Hearing Transcript — In re Carvana Securities

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U.S. District Court for the District of Arizona · No. 2:22-cv-02126-MTL · Doc. 172 · 2025-06-27 · Docket on CourtListener

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
  
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United Association National 
Pension Fund, et al., 
Plaintiffs,
vs.
Carvana Company, et al., 
Defendants.
  
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No. 2:22-cv-02126-MTL 
Phoenix, Arizona 
June 23, 2025
1:56 p.m. 
BEFORE:  THE HONORABLE JOHN Z. BOYLE, MAGISTRATE JUDGE
TRANSCRIPT OF PROCEEDINGS
HEARING ON DISCOVERY DISPUTE
Transcriptionist:
Cathy J. Taylor, RMR, CRR, CRC
Sandra Day O'Connor U.S. Courthouse, Suite 312
401 West Washington Street, Spc 31 
Phoenix, Arizona 85003-2151
(602) 322-7249
Proceedings Recorded by Electronic Sound Recording
Transcript Produced by Transcriptionist 
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A P P E A R A N C E S
For the Plaintiffs:
ROBBINS GELLER RUDMAN & DOWD, LLP 
By:
Rachel A. Cocalis, Esq. 
Tor Gronborg, Esq.  
655 West Broadway, Suite 1900 
San Diego, California  92101
For the Defendants Carvana, et al.:  
LATHAM & WATKINS 
By:
James Christian Word, Esq. 
555 11th Street NW, Suite 1000
Washington, DC  20004-1304    
FENNEMORE CRAIG, PC 
By:  Ms. Andrea Lynn Marconi, Esq. 
2394 East Camelback Road, Suite 600
Phoenix, Arizona  85016
For the Defendants Citigroup Global Markets, Incorporated, and 
J.P. Morgan Securities, LLC:
PAUL WEISS RIFKIND WHARTON & GARRISON, LLP 
By:
Susanna M. Buergel, Esq. 
1285 Avenue of the Americas 
New York, New York  10019 
For Defendant Ernest Garcia, Sr.:  
DLA PIPER, LLP 
By:  Melanie E. Walker, Esq. 
2000 Avenue of the Stars, Suite 400
Los Angeles, California  90067
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P R O C E E D I N G S 
(Court was called to order by the courtroom deputy.) 
(Proceedings commence at 1:56 p.m.)  
THE COURTROOM DEPUTY:  All rise.  The 
Honorable John Z. Boyle is now presiding.  
THE COURT:  Thank you.  Please be seated.  
THE COURTROOM DEPUTY:  This is Civil Case 
Number 22-2126, United Association National Pension Fund vs. 
Carvana Company, before the Court for a discovery dispute.  
Will the parties please announce for the record 
starting with the plaintiffs.  
MS. COCALIS:  Rachel Cocalis on behalf of the 
plaintiffs. 
THE COURT:  All right.  Good morning -- or good 
afternoon.  
MR. GRONBORG:  Tor Gronborg, Robbins Geller Rudman & 
Dowd, also on behalf of the plaintiffs. 
THE COURT:  All right.  Good afternoon.  Thank --
MR. GRONBORG:  Good afternoon --
THE COURT:  -- you.
MR. GRONBORG:  -- Your Honor.
MS. MARCONI:  Good afternoon, Your Honor.  Melanie 
Walker on behalf of Ernest Garcia, Sr. 
MR. WORD:  Good afternoon, Your Honor.  Christian Word 
of Latham & Watkins.  I represent the Carvana defendants. 
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THE COURT:  All right.  Good afternoon.  
MS. BUERGEL:  Good afternoon, Your Honor.  Suzanna 
Buergel from Paul Weiss for the underwriter defendants. 
THE COURT:  Okay.  Thank you.  
MS. MARCONI:  Good morning, Your Honor.  Andrea 
Marconi, Fennemore Craig, for the Carvana defendants and the 
underwriter defendants as well.  
THE COURT:  Give me one moment.  Thank you.
All right.  Good afternoon, everyone.  
So, first, I try to avoid having people come in for 
discovery disputes, but given the scope of the case -- and I 
don't know how far we'll go into this in the future.  I do 
appreciate you coming here for this, but as we go forward, if 
there are more issues that pop up, I'm happy to do these either 
through a video teleconference or over the phone, as I normally 
handle them.  And, obviously, I've handled hundreds of these, 
dozens from district judges that have come down.  A little 
different for a class action.  We don't get these normally.  
So my plan today is to start with 154.  And then 155 
shouldn't take very long.  Let me tell you what I've done and 
give you a roadmap of what I think how we should approach this. 
So, obviously, I looked at what you filed at 154, and 
then I went through the motion to dismiss and the operative 
complaint.  And I ended up right where you both were, which 
was:  Okay.  What did Judge Liburdi mean in his motion to 
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dismiss when he basically cut out everything except for 1 
through 8 and 19 through 20.  
That's how I look at this.  Like what did he mean?  
Did he just keep this down to the title and registration issue, 
or is it broader than that?  
And that's what you briefed to me.  In the discovery 
context, obviously this is typically more broad, but let me 
just cut to it.  
There are two legitimate ways to review this.  You 
could -- you -- both of them are -- are a fair way of reading 
this.  I have the advantage of the fact that I can just call 
Judge Liburdi.  And to save you all time, that's what I did.  I 
haven't done that before.  As I mentioned, I've had this for 
more than 10 years, and I've just never needed to call a judge 
on this.  But I just -- why should I just try and guess like 
you and figure out what the judge meant instead of just 
contacting him and asking -- and said:  What's the scope of 
this for the purpose of discovery, not for the summary 
judgment?  
