IN THE NINTH CIRCUIT TALKS ABOUT WHEN THERE ARE TWO COCONSPIRATORS AND ONE WANTS TO USE, OR SOMETIMES THE GOVERNMENT WANTS TO USE, ONE COCONSPIRATOR STATEMENT AGAINST THE OTHER, THERE'S A LARGE BODY OF LAW ABOUT THIS, AND THERE DOES NEED TO BE TRUSTWORTHINESS BECAUSE THERE CAN BE ULTERIOR MOTIVES WHEN IT IS TWO COCONSPIRATORS, AND I DO THINK THAT WE HAVE TO CONSIDER THAT HERE.
JUDGE DAVILA: OKAY. I THINK MOST OF THE CASES ARE THE LATTER AS YOU SAY, THE GOVERNMENT TRYING TO GET COCONSPIRATOR STATEMENTS IN. IT WAS KIND OF A MIRROR IMAGE OF THAT HERE. OKAY.
MR. FLEURMONT: SHOULD WE CONTINUE OR?
JUDGE DAVILA: WELL, IT'S ABOUT 9:00 O'CLOCK NOW. LET'S FINISH THIS. LET'S FINISH EXHIBIT A. LET'S DO THAT.
MR. FLEURMONT: WE HAVE ONE MORE PORTION, YOUR HONOR.
JUDGE DAVILA: SURE.
MR. FLEURMONT: SO NOW I'M LOOKING AT PAGE 9. AND THIS RELATES TO RESPONSIBILITY ABOUT THE CLIA LAB. THE QUESTION AT LINES 4 THROUGH 5, DID YOU SUPERVISE THERANOS'S CLIA LAB? AND AS I SAID BEFORE, WE INCLUDED THE ENTIRE ANSWER. WHAT WE'RE MOST INTERESTED IN IS LINE 10, "HOWEVER, ALL LABS REPORT ULTIMATELY TO BUSINESS," AND THEN LINES 19 THROUGH 21, "SO ALL OF THAT CAME TO ME, REPORTED TO ME BUT THERE WERE OTHER PEOPLE MANAGING IT," TALKING ABOUT THE LAB DIRECTORS, "BUT THEY REPORTED UNDER ME." AND I THINK THAT'S ONE OF THE MORE CLEAR STATEMENTS, YOUR HONOR, HIM TAKING RESPONSIBILITY FOR THE CLIA LAB, WHICH WE KNOW IS AT ISSUE IN THIS CASE. TO BE SURE, THERE ARE OTHER STATEMENTS IN HERE ABOUT THE LAB DIRECTOR, BUT THE STATEMENT THAT WE'RE INTERESTED IN IS HIM SAYING "ALL OF THAT CAME TO ME, THEY REPORTED TO ME." WE THINK THAT ONE IS ONE OF THE MORE CLEAR ISSUES.
JUDGE DAVILA: 19 THROUGH 21?
MR. FLEURMONT: SO, YOUR HONOR, WE THINK THE WHOLE THING SHOULD COME IN. I THINK YOU UNDERSTAND MY POINT AND I'M JUST BEING FRANK WITH, YOUR HONOR.
JUDGE DAVILA: RIGHT.
MR. FLEURMONT: JUST TO HEAR THAT, IT DOESN'T REALLY MAKE SENSE WITHOUT HEARING THE FULL STATEMENT. BUT THE QUESTION FROM THE COURT WAS, WHICH PART OF THE STATEMENT IS?
JUDGE DAVILA: I APPRECIATE YOUR CANDOR. THANK YOU.
MR. FLEURMONT: AND THAT'S WHAT WE'RE LOOKING FOR.
JUDGE DAVILA: RIGHT.
