2008 Dennis Montgomery Litigation and Related Events

Last Updated: Sept. 20, 2015

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?, 2008

According to the New York Times, "[i]n 2008, the government spent three days 'scrubbing' the home computers of Montgomery’s lawyer of all references to the technology." See Eric Lichtblau and James Risen, Hiding Details of Dubious Deal, U.S. Invokes National Security, New York Times, Feb. 19, 2011.

 

 

Jan. 4, 2008

Montgomery v. eTreppid.  Flynn files a Supplemental Declaration in Reply to Montgomery’s Opposition the the United States’ Nov. 30, 2007 Motion for Protective Order.  ECF 384.

 

Jan. 7, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order denying eTreppid’s Dec. 10, 2007 Motion to Realign the Parties, primarily on the basis that doing so would create great difficulties in the ECF filing system.  ECF 387.

 

Jan. 10, 2008

Montgomery v. eTreppid.  The United States files a Reply in Support of its Nov. 30, 2007 Motion for Protective Order.  ECF 389.

Montgomery files:

  • Montgomery files a Motion to Strike Flynn’s Dec. 7, 2007 response, declaration, and Jan. 4 supplemental declaration.  ECF 391.  See ECF 392 (errata re: 391)

 

Jan. 11, 2008

Montgomery v. eTreppid.  eTreppid files an Answer to Montgomery’s Feb. 21, 2006 First Amended Complaint and Counterclaim against Michael Sandoval, Edra Blixseth, Atigeo, LLC, Opspring, LLC, Dennis Montgomery, and Montgomery Family Trust.  ECF 393.  (This pleading was necessary given the Court’s Jan. 7 order denying eTreppid’s Motion to Realign the Parties.)

Montgomery files Opposition to eTreppid’s Nov. 29, 2007 Motion for Sanctions and Objections to eTreppid’s Evidence in Support of Motion for Sanctions.  ECF 394.  See also ECF 395 (Objections to eTreppid’s Evidence); ECF 396 (Declaration of Marsha-Laine F. Dungog); ECF 397 (Declaration of Scott Cooper).  

 

Jan. 16, 2008

Montgomery v. eTreppid.  eTreppid files

  • Motion for Reconsideration, or in the Alternative, Motion to Align Parties for Purposes of Trial by Counter Claimants re: Magistrate Judge Cooke's Jan. 7 Order denying its motion to realign parties.  ECF 399.  See also ECF 400 (Notice of Objection to Magistrate Judge’s Order)
  • Discovery Status Report.  ECF 401.

 

eTreppid v. Montgomery.  eTreppid files its Discovery Status Report on this docket as well.  ECF 94.

 

Jan. 17, 2008

Montgomery v. eTreppid.  Flynn files an Opposition to Montgomery’s Jan. 10 Motion to Strike his declarations.  ECF 402.

Montgomery files his Discovery Status Report.  ECF 404.

 

Jan. 18, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order that, at the next status conference, she will hear argument on (a) Montgomery’s Motion to Enforce Right of Inspection of Records; (b) eTreppid’s Motion for Sanctions; and (c) The United States’ Motion for Enforcement of Protective Order;  and (d) Montgomery’s Motion to Strike Flynn’s Responses to same.  ECF 405 (amending ECF 403).

eTreppid files a Reply in Support of its Nov. 29, 2007 Motion for Sanctions.  ECF 407 (Reply); ECF 406 (Response to Montgomery’s Objections to Evidence);  ECF 408 (Frye Supplemental Declaration); ECF 409 (Karchmer Supplemental Declaration); ECF 410 (Trepp Supplemental Declaration).

 

Jan. 22, 2008

Montgomery v. eTreppid.  Montgomery files

  • Objection to eTreppid’s Jan. 18 filing of supplemental declarations.  ECF 411.
  • Objection to the United States’ Motion for Enforcement of Protective Order re: Attorney Files and Evidentiary Objections to Flynn’s Filings.  ECF 412.
  • Motion to Dismiss eTreppid’s Counterclaim re Non-Statutory Trade Secrets per FRCP 12(b)(6).  ECF 413.
  • Request for Judicial Notice in Support of Motion to Dismiss.  ECF 414.

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over the scheduled discovery status conference and motions hearing.  Minutes of Proceeding (ECF 419); Transcript (ECF 425).  Among other things, the Court

  • notes that Montgomery has outstanding responses to eTreppid’s document requests; must respond no later than Jan. 26, 2008;
  • denies Montgomery’s Motion to Strike Flynn’s submissions;
  • admonishes the parties about filing “Objections to Evidence” (which is not allowed);
  • grants Montgomery’s Motion to Enforce Right of Inspection of Records (though not to allow a forensic inspection of records) and orders parties to meet and confer regarding scope of production sought and to file report re: production by Feb. 4, 2008.

 

Friendly Capital v. Montgomery.  Friendly Capital/Trepp file Supplemental Brief in Support of their Motion to Dismiss Montgomery’s Counterclaim.  ECF 65.

Montgomery files a Supplemental Brief Regarding Diversity Jurisdiction.  ECF 66 (Motion); ECF 66-1 (Montgomery Declaration).  In his Declaration, Montgomery asserts:

  • From November 1999 to September 2006, he was domiciled in Nevada.  ECF 66-1 ¶ 4.
  • From September 23, 2006 to October 2007, he was domiciled in Washington.  Id. ¶ 3.
  • From October 2007 to the present, he was domiciled in California.   ECF 66-1 ¶ 5.

Note:  As Judge Pro points out in his Feb. 13 order, this declaration is inconsistent with Montgomery's prior claims of domicile.  He previously asserted that he had been a resident of California prior to November, 5, 2006.  Complaint ¶ 1, Montgomery v. Flynn, No. BC375353 (Cal. Super. Ct. Los Angeles, filed Aug. 23, 2007), submitted in Montgomery v. eTreppid ECF 275-2. During his June 24, 2008 testimony, he gives still different dates, stating that he moved from Seattle to California in August or September of 2007.  Montgomery v. eTreppid, ECF 731 at 47.

 

Feb. 5, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order on stipulation extending deadline for production of documents in native format to Feb. 15, 2008.  ECF 423.

 

Feb. 6, 2008

Friendly Capital v. Montgomery.  Friendly Capital/Trepp file a Response to Montgomery’s Jan. 22 Supplemental Brief.  ECF 68.  In their brief, they note that "Counterdefendants reserve the right to move to remand this action for lack of subject matter jurisdiction in the event that discovery in this matter reveals that Montgomery was domiciled in California either at the time of filing the complaint or at the time of removal to this Court. At this point, Counterdefendants have no choice but to accept as true the factual assertions set forth in Montgomery’s Declaration."  Id. at 2.

 

Feb. 11, 2008

Montgomery v. eTreppid.  eTreppid files an Opposition to Montgomery’s Jan. 22 Motion to Dismiss.  ECF 426.

 

Feb. 13, 2008

Friendly Capital v. Montgomery.  Judge Pro issues an order granting in part and denying in part Defendants' Motion to Dismiss Montgomery's First Amended Counterclaim/Motion for a More Definite Statement, dismissing Count 4 (Breach of Fiduciary Duty) and requiring a more definite statement with respect to Counts 1 (Fraud)  and 6 (Unjust Enrichment). ECF 69 (PDF).

In this order, Judge Pro addresses first whether he has jurisdiction over the matter and, in so doing, recites Montgomery's seemingly inconsistent statements regarding their domicile. Id. at 406. He also notes that Montgomery's allegations re: domicile in this case conflict with his allegations made re: domicile in another other case.  Id. at 6 n.1.  However, given that the only evidence he had before him was from Montgomery, he holds that "[t]he Court therefore will assume jurisdiction over this matter unless and until other evidence is presented to the Court suggesting diversity jurisdiction did not exist as represented."  Id. at 6.

 

Feb. 15, 2008

Montgomery v. eTreppid.  eTreppid files

  • Memorandum of Points and Authorities in Support of Its Assertion of the Attorney-Client Privilege Against Dennis Montgomery.  ECF 427.
  • Motion to Compel Discovery.  ECF 431 (Motion); ECF 433 (Snyder Declaration).

Montgomery files

  • Memorandum of Points and Authorities, arguing that eTreppid’s Attorney-Client Privilege Objections Should be Overruled in Their Entirety.  ECF 428 (Memo); ECF 429 (Tuneen E. Chisolm Declaration).
  • Brief re: Disputes re: eTreppid’s Requests for Documents.  ECF 432.

 

Feb. 19, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting – with some amendments – the United States’ Nov. 30, 2007 Motion for Enforcement of Protective Order, and adopts the United States’ Proposed Protocols.  ECF 435.

The United States files a Notice of Filing of Vendor Protocols.  ECF 434.

 

Feb. 20, 2008

Montgomery v. eTreppid.  District Judge Pro issues an order overruling eTreppid’s Jan. 16 Motion for Reconsideration/Objections to Magistrate Judge Cooke’s Jan. 7 Order denying its motion to realign the parties, and further ordering “that to the extent the foregoing motions filed on behalf of D, eTreppid Technologies seek an Order of the Court to realign the parties for trial, said motions are DENIED without prejudice to renew the same after the completion of discovery.”  ECF 442.

Magistrate Judge Cooke issues order that it will hear argument on eTreppid’s Motion to Compel and Montgomery’s Discovery Disputes Brief at the next scheduled status conference.  ECF 440.

eTreppid files a Response to Montgomery’s Feb. 15 Memorandum re: Attorney Client Privilege (ECF 438).

Montgomery files a Response to eTreppid’s Feb. 15 Memorandum re: Attorney Client Privilege (ECF 439).

 

eTreppid v. Montgomery.  Montgomery files a Notice of Deposition of Ashley Quinn CPA.  ECF 95.

 

Feb. 21, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over the scheduled discovery status conference. Minutes of Proceeding (ECF 448); Transcript (ECF 456).  Among other things, the Court

  • “notes that the contents of CD No. 1, purportedly attached to the parties’ contribution agreement, is critical evidence in this action. Counsel present arguments concerning the extent to which discovery is proper regarding the trade secrets at issue in this proceeding”;
  • orders Montgomery and Trepp to file declarations under penalty of perjury confirming that “they have diligently reviewed their files in a good faith effort to locate CD No. 1 and have not been able to locate the original CD No. 1, a copy of CD No. 1, or CD No. 1 in printed form or otherwise”;
  • orders Montgomery to produce documents responsive to multiple eTreppid requests by Mar. 14;
  • orders additional briefing on several eTreppid document requests;

ECF 448.

 

Feb. 29, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over a telephonic discovery hearing to discuss the parties’ stipulation regarding the hard drives seized by the FBI.   Minutes of Proceedings (ECF 458); Transcript (ECF 476).  During this hearing, Judge Cooke:

  • establishes procedure for selection of a neutral expert;
  • orders the creation of forensic copies of the hard drives for which eTreppid has some indicia of ownership;
  • orders Montgomery to review records re: remaining hard drives to determine whether they have indicia of ownership those and, examine the initial registrants of those hard drives;
  • orders that the neutral expert will examine CDs with no indicia of ownership for certain specified information.

eTreppid files a Supplement to its prior briefing on attorney client privilege.  ECF 445 (as corrected).  Attached to this supplement is a April 5, 2006 letter from Montgomery to D. Frye, in which Montgomery expressly asserted that he is not and has never been a member of eTreppid's Management Committee – in contrast to Montgomery’s current claims that he was a member and, as such, eTreppid has no attorney-client privilege with respect to its documents.

Montgomery files a Reply in Support of his Jan. 22 Motion to Dismiss.  ECF 446.

 

Mar. 3, 2008

Montgomery v. eTreppid.  Atigeo LLC files a Motion to Dismiss eTreppid’s Counterclaims and an Answer.  ECF 452.

 

Mar. 6, 2008

Montgomery v. eTreppid.  Montgomery files Objections to and Request for Reconsideration of Magistrate Judge Cook’s Feb. 21 order.  ECF 460.

 

Mar. 10, 2008

Montgomery v eTreppid.   eTreppid files a Motion to Compel Production of Source Code.  ECF 461 (Motion); ECF 462 (Snyder Declaration); ECF 463 (Karchmer Declaration); ECF 464 (Trepp Declaration);  ECF 465 (Frye Declaration).

Montgomery files

  • Motion for Order on Shortened Time Staying Magistrate Judge's Feb. 21 Order.  ECF 466.  This motion contains a Declaration of Dennis Montgomery Per Minute Order of Feb. 21, but the declaration was apparently attached in error (per ECF 472 – Notice of Errata).
  • Motion for Protective Order Precluding Production of Actual Software and Technology-Enabling Information.  ECF 467.  This Motion also contains a Declaration of Dennis Montgomery, making similar allegations against the FBI as included in 466-2 and in ECF 471 (filed Mar. 11).  ECF 467 at 25-30.
  • Request for Judicial Notice of State Court Order Re: Preliminary Injunction and Certain Related State Court Pleadings and Transcript of Proceedings.  ECF 468.
  • Motion to File Under Seal Certain Documents referenced in his Request for Judicial Notice.  ECF 469.

Note:  Flynn will later contend that these Montgomery declarations (ECF 466-2 and ECF 467)  - along with others - are perjured.  See, e.g., Apr. 24, 2008.  The Court will rule that Montgomery committed perjury with respect to one of the challenged declarations (see Mar. 31, 2009), but the case will be dismissed before the court determines whether Montgomery did commit perjury again with these declarations and, as such, the court denies as moot Flynn's motion regarding same (see Feb. 20, 2009).

 

Mar. 11, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order denying Montgomery’s Mar. 10 Motion for Order on Shortened Time.  ECF 470.

Montgomery files Declaration Per Minute Order of February 21.  ECF 471. (This declaration was already submitted on Mar. 10, attached to Montgomery’s Motion to Stay Discovery, apparently in error per ECF 472 (Notice of Errata). 

In his declaration, Montgomery asserts that the FBI stole and/or destroyed some of his materials during the 2006 search and seizure. The declaration includes the following statements:

"8. The volume of my work over the last 35 years is enormous. There are hundreds of millions of files that were kept and maintained, in various media forms, before the "illegal raid." Some forms of this media, require specific devices or software to restore the work to a readable format, which are not readily available. At least one of these devices, that I kept over time, was seized and never returned to me by the FBI. The FBI's mishandling of this data and in some cases destruction of the data make it difficult to gather the information necessary to reconstruct the work product to the point in time it was made.

9. I was careful to maintain my work product in an organized fashion to insure I could reconstruct my work product to the point in time it was developed. From my perspective, the FBI destroyed that organization on February 28, 2006 and March 3, 2006, when they ravaged through the containers of my work product located in both my home and storage facility. While some effort may have been made, at least superficially, to keep track of what was searched and seized, the FBI did not seem to take any care to insure that my organization was maintained. They damaged, and in some cases destroyed my property as they conducted their search and seizure, which a federal magistrate and district judge subsequently ruled was illegal. 

10. On information and belief it appears clear that the FBI has taken some of my "intellectual property" and to this day has never returned it. This can be shown by discrepancies between the FBI inventory seizure list and the FBI return lists. There are errors and omissions that have not been explained or resolved to this day. Without knowing exactly what data was kept by the FBI, to the extent it would ever acknowledge that some data was in fact retained, it makes it impossible to ultimately determine how the reconstruction of the work product can be determined, if it can be done at all."

ECF 471 (Declaration of Dennis Montgomery Per Minute Order of February 21, 2008).  

Note:  Later this fall, after an evidentiary hearing (called at his request, but at which he does not appear), is held on Sept. 5, Montgomery will enter into a stipulated agreement with the FBI essentially conceding that his charges were (at best) inaccurate.  See Oct. 2. 

 

Mar. 12, 2008

Montgomery v. eTreppid.  The DOD files a Notice Pursuant to the Court’s Feb. 29 Order.  ECF 473.

Montgomery files a Status Report as of March 12, 2008.  ECF 474.

 

Mar. 13, 2008

Montgomery v. eTreppid.  eTreppid files a Status Report as of March 12, 2008.  ECF 475.

 

Mar. 14, 2008

Montgomery v. eTreppid.  eTreppid files an Opposition to Montgomery’s Mar. 10 Motion to Stay Discovery Order. ECF 477.

 

Mar. 17, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over the discovery status conference.  Minutes of Proceedings (ECF 481; as corrected, ECF 512); Transcript (ECF 530; ECF 981).  Among other things, the Court:

  • orders Montgomery to answer eTreppid’s Interrogatory No. 4, as originally propounded, by March 28;
  • orders that if Montgomery plans to file a motion regarding alleged deficiencies in FBI return of seized property, it must do so by April 7;
  • confirms that there is no stay of the Court’s Feb. 21 order and if Montgomery seeks a stay, he needs to file a motion in District Court.

ECF 481.

 

Mar. 18, 2008

Montgomery v. eTreppid.  Montgomery files an Emergency Motion for Order from District Court Judge on Shortened Time Staying Items 4, 9, 10 and 13 of Magistrate Judge Cook’s Feb. 21 Order.  ECF 478.

eTrepped files an Objection to Montgomery’s Emergency Motion.  ECF 479.

 

Mar. 19, 2008

Montgomery v. eTreppid.  District Judge Pro issues an order denying Montgomery’s Mar. 6 Motion for Reconsideration/Objections to Magistrate Judge Cook’s Feb. 21 order and denying Montgomery’s Mar. 18 Motion to Stay.  ECF 480.

eTreppid files Motion for Discovery Sanctions.  ECF 482.

 

Mar. 21, 2008

Montgomery v. eTreppid.  Montgomery files

  • Opposition to eTreppid’s Mar. 10 Motion to Compel and Objections to Declarations filed in Support thereof.  ECF 498.
  • Objections to the United States’ Proposed Vendor Protocols.  ECF 499.

 

Mar. 24, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting in part Flynn’s Aug. 21, 2007 Motion for Attorney Fees.  ECF 502.  Per this order, Flynn is awarded $530,612.00 and costs in the amount of $26,910.18, for a total of $557,522.18.  The Court denies Montgomery’s in camera evidentiary objections (Dec. 13 and Dec. 26, 2007) as well as Montgomey’s in camera ex parte application for order striking supplemental reply (Dec. 26).

Edra Blixseth and Opspring LLC file

  • Joinder in Montgomery’s Jan. 22 Motion to Dismiss. ECF 503. 
  • Motion to Dismiss.  ECF 504 (Motion); ECF 505 (Request for Judicial Notice).

eTreppid files

  • Opposition to Montgomery’s Mar. 10 Motion for Protective Order Protective Order Montgomery Parties' Motion For Protective Order Precluding Production Of Actual Software and Technology-Enabling Information.  ECF 500.
  • Opposition to Atigeo’s Mar. 3 Motion to Dismiss.  ECF 501.

 

Mar. 26, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order denying Flynn’s (apparently filed under seal) Ex Parte Motion To Conform Final Amount of Fees and Costs to Court Order of March 24, 2008 and orders him to re-file motion and serve it on all parties.  ECF 513.

Michael Sandoval files Motion to Dismiss and Joinder in Atigeo’s Mar. 3 Motion to Dismiss.  ECF 514.

 

Mar. 31, 2008

Montgomery v. eTreppid.  Flynn files Motion to Conform Amount of Fees and Costs (re: Mar. 24 Order).  ECF 520.

 

Apr. 1, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues Report and Recommendation denying eTreppid’s Nov. 29, 2007 Motion for Sanctions, primarily on the grounds that eTreppid has not yet provided conclusive evidence to support its claims.   See ECF 521 (PDF) at 4 (“Any challenges eTreppid may have to the veracity of Mr. Montgomery’s statements will be fully vetted through deposition and written discovery. Although eTreppid did not address the Halaco factors as it related to this declaration, the court has done so and finds that dismissal or lesser sanctions are not warranted.”); id. (“The court is familiar with the seized property and the dispute concerning whether certain items belong to eTreppid or Mr. Montgomery, and it finds that there is not conclusive evidence before the court that Mr. Montgomery misappropriated the hard drives or other seized property, or that he was untruthful in his testimony at the preliminary injunction hearing. The labeling, storage, and ownership of the disputed property will be better understood after inspection of these items is completed, and also after discovery is completed.”) Per this order, the Court also denies Montgomery’s objections to declarations filed in support of the motion.  Id.

