Declaration In Support

Cal. Super. - 6th Dist.September 21, 2016

Electronically Filed by Superior Court of CA, County of Santa Clara, on 9/7/2018 10:16 AM Reviewed By: R. Aragon Case #16CV300285 Envelope: 1919274 16CV300285 Santa Clara - Civil R. Aragon 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, WILLIAM T. PALMER, declare as follows: 1. I am a member of theState Bar 0f California and the law firm of Pillsbury Winthrop Shaw Pittman LLP, attorneys of record for defendants The Board 0f Trustees 0f the Leland Stanford Junior University (sued as Leland Stanford Junior University) and William J. Perry (collectively, “Defendants”) in the above-entitled action. I make this declaration in support 0f Defendants’ motions in limine. 2. The facts set forth below are known to me personally, and I have first-hand knowledge of them. If called as a Witness, I could and would testify competently, under oath, to such facts. 3. Attached hereto as Exhibit A is a true and correct copy 0f the expert report by Susan Heinemann, provided t0 Defendants 0n August 7, 201 8, which has been designated “Confidential.” 4. Attached hereto as Exhibit B is a true and correct copy 0f portions of the deposition 0f Susan Heinemann, Which occurred 0n August 20, 201 8. 5. Despite being designated as retained experts by Plaintiff, neither William Fellers nor John Swensson served expert reports. 6. Attached hereto as Exhibit C is a true and correct copy 0f portions 0f the first deposition 0f William Fellers, which occurred on August 8, 2018, and Which has been designated “Confidential.” 7. Attached hereto as Exhibit D is a true and correct copy 0f portions 0f the second deposition of William Fellers, which occurred 0n August 21, 201 8, and Which has been designated “Confidential.” 8. Attached hereto as Exhibit E is a true and correct copy 0f portions 0f the deposition 0f John Swensson, which occurred on August 16, 201 8. 9. Attached hereto as Exhibit F is a true and correct copy 0f portions of the First Amended Complaint in this matter, Which was filed on January 20, 2017. 2 PALMER DECLARATION IN SUPPORT OF DEFENDANTS’ MOTIONS IN LIMINE 4833-0419-8257.vl OONO Q 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10. Attached hereto as Exhibit G is a true and correct copy of the Court’s order sustaining in part and denying in part Defendants’ demurrer t0 Plaintiff” s First Amended Complaint, which the Court entered 0n April 20, 2017. 11. Attached hereto as Exhibit H is a true and correct copy 0f Plaintiff’s February 13, 2016 appeal of the denial 0f his non-academic grievance filed with Stanford. 12. Attached as Exhibit I is a true and correct copy of portions 0f the deposition of John Etchemendy, which occurred 0n the March 22, 201 8. 13. Attached as Exhibit J ‘is a true and correct copy of portions of the deposition 0f Stephanie Kalfayan, which occurred on August 2, 2018. 14. Attached as Exhibit K is a true and correct copy of portions of the deposition 0f Lauren Schoenthaler, which occurred on April 25, 201 8. 15. Attached as Exhibit L is a true and correct copy of the revised calculations 0f Plaintiff’s damages expert, Susan Heinemann, which was provided t0 Defendants 0n September 4, 201 8, and which has been designated “Confidential.” 16. Attached as Exhibit M is a true and correct copy 0f portions of the deposition of Michael Hanneken, which occurred on May 16, 201 8. I declare under penalty of perjury under the laws of the State 0f California that the foregoing is true and correct. Dated: September 6, 2018. PILLSBURY WINTHROP SHAW PITTMAN L ./ Wyl’hanfT Falye ...... w" Attorneys for Defendants 3 PALMER DECLARATION IN SUPPORT OF DEFENDANTS’ MOTIONS IN LIMINE 4833-04 l 9-8257.v1 EXHIBIT 1 I T A * REDACTED EXHIBITEXHIBIT B Suzanne Heinemann SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA MICHAEL HANNEKEN PLAINTIFF CONDENSED TRANSCRIPT vs LELAND STANFORD JUNIOR UNIVERSITY WILLIAM PERRY DOES 1-50 10 11 12 13 DEFENDANTS No 16-CV-300285 14 15 16 17 18 19 20 21 22 23 24 25 VIDEOTAPED DEPOSITION OF SUZANNE HEINEMANN Monday August 20 2018 Chase htiçahan Services Company DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 11 Reported By KATHLEEN WILKINS CSR 10068 RPR-RMR- CRR-CCRR- CLR- CRC File No 18-26433 Suzanne Heinemann VIDEOTAPED DEPOSITION OF SUEANNE HEINEMANN BE IT REMEMBERED that on Monday Auguat 20 2018 commencing at the hour of 933 a.n thereof at PILLSBURY WINTHROP SHAW PITTMAN Four Embarcadero Center 22nd Floor San Franciaco California before me Kathleen Wilkina RPR-RMR-CRR-CCRR-CLR-CRC Certified Shorthand Reporter in and for the State of California personally appeared SUEPNNE MEINEMANN 10 witneas in the above-entitled court and cause 11 who being by me first duly sworn was thereupon 12 examined as witness in said action 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INDEX INDEX OF EXAMINATIONS PAGE EXAMINATION BY MR LANPHERE AFTERNOON SESSION 128 INDEX OF EXHIBITS EXHIBIT DESCRIPTION PAGE Exhibit 222 Curriculum Vitae Suzanne Heinemenn Exhibit 223 Handwritten notes and 58 outline Exhibit 224 Spreadsheet 110 Exhibit 225 Spreadsheet entitled 183 Companies with Commercial Real Estate Projects in Bay Area Exhibit 226 Group of invoices 228 EXHIBITS PREVIOUSLY HARKED AND REFERRED TO IN THIS DEPOSITION EXHIBIT PAGE Exhibit 200 Exhibit 206 22 Page 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES OF COUNSEL FOR THE PLAINTIFF MCMANIS FAULKNER Fairnont Plaza 10th Floor 50 San Fernando Street Sen Jose California 95113 BY JAMES GIACCHETTI ESQ Telephone 408 279-8700 E-mail jgiacchatti@mcmanislaw.com FOR THE DEFENDANTS PILLSBURY WINTHROP SKEW PITTHAN LLP Four Embarcadero Center 22nd Floor San Francisco California 94111 5998 BY ANDREW LANPHERE ESQ Telephone 415 983-1000 andrew lanphere@pillsburylaw.com ALSO PRESENT Stave Hazel Robert Delantoni Videographer Page AUGUST 20 2018 933 A.M PROCEEDINGS THE VIDEOGRAPHER Good morning Were on the record at approximately 933 a.m Todays date is August 20 2018 We are located at Four Embarcadero Center 22nd Floor San Francisco California This marks the beginning of Media Number of the deposition of Suzanne Meinemsnn on 10 August 20 2018 in the matter of Michael Hsnneken 11 versus Leland Stanford Junior University venued 12 in the Superior Court State of California in and 13 for the County of Santa Clara The case number is 14 16CV300285 15 My name is Rob Delantoni Im legal 16 video specialist here on behalf of Miller 17 Company Reporters The court reporter is 18 Kathleen Wilkins on behalf of Miller Company 19 Reporters 20 Counsel and others present please 21 identify yourselves for the record 22 MR LANPMERE Andrew Lanphere for the 23 defendants And with me here today is Steve Hazel 24 of FTI 25 MR GIACCHETTI James Giacchetti for DepoServices.com MILLER COMPANY REPORTERS Page 800.487.6278 Suzanne Heinemann McManis Faulkner representing the plaintiff colonel Michael Hanneken THE VIDEOGRAPHER Thank you Madam court Reporter please swear the witness end begin SUZANNE MEINRMANN having been duly sworn wee examined end testified as follows EXAMINATION BY MR LANPHERE 10 BY MR LANPHERE 11 Good morning Ms Heinemann 12 obviously have seen your bio so know youve 13 been deposed before but Ill just run through 14 couple of the basics so were all on the same 15 page 16 The first is you -- the oath you just 17 took is the same oath you would take in court cf 18 law It carries with it the same obligation of 19 truthfulness end penalty of perjury 20 Do you understand that 21 Yes 22 Because youre under oath youre 23 entitled to clear question from me If for 24 whatever reason you dont understand any questions 25 or my question isnt clear please just let me 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 besides the two you just mentioned to me that you hold No Those are the two that come to mind Do you have any certifications or training -- let me rephrase that Do you have any education specific to the real estate industry do not have education specific to the reel estate industry outside of my work experience in cases throughout the years Okay And perhaps you know also including just personal experience you know -- Buying and selling property Remodeling all that jazz And the lees of that experience the better in my -- my experience Oh dont know Were sort of fans of MGTV in our house All right In terms of your work as retained expert have you predominantly worked for plaintiff side defense side or is there -- is there predominant side Theres pretty healthy mix of both PagePage know and Ill rephrase it Do you understand that Yes By the same token if you answer any of my questions were going to assume you understood it Do you understand that Yes Okay Let me just talk first little 10 bit about your -- or ask about your educational 11 background 12 What education degrees have you earned 13 have en undergraduate degree from the 14 college of William Mary Its bachelor in 15 business administration with concentration in 16 finance and minor in accounting Do you heve any other educational 18 degrees 19 have accreditations Im certified 20 public accountant in the state of california And 21 Im also accredited in business valuation 22 And what accreditation in business 23 valuation is that 24 Its through the AIcPA 25 Are there any other certifications 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 Okay So you wouldnt characterize yourself as more on the plaintiff side than defense side just looking back over your career as retained expert No If anything would say if had to put percentage on it think would be slightly more heavily weighted on the defense side MR LANPHERE Okay Lets mark this as next in order Exhibit 222 Whereupon Deposition Exhibit 222 wee marked for identification BY MR LANPHERE Why dont just give you now so weve got it in front of us this has been previously marked ee Exhibit 200 Within Exhibit 200 if you flip oh six or seven points -- pages in theres Exhibit and then your -- your cv Do you eee that Ido Okey So Im going to ask you about both of these documents because they relate to your background but Ill ask you about them together PagePage DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 Suzanne Hnemann So first of all you know looking at Exhibit 222 this is printout of your wsbsite bio for your firm correct It looks to be yes Okay And it hss under your nsme number of categories of information the last of which is industry experience Do you see that Yes And it lists automotive as industry experience for you Do you see that do see that Why does it list automotive for you as industry experience Its an awfully good question actually didnt know that it was restricted to automotive -- probably because do -- among my other concentrations do fair bit of work or have in the network dispute area for automotive in the automotive industry And whet are the other concentrations you have that you referred to in your lest answer So generally what -- the way characterize my practice is one that focuses you Page 10 know portion on straight commercial damages breach of contract things of that nature portion of it related to intellectual property issues patent copyright Lately Ive been doing lot more trade secret And then the other third of my practice is having to do with the automotive industry insofar as disputes between manufacturers and dealerships usually regarding location performance issues surrounding dealerships With reference to the portion of your practice that you characterize as straight commercial damages breech of contract things of that nature have you had any cases in -- that concerned damages to business in the real estate industry guess broadly have like sort of two cases that come to mind One had to do with trade secret misappropriation as it related to Cushman Wakefield That was awhile ago The other that comes to mind would say is sort of in the automotive area but it was dispute end it was down on the Peninsula and it had to do with valuation and issues regarding you know property dealership property things of Page 11 that nature down on the San Francisco Peninsula Do either of the two cases -- sorry not do Did either of the two cases you mentioned just now concern calculating lost profits of business in the real estate industry reel estate industry guess would say yes Both of those bed to do with damages as it relates to issues concerning the reel estate industry With respect to the two cases you just referenced are they listed on your bio which is Exhibit -- in Exhibit 200 MR GIACCHETTI Ms Meinemann please take the time that you need to review your bin and then make sure that youre comfortable with the information contained therein before you answer the question So the one regarding -- made reference regarding San Jose is listed on THE WITNESS the one case to which the reel estate deal in page of my CV BY MR LANPHERE Which case is that Matthew Enterprise versus Chrysler Group Page 12 And from the description here it appears that case involved an oral agreement to purchase automotive real estate is that correct Thats what it says yes And thats correct correct That was part the claims yes Okay And were any of the parties in that case commercial real estate developer Not as the primary -- well Matthew Enterprise would probably consider himself real estate developer Many of the automotive dealerships make more money by buying acquiring and managing their automotive properties than they do by actually running the dealerships properly or in proper specifically Sn he might consider himself developer Hes also an automotive franchisee Were you representing the defense or the plaintiff in that case was retained by Chrysler Group And what was the second case you mentioned as broadly speaking involving commercial or involving the real estate industry This was trade secret 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 410-13 Page 13 Suzanne Heinemann misappropriation case believe you mentioned Yap It was trade secret misappropriation and it was Team Act versus -- versus Cushman Wakefield Its not listed on my CV It was number of years ago just was thinking about it this morning This Exhibit 200 Exhibit thereto which is your CV the list of cases goes on for about -- it looks like ten pages and it goes back to it looks like approximately 2005 Does this list all of your cases in which you were retained as an expert -- testifying expert should say in the period 2005 to the present MR GIACCHETTI Ill just object to the extent that she just testified that it doesnt THE WITNESS Well it would not reflect all the instances in which was retained as testifying expert Insofar as the nore recent times if Ive been retained as testifying expert but not yet been disclosed by virtue of report or court testimony et cetera its most certainly not listed on here With respect to historic instances where Ive been disclosed as an expert it is complete in that nature BY MR LANPHERE Page 14 Going back to 2005 Correct Okay So gather then that the trade secret misappropriation case you nentioned was sometime prior to 2005 Oh it could have been Or it could have been matter on which wasnt testifying expert but was involved in case management or consulting or supporting in an outside expert type of role Do you have recollection of what your in that case That was not the testifying expert Okay Were you the testifying expert in the case in which you were retained by Chrysler that you referenced about the real estate transaction in San Jose Yes So then its your recollection as you sit here today thats the single instance prior suppose to today that youve been retained to be testifying expert in case involving the real estate industry is that correct Page 15 MR GIACCHETTI Object that its argumentative It misatates prior testimony as well Asked and answered BY MR LANPHERE You can answer To the best of my recollection those are the -- that is the case that comes to mind with regard to being testifying expert Specific on that area suppose could go through in more detail on the other matters listed on this CV You know many of my cases touch tangentially on real estate insofar as valuations of businesses and things of that nature As an example there is disclosed in here confidential valuation assignment for another dealership that had to do with the valuation of their real estate properties as well So mean thats not one Ive sort of called out to you but would hate to say that narrowly the only instance in which real estate issues have come to mind has to do with the Matthew Enterprises versus Chrysler Group Have you performed business valuation in this case Page 16 No Not in this matter Okay So do any of the cases in which youve been retained -- sorry Let me rephrase that Do any of the cases in which youve been disclosed as testifying expert in Exhibit to Exhibit 200 involve your calculating lost profit damages for businese in the cueeLciel real estate industry Cell phone rings MR LANPHERE My apologies MR GIACCHETTI Im sorry Could you please read the question back MR LANPHERE Yeah Let me -- let me read it again Im sorry about my phone Do any of the cases in which youve been disclosed as testifying expert in Exhibit in Exhibit 200 involve your calculating lost profit damages for business in the commercial real estate industry So of the ones listed on this document my CV as it relates to where Im testifying expert think the only other one that is probably close to that has to do with the cases on page which is Oakridge versus Southern Page 17 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 role was 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 514-17 Suzanne Heinemann California Ediaon And it had to do with an owner of real estate mobile home park And so had to compute lost profits as it relates to remts collected from the mobile home park So mean as it relates to sort of quasi-commercial real estate dont know that totally fits but guess its worth mentioning Again am limiting my answer to the oases listed on this CV Separate from the oases listed in this CV have you been retained to calculate lost profits with respect to business in the commercial real estate industry Yes okay Can you describe that experience to me There was trade secret misappropriation matter for Cushman Wakefield in which recall computing lost profits related to misappropriatiom of trade secrets Have you ever prior to this engagement attempted to calculate lost profits from lost opportunities to develop commercial real estate Are you asking if Ive ever had model that -- guess maybe be more specific Page 18 Sure Prior to this emgagement have you ever attempted to calculate profits in business lost from losing opportunities to develop commercial reel estate have done lost profit calculations on probably SO to 100 different companies industries et oeters using benchmarks to understand what lost profits would be As sit 10 here dont have specific recollection of 11 having done that for someone who is in 12 13 14 15 16 17 18 19 20 21 22 23 24 25 construction management or real estate development prior to my involvement in this case okay And what about with respect business providing real estate consulting -- estate development consulting services think the same answer would apply which is Ive done lost profit calculations in numerous industries so many of them have to do with services industries whether they be consulting or physician practices or dental practices or any number of services So with respect specifically to someone who does construction management and owner representation-type business think this is my Page 19 first Do you consider yourself an industry expert with respect to the commercial real estate industry HR GIACCHETTI just object to the extent that its calling for Ms Heinemann to engage in speculation BY MR LANPHERE You can answer consider myself damages expert who reasonably relies on industry research data benchmarks compiled by others in the industry and rely typically on industry experts So in your cases if you need specialized knowledge about particular industry youll rely on an industry expert to provide you with that support is that correct Among other sources right So typically do research into an industry and that involves usually trying to find data benchmark or different resources that provide metrics and tracking of industries usually have interviews with company personnel read depositions and oftentimes have access to industry experts who can also provide Page 20 some information Do you consider yourself an industry expert in the real estate development consulting -- sorry let me rephrase that Do you consider yourself an industry expert in the industry for providing real estate consulting development consulting services MR GIACCMETYI Id just object that its vague and ambiguous as to the term industry expert THE WITNESS give -- would give the same answer consider myself damages expert who is trained in the field of understanding numerous industries think the other clarification would make is myself am in the consulting industry so think that gives me little bit of framework that nay weigh in little bit in case that to do with consulting revenues would not hold myself out to be an expert in the industry of owner representative-type consulting work BY MR LANPHERE We received production of documents from your -- not your -- from oounsel for plaintiff on August 7th believe it was which Page 21 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to real MILLER COMPANY REPORTERS 800.487.6278 618-21 DepoServices.com Suzanne Heinemann included informetion ebout you end Mr Fellers Have you prepared any additional documents since Auguat 7th that you brought here today to provide No All right Have you done any additional analysis to supplement -- since August 7th to supplement any of the analysis contained in the documents that were produced to us at that time No Okay This is docunent Im going to show you thets previoualy marked as Exhibit 206 Do you recognize this document Yes do And what is it It is set of schedules that are reflective of my damages opinions in the present matter Okay Can refer -- recognize its not like federal court report but can refer to this for shorthand as the report your report report Okay And this reflects your review of certain financial documents for the company HESS and revenues by revenues and expenses by product lines over time correct think thats fair statement And there is two -- looking at the top theres two categories of revenue Theres design-build revenue at risk and theres consulting revenues FFS Do you see that Ido First question is what is design-build revenue at risk So the category design-build revenue relates to work HESS performed that was at risk and included elements of sort of construction development construction management and -- and was situation where it was not fee-for-service it was an at-risk development proposition Could you just elaborate little bit Page 23 further on what it means to be at risk in this context Sure So to be at risk in this context means that HESS was responsible for completion of services development under contract with Plantronics And its gross margin would be determined based on its success in managing and controlling costs Okay And then what is consulting revenue FFS meant to indicate So consulting revenue FFS is meant to indicate fee-for-service revenues business And its an indication of instances where HESS has been retained and paid on an hourly basis for services provided To your knowledge does this schedule 02 reflect all of the revenues that HESS has earned in these two product lines since 2004 Thats my understanding Or should -- let me rephrase that From 2004 through the end of 2017 right Thats correct Thats my understanding Page 24 Okay Now in connection -- Ill withdraw that and start over Have you ever prepared valuation for business in the design-build at-risk industry previously No have not Have you ever prepared lost profits analysis for business in the design-build at-risk industry previously Prior to this case do not recall having prepared damages calculation for an at-risk design-build client or entity Now with respect to the fee-for-service consulting revenue reflected in Schedule D2 theres four different clients there Do you see that Ido Okay Are you able to specify what type of fee-for-service consulting services were provided by HESS to those customers For certain of them know more than for -- for others Which ones do you know more for Well for example for C51PEHS have an understanding of the sort of capital outlay and Page 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2502 in the Sure Okay Now could you turn to Schedule report Exhibit 206 Page 22 Did you prepare this -- this schedule in connection with preparing this report Yes This schedule is part of the 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 22 25 Suzanne Heinemann consulting services thst RESS was providing in helping C51PERS you know sort of right size its assets and figure out whet it should be doing Were those services being provided by RESS to Ca1PERS were they focused on commercial real estate on some other industry or do you know My understanding it was review of capital assets that think would have included commercial real estate but maybe not exclusively think it was capital budgeting and just sort of asset analysis Okay What is your understanding of the types of fee-for-service consulting services that RESS has provided to the California High-Speed Rail Authority understand those services are somewhat similar Theyre focused on the California high-speed light rail contract and providing sort of budget and planning -- budgeting and planning oversight as it relates to commercial real estate and other areas required by the California high-speed light rail Can you give me some examples of other areas besides commercial real estate that ware Page 26 required by the high-speed rail authority and RESS provided consulting services with respect to MR GIACCHETTI would just object to the extent that its vague and ambiguous THE WITNESS You know my understanding is limited to discussions with Michael Hanneken Colonel Hanneken generally to understand the California hiyh-speed light rail and understanding you know that it is this type of work for which he is -- for which he is qualified which would include his coamercial real estate his planning his possibly some of the attributes that are reflected on his GSA schedules that type of consulting capital asset planning- type work BY MR LANPHERE Do you know what proportion of the revenues that RESS earned from consulting services provided to the California High-Speed Rail Authority pertained to commercial reel estate-related consulting as opposed to other consulting dont Okay With reference to Re- -- ReloConnect from which RESS appeared to have Page 27 earned whopping $4140 in 2004 do you have an understanding of the type of consulting services that RESS provided to that client You know didnt -- dont have specific -- think that ReCollect is commercial entity me opposed to public entity such as C5IPERS or California high-speed light rail Thats the extent of sort of my -- my understanding of that project Okay And the lest one listed here is L3 Communications for which RESS is listed as earning $105000 in revenue in 2006 Whets your understanding if any regarding the type of consulting services that HESS provided to L3 Communications So L3 theres more substantial feedback or recommendation on RESSs website that in conjunction with my conversations with Mr Hanneken think they provide more broed understanding that it had to do with asset planning end you know thinking through the configuration of Ill say laboratories end/or assets end -- and related specifically to commercial reel estate Okay Now so theres five total Page 28 clients listed on Schedule 02 correct Thets correct There are five client names listed on Schedule 02 Okay Do you know how RESS won any of these clients in their business MR GIACCHETTI Object to the term won as vague and ambiguous BY MR LANPHERE You can answer dont have any of the specifics as to any of the particular clients My sense from Plantronics is it had to do with you know sort of networking or lead generation not dissimilar from you or my business And -- okay Before we talk about Plantronics little bit do you have any sense as to the other four listed Let me ask better question Do you have any sense how RESS won the business of ReloConnect L3 Communications Ca1PERS or the California High-Speed Rail Authority dont have the specific details of the procurement of those four contracts outside of Michael know hes got long resume in the Page 29 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 26 29 Suzanne Heinemann commercial real aatata buaineaa and thata all dont have more apacific detaila Did you -- with raapect to any of the five clienta hated on Schedule 02 did you attempt to determine how that bucineac waa won hiatorically by RESS did not do an invactigation into the procurement proceca for any of thoae four cuctomera Do you know what characteriatica the fiva clientc hated on Schedule 02 ware looking for in vendor auchaa -- actually let me rephrace that Juct focuaing on the four conculting revenue clientc do you know what characteriatica thoce clienta were looking for in vendor auch aa RESS for fee-for-aervice conaulting cervicea preaume they were looking for the typec of qualificationa that RESS haa provided them with by virtue of the fact that theyre paying compenaation to RESS for thoce aervicec rendered You didnt do any analycia to determine for example if they put out requect for propoaal or regueet for quotation Page 30 Aa atated earlier didnt do an inveatigation into the procurement proceaa can obaerve that they retained RESS and that RESS ia earning revenue for carvicca provided Sure But you dont know for example what cauacd any of thece four fee-for-aervice conaulting revenue chianta to chooae RESS inatead of aome competitor correct MR GIACCHETTI Objection Acked and anawered THE MITMESS can obcarva through the financial atatament that RESS waa indeed retained and have an underatanding of RESSa quahificationc both through ita work prior to forming the ita own company and aome of the quahificationa hated on ita webaite and the quahificationc diacuaeed at length with Mr Manneken can obaerve theae market tranaactiona through the financial etatementa And beyond that Ive already indicated have not done an inveatigation into the procurement proceaa BY MR LANPHERE And ia your anawer the came for opinion Plantronicc that ie you dont know other than Page 31 obaerving that there waa revenue obtained from Plantronice and having an undaretanding of RESSa quahificationa you dont know why Plantronica choae RESS for that work aa oppoaed to coma other company ia that correct MR CIACCHETTI Objection Its acked and answered THE MITMESS Ac Ive talked about prior with Plantronica understand you know that there waa come relationahip or come initial conaulting that wac done for Plantronica which ultimately led into cone at-rick decign-build development can infer from the amount of ravenuec to which Plantronica allocated RESS over 14 or co contractc over five-year period that the typac of cervicca he wac offering met their needa BY HR LANPHERE Now Plantronica wac the only design-build -- think Ive already asked thic but apologize if havent -- have Plantronica was the only decign-build at-rick work that RESS has aver done correct Plantronicc the cuctomer Plantronicc over five-year period and over Page 32 comething like 10 to 14 contracta ic the cingle entity for which RESS had done design-build work in the OS to 09 time period Well at any time cince as well correct HR GIACCHETTI would juat -- would object to thic line of questioning to the extent that it raliec on the term ever done cc that phrace ic vague ambiguouc and calls for apeculation BY MR LANPHERE ___________________ Okay RESS hasnt had any other dacign-build at-rick chienta besides Plantronica in the period from 2004 to the present correct Yec Ac reflected on the financial ctctemantc the dacign-build revenue for RESS ic rcctricted to Plcntronicc and itc indicated on Schedule 02 to cover the period roughly -- it includec 04 but generally from OS to 09 And are you aware of any decign-build at-rick revenue earned from other chientc by RESS prior to 2004 Hot by RESS My undcrctcnding ic that Michael Hcnnekcn hcc cort of been in the commercial real cctctc inductry and co it might Page 33 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 930-33 Suzanne Heinemann be -- and have not specifically inveatigated -- that he wee involved at another firm doing aimilar types of work But if we limit that queation to RESS there arent -- youre not aware of any of RESS earning any rough from design-build eu-risk work prior to 2004 Correct Because HESS wee initiated in 04 And as reflected in 02 thie ie complete recitation of HESS revenuee to date Okay Thank you So the Plantronics business started in 2004 correct As reflected on Schedule 02 yee And you reference there were 10 to 14 contracts Thats my understanding Yes Whats the basis of that understanding Oh there was variety of docunents received from Plantronics with nunerous cootrects numbers -- dont have the exact amount in mind but it was in the production The number 14 comes to mind It seems to be something either read in Michaels deposition or that we had talked about before contracts Page 34 Theyre referenced in the source documents There is -- sort of summary by contract in some of the Plantronics documents that were produced But my question is have you actually seen the individual i4 contracts My recollection is that Ive reviewed at least one design-build dont recall off the top of my head if it has sort of all of the sub pieces Theres definitely something that comes to mind Thats control-build estimate that has an indication of costs sort of by project scope and another document that comes to mind that in different manner breaks out the costs by contract Okay Now revenues from Plantrooics for design-build at-risk work ended in 2010 correct The last year for which revenue was reported for design-build at Plaotronics was 09 as reflected on Schedule 02 Yeah that was bad question Page 35 Do you know when in 2009 revenue ceased to be earned by HESS for Plantronics work You know did not have monthly data for the -- the Quick000ks or the HESS records did see the completion or sort of the terminstion of the contract for Plentronics was sigoed believe in December of 09 So cant tell you the workf low or the you know the rate at which revenue was earned over 09 but think its fair to say that the final contract was signed in 09 or the termination of the contract Do you know why HESSs work for Plantronics ceased at that time You know my sense of it is that it was sort of the the cycle of work had played itself out mean by that time by 09 the economy was pretty heavily into recessionary state and so think both of