icearizona_6-25
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ICEARIZONA_6-25TRANSCRIPT
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James R. Condo (#005867) Patricia Lee Refo (#017032) Adam E. Lang (#022545) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, Arizona 85004-2202 Telephone: 602.382.6000 [email protected] [email protected] [email protected] Attorneys for Plaintiffs IceArizona Manager Co LLC and IceArizona Hockey Co LLC
IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA
ICEARIZONA MANAGER CO LLC, a Delaware Limited Liability Company; ICEARIZONA HOCKEY CO LLC, a Delaware Limited Liability Company,
Plaintiffs,
v.
CITY OF GLENDALE, an Arizona Municipal Corporation; CITY OF GLENDALE CITY COUNCIL, in its official capacity; JERRY WEIERS, in his official capacity as City of Glendale Mayor; IAN HUGH, in his official capacity as City of Glendale Vice Mayor and Councilmember; BART TURNER, in his official capacity as City of Glendale Councilmember; LAUREN TOLMACHOFF, in her official capacity as City of Glendale Councilmember; JAMIE ALDAMA, in his official capacity as City of Glendale Councilmember; GARY SHERWOOD, in his official capacity as City of Glendale Councilmember; SAMUEL CHAVIRA, in his official capacity as City of Glendale Councilmember; DICK BOWERS, in his official capacity as City of Glendale Acting City Manager; MICHAEL BAILEY, in his official capacity as City of Glendale City Attorney, Defendants.
No. CV2015-007216
RESPONSE TO MOTION TO MODIFY TEMPORARY RESTRAINING ORDER WITH RESPECT TO JULY 1, 2015 PAYMENT OR, IN THE ALTERNATIVE, REQUEST TO DEPOSIT PAYMENT INTO ESCROW Hearing: June 29, 2015 at 10:30 a.m.
(Assigned to The Honorable Dawn Bergin)
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The City of Glendale seeks to avoid, or escrow, the $3.75 million payment due to
Plaintiffs on July 1, 2015, or, alternatively, asks this Court to raise the bond amount to
$4 million. The City makes these requests even though the City admits that it hasnt
actually taken steps to cancel the contract[,]1 and that the payment is for services already
rendered by Plaintiffs. Becauseas the City admitsthe contract is still in full force and
effect, preservation of the status quo requires that the City make its July 1, 2015 payment
for services rendered. The City offers no legal basis upon which this Court could excuse
the City from paying for the services it has already received. Simply put, the relief the
City requests would both fundamentally alter the status quo and completely undermine the
efficacy of this Courts June 12, 2015 Temporary Restraining Orderto which the City
stipulated. The Court should, therefore, deny the Motion to Modify Temporary
Restraining Order With Respect to July 1, 2015, Payment or, in the Alternative, Request
to Deposit Payment into Escrow (the Motion) in its entirety, and decline to modify the
TRO.
MEMORANDUM OF POINTS AND AUTHORITIES
I. RELEVANT FACTUAL BACKGROUND
Much of the Citys brief factual and procedural background section is irrelevant to
the pending Motion.2 The Court has already found, and the City has already stipulated,
that Plaintiffs have established all of the prerequisites for the TRO;3 the facts fail to justify
the Citys attempt to avoid paying Plaintiffs for services already rendered.
A. The Court Correctly Decided the Payment and Bond Issues at the TRO Hearing
At the TRO hearing, the City specifically asked the Court for the same relief it
requests in the Motion. Indeed, the City specifically requested permission to avoid, or
escrow, the July 1, 2015 payment, but the Court inquired: [W]hy should [Plaintiffs] not
get payment for services theyve already performed under a contract that the City
1 See TRO Hrg Tr., 14:25-15:1, June 12, 2015, attached as Exhibit A.
2 See Motion at 3-5.
3 See TRO, 2:9-14.
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acknowledges was in place and valid at the time?4 Hearing no satisfactory response, the
Court correctly entered the TRO.
The City also requested that Plaintiffs post a $15 million bond, claiming that $15
million equaled the exposure the City faced if Plaintiffs continued to perform for the
next year.5 Again, the Court appropriately asked, whats the potential loss to the City if
you all ultimately prevail?6 The City failed to articulate any harm that it would suffer by
continuing to accept (and pay for) Plaintiffs performance, and the Court appropriately set
a $250,000 bond.
The Citys arguments in the Motion are the same flawed arguments that failed at
the TRO hearing. The Court should not revisit either of these arguments now.
B. Because Plaintiffs Performed (or Will Perform) Through July 1, So Should the City
By seeking to avoid paying for Plaintiffs performance through July 1, 2015, the
City basically asks the Court to confer a multi-million dollar windfall on the City.7 The
facts that led to the entry of the TRO do not justify such an inequitable result for several
reasons.
First, the City has known that Mr. Tindall works for Plaintiffs since at least
September 2013, and Plaintiffs informed the City of Ms. Frisonis proposed (and
limited) engagement, in writing, prior to retaining her as a consultant (an
engagement which is now terminated).8 The City took no action on this
knowledge, never expressed any concern over the hires, and never once claimed
that any conflict existed under A.R.S. 38-511 until earlier this month. Allowing
the City to avoid the July 1 payment (for services already rendered) would
inequitably reward the Citys dilatory conduct and penalize Plaintiffs reasonable
reliance on the Citys inactions over the last nineteen months.
4 See TRO Hrg Tr., 34:2-4, Exhibit A.
5 See TRO Hrg Tr., 26:12-13; 27:5-8, Exhibit A.
6 See TRO Hrg Tr., 27:21-22, Exhibit A.
7 See TRO Hrg Tr., 34:9, Exhibit A (arguing that the Court can, and should,
approve a windfall to the City). 8 See April 30, 2015 Email from C. Tindall to M. Bailey, attached as Exhibit B.
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Second, the City is using A.R.S. 38-511 as a negotiating tactic, not as a
tool to remedy any actual public harm. Indeed, since Plaintiffs filed the lawsuit,
City officials have given interviews stating [w]e want the Arizona Coyotes in
Glendale and we want to see them succeed. As weve consistently indicated to the
team, we are prepared to negotiate a mutually beneficial approach to address
concerns.9 The request to avoid the July 1, 2015 payment (for services already
rendered) represents just another unfair attempt by the City to gain leverage.
Third, the City acknowledges that Plaintiffs have not breached, or
threatened to breach, the Agreement. Rather, Plaintiffs fulfilled (or will fulfill) all
of the contractual obligations and duties required of them from April 1, 2015
through June 30, 2015.
As set forth below, the Citys arguments do not support the unequitable and unjust
result the City seeks.
II. LEGAL ARGUMENT
A. The City Does Not Satisfy the Requirements for Modification of a TRO
The City fails to address the applicable standard for modification of a TRO. Rule
65(c) allows a dissolution or modification of a preliminary injunction on a showing of
changed circumstances. Nu-Tred Tire Co. v. Dunlop Tire & Rubber Corp., 118 Ariz.
417, 420, 577 P.2d 268, 271 (Ct. App. 1978) (emphasis added). This Rule does not afford
a party with a means of attack[ing] the original basis for the injunction. Id. The City
does not address this standard, nor does it show how any circumstances changed between
the TRO hearing and the date it filed the Motion. Instead, the City attacks this Courts
sound rulings at the TRO hearing. Under Nu-Tred, the Court can deny the Motion
outright. Nevertheless, Plaintiffs turn to the merits of the Citys arguments.
9 See Associated Press, Glendale officials willing to renegotiate arena lease with
Coyotes, ESPN.com (June 16, 2015), http://espn.go.com/nhl/story/_/id/13096100/ glendale-willing-renegotiate-arizona-coyotes-arena-lease (quoting Assistant City Manager, Tom Duensing).