 

Apr. 2, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order adopting the vendor protocols proposed by the United States.  ECF 522.

Magistrate Judge Cooke also presides over the discovery hearing.  Minutes of Proceeding (ECF 525); Transcript (ECF 534; ECF 1184).

 

Apr. 3, 2008

Montgomery v. eTreppid.  Atigeo LLC files an Opposition to eTreppid’s Mar. 19 Motion for Discovery Sanctions.  ECF 523.

 

Apr. 7, 2008

Montgomery v. eTreppid.  Judge Pro issues an order denying as moot Montgomery’s Nov. 8, 2007 Motion for Judgment on the Pleadings and denying Montgomery’s Jan. 22, 2008 Motion to Dismiss eTreppid’s Counterclaim.  ECF 524.

Atigeo files a Reply in Support of its Mar. 3 Motion to Dismiss and Joinder in Motion to Dismiss.  ECF 526.

Montgomery, Blixseth and Opspring file an Opposition to eTreppid’s Mar. 19 Motion for Discovery Sanctions.  ECF 528 (Opposition); ECF 529 (Dahl Declaration).

Montgomery files a Motion for Protective Order and Motion for Evidentiary Hearing (re: FBI Return of Property).  ECF 527.  In this motion, Montgomery seeks an order

"an order setting an evidentiary hearing to (1) identify the items seized on March 1 and 3, 2006 pursuant to search warrants executed by the FBI at Montgomery’s home and storage facility; (2) explain the disparity between the inventories prepared at the time of the search and inventories reflecting items returned to Montgomery pursuant to this Court’s November 29, 2007 Order; and (3) establish the chain of custody for items seized pursuant to the warrants. The Montgomery Parties will also seek a protective order staying the Montgomery Parties' production of documents responsive to eTreppid Technologies, LLC (“eTreppid”) and Warren Trepp's ("Trepp") Second Set of Requests for Production, Request Nos. 6 & 7, until after the conclusion of the evidentiary hearing.”

Id. at 2.  Montgomery also seeks an order "deferring the Montgomery Parties' production of documents responsive to eTreppid and Trepp's Second Set of Requests for Production, Request Nos. 6 & 7 pending that hearing.  Id. at 12.

 

Apr. 11, 2008

Montgomery v. eTreppid.  eTreppid files

  • Supplemental Opposition to Atiego’s Mar. 26 Motion to Dismiss Counter Claims and Joinder in Motion to Dismiss.  ECF 531.
  • Opposition to Blixseth and Opspring’s Mar. 24 Motion to Dismiss.  ECF 532.
  • Opposition to Michael Sandoval’s Mar. 26 Motion to Dismiss and Joinder in Atigeo’s Motion to Dismiss.  ECF 533.

 

Apr. 16, 2008

Montgomery v. eTreppid.  Montgomery files Motion to Compel Further Responses to Interrogatories (ECF 535) and Motion to Compel Production of All Documents withheld by eTreppid under Attorney-Client Privilege Objections (ECF 536).

 

Apr. 17, 2008

Montgomery v. eTreppid.  eTreppid files Objections to Magistrate Judge Cook’s Apr. 1 Report and Recommendation (denying sanctions per Montgomery’s alleged perjury).  ECF 539.

 

Apr. 18, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an 18-page order permitting eTreppid to assert “attorney-client privilege in response to Montgomery's discovery requests” and requiring that “eTreppid produce a privilege log that includes all documents and communications for which it intends to assert the attorney-client privilege.”   ECF 541.

Montgomery files an Opposition to Flynn’s Mar. 31 Motion Conform Amount of Fees and Costs to March 24, 2008 Order .  ECF 542.

Michael Flynn files a Motion for Sanctions and Motion to Establish Rule 3.3 Procedures Pursuant to Nevada Rules of Professional Conduct.  ECF 540 (sealed per ECF 746).

 

Apr. 21, 2008

Montgomery v. eTreppid.  The United States files an Opposition to Montgomery's Apr. 7 Motion for Evidentiary Hearing in These Proceedings Regarding Return of Property.  ECF 543.

eTreppid files its Reply in Support of its Mar. 19 Motion for Discovery Sanctions.  ECF 544.

 

Apr. 24, 2008

Montgomery v. eTreppid.  Michael Sandoval files a Reply in Support of his Mar. 26 Motion to Dismiss.  ECF 549.

Michael Flynn files a Motion for Sanctions, with accompanying documents (all sealed per ECF 746).  See ECF 545 (Motion); ECF 546 (“Timeline in Support of Motion for Sanctions”); ECF 547 (Declaration of Michael Flynn); ECF 548 (Exhibits 1-6:  # 1 Exhibit Ex. 2 Denial of Writ of Poss., # 2 Exhibit Ex. 3 Minute Order re withdrawal of ex parte writ of poss., # 3 Exhibit Ex. 4 Dismissal of San Diego Fee Arb. complaint, # 4 Exhibit Ex. 5 Mass Bar complaint dismissal, # 5 Exhibit Ex. 6 Response to Mass. Bar complaint); ECF 550 (“Emails proving Montgomery perjury” – Exhibit 9); ECF 551 (“2.27.07 Dec. proving Montgomery perjury”);  ECF 552 (“Task Summary”); ECF 553 (“Inovices”); ECF 554 (“Docum[en]ts served on Klar proving perjury”); ECF 555 (“Documents served on Klar proving perjury”); ECF 556 (“Documents served on Klar proving perjury”); ECF 557 (“Documents served on Klar proving perjury”).

While these documents are sealed/not available, later documents reveal that this filing and in Flynn’s Apr. 18 Motion for Sanctions (collectively, “the Flynn Filings”), Flynn

"repeatedly accuse[s] the Montgomery Parties and their current counsel of making false and perjurious statements to this Court. The Flynn Filings specifically identify only the following occurrences of such false and perjurious statements: a hearing in this action on January 22, 2008, at which false statements were purportedly made by Montgomery’s current counsel, and Montgomery’s declarations dated September 10, 2007 (Docket # 261); November 2, 2007 (Docket #321); and March 10, 2008 (Docket #466-2 and 467) (collectively the“Statements”)."

See ECF 562-2 at 3.  Additionally,

“Flynn uses, reveals and relies upon information relating to his representation of the Montgomery Parties. … The information that is used, revealed and relied upon by Flynn in the Flynn Filings extends well beyond information relating to Statements. … The Flynn Filings are extraordinarily prejudicial and damaging to the interests of the Montgomery Parties and counterdefendants Edra Blixseth (“Blixseth”) and Opspring LLC (“Opspring”) in this action.” 

Id. at 4.  Additionally, eTreppid later reveals that 

"Michael Flynn, has stated, in a sworn declaration  ... that Blixseth and Klar are currently engaged in an effort to destroy emails relating to the relationship between Blixseth, Opspring, and Montgomery."  

ECF 634, citing Flynn Declaration [ECF 547] at 49:6-23. 

 

Apr. 25, 2008

Montgomery v. eTreppid.  Flynn files Reply in Support of his Mar. 31 Motion Conform Amount of Fees and Costs to March 24, 2008.  ECF 558.

Edra Blixseth and Opspring file a Reply in Support of their Mar. 24 Motion to Dismiss.  ECF 559.

eTreppid files an Opposition to Montgomery’s Apr. 7 Motion for Evidentiary Hearing and Motion for Protective Order.  ECF 560.

 

Apr. 29, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order establishing a procedure for United States to schedule requested “in camera meeting in chambers with the government officials who will review the Montgomery parties’ files currently in the custody of Michael Flynn, Esq.” re: redactions of information subject to military and state secrets privilege.  ECF 561.

Montgomery files an Emergency Motion to Seal and Strike the Apr. 18 and Apr. 24 Flynn Filings.  ECF 562.  In this motion, Montgomery claims that the Flynn Filings contain confidential attorney-client communication information that is “extremely prejudicial” to Montgomery (and related parties) and that Montgomery’s alleged bad acts do not fall within any of the Rules of Professional Responsibility permitting disclosure of such information.  See, e.g., ECF 562-2 at 8 (“The Flynn Filings do not establish that while Flynn was representing the Montgomery Parties, criminal of fraudulent conduct “relating to the proceeding” occurred”).  

 

Apr. 30, 2008

Montgomery v. eTreppid.  Flynn files an Opposition to Montgomery’s Apr. 29 Emergency Motion asserting (among other things), that he relied solely on publicly-available information and did not disclose any confidential information in either of the Flynn Filings.  ECF 564.

Magistrate Judge Cooke issues an order denying Montgomery’s Apr. 29 Emergency Motion.  ECF 565.  In this order, Judge Cooke admonishes Montgomery counsel for attempting ex parte contact with the Court regarding Montgomery’s desire to have the Flynn Filings stricken from the record:

“Implicit in the communication between the Montgomery parties’ counsel and the deputy court clerk was the request that the deputy clerk advise this court that the Montgomery parties desired that this court enter an immediate order striking Mr. Flynn’s papers. This is a violation of the Local Rules.”

The deputy clerk routinely communicates with counsel for parties who have proceedings pending before the court on matters such as scheduling upcoming hearings, clarifying briefing schedules, and the like. Asking the deputy clerk to inquire of the court whether it intends to issue an order sua sponte goes well beyond such routine matters. Counsel for the Montgomery parties are admonished that should they engage in such ex parte communications in the future, they will be subject to sanctions.”

Id. at 1-2.  Judge Cooke then denies the Emergency Motion because the “proposed orders” (upon which the Motion was based) “are not points and authorities, and there is no factual or legal basis for the relief requested.”  Id. at 2.

 

May 2, 2008

Montgomery v. eTreppid.  Montgomery files a Motion for Order Sealing and Striking the Flynn Filings, etc.  ECF 566 (Motion); ECF 567 (Request for Judicial Notice of Transcript); ECF 570 (Ex Parte Application for Order Shortening Time for Briefing on Order); ECF 571 (Request for Sealing of Document Filed in Support of Motion) (Docs sealed per ECF 746).

 

May 5, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order denying Montgomery’s Ex Parte Application for Order Shortening Time and setting briefing schedule on Motion.  ECF 575.

Flynn files an Opposition to Montgomery’s May 2 Motion for Order Sealing/Striking Flynn Filings.  ECF 572.

Michael Sandoval files Joinder in Montgomery’s May 2 Motion for Order Sealing/Striking Flynn Filings.  ECF 574.

eTreppid files

  • Opposition to Montgomery’s Apr. 16 Motion to Compel Further Responses to Interrogatories.  ECF 576.
  • Motion for Protective Order Staying Montgomery's Discovery of eTreppid and third parties.  ECF 577.
  • Opposition to Montgomery’s Apr. 16 Motion to Compel Production of all Documents Withheld by eTreppid under Attorney-Client Privilege Objections.  ECF 578.

Montgomery files an Opposition to eTreppid’s Apr. 17 Objections to Magistrate Judge Cooke’s Apr. 1 Report and Recommendation (denying eTreppid’s Motion for Sanctions).  ECF 579.

 

May 7, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting eTreppid’s Mar. 19 Motion for Discovery Sanctions Against Montgomery.  ECF 582.  In this order, Judge Cooke states that “It is an understatement that the document production fell woefully short of what the court ordered.” Id. at 3.  With respect to Montgomery’s claim that it need not produce a variety of documents because they are not in paper form, the Court holds:

“The court has read and re-read its February 21, 2008 order to locate any statement by this court that documents ordered to be produced were limited to “hard copy documents” only. The court found no such statement, nor any statement in the order that could remotely be construed in such a fashion. The reason is simple. It is axiomatic that in civil litigation throughout the United States today, documents are now created on computers in an electronic format. One has to push the “print” button on the computer to generate a copy of the document on a piece of paper. Printing electronically stored documents in response to a document production request, much less a court order, is something litigants and lawyers do everyday. For the Montgomery parties to seriously contend that documents that this court ordered to be produced were somehow exempt because they are in electronic form is not only astonishing; it is bad faith, and it will not be tolerated.“ 

Id. at 4.  With respect to Montgomery’s claim that production was delayed because vendor protocols were not yet in place, the Court holds:

“This is a red herring, and if there had been a bona fide concern about the vendor protocols, counsel for the Montgomery parties surely would have raised that prior to the filing of the motion for sanctions. They did not.”

Id.  Regarding Montgomery’s claim that alleged discrepancies with the FBI’s seizure inventory list and the FBI return inventory list prevented his compliance with the Court’s Feb. 21 order, the Court holds:

“As with the vendor protocols, the Montgomery parties’ counsel never mentioned this issue in the communications concerning the failure to produce documents as ordered by this court. The court finds that the Montgomery parties deliberately refused to comply with the February 21, 2008 order and invited either a motion for sanctions or a motion for order to show cause.”

Id. Regarding eTreppid’s request for case-ending sanctions, the Court holds:

“As tempting as it might be to recommend dismissal of this case, this court is not going to issue a report and recommendation to the District Court granting eTreppid’s request for caseending sanctions. However, the court’s patience for abusive, bad faith discovery gamesmanship is ended. The court finds that the Montgomery parties have deliberately violated this court’s February 21, 2008 order by failing to produce the documents as ordered, and sanctions for this misconduct are warranted as more fully set forth herein.”

Id. at 5.  Instead the Court holds that it will sanction Montgomery by requiring him to pay eTreppid’s attorney fees and costs incurred in bringing the sanctions motion and orders further briefing in that regard.  Id. The Court also orders:

“that the Montgomery parties shall produce every single document, no matter that document’s format, as ordered by this court in the following categories, and they shall do so no later than Monday, May 19, 2008: [listing of documents to be produced per Feb. 21 Order].”

Id. at 5-6.  The Court also orders the parties to meet and confer over the multiple outstanding discovery motions and file a joint report by May 23 re: status of issues raised in those motions.

Magistrate Judge Cooke also issues an order granting Flynn’s Mar. 31 Motion to Conform Amount of Fees and Costs.  Per this order, Flynn is awarded a total of $628,812.15 in fees and costs.  ECF 584.

Magistrate Judge Cooke also issues an order clarifying that responses to Flynn’s Apr. 24 Motion for Sanctions are due May 12. ECF 581.  Per this order, Judge Cooke also (again) admonishes Montgomery for improper filings:

“The Montgomery parties have filed two ex parte motions in the past week (#s 569 & 580). Counsel are advised that the term “ex parte” is an adjective defined by Black’s Law Dictionary as something “done or made at the instance and for the benefit of one party only, and without notice to, or argument by, any person adversely interested . . . .” The court is concerned that counsel are using the term ex parte to indicate an emergency when, in fact, they have only to state that the motion is an emergency. The court has also noted that not all interested parties are being served electronically through the court’s CM/ECF system when a document is filed ex parte because the filing party is selecting only certain counsel to be served. The parties are ordered not to use the ex parte indication on their emergency filings in the future.”

ECF 581.  Judge Cooke also issues an order vacating the May 20 status conference.  ECF 583.

 

May 8, 2008

Montgomery v. eTreppid.  eTreppid files a Joinder in Flynn’s Apr. 18 Motion for Sanctions and to Establish Rule 3.3 Procedures Pursuant to Nevada Rules of Professional Conduct.  ECF 585 (sealed per ECF 746).

Montgomery files an Opposition to Flynn’s Apr. 18 Motion for Sanctions and to Establish Rule 3.3 Procedures Pursuant to Nevada Rules of Professional Conduct.  ECF 588 (Sealed per ECF 746).

Michael Sandoval files an Opposition to Flynn’s Apr. 18 Motion for Sanctions and to Establish Rule 3.3 Procedures Pursuant to Nevada Rules of Professional Conduct.  ECF 587 (Opposition); ECF 589 (Request for Judicial Notice) (both sealed per ECF 746).

 

May 9, 2008

Montgomery v. eTreppid.  Montgomery files an Emergency Motion for an Order Permitting Montgomery Parties To File Memorandum Of Points And Authorities in Excess of 30 pages In Opposition to Flynn’s Motion For Sanctions – seeking to file a 75-page brief.  ECF 590.

 

May 12, 2008

Montgomery v. eTreppid.  Flynn files an Opposition to Montgomery’s May 9 Emergency Motion.  ECF 591.

Magistrate Judge Cooke issues order granting Montgomery’s May 9 Emergency Motion to file brief up to 75 pages long.  ECF 592.

eTreppid files a Joinder in Flynn’s Apr. 24 Motion for Sanctions.  ECF 593.deferring the Montgomery Parties' production of documents responsive to eTreppid and Trepp's Second Set of Requests for Production, Request Nos. 6 & 7, pending the Court holding an evidentiary hearing to determine what documents and other materials were: (a) seized by the FBI from Montgomery; and (b) returned by the FBI to Montgomery files

  • Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 601 (sealed/not on docket)
  • Request for Judicial Notice in Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 597 (sealed per ECF 746)

Montgomery files

  • Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 601 (sealed/not on docket)
  • Request for Judicial Notice in Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 597 (sealed per ECF 746)

Sandoval files an Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 603 (Opposition, as corrected; ECF 595 Orig); ECF 596 (Sandoval Declaration) (both sealed per ECF 746).

 

May 14, 2008

Montgomery v. eTreppid.  Montgomery files Emergency Request for Status Conference to Address the Montgomery Parties' Compliance with the Court's May 7, 2008 Order.  ECF 604.

In this filing, Montgomery asserts that he seeks the Court’s assistance in addressing “logistical difficulties that the Montgomery Parties are encountering” in attempting to comply with the court’s orders in light of the (alleged) fact that potentially responsive documents could equal about “1.5 million pages of paper” – “estimated to consist of 350 gigabytes of information.”  Id. at 2-3.

Montgomery also asserts that “A substantial percentage, i.e., sixty to eighty, of the Technology Data” may fall – “the Montgomery Parties reasonably believe” within the United States’ requested Protective Order “and/or Non-Disclosure Agreements executed by Dennis Montgomery … in connection with work he performed for the Government (the "Protected Data").”  Id. at 3. 

Notes:  As eTreppid points out in its Memorandum per the Court's May 16 Order:  "Montgomery’s assertion that he has approximately 1.5 million pages of responsive documents – the bulk of which could only have come from eTreppid – is especially ironic in light of Montgomery’s testimony, at the preliminary hearing, that he did not take “files or hard drives or anything” from eTreppid." Montgomery v. eTreppid ECF 615 at 2 n.1, quoting Montgomery's Feb. 7, 2006 testimony under oath.  

With respect to Montgomery's assertion that 60-80% of the material is classified, in his Nov. 6, 2006 declaration under oath, Montgomery asserted that he did not possess any classified data. See also Aug. 18, 2008 (summarizing Montgomery's attempts to explain the inconsistency between his 2006 testimony and 2008 assertions).

 

May 15, 2008

Montgomery v. eTreppid.  Flynn files Reply in Support of his Apr. 18 Motion for Sanctions and to Establish Rule 3.3 Procedures Pursuant to Nevada Rules of Professional Conduct.  ECF 605 (sealed per ECF 746).

Montgomery files Answer to eTreppid’s Jan. 11 Counterclaim / Answer to Complaint.  ECF 606.

Magistrate Judge Cooke issues an order setting a hearing on Montgomery’s May 14 Emergency Request for Status Conference.  ECF 608; see also ECF 609 (setting forth issues the parties should be prepared to discuss at the hearing).

 

May 16, 2008

Montgomery v. eTreppid.  Carla DiMare files an Opposition to Montgomery’s May 2 Motion to Strike/Seal the Flynn Filings.  ECF 610 (sealed per ECF 746).

 

May 19, 2008

Montgomery v. eTreppid.  The United States files a Memorandum Pursuant to the Court’s May 16 order.  ECF 611.  In this filing, the United States rejects Montgomery’s contentions that a large percentage of his documents may fall under the Protective Order and/or any NDA: “Further, the government’s estimate of the percentage of documents likely to contain information covered by either the United States Protective Order or the NDA is substantially lower than Montgomery’s. Indeed, government counsel advised that the vast majority of the documents in Montgomery’s possession is unlikely to contain either state secrets privileged or classified information.”  Id. at 3.  It also notes, “It appears that Montgomery has made no attempt to review his files to exclude documents that are not subject to the U.S. Protective Order.”  Id. at 2 n.2.