It did align with how I looked at this at the 
beginning, which is that I went to 19 and 20 because -- and 1 
through 8 because that's what's left.  Everything else is 
dismissed with prejudice.  So that "with prejudice" said to me 
that what you're left was 19 through 20, 1 through 8.  
So I'm at page 139 of Doc. 71.  This is the -- I think 
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the operative complaint.  Paragraph 211.  But -- and this is 
just above where it says -- it's Section C again.  Document 71, 
139.  What does statement 19 allege?  
And there, as I see it -- I'm on lines 12 to 15.  "The 
sales in violation of title and registration laws and 
regulations; (ii) 'less profitable sales'; (iii) trade-in 
sales; (iv) 'sales that were less profitable.'" 
According to Judge Liburdi, that is broader than just 
the T&R.  
So, in short, it -- the plaintiff is looking like 
you're going to have the advantage on this, and you're going to 
prevail on the idea that the discovery in the case is not going 
to be just related to the title and registration issue, even 
though that language, of course, is in the motion to -- or the 
order dismissing chunks of this case.  For the purpose of 
discovery, because 1, 2, 3, and 4 are in here, and those are 
broader than title and registration, the discovery will be 
broader.  
So I hope you're not frustrated by the fact that I 
could have had you just argue these points to me.  And I'm 
happy to do that, because I'm still going to write up this 
order, and it's still appealable to Judge Liburdi.  And in that 
context, you -- he will have the final word, of course, because 
this is his case.
But I just didn't think it was fair to have you all 
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argue to me what you thought Judge Liburdi meant when I've got 
a sense already of what it was.  Just more efficient to tell 
you and then see if we can use our time effectively today.  
I will write my order promptly.  If you have issues 
with it, of course, you don't have to take my word for it.  You 
get a chance to take this up with Judge Liburdi, but this just 
seemed like the quickest way to get through this.  
So I am not curtailing any argument on what you filed 
here.  And then I do think there was some -- I did go through 
the RFPs at 154-5.  There might be some outstanding questions 
that you might want me to resolve, and we could go through 
those.  I have that prepared.  
I don't think I need to turn to plaintiffs here.  So 
given what I've mentioned from the outset, I thought you might 
think of it as like a prospective ruling.  
But from the defense side, who would like to talk more 
about 154?  
MR. WORD:  Thank you, Your Honor.  Christian Word 
again --
THE COURT:  Yeah. 
MR. WORD:  -- on behalf of the Carvana defendants.  
And I appreciate you cutting to the chase on that, 
everyone's time.  We appreciate it by that.  
So I don't assume I could persuade you that, look, 
what Judge Liburdi told you is not what he thinks the 
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opinion -- 
THE COURT:  I -- I could make any record you want, 
because if there's something that's im- -- that's improper 
about this, certainly it's appealable not only to him, but 
otherwise, so -- and, by the way, you all are welcome to stand.  
I know we always stand in federal court, but for the purposes 
of today you can sit if you wish.  I don't know that you need 
to come up here unless there's something you need to do, 
because you have all your documents with you.  So -- but given 
that your computers and what you might have in front of you, if 
you want to remain seated as well.  We don't normally do that 
here.  You have permission to do that.  
Please continue.  
MR. WORD:  I note that you're standing.  I have a 
standing desk, too.  I actually prefer to stand. 
THE COURT:  Yeah, I've done it since I started.  So 
either way's fine with me, but go ahead. 
MR. WORD:  And I -- appreciating the Court's time as 
well, I'm not going to belabor this point -- 
THE COURT:  Okay. 
MR. WORD:  -- that Judge Liburdi's decision is what it 
is.  And he, of course, is the only one who can tell us 
definitively what it means.  I think the language is somewhat 
ambiguous.  I do think, you know, the Ninth Circuit has 
cautioned us at times -- several times, you know, not to treat 
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judicial opinions like statutes.  There aren't statutory 
construction rules for interpreting an opinion.  And judges are 
deciding cases, deciding issues, and they're not -- not 
thinking that each word is going to be parsed.  And that's one 
of the issues I have with the plaintiffs' argument.  
But more than that -- let's move beyond that, because, 
again, I appreciate what Judge Liburdi's told you.  My problem 
comes -- and I can appreciate -- this is what I will raise with 
Judge Liburdi, is that other components of the decision only 
focus on T&R.  So if it's a securities class action -- excuse 
me.  For a securities claim under Section 10(b) there are 
numerous elements.  He dealt with falsity.  And that's mostly 
what we've discussed so far, is falsity, and whether or not 
certain statements were false.  And when it comes to the retail 
retail sale -- retail unit sales, Judge Liburdi indicated that 
maybe these factors were in them.  He's clarified now that they 
are all in and provided a basis for that statement to be false.  
But then when you step beyond that to the next 
elements, scienter, for example, all of the allegations that 
Judge Liburdi credited for purposes of saying that each of 
these defendants have the requisite level of intent to commit 
securities fraud deal with T&R.  There's not a single one he 
identifies about any of the other factors.  
So how is it that statement could -- I mean, the 
statement might be false and misleading, properly pled for that 
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purpose, but there's no evidence, no finding in his opinion 
that suggests that anybody made those statements with the 
requisite intent.  So that would be my first point.  
And then the second one is -- is a corollary.  The 
last elements that a plaintiff has to plead is lost causation.  
And Judge Liburdi rejected all of the non-T&R corrected 
disclosures.  What that means is that plaintiffs don't have a 
loss that they can tie to any other element other than title 
and registration.