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B. The Fundamental Purpose of the TRO Is to Preserve the Status Quo
In Arizona, temporary restraining orders preserve the status quo.10
See Farnsworth
v. Hubbard, 78 Ariz. 160, 170, 277 P.2d 252, 259 (1954) (We find no abuse of discretion
in maintaining the status quo of the parties during this litigation. Otherwise the final
judgment could be rendered meaningless . . . .) (internal citation omitted). Indeed, the
very purpose of injunctive relief is to preserve the relative positions of the parties until a
trial on the merits can be held. Univ. of Texas v. Camenisch, 451 U.S. 390, 395 (1981).11
[T]he courts task when granting a preliminary injunction is generally to restore, and
preserve, the status quo ante, i.e., the situation that existed between the parties
immediately prior to the events that precipitated the dispute. Asa v. Pictometry Intl
Corp., 757 F. Supp. 2d 238, 243 (W.D.N.Y. 2010) (emphasis added); see also Camenisch,
451 U.S. at 395. This Courts TRO preserves the status quo by [r]equiring the City of
Glendale to continue to perform and comply with all of the Citys obligations under the
Agreement.12
The Motion seeks to fundamentally alter this Court-ordered status quo, by relieving
the City of its most significant obligation under the Agreementto pay Plaintiffs for
services rendered. As explained below, as a matter of law, the City has not shown that it
should be relieved of its obligation to pay for the benefits it has already received.
1. The Status Quo Requires the City to Make the July 1, 2015 Payment to Plaintiffs
Because the TRO obligates both Plaintiffs and the City to perform under the
Agreement, the status quo means that the City must pay Plaintiffs on July 1, 2015, for
services rendered. A federal district court reached this exact conclusion under similar 10
Ironically, the Motion also argues that the purpose of injunctive relief is to maintain[] the status quo pending a trial on the merits. See Motion at 9. Plaintiffs agree with this proposition. Contrary to the arguments in the Motion, however, maintaining the status quo requires the City to continue to perform under the Agreement, which necessarily includes making all payments due to Plaintiffs during the pendency of the case. 11
Arizona courts often look to federal precedent for guidance on Rule 65, Ariz. R. Civ. P. See Paris-Phoenix Corp. v. Esper, 112 Ariz. 320, 321, 541 P.2d 917, 918 (1975) (The question of notice [under Rule 65(a)(2)] has been answered in the federal courts). 12
See TRO, 3:6-7.
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facts in Asa, 757 F. Supp. 2d at 240.
In Asa, two companies, Blom and Pictometry, entered into a 2009 License
Agreement. Id. Under that agreement, Pictometry granted Blom an exclusive, non-
transferable license to use Pictometrys technology within a defined geographic area in
Europe. Id. In exchange, Blom agreed to pay Pictometry license fees and royalties. Id.
In 2010, Pictometry gave Blom written notice terminating the License Agreement,
effective immediately, because of Bloms alleged breach. Id. at 241. Blom filed suit for
an injunction. Id. Among other relief, Blom sought an order enjoining Pictometry from
dishonoring its contractual obligations and commitments pending the outcome of the
litigation on the merits. Id. The district court granted Blom relief, required both parties to
perform under the contract, and fashioned an injunction that as closely as possible
restore[d] the parties to their status prior to the genesis of the dispute. Id. at 243. To
reach this conclusion, the district court emphasized the fact that the parties had a
continuous contractual relationship for several years before the relationship was
abruptly terminated by Pictometry; therefore, the district court issued the injunction to
maintain the parties contractual relationship pending a final decision on the merits. Id.
at 243-44.
Like Asa, this dispute involves the unilateral, and abrupt, attempted termination of
a contract after performance by both parties for a number of years. This Court properly
enjoined the City from terminating the Agreement, and the TRO binds the parties to the
status quo as of the date of the TRO. The Citys attempt to modify the TRO, now, to
relieve the City of its primary obligation under the Agreement to avoid its July 1 payment
to Plaintiffs, completely defeats the status quo. For the same reasons the Asa court
maintained the status quo by requiring continued mutual performance, this Court should
not relieve the City of its obligation to make the July 1 payment.
2. Relieving the City of Its Obligation to Pay Plaintiffs Would Be Inequitable
The City asserts without analysis or citation that modification of the TRO will
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not harm or otherwise prejudice Plaintiffs. See Motion at 1. This argument defies
reason. As the City acknowledged at the TRO hearing, the City pays Plaintiffs in arrears.
Plaintiffs count on those quarterly payments, and provided services in anticipation of
those quarterly payments. Because the City admits that the Agreement has not been
terminated, there is no reason why this Court should authorize the City to breach the
otherwise valid and enforceable Agreement by withholding payment from Plaintiffs.
Simply put, the Agreement requires the City to make the July 1, 2015 payment to
Plaintiffs. Estrada v. Planet Ins. Co., 26 Ariz. App. 103, 105, 546 P.2d 372, 374 (Ct.
App. 1976) (Consequently, where the provision of the contract is plain and unambiguous
on its face, it must be applied as written and the court will not pervert or do violence to the
language used or expand it beyond its plain and ordinary meaning or add something to the
contract which the parties have not put there.).
3. Maucher v. City of Eloy Is Inapposite
The City relies exclusively on Maucher v. City of Eloy for its argument that it is
entitled to a windfall. 145 Ariz. 335, 701 P.2d 593 (Ct. App. 1985). Maucher, however,
does not stand for that proposition.
In Maucher, a city engineer entered into a contract with the City of Eloy in clear
violation of A.R.S. 38-503. Id. at 336, 701 P.2d at 594. The engineer failed to (1)
disclose his substantial interest in the contract in the official records and (2) comply with
the mandatory competitive bidding statutes then in effect. Id. When a payment dispute
arose between the engineer and the City of Eloy, the engineer sued for breach and the city
cancelled the contract under A.R.S. 38-506. Id. at 335-36, 701 P.2d at 593-94. In light
of the clear violation of A.R.S. 38-503, the Court of Appeals held that the city
appropriately cancelled the contract such that the engineer could not recover damages.
Significantly, the city did not seek to recover funds expended on the project from the
engineer. Id. at 337, 701 P.2d at 595. Instead, [b]ecause a substantial portion of the
contract had already been performed by both parties, this action was treated by the city as
voiding the balance of the original contract Id.
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Maucher is distinguishable from this case in at least four significant ways.
a. The Agreement Is in Full Force and Effect
First, unlike the contract in Maucher, the City has not terminated the Agreement.
On the contrary, the central issue in this case is whether the City may act on its improper
vote to terminate the Agreement under A.R.S. 38-511(A). The Court has found, and the
City has stipulated, that Plaintiffs demonstrated a strong likelihood of success on the
merits of their claims. The continued efficacy of the Agreement here is a critical factual
distinction between Maucher and this case.
b. Maucher Does Not Stand for the Proposition That the City Can Escape Paying Plaintiffs for the Last Three Months of Work
Second, Maucher does not stand for the proposition that the City can escape
payment for work already performed. As noted above, the City of Eloy cancelled the
contract, but expressly declined to seek disgorgement of the fees already paid. Id. at 337,
701 P.2d at 595. By contrast, the City argues that Plaintiffs past performance should go
uncompensated. Maucher does not stand for such an inequitable result.
c. Maucher Involved Different Remedies Under a Different Statute
Third, Maucher relied on the remedies in A.R.S. 38-506; the City relies on
A.R.S. 38-511. A.R.S. 38-511(E) limits the Citys right to recover money to any fee
or commission paid or due to any person significantly involved in initiating, negotiating,
securing, drafting or creating the contract on behalf of the [City]. (Emphasis added).
Under this statute, the Citys has no basis to claim that it can somehow avoid the $3.75
million payment, in arrears, to Plaintiffs for services the City has already received.
Maucher does not hold otherwise.
d. Mauchers Policy Considerations Are Wholly Absent
Fourth, the public policy interests promoted by Maucher are simply absent here.
Under Arizona law, [a] statutory conflict exists within the meaning of A.R.S. 38-501
to 38-511 when a public official has a substantial pecuniary or proprietary interest in one
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of his or her decisions. Shepherd v. Platt, 177 Ariz. 63, 65, 865 P.2d 107, 109 (Ct. App.
