1773 546MZUBF 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 LAURA ZUBULAKE, 3 4 Plaintiff, 4 5 v. 02 Civ. 1243 (SAS) 5 6 UBS WARBURG, LLC; UBS WARBURG; 6 and UBS AG, 7 7 Defendants. 8 8 ------------------------------x 9 New York, N.Y. 9 April 6, 2005 10 2:30 p.m. 10 11 Before: 11 12 HON. SHIRA A. SCHEINDLIN, 12 13 District Judge 13 14 APPEARANCES 14 15 LIDDLE & ROBINSON 15 Attorneys for Plaintiff 16 BY: JAMES R. HUBBARD 16 JAMES A. BATSON 17 CHRISTINE A. PALMIERI 17 ALYSON C. BRUNS 18 18 PROSKAUER ROSE 19 Attorneys for Defendants 19 BY: BETTINA B. PLEVAN 20 LLOYD B. CHINN 20 BRIANNA C. KENNY 21 LISA A. SWEBERG 21 22 22 23 ALSO PRESENT: REBECCA WHITE 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1774 546MZUBF 1 (Trial resumed) 2 (In open court; jury not present) 3 THE COURT: There was a note from the jury which I 4 have marked as Court Exhibit 6. That note said: Can we please 5 have Josh Varsano's Friday and Monday testimony now? Thanks. 6 10 a.m., April 6, '05 signed by Mr. Coles. 7 I understand a lawyer from each side went over the 8 transcript from Monday and the lawyers agree on appropriate 9 redactions. My clerk has prepared the redactions and the 10 Monday transcript was sent to the jury approximately 2:00. 11 Is that an accurate statement, Mr. Batson? 12 MR. BATSON: That's correct, your Honor. 13 THE COURT: Mr. Chinn, that's accurate? 14 MR. CHINN: Yes, that's accurate. 15 THE COURT: Then I received a note marked Court 16 Exhibit 7 at 2:05 p.m. and that note says: May we see the 17 compensation charts of front pay and back pay that the 18 plaintiff and defendants' lawyers showed us during closing 19 arguments. 20 The lawyers heard that note prior to going on the 21 record, and they are considering now their response to that 22 note. 23 In addition, after we solve the note I would like to 24 talk about the punitive damages charge and the evidence. 25 MS. PLEVAN: We will consent, your Honor. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1775 546MZUBF 1 THE COURT: Let me explain for the record, my first 2 instinct from reading the notes, that these charts were used in 3 summation and were not therefore evidentiary. But I said 4 before the reporter came in if both parties agreed with the 5 jury's request to see the charts, I would allow them to be 6 used. I need to basically need to make sure I heard that 7 right. 8 Ms. Plevan, do you consent on the record to the jury 9 seeing both charts? 10 MS. PLEVAN: Yes, your Honor. 11 THE COURT: Mr. Hubbard, do you consent to the jury 12 seeing both charts? 13 MR. HUBBARD: We do. 14 THE COURT: In what form are we sending them in? 15 MS. PLEVAN: We have ours. 16 THE COURT: Let's mark it as something for the record. 17 Let's call it Court Exhibit 8 so it's clear it is not evidence. 18 Mr. Hubbard, do you have it in that format? 19 MR. HUBBARD: I only have -- I have a copy in Word. 20 THE COURT: Of yours? 21 MR. HUBBARD: Yes. 22 THE COURT: Why don't you show the adversary each 23 others. 24 MR. HUBBARD: We did. 25 THE COURT: And everything is accurate. It is what SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1776 546MZUBF 1 was used in the summation? 2 MS. PLEVAN: Yes. 3 THE COURT: Ms. Plevan, yours is Court Exhibit 8. Can 4 you write on yours, Mr. Hubbard, Court Exhibit 9? 5 MR. BATSON: Our exhibit has holes punched in it. We 6 took it out of our binders. Is there any chance we can have a 7 photocopy made so the jury doesn't have one with tears in it? 8 THE COURT: We don't have a photocopy machine handy. 9 We have waited 25 minutes to respond to them. I'll send it in. 10 At this time Court Exhibits 8 and 9 are going in on 11 consent. 12 Marshal, I want you to give them these two pieces of 13 paper. We don't need the jury. They asked for that. We are 14 giving them that. 15 I would not presume ever to read tea leaves, but it 16 seems to me there is some chance of a damages verdict. We need 17 to finalize our work on punitive damages, both evidentiary and 18 the language of the charge. 19 Have you been given by my clerk the language after 20 last night? Give us two more seconds and we will get that to 21 you. It's only two pages. There were two open issues last 22 night, I think. One had to do with the net worth situation. 23 One had to do something about Ms. Yeh. I noticed that in one 24 of your e-mails. 25 MR. HUBBARD: Your Honor, Mr. Chinn proposed an SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1777 546MZUBF 1 instruction that would direct the jury not to consider any of 2 the testimony of Ms. Yeh on the issue of punitive damages. Our 3 response was and our response in writing to your Honor was that 4 her testimony on the issue of the attempt to conceal her 5 views -- Mr. Chapin's effort to have her -- what she said, 6 threaten her not to say anything about what he did is certainly 7 relevant to the issue of concealment which is reference to the 8 issue of awareness of the misconduct. 9 THE COURT: I didn't see your writing. Now I see. It 10 was in the back of a packet that Mr. Riley gave me. Let me 11 look at your writing for a minute. 12 I have read the three writings I received now. 13 I received for the record an e-mail at 8:37 a.m. from 14 Ms. Palmieri this morning on the issue of the defendant's net 15 worth being given to the jury as evidence. 16 I received another e-mail at 9:41 a.m. from 17 Ms. Palmieri saying that the charge shouldn't address it, but 18 counsel should be able to argue that the jury should consider 19 Ms. Yeh's testimony with particular attention to the notion -- 20 I don't know how to quite say it, but concealment or cover-up. 21 Then I received an e-mail at 2:10 p.m. That's a 22 resend. I think you sent it before 2:10. From your Blackberry 23 you didn't get it Mr. Chinn. Around 2:00, I received an e-mail 24 from Mr. Chinn addressing the question of whether the jury 25 could learn or should learn of the net worth. Unless you wish SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1778 546MZUBF 1 to be heard further, I found the plaintiff's letter persuasive 2 on this. 3 They cited a number of cases post State Farm which do 4 go ahead and say that the defendant's financial position is a 5 proper consideration in assessing punitive damages. That's a 6 direct quote from the Fourth Circuit case, and the Eleventh 7 Circuit said the same thing. The wealth of a defendant is a 8 legitimate consideration in determining the reasonableness of 9 the jury's punitive damage award. A district court case in 10 this district that said State Farm cannot be reasonably 11 understood to preclude evidence of defendant's net worth. So 12 whatever case law there is seems to favor allowing the jury to 13 know this. 14 The defense cited one case which points out that 15 sanctions should be based on the wrong done rather than on the 16 status of the defendant; a person is punished for what he does, 17 not for who he is, even if the who is a huge corporation, and 18 that's quoting from a Seventh Circuit case. But even in that 19 case I don't think that the net worth or wealth of the 20 defendant was kept from the jury even though I understand the 21 reasoning was somewhat unusual. Even there the net worth of 22 the wealth went to the jury. There is no case law that support 23 my excluding it and I'm not going to exclude it. Hopefully, 24 you have worked out the number. 25 With respect to this argument about being -- that the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1779 546MZUBF 1 defense is asking for the charge, I tell the jury that they may 2 not consider Ms. Yeh's testimony. I can't do that. I think it 3 is relevant for the reasons stated in Ms. Palmieri's letter. I 4 don't want to say anything about it one way or the other. You 5 each have your 15 minutes and you can say what you want to say. 6 I think that's appropriate. 7 Anybody want to be heard further, or are we ready to 8 go over the charge again? 9 MR. HUBBARD: Nothing further from the plaintiff, your 10 Honor. 11 MR. CHINN: Your Honor, on the wealth issue or value 12 of the company issue? 13 THE COURT: You want me to talk about proportionality? 14 Mr. Hubbard, I think you even leaned that way last night. I 15 think you said, that makes some sense to you. Requested 16 charge, as you will recall, had said the amount of punitive 17 damage must bear a reasonable relationship or proportion to the 18 injured harmed or damage action caused to plaintiff by UBS's 19 punishable misconduct as measured by the amount of actual 20 damages that you awarded. 21 MR. HUBBARD: Your Honor, I told Mr. Chinn before we 22 concluded yesterday afternoon that I would not agree to that as 23 a charge. And as I reflected upon it last night, I'm even more 24 satisfied that that should not be a part of the Court's charge. 