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Last Atlantis Capital LLC v. AGS Specialist Partners

United States District Court, N.D. Illinois, Eastern Division

May 2, 2017

LAST ATLANTIS CAPITAL LLC, et al., Plaintiffs,
v.
AGS SPECIALIST PARTNERS, Defendants.

          MEMORANDUM OPINION AND ORDER

          John Robert Blakey United States District Judge

         In this 13-year old case, Plaintiffs Last Atlantis Capital LLC, Speed Trading LLC, River North Investors LLC, Bryan Rule and Brad Martin have sued various Defendants including Susquehanna Investment Group and Susquehanna International Group, LLP, alleging violation of the federal securities laws and various state law claims. More specifically, Plaintiffs claim that Defendants failed to provide best execution in the handling of trade orders Plaintiffs submitted to them. The case is currently before the Court on various motions, many of which involve (directly or indirectly) certain exhibits Plaintiffs planned to offer at trial. For the reasons explained below, the Court finds that those exhibits - which consist of lists of orders that Plaintiffs claim were mishandled by Defendants - are not admissible at trial. What's more, because Plaintiffs have conceded (and indeed the record confirms) that they cannot prove their claims without these exhibits, the Court finds that Defendants are entitled to judgment as a matter of law on all remaining claims.

         Factual Background

         A. Procedural History

         This case had a tough time getting off the ground. Plaintiffs filed their initial complaint on January 20, 2004 [1], and Judge Bucklo, to whom the case was initially assigned, dismissed it on March 30, 2005 [102]. Plaintiffs filed an amended complaint June 1, 2005 [113]; a Second Amended Complaint on October 4, 2005 [147]; and a Consolidated Complaint on November 7, 2005 [164]. The Court dismissed the Consolidated Complaint on September 13, 2006 [238]. Plaintiffs moved for reconsideration, and Judge Bucklo granted the motion as to certain named defendants and gave Plaintiffs two weeks to amend their complaint naming only those defendants [284].

         On April 5, 2007, Plaintiffs filed their Consolidated Amended Complaint [286], which is still the operative complaint today, though Judge Bucklo later dismissed numerous defendants for lack of service. The operative complaint - proceeding against AGS Specialists, Bear Wagner, Knight Financial Products, SLK-Hull Derivatives, Goldman Sachs Execution and Clearing, TD Options, Citigroup Derivatives Market, Inc., and Group One - alleged eight counts, including violation of §10(b) and Rule 10b-5, breach of contract, common law fraud, and breach of fiduciary duty, among other claims. When Judge Bucklo allowed the complaint to proceed, she denied Plaintiffs' untimely request to file yet another amended complaint based upon the record, including the length of the litigation (four years), the number of previously filed complaints (five) and the numerous motions to dismiss or for reconsideration that had already been filed and resolved (at least 15 by that time). See [408], p. 15, n.6.

         In addition to all of the motions regarding the many attempts to amend the complaint, the Court considered and resolved a series of motions for summary judgment before discovery got underway in earnest.

         On March 10, 2008, CDMI[1] moved to dismiss the operative complaint [428]; Judge Bucklo converted the motion to a motion for summary judgment and, after briefing, granted the motion [548, 549]. On May 21, 2009, Knight Financial filed a motion for summary judgment [584]; Judge Bucklo granted that motion on March 26, 2010 [758], finding that Plaintiffs failed to put forward any evidence connecting their expectations that Knight would provide “best execution” to statements made by Knight. Thereafter, on April 12, 2010, Defendants SLK-Hull and Goldman Sachs also filed a motion for summary judgment [764], arguing that the Court's decision resolving Knight's summary judgment motion would apply with equal force to the other Defendants. On November 4, 2010, Judge Bucklo granted in part and denied in part Defendants' motion for summary judgment [833, 834]. Specifically, the Court ruled that Last Atlantis' claims and Brad Martin's claims under Rule 10b-5(a), (b) and (c) would survive against the Susquehanna Defendants and certain other Defendants, and it dismissed Martin's claims against AGS, all claims (including state law claims) brought by River North, Bryan Rule and Speed Trading, and all claims (including state law claims) brought against Goldman Sachs and SLK. Judge Bucklo, however, declined to dismiss Last Atlantis' state law claims against the Susquehanna Defendants, AGS, SIG, Bear Wagner and TDO, or Martin's state law claims against the Susquehanna Defendants, Bear Wagner and TDO.

         With regard to the Susquehanna Defendants, [2" name="FN2" id="FN2">2] Judge Bucklo similarly found that two alleged statements on SIG's website were actionable because they ostensibly showed that Defendants had publicly asserted: (1) they had institutionalized the pursuit of best execution; (2) they desired to meet and exceed regulatory requirements for “execution quality”; and (3) they deliver “best execution.” From these statements, the Court determined that, at that preliminary stage of the proceedings, a reasonable jury could conclude that Defendants promised to provide “best execution” when handling orders. Judge Bucklo determined that Last Atlantis and Martin proffered evidence that their expectations that Defendants would provide “best execution” were based upon these statements.