those were at play To your knowledge has Plantrooics had any other commercial real estate development projects in the San Francisco Bay Area since 2009 did not investigate that Do you know why HESS did not enter into amy design-build at-risk contracts with any other clients besides Plantronics Page 36 MR GIACCMETTI Objection to the extent that it calls for Ms Meinemann to engage in speculation THE WITNESS can only observe that they were retained and you know engaged by Plantronics during that time period BY MR LANPHEHE Do you know whether HESS was attempting to obtain other design-build at-risk work during that time period that is 2004 to lets say 2009 do not know Do you know whether HESS attempted to 14 obtain any other design -- let me withdraw that is and say different question 16 Do you know whether HESS attempted to 17 obtain any design-build at-risk work in the period 10 2010 until he enrolled at Stanford in 2013 19 My understanding is that by and large 20 the focus was -- either two things were happening 21 is what my understanding is One the economy had softened and we see this in the GIL data that construction was down 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Did you get copies of the actual 14 10 11 12 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com 22 23 24 25 also have an understanding through my Page 37 MILLER COMPANY REPORTERS 800.487.6278 1034-37 Suzanne Heinemann discussions with Mr Hanneken that he was preparing to go to Afghanistan and so design-build was not focus even if the economy would support that So my question was whether RESS attempted tn nbtain any design-build wnrk in the 2010 period until he enrolled at Stanford in 2013 Do you know whether any attempts were made guess would want to think more broadly about the word attempt know that RESS was engaged in its business and was pursuing GSA schedules and was certainly pursuing consulting work dont know that Ive had specific conversations about whether there were active solicitations for design-build work think that the tenor of the conversation was that the world kind of fell apart and there was not opportunities that ware meaningful during that time period Its not to say that Michael wasnt still networking and keeping his you know ear to the ground think thats the feedback have You mentioned active -- something like active solicitations Let me ask you question Page 38 kind of follow up with that part of your answer Are you aware of any instances during the period 2010 to when he enrolled at Stanford in 2013 where RESS submitted bid for design-build at-risk contract have not been furnished that information or provided information on bids or RFP submissions Okay Did you ask for such information think in roundabout way yes because there was pretty robust discussion trying to understand sort of the chronology of the sequence of events in Mr Hannekens business at RESS in concert with the economy and in concert with going to Afghanistan and in concert with thinking of applying to Ph.D program So would say broadly that that would be an area that we covered Okay Now were there still opportunities to enter into design-build at-risk contracts in the San Francisco Day Araa in the 2010 to 2013 period MR GIACCHETTI Objection to the term opportunities as vague and ambiguous THE WITNESS Well if we look at like Page 39 an index of economic activity in the San Francisco area and that we can turn for this discussion -- for example we can turn to Schedule B9 in my report think one way you could -- there seems to be copying mistake on Schedule R9 unless left the letter out of office Strange think more broadly would bring us to Schedule B9 as we think about sort of an index or proxy or benchmark for economic activity in the Bay Area And so with that in mind can have you reask your question BY MR LANPHERE Were there still opportunities to enter into design-build at-risk contracts in the San Francisco Bay Area in the 2010-to-2013 period Well if we look specifically at 2009 2010 and 2011 based on this indici and these data from JLL it would suggest that there were very very limited opportunities for design -- design-build and construction across the industry And that began to change in the second half of 2011 is that correct based on this data Yeah So based on these data as we Page 40 head into -- and more broadly based on the pretty comprehensive set of reports from JLL that weve looked at there is the smatterings of an upturn in 2011 in the San Francisco Bay Area And just so understand what Schedule B9 depicts the shaded the gray shaded area on the right-hand side is the pariod of time when Mr Hanneken was attending Stanford is that correct Yes it is Okay Now looking at the period starting in 2012 -- lets just start 01 2012 so the period 01 2012 through when he enrolled at Stanford Okay Are you aware of any instances of RESS in that time period attempting to obtain any design-build at-risk work In the mainstay of that period RESS was in Taiwan or the principal owner of RESS was in Taiwan or stationed in Afghanistan on active duty So without knowing the full datails of every instance or opportunity on which RESS communicated would broadly say they were not participating in the San Francisco market during Page 41 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800A87.6278 1138-41 Suzanne Heinemann that time Okay And its your understanding they ware not participating in tha San Franciaco market at that time due to the deployment rasponaibilities of Mr Hannakan in that period MR GIACCHETTI Objection t-o the extent that it misstates prior testimony THE WITNESS Again first Id like to say caveat that havent investigated with Mr Henneken every instance where he might be thinking of leads or keeping up with the San Francisco area But generally speaking in 2012 understand that he was in Taiwan and his focus was in large pert on federal -- federal government contract out of Taiwan But know he had ties still to the Bay Ares because he was working on the California high-speed light rail as well during that 2012 time period BY MR LANPHERE So my question was its your understanding that -- well actually withdraw that 24 Do you have an understanding of what are 25 the factors that determine which company is chosen Page 42 for design-build at-risk project MR GIACCHETTI Objection Its vague Ambiguous Calls for speculation Could you be more specific BY MR LANPHERB You can answer think you know one of the large bases of my understanding for how contractors are selected for design-build come from both conversations with Mr Benneken end also conversations with Mr Fellers and understanding that experience recommendations are -- reputation are key component to how project managers general contractors consultants owner representatives are selected as it relates to design-build opportunities And thats an understanding you gained through your discussion with Mr Henneken end Mr Fellers Thats correct Okey Separate from those discussions did you have sny prior experience with the factors that customers -- sorry let me rephrase that question Separate from those discussions did you Page 43 have any prior experience for any one of the factors that determine which company is chosen by customer for design-build at-risk project contract MR GIACCHETTI Object that the question is vague ambiguous end calls for speculation back THE WITNESS Can you reed the question Discussion held off record BY MR LANPHERE Let me rephrase it then or say it again Separate from your discussions with Mr Benneken and Mr Fellers did you have any prior experience or any fact -- prior experience -- let me try again Separate from your discussions with Mr Henneken end Mr Fellers do you have any prior experience regarding what the factors are that determine which company is chosen by customer for design-build st-risk contract MR GIACCHETTI Objection Its vague ambiguous Calls for speculation THE WITNESS guess would herken Page 44 beck to broadly experience across most industries end then also back to my own personal experiences just insofar as in our ares where live and thinking about hiring contractors the idea that reputation and experience would be factor that would weigh heavily in to someones selection process Certainly would sort of be in my nindset independent of having it sort of confirmed end reiterated by Mr Manneken end Mr Fellers Again and would also just naturally imagine in the business world lot of it is networking and having opportunities become available through sort of the internal network of being in that industry Thats just baseline appreciation for how business can accumulate BY MR LANPHERE Are you aware of any other factors besides reputation experience recommendations and networking that clients consider in 20 determining which company to choose as -- chose 21 for design-build at-risk contract 22 MR GIACCHETTI Objection Misstetes 23 prior testimony And the question is vague 24 ambiguous end calls for speculation 25 THE WITNESS think it depends on the Page 45 10 11 12 13 14 15 16 17 18 19 20 21 22 23 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 10 11 12 13 14 15 16 17 18 19 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1242 -45 Suzanne Heinemann project the neture of the project end the qualifications of the persons who ere et issue You know if -- if you heve specific need for workspace configuration versus some other particular issue youre going to look for somehody in that area think thats cnnsistent with all the conversations that Ive had with Mr Hanneken and Mr Fellers BY MR LANPMERE So for example is cost consideration for customers deciding whether to retain design-build at-risk or company for design-build at-risk contract MR GIACCHETTI Objection Vague Ambiguous Calls for speculation THE WITNESS think cost always goes into the balance of the equation think its balance among other factors of you know delivering what you need in the scope of what is going to be an economic benefit to you BY MR LANPHERE Could you turn to Schedule A2 of your report Exhibit 206 Youll saa that theres bracket in the middle of the page that spans from part of 2010 until part of 2012 with the label Preparing for/Deployment to Afghanistan Do you see that Page 46 Yes Okay Whats your understanding of how long he was actually deployed to Afghanistan think the deployment might have been something less than six months roughly Okay And whats your understanding as to what preparing for that deployment entailed My understanding is it related to sort of winding down relationships or contracts or closing the loop with certain business matters So in -- as part of the process -- let me withdraw that and ask different question Your understanding is that part of the process of Mr Hannakan preparing for his deployment to Afghanistan involved his winding down existing relationships and contracts is that right No dont think thats what said think its conceptually structuring your business so that others can manage in your absence or preparing customers think theres also during that period potentially an element of preparing Page 47 personal matters for being -- personal -- yeah personal matters for being overseas and in Afghanistan break MR LANPHERE Why dont we take short THE VIOEOGRAPMER Were going off the record at 1032 a.m Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 1043 a.m Please continue BY MR LANPHERE So looking at the first page of Exhibit 206 which is Schedule Al this lays forth sort of the ultimata conclusions based upon different calculations in the body of the report right Thats correct Its summary of conclusions contained in the body of the report These are all alternatives Okay So that was my question It looks like if you -- tharas -- first for -- based on assumption that the plaintiff will depart Stanford in December 2018 Theres three alternative calculations based on that assumption Page 48 is that correct Thats correct And then theres three more calculations based upon alternative calculations based upon the assumption that the plaintiff departed Stanford in September 2016 when ha filed this lawsuit correct Thacs corracc There are three alternatives under both December 2018 departure 10 scenario and September 2016 departure scenario 11 So lets start with the RESS consulting 12 fee-for-service calculations here 13 My understanding of your methodology is 14 that the RESS consulting faa-for-service 15 calculation assumes that ha would not RESS 16 would not ha doing any design-build at-risk work 17 during the period in question it would just be 18 doing consulting work is that corract 19 Thats corract 20 Okay And the RESS design-build at-risk 21 calculations of which there are two and well 22 talk about them saparataly hare but for both of 23 tham those assuma that thara would ha an initial 24 period of consulting work and than RESS would 25 focus after that initial period entirely on Page 49 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MILLER COMPANY REPORTERS 800.487.6278 13 46 49 DepoServices.com Suzanne Heinemann design-build st risk work is tbst correct Thst is correct Thst is how it is modeled Its probably little conservative in that respect But -- would agree that it is the second model which is the design-build modal Tt initiates with consulting wnrk which at certain point transitions fully in the model to design-build And within the design-build at-risk models there are two Theres market index approach and P555 historic approach correct Thats correct The 5555 -- the market index approach let me sorry Let ne withdraw it and start again Can you just describe to me the distinction between the two approaches Sure So there are two approaches under the design-build One -- both of them -- the difference in the approaches has to do with the underlying assumption for how NESS revenues or design-build opportunity would have matriculated 24 during the damages period 25 Under the historic approach it that notwithstanding the upside potential market during the damages period relative historical periods notwithstanding that NESS would have revenues equivalent -- or activity equivalent to what it had earned historically Under the market index approach it computes SEES lost opportunity lost revenues from design-build taking into account sort of an unprecedented growth in the San Francisco market And the market index is -- is factor that you apply to capture the growth in that market over time and you multiply that by the historical revenue that are in the historical approach is that basically -- mean were going to go through it in detail but is that basically the approach The approach is to use construction end renovation square footage in the San Francisco market as benchmark for changes in economic activity over time And it derives using those date those square footage data and trends over time derive an index which is them applied to the square footage that NESS had performed in the Plantronics period the prior period And it uses Page 51 that as the method to estimate future NESS economic activity Okay Now with respect with reference to the three alternative approaches under the assumption of Oecember 2018 Stanford departure do you have an opinion on which of the three is correct really dont You know provided three approaches so that could provide the finder of fact different ways of thinking about NESS and different ways of thinking about economic activities available to NESS during the damages period and that they would be useful data in considering damages And is the answer the same for the September 2016 Stanford departure theres three scenarios three approaches under that departure assumption and do you not have an opinion that one is correct of those three Thats correct provide them all three to provide frame -- framework for finder of fact to think about the economic activity and opportunities to NESS Are any of the three in your view more valid than the others Page 52 Its an interesting question Theres elements that like lot about each of the approaches For example in the market index approach really like the expression of economic activity based on changes that are observed in the market And so for that reason think its -- thats one of the key benefits to the market index approach On the other hand the NESS historic approach think is sort of conservative way to think about sort of the the level of economic activity observed in the past as an indication of opportunity in the future So from that point of view think its valuable And finally one of the reasons like the NESS consulting approach is theres less predictability about the timing of design-build work and whether thats going to come in small pieces or in one big piece And so for that reason think like the sort of predictability or the -- the granular approach of the consulting model as well to be an expression of the economic upside of NESS So each of the approaches think have its benefits 10 11 12 13 14 15 16 18 19 20 21 22 23 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25assumes Page 50 in the to that economic 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1450-53 Page 53 Suzanne Heinemann One thing you mention in your enswer wes you like the RESS consulting epproech because theres less predictsbility sbout the timing of design-build work end whether thsts come in -- going to come in small pieces or in one big piece Could you explain by whst you mesn by thst Right So historicslly RESS worked on Plantronics which you could look st it ss one big chunk or you could look st it as little chunks over tine through 14 projects When we think sbout the economic ectivity in the San Francisco market we certainly can observe larger projects like the Googles of the world and the Fecebooks of the world And theres also smaller projects that are 20000 40000 lease renovations Theres lots of different components that derive opportunity Ita just more difficult to pick particular opportunity that would bean -- that would have been in hypothetical world the one that RESS would have got Theres less -- theres lees ability to specifically identify that at granular level Now if you could turn to 81 Page 54 Schedule 81 within Exhibit 206 of your report Im sorry need tissue Is there tissue in here MR LANPHERE Hang on second Lets go off the record just for second THE WITNESS Sorry Im not sure why my nose is running but THE VIDEOGRAPHER Were uff the record at 1252 Whereupon recess was taken THE VIDEOGRAPHER Correction We were off the record at 1052 a.m and now were back on the record at 1053 a.m Please continue DY MR LANPMERE So could you turn to Schedule 81 in Exhibit 206 And can direct your attention to Footnote or Note to this schedule And the first sentence reeds RESS but-for revenue estimates assuned that Mr Hanneken would depart Stanford after completing the fell 2013 quarter Now thats en assumption that is mede with respect to each of the alternative analyses presented in the report correct Thats correct Okay And why did you make this assumption was asked to make this assumption end it was one that was developed end derived through my conversations with Mr Hanneken and as observed in the complaint Its my understanding that with full information regarding the -- you know with full information as it relates to the liability act in other words if no promise had been made and if there was full information that constructive credit was not an option or letter was not en option or security-focused degree Ph.D degree was not an option Ive been asked to assume and understand that Mr Hanneken would have left the program Now just so understand the scope of the opinions youre intending to offer et trial are you intending to testify that youve reviewed Page 56 the evidence and concluded that thats an eccurste assumption or youre -- just that youre assuming it for purposes of your anslysis Im assuming -- Ive been asked to do the calculation assuming that he would leave And rely on Mr Hanneken to provide the testimony that indeed it would be in his best economic interest tu leave the prugrem should he have bed different or full information in the fell of 2013 Okay Did you consider preparing any alternative but-for damages calculations based upon en assumption of different date when he would have departed Stanford So Im confused little bit ebout your question world So are you talking about the but-for em talking about the but-for world Okay Let me rephrase my question Okay So Im talking about the but-for world and Im asking did you consider using different beginning to the but-for world than at the end of the fall quarter of 2013 Page 57 Do you see that do 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com Paqe 55 MILLER COMPANY REPORTERS 800.487.6278 1554-57 Suzanne Heinemann No did not My -- the premise of the hut-for world is you know absent thet meeting with Perry and absent the liability acts and with full information the hypothetical world would be one in which Michael would just leave Stanford given the imbalance of economic opportunities MR LANPHERE So lets mark this as next in order please Whereupon Deposition Exhibit 223 was marked for identification BY MR LANPHERE Youve been handed whets been marked as Exhibit 223 This is multipage document The first page consists entirely of handwritten notes The next three pages after that consist of typewritten document with various handwritten notes on it Do you recognize the handwritten notes as your notes Yes And looking at the second through fourth page of this document did you prepare this typewritten document on which there are notes on these pages Yes Okay And when did you prepare the typewritten document long time ago is the beat can say Was it about -- close in time to when you were initially retained for this Yes Why dont ask you when ware you initially reteined You know feel like it was about year ago You probably have the engagement latter And what was the purpose of this typewritten document that is part of Exhibit 223 The purpose of the typewritten document was to pull together some -- some smatterings of facts or not facts some ideas or notes in an organized fashion so that could follow up batter on then to figure out what my assignment was going to be and in what direction was headed and what damages would look like Okay So if you turn to the third page of the exhibit which is the second page of the typewritten document youll see theres -- towards the top of the page the third line down theres sub Page 59 Do you see that Mh-hmm yes And it says But for But for the military coursework the Ph.D program would have been completed in two to three years i.e by summer 2015 to winter 2015 Do you see that Ido And where did you have that understanding from think the primary understanding probably would have cone from the complaint and reading the complaint as it relates to military coursawork And sort of conceptually feel like it said -- maybe said like 20-month or -- some kind delsy in the complaint And below that sub theres another type of statement It says Damages are lost business income/profits stemming from loss of business employment from September 2016 through September 2018 Ido Okay Did you attempt to calculate lost business income or profit stemming from loss of business employment for Mr Hanneken from the summer of 2016 through the summer of 2018 No Why not Because understood that that would not reflect damages suffered by Mr Hanneken Is that the only reason you didnt to calculate that Right Because in talking through sort of my initial notes from the complaint and the facts that was learning from the came to understand that really given the -- given the economic realities that Ph.D without -- sort of international security focus given the fact that having just civil engineering degree and organizational dissertation my understanding from Mr Hanneken is that that really wasnt of economic benefit to him And had ha had full information that the but-for world that would better reflect his damages is one in which he would have left school Page 61 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 58 Do you sea that Page 60 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 properly attempt of some some of case 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1658-61 Suzanne Heinemann Looking under relevent case date and then theres Numher 4A Do you see that It says HESS undertook 14 projects Yeah We talked earlier about meybe 14 contracts Isnt it true that there wee one meeter contreot and 14 different projects that fell within the scope of that Is that your understanding would agree that those -- well it depends on what meant by this comnent If were talking shout Plantronics would agree that there is Plentronica entity with nultiple contracts As sit here cant remember what 14 projects means It could refer to Plantronics Certainly that would be part of it It might relate to other of tha work including L3 or California high-speed light reil et cetera So with reference to Plantronics it is your understanding that there were actually 14 different contracts entered into not one meeter contract with 14 different projects falling within it think as kind of just said as it Page 62 relates end as we talked about earlier dont have recollection of like the specific number of contract order numbers But as it relates to the Plantronice customer do recall that there are sort of numerous contracts under the one five-year design-build relationship Looking at number -- the sentence after Number on this same page it says Does 2010 reflect the run-out of contracts Were they naturally terminated or phased out because of deploynent Actually well whet did you conclude the answer to these questions were In other words were the -- wee -- does -- does 2010 reflect the run-out of contracts were they naturally terminated or phased out because of deployment MR GIACCMETTI Objection to the extent the question calls for speculation Ms Heinemenn you can answer if you understand the question and you have knowledge as to the enawer of the question based upon these notes THE WITNESS My recollection as it relates to item Number think goes beck to our diecuseions earlier this morning that remember having conversations about you know the natural end to Plentronics end why did that occur end it was kind of the economy end the cycle had ended And all those things kind of all those same answers think would epply to this note mean that wee probably the basis of the recollection that had BY MR LANPMERE Okay Now are you aware of -- oh actuelly sorry If you turn to the next page leet page of Exhibit 223 theres number -- sentence numbered 12 that reads Is there any direct evidence of project thet was turned Ido Okay Did you ever answer that question is there any direct evidence of project that wee turned away Well the one project -- dont know if Page 64 its characterized as turned ewey but that it was directly impacted is California high-speed light rail think on average Mr Hanneken billed something like eight hours month And understend through conversations with him that thet is an area where he would have grown work given the opportunity and the time With respect to other instances you know it ended -- the conversetion ended up being no was restricted by time by effort by ability to be out soliciting work So there werent -- by and large there werent specific instances that we could identify Now do not remember having conversations about certein opportunities that ended up being on one of my exhibits and it was kind of robust conversation ebout understanding those projects and leads and just that Mr Henneken thought he would be in position for many of those Okey So you mentioned Mr Nanneken being restricted by time by effort by ability to be out soliciting work What was restricting him in thet regerd Full -- well guess couple of Page 65 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 ewey Do you see thet 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 Page 63 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 17 62 -65 Suzanne Heinemann things think one is just being full-time Ph.D student elso understood from Mr Henneken thet there wee sort of en informel or possibly formel but en underetending thet he wee supposed to be full-time student end wee not euppoeed to be growing his bueineee to the detriment of the Ph.D progrem And wee the decieion to be restricted in thet feehion to be et Stenford end be full-time etudent wee thet Mr Hennekens choice MR GIACCMETTI would juet object to the extent thet it cells for Me Heinemenn to epeculete BY MR LANPHERE You cen enewer By -- well gueee ite -- he entered the progrem to get the Ph.D So Im eeeuming liebility end thet he would hmve left the progrem in the ebeence of thet liebility ect So -- so given thet bee in the progrem then there would be reetriction on the economic ectivity ee it relates to the RESS business Okey Now think you elreedy referred to it but youre ewere thet Mr Henneken Page 66 continued to work on projects for RESS while he wee enrolled -- or project for RESS while he wee enrolled et Stenford the Celifornie high-epeed reil eeeocietion project right Yes Ive reviewed invoices from RESS to Celifornie high-epeed light reil And you prepered en enelyeie in your report of the number of hours over time that Mr Henneken worked on that project while he wee at Stenford correct Yes Mr Henneken end eteff et his direction queetion Do you know if RESS bed eny employees while Mr Henneken wee et Stenford And this question Im intentionelly meening to distinguish between employees vereus independent contrectore thet he mey heve reteined to help him with thet contrect Yee know Okey And did he heve eny employeee In the leter periode if recell correctly in -- end could look et the finenciel etetenente but meybe 2016 meybe 2017 there ere Page 67 wegee reported By end lerge most of the coet the lebor cost releted to coneultente other them himself By end lerge theyre independent contrectore There is come wege expense In other words there ere come persons who were teking W-2e from RESS And do you know how meny do not Okey How if et eli did the fect thet RESS bed employeee end reteined independent contrectors to work on the Celifornie high-speed reil eseocietion fector into your opinions in this metter Well think es its footnoted throughout the report think thet you know Mr Mennekene work on the Celifornie high-speed light reil provides benchmerk for underetending leverege retioe end levereged rete thet ceo be -- thet is used cc one of the beeee to think ebout the economic opportunity ebeent his time in Stenford Wee there eny restriction youre ewere of thet if Mr Henneken wented RESS to do more work for Celifornie high-speed reil thet would prevent him from hiring edditionel employees or Page 68 edditionel independent contrectore to perform thet work Cen you teke thet one beck Cen you reed thet one beck Record reed by the reporter es follows QUESTION Wee there eny restriction youre aware of that if Mr Henneken wented RESS to do more work for Celifornie high-speed reil thet would prevent him from hiring edditionel employees or edditionel independent contrectore to perform thet work THE WITNESS think the restriction is simply one of time right Time end effort So the Ph.D progrem is en intensive progrem Theres lots of reeeerch end its rigorous end theres responsibilities thet Mr Henneken hes to complete thet Ph.D So think thet you know you cen imegine in the consulting besie theres leverege model but theres only certein number of hours thet Mr Menneken would be willing to Page 69 10 ii 12 13 14 15 16 17 18 19 20 21 22 23 10 ii 12 13 14 15 16 17 18 19 20 21 22 23 24 25 24 25 10 ii 12 Okey So -- end thet wee my next 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 18 66 69 Suzanne Heinemann commit to continuing to do that work and grow that work So think that theres the tine restriction the reasonable time restriction to accomplishing Ph.D studies and trying to at the same time keep balance so that you could retain client BY MR LANPMERE Did you conduct any kind of analysis to determine whether Mr Henneken had enough time consistsnt with his obligations to the Ph.D program to expend the California High-Speed Rail Authority work through hiring additional employees or additional independent contractors would say my analysis of the California high-speed light rail and in response to your question it would be restricted to ny consideration of the invoices over time And specifically whet In thinking of is the kind of leverage ratio -- ratio that we see thet project settling into think that that provides an indication of sort of the constraints of -- of Mr Hanneken snd generally speaking working about eight hours month on this client while hes at his Ph.D program Page 70 So think that if you think about hiring sdditional staff or additional consultants you have to then make assumptions that the leverage ratio would be greater if youre assuming that Mr Henneken would work the same hours So my analysis is limited really to what ectuelly happened Do you have an opinion as to whether RESS could have hsd higher leverage ratio during the period Mr Hanneken wee at Stanford and thereby expand his business with California high-speed rail association MR GIACCHETTI Objection to the extent that it calls for speculation THE WITNESS No dont hsve en opinion nbserved the ratio and it settled in at roughly at 13-to-l leverage ratio And think draw from that that thats sort of en economic equilibrium didnt do any specific investigation to see if additional leverage could have been sustained BY MR LANPHERE Okey Thank you So were still on Schedule El Note And weve slrssdy tslked about the first sentence of Note Are you with me Oh yeah went to Footnote Sorry Note Got it You said first end went to one so -- but Im with you now Im sorry may have confused you Nope You did nothing wrong No Im good All right So were on Schedule El Note The second sentence reads RESS but-for revenues include both consulting end design-build revenue RESS but-for consulting revenues are estimated based on an 18-month ramp up following Mr Hannekens but-for depsrturm RESS but-for design-build revenues are estimated based upon 15-isonth leg following Mr Hsnnekene but-for departure Excuse ne Do you see that Ido Page 72 Dkay First can you tell ne whets the difference between ramp-up period and lag period Excuse me So ramp-up is linear reletionehip that gradually increases revenues over tine over the period indicated which is 18 nonthe lag is sn indication of no economic activity during the lag period and then the start of economic activity at the end of the leg And why did you use lag period with design-build at-risk work The lag period is modeled to reflect the tine between when Mr Hanneken would be out and engaging in the real eetste commercial reel estate community end the tine at which we could reasonably expect some engagement on design-build construction manegenent And by reasonably expect sons engagement