25 It's just simply not -- it's simply not a criteria for the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1780 546MZUBF 1 jury's consideration. It's already in there that they have to 2 be reasonable, that they have to be all the other things that 3 are in the instruction, and I think that, again, it's the kind 4 of thing that could be a matter of argument. I mean, I 5 think -- 6 THE COURT: In that argument the Supreme Court said it 7 must be proportional. If I have a runaway jury here, it isn't 8 going to stand. There is going to be a remittor to reasonable 9 proportionality. You would rather see it a big number, and if 10 I have to set it aside I will set it aside. 11 MR. HUBBARD: I would rather see a reasonable number. 12 You have your obligations under the Supreme Court 13 criteria to review it and you would. Our job is to try to get 14 it done the right way. 15 THE COURT: Which means what? 16 MR. HUBBARD: To try to get the jury to reach a 17 reasonable punitive damage award and not some outrageous 18 punitive damage award. 19 THE COURT: You may intend to talk about that? 20 MR. HUBBARD: Yes, your Honor. 21 MR. CHINN: Your Honor, I would observe the following. 22 Accepting the Court's ruling that it may be referred to, the 23 resolution of the evidentiary issue, we object, but accepting 24 that's what the Court is going to do, my question would be, is 25 there a need to point this out in the charge? And, if so -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1781 546MZUBF 1 THE COURT: Point what out. I don't know what the it 2 is. 3 MR. CHINN: The sentence, as part of this 4 determination you may consider the financial circumstances of 5 the defendant. 6 THE COURT: Where is that? 7 MR. CHINN: Last sentence of the first paragraph. 8 THE COURT: I see it. 9 MR. CHINN: The problem with pointing that out, your 10 Honor, if that is going to be pointed out, it needs to be 11 pointing out the way that State Farm describes wealth, that 12 that factor alone can't make up for other factors. 13 THE COURT: It should say as part this determination 14 you may consider the financial circumstances of the defendant, 15 but that factor alone may not -- 16 MR. CHINN: It is a little hard to work this text. 17 THE COURT: But that factor alone may not -- 18 MR. CHINN: Make up for the failure of other factors 19 such as reprehensibility. 20 THE COURT: I don't know if there was an easier way to 21 do it. What about dropping that sentence from the charge? 22 Obviously, I'm allowing them to consider it because it's being 23 put before them and he's going to argue it. To say, as part of 24 this determination you may consider the financial 25 circumstances, that's obvious. I've allowed the evidence. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1782 546MZUBF 1 I've allowed the summation. 2 Mr. Hubbard, what about just deleting the sentence? 3 They obviously can consider it. It's before them. There is 4 going to be a number read to them and there is going to be oral 5 argument. I don't know why I have to tell them. 6 MR. HUBBARD: Well, suppose, for example, your Honor, 7 the defendant gets up and they argue that their financial 8 circumstances are not relevant. 9 THE COURT: Then I will have to put it back in the 10 charge. 11 MR. HUBBARD: I fear that. 12 THE COURT: No, don't fear that, because I won't have 13 ruled. In other words, you can always change a charge, 14 depending on the summation. If they were to say, and you may 15 not consider our financial circumstances, they know I am going 16 to put the sentence back in. 17 MR. HUBBARD: I can certainly tell them that they can 18 consider it. 19 THE COURT: Yes. I'm allowing the evidence and the 20 summation. Of course, you can. So given that, I think we 21 could drop the sentence and see if I had to add it back, 22 depending on the defense summation. 23 MR. HUBBARD: I certainly think it's a proper 24 instruction. If the Court exercises her discretion in that 25 fashion, I won't object to it. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1783 546MZUBF 1 THE COURT: I will take that sentence out. But 2 subject to the defense summation making some kind of a 3 statement such as, the law forbids you from considering the 4 financial circumstances. If you do that -- in other words -- 5 Mr. Chinn, you got your point. If you misstate the law, I am 6 going to correct it. 7 MR. CHINN: If Ms. Plevan misstates the law. 8 THE COURT: I will correct her. If she says as a 9 matter of law you can't consider the circumstances of the 10 defendant, obviously, I am going to correct it. 11 MR. HUBBARD: Your Honor, just so there is no 12 question, she can't even say they shouldn't consider it. 13 THE COURT: I understand. I think she will be careful 14 with it. 15 MR. CHINN: Consistent with the law, your Honor, we 16 can certainly absolutely say they can't ask you to give this 17 money just because this is a big company. That's what the law 18 says. 19 THE COURT: Absolutely. Just stick with the law. You 20 can't go wrong. Absolutely. You can say as much as you want 21 to say about that. 22 Can we look at the punitive damages charge and see 23 what other lingering language problems there might be? I have 24 taken out the last sentence in the first paragraph. 25 MR. CHINN: Your Honor, may I ask one other question. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1784 546MZUBF 1 With respect to the Peggy Yeh issue, if Mr. Hubbard argues in 2 closing that you should punish this company because not only 3 did it do bad things to Ms. Zubulake, but look at the sexual 4 harassment -- 5 THE COURT: I don't think he will do that. 6 MR. CHINN: We would have a right to object to that. 7 THE COURT: And I think I would sustain it. Might as 8 well be on some kind of notice. 9 You want to use it to say that it was part of the 10 cover-up that she not tell management about her years with 11 Chapin and her experiences with Chapin that he made her feel 12 that way. At least that's her state of mind, that things he 13 said made her think that it would be bad for her career, bad 14 for everybody that he said, not they harassed her. It is not 15 about her being harassed. 16 MR. HUBBARD: Her claim is not before the jury. 17 THE COURT: He wrote that in his letter. It is not a 18 sexual harassment case as to Ms. Yeh. 19 Going back to the charge, is there anything in the 20 charge, or are we done? 21 MR. HUBBARD: Your Honor, if I may, with the charge, 22 there is something that I think is important and it's just 23 really a matter of the order. If you come down in the second 24 paragraph, beginning having found, second sentence begins UBS 25 acted with. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1785 546MZUBF 1 THE COURT: Yes. 2 MR. HUBBARD: Now, the third sentence begins, an 3 employer may not. First of all, probably that should be a new 4 paragraph because you've gone to the affirmative defense. 5 THE COURT: I don't care about new paragraph. I'm 6 happy to do that. Go ahead. 7 MR. HUBBARD: But you state that in two sentences here 8 we now state that the defendant, the employer, the defendant 9 may not be vicariously liable or liable if the defense proffers 10 by a preponderance of the evidence that the defendant made a 11 good-faith effort to comply with the laws prohibiting sex 12 discrimination and retaliation. 13 Now, that in the abstract is not a correct statement 14 of the law. The next sentence says: An employer is shielded 15 from punitive damages only if it has an antidiscrimination 16 policy and that policy is coupled with a good-faith effort to 17 enforce it. We have kind of got the cart before the horse. 18 There are two criteria. They must prove both. They must prove 19 both that they had an antidiscrimination and antiretaliation 20 policy and, secondly, they made a good-faith effort to enforce 21 it. In my view, at least, I think the emphasis on the latter 22 suggests that that might be the overriding criteria. In fact, 23 it's only one part of the test. 24 So I would ask your Honor, if you would, to at least 25 introduce that paragraph with the statement that the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1786 546MZUBF 1 affirmative defense requires proof of two things, that they had 2 a policy on both issues and, secondly, that the evidence 3 demonstrates that they made a good-faith effort to enforce it. 4 And because I think that is what the Zimmerman case from the 5 Second Circuit and Kolstad tell us. 6 THE COURT: I guess what he is saying is -- 7 MS. PLEVAN: I'm not clear. 8 THE COURT: I'll help. The last sentence, an employer 9 is shielded from should become the first sentence of a new 10 paragraph and it should say, an employer is shielded from 11 punitive damages if it proves two things: One, it had an 12 antidiscrimination policy; two, and the company made a 13 good-faith effort to enforce that policy. That's his request. 14 MR. HUBBARD: Antidiscrimination and antiretaliation. 15 It must have both. 16 THE COURT: Usually, it's in the same policy. 17 MR. HUBBARD: In this case it's not and that's the 18 significance of it. 19 THE COURT: That's the request. 20 MR. CHINN: Is it moving? 