         All of these motions, however, were filed and decided without the benefit of any significant discovery. Indeed, on April 15, 2010, Magistrate Judge Keys, who had the case for discovery supervision, stayed discovery pending Judge Bucklo's ruling on Defendants SLK-Hull and Goldman Sachs' summary judgment motion. See [767]. Following Judge Bucklo's ruling, on December 13, 2010, Judge Keys directed Plaintiffs to obtain discovery regarding audit trail data from the Exchanges; he indicated that, once the audit trail data was turned over, he would determine how discovery would proceed in order to meet the discovery deadline, then set for June 1, 2011. See [839].

         On January 21, 2011, Judge Bucklo issued an order inviting additional summary judgment briefing on Plaintiffs' state law claims. See [856]. Consistent with that invitation, Knight [869], Susquehanna/Bear Wagner/TDO [871], and SLK-Hull/GS [874] all filed motions for summary judgment on Plaintiffs' state law claims. On June 6, 2011, Judge Bucklo ruled on all three motions, granting each in part and denying each in part. [965, 966]. As a result, Judge Keys lifted the discovery stay on June 18, 2012 [1037]. Thereafter, on July 12, 2012, Judge Keys adopted Plaintiffs' scheduling order, which contemplated full discovery by all parties [1042].

         B. Reassignment and Post-reassignment Procedural History

         On October 6, 2015, the case was reassigned from Judge Bucklo to this Court [1393]. At the initial status before this Court, Defendants advised that they planned to file dispositive motions; Plaintiffs' counsel objected, noting that Defendants had already filed their summary judgment motions and should not be permitted to file another. At the same time, Plaintiffs indicated that they planned to file a motion for partial summary judgment.

         The Court advised Plaintiffs that, if they intended to assert a waiver argument in response to Defendants' renewed summary judgment motions, they could do so, but would also need to respond on substantive grounds as well. Specifically, the Court advised “if you have an argument on forfeiture or waiver, law of the case, make sure that that's part of your calculation.” Transcript of Proceedings of 10/21/15 [2');">1402], 25');">p. 25. This Court then set a briefing schedule on any further dispositive motions, in an effort to bring this case to final resolution either by way of motion or subsequent trial. See [1405]. This Court then had to extend that schedule for the Plaintiffs at least 14 times. See [1407], [1408], [1432], [1434], [1441], [1465], [1478], [1488], [1489], [1492], [1493], [1498], [1508], [1519].

         On January 22, 2016, Defendants AGS, Bear Wagner, SIG and TDO filed their motion, seeking summary judgment on Plaintiffs' Amended Consolidated Complaint in its entirety [1409]. On February 1, 2016, Plaintiffs filed their motion, seeking partial summary judgment on certain state law claims against SIG and TDO, and against all Defendants on their affirmative defenses [1442].

         On February 11, 2016, while the motion practice remained pending, this Court also set the case for trial on November 14, 2016 - giving the parties a full nine months' notice. That same day, the Court set the case for a final pretrial conference on October 31, 2016, and ordered the parties to file their proposed final pretrial order by October 17, 2016. See [1478]. By April 7, 2016, after consideration of the record, this Court determined that the parties were unable to work cooperatively in good faith, and, after a status and motion hearing, set the case for regular status hearings on April 28, 2016, June 7, 2016, July 28, 2016, and September 13, 2016 [1540]. The Court advised the parties that they should be prepared to report at each status hearing on their trial preparation efforts, and that they should, absent an emergency, notice any and all motions for presentment at the status hearing dates set by the Court [1540]. At each such status hearing, the Court asked the parties about their trial preparation and warned the parties, again and again, that they must be prepared to go to trial on the scheduled date. See Transcript of Proceedings of 4/28/16 [1554], p. 6');">p. 6');">p. 6');">p. 6 (“I'm not going to move the trial date”; “we have to work toward meeting that trial deadline.”); [1557] (“All previously set dates and deadlines to stand”); [1576] (“All other deadlines to stand”).

         Despite these clear admonishments, at the status hearing on October 13, 2016, the parties advised the Court that they were not able to meet the Court's deadline for the filing of the proposed final pretrial order, and Plaintiffs requested additional time. The Court, after noting that the schedule for filing the order had been set months ago, initially denied the motion; but after considering the prejudice to Defendants and recognizing that the proposed pretrial order should be filed jointly, the Court ultimately allowed the parties to file their proposed final pretrial order on October 19, 2016. See [1576]. The Court declined to extend the date for filing motions in limine, however, and required the parties to file those, as previously ordered, on October 17, 2016. Id.

