USA v. National Association of Realtors status hearing

My partner John L. Leonard volunteered to sit in on yesterday's status hearing in the USA v. NAR suit pending here in the Northern District of Illinois. Here are his observations from the hearing:

In a somewhat unusual move, District Judge Filip held a status conference in his Courtroom today at which he presided jointly with Magistrate Judge Denlow, who has been presiding over discovery matters in the case. Normally, a District Judge and Magistrate Judge do not hear matters together.

Judge Fillip noted that Magistrate Judge Denlow had earlier set some deadline dates by which the parties were to identify fact and expert witnesses. He said that he wanted to conclude discovery within a reasonably short period of time, after which he anticipated a number of motions, and then, if the case survived the motions, it would go to trial.

Assistant U.S. Attorney Conrath told the Judges that on January 31, the Government disclosed 71 fact witnesses, whom he assumed the defendant would need to depose. In response, the defendant’s attorney Jack Bierig said that of these 71 witnesses, some of them are corporations, and he did not know who the actual individuals were who would testify on behalf of these corporations. He said that in attempting to get discovery from some of these witnesses, the defendant met with resistance, and in fact had to go before Magistrate Judge Denlow to compel discovery with respect to certain of these witnesses.

Mr. Bierig said that before the defendant could identify its witnesses, it would need to see who the Government’s experts witnesses are, and what reports they prepared. He said that those expert reports would raise additional factual questions, and until the defense saw them, they could not present a list of their witnesses to the Court or to the Government. Mr. Bierig noted that the Government had identified 36 separate markets where it claims that anti-competitive conduct and effect had occurred. He noted that the defense would not see a list of the Government’s experts until May 1, 2007.

Judge Filip said that he was not willing to extend discovery in this case such that the case would go on for years (he mentioned nine years, perhaps as an extreme example). He said that the way to make sure that this wouldn’t happen was to set deadline discovery dates as Magistrate Judge Denlow had been doing.

Magistrate Judge Denlow then asked the Government if the 71 witnesses already disclosed related to all of the 36 competition markets that the Government had identified. Mr. Conrath said that these are the 71 fact witnesses that the Government was relying upon to prove its case. In response to Mr. Bierig’s request for a delay in the defendant’s deadline to designate its witnesses, Mr. Conrath said that he was concerned that the defendant in effect wants the Government to wrap up its entire case before the defendant would begin getting to work on its own case. He reminded the Court that the Government had produced numerous documents over a year ago, and that the defendant is well aware what the case is about. He said that the Government wants to move the case to the trial stage.

Mr. Bierig responded that he agreed with Judge Filip, and that he and his client did not want the case to drag on for nine years. He said that even though the Government had produced documents, it still hasn’t produced anywhere near the documents that the defense needs. He also said that there should be some limit on the number of witnesses that the Government would produce. He noted that Federal Rules of Civil Procedure limits each side to ten depositions, and while he realized that this number was unreasonably low for this case, he thought that a limit should be set, perhaps thirty or so depositions per side.

He also suggested that since discovery had been completed with respect to the Government’s prime example of an anti-competitive market (a market where anti-competitive effects allegedly exist), namely, Emporia, Kansas, perhaps a mini-trial or some sort of alternative dispute resolution proceeding could be conducted, with Judge Filip and/or Magistrate Judge Denlow presiding. He said that he was confident that this would show that there is no anti-competitive effect as to this market, and, if the Government couldn’t prove its case in this instance, it would show that the whole case was lacking in merit. He admitted that although he had mentioned this proposal earlier in one of the hearings before Magistrate Judge Denlow, he hadn’t yet formally presented it to the Government.

Judge Filip was somewhat cool to Mr. Beirig’s proposal. He said that it was a creative and original idea, but that he couldn’t force it on the Government which has the right to present its case the way it wants to. He also said that there are different schools of thought among his fellow judges as to whether a trial judge should participate in a mini-trial. He then asked the Government’s lawyer if this was a jury case, and was told that it was not, that the Government was primarily seeking injunctive relief. Magistrate Judge Denlow, however, seemed more receptive to the idea. He asked that if the Emporia, Kansas market was typical, why couldn’t the case rise or fall on this one market alone?

Judge Filip then turned to Mr. Bierig’s request to limit the number of witnesses and/or depositions. He said that if there were 36 separate markets involved, he didn’t think that naming 71 witnesses was at all excessive. He speculated that all of these markets were different, and that there could be as many as 10 witnesses who would testify to conditions in the Chicago market alone.

Judge Filip and Magistrate Judge Denlow then left the bench for a few minutes to confer in private. When they returned, Judge Filip said that he would like the defense to go ahead and start deposing as many of the 71 Government witnesses as it could. He then set the case for another status report on March 28, 2007, at 11:00 a.m. He encouraged both sides, who, he said had been cooperating well, to try to come to some initial agreements about how the case can efficiently proceed.

Thank you, John, for sitting in on the hearing and sharing your observations with RERCLAW readers.