21 THE COURT: That's the request. The request is that 22 that sentence become the first sentence in a new paragraph that 23 would start after the words, or acted with reckless disregard 24 of those laws. See that three lines from the bottom. And 25 there would be a new paragraph that says, an employer will be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1787 546MZUBF 1 shielded from punitive damages if it proves two things: One, 2 that it had an antidiscrimination and antiretaliation policy; 3 and, two, that he made a good-faith effort to enforce those 4 policies. 5 MR. HUBBARD: Unfortunately, from that point forward, 6 the next two sentences are not accurate because they focus only 7 on one issue. If I can just read you the third sentence of the 8 paragraph now, it says, you may not award punitive damages if 9 the defendant has proven by a preponderance of the evidence 10 that defendants made a good-faith effort to comply with the 11 laws prohibiting sex discrimination. 12 That is manifestly not the law. That is only one 13 prong of the test. That would be wrong. 14 THE COURT: I have not given this charge. Relax. 15 I'll get it right before I give it, you know. 16 MR. HUBBARD: I apologize. 17 THE COURT: It would be wrong, but don't stress wrong 18 so many times. 19 What is it, Mr. Chinn? 20 MR. CHINN: Frankly, I think it's right the way it is 21 right now. Because the paragraph -- 22 THE COURT: You're allowed to say right a number of 23 times. That's okay. 24 MR. CHINN: I'm on a roll. The quoted language is 25 right out of Kolstad. That's the general description of the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1788 546MZUBF 1 affirmative defense. The particulars of the affirmative 2 defense is what Mr. Hubbard is focusing upon. The general 3 statement of the affirmative defense, an employer may not be 4 vicariously liable for the discriminatory employment decisions 5 of managerial agents where these decisions are contrary to the 6 employer's good-faith efforts to comply with Title VII, that's 7 not focusing on one element over the other. It's just saying 8 in general terms that's what it is. 9 THE COURT: The only reason he kept saying wrong is, 10 it doesn't talk about having an antidiscrimination and 11 antiretaliation policy. 12 MR. CHINN: The Court goes on to instruct the jury by 13 saying this is the general proposition -- 14 THE COURT: He is saying, you're not off the hook 15 unless you have a policy. So he is saying, even though this is 16 a quote from Kolstad, it may come after some other quotes from 17 Kolstad. He is saying, is it a necessary condition not just 18 you made a good-faith effort to comply with Title VII, but you 19 actually had to have a policy in place and you had to make a 20 good-faith effort to comply with the policy. 21 I don't know the answer to that. Do you have to have 22 a policy in place? What if, for example, you didn't have a 23 policy in place because you made a good-faith effort to comply 24 with the law? He says that's not enough. I don't know the 25 answer. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1789 546MZUBF 1 MR. CHINN: I think, your Honor, the method of proving 2 good faith. 3 THE COURT: Is by having a policy. 4 MR. CHINN: Essentially, the cases have focused upon 5 in the first place having a policy and in the second place -- 6 THE COURT: You don't think it is a necessary 7 condition. You're saying the company never had a written 8 policy but made every effort to comply with Title VII. 9 MR. CHINN: The point is, you have to make good-faith 10 efforts to comply with Title VII. 11 THE COURT: I understand that. You think the law is 12 that you don't have to have a policy. It is nice. It's a good 13 way to comply. If you don't have one, you can still make the 14 defense to try to convince the jury that you make good-faith 15 efforts to comply with Title VII. All the policy does is offer 16 proof of those efforts. It is not a necessarily legal 17 condition. It makes it easier for a defendant who has a policy 18 so they can say, we have -- 19 MR. CHINN: I believe, your Honor, a fair way to state 20 this, the Courts have held that having a policy and complying 21 with it or acting in good faith to comply with it are 22 sufficient, constitute sufficient evidence to avail oneself of 23 the defense. But I don't know that they are necessary. 24 THE COURT: I agree. I am going to stay close to 25 Kolstad. I am going to stick with the sentence as I now have SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1790 546MZUBF 1 it. 2 MR. HUBBARD: Your Honor, may I just do one thing, 3 please? May I quote you from the Second Circuit's decision in 4 Zimmerman? 5 THE COURT: Which is what date? 6 MR. HUBBARD: May 31, 2001. 7 THE COURT: That predates or postdates Kolstad? 8 MR. HUBBARD: Postdates. 9 THE COURT: Go ahead. 10 MR. HUBBARD: The defendant contests the punitive 11 damages award on the additional ground that as a matter of law 12 it is entitled to the affirmative defense recognized in Kolstad 13 which insulates an employee from punitive damages liability if 14 it has made good-faith efforts to enforce an antidiscrimination 15 policy. This defense requires an employer to establish both 16 that it had an antidiscrimination policy and made a good-faith 17 effort to enforce it. 18 THE COURT: The Second Circuit seems to have made it a 19 necessary condition. 20 MR. HUBBARD: It goes on. Where evidence supports 21 both components of the defense, the employer is entitled to 22 have the defense considered by the jury under proper 23 instructions. 24 In fact, in this case, this defendant is not entitled 25 to this defense because there is no antiretaliation policy at SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1791 546MZUBF 1 all adopted by the company in their human resources policies. 2 I won't ask you to do that. I am going to argue that. But I 3 just point out how serious this issue is. 4 MS. PLEVAN: The company has a policy and what I also 5 would say, you can have a policy and it doesn't have to be in 6 writing. You could have a policy that's not in writing, and 7 certainly all the testimony from all of the witnesses, they 8 understood that was the requirement. 9 THE COURT: It seems that the Second Circuit has put a 10 gloss on Kolstad that both are required. You're welcome to 11 reread that to yourself, if you want to look at it. 12 MS. PLEVAN: I think there is still a difference, that 13 he is asking to add retaliation, and we would object to that. 14 THE COURT: It does seem that in the Second Circuit 15 it's necessary to have both. He just read it from Zimmerman, 16 which postdates Kolstad. That's what our circuit has said. 17 MS. PLEVAN: We will take a look at it, your Honor. 18 THE COURT: What do you mean, we will take a look at 19 it? You've got it in front of you, or he can hand that to you. 20 It seems that the Second Circuit has made it a necessary 21 condition. 22 MR. HUBBARD: Your Honor, just one other thing so it 23 doesn't come up in argument. Kolstad is a discrimination case, 24 not a retaliation case. 25 THE COURT: I think retaliation is a form of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1792 546MZUBF 1 discrimination, the ultimate form. I think you even said that. 2 You were so pleased when the Supreme Court last week issued a 3 decision about the coach of the girl's basketball team. I 4 think it is subsumed in the phrase antidiscrimination policy. 5 MR. HUBBARD: We don't ask for any other change of the 6 instruction. 7 THE COURT: The ruling is, I am not going to add the 8 phrase, and antiretaliation, because I think retaliation is a 9 subset of discrimination. It is subsumed by it. 10 So the only question is whether to change the order of 11 the sentences as drafted now. I think not. I think I am going 12 to start with the Supreme Court and work to the Second Circuit 13 because the Supreme Court comes first. 14 I am going to put the paragraph -- there will be a new 15 paragraph that starts with, an employer may not, and the 16 paragraph will end with, an employer will be shielded from 17 punitive damages only if it has an antidiscrimination policy 18 and that policy is coupled with the good-faith effort to 19 enforce it, just the way it is now. 20 Other than that, is there anything else you want to 21 bring to my attention in the punitive damages charge? 22 MR. HUBBARD: Nothing from the plaintiff, your Honor. 23 MR. CHINN: I'm just finishing the second page, your 24 Honor. 25 THE COURT: Okay. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1793 546MZUBF 1 MR. CHINN: Your Honor, we have nothing further on 2 punitive damages charge. 3 THE COURT: Just to review what happens, if and when 4 we get a verdict, if it happens to be favorable to the 5 plaintiff, we will break the news to the jury that this was a 6 bifurcated trial. There is another issue, hopefully brief, 7 that they have to hear. I will tell them it concerns the topic 8 of punitive damages. I will tell them that each lawyer has no 9 more than 15 minutes to make an argument about why they should 10 or shouldn't award it. I have a brief charge of two pages and 11 I am going to send them back. 12 How are you going to put in this evidence of whatever 13 you want to call it, the financial condition, net worth, 14 whatever the number is? 15 MR. HUBBARD: Your Honor, we don't have a stipulation. 