         C. Procedural History Relating to Plaintiffs' Lists of “Relevant Orders”

         Having by this time reviewed and analyzed the parties' summary judgment submissions, the Court advised Plaintiffs that it had grave concerns about the admissibility of the exhibits Plaintiffs referred to as the lists of relevant orders. The Court advised Andrew Friedman, counsel for Plaintiffs, that he would have to show that the orders included on the lists were mishandled or they likely would not be relevant to any issue left in the case; and counsel agreed. Transcript of Proceedings of 10/13/16 [1578');">1578], pp. 9-10. In an attempt to address the Court's concerns, attorney Friedman represented that Plaintiffs' experts, Robert Lowry and Dr. Roy Freedman, would testify that the orders included on the list were, in fact, mishandled; and counsel further represented that the experts would testify and establish the analysis of the underlying data showing whether any orders were mishandled. Id., pp. 11-12.

         After review of the record and hearing counsel's evidentiary proffer, this Court advised:

Based on my review of what you've submitted, I don't see how you're going to be able to show that any specific order was mishandled. And simply having an expert opine, based on what you just said, is not going to be sufficient based on what orders were mishandled or not mishandled because there's more factors involved that simply what you've articulated. And there would also be other predicate determinations which the expert would not be able to address including who exactly received it, who exactly sent it. You've got some serious issues, Counsel.

         [1578');">1578], 2');">p. 12. The Court further advised that under the law a mere three- or five-second delay could not, standing alone, establish that an order was unlawfully “mishandled” and that other determinative factors would also need to be shown. In no uncertain terms, this Court warned counsel that the Plaintiffs, like all litigants, needed to adhere to the rules of evidence as to the proposed exhibit:

The Court: You're the plaintiff. You bear the burden of proof. And you're the proponent of the exhibit, which means you have to show -
Friedman [counsel for Plaintiffs]: Yes.
The Court: - you have to show the admissibility of the exhibit. The burden does not shift to the other side simply because you proffer some window of delay and then say, all right, go ahead and try to prove that this is, in fact, inadmissible by some burden-shifting. There's no burden-shifting here. It's not like you make a prima facie case and then there's a response. This is your exhibit. You have to show that it's authentic, that it is relevant, that it satisfies 403, that it is non-hearsay or an exception to hearsay, et cetera, et cetera, et cetera. All they have to do is, “Objection, your Honor, ” and if you haven't laid the foundation, it doesn't come in.

Id., p. 16.

         This Court's serious misgivings about Plaintiffs' proposed proof did not come as a surprise to counsel. Indeed, long ago, Magistrate Judge Keys issued an order on March 13, 2009, stating that, before he would order Defendants “to engage in further time-consuming and expensive discovery, the Court needs to assure itself that Plaintiffs' allegations are not based on suspicions and hunches, but on real evidence.” [554]. Judge Keys, therefore, ordered Plaintiffs to identify and produce “a listing of at least 500 specific orders that they claim were mishandled (at least 50 from each plaintiff and 25 for each defendant), along with an explanation as to how they concluded that the orders were fraudulently mishandled as opposed to having been merely not executed.” Id. Plaintiffs requested and received an extension of time to produce the requisite orders [561]; they were due by April 17, 2009.

         Four years later, Judge Keys was still dealing with the issue. In a decision issued March 4, 2013, in connection with various discovery disputes and motions - the “bulk of which involve[d] the Relevant Orders, including the underlying data and methodology the plaintiffs used to identify these particular orders as being ‘relevant'” - Judge Keys summarized the discovery that occurred in the wake of his 2009 Order requiring Plaintiffs to come up with some actual proof of their claims. Judge Keys indicated that some plaintiffs (Last Atlantis and Speed Trading) had submitted charts identifying orders, along with explanatory affidavits; others (River North, Brad Martin and Bryan Rule) initially conceded that they could identify only unexecuted orders, but subsequently submitted charts and lists of purportedly fraudulently mishandled orders; and still others (Lulu, Lola, Friendly Trading and Goodbuddy) failed to respond at all. See [1164');">1164');">1164');">1164], p. 6');">p. 6');">p. 6');">p. 6.

         Furthermore, he noted, as the discovery disputes continued, that Plaintiffs were taking an untenable position:

[i]nformation concerning the relevant orders is plainly relevant - indeed, that evidence is at the crux of the claims at issue in this lawsuit. To be sure, all of the defendants question the plaintiffs' ability to identify specific orders that they claim were handled improperly and for which they seek millions of dollars from defendants. Indeed, this has been the primary focus of the defendants' discovery over the past several years. The plaintiffs are claiming that the defendants failed to properly execute these orders; the defendants are entitled to discovery concerning how the plaintiffs arrived at those claims and what evidence they have to substantiate those claims.

