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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`
`RAI STRATEGIC HOLDINGS, INC.,
`et al.,
`Plaintiffs,
`v.
`ALTRIA CLIENT SERVICES, LLC,
`et al.,
`Defendants.
`TRANSCRIPT OF MOTION HEARING PROCEEDINGS
`(VIA ZOOM CONFERENCE)
`BEFORE THE HONORABLE THERESA C. BUCHANAN,
`UNITED STATES DISTRICT COURT MAGISTRATE JUDGE
`
`)))))))))))))
`
`Civil Action
`No. 1:20-cv-00393-LO-TCB
`December 4, 2020
`11:06 a.m.
`
`APPEARANCES:
`For the Plaintiffs:
`
`Charles Bennett Molster, III, Esq.
`The Law Offices of Charles B.
`Molster III, PLLC
`2141 Wisconsin Ave NW, Suite M
`Washington, DC 20007
`703-346-1505
`Email: Cmolster@molsterlaw.com
`Jason Burnette, Esq.
`Jones Day
`1420 Peachtree Street, N.E.,
`Suite 800
`Atlanta, Georgia 30309-3053
`1-404-521-3939
`Jburnette@jonesday.com
`Sanjiv Prakash Laud, Esq.
`Jones Day
`90 South Seventh Street,
`Suite 4950,
`Minneapolis, MN, 55402
`612-217-8800
`Email: Slaud@jonesday.com
`
`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
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`Case 1:20-cv-00393-LMB-WEF Document 444 Filed 01/13/21 Page 2 of 14 PageID# 9918
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`APPEARANCES: Cont.
`
`For the Defendants:
`
`Maximilian Antony Grant, Esq.
`Latham & Watkins LLP (DC)
`555 11th St NW, Suite 1000
`Washington, DC 20004-1304
`202-637-2200
`Email: Max.grant@lw.com
`Lawrence Jay Gotts, Esq.
`Latham & Watkins LLP (DC)
`555 11th St NW
`Suite 1000
`Washington, DC 20004-1304
`(202) 637-2200
`Fax: (202) 637-2201
`Email: Lawrence.gotts@lw.com
`
`Court Reporter:
`
`Scott L. Wallace, RDR, RMR, CRR
`Official Court Reporter
`United States District Court
`401 Courthouse Square
`Alexandria, VA 2231-5798
`703.549.4626
`scottwallace.edva@gmail.com
`Proceedings reported by machine shorthand, transcript produced
`by computer-aided transcription.
`
`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
`
`Case 1:20-cv-00393-LMB-WEF Document 444 Filed 01/13/21 Page 3 of 14 PageID# 9919
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`FRIDAY MORNING SESSION, DECEMBER 4, 2020
`(11:06 a.m.)
`THE COURTROOM CLERK: RAI Strategic Holdings, Inc., et
`al., versus Altria Client Services, LLC, et al., 20-cv-393.
`Counsel, please note your appearances for the record.
`MR. MOLSTER: Good morning, Your Honor. Charles Molster
`on behalf of the plaintiffs, and with me are a number of Jones
`Day lawyers. If you would like them to all enter their
`appearances, I'm sure they would be happy to. They include Jason
`Burnette from the Atlanta office, who is pro hoc vice. He will
`address defendant's motion to stay, with the Court's permission;
`and Sanjiv Laud, who is from Jones Day, the Minneapolis office,
`and, with the Court's permission, he will address Reynolds's
`motion to compel and motion to strike.
`MR. GRANT: Your Honor, Max Grant on behalf of the
`defendants, and arguing with me or sharing the load today will be
`Larry Gotts.
`THE COURT: All right. Mr. Grant, are you actually at a
`podium? Like, are you recording this?
`MR. GRANT: Yes, Your Honor, we are. The way we do these
`remote hearings and remote trials is we actually have a sound
`stage set up so that it has the feel and look of a courtroom.
`MR. MOLSTER: I've got to get one of those.
`THE COURT: Better than where I am right now.
`MR. GRANT: Well, candidly, Your Honor, I was going to say
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
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`you look like you're on a movie set. That looks exactly like
`what I would expect a judge's background to look.
`THE COURT: I managed to get the picture of the Supreme
`Court Reporters behind me. When I tried to do the one with the
`seal that some of the other judges have done, that was the limit
`of my technological capabilities, and I just gave up and went
`with the Supreme Court Reporters.
`MR. GRANT: If you can believe it, Your Honor, we actually
`have two of these sound stages, and the other one is being used
`for a virtual trial that's ongoing.