And so for that purpose, it just it's -- I'm not sure 
how it fits in the case.  And maybe your -- your conclusion's 
to summary judgment where it comes out, or class cert or 
something, in discovery.  You know, this greatly expands the 
scope of discovery from T&R, which is arguably a very large 
issue anyway, to basically everything at the company.  Because 
you're talking about the foundation of the company, its entire 
business model.  And I just worry that we're going to spend 
lots of money on discovery on topics that there's no scienter 
for and there's no loss causation pled and approved.  So we 
just get in a position where we're going to have discovery into 
all these issues, but it's for not.  My client's just going to 
waste millions and millions of dollars.  My client's going to 
waste lots of time in discovery on statements and issues that 
cannot support a securities fraud violation because there's no 
scienter and there's no loss causation.  And, quite frankly, 
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that was the whole purpose of the Reform Act; right?  As 
Congress said:  Look, we -- we don't want claims that don't 
survive a basic motion to dismiss to proceed.  
And so, again, appreciating the Court's time, I'll cut 
it off there --
THE COURT:  This is -- 
MR. WORD:  -- but that's -- those are my points.  
THE COURT:  Yeah, let's have a conversation about how 
I read this as well, which is -- and, to be clear, this is -- 
you know, the parameter of me ruling on this, I just -- this is 
the one case I did seem to get the -- you know, input from 
Judge Liburdi would be valuable just to save time.  
But let's talk about paragraph 211, because I get your 
point.  It looks like everything's been carved out except for 
title and registration.  But 2- -- under paragraph 211, you 
still have a case for you all.  
What's the scope of this case?  What are you trying, 
you know, if this case goes to trial; right?  
You're saying, we're just trying these issues as they 
relate to title and registration, but you still have these -- 
these subparagraphs of a less profitable sales, trade and 
sales, sales that were less profitable in an immediate period.  
Like, that seems broader to me than title and 
registration.  So by carving out everything except 19 and 20, 
like you said, which supports your argument, it does seem like 
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there's still these -- these other facets of the case that are 
still here. 
MR. WORD:  There are -- 
THE COURT:  Your thoughts?  
MR. WORD:  And those are the -- the sort of drivers or 
devices and artifaces that plaintiffs identify as animating 
their retail unit sales statement --
THE COURT:  Right. 
MR. WORD:  -- right?  
Judge Liburdi, however, dealt with those in other 
parts of the opinion.  And so you might ask him:  Well, why 
when it comes to the Court's role -- the opinion that matters 
where Judge Liburdi mentions this, does he only mention 
DriveTime and T&R?  
All right.  But that's what he does:  He says, for 
example, some of these have been disclosed.  DriveTime, for 
example, it was disclosed.  He says for others, like T&R, that 
wasn't disclosed.  And so to claim this is sufficient to plead 
a false statement.  
And plaintiffs make an argument, you know, the he used 
the plural word "practices" and things like that.  But, again, 
he's gone through already and said that these other issues were 
disclosed.  He held -- and that's why he dismissed the 
statements regarding those claims. 
So they match -- they match it perfectly.  It's the -- 
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this -- the same portions of the false statements, the other 
false statements that Judge Liburdi dismissed animate the 
retail units in the sales claim, too.  
And so I have a presentation.  It seems unnecessary 
now.  But, for example, there -- in the complaint, there were 
six categories of motions -- of misstatements alleged. 
THE COURT:  Right. 
MR. WORD:  T&R, purchases, retail unit sales, 
expansion, aged inventory and profitability.  
Now, we've -- and Judge Liburdi got rid of all of 
those except, as you pointed out, title and registration and 
retail unit sales.  
Now, retail unit sales had five components that 
animated these five components you're identifying as   
paragraph 211.  The first was title and registration.  No 
debate.  That one's in.  Judge Liburdi said that. 
THE COURT:  No question. 
MR. WORD:  Expansion.  Well, Judge Liburdi already 
said the expansion claims are out.
Purchases.  Same thing.  He said that purchases claims 
are out.  They hadn't been pled.  There wasn't -- Carvana 
hadn't disclosed sufficient information.  
Profitability.  Same thing.  Plaintiffs' allegation is 
that Carvana hid that it was -- that it was selling cars 
unprofitably.  No.  That was the entire business model, is what 
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Judge Liburdi said.  That was well public.  So those three 
things are public, along with the DriveTime; right?  Because he 
says in this paragraph that one's public.  
How can those either four items besides T&R still be 
in the case?  Because he's already held there weren't false 
statements based upon those.  
THE COURT:  So let me ask you -- I'm looking at his 
order at 105, page 25.  And this is right where I'm sure 
everyone honed in on as well, which is the language in his 
order that at the same time -- I'm on line 25.  Again, 105, 
page 25, line 25.  
"At the same time, some of Carvana's other expansion 
practices, such as the alleged practice of selling vehicles 
without proper title and registration, may not have been known 
to investors a later date.  Therefore, they alleged a material 
omission as to these statements, and Defendants' 
truth-on-the-market defense shall be reserved for another day," 
which, of course, is summary judgment."  
And I take plaintiffs' argument to be when he -- this 
language does not say explicitly this is the only -- this is 
the gray area, I think, why we're here. 
MR. WORD:  Yeah. 
THE COURT:  The order itself does not say:  This is 
all that's left, parties.  It says:  This is something that is 
left.  
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And does that "something that is left" mean that 
everything you've just described is automatically out because 
he excluded it before and dismissed it with prejudice?  
You get to reserve that for another day.  But I'm 
sympathetic to the point that now you have these discovery 
issues on a broader case.  And I -- as I read it, my 
understanding in reviewing this as well is -- is that for the 
purpose of discovery -- and this has no bearing on summary 
judgment, of course.  I have nothing to do with that.  Your 
discovery's going to be as broad as I started before, which is 
19 is in, page 139, 1 through 4, for example.  That's been left 
in.  Those four subsections broader than what you've described, 
but it's -- I think that's the scope of discovery.  