         [1164');">1164');">1164');">1164], p. 11. Ultimately, Judge Keys rejected Plaintiffs' attempt to withhold information relating to the lists of orders on the basis of privilege:

Nor is the discovery sought privileged. Although the spreadsheets may have been prepared in anticipation of trial, the basis for the plaintiffs' claims should have preceded the filing of the suit (to satisfy Rule 11). And, to the extent the information requested concerning the spreadsheets reflects mental impressions, they would seem to be those of the plaintiffs' experts, not their attorneys. Discovery concerning how certain orders were singled out as being improperly executed, again, would seem to go to the crux of the plaintiffs' case; the Court fails to understand why the plaintiffs continue to want to hide the ball on the issues.

Id. Specifically concerning the Susquehanna Defendants' motion to compel, Judge Keys again addressed the question of whether the Defendants were entitled to discovery concerning Plaintiffs' lists of orders:

As the Court understands it, the plaintiffs took underlying data - audit trail data - ran searches and programs on it and came up with a list of “relevant orders, ” i.e., the orders they claim were either mishandled by the defendants or not executed. The defendants claim they need to be able to see what the plaintiffs did with the data, to see how they came up with the lists, in order to test the validity of their allegations of mishandling and/or non-execution. The plaintiffs claim that the searches and the programs run to create the lists from the audit trail data amounts to work product. But the list of relevant orders was not simply prepared in anticipation of trial, it was prepared because the Court ordered the plaintiffs to prepare it; the plaintiffs are claiming that the defendants mishandled these orders or fraudulently failed to execute them in accordance with established rules and protocols. The defendants have the right to test those claims, and the requested discovery is the easiest and most efficient way to get at the issue; forcing the defendants to re-create the underlying data, figure out the specific methodology employed by the plaintiffs and take the necessary steps to determine exactly how the plaintiffs arrived at the orders they did, would, indeed, cause undue hardship.

[1164');">1164');">1164');">1164], p. 14. Judge Keys' frustration with Plaintiffs' improper discovery tactics was clear:

Reduced to their essence, the plaintiffs' claims allege that certain orders were mishandled by the Specialist defendants in violation of Exchange policies and in violation of the securities laws; fundamentally, the Court accepts that the defendants would need to know how the plaintiffs determined which orders were “Relevant Orders” and the basis for their claims that those orders were mishandled. The plaintiffs must have the information that allowed them to discern from the universe of all orders which were “Relevant” and why; it is only fair that the defendants - who are being hauled into court to defend themselves against these claims - are allowed discovery on the issue. The information is not work product, it is the factual basis of the plaintiffs' claims and it should be disclosed. This has consistently been the Court's view of this case; yet years have passed without this information ever coming to light. It is time for the plaintiffs to stop resisting the disclosure of this information, to provide the requested discovery and to move this case forward to resolution.

Id., p. 17 (emphasis added).

         A year and a half later, Magistrate Judge Cole, who had by then inherited the case from Judge Keys when he retired, remained equally frustrated by Plaintiffs' failure to move the case forward with real evidence to support their claims. On September 29, 2014, Magistrate Judge Cole held a hearing on Defendants' motion to compel the deposition of Robert DeMeritt, the Last Atlantis partner and designated expert who had created the infamous lists of orders. Plaintiffs had taken the position that DeMeritt was not relevant and should not be deposed, despite the fact that DeMeritt was the individual who had run the critical spreadsheets and maintained the underlying data. Judge Cole observed:

[t]here is a difference between running an analysis of underlying data and the validity of the underlying data. Nobody is going to dispute - or they will dispute. But obviously you can test somebody who says, well, I have this piece of paper and that piece of paper and this and that, and I added up all the invoices, and we sold a million dollars worth of stuff to GMAC, and that's our damages. . . . That's easy. But the underlying - the validity of the underlying data the experts cannot opine on in this case obviously requires, even for admissibility purposes, that whoever didn't just gather this up, but apparently created the mechanism for obtaining it and - well, the valid - the underlying validity, that person has to testify.

         Transcript of Proceedings of 9/29/14 [1559-15], pp. 11-12. In Judge Cole's view, Friedman had not been forthcoming with Plaintiffs' expert disclosures, initially disclosing DeMeritt as an expert, then advising the parties that DeMeritt was no longer available to serve as an expert, then deciding that DeMeritt would serve as an expert. Judge Cole admonished Friedman that “[y]ou can't make it this labyrinthian and this hard for opponents in a case, ” and he observed, being relatively new to the case, “I was struck with how difficult you made it and how it was easy to see why these delays occurred.” Id., pp. 29, 30. Judge Cole found that DeMeritt “is really critical to this case, ” “[a]nd I'm not going to take - nobody needs to take your word for it that he's not.” Id., pp. 31, 32. He granted the motion to compel.[3]

         Two years later, in the final stages of trial preparation before this Court, the parties were still fighting over the lists of orders. Defendants were still claiming that Plaintiffs had no evidence to support their claims, and Plaintiffs still had not produced a single witness to testify as to the validity of the underlying data and the resulting lists of orders, and still had not produced any witness to testify concerning the methodology used to create the lists of orders. In response to this Court's inquiry just a month before trial, Plaintiffs were still unable to reassure the Court that they were prepared to lay a sufficient evidentiary foundation for the lists of orders. Without the orders, as Plaintiffs conceded in open court, Plaintiffs could not legally succeed on any of their claims, making a trial unnecessary. See Transcript of Proceedings of 10/13/16 [1578');">1578], pp. 7-8 (Counsel for Plaintiffs indicating that “the specific spreadsheets with the specific - identifying the specific orders, that's critical to the case” and conceding that, without the spreadsheet exhibits, none of Plaintiffs' claims would survive.).