16 I think we will offer the net worth of the defendant UBS AG, 17 which is about $5 billion. 18 MS. PLEVAN: It is a Swiss company, your Honor. It 19 seemed to us that it made sense to wait to see because of the 20 possibility that whatever number -- I thought that was the 21 direction we were headed yesterday, that the proportionality 22 issue might obviate the need to -- those numbers would be so 23 far-fetched that it would be -- 24 THE COURT: There is no way around it. The law says 25 that the jury can learn of the financial condition. As far as SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1794 546MZUBF 1 proportionality, he says he is going to argue to them. If it 2 comes in as a runaway number, it will be reduced. That's the 3 story. Now we have to just get the evidence in. 4 MS. PLEVAN: Well, the entity that we think is the 5 proper entity is the UBS Securities. 6 THE COURT: What's the net worth? 7 MS. PLEVAN: The New York -- the net worth of the New 8 York assets of UBS Securities was 1.990 billion. 9 THE COURT: What about that, that the net worth of the 10 New York office of UBS Securities is $2 billion? 11 MR. HUBBARD: Okay. 12 THE COURT: Big concession, wonderful. Can we 13 stipulate to that? 14 MS. PLEVAN: Yes. 15 THE COURT: How will it be read? Should I say the 16 parties stipulate that the net worth of the New York office of 17 UBS Securities is $2 billion? I will write that sentence out 18 before I lose it. Is the net worth the right word? That the 19 net assets, is that okay? 20 MS. PLEVAN: I think net worth is the technical term. 21 It's before expenses. 22 THE COURT: Net worth of the New York office of UBS 23 Securities -- is that what it is called? 24 MS. PLEVAN: Yes. 25 THE COURT: -- is $2 billion. That's the whole thing. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1795 546MZUBF 1 Is it approximately 2 billion or 2 billion? 2 MS. PLEVAN: It is just under. 3 MR. HUBBARD: I thought the agreement was we would use 4 2 billion. 5 MS. PLEVAN: It's 1.99. 6 THE COURT: I'm happy to do 1.99, if you want. 7 MS. PLEVAN: Yes, 1.99. 8 THE COURT: Say it again. 9 MS. PLEVAN: 1.990,648. 10 THE COURT: Is that what you want? Would you rather 11 have that than 2 billion, 1.99 -- 12 MS. PLEVAN: I thought we would go with 1.99. 13 MR. HUBBARD: Let me explain my problem on that. I 14 have the net worth of the defendant in this case in their SEC 15 filing. I do not have any evidence of what the net worth of 16 what UBS Securities is. My client and I are being asked to 17 agree to a number that we have not had a chance to audit, and 18 we just agreed that 2 billion was okay. We did not agree that 19 any other number was okay. Because I don't have any way of 20 verifying it. 21 THE COURT: I'll go with approximately because it is a 22 stipulation. 23 Let's read it back. The parties stipulate that the 24 net worth of the New York office of UBS Securities is 25 approximately $2 billion. Do the parties so stipulate? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1796 546MZUBF 1 MR. HUBBARD: For the plaintiffs, yes, your Honor. 2 MS. PLEVAN: Yes, your Honor. 3 We have offices. More than one. 4 THE COURT: The net worth of the New York offices of 5 UBS Securities. 6 We will see what happens. Maybe we still never get 7 there. I have no idea what this jury is going to do. At least 8 we are ready if they do something. 9 (Recess pending verdict) 10 THE COURT: With respect to cases that are on for 4 or 11 4:30, I have to take a verdict first in a civil case that's 12 been on trial for two weeks. Depending what that verdict is, I 13 am going to ask the jury to make a decision. If the jury has a 14 liability verdict in favor of the plaintiff, I am going to tell 15 the jury, which they don't know, that they are now going to 16 have to hear a request for punitive damages, short summations, 17 and a short charge. Do they want to do that tonight, or do 18 they want to come back tomorrow? If they do want to do that 19 tonight, I have to put off the conferences to get them argued 20 and charged, et cetera. If they want to come back in the 21 morning, that's fine, too. I can't tell you when I am going to 22 hear your case. If it is a verdict for the defendant, they are 23 done. In that case, if it is a verdict for the defendant and 24 there is nothing more to do with this jury, I am going to tell 25 the jury -- because it has been a two-week trial, I am going to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1797 546MZUBF 1 visit with them in the jury room. Either way, we are going to 2 be a bit delayed. 3 I think with that, we are ready to take this verdict. 4 Before I do, does anybody object to the plan that I'm going to 5 offer them the choice of going right into the punitives tonight 6 or tomorrow morning? 7 MR. HUBBARD: No objection from the plaintiffs. 8 MS. PLEVAN: No objection, your Honor. 9 THE COURT: We are ready. 10 (Jury present) 11 THE COURT: This is the second day in the row I have 12 not seen you until late in the afternoon. I received three 13 notes. 14 The first one was Court Exhibit 6 which said: Can we 15 please have Josh Varsano's Friday and Monday testimony now? 16 Thanks, 10 a.m., April 6, '05, Court Exhibit 6, signed by Mr. 17 Coles. That was sent to you at 2:00. 18 Then at 2:05 we received Court number No. 7 which 19 says: May we see the compensation charts, the front pay and 20 back pay that the plaintiff and defendants' lawyers showed us 21 during closing arguments? Again, 2:05, Mr. Coles signed it, 22 and that was sent in to you about 2:30. Now we have a new note 23 marked Court Exhibit No. 10 and it says, we have reached a 24 verdict. That was at 4:15 p.m. 25 We are here and we are all anxious to hear your SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1798 546MZUBF 1 verdict. At this time I will ask the clerk to take your 2 verdict. 3 THE DEPUTY CLERK: Mr. Foreperson, discrimination, 4 question 1. Did plaintiff prove by a preponderance of the 5 credible evidence that UBS intentionally discriminated against 6 her by terminating her employment because of her gender? 7 THE FOREPERSON: Yes. 8 THE DEPUTY CLERK: Question 2, retaliation. Did 9 plaintiff prove by a preponderance of the credible evidence 10 that UBS terminated her employment in retaliation for her 11 filing a charge of discrimination of the EEOC? 12 THE FOREPERSON: Yes. 13 THE DEPUTY CLERK: Question 3, actual damages. Did 14 plaintiff prove by a preponderance of the credible evidence 15 that she has suffered damages in the form of lost compensation? 16 THE FOREPERSON: Yes. 17 THE DEPUTY CLERK: Question 4. What amount, if any, 18 should be awarded to plaintiff for the period since October 23, 19 2001 until today in order to compensate her for such lost 20 compensation? 21 THE FOREPERSON: 2,241,009. 22 THE DEPUTY CLERK: Question 5. What amount, if any, 23 should be awarded to plaintiff from the period from today to 24 the date in the future that you find plaintiff would have 25 voluntary resigned from UBS or obtained comparable employment SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1799 546MZUBF 1 in order to compensate her for future lost compensation? 2 THE FOREPERSON: $6,863,100. 3 THE DEPUTY CLERK: Thank you. 4 THE COURT: Would anybody like the jury polled? 5 MS. PLEVAN: Not necessary. 6 THE COURT: Mr. Hubbard. 7 MR. HUBBARD: No, your Honor. 8 THE COURT: Ladies and gentlemen, I feel a little 9 guilty doing this to you, but I didn't have a choice. We had 10 decided, the lawyers and myself, that we were going to 11 bifurcate, which means separate out yet another issue for you, 12 and that is the issue of punitive damages which are being 13 sought in this case. Under the law they may be sought. 14 There is a short charge on punitive damages that I 15 would read you to explain to you how you should make a decision 16 on that, and the lawyers are permitted to briefly argue, each 17 side gets 10 to 15 minutes to argue to you why you should or 18 shouldn't grant any further damages called punitive damages. I 19 couldn't tell you in advance because we had decided it was the 20 best thing to deal with that issue separately until you have 21 decided separately. 22 It is 4:30. Here are the choices. I am going to ask 23 you to go into the jury room just for a minute to talk to each 24 other. Do you want to go right into the punitive phase and try 25 to finish this case? Are you tired, do you want to come back SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1800 546MZUBF 1 in the morning and have the punitive phase in the morning? My 2 charge is all of two minutes. The charge is two minutes. The 3 summations will run between a total of 20 or 30 minutes. There 4 is no new evidence, except for one stipulation which I will 5 tell you about. The whole procedure, charge and summations, 6 will be a half hour. Do you know now whether you would like to 7 stay or do you want to talk to each other? You can look 8 around. 