The United States also informs the Court of its offer to meet with Montgomery in order to give him “an explanation of the parameters of the United States Protective Order, a conversation that is possible with Montgomery, because of his government-authorized access to protected information” –  and that Montgomery’s counsel rejected that offer.  Id. at 4-5.

Flynn files a Opposition to Montgomery’s May 2 Motion to Strike/Seal the Flynn Filings.  ECF 613 (sealed per ECF 746).

eTreppid files

  • Joinder in DiMare’s May 16 Opposition and Flynn’s May 19 Opposition to Montgomery's Motion to Strike/Seal Flynn Filings.  ECF 614.
  • Memorandum per the Court’s May 16 Order (re: Montgomery’s alleged Emergency).  ECF 615.
  • Memorandum of Fees and Costs per the Court’s May 7 Order granting its motion for sanctions.  ECF 616 (Memorandum); ECF 617 (Snyder Declaration).

Montgomery files:

  • Reply in Support of its Apr. 16 Motion to Compel Production of Attorney Client Documents.  ECF 618.
  • Reply in Support of its Apr. 16 Motion to Compel Further Responses to Interrogatories.  ECF 619.

 

May 20, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order setting ex parte in camera meeting with United States' per US request to "discuss information subject to the United States’ protective order which may aid the Court in addressing issues set for hearing. Ms. Wells further represents she has sought and received the consent of counsel concerning this ex parte meeting in chambers.”  ECF 626.

District Judge Pro issues an order affirming Magistrate Judge Cooke’s Apr. 1 Report and Recommendation denying eTreppid’s Nov. 29, 2007 Motion for Sanctions.  ECF 627.

 

May 21, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over the scheduled discovery hearing.  Minutes of Proceeding (ECF 628); Transcript (ECF 641).  Apparently, even though this hearing was requested by Klar (Montgomery Counsel) on emergency basis, Klar is unavailable.  However, the Court orders local counsel to contact her and “so she can be re-connected telephonically to participate in this hearing which was scheduled pursuant to her emergency request for status conference.”  ECF 628. 

The Court admonishes “Ms. Klar . . .  that attorneys appearing in this Court shall not unilaterally set hearings and that this Court will manage its docket. Ms. Klar is further admonished that she shall abide by the local rules of practice for this Court, as well as related court orders, and that future violations will not be tolerated.” Id. at 2.  Following the parties’ arguments, the Court finds as follows:

1) Counsel for Mr. Montgomery and the United States have agreed that Mr. Montgomery shall travel to Washington, D.C., the week of May 26, 2008, to meet with government officials to discuss the scope of the United States protective order and any nondisclosure agreements Mr. Montgomery has executed. Counsel for these parties placed on the record their agreement concerning a written summary of that meeting;

2) Mr. Montgomery shall comply with this Court’s May 7, 2008 order (#582) and produce all documents described more fully on page 6, lines 1-12 (item numbers 1 - 4) no later than Friday, May 23, 2008; however, to the extent Mr. Montgomery has a good faith belief that documents responsive to this request may be subject to the United States protective order, production is deferred until after Mr. Montgomery’s meeting with government officials next week;

3) M[s]. Klar, counsel for the Montgomery parties, advises the Court that she is awaiting production of certain responsive documents from Opspring, LLC; therefore, production of these documents is deferred until Monday, May 26, 2008; and

4) Mr. Montgomery shall produce the Glen Glogauer emails as part of this document production no later than Friday, May 23, 2008, and these documents shall be produced in PST or native format.

Id. Judge Cooke also states that she will “consider eTreppid’s request for sanctions against the Montgomery parties for their failure to comply with this Court’s May 7, 2008 order (#582). Counsel for eTreppid shall file a statement of attorney’s fees and costs, along with a supporting affidavit, no later than Wednesday, May 28, 2008, the Montgomery parties may respond no later than Wednesday, June 4, 2008, and eTreppid may reply no later than Monday, June 9, 2008.”  Id. at 3.

 

May 23, 2008

Montgomery v. eTreppid.  Montgomery files an Opposition to eTreppid’s May 5 Motion for Protective Order.  ECF 629 (Opposition); ECF 630 (Klar Declaration); ECF 631 (Cervini Declaration).

Montgomery delivers a hard drive to eTreppid, purportedly containing documents created prior to December 31, 2002 and relating to eTreppid's technology.  However, the hard drive was dead/nonreadable.  See Montgomery v. eTreppid ECF 634 at 4.  

Notes:  As eTreppid points out, "it is ironic that Montgomery is obliged now to provide documents that relate to eTreppid's technology on a hard drive, given that Montgomery previously took the position that he did not take "files or hard drives, or anything from eTreppid." Id. (quoting Montgomery's Feb. 7, 2006 testimony under oath.)   See also June 3 (when Montgomery does produce some hard drives, they are riddled with viruses).

 

May 27, 2008

Montgomery v. eTreppid.  Flynn files a Reply in Support of his Apr. 24 Motion for Sanctions.  ECF 633 (Motion); ECF 635 (Flynn Declaration in Support of Reply); ECF 637 (Exhibit 3 (“Cooperation Agreement”) filed in support of Reply); ECF 638 (“Montgomery Hire Letter” filed in support of Reply);  (all sealed per ECF 746).

eTreppid files

  • Motion to Strike Montgomery’s Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 632 (referencing ECF 601, which does not appear on the docket) (sealed per ECF 746).
  • Motion for Discovery Sanctions for Failure to Comply with Magistrate Judge Cooke’s May 21 Order.  ECF 634.  In this motion, eTreppid seeks terminating sanctions for Montgomery's bad faith refusal to comply with the Court's discovery orders.

Montgomery files an Objection to Magistrate Judge Cooke’s May 21 Order Conforming Costs and Fees.  ECF 636 (Objection); ECF 639 (Memorandum of Points and Authorities).

 

May 28, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order that she has confirmed with United States’ counsel that the files from the state court action (eTreppid v. Montgomery) have been redacted and, therefore, are unsealed and attached to order.  ECF 644.

eTreppid files Proposed Discovery Plan/Scheduling Order – Special Scheduling Review Request.  ECF 640.

 

May 29, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an 18-page order requiring Montgomery to produce the source code.  ECF 645.  This order is worth reading for a great summary of the parties’ various claims as well as the discovery disputes in relation to those claims.  In this order, the Court states (in part):

“At this point in the litigation, the court will not order Mr. Montgomery to recreate CD No. 1, but it reserves this issue for future consideration after more thoroughly testing Mr. Montgomery’s allegations that the FBI lost or destroyed property such that it prevents him from being able to re-create CD No. 1. In the interim, the court draws two conclusions. First, these document production requests are broader than simply seeking production of CD No. 1. Second, the court agrees with eTreppid that Mr. Montgomery’s declaration is silent as to whether he has in his possession any documents or information that was contained on CD No. 1, other than to state that CD No. 1 itself did not exist in printed form.”

Id. at 12. Additionally, the Court notes: “The court also noted earlier that the Montgomery parties originally named the United States Department of Defense as a defendant in their amended complaint, and those allegations are quite contrary to the position the Montgomery parties’ new counsel now takes concerning disclosure of Mr. Montgomery’s technology..." Id. at 14.  Further…

“What the source code is, or is not, is a central issue in this action. . . .  Because Mr. Montgomery took or deleted the source code from eTreppid’s computer – a finding Judge Perry made in February 2006 – eTreppid cannot define the source code without its requested discovery, and it is clear that it will be impossible to adequately prosecute or defend the myriad of claims and counterclaims without defining the source code.”

This case also revolves around the technology developed at eTreppid for use in contracts with government entities. It was eTreppid, not Mr. Montgomery, who entered into these contracts. However, Mr. Montgomery claims that the technology used in these contracts is derived from his copyrights, which he never assigned to eTreppid. . . . Mr. Montgomery essentially asks eTreppid and this court to “take his word for it” that all that eTreppid is entitled to is that which was contributed on the now vanished CD No. 1, and that any technology he now possesses is solely derived from his unassigned copyrights. In other words, the valuable trade secret in this case is his because he says so. This is not enough.

. . . . The questions to be answered are what technology eTreppid began with in September 1998 and what technology was developed at eTreppid in the ensuing seven years. Only after sorting through this tangle can the parties reasonably argue ownership and develop their claims and defenses accordingly. Simply put, there is no conceivable way eTreppid can describe its trade secret, because Mr. Montgomery has made that impossible based upon the events that occurred in December 2005 and January 2006.

The court is convinced that neither eTreppid nor the Montgomery parties will be able to conclusively prove ownership of the technology without analysis of the source code; thus, the court concludes that documents related to the source code and other technology Montgomery claims as a trade secret are “reasonably calculated to lead to the discovery of admissible evidence.” The Montgomery parties are ordered to produce all documents, including but not limited to those in electronic form, which are responsive to [eTreppid’s RFPs re: source code] as limited by the court below. . . . . “

Id. at 16-17.

Magistrate Judge Cooke also issues a 6-page Order to Show Cause Why Montgomery Should Not be Held in Contempt of Court for Failure to Abide by the Court’s May 7/May 21 Orders ("Document Production OSC").  She sets an evidentiary hearing for June 10, requiring Montgomery to appear in person and be prepared to testify.  ECF 646.  This order also requires Montgomery to “bring with him all documents and/or tangible things (including hard drives) ordered to be produced pursuant to this court's May 21, 2008 order, its May 7, 2008 order, and its February 21, 2008 order.  ECF 646, as amended by ECF 647 (to correct hearing time to June 10 at 9 am).

Flynn files a Motion to Strike Montgomery’s May 27 Objections to Magistrate Judge Cooke’s May 7 order conforming fees and costs.  ECF 643.

 

May 30, 2008

Montgomery v. eTreppid.  The United States files a Notice Pursuant to the Court’s May 21 Order.  ECF 648.  In this notice, the United States asserts that (1) the meeting between Montgomery and the Government requires attendance of various US security officials in different offices, and that meeting could not be arranged during week of May 26; (2) On May 29, US Counsel notified Montgomery’s Counsel of wish to confirm June 4 meeting in DC; (3) Montgomery’s Counsel has not confirmed the date for the court-ordered meeting.  Id.

Montgomery files a Reply in Support of its May 2 Motion to Seal/Strike Flynn Filings.  ECF 649 (sealed per ECF 746).

 

June 2, 2008

Montgomery v. eTreppid.  eTreppid files Joint Discovery Motion Status Report Following Meet and Confer Pursuant to Order of May 7, 2008.  ECF 650.

Montgomery, Edra Blixseth and Opspring file Certification of Efforts to Meet and Confer re: Status Report.  ECF 651.

 

June 3, 2008

Montgomery v. eTreppid.  Montgomery files Response to the Court’s May 29 Order to Show Cause (re Document Production).  ECF 652.  Among other things, Montgomery asserts that

  • Flynn has all the documents relating to Montgomery's communications with the Wall Street Journal and other media outlets.  Id. at 7.
  • The the only documents "even arguably responsive" to eTreppids' request for documents relating to OpSpring's attempts to market Montgomery's alleged technology is the agreement between the parties, a copy of which is produced.  Id. at 6.
  • The Glogauer pst file is "scheduled to occur on June 5.  Id. at 9.
  • Montgomery has searched for the CD  labeled "Warren's Old Emails" but can't find it and "believes that the CD may in Mr. Flynn's or his son's possession (and may include emails provided to the press by Flynn).  Id. at 8.

About the Hard Drives.  

Regarding the unreadable hard drive delivered to eTreppid, Montgomery states:

"Although the hard drive was timely produced, eTreppid advised the Montgomery Parties' counsel that it was not "readable." The problem may be due to viruses present in the original electronic files at the time they were backed up. It is possible that if eTreppid started up the drive delivered on May 23rd without taking precautions for the possibility that some files contained viruses, many files on the hard drive could have been rendered unreadable.

In any event, to cure the problem, on May 24, 2008, the Montgomery Parties sent another hard drive containing the same electronic files to eTreppid by Greyhound Bus. A label on the outside of the drive indicated that the drive might contain viruses. . . . "

Id. at 4-5 (emphasis added).  

Notes:  Indeed, as As eTreppid later reports, when it examined the hard drives that Montgomery produced, it discovered that: "These hard drives contained dozens of viruses which, if they had been allowed to infect the networks of eTreppid or of eTreppid’s counsel, could have caused significant damage to the network. Given the fact that (1) anti-virus software is ubiquitous on modern computers, and (2) Montgomery is a self-styled computer scientist who presumably would have the ability to screen these viruses, the fact that viruses existed on the hard drives delivered by Montgomery is further evidence of the bad faith and gamesmanship with which Montgomery has approached his discovery obligations."  (ECF 662 at 3 (emphasis added).

About the Post-2002 Files.  

Montgomery explains his failure to produce post-2002 files as follows:

"In addition to the Pre-2003 files, Montgomery has millions of [potentially responsive] files in electronic form that may ...  contain information subject to the U.S. Protective Order and/or non-disclosure or confidentiality agreements... .  These files will be the subject of the meeting between Montgomery and the Government which is set for June 6, 2004. Once Montgomery receives guidance from the Government, all files which are outside the scope of the protective order will be promptly produced."

ECF 652 at 5.  

Notes:  As eTreppid later notes, this assertion "is in marked contrast to the position he took during the Buckthorne Lane proceedings, when he asserted that he did not have any classified information in his possession. . . . For Montgomery to now claim that he has a good faith belief that every file in his possession which was created from 2003 forward may contain classified information is simply not credible."  ECF 662 at 3 (emphasis added).

With respect to FBI-seized materials, as eTreppid later notes, "in the course of the proceedings related to the FBI’s search of his residence at Buckthorne Lane, Montgomery asserted, repeatedly and vigorously, that the information taken by the FBI was not classified. Montgomery’s assertion that he now has developed a good faith belief that the subject information may be classified is simply dishonest." ECF 662 at 8 (emphasis added).

 

June 4, 2008

Montgomery v. eTreppid.  The United States files Notice Pursuant to May 29, 2008 Order to Show Cause.  ECF 653.  In this notice, the US requestes an in camera, ex parte meeting with Court before the June 10 hearing “to discuss matters related to the United States Protective Order (docket no. 253) and the Montgomery parties’ document production.”  Id.

 

June 5, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting the United States’ June 4 request for in camera, ex parte meeting with the Court  - which will take place June 10 at 8 am.  ECF 654.

Magistrate Judge Cooke also issues an order awarding eTreppid $6,706.91 in attorney fees and costs per her May 7 order granting sanctions against Montgomery.  ECF 655.

Montgomery files an Emergency Motion Requesting Delay in Hearing, or in the Alternative, Relief from the Requirement that Montgomery Bring Hard Drives Containing Potentially Privileged Information.  ECF 656 (Motion); ECF 657 (Klar Declaration and Montgomery Declaration filed in support of Motion). In this motion, Montgomery asserts that “the Government has forbidden him from transporting any storage medium, whether an original hard drive or full or partial copies, that potentially contains classified material. Exh. 1, at 1. Accordingly, the Court's current Order leaves Montgomery in a position where he must either (a) violate the provisions of the Court's Order requiring him to bring original hard drives or (b) risk penalties for mishandling classified information. Montgomery should not be placed in this dilemma.” ECF 656 at 2.

 

June 6, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting in part Montgomery’s June 5 Emergency motion; ordering that “Mr. Montgomery be relieved from his obligation to "bring with him all documents and/or tangibles things (including hard drives)" to the extent that they potentially contain classified information; but denying the motion “to the extent that Mr. Montgomery requests that the June 10, 2008 hearing be delayed or requests relief from attending the hearing.”  ECF 659.

The United States files a Report Pursuant to May 29, 2008 Order to Show Cause.  ECF 660.  In this Report, the US notifies the Court that representatives met with Montgomery on June 6 and provided “specific instructions and guidance regarding implementation and application of the U.S. Protective Order. Mr. Montgomery cooperated in the briefings, asked questions, and otherwise discussed issues relating to the parameters of the U.S. Protective Order.” Summaries have been prepared and a security officer “will courier the summaries to the Court for review during the in camera, ex parte conference scheduled for 8:00 a.m. on June 10, 2008.”  Id.

Montgomery files a Motion to Strike Flynn’s May 27 Declaration filed in support of his Reply in Support of Sanctions.  ECF 661 (sealed per ECF 746).

eTreppid files

  • Reply in Support its May 27 Motion for Discovery Sanctions (for failure to comply with May 21 Oder).  ECF 662.
  • Reply in support of its May 5 Motion for Protective Order Staying Montgomery's Discovery of eTreppid parties and Third Parties.  ECF 663.

In its Reply in Support of Motion for Discovery Sanctions, eTreppid states (referencing Montgomery's June 3 Response to the OSC) that "Montgomery’s excuses for failing to comply with this Court’s orders are unavailing and demonstrate a degree of bad faith that is breathtaking," and reiterates its request for terminating sanctions. ECF 662 at 2. 

 

June 9, 2008

Montgomery v. eTreppid.  Flynn files Reply in Support of eTreppid’ds May 27 Motion for Sanctions.  ECF 664 Reply (sealed per ECF 747); ECF 667 (Exhibits, sealed per ECF 747).

Montgomery files Notice of Errata re: its June 3 Response to Court’s Order to Show Cause.  ECF 666.

 

June 10, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over evidentiary hearing Document Production OSC (re: May 29 Order). See Minutes of Proceeding (ECF 670); Transcript of Proceedings (ECF 732).  Montgomery testifies under oath. 

Magistrate Judge Cooke questions Montgomery on multiple matters. ECF 732 at 8-116.  Klar (Montgomery's counsel) then spends several minutes "clarifying" multiple answers provided by Montgomery.  Id. at 116-140.  During this period, Montgomery testifies a bit again and there are several exchanges between counsel and with Rapheal Gomez re: materials potentially subject to the Protective Order.

Testimony re: Possession of eTreppid Property.  

Klar then (very briefly) questions Montgomery on direct.  Id. at 140-42.  During this testimony, Montgomery attempt to explain why - given his prior testimony under oath that he took nothing from eTreppid - he is now producing eTreppid property: 

Q -- you testified earlier today, in response to a question from the Court, that you did not take anything from eTreppid at the time you left in January of 2006. Do you remember that testimony?

A Yes.

Q Can you then explain how you then came into possession of the backup drives that you have been in the process of producing?

A Warren wanted all the backup drives out of the building and gave them to me to take out of the building. He did not want them left in the building.

Montgomery v. eTreppid, ECF 732 at 140. When questioned on cross, after first claiming he doesn’t  remember his February 2006 testimony (just discussed moments ago on direct...), Montgomery testifies as follows:

"Q [Referencing Feb. 7, 2007 Transcript]: Question: Did you destroy or take any files or hard drives or anything from eTreppid Technologies? "Answer: No." And that was your testimony then?

A. Yes.

Q. Your testimony now is that you did take files and hard drives from eTreppid, is that correct?

A. I didn't take them. Warren gave them to me to take out of the building. That's my testimony.

Q. Okay. Well, you didn't tell Judge Perry that you had permission to take certain of the backup, did you?

A. He didn't ask.

Q. You just were asked did you destroy or take any files or hard drives or anything from eTreppid. And your answer was no.

A. I didn't take them. I was told -- they were given to me to take out of the building.

Q. But, you took them?

A. Because they were given to me and told --

Q. Sir, did you take files?

A. Whatever was given to me, yes.

Id. at 143.  (Note:  Montgomery will change his rationale again during the Aug. 18 continuation of this hearing).  

Montgomery also testifies that he has kept some of the eTreppid property that he admittedly took, which consisted of at least 30-40 hard drives, in his "home or the storage facility shortly up to and before the raid on my home.”  Montgomery v. eTreppid ECF 732 at 149 (emphasis added):

Q. Okay. And then where was [hard drive] shortly up to or before the raid on your home?

* * *

THE WITNESS: They were in my car.

Q. And did they remain in your car for the period of – I guess the raid occurred on or about March 1st or 2nd, 2006 --did they remain in your car up until you produced them on May 23rd?