         As a result, before committing to empaneling a jury and forcing the litigants to incur any further expenses, this Court directed Plaintiffs' counsel to file a certification under Rule 11 laying out the purported evidentiary basis for Plaintiffs' critical exhibits [1576]. Counsel submitted a certification, [1587], but it missed the mark and failed to address the fatal concerns raised by this Court at the October 13, 2016 status hearing. In his certification, counsel represented in conclusory fashion:

[P]laintiffs will present the testimony of Mr. DeMeritt to establish a foundation for the spreadsheets setting forth detailed information regarding the times the Orders were sent to each exchange and routed to defendant Bear or SIG for execution, the prevailing Exchange and National Best Bid and Offer price, the length of time the orders were pending prior to execution or cancellation and other material information under F.R.E. 901(b)(1), and (7)-(9), R. 1005, R. 1006 and/or R.1007. . . . With respect to objections raised by defendants to the admissibility of this evidence, plaintiffs will establish that the information in the spreadsheets are not barred under the hearsay rules under exceptions in F.R.E. 803 (6), (8) and (17).

[1587]. Despite this Court's explicit instructions, Plaintiffs' counsel did not explain specifically how he would lay a foundation for the underlying data from which the spreadsheets were derived. Among other short-comings, counsel failed to explain what he meant by “other material information”; failed to provide any information to substantiate his bare assertion that the orders would survive a hearsay challenge; and failed to provide any factual support for his suggestion that the lists of orders constitute “records of a regularly conducted activity, ” public records or market reports such that they would fall within the hearsay exceptions referenced. See [1594].

         In light of the above, this Court set the matter for an evidentiary hearing, seeking to give Plaintiffs' counsel one last opportunity to reassure the Court that empaneling a jury would not be a complete waste of everyone's time.[4] At the evidentiary hearing, the Court noted that “there's been a systemic failure of plaintiff to comply with routine deadlines and to give a straight answer to a simple question, so proceeding by way of proffer and even requested Rule 11 certifications has been ineffectual.” Transcript of Proceedings of 10/27/16 [1610');">1610');">1610');">1610');">1610');">1610');">1610');">1610], p. 6');">p. 6');">p. 6');">p. 6. Thus, the Court noted, the point of the evidentiary hearing was to ascertain exactly what evidence Plaintiffs planned to offer at trial concerning the critical spreadsheets and to determine whether counsel could actually lay an evidentiary foundation for those exhibits and otherwise establish their admissibility:

Right now I want to know what the evidence is because I can't get a straight answer. So let's get a straight answer. Let's figure out what the exhibit is and what the testimony is, and then I can apply the rules of evidence. Because right now I can't do it with a hypothetical.

Id., p. 7.

         Unfortunately, Plaintiffs made this Court's task even more difficult when they failed to bring copies of their actual exhibits to the hearing. The following exchange illustrates the Court's many attempts to address Plaintiffs' ongoing inability to support claims with actual evidence:

THE COURT: Let me - hang on a second, hang on a second. Let me interrupt. This is your main exhibit. You don't - do you have a copy of what the exhibit is?
MR. FRIEDMAN: Yes.
THE COURT: Okay. Can you get it to me and opposing counsel, the version you're going to use at trial. Not a draft, not a version that's going to change between now and trial, but the version, the [whole] version, can you get it to me by the end of business today?
MR. FRIEDMAN: I probably cannot. They have the copies of that, but-
THE COURT [to defense counsel]: Do you have a copy of it?
MR. STERN: We have what he has sent us, yes, your Honor.
THE COURT: All right. We're going to take a little break. You're going to show him the copy that he's given you. You're going to confirm that that's your exhibit.
MR. FRIEDMAN: Okay.
THE COURT: Because I want a copy of the exhibit. Because once you hand it to me, that's going to be the exhibit whose admissibility is going to be tested in this hearing.
MR. FRIEDMAN: Okay. These are big spreadsheets.
THE COURT: I don't care how big it is. This is your evidence. You can bring in 20 bankers boxes, if that's what your evidence is.
MR. FRIEDMAN: Okay.
THE COURT: Whatever your evidence is, testimony and exhibits. I don't know how clear - I don't know how I can be more clear. I need to know what your exhibit is because I don't know if it's coming into evidence, and I can't make an assessment under the rules of evidence if you don't bring the exhibit to the hearing. . . . Okay. And do you have any summary exhibits to - because obviously it will be normally not the routine practice to publish 20, 000 pages to the jury. So normally it happens all the time, like in a wiretap case, they've got all these phone records. They move the phone records in, and then there's a summary exhibit which basically breaks down the larger exhibit, and that's what the person would testify to in terms of authentication of both the underlying exhibit and the summary exhibit. And then once both of those are in, which there's independent foundation for each, that's what the experts would use in aid of their testimony. So it would be both not just a demonstrative, but a summary exhibit. So every version of every exhibit that you want to admit with respect to this area of evidence, I want to have it, and I want to have the version. Because I don't want to have another version come up two weeks from now on the 14th of November, oh, Judge, I've changed the exhibit, and now it's this, because that's going to be excluded as untimely. Because this might be excluded as untimely. At this point I don't know what it is. So can the parties meet and confer right now. Do you have the other exhibits? It sounds like they have the spreadsheets, but it doesn't sound like that's all the pieces of evidence you're going to try to seek to admit, right?
MR. FRIEDMAN: The spreadsheets [are] what I thought we were dealing with today.
THE COURT: Well, the spreadsheets [are] the beginning of it, but if you get the spreadsheets into evidence and you can't get your summaries or any other exhibit in, then you're also going to have a problem. And you're going to have a problem with your experts and you're going to have a problem with directed verdict. So this is why we're doing it now because I want to have it tied down, and I don't want to have a discovery dispute or a late disclosure dispute while I got 14 people in the box who are waiting back there. Because I have a grave concern - and it's been predicated by the track record in this case - that there will not be an efficient trial. And we will have the jury waiting hours at a time while we're arguing about something, about whether or not it was disclosed or whether or not it's the same thing, which is why we're doing this on a pretrial basis. Let me ask the question again. Other than the spreadsheet, do you have the other exhibits - exhibits with an S - that you intend to admit into evidence?
MR. FRIEDMAN: No, I do not.
THE COURT: Okay. When can you get that composite exhibit, which would be the summaries, anything else you want to use, any demonstratives you want to use, the underlying exhibits, the dataset, whatever, all of your evidence. Because I am tying you down, because I need to, because I have a responsibility to the jury. That entire universe, how long would it take you to submit it? Now, obviously if it's going to be 20, 000 pages, some of it's going to be electronic, and some of it could be hard copy. But how long would it take you to actually give me the main evidence in your case?
MR. FRIEDMAN: Probably about a week or so.
THE COURT: Do you not have this now? This is the reason I set the trial out, and I set multiple statuses on trial preparation. How do you not have your exhibits?
MR. FRIEDMAN: I'm preparing. Your Honor, I'm preparing them, okay? I'm one person. I'm doing - they're filing motion after motion after motion. I'm responding to them. I'm getting - I'm working very diligently pretty much round the clock on this case. We prepared the spreadsheets. We're going to prepare the summaries, and then I would imagine that your Honor wanted to continue this hearing as well to get other experts before the Court, and I would think that we would have that before then, but -
THE COURT: Well, here's another deadline. One of the deadlines as part of the pretrial conference - which is Monday, right?
MR. STERN: Yes, your Honor.
THE COURT: Which is not a week from now. And you have to exchange your exhibits.
MR. FRIEDMAN: Yes.