MS. VOLKAR: YOUR HONOR, I'LL PREVIEW ANOTHER RULE 106 SUGGESTION, AND POSSIBLY IT MAY BECOME A DEBATE. EARLIER IN THE TESTIMONY HE SAYS HE'S THE PRESIDENT AND COO AND HE REPORTED DIRECTLY TO MS. HOLMES AND THEY WERE THE TWO BUSINESS ASPECTS OF THE COMPANY. AND I THINK THAT THIS TESTIMONY IS ENTIRELY CONSISTENT WITH THAT, AS WELL AS, TO BE FRANK, CONSISTENT WITH TESTIMONY THAT WE HAVE HEARD THROUGHOUT THIS TRIAL, WHICH IS BOTH OF THEM, BOTH DEFENDANTS, BELIEVE THE CLIA LAB DIRECTOR WAS THE PERSON RESPONSIBLE FOR THE DECISIONS IN THE LAB. AND THAT'S THE MAJORITY OF THIS ANSWER AND THE MAJORITY OF THE SIMILAR ANSWER IN EXHIBIT C. BUT THE KEY PART THAT THEY WANT IS THAT THE LAB REPORTED TO HIM, AND HE REPORTED TO MS. HOLMES. AND THAT'S THE RULE 106 PART THAT THEY HAVE NOT INCLUDED IN THESE EXCERPTS, BUT IS IN THE TESTIMONY. IT'S ALSO, TO BE FRANK, WHAT HAS COME OUT DURING THE TESTIMONY OF THIS CASE, AND INCLUDING IN EXHIBIT -- I CITED IT IN MY BRIEF AND I'M WORRIED I'LL MESS UP THE NUMBER -- BUT 4528, THE POWERPOINT PRESENTATION THAT THEY PRESENTED TO CMS, DEFENSE BROUGHT THAT OUT ON CROSS OF ONE OF THE LAB DIRECTORS THAT THE LAB REPORTED TO MR. BALWANI AND MR. BALWANI REPORTED TO MS. HOLMES. SO I JUST -- ONE, I DON'T THINK THAT'S IN DISPUTE IN THE CASE; AND, TWO, IF THIS PART IS GOING TO COME IN, THEN IN FAIRNESS, AS WE'LL GET TO THE RULE 106, IT SHOULD BE THAT HE ALSO REPORTED TO MS. HOLMES AND TOLD HER WHAT WAS GOING ON IN THE LAB.
JUDGE DAVILA: OKAY.
MR. FLEURMONT: ONE LAST BRIEF POINT. MS. VOLKAR HAS SAID A FEW TIMES THAT CERTAIN PARTS ARE CUMULATIVE, AND THAT JUST MEANS IT'S CORROBORATED. YOU KNOW, JUST POINTING THAT OUT.
JUDGE DAVILA: OKAY.
MS. VOLKAR: YOUR HONOR, MAY I RESPOND TO THAT?
JUDGE DAVILA: YEAH, SURE.
MS. VOLKAR: I'M NOT SURE THAT I SAID THIS YESTERDAY, AND I HOPE THAT I DID. ONE THING THAT I TRIED TO DO IN THE BRIEF, BUT PERHAPS FAILED TO DO, THERE ARE PORTIONS THAT ARE CUMULATIVE, AND THOSE ARE REALLY THE PORTIONS OF WHAT YOUR HONOR IS DEEMING FACT TESTIMONY, AND IT'S NOT THE INCULPATORY OR AGAINST PENAL INTEREST PORTIONS OF IT, OR MAYBE THERE'S SOME SLIGHT OVERLAP THERE. BUT I THINK THE KEY PORTIONS THAT THEY WANT, THE PART THAT SAYS, "AND NOT MS. HOLMES," THOSE PARTS ARE NOT CORROBORATED AND WE'RE NOT SAYING THEY'RE CUMULATIVE. THERE'S NO EVIDENCE TO SUPPORT THEM. IF ANYTHING, IT'S EVIDENCE TO THE CONTRARY. SO THERE ARE TWO BUCKETS HERE WHEN IT COMES TO THAT. AND TO THE EXTENT THAT MY COMMENTS ARE CONFUSING OR HAVE CONFLATED THEM, I JUST WANT TO BE VERY CLEAR. THERE ARE SEVERAL OF THE STATEMENTS THAT ARE CUMULATIVE, AND MR. FLEURMONT WOULD CALL THAT CORROBORATED, BUT I WOULD CALL THAT, GIVEN ALL OF THE OTHER ISSUES AND THE FACT THAT THEY'RE NOT AGAINST PENAL INTEREST IN MOST CASES, WE THINK THAT IT'S JUST ANOTHER REASON TO EXCLUDE THEM. SO THAT'S THE GOVERNMENT'S POINT IN ITS BRIEF WAS EVEN IF WE GET PAST THE HEARSAY ISSUES, THERE'S STILL A 403 ISSUE. THOSE ARE SEPARATE REASONS TO EXCLUDE THIS. SO I JUST WANT TO MAKE SURE THAT WE'RE NOT -- THAT I'M BEING AS CLEAR AS I CAN BE THAT THOSE ARE TWO DIFFERENT REASONS TO EXCLUDE SOMETIMES WHAT WE'RE TALKING ABOUT AS THE SAME TESTIMONY.
JUDGE DAVILA: OKAY. THANK YOU.