`THE COURT: That's great. All right. So, I have all of
`the motions. I read all of the replies. And before I get
`started, one thing I just wanted to bring up was it appears that
`we did not receive -- and I'm not going to yell at you right now
`because I think we're having Clerk's Office issues as well, but
`we checked everywhere, checked Judge O'Grady's chambers, and it
`appears that Reynolds did not give us courtesy copies this week
`of any of their pleadings.
`MR. LAUD: Well, that's a --
`MR. MOLSTER: Your Honor, I think I checked on that, and I
`think I was told that they were all delivered, Your Honor. So,
`if that's the case, we profusely apologize, but we're obviously
`aware of the rule, and we thought we complied.
`THE COURT: If you could make sure. Mr. Molster, if you
`don't mind just checking on it, I would love to know if they were
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
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`dropped in the drop box outside of the Clerk's Office and if they
`had my name on them or if they had Judge O'Grady's name on them,
`because we've checked everywhere. And if it was the Clerk's
`Office's fault, I want to make sure that I follow through with
`them and don't let them off the hook on this.
`MR. MOLSTER: Very good, Your Honor. We'll do so. And my
`apologies. If it was our mistake, which I don't know, but it's
`my understanding that it's not. But if it was, we profusely
`apologize.
`THE COURT: We just want to make sure in the future that
`you do it, but, in this instance, please let me know where they
`were delivered because I want to make sure that whoever is
`handling these --
`MR. MOLSTER: With the Court's permission, may I send
`Erica an e-mail on that?
`THE COURT: That's totally fine.
`MR. MOLSTER: Thank you, Your Honor.
`THE COURT: Okay. So, sa I said, I read everything. I
`even read the replies that came in yesterday, and I don't feel
`like I need much oral argument. Is there anything that you all
`want to add? I was going to address the motion to stay first
`because, frankly, that would moot everything else.
`Is there anything that you all need to add to that? Okay.
`Hearing nothing --
`MR. GRANT: Your Honor -- Look, Your Honor, if you're
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
`
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`ready to roll, so be it.
`THE COURT: I am. And what I'm going to tell you, as to
`the motion to stay, I had a lengthy discussion with Judge O'Grady
`about this yesterday, and we're both of the same mind. We think
`that {indiscernible} --
`THE COURT REPORTER: I'm sorry, Judge. Judge, I'm sorry,
`you weren't coming through. Could you repeat that last sentence,
`please?
`THE COURT: We think that the motion to stay should be
`granted; as to the counterclaims as well. It should be stayed in
`its entirety. They -- we think it makes sense for them to decide
`whether or not to institute review first, and, if granted, then
`they, of course, will rule on the merits, because otherwise it's
`a waste of judicial resources.
`We noticed that you had litigation pending in, I think,
`North Carolina, and I can see -- and frankly, because of COVID,
`we've passed on doing jury trials again. I would not be
`surprised, and Judge O'Grady said it, that he would expect that
`we wouldn't actually go to trials again until maybe 2022, maybe
`the end of 2022, because they have to do all of the criminal jury
`trials first.
`So, as I already stated, it does not seem appropriate to
`proceed on the counterclaims if the claims by the plaintiff are
`stayed, so we --
`MR. GRANT: Can I just briefly be heard on that, Your
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
`
`Case 1:20-cv-00393-LMB-WEF Document 444 Filed 01/13/21 Page 7 of 14 PageID# 9923
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`Honor?
`THE COURT: Okay.
`MR. GRANT: You know, look, I understand the Court's
`ruling, and my only point would be this, Your Honor: The rule
`that we thought made sense for the Court to adopt is one that
`says, you know, you will stay the case if the IPR petitions are
`instituted.
`As to the counterclaims, there have been no IPR petitions
`filed, much less considered, and so the concern I have from my
`client's perspective is, you know, we're staying a case just
`because they're saying they may file them. And even if they did
`file them, it would be hard for them to demonstrate diligence
`because here we are six months down the road.
`THE COURT: I am not staying it because they might file
`it. That's a separate issue. And I don't think that that is a
`good reason to stay, because they haven't even filed it. I'm not
`basing it on that. It just makes no sense to proceed with this
`piecemeal, and especially when we're not going to get to trial
`any time soon.
`So, Judge O'Grady and I, as I said, discussed this
`yesterday. We agreed that this was the proper thing to do, so
`it's stayed in its entirety. You all are welcome to appeal me,
`but, frankly, I think that might be a waste of time.