1993) (emphasis added). The object of conflict of interest statutes is to remove or limit
the possibility of personal influence which might bear upon an officials decision. State
v. Ross, 214 Ariz. 280, 284, 151 P.3d 1261, 1265 (Ct. App. 2007), as amended (Mar. 28,
2007) (quoting Yetman v. Naumann, 16 Ariz. App. 314, 317, 492 P.2d 1252, 1255 (1972))
(emphasis added). Unlike here, Maucher involved a public official, in his official
capacity, entering into a contract on behalf of the City for his own personal gain.
Moreover, the City does not allege that Mr. Tindall or Ms. Frisoni made any decision on
behalf of the City of Glendale, nor does it allege that they were they authorized to make
any decision on behalf of the City of Glendale with respect to the Agreement. Although
Maucher properly prevented a city engineer from self-dealing, no such policy
considerations exist here.
4. Allowing the City to Deposit the July 1, 2015 Payment in Escrow Would Render the TRO Meaningless
The Citys renewed plea to deposit the payment into escrow would also
fundamentally alter the status quo. The City has two primary obligations under the
Agreement: (i) allow Plaintiffs access to the Arena; and (ii) pay Plaintiffs for services
rendered. If the City were allowed to pay the July 1 payment into an escrow, the TRO
would be rendered effectively meaningless. Plaintiffs have performed the services and the
City has received the benefit.
The cases cited by the City do not stand for the proposition that the City may
escape its clear obligation to make payment for services rendered by paying into an
escrow. See IRIS Mgmt. Grp., LLC v. Malan, 329 F. Appx 112, 114 (9th Cir. 2009)
(unpublished) (interpreting Nevada law in upholding the district courts decision requiring
the Defendant to place a portion of his profits from a Management Agreement with
Plaintiffs into an escrow account after determining that Plaintiff was likely to obtain a
judgment against [Defendant] under the [] Agreement and that there was evidence that
[Plaintiff] might be unable to recover a judgment against [Defendant] without an escrow
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requirement. The escrow requirement enforced against the Defendant applied only to a
portion of Defendants profits and left untouched a substantial monthly payment made
from Plaintiffs to Defendant.); see also Leathers v. Medlock, 499 U.S. 439, 443 (1991)
(discussing the factual background of the case, the Court mentioned the Arkansas
Chancery Courts decision to require the State of Arkansas to place disputed sales taxes
levied against cable television services in escrow until the constitutional challenge was
decided).
Simply put, allowing the City to take the benefit of the bargain without paying
Plaintiffs would eviscerate the status quo.
C. The Court Should Not Alter the Bond Amount
After considering the arguments of both sides at the TRO hearing, the Court set
bond in the amount of $250,000. The City now reargues that the Court should increase
the bond amount by 1600%. There is no basis for such a drastic change. The Court
should decline to alter the bond amount because: (1) the issue was already litigated and
decided; (2) the Court set an appropriate bond amount; and (3) there is no legal basis to
require a $4 million bond.
1. The City Already Litigated, and Lost, the Bond Argument
The City had a full opportunity to address the bond amount with the Court during
the June 12, 2015, TRO hearing.13
The City requested Plaintiffs post a $15 million bond
and argued its position during the hearing.14
This Court rejected the Citys $15 million
request, and the attempt to revisit this issue is an impermissible attempt to relitigate the
merits.15
Nu-Tred, 118 Ariz. at 420, 577 P.2d at 271 (noting that parties cannot use a
motion to modify a TRO as a means to challenge the merits of the original order).
2. The Court Set an Appropriate Bond Amount
The Court appropriately exercised its discretion to set the $250,000 bond amount.16
Ariz. R. Civ. P. 65(e) requires the setting of a bond in an amount that the court deems 13
See TRO Hrg Tr., 26:1-30:19, Exhibit A. 14
TRO Hrg Tr., 26:12-13; 27:5-28:9, Exhibit A. 15
TRO Hrg Tr., 30:16-17, Exhibit A. 16
TRO Hrg Tr., 30:16-17, Exhibit A.
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proper. The Court has discretion to determine the appropriate bond amount, which it did
here, after giving consideration to the arguments of both sides. Bayham v. Funk, 3 Ariz.
App. 220, 222, 413 P.2 279, 281 (Ct. App. 1966); Matter of Wilcox Revocable Trust, 192
Ariz. 337, 341, 965 P.2d 71, 75 (Ct. App. 1998). The City has not, and cannot, show that
the Court abused its discretion in any way.
3. The City Fails to Show They Would Suffer $4 Million in Damages by Paying for Services Rendered
[A] party seeking an increase in the amount of a bond bears the burden of
justifying the increase. In re President Casinos, Inc., 360 B.R. 262, 266 (8th Cir. B.A.P.
2007). The City presents no evidence at all to justify increasing the bond by 1600%.
Instead, the City alleges, without any evidentiary support, that there is a risk that
Plaintiffs will not have the financial ability to repay the City should the City pay them the
July 1st Payment directly.17 This argument fails for several reasons.
First, Plaintiffs ability to repay the $3.75 million is irrelevant (and in contrary to
the limitations placed on the Citys recovery under A.R.S. 38-511(E)). Rather, the
pertinent issue is what bond amount is needed to protect the City from harm in the event
of a wrongful injunction.18
See Smith v. Coronado Foothills Estates Homeowners Assn
Inc., 117 Ariz. 171, 172, 571 P.2d 668, 669 (1977) (noting a bond is required to indemnify
the enjoined party for damages incurred as a result of an improperly granted restraining
order obtained without an opportunity by the party to be heard). Here, there can be no
harm because Plaintiffs are paying for services already rendered and received by the City.
And there can be no wrongful injunction because the City had the opportunity to be heard
at the TRO hearing and stipulated to the TRO.
Second, the Citys argument is wholly speculative. Even if Plaintiffs assets were
relevant (which they are not), the City has no evidence that Plaintiffs lack $3.75 million in
assets. Accordingly, the argument fails as a matter of law. In re President Casinos, Inc.,
360 B.R. at 266 (A court is not required to order a bond to protect a party from economic
17
Motion, at 11:4-6; TRO Hrg Tr., 33:8-13. 18
Motion, at 10:10-20.
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damages that are speculative.). In In re President Casinos, Inc., the bankruptcy appellate
panel affirmed the courts denial of a request to increase a bond, finding that allegations
that defendant would lose money during pendency of injunction was insufficient to justify
a bond increase. The Court should reach the same result here.
Third, the cases cited by the City do not support its argument to increase the bond
amount because those cases involved changed circumstances that warranted an increase.
In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Patinkin, the court extended the TRO
preventing defendant from soliciting plaintiffs customers until the arbitration hearing and
increased the bond amount to $50,000 because the plaintiff refused to agree to an
expedited arbitration hearing, resulting in additional harm to the defendant during the
pendency of the TRO. No. 91 C 2324, 1991 WL 83163, at *6 (N.D. Ill. May 9, 1991). In
Aevoe Corp. v. AE Tech Co., Ltd., the court increased the preliminary injunction bond
from $10,000 to $500,000 to cover profits the defendants would lose after decisions by the
United States Patent and Trademark Office cast significant doubt on plaintiffs likelihood
of success on the merits and the litigation extended longer than the court anticipated. No.
2:12-cv-00053-GMN-NJK, 2014 WL 1089676, at *3-5 (D. Nev. Mar. 18, 2014). There
are no changed circumstances here that warrant an increase in the bond amount.
III. CONCLUSION
For the foregoing reasons, the Court should deny the Motion.
DATED this 25th day of June, 2015.
SNELL & WILMER L.L.P.
By s/ Patricia Lee Refo James R. Condo Patricia Lee Refo Adam E. Lang One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Attorneys for Plaintiffs
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ORIGINAL of the foregoing e-filed and a COPY mailed and e-mailed the 25th day of June, 2015 to: Cynthia A. Ricketts Sacks, Ricketts & Case LLP 2800 N. Central Avenue, Suite 1230 Phoenix AZ 85004 [email protected] Attorney for Defendants COPY hand-delivered to: The Honorable Dawn Bergin Maricopa County Superior Court East Court Building 101 W. Jefferson Room 713 Phoenix, AZ 85003 /s/ _Jeannie Fisher ___________
21908268
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Exhibit A
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IN THE SUPER]OR COURT OF THE STATE OF ARIZONATN AND FOR THE COUNTY OF MARICOPA
ICEARIZONA MANAGER CO., LLC,Plaintiff'
v.