MR. FLEURMONT: QUICKLY. WE ARE INTERESTED IN STATEMENTS THAT TAKE RESPONSIBILITY AND STATEMENTS THAT ARE INCULPATORY. IF THOSE STATEMENTS ALSO SAY "AND NOT MS. HOLMES," THE CASE LAW IS CLEAR THAT'S FINE. BUT THIS IS NOT AN EXERCISE TO PUT IN STATEMENTS THAT SAY "AND NOT MS. HOLMES." ALL OF THE STATEMENTS WE HAVE PUT IN HAVE BEEN MR. BALWANI TAKING RESPONSIBILITY OVER A CRITICAL ALLEGATION IN THIS CASE, AND I'LL JUST LEAVE IT AT THAT.
JUDGE DAVILA: ALL RIGHT. WHAT ABOUT THE NULL PROTOCOL? DARE I GO THERE? I ASKED YESTERDAY, IS THIS MOOT NOW?
MR. FLEURMONT: WITHOUT CONCEDING ANY ARGUMENTS, WE'LL WITHDRAW THAT PORTION.
JUDGE DAVILA: ANY OBJECTION?
MS. VOLKAR: NO OBJECTION FROM THE GOVERNMENT. THANK YOU.
JUDGE DAVILA: WELL, LET'S CONTINUE OUR DISCUSSION ON B AND C AT SOME OTHER TIME IF THAT'S ALL RIGHT WITH YOU, COUNSEL?
MR. FLEURMONT: YES, YOUR HONOR.
JUDGE DAVILA: GREAT. LET'S DO THAT THEN. I'LL STEP DOWN AND WE'LL -- ANYTHING FURTHER ON THIS? WE'LL FIND A TIME WHEN WE CAN CONTINUE THIS MAYBE DURING OUR BREAK OR SOMETHING.
MR. FLEURMONT: THAT SOUNDS GOOD, YOUR HONOR.
JUDGE DAVILA: GREAT.
MS. VOLKAR: THANK YOU, YOUR HONOR.
JUDGE DAVILA: LET ME ASK BEFORE WE BRING THE JURY OUT, ANYTHING WE NEED TO TALK ABOUT BEFORE THE JURY COMES OUT, MR. LEACH? YOU'RE PREPARED FOR CROSS-EXAMINATION?
MR. LEACH: I AM, YOUR HONOR. IF WE CAN HAVE MAYBE FIVE EXTRA MINUTES TO GET THE BINDERS AND THINGS?
JUDGE DAVILA: SURE. MR. DOWNEY?
MR. DOWNEY: I DIDN'T KNOW YESTERDAY WHAT MR. LEACH'S EXHIBITS WILL BE. HE DID DISCLOSE SOME EXHIBITS WHICH IMPLICATE THE COURT'S PRIOR RULING ON WEALTH, THE MOTION IN LIMINE ON 798. I DON'T KNOW HIS INTENDED USE OF THEM. I CAN IMAGINE USES THAT GO BOTH WAYS, BUT I JUST WANTED TO SENSITIZE THE COURT TO THAT BECAUSE I KNOW THAT THE COURT'S RULING WILL NOT NECESSARILY BE TOP OF MIND IN THE HEAT OF THE MOMENT, AND WE HAD A SUBSTANTIAL DISCUSSION OF IT AT THE TIME. AMONG THE EXHIBITS HE'S DISCLOSED, FOR EXAMPLE, TRAVEL ITINERARIES FOR BOARD MEMBERS WHERE MS. HOLMES TRAVELLED TO WASHINGTON, D.C. WITH BOARD MEMBERS. WHEN WE HAD THE MOTION IN LIMINE HEARING, THE MODE OF TRAVEL, THE SPECIFIC ITINERARY WAS A SPECIFIC DISCUSSION BETWEEN YOUR HONOR AND MR. BOSTIC AND SOMETHING THAT I OBJECTED TO IN THAT ARGUMENT. I THINK THAT'S EXCLUDED UNDER THE COURT'S RULINGS, SO I JUST WANT TO SENSITIZE THE COURT TO THAT. AND MR. LEACH CAN PERHAPS EDUCATE US AS TO HIS INTENTIONS.
JUDGE DAVILA: MR. LEACH?