you nesn reasonably expect RESS to start earning revenues with respect to that work is that what youre saying Yes Okay And whet besides -- well what if anything besides engaging with the commercial real estate build connunity are you aeeuning that Page 73 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS Page 71 800.487.6278 19 70 73 Suzanne Heinemann Mr Henneken would be doing in the leg period before we see econonio activity as to design-build st-risk revenues Well during that lag period he would be performing consulting services within the conmerciel reel estate industry Would he be hiring employees to do the design-build st-risk work guess Im confused by your question Msybe when dont know whet youre -- During the leg period Oksy As hes preparing to attempt to do design-build st-risk work would he be hiring employees to perform that work His model wee not to hire employees but rather use independent contractors to be assisting him on consulting basis end then hiring contractors with respect to the design-build opportunities Okay So during the leg period would he be entering into relationships with independent contractors so that they could assist him with the opportunities that he would then be pursuing once the leg period is over Page 74 guess Im kind of confused by your question so let me just step beck end explain what this reflects and then maybe we can have dialogue because Im trying to answer your question So the way the model works is conceptually thet RESS is engaging on consulting projects Some of them could be more work in the public sector including Celifornie high-speed light rail end some of them could be the beginning stages of consulting and owner representative-type work that would reasonably matriculate into design-build So in those instances we would observe independent contrectors working in consulting capacity alongside of Manneken Mr Henneken in the consulting period In the design-build period it is -- you would still have independent contractors working to the extent that there was consulting services enhedded in the design-build and then there would be series of contract work by construction-type people type entities thet would start then Okay And other then going out end networking connecting with the commercial reel Page 75 estate industry would Mr Henneken have to do enything to place RESS in position to compete for design-build at-risk business once he dropped out of Stanford Im sorry Other then -- can you -- Other -- all right Let me rephrase the question What would Mr Menneken have to do in order to place RESS in position to compete for design-build at-risk business once he dropped out of Stenford MR GIACCHETTI Objection to the extent that it calls for speculation THE WITNESS RESS would be doing marketing end raising his profile and continuing to develop contacts end seeking opportunities within the marketplace DY MR LANPHERE And just to be clear its your testimony that he wouldnt heve to -- let me actually Im sorry Ill rephrase that Did Mr Menneken have in place the relationships with independent contrectore end construction companies or contractors that you reference that he would leverage in the Page 76 design-build st-risk work -- MR GIACCHETTI Objection BY MR LANPHERE when he dropped out of Stanford in 2013 Well dont -- the design-build lag period is specifically 15 months And so guess your question to me is whether he had the relationships in plece in November of 2013 when he drops out of Stanford Yes havent specifically investigated that with Mr Hanneken understand that this is his industry end that he holds h4mself out to be design-build entrepreneur And implicit in my model is the fact that he either has existing contacts or he bee the capabilities to be pulling upon those resources at the commencement of the 15-month leg Okay So its your assumption for purposes of the model that he either had -- had the relationships in place or had the ability to put them in place Thats correct Now with reference to -- lets talk Page 77 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 20 74 77 Suzanne Heinemann about the consulting ramp-up pariod now What if anything would RESS need to do during the ramp-up period in order to allow it to ramp up in tha fashion your model projects Generate business Genarate leads Find the clients who are looking to figure out their space needs looking to overcome their space constraints in light of the San Francisco markets looking to get into 100000 square foot leases that have work -- work spaces that work for them Companies that are looking to buy or acquire Get connected with owners of the buildings who are looking to find other options HESS would need to find work Beyond HESS needing to find work in order to ramp up in the way that your modal projects would it need to enter into relationships with any additional employees or independent contractors to perform that work have evidence through the California high-speed light rail that HESS has network of contractors that it has been using And implicit in my model end through my conversations with Mr Henneken understand that he has the ability to ramp up with either existing contractors that Page 78 hes aware of independent contractors or other contractors that he would have access to in order to fulfill this consulting work Now in terms of the 15-month leg period for design-build at-risk work end 18-month ramp-up for consulting work did you do anything to determine the reasonableness of those tine periods think that broadly speaking the economic data as reflected on Schedule ES is one of the larger bases on which rely to think about the reasonableness of the assumptions of the ramp-up think that in conjunction with the qualitative information contained in the JLL reports that in conjunction with conversation with Sill Fellers end his assessment of the skill set end the need for owner representatives similar to Mr Hanneken end in conjunction with conversations with Mr Henneken end his interest end ability to grow his business Have you ever performed an analysis of -- lets focus on the design-build at-risk component here Have you ever calculated lag period in Page 79 the design-build at-risk market space previously Mo Is the 15-month period sonething you calculated or something that Mr Fellers or Mr Henneken calculated Mow was it calculated MR GIACCMETTI Objection -- objection to the extent that its been asked end answered BY MR LANPMERE And it was bed question so let me ask it the last pert How was the 15-month period as opposed to 18 months or 21 months Yeah So you know its little bit based on Mr Mannekens experience with Plsntronics end the matriculation of design-build work from his initial consulting work with Plentronics Its based more broadly on conversations with Mr Henneksn on future work And its also formuleted -- its en estimate from conversation with Mr Fellers and his understanding of the industry So its en assumption from that accumulation of those three sources of date Okay And how was for the consulting revenues the 18-month remp-up period celculeted Page 80 So the 18-month ramp-up period is based on conversations with Mr Henneken end Mr Fellers Mr Fellers in particular felt thet given Mr Hennekens skill set end his positive experience as an owner representetive the positive feedbeck from L3 the positive feedback from Plentronics and given his expertise end his military training thet he was in good position to be almost immediately winning owner representetive work For the pace at which the consulting revenues would ramp up of 18 months that wes come to through conversations Mr Henneken as well as recognition of the opportunity in the merket the Sen Francisco market again cc reflected in really not just the enalyticel dete from JLL but quelitetively the fact end the expansion of the Sen Francisco merket which wee the fastest growing market in the United Stetes So did you pick 18 months for the consulting ramp-up period or did Mr Henneken How exactly did 18 months get arrived at MR GIACCHETTI Objection to the extent that the tern pick 18 months is vague and Page 81 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 21 78-81 Suzanne Heinemann ambiguous THE WITNESS It was information from Mr Hanneken And in my assessment of the San Francisco market it was reasonable assumption And the -- just to be clear so it was in discussions with Mr Fellers that the start of the ramp-up he had lot of think input that influenced me regarding the fact of Mr Hannekens experience and the fact that that would be well received in the market at the time he would hypothetically have left Stanford In terms of the slope of the ramp-up that was really through conversations with Hr Hanneken And given the robustness of the San Francisco market it seemed like reasonable assumption EY MR LANPHERE Okay And what about the 15-month leg period Was that -- that 15-month number was that something you determined Hr Hanneken determined Hr Fellers determined or some collection thereof Im pretty sure two answers ago explained this Page 82 All right Well nissed it If you could tell me again Id appreciate it Yeah So the 15-month assumption was derived through conversations with Mr Fellers and confirmed with conversation with Hr Hanneken And it was also based on the experience Hr Hanneken had at Plantronics and the difference and the accumulation of Mr Hannekans consulting work on Plantronics which then ultimately matriculated into design-build contract So those pieces of information of course in conjunction with whats happening in the San Francisco market were all the bases of the assumption which was ultimately provided to me you know from Hr Fellers but would say also Hr Hanneken Put in tarms of who put forward 15 months was that Mr Fellers MR GIACCHETTI Just -- just for point of clarification Drew are you asking whether the 18-month period and the 15-month period are Ms Heinemanns opinions MR LANPHERE Im just asking the quastion Im asking In terms of who put forward tha 15-month Page 83 period was that Mr Fellers It was Mr Fellers and it was confirmed by Mr Hanneken and the data from Plantromics and again in concert with the robustness of the San Francisco market So what Im getting at is you didnt say Should it be 15 months to tham They said -- Mr Fellers said think it should be 15 months and you ware satisfied with the reasonableness of that is that correct roughly HR GIACCHETTI Objection Objection to the extent that it assumes facts and calls for speculation as to what Mr Fellers said or intended to say DY MR LANPHERE You can answer It was primarily generated through conversations with Mr Fellers relied on him as an industry expert and frankly found his expertise helpful in particular as it relates to owner representative work and kind of understanding the industry Michael was in So the 15-month assumption really emanated from Mr Fellers It was one to which Mr Hanoeken can -- can agree to and one that was Page 84 the consistent with Plantronics Okay So why dont wa turn to Schadula C2 now in your report which is Exhibit 206 Now Schedule C2 is the breakdown of the calculation of RESS consulting-only damages based on the assumption of December 2018 Stanford departure by Mr Hannaken correct Thats correct Okay And the first column in here talks about -- wall sorry First column is quarter Tha sacond column is Harinakan hours Do you saa that Ido Okay And theres note appended to Hanneken hours And you go down to Mote and after it has the same languaga about ramp-up and lag period estimates ara based on discussions with Bill Fellers and Michael Hanneken It says RESS consulting hours are estimated based on 1920 hours year Now want to stop there Do you see that statement 10 11 12 13 14 15 16 17 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 iS 16 17 18 19 20 21 22 23 24 2S DepoServices.com MILLER COMPANY REPORTERS Page 85 800.487.6278 22 82 85 Suzanne Heinemann 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1920 doesnt include is the leveraged Thats correct Okay And when you say that -- then that the Hanneken hours are estimated based on 1920 hours year who made that estimate Well the estimate is -- its combination between myself and discussions with Mr Hsnneken How was it calculated Well to start with sort of full-time estimate of work is roughly 2000 hours You know theres roughly 2080 hours in year Just for shorthand 2000 is used to sort of take out for vacations et cetera made further reduction for the fact that Mr Hanneken has two weeks of reservist duty requirements per year and that would get to the 1920 figure Page 86 And what analysis besides reducing -- or removing two weeks for reserve duty per year did you undertake to arrive at the 1920 estimate The 1920 is really computation reflecting essentially full-time hours on consulting -- and the full-time maybe has an asteiisk next to it -- based cii discussions with Mr Hanneken He felt strongly that you know consulting is not an eight-hour job and that it would -- you know the available hours could be substantially greater than 1920 felt for the purposes of modeling the parameters of this analysis that 1920 was sufficient So you made an assumption that in the but-for world after the ramp-up period Mr Hanneken would work 1920 hours year on consulting correct Yeah think the right way to frame it is that theres the -- almost capacity of 1920 potentially more and then theres some caveats with respect to whether youre talking about public or private that we can get into Paqe 87 So for the basis of this model the numbers are 1920 Okay So the 1920 under Hanneken hours is your estimation of his capacity Well its an estimate of -- its sort of supply-side estimate of hours based on assuming somebody is going to work no more than an eight hours day which is probably which is conaervative assumption for consulting work but thats the basis of the model Okay But did you do anything other than assume he would work this amount of hours to validate that he would actually have the opportunity to work that amount of hours on consulting work Absolutely What And thats the entire basis of looking at the JLL data and the opportunity in the San Francisco market And it harkans little bit also back to our conversations about growth with the high-speed light rail MR LANPHERE Weve got to change our tape in three minutes so why dont we go off the record here and do that Page 88 THE WITNESS Okay THE VIDEOGRAPHER Were going of the 1137 a.m This is the end of Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 1148 a.m in the deposition of Suzanne Heinemann This is the beginning of Master Recording Number Please continue BY MR LANPHERE So looking at -- so were still on Schedule B6 right Are we Ho were not Im sorry lost my place We were on Schedule C2 Sorry hours And the next column over is leveraged Do you sea that Yea And that has another reference to Leverage is estimated -- in Footnote Leverage is estimated based on RESS historic leverage from CAHSRA from October 2011 to Ido Okay When you say RESS consulting hours are estimated to be -- to be -- or estimated the 1920 hours are thebased on 1920 hours year Hanneken hours correct Correct Okay And so the the next column over which hours right 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record at Media Number 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Footnote And it says DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 2386-89 Page 89 Suzanne Heinemann Ido So the assumption for the purposes of ths figures in the leveraged hours calculations is you took the average leverage for the high-speed rail consulting work in the 2011-2017 period and multiplied that by the Nanneken hours to get total is that correct Im sorry Can you say that again Yeah The assumption for purposes of figures on the leveraged hours column is that you took the average leverage during the 2011 to 2017 period for the California high-speed rail work and then multiplied that by the Nanneken hours to derive the figures under leveraged hours Thats correct So the leveraged hours are based on the leverage ratio observed under California high-speed light rail And in this model the Manneken hours are ramping up and so thats deriving the leveraged hours Right Now if you could turn to Schedule CS now please And CS is an analysis that you prepared Page 90 of the California Nigh-Speed Rail Authority consulting invoices by year correct Thats correct okay And as indicated on Schedule CS you have the first column -- the first row is the Hanneken hours worked on the high-speed rail consulting work per year is that right Thats correct And then the total hours below that is that Nannekens hours plus additional hours worked by employees or independent contractors believe it is believe it is Okay And the leverage factor is the -- the multiple by which the total hours are greater than the Hanneken hours is that right Thats correct Okay Now the leverage as you found here for the high-speed rail authority work varied from low of 4.46 percent up to high of -- looks like 21.49 percent Or its not peroent Im sorry Let me rephrase that The low leverage was leverage factor of 4.46 in 2011 right That is the lowest within that data set thats correct And the highest was in 2012 21.49 is that correct Thats correct And is 2012 part of the period when he was deployed abroad believe so have in my mind that he came back in April of 2012 Did you conduct any investigation to determine what factors cause leverage to fluctuate from higher and lower figures over time Im sorry Your question is did determine did -- Did you conduct any investigation to determine why the leverage factor fluctuated over time did not simply observed the leverage factor changing over time have some ideas on why it might change but didnt do any particular investigation Okay Now did Mr Hanneken tell you that while he had been enrolled at Stanford he wee only able to spend certain amount of his time on consulting work due to his commitments to the Ph.D program He may not have used those words but Page 92 Ive come to understanding that you know the Ph.D program is large commitment of his time and so that is impacting his ability to take on more work Okay And what impact if any did that have on leverage during time that Mr Hanneken has been enrolled at Stanford You know based on oui conversations -- dont think it directly impacted the leverage think that through my conversations with Mr Manneken hes -- on California high-speed light rail hes able to meet the needs of the client for the scope of work on which hes currently engaged The issue is that hes unable to increase the scope of work given the limitations of the hours on which he has available to work Okay Did Mr Manneken tell you whether or not if he hadnt been enrolled at Stanford he would have worked more on the California high-speed rail scope of work for current for which hes currently engaged Wasnt -- my conversations with him were not so much about whether he would work more on the current scope of work but really more that Page 93 October 2017 Do you see that 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 91 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 24 90 93 Suzanne Heinemann its $70 billion project And to the extent he wasnt engaged full-time in Ph.D program that he would be looking for other opportunities to be involved in additional scopes of work within the $70 million project Now for purposes of determining the leverage factor to apply in your but-for model you assume the leverage factor would be the same as the historical leverage for the Californis High-Speed Rsil Authority work correct Thats correct assume that its the average While observe low of 4.46 end high thst can be as much as 21 on balance assumed leverage of -- well celculsted leverage of 13.77 stopped short of saying assume because confirmed that with Mr Henneken that this is reasonable staffing ratio in terms of hours that he would expect on other engagements But for purposes of your model you assume that that would be the leverage fector applicable to all of the sdditionel consulting work he would have obtained in the but-for world right Yeeh only take issue with the word assume It sort of means something more to me Page 94 So use for sure this average leverage factor that observe in Celifornia high-speed light rsil Its 13.77 And it is incorporated into the model into the consulting model in order to determine the lost opportunity in the consulting Did you do any kind of investigation into leverage factors for privste sector consulting in the reel estete industry in Sen Francisco didnt do any additional research outside of whet observed in Mr Hannekens model end whst understood from Mr Hsnneken to on average over time be the leverage that would be recognized or realized by RESS So you didnt do -- just so ceo close make sure understand in determining whet leverage factor to use in your but-for model for consulting work you didnt do any additional research besides celculeting the average leverage fector for the Celifornie high-speed rail association isnt that right guess would phrase it slightly differently would say that observed the trends of leverage in the California high-speed light rail over time observed thet on Page 95 average there are 13.77 had conversations with Mr Meoneken ebout reasonable expectation on other types of consulting work And in concert those three inputs caused me to use the average ratio in my model for computing consulting damages Okay So what did Mr Hanneken tell you about reasonable expectations for leverage on other types of consulting work That while it could range from highs to lows thet on average looking at whet was observed on California high-speed light rail is reasonable estimate to use And why did he tell you he thought that was reasonable estimate MR GIACCHETTI Objsction to the extent that it cells for Ms Meinemenn to opine as to Mr Hannekens state of mind at the time that they spoke BY MR LANPHERE Did he tell you why he thought that was reasonable estimate We might heve just remember having conversations about sort of how to model the lost opportunity And this was certeinly topic that Page 96 came up and was discussed Okay Did he -- to your knowledge did Mr Menneken conduct any analysis -- let me withdrew that To your knowledge did Mr Hanneken conduct any kind of investigation of his own regarding leverage rates in the consulting industry in San Francisco Bid he conduct such an investigation to your knowledge Not to my knowledge My sense from the conversation was based on his experience in providing to Ca1PERS California high-speed light rail and other consulting that that seamed to me to be the basis of his input But you might ask him Bid Mr Manneken provide -- well what was his leverage factor -- withdrew that What was the leverage factor for RESS for the Ca1PERS work do not have the invoices on the Ca1PERS so dont have the answer to that Whet was the leverage factor on -- for RESS on the other consulting work it did besides California high-speed rail and Ca1PERS Thats not information that have My Page 97 10 11 12 13 14 15 16 17 16 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 25 94 97 Suzanne Heinemann analysis as footnoted and as clearly indicated in the report is based on California high-speed light rail and then also conversations with Michael just to understand the robustness of that And the understanding you have of I-he robustness of that for Mr Hanneken -- your conversation with Mr Hanneken was Mr Hanneken relaying his own personal past experience with leverage factors in his the work he did with RESS is that right can tell you we had conversation about it and the tenor of the conversation was would -- is this reasonable And the feedback got was -- was yes And guess would also caveat with what Ivs said to you before which is when were talking about consulting were talking about an average of 13.77 ratio understanding that there can be variances as low as and as high as 21 But when were building model were sort of building it on average And did you rely upon Mr Hannekens relaying his view that this leverage factor was reasonable one to apply in constructing your Page 98 model relied in part on feedback from Mr Mannekan So relied on my own assessment of the invoices on the observation of the variance and the trends over time And confirmed the reasonableness of that with Mr Hannekan and his expectations for leverage in commercial real estaca 13 So in that regard in confirming with 10 Mr Hanneken the reasonableness of his expectation 11 for leverage in commercial real estate were you 12 relying upon him as an industry expert 13 You could characterize it as that Im 14 relying on him as an owner of business in which he has participated and damonstratad past economic 16 activity 17 13 Do you have an undarstsnding in 18 general of what factors affect the amount of 19 leverage on any given consulting project Lets 20 start with in the private sector in the 21 San Francisco commercial real estate industry 22 MR GIACCHETTI just -- object that 23 the question is vague Ambiguous 24 THE WITNESS would say that dont 25 have expertise as it relates to the commercial Page 99 real estate consulting and relied on Mr Manneken for guidance as it relates to leverage on that BY MR LANPHERE Okay And what about -- the same question no you have an understanding in general what factors affect the amount of leverage on any given consulting project in the public sector in the San Francisco commercial -- MR GIACCHETTI Just object -- BY MR LANPMERE 13 the San Francisco market MR GIACCHETTI Again object that the question is vague and ambiguous THE WITNESS think the same answer would apply Its -- you know these data are observed in the California high-speed light rail You know have personal observations through my work as consultant as it relates to leverage They are not specific to commercial real estate consulting BY MR LANPHERE 13 Do you have an opinion as to whether the market for private sector real estate consulting in San Francisco and public sector are different Page 100 markets whether those are two different markets MR GIACCHETTI Object that the terms as used in the question are vague and ambiguous THE WITNESS have an opinion that its reasonable to use the leverage factor observed in California high-speed light rail based on my conversations with Mr Hanneken And tangentially think based on my discussions with Mr Fellers you know this is something talked about with him as well So guess we didnt get into the specifics of the nature or differences of potential owner representative consulting for private sector versus public sector but the notion and the idea of the leverage factor and using the historical factor was one that was part of the conversations with both Mr Fellers and Mr Manneken BY MR LANPMERE 13 Do you have an understanding as to whether leverage factors in the public and private sector are the same or different MR GIACCMETTI Objection that the question is vague and ambiguous THE WITNESS Well based on my discussions with Mr Hanneken and Mr Fellers Page 101 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 2698-101 Suzanne Heinemann have no reason to believe that they should be substantially different To the extent Mr Manneken and RESS are providing consulting services related to commercial real estate owner representative asset allocation identifying properties budgeting control or anything to do with the GSA schedules we would expect the nature of that work on average over time to require the same amount of leverage arid to broadly have the sane amount of you know data analytics and expert needs BY MR LANPMERE Did you attenpt independent of your discussions with Mr Fellers and Mr Hanneken to conduct any investigation of your own to validate that assumption Other then whet Ive already talked about which is my analysis of the California high-speed light rail invoices and discussions with Mr Menneken end discussions with Mr Fellers Ive done no other independent investigation Okay Now back on Schedule C2 Still in Note on the third line theres sentence that reeds Consulting revenues are expected to be derived from Page 102 mix -- sorry -- mix of commercial and public consulting opportunities available to RESS based on its experience qualifications and the breadth sorry the bLeadth uf commercial and public consulting opportunities in the narket during the damage period Do you see where Im reading from Ido Okay want to focus within that sentence on the part that refers to the breadth of commercial and public consulting opportunities What do you mean by commercial consulting opportunities So conmercial consulting opportunities would be opportunities to do owner representative-type work for landlords of buildings for tenants who are looking to either purchase and/or relocate into different space who tenants and/or entities who are looking to Page 103 figure out their space and real estate needs during this period And this is comnercial so its in the private sector is that correct Yes Okay What if soy experience does RESS have in providing such services in the private sector Its experience with L3 ReCollect sod Plantrooics And what did -- what did RESS -- what services did RESS provide in L3 understand -- sod Im thinking back to the letter of recommendation thats posted on their website -- that they did sort of asset planning sod real estate consulting as it relates to L3 Okay So -- but -- okay So your understanding of the experience that -- sorry -- that RESS has in providing commercial consulting as that term is used here is the consulting opportunity -- the consulting work they did for ReCollect L3 and what was the other Was it Plantronics Correct Page 104 Okay And so therefore believe what youre saying -- well this isnt what youre saying Therefore its true is it not that RESS hasnt done any commercial consulting as were using the term here since 2009 correct MR GIACCMETTI Objection to the extent that the question assumes facts and is argumentative BY MR LANPHSRE Is that correct Based on the income statement that we looked at earlier today it would be correct that the -- the last of that work that RESS had done would be roughly 2009 Okay And then lets -- theres reference in sentence from Note we just talked about about the breadth of public consulting opportunities What do you mean by public consulting opportunities That would be primarily something like California high-speed light rail or other public transit-type projects or -- thats the one that cones to nind It was -- think its just on my Page 105 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 27102-105 Suzanne Heinemann mind looked at dooument But mostly California high-speed light rail So most -- Im not sure understood the last part of your answer So when you refer to the breadth of publio consulting opportunities in the market during the damages period are you -- are you referring mostly to opportunities with California high-speed rail Well think the way to interpret ny footnote is that truly the -- the thrust of the analysis that Ive put forward in this deok has to do with the developments in the commeroial property area you know in the San Franoisoo market and the burgeoning growth in -- growth in real estate and movenent of tenants and all of these things that would require owner representative-type work Thats really the thrust of it is this commercial There are there are also public consulting opportunities think the one that oomes -- thats easiest to articulate is the California high-speed light rail but it is not the exclusive opportunity Thank you saying Page 106 Consulting revenues are expected to be derived fron mix of commercial and public consulting opportunities What would the mix be What proportion public What proportion commercial Thats great question The way that its modeled currently Id assune that the leveraged rate is the rate that he would be getting on public work But the reality is to the extent that the work is greater mix of private work which we would expect it to be given the robustness of the San Francisco market it would probably be higher leveraged rats because theyre not public consulting rates Im not asking you about leverage rate right now Im asking you your modal assumes -- well sorry Your report says Consulting revenues are expected to be derived from mix of commercial and public consulting opportunities Im asking you what is the mix What proportion of the opportunities are going to be public What portion are going to be commercial Thats great question and thats situation that BESS is in is you cant know what you dont know We have good evidence of growth in the commercial sector And through my conversations with Mr Wanneken and through my conversations with Mr Fellers we would expect that to provide substantial owner representative consulting-type work In addition to we know that theres California high-speed light rail which is $70 billion project that Mr Hanneken believes he could grow into that The actual numeric product mix is not included in the model The model frankly uses the -- this is what was talking about earlier It uses the lower public rate to make an estimate for the amount of lost consulting opportunity What is the basis for your statement that the public rate is lower than the commercial rate Well frankly the primary basis is Page 108 looking at it was one of the communications or documents prepared by BESS that provides comparison of GSA-type public rates to commercial rates And in looking at that document it appears that the -- the California high-speed light rail rates are generally on par with GSA rates Did you do any independent analysis to verify the accuracy of the document you just referred to looked at document from BESS that provided am indication of rates and used it as data point accepted it as piece of information as is Okay Weaning you didnt do some additional investigation to validate the information in it correct didnt do any additional operation on this hypothetical document to which Im referring which hopefully is the same document to which youre referring because we dont have it here in front of us But if we were to find the document to which Im referring -- Keep going Page 109 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So the same sentence starts out by 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 107 MILLER COMPANY REPORTERS 800.487.6278 28106-109 DepoServices.com Suzanne Heinemann -- did not do any additional work on that documant Whereupon Deposition Exhibit 224 was markad for idantification BY MR LANPNERE So youva baan handad whats baen markad as Exhibit 224 This is documant that was containad in tha back of what was providad to your report Do you recognize this documant 10 do in an elactronic forn 11 Okay And is this summary of tha GSA 12 rata information you wara just rafarring to that 13 was praparad by you or your firm 14 This is -- would charactarize it 15 littla