So am I missing anything so far?  I know you've made 
your points; I've made mine.  
MR. WORD:  No.  I mean, I -- 
THE COURT:  Is it clear?  
MR. WORD:  I can't -- yeah.  I mean, your order's 
perfectly clear. 
THE COURT:  Okay. 
MR. WORD:  It's the language was ambiguous.  We did 
our best to try to interpret it.  The plaintiffs did the same 
thing.  We happen to carry the day of what Judge Liburdi meant.  
And I'm not sure that anyone could be the arbiter of his words 
other than him. 
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THE COURT:  Okay.  
MR. WORD:  But I will take it up with him.  
These points, I don't think it's consistent, then, the 
other portions of his opinion, to try to clarify from him what 
this means going forward.  
Are we really going to do discovery into issues that 
we already know can't provide a basis for securities law 
liability?  Because in that case, again, we're wasting millions 
of dollars for no reason at all.  And so -- and -- and he might 
have an answer.  I just -- in reading the opinion, I don't see 
how he spends 73 pages trimming this case down to these issues 
and then in a single paragraph brings all of the issues back 
in.  I mean, we got rid of so much.  So much that the 
plaintiffs' gone, the allegations and the topics and then 
everything just gets backdoored in in perhaps the use of a 
plural when he didn't mean to use a plural.  I point out as 
well -- I mean, it's -- again, "practices" is how plaintiffs 
refer to T&R, T&R practices.  That's what they said.  They 
didn't -- it wasn't the practice.  It was the T&R practice.  
So I -- you know, I'll make all those arguments to 
Judge Liburdi.  I appreciate your time and, again, cutting this 
to the chase.  
THE COURT:  Anything else you want to add before I 
turn to co-counsel?  
You all will get an opportunity to address these 
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points.  
MS. WALKER:  No.  I have nothing to add on that.  
Understand the ruling.  And I'm really here to argue 155, so -- 
THE COURT:  Okay.  
MS. WALKER:  -- I'll turn it over to plaintiffs.  
THE COURT:  And -- okay.  Just the two of you?  I know 
other people announced.  
UNIDENTIFIED FEMALE VOICE:  We have nothing to add.  
We join in the arguments advanced by the company. 
THE COURT:  Okay.  All right.  With that, you get the 
opportunity here to make a record.  I know that you -- not 
just -- not dissatisfied, but, nonetheless, why don't you 
address the point that is fairly made, which is the judge has 
cut out everything but 1 through 8 and 19 and 20.  And it 
pretty much, in many ways, cut out everything but title and 
registration, although, as you've heard from me and I described 
Sections 1 through 4 on page 139, it's -- that is left in there 
and that's broader.  
But what would you like to argue on this point?  
MS. COCALIS:  Sure, Your Honor.  Thank you.
So I would just point out that this scheme liability 
claim also, the Carvana defendants moved to dismiss that claim, 
and Judge Liburdi rejected that motion.  So that is still at 
play.  And plaintiffs allege seven artifaces, without the 
majority of which don't involve title and registration.  So I 
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just want to make that point clear as well.
And then as to your question as to whether they were 
all dismissed, I would say that's not true.  The Court 
acknowledged that the defendants made a disclosure regarding 
DriveTime.  He also acknowledged in the order at page 36 that 
plaintiffs challenged the adequacy of that disclosure, and it 
was never part of another false statement.
I would also say that the statements are different.  
So, for example, one of the artifaces is the fact that 
defendants' internal sales calculation incorporated, you know, 
a metric and -- or a future sales into it, and that was not a 
part of another false statement.  So there's not -- you know, 
they're saying everything was dismissed, it all equals up, but 
I would argue that's not true. 
THE COURT:  Okay.
MS. COCALIS:  And to the last point regarding 
scienter, the Court did discuss the drivers of retail sales in 
the scienter section at -- let me see -- at page 50.  So he 
mentioned title and registration and defendants must have known 
of the drivers of its retail unit sales.  
THE COURT:  Okay.  So let me be clear.  I will draft 
an order.  This is how I looked at the case as well.  You get 
to appeal the order and perhaps address this issue of scope 
to -- just to be clear, my order here is merely about 
discovery, which, of course, is expensive.  This is a huge 
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case.  So I don't know if we need to talk about 
proportionality, but I doubt it given where we're at on this, 
these allegations.  But I just want to make that clear.  
I -- it's a little unusual for me to say I've 
contacted your district judge and say, what -- where are you at 
on this, but it's just better, you know.  It -- I've done 
enough of these that this was the exception.  And it gives you 
the chance to now hone in on what -- what kind of case are you 
trying and -- and that you maybe are too early for that for 
those purposes.
Anything else to add?  
MR. WORD:  Yeah.  No, no.  And I -- I -- if I didn't 
say it enough before, I really appreciate you reaching --
THE COURT:  Okay.  
MR. WORD:  -- out to Judge Liburdi --
THE COURT:  Okay. 
MR. WORD:  -- because I do think that made this much 
easier and got us to the right answer; right?  I mean, we know 
now.  
One thing I do want to understand, though, is these 
five artifaces that animate the --
THE COURT:  Right. 
MR. WORD:  -- retail unit sales, that discovery -- I'm 
trying to see where this goes.  The discovery that you're going 
to order for that is only for those components with respect to 
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those specific statements; right?  
I mean, I might be too unclear on that.  So for the 
securities case, we're all driven by statements, for the most 
part --
THE COURT:  Right. 
MR. WORD:  -- right?  