THE COURT: So you're telling me that your main exhibit in the entire case, you're not going to have for a week, which would put it multiple days past the pretrial conference, which at that point would be excluded. If you can't exchange the exhibits in time for the pretrial conference, your exhibit's gone because you failed a deadline. So I mean - MR. FRIEDMAN: It sounds to me like you're telling me I have to have it on Monday, so I guess I'll have it on Monday.
THE COURT: Well, Counsel, this is not a question of - I'm bending over backwards to give you your day in court, I really am. And I don't mean to be short with you. I don't. But there's a reason there's deadlines, and I have to be fair to the other side, too. And it's not fair to them to have the lead exhibit in the case handed to them while they're picking a jury. That's not fair to them.
MR. FRIEDMAN: Well, the summary is just going to be a subset of the spreadsheet.
THE COURT: A summary is everything because you're not going to publish or inquire on the stand about 20, 000 pages. You have to get the admissibility of that because a summary won't come in without it. But that spreadsheet or the derivative samples or summaries or however you want to call it, they're entitled to get that because that's the exhibit that's actually going to be published.
MR. FRIEDMAN: Okay.
THE COURT: Right?
MR. FRIEDMAN: Right.
THE COURT: Right?
MR. FRIEDMAN: Sure.
THE COURT: Okay. I'm not moving the trial date, okay? All right. So you're going to have to exchange it and get it to me and the other side by the pretrial conference.
MR. FRIEDMAN: Okay.
THE COURT: Which is - and that's a deadline that was set a long time ago [on February 11, 2016]. So if you're not able to do that - and even with the certification I asked for and some other pleadings, even as of last week and the week before, there was one version and then there was another version and a corrected version. I'm really trying to give you your day in court. And I - I really am, okay?
MR. FRIEDMAN: I appreciate that.
THE COURT: I really am. But I have to be fair to them, too. And allowing you to not make the deadlines is just not fair to them.
MR. FRIEDMAN: I will prepare the summary spreadsheet and get it to them by Monday.
THE COURT: No. The order is comply with the order setting the pretrial conference. That's what the order is.
MR. FRIEDMAN: Okay.
THE COURT: So this is nothing new or special.
MR. FRIEDMAN: They have all my exhibits except for the summary exhibits.
THE COURT: Well, any exhibit you don't give them, consistent with my order for the pretrial conference, is not going to be timely.
MR. FRIEDMAN: Understood.
THE COURT: All right. Now, I want you to bring on Monday - because you will as part of it - all the exhibits that you intend to admit in this area, whether they're summary samples, underlying exhibits. And if it's the digital stuff, then I want it on a flash drive. Because it's really important that the ball [will] not move anymore -
MR. FRIEDMAN: Okay.
THE COURT: - with respect to that. And that will at least give counsel, as of the date of the pretrial conference, an idea to articulate objections.
MR. FRIEDMAN: Okay.
THE COURT: Because this is one of the reasons there's prejudice to them. . . . One of the prejudices to them is to the degree the exhibit's changing or opinions or portions of expert opinions are changing, that's prejudicial to them because it's outside of discovery. And they would have done different things, whether it's a Rule 26 disclosure or questions they would have asked to an expert in a deposition or rebuttal experts. And moving the ball late in the game is devastating to the defendants and unfair because you're correct when you call it a standard of care. This is like a medical malpractice case. And you need to have an expert to explain the standard of care because the jury doesn't know what best execution is. But you need both the factual predicate and the expert opinion. So you can't change the ball on them and expect them to be able to have a chance to defend them[selves]. So I'm trying to give you your day in court. I'm trying to give them their day in court.
MR. FRIEDMAN: We're not changing the ball, your Honor.
THE COURT: Well, that remains to be seen. We'll find out. I hope what you're saying is correct. I really do. So I want copies for the Court of whatever the exhibits are, plural. I also want to know the names of the witnesses who are not available today but that you intend to call to support the admissibility under all of the rules of evidence, not just 403 or relevance, but every single rule of evidence. Because I'm going to expect objections on multiple grounds. All of the witnesses that you intend to call. Can you put on a record right now - I know what you've put in your pleadings, but I want to get it on the record. Can you name I believe it's four witnesses total.
MR. FRIEDMAN: Yes.
THE COURT: Can you put their names on the record.
MR. FRIEDMAN: Yes. Paul Picchietti, Robert Lowry, Dr. Roy Freedman and Robert DeMeritt.
THE COURT: All right. And you have here today which one?
MR. FRIEDMAN: Mr. DeMeritt.
THE COURT: Okay. When are the other three available?
MR. FRIEDMAN: Mr. Lowry is the one who is the most busy, and he would be available the week of the 7th, if we could do it that time. He'd like that Wednesday, which I guess is what, the 9th?
THE COURT: All right. What about the availability of the other ones?
MR. FRIEDMAN: I have to coordinate with them. I just found out this morning that Mr. Lowry was available on the 9th.
THE COURT: All right. Obviously since I set the trial on the 14th, all of the witnesses will be available on the 14th, correct?
MR. FRIEDMAN: Yes.
THE COURT: All right. We are going to pick the jury on the 15th, and we're going to have the evidentiary hearing on the 14th. Well, actually we're going to complete the evidentiary hearing. We're going to take as much testimony as we can today.