9 The answer is stay. Everybody is okay with that? If 10 it takes you -- again, I can find cookies or soda or food. I 11 get the sense that you would like not to come back. Whatever 12 it takes to keep you going, I'm happy to give you. With my 13 apologies, that's what we are going to do. 14 Let me first tell you the only piece of new evidence, 15 and I am going to ask the lawyers to make their summations as 16 briefly as they can, and then I am going to read you a very 17 brief charge. It is a page and a half and then I am going to 18 have to ask you to consider the question of punitive damages. 19 The one sentence I have to add as evidence. It is a 20 stipulation. So I am going to read you the stipulation of the 21 parties. The parties stipulate -- which means they agree -- 22 the parties stipulate that the net worth of the New York 23 offices of UBS Securities is approximately $2 billion. That's 24 the only additional piece of evidence. 25 With that, once again, the plaintiff has the burden of SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1801 546MZUBF 1 proof, so the plaintiff will be heard last. 2 Ms. Plevan, if you wish to make an argument with 3 respect to punitive damages, now is the time. 4 MS. PLEVAN: Yes, your Honor. 5 Good afternoon. The Court is going to instruct you as 6 she did before, with respect to the law on the claims that were 7 asserted. The Court is also going to instruct you shortly on 8 the issue of punitive damages. And she is going to tell you 9 that the plaintiff is not entitled to punitive damages as a 10 matter of right. It is not enough for her just to win her 11 case. There is an added burden and a defense that UBS has 12 established, we believe, which she will tell you about in the 13 charge as well. 14 The two elements I just want to introduce with respect 15 to the punitive damages claim is that you must decide -- if you 16 were to award punitive damages, you must decide that UBS acted 17 with malice or reckless indifference to Ms. Zubulake's rights 18 and, second, you have to consider UBS's defense that it acted 19 in good faith in an effort to comply with the laws prohibiting 20 discrimination. I'll describe those both to you. But you must 21 address both those questions in order to make any award for 22 punitive damages. 23 We submit the evidence did not -- the evidence showed 24 that UBS did not act with malice in a way towards Ms. Zubulake 25 and that in fact it did make a good-faith effort to comply with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1802 546MZUBF Summation - Ms. Plevan 1 the laws prohibiting discrimination and retaliation. 2 I want to turn also to what I believe you will hear 3 from plaintiff's counsel, because I know you heard it in his 4 closing argument, about concealment and allegations of 5 concealment. And what I want to stress with you is that at no 6 time has there been any evidence that any UBS employee 7 destroyed a piece of evidence intentionally destroyed any 8 e-mail. All you've been told is that there was a failure to 9 preserve, which can mean something was gone for many different 10 reasons. And if you look at the particular e-mails that were 11 part of the stipulation, if you will recall, there was a 12 stipulation that we entered into to identify the e-mails that 13 were lost, were not available except in backup tapes. And if 14 you look at those e-mails there are about ten of them. Some of 15 them helped the plaintiff's case, some of them helped our case. 16 Some of them are not relevant at all. 17 One of them in particular, D204, is a complaint. It's 18 one of the complaints that was made about Ms. Zubulake's 19 conduct. So what I would suggest to you is that there is no 20 pattern there that would suggest that people were trying to 21 hide these e-mails, that there was an effort made, and that's 22 why these were only found on backup tapes. 23 Indeed, you have found no prejudice to Ms. Zubulake 24 because you have found that she was able to prove her claim 25 with the evidence that was provided to her. And there was a SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1803 546MZUBF Summation - Ms. Plevan 1 lot of documents produced and provided by UBS during this case. 2 There is also no evidence of other kinds of 3 concealment. Mr. Hubbard, I believe, in his closing on Monday 4 referenced the use of the phrase attorney-client privilege on 5 some documents. There were several explanations from 6 nonlawyers as to why they put that label there. It's on about 7 10, 20 documents. I think about 20 different exhibits. But 8 those exhibits were produced and they are part of the evidence. 9 So they weren't -- those documents were not concealed either. 10 And you also heard from the witnesses what they did to 11 preserve evidence. And with respect to Mr. Chapin, I think an 12 argument was made that he discouraged someone from speaking to 13 human resources, Peggy Yeh. Her testimony was contradictory on 14 that. She said several different things. But whatever 15 Mr. Chapin was talking to her about, it wasn't about 16 Ms. Zubulake. This was 19 -- 2004, long after Ms. Zubulake had 17 left. 18 The charge asks you first or tells you that the -- you 19 must determine whether UBS acted with malice or reckless 20 indifference to plaintiff's rights. And none of these issues 21 about concealment show any reckless indifference directed 22 towards Ms. Zubulake, and there is no other evidence of that 23 kind of attitude. There were a number of people who were 24 resources to her, human resources people who spoke to her, 25 management people who made themselves available to her, didn't SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1804 546MZUBF Summation - Ms. Plevan 1 turn her away. People listened to her. They did not act with 2 reckless indifference. 3 Now, the Court will also instruct you that UBS has a 4 defense to a claim for punitive damages and it reads: An 5 employer may not be vicariously liable for the discriminatory 6 employment decisions of managerial agents. In other words, the 7 law recognizes that there is a distinction between what 8 individuals do who work for a company and what the company 9 should be held responsible for. And this instruction guides 10 you to make that distinction where people act contrary to what 11 the employer's policies and good-faith efforts are to comply 12 with the law. 13 And so you'll be instructed that you may not award 14 punitive damages if it has been proven by a preponderance of 15 the evidence that UBS made a good-faith effort in complying 16 with the laws prohibiting sex discrimination and retaliation 17 and that you will also be told that an employer is shielded 18 from punitive damages only if it has antiharassment policy and 19 that policy is coupled with a good-faith effort to enforce it. 20 And so I'd like to address those points with you briefly. 21 First, in Exhibit D5 we have the UBS policy that 22 prohibits discrimination. I'll try to blow it up for you. And 23 you saw this during the course of the trial. And just look at 24 some of the elements. It's the policy to take affirmative 25 steps to ensure that all employment decisions are based on SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1805 546MZUBF Summation - Ms. Plevan 1 legitimate business considerations. That means it's the policy 2 not to make decisions based on something that's unlawful, 3 whether it's discrimination or retaliation. And the policy 4 applies to the entire employment process. 5 In the bottom paragraph it says: Each and every 6 employee of UBS is responsible for carrying out this policy. 7 I'm paraphrasing. Violation of the policy is strictly 8 prohibited. 9 There are also provisions in the handbook, which is 10 Exhibit D21, and on the page that's Bates stamped 4562, under 11 the heading of sexual harassment where it goes into various 12 forms of sexual discrimination, the policy provides UBS Group 13 prohibits any form of retaliation against any employee for 14 filing a good-faith complaint under this policy or for 15 assisting in a complaint investigation. 16 Then, you heard reference earlier on page 4570 to the 17 open-door policy where employees are encouraged to bring 18 suggestions, issues, and concerns to the attention of 19 management. And management, the policy is to have a quick and 20 fair resolution of issues without recrimination, without 21 retaliation. And this is in the best interests of UBS Group, 22 as well as its employees. Those are the policies. 23 There is also evidence that these -- it was a 24 good-faith effort to enforce these policies. Recognizing that 25 you have found in this case those efforts were not successful, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1806 546MZUBF Summation - Ms. Plevan 1 we do want you to focus on what those efforts were. You heard 2 testimony by several of the management employees about the 3 training that took place at UBS. There were procedures in 4 place to ensure that business executives consulted human 5 resources people as well as lawyers because you heard lots of 6 testimony -- this was not a situation where people did not 7 understand that they should get advice and counsel because the 8 human resources people were all trained and were all involved 9 in aspects of addressing Ms. Zubulake's complaints. 