differently 16 Okay 17 This is an Excel version of chart that 18 was found in the production And think the 19 calculations to the right are those that were 20 provided -- performed by my staff 21 Okay And so the -- when you say the 22 calculations to the right do you mean the 23 calculations under average by SIN and below 24 that where the right starts 25 Yes Okay So everything to the left of the column average by SIN was derived from the document in the production you just referred to Thats my recollection mean this is -- -- didnt personally work on this have reviewed it and seem to recall almost maybe like Word -- Word-format document provided by RESS from which the table format data may have been derived Okay And did you do anything to validate the accuracy of any of the information to the left of average by SIN as reflected Exhibit 244 guess maybe what do you mean by validate it Oid you do amy independent research regarding the types of information reflected in that portion of Exhibit 244 or 224 sorry to determine if its accurate took it as given for the -- took it as given from the document in which it was included Do you happen to have the document No dont have that 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 -- from which the table actually came think it wes RESS document with lot of narrative Okay But whatever was in it in terms of this data in Exhibit 224 to the left of that column average by SIN you took that as given correct took it as data conteined within the larger document that contains narrative that cant remember the body of the narrative Okay So going back to the mix of commercial snd public consulting opportunities that your model posits were available to RESS during the but-for period is it correct that you did not do any kind of analysis to try to determine -- well actually let me withdraw that end ask different question Do you have any data regarding the total annual revenue for commercial consulting work in the Sen Francisco merket in the 2013 to 2018 period Any data certainly have data as it relates to the construction and the commercial development and redevelopment of commercial properties as reflected in my report Page 112 Is Page 110 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have not looked at data regarding -- or metric regarding consulting-specific revenues attributed to those commercial real estate movements developments renovations at cetera Okey And does the data that you referred to that you do have related to construction and commercial development and redevelopment of commercial properties does that contain any kind of breakout for consulting revenues No Those data are based on square footage so they track to new square footage and renovations et cetera Those ILL data do not track dollar construction value dollar or consulting owner representative dollars et cetera Okay So did you attempt to determine the size in terms of annual revenue of the market for commerciel consulting work in San Francisco in the 2013 to 2018 period did not pull analytics regarding the size of commercial owner representative end/or other consulting revenue related to renovations and development at cetera Okay Now let me ask you similar Page 113Page 111 MILLER COMPANY REPORTERS 800.487.6278 29110-113 DepoServices.com Suzanne Heinemann questions regarding the market for public consulting work Did you -- do you have any data regarding the total annual revenue for public sector consulting work in the San Francisco market from 2013 to 2018 did not pull data for public consulting work in San Francisco outside of you know to the extent in any of these there are projects reported -- in any of the documents produced for example like the top 50 of the top 75 construction projects would expect that certain portion of the dollar budgeted that are cited in those reports are probably intertwined with you know fees related to consulting that are not necessarily broken out from hard construction costs Did you make -- attempt to make any kind of determination about what proportion of the dollar budgeted for the construction projects are devoted to consulting fees No did not So -- sorry Excuse me Did you attempt to determine you said you didnt have any data or you didnt pull data Page 114 for consulting work in San Francisco outside of what you otherwise said Did you pull data for consulting work in any other market besides San Francisco did not pull specific demand side data specific to consulting work The data that pulled was largely related to tracking economic activity through proxy of square footage in San Francisco that does not have dollars associated with it either for development dollars or consulting revenues that would be attached to those square footage economic activity Do you know how many hours of consulting work annually are -- during the 2013 to 2018 period were available for competitors in the commercial consulting market in San Francisco Day Area have not pulled analytics related to commercial consulting in the Bay Area Have you -- have you pulled analytics relating to commercial consulting in any area Ive pulled analytics related to commercial consulting as said only insofar as they should be closely tied to the economic activity of the square footage as observed through Page 115 the JLL data And that is the purpose of using it as proxy for economic activity And that data that you pulled doesnt have any data about the hours of consulting work available to competitors in the commercial consulting market correct Your question is -- Can rephrase it Yeah Yeah Im sorry Yeah Let me read it and see -- okay So the data that you have pulled doesnt include any data about the hours of consulting work available to competitors in the commercial consulting market from 2013 to 2018 correct Thats correct The date pulled has to do with square footage related to development in the San Francisco ares both development and redevelopment Its an indication of square footage under development but not consulting hours associated with that square footage How many competitors have there been for work in the commercial consulting market in the 2013 to 2018 period in San Francisco Page 116 would imagine numerous Do you have any data about the number of competitors in that market space Specifically as it relates to owner representative work no Okay How many competitors have there been in the market for public consulting work in the 2013 to 2018 period Your question was how many competitors are there How many competitors Same question we just did for the commercial Now Im asking it for public Yeah dont know the number would imagine theres numerous Oo you know who HESSs competitors -- so looking at Schedule C2 Hanneken hours and 18 leveraged hours do you know who HESSs 19 competitors would have bean in the 2014 to 2018 20 period for that work 21 Numerous competitors Big and small 22 dont have names at the top of my head 23 know we did some analysis that we 24 might have turned over to you on develop -- 25 developers in the Day Area But that -- developer Page 117 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 DepoServices.com MLLER COMPANY REPORTERS 800.487.6278 30114-117 Suzanne Heinemann is slightly different animal than an owner representative and somebody -- anyway so slightly different animal And know what youre talking about and we will talk about that promise when we get to the deaign-build model But in terms of the consulting model so C2 is it correct that you didnt do any analysis to determine who were the competitors that MESS would be competing with or against in the but-for world to achieve the Manneken hours and the leveraged hours always take issue with didnt do any analysis because theres many things that Ive considered in looking at you know other potential competitors and thinking about the competitive advantages of Mr Hanneken and talking to Mr Hanneken and talking to Mr Fellers If youre asking if have any specific listing of competitors or profile of hours market share something like that the answer is no That does not go into Exhibit C2 And thats true for both commercial and public correct Yea There is no specific analysis of Page 118 the number of available hours for competitors in the San Francisco area as it relates to commercial or public The basis of C2 as Ive discussed is really the economic activity of the square footage for the commercial side as proxy for the consulting opportunity And did you identify any competitive advantages that MESS would have had over competitors in the commercial or public consulting markets in the 2014 to 2018 period certainly considered its advantages and talked about them with Mr Fellers and Mr Hanneken Insofar as it has experience in the consulting owner representative space with some pretty glowing recommendations from former clients that would at minimum put it in rompetit-ive poeit-ion fnr work going forward Do you have an understanding of how many competitors in that market had similarly glowing recommendations from prior clients No Did you conclude that -- sorry Did you attempt to determine what if any market share MESS would have in the commercial or public consulting markets as discussed in C2 The approach was supply-side approach And as we just discussed didnt look at demand-side high-level metrics of consulting market share Thie was buildup approach of I-he capacity of Manneken and his firm in conjunction of looking at the square footage of the San Francisco market and the growth end the expansion in that area ___________________________ So what you determined in C2 was that Mr Hanneken had the capacity to do the hours reflected in Hanneken hours and leveraged hours and then you also have date showing that there was growth in the square footage in the Sen Francisco market and the expenaion that area is that right And that -- well partially So the data and the analysis of the San Francisco market is you know numerically expressed as the square footage in the growth as reflected in the chart in my graph But the basis end think the story behind those numbers are really kind of reflected in the massive expansion in the Sen Francisco area through the iLL narratives Page 120 So in looking at that end in discussions both Fellers end with Michael Manneken it wee from demand side the indication is there was such substantial growth that it would provide demand from the consulting model And moreover the kind of work in the public sector for example California high-speed light rail is tangible connection that Mr Hanneken believes could have been expanded through scope of extra work Looking at the hours reflected on Manneken hours and leveraged hours did you attempt to determine what proportion of those hours would be in the commercial and whet portion would be in the public consulting space did not Me talked about this little bit earlier think it wee just slightly different question so appreciate your answering that one Now if MESS wee operating in the consulting market in the 2014 to 2018 period as reflected under Manneken hours end leveraged hours and achieved these results it would have to beat out other companies for that business right It would certainly have competitors Page 121 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 18 19 20 21 22 23 24 25 DepoServices.com Page 119 MILLER COMPMNY REPORTERS 800.487.6278 31118-121 Suzanne Heinemann And the question is you know does the merket dste support that the expansion was so substantial that theres roon for nany conpetitors And the other question to answer is you know does Mr Hanneken have enough experience in the space that it would garner those clients Does the mere fact that market is expanding mean that company competing in that market will obtain new business No dont think thats true at all think that there is baseline need for qualifications expertise marketing all the things you need for successful business think that fact that theres auch remarkable expansion speaks to the amount of opportunity Did you review amy information about consulting projects that were available in the market in the 2014 to 2018 period guess how do you define consulting proj act Projects of the type that -- the hours under Mamneken hours and leveraged hours were ones that he would have been working on in the but-for world Sure So the answer is of course Page 122 Which opportunities Yeah So all of the opportunities that are indicated in all the JLL reports which matriculate into in very high level the chart thats in this report mean the whole notion amd the whole idea is that the expansion in the Sen Francisco market is real tenants who need real solutions and real owners of the buildings who need to renovate end need consulting advice on what to do So all of those are -- embodied the opportunities that were available on the consulting basic The JLL reports are at summery level that is market-wide level correct -- maybe you could be more specific floes the JO -- do the CTLT reports go through specific consulting projects They go through specific -- theyre think rather robust Theyre segregated between Silicon Valley Sen Francisco and the Peninsula They provide narrative on quarterly basis of movement of tenants and people who are seeking seeking to relocate who is looking for 100000 square feet which -- what are the trends with Page 123 owners and buildings end the fact that people are moving from class space to class spece and renovating They have listings of specific opportunities with lease buildouts and with new owner purchases Theyre very -- would call them fairly robust Okay Beyond reading whets contained in the JLL reports did you review any information about consulting projects that were available in the market during the damages period so 2014 to 2018 would give the answer that said earlier which was theres other listings we provided of sort of top projects going on in the Bay Area and think emhodied in all of those is en element of consulting But you dont know how much consulting was embodied in any one of those correct There ie not specific reporting for consulting versus development hours Okay And what about on public consulting JLL doesnt talk about public projects does it Tts commercial correct Thats correct Page 124 Okay On the public consulting market did you review any information talking about the consulting projects in the public space that were available in the 2014 to 2018 period The same answer would apply The listings that we pulled down the top 75 or 50 are an indication at higher level of key projects in both the public and private seccor The same answer would apply that the dollar magnitude of those projects dont break out explicitly consulting versus development revenues So the data you reviewed cm public consulting opportunities in the 2014 to 2S period is ambodied in the list of 75 largest construction projects thats in your backup Its one of the data source right And as we talked about earlier today that another key component of that the mix of consulting that comes from public is most certainly going to be the California high-speed light rail and the opportunities from -- discussed with Mr Manneken What specific opportunities with California high-speed rail were discussed with Mr Manneken Well the discussion was over the Page 125 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 Li 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S DepoServices.com MILLER COMPiNY REPORTERS 800.487.6278 32122-125 Suzanne Heinemann sort of the total size and scopa of the $70 billion project and that although has involvad in specific scope of work now that given sort of his position within that engagement his expectation is that he has the ability to sell more work within that project Did he identify any specific additional scopes of work that he was in position to sell at California high-speed rail He did not Did you ask him about any of that Did you ask him for any examples of specific scopes of work that he was in position to sell at California high-speed rail dont know that did mean think understood that for the last five years or four years that hes been fully employed as Ph.D So -- dont recall if asked him for specific date But your model in C2 for consulting -- projecting consulting revenues in the but-for world does rely upon at least in part Mr Hannekens stetenent to you that he was in position to expand his revenues with California high-speed rail is that correct Page 126 Yes From demand point of view it relies at least in part on the expectation that there would be some potential opportunity in the public sector as it relates to California high-speed light rail Okay Now did you attempt to determine who was providing the additional work to California high-speed rail that Mr Hanneken told you he could have gotten in the 2014 to 2018 period Im not sure know what you mean by who What company or companies or -- actually provided the additional work for California high-speed rail in the 2014 to 2018 period that Mr Hanneken told you he could have gotten if he werent at Stanford Well think youre mischarecterizing our conversation The conversation was that had he not been employed full-time as student -- Im sorry had he not been engaged full-time as Ph.D student that there would have been the ability for him to explore market and pursue additional opportunities It was not conversation of specific lost projects to competitor It was an expression of existing demand $70 billion project on which his skill set was well suited MR LANPHERE Okay This is probably good place for us to break for lunch Why dont we go off the record Well talk about logistics THE WITNESS Okay THE VIDEOGRAPHER Were going of the record at 1240 p.m Whereupon lunch recess was taken AFTERNOON SESSION THE VIDEOGRAPHER Were back on the record at 131 p.m in the deposition of Suzanne Heinemann Please continue BY MR LANPHERE So were still on schedule C2 in your report Exhibit 206 And in Mote the bottom of the page the last sentence reads RESS consulting expectations based eleo on discussions with Dill Fellers and Michael Henneken want to ask you first about Page 128 discussions with Bill Fellers In what way did you rely on your discussions with Bill Fellers in performing the calculations reflected in Exhibit- Schedule C2 think -- well the first way is with regard to the timing of the consulting revenues after leaving Stanford in the fall of 2013 So -- Thats the ramp-up period we talked about earlier end immediately -- the revenues would start immediately based on his evaluation think you talked about that yesterday Yes And how else did you rely on Mr Fellers -- information Mr Fellers gave you during your discussions for the RESS consulting expectations reflected in Schedule C2 So Mr Fellers was helpful resource for me in understanding more the commercial real estate industry and the role of in particular an owner representative and what that means insofar as consulting revenues and the times of services that can be provided think it was through those conversations that got level of comfort with using the trends in growth of construction in the Page 129 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com Page 127 MILLER COMPRNY REPORTERS 800.487.6278 33126-129 Suzanne Heinemann San Francisco area as proxy for the basis of opportunity as it relates to consulting In other words information on the relationship between the activity end construction and renovation and the opportunity for consulting through owner representative and other commercial reel estate services Did Mr Fellers in your discussions provide you with his views on whether the Manneken hours and leveraged hours reflected in Schedule C2 were reasonable You know did talk to him not so much shout the application of the exact leverage ratio but just conceptually that the type of work dons would also you know require staffing and that that was reasonable So -- so broadly did talk to him shout thst as well Did he specifically tell you that he thought the 1920 hours that Mr Hanneken would be working in the model after the ramp-up period was reasonable So thats slightly different question agree Okay So let me have -- maybe can you just do that one -- Page 130 Did Mr Fellers specifically tell you in your discussions that he thought the 1920 hours that Mr Hanneken would be working under your model after the ramp-up period was reasonable dont think -- did not rely on Mr Fellers for -- for that specific sort of notion of the number of hours It was more broadly the relationship of construction square footage to consulting revenues the immediacy and then we talked little bit earlier today about the applicability of Mr Hannekens experience the relevancy of that insofar as winning new work Did you rely on Mr Fellers with respect to your calculation of the leveraged hours in Schedule C2 Yeah think the -- like two answers ago its same answer It was more of -- conceptually this type of work would also require leverage But with rsspect to the particular ratio think that it was mostly derived from our earlier discussions which is review of the work and discussions with Michael and what would this look like and so as it relates to Dill Fellers Page 131 conceptually the ides of leverage But wasnt relying on him so much exactly for the assumption of the amount of the leverage Okay So you had discussions about the concept of leverage with Mr Fellers but he didnt for example gve you his opinion that the specific leverage factor used to calculate the leveraged hours in Schedule C2 was reasonable in his opinion is that correct Yeah cant -- mean guess Im agnostic on that Like dont remember him saying -- didnt say to him Is 13 reasonable and he said Yes and -- at the same time he was aware of my calculations and it was msver the case that he said Oh that seems aggressive So would say that really tried to loop him in to the structure that was giving to the damages analysis But it would be fair to say thst he didnt specifically give me am assumption or specifically say 13.77 is the right number to use Okay Now weve talked at different points Ill acknowledge about what Michael Hanneken told you with reference to the consulting analysis that youve performed here Page 132 And just want to make sure Ive kind of heard everything in that regard So Im just going to ask you what -- what did you rely upon that Michael Hanneken told you in connection with preparing the RESS consulting-only damages reflected in Schedule C2 MR GIACCMETTI just will object to the extent that the question is vague sod ambiguous THS WITMESS So Im just trying to almost go back chronologically you know to the kind of -- the discussions that we had over time about his business and the means by which bscame educated on his business So think as it relates specifically to this model you know in talking with him he provided me as we talked about level of comfort about the basis of the number of hours that he would be able -- be available for consulting And in his view that there would be demand for his services at that level or above So that was one component The other component that spoke to Michael about was with regard to his traditional model of leverage over the California high-speed Page 133 10 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2S DepoServices.com MILLER COMPMNY REPORTERS 800.487.6278 34130-133 Suzanne Heinemann light rail and if that would be representative of the type of work he would expect going forward recognizing that the 13.77 was an average of some times where its and some times where its 20 That was piece of information on which relied on Mr Manneken You know certainly as it relates to the gross margin percentage you know thats really derived from actual data observed And so dont know that -- think he was aware generally that was thinking about his damages from that gross margin perspective but wouldnt say that that was an assumption that relied on him too heavily for BY MR LANPHERE Mhat about the expenses column Did you rely upon him to calculate the expenses column in any way Yes We had conversations about expenses The approach that took to estimate expenses ultimately didnt -- was ultimately somewhat independent from my conversations with Michael Me did talk about expense and asked questions about if he would need additional staffing or billing resources Page 134 His -- in his view the additional increnental expenses would be fairly limited And modeled probably more than he would have expected And so let me ask you how did you model expenses for the consulting work So looked at the level of economic ectivity and the level of expenses that we observed with RESS in periods where revenues are roughly 5- to $6 million year and that was basically 175000 In the period where RESS has actual consulting revenue his expenses are -- and these are primarily fixed expenses but for certain intervals of activity So those expenses were roughly $65000 So my expectation is that -- that expenses would be greater in consulting-only world And did talk to Mr Hanneken and he said you know there would be things like additional marketing expense and we might need to retool our website And so used that input and normalized what observed in the Plantronics world from 175- down to 100- And how did you decide to normalize down from 175- down to 100- Now -- so the 175000 on average expense includes fair bit of insurance related to construction work And so in consulting-only world at that level of revenues absent the high level of construction insurance estimated expense to be 100000 year Okay Mow if you could turn to Schedule CS in Exhibit 206 Mow think we talked about this once already but this is your analysis of the actual historical hours that RESS has worked on the California high-speed rail work for consulting between 2011 and 2017 right Yes Okay And so if we look over to the total column on the right the total number of hours that RESS has worked for California high-speed rail over that 2011 to 2017 period is -- is 8578 right Thats whats reflected on the schedule And thats your understanding based on the materials you reviewed right Assuming the compilation on this Page 136 schedule is correct yes thats all the data we have Okay And thats over seven-year period so thats an average of about 1200 hours year in that range approximately Sure Mow going back to C2 just go back to Schedule C2 please within Exhibit 206 -- actually have foundational question Is the leverage hours numbers do those include Hannekens hours Yes Okay So so once the ramp-up period is over starting in Q3 of 2015 your model projects that RESSs leverage consulting hours would be 6611 per quarter right Thats correct Okay Now thats over 26000 consulting hours per year right Thats the math yes Okay How many additional consulting engagements would RESS have had to secure in order to achieve that anount of hours Well it depends on the size of the engagement 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 135 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 35134-137 Page 137 Suzanne Heinemann Did you attempt to determine the average size of engagements for consulting work in this market guess would get at it little bit differently thought about this issue and looked at as an example the consulting revenues that we observe lets say in 2015 which which is one of his -- his better years And -- had looked at the consulting fees and had looked at it on revenue basis insofar as you know in 2015 the California high-speed light rail is 635000 And if we look at the total revenue -- excuse me -- that is projected in but-for world its something on the order of 5.7 million So you know at that order of magnitude and those leverage ratios its another nine projects So if -- thats assuming that its that same scale of project Okay Does your analysis in Schedule 02 depend in any way on how many -- on the number of projects it would take for RESS to achieve 6611 consulting hours in quarter Well its algebraic so it would -- you Page 138 know if you had smaller projects there would be more And if its larger projects there would be fewer But -- guass let me ask slightly different question If the projects RESS was getting in the but-for world wars smaller than the high-speed rail account then how if at all would that affect your projection of 6611 consulting hours par quarter following the ramp-up period Well it doesnt impact the projection What it implies is that there are more smaller-sized engagements under your hypothetical Okay Now asked you earlier whether you considered -- believe asked you whether you considered whether there were any capacity constraint-a that would impact RESSs ability to obtain additional business during the but-for period and you said well he had access -- Mr Hanneken had access to something like -- dont know what the term stable of consultants or independent contractors that he could bring in to assist hin with the work 24 Do you remember saying words to that 25 effect Im just trying to orient us to that Page 139 prior testimony have some follow-up quastion remember you asking questions before about the extent to which Michael had consultants available to scala up Were those consultants in the actual world during the but-for world working for other companies Thats good question dont have rostar of the consultants in mind You know in talking through this damage model with Michael he gave an indication that the capacity of other consultants independent consultants existed Is it your understanding that RESS would have to conpeta for the services of those consultants in ordar to use them on additional proj acts Wall guess take issue with the word compete mean it depends on what the landscape is and the relationship is with those consultants and the dagree to which theyre specialized But -- so Id answer it that way So do you have an opinion whether or not RESS would have to compete for the services of independent contractors and consultants to allow it to fulfill the leveraged hours raflected in 02 Page 140 Well dont know that it would have to compete It would certainly need the resources to fulfill those hours think competition is suggesting that they are at capacity or otherwise engaged on another project such that you would need to pull them away To the extent that theyre not and theyre -- there are persons located around the country working remotely on certain projects it may or may not be that they -- you actually have to compete to pull then away It could be that they have excess capacity You didnt do an investigation to datermine whether -- well let me withdraw this baliava part of your opinion has bean -- or part of your support for Schedule 02 baa been to note the expanding size of the commercial construction market in San Francisco in terms of square footage right Thats part of your -- part of what you base 02 on correct Thats right Okay And you infer from that that the market for consulting services within the San Francisco commercial market is expanding to some extent at the same tine right 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS Page 141 800.487.6278 36138-141 Suzanne Heinemann -- yes believe that the revenue opportunities in the San Francisco market have expended as result -- or as it relates to the square footage expansion in the commercial market So with the expansion in the market theres going to be higher demand for services from consultants and independent contractors in the consulting ares right Well depends on what you define as the ares dont understand that Michaels consultants ere necessarily constrained by geography neen certainly MESS is located in the Northern California and that should allow him to capture some of the opportunity you know face time being in the geography for these consulting opportunities But understand by virtue of hiring network of independent contractors that they dont need to be locally -- they dont need to be located in the San Francisco area So to the extent there are constraints it would depend on where theyre located Mow would it depend on where theyre located Have you done some analysis of markets Page 142 outside of San Francisco with respect to consulting services have not undertaken an analysis of consulting services outside of San Francisco Okay So -- and have you done some analysis to determine the capacity -- the available capacity to MESS of consultants and independent contractors to fulfill the additional leveraged hour requirements reflected on Schedule 02 have relied on Michael Manneken and his support that he has the ability and the network and the capabilities to collect the individuals the resources required for his consulting needs Okay And did you have any discussion with him whether -- actually Ill just withdraw that Mow is it possible that during the period reflected in Schedule 02 from 2014 to 2018 that MESS in the but-for world where Michael Hanneken drops out of Stanford in December 2013 that MESS in that world doesnt obtain single additional consulting contract other than the existing Cal high-speed rail contract Page 143 Is it possible Yes think its highly unlikely based on the information have on the -- the narket in Sen Francisco and based on the input from Michael Manneken and based on the input fron Bill Fellers How unlikely Have you attempted to quantify the likelihood of that happening Well would guess would flip it end say feel very confortable with the calculations Ive put forward here And to the extent that theres evidence suggesting that the -- the demand for services would be sonething less than modeled here can certainly see world where 100 percent of what model would -- would -- it could be sonething less than 100 percent Theres always room for disagreement But the extent to which it would be zero which is your question think is highly unlikely How did you factor the risk that the amounts in the real world if Michael Hanneken had dropped out of Stanford -- actually let me withdraw that Thats not the right term Page 144 How did you factor the risk that the revenues from consulting in the but-for world would be less than what you project into your model guess let me answer it slightly different way which is we have time series of data from MESS and it goes beck to 2004 end 2005 And notwithstanding the fact that sons of that data in that early period relates to design-build it provides ne with an economic indication of the value of the services that MESS provides And to my mind when think about the economic value of those services being provided in but-for world and the idea that the value of those services would be on the order of 5- to $6 million year it gives me degree of confort that full capacity or its less than full capacity nodel is reasonable basis or reasonable construct for Michael Hennakens MESS danages So you agree that the hours projected the leveraged hours projected in your consulting but-for model are more than 20 times the historical average of MESS for consulting hours MM GIACCHETTI Id just object to the Page 145 