MR. LEACH: YOUR HONOR, I THINK THE FACT THAT THE DEFENDANT HAS ACTUALLY ASSERTED HER 12.2 DEFENSE AND PUT AT ISSUE HER LIVING CONDITIONS WITH MR. BALWANI, PUT AT ISSUE HER AGENCY OVER WHAT SHE ATE, HER AGENCY OVER WHAT SHE WORE, YOU KNOW, HER RELATIVE POWER WITHIN THE RELATIONSHIP, HER RELATIONSHIP WITH OTHER VERY POWERFUL PEOPLE WHO WERE THERE IN A POSITION TO SUPPORT HER, ALL ESSENTIALLY MOOT MANY OF THE ARGUMENTS THAT WERE MADE AT THE MOTION IN LIMINE STAGE. THEY HAVE NOT JUST OPENED THE DOOR, THEY HAVE OPENED THE FLOODGATES TO THAT RESPECTFULLY, AND IT IS MY INTENTION TO PUT IN ITINERARIES WITH TRAVEL WITH BOARD MEMBERS THAT WERE PAID BY THE COMPANY, TRIPS TO MEXICO ON JETS PAID FOR BY THE COMPANY FOR BUSINESS PURPOSES. MR. BALWANI AND MS. HOLMES OWNED A HOME TOGETHER THROUGH AN LLC. I THINK THAT'S RELEVANT TO HER RELATIVE AUTHORITY WITHIN THE RELATIONSHIP. I UNDERSTAND WHY SOME OF THESE MIGHT PRESENT 403 ISSUES IF SHE'S NOT RAISING THIS, BUT SHE'S PUT THE ENTIRETY OF THEIR RELATIONSHIP AT ISSUE. SHE'S PUT HER RELATIVE POWER WITHIN THE RELATIONSHIP AT ISSUE, AND THE GOVERNMENT MUST BE PERMITTED TO COMBAT THOSE ASSERTIONS.
MR. DOWNEY: 12.2 IN THIS CONTEXT, YOUR HONOR, RELATES TO DISCLOSURE OF POTENTIAL EXPERT TESTIMONY. THAT IS NOT SOMETHING THAT IS AT ISSUE YET IN THE COURSE OF THE CASE.
JUDGE DAVILA: PARDON ME FOR INTERRUPTING YOU. I WANTED TO ASK THAT THRESHOLD QUESTION, AND I DON'T KNOW IF YOU'RE PREPARED TO ANSWER THAT. AND IF YOU'RE NOT, THAT'S FINE. BUT IS 12.2 AN ISSUE IN THIS CASE YET?
MR. DOWNEY: I'M NOT PREPARED TO ANSWER IT. WE'LL SEE WHERE WE ARE AT THE END OF MS. HOLMES'S TESTIMONY.
JUDGE DAVILA: OKAY. SO I ASKED THAT QUESTION, MR. LEACH, BECAUSE, OF COURSE, A PARTY, A DEFENDANT IS REQUIRED UNDER THE RULES TO GIVE NOTICE, AND WE HAD THAT DISCUSSION OVER THE LAST YEAR. THAT NOTICE WAS GIVEN APPROPRIATELY ACCORDING TO THE RULES. BUT WHETHER OR NOT A PARTY DECIDES TO ENGAGE THAT DEFENSE IS STILL AN ISSUE. AND LET ME JUST ASK THE QUESTION, IS THAT, IS THAT A 12.2 DEFENSE ENGAGED BY VIRTUE OF CALLING AN EXPERT TO SPEAK TO IT?
MR. LEACH: WELL, YOUR HONOR, I DON'T THINK IT'S MERELY CALLING THE EXPERT. I MEAN, THE WITNESS TESTIFIED YESTERDAY, "BALWANI CONTROLLED WHAT I ATE." SHE TESTIFIED YESTERDAY, "I DON'T KNOW WHAT IMPACT THE RELATIONSHIP HAD ON ME." SHE TESTIFIED TO FEAR GOING HOME AND WHAT WAS GOING TO HAPPEN. THE GOVERNMENT MUST BE ABLE TO TEST THAT, AND WHETHER SHE'S DOING IT IN THE GUISE OF A NOTICE EXPERT, WE'RE SIMPLY RAISING THESE FACTS AND CLAIMING THROUGH A NUMBER OF STATEMENTS THAT "I DIDN'T HAVE AGENCY," THAT "I WAS FEARFUL OF HIM," THAT "I DIDN'T HAVE POWER IN THE RELATIONSHIP." WHETHER OR NOT SHE CALLS AN EXPERT TO BOLSTER THAT -- AND WE'VE HAD THAT CONVERSATION A NUMBER OF TIMES -- I DON'T THINK IT MATTERS AT ALL. SHE SAID SHE DIDN'T CONTROL WHAT SHE ATE. THERE'S AMPLE EVIDENCE TO SUGGEST THAT SHE DID. THE GOVERNMENT SHOULD BE ABLE TO CONFRONT HER WITH THAT. THE COURT'S MOTION IN LIMINE ON THE TRAVEL I THOUGHT WAS ANYTHING THAT THE COMPANY PAID FOR IN TERMS OF JETS, HOTELS ON THE COMPANY DIME WAS FAIR GAME. DANISE YAM TESTIFIED TO EXPENSES THAT WERE INCURRED THERE. I DON'T THINK IT MATTERS WHETHER THEY CALL AN EXPERT OR NOT. THIS WITNESS TESTIFIED TO THOSE MATTERS ON HER DIRECT EXAMINATION.