And so I want to know, is the discovery about -- say 
DriveTime.  Is DriveTime relevant only at that point in time of 
that actual statement?  So what was known then what DriveTime 
was going on and what was disclosed then at the time of that 
statement, or is it just for all purposes of the case the whole 
time period?  
THE COURT:  I think it's broad.  Why -- why wouldn't 
it be?  
MR. WORD:  Because it doesn't -- these statements -- 
again, he dismissed the statements --
THE COURT:  Sure. 
MR. WORD:  -- right?  So those statements are gone.  
This discovery's only relevant to the two retail unit sales 
statements; right?  
And so discovery -- like you could go look at 
DriveTime back to the beginning of DriveTime's existence; 
right?  
But it seems to me that we're talking about only the 
retail unit sales statements, so discovery should be cabined 
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around those statements and not every other issue related to 
DriveTime.  To the extent -- to the extent DriveTime was a 
driver of retail unit sales, it seems like that's what you're 
saying is in.  
I -- just I know we're going to have stiff debates 
about this amongst ourselves.  I'm just trying to understand, 
are you going to specify that in your order, or are you just 
going to say it's in and it's up to the parties to try to 
negotiate that?  
THE COURT:  I would try to allow you to fashion what 
you think is the correct scope and then come back here if that 
doesn't work now that you have the -- the larger parameter, 
otherwise we're going to spend a -- I think quite a bit of time 
parsing, which might be better off done by you.  
But I'm happy to -- if you -- if you all are ready 
to -- to do this right now.  It's more efficiently done, I 
think, between you all, and then we get you on the phone if 
there are little carve-outs.  
MR. WORD:  I think so, too. 
THE COURT:  Okay.  
MR. WORD:  I mean, I'm just trying to understand the 
scope -- of what you envisioned in your order, whether you were 
going to say it's all -- it's for all time, or you're just 
going to say essentially what Judge Liburdi told you, which is 
that these five drivers, per set discovery, are in the case 
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with respect to the retail unit sales statements. 
THE COURT:  Yeah.  I saw it as pretty broad.  I don't 
have that specific from him, but I did see it broader than 
that. 
MR. WORD:  Okay.  Great.  Thank you, Your Honor.  
THE COURT:  Okay.  How -- let me ask the plaintiffs 
this:  How -- do you anticipate there -- this -- there'd be -- 
be any significant discovery issues you need to have me address 
right now, or do you think you're -- you agree that you're 
better to meet and confer and go through this and then come 
back with --
MS. COCALIS:  I -- 
THE COURT:  -- specifics?  
MS. COCALIS:  Oh, I'm sorry. 
THE COURT:  Go ahead. 
MS. COCALIS:  Excuse me.  I think it would be good to 
meet and confer.  I'm not sure I quite understand the point, 
and we can flush it out further.  And I would, again, say that 
the scheme claim against the Carvana defendants is -- well, 
particularly Carvana, Garcia, Jr., and Jenkins, is still in.  
And so to start cabining it off now would be a little 
premature.  And hopefully we can reach a resolution.  
THE COURT:  It does seem, then, it would be helpful if 
I say what's in and out of my order so you can appeal it and 
then have a final resolution with Judge Liburdi.  
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MR. WORD:  I appreciate that, Your Honor.  Yeah. 
THE COURT:  Doesn't that just save time?  
MS. COCALIS:  Sure.  But do you mean you're going to 
set a time period?  Is that -- 
THE COURT:  I'd like your input on what -- I would 
like to address these things.  My goal here is just to simplify 
this.  This is going to be a lot of discovery.  And, again, 
you -- you're all looking at scope of the case, what are you 
defending later on.  How wide does this go given the fact the 
judge has carved out a whole bunch of this?  
So I don't know.  That's a summary judgment question.  
I don't have the answer to that.  I don't know that 
Judge Liburdi does.  But I'm sympathetic to the idea that 
you're diving into discovery that might not -- what -- this 
doesn't have to be admissible.  It just has to be relevant for 
discovery purposes.  But even -- it's not relevant if it's not 
part of the case.  So what I'm trying to do is at least set you 
up so that you can go back and get the final ruling from your 
district judge on where do you stand on -- on really this main 
issue of what's the scope of the trial of this case.  
So you both made good arguments.  I think by setting 
this up in the discovery context, which is typically      
broader, maybe you can get some more clarification from 
Judge Liburdi.  And I can -- I can help you with that by 
putting that in my order.  However, if it's better for you all 
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to meet and confer and go through that in a -- you know, over 
the next time frame, four weeks, whatever you want to pick, and 
then say to me, here's what we've agreed on, we all agree this 
is in and here's the gray area we don't know about, it'll give 
you time to think about it.  And you can come back, and then 
you can have an even more precise order from me, and then that 
you appeal to Judge Liburdi.  It's pretty prompt.  And I'd be 
happy to do this quickly so that we also make it somewhat easy 
for him.  
So that's my suggestion --
MR. WORD:  Yeah. 
THE COURT:  -- is if you meet and confer, decide what 
you agree on certainly's coming in and then, like, here are the 
three gray areas you don't know about -- you identify for the 
Court, here's what we're unclear about, I rule on that, and 
then you appeal it, I assume, hopefully, all right, assuming 
you do that, and then you get a final order from the district 
judge, and then you're off.  Because your discovery goes until 
2026.  Your fact discovery, I -- May 29, 2026.  So we're in 
June.  We do this process over the next six weeks or 
eight weeks, whatever your time frame is.  Maybe that's the 
most efficient way to do it.  
So your thoughts?  
MR. WORD:  Yes.  I'm sort of rethinking it the way you 
laid it out there.  I won't be in a position to essentially 
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agree --
THE COURT:  Correct. 