A. No.

Q. Where did it go then?

A. Back into the storage place.

Q. The storage facility here in Reno?

A. Yes.

Q. And for how long did it remain there?

* * *

Q. After the car, where did it go?

A. Um, back in storage.

Q. And where this time?

A. Reno. I mean, I think I said that.

Q. So it went, storage, car, storage?

A. Right.

Q. Give me the time frames.

A. Um, the month of, say, the month of April. I had moved it several times.

Q. Why were you moving it several times?

A. Because I was continuously being followed by the FBI.

Id. at 151-52.

"Q. Okay. Why didn't you -- why were you concerned that the FBI might take this hard drive from you, if it contained eTreppid property?

A. Well, they already tried -- they already tried a pretty rough raid on me once.

Q. Sir, why did you think the FBI might want from you property that belonged to eTreppid?

A. They didn't ask me for property that belonged to eTreppid.

Q. You said you were sort of taking it around because the FBI was following you. Why did you have a concern that the FBI might get access to this hard drive which had eTreppid property on it?

A. I was more concerned that they were after me, not what they were after."

Id. at 153-54. Montgomery then testifies as to the rather incredible lengths taken apparently to ensure these materials were not discovered:  He hen gave the materials to Flynn who kept them for at least seven months (id. at 154-55), before they were turned over to Flynn’s son for six or seven months (id. at 155-56), before they were returned to Montgomery sometime after the FBI-seized materials were returned to him in 2007 (id. at 159).

The hearing is continued. It will resume June 24. 

 

June 12, 2008

Montgomery v. eTreppid.  eTreppid files a Discovery Status Report as of June 12, 2008.  ECF 671.

Montgomery files an Objection to Magistrate Judge Cooke’s May 29 Order re: Source Code Discovery and Request for Stay Pending Appeal.  ECF 672.

 

June 13, 2008

Montgomery v. eTreppid.  Montgomery files a Motion to Strike Flynn’s June 9 Reply in Support of eTreppid’s May 27 Motion for Discovery Sanctions. ECF 674 (sealed per ECF 747).

eTreppid files

  • Response to Montgomery’s May 27 Objections to Magistrate Judge Cooke’s May 7 Order granting sanctions.   ECF 673.
  • Motion to Compel Attendance of Edra Blixseth and motion for shortening time to respond re: same.  ECF 675.

 

June 16, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order granting eTreppid’s June 13 Motion for shortening time on its motion to compel Edra Blixeth’s attendance.  ECF 676.

Montgomery, Blixseth and Opspring file a Discover Status Report as of June 16.  ECF 677 (Report); ECF 679 (Exhibits re: Report).

Montgomery files

  • Opposition to Flynn’s May 29 Motion to Strike Montgomery’s May 27 Memorandum in Support of Objection to May 7 Order Conforming Costs and Fees.   ECF 678.
  • Opposition to Flynn’s May 27 Motion to Strike Montgomery’s May 12 Opposition to Flynn’s Apr. 24 Motion for Sanctions.  ECF 680 (sealed per ECF 746).

 

June 17, 2008

Montgomery v. eTreppid.  Judge Pro issues an order affirming Magistrate Judge Cooke’s May 7 Order sanctioning Montgomery and overruling Montgomery’s May 27 Objections same.  ECF 682.

Montgomery, Blixseth and Opspring file Opposition to eTreppid’s June 13 Motion to Compel Edra Blixseth’s Attendance at Hearing.  ECF 681.

Magistrate Judge Cooke presides over discovery hearing.  Minutes of Proceeding (ECF 700); Transcript (ECF 733).  During this hearing, Judge Cooke

  • advises Montgomery that she "has reviewed his objection and notes that other than the “request for stay pending appeal,” which is found in the title of the objection, the Montgomery parties articulate no basis for a stay. The Montgomery parties are advised that there is no stay of this Court’s order (#672) at this time (ECF 700 at 1);
  • grants, in part, Montgomery’s Apr. 7 Motion for an evidentiary hearing re: FBI return of seized material but requires counsel to coordinate with FBI re review of video tape of return process first, then inform the court whether evidentiary hearing remains necessary (id. at 4);
  • denies Montgomery’s Apr. 16 Motion to Compel as to First Interrogatories #3 without prejudice, pending District Court’s order regarding Cooke’s May 7 Source Code Production Order (id. at 5);
  • grants in part Montgomery’s Apr. 16 Motion to Compel with respect to documents evidencing eTreppid’s commercial contracts with third parties and to require eTreppid to supplement its answer to explain why it cannot more fully respond to the interrogatory seeking factual basis for its putative ownership of copyrights in the alleged trade secret source code. (id. at 5-6);
  • grants in part Montgomery’s Apr. 16 Motion to Compel Production of Privileged Documents by (a) confirming that the Apr 28 order re: attorney-client privilege made determination that there was no waiver of the attorney client privilege (as Montgomery continued to dispute that issue); (b) requiring eTreppid to produce privilege log re: Doug Frye documents by June 23, and (c) requiring the parties to meet and confer re: production of Frye hard copy document privilege log then report back to court (id. at 6-7);
  • denies eTreppid’s May 7 Motion for Protective Order Staying Montgomery Discovery (id. at 7);
  • schedules a Case Management Hearing for Monday, Aug. 18 (id. at 7);
  • suspends the July 11, 2008 discovery cut-off and all subsequent deadlines pending the Aug. 18 hearing, while cautioning parties that their obligation to continue to produce discovery is not suspended (id. at 8);
  • orders the parties to meet and confer on several outstanding issues (id.); and
  • orders that any evidentiary hearing regarding FBI return of Montgomery’s property will be heard in the Search Case proceedings (id. at 9).

 

June 18, 2008

Montgomery v. eTreppid.  Flynn files an Opposition to Montgomery’s June 6 and June 13 Motions to Strike his Reply in Support of his Motion for Sanctions.  ECF 683 (sealed per ECF 747).

 

June 19, 2008

Montgomery v. eTreppid. Montgomery et al file Motion to Compel Compliance with the January 22, 2008 Order and for an Order to Show Cause Why eTreppid et al Should Not Be Held in Civil Contempt.  ECF 684 (Motion); ECF 685 (Poehler Declaration); 686 (Dahl Declaration); ECF 687 (Chisolm Declaration).

 

June 20, 2008

Montgomery v. eTreppid.  eTreppid files Reply in Support of its June 13 Motion to Compel Attendance of Edra Blixseth at OSC Hearing.  ECF 688.

Magistrate Judge Cooke issues order denying eTreppid’s June 13 Motion to Compel Attendance.  ECF 689.

Montgomery files

  • Motion to Stay the Court’s May 29 Order requiring production of Source Code.  ECF 693 (Motion); ECF 692 (Motion for Order Shortening Time for Hearing on Motion)
  • Declaration of Dennis Montgomery Regarding Efforts to Search for CDs Depicted in FBI Photos.   ECF 690.
  • Reply in support of its June 13 Motion to Strike Flynn’s June 9 Declaration.  ECF 691 (sealed per ECF 747).

 

June 23, 2008

Montgomery v. eTreppid.  Montgomery et al file Brief re: Limitation on Subject Matter of Correspondence Required to be Produced Pursuant to eTreppid’s RFP2, No. 26. ECF 696.   

 

June 24, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order granting Montgomery’s Motion for order shortening time on his Motion to Stay May 29 order.  ECF 697.

Flynn files Opposition to Montgomery’s June 6 Motion to Strike his May 27 Declaration filed in support of his Reply.  ECF 698.

Magistrate Judge Cooke presides over continued evidentiary Document Production OSC Hearing (per May 29 order).  See Minutes of Proceeding (ECF 702); Transcript (ECF 731). 

At the beginning of the hearing, Montgomery counsel makes on oral motion to stay the hearing, on the grounds that an "inflammatory" article was published in the local paper the day before.  ECF 731 at 5-8.  The article is likely Martha Bellisle, "eTreppid could face testimony from billioniare," Reno Gazette, June 23, 2008, in which Flynn is extensively quoted and at least some of the allegations contained in his motion(s) for sanctions filed in this case) are summarized.  The motion is denied.  ECF 731 at 8.

Montgomery resumes the stand for continued cross-examination.  Matters addressed include:

  • Montgomery testifies that he can’t recall information related to his Declaration (filed four days ago), and confirms that he did not product the CD labeled “Warren’s old emails” – because, he alleges, he can’t find it.  Id. at 14-17.
  • Montgomery “clarifies” his June 10 testimony about the chain of custody of the eTreppid property he took (or was given, according to him) and, under extensive questioning, testifies regarding how he comingled FBI-seized/returned materials, allegedly classified materials, and other materials, over the course of multiple months .  Id. at 17-73. 
  • Montgomery also acknowledges that he has recently alleged that at least some of the FBI-seized materials contained classified information – which is directly contrary to his repeated assertions in the Search Case  that the materials seized by the FBI contained no classified materials.  Compare id. at 63 (June 24, 2008 testimony) with xx.
  • Montgomery testifies about the alleged process he went through to back up eTreppid employee computers (and whose computers he allegedly backed up).  In essence, he testifies that he repeatedly backed up employee computers from before 2002 through November 2005.  Id. at 78-112. Remarkably, despite this (according to eTreppid counsel):
    • The drives containing these reported employee computer back-ups that have been produced to date contain not a single PST file (i.e., email back up).  Id. at 111, 112-15. 
    • The terabyte drive was formatted on a date when terabyte drives didn’t exist (indicating that Montgomery manually changed the date of the drive).  Id. at 125.
    • Of the 1.4 million files contained on two hard drives produced, less than 2% are searchable; “the rest are just noise, garbage, photos unrelated to this matter.”  Id. at 135.

Montgomery also testifies regarding:

  • His alleged process of backing up and copying file names.  Id. at 116-20.
  • His alleged process for naming directories.  Id. at 120-24.
  • His alleged process of formatting drives for copying.  Id. at 124-35.
  • The source (and production – or lack thereof) of the (allegedly fabricated) “Glogauer e-mail” which Montgomery previously produced in PST format – although questioning is limited due to assertions of attorney-client privilege, grand jury confidentiality matters, etc..  Id. at 135-70.
  • Additional hard drives to be produced.  Id. at 165-70.
  • Materials previously provided to the Wall Street Journal (in connection with Montgomery’s claims re: Gibbons bribery, etc).  Id. at 170-214.  

With respect to one 20-page document that a appears to be an email chain containing "incriminating" evidence,  Montgomery acknowledges whoever created it “could have” done so in a manner “where the e-mails are cut and pasted from different PSTs,” and that the so-called string does in fact consist of emails of varying dates and subject matters (rather than a single, connected email string as the document seems to indicate).  Id. at 208-214.

The hearing is continued.  (It will resume Aug. 18.)

 

June 26, 2008

Montgomery v. eTreppid.  District Judge Pro issues an order finding that “eTreppid sufficiently has alleged facts demonstrating a plausible entitlement to relief on its misappropriation of trade secrets claim,” and, thus, denying  Atigeo’s Mar. 3 Motion to Dismiss;  and Sandoval’s Mar. 26 Motion to Dismiss.  ECF 701.

Montgomery files a Motion for Continuance of June 30 Deadline in the May 29 Source Code Production Order Pending Resolution of Motion to Stay.  ECF 703.

 

June 27, 2008

Montgomery v. eTreppid.  eTreppid files

  • Opposition to Montgomery’s June 26 Motion for Continuance of June 30 Deadline.  ECF 704.
  • Motion for Protective Order and Order Shortening Time.  ECF 712 (as corrected; ECF 708 as originally filed).

Flynn files Reply in Support of his May 29 Motion to Strike Montgomery’s May 27 Objection to the May 7 Order Motion to Conform Amount of Fees and Costs (awarded to Flynn).   ECF 706.

Magistrate Judge Cooke issues order granting Montgomery’s June 26 Motion for Continuance and staying the Jund 30 deadline for source code production pending further order from Court.  ECF 707.

 

June 30, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order scheduling continuation of the OSC re: Document Production Orders hearing for Aug. 18 (same day as Case Management Conference).  ECF 711.

Montgomery files

  • Status Report re: Parties’ June 27, 2008 Meet and Confer.  ECF 713.
  • Response to Court’s June 17 Order – to request an evidentiary hearing re: FBI return of seized materials.  ECF 716.
  • Motion for Protective Order and Determination re: Common Interest Agreement.  ECF 717 (Motion); ECF 718 (Declaration of Dennis Montgomery in Support of Motion).

eTreppid files

  • Reply in Support of Flynn’s May 27 Motion to Strike Montgomery’s May 12 Opposition to Flynn’s Apr. 14 Motion for Sanctions.  ECF 714 (sealed per ECF 746).
  • Opposition to Montgomery’s June 12 Objections to the May 7 Order requiring Montgomery to produce the source code.  ECF 715.

 

July 1, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues granting eTreppid’s June 27 Motion to Shorten Time re: its Motion for Protective Order. ECF 708.

Atigeo files Motion for Order Preserving Rights and Motion for Order Shortening Time.  ECF 719 (Motion); ECF 720 (Schwartz Declaration).

Montgomery files Reply in support of its June 20 Motion to Stay the May 29 Order requiring source code production.  ECF 721.

 

July 2, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order granting Atigeo’s July 1 Motion to Shorten Time on Motion for Order Preserving Rights.  ECF 724.

District Judge Pro issues a 16-page order granting in part and denying in part Blixseth and Opspring’s Mar. 24 Motion to Dismiss.  The Motion is granted “in that eTreppid's claim for intentional interference with the contractual relations between eTreppid and Montgomery is hereby dismissed against [Blisxeth and Opspring].  The motion is denied in all other respsects.”  ECF 727.

 

July 3, 2008

Montgomery v eTreppid.  Judge Pro affirms Magistrate Judge Cook’s May 29 Order requiring Montgomery to produce his alleged source code and overruling his objections to the May 29 order.  ECF 728.

Montgomery/Opspring file Motion to Compel Production of Tax Returns of Warren Trepp.  ECF 726.

 

July 7, 2008

Montgomery v. eTreppid.  eTreppid files Opposition to Montgomery’s June 19 Motion to Compel Compliance with the January 22, 2008 Order and for an Order to Show Cause.  ECF 729.

 

July 8, 2008

Montgomery v. eTreppid.  eTreppid files Opposition to Atigeo’s July 1 Motion for Order Preserving Rights.  ECF 730.

Montgomery files:

  • Opposition to Atigeo’s July 1 Motion for Order Preserving Rights.  ECF 734.
  • Reply in Support of its June 6 Motion to Strike Flynn’s May 27 Declaration.  ECF 735.
  • Opposition to eTreppid’s June 27 Motion for Protective Order.  ECF 737.

eTreppid files Opposition to Montgomery’s June 30 Motion for Protective Order and Determination Regarding Common Interest Agreement. ECF 736

 

July 9, 2008

Montgomery v. eTreppid.  The United States files a Status Report Regarding Evidentiary Hearing Requested by Montgomery Parties. ECF 738.  In this report, the United States

  • Proposes that, “in order for all parties' interests to be adequately represented and preserved,” the evidentiary hearing requested by Montgomery should “be conducted simultaneously in this civil action as well as in the search warrant proceeding, with appropriate findings and orders entered in each action. Based on discussion with Montgomery counsel and eTreppid counsel, the undersigned United States' counsel believes there is no objection to this proposal.”  Id.at 2.
  • Asserts that since Montgomery “prepared a video record at the FBI facility at the time property was returned to Montgomery” that “video record should be produced by the Montgomery parties prior to the evidentiary hearing which Montgomery parties have requested. Id. at 3
  • Asserts that Montgomery counsel’s (Klar) claim that it was media, not Montgomery, recording the return and that no such video exists “is, at best, intentionally misleading and is properly characterized as demonstrably false.”  Id.

eTreppid Files Status Report Regarding Electronically Stored Information.  ECF 739.

Atigeo files Status Report Regarding Electronic Discovery Procedures. ECF 740.

 

July 10, 2008

Montgomery v. eTreppid.  Judge Pro issues an order denying as moot Montgomery’s June 20 Motion to stay, in light of his July 3 Order lifting the existing stay (and affirming Magistrate Judge Cooke’s May 29 Source Code Production Order).  ECF 742.

Atigeo and Sandoval file Status Report.  ECF 741.

eTreppid files Status Report as of July 10, 2008.  ECF 743.

Montgomery files

  • Status Report re: FBI Evidentiary Hearing.  ECF 744.
  • Status Report as of July 10, 2008.  ECF 745.

 

July 11, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting in part Montgomery’s May 2 Motion to Seal/Strike the Flynn Filings and June 13 Motion to Seal/Strike Flynn’s Reply Declaration – i.e., she orders that the documents be sealed, but denies Montgomery’s request to have them stricken.  ECF 746 (Order re: May 2 Motion); ECF 747 (Order re: June 13 Motion)

Magistrate Judge Cooke issues order directing Assistant U.S. Attorney Greg Addington to be present at the discovery status conference scheduled for July 15, 2008 “purpose of considering how the court will proceed with the scheduling of an evidentiary hearing.”  ECF 748.

Atigeo/Sandoval file Reply in Support of their July 1 Motion for Order Preserving Rights.  ECF 749.

eTreppid files:

  • Notice of List of Witnesses to Testify at Continued Order to Show Cause Hearing.  ECF 750.
  • Reply in Support of its June 27 Motion for Protective Order.  ECF 751.

Montgomery files:

  • Reply in Support of its June 30 Motion for Protective Order and Determination Regarding Common Interest Agreement. ECF 752.
  • Notice of List of Witnesses to Testify at Continued Order to Show Cause Hearing.  ECF 753.

 

July 15, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over discovery status conference. Minutes of Proceedings (ECF 760); Transcript (ECF 810).  A laundry list  of discovery matters is addressed. Among other things, Judge Cooke:

  • Orders that evidentiary hearing re: FBI return of property is scheduled for Sep. 5, “specifically concerning the following three areas of inquiry: [a] Inventory of the items seized by the FBI; [b] Inventory of the items returned to Dennis Montgomery by the FBI; and [c] The chain of custody concerning the items seized and returned by the FBI. ECF 760 at 2.  The hearing will be conducted simultaneously in the Search Case and this action.  Id.
  • Orders that, if Montgomery seeks to file motion to modify protective order, they must do so within the next week and, in the meantime, “[t]he Court advises that the current protective order (#264) remains in place..”  Id. at 5.
  • Grants eTreppid’s June 27 and Atigeo’s July 1 Motions for Protective Orders (delaying depositions), pending further document production.  Id. at 6.
  • Denies, without prejudice, Montgomery’s June 30 Motion for Protective Order and Determination re: Common Interest, noting that Montgomery et al “have not met their initial burden to establish that the attorney-client privilege applies to documents which may be the subject of this agreement. Moreover, the Montgomery parties have not provided a privilege log, making it impossible for the Court of the other parties to evaluate whether this doctrine applies.”  Id. at 7-8.  The Court orders production of a privilege log.  Id.

 

July 16, 2008

Montgomery v. eTreppid.  Atigeo files ANSWER to eTreppid’s Jan. 11 Counterclaim.  ECF 756.

Sandoval files ANSWER to eTreppid’s Jan. 11 Counterclaim.  ECF 757.

 

July 17, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order setting continued show cause hearing for Aug. 18 and 19.  ECF 759.

 

July 18, 2008

Montgomery v. eTreppid.  eTreppid files an Opposition to Montgomery/Opspring’s July 3 Motion to Compel Production of Trepp Tax Returns.  ECF 761.

Montgomery files (yet another) Emergency Motion to Stay the May 29 Source Code Production Order.  ECF 762.

 

July 19, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting Montgomery’s Motion to Seal Klar Declaration (apparently filed under seal on June 23).  ECF 764.

 

July 21, 2008

Montgomery v. eTreppid.  Judge Proissues order denying Montgomery’s July 18 Emergency Motion to Stay the May 29 Source Code Production Order – and ordering Montgomery to comply with the order (i.e., produce the source code) by July 23.  ECF 765.