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 37142 145 Suzanne Heinemann extent thet the question is argumentetive end misstatesprior testinony snd calls for Ms Meinensnn to speculete BY MR LANPHERE Do you agree with that statement Well lets take particular example So are you asking me to make comparison of period during which hes in the Ph.D program to period in which he would be outside of the Ph.D program Im esking you thst isnt it true that once the ramp-up period is over -- lets be clear about that -- so the leveraged hours are 6611 hours per quarter that thats more then 20 times the amount that RESS has ever -- the average amount RESS did annually over the 2011 to 2017 period If you mathematically went me to look at the number of hours thats reflected on California high-speed light rail the invoices during periods where Michael is either deployed in Taiwan or otherwise in full Ph.D program that could do the math And lets say oo average for this period where hes working part time on one client we came to so agreement that the average was Page 146 roughly 1200 hours Annuslly right Sure Annually And mathematically if you compare that to -- More than 26000 annually under your model Ba Now Schedule NB is the RESS consulting end design-build damages the RESS historic approach for September 16 Stsnford departure is that correct Thats correct Okay And first of all the consulting fee for-service columns to the left here are those identical to the first four quarters of consulting-only revenues in the consulting-only model Im not trying to trick you think they are Yes they are didnt suspect you Page 147 were trying to trick me just like to check Pardon me Im going to get another napkin MR LANPNERE Oh absolutely Do we need to go off the record TME WITNESS Whatever Im stuck here though Okay BY MR LANPRERE Okay And then starting in Q2 -- under this model starting in Q2 2015 you then project revenue -- design-build st-risk revenues in the but-for world is that correct Thats correct Okay And this -- under the RESS SF column that is the projected amount of square foot per -- footage per quarter that you project RESS would be -- whats the right term doing design-build at-risk project Now -- Yeah Design-build under management Whatever we want to come up with Why dont you tell me since this is -- dont know whet to -- Im not sure what the right term -- the verb for this is You know RESS would be managing design-build st-risk projects in the amount of Page 148 2500 square feet is that the right way to -- Yes Under construction management think thats fair to say Construction management Okay Thank you Now this is the RESS historic approach to design-build damages as weve already discussed How did you derive the 2500 square feet per quarter that would in the but-for world you project RESS would be -- it would be under construction management by RESS 13 Sure 14 So in looking at Schedule -- either -- is lets see here 16 So looking at Schedule B-i theres 17 summary of some of the statistics during the 18 design-build the historic period for RESS And 19 during the five-year period basically from 2005 20 through 2009 an estimate of the square feet of 21 construction under management or -- really under 22 management wee 50000 23 And SO oo yearly besis that was 24 roughly 10000 square feet addressed or under 25 management And so that breaks down to 2500 per Page 149 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 is 16 17 18 19 20 21 22 23 24 25 something 10 11 12 It would be factor of -- think less than 20 but Well 20 times 12 is 24- So around 20- little over 20- Okay All right So why dont we turn to Schedule NB 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 38 146 149 Suzanne Heinemann quarter If youre trying to think of it in terms of netric of activity of revenue generating grof it generating activity it gets broken down into that way And this is square footage that -- In sorry Ill rephrase that The 50000 square foot of construction reflected in Schedule Dl thats from the Plentronics project right Thats correct Okey Did the amount of square foot under construction in any given year very during the Plantronics project Thats good question So the amount of square foot under construction is being measured as 50000 over the entire period There probably was variance That 50000 square feet likely related to perticuler area that wee constructed end then there were other activities including solar panels end FFE that may or may not have been directly related to that 50- but in totality thats the measure of activity as it reletes to Plantronics So thats the measure that we use to give us sense for revenue end profit per unit Page 150 per unit of square footage In the historic approach model that you put together as reflected Schedule B8 you conclude that starting in Q2 of 2015 and continuing through Ql of 2018 the equere footage RESS would have under constructive management -- construction management in that period would be exectly the same es the -- as the average square footage under construction in the Plantronics job from 2005 to 2009 is that correct Thats correct Essentielly were looking at the measure of economic activity in temporal -- on temporal basic In other words you look over five-year period and you see $25 million of revenue end you enchor that against well how much square feet were touched And that gives you measure by which you can project activity in future periods And eo that measure is 2500 square feet per quarter of revenue -generating ectivity Now had there been any changes in the design-build at-risk market between 2009 end 2015 And what kinds of changes Any kinds of changes Or is it completely static market and there were no Page 151 changes MR GIACCHETTI Object to the extent that the question is vague and ambiguous THE WITNESS Well there certainly have been changes at minimum insofar as the volume of design build activity And that is essentially what the index market approach is intended to reflect BY MR LANPHERE Volume has grown Whet about profit margins in the market has it changed between 2009 snd 2015 It is not an area that studied It was -- my epproach was to look at sort of the economic contribution of RESS as we observe in the Plantronics project Whet about the cost structure of businesses in the design-build at-risk market had that changed from 2009 to 2015 dont actually understand your question Okay The cost of doing business for competitors in the design-build at-risk business in the 2015 period was it any different from the cost in the -- at 2009 Page 152 MR GIACCHETTI Objection that its vague and ambiguous THE WITNESS Well would expect that costs in absolute would change over time Im not sure how that would -- okay So costs in the absolute can change Im not sure how that would impect my opinion insofar as Im using estimates of the profitebilicy BY MR LANPHERE Has profitability in the design-build at-risk market changed between 2009 and the 2015 to 2018 period Its possible in totality And if you look at totality of the mix of the entire market its absolutely possible that the mix of profit had changed You would want to make sure to control for the type of activity that is -- is -- that youre looking at Okay Did you attempt to determine whether profitability in the design-build at-risk market changed between 2009 and the 2015 to 2018 period based my analysis on the cost end revenue and margin profile that RESS was able to Page 153 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 39150-153 Suzanne Heinemann accomplish in Plantronics and hava assumed that that sort of value contribution would ha the same in the 2014 to 2018 tima period Okay So you didnt do broader market analysis to determine if profitability in the design-build at-risk market changed between 2019 -- 2009 and the 2015 to 18 period is that right did not benchmark the analysis of HESS consulting profits against the broader market took my understanding of the amount of profit that HESS would be making based on the historic amount pf profit and margin over end above cost that it had historically been able to charge Did you attempt to determine whether HESS profitability in the Plantronics project was an outlier when compared to profitability of other design-build at-risk projects in the market at that time Page 154 profitability of the different components undertook conversations with Mr Hanneken and undertook conversations with Mr Fellers You said the first thing you tried to do is to try to understand the project little more through understanding the components of the project and the relative profitability of different components Yes So is it your understanding that different types of work that HESS performed in the Plantronice project had different profitability levels Generally yes Do you make any assumptions in your model in Schedule B8 as to what types of projects in the design-build at-risk work apace HESS would be performing in the 2015 to 2018 period Yeah So embedded in the analysis is the assumption that the product mix and the level of profit would be the same in future periods in the but-for damages period as HESS was actually able to obtain through you know the mix of its qualifications and the mix of the products and Page 155 offerings and services provided Did Mr Manneken tell you that he expected that would be the case Well think the conversation was little more broad and it was an understanding of conceptually the at-risk model versus mode where specific markup not at risk would be applied So in other words his returns and profits were directly measure of the risk he had taken on that project end his ability to manage costs versus the revenues associated with the contract offerings What information if any did Mr Fellers give you -- actually Ill withdraw that question What information if any did Mr Fellers give you that you relied upon in determining whether or not the Plantronica profit margin was an outlier So we had pretty robust conversation about the Plentronics contract end -- broken down between FFE end the construction and the engineering services et cetera We talked little bit about Page 156 specifically that margins at risk can be higher but -- of course because its higher risk Talked about margins on FFE and how those are substantially higher than you might expect on other areas of construction We just generally talked about it And think one of the other comments and takeaways from my conversation with Mr Fellers is ycu know to the extent there are renovations being done as opposed to brand-new construction that can have an impact on the pricing and the risk profile end the profit profile of project And those are some of the reasons explaining the degree of profit that -- that Michael observed on Plantronirs Can you elaborate on that How did that impact the degree of profit on the Plantronics proj ect Because theres more uncertainty to the extent that you have portion of your project thats remodel versus 100 percent new build And so in the discussion Bill aod had that was one element that would weigh in on the relative profit one might expect on build-to-suit project Page 157 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 first is little bit components Absolutely How did you go about doing that Well did number of things The tried to understand the project more through understanding the of the project and the relative 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 40154-157 Suzanne Heinemann Do you make any essumptions in calculating the RESS square footage under design-build at-risk construction management as to the type of projects that RESS would be doing in the but-for world Yeah Its implied by that 45 percent So the very nature of the 45 percent implies the same -- similar risk profile end it implies that they would be taking the risk end potentially implies that there might be projects that are more renovation-oriented with that same higher level of risk not necessarily not exclusively but it could imply that It certainly implies by virtue of using that percentage that same product mix Okay Now did you attempt to identify any actual problems in the market in the 2015 to 2018 period that fell in that category Oh 100 percent Okay Whet did you do to do so Right So in my review of the JLL date -- end there was other data that located at in this case Dodge date but it was less comprehensive end on target but in particular in the JLL date they indicete that theres roughly Page 158 $24 million of renovation end construction ongoing Dollars or square feet Squere feet 24 million -- from the January 2014 through December 2017 time period So within thet there are you know listings within their reports of specific you know tenants moving end buildouts and improvements thet need to be mede But theres elso quite bit of commentary shout how owners buildings are looking specifically to renovate their properties given the high demand in square footage So there is combination of qualitative and quantitative that gave me high degree of comfort that the you know 40-some-odd-thousand square feet thats embedded in this model relative to the 24 million of square footage under construction would be reasonable estimate Did you attempt to determine how much of the 24 million square foot in ongoing design-build at-risk work there was in -- actually let me rephrase that Did you attempt to determine how much of Page 159 the $24 million in commercial development reflected in the Jones Lang LaSalle date represented design-build at-risk work MR GIACCHETTI Objection to the extent that mischaracterizes Ms Heinemenns prior testimony THE WITNESS Well the 24 million relates to new construction end renovations And so broadly think its all on point with respect to design build work BY MR LANPMERE But how much of its design-build at-risk work Well that -- you know the -- the date dont indicate that So if your question is do have specific projects or information that would ellow me to understand the financial profile of each of those projects dont felt as though the -- the totality of that date both from quantitative and qualitative perspective as mentioned gave me strong basis to feel that this is reliable and reasonable estimate using this approach Is there difference between Page 160 design-build work and design-build at-risk work Yes There certainly could be right Okay Do you -- do you define design-build at-risk work to mean any design-build work or only design-build work where the company bidding for the work takes on financial risk in connection with it So Im not -- let me see if try end answer your question -- Okay -- because Im not exactly sure what youre asking But think its fair to say that whats reflected as my model is an element of risk from design-build that we see inherent in the plantronics work you know by virtue of the 45 percent gross margin rate When we look at the JLL data right its measure of construction and renovation square footage in the San Francisco areas generally And the distinction between those square feet that were done on an st-risk contrast versus cost-plus contract et cetera that distinction is not made within the data So you dont know whet proportion of the Page 161 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 41 158-161 Suzanne Heinemann construction and renovation square footage reflected in the Jones Lang LaSalle report represents at-risk work correct Yeah that is not data thats present as mentioned before given that the lost profit claim is you know less than 50000 square feet and the Jones Lang LaSalle data is reflective of the 24 million And given the qualitative descriptions that can see in the JLL data it seems quite clear that there are substantial -- theres substantial business renovations exactly of the type that the 45 percent would be more specific to But you dont know how substantial correct Again -- dont have specific number think given the scope and the magnitude of the 24 million and the qualitative comments within the report think the order of magnitude is consistent with the type of -- order of magnitude of demand is consistent with the damages model that Ive presented So if you could turn to Schedule BlO please Page 162 810 is listing you prepared of specific examples of campus/office spece under development in the 2013 to 2016 period correct Yes Okay Which of these projects were design-build st-risk projects These data are derived from JLL So the same comments from two questions ago would apply So you dont know if any of these were design-build at-risk projscts correct Well you know dont know the terms of the contract But even if in fact one of these and this applies more broadly to my answers for the last three questions but even if we know in fact in the actual world that contract was done either at cost plus or design-build that doesnt necessarily mean in the but-for world it would have not bsen -- it would have been done at design-build at-risk right So the difference between the actual and the but-for worlds the actual data -- the actual world does not necessarily reflect what the but-for world would have looked like You do agree that whether project is done on design-build at-risk basis or coat-plus Page 163 basis affects the potential margins for that proj act Yeah absolutely Weve talked about the very basis for the Plantronics data And understanding the 45 percent has to do with not only the capabilities that Michael brought to the project and his ability to control costs but the fact that he got the benefit of that from the at-risk profile So to the extent that Im modeling 45 percent gross margins it assumes that he would take further projects future projects on an at-risk model as wall Just coming back to Schedule 810 -- appreciate your saying that in the okay With respect to Schedule 810 do any of these projects -- did they in actual fact include FFE equipment like solar panels dont have the actual details behind every one of these transactions They were provided as the illustrative because theyre somewhat more high profile so its more of way to get behind the data Its not comprehensive list of all the propertias but examples of few of them Page 164 And no the details behind each and every one of these contracts is -- is not provided And again would mention that this is small subset This happens to be million of the 24 million Do you have the details about any of these projects Do have them mean are they available Possibly Have looked at them all No Have you looked at any of the details for any of these projects Well Id have to go and look through what was produced to you Theres certain of these that we pulled down some more information It was not primary focus of mine Okay Yeah All right And just -- appreciate the answer you gave previously saying in the but-for world who knows if any of these projects on 810 would have bean dasign-build at-risk projects But as you sit here today do you know if any of them in the actual world were design-build at-risk projects Page 165 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 42162-165 Suzanne Heinemann The nature and the character of the you know project management agreeing -- agreement underlying any -- each of these projects dont know that thats public information certainly as sit here do not know which of these are at risk or what the cost profiles for these engagements and again were pointing to list at BlO of subset of the 24 million under construction dont have the risk profile or the margin profile for these proj acts Okay As general matter based on your experience does the fact that business succeeded in obtaining work five years ago mean theyre certain to gain work today MR GIACCHETTI Objection The question is vague and ambiguous Calls for speculation THE WITNESS So certain what 100 percent certain BY MR LANPHERE Yeah Page 166 As general matter baaed on your experience does the fact that business succeeded in obtaining work five years ago mean they are certain to gain work today MR GIACCHETTI Any business ever is that the question Drew MR LANPHERE Yeah THE WITNESS Okay So your hypothetical is the fact of business having work five years ago so any business widget-making business -- BY MR LANPHERE Yeah -- five years ago is -- end whets the state of the economy Is there any context around your hypotheticel All things being equal otherwise All things being equal is it 100 percent probability that this widget-making factory would have sale in whet year Five years later Five years later think all else equal theres -- theres -- you know would need more information mean is it still in business Page 167 Has it been selling widgets Is it -- Lets assume it heant sold eny widgets in the five-year period between the sale five years ago end the present day Does it still heve relationships with cuatonera Does it still have relationship with distributors guess there would be more in the hypothetical Id like to know So youre uneble to answer whether its 100 percent certain that that business would obtain enother contract without knowing lot of facts about that business is that whet youre saying -- MR GIACCHETTI Objection BY MR LANPHERE -- not knowing these additional facts MR GIACCHETTI Objection Its argumentative Its vague end emhiguous It misatetea Ms Heinemenna testimony THE WITNESS dont -- dont know what your question is BY MR LANPHERE Okay Now RESS had not done any design-build at-risk projects fron 2009 -- well hasnt done any from 2009 to the present correct Page 168 Yea thats correct Okay And under your but-for model for design-build damages you assume that -- in the historical approach you assume that starting in Q2 2015 RESS would begin doing 2500 squere feet per quarter of design-build et-riak projects is that correct Thats correct Okay And what is the basis of that aaaumption The timing or the amount Both Okay Well no not the timing We talked about the timing Thats efter -- sorry the ramp -- the lag period but -- so the amount Right So based on the historic approach we see through Plentronica that there was 50000 of ebsolute square foot construction in addition to other components of the project So in order to get gauge of economic activity we look et that 50000 over five-year period end derive run rete construction management run rate so to speak of 10000 square feet per year Thats way to use whet weve Page 169 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you set 13 Is that your hypotheticel it up for me Its just question Why dont 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 43166-169 Suzanne Heinemann 22 23 24 25 RESS design-build revenues are expected to be derived from commercial design-build 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 learned from the past and gauge it going forward So 10000 per year run rate would be basically 2500 square feet per quarter And so in order to think about what would be accomplished in the damages period we use that measure of activity thats based on actual results from Plantronics Okay Now in note -- excuse me Sorry Let me get the right note number Note on Schedule 88 second sentence says opportunities Do you see that Oh sorry mean including -- sorry meant Including at-risk construction management and consulting services Do you see that Ido Okay What is the basis for your expectation as stated here The basis is -- excuse me -- looking at Page 170 presence And you say it was primarily based on input from Mr Fellers and Mr Manneken Thats correct So what was the input from Mr Manneken Was it of the same nature Same nature Same nature that this is what he does and this is what he has done And hes got positive reviews and hes good at construct management And these are opportunities -- you know even recall going through you know some of those anecdotal examples and him kind of recalling people that he knew who would be working on them that would be in the industry or that he knew about it And it was just clear that this is -- you know this is what he does These are the types of opportunities that he would be seeking and would be bidding on and -- and to the amount that modeled here which is less than 50000 square feat successful on Okay So other than determining that opportunities for design-build work existed in the 2015 to 2018 period and the input you received from Mr Manneken and Mr Fellers did you do any Page 172 10 11 12 13 14 15 16 17 the -- well think primarily the basis is some of the examples cited in the footnote so 39 10 biz journals Dodge and then always come back to JLL because it has been nice resource in this -- in this case But -- so conceptually the idea is looking at the construction opportunities both the new build and renuvatiun that is benchmarked in the JLL data weve seen on 39 Other than determining that there were construction opportunities in the market in the 2015 to 2018 period did you do any analysis to determine whether RESS would be able to obtain any opportunities Yes So thats primarily based on input from Mr Fellers and from Mr Hanneken And Mr Fellers in particular as it relates to you know hie understanding in the industry and his appreciation for the experience that RESS RESS has demonstrated with Plantronica and the positive reviews from Plantronics and L3 And in some intangible way maybe tangible or side way RESSs reputation with California high-speed light rail just that its legitimate entity out there with an economic Page 171 18 li21 19 20 other analysis to determine whether RESS would be able to obtain any of that work No think most of my analysis wes limited to fully understanding the exponentiiT growth in the San Francisco market the opportunities the nature of those opportunities as they related to renovations and the type of work that RESS has done observed RESSs historical operations as it relates to Plantronics and the types of revenue expense and gross margin on that project and that in concert with Mr Hanneken and Mr Fellers input is really the primary basis of the model on 38 MR LANPMERE think we need to change our tape again Its time for break so why dont we take break Thank you THE VIDEOGRAPMSR Were going off the record at 233 p.m This is the end of Master Recording Number Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 247 p.m in the deposition of Suzanne Heinemann This ia the beginning of Master Recording Number Page 173 DepoServices.com MILLER COMPMNY REPORTERS 800.487.6278 44 170 173 Suzanne Heinemann Please continue BY MR LANPRERE So back on schedule ss Note the next sentence after the one we just finished talking about reads growth RESS at-risk design-build opportunities are expected based on its qualifications its proven success in design-build and the growth in the cosimercial reel estate market during the damages period Do you see that do Okay Now whet commercial reel estate are you referring to here in which there is The same one on Schedule B9 right So the same discussion of the $24 million of San Francisco Sen Francisco Peninsula Silicon Valley looking at new construction starts end also renovations Those are the date Okay And the geographic ares is San Francisco proper the Peninsula end Silicon Valley Page 174 Thats correct Dkay And is this the market for private sector commercial -- is the commercial real estate market just individual for private sector or does it include design-build -- govermmental design-build projects as well That was kind of confused question Can restate it because muttered it around Is the commercial real estate market referred to in Note just for private sector design-build or does it include government design-build projects as well My understanding of the date is its commercial So thats not to say that it couldnt be lets say commercial building in which government took floor but its not government-generated development work Okay And does the commercial reel estate market you refer to in Exhibit end depicted on schedule -- or sorry Note end on Schedule 58 amd depicted on Schedule B9 does that include any public-private partnership projects P-3 projects Thats good question Its -- its -- when you say that it reminds me of -- there are certain projects in development think in Mission Bay or Chine Basin In particular think there was project that launched in 2016 They may have certain public element to it think for all intents and purposes when look through those reports they were en amalgamation of projects like that we looked at on 510 that were the basis of the data that are in the chart on 59 So most of the projects like say the majority of the square footage was related to commercial buildings and commercial renovations Do you recall as you sit here right now whether there were any P-3 projects among that data dont Does the 25 does the projection that RESS would do 2500 square foot of st-risk design-build work in -- starting in Q2 2015 assume that any of that work would be for P-3 project It primarily assumes that the mature of the project would be similar to that of Plentronics That is the basis on which this model is based Page 176 Okay In constructing this model are you relying on amy projection that in the but-for period the RESS design-build at-risk square footage projected in the model would include P-3 proj ects So tell me again P-3 is combination of public and private partnerships Yes Again think the same answer applies which is you know in my review of the fimamcials date for the San Francisco the Peninsula and the Silicon Valley the mainstay of the business statistics that are reflected on 59 appear to relate to commercial development Its not to say there might not have been some public-private in there some P-3 but think certainly my focus was on the types of projects or renovations that would be office building related end/or campus development and/or tenant development that type of work Okey And so the projection of 2500 square foot per quarter under the RESS SF column its -- youre projecting that it would be that type of work you just described Yes 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 market 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 175 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 45174-177 Page 177 Suzanne Heinemann Okay With respect to tha commercial real estate market youve described which is consisting of the San Francisco Silicon Valley and Peninsula areas how many competitors have ware there in that market for design-build at-risk work in the 2014 to 2018 period dont hava listing of the number of competitors There clearly would be competitors mean Im talking about 24 million square feet of construction during this period of which our damage modal -- my damage modal reflects less than 50000 So clearly there are competitors in the market meeting the mainstay of that demand rrrr-y6u identify any competitors in that market in the 2014 to 2018 period that you consider to be comparable to RESS You know when was first retained on the matter pulled down some data regarding Ill call it other folks in the apace But when looked back more recently at the listing that we had pulled down and soma of the initial work we had done at researching some of these other companies was looking at that for the production request And its interesting to ma how years Page 178 time makes difference because its clear to ma that you know some of the folks that we had pulled down than while they certainly might be doing consulting and construction management most of them fall under the character the category of developers which is similar but different right Ita -- developer is in my view somebody who is acquiring property and then developing it and reselling it So thats long way of saying theres others out there clearly Some big Some small Some giant Yeah So my question was from among those that are out there did you identify any competitors who participated in the design-build at risk market from 2014 to 2018 that you consider to be comparable to RESS You know dont have them from memory mean to my mind to ba comparable from RESS remember looking at this issue was looking for smaller players definitely felt satisfied that there were smaller players out there But the issue cams out of focus because it just wasnt totally relevant -- it wasnt Page 179 something that was necessary precursor to the analysis that was putting forward And when you say you were looking for smaller players what do you mean by smaller players What mean to say is companies that -- you know remember one in particular that had you know four principals or three or four principals and could maks this leveraged modal work was trying to get comfortable that you could have company that generates $25 million of revenue with vary light overhead So that sort of was the nature of my initial imquiries is just to understend sort of the industry and the perspective from which Mr Hannakem derived But you ultimately -- gusss you said you ultimately concluded it wasnt nscessmry precursor to the analysis you wars putting forward is that right Right Because for the reason expressed earlier which is you know we have clear evidence of Henmeken -- Mr Henmakam and RESSs success in Plsmtronics And when we look forward at the explosion in the market in the Page 180 futura the relative share that wa are claiming is so small that of course were acknowledging competitors But you didnt attempt to identify comparable competitors in order to benchmark their for example profitability for purposes of your analysis of the but-for -- RESSs performance in the but-for world Oh you know if profitability-type data wars available -- mean on our initial search we were not finding granular date nor would you expect to for companies of that size So you know if there were publicly available data on profit ratios end stuff it might be something that would consider But wouldnt consider it to be determinative relative to actual experience at RESS given RESSs capabilities and basket of contributions And dont want to be limiting in my -- use profit profitability as the example in the last question but you didnt attempt to identify comparable competitors in general in order to provide any benchmarkimg to validate the conclusions in your but-for model in terms of whet square footage RESS would have had under Page 181 10 11 12 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 46178-181 Suzanne Heinemann constructive menegement -- construction menegement in the design-build et-risk world from 2014 to 2018 Well Ill go heck to know one of the things produced to you ended up being end cant even tell you how those six or seven ten people came to be on one of the lists that we produced to you But certainly had that in mind that there were competitors out there with substantially greater -- you know with low level of staffing and substantially greater square footage And it was just -- dont know that would need that to validate sort of the claim for lost profits for Hanneken again given that we have the experience of Plantronica But it is sort of piece of data out there Do you rely on that data in any way in your