MR. WORD:  -- that these issues are, it's my position, 
before Judge Liburdi.  It's going to be that, hey, for the 
other reasons in your opinion, these statements should be out.  
There's no reason to have discovery.  
So I don't know how much agreement we'll get other 
than in the world where if these are in --
THE COURT:  Correct. 
MR. WORD:  -- these may not be.  
And so I -- I don't want to inject more ambiguity in 
your order, whereas if you just say what it is, we'll let 
Judge Liburdi -- we'll put all this stuff before him, that 
might be more expeditious.  But I feel -- I can see it both 
ways. 
THE COURT:  Yeah.  You're certainly not agreeing to 
any of this.  My point is whether you want to take a run at all 
of these issues without having me get your input.  Again, if 
that's easier for you and it's faster and you -- it takes less 
time with me because you don't have to double brief this, then 
we can do it that way.  You all can meet and confer and then 
appeal whatever you wish.  And I'll give you plenty of time to 
do that.  Normally there's a deadline for appeals for these 
orders, but if we build that in ahead of time, that you have 
the time to meet and confer after I rule, that's longer than 
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normal.  And it's the summer.  I can give you four, six weeks. 
MR. WORD:  I don't think we need that much time.  
Do you?  I mean, can you meet this week sometime.  
MS. COCALIS:  Yeah, we can meet this week, but I would 
say just give us, like, two weeks --
MR. WORD:  Yeah, uh-huh.  
MS. COCALIS:  -- to -- to -- 
MR. WORD:  To go back and forth --
MS. COCALIS:  Yeah.
MR. WORD:  -- a couple of times?  Yeah.  
So two weeks will be sufficient, I think, Your Honor. 
THE COURT:  All right.  
MR. GRONBORG:  Sorry.  Just make sure we're all on the 
same page. 
THE COURT:  Yeah.  
MR. GRONBORG:  I understood you to be saying you were 
going to issue the order -- 
THE COURT:  I -- 
MR. GRONBORG:  -- and give us time to meet and --
THE COURT:  Correct.
MR. GRONBORG:  -- confer. 
THE COURT:  Well, I was giving --
MR. GRONBORG:  So -- 
THE COURT:  -- you either option.  I could -- 
MR. GRONBORG:  Okay. 
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THE COURT:  I could have you meet and confer and file 
a notice with the Court of what you agree to and what you would 
like clarified, and then I can issue an order.  That, I don't 
think, is what we're doing.  Instead what we're going to do is 
I'm going to issue my order and give you two weeks, then two 
more weeks to file briefing, and then that will go to 
Judge Liburdi, and he can give you the scope.  And I think 
that's the plan we're on.  
MR. WORD:  Yeah. 
MS. COCALIS:  Okay.  Great. 
THE COURT:  Okay.  So, to be clear, I assume you'll 
be re- -- you want to file first, or do you want to file a 
joint motion?  
I doubt you do.  I assume, if you're going to object 
to the ruling, you're going to file an objection. 
MR. WORD:  Yeah.  That would be my preferred -- 
preferred path.  We'll file our objection, and they can oppose 
it. 
THE COURT:  Okay.  After the -- my order is filed, how 
much time do you want?  
MR. WORD:  Sorry, Your Honor. 
THE COURT:  That's fine. 
MR. WORD:  Just conferring.  I have obligations on 
that.  
THE COURT:  No.  Please take your time.  
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MR. WORD:  Two weeks, Your Honor, would be 
sufficient --
THE COURT:  Okay. 
MR. WORD:  -- after you rule.  
THE COURT:  Response two weeks after?  
MS. COCALIS:  Yeah, that'd be great. 
THE COURT:  Okay. 
MS. COCALIS:  Thank you.  
THE COURT:  All right.  We don't usually do replies on 
discovery, so response -- or objection and a response will be 
sufficient.  
Anything else on 154?  
MR. WORD:  No, Your Honor.  
UNIDENTIFIED FEMALE VOICE:  Thank you.  Nothing.  
THE COURT:  So 155.  Well, let me go back, actually, 
on 154, because I do have a question.  I went through the RFPs.  
Do you want to be heard on any of these?  I mean, 
they're -- I'm looking at 154-5, RFP 9.  I don't know that we 
want to dive into every one of these.  It's long.  
But anything to add from plaintiffs on 154-5?  
MS. COCALIS:  I -- no.  I would say that we've offered 
to narrow some of the requests.  And I think, you know, given 
your order, I think the parties will meet and confer to -- to 
kind of resolve any disputes.  But I think the basic dispute 
now is sort of where we're at.  It's a relevance dispute.  And 
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I think if there are any issues, we could probably come to you.  
But hopefully there won't need to be any. 
THE COURT:  Okay. 
MR. WORD:  I think that's right, Your Honor.  We'll 
be -- I think we'll be able to dive into these in more detail 
with your order in our dispute narrative. 
THE COURT:  That's fine.  I mean, for example, I was 
looking at RFP 9, which is they're -- you're not producing 
something, but it doesn't appear there's anything for me to 
rule on there.  So I'll let you all continue to work on this 
and come back to me if you need to.  
UNIDENTIFIED FEMALE VOICE:  Thank you. 
THE COURT:  Okay.  So that stops 154 for today.  
155.  Let me tell you how I look at this.  I don't see 
the rules requiring the disclosure of all witnesses right now.  
My thought on this was that, you know, a CEO of a company -- 
I'm just giving you a hypothetical -- might not remember every 
memo that came from everyone in the organization.  Later on 
might realize through discovery that, oh, the CFO sent me 
something.  I forgot about this.  