Edra Blixseth and Opspring file ANSWER to eTreppid’s Dec. 17 Third Amended Complaint.  ECF 766.  (May have meant to be Answer to eTreppid’s Jan. 11 Counterclaim.)

Montgomery files Reply in Support of his June 19 Motion to Compel eTreppid Compliance with Jan 22 Order/Order to Show Cause.  ECF 767.

 

July 23, 2008

Montgomery v. eTreppid.  Montgomery files a “Notice” – “Report Re Compliance with Court's May 29, 2008 Order Regarding Source Code Discovery.”  ECF 768.  In this rather remarkable document, Montgomery contends (among other remarkable things), as follows:

“With respect to source code developed by Montgomery in the fields of object tracking, pattern recognition and anomaly detection created in or after 1998-i.e., source code that was not transferred to eTreppid under the Contribution Agreement-the Montgomery Parties respectfully submit that the Court's Source Code Order requiring the production of these documents is in error. The Montgomery Parties intend to file a Petition for a Writ of Mandamus with the Ninth Circuit to vacate the Source Code Order to the extent it requires production of any source code and related information other than the data compression technology that the Montgomery Parties transferred to eTreppid under the Contribution Agreement. The Montgomery Parties will seek an order staying the enforcement of the Source Code Order pending a determination of the Writ Petition.”

* * *

. . . . If the Writ of Mandamus is denied, the Montgomery Parties will produce source in their possession, custody or control, code within 30 days after there has been a final determination on the Montgomery Parties' motion to modify the protective order."

Id. at 2-3.

 

July 24, 2008

Montgomery v eTreppid.  Magistrate Judge Cooke issues an Order to Show Cause as to why Montgomery and Klar (his counsel) should not be held in contempt for failure to comply with the May 29 Source Code Production Order ("Source Code Production OSC"), setting a hearing on the matter for Aug. 18. ECF 769.  In this order, the Court notes (among other things) as follows:

“The pattern and practice of the Montgomery parties in this case – to take whatever position suits their needs at that immediate moment – makes their current sentiments appear extremely disingenuous. As the participants in this case are all aware, this type of flip-flopping has occurred over and over with respect to the Montgomery parties’ compliance with this court’s discovery orders.

Moreover, in complete defiance of three court orders requiring the production of source code related to object tracking, pattern recognition, and anomaly detection, the Montgomery parties state that they “respectfully” disagree. Notably, the Montgomery parties have continually informed this court that they “intend” to file a Writ with the Ninth Circuit to vacate the Source Code Order. To this court’s knowledge, this has not been done. Further, although they have already sought and been denied a stay from the District Court pending appeal to the Ninth Circuit, the Montgomery parties purport to grant themselves a stay in their notice by stating that they will not produce any documents related to object tracking, pattern recognition, and anomaly detection until after the Ninth Circuit has made a determination on their unfiled Writ. Finally, the court notes that despite their assertions, the Montgomery parties have yet to request a modification of the protective order.

It is quite clear to both this court and the District Court that the Montgomery parties’ “notice of compliance” represents their intent to defy the court’s orders by any means necessary.”

Id. at 6-7.

 

July 25, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order setting an evidentiary hearing to consider Flynn’s Apr. 24 Motion for Sanctions.  ECF 770. This order requires Flynn, Montgomery, Klar and Pham (both Montgomery counsel) to be present and prepared to testify.  ECF 770.

eTreppid files Opposition to Montgomery’s June 23 Motion to Limit Subject Matter of Correspondence Required to be Produced.  ECF 771 (Opposition); ECF 772 (Powers Declaration); ECF 773 (Perez Declaration).

Montgomery files a Motion for Appointment of Special Master and/or Modification of the Protective Order.  ECF 774.

 

July 31, 2008

Montgomery v. eTreppid.  Montgomery files a Reply in Support of its June 23 Motion to Limit Subject Matter of Correspondence Required to be Produced.  ECF 779.

 

Aug. 1, 2008

Montgomery v. eTreppid.  Montgomery/Opspring file Reply in Support of July 3 Motion to Compel Production of Warren Trepp Tax Returns.  ECF 783.

 

Aug. 4, 2008

Montgomery v. eTreppid.  Montgomery files Objection to Magistrate Judge Cooke’s July 17 Order (Minutes of July 15 Hearing) re: 30(b)(6) Depositions.  ECF 784.

 

Aug. 7, 2008

Montgomery v. eTreppid.  The United States files a Notice Pursuant to [Order issued in June 17 Hearing], requesting “an in camera, ex parte meeting with the Court prior to the August 18, 2008 hearing to discuss matters related to the United States Protective Order.”  ECF 788.

Montgomery files still yet another Emergency Motion – this time an Emergency Objection and Motion to Vacate Magistrate Judge Cooke’s July 25 Order setting evidentiary hearing on the Flynn Sanction Motion.   ECF 789.  In this motion, Montgomery “respectfully object[s] to the Magistrate Judge's July 25, 2008 Order setting an evidentiary hearing on August 21 to take testimony regarding the Motion for Sanctions filed by the Montgomery Parties’ former attorney Michael Flynn in the presence of opposing counsel and others” because

“(1) holding such a hearing at the present time is unnecessary, unwarranted, and extremely prejudicial in that it may require the disclosure of attorney-client communications and work product while the underlying litigation is ongoing and has the potential to create a conflict of interest between the Montgomery Parties and their counsel, and (2) even if a hearing were properly held at this time, counsel for all other parties and the Government should be excluded from the hearing.”

Id. at 2.

 

Aug. 8, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order granting the United States’ Aug. 7 request for in camera ex parte meeting to discuss matters related to the United States Protective Order.  ECF 790.

Judge Pro issues an order denying Montgomery’s Aug. 7 Emergency Objection and Motion to Vacate Magistrate Judge Cooke’s July 25 Order setting evidentiary hearing on the Flynn Sanction Motion, “without prejudice to raise these issues before Magistrate Judge Cooke at the August 21, 2008 hearing.”   ECF 791.

 

Aug. 11, 2008

Montgomery v. eTreppid.  Montgomery files a Supplemental Report Regarding Source Code Production.  ECF 793. In this supplement, Montgomery notifies the court that:

“The Montgomery parties have recently determined not to file a petition for a writ of mandamus with the Ninth Circuit Court of Appeals to vacate the Order Regarding Source Code Discovery as stated in the Montgomery Parties' previous report. The Montgomery Parties have, however, filed on July 25, 2008 a Motion for Appointment of Special Master and Modification of the Protective Order (Docket# 774) (the "Motion for Appointment of Special Master"). Accordingly, the Montgomery Parties file this Supplemental Report Regarding Source Code Discovery to set forth a revised timeline for production by the Montgomery Parties of the source code that is the subject of the Court's May 29, 2008 Order including the source code that the Montgomery Parties claim as their trade secret.

Id. at 1-2.  The report thereafter sets forth various commitments to begin producing source code.  This report is not signed by Klar but, rather, by another Liner attorney (Richard Mooney).

 

Aug. 12, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues a 14-page order granting in part and deferring ruling in part on Flynn’s Apr. 18 Motion to establish procedures to comply with Nevada Rules of Professional Conduct 3.3(a)(3) and (b).  ECF 795 (PDF). After a detailed analysis, Judge Cooke orders as follows:

“IT IS HEREBY ORDERED that Mr. Flynn submit his declaration to the court, in camera, by Wednesday, August 27, 2008. Mr. Flynn shall include all allegedly privileged communications that relate to any alleged fraud upon the court that were generated during the course of his representation of the Montgomery parties, and which Mr. Flynn reasonably believes require disclosure to the court pursuant to the NRPC or fall under an exception to the attorney-client privilege.

IT IS FURTHER ORDERED that in his declaration, Mr. Flynn will inform the court as to each disclosure:

(1) whether he reasonably believes the communication is protected by the attorney-client privilege in the first instance;

(2) if it is privileged, whether he reasonably believes the communication is subject to an exception to the attorney-client privilege, which exception, and why and/or pursuant to which rule of professional conduct Mr. Flynn makes the disclosure; and

(3) how the communication relates to allegedly false evidence submitted to this court.

IT IS FURTHER ORDERED that Mr. Flynn shall be particularly careful to exclude any and all attorney-client privileged communications that are clearly not subject to an exception, which concern alleged past or completed crimes or frauds for which the Montgomery parties consulted Mr. Flynn in the first place, i.e., those that would not come within the crime-fraud exception. In re Grand Jury Subpoena 92-1(SJ), 31 F.3d 826, 831 (9th Cir. 1994).

IT IS FURTHER ORDERED that after the court has an opportunity to review Mr. Flynn’s declaration in camera, the court will make a determination as to whether it believes that Mr. Flynn may have a Rule 3.3 duty and/or whether the crime-fraud exception may apply to some or all of the communications. If the court so concludes, any party seeking outright disclosure of the privileged materials must demonstrate by a preponderance of the evidence, the existence of a crime-fraud. . . . At such time and if the court makes such a determination, the court will provide the Montgomery parties with ample notice and an opportunity to be heard, including the opportunity to present “countervailing evidence.” . . .  Depending on the content of the communications, when they were made, and what they pertain to, the court may order additional briefing on certain issues, including whether the communications are privileged in the first instance, waiver of the attorney-client privilege, the crime-fraud exception, and Mr. Flynn’s Rule 3.3 duties.

IT IS FURTHER ORDERED that the outstanding issues contained in Mr. Flynn’s motion to establish procedures (#540) are stayed for further decision until this court has an opportunity to review Mr. Flynn’s forthcoming declaration.”

Id. at 14.

The parties file status reports in preparation for the Aug. 18 Case Management Conference:

  • Atigeo Report – ECF 796.
  • eTreppid Report – ECF 797.
  • Montgomery Report – ECF 799.

Montgomery files

  • Notice of Lodging of Sept. 14, 2007 Hearing Transcript (re: Aug 21 Sanctions Hearing).  ECF 798.
  • Emergency Motion to Preclude the Testimony of Jonathan Karchmer, or in the Alternative, Continue the [Source Code Sanctions] OSC Hearing.  ECF 803.

eTreppid files Opposition to Montgomery’s July 25 Motion for Appointment of Special Master and/or Modification of the Protective Order.  ECF 800.

Atigeo files Opposition to Montgomery’s July 25 Motion for Appointment of Special Master and/or Modification of the Protective Order.  ECF 801 (Opposition); ECF 802 (Schwartz Declaration).

 

Aug. 13, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order setting briefing schedule on Montgomery’s Aug. 12 Emergency Motion.  ECF 804.

 

Aug. 14, 2008

Montgomery v. eTreppid.  eTreppid files Opposition to Montgomery’s Aug. 12 Emergency Motion.  ECF 805.

Montgomery files Reply in Support of its Aug. 12 Emergency Motion.  ECF 806.

Magistrate Judge Cooke issues order denying Montgomery’s Aug. 12 Emergency Motion.  ECF 808.  In the order, Judge Cooke notes:

“On July 11, 2008, the Montgomery parties and eTreppid filed their respective notices of witnesses to be called for the continued order to show cause hearing, and the Montgomery parties identified a Fulcrum Inquiry representative and an FTC Consulting representative (#753). Since early June, all parties have been on notice that expert witnesses may be called to testify in this matter. The Montgomery parties have not advised the Court that they have produced an expert analysis to eTreppid, but they now have the benefit of such an analysis from eTreppid. Finally, the court does not find the production from eTreppid/LECG to be an inordinate or unmanageable amount of documents for the Montgomery parties’ expert to review over the course of six days.”

Id.

eTreppid files Opposition to Montgomery’s Aug. 11 “Supplement” to Report re: Source Code Production.  ECF 807.   

 

Aug. 15, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order re: Montgomery’s June 23 Brief re: Limitation on Subject Matter of Correspondence Required to be Produced: “The Court, having reviewed the transcript of the February 21, 2008 hearing, as well as its minute order (#448), having considered the papers filed, and good cause appearing, finds that the Court did not intend to limit the scope of documents responsive to request no. 26, set two, to correspondence concerning technology only. The correspondence required to be produced in response to request no. 26, set two, shall be produced without any limitation.” ECF 809.

 

Aug. 18, 2008

Montgomery v eTreppid.  Judge Pro and Magistrate Judge Cooke together hold a Case Management Conference and Source Code Production OSC Hearing.  See Minutes of Proceedings (ECF 815); Transcript (ECF 832). 

Aug. 18 Case Management Conference.  

Multiple discovery issues are addressed.  (Transcript at 1-50.)  Among other things, eTreppid counsel provides a status of Montgomery’s production, during which he states “I certainly do have numerous hard drives from Mr. Montgomery. Most of which, Your Honor, contain what I would refer to as garbage in; garbage out. And that will be the subject matter of the follow-up hearing today."  Id. at 13. He further reports that while Montgomery has produced 21 hard drives, of which 13 are unreadable. Id. at 28.  

Magistrate Judge Cooke issues several orders, including as follows:

  • First phase of deposition discovery will include “depositions of Dennis Montgomery, Warren Trepp, Edra Blixseth, and Michael Sandoval, in that order, and shall be taken and completed no later than Friday, October 31, 2008.” ECF 815 at 1.
  • “Counsel shall meet and confer and file a joint proposal concerning potential Alternative Resolution Dispute options by no later than Friday, August 29, 2008”  Id. at 2.
  • Mr. Sunshine (Montgomery’s “new” Liner counsel) “shall resolve the problem concerning the thirteen unreadable hard drives and produce these hard drives by no later than Wednesday, August 27, 2008.”  (Per eTreppid counsel, 13 of the 21 hard drives produced by Montgomery are unreadable.)  

Aug. 18 Source Code Production OSC Hearing.

During the Source Code Production OSC portion of the hearing (Transcript at 52-68), Montgomery's (new Liner) counsel represents to the Court “that the Montgomery parties will produce all Source Code in their possession within three weeks of today's date. In fact, we have the first wave of that Source Code. We just received it today. I am told that it is a significant amount of the Source Code, and we plan on producing it within the next day or so.”  Transcript at 55.  Montgomery is not called to testify.  

Despite counsel's new promises that Montgomery will comply with Court orders, Magistrate Judge Cooke strongly admonishes Montgomery (and his counsel):

And this is what really disturbs me -- apart from, I'll tell you, any judge reading this order would have the same, I suspect, reaction that Judge Pro and I did the morning that we conferred about what was filed by the Montgomery parties -- but what really troubles me is that since the inception of this litigation, first, Mr. Montgomery had Mr. Flynn. Then he and Mr. Flynn had a problem, so the Liner firm comes in. Then Ms. Klar and Ms. Pham are on board. And then what -- what we're getting, as time passes, and trouble comes, is different lawyers stepping in and coming in to say, well, you know, we can't -- we're sorry. We want to turn the page and so forth. But the fact is, that this is where we are today.

We have an order that was issued by this Court. And I have, utterly, no problem with any party objecting, filing an objection and taking it up to Judge Pro. That's everybody's right. If you wish to do that, that's perfectly fine with me. And if you want to go to the Ninth Circuit -- I said in July, when Ms. Klar announced the intention to take this matter up to the Circuit, that was fine. Go ahead. But, do it. Don't come into this court and, well, this is what we're going to do. And, by the way, you are in error. And we simply are not -- are going to just completely disregard this Court's order.

That is inexcusable. That is inexcusable. And because this pattern that I'm seeing has recurred time and again -- you know, I appreciate very much, Mr. Sunshine, your statement here today about how the Montgomery parties and your law firm intends to proceed. But, the fact is -- and then, you know, you file this supplement. And I've got problems with the supplement.

Again, I find it sort of breathtaking that -- let's see, the supplemental order appears to me, appears to me, to try to rewrite the request for production of documents that were the source of this whole piece of discovery litigation, number one. And then we're told, well, this -- it's going to really take too much time. And a lot of the computer software and so forth that would be necessary, or the hardware, I don't know, to respond to some of these. Well, it's just too expensive. It's outmoded. So, we certainly aren't going to do it. And if eTreppid wants to incur the expense, why they can go ahead -- in other words, again, what you're telling me, unless I'm missing something, is you aren't going to do it. Mr. Montgomery is not going to do it.

And then, then there's a statement that, in addition to that, well, we're going to wait until, until 30 days after the Court makes its determination on the motion for appointment of a special master.

I am here to tell you that nobody is waiting anymore. This court has really reached the limits of its patience in terms of the Montgomery parties and counsel dictating to this Court when its orders will be complied with, and when it -- and, and continually -- this is another issue, sir -- continually, well, no, we're now going to call the -- let's see, the requests for production, set one, numbers 3, 4, 6, 8, and, we're now calling that a new thing. And we're just kind of recasting that.
* * *  
And, again, it just appears to the Court that there's this pattern of we didn't get what we want. The Court's -- the Court was in error. We're not happy. We try this tactic. We threaten appealing to the Ninth Circuit -- which, again, is fine -- decided to forgo that. Then we filed this report that said, you know, we're just not going to do what you ordered. And then we've gotten this supplement that says, well, you know, we're not doing this until this. And we're never going to produce this outmoded stuff -I mean, the eTreppid -- I mean, this is unacceptable.

Id. at 57-60.  Judge Pro agrees:

I don't think, again, I -- as Judge Cooke said, when we read this notice or this report concerning production that was filed on the 23rd of July, while we couldn't see each other on the phone, I know we were both shaking our heads because we simply didn't know what to make of this, other than it was telling the Court to take a long walk off a short pier. We're not complying.

I do appreciate, Mr. Sunshine, your representation that the Montgomery parties are now ready to comply. I think it behooves your client, as well as those representing Mr. Montgomery to do so. But I don't think it excuses, for a minute, the failure to comply with the orders of the Court that have previously been entered.  
* * *  
And I have concluded that it is appropriate to impose sanctions on the party, Mr. Montgomery, for the failure to comply with the clear orders of the Court; the repeatedly clear orders of this Court, from the date of the failure to produce, starting on the 23rd, which was the deadline which was required, until the production actually occurs.

I'm going to impose a monetary penalty. I had considered, quite frankly -- and I suppose that's something that would always be in the back of my mind if there were future failures to comply with something so obviously clear from the Court's orders, of case dispositive type sanctions. But, I don't want to start with anything like that.. . . 

Id. at 61-62.  As such, Judge Pro sanctions Montgomery for his failure to produce the source code. Transcript at 63-64. As more fully set forth in the Minute of  Proceedings, the Judge orders issues sanctions against Montgomery as follows:

“Having heard from counsel for the Montgomery parties, the District Court finds that it is appropriate to impose a monetary penalty against Dennis Montgomery for his failure to comply with the repeatedly clear orders of the District Court and Magistrate Court.

THEREFORE, IT IS ORDERED that a monetary contempt sanction is imposed against Dennis Montgomery in the amount of two thousand five hundred dollars ($2,500.00) per day from the date of the failure to comply, July 23, 2008, through the date the production actually occurs.

IT IS FURTHER ORDERED that this sanction shall remain in place until a declaration by Dennis Montgomery and his counsel file a declaration with the Clerk of the Court certifying that the source code production is complete.” 

Minutes  at 4.  

Aug. 18 Continuation of Case Management Conference (with Magistrate Judge Cooke).  

After a lunch break, the court reconvenes to discuss additional discovery matters and to continue the Document Production OSC Hearing.  See Minutes of Proceeding (ECF 816); Transcript (ECF 833).

Discovery Matters.  During the case management conference portion of this hearing, the following matters are addressed:

  • Montgomery's June 19 Motion to Compel:  Montgomery counsel requests - and obtains - deferral of that motion pending full review of the materials eTreppid already produced.  ECF 816 at 1-2.
  • Opspring's July 3 Motion to Compel Tax Returns:  The Court grants the motion in part and denies it in part, requiring Trepp to "produce those portions of his tax returns concerning compensation he has received from eTreppid for the time period of 1998 through 2006 by no later than Monday, September 8, 2008."  Id. at 2.
  • Montgomery's Production of Privilege Logs:  The court finds that  

"not all counsel were provided with the privilege log as ordered by the Court at the July 15, 2008 discovery status conference (#760). Therefore, counsel are admonished that when providing papers among counsel, all attorneys shall be provided papers in this matter. The Court further admonishes counsel that this has happened before and if it continues to occur sanctions will be ordered.