JUDGE DAVILA: SO TWO POINTS HERE THAT I'M CURIOUS ABOUT. LET ME JUST STATE THE FIRST ONE. IF NO EXPERT IS CALLED THEN, AND IF YOU STOOD UP AND SAID, YOUR HONOR, I WOULD LIKE TO STRIKE ALL OF THE TESTIMONY ABOUT MR. BALWANI AND MS. HOLMES'S TESTIMONY ABOUT THAT BECAUSE IT'S NOT RELEVANT IF THERE'S NO 12.2 -- I'M BEING HYPOTHETICAL HERE -- I'M THINKING AHEAD, BUT THAT'S POTENTIALLY SOMETHING THAT COULD HAPPEN. WHAT IS THE RELEVANCE? I'M NOT ASKING YOU TO RESPOND. BUT WHAT IS THE RELEVANCE OF THAT TESTIMONY WITHOUT SUPPORTING 12.2 EXPERT, ET CETERA, ET CETERA? I DON'T KNOW THE ANSWER TO THAT, AND MAYBE WE'LL BE DISCUSSING THAT. I DON'T KNOW. TO YOUR POINT, AND MR. DOWNEY, TO THE GOVERNMENT'S POINT, YOUR CLIENT HAS TESTIFIED AS TO CERTAIN THINGS ABOUT THE RELATIONSHIP. AND ON CROSS-EXAMINATION THE GOVERNMENT SHOULD BE ABLE TO TEST AND PROBE THOSE, SOME OF THOSE THINGS. AND HE SHOULD BE PERMITTED TO DO THAT. AND I DON'T THINK YOU'RE SAYING THAT. THIS IS ABOUT EXPENSES SPECIFICALLY.
MR. DOWNEY: THAT'S RIGHT, YOUR HONOR. THERE'S NO QUESTION, THERE'S NO QUESTION THAT HE CAN CROSS-EXAMINE AROUND THAT.
JUDGE DAVILA: THE ORDER IN 798 AS TO THE EXTRAVAGANCE WAS RELATED TO WHETHER OR NOT THE GOVERNMENT, IN THEIR CASE-IN-CHIEF, COULD PUT ON EVIDENCE THAT SHE SHOPPED AT, IF SHE DID, AT DESIGNER STORES, IF SHE ATE AT FIVE STAR RESTAURANTS, WHATEVER THAT IS, SOMETHING THAT MIGHT CAUSE THE JURY TO THINK THAT SHE WAS LIVING AN EXTRAVAGANT LIFESTYLE, ET CETERA. THE ORDER SAID, DIDN'T IT, THAT THE GOVERNMENT COULD AND EVIDENCE COULD BE INTRODUCED THAT I THINK I SAID IN THE ORDER THAT IT'S COMMON KNOWLEDGE THAT CEO'S OF LARGE COMPANIES LIVE A LIFESTYLE VERY DIFFERENT THAN THE GENERAL PUBLIC AND ALL OF OURS.
MR. DOWNEY: SURE.
JUDGE DAVILA: I THINK THAT'S COMMON KNOWLEDGE. INCLUDED IN THAT KNOWLEDGE IS THE FACT THAT CEO'S TRAVEL ON PRIVATE JETS SOMETIMES. THAT'S WHAT THEY DO. THEY DON'T FLY COACH. AND IN THE ORDER I THINK THAT'S PERMITTED TO TALK ABOUT WHAT DO NORMAL, WHAT DO NORMAL PEOPLE DO, WHATEVER THAT IS? WHATEVER THE NORMAL LIFE OF A CEO OF A MAJOR COMPANY IS, I DON'T KNOW WHAT THAT IS. BUT WHAT I WAS -- AND I THINK IN RECOGNITION OF THE DEFENSE OBJECTION THERE, IS IT RELEVANT THAT SHE SHOPPED AT, AND THIS IS JUST -- I DON'T KNOW ANY EVIDENCE ABOUT IT, BUT IS IT RELEVANT THAT SHE BREAKFASTED AT VAN CLEEF & ARPELS, IS IT RELEVANT THAT SHE HAD CAVIAR FLOWN IN EVERY DAY, EVERY HOUR. THERE'S NO EVIDENCE OF THAT, AND I'M NOT INDICATING THERE IS, BUT I'M SUGGESTING THAT TYPE OF EXTRAVAGANCE IS SOMETHING THAT THE JURY SHOULDN'T HEAR ABOUT BECAUSE THAT DOESN'T HAVE RELEVANCE TO THE CASE. BUT IF THERE ARE TRAVELS THAT ARE COMMENSURATE WITH CEO TRAVEL, IF IT'S A BUSINESS TRAVEL, THAT'S, THAT'S KIND OF THE WAY SILICON VALLEY OPERATES.