`MR. GRANT: And I appreciate the Court's insight that it's
`conferred with Judge O'Grady. That's very helpful. We'll be --
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
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`Case 1:20-cv-00393-LMB-WEF Document 444 Filed 01/13/21 Page 8 of 14 PageID# 9924
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`So, can I ask --
`THE COURT: Sure, go ahead. Go ahead.
`MR. GRANT: Can I ask the Court this, because it's
`relevant to the timing for the motion to reconsider which is on a
`very short time-frame, particularly in light of your last
`statement, you know. One thing I don't want the PTAB to rely on
`is to rely on the fact that the stay order is issued by a
`magistrate judge and is subject to an, arguably, report and
`recommendation, objections and the like, and so one thing I would
`ask the Court to consider is whether that order could be issued
`by Judge O'Grady, because the deadline that we're facing in the
`PTAB is just a week away or a little bit over a week away, and I
`don't want the response from Jones Day to the PTAB being, Well,
`this isn't really a stay, it's just a report and recommendation.
`So that's one question.
`And then the other question I have, Your Honor, is what
`will be the deadline for the stay? In other words, I understand
`the Court is staying the case with respect to our IPRs. What
`makes sense to me is that it's stayed until there's an
`institution decision or a denial on the merits.
`Is there -- when do we know to come back in front of the
`Court and say it's time to lift the stay, nothing's happened?
`THE COURT: Well, I think it's appropriate, frankly, that
`we do what counsel for the defendants suggested, which was to
`report back within three days, once they have any kind of
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
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`indication from the PTAB as to what they're going to do. I think
`it's on page -- on their reply, page -- the reply on the last
`page.
`"The parties should further be directed to file a joint
`status report three days following each decision by the PTAB so
`that the Court and the parties may revisit the appropriateness of
`a continued stay," and I think that's the appropriate thing to
`do.
`
`With regard to everything else here, and I'll get to that
`now, I'm staying this with regard to motions that you all may
`file, but what I'm not going to do is stay it as to things that
`need to be cleaned up in discovery. I don't expect you all to
`just do nothing, stop production that's already in the process of
`going on. I want you to finish that process -- finish that
`production and finish answering any discovery that may be out
`there. I don't want you bringing a motion to compel if you think
`that it wasn't answered completely at this point. We'll deal
`with that later. But I want you to produce everything. So that,
`you know, for instance, affects the plaintiffs' motion to compel
`because I think you're in the production on that one, and --
`MR. GRANT: And I can confirm for the Court that that
`production is complete.
`THE COURT: Okay. And the timeliness issue is,
`effectively, mooted on the defendants' -- on the plaintiffs'
`motion to strike the infringement contentions. So, you know, all
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`(703)549-4626 * scottwallace.edva@gmail.com
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`of those motions, because they both deal with timeliness issues,
`I think are mooted in terms of the argument on timeliness.
`So, basically, whatever else is in the works I want you to
`complete. It doesn't necessarily mean that the expert reports
`need to be produced. I don't think that they do. But what I
`would like you all to do is to come up with a timeline that makes
`sense. As soon as we hear from the PTAB, you all in the
`meantime, before you even hear from them, meet and confer about
`what -- because I don't want to be fooled with later on. You all
`figure out now, you know, okay, once the stay is lifted, how many
`days to finish this, how many days to do that. Figure it out now
`so when the stay is lifted we're ready to go. Okay?
`MR. GRANT: Understood.
`THE COURT: Okay. The only other issue, then, is with
`regard to the defendants' motion to compel a complete answer to
`Interrogatory 7. Do you all have anything that you want to add
`with regard to that on behalf of the defendants?
`MR. GRANT: No, I don't, Your Honor. I think we'll rest
`on the papers. I think it's crystal clear that we're entitled to
`some of the facts supporting the damages claims, and we've yet to
`receive them.
`THE COURT: I think that their answer is with the third
`supplement, and, frankly, are adequate at this point. I think
`that the additional -- you've got, I think, the basis there for
`it, essentially. And as far as the other details are concerned,
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
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`the expert reports are due soon, and I think you'll be able to
`get that out of the expert report now.
`I think, since -- that's due in another week or so, isn't
`it, perhaps, when the expert reports are due?
`MR. GRANT: I think the expert reports are due in about
`ten days, Your Honor, but what I understand the Court to be
`saying is that that is part of what's stayed. Is that correct or
`wrong?