IT IS ORDERED that the Montgomery parties shall have one last opportunity to review the documents identified in the privilege log and provide to the Court and all counsel a revised supplemental privilege log correcting the deficiencies as outlined here in court. The supplement privilege logs are due" by Sept. 2.

Id. at 2-3.

Aug. 18 Continuation of Document Production OSC Hearing.

Montgomery resumes the stand for cross-examination.  See Transcript, ECF 833.  

  • Montgomery continues testifying re: documents provided to the Wall Street Journal and NBC re: his claims against Trepp and Gov. Gibbons.  ECF 833 at 38-43 (WSJ), 56-71 (WSJ), 79 et seq. (NBC).
  • Montgomery testifies that he recently found a(nother) hard drive that may contain the eTreppid employee PST files.  Id. at 43-46.
  • Montgomery testifies regarding chain of custody of various hard drives, including that they have been in his custody and control since August 2007.  Id. at 47-55, 65-68.
  • Montgomery testifies that, shortly before the FBI raid on his home, he gave eTreppid back up drives (including those maybe containing the PST files) to Flynn– who thereafter “put them in a storage facility that was under was Al Rava's name in San Diego.”  Id. at 49, 51.
  • With respect to the PST files that were somehow transferred from the back-ups to another drive, Montgomery testifies that he does not “remember doing that. I'm not saying it didn't happen.  Id. at 56.
  • Montgomery testifies as to materials taken by the FBI.  E.g., id. at 85-92.
  • As explanation for why he has failed to turn over emails (obtained from other discovery), Montgomery testifies that his email account ([email protected]) is on a server he set up, which only keeps his emails for ”a day; 24 hours.”  Id. at 119.  See also id. at 116-147 for testimony regarding Montgomery alleged receipt and/or possession (or lack thereof) of emails generally and search (or lack thereof) for responsive documents.

Montgomery Testimony re: Possession of eTreppid property.  

Montgomery changes his June 10 explanation for why he now has eTreppid property given his prior testimony under oath that he had not taken any eTreppid property, contending now that since he "was eTreppid" he had (apparently implicit) authorization to take stuff:

"Q. Okay. Remember your testimony at the preliminary injunction hearing where you said you took no electronic media from eTreppid.  Do you remember that testimony?

A. Yes.

Q. So that's false testimony?

A. No.

Q. Okay.

A. Well --

Q. So, then you took the CDs. You took that data and put it on a CD, and took it out of the premises, did you not?

A. Everything I took out of there, Mr. Trepp knew I was taking out.

Q. So are you saying, then, that you downloaded or you, excuse me, copied data from eTreppid, put it on a machine,burned it on to a CD, and then asked permission to take it?

A. No. I don't recall that specifically like that.

Q. Well, how did you get -- tell us the form in which you received permission to take eTreppid's property?

A. I can't tell you. I thought I was eTreppid.

Q. Pardon me?

A. I mean, I own stock in the company. I thought --

Q. So you took it because -- I'm just talking about the testimony you gave us when you said you took no electronic data from --

A. The way that question was asked to me, I thought that was meaning taking it illegally, or without somebody's permission.

Q. The question was have you taken anything?

A. I --

Q. You said no. So, that was false testimony.

A. No. I don't know."

Montgomery v. eTreppid ECF 833 at 103-04.

Montgomery Testimony re: Possession of Classified Information.  

Montgomery attempts to explain why, given his prior testimony under oath in the Search Case proceedings that he possessed no classified information, he now contends that a large percentage of his material is classified:  

Q. . . . You said that one of the reasons why you hadn't produced a lot of the documents that were required to be produced is because you had a concern that the State Secret Privilege may be implicated on some of that electronic media you had.

Do you remember that testimony from June 10th and June 24th?

A. Yes. Yes.

Q. Okay. That was your position then, was it not?

A. Yes.

Q. Okay. You've taken a contrary position before, have you not, that there's no State Secret Privilege on any of the seized material?

A. Seized material?

Q. Yes.

A. I think, originally, that was the position.

Q. And that was the position you took in a sworn declaration, was it not?

A. Yes. I remember signing something.

ECF 833 at 105-06.

Q. Okay. So when you said this [ECF 228 Declaration] under penalty of perjury, that was false?

A. No. Just what I believed at the time to be accurate.

ECF 833 at 110. Upon further questioning, he changes course, asserting instead that that the information was maybe not classified but still subject to the state secrets privilege.  Id. at 110-11.

The hearing is continued until the next morning (Aug. 19).

 

Aug. 19, 2008

Montgomery v eTreppid.  Magistrate Judge Cooke presides over the continuation of the Document Production OSC Hearing.   See Minutes of Proceedings (ECF 817); Transcript (ECF 834).

Montgomery resumes the stand for continued cross.

  • Montgomery testifies further regarding the materials provided to the Wall Street Journal and NBC.  Montgomery testifies that he thinks Tim Blixseth is the person who directly contacted NBC. He isn’t sure whether it was Tim Blixseth or Edra Blixseth who contacted the Wall Street Journal.  ECF 834 at 155-60. See also id. at 185-90. 
  • Montgomery testifies further regarding the status of his emails (received at ncoder.net).  Id. at 159-171.
  • Montgomery testifies further regarding status of emails/materials relating to OpSpring marketing of his alleged technology.
  • Montgomery testifies that his alleged provision of output to the Government in Summer 2006 was not related to marketing his technology. Id. at 171-76.
  • Montgomery further testifies that his Feb. 2007 declaration statement  - “my current employers engaged in multiple meetings and conferences with high level Bush administration officials beginning in May 2006, and continuing to December 2006” – was not a reference to marketing.  Id. at 191. 
  • Per Montgomery, the July 2006 meeting with Vice President Cheney’s office was not a “marketing” effort.  Id. at 191-92.
  • Per Montgomery, the March 2006 letter stating “Mr. Montgomery desires to enter into an exclusive license agreement with the U.S. government as soon as possible" was not a marketing effort.  Id. at 193. (However, he later equivocates on this:  “A No. I'm not saying that [that licensing of the technology is not marketing the technology, the Source Code}. I don't remember -- I just remember a lot was going on on that day. And why this was sent with those exact words, I can't explain.”  Id. at 194)
  • Montgomery testifies further regarding the inconsistencies between his 2006 testimony offered in support of motions for return of FBI-seized materials (i.e., that the items seized contained no classified information) and his current testimony that 60-80% of the information on the FBI-seized materials is classified/subject to state secrets privilege.  Id. at 176-78.  Montgomery testifies that the “secret” information came from the Government, not from eTreppid materials (id. at 178-80) but, upon further questioning, equivocates: “Q Well, did it or did it not come to you directly from the United States Government? Or, did it come off of the computers at eTreppid?  A I can't remember right now everything that was on the drive that was given to them, to be certain whether that's correct or not. I believe it is. But, I'm not certain.”  Id. at 184.
  • Montgomery testifies further about the various eTreppid and related computers that he allegedly backed up periodically (and regarding the fact that some of the files allegedly backed up were eTreppid’s financials, to which he previously testified that he did not have access – yet he produced, demonstrating that he, in fact, did have access).   Id. at 197-202.
  • Montgomery testifies regarding the relevant content (or lack thereof) of 21 hard drives provided to eTreppid purportedly responsive to eTreppid’s RFP 16.  Id at 202-10.

Jonathan Karchmer, eTreppid’s computer forensics expert, takes the stand.  Id. at 218-328.  Karchmer testifies regarding his analysis of two hard drives produced to eTreppid. Per that testimony:

  • “The drives contained hundreds of thousands of files but very few, if any, directories or folders which, generally, would impede one's review of the documents on the drive.”  Id. at 218, 220, 226-27.
  • The file names “were something I've never seen before. They were extremely long, very cryptic. Not what I would call a normal file name. Id. at 218, 220-222.
  • The formatting date is irregular.  Id. at 222-24. 248-49.  “All I can -- all I can say is that I know somebody went above and beyond a normal copy operation to put the files on these hard drives. Meaning, if the original files were copied from source hard drive to a destination hard drive, one would expect the file names to remain in tact. It appears, on these drives, that somebody undertook an effort to manipulate and change and lengthen file names.” Id. at 224. “[O]n more than one drive I identified, even though that a file had a creation date of December of 2002, the file itself was not created until later. … Which of course is not possible.  Id. at 248.
  • The files were “highly duplicative.”  Id. at 227 .  In fact, 92% of the 1.3 million files were duplicative.  Id. at 230.  Of the 1.3 million files, only 152,961 files were unique (id. at 231) , and of this, only about 23,000 files (20 gigabytes) was reviewable (id.  235-6).  Of the 23,000 reviewable files, about 16,000 are either TXT, HTM, or HTML files. Id. at 239.  Of the remaining merely 12,000 files, only some are relevant/related to eTreppid.  Id. at 239-40.
  • The recent additional hard drives produced by Montgomery (shipped to eTreppid’s expert) were “simply stacked together, with no packing material, in a large box. And likely due to the fact, or due to how they were shipped, large number of the drives that were shipped were basically dead on arrival. They would not -- they would not spin out. They would not work.”  Id. at 240-43
  • Adding the 8 newly provided “working” hard drives to the two originally produced, there  are a total of  2.8 million files, of which only about 302,000 were unique.  Of that, only about 532 are WORD or Powerpoint documents.  (There are no PST/email files.)  Id.at 246-49.  Also, for the 8 working drives, two were “100 percent identical.”  Id. at 249.
  • Re: “Glogauer emails” Karchmer testifies about the importance/need to obtain full copies of original PST files in order to determine authenticity of emails (id. 250-53) and how  he knows that the “PST” that Montgomery provided was modified/manipulated.  Id.  at 253- 61, 267-70.  “The PST that was provided … was, as I've mentioned, something engineered or created in order to only contain the single e-mail message, as well as the folders that were present in the PST.”  Id. 260.

Len Glogaeur, eTreppid Vice-President of Business Development and Industry Relations, takes the stand.  ECF 834 at 328-341.

  • Glogaeur testifies that Montgomery regularly (at least twice a month, generally) came in and backed up his computer.  When this occurred, all applications were closed.  Montgomery would instruct him (and others) to close all applications.  Additionally, he personally observed Montgomery closing any open applications a  number of times.  Id. at 329-332.
  • Glogaeur denies that he wrote the sentence in the infamous Glogaeur email (contained in the txt file that Montgomery submitted to the press, etc.). Id. at 332-33.  He further testifies that when he went to find the original email after the Wall Street Journal reported on the matter, he discovered it had been deleted from his computer.  Id. at 333.

Sloan Venables, eTreppid Director, is called to the stand.  ECF 834 at 341-47. 

Warren Trepp takes the stand.   ECF 834 at 348-58.   Trepp testifies that

  • He never asked Montgomery to perform any backups of individual employee computers at eTreppid, or to back up his wife’s computer, or to back up anyone else’s computer.  Id. at 349.
  • He never gave Montgomery hard drive to perform back ups.  Id. at 350.
  • He did not know Montgomery was performing backups of individual computer stations until Montgomery testified to such on June 10.  Id.
  • He did ask Montgomery to provide copies of “what he purported to be our proprietary Source Code, which [he] kept in those safe deposit boxes.”  Id. at 351.  When the CDs, DVDs, and hard drives were examined, however (following Montgomery’s departure), he discovered that “[t]here was a portion of Source Code that was worthless, that was found on one of the medium. Everything else was total garbage.”  Id. at 358.

Scott Cooper, Montgomery’s computer expert, is called to the stand.  ECF 834 at 360-412.   Cooper testifies that

  • It is his opinion that US Protective Order “required Mr. Montgomery to review , I believe, every single file that existed, whether it was duplicated or not.”  Id. at 371-76.
  • Cooper challenges Karchmer’s contention that access to the original PST file is necessary to determine authenticity (Id. at 376-81), and asserts that emails found in PST files can also be altered/manipulated (id. at 381).
  • Cooper testifies that it is his understanding that the formatting date issues were caused by the fact that Montgomery used cloning software to copy the data at issue.  Id. at 381-83.  On cross, he explains that Montgomery told him within the week that he’d used cloning software, though he admits that he does not know what particular cloning program was used.  Id. at 385, 390.  (As eTreppid counsel points out, when Montgomery was asked to explain the dates during his June testimony, he never mentioned using any cloning software.  Id. at 387-88.

The hearing is continued until tomorrow, Aug. 20.

 

Aug. 20, 2008

Montgomery v eTreppid.  Magistrate Judge Cooke presides over the continuation of the Document Production OSC Hearing.   See Minutes of Proceedings (ECF 823); Transcript (ECF 835).  

The proceedings begin with some drama:

“COURT:  “As you know, this is the final day for the Order to Show Cause Hearing in this matter. And we've had an unforeseen development. Mr. Montgomery is not present here in the courtroom. And I guess I'll just indicate on the record that he is -- well, Mr. Sunshine, why don't you just report what's occurred for the record.

MR. SUNSHINE: There is a -- Your Honor, there was an incident that Mr. Montgomery was involved in, of grave concern to me and to him.

THE COURT: All right.

MR. SUNSHINE: I would rather not report on it in any more details than that, but I will assure the Court that there is a very good reason for him not being here.

THE COURT: All right. And counsel for all of the parties, including Ms. Wells, conferred in chambers with the Court prior to this hearing, and apprised counsel of the details of the situation. And the Court will simply say that Mr. Montgomery has been delayed in getting here. We're hopeful he will be able to return to the Court. And I'm sure Mr. Sunshine will keep us apprised of that, and we'll complete today's hearing as soon as we can.”

Id. at 418-19.  The Court handles some housekeeping matters (exhibits, etc.), then recesses, pending Montgomery’s arrival.  Id. at 419-429.

When the proceedings resume (id. at 429), Scott Cooper again takes the stand for continued cross-examination. Id. at 430-64.

  • Cooper appears to backtrack from his statement yesterday regarding the cloning process and effect (id. at 432):

“Q. Well, I understood you to say that you believed that Mr. Montgomery had performed and used cloning software, and that's the explanation for why the dates are on -- the earlier dates are on the terabyte drive and the 500 gigabyte drive. That was your testimony, was it not?

A. I believe not. I said, assuming that that's the case, it provides an explanation on how the dates are different than what Mr. Karchmer had opined about. I don't know what mechanism he used.

Q. Okay. 

A. Nor did I try to inquire and get perfect clarity on that. I was simply providing an explanation of why I thought Mr. Karchmer's conclusion might not be valid.”  

Q. Okay. Well, are you offering an opinion to this Court that, in fact, the reason for the dates that appear on the terabyte drive and the 500 gigabyte drive, which are earlier in time than when the drives were available in the market place, comes from the cloning software. Is that your opinion?

A. No. . . . I'm not saying that it's not. I just don't -- I don't know.

  • Cooper acknowledges that he hasn’t looked at the hard drives or files produced by Montgomery (id. at 455-56):

“A. I'm lost. I'm sorry.

Q. So am I, because I don't understand how you can reach  a conclusion that there wouldn't be varying dates in the terabyte drive showing a date other than 11-18-2003. I mean, the files we know would have had a date of when -- if they contained all of the metadata. But, frankly, I haven't looked myself at all 1.3 million files. But the date, you were saying the 11-18-2003 date is easily explicable because it would have come through the cloning process. And I'm just trying to understand why it would all have the same date, if the set B, all themselves had varying dates?

A. Assuming that set B all had varying dates and they were cloned preserving CAW, I don't know how this -- I don't understand. I would like --

Q. Unless they were manipulated?

A. Well, I'm not going to jump to that conclusion.

Q. Well, the date of the folder create date, where it's going to get that date, which is the hard drive, the one terabyte drive, picked a date of 11-18-2003, how did it get that date on format?

A. It would certainly be helpful if I could look at the full set of data.

Q. Well, sir, you haven't done that, have you?

A. I have not.”

  • Cooper acknowledges that he could have provided advice to Montgomery on how to simplify the document review process.  Id. at 458-62.
  • On redirect, Montgomery counsel attempts to elicit testimony from Cooper that the reason he didn’t provide such advice to Montgomery is due to the fact that Montgomery had failed to pay the bills (from his January 2008 work), his firm.  However, Cooper testifies as follows (id. at 464):

“Q. And do you, as you sit here today, know whether or not FDI actually declined to provide services to Mr. Montgomery?

A. To my knowledge, FDI did not decline to provide the services.

Q. Do you know whether FDI declined, or is that just speculation?

A. I don't know if the accounting department provided notice. I did not.”

After a break, the parties present closing argument.  (eTreppid – Id. at  471-99; Montgomery – id. at 499-520; eTreppid - id.i at 520-28).  

Magistrate Judge Cooke is very active during Montgomery Counsel's closing argument, clearly indicating that she is not buying Montgomery's various excuses/explanations.  For example:

“THE COURT: …[A]as I listen to Mr. Montgomery's testimony in this proceeding, it struck me as odd that having been involved in the search warrant proceedings; that is, Mr. Montgomery, having been involved in a preliminary injunction hearing in the state court proceeding, having seen Judge Perry's preliminary injunction  order, having then, of course, come into this court after the state court case was removed and so on, and appreciating, one would think, the extreme importance of maintaining the integrity of items that were subject to the FBI search in a careful, secure manner, and then learning that that was not the case, based on Mr. Montgomery's testimony, that isn't how that material was handled. In fact, there's -- it strikes the Court as sort a rabbit warren trying to track, well, this set went here and then it went there, and so forth. Then, logically, it might come as no surprise to a person, a reasonable person, that something either was unintentionally loss, or intentionally misplaced. And, I agree, there is certainly no evidence of intentionally destroying or misplacing that. But, that's very troubling to the Court that this evidence of great importance to all of the parties in litigating this case, it's gone.”

* * *

“THE COURT: Well, [Judge Pro] did get -- you know, I can't bring up Judge Pro's order -- I don't know what docket number it is that related to those materials, but there is an order from the Court saying, you know, let's -- I suppose we can argue, and maybe the parties will argue, and Judge Pro will tell you more clearly if there's a dispute about what he meant, but the gist of the Court's order was this is important evidence. Keep it. Don't destroy the integrity of this evidence. And that was an order from the district court.”

Id. at 505-06, 507. When Ms. Garofalo asserts that “in order to find contempt, somebody has to have the ability to comply. There has to be evidence that they had the ability to comply and failed to comply. There is no evidence that that CD, the Warren Trepp e-mail, or the other missing CD, came back to Mr. Montgomery after the search.” (id. at 508), the court responds: “Well, that will be an interesting issue for that hearing because, I don't know -- and I've had so many hearings about these, that I don't recall that position being taken. It may well have. So, I just can't remember whether it was ever asserted that the Warren Trepp old e-mail CD was not returned.” Id. at 508. 

Note:  On this, as eTreppid counsel later notes “for Ms. Garofalo to stand up and say in this court, in good conscience, that that e-mail may have been lost by the FBI is ridiculous and disingenuous, because pleadings were filed by her client showing a copy of the "Warren Old E-mail" attached to it [as contained in the items returned]. That's where we saw it for the first time….”  Id. at 521.

When Ms. Garofalo attempts to explain the delay in production on the massive amounts of data combined with the restrictions imposed by the Protective order (id. at 509-10), the court makes clear that she does not find these explanations credible, and she sees no justification for the delayed production.  Id. at 511-15.  After a long recitation about why she does not find Garofalo’s argument credible, Magistrate Cooke sums up as follows:

[THE COURT]: “So why -- what about Mercury, Venus, Mars and Earth [i.e., materials clearly not subject to the Protective Order]? That's my question. Why wasn't that work done in advance of all of this, even with the U.S. Protective Order? And if Mr. Montgomery was concerned that he thought that was part of the U.S. Protective Order, then why didn't he meet with the government, like they asked him to meet with them.”

Garofalo responds:

“I can't answer that question, Your Honor. I can say to the Court, and I am going – when the Court is finished with its inquiries, to move on to the notion of terminating sanctions and what is the appropriate sanction, if any, in this case.”

Id. at 515.  Garofalo then proceeds to argue why terminating sanctions should not be imposed on Montgomery.  Id. at 515-520.