CITY OF GLENDALE,
Defendant.
No. Cv 20t5-0Q7216
Phoenix, ArizonaJune 12, 2015
2: p.m.
BEFORE THE HONORABLE DAWN M. BERG]N
TRANSCR]PT OF PROCEED]NGS
Request for Temporary Restraining Order
Proceedj-ngs recorded by electronic sound recording; transcriptproduced by AVTranz.
NANCY M. DEVI]TZTranscriptioni stCET* *D_7 L9
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2INDEX
'June L2 20r5
PLATNTIFF I S I^]]TNESSES DIRECT CROSS REDIRECT RECROSS VD
None
DEFENDANT I S VTTNESSES DTRECT CROSS RED]RECT RECROSS VDNone
MISCELLANEOUSPAGE
Court t s Orders 36
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3,June 12 20L5
APPEARANCES
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Judge: Dawn M. BerginFor the Plaintiff:
,James Condo
Adam Lang
Nicolas VtloodVitnesses;
None
For the Defendant:Cyntha RickettsMichael- BaileY
Ili-tnesses:
None
Al-so Appearing:Anthony LeBlanc
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Phoenix, Arizona
June 12, 20]-5(The Honorable Dawn M. Bergin
HEARING ON TEMPORARY RESTRAIN]NG ORDER:Presiding )
THE BAILIFF: AII TiSC.
THE COURT: Good afternoon. Please be seated.
Okay. This is the time set for a hearing on anapplication for the temporary restraining order, reguest for
evidentiary on a preliminary injunction in cv20T5-007216.Could I have appearances Please?
MR. CONDO: Your Honor, good afternoon. James Condo
and my partner, Adam Lang, on behalf of the Plaintiffs. And
with me is Mr. Anthony LeBIanc who is the president and CEO of
Plaintiffs. And my other partner, Nichol-as Vood.THE COURT: OkaY. Thank You.MR. LANG: Good afternoon, Your Honor.THE COURT: Pl-ease be seated.MS. RICKETTS: Good afternoon, Your Honor. Cindy
Ricketts wth Sacks, Rickets and Case and on behalf of the City
of Glendal_e. And with me here is the city Attorney Mike
BaiIey.THE COURT: Okay. Thank you. You can be seated.Okay. So obviousJ-y I just got ths, I don't know, 45
minutes or so ago. And so I just have some preliminaryquestions. First, I do have to give parties an opportunity to
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object to any cameratalked to the lawYersis no objection, Mr.
MR. CONDO:
THE COURT:
5
I think my judicial assistantsides. Am I correct that there
requests.for both
Condo?
No objecLj-on, Your Honor.Ms. Ricketts.
MS. RICKETTS: No objection.THE COURT: OkaY. Thank You. OkaY.The other issue that I just wanted to address is
whether all of the Defendants have had notice of this hearing.
I mean obviously Ms. Ricketts's here on behalf of the City ofGlendale. Is Mr. Bailey -- isn't he a named Defendant as wel-l-?
MR. BAILEY: Yes, Your Honor, I am.THE COURT: Okay. And so are you representing
yourself or is Ms. Ricketts representing you?MR. BAILEY: As we speak today, I^Ie are representing
the City of Glendale.MS. RICKETTS: So, Your Honor --MR. BAILEY: Werre not representing any individual
Defendants.
MS. RICKETTS: Right,. Ifm not here representing theindividual Defendants, and f have not had any personal contact
with individual- Defendants, nor has Mr. Baley had anopportunity to contact the individual- Defendants, although'obviousl-y he, himself, is a/are of --
THE COURT: OkaY.
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MS. RICKETTS: -- of the indvidual-THE COURT: AII- right.MS. RICKETTS: -- Defendants.
THE COURT: So Mr. Bailey is here simply as an
attorney for the CitY of GIendale,And the
not in his individual
capacity asparty that I
MS
a Defendant City of Glendal-ehave before me todaY in court; isRICKETTS: Yes, Your Honor.
COURT: All right. Thank You.
thatis the onlycorrect ?
THE Okay.
Itve reviewed.the severance
Let me start out by teJ-ling you whatI did review the verified complaint whch have
agreement with Mr. Tindall, and the professional management
servj-ces in a rent lease agreement between the City and thePl-aintiffs. Obviously, I think it's over a 100 pages, I didnot have an opportunity to read the entire agTeement, but I do
understand the legal issue here. And I don't think it's
necessary for today's purposes for me to be completely familiar
with the entirety of that agreement.frve afso reviewed the application for temporary
restrainng order and the reguest for evidentiary hearing on apreliminary injunction, the memorandum of points andauthorities in support of the applJ-cation, and the request for
an evidentiary hearing, and the proposed TRO. So anything of
substance that I should be reviewing or should have reviewed?
MR. CONDO: I don't think so, Your Honor. If in the
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l-st you included the three decfarationsTHE COURT: Yes.
MR. CONDO: *- the --THE COURT: I had declaration of Greg
decfaration of Anthony LeBlanc, and declaration
Daily.MR. CONDO:
THE COURT:
MR. CONDO:
THE COURT:
writing from the CitYdon't have anYthing.
Then that. completes it, Your Honor.
Tindall,of ![i]-liam
AII right.Thank you.
Thank you. Andof G]endale. I
f donrt have anything injust want to make sure I
MS. RICKETTS: You do not, Your Honor. And we justreviewed this probably the same time you did it and have not
had an opportunity to read it fully.THE COURT: That's what I figured. Thank you'
MS. RICKETTS: OkaY.
THE COURT: Okay. So obviousfy the attorneys have
been in communication with each other about at feast to some
extent. so have you been abl-e to make any plogress on a
potential- comPromise, Mr. Condo?MR. CONDO: No, Your Honor.
THE COURT: OkaY.
MR. CONDO: V'Ie have not.
THE COURT: All right.
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MR. BAILEY: Your Honor, if I maY.THE COURT: Yes.
MR. BAILEY: The City would be wil-l-ing to stipulateto the temporary resLraining order with a couple of exceptions.
THE COURT: OkaY.
MR. BAILEY: First and foremost, in terms of the
evidentiary hearing, we woul-d need approximately two months toprepare for the evidentiary hearing. And second of all, there
is a payment that is due approximately June 30th that is under
the terms of the agreement. And rather than make that payment,
the City would l-ike to escrow that, Put that payment in escrow.THE COURT: Mr. Condo?MR. CONDO: Your Honor, I^/e appreciate the offer to
stipulate to the temporary restraining order. The problem with
the extended schedule that has been proposed j-s that literallyevery day in every moment, harm is continuing to accrue. As we
tried to outline in our -- in our filings, as early as JuIy 1-,
free agency opens in the NHL. The cloud that is now over the
Coyotes by virtue of what the City has done \^IiIl- remain, even
with a TRO, that's the first lifeline, that's good. But it
doesn't provide any certainty or stability. And we would very
much want an expedited schedule for discovery and the
evj-dentiary hearing. Now -*THE COURT: Vell, what do we -- what do we mean by
that for if you can outline what discovery you think would
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be necessary. And if we're going to -- f we're going to dosomething expedited, 'hre I re going to have to come up wth a veryconcrete schedul-e in terms of how many depositions can betaken, when they're taken by, you know what sort of writtendiscovery can be done. And t.hen also, you know, how long do weactually need for t.he evidentiary hearing.
This is not my case. This i-s Judge Bl-omo's case. Ijust happenedtoday. So we
to be in my office, and rm coverng for himal-so have
that I even have accessscheduling issues there. I don't knowto Judge Bl-omo's cal-endar to set
something. So with those caveats, if you could --MR. CONDO: Sure.