model Not directly Do you rely on it indirectly Maybe the fact -- mean its in my fact set Ive looked at other comgetitors dont -- see they have higher square footage than the amount were claiming Its kind of Page 182 neither here nor there dont want to say Im not using it Does it go directly into my model No way this Did it impact your calculations in any No MR LANPHERE Lets go ahead end mark Whereupon Deposition Exhibit 225 was marked for identification BY MR LANPHERE Youre being handed whats been marked Exhibit 225 Ill represent to you that this is couple documents from the backup we received in connection with your report Ill also further represent to you that the second two following pagee of this we minimized some of the columns so we could fit the things about address end website you know URLe and things like that so we could fit it on one -- one legal sheet With all of that is this the documentation of the process of looking at competitors that you were describing just now in your answers It is And would caveat it as sort of Page 183 first blush attempt to look at some competitors when first got acclimated with this case havent looked at it critically since then so So this is something you put together as first blush about year ago Yea Okay You havent looked at it since Well certeinly looked at it before produced it to you should have said -- It was not primary factor to my knowledge in my analysis Okay And -- okay Did you attempt to determine whet competitive advantages if any RESS would have over competitors in the market for design-build at-risk work from 2014 to 2018 wouldnt say that -- guess the way would -- your question what did do to determine Im not in position think from an industry point of view of determining what RESSe skill set is can observe it through success at Plentronics You know certainly reviews from plantronics letters of recommendation from L3 Page 184 et cetera And can observe it through financial data just by virtue of you know an engagement that went on through five years through multiple contract points points that could have been guess preaumably termination points but they were points at which additional work was given So from sort of forensic and economic point of view observed those as quality or attributes or positive signals of differentiating attributes But did you attempt to determine the extent to which those attributes differentiated RESS from any competitor in the market 2014 to 2018 _________________________ What Im getting at is did you do any comparative analysis between RESSa attributes and the attributes of any competitors in the market from 2014 to 2018 Not from 2014 to 2018 So my analysis is really focused on you know the fact of the economics from 2005 through 2009 And more broadly with conversations with Bill Fellers really to say how is business won and get an understanding that its through reputation and successful projects And certainly through market Page 185 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 47182-185 Suzanne Heinemann expansion and those opportunities that they exist that would provide basis for projections Okay So for purposes of understanding how business is won on the market youre relying on Bill Fellers -- what Bill Fellers had to tell you about that subject And also with conversations with Mr Nanneken But found Bill Fellers to be good resource outside of the case to understand more of the market dynamics Im just reflecting on JLL No its really -- its really Bill Fellers and getting an understanding outside of Mr Nanneken from Bill Okay Now did you attempt to identify any specific design-build at-risk projects in the market in 2014 to 2018 that in your opinion RESS would have wcn if it had been competing for them in the but-for market think weve talked about this before So in large part the -- what rely on is JLL data to get sense for the market There is no distinction or data present or available that could discern that would allow me to see whether contractors were performing these engagenents at risk or otherwise Page 186 And now Ive lost my train of thought Okay This is good news Im crossing things off Sorry All right Back on Schedule B8 at the last sentence of Note -- actually hang on one second Im sorry Now did you ask Mr Fellers whether the MESS SF figures the 2500 per quarter were reasonable projection of the design-build st-risk work that MESS would do during the but-for period think generally we had conversations about the reasonableness that MESSs historic experience would be sonething to consider or as the basis of computation going forward But it was not en assumption that got from Bill It was really an assessment that came to by virtue of looking at the growth in the market and modeling that it would be at least 55 -- that that growth would support at least as much as Michael bed secured with Plentronics based on Bills input that Michael should find success So in other words think said okay well lets imagine that we model its just as successful given Bill Fellers feedbeck So just went to make sure the lest Page 187 part of whet you said So is your recollection of the interaction with Bill Fellers that you said lets imegine we model its just es successful as with Plentronics but in the 2014 to 2018 period end he said thets reasonable No no no Beceuss its my model So heres the thing Im the damages expert The we Im sorry is the problem Yeeh So just -- this isnt -- Im damages expert rely on Bill because hes en industry expert So its nice for me to get feedbeck on hey how do people win clients You know his experience Would you imagine he bee success if he goes beck in can get feedback from Bill From my point of view triangulate whet information is available to me right So see the meesure of success on Plentronics beer whet Michael Hennsken believes his options ere end his networks and contacts end ability to penetrete this merket And get feedback from Bill about whet contributes to success also see JLL data So the totelity of that date in my opinion create model that Page 188 assumes essentially the same level of economic activity in the but-for world as observed in quasi similar period of timer beck in 05 to 09 Okay So just to meke that clear too because read Bill Fellers deposition end it was almost like it was this is my damage Im damages expert Mes an industry expert Mes just an input Okay Did you ask Michael Hsnneken for any input on the figures reflected for MESS square footage for design-build at-risk work in the 2014 to 2018 period in your model Just feedback that he felt it was reasonable that given -- given his expectations that he would expect to secure at least ss much square footage as Plsntronics if not more given the state of the nerket And just so understand this completely you mentioned that Bill Fellers provided input 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 What input did he provide that you relied upon in calculating the -- or projecting the MESS square footage for design-build st-risk in the in your model Page 189 MILLER COMPANY REPORTERS 800.487.6278 48186-189 DepoServices.com Suzanne Heinemann Just conceptuelly thet there would be denend for someone like Nicheel end thet there would be 15-month leg Okey Now cen we turn to Schedule B2 pleese in Exhibit 206 Schedule B2 in Exhibit 206 is your P555 consulting end design-build demeges deteil using the merket index egproech with December 2018 Stenford degerture right Yes Okey And egein in this model like in the historicel model the consulting revenues through Querter 2015 ere identicel to the consulting revenues projected for thet period of time in the consulting revenues-only model correct Yes insofer es theres remp-up over time until such time thet the 15-month leg ebetes end design-build kicks in And the 5555 squere foot column under the design-build et-risk section of this model hes figure thet vecies over time sterting with 1.37 Yeeh Sorry And seid yes to the wrong thing so there we go Were both wrong Let me stert over The 5555 equere footege figure here on Schedule B2 is the product of multiplying the historicel 2500 per querter by the merket index reflected in the merket index column for thet time period correct Not quite Okey Cen you explein to me how its derived Sure So the merket index is figure thet is looking et -- is derived by looking et the squere footege under construction in the merket in celender yeer reletive to the equere footege under construction ee of 2007 which is proxy for the Plentronics period Yeeh wee eeking ebout how the 5555 squere foot column is derived Oh but its -- merket sorry go eheed Let me try -- let its -- so its the Its mees me try egein know Page 191 whet you were seying end underetend it but let me just meke sure So in the first inetence the 5555 equere foot column Correct yes -- squere footage column is derived by multiplying 2500 squere foot per querter by the number under merket index for thet querter correct Yes youre right Youre totelly right yee And then the merket index by querter is derived by compering the full yeer one querter of the -- well Im going to etert over The merket index number is derived by compering the full yeer merket equere footege in 2007 with the full yeer merket equere footege in the corresponding yeer so 2015 16 17 Thete shout right Its sort of like the everege of the full yeer beceuee were just trying to -- but yes You didnt seperetely determine the for eech querter By querter correct You took the totel eggregete of the Page 192 querterly emounte you hed divided it so you hed en even querterly emount for eech querter in eech yeer end then you compered thet number with the 2007 figure for the merket right Pretty much right Nethemeticelly yes Okey For purposes of this celculetion of the merket index you used only the dete for the Sen Frencieco merket correct Thete correct Why did you not use dete for Silicon Velley end Penineule in determining the merket index We would heve loved to We hed chellenge finding dete eerlier JLL seemed to be much more complete in its reporting eterting besicelly in -- eometime in 2008 it sterted to segment into different regions We hed phone cells with JLL trying to find eerlier dete So while we would heve liked to heve it for ell three we only hed it for Sen Frencieco which felt comforteble with Beceuseif we look et the trends in Sen Frencieco end trends in Silicon Velley end in the Penineule we see consistent trends in this leter period this 09 to 2017 period en thet felt comforteble with Page 193 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Do you see thet Yes emount No no no Thete sorry mieeteted thet Page 190 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 49190-193 Suzanne Heinemann San Francisco being the proxy for the index approach Okay That actually reminds me how did you obtain the JLL date Did you obtain it personally your firm or did you -- were you prnvided with it by counsel or some other source We researched it Okay So you obtained it directly from ILL Yes Okay And what about like the Dodge Is the answer the same We researched it And so you or your firm obtained the Dodge date Correct Okay Im not talking about like the depositions end the materials produced in the case but the other research materiel about the market thats in your backup did you obtain that directly or was it provided to you Oh directly yeah Going beck to the -- using the San Francisco market data RBSS bee never done design-build at-risk project in San Francisco right Page 194 Thats correct plantronics was in Sante Crus Does that make eny difference to the viability using Sen Francisco market in your view es the proxy for the market index dont think so Its supposed to be measure of relative economic activity in one period versus another And so think its en important measure and its useful measure end it doesnt make difference Now are there differences of the types of commercial reel estate projects in Sen Francisco versus the Peninsula versus Silicon Valley There can be Much of the development in San Francisco however during this time is China Basin Mission Day There are development projects that are -- with one small exception -- one big exception with one exception Theyre probably more similar to the type of projects you would see in Silicon Valley in particular in the JLL data Because it includes renovation data youre seeing lot of activity related to internet start-ups south of Market and in these -- these sort of developing areas Is the one big exception the Selesforce Tower Oh then two big exceptions yeah Whet was the other big exceptions Ocean-something or other think it was in 2017 Its tower thats breaking ground down in Mission Bay Okay Is there -- actually Ill withdraw that If Michael Hanneken bed dropped out of Stanford at the end of 2013 as you sesume for purposes of your report would NESS have been competing for high-rise design-build projects in the Financial District like Selesforce No dont think so Thats not what Im modeling Im modeling renovation office development and -- mean if it was high-rise the square footege would be through the roof Thets not what were modeling right Were modeling 50000 square feet 64000 square feet So think the answer to that question is no The 24 million figure in square feet that youve referred to comprising the market Page 196 does that include high-rise design-build projects like Selesforce It includes -- Excuse me handful of high-rise development yes But would note that those high-rise developments if you look in B9 -- and this is sort of interesting Let me catch up with you Sorry Okay Im with you That conceptually the index that were using because were constrained on backward-looking data were using Sam Francisco as proxy for our index And notwithstanding the fact that it includes -- in the later period believe at least construction starts for something like the Selesforce Tower et cetera it still comports with Silicon Valley end is lower then Silicon Valley which is enother important date point So just think thats -- just like to add that context because thinking of an index was trying to be thoughtful in using that San Francisco index understanding that it does include some square footage for construction other Page 197 data 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com Page 195 MILLER COMPANY REPORTERS 800.487.6278 50194-197 Suzanne Heinemann than the bases of our damage model but still think its good proxy for purposes of this analysis Okay Does the JLL data you use to calculate the market index ssparate out the square footage at different points so 2007 and f-hen in this later period by type of project It separates it out Class and Class and it separates it out by region within the city Does it separate out the type of project in such way that you can identify the type of project that in the but-for world MESS would be competing for and determine the growth in that market segment Not consistently through the period And the most important piece would be in the early period in the you dont have breakout So in order to use it as an index that would take you through all those periods of time you are not able to disaggregate it in the earlier period of time In the later period of time so lets just say for 2014 to 2018 are you able to disaggregate and determine the amount of the size of square footage construction in the but-for Page 198 world that MESS would be competing for So sure So that 24 million figure if we wanted to drill into that and say something like okay 21 million of it was related to renovatioos lets say exclusive of high-rises you should be able to do that with the OIL data What you would not be able to do is have an apples-to-apples comparison for purposes of using an index from 200 to date You would need to use the aggregated total in order to have that to be meaningful measure through time Okay Did you drill into the JLL date and determine the amount of the 24 million that was square footage of the construction in the but-for world that MESS would be competing for As sit here right now dont have the lets say distinction between total construction and renovation Lets say if we want to make distinction between high-rises and not high-rises dont have that distinction in front of me My suspicion is that it wouldnt substantially change the volume of square foot construction relative to the 50000 square feet were claiming ________ Page 199 Are you limiting the -- well Ill withdraw that So just to be clear did you do that process of drilling into the JLL data to determine which portion of the 24 million is square footage that BASS in the but-for world would have been competing for didnt do it at the level you are talking about because did it at more qualitative level So when you resd through the JLL reports aod you can build up the information qualitatively about the influence and demand from owners to have their buildings renovated and specific examples of tenants moving needing tenants improvements et cetera there were clesrly enough examples either through the narrative or through the listings that are provided every quarter that felt high degree of comfort that the -- there was substantial demand and at least more than enough for the market share that we are modeling Okay But you didnt do quantitative analysis to determine the -- as figure in square footage the square footage that MESS would have bean competing for in the but-for world is that Page 200 correct You did qualitative analysis but did you do quantitative one No think -- as preliminary matter think $24 million -- 24 million square foot number is not that far off the mark The fact that there might be million square feet or 500000 square feet that involve an office tower in Mission say that started in 201 doesnt -- wouldnt -- feel like given that youre 10 mischarscterizing my testimony 11 Im not trying to characterize it Im 12 asking if you did quantitative analysis to 13 determine what proportion of the square footage 14 reflected in the JLL reports was -- were projects 15 of the type that MESS would have been competing 16 for in the but-for world did quantitative one but didnt 18 memorialize in documents 19 Okay What was your conclusion of that 20 quantitative analysis 21 That the -- the majority of the square 22 footage that was reviewing through the JLL 23 documents which are manifested in the chart data 24 here were relevant to the type of work in market 25 that MESS would be competing for Page 201 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 51198-201 Suzanne Heinemann Okay How did you make that determination that the majority was relevant to the type of work in the market that RESS would be competing for Through my review And what factors did you -- well what did you rely upon in reaching that determination Looking through the reports Okay But you didnt write down the number that you derived from that review is that correct HR GIACCHETTI Object to the question as argumentative Shes already answered THE WITNESS Well havent written down the specific number that would take out potentially office buildings You know in my view the primary source that were looking for are renovations and new construction starts that are probably not including office towers Is it possible that he could work on office towers Certainly Did need to strip from it my calculation dont think so Its not relevant to the index and it certainly doesnt impact the square footage that Im putting in the model Page 202 BY HR LANPHSRE For purposes of your model do you assume -- and the market index in your model do you assume that the growth rate reflected in the market index figure wee the same across all types of commercial real estate projects Can have you read that question beck And tell me again what schedule are we on B2 Okay Record read by the reporter as follows QUESTION For purposes of your model do you assume -- and the market index in your model do you assume that the growth rate reflected in the market index figure wss the same across all types of commercial real estate projects THE WITNESS Yes Because the growth rate in that model is proxy generally for economic activity in the commercial real estete market So in other words this is measure as compiled by JLL end its used as proxy to Page 203 understand sort of the economic activity generally And so yes its -- that growth rate impacts the cslculation and do assume thst thet is relevant BY HR LANPHERE In calculating the market index used in the market index approach in your report did you rely upon any information provided to you by Hr Fellers No to you Did you rely on any information provided by Mr Hsnneken No Okay Looking at the column gross percentage -- do you see that column Ido Okay How did you calculate the gross margin percentage in that column The gross margin is based on RESS experience at Plantronics And that is the same gross margin percentage as used in the RESS historic approach It is Okay And did you do any research to Page 204 determine gross margins within the design-build at-risk market in the 2014 to 2018 period -- the same answers would all apply with the rounds of questions you asked me ebout the historic approach end that is the gross margin percentage is based on Plentronics Its based on the success end the project renewals over those five years And it is not based on specific analysis of actual projects and the extent to which in the actual world they were at risk or cost-plus or whatever the actual financialing -- financial arrangement was So in other words you assume that the gross margin in the 2014 to 2018 period for design-build st-risk work would be the same as the average gross margin that RESS achieved on the Plentronics project in the 20 -- 2004 to 2009 period is that right Yes estimate and assume that the gross margin obtained through the st-risk model for Plantronics and the qualifications end the value add that RESS brought to Plantronics would be good proxy for the value add of the economics that would apply in the but-for world Okay In making that assumption did Page 205 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 margin 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 52 202 205 Suzanne Heinemann you rely upon eny informetioo provided to you by Bill Fellers tbiok as we discussed before bed conversation with Bill Fellers and also some conversations with Michael Manneken to get behind the 45.9 percent of Plantrnnice and try tn understand if that would be reasonable proxy for the but-for world In other words what were the components that were driving the 45 percent FFE different at risk remadiation elements of renovations all of those -- all of those elements So did rely on comments in comprehensive understanding with Bill Fellers and as well as conversation with Michael Hanneken Okay And did Bill Fellers provide you with any information about actual profit margins in the design build at-risk market in the 2014 to 2018 period He really didnt He -- his exparienca is in much larger corporation And think that he had some thought contributions insofar as he could understand that smaller projects have higher risk profile and that higher margins could be accommodated So that was part of tha Page 206 But his industry experience is guess in slightly larger size company And what significance do you attach to the fact that his industry experience is in slightly larger size company Oh the types of projects that his company does and the types of margins thac he might have exposure to or heard about in the industry or whatever night be on projects that are 100- or $200 million or something Okay So whats -- actually withdraw that So the Plantronica project by comparison was roughly $25 million project is that the distinction youre making in terms of size Yea And risk and profile meaning that it was in part renovation and ramediation and part construction part FFB So think the tenor of the conversation with Bill and in separate tine with Michael Hanneken was understanding the component parts of campus planning and renovation as compared to other types of construction Page 207 Is it your understanding that the Plantronics project was small project in the design-build at-risk market in the San Francisco area at that time MR GIACCMETTI Just object to the term as vague and emhiginus BY MR LARPHERE Do you understand -- mean it is little bit vague but do you have an understanding of the average size of -- of design-build at-risk project in the 2004 to 2009 period in the Bay Area Well first clarifying question Do you mean size in terms of revenue Size in terms of square foot Revenues Thank you You know dont have sense for that no MR LP.NPMERE Okay Why dont we take short break THE WITNESS Okay THE VIDBOGRAPHER Were going of the record at 336 p.m Whereupon recess was taken THE VIDEOGRAPHER Were back on the Page 208 record at 346 p.m in the deposition of Suzanne Heinemann Please continue BY HR LANPHERE Are you intending to offer any opinions at trial regarding whether plaintiff took any steps to mitigate the damages ha suffered as result of defendants alleged actions Whether he took steps to mitigate Lets -- let me just noodle through this So have -- pardon me but its later in the afternoon so its just -- let me just noodle through So we have two scenarios right December 2018 and September 2016 guess would say that dont have affirmative opinions about -- Im trying to think of the issue of mitigation mean it creeps into my analysis Certainly its something Ive thought about you know whether -- whether there needs to be modeling for the fact that you know when he leaves in December 2018 he will have Ph.D And on balance -- on balance didnt model -- cut off the model in 2018 and kind of Page 209 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 conversation 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 53 206 209 Suzanne Heinemann made that neutral issue So guess dont have any affirmative opinions on mitigation Now do you agree with me that at any time since he enrolled at Stanford the plaintiff had the ability to decide to drop out of Stanford end pursue additional business opportunities Well mean certainly he has his own free will right But then theres different theres different issue with respect to the economics and guess certain steps he would try to take to protect what his initial business interest was insofar as you know getting constructive credit and coming out with Ph.D guess in the ares in which he was interested So if he dropped out of Stamford one of the costs would be he wouldnt get Ph.D right Well potentially guess the question is do you -- in whet ares are you interested to get Ph.D mean is all Ph.D -- is Ph.D equal in every respect you know That wasnt my question My question wee if he drops out of Stanford hes not going to get any kind of Ph.D correct from Stanford Thats absolutely correct Okay Page 210 MR GIACCHETTI And just -- just object to the extent that the question is argumentative as phrased BY MR LANPMERE Okay From an economic standpoint Michael Mannekens decision to stey enrolled et Stanford reflected his ongoing choice economic choice by which Michael Manneken valued continuing his Ph.D studies over pursuing business opportunities right MR GIACCHETTI Objection Assumes facts Argumentative Really -- mean objection on the basis of relevance as well THE WITNESS So cant speak to point of view or his mind where hisMichael mind was at have modeled en alternative scenario as September of 2016 to explicitly deal with period of time when it might be reasonable to depart Stanford after the resolution of the dispute process and the recognition of the letter from the provost et cetera et cetera et cetera II BY MR LANPHERE Did you attempt to -- excuse me Let me start over Did you attempt to identify any other reasonable times -- sorry Let me start again Did you attempt to identify any times other than September 2016 when it would be reasonable for Mr Manneken to depart Stanford did not identify any other alternative assumptions that would -- from which would derive damages calculation Theyre based on September primarily for those -- the reasons just stated Now era you calculating in this case damages for breech of contract MR GIACCMETTI would just object to the extent that it calls for legal conclusion It assumes facts Its vague and ambiguous And its -- its really beyond the scope of whats called for today THE WITNBSS So as damages expert assume liability And eo understand at least the primary claims are breach of contract claim And so Im assuming liability for that purpose II Page 212 BY MR LANPHERE Have you made any assumptions as to when the breach of contract occurred MR GIACCHETTI object that this is calling for legal opinion end legal conclusion MR LANPMERE Im just asking if she made an assumption MR GIACCMETTI its -- its an area that legal enalyeie thats not BY MR LANPHERE You can answer dont know if my analysis speaks to the date of the breach My analysis is based on finding of liability And in that instance Ive developed damages based on but-for world where given full information end absent the liability Michael Manneken would have left Stanford Now you have two dates in your report You have leaving Michael Hanneken leaving at the end of 2018 with his Ph.D end -- you assume and leaving in September 2016 when he files this lawsuit correct Thats correct 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Well okay mean is really requiring called for here10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 211 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 54210-213 Page 213 Suzanne Heinemann Now you reviewed the compleint filed in this ection correct did Okay And are you aware that according to the complaint theres an allegation that Mr Manneken was told on necember 8th 2014 that Secretary Perry would not provide the latter as promised MR GIACCHETTI objection to tha extant that the document speaks for itself BY MR LANPHERE You can answer Ive reviewed lots of case documents so know that fact or that know that fact through either provost letter that Ive read or from deposition that you took of Michael Hannaken So something in Dscamhar 14 regarding communication think with Ms Gordon sounds familiar Okay Did you consider using December 2014 as the data when Michael Hannakan drops out of Stanford for purposes of your damages model No didnt Why not Because it was reasonable to ma to Page 214 consider mitigation to begin once essentially theres reasonable resolution of dispute that Mr Hanneken believed existed think that comporta with my role as damages expert which assumes liability finding Okay And does your assumption of liability finding in the usual case require you to have an understanding as to when in breach of contract case the breach of contract occurred MR GIACCMETTI just -- -- object to tha quastioning regarding breach of contract Its legal issue that calls for legal opinion that is reserved for attorneys to argue about and to judges to rule on Its improper for damages expert to be opining on -- on issues regarding legal -- the rule of law and legal doctrines MR LANPHERE Are you finished MR GIACCMETTI Yap MR LANPHERE You can answar Would you mind please reading that back or restating Yaah Your -- Ill do it Ill just restate it When you calculata damages arising out Page 215 of breach of contract in prior cases is it relevant to your analysis when tha breach of contract occurred think the way would answer it is broadly in avery case that work on whether it be breach of contract or frankly patent infringement at cetera tha construct is damages are hypothetical but-for world versus an actual world So think the important criteria is 10 basis for the hypothetical world 11 And in the hypothatical world that 12 youve constructed Mr Hannakan remained at 13 Stanford after being told that ha wasnt going to 14 get the latter right 15 MR GIACCHETTI Objaction Its 16 argumentative and it assumes facts THE WITNESS No My modal has 18 hypothetical but-for world where Mr Hannakan 19 would not have stayed at Stanford as of the fall 20 of 2013 21 BY MR LANPHERE 22 Okay Im sorry 23 But in tarma -- for purposes of 24 comparing the damages in that but-for world the 25 time period doesnt end for when the damages Page 216 accrue with when ha learned ha was not going to receive the latter it continues either through September 2016 or through the and of 2018 right As modeled yea Okay Now undar your modal at the 2018 -- let ma rephrase that Under your modal that assumes ha Stanford at the and of 20i8 you assume ha attain his Ph.D right Thats correct assume hell -- undarstand has going to gat Ph.D in civil engineering think its with coma sort of organizational focus Does that Ph.D have any economic value Wall maybe Maybe not guasa it dapanda on aconomic valua over and above its cost economic valum as consultant economic value in an area in which ha was initially interested to puraua which is international sacurity guaaa theres rafinament nasdad So ona cost of obtaining the Ph.D that you assume hall attain at tha and of 2018 is that ha could not engage in business opportunities other than the California high-speed rail opportunities reflected in your analysis correct Page 217 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 through 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 least Sorry departs woulo 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 55 214-217 Suzanne Heinemann Thats corract Okay Was Mr Hannaken swara that ha was incurring that cost whan ha was studying for Ph MR GIACCHETTI Objection to tha axtent that it calls for Ms Meinemann to speculate THE WITNESS So at what time think that the timing is relevant BY MR LANPHERE Okay He was aware of business opportunities throughout time he was at Stanford that hypothetically he could have been pursuing instead of being at Stanford right Yes But -- MR GIACCMETTI object that its argumentative and it misstates prior testimony misrepresents facts THE WITNESS think its relevant to understand the foregone economic opportunities in light of at what period during this damages dispute are we talking For example if you talk about when Mr Hanneken is looking to enter Stanford right his -- his landscape is one in which he believes hes -- understand that he believes that hes going to forego certain Page 218 number of years of economic activity but in return he would be getting the future economic benefits related to security-focused Ph.O that would allow him to move his career into different direction So thats sort of the cost benefit equation in lets say fall 2013 But that changes through time as different liability acts end information becomes available BY MR LANPMERE Did you attempt to determine the future benefits of security-focused Ph.D to Mr Henneken if he had obtained such Ph.D did not make calculations as it relates to security-focused Ph.D No investigations outside of discussions with Mr Henneken end an appreciation for the notion thet thet security-focused Ph.D was