Finally, Peek, eTreppid counsel, makes his final closing argument.  Id. at 520-28.  His arguments include:

[Garofalo] says there's no evidence of intentional destruction and, yet, the key piece of evidence that would show the false and fabrication nature of the Jale Trepp e-mail and the Len Glogauer e-mail are on "Warren's Old E-mails." That's an intentional holding. The Court can draw an inference that that's been intentionally lost. Because of all of the other data, it's this one CD, one CD -- the other one he doesn't even know what it was -- but, it's one CD. . . .” Id. at 524.

“From August of '06, until August 29th of 2007, as the Court noted, he had the ability to review and produce [certain] documents without regard to a State Secret Privilege.  And he did nothing in that one year period of time.  [Garofalo] says well, you finally got his attention now. Well, we finally got his attention because he is now facing the terminal sanctions. Of course it's going to get his attention, but it's too little too late.” Id. at 525.

After his conclusion, Magistrate Judge Cooke orders that post-hearing briefs are to be filed by Sept. 19. 

 

Magistrate Judge Cooke issues an Order as follows:  “On August 20, 2008, the court received the attached email correspondence from Scott Cooper via the courtroom administrator. Scott Cooper has testified as an expert witness in this case. As such, the court considers his email improper ex parte communication with the court pursuant to LR 7-6(a). Mr. Cooper is admonished not to attempt any further ex parte communication with the court in any form.” ECF 814 (attaching email from Cooper).

eTreppid files Opposition to Montgomery’s Aug. 4 Objection to Judge Cook’s July 15 Order.  ECF 812.

 

Aug. 21, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over a sealed evidentiary hearing regarding Flynn’s Apr. 24 Motion for Sanctions.  See ECF 844 (ordering hearing to be transcribed under seal).

 

Aug. 26, 2008

Montgomery v. eTreppid.  Judge Pro issues an order affirming Magistrate Judge Cooke’s July 15 Order and overruling Montgomery’s Aug. 4 Objection to same.  ECF 818.

Montgomery files a Motion for an Order Taking the September 5, 2008 FBI Evidentiary Hearing Off Calendar.  ECF 819 (Motion); ECF 820 (Motion for Order Shortening Time re: Same); ECF 824 (Order granting Motion to Shorten Time).

 

Aug. 27, 2008

Montgomery v. eTreppid.  The United States files an Opposition to Montgomery’s Aug. 26 Motion for Order taking the Sept. 5 FBI evidentiary hearing off calendar.  ECF 821.

Flynn files a Status Report re: Compliance with the Court’s Aug. 12 Order re: Rule 3.3 Order.  ECF 822.  Magistrate Judge Cooke issues an order granting extension of time to comply (until two weeks after US returns electronic files).  ECF 825.

 

Aug. 28, 2008

Montgomery v. eTreppid.  eTreppid files a Joinder in the United States’ Opposition to Montgomery’s Aug. 26 Motion for Order taking the Sept. 5 FBI evidentiary hearing off calendar.  ECF 824.

Montgomery files a Reply in Support of his Aug. 26 Motion for Order taking the Sept. 5 FBI evidentiary hearing off calendar.  ECF 828.

 

Aug. 29, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order denying Montgomery’s Aug. 26 Motion for Order taking the Sept. 5 FBI evidentiary hearing off calendar.  ECF 829.

eTreppid files:

  • Joint Proposal Concerning Potential Alternative Dispute Resolution Options.  ECF 830.
  • Proposed Discovery Plan/Scheduling Order.  ECF 831.

 

Bloomberg publishes an article discussing Montgomery’s alleged activities relating to US national security.   See Anthony Effinger, “Yellowstone Club Divorcee Entangled in Terrorist Software Suits,” Bloomberg.com, Aug. 29, 2008.  Among other matters, the article reports on:

  • Montgomery’s prior allegations that his former business partner (Trepp) “had bought support for eTreppid from Gibbons through bribery.”*  The article notes that a computer security expert (Jonathan Karchmer) determined that the email that Montgomery had submitted in court to support his bribery claim was fabricated.  Karchmer determined that a sentence contained in the email Montgomery submitted was not contained in the original email and had been added. 
  • The “unflattering” information – including allegations of faked a demonstration to government officials -- revealed in 2007 when the Nevada judge unsealed all of the records in the ongoing lawsuit between Montgomery and eTreppid (his former employer), after allowing the Department of Defense to redact items it claimed were subject to state secrets privilege. 

*Note: See May 11, 2007 and June 22, 2007 for more details on Montgomery's allegations. Gibbons will later cleared of any wrongdoing as reported by the New York Times on Nov. 2, 2008.

 

Sep. 5, 2008

Search Case  | Montgomery v eTreppid.  Magistrate Judge Cooke presides over the scheduled evidentiary hearing regarding Montgomery’s claims that the FBI destroyed and/or damaged his property during the 2006 FBI search and seizure.

Montgomery fails to appear at this hearing even though he was the party who requested the hearing.  See Minutes of Proceedings (Search Case, ECF 135; Montgomery v. eTreppid ECF 837); Transcript (Montgomery v. eTreppid, ECF 861).  

After a few FBI witnesses testify at this hearing, Montgomery’s counsel essentially concedes that Montgomery’s accusations against the FBI are not true.  See, e.g., Transcript at 76.  

The Court orders parties to file post-trial briefs by Sept. 22, 2008. See Minutes of Proceeding (ECF 837) at 4.  Montgomery will fail to do so.

Sep. 8, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order scheduling (per parties’ request) a settlement conference for Sept. 15-18 and ordering that settlement statements be submitted by Sept. 11.  ECF 838.  Judge Cooke also issues an order vacating the discovery status conference currently scheduled for the 16th, in light of the settlement conference.  ECF 839.

Edra Blixseth/OpSpring file a Notice of “Potential Inability to Appear Promptly at 9:00 a.m. for September 15, 2008 Settlement Conference.”  ECF 841 (as corrected; ECF 840 as originally filed).

Magistrate Judge Cooke issues an order granting Flynn’s motion (ECF 842) requesting that the Aug. 21 evidentiary hearing be transcribed under seal.  ECF 844.

 

Sep. 9, 2008

Montgomery v. eTreppid.  Atigeo files a Notice re: Availability for September 15, 2008 Settlement Conference.  ECF 845.

The United States files a notice that Carlotta Wells and Raphael Gomez will attend the settlement conference scheduled for Sept. 15-17, 2008.  ECF 846.

 

Sep. 10, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order requiring Edra Blixseth/OpSpring to file a notice by noon, Sept. 12, re: “Ms. Blixseth's travel arrangements so the Court can issue a final order concerning the commencement of the settlement conference scheduled for 9/15/2008.”  The Court also orders parties to submit notice as to whether they consent to Flynn’s attendance at the conference.  ECF 847.

Montgomery files a Stipulation to Continue Time for Filing Post-Hearing Briefs Regarding the Court’s OSC on Document Production.  ECF 848.  Magistrate Judge Cooke will grant this to extent that briefs will be due Sept. 16.  ECF 850.

 

Sep. 11, 2008

Montgomery v. eTreppid.  Montgomery files Objection to Flynn’s Attendance at Settlement Conference.  ECF 849.

Edra Blixseth/OpSpring file Notice that Edra Blixseth Will Be Available to Appear on September 15, 2008.  ECF 851

Magistrate Judge Cooke issues order that Flynn will not attend settlement conference.  ECF 852.

 

Sep. 12, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order:

“The Court is in receipt of the Montgomery parties’ settlement conference statement; however, the settlement conference statement does not comport with the requirements set forth in this Court’s order scheduling settlement conference (#838).

THEREFORE, IT IS ORDERED that the Montgomery parties shall have until 5:00 p.m. P.D.T. on Friday, September 12, 2008to [submit] a supplemental settlement conference statement which fully complies with all requirements outlined in the order scheduling settlement conference (#838).”

ECF 853

 

Sep. 15, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over Day 1 of the Settlement Conference.  See Minutes of Proceeding, ECF 854.

 

Sep. 16, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over Day 2 of the Settlement Conference.  See Minutes of Proceeding, ECF 855.  Montgomery Parties (Dennis Montgomery, Brenda Montgomery, the Montgomery Family Trust, Edra Blixseth, Blxware Inc. and Opspring Inc.) and eTreppid Parties (Warren Trepp, eTreppid, Friendly Capital)  sign a Settlement Agreement.  See Sept. 23 (settlement announcement, etc.) and Dec. 10 (eTreppid submission referencing Sept. 16 Settlement Agreement).

 

Sep. 17, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke presides over Day 2 of the Settlement Conference.  During this session, Montgomery and eTreppid advise the Court that a settlement agreement has been negotiated between those parties and a proposed stipulation of dismissal is forthcoming.  See Minutes of Proceeding, ECF 856.

 

Sep. 18, 2008

Montgomery v. eTreppid.  Atigeo files Notice Re: Settlement or Dismissal.  ECF 857 (Notice); ECF 858 (Motion to Shorten Time).

 

Sep. 19, 2008

Montgomery v. eTreppid.  Ronald Logar (former Montgomery local counsel) files Notice of Statutory Attorney's Lien ($107,316.69) Pursuant to Nev. Rev. Stat. 18.015.  ECF 859.

 

Sep. 22, 2008

Search Case  | Montgomery v eTreppid.  The United States files its post-hearing brief regarding Montgomery's claims that the FBI destroyed, damaged, and/or failed to return his property. See Search Case ECF 136; Montgomery v. eTreppid ECF 863.  In this brief, the FBI states as follows:

4. There is no evidentiary support for Mr. Montgomery’s sworn statement that materials, devices, property, or data seized by FBI were “destroyed” or “damaged” or “never returned.” Mr. Montgomery’s sworn statement (#466-2) is false.

5. There is no evidentiary support for Mr. Montgomery’s sworn statement that FBI destroyed the organization of Montgomery’s work product. Mr. Montgomery’s sworn statement (#466-2) is false.

6. There is no evidentiary support for Mr. Montgomery’s sworn statement that FBI ravaged through the containers of Mr. Montgomery’s work product. Mr. Montgomery’s sworn statement (#466-2) is false.

7. There are no disparities, irregularities, or anomalies concerning the FBI’s management or return of materials or data seized from Mr. Montgomery’s residence.

8. There are no disparities, irregularities, or anomalies concerning the FBI’s management or return of materials or data seized from Mr. Montgomery’s storage unit facility.
* * *
It is the United States’ view that the motion (#527) for evidentiary hearing and the Montgomery declaration (#466-2) were submitted for an illegitimate and fraudulent purpose; namely, to advance Montgomery Parties’ improper litigation and discovery strategies in this civil proceeding by falsely alleging FBI malfeasance including collusion between the FBI and various eTreppid Parties. The evidentiary presentation has exposed the falsity of those allegations.

ECF 863 at 5 (emphasis added).  Montgomery fails to file any post-trial brief supporting his prior claims.

 

Montgomery v eTreppid.  Flynn files a Motion to Retain Jurisdiction, prevent spoliation of evidence enforce existing orders, and enter a judgment that includes all fees and costs awarded to former counsel.  ECF 860.

Judge Pro issues a 15-page order

  • overruling Montgomery’s May 27 Objections and affirming Magistrate Judge Cooke’s May 21 Order Conforming Costs and Fee (re: Flynn Fee Award);
  • denying Flynn’s May 29 Motion to Strike Montgomery’s May 27 Objections to Magistrate Judge Cooke’s May 7 order conforming fees and costs; and
  • denying Flynn’s request for attorney’s fees as a sanction for having to respond to Montgomery’s objection

ECF 862.

 

Sep. 23, 2008

Montgomery v eTreppid.  The Court issues an order regarding the settlement and open issues remaining. Per that order,

  • Dennis Montgomery, Brenda Montgomery, The Montgomery Family Trust, Edra Blixseth, Opspring, LLC, eTreppid Technologies, LLC, and Warren Trepp (“settling parties) agreed to a settlement of the claims among these parties. While the settlement agreement is to remain confidential, the parties intend to lodge a stipulation for dismissal of their respective claims with the Clerk of Court.
  • The settling parties agree that the Court will, after settlement, retain jurisdiction over

    • claims alleged against Atigeo LLC and Mr. Sandoval as third-party defendants;
    • Flynn’s attorney’s fees (#s 502 & 584)
    • Flynn’s motion to establish Rule 3.3 procedures pursuant to the Nevada Rules of Professional Conduct (#540);
    • Flynn’s motion for sanctions (#545);
    • compliance with the United States protective orders (#s252 & 253); and
    • enforcement of the mutual non-disparagement and confidentiality provisions of the settlement agreement.
  • The Court orders the settling parties to lodge a proposed stipulation and dismissal with prejudice containing the above-stated reservation of jurisdiction by Sept. 26.
  • Thereafter, Atigeo, Sandoval, Flynn and Logar may file objections or consent to terms by Oct 1.
  • Briefing on motions and any other court-ordered deadlines in this matter are stayed until disposition of the settling parties’ stipulation for dismissal with prejudice.

ECF 864.

 

The Montgomery-eTreppid settlement is announced. See “eTreppid Technologies Reaches Settlement with Blxware LLC Chief Scientist in Software Litigation,” BusinessWire, Sept. 23, 3008 (“Blxware Press Release”).

The terms of the Montgomery-eTreppid Settlement Agreement are confidential as noted above (and will not be finalized until Nov. 18).  However, the following is known:

  • The agreement provides that Blxware will own and control the disputed technology for commercial distribution “in exchange for various concessions and monetary considerations. See Blxware Press Release.
  • The agreement provides that eTreppid will “retain an economic interest in sales of the product for particular market segments.” See Blxware Press Release; see also Nov. 18 (Promissory Note setting forth schedule of payments to eTreppid).
  • The Montgomery Parties must secure their payment agreements with collateral -- i.e., the (alleged) source code/technology.  See Nov. 18 (Promissory Notes describing collateral); June 18, 2009 (eTreppid asserting that, "absent the sudden appearance of" $26.5MM, eTreppid is "entitled to execute" against the source code). 
  • The Montgomery Parties must pay a total of $26,500,000 to the eTreppid Parties: $20,000,000 to eTreppid; $5,000,000 to Warren Trepp, and $1,500,000 to Friendly Capital. See Nov. 18, Nov. 19, Dec. 10.
  • The Montgomery Parties must both execute Secured Promissory Notes and sign Confessions of Judgment. See id. 
  • The portion of the settlement relating to Warren Trepp stems at least in part from Montgomery’s claims against Warren Trepp, particularly the Gibbons bribery allegations.  

See December 17, 2009 Deposition of Edra Blixseth at pp. 203-04, as submitted in Snow v. BLX Group ECF 319-1 (“…there was a huge issue with Warren Trepp's wife that wanted -- and Warren, himself, told me that since there were shareholders in eTreppid, he wanted something that was specifically going to go to them and he didn't have  to do with the shareholders.  And she wanted to feel like she had some --  some kind of something for all the stuff that had been in the press and so it was the same amount of money, it  was just how they wanted it divided. . . . There had been a whole lot of stuff in the press of what Dennis's allegations were were not true, what Warren and Gibbons were saying were not true. It was back and forth.”); see also  Blxware Press Release (stating that the Warren Trepp portion of the settlement was “compensation for certain allegations made against Mr. Trepp in print and electronic media”).  See, e.g., May 11, 2007 and June 22, 2007 for more details on Montgomery's allegations and Nov. 2, 2008  for resolution (i.e., Gibbons will be cleared of any wrongdoing).

 

Sep. 26, 2008

Montgomery v. eTreppid.  Montgomery files Stipulation of Dismissal and Proposed Order on Stipulation and Dismissal with Prejudice.   ECF 866.

 

Sep. 27, 2008

Montgomery obtains $1,000,000 in gambling credit from Caesar’s Palace in Nevada, which he "secures" with nine credit instruments totaling $1 million.  See Desert Palace v. Montgomery, Sept.26, 2009 Complaint, ECF 1, ECF 1-1; see also ECF 4 ¶ 6 (Montgomery's Answer, in which he admits  (admitting that he obtained this credit for gambling purposes); Montgomery Bankruptcy Proceedings ECF 9 at 22 (Bankruptcy schedule indicating $990,000 in debt to Caesars, incurred Sept. 27, 2008).  

In its complaint, Ceasar’s Palace alleges, among other things, that at the time Montgomery signs the instruments, he knows that (a) the instruments are drawn against a bank account that did not and would not have available funds; (b) that he does not and will not have available funds from any other source to cover the debt: (c) that he will (and he in fact does) stop payment on the instruments; and (d) that the instruments will be dishonored when Ceasar’s Palace presents them for payment.  Desert Palace v. Montgomery, ECF 1 at 2-4.  

On Nov. 10, 2010, a Nevada Grand Jury will indict Montgomery with six felony counts apparently based on these allegations. 

 

Montgomery apparently also obtains a line of credit of at least $802,000 at Pallazo in Las Vegas, according to the schedules he signed in his bankruptcy proceedings.  See Montgomery Bankruptcy Proceedings ECF 9 at 26 (indicating $802,000 in debt incurred on Sept. 27, 2008).

 

Oct. 1, 2008

Montgomery v. eTreppid.  Flynn files an “Objection to Confidentiality Terms of Settlement, Sealing of Discovery Materials, and Related Issues; Non-Opposition to Other Terms, Pending Disclosure.”  EF 867.

The United States files a Response to the Settling Parties' [Proposed] Order On Stipulation and Dismissal, stating that it has no objection to the proposed stipulation.  ECF 868.

Ronald Logar files Objection to the Proposed Stipulation.  ECF 869.

Atigeo files a Proposed Stipulation and Dismissal (ECF 872 as corrected; ECF 870 as originally filed) and an Objection to Form of Dismissal in Proposed Settlement (ECF 871).

 

Oct. 2, 2008

Search Case.  Montgomery and the FBI/United States enter into a “Stipulation Regarding September 5, 2008 Hearing.”  See ECF 138 (Order entering stipulation; see also ECF 137 (Stipulation submitted to court). 

Per the stipulation, Montgomery agrees that he “do[es] not and will not institute any court proceeding to challenge the adequacy or completeness of the FBI return of 24 seized property to Mr. Montgomery on March 29 and April 6, 2007, as ordered by this court.” 

Note:  But see, e.g., Feb. 23, 2015 and Apr. 29, 2015 (referencing court documents that appear to indicate Montgomery alleges FBI damaged, destroyed, and/or failed to return materials relating to his pending IRS proceedings.

 

Oct. 9, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order vacating the scheduled discovery status conference.

Magistrate Judge Cooke issues order setting the various parties’ objections to the proposed settlement for hearing and setting a briefing schedule on three specific issues:

1. N.R.S. 18.015(3) provides that an attorney's lien attaches to "any verdict, judgment or decree entered and to any money or property which is recovered on account of the suit or other action, from the time of service of the notices required by this section." The court intends to retain jurisdiction of issues relating to Mr. Flynn's attorney's fees and his motion for sanctions. Since Mr. Logar has also filed a notice of attorney's lien, the court now intends to retain jurisdiction over that matter. However, if the court enters an order dismissing this action with prejudice as to the Montgomery parties, the court invites counsel to address the effect that order may have on the attorneys' liens, given the language cited in N.R.S. 18.015(3).

2. The court intends to retain jurisdiction over Mr. Flynn's motion for sanctions and his Rule 3.3 motion. The United States is currently reviewing emails and other documents Mr. Flynn intends to produce to this court in support of his in camera submission in the Rule 3.3 matter. Mr. Flynn asks the court to order preservation of all documents, emails and correspondence that may relate to both of these motions. The court believes such an order may be proper and invites counsel for the parties to advise the court concerning the scope of a preservation order. In addition, the court directs the United States to report on the status of its review of the documents under review in the Rule 3.3. matter and when that review will be completed.

3. Atigeo and Mr. Sandoval object to the form of the settling parties' proposed dismissal to the extent it may prohibit them from seeking discovery of the terms of the agreement in other litigation that may arise between Ms. Blixseth and her companies, since these parties were engaged in litigation in another forum. The court observes that in the event some or all of these parties find themselves involved in future litigation, and discovery of the settling parties' agreement in this action may be deemed discoverable, Atigeo and Mr. Sandoval can seek appropriate relief from the court at that time. The court invites Atigeo, Mr. Sandoval, and the settling parties to respond.”