THE COURT: enlighten me about how you think wecan move this
MR. CONDO:
THE COURT:
MR. CONDO:
along. First of al-I, the numberof who wasetcetera,who it is.
actually involved in
Vel-1, I think -*forward.
there are several ways i^/e can move j-tof people who have knowledge
the negotiation drafting'should be reJ-atively
And we don't knowsma.lf . Ve have never been t.o]d
today who the City believes issubject to ARS 38-51-1. V'le have assumed that it wa sMr. Tindal-I, but we don't know that. That IIas never discl-osed.
That was never exposed at the City hearing on June 9th --THE COURT: Uh-huh.
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MR. CONDO: -- at the special- voting meeting. V{edon'L know. le dontt know whether there is one person or more
than one person. The statement that was made is that counsel
has concfuded that they b/ere employees. So that suggests more
than one, but at this moment, we do not know who those people
are or on what grounds they supposedly heavily influenced -- I
think that's the words that l^Iere used at the council meeting --
the final negotiations for the agreement that was approved in.TuIy of 201-3.
So the very first thing we would need is we need thePlaintiffs, and they can do it today because they've obviouslymade the decision already on the basis of what they l^Iere told
by counsel at council meeting in the executive session. They
coul-d tell- us today right here, right now who are theindividual-s that they believe entitle them to invoke 38-511.And obviously we'l-1 need to take their depositions if itrs
someone anyone other than Mr. Tinda]l.Second, I^Ie I re probably going to need to take the
depositions of one or two of the board members excuse me
council members who were then on the council about their
knowledge. Je may wellof the board members I
have to depose Mr. DePiazza. And oner^/as tal-king about was Mr. Bowers, h/ho's
the acting city manager and who, in fact, handled thenegotj-ations. And our evidence makes it very cl-ear that Mr.
room with Mr. Bowers orTindal-l- was never in the negotiating
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Mr. DePazza, the assistant acting cty -- excuse me -- theacting city manager in 2013. And he certainly wasnrt in theback room with either of them. He had been effectively
terminated. He was operating under a severance agreement thatrequired him to respond to the city, and if asked, provide
legal services under a separate contract. So we know thatMr. Tindat wasnrt invol-ved in any way that heaviJ-y infl-uencedor was significantly invofved under the statute. so we I Tegoing to have to f ind out who those people l^/ere. And the bestsources are Mr. Bo/ers, MI . DePiazza, and certainl-y whomever
they tell_ us today are the individuals they bel-ieve heavily
influenced the decision.Once thatts done, I dontt know what more discovery
needs to be done.THE COURT: From Your side.
MR. CONDO: From our side, yes . I you know' \^Ie ' re
not seeking damages today, you know. That will- come later. Ve
don't want to be distracted. We want to get back on ice. Veneed stabil_ity in the operations. vrle need to be abl-e to
continue to move forward, attract free agents, sign free agentplayers, market ourselves, have a schedule approved by the NHL
t.hat will- hotd for a fulI year. le canrt be at risk in any
wy, shape or form. So we need as expedited consideration of a
preliminary injunction as the Court could accommodate.THE COURT: Vhat about written discovery? Arenft you
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MR. CONDO: Yeah. Butisnrt a J-otr Itell us whatever documents theY
individuals who l^Iere j-nvolved -- and this is really in theircamp. l{erre sort of at a disadvantage because we don't know.They can tel-l- us . These are the documents hle rely on. This is
what wetve seen. This is what we bel-ieve establ-ishes the
substantial- or significant involvement that al-lows us to invokenow the statute.
going to be ProPounding request
easy too. There
shoul-d be abl-e to
ofdiscovery on
THE
MR.
for production?those should be
wouldn't think.
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relativelyAgain theythink the
course we I re probably going to have a littlethe issue of waiver --COURT: Uh-huh.
because they've waited 19 months sinceCONDO:becoming f irst avlare that Mr. Tindal-l was employed by theCoyotes. They've known since September of 20I3t and now forthe first time on June 9th they raise this issue in the form of
a special voting meeting where they, n fact, voted to directthe City attorney to take steps to effectuate the cancelfationof the contract.
We're probably afso going to need a l-ittle discovery'but it shoul-dn't be much, and we al-ready know whatMr. Tindal-I's going to say, on the severance agreement becausethat has a very clear conflict waiver provision. Itrs very
clear. It i^/as negotiated and signed by Mr. Bowers and by
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DePiazza, Mr. DePiazza, the same individuals who three months
l-ater signed the management services agreement in which, if you
Iook at paragraph 6 of the service agreement which is Exhibit
A, it makes it very clear that the City has waived confl-ictsarising from Mr. Tindall-'s involvement in transactj-onal- mattesthat he handled for the City through the date of separaton.so there isn't anything that hasnrt afready been waived orwhich they are al-ready estopped from raisng by virtue of theirconduct.
So those are the kinds of things that h/e I re going toneed to do, but most of that stuff is in the possession of the
Defendants, and t.hey're the ones who could literally, withinthe next 24 hours, provide everythlng that is needed becausetheir -- made the June 9th or June 10th. And there was a basis
for that, and I^Ierre entitl-ed to that.THE COURT: Okay. There are I don't know -- eight
or so other Defendants who would need to be served. I donrt
know if they woul-d be retaining other counsel so I have to takethat into account, the possibil-ity that I may end up with eightadditional lawyers coming in. f don't know what their
determination or decision will- be so obviousJ-y that could afso
very much impact how J-ong it will take to prepare for apreliminary injunction hearing.
MR. CONDO: Your Honor, I would not disagree withyou, but I think it would be I think it woul-d be a little
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disingenuous for them to reall-y do that because we have sued
them clearly and solely in their individual- capacities and --excuse me -- official- capacities' not as husband and wife.
Ve're not seeking damages. And frankly the TRO, even if you
granted it agalnst the City would extend as traditional- TROs
extend to al-l- the agents, etcetera. So I think it woul-d be a
l-ittle disingenuous for them to come in and say, we need eight
separate lawyers here when they're only being sued n their
official capacities for an act that was that occurred at a
city council_ meeting, and which if the injunction issuesagainst the city, would issue against all- other agents.
THE COURT: Okay. Thank you. Ms. Ricketts?Mr. Bailey?
MS. R]CKETTS: YOUTan opport.unit.Y to read all the
Mr. Condo just said' therersthat he wants to take. There
obviously have not hadbut f mean what
five or six depositionssome written
Honor, we
papers,
Ieastatis obvj-ously
discovery that needs to be conducted. It is not as sj-mpIe asproducing a few pages of paper as Mr. Condo suggested. He also
neglects that they have piled at least three or four
declarations. I haven't had an opportunity to review aII of
them, but there are many accusations about the rreparable that
this the Pl-aintiff is suffering as a result of the action
taken by the CitY of Gl-endale.I also need to note this is all premature because the
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city hasn't actually taken steps to cancel- the contracts.THE COURT: But they could at any tj-me, right --MS. RICKETTS: TheY coul-d --
THE COURT: -- because the
MS. RICKETTS: -- at anY time.
THE COURT: citY councilin fact, I think directed them to the
gave them authorltY and,
attorney to execute a termination. Amcity manager and the citYI right about that?
MS. RICKETTS: Thatrs correct.THE COURT: OkaY.
MS. RICKETTS: But I just mention that whil-e Inlerrehere today
THE COURT: OkaY.
MS . RICKETTS: But obviousl-y \^e would discovery as to
the irreparable harm. le woufd brant dscovery into the
negotiation of the conlract and Mr. Tindal-'s invofvement.Depositions that we obviously wouJ-d all need to take would be
Mr. Tindal-l-'s deposition, Mr. Dailey's deposition who I s an NHL
representative that they have filed, Mr. LeBlanc, and
Mr. LeBfanc's partner thatrs menLioned, just to name a few.That's ten depositions that need to occur at a minimum.
so having a expedited discovery schedule needs to
al_Iot for the fact that that needs to happen. It's not going
t.o happen in a week. ft's not going to happen in ten days, and
that was why we thought it made it very reasonable, st,ipulated
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request for two months. That's, I think, pushng it to get it
addressing your question about the expedited schedule.THE COURT: Atl- right. Thank You.MR.BAILEY:Andjusttofollowup,YourHonorrthe
council when we said they're in recess, most of them have
schedufed vacations.THE COURT: Uh-huh.