MR. DOWNEY: WELL, OF COURSE, YOUR HONOR, IF IT'S RELEVANT FOR SOME PURPOSE TO COMMENT ON A TRIP AND EVENTS ON THE TRIP ARE RELEVANT, WE HAD SOME OF THAT WITH RESPECT TO ANOTHER WITNESS WHO TESTIFIED DURING THE CASE, IT WASN'T -- A MAJOR ISSUE WASN'T MADE OF IT. THAT'S NOT WHAT THIS IS. THIS IS THE INTRODUCTION OF EVIDENCE ABOUT TRAVEL ON PRIVATE PLANES PURELY, PURELY FOR THE PURPOSE PROHIBITED BY 401 AND 403. IT DOESN'T HAVE ANY RELEVANCE TO THE CASE. THESE TRIPS ARE NOT RELEVANT TO ANYTHING THAT ANYONE HAS TALKED ABOUT. THEY'RE NOT RELEVANT TO ANYTHING THAT MS. HOLMES HAS TALKED ABOUT. THEY'RE ONLY BEING INTRODUCED TO SHOW THAT PRIVATE PLANE TRAVEL WAS INCLUDED. MR. LEACH JUST CONCEDED THEY'RE FOR BUSINESS PURPOSES. THEY'RE BUSINESS APPROVED TRAVEL. WHY DOES THE JURY NEED TO HEAR ABOUT THAT? I THINK IN TERMS OF BRANDS, I DON'T KNOW MR. LEACH, I MUST SAY THAT YOUR HONOR'S REFERENCE FLOWED RIGHT OVER ME.
JUDGE DAVILA: YOU DON'T SHOP THERE, MR. DOWNEY?
MR. DOWNEY: I COULDN'T REPEAT WHAT YOU SAID.
(LAUGHTER.)
MR. DOWNEY: BUT I, I -- YOU KNOW, I -- IT'S JUST NOT NECESSARY. OF COURSE HE'S ENTITLED TO CROSS-EXAMINE HER ABOUT HER STATEMENTS AND SO FORTH AND TO EXPLORE THE TRUTH OF THEM. BUT THIS ISN'T BEING OFFERED FOR THAT PURPOSE. THIS IS BEING OFFERED FOR INFLAMMATION OF THE JURY.
MR. LEACH: NO, YOUR HONOR. THIS IS BEING OFFERED FOR MOTIVE. THIS WITNESS HAS TESTIFIED I HAD A VISION, I WAS DOING THIS, THE THRUST OF WHICH IS FOR ALTRUISTIC PURPOSES, I DIDN'T SELL A SHARE OF STOCK. THERE'S ANOTHER SIDE TO THAT COIN. SHE WAS FLYING AROUND THE WORLD MEETING WITH SOME OF THE MOST POWERFUL PEOPLE IN THE UNITED STATES ON THE COMPANY'S DIME, AND THAT IS RELEVANT TO HER MOTIVE. SHE COVETED FAME. SHE COVETED ATTENTION. SHE COVETED THE ABILITY TO INTERACT WITH MANY OF THESE PEOPLE. THAT'S A VERY POWERFUL PART OF THE MOTIVE HERE, AND IT'S SQUARELY WITHIN WHAT THE COURT HELD. SO I -- AND THESE ARE BUSINESS TRIPS. THESE ARE RELEVANT TO THE ALLEGATIONS IN THE INDICTMENT. ONE OF THEM IS A TRIP TO MEET A POTENTIAL INVESTOR. ONE OF THEM IS A TRIP TO ACCEPT AN AWARD. AT THE SAME TIME, SHE'S WRITING DOWN THAT SHE HAS -- I DON'T WANT TO USE THE EXPLETIVE -- BUT A COMPANY NOT WORTHY OF THAT. ALL OF THIS GOES DIRECTLY TO HER MOTIVE AND HER STATE OF MIND. YES, THEY MIGHT APPEAR TO A LAYPERSON AS BEING OUTSIDE OF THE NORMAL COURSE OF WHAT PEOPLE DO. BUT WE SHOULDN'T SANITIZE THINGS HERE. THIS IS PART OF THE MOTIVE.