ECF 874.

 

Oct. 16, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order setting hearing for Nov. 19 to address the settlement issues outlined in her Oct. 9 order. ECF 876.

 

Oct. 17, 2008

Montgomery v. eTreppid.  The United States files a Stipulation to Amend the Court's Feb. 19, 2008 Order Regarding Enforcement of U.S. Protective Order.  ECF 877.

 

Oct. 27, 2008

Montgomery v. eTreppid.  Flynn files a Response to the United States’ Oct. 17 Stipulation to Amend the Court's Feb. 19, 2008 Order Regarding Enforcement of U.S. Protective Order.  ECF 878.

Judge Pro issues an order amending his Sept. 22 order “is amended at page four, lines 22-23 to reflect that Michael Flynn sent the Montgomery parties multi-page billing statements reflecting hourly work performed, rather than one-page billing statements as stated in the Order.”  ECF 879

 

Oct. 30, 2008

Montgomery v. eTreppid.  Flynn files Notice of Statutory Charging Lien.  ECF 880.

Nov. 2, 2008

The New York Times reports that the FBI investigation into Nevada Governor Jim Gibbons – initiated as a result of Montgomery’s claims and alleged documents* -- has been closed and Gibbons has been cleared “of any wrongdoing in connection with an inquiry into whether he helped a friend win military contracts in exchange for gifts,” according to Gibbons' counsel.  See Randal C. Archibold, “Governor of Nevada Is Cleared in an Inquiry on Gifts, His Lawyer Says,” New York Times, Nov. 2, 2008.  

*Note:  See, e.g., May 11, 2007, June 22, 2007 and Aug. 29, 2008 for more details on Montgomery's allegations. 

 

Nov. 4, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order on the Oct. 17 Stipulation to Amend the Feb. 19, 2008 Order Regarding Enforcement of U.S. Protective Order, “to permit counsel for the United States and U.S. government personnel connected to or otherwise involved in representing the United States' interests either in the consolidated civil cases or the criminal search warrant case to review the attorney-client files that are the subject of that Order. Only the provisions set forth in paragraph 3 at page 7 of the 435 Order would be altered.“  ECF 881.

 

Nov. 7, 2008

Montgomery v. eTreppid.  Flynn files Memorandum of Points and Authorities to Convert Lien and Orders to Judgment (per Judge Cooke’s Oct. 9 Order).  ECF 882

The United States files a Motion for Extension of Time to File Status Report Pursuant to Oct. 16 Order.  ECF 883.

Montgomery files Response to Judge Cooke’s Oct. 9 Order, addressing (objecting to) Flynn’s and Logar’s claims. ECF 884 (Response); ECF 885 (Request for Judicial Notice re: Atigeo v. Blixseth Complaint). 

 

Nov. 10, 2008

Montgomery v. eTreppid.  eTreppid files its Response to the Court’s Oct. 9 Order.  ECF 886.

Ronald Logar files a Motion to Adjudicate and Enforce Statutory Attorney's Lien.  ECF 887.

 

Nov. 12, 2008

Montgomery v. eTreppid.  Atigeo files an Objection to Flynn’s Nov. 7 Memorandum of Points and Authorities to Convert Lien and Orders to Judgment.  ECF 888.

 

Nov. 14, 2008

Montgomery v. eTreppid.  The United States files a Status Report Pursuant to the Court’s Oct. 9 Order, in which it states that “the review of the files of the Montgomery parties’ former counsel is in progress, the technical difficulties noted in the United States’ Motion for Extension of Time (docket no. 883) have been resolved, and the review should be completed within four months.”  ECF 889.

Magistrate Judge Cooke issues an order granting the United States’ Nov. 7 Motion for Extension of Time to File Status Report.  ECF 890.

 

Nov. 18, 2008

The Montgomery Parties  (i.e.,Dennis Montgomery, Brenda Montgomery, The Montgomery Family Trust, Edra Blixseth and Blxware) execute a series of promissory notes:

The Montgomery-eTreppid $20,000,000 Promissory Note

Montgomery Parties sign a $20,000,000 Secured Promissory Note to Warren Trepp (i.e.,Dennis Montgomery, Brenda Montgomery, The Montgomery Family Trust, Edra Blixseth, Blxware Inc. and Opsring Inc.).   ECF 894.  Per the “eTreppid Note,” Montgomery Parties (jointly and severally) must pay to eTreppid:

  • By Sept. 15, 2009 - $6,000,000 (plus accrued interest to date on outstanding principal)
  • By Sept. 15, 2010 - $6,000,000 (plus interest)
  • By Sept. 15, 2011 - $8,000,000 (plus interest)

See Montgomery v. eTreppid ECF 894 ¶1.1.  Per this Note, Montgomery Parties also must:

  • by Dec. 15, 2008, grant a perfected security interest, “with a verifiable, tangible net fair market value of no less than $40,000,000 (the "Collateral"); and
  • provide upon request “adequate information …  to identify the owner of the collateral and its value, including without limitation evidence of title, copies of appraisals, and copies of all documents evidencing any ownership or other interest in the Collateral;” and
  • by Dec. 8, 2008, pay $1,500,000 to Friendly Capital (pursuant to a separate Promissory Note – the “FCP Note”); and
  • provide to eTreppid a fully executed original of a confession of judgment for $20,000,000, which eTreppid may file with the Nevada Federal District Court on Dec. 18 if Montgomery Parties fail to provide the required perfected security interest in the Collateral or if the “FCP Note” is not paid by Dec. 8.

Id.  ¶ 3.  In the event of default (among other things), the entire balance of the Principal and accrued interest becomes immediately payable and eTreppid may “proceed against any or all of the Collateral” as he sees fit.  Id. ¶ 4.  

The Montgomery-Trepp Promissory Note

Montgomery Parties sign a $5,000,000 Secured Promissory Note to Warren Trepp.  ECF 893. Per the “Trepp Note,” Montgomery Parties (jointly and severally) must pay to Trepp:

  • By Sept. 15, 2009 - $1,000,000 (plus accrued interest to date on outstanding principal)
  • By Sept. 15, 2010 - $1,000,000 (plus interest)
  • By Sept. 15, 2011 - $2,000,000 (plus interest)

See Montgomery v. eTreppid ECF 893 ¶1.1.  Per this Note, Montgomery Parties also must:

  • by Dec. 15, 2008, grant a perfected security interest, “with a verifiable, tangible net fair market value of no less than $10,000,000(the "Collateral"); and
  • provide the same info as described above re: Montgomery eTreppid Note; and
  • by Dec. 8, 2008, pay $1,500,000 to Friendly Capital per the FCP; and
  • provide to Trepp a fully executed original of a confession of judgment  for $5,000,000, which Trepp may file as above re: Montgomery eTreppid Note.

Id.  ¶ 3.  Trepp has same rights and remedies upon default as eTreppid, described above.

The Friendly Capital Promissory Note

As reflected in the Montgomery-Trepp and Montgomery eTreppid Promissory Notes, Montgomery Parties must pay $1,500,000 to Friendly Capital by Dec. 8.  It is believed that this note has essentially the same terms as above, except the confession of judgment will be filed with state court. 

 

Nov. 19, 2008

Montgomery v. eTreppid.  Judge Pro and Magistrate Judge Cooke preside over the scheduled status conference to discuss settlement issues.  See Minutes of Proceeding (ECF 891); Transcript (ECF 928).

 

The Montgomery Parties sign Confessions of Judgment (as required by the Nov. 18 Promissory Notes).

The Montgomery-Trepp Confession of Judgment.   Montgomery Parties

“verify under oath that they, stipulate, confess, and authorize the entry of judgment (the "Judgment") against them, jointly and severally, and in favor of eTreppid Technologies, LLC ("eTreppid"), a Nevada limited liability company, in the amount of twenty million dollars ($20,000,000.00), as set forth fully in the Promissory Note (the "Note"), which is attached hereto as Exhibit"A" and incorporated herein by reference, if and in the event [Montgomery Parties] fail[] to provide the collateral described in Paragraph 3.1 of the Note on or before December 15, 2008 or fail[] to pay Friendly Capital $1,500,000.00 on or before December 8, 2008.

[Montgomery Parties] further expressly agree that upon the filing of this Confession of Judgment in the above court, judgment may be entered against them, jointly and severally, and in favor of Warren Trepp, by the Clerk of the Court as outlined above. The parties further acknowledge that complete diversity of citizenship exists between the plaintiff and all defendants pursuant to 28 U.S.C. § 1332.”

Montgomery v. eTreppid ECF 894.

The Montgomery-Trepp Confession of Judgment 

This document is virtually identical to the Montgomery-eTreppid Confession described above, except that the judgment confessed to is $5,000,000.  Montgomery v. eTreppid ECF 893.

The Friendly Capital Confession of Judgment 

A copy of this Confession of judgment has not yet located.  However, it is referenced in other documents and, on Dec. 9 - one day after the payment is due - Friendly Capital files a Confession of Judgment in Nevada State Court.  See Friendly Capital v. Montgomery et al, No. CV08-03289 (Nev. 2nd District, filed Dec. 9, 2008).

 

 

Nov. 22, 2008

Montgomery apparently loses $422,000 at Aqua Caliente (a casino in Rancho Mirage, CA). See Montgomery Bankruptcy Proceedings ECF 10 at 6. 

 

Nov. 23, 2008

Montgomery apparently loses (at least) $540,000 at Harrah's Lake Tahoe Casino  and (at least) $375,000 at Peppermill Reno.  See Montgomery Bankruptcy Proceedings ECF 9 at 26 (indicating debts incurred at these locations on Nov. 23, 2008).

 

Nov. 25, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues an order scheduling a settlement conference for January 8, 2009.  ECF 892.

 

Late 2008

Air Force officials reportedly begin negotiating a $3 milion contract with Blxware, based on Montgomery’s asserted software capabilities.  See Eric Lichtblau and James Risen. "Hiding Details of Dubious Deal, U.S. Invokes National Security," New York Times, Feb. 19, 2011. 

 

December 2008

Air Force contracting officer, Joseph Liberatore, states in an email regarding the potential Air Force-Blxware contract that “[i]f other agencies examined the deal, ‘we’re all toast,’” according to a later report.  See Eric Lichtblau and James Risen. "Hiding Details of Dubious Deal, U.S. Invokes National Security," New York Times, Feb. 19, 2011. 

 

Dec. 8, 2008

A payment of $1,500,000 from Montgomery and his co-settlers is due to be paid to Friendly Capital today, per the Nov. 18 promissory notes signed by Montgomery et al and held by eTreppid and Warren Trepp.  That payment is not made.

 

Dec. 9, 2008

Montgomery v. eTreppid.  eTreppid files Notices of the Nov. 19 Confessions of Judgment signed by the Montgomery Parties in light of the Montgomery Parties' breach of the Nov. 18 Promissory Notes.  ECF 893 (Confession of Judgment as to Trepp) and ECF 894 (Confession of Judgment as to eTreppid).

 

Friendly Capital files a Confession of Judgment in Nevada State Court.  See Friendly Capital v. Montgomery et al, No. CV08-03289 (Nev. 2nd District, filed Dec. 9, 2008).

 

Dec. 10, 2008

Montgomery v. eTreppid.  eTreppid files Requests for Entry of Judgment. Per those requests:

"Under the terms of a September 16, 2008 Settlement Agreement between [the eTreppid Parties and the Montgomery Parties], the [Montgomery Parties] were to pay the sum of $1,500,000.00 to Friendly Capital Partners on or before December 8, 2009. The Parties agreed that, if the Blixseth Parties failed to make this payment, the eTreppid Parties would be entitled to enter three separate Confessions of Judgment:

  • A federal court Confession of Judgment against the [Montgomery Parties]  and in favor of Warren Trepp in the amount of $5,000,000.00 (the “Trepp Judgment”),
  • A federal court Confession of Judgment against the  [Montgomery Parties] and in favor of eTreppid in the amount of $20,000,000.00, (the “eTreppid Judgment”) and
  • A Nevada state court Confession of Judgment against  [Montgomery Parties] and in favor of Friendly Capital Partners in the amount of $1,500,000.00 (the “FCP Judgment”).

The Blixseth Parties failed to make the required payment. . ."

See ECF 895 and ECF 894 at 2.

 

Dec. 11, 2008

Montgomery v. eTreppid.  The Court issues Judgments: 

  • “Pursuant to NRS 17.110, the Clerk of this Court hereby endorses this judgment, and judgment in the amount of Five Million Dollars ($5,000,000.00), together with interest thereon in the amount of the statutory rate until paid, is entered in favor of Warren Trepp' and against the Defendants, Montgomery Family Trust, Opspring, LLC, Brenda Montgomery, Dennis Montgomery, Edra Blixseth and Blxware, Inc., jointly and severally.  ECF 897.
  • “Pursuant to NRS 17.110, the Clerk of this Court hereby endorses this judgment, and judgment in the amount of Twenty Million Dollars ($20,000,000.00), together with interest thereon in the amount of the statutory rate until paid, is entered in favor of eTreppid Technologies against Defendants, Montgomery Family Trust, Opspring, LLC, Brenda Montgomery, Dennis Montgomery, Edra Blixseth and Blxware, Inc., jointly and severally. ECF 898.

 

Dec. 15, 2008

Montgomery v. eTreppid.  eTreppid files Motions to Certify the Dec. 11 Judgments, "so that they may register the judgments in other district courts where assets may be located" and to Shorten Time.  ECF 899 and ECF 900.  Per these motions:

"There is "good cause" for the Court to certify eTreppid's judgments immediately, without waiting the 30-day appeal period because the judgments were entered pursuant to confessions of judgment from which no appeal would or should be taken and that will likely not be appealed and Edra Blixseth ("Ms. Blixseth") has failed to provide the collateral required by the parties' settlement agreement and the secured promissory notes. Indeed, Ms. Blixseth's failure to provide the collateral provides reason to believe that the collateral may be lost or impaired and eTreppid should be permitted to register its judgments in other federal district courts as soon as possible. Accordingly, there is "good cause" to certify eTreppid's judgments without waiting for the "time to appeal" to run and eTreppid respectfully requests that this motion be granted.

Id. at 2.

 

Dec. 16, 2008

Montgomery v. eTreppid.  Magistrate Judge Cooke issues order granting eTreppid’s Dec. 15 Motion to Shorten Time.  ECF 901.

Judge Pro issues "JUDGMENT in favor of interested party Michael J. Flynn, Esq. and against Dennis Montgomery, Brenda Montgomery, and Montgomery Family Trust in the amount of $628,812.15, consisting of $601,901.97 in attorney's fees $26,910.18 in costs."  ECF 902.

 

Dec. 18, 2008

Montgomery v. eTreppid.  Flynn files Motion to Certify Judgment.  ECF 903 (Motion); ECF 904 (Flynn Declaration in Support of Motion, which is later striken per ECF 954); ECF 905 (Motion to Shorten Time).

 

Dec. 19, 2008

Montgomery v. eTreppid.  Montgomery files an Opposition to eTreppid’s Motions to Certify Judgments.  ECF 906 (Opposition); ECF 907 (Notice of Manual Filing of Declaration and Exhibits 1 Declaration of Ellyn S. Garofalo).  

In this Opposition, Montgomery asserts (among other things) that "there are significant assets belonging to the judgment debtors not only in the State of Nevada, but in the possession and control of the Trepp Parties."  ECF 906 at 3.  As such, "there is no danger that they will be “impaired or lost.”  Id.   Moreover, Montgomery asserts, "Ms. Blixseth was relieved of the obligation to provide collateral by the filing of the confessions of judgment. Thus, the failure to provide collateral is not evidence that assets are being “lost or impaired.” Moreover, disclosure of this provision of the Settlement Agreement constitutes a violation of the Settlement Agreement’s confidentiality provision, over which this Court has retained jurisdiction. The Trepp Parties’ Motion to Certify Judgments should therefore be placed under seal."  Id. at 3 n.1. With respect to the alleged "significant assets," apparently Garofalo declares it is worth more than $20,000,000, see Dec. 29. 

 

Dec. 21, 2008

Montgomery v. eTreppid.  Flynn files Motion to Compel Discovery, which seeks discovery “regarding the Montgomery parties’ assets, payments to the Montgomery parties from Edra Blixseth and/or her companies, Blxware and Opspring, the Montgomery parties’ ownership or other interest in Blixseth’s companies, or its software, and related matters involving the Montgomery parties’ ability to pay the judgment in favor of Michael Flynn, (Doc.# 902). At the conclusion of discovery, Mr. Flynn moves for a court-conducted debtor examination.”  ECF 908.

 

Dec. 22, 2008

Montgomery v. eTreppid.  eTreppid files a Reply in Support of its Dec. 15 Motions to Certify Judgment.  ECF 909.  In response to Montgomery's claim that the early registration is not justified " because certain 'significant assets' are already in possession of the Trepp Parties," eTreppid notes that Montgomery failed to serve it with the Garofalo Declaration filed under seal and, moreover, "it is unlikely that the value of any property belonging to the Blixseth Parties will amount to anything more than a small fraction of the amount owed to the Trepp Parties pursuant to the Confessions of Judgment."  Id. at 3.

 

Dec. 23, 2008

Montgomery v. eTreppid.  Montgomery et al file Notice Manual Filing/Notice of Errata re: Declaration of Ellyn S. Garofalo in Support of Opposition to Trepp Parties' Motion to Certify Judgments (filed under seal).  ECF 910.

 

Dec. 29, 2008

Montgomery v. eTreppid.  eTreppid files

  • Motions for Writ Affidavit and Request for Issuance of Writ of Execution re: Judgements.  ECF 912 (Trepp); ECF 913 (eTreppid).
  • Motion to Enforce Judgments.  ECF 914.

In its Motion to Enforce Judgment, eTreppid acknowledges that it is in possession of

"personal property, including “that certain software compression, object detection and anomaly detection software, including, without limitation, all electronic media, source code, contracts, related documents, hard drives, intellectual property, tapes, outputs of any nature in [eTreppid’s] possession or under its reasonable control and any other property which was the subject of [eTreppid’s] software development and which was licensed and/or sold pursuant to U.S. Government contracts, which it agreed to provide to the Blixseth Parties pursuant to the settlement agreement.”

ECF 914 at 2.  However, it (a) states that "the Blixseth Parties’ appraisal of the value of this property is inflated by several orders of magnitude" (id. at 2) and (b) "[t]his information is of significant value only to the [Montgomery] Parties, who are in possession of the software source code which is at issue in this litigation. Without this software and other trade secret information, which is in the exclusive possession of the Blixseth Parties, the information on the subject hard drives is likely to be of very limited value on an open market (id. at 3). 

eTreppid thus seeks an order:

"(1) That eTreppid and Trepp be deemed to have executed the subject judgments against the Property as of the date the Writs of Execution, filed contemporaneously with this motion, are issued.

(2) That the United State’s Marshall’s office defer enforcement of the subject Writs of Execution pending resolution of a mechanism for liquidating the Property,

(3) That eTreppid is entitled to maintain possession of the Property pending resolution of the manner in which the Property is to be liquidated.

(4) That a mechanism for liquidating the value of the Property will be determined through further proceedings following an effort by the Parties to meet and confer in an attempt to agree on such a mechanism."

Id. at 4.  No opposition to this motion will be filed and, on Feb. 3, 2009, the motion will be granted.

 

Judge Pro issues an order granting eTreppid’s Dec. 15 Motions to Certify Judgment.  ECF 915.

The Court enters (a) WRIT OF EXECUTION in the amount of $5,012,328.77 (ECF 917) and (b) WRIT OF EXECUTION in the amount of $20,049,315.07 (ECF 918).

Judge Pro also issues an order granting Flynn’s Dec. 18 Motion to Shorten Time to Respond to Flynn's Motion to Certify Judgment. ECF 916.

 

Dec. 31, 2008

Montgomery v. eTreppid. Montgomery files Motion to Seal Dec. 19 Declaration of Ellyn S. Garofalo.   ECF 921. 

 

 

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