So I don't see that right now that this has to be  
dis- -- that every affirmative witness has to be disclosed, but 
it does have to be done.  It seems to me it has to be done 
before any deposition. 
So my initial takeaway on this was the disclosure 
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needs to be made, but it's -- it should happen, you know, a 
week before any deposition.  And that gives each side a chance 
to prepare.  You get a chance to go through discovery and -- 
and you know how to defend your case -- how to go forward with 
your case, and you get a deposition that's fully disclosed.  
So let me turn to plaintiffs.  
MR. GRONBORG:  Thank you, Your Honor.  
I agree with you that obviously you could have a 
hypothetical where a CEO doesn't remember and their memory is 
jogged as they go through.  I guess what I disagree is the 
point of not every witness has to be disclosed now, where I do 
think Rule 26 says if you know, if you do know somebody, you 
have to and you may use them.  So they may be a witness.  Not 
even they will be.  They have to be disclosed.
And the issue with having them just be, say, disclosed 
before a deposition, but the most obvious is whose deposition.  
And in this case, it's one person.  It's Garcia, Sr. 
THE COURT:  Senior, right. 
MR. GRONBORG:  He's likely to be deposed near the end 
of the case.  
THE COURT:  Yeah.  
MR. GRONBORG:  If a week before an email says, you 
know, I'm likely to rely on these 12 people -- or almost going 
back to square one.  If they are, say, third-party experts who 
haven't been served document requests.  
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And the -- the real-world concern out of all of this 
is that we end up near or at the end of discovery, you know, 
with the Court rightly saying, I gave you guys 18 months, and 
we're having to go back and say, now we've got to take some 
extra document requests, we've got to do extra depositions, or 
alternatively you, the Court, need to say these disclosures 
were made too late.  They should have been made timely and 
expose on that.  
Last point, I really would hate to have an order that 
said you don't need to disclose until a week before deposition, 
because that done run counter to the federal rules.  Like I 
said, even that CEO who had no memory of who they got memos 
from, in the course of discovery, when they -- those memos 
popped up and they knew, they'd have an obligation to promptly 
correct or amend those disclosures. 
THE COURT:  Okay.  But that's -- if they are -- if 
they are allowed to amend with that updated discovery, doesn't 
go right into your concern, though, that now we might have to 
do additional disclosures?  
You know, I mean, that was your concern about why you 
didn't think this process was fair.  You're still going to have 
that problem, aren't you?  
MR. GRONBORG:  It's possible.  But, again, let's say 
Garcia, Sr., with three weeks left in discovery, says, now here 
are these three people who I'm going to rely on, and it turned 
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out those memos were produced a year earlier, I'm going to have 
a grounds to go to the Court and say:  They can't rely on those 
people.  They weren't timely deposed.  
I shouldn't now have to extend the discovery deadline, 
or at least that should be the option.  If the Court wants to 
extend the discovery deadline, it can.  But it also has the 
option of saying:  You didn't timely -- you didn't follow the 
rules which required a timely amendment of your disclosure. 
And that will matter because, you know, honestly, 
we're -- you know, we're going to probably be in the position 
of the ones who say we want to get this thing to trial as fast 
as possible and being hurt.  
And so that -- again, that's not -- 
THE COURT:  Yeah. 
MR. GRONBORG:  If -- if that CEO, or in this case 
Mr. Garcia, Sr., like, truly they just -- they don't know who 
it is who they relied on -- and we talked about this in the 
meet and confer process -- then, sure, you know, I can't get 
blood from a stone.  But at a minimum -- and even if it was 
that, which I -- you know, sort of like I can't -- I can't 
force somebody to get blood from a stone.  The -- the results 
should just be the federal rules should continue to stand, and 
the defendant has an obligation to timely disclose anyone who 
they may rely on.  
THE COURT:  Number 1, one way to perhaps rectify that 
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concern, or at least ameliorate it, is to move up to the 
deadline for the disclosure not so close to the end of fact 
discovery.  
But one other issue I might have with your approach is 
that now the Court's diving in again as to making decisions 
about whether Garcia, Sr., what he knew or should have known 
about this discovery, and it -- and, therefore, should have 
made the disclosure earlier.  So at this -- like what I see the 
Court having to dive into in the future, that's -- your plan 
has that as a fault. 
MR. GRONBORG:  It does, but that's what the federal 
rule says --
THE COURT:  Okay. 
MR. GRONBORG:  -- as the default.  I mean, that's just 
what the federal rules require.  And, unfortunately, you know, 
timely has different meanings in -- in different places and why 
courts often have to get involved in it.  
I would say replacing the federal rules with a regime 
that just says "make your disclosures by X," you know, the day 
after document production is done, one, that creates a delay, 
you know, in a sense of a delay.  But, two, even if you have 
that, some information could come up in the course of a 
deposition where, you know -- 
THE COURT:  Of course. 
MR. GRONBORG:  I don't think Garcia, Sr. -- I -- I 
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doubt they would like to live with a regime that said there's a 
hard-and-fast deadline of December 1st, 2025.  And I'd probably 
be on their side.  And they'd say:  Well, that's that not quite 
fair, because the federal rules let me timely amend whenever it 
is that I get the information.
So it probably just cuts -- you know, it cuts both 
ways.  There's a point in time where I think they're going to 
want, you know, exactly what the rule says.  And obviously 
we -- we want to have, you know, what the rule requires. 
THE COURT:  Okay.  I will -- I'll come back to you.  
Let me hear from the defense.
So, you know, I'm trying to weigh these things, 
obviously, by setting a deadline here sympathetic to the idea 
that there might be additional discovery and new amendments and 
additional depositions, and there should be a -- some 
disclosure at some point.  I also don't want to get our -- you 
know, I or Judge Liburdi too involved in when Mr. Garcia, Sr., 
should have known or knew that he was going to rely on these 
individuals.  