Id., pp. 8-9, 11-19.

         With that, Plaintiffs called to the stand Robert DeMeritt, a partner at Last Atlantis Capital who has served as records custodian for the Plaintiffs in this case. Plaintiffs indicated that they planned to use DeMeritt to lay a foundation for the spreadsheets of what they referred to as “traded ahead orders” - that is, orders where Defendants traded their own interests over Plaintiffs'. For purposes of the evidentiary hearing, those spreadsheets were marked as Exhibits 1, 2, and 3, with Exhibit 1 relating to traded ahead orders placed with the Philadelphia Stock Exchange (PHLX), Exhibit 2 relating to traded ahead orders placed with the Chicago Board Options Exchange (CBOE), and Exhibit 3 relating to traded ahead orders placed with the American Stock Exchange (AMEX).

         With regard to the first spreadsheet, identified for purposes of the evidentiary hearing as Exhibit 1, DeMeritt testified that he received “a list of orders that were traded ahead at the PHLX by Susquehanna that I believe it came from an exchange surveillance. And I matched up our orders with that and that produced the spreadsheet.” Transcript of Proceedings of 10/27/16 [1610');">1610');">1610');">1610');">1610');">1610');">1610');">1610], 27');">p. 27. DeMeritt testified that he received the initial list of orders from Plaintiffs' counsel and that counsel told him the information “came from the SEC investigation.” Id., p. 31. DeMeritt testified that he then wrote an algorithm to extract, from that broader list of orders, orders that were placed by Plaintiffs. Id., p. 33. When creating Exhibit 1, DeMeritt testified, he manually entered certain columns and information that was not produced by the algorithm using Last Atlantis' records in addition to whatever data was available from the PHLX data. Id., pp. 35-36. He testified that he used information from Last Atlantis' own trading platform. Id., p. 36. DeMeritt then made the following point in response to questions from the Court:

THE COURT: I'm trying to figure out what the basis - underlying basis of the entries are in Plaintiffs' Exhibit 1 for the evidentiary hearing. And you're saying you looked at your own records, and I'm trying to figure out exactly what that is. When you say your own records, what are you referring to? Because you're matching that. You're not just pulling information and creating a spreadsheet based on the trade data. You're using additional sources, correct?
THE WITNESS: Correct. Our FIX [Financial Information Exchange] engine created logs, and that's where this data is coming from, from our FIX engine logs.

Id., p. 38.

         DeMeritt then confirmed that the data he used to match orders came from Last Atlantis' own internal dataset. Id., p. 42. Counsel did not seek to introduce that dataset (or any other underlying dataset) at the hearing, and it became clear that DeMeritt could not even identify what some of the information on Exhibit 1 was. For example, when asked what the symbol C meant in Column AO on Exhibit 1, he testified, “that's not my data . . . I do not know that.” Id., p. 6');">p. 6');">p. 6');">p. 60.

         DeMeritt similarly testified that he created the spreadsheets marked as Exhibits 2 and 3. When asked about the particular underlying data sets he used to create the exhibit spreadsheets, he testified:

THE WITNESS: For the plaintiffs' data, there are three types of data. There was Last Atlantis data which came from Last Atlantis FIX logs. There was Speed. There was order tracking data from their order engine, whatever they called that.
THE COURT: Do you have any knowledge of what kind of order engine they have?
THE WITNESS: It was something -
THE COURT: Do you know? I'm not asking you to guess. That's why we're having this hearing, not guessing.
THE WITNESS: No, I do not. . . . The other three plaintiffs, River North, Brad Martin and Bryan Rule that came - that order tracking data came from their broker which was REDI.
THE COURT: You're familiar with that system that those plaintiffs used or not? It's okay. If you don't, that's okay. I just want to know what you know.
THE WITNESS: I'm familiar with the trading application, the REDI trading platform that would have created that data. Where they pulled the data from, I don't know.
THE COURT: Okay. And then what else? What other types of data?
THE WITNESS: That was the plaintiffs' data.
THE COURT: Okay. Let's go into the other areas with respect to the SEC, et cetera, et cetera.
BY MR. FRIEDMAN: That COATS [Consolidated Options Audit Trail System] data from the SEC, what was that - what was that specifically?
A: COATS data from the SEC.
Q: Yes.
A: There was an analysis done by Mayhew and somebody else, and they had roughly three weeks of consolidated audit trail data from the three exchanges, the AMEX, the Philly and the CBOE.
Q: And that was produced to you from the SEC; is that correct?
A: That was produced from the SEC to me, yes.
Q: Okay.
THE COURT: That was produced to you from the SEC. Do you have any knowledge how they produced that information, what process they used or where it came from, what the source data was?
THE WITNESS: I do have some knowledge. I've read - read some of the - I've read the information on how it was created I guess would be the way to say it, but I don't know the specifics.
THE COURT: You don't know the answer - you read somewhere that you think you know?
THE WITNESS: That is correct.

Id., pp. 87-90 (emphasis added).

         Similarly, it became clear that DeMeritt did not know how the underlying data from the SEC was actually created or the sources it came from.

THE COURT: When you say “that data, ” what is that data, where does it come from, how is it compiled? How do you know any of that?
THE WITNESS: The data was - came from the SEC. It was created for the SEC by the exchanges.
THE COURT: How do you know that?
THE WITNESS: I've seen documentation that states that.
THE COURT: What documents did you review to understand where and how that information is what it reports to be?
THE WITNESS: It was an SEC report that came with - that came with the data.
THE COURT: You saw a report?
THE WITNESS: Yes.
THE COURT: Okay. And it was a report from who to whom? What kind of report are you talking about?
THE WITNESS: I - it was ...
THE COURT: If you know. I don't want you to guess.
THE WITNESS: I don't know.

Id., pp. 91-92. Further, with regard to the SEC data:

Q: Okay. So what specifically - how was it created? Who created it?
A: The exchanges created it for the SEC, for the SEC investigation.
Q: Okay. And what did - how did they create? What data did ...

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