JUDGE DAVILA: IF, IF -- THANK YOU. IF -- IT WOULD SEEM TO ME, MR. DOWNEY, THAT THERE MIGHT BE SOME FINANCIAL RELEVANCE TO THE FINANCIAL STATE OF THE COMPANY AND WHETHER OR NOT AN INDIVIDUAL WHO HAS A LEADERSHIP ROLE WITH THE COMPANY WAS EXPENDING MONIES IN SOME MANNER. THAT MIGHT HAVE SOME RELEVANCE AS TO INTENT.
MR. DOWNEY: WELL, I SUPPOSE, EXCEPT THAT THE RELEVANCE THAT MR. LEACH JUST ARTICULATED IS EXACTLY WHAT IS PROHIBITED UNDER NINTH CIRCUIT CASE LAW. ONE IS NOT IN THE POSITION OF THE GOVERNMENT ENTITLED TO SAY THAT THE ALLEGED CONDUCT WAS UNDERTAKEN TO IMPROVE ONE'S FINANCIAL SITUATION OR TO GAIN THE BENEFITS ASSOCIATED WITH THAT. SO WE HAVEN'T HEARD THAT PURPOSE YET.
JUDGE DAVILA: RIGHT.
MR. LEACH: YOUR HONOR, MR. BOSTIC IS REMINDING ME THAT THE GOVERNMENT MAY INTRODUCE EVIDENCE THAT HOLMES ENJOYED A LIFESTYLE AS THERANOS'S CEO THAT IS COMPARABLE TO OTHER TECH COMPANY'S CEOS. THIS INCLUDES TRAVEL, SALARY, CELEBRITY AND PERKS AND OTHER BENEFITS COMMENSURATE WITH THE POSITION. THOSE ARE EXACTLY WHAT THOSE ARE, AND I THINK YOUR HONOR MADE A POINT THAT THE JURY SHOULD BE ABLE TO DRAW INFERENCES FROM THE FACT THAT THEY ARE SPENDING TENS OF THOUSANDS OF DOLLARS OF THIS RATHER THAN HIRING A LAB DIRECTOR OF THE GREATER STATURE OF THE ONES THAT THEY HIRED IN THE RELEVANT TIME PERIOD. SO NOTHING HAS CHANGED IN THE COURT'S ORDER OTHER THAN THEY'VE OPENED THE FLOODGATES ON DOES THIS WITNESS HAVE CONTROL AND AGENCY OVER WHAT SHE DOES.
MR. DOWNEY: I MUST SAY THAT THAT MIGHT BE THE MOST AGGRESSIVE RUNNING OVER OF AN ORDER THAT I'VE SEEN IN RECENT TIME. I THINK THE POINT OF THE ORDER WAS -- EVIDENCE IS GOING TO COME IN ABOUT CELEBRITY, EVIDENCE IS GOING TO BE RELEVANT IN A CASE LIKE THIS, AND WE CAN'T USE THIS ARGUMENT AS A BARRIER TO INTRODUCING THAT ARGUMENT. BUT WHEN THE EVIDENCE IS BEING INTRODUCED EXACTLY FOR THE REASON THAT MR. LEACH ARTICULATED THIS MORNING, WHICH IS THAT IT'S ABOUT MOTIVE AND SO FORTH, THAT IS PROHIBITED. WE'VE HAD EVIDENCE IN THE CASE ABOUT CELEBRITY, WE'VE HAD EVIDENCE IN THE CASE ABOUT PRIVATE TRAVEL. I HAVEN'T OBJECTED TO ANY OF THAT. BUT THIS IS DIFFERENT.
JUDGE DAVILA: ANYTHING FURTHER?
MR. LEACH: NOT ON THAT POINT, YOUR HONOR. BUT I DO WANT TO GO BACK TO THE CLOTHING PART. SHE'S SAYING --
MR. DOWNEY: SPEAK AT A HIGH LEVEL FOR MY BENEFIT.
MR. LEACH: IT'S ABOVE MY PAY GRADE, TOO.
JUDGE DAVILA: START AT MACY'S.