`THE COURT: Well, you know, it seems to me as though, if
`the -- it might be a waste of time at this point to produce the
`expert reports if the PTAB acts.
`On the other hand, I think, if they do produce it and you
`don't have to produce your expert reports yet, then I think that
`kind of gives an unfair advantage for you to have what could be
`months to produce your expert report.
`So, at this point, I don't think you need to produce the
`expert reports, but I expect counsel for the plaintiffs to be
`ready to file that within the same time period, once the stay is
`lifted. So, if it's due in ten days, I expect, once the stay is
`lifted, you'll file it in ten days. Okay?
`So, is there anything I didn't deal with here? Because
`what I'm going to do is deny that -- I'm denying all of the --
`{indiscernible}.
`THE COURT REPORTER: I'm sorry, Judge. You're not coming
`through.
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`(703)549-4626 * scottwallace.edva@gmail.com
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`MR. GRANT: Your Honor, I just want to make sure I'm a
`hundred percent clear, that the parties are a hundred percent
`clear. So, as of today, or shortly thereafter, we'll have a
`definitive order from the Court staying the case pending
`decisions from the PTAB, at least on the IPRs that are filed.
`As of today, the parties will -- or at least as of the
`close of business, because, obviously, there are depositions
`occurring today, as of close of business today, the parties will
`suspend conduct in the litigation, and, for example, if there's a
`week due from today until expert reports, when we approach the
`Court within three days of those IPR decisions in January and the
`Court deems it correct to lift the stay, we will put up a draft
`schedule before the Court that picks up exactly where we left off
`at the close of business today, i.e., if expert reports are due
`in seven days, they'll be due in seven days from that, and all
`the other scheduling deadlines will follow accordingly.
`THE COURT: Exactly, exactly.
`MR. GRANT: Understood.
`THE COURT: Okay. And I think, if you think there's a
`problem with the PTAB, I'm sure Judge O'Grady will have no
`problem issuing an order staying it.
`MR. GRANT: I think that would be -- I think that would
`help with the PTAB, Your Honor, and it would avoid any motion
`practice regarding objections.
`THE COURT: Okay. Is there anything else, counsel?
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`
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`Case 1:20-cv-00393-LMB-WEF Document 444 Filed 01/13/21 Page 13 of 14 PageID# 9929
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`MR. LAUD: May I ask one clarifying question for
`plaintiffs, Your Honor? There are some outstanding discovery
`requests that were just served, I believe, yesterday, and there
`are others, I think, on our side that were in the works that
`haven't quite been served yet. Should we pause on those as well?
`I think I understand Your Honor to be saying we should answer the
`discovery requests that were just served as if -- so that we can
`keep things moving in the background.
`THE COURT: I think it makes sense. I mean, you know, if
`the case is stayed, technically you don't have to, but I hate to
`see you pause in production -- that's the thing -- when we can
`just kind of get that thing wrapped up. And if there are any
`objections to anything, we can deal with that once the stay is
`lifted.
`MR. GRANT: And again, Your Honor, just for clarity,
`continue producing documents. Does the stay/suspension apply to
`other written discovery, or should we continue with any pending
`written discovery?
`THE COURT: I think that you should finish the discovery
`that you've got and not issue new discovery until the stay is
`lifted.
`MR. GRANT: I understand.
`MR. LAUD: Okay. Thank you, Your Honor. And I'll just
`say, before we close, if it's all right, thank you, Your Honor,
`for hearing us virtually today. It was a great help to our side.
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`(703)549-4626 * scottwallace.edva@gmail.com
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`THE COURT: No problem. We don't want people traveling.
`MR. LAUD: Thank you.
`THE COURT: Okay. Anything else that you all can think
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`of?
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`MR. GRANT: Nothing further for the defendants.
`MR. MOLSTER: Nothing further for plaintiffs, Your Honor.
`Thank you very much for your time this morning.
`THE COURT: All right. Thank you all. Take care.
`(Proceedings adjourned at 11:21 a.m.)
`
` C E R T I F I C A T E
`
` I, Scott L. Wallace, RDR-CRR, certify that
`the foregoing is a correct transcript from the record of
`proceedings in the above-entitled matter.
`
`12/4/20
` /s/ Scott L. Wallace
` ---------------------------- ----------------
` Scott L. Wallace, RDR, CRR
` Date
` Official Court Reporter
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`Scott L. Wallace, RDR, CRR, Official Court Reporter
`(703)549-4626 * scottwallace.edva@gmail.com
`
`