MR. BA]LEY: So t'hey wil]- be unavailable. You know
al-I done.With resPecL to the
not here and rePresented here
that the City Council- is on --of July. Sodepositionsaddress the
that is going toso I mention that. Mr
individual Defendants that aretoday, the other consideration isout of session the entire month
complicate the scheduling of. BaiJ-ey will- mention -- toCondo said. I was just
this is premature.them anything with. Some of thethat point in time.
the stipulation withfor the evidentiarYcan come back and
substance of what Mr.
for the most part, the City bel-ieves that
We have not had the opportunity to tender
regards toinformation
the cancelation of the contractthey seek would be received at
That's why I think at this point in time,
regards to the TRO in place, the allowancehearing, we can provide that evidence so wehave a thorough discussj-on through the Court.
THE COURT: Okay. I have to tell you, Mr. Condo,you'd be able to get your part of the discovery
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done
she's
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fairly quickly, but I agree with Ms. Ricketts. f meangetting, you know, these material-s for the first time.sort of telling me, outlJ-ning for me what kind of
dj-scovery she thinks shers going to need. And it soundsreasonabfe to me. And thenr You know, T have yet to see
from a TRO hearing to a preliminary injunction in -- youin three weeks or something when ten depostions need toget done.
goang
know,
be
a number ofdiscoveryl-ess than
And there are, You know -- you've allegeditems of irreparabl-e harm. And theyrre entitl-ed toon those. So I'm not sure in how we get it done in60 days.
MR. CONDO: Well, f think we can, Judge. And I
appreciate I appreciate what you're tetling me. And it is
not my desire to penalize anybody or deny them an opportunityto do the discovery that. they need. But fetrs deconstruct a
litt1e bit about what werre talking about.Vrlef re talking about an action they took f ol-Iowing an
investigation done by their city attorney and council- andothers that l^as presented to the board. Everything that we
need and that they need to establish significant invol-vement is
withn their knowledge and control right at this moment. Theyknow who those people are. Al-l- of that's avail-able.
Mr. LeBlanc is available . Mr. Tindall- is availabl-e. lVe can
certainly expedite discovery. If we need discovery in ten days
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or tr^ro weeks or three hreeks, thatts fine.But we canrt -- we canrt push all of this out 60
days. The uncertainty that hangs over the team is tooprofound. This is it's not a cloud anymore. I mean, it's afuII on haboob because this team l-iterall-y is missingopportunities. It's losing opportunities. Itrs going to becompetitve1y disadvantaged if it canrt sign the signs ofplayers it needs or re-sgn. lVe have al-l of the famil-ies.This is the kind of -- this is exactly the kind of situationwhere an expedited hearing and a temporary restralning order isappropriate.
Second, the other part. of their proposal was thisidea that they not pay and escrow the money. V{eIl-' that toosort of rewards the wrongdoer, okay? They get to keep themoney they are required to pay us under the contract. Theyshould be required to pay that money. They have anticipatedit. They bargained for it. !e have provided services for it.
This contract has been in effect since JuIy of 201"3. This
notion that it should be escrowed is silly. It shoul-d go to
the team. The team isTHE COURT: Vel-l, You're going to have to post a bond
if I enter a TRO. Ve all agree on that, rght?MR. CONDO: We al-l agree on that.THE COURT : Okay. AII right . Ve1l-, let ' s get to
that payment ssue in a few moments, but let me just kind of gollVTranz
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over v,/hat you just tol-d me about, Yo know, irreparable harm.MR. CONDO: Sure.
THE COURT: Harm to t.he continued viability and
stability of the Coyotest hockey team; harm to the hockey
teamrs competitive standing within the NHL; harm to theCoyotes' ability to schedul-e and promote home games. Irm notquestioning whether these I'm not suggesting that theyaren't. val-id points for irreparable harm. The reason Irm
reading these is because Ms. Rlcketts needs to do discovery onthese things. And I fm not convinced that I mean given the
extent of the items of irreparabfe harm that yourve alleged' Ithink that there's a fair amount of discovery that she I s
entitled to do on al-l- of these points of irreparable harm.MR. CONDO: And, Your Honor, I really don't disagree.THE COURT: OkaY.
MR. CONDO: You and I are not disagreeing --THE COURT: AtI right.MR. CONDO: -- about any of that. What lrm
suggesting onty is that a 60-day period is far too long. Maybeten days is too short, but we cannot live with an extended
discovery period with all- of the issues that are hanging over
the Coyotes' heads. Al-l- of the you know, trying to bookacts for an arena, trying to assure artists that plays andperformances are going to go on, trying to market tickets --
THE COURT: f understand your point but
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MR. CONDO: So --
THE COURT: l-et's get down to the practicalities
of it, okay, because ten depositions, of course rre can't do
that in ten days, right? Can't do ten depositions in ten days.MR. CONDO: Itell, but --THE COURT: !e've got the issue of , you know' these
other Defendants who maY be
There's no waY I can get allon vacation. I mean come onthat discovery --
al- the discovery, that theYrreAnd I think 30 days is Pushing it.
CONDO: Well'COURT: OkaY.
CONDO: -- Ibe done. And
Your Honor, -- agarn
or they, theentitl-ed to, doneCity, can get
j-n ten days.MR.
THE
MR.
that needs todon't disagree with the discoveryobviousfy Your Honor wil-I enter an
appropriate order in Your Honor's discretion, and we will- abide
by it. But we would like the order clearly to be on the
shorter side rather than the longer side simply because of all
the issues that werre facing.THE COURT: Okay. Here 's what I 'd l-ike to do '
First, if you need to -- if you want to set this on Judge
Blomors cal-endar, I'ITl not going to be able to do that today.
If you want me to keep the case, I can give you some dates that
I'd be available. So, you know, it's up to you.MR. CONDO: Ve'd be pleased i-f Your Honor kept the
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MS. RTCKETTS:
THE COURT: AlI
2L
We'11- consent to that as well.right. frm saying that but let mecase it's more bl-ocked than Judgecheck my
BJ-omo I s,
many days
calendar justand then we'l-1
l-n
go from there. I need one moment. Howdo we need, Mr. Condo?MR. CONDO: For the evidentiary hearing itself?THE COURT: Yes.
MR. CONDO: I woul-d think two days probably.
THE COURT: Ms. Ricketts?MS. RICKETTS: I have no reason to disagree with that
at this point, but I ' II reserve the right to reguest additional-time as ble get into this further.
THE COURT: I'm just going to tal-k to my bailiff fora minute.
( Pause )
THE COURT: Vhat I could do, and this may help a
Iittle with discovery -- so if I go to the begj-nning of Augustor the end of JuIy, f have trial Monday through Friday -- or
Monday through Thursday, but I could do like the first. day on
the 31st and then the second day on the 7th. So those are two
Fridays. And therers a week between those which may he1p. I
mean, you know, I have the week of July 20 open as well-, but Ijust frm not -- I really think that the City might beunfairly pushed and compressed in terms of tme to do the
discovery that they need. So that's what I would offer. I
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r^oul-d of fer the 3l-st of July and the 7th of August.Mr. Condo? I know itts not your preference. Ifve
heard that l-oud and cfear butMR. CONDO: I know, Your Honor. And if I seemed
over --
THE COURT: No, f underst.and.MR. CONDO: -- bearing,THE COURT: No. Yourre
I apologize. Butrepresenting your client. I
undersLand.
MR. CONDO: You know where I -- where I stand, and we
wil-l- take those days if those are the f irst avail-abl-e dates.
THE COURT: Ms. Ricketts?
MS. RICKETTS: Your Honor, I think July 31st is
pushing it just because of the city councif being in place. Ithink we coufd sLart on August 'lLin, and then the next available
date after that. And, Mr. BaiJ-ey, just, whiJ-e /e 'hlere -- yourdere looking at your calendar, he thinks we might need an extra
three days for the hearing.MR. BAILEY: One to two.MS. RICKETTS: One to two additional days.
after the 7t}l,,THE COURT : lVell, the probl-em isfor the nextI'm double-booked for trial-s week actual-ly through
avail-abl-e woufd beFriday. And so then the next day I have
August 2I. Am I right about that?