10 You also heard testimony of good-faith efforts by many 11 of the individuals to comply with the law and to address the 12 complaints that have been made by Ms. Zubulake. You have heard 13 the testimony of Mr. Varsano in particular who had worked with 14 Ms. Zubulake on a number of occasions in an effort to try to 15 resolve her issues. And you heard testimony from Mr. Hardisty 16 about his efforts to address and, in fact, and succeed in 17 addressing some of her complaints. Whether it was changing her 18 seating arrangement or accounts that had been assigned to her, 19 he took action when she didn't complain. 20 He also addressed her concerns with Mr. Chapin by 21 speaking to him and by having this conversation with Mr. Chapin 22 in June that he viewed as a warning to Mr. Chapin. He did all 23 of those things. There was also evidence that Mr. Holland 24 addressed these issues with Mr. Chapin as well to encourage him 25 to conduct himself in a constructive way with Ms. Zubulake. He SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1807 546MZUBF Summation - Ms. Plevan 1 coached him about speaking to her off the desk and in other 2 ways urged that he be responsive to her concerns. Mr. Hardisty 3 also tried to help, as did others, in an effort to find her 4 another position within the organization. 5 In one other respect as well, there was an effort, 6 good-faith effort after Ms. Zubulake filed a charge of 7 discrimination. Mr. Hardisty spoke to her and there is a memo 8 where he says that things will go on in a business-like way 9 thereafter. He didn't make any threats to her or tell her that 10 there was anything that was going to happen to her, and there 11 was an investigation conducted. You heard testimony that an 12 investigation was conducted by the bank's counsel and that 13 issue was addressed in that fashion and in good faith. And 14 good faith is the key term there as to how the institution of 15 UBS responded. 16 For these reasons, we think both that the evidence 17 does not show the type of conduct that should warrant an award 18 of punitive damages; likewise, we think that we have shown that 19 the institution, UBS, put in place the type of policies and 20 procedures and made an effort to enforce those policies and 21 procedures in a way that it demonstrated its good-faith 22 adherence to the law and those should lead you to conclude that 23 you would not award punitive damages in this case. 24 Now, the judge is also going to tell you that if you 25 did decide to do that, you would, of course, consider the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1808 546MZUBF Summation - Ms. Plevan 1 amount. And we would urge you to consider a number of factors 2 both in deciding not to award punitive damages or in 3 considering whether it's necessary to fulfill the purposes that 4 she will tell you of deterrence and punishment in this case. 5 This is not a case where there has been injury to the 6 public. It involves a single individual. It is not a 7 situation where there has been harm claimed other than economic 8 harm, which you have already addressed. You have addressed the 9 issue of economic harm. But Ms. Zubulake is not claiming that 10 she was harmed in any other way or sought damages of any other 11 kind. 12 And, finally, I would add that your verdict that you 13 have already rendered sends a message, and I think you know 14 that, and it sends a powerful message. And you do not need to 15 do more to punish or to deter conduct. The verdict will speak 16 for itself and is more than sufficient to convey whatever -- 17 what your conclusions have been. And for that reason we would 18 urge that you not award any sum as punitive damages. Thank 19 you. 20 THE COURT: Thank you, Ms. Plevan. Thanks for staying 21 within the time frame. 22 Mr. Hubbard, the same, please. 23 MR. HUBBARD: Thank you, your Honor. 24 Ladies and gentlemen, the purpose of this proceeding 25 is to decide whether or not you conclude that UBS acted with SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1809 546MZUBF Summation - Mr. Hubbard 1 malice or reckless disregard to Laura Zubulake's rights in this 2 case, and that is by discriminating against her on the basis of 3 her gender and by retaliating against her. 4 Now, there is a different standard here. You've 5 determined before intentional discrimination and intentional 6 retaliation. The standard here now is different and that is 7 whether or not the men whose testimony you heard here acted 8 with malice or with intentional disregard of those rights. 9 How do you make that decision? Because they are big 10 words. The judge is going to tell you how you make that 11 decision. The defendants act with malice if you find that the 12 employees knew that the treatment of her and that her 13 termination on the basis of her gender and on the basis of 14 retaliation was in violation of the laws that protect us from 15 those things. And that's why I asked or Mr. Batson asked every 16 man who is on that stand, did you know when you did this that 17 this was against the law, both federal, state, and city? And 18 everybody said yes. You need to go no further. They acted 19 with knowledge that they were acting in violation of these 20 laws, and, therefore, with malice, as the law defines it in 21 this case. 22 But there is a lot more than that beyond the witnesses 23 agreeing to it. Their conduct demonstrates that they acted 24 with awareness that they were violating the law. They 25 destroyed the evidence that they knew would reveal their SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1810 546MZUBF Summation - Mr. Hubbard 1 misconduct. They didn't just inadvertently or negligently 2 delete those e-mails or fail to serve them. They repeatedly 3 failed to preserve those e-mails when their own lawyers told 4 them to save them, their own lawyers. And they did that and 5 the only fair inference from that is they did it to cover up 6 what they were doing and, therefore, with awareness of what 7 they were doing. 8 Most significantly, they covered up the two that 9 showed the tracks to Mr. Orgill. The first one where he says 10 exit her ASAP doesn't put him in touch with the rest of the 11 termination process. Okay. It's a pity. Remember those 12 things were not recovered until the backup tapes were 13 recovered. So the two e-mails that linked Mr. Orgill to the 14 entire episode were not saved, in part by Mr. Varsano. He was 15 on both of those e-mails. 16 What else did they do? They take all these complaints 17 against Ms. Zubulake that Mr. Chapin is storing, and they put 18 attorney-client privilege on them to hide them from discovery. 19 What else do they do, worst of all? They come in this 20 courtroom and they don't tell you the truth. And that, again, 21 is part of an effort to conceal or protect themselves from 22 their responsibility for what they did. 23 For all of those reasons, we say the evidence shows in 24 this case that UBS egregiously, egregiously acted with 25 knowledge of the wrongdoing and with malice and with reckless SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1811 546MZUBF Summation - Mr. Hubbard 1 disregard here, and that they should be liable, therefore, for 2 punitive damages. 3 I want to show you one thing that tells you how deep 4 this disrespect for the law goes. Give me J35, please. 5 Because it goes to the soul of this company. You remember in 6 the first five minutes of this trial or the first five minutes 7 of Mr. Chapin's testimony, I asked Mr. Chapin if there was a 8 designation at the company between junior and senior, because 9 it was relevant to whether or not she was being treated 10 differently in her position. And for about five minutes he 11 said no, no, no, no, no. The first thing I did was pull up his 12 own memorandum where he acknowledged that that was true. Then 13 we pulled up Ms. Zubulake's employment form which, 14 Mr. Fitzgerald, I guess, is maybe 197 where it's noted senior. 15 And then we pulled up her appointment letter, the letter 16 offering her the job which said senior. 17 Give me, please, 305. 18 Mr. Chapin's memo is dated May 16, 2001, six months 19 after he wrote that memo. Six months after he wrote that memo, 20 UBS filed a response with the Federal Government in this case, 21 November 2001, signed by their lawyers. I am going to show it 22 to you in a minute. 23 Go to page 2. Go to the footnote and blow it up, 24 please. Next page, Pete. Go to the footnote and blow it up, 25 please. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1812 546MZUBF Summation - Mr. Hubbard 1 MS. PLEVAN: What's the exhibit number? 2 MR. HUBBARD: 305. 3 Page 2, Pete. Blow up the footnote on page 2, please, 4 P305. 5 MS. PLEVAN: It is not on the stipulated list of 6 exhibits. 7 THE COURT: It is not even on the list of exhibits, 8 P305, so this can't come in now. 9 MR. HUBBARD: I thought it was on the list of 10 exhibits. 