viewed to be en important component to internetionel work for him In terms of we already discussed one component of the cost of obtaining Ph.D to Mr Henneken To your knowledge did he have to pay for tuition at Stanford Page 219 MR GIACCHETTI Objection on the basis of relevance BY MR LANPHERE You can answer To my knowledge his tuition believe was paid for through the army or government There are certain other expenses related to Stanford University that observed on his financial statements end we pulled out of the financiels Have you included any of the Stanford expenses in your damages calculation have not Did you ask Mr Hanneken if his Ph.D has any value to him The Ph.D he hopes to obtain in December Well had some conversations with him about his Ph.D dont know that used those words in particular think the tenor of it was more understanding frankly the difference in Ph.D with en organizational focus as opposed to security-related And it was definitely information from Mr Hanneken that the organizational-related was not going to be Page 220 effective insofar as plans to do reconstructive work internationally end that it was going to be of limited -- dont know that he said no value -- with respect to commercial real estate Did you ask him -- now its your understanding at some point in time he has to change the focus of his Ph.D from security-related to organizational-related is that right Thats my understanding Okay Did you ask Mr Hanneken why he didnt leave Stanford at that point in time did Okay What did he say He -- what recall from our conversations is that he thought that the fact of spending that much time at Stanford end then returning to the market without Ph.D would actually diminish his reputation end/or perception in the marketplace and that it would actually be more berm see Okay Did you determine whether the Ph.D he would obtain in December of this year will assist RESS in obtaining design-build at-risk Page 221 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 56218-221 Suzanne Heinemann work Ive had convarsations with Bill Fellers and Ive read his deposition as well And in my discussions with Bill Fellers understand that it would generally not be benefit in the cnnmercisl real estate world That the larger benefit was with nore strategic focus to Ph.D do understand that under certain situations maybe for certain clients it could be benefit to have the Ph.D But in totality -- well Ill leave it at that Is your understanding of the value of Mr Hannekens Ph.D that he hopes to obtain in December of this year in the design-build at-risk and consulting areas that are the subject of your report based upon what Bill Fellers has told you THE WITNESS Im sorry Can you just read that back Record read by the reporter as follows QUESTION Is your understanding of the value of Mr Hannakans Ph.D that he hopes to obtain in December of this year Page 222 in the design-build at-risk and consulting areas that are the subject of your report based upon what Bill Fellers has told you MR LANPHERE Let me rephrase it cause kind of moved things around there Is your understanding of the value of the ph.u that he hopes to obtain to RESSs work in the design-build at-risk and consulting areas that are the subject of your report based on what Bill Fellers told you Theyre in part based on Bill but theyre also based in part on the convarsations with Mr Hanneken and his assessment of how the Ph.D with an organizational focus again it would not mast his original intent internationally and as -- as functional matter with his consulting work in the local Bay Area would be -- would not be nat benefit Okay Why -- what is your understanding as to why Mr Hanneken changed the focus of his Ph MR GIACCHRTTI Objection to the extant that it calls for speculation by Ms Heinemann and is really beyond the scope of the deposition Page 223 today THE WITNESS My understanding generally is it relates to change in focus related to CISAC and potentially related to some of the liability claims BY MR LANPHERE Okay Shifting topics to something different Schedule D2 Turning back to we looked earlier at Can we turn back there again please And D2 contains information derived from financial statements is that correct Thats correct Okay Did you perform any kind of review of RESSs financial statements to determine their accuracy did not Did you attempt to reconcile financial statements to Mr Hannekans bank statements did not Did you attempt to reconcile the financial statements to Mr Hsonekens client invoices did did -- wouldnt say -- yeah Page 224 guess you would call it reconciliation And footnoted as such on the California high-speed light rail exhibit page that theyre -- while in aggregate they roughly comport There clearly are timing differences between the date of the California high-speed light rail invoices and the date at which revenues are recognized in QuickBooks Its likely because its you know cash basis/timing issue Okay So did you perform amy reconciliation of the RESS financial statements to client invoices for any client other than California high-speed rail Wall looked at the Plantronics There was budget control estimate document and another project control document And those -- those both had revenues by different components know that the absolute number was will say roughly 24 million It didnt exactly tie to the 23967930 cm the RESS financial statement But the order of magnitude was fairly consistent that felt satisfied Okay Other than the exercise you just discussed with Plantronics and the reconciliation process with the California high-speed rail Page 225 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 HESSs forensic 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 57 222 225 Suzanne Heinemann association invoicas you mantionad did you attempt to reconcile tha NESS financial statements with client invoicas so for othar clients No Did you attampt to varify ths cost and axpansas related to NESS reflected in ths RESS financial statements did not attampt to verify them insofar as comparing them to any other source documents had discussions with Michael Hannekan to understand them over time Okay And when you say to understand them you mean to understand the sources and changes in the costs And the nature Okay Did you review Mr Hennekens tax returns or the Schedule reflecting business earnings as part -- in order to ettempt to verify the information in the NESS finenciels Ive recently received Schedule Cs from an accountant but only for certain of the periods believe it was 2011 forward The -- end did look at them Theres little bit differences with respect to expense deprecietion expense and Page 226 think home business expense Are there any differences in revenue With respect to the tax returns do think with respect to 2010 thet the tax returns have slightly higher revenues for Ce1PERS and guess that makes sense There was -- there was reconciliation schedule in the production that bed some note about timing difference of $28000 So its probebly the case that my Schedule D2 understates revenue and understates gross profit percentage on consulting by something like less then percentage point but nothing that would update my calculation for Do you have any other opinions besides the ones reflected in your report end the notes end that youve testified to today that you intend to testify tn et triel was going to edd that including whet Ive talked about here today but you did to your question So no thats complete -- the testimony today end the exhibit my report are the full set of my opinions Okay Do you plan on performing any Page 227 additional work before trial Ido Okay Whet work plan to look at -- forgot your name but the opposing experts response to my report plan to look at that plan to respond to it either with calculations or additional exhibits for trial plan to prepare trial demonstretives based on the report in front of me end if necessary in response to the opposing experts work Do you have any other additional work you plan to do before trial other then you just described No Whereupon Deposition Exhibit 226 wee marked for identification DY MR LANPMERE Youve been handed whets been marked es Exhibit 226 Do you recognize this es compiletion of the invoices for the time you end colleagues at Nathan have spent on this assignment Yes Page 228 And Ill just represent to you that believe this is all of the invoices that were in the backup that was produced to us Do these invoices reflect all the time that you end your colleegues at Nathan have spent on this assignment through the date of August 7th when we received your production Yes And whet -- you elreedy said you didnt do any additional work on the report in the interim between August 7th end today Whet did you do to prepare for this deposition reviewed documents thet had elreedy been produced to you looked et my celculetione looked et Bill Fellers deposition looked heck through Michael deposition Wee anything thet Mr Fellers said in his deposition inconsistent with whet he had told you MR GIACCMETTI Iuet object to the extent that the queetion is vegue end embiguoue overbroed TME WITNESS No Other -- there wee Page 229 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 No Okay DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 68 226 229 Suzanne Heinemann nothing -- can you ask -- let ma -- can you tall ma what your axact question was again BY MR LANPHERE You said you read Mr Fellers deposition My question waa is anythng he testified to in his deposition as you read it inconsistent with what he had told you No guess should clarify one thing shout Exhibit 226 believe this actually just reflects work parforned before June 30th of 2018 Is there -- Oh you know didnt issue -- lets see So July -- so this was issued -- the last invoice was issued in July 2018 So there was work in July and then the prebills like our invoices come out -- well let me just put it to you this way didnt issue an invoice yet Im little behind in billing There definitely have been think its about another 17000 of hours thst have yet to bill lets say up to the time of the report Now you initially on this case worked Page 230 on developing damages model for purposes of it being used at mediation in this case correct Thats correct MR GIACCMETTI And would just -- would just object to the extent that damages model for mediation end those documents are privileged end confidential BY MR LAMPHERE Is the damages model that youve prepared es reflected in Exhibit 206 different from the model that you prepared in connection with the medietion MR GIACCMETTI would object to that to this entire line of questioning on the grounds that that information is privileged end confidential different MR LAMPMERE In just esking if its MR GIACCHETTI just -- think its en inproper question BY MR LANPMERE You can answer It is different Okey The -- did you meke any changes in the calculations in your deneges nodel Page 231 Exhibit 206 based upon any informetion that Mr Fellers gave you No Okey Did you meke eny changes in the damages model thats Exhibit 206 besed on any information Mr Manneken geve yo No But meen chenges you know the model is kind of living breathing thing And em modifying it over time as learn new information So is it -- so guess the cevest to my answer to no is is it the cese that have discussions end learn more shout something end then decide to you know for exemple add another scenario where essume Michael departs in 2016 yes Is that besed on conversetiun with Micheel No It just changes over tine So feel very comfortable in ssying absolutely didnt take edits or responses from Mr Fellers or from Mr Henneken This is my model And they both have inputs to it So it does nove end change over time but not in direct response to enything snybody is saying to me Now et his deposition Mr Fellers Page 232 described the process by which he luoked at you know draft versions of the schedules thet ere in Exhibit 206 end gave you some feedback on them Do you renemher that process remember the testimony so Im glad you brought it up Because every time he said the word dreft thought yeah thets not -- thets not eccurste recitetion of guess the stete of the world Okay The question bed wes whether you recelled whether he looked at dreft or something else Did you meke any changes to eny of the celcuistions in the schedules comprising Exhibit 206 besed upon any of the feedbeck that Mr Fellers gave you No No No Okay And did you show Mr Hsnnekem eny of the schedules in Exhibit 206 at any time prior to finelizing this report No No Did you make any chenges to any of the calculations in Exhibit 206 besed on anything Mr Msnneken -- sorry Let me withdraw thst asked thet Page 233 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800487.6278 59 230 233 Suzanne Heinemann 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DECLARATION UNDER PENALTY OF PERJURY the undersigned declare under penalty of perjury thet heve read the entire foregoing transcript of my deposition or the same has been read to me and the same is true and correct save and except for changes con-ect-icnq additions or deletions indicated by me on the DEPOSITION ERRATA SNEET hereof with the understanding that offer these changes as if still under oath Signed on the day of ____________ 2018 at Did you modify any of the calculations in Exhibit 206 based on anything Mr Hammekem told you No MR LANPHERE Why dont we go off the record want to look at my notes see where am Okay TME WITNESS Yeah THE VIDEOGRAPHER Were going off the record at 422 p.m Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 430 p.m Please continue DY MR LANPHERE Did you have any relationship with Michael Hanneken before you began working on this case No Okay Have you ever been retained as an expert by McManis Faulkner previously No How did you cone to be retained in this case as you understand it There is another testifying expert in Page 234 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 scace WITNESS SIGNATURE Page 236 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 our Irvine office who was unavailable to work on the case and so he suggested my name So somebody at Nathan Correct Okay And was that person who had worked for McManis Faulkner previously previously Excuse me dont have personal knowledge suspect they may have MR LANPHERE Okay dont have any further questions so think we are concluding this deposition All right MR GIACCHETTI Okay Thank you THE VIDEOGRAPHER This concludes Volume of the deposition of Suzanne Neinemann on August 20 2018 This is the end of Media Number Were off the record at 432 p.m Whereupon the deposition concluded at 432 p.m Page 235 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Kathleen Wilkins CSR 10068 RPR RMR CRR CCRR CLR certify that the foregoing proceedings were taken by me at the time and place herein set forth at which time the witness wee duly sworn and that the transcript is true record of the testimony so given Witness review correction and aigneture wee by code requested waived not requested not handled by the deposition officer due to party stipulation The dismantling unsealing or unbinding of the original transcript will render the reporters certificate null and void further certify that em not financially interested in the action end am not relative or employee of any attorney of the parties nor of any of the parties Dated this 24th of August 2018 Page 237 DepoServicecom KATHLEEN WILKINS CSR 10068 RPR-RNR-CRR-CCRR-CLR MILLER COMPANY REPORTERS 800.487.6278 60 234 237 MJJALER LQMPANY KEPO RTERS August 24 2018 Suzanne Heinemann do James Giacchetti Esq McManis Faulker 50 West San Fernando Street San Jose CA 95113 Re Michael Hanneken Leland Stanford Junior University Deposition Of Suzanne Heinemann Taken On 08/20/2018 Miller File No 26433 Please be advised that the transcript in the above-referenced matter is available for reading and signature Unless instructed otherwise the witness should complete the following steps within 35 days of the date of this letter Please contact our office to schedule the review of your printed original deposition in person orto schedule the review of an electronic certified transcript online If you would like to review your attorneys certified copy of the transcript either printed or electronic we have enclosed an errata sheet for that purpose Enclosed you will find the original deposition transcript Read the certified transcript and Note any corrections necessary on the errata pages only Do not write on the transcript itself Write No Changes on the top of the errata pages if you do not wish to make any changes Obtain notarization if instructed by counsel Sign the bottom of the errata pages Return the original transcript to the custodial party if this was requested or you were instructed to do so Return the original errata pages and witness signature page to the custodial party Send copy of the errata pages and witness signature page to Miller Company Reporters 880 Apollo Street Suite 352 El Segundo CA 90245 If electronic documents are permissible in the applicable venue for this matter you may instead submit scanned copy of the errata pages and witness signature page via e-mail to info@millerreporters.com If you should have any questions relating to this matter please do not hesitate to contact our office Sincerely Kathleen Wilkins Deposition Officer Enc cc James Giacchetti Esq Andrew Lanphere Esq DEPOSTON ERRATA SHEET CASE Michael Hanneken Leland Stanford Junior University WITNESS Suzanne Heinemann MILLER FILE NO 26433 DATE TAKEN 08/20/2018 Page No Line No Change to Reason for change _________________ Page No ____ Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change declare under penalty of perjury that have read the foregoing transcript of my deposition testimony taken in the matter and on the date above and that with the following exceptions the same is true record of the testimony given by me under oath or affirmation Witness Signature ________________________________Date Suzanne Heinemann Page No ____ Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change declare under penalty of perjury that have read the foregoing transcript of my deposition testimony taken in the matter and on the date above and that with the above exceptions the same is true record of the testimony given by me under oath or affirmation Witness Signature ______________________________Date Suzanne Heinemann EXHIBITEXHIBIT C ' REDACTED EXHIBITEXHIBIT D REDACTED EXHIBITEXHIBIT E John Swensson M.A M.S SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA MICHAEL HANNEKEN PLAINTIFF CONDENSED TRANSCRI PT vs LELAND STANFORD JUNIOR UNIVERSITY WILLIAM PERRY DOES 1-50 DEFENDANTS 11 12 13 No 16-CV-300285 14 VIDEOTAPED DEPOSITION OF JOHN SWENSSON M.A M.S 16 Thursday August 16 2018 17 18 19 20 21 22 23 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 15 24 25 Reported by KATHLEEN WILKINS CSR 10068 RPR-RMR- CRR- CCRR- CLR-CRC File No 18-26264 Chase Uiiçation Seivices Company 11 John Swensson M.A M.S VIDEOTAPED DEPOSITION OF JOHN SWENSSON N.A M.S BE IT REMEMBERED that on Thursday Auguat 16 2018 commancing at tha hour of 925 a.m thareof at PILLSBURY WINTHROP SHAW PITTMAN Four Embarcadero Cantar 22nd FlouL Sen Franciaco California bafore me Kathleen Wilkins RPR-RMR-CRR-CCRR-CLR-CRC Cartified Shorthand Raporter in and for tha State of California personally appeared JOHN SWENSSON M.A M.S witness in the above-entitled court and cause who being by me first duly sworn was thereupon examined as witness in said action FOR THE PLAINTIFF MCMANIS FAULKNER Feirmont Plaza 10th Floor 50 San Fernando Street San Jose California 95113 BY JAMES GIACCHETTI ESQ Telephone 408 279-8700 E-mail jgiacchetti@mcmanislaw.com FOR THE DEFENDANTS PILLSBURY WINTHROP SHAW PITTMAN LLP Four Embarcadero Center 22nd Floor San Francisco California 94111-5998 BY ANDREW LANPHERE ESQ Telephone 415 983 1000 andrew lenphereapillsburylew com ALSO PRESENT Robert Delentoni Videographer INDEX INDEX OF EXAMINATIONS PAGE EXAMINATION BY MR LANPHERE EXAMINATION BY MR GIACCHETTI 65 FURTHER EXAMINATION BY MR LANPHERE 65 INDEX OF EXHIBITS DESCRIPTION Curriculum Vitae John Sweneson Type-written notes 25 Type-written notes dated 26 20 June 2018 Notes entitled CISAC 53 letterhead/memo Bates stamped S-00006 PROCEEDINGS THE VIDEOGRAPHER Good morning Were on the record at approximately 925 a.m Todays date is August 16 2018 We are located at Four Embarcadero Center 22nd Floor San Francisco California This marks the beginning of Media Number of the deposition of Mr John Sweneson in the matter of Michael Henneken versus Leland Stanford Junior University venued in the Superior Court State of Celifornie in end for the County of Santa Clere My neme ie Robert Delentoni Im legal video specielist here on behelf of Miller Company Reporters The court reporter this morning is Kathleen Wilkins also on behalf of Miller Company Reporters the record defendent Counsel please identify yourselves for MR LANPHERE Andrew Lanphere for the MR GIACCHETTI James Giacchetti for Colonel Hsnneken essociete attorney for McManis Faulkner THE VIDEOGRAPHER Thank you 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXHIBIT Exhibit 210 Exhibit 211 Exhibit 212 Exhibit 213 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAGE APPEARANCES OF COUNSEL Page AUGUST 16 2018 925 A.M Page 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page DepoServices.com MILLER COMPANY REPORTERS 800487.6278 Page John Swensson M.A M.S Please swear the witness and begin JOHN SWBNSSON having been duly sworn was examined and testified as follows EXAMINATION BY MR LANPHERE BY MR LA1IPHERE Good morning So my first question is could you please state and spell your first name for the record 10 John J-O-H-N 11 And your last name as well Sorry 12 Swensson S-W-E-N-S-S-O-N 13 And have you ever had your deposition 14 taken before 15 dont believe so 16 Have you ever been -- well okay Let 17 me run through some of the ground rules first 18 You may have had chance to talk with 19 Mr Giacchetti about these but the first rule of 20 deposition is the oath that you just took is 21 the sane oath you would take if you were 22 testifying in court of law It carries with it 23 the same penalty of perjury and obligation of 24 truthfulness 25 Do you understand that 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes And you understand the purpose of this deposition is for me to learn the opinions that you intend to testify to at trial right Okay Do you understand that thats the purpose of this deposition Yes And so its going to be inportant as we go through that you give ne as complete an answer as you can so understand whet your expert opinions are in this case Do you understand that Yes Okay Now have you ever been retained as an expert witness before in litigation No Have you ever been retained by lawyer to provide consulting services in connection with that lawyers work Only insofar as court martial in the military Not in civilian context then No Okay Let me talk little bit about PagePage 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes Because youre under oath youre entitled to clear question from me If for whatever reason my question isnt clear to you you can ask me to rephrase it or just tell me its not clear and Ill do my best to make it clear Do you understand that understand By the same token if you do answer question were going to assume you understood it Do you understand that Yes At the end of this process the court reporter will prepare transcript of everything said on the record in the room today all my questions your answers any objections by Mr Giecchetti Youll have chance to zeview your testimony and you can make changes But if you make changes Ill be entitled to comment on those at trial It could effect your credibility Do you understand that do yes Now youre here testifying as en expert witness retained expert witness in this case correct Page 10 11 12 13 14 15 16 1/ 18 19 20 21 22 23 24 25 your background your personal beckground Im going to have the court reporter mark this document as next in order 210 And youll receive copy from the court reporter here in just moment once she puts en identifying label on it Whereupon Deposition Exhibit 210 wee marked for identificetion THE WITNESS Thank you BY MR LANPHERE Youve been handed whets been marked sir as Exhibit 210 And Ill represent to you that this is document that wee etteched to the expert disclosure served in this case by plaintiffs counsel And it eppeere to me to be copy of couple different resumes of yours Do you recognize tide document in general Yes do Okay And looking just et the first page guess my question -- let me just eek it as to the first page first Is this current resume or is this resume through certain period in time end it doesnt reflect some of your professional Page MILLER COMPANY REPORTERS 800.487.6278DepoServices.com John Swensson MA M.S 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 okay Arid the director of global educetion partnershipe could you deecribe whet thet entails Yee coordinete the overeeae etudy progreme So study -- Im sorry Study abroad Vietnam Kenya Taiwan China other countries All right Thank you So other than what you just described about being professor emeritus and assistant to the president and director global education partnerships at De Arise have you held any other work-related positions since 2012 Well also teach And whet do you teach in this period Is it -- go ahead teach English teach critical thinking Now you attended Weetpoint correct Thets correct When did you graduate fron Wsstpoint 1965 okay Arid when were you commissioned as an officer Page 12 experience Its current through 2012 retired from De Ansa in 2012 continue to teach and run the overseas study program thats not reflected there And before we went on the record you gave me kindly copy of your card -- Yes -- which has title assistant to the 10 president director global education 11 partnerships 12 Thats correct 13 Is that your current title 14 Yes it is Professor emeritus yes 15 So one of the ground rules we didnt 16 talk about and it applies to everyone in the room 17 here is because the court reporter has to write 18 everything down thats said we have to try not to 19 talk over each other So what that means is if 20 Im asking you questions often -- guarantee 21 often it will happen today that you know what my 22 question will be before actually enunciate the 23 last words But nevertheless its important to 24 wait until finish getting that out and 25 likewise may know what the end of your answer Page 10 is before youve gotten to the last word but its important for me not to start asking the next question until you get everything out Arid this is for the benefit of the court reporter and to make sure we have clear transcript Ill do my best not talk over you or talk over James If you could try your best to wait until get everything out before you answer even if you know where Im going that would be great help Okay 10 Yes 11 Let me ask and sort of put together the 12 last couple things you said 13 So youre currently professor 14 emeritus is that correct 15 Yes 16 Youve been in that position since 2012 17 Yes 18 And you also hold this position 19 assistant to the president and director global 20 education partnerships is that correct 21 Yes 22 Now is that an employee position or 23 just title for what -- the work youre doing as 24 an emeritus professor 25 The latter Page 11 The 9th of June 1965 And when did you retire from the Army retired in 1984 And you had the rank of Lieutenant Colonel at that time Thats correct Were you on active duty the entire period between June 9th 1965 and when you retired in 1984 10 Yes was 11 Now if you could look back at 12 Exhibit 210 again Go to page Its actually 13 the fifth page because theres second document 14 but it says page on the bottom And theres 15 section entitled Military Leadership 16 Do you see that 17 Yes 18 Now does this -- theres discussion 19 of various positions that you held within the 20 military is that correct 21 MR GIACCHETTI And Colonel Swenseon 22 if you need please take your time to read that 23 section and become familiar with it so you can 24 answer Mr Lanpheres questions 25 THE WITNESS Yes Those are the DepoServices.com MILLER COMPANY REPORTERS Page 13 800.487.6278 410-13 John Swensson M.A M.S highlights BY MR LPNPHERE Oksy Is this intendsd to be en exheustive summery of every position you held in the militery or just certein positions Certein positions -- MR GIACCMETTI Im sorry Mr Swensson apologize for interrupting you Another rule today is thet youre not to speculete when youre enswering question And so to the extent that you have personal knowledge that allows you to respond to question then you may answer it But please dont speculate today MR LANPHERE Well -- TME WITNESS These are highlights They are not all the positions BY MR LNSPHERE Why did you retire when you retired in 1984 retired in order to go into the private sector Id been in the Army since was wanted to get out and go into business What military educational level did you achieve while you were in the Army Command and general staff college Page 14 attended as major And that was the highest level did the advanced course Now since you left the Army in 1984 what if any involvement with the Army have you had in your subsequent career Ive had quite bit of involvement Working with Association of the United States Army was chapter president in the Silicon Valley chapter made movie from 1987 until 1990 called Fire Birds with Nicolas Cage and Tommy Lee Jones about the armys Apache fleet My silent partner in that project was four-star general who was on active duty It was movie to show -- what we call hardware movie to show the armys involvement going against the drug wars Ive maintained quite bit of contact with the Army throughout the years continue that today This question may be uninformed on my part but since you retired as Lieutenant Colonel in 1984 have you held any position in the reserves No So your involvement has been as civilian youve been involved in various If could add to that though my involvement with the Army particularly through the Association of the United States Army and in my last assignment as commander of -- wall actually two recruiting battalions worked very closely with the Army reserve So what is the Association of the U.S Army Its professional association Its designed to foster the goals of the Army And what kind of work have you done in connection with that association Well Ive bean chapter officer many different positions Ive been chapter president of the Silicon Valley chapter Ive attended the national conferences Its an international national organization and very active in supporting the Army When you say that the association is designed to foster the goals of the Army can you Page 16 give ma some examples of how it goes about doing that Surely It -- for instance they have an annual conference in Washington in which they involve government officials and industry They sponsor -- they have scholarships for soldiers They recognize outstanding soldiers They have social events The Association of the United States Army works at the national level and the local level and every Army base has chapter And .. its pretty extensive -- they have magazine Army magazine that keeps paople informed Boss this association -- Im trying to understand whether its goals are to advocate on behalf of the Army the institution or on behalf of the personnel who are in the Army Bo you understand the distinction Im making MR GIACCHETTI Mr Swensson please do not speculate TME WITNESS Its both BY MR LANPBERE Okay And can you give me examples of Page 17 capacities -- With the Army with issues related to the Army Yes Okay 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 15 DepoServices.com MILLER COMPMNY REPORTERS 800.487.6278 514-17 John Swensson M.A M.S some of the issues thet the association advocates regarding on behalf of individuals who are you know soldiers or offioers in the Army What are some of the kinds of issues that it advooates on behalf of those people for MR GIACCHETTI just would object to the extent that the question is vague and ambiguous and calls for speculation BY MR LANPHERE Do you understand my question can rephrase it Mo understand the question but So in terms of the -- TME WITNESS Can answer it MR GIACCHETTI Yes TME WITNESS Oh okay BY MR LANPHERE Yeah So the ground rule here is that the objections are made for the record and you can answer the question Association of the United States Army advocates on pay for -- one example pay and benefits for military members Okay Now do you have -- have you in connection with your career at De Anza College as Page 18 an instructor and then dean and now your current position have you had any role at He Anza with reference to any military affairs Okay Can you describe that to me please Yes have faculty sponsored our veterans clubs Ive coordinated VA activities on the campus coordinated recruiting efforts by the Army recruiters on the campus have brought to the campus to meat with the president number of senior general officers Army secretary and people like that Does De Anza have any kind of ROTC program We have it only through Foothill and our students attend Santa Clara university through the Army program there That ROTC program services multiple colleges including Foothill-Dc Anza Do you have any involvement with the ROTC program you just described Ive lectured there on ethics Ara there faculty or administrators at Da Anza that have specific responsibilities for the ROTC program Page 19 No Is that just adninistared by the service branches Sorry dont understand the question Yeah So Im trying to just understand theres this ROTC program that -- at Dc Anza that youve described and Im trying to figure out whos responsible for that program at Dc Anza No one is We refer students to Santa Clara if theyre interested in ROTC Okay So nisundaratood your misunderstood your prior answer Let me make aura have it correct To the extent that Da Ariza students are interested in participating in ROTC and that becomes known to someone at Da Anza you refer them to this other program and thats how they participate in ROTC is that correct Thats correct But they register as students from Foothill our sister collage And they pay community collaga tuition but they attend school at Santa Clara Okay So actually to tha extant somebody who is student at Dc Anza wants to attend ROTC the way they do that is register at Page 20 Foothill and than attend it at Santa Clara University Thats correct Okay Do you know who at Foothill administers the Foothill ROTC program Its the same program Its admissions and records We have course number student signs up for it after being admitted at Santa Clara MR GIACCNETTI Colonel Swanason just please be careful to answer Mr Lanpharas question as its posed THE WITNESS Okay MR GIACCHETTI Do not speculate MR LANPHERE