So do we move up a deadline and sort of cut this in 
half so that there is a -- a -- faster deadline than perhaps 
the one I was proposing and sort of balance both of these?  
Your thoughts?  
MS. WALKER:  Thank you, Your Honor.  
I think we don't have a ripe dispute yet is part of 
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the problem.  And we're talking in a lot of hypotheticals.  So 
the purpose of the motion to compel, obviously, is to force a 
party to disclose information that it's withholding.  
Mr. Garcia, Sr., is not withholding information known 
to him at this time from his initial disclosures.  He had an -- 
he has an affirmative defense that he relied on others.  
"Others" being people other than himself.  He identified in his 
initial disclosures officers and directors of Carvana that he 
relied on.  
All that we said in the back and forth on -- in the 
meet and confer process was that if he during discovery 
identified additional people, either through his memory being 
refreshed from the scope of the dispute being clarified, we 
would timely amend.  We have always agreed to timely amend.  We 
recommended a date of December to try to give plaintiffs some 
clarity.  They would still have five months, almost six months 
of discovery left.  I don't know that we need a date.  We 
agreed to timely amend.  But what we couldn't agree to, and why 
we're here, is to be limited at the very beginning of discovery 
to only the people that he put in his initial disclosures and 
not have the option to amend later or supplement.
And we could not agree to sort of adopt plaintiffs' 
preferred formulation of his affirmative defense.  We have our 
different affirmative defense.  We've disclosed the individuals 
known to him at this time.  We're simply reserving the right 
Case 2:22-cv-02126-MTL     Document 172     Filed 06/27/25     Page 35 of 39

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that we have under Rule 26 to timely amend or supplement if we 
later determine that we should disclose additional people.
If -- if we put a time limit on that, I do think that 
the December date that we put out is reasonable.  At that point  
we'll have the benefit of documents from the Carvana 
defendants, from plaintiffs, who I think have nothing related 
to Mr. Garcia -- Garcia, Sr.  But to the extent we -- they do, 
we'll have that.  Plaintiffs will still have five, almost 
six months to conduct depositions and -- and further discovery.  
If it needs to be earlier, you know, we certainly would agree 
to that.
But I just want to make clear we were not trying to -- 
THE COURT:  Oh, I -- 
MS. WALKER:  -- engage in gamesmanship.  I'm afraid 
that we were putting in a -- being put in a position of sort of 
a gotcha.  If we didn't disclose now, we were foreclosed. 
THE COURT:  You agree, then, under your proposal that 
after December, whatever -- if that's the deadline, there's no 
more amendment?  You'll have enough discovery to have listed 
your affirmative defense witnesses? 
MS. WALKER:  We -- we actually had proposed that to 
plaintiffs, and they rejected it, which I think is -- is 
more than generous, because something could come out in --
THE COURT:  No. 
MS. WALKER:  -- a -- in a deposition later. 
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THE COURT:  Sure. 
MS. WALKER:  You know, and I think then if we try to 
supplement and, you know, claimants wants to come in and say 
we've been sandbagged -- 
THE COURT:  No. 
MS. WALKER:  -- you know, we could have that dispute 
at that time when it's ripe and when -- 
THE COURT:  That's -- 
MS. WALKER:  -- the Court has all of the facts. 
THE COURT:  So the answer's yes?  
MS. WALKER:  But the answer is yes. 
THE COURT:  Okay. 
MR. GRONBORG:  Oh, I -- we never understood that to be 
a proposal.  And, honestly, just about everything Ms. Walker 
said is a very good characterization of our meet and confer.  
But I suppose if Garcia, Sr., is willing to timely amend up to 
and through December of 2025 and that's the cutoff, we're fine 
with that. 
THE COURT:  That seems right.  I mean, it does allow 
us to administer the case efficiently, which is the main issue 
here.  You heard my thoughts about his needing to amend, if 
necessary, but also making sure the case goes forward. 
So I am in agreement with what you all have said.  
We'll set a December 31, 2025, deadline for Garcia, Sr.'s 
disclosure of affirmative witnesses.  
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Okay.  Well, that handles 154 and 155 for today.
Let me turn to plaintiff.  Anything else to address?  
MS. COCALIS:  No, Your Honor.  
THE COURT:  From the defense?  
MR. WORD:  Not for the Carvana defendants, Your Honor.  
MS. WALKER:  Not for Mr. Garcia, Sr.  Thank you. 
THE COURT:  Let me just say before we adjourn that I 
really want to say that I appreciate you all coming here in 
person.  I am very much in favor of not having discovery 
disputes like this and requiring you all to -- to come down to 
court or to travel.  So I assume we can handle all of this in 
the future not doing it this way.  So I am thankful for you 
being here in person.  I know that's not the most efficient way 
to do this.  It's been a little unusual overall.  And my goal 
here is not only to give you a clear order, but also to put 
myself in both of your shoes and see what is the case that you 
have so that you know what it -- how to try and defend the case 
going forward.
So I appreciate your input and our discussion.  And 
with that, we're adjourned.  
Thank you.  
(Proceedings conclude at 2:39 p.m.)
---oOo---
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C E R T I F I C A T E
I, CATHY J. TAYLOR, court-approved transcriber, 
certify that the foregoing is a correct transcript from the 
official electronic sound recording of the proceedings in the 
above-entitled matter.
DATED at Phoenix, Arizona, this 27th day of June, 
2025.
/s/Cathy J.  Taylor
Cathy J. Taylor 
Case 2:22-cv-02126-MTL     Document 172     Filed 06/27/25     Page 39 of 39

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