11 This conduct, all of this conduct I've mentioned to 12 you, demonstrates the intent and the deliberateness and the 13 knowledge and the knowledge of the violation with which they 14 acted. What do you do about it? Well, if you find that they 15 acted with malice and they acted with reckless indifference to 16 the plaintiff's rights, then you are entitled under the law to 17 award what are punitive damages. Sometimes they are called 18 exemplary damages because their purpose is twofold. Their 19 purpose is not only to punish, but equally important, it's to 20 make an example out of the defendant and that is to deter the 21 conduct of others from something the same thing. It is to set 22 an example. 23 When you do that, you say, never again, never again 24 are we going to allow an employer to judge a woman, a mother, a 25 sister, a daughter by the happenstance of their birth or by SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1813 546MZUBF Summation - Mr. Hubbard 1 their sex. But they must be judged by the quality of their 2 mind and the strength of that fact I told you about and 3 God-given talent and the strength of their character. Not 4 based on some insidious discrimination based on their birth. 5 This company had the resources to train, to protect, 6 to guard, to enforce. They did none of it. They turned those 7 guns right around on this woman. Did they conduct any 8 investigation? None. There was no good-faith effort in this 9 case to do anything. When the lawyers conducted the 10 investigation after the complaint was filed in August of 2001, 11 not once, not one time did they speak to Ms. Zubulake. 12 Mr. Varsano met with Mr. Chapin 50 times and never took a note. 13 Every time they met with Ms. Zubulake they recorded it and then 14 tried to store it up and they tried to hide it by putting on 15 most of it attorney-client privilege. 16 They can conceal, they can fabricate, even some of 17 these complaints were falsely written. They can destroy 18 evidence or fail to preserve it in an intentional way. They 19 can cover up, and they can lie. And they think they can get 20 away with it. Not here, not in this city, not in this 21 courthouse, and not before this jury. This misconduct 22 belittles all of us. It should stop. 23 How do you stop it? The law shows the way. And 24 that's through exemplary damages. You should make it too 25 costly for this defendant to ever think, ever think about SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1814 546MZUBF Summation - Mr. Hubbard 1 fabricating an employee's records, violating their lawyers' 2 instructions to save evidence, and about taking an oath on that 3 witness stand and not telling you the truth about who was 4 responsible for that termination and who knew about that EEOC 5 complaint. 6 How should you decide what that award should be? This 7 company has billions in assets, so how are you going to get 8 their attention? Well, they won't listen to their own lawyers. 9 They won't even listen to the law. They wouldn't listen to 10 Laura Zubulake. How are they going to listen to you? How are 11 you going to say to them, never again, no more, you must stop 12 this? The law, again, shows us the way. It says what you 13 should do. 14 Based upon evidence you have heard, you should return 15 an award of punitive damages that relates to the harm that you 16 found was suffered. It doesn't mean that we pull a number out 17 of the air. It doesn't mean -- I respectfully say, it doesn't 18 mean we imagine a number that might get the attention of a 19 company like UBS. It requires that you look at what you have 20 found the harm to be and the magnitude of that and perhaps 21 relate it to what a punitive damages award should be. Perhaps 22 your decision will be to use some multiplier of the 23 compensatory damages of the harm you have found. Maybe your 24 judgment will be that you will award punitive damages in an 25 amount equal to the compensatory damages you returned. Maybe SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1815 546MZUBF Summation - Mr. Hubbard 1 you will decide it takes two times. Maybe you will decide it 2 takes three times. 3 But you've heard this evidence. You've seen what 4 happened. You've seen the kind of misconduct that led us to 5 this courtroom. Never again will there be somebody who has to 6 live on the luck, on the luck that somebody's going to find 7 those backup tapes, on the fortuitous chance that someone is 8 going to uncover what had happened. Because that's not what 9 the law requires. The law requires that they be preserved and 10 the law requires that people tell the truth, and that gives 11 people a chance when something happens to them to use our 12 system to obtain the kind of justice they need. 13 If this continues, all of us suffer and it's on this 14 basis that I ask you to take this serious task in your wise 15 hands and consider whether or not you should find on this 16 basis. 17 I want to address one other thing with you real 18 quickly and that is, the concept that there is some affirmative 19 defense here that there were policies here that were enforced 20 in good faith. There is no evidence here of the enforcement of 21 any policy other than to retaliate against this woman. They 22 didn't investigate her, they documented her, they didn't speak 23 to her when they did the investigation for the EEOC, and it 24 goes on and on and on. She gets documented. No one else does. 25 Mr. Varsano told us that it was against the policy. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1816 546MZUBF Summation - Mr. Hubbard 1 It was against the policy of UBS to persecute an employee, and 2 he said, I learned about it, but I didn't do a thing about it. 3 Mr. Holland, did you investigate? No. You remember when we 4 asked those questions. So the discussion that there was some 5 effort here to enforce these policies against gender 6 discrimination and retaliation, I respectfully suggest to you, 7 does not give or should not convince you not to exercise your 8 right to return an exemplary damage award, to deter both this 9 defendant and others from this kind of conduct in the future. 10 We leave that decision in your wise hands. Thank you. 11 THE COURT: Thank you, Mr. Hubbard. You also managed 12 to stay within this limit. 13 I am going to give you this charge. It is short. 14 In addition to actual damages, the law permits the 15 jury under limited circumstances to award an injured person 16 punitive damages. Plaintiff is not entitled to punitive 17 damages as a matter of right. You must make a judgment about 18 defendants' conduct. To make such a judgment, it is important 19 to keep in mind the reason for awarding punitive damages. 20 First, to punish defendants for any malicious conduct against 21 plaintiff or any callous disregard or indifference to 22 plaintiff's rights; and, second, to deter like conduct in the 23 future. Thus, you should consider whether an award of punitive 24 damages will accomplish this dual purpose of punishment and 25 deterrence. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1817 546MZUBF Charge 1 Having found for plaintiff you must now decide whether 2 UBS acted with malice or reckless indifference to plaintiff's 3 rights not to be discriminated against on the basis of her sex, 4 or to be retaliated against for filing a charge of 5 discrimination. UBS acted with malice or indifference if it 6 has been proven by a preponderance of the evidence that UBS 7 knew that the termination of plaintiff's employment was in 8 violation of laws prohibiting sex discrimination and 9 retaliation or acted with reckless disregard of those laws. 10 An employer may not be vicariously liable for the 11 discriminatory employment decisions of managerial agents where 12 these decisions are contrary to the employer's good-faith 13 efforts to comply with Title VII. Therefore, you may not award 14 punitive damages if it has been proven by a preponderance of 15 the evidence that defendants made a good-faith effort to comply 16 with the laws prohibiting sex discrimination and retaliation. 17 An employer is shielded from punitive damages only if it has an 18 antidiscrimination policy and that policy is coupled with a 19 good-faith effort to enforce it. 20 If you find that UBS acted with malice or reckless 21 disregard and did not make a good-faith effort to comply with 22 the law, then, in addition to the actual damages that you have 23 already found, you may, but are not required, to award 24 plaintiff an additional amount as punitive damages if you find 25 it is appropriate to punish UBS or to deter UBS and others from SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1818 546MZUBF Charge 1 like conduct in the future. Whether to award plaintiff 2 punitive damages and the amount of those damages are within 3 your discretion. 4 With that, ladies and gentlemen, I must ask you to 5 deliberate further. We will be here. If there is anything you 6 need, you can think of, tell me now, and I'll try to get it 7 right away. 8 Thank you. The jury is excused. 