Counsel you -- has not speculating and youre kind of -- object to the form if you think theres an objection Mas an expert witness your expert witness Ha is able to testify about things that happens at the collaga Has bean dean and an assistant to the praaidant at it for decades so you know hope wa can afficiantly proceed through this but if were going to get lot of speeches objactions than think you know its going to take longer but whatever 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS Page 21 800.487.6278 618-21 John Swensson M.A M.S So are there eny -- aside from the ROTC program we just discussed are there any programs at Be Anza where Be Anza has any kind of affiliation or partnership with the military No So for example youre aware that part of this case involves the military fellows program at Stanford Yes Is there any kind of program at Be Anza that in your mind is analogous to the military fellows program at Stanford MR GIACCHETTI Objection Vague and ambiguous and calls for speculation THE WITNESS No We are community college We only teach the first two years BY MR LANPHERE Right Im just trying to understand the nature of the college you teach at relationship with the military and whether theres some kind of program there thats analogous understand understand Let me ask you since you referenced it -- and didnt -- didnt fully understand this reference On the first page of Exhibit 210 Page 22 in your -- in your CV here it says from 1982 to 1984 you were commander chief executive officer of -- is it LA Recruiting Battalion Los Angeles Okay Yeah It -- it -- Los Angeles recruiting battalion Got it Can you describe what what that position was Can you just elaborate on what read there Surely supervised 300 Army recruiters in recruiting for the Army and the Army reserve Had monthly sales mission had seven companies of recruiters worked very closely with the 63rd Army command at the general officer level and at the colonel level as we recruited for the reserves had my own public affairs and marketing outfit -- within my organization had 200 cars and did lot of work with the 400 high schools the colleges and the LA Raiders Okay What struck me as something didnt fully understand in the description in the Page 23 resume is it says commander understand that But it says chief executive officer Thats right Can you -- can you elaborate was that your title at the time chief executive officer Title commander is analogous to chief executive officer in civilian world Okay So it wasnt that you had some business card at the time that said Im -- No It said commander This is resume for civilian consumption Okay So the position you had was actually commander Commander Los Angeles Recruiting Battalion MR GIACCHETTI And Colonel -- Colonel Swensson please just allow Mr Lanphere to ask his question before you respond THE WITNESS Thank you MR GIACCHETTI know its -- know that its unnatural and difficult but please Thank you BY MR LANPHERE Okay Have you prepared any writing setting forth the opinions you intend to testify Page 24 to at trial in this case No MR LANPHERE Mark this as next Whereupon Deposition Exhibit 211 was marked for identification THB WITNESS Thank you LANPHEREBY MR Sir youve been handed what has been marked as Exhibit 211 Thats right Ill represent to you we received yesterday as backup this is document for your report Okay For it was in folder that indicated it related -- Okay -- to your testimony Do you recognize this document do yes Did you write this Okay When did you write this MR GIACCHETTI Colonel Swensson please dont speculate as to the date MR LA.NPHBRE Counsel Im asking 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 did DepoServices.com MILLER COMPANY REPORTERS him Page 25 800.487.6278 22 25 John Swensson M.A M.S question when he write -- wrote it end youre -- are ynu going to ask hin not to speculate to every question ask thats clearly based on his personal knowledge Mr Swsnsson let me make clear dont want you to speculate about things within your personal knowledge If you dont remember when you wrote this you should just tell me dont remember and Ill ask other questions okay Probably month ago but perhaps more So dont remember the exact date Sometime this year though correct Yes Okay When were you retained to act as an expert in this case could get the date Okay dont went -- let me show you document and maybe it will refresh your recollection okay Whereupon Deposition Exhibit 212 was marked for identification THE WITNESS Ah okay EY MR LANPHERE Do you recognize this document matter This is two pages do Are these your time records for this Yes its true And looking at this document if you would could you look at it and tell me if it refreshes your recollection as to when you were retained to work as an expert now Yes Okay And whet is your recollection MR GIACCHETTI Well Ill just object to the extent that the term retained calls for legal conclusion DY MR LANPHERE Okay You can answer would say 15 March thereabouts Okay And who first contacted you about as -- as en expert in this case Mr Giacchetti called me Okay Now had you ever -- let me that and rephrase the question Had you ever met Mr Hanoeken prior to Page 27 case No Had you ever heard of him prior to this No Okay So going beck now to Exhibit 42 and now that weve established that you know you started working on this case around 15 March are you -- with that in mind are you able to answer my question as to when you prepared this document thats Exhibit 211 Sorry its Exhibit 211 not 42 apologize Give me just minute would speculate its probably in the time Now putting Exhibit 211 aside for the moment could you please tell me what are the opinions that you intend to offer into testimony at trial in this case _____________________________ Ive reviewed depositions lot of documentation There is -- in my opinion Page 28 Mr Hannekeo has been -- Colooel Hannakeo has been truthful in his recounting of the meeting that he had with Secretary Perry and that -- believe what he said It is supported by other documents firm -- believe that he met with Secretary Perry that they had good meeting Secretary Perry expressed his enthusiastic support asked him to write letter and offered to make phone call Thats my opinion Are there any other opinions you intend to offer at trial in this case -- thats pretty much the extent of it -- believe -- we dont know why there was oo follow through We dont know why he didnt get the letter believe thet Deborah Gordon closed him off Im not sure why think that -- will tell you that my opinion is that Nanoeken is an outstanding officer Hes very much leader very much the kind of officer that the Army needs When you come to civilian graduate school as an Army officer as did at University of Virginia which refer to here you tend to believe that everyone operates with integrity and you respect the authority of the people in charge Page 29 this case 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 May time document frame Okay Why did you prepare this Exhibit 211 It was summary of my thinking at the Yes Page 26 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 serving withdraw DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 26 29 John Swensson M.A M.S So think that Colonel Hanneken had every reaaon to believe that Secretary Perry would follow through with what he had agreed to Thats pretty much it Okay NoO ib reaching theee opinione did you do anything other than review the depoeitions and documenta produced in connection with this case Well have my own experience in graduate school have my own experience as dean Secretary Perry is technically not dean but really served as dean with CISAC know the folks that are involved How do you know the folks who were involved Well let me -- actually let me ask you another question Who were the folks involved know Colonel Falter Ive met Ambassador Eikanbarry Ive met Secretary Perry 20 And how does your involvement with 21 Colonel Felker -- Falter excuse ma Ambassador 22 Eikenberry Secretary Perry as you just 23 described inform the opinions youre giving in 24 this case 25 Ive -- Ive only met Ambassador Page 30 Eikenherry know Colonel Falter very wall have not discussed the case with him sea that ha had had lunch with Colonel Hannakan that ha had referred nota over to Deborah Gordon saying the sacratary should meet with Colonel Hannakan Colonel Falter is highly raspactabla individual ran the West Point countartarrorism canter for many years Has vary highly regarded Of course wa can sea that from his currant position Is there anything else about your involvamant with Colonel Falter Ambassador Eikanharry and Secretary Parry as you dascribad it that -- besides what you just said that informad your opinions as youve described them in this case Only in the -- tha sense of tha integrity in tha military expect people to be honest know Colonel Falter to be vary hnnast parson assume Amhassador Eikanbarry is but -- Ive only mat him and Secretary Parry Iva had no dealings with tham But as look at tha paperwork in this case Ive given you my opinion Have you concluded that Sacratary Parry is lacking in integrity No Sorry let ma finish -- that has not baing honast No Did you read his deposition did Now in his deposition ha -- ha danias an agraamant with Hr Hannaken right wouldnt agree to that ha says -- HR GIACCHETTI Ill objact object because its beyond the scope nf Colonel Swsnssons axpartisa in this calls for legal analysis and lagal BY MR LANPHERE You can answer Im sorry -- my recollection is he said ha And all said was what ha said Page 32 dont have conclusion Now in stating your opinions as youve described them hare are you ralying upon any published articles Actually let ma rephrase that In stating your opinions as you dascribad them hera ara you relying upon anything other than the documants you raviawad in the daposition the documents you reviewed and your own personal axparianca No Are you awara of any scientific research that supports the conclusions youva hara today No Are you aware of any academic publications that support the opinions that youre offering hara today No Hava you aver published any writings that in your opinion baar upon the opinions youra of faring hare today No Have you aver -- are you aware of any publications not ones you wrote but other No Hava you concluded that -- concluded based on your review of the matarials hare that has not 10 11 12 13 14 15 16 17 18 19 raaching 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case and it conclusion Im -- didnt ramambar sea 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that -- reached DepoServices.com MILLER COMPANY REPORTERS Page 31 Page 33 800.487.6278 930-33 John Swensson M.A M.S publications that in your opinion baar upon tha opinions you are offering here today No To your knowledge is there any recognized field of scientific study upon which youre basing the opinions youre offering here today dont understand the question Is there any field any scientific field upon which you believe youre basing your opinions ss offered here today My opinions are based on ny experience which is extensive my military experience is extensive my personnel and administrative experience is extensive end my educational experience is extensive My opinions are based on my experience and common sense end general educetion Now you understand if this case is tried therell be jury or judge hearing the evidence like the evidence youve seen in the deposition transcripts end the documents right assume Is there anything about you that makes you more qualified than jury or judge to Page 34 evaluate whether Michael Hennekens telling the truth or Secretary Perry is MR GIACCHETTI Objection It misstetes Colonel Swenseons prior testimony Colonel Sweneson -- thats the objection Misstetes prior testimony end cells for speculetion on Colonel Swenssons pert BY MR LANPHERE You cen enswer the question Would you like me to reed it egein Sure Is there anything about you that makes you more qualified then jury or judge to evaluate whether Micheel Henneken is telling the truth or Secretery Perry is MR GIACCHETTI And Ill just object the question goes beyond the scope of whet Swenseon has been retained to testify to because Colonel as en expert in this metter BY MR LANPHERE You can answer the question have been reteined es en expert because of my extensive military experience end ecedemic experience My many years of being submersed in military ethics have my -- Page opinions on the case based on that end further heve nothing We elreedy talked shout briefly shout the military fellows program at Stanford that youre ewsre of it from what youve reed in this case right Yes Were you aware of the military fellows progrem at Stanford prior to your involvement in this case Oh yes What was -- can you just describe what your awareness of that -- of the military fellows program Certainly Theres the CISAC program and the Hoovers program end they are two separate programs Ive known greet numher of people as they have come through over the years many of whom went on to make general officer They came through here when they were lieutenant colonels One of them he retired as three star was student of mine at West Point So Ive had --- H.R McMaster has been in my class couple of times have known the Hoover fellows as theyve gone through end known Page 36 some of the CISAC fellows as theyve gone through so was aware of the program well before this case Were you aware of whether reserve officers participated in the military fellows program at CISAC Is that something you were -- one way or another were you aware of that before you were involved in this case MR GIACCMETTI Objection Its vague and ambiguous as to the term participated MR LANPHERE Thats -- thats fair point and Ill rephrase the question Were you prior to your involvement in this case were you aware whether or not reserve officers could be selected by branch to be military fellow in the CISACs program dont think so Atl the ones knew were active duty Okay Now were -- was -- to your knowledge was there military fellows program that the military had at colleges at the time that you were an active duty Army officer MR GIACCMETTI Vague -- vague and ambiguous as to time Could you be more specific MR LANPHERE When he was an officer Page 37 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 10 34 37 John Swensson M.A M.S THE WITNESS retired in 84 Im sure we had similar program BY NH LANPHERE Did you know of them at the time dont think so take it then you werent military at some college while you were in the Army No because retired as lieutenant colonel Okay And you didnt go to the Army War College as well No Did you have an understanding when you were in -- when you were in the Army as lieutenant colonel of the process by which officers were selected to go to the Army War College Certainly Okay What was your understanding of There is board of people who conaider folks aa they become eligible Its based on your job performance on your level -- previous level of schooling and how well youre doing Its Page 38 competitive process The auger competitive people get selected early And the list is published And its something that people want to do Had stayed in the military past 19 years commissioned and had year enlisted which is why could retire would have probably been competitive myself But elected to leave So that was going to be my next question is whether you -- Im sorry were you still talking apologize Yeah wanted to say that -- served in the -- for the last -- started in the infantry in comhat in Vietnam but agent the last 17 years in personnel administration in the general course so -- and served at high level in NACV headquarters in TJSARETJR in the European command So was very aware of military personnel procedures and how folks were selected and what the criteria was And when you say you were aware of what the criteria was do you mean the criteria to be selected to go to the Army War College Yea And what was your underatending of the criterie Page 39 That you had to be an outstanding officer that you had to have outstanding duty performance that you had to have the right assignments you had to have command you had to have gurgle suit assignment -- well to make general officer So -- mean theres no myatery about this And people -- -- certainly understood whet the criteria were and how the selection process went And we all go through it Selected for lieutenant colonel get selected for commend Its also important who you -- who your mentors are who your patrons are Whats -- whats gurgle suit assignment Purple suit assignment is where you are assigned to aome service other than the Army ur to multiaervice assignment served in Zaire with the U.S military mission to Zaire which was joint Air Force and Army So that would be in other words you could be assigned there from the Army or other The purple suit refers to color combination of blue and green Okay -- the Air Force or Navy and Army Page 40 Okay The process for being selected to go to the Army War College you just described was it your understanding that was competitive process Absolutely Were all lieutenant colonels selected No Absolutely not Do you have en understanding -- let me withdraw that Did you have an understanding when you were in the Army of the proportion of lieutenant colonels who were eligible who were actually selected would aay 20 to 30 percent And its alao possible and particularly in the reserves to work your way up which is to say to apply for schooling to apply for courses to apply as Colonel Hanneken did for constructive credit There are number of ways to go about that One of the intriguing documents to me wee the NcGurk case that was signed by General Thurman awarding constructive credit to Colonel NcGurk There -- there are -- if you look at the Army regulations there are number of ways you can go And number of opportunities Page 41 fellow correct 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that process 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MILLER COMPANY REPORTERS 800.487.6278 1138-41 DepoServices.com John Swensson M.A M.S that people have for seoior service college credit And thats particularly true on the reserve side Prior to your involvement in this case ever heard of donstructive credit Oh yes When did you become aware of that term connection with the military education While was in the military When you were in the military While was in the military Did you ever apply for constructive credit with -- for anything when you were in the military No did not Okay Did you ever have any experience in reviewing -- while you were in the military reviewing applications for constructive credit No Now think you said youre -- youre aware that there are regula Army regulations that bear upon how you get constructive credit Yes Okay Did you review those regulations in connection with your work on this case Page 42 saw couple of them excerpted in the documentation Dut other then whet you saw in those excerpts you didnt -- No Okay What Im trying to get at is did you go out on your own separate from documents in the case and research the Army regulations that relate to constructive credit made phone call to classmate of mine who had served in -- as faculty at one of the senior service colleges And he apprized me of how it -- how you could get constructive credit And also celled Cenerel Hillhouse because knew he was an expert in that subject and he explained to me how it -- how it would work particularly on the reserve side Okay So who wee the faculty at senior -- senior service college you called believe classmate of mine named Sinnreich Could you say that again Im sorry Page 43 Colonel Richard Sinnreich S-I-N-N R-E-I-C-N And what did he tell you about the constructive credit process Well he explained to me how the process worked end that you had to go to the -- to the Department of the Army end -- just in gen -- generic terms Can you recall anything he said other than in generic terms he -- that you had to go to the department of Army-- the Army Yeah And you had to have good reason for your justification Did he -- And he wee not familiar with the reserve side of the equation He wee familiar from the active -- Yee -- active duty side Yes Is there anything else he -- you can him telling you about No And then you spoke with General Hillhouee is that correct Page 44 And whet did General Hillhouee tell you about the constructive credit process Well General Hillhouee is very familiar with the reserve side end explained the importance of letters because asked him ebout in the context of letter from Secretary Perry And whet did he say in that regard He said what already knew that letter from Secretary Perry would be extremely important extremely valuable end probably the deelmeker If you look at the lest line of 211 Yep Item WRT NRT is general Nexwell Thurman legend in the military wee one of my patrons he wee commander of recruiting commend he always said dynomite Thats not misspelling And hes well known to both general -- General Hillhouee end myself So is this statement the last line in Exhibit 211 which Ill just reed letter from former sec def -- S-S-C D-E-F -- who is also the CISAC dean would be quote Page 45 10 11 had you in -- in 12 13 14 15 16 17 18 19 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 20 21 22 23 24 25 recall Yes Could you rephrase the question Yeah 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1242 -45 John Swensson M.A M.S dynomite spelled with en Yes And then MRT Yes Is that something General Hillhouse said during when you talked to him Its my recollection -- cant youll have to ask General Hillhouse Its certainly my opinion MR LANPHERE Weve been going for little while Why dont we go off the record for 15 minutes could use break myself Thank you Well just take -- well just go off the record THE VIDEOGRAPHER We are going off the record at 1016 a.m Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 1036 a.m Please continue MR GIACCHETTI Colonel Swansson would appreciate the opportunity make some clarifying comments about testimony that he gave earlier this morning BY MR LANPHERE Okay Go ahead Page 46 We finished we were talking about Secretary Perrys letter would have bean dynomite -- have some further opinions that was somewhat reticent about -- think it was very reasonable request on Colonel Hannekens part to ask for constructive credit It would have helped his career and think it was reasonable for him to rely on on Secretary Perry In all the paperwork for this case the key document for me has been the draft latter to General Huggins in which after he had met with Secretary Perry and Secretary Perry had said he would support letter and make phone call he -- Colonel Hanneken did some further research he met with General Eikenberry as recall he suggested that he point out the benefits to the Army and he drafted this letter So as look at this the Huggins letter this for me has always been the key document in the case And seems to me to be perfectly appropriate yes Okay Thank you for that clarification MR GIACCHETTI Colonel Hanneken -- Im sorry Colonel Swensson did you have any -- MR LANPHERE No No You can examine him when Im done with ny examination MR GIACCHETTI Okay apologize MR LANPHERE If you need to lead him into opinions that hes not giving guess you can do that at the end So as you sit here right today youve given me all the opinions that you intend to testify to at trial correct The opinions have given you are the opinions that would testify to Okay Thank you So want to ask you about the topic of letters of recommendation Surely And the letter you just referenced the draft letter that was to be signed by Secretary Perry and go to General Huggins that was -- Yes you would call that letter of Yes Now have you ever provided student letter of recommendation assume you Of course And how do you determine whether or not to provide student letter of recommendation MR GIACCHETTI Objection Its vague and ambiguous Calls for speculation THE WITNESS typically will provide letter of recommendation when requested and if the student is deserving If believe in what theyre doing and feel that letter is appropriate will generally support my students BY MR LMPHERE And how do you make determination of whether particular students request is deserving MR GIACCHETTI Objection Its -- its vague and ambiguous and its calling for speculation and its also an incomplete hypothetical question MR LANPMERE Its actually not hypothetical question 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 recommendation correct with have Page 48 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 My -- so those are my opinions Those in addition to what you said previously In addition to what said previously Page 47 DepoServices.com MILLER COMPANY REPORTERS Page 49 800.487.6278 13 46 49 John Swensson M.A M.S You can answar MR GIACCHETTI Theres no particular student that youre talking about Its an imaginary student BY MR LANPMERE You can answer sir have student right now whon Im supporting to go to be admitted to Santa Clara Shes done excellent work in the class shes written superb papers shes gone out of her way to do extra work and recently had occasion to observe her on three-week trip just finished with students in Vietnam She is the type of student that Santa Clara should have so Im supporting her as one example Okay Are there any -- as you sit hers today and Im not suggesting theres sone written list of criteria but are there any criteria you use to decide whether or not to agree to particular students request for letter of recommendation This -- this is sonething that when youre in management or when youre teacher you constantly have to make value judgments have supervised up to 300 faculty in my language arts Page 50 dean position get all sorts of requests and some you support and some you dont And it depends on the individuals performance how theyre doing whether its reasonable request And also make suggestions to faculty and to students about letters Is it important for you in deciding whether to give letter of recommendation to particular student that you have prior relationship with that student wouldnt -- would not give letter to student did not know Now youve referenced the letter the draft letter that Mr Hanneken provided for Secretary Perrys signature Do you recall that Yes Colonel Hanneken wrote the draft to General Muggins yes And we can look at it but whats your understanding of what that draft letter was asking of General Huggins MR GIACCHETTI Objection The document speaks for itself THE WITNESS was going -- II BY MR LANPHERE You can answer was going to say that hays the document right in front of me said my opinion is is that its very reasonable what he is requesting hera Well constructed argument benefits to the Army are significant Some of those bed come from my understanding from General Eikenberry The request for constructive credit upon successful completion of the program is perfectly appropriate Hes -- while reservist is not eligible to be selected for the fellows program he would be doing the same coursework the sans assignments Seams to me to be perfectly reasonable request snd ons that he was justified in making of Secretary Perry based on their discussion and based on Secretary Perrys assuring him that he had his enthusiastic support So youre referring to copy of the latter thst you brought with you today Yes said -- yes Okay And note theres some handwriting at the bottom of that latter Do you Page 52 mind if we -- Id like to mark that as an exhibit hare Surely Thats my notes MR LANPHERE Mark this as next in order please Whereupon Deposition Exhibit 213 was marked for identification BY MR LANPMERE So this has been marked ss -- now as Exhibit 213 obviously dont have another copy but it bears the Bates range -- actually its two-sided document Yes it is It has S0005 and then the second page is S006 There are some handwritten notes at that time bottom of the page Do you see that Yes And tho -- those are your notes Yes Could you read them Theyre what just testified to Just read them so we dont -- will -- have any issues 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 51 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1450-53 Page 53 John Swensson M.A M.S Reasonable request for constructive credit letter from Secretary Perry would have been dynamite would have helped his career and it was reasonable for him to rely on Secretary Perry Now had you written that at the bottom of the page before you arrived here today or did you write it during the break just -- wrote it during the break Okay And you wrote it during the break following -- let me finish the question You wrote it during the break following conversation with Mr Giacchetti is that correct Yes And did Nr Giacchetti come -- ask you to come back in and make that clarification No Okay So now do you have any opinion regarding whether or not Secretary Perry would have been within his rights when he met with Michael Hanneken to decline to provide this letter of recommendation Well think Secretary Parry can do anything ha wants to do Page 54 sand latter to the military requesting the military make an exception to policy for that student No Id like you to assume for purposes of this question that you have bean asked by student to sand latter to the military raquasting that the military make an exception to policy for that student Wow woul MR GIACCHETTI Colonel Swanason let Mr Lanphara ask his question THE WITNESS Im sorry MR GIACCHETTI Its okay BY MR LANPHERE Ill start over Id like you to assume -- want to clarify that my students are Page 55 civilians they have nothing to do with the military so its not reasonable they would ask ma to writs latter to the military If on the othar hand you are -- when was student at University of Virginia graduate student was captain in the Amy than might have made sons request That would ha more appropriate quastion Wall -- your -- Im not trying to rephrase your question but Im just -- -- to ask whathar my students have asked ma to do this no Yeah thats all was asking if its happened No Okay Now Id like you to maka an assumption Youre -- youre testifying as an expert witness Im allowed to ask you to assume certain facts -- Okay -- and obtain your opinion or response based upon those factual assumptions So tha fact Id like you to assume is that one of your students did in fact make raquast to you to sign and sand to the military Page 56 latter requesting that the military maka an exception to policy for that student Okay want you to assume that thats happened Okay Okay How would you determine whether or not to send that latter on behalf of that student It would depend on the merits of the case If the military had ragulation that said that an applicant for Army dental school could not be over 21 years of age and student wars 22 yasrs of age and had good record and otharwisa justified for going to dental school might wall support latter -- such latter Now were talking hypothatical Of course So in that circumstance however you would want to understand what the armys policy was that -- Of course Let ma finish my question Im sorry In that circumstances you would want to undarstand what tha armys policy was bafora deciding whether to sand that letter on behalf of that student right Thats corract 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 So you -- Thats -- but thats not -- its my understanding thats not whst happened understand your understanding Im just trying Yes 10 11 Have you aver bean askad by student to 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 12 13 14 15 16 18 19 20 21 22 23 24 25 DepoServices.com MILLER COMPANY REPORTERS Page 57 800.487.6278 15 54 57 John Swensson M.A M.S Now have you ever been -- have you ever told student whos asked you for letter of recommendation that youd have to consider the request before deciding whether to provide the letter Certsinly And what -- what are the circumstances under which you have responded to students request for letter of recommendation by saying at least initially need to think about it MR GIACCMETTI Its vague and ambiguous Calls for speculation THE WITNESS If needed further additional facts if needed to talk to another teacher handle student complaints all the time would say well Ill consider it and get back to you BY MR LANPHERE Now when you send out letters of recommendation do you draft them yourself or do you have the students draft them for you MR GIACCMETTI Objection Vague and -- vague and ambiguous THE WITNESS typically draft my own letters And if decided not to give the student Page 58 letter would let them know or same -- similarly if declined to support faculty request would let then know and timely BY MR LANPHERE Is it your opinion that the -- the military treats officers of similar rank and qualification differently based upon who they know MR GIACCMETTI Objection Cells for speculation Incomplete hypothetical Beyond the scope of Colonel Swenssons testimony today BY MR LANFHERE You can answer Its not matter of who you know its matter of what youre doing end are you supported Weve talked earlier about General Thurman Generel Thurman is highly respected If youre -- if he is your patron or you are mentee of his may be helpful but you got to do your own thing Youve got to walk your own talk Having said that its very very helpful if you have letter of recommendation from the right person because again theres great deal of responsibility end great deal of Page 59 integrity in how we operate in the military So Im not going to get letter from somebody supporting something that want to do unless Ive eerned it unless theres good reason for it Thats the extent of my response Okay Are you familiar with the Army reguletions relating to the required level of military education to be promoted to the rank of colonel Generally yes And whats your understanding of the -- what that requirement -- To be promoted to the rank of colonel Correct In the reserves should say In the reserves it would be based on duty performance end you must have completed command and general staff college Are you familiar with the military -- level of education referred to as MEL1 Yes Is that different from general staff college There are -- no There are four -- one two three end four Okay Basic advenced managerial staff college and wer college And is that -- is MEL1 something separate from -- Page 60 Unless theyve theyve renumbered it since was in its basic course Okay Advanced course is two managerial staff college is three and the war college is four Okay So then its not -- if put the prior testimony you had together to make sure understand it its your understanding that completion of the war college so that would be MEL4 is not required for promotion to colonel is that right The full colonel -- MR GIACCMETTI Misststes testimony Cells for speculation BY MR LANPHERE Is that correct Thats