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(Off the record)MS . RICKETTS : August 2l-st isTHE COURT: f rm sure it is.MR. CONDO: Oh, Irm sorrY.THE COURT: No. That's okaY.
I guess, July -- st.arting on August 7thAugust 2t. And I guess yourre asking for
23
acceptabl-e to us
They ^rere asking for,and then going to
another day, and I doSo they donrt want to
is that that's youtoo long
well,the
are you stilttalk in a minute
have the l-ast week of August availabl-e.August 7th. The problemfrom the 7th to the 2tsL, you know, thatrs
so I'm going to I'm going to go ahead --let me Iet me ask the City first. If I were to set
start untilknow, gong
of a break
evidentiary hearingwiJ-Iing to agree toabout this payment?
( Pause )
for the 3l-st and the 7th'the TRO? And then we'l-l-
stipulationYour Honor
doing JuIytal-ked about it
MS. RICKETTS: The City is wil-ling to keep theinitialty offered the Plaintiff andthat Mr. Bailey
when we started this hearinq. But the problem with31st and then August 7th is, we really do -- as rIe
nor^r -- think there needs to be at l-east one
additional day --THE COURT: Uh-huh.
MS. RICKETTS: -- and if there's going to be that
much of a gap between dates any\^ay starting on the 7th and then
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continuing onto thecloser proximity andcalendar being more
THE COURT:
second. My bailiff( Pause )
THE COURT:
wel-l. Now here's what I
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21,sL, w'l-1 have those hearing dates into us that makes more sense with your
availabl-e for additionalVeJ-l, I could probablY
is the one with all- the
oh
days.
give me oneanSI^Ief S.
conference early with us andthat al-l of those issues are
happens a lot with preliminary injunction hearings. I say tothe lawyers, can you work out a schedufe? And they say yes.
And then the next thing that happens is, two days before the
hearing I get a motion to excl-ude the expert because they justtold me about him yesterdaY, right?
So what. do we need to do to make sure that we don't
run into any problem like that? Do the parties want to get
toqether and come up with a discovery schedule because, Youknow, you need to set out at the outset. Herets who we want to
dispose, you know. Here's how many discovery requests or
interrogatories, etcetera, and come up with scheduling for
those. And then the parties are going to be l-imited to
whatever you agreed t.o. Mr. Condo?MR. CONDO: I agree with that, Your Honor. And I
, okay. I can give you August 10th asdon't hrant to run into because this
I ask the Court'swould takeindulgence
bringing us
it one step further, andin scheduling a RuIe 1-6all in and making sure
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addressed. So within a week or ten days, we have identifiedeverythlng that needs to be done and when itrs going to bedone.
MS. RICKETTS: No objections to that. That soundsvey reasonabfe. And I think that I'm quite confident thatMr. Condo and I can work together to come up with a reasonablediscovery schedule.
THE COURT: OkaY.
( Pause )
THE COURT: Okay. Let's do 10:30 on June 25th for aschedul-ing conference, and that'11 be in person.
MS. RICKETTS: Your Honor --
THE COURT: Yes.
MS. RICKETTS: -- I actually am scheduled to be out
of town that day --THE COURT: OkaY.
MS. RTCKETTS:
attend telephonicallY, orMonday on the 29Lh.
a hearj-ng in another matter. canif you can push to the following
THE COURT: 29t,h. 10:30 on the 29lh?MS. RICKETTS: Yes, Your Honor.
THE COURT: Mr. Condo?MR. CONDO: I think that should be good, Your Honor.
THE COURT: Okay.
MR. CONDO: Thank You.
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THE COURT: AlI right. Okay. Now fet's talk aboutthe bond and the payment. I guess, Ms. Ricketts orMr. Bailey, you hlere the one who addressed this in terms of the
payment. You're going to have a bond posted, right? So yourll
have some security in the event that you prevai]- and theydon't, so f'm n9t sure why we would need to have the payment go
into escror. Is that something that is a deal breaker for you
or --
MR. BAILEY: If I may?THE COURT: Sure.
( Pause )
MR. BAILEY: Thank You,be comfortable wth the Pl-antiffs
Al-1 rightYou know,
Your Honor. The City wouldposting a $15 millon bond.
Mr. Condo?Your Honor, I think therers
for us to agree to that.All- right.And we coufdnrtThen let me
agree to that.talk to Mr. BaileY about it. HeIp me
THE COURT:
MR. CONDO:
virtuall-y no reasonTHE COURT:
MR. CONDO:
THE COURT:
MR. CONDO:
THE COURT:
out here. How are You --MR. BAILEY: Your Honor
coming up with $50 mill-ion? Tel-l me
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THE COURT:
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MR. BAILEY: Fifteen --THE COURT: elementsMR. BAILEY: $15 mil-lion.THE COURT: Oh, I t.hought you said 50-.MR. BAILEY: $15 million is the value of -- is an
annual value of one year in the contract. The exposure that
the city can have under the contract is $15 million on anannual-i-zed basis.
THE COURT: Okay. And when you -- when you saythat, you mean that you end up paying them $15 mitlion for --
MR. BAILEY: There is the potential that the Citycould be paying $15 million to the team, correct.
THE COURT: But is there a possibility that you could
be paying g15 million to the team and not receiving any benefitfrom that.? I mean, in other wordsr Yo pay them because
they're performing games, right? And, Irm sorry, I'm probably
using the wrong sports' terminology, but pardon me. I haven'tbeen to a Coyotes' game. But in any event, theyrre futfillingtheir part. of the contract, right? So you're getting
consideration. So what I kind of want to look at is what are
the -- what's the potential loss to the City if you allultimately prevaiJ-? I mean are there costs that yourre going
to invest that you wontt recoverr that arenrt required by the
contract? That's kind of what f'm looking at here.MR. BAILEY: The exposure that the City faces under
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the contract on an annual-ized basj-s s $L5 million. Thepurpose for that, it's paid to the arena manager to manage thearena. To the extent that there is Ievenue thatfs derived from
t.hat, that comes off the $15 million. From -- probably fromthe past two years, I think *- it's the exposure has beenapproximately B- to $9 mIlion. So to the extent $15 million,Your Honor believes is too high, B- to 99 million is the lossthat the City has actually had to pay out and experience underthis agreement.
THE COURT: Okay. Thank you. Mr. Condo?MR. CONDO: Your Honor, I think that confuses two
entirely different issues. Number 1, the fact that the Citymay be losing money because of the deal that they negotiatedand don't like is not a consequence of anything my client has
done. It there are no losses to the to the City. Vrlewill continue to book. They wil-l- continue to earn revenue.
They pay us a management fee. Ve pay them in the neighborhood
of $9 mIl_ion in terms of -- on concessions and parking andtickets and everything. So therers just literal-ly no coststhat they are going to incur that were not conLractuallybargained for. There are no damages. There's nothing thattsgoing to happen at all in --
THE COURT: Give meMR. CONDO: -- in this resPect.THE COURT: a counteroffer because I'm going to
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set a bond.
one, so.
MR. CONDO:
THE COURT:
going to happen.MR. CONDO:
community. Itts a unique assetr sobond or a $25,000 bond is ProbablY\e I re j ust talking attorneys ' f ees .isn't an impecunious Defendant.
29
MR. CONDO: VeIl-
THE COURT: Give me your number because I'm setting
Honor, the Coyotes are fighting to stay in the arena.to make this work. And we can't be handicapped with a
substantial- bond. And we shouldn't be because ble're a
reputable organizaton. lVe've invested a lot in the
know. I know. I know, Your Honor.If you're pushing for zerot thatfs not
Wel-lr o, no . But j-n this instance, YourIe want
I woul-d think a $15,000as good as it gets, because
And this isn't -- and this
THE COURT: Vell_r vou just totd me what a substantial-organization this is.