9 (At 5:05 p.m. the jury retired to deliberate) 10 THE COURT: Before I bring the jury in for this -- the 11 note says: We have reached a verdict -- let me tell you what's 12 going to happen after the verdict. Whenever I have a jury who 13 has been here a significant amount of time I like to go into 14 the jury room and personally thank them and shake their hands 15 and all that stuff. On the other hand, I also like to meet 16 with counsel because sometimes there are posttrial motions, 17 schedule needs to be set. There is also motions to set aside 18 the verdict, whatever. 19 Do you want to do that for a minute or two now, or do 20 you want to wait for me to come back out of the jury room? 21 MR. HUBBARD: Let's wait. 22 MS. PLEVAN: The only advantage, we might want to talk 23 to some of the jurors. 24 THE COURT: They may want to go, too. 25 Let's talk now. What kind of schedule are you SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1819 546MZUBF Charge 1 thinking of? What kind of motions are you thinking of? 2 MS. PLEVAN: I'm sure we will make the appropriate 3 motions for a new trial and so forth, based on issues that will 4 not be surprises to the Court. And I don't know what schedule 5 you would indulge. Obviously, everybody would like a little 6 time. 7 THE COURT: Are there any time limits? 8 MS. PLEVAN: Only if you enter judgment. If you defer 9 the entry of judgment, then we can work out a briefing schedule 10 that takes everybody's schedules into account. I guess that 11 would be my preference. 12 THE COURT: I do want to talk briefly with counsel. I 13 guess what I would say is, after I talk to the jury, if you 14 folks wanted to talk to the jury, we all reconvene in the 15 courtroom briefly at some point. 16 MS. PLEVAN: That's fine. 17 MR. HUBBARD: I just wanted to make sure. Are there 18 any guidelines in this district about speaking to the jury? 19 THE COURT: There are no guidelines. I always tell 20 the jury, and I'll tell them in open court, that that is up to 21 them. They do not have to speak to any counsel or they are 22 welcome to speak to any counsel. It is completely up to them. 23 I always say that. 24 MR. HUBBARD: Your Honor, does the jury have a verdict 25 form on punitive damages? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1820 546MZUBF Charge 1 THE COURT: No. I am going to say, you have reached a 2 verdict. What is it? 3 Thank you, Marshal. 4 (Jury present) 5 THE COURT: I received a note at 5:35 p.m. It has 6 been marked as Court Exhibit 12. It says quite simply: We 7 have reached a verdict. We don't have a verdict form for you 8 at this time. I think it's very simple. 9 Mr. Foreperson, will you tell us what the jury's 10 verdict is. 11 THE FOREPERSON: The jury's decision is to award 12 punitive damages $20,169,081. 13 THE COURT: Thank you. 14 Ladies and gentlemen, would you like the jury polled? 15 MS. PLEVAN: Yes, your Honor. 16 (Jury polled; each juror answered in the affirmative) 17 THE COURT: Now, ladies and gentlemen, you are done 18 with your jury service but there is always a but. I would like 19 to come into the jury room and thank you personally. I try to 20 do that in any case that's more than a week. You've really 21 come down here. I know you want to get out of here. I would 22 like a few minutes to come and visit with you. 23 Then -- and this is completely up to you. There are 24 no rules one way or another -- the lawyers may wish to talk to 25 you about your reactions. You do not have to do that. You're SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1821 546MZUBF Charge 1 welcome to skedaddle after I thank you, or you can stay and 2 chat with them. It is completely up to you. The same might be 3 true of anybody in the press. If anybody wants to speak with 4 you, you don't have to, or you can. It is completely up to 5 you. There are no rules. After I say good-bye, wait for me 6 for about 30 seconds. After I thank you, the rest is up to 7 you. 8 With that, the jury is excused. 9 A JUROR: Can you make us copy of the telephones, 10 eight jurors, because we became friends sitting so long. 11 (Jury discharged) 12 THE COURT: I guess we have to talk about the schedule 13 which I think we began to talk about, but I also want to make a 14 plea to you at a time when maybe you don't really want to hear 15 this plea. This is as good as any time to settle. That might 16 be a surprise to you. 17 You just won an enormous verdict. The realities are 18 is that postverdict litigation can go on for two years. There 19 is also risk in postverdict litigation that the verdict will 20 not stand or be reduced. Nobody ever knows what's going to 21 happen, but the risk is both sides. It can be confirmed with 22 some law that you may not want to see in some circuit. You 23 really don't know what's going to happen down the road. 24 So I would ask the parties to give continuing and 25 serious thought to discussing settlement. I will say that in SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1822 546MZUBF Charge 1 my conversation with the jury it was never a close call. It 2 was just not a close call. They saw the case particularly on 3 retaliation as extraordinarily strong. Most of the time they 4 were more concerned with discrimination. For some reason they 5 wanted to hear Varsano's readback. Be that as it may, that's 6 one jury and there are always issues of law. It would be a 7 wise, wise, wise decision to consider settlement. 8 And I know that when people are faced with considering 9 settlement they go through all these silly games, well, if I 10 call the other party, that will be the sign of weakness. To 11 take care of that, you don't even have to call the other. I'm 12 happy to call a conference. I'm happy to plead with you to 13 try. We don't have to go through any of those worries, that 14 kind of psychology. The Court stands ready to help or to help 15 you with a private mediator or anything you want. It would be 16 a thought, given this verdict. 17 I know there were people in the audience that might 18 have maybe should have heard the speech, but they seem not to 19 be here to hear it. Your client was here -- I'm sure you can 20 summarize it. She is not here now. I thought there may be 21 some folks sitting in the back for what comes next. 22 MS. PLEVAN: We will certainly convey -- 23 THE COURT: My thoughts are an invitation. My 24 thoughts are more than thoughts. I invite them to my table. I 25 invite them to any other table that they may wish to go to. It SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1823 546MZUBF Charge 1 would be a wise move. This is not -- this is far from over if 2 you can't settle it. 3 I know you just won a very big verdict, Mr. Zubulake, 4 and you should enjoy the moment for sure, but it's far from 5 over. Everything you've been through will continue for a 6 lengthy time if you can't settle the case. I think the lawyers 7 are experienced enough. My prediction of about two years is 8 probably right. First there are postverdict motions here. Not 9 until the judgment is entered here that the appeal process even 10 starts. Our circuit likes to think of itself as fast and my 11 experience is a year from fully briefed is typical in a big 12 case. It's a long way off and you may want to consider 13 settlement. 14 I guess we will deal with scheduling. If my phone 15 rings, you have to lift your hand to call the Court. I can't 16 save you that. If you ask for my help, you will get it. 17 MS. PLEVAN: I didn't have a chance to really to talk 18 to Mr. Hubbard about this, but I'm just wondering whether it 19 wouldn't make sense to give us a little time, A, to talk, and 20 B, to see whether that's going anywhere. But also just to see 21 everybody's schedules and to try to agree with them on a 22 briefing schedule. 23 THE COURT: You said you would try to work out a 24 briefing schedule. 25 MS. PLEVAN: We didn't have a chance to do it yet. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 1824 546MZUBF Charge 1 I'm sure they may want to take some time off. 2 THE COURT: That particular night when we finished the 3 charge, I thought you were the only one standing, Ms. Plevan. 4 I did say already on the record that the rest of us looked 5 terrible. Many of us need some rest. I, of course, don't get 6 any. The Advisory Committee meets on the 14th and 15th to 7 consider the new rules. The week after I must speak on the 8 Class Action Fairness Act. I was asked to do it in Washington. 9 I have to figure out that by then. Then it is my holiday. It 10 is very busy. 11 MS. PLEVAN: Perhaps in the next couple of days we 12 could work out a schedule and submit a letter. 13 THE COURT: Try to keep it realistic. 14 Other than that, I can only say it was very well 15 tried. Once it had to go to trial, it was very well tried by 16 everybody. I know the defense had certainly less time to 17 familiarize themself with a rather lengthy record, and you were 18 all courteous counsel to each other and to the Court. It was a 19 pleasure to try this case with such competent counsel. 20 Thank you. 21 (Trial concluded) 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300