MR. LEACH: THE POINT OF THE EVIDENCE IS NOT THAT SHE WENT TO A PARTICULAR STORE OR BOUGHT A PARTICULAR BRAND. THE POINT IS THAT SHE'S DOING THIS WITHOUT MR. BALWANI. THE POINT IS THAT SHE AND HER ASSISTANT ARE MAKING DECISIONS OVER WHERE TO GO AND WHAT TO GET.
JUDGE DAVILA: YEAH. AND THAT'S A FAIR POINT, YES, I AGREE. AND I THINK MR. DOWNEY WOULD, I'M NOT ASKING HIM TO, BUT I THINK HE WOULD HAVE TO CONCEDE THAT POINT, THAT'S RIGHT. AND BASED ON THE TESTIMONY THAT WE HEARD YESTERDAY, I THINK THAT'S WHAT YOU'RE TALKING ABOUT FROM MS. HOLMES, YOU'RE ENTITLED TO PROBE THAT FOR THOSE ISSUES, THOSE INDEPENDENT ISSUES, IF YOU WILL, I'LL CALL IT THAT, AND I THINK YOU'RE RIGHT, YOU'RE RIGHT ON THAT. AND I THINK MR. DOWNEY HAS TOLD US THAT YOU'RE ENTITLED TO PROBE ON THOSE THINGS. MY SENSE IS THAT THE TERRITORIAL BORDER HERE IS EXTRAVAGANT EXPENSES, TWO DIFFERENT THINGS, BUT PERHAPS THERE'S CROSSOVER AND A VEN DIAGRAM ON THAT. BUT FOR THE PURPOSE, FOR THE PURPOSE, I GUESS, IS WHAT YOU'LL HAVE TO SPEAK TO IF YOU SEEK TO INTRODUCE THIS EVIDENCE, AND I DON'T KNOW IF THIS WILL COME IN THIS MORNING OR SOMETIME LATER TODAY.
MR. LEACH: I IMAGINE IT WILL BE AFTER THE BREAK, YOUR HONOR.
JUDGE DAVILA: THAT'S MY SENSE OF IT. OKAY.
MR. DOWNEY: THANK YOU, YOUR HONOR.
JUDGE DAVILA: WELL, THANK YOU FOR BRINGING IT TO MY ATTENTION. ANYTHING ELSE THEN? WE'LL BREAK AT ABOUT 11:00 O'CLOCK, WE'LL TAKE A BREAK, AND THEN AGAIN ANOTHER ONE AT ABOUT 1:30 IF THAT WORKS.
MR. LEACH: THANK YOU, YOUR HONOR.
MR. DOWNEY: THANK YOU, YOUR HONOR.
JUDGE DAVILA: THANK YOU.
COURT CLERK: COURT IS IN RECESS.
(RECESS FROM 9:22 A.M. UNTIL 9:33 A.M.)
(JURY IN AT 9:33 A.M.)
JUDGE DAVILA: GOOD MORNING. WE'RE BACK ON THE RECORD IN THE HOLMES MATTER. ALL COUNSEL ARE PRESENT. OUR JURY IS PRESENT. MS. HOLMES IS ON THE STAND. LADIES AND GENTLEMEN, GOOD MORNING. LET ME, BEFORE WE BEGIN, LET ME ASK YOU THE QUESTION AGAIN. DURING THE EVENING, DID ANY OF YOU HAVE CAUSE TO COME ACROSS INFORMATION, SPEAK TO ANYONE, READ, OR DISCUSS ANYTHING ABOUT THIS CASE? IF SO, COULD YOU PLEASE RAISE YOUR HAND. I SEE NO HANDS. THANK YOU VERY MUCH. MS. HOLMES, IF YOU COULD JUST STATE YOUR NAME, PLEASE.
ELIZABETH A. HOLMES: MY NAME IS ELIZABETH HOLMES.
JUDGE DAVILA: THANK YOU. AND, MR. LEACH, DO YOU HAVE EXAMINATION?
MR. LEACH: I DO, YOUR HONOR. THANK YOU.
JUDGE DAVILA: AND YOU'RE STILL UNDER OATH, MS. HOLMES.
ELIZABETH A. HOLMES: THANK YOU.
JUDGE DAVILA: AND YOU CAN REMOVE YOUR MASK IF YOU WISH.
ELIZABETH A. HOLMES: THANK YOU.
JUDGE DAVILA: YOU'RE WELCOME.
(DEFENDANT'S WITNESS, ELIZABETH HOLMES, WAS PREVIOUSLY SWORN.)