MR. CONDO: Right.THE COURT: And so, you know -- and then you said you
shouldn't be hampered by a substantial bond, buL if it's a
substantial company, right, then, you know, I dontt know enoughabout the, you know, net worth of this company or what funds it
has avalabl-e to post a bond. But certainl-y it can do more
than $15,000. I hear what yourre saying. You think $15'000 isllVTranz
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the right number because that's the actual potental foss ifthe City were to prevail. Let me hear from Mr. Bailey now.
MR. BAILEY: The unique aspect of this -- and I thinkthis is the City's position is that in the event that the Citydid, in fact, prevail, we would not have to make thosepayments.
of the TRO,our budget.
And so in terms of what we'ff be doing aswil-l be
a resultimpacting
to thewe will- be making paymentsVe're actually making cash
that
extent
understand
THE COURT: OkaY.
MR. BAILEY: -- that.
unaccepLabl-e.
THE COURT: OkaY. AIIto require a 250t 000 bond. And'a favor and send me -- send to mYTRO --
MR. CONDO: Yes.
outlays. Sowe woufd want to Protect that.THE COURT: OkaY. ButMR. BAILEY : tre ' re wil-Iing to come down. I
$15,000, I think is cIearIY
right. Thank you. I'm goingMr. Condo, J-f you could do mejudicial assistant a revised
THE COURT: with a bond amount in there.
MR. CONDO:
THE COURT:
Okay.
And I think that was the only change.evdentiary hearingShe can add to it. She'l1 add to that the
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MR. CONDO: All- right.THE COURT: And the scheduling conference date. So
can just email that out to her, then itfl-I get to me.can -- I can issue the TRO.
MR. CONDO: I thnk we can do that even yet this
if youAnd I
afternoon --THE COURT: OkaY.
MR. CONDO: -- Your Honor.
THE COURT: Ve1l, I do havesee the attorneys in the courtroom soafternoon.
another hearing, and II'1I try to do it ths
MR. CONDO: Is Lonnie back there?UN]DENTIFIED SPEAKER: YES.MR. BAILEY: Your Honor, weMR. CONDO: Oh, there he is.THE COURT: There he is.MR. LANG: Your Honor, it would be helpful to send in
a Vord version?THE COURT: Yes. V{ord version, Yesr absolutely.MR. LANG: OkaY.THE COURT: Yes, Mr. BaIeY.MR. BAILEY: Your Honor, at the outset, the City
inquired, with regards to stipping to the TRO, there is apayment that's coming due, and the opportunity to put that into
eSCf O',^I .
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THE COURT: Okay. But I thought -- when I asked you
about that, I thought you said you'd be comfortabl-e becauseyou'd have a bond?
MR. BAILEY: Right. And we spoke about the bond athave a discussion about$250,000. I t.hink we probably need to
whether or not the city's going to outlay then upwards to $3mill-ion when, in fact, Inlerre stipulating to this TRO.
THE COURT: So the PaYment is how much?
MR. BAILEY: ft's approximat,ely $3 million. I donrthave the exact figure before me. My apologies.
THE COURT: No. That's okay. And tel-l- me how that
works. It's $3 million for how many months comj-ng up? Is itlike
MR. BAILEY: Itrs a quarter --THE COURT: a quarter?MR. BAILEY: ft's a quarterly payment, correct.THE COURT: In advance?MR. BAILEY: In advance of --THE COURT: Of the games. In other words, the $
mitlion that yourre payingr saY JuIy 1, that's theirperformance is for JuIy 1 through October -- am f making sense?
T'm tryj-ng to figure outMR. LANG: fN ATTEATS
MR. CONDO: ftrs not for --MR. BAILEY: Maybe Mr. LeBfanc coufd answer the
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question.THE COURT: Yes.
MR. BAILEY: Wel-l-, t's not for games. ftrs tomanage the arena.
THE COURT: Okay. All right. Yeah, Irm sorry. Sothe management of the arena.
MR. BAILEY: Correct.THE COURT: But what I guess what I'm saying is,
the $3 million, what time period does that --MR. BAILEY: ItrsTHE COURT: cover?MR. BAILEY: It's paid in arrears, so itrs for the
preceding three months.THE COURT: The Preceding?MR. BAILEY: Correct.MR. CONDO: Correct.THE COURT: Wel-l, then that means that theyrve
already performed --MR. CONDO: Correct.MR. BAILEY: Yes.THE COURT: for that PaYment' right?MR. CONDO: Yes. At the end of the period, they now
terminate the contract,obJ-igated to pay.
THE COURT: I
and they don't want to pay what theyrre
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MR. BAILEY: To theTHE COURT: -- how -- I^Ihy shoul-d they not get payment
for services they've already performed under a contract that
the city acknowl_edges was in place and valj-d at the time?MR. BAILEY: Vhat \^Ierre talking about here is in the
context of public interest and pubJ-ic funding. And when you
speak to a contract that can be canceled with a purpose of
protecting the public interests, while there may be in fact a
windfal-I that could occur t.o the City, court cases have gone tojust that conclusion, is that by no means would there be apenalty because the agreement it.sel-f blas a bad agreement. And
in this case to the extent we succeed and are successful on the
merits, we woul-dn't have to pay that.THE COURT: You wouldn't have to pay the $3 million
for services they've al-ready rendered that youf re not al-Ieging
constitute a breach of contract, or you're not alleging that
they didn't perform according to the agreement- I don'tunderstand how you could -- I don't understand how you could
recover in this lawsuit $3 million for services that youreceived. In other words, it's consideration, right?
MR. BAILEY: You' re correct. There' s consideration.
And I don't have the cite before me. Again we'Ie rushing here.
As I recall off the top of my head, there is a case that we can
provide to the court that speaks to the issue directly, and
that in the event that. the City woul-d experience a windfal-l-
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under a matter where the contract was canceled
afternoon,
on the 29Lhaddress that specific issue since
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for the publicCity that a bad
suggest in that since this came uPaddress that issue when we come before
you
itfs not due until the
interest, thoughact or because of
there may be a windfall to thetheir enterng into the contracts is a bad
act or they -- that Lhere is no harm to them.THE COURT: When is that PaYment due?MR. BAILEY: June 30th.MS. RICKETTS: Your Honor' may \^e
THE COURT: Yes.
MS. R]CKETTS:
that wethisyou
to
so that we can bring whatever Iegal cites
30rh?
THE COURT: Vel-lr You can do that, but Irm not going
to hold off on the TRO, right?MS. RICKETTS: No. Understood -*THE COURT: OkaY.
MS. RICKETTS: -- with respect to the cl-arificatonwhether the TRO requires the City of Gl-endal-e to make a payment
on June 30th.THE COURT: Okay. So herers the way that f would do
this then. The TRO is not going to have any reference to the
payment. vrletre just moving along wth the contract, and thecity needs to plan on making that payment on time. Now if you
want to fil-e something with me, and the way that you shoutd do
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this -- because I donrt want to wait until the 29th, you know,
and then have everybody scrambling and arguing, is that you
need Lo fil-e a motion to amend the TRO to include this term
with some authority. Does that make sense? Okay.MS. RICKETTS: Yes, Your Honor.
THE COURT: And I'd ask you to do that by the 17th'
I mean obviously we have a condensed --MS. RICKETTS: Yes, Your Honor. Thatfs
THE COURT: schedufe for everything. Is that --wiII that work for You?
MS. RICKETTS: That's acceptable' Your Honor.THE COURT: OkaY.
MR. CONDO: Just so frm clear, Your Honor. The TRO
which wil-I be entered wiIl, and as f understand Your Honor, not
address whether or not the payment has to be made. Your Honor
is contemplating by virtue of the TRO that the contract remains
in effect. They can do nothing to breach the contract and that
a payment will be due unfess there is a further order from this
court rel-ieving them of a payment for services that have
aJ_ready been provided, earned, and they're paid in arrears?THE COURT: ExactlY.
MR. CONDO: Thank You, Your Honor.
THE COURT: Okay. Is there anything else that we
need to do todaY?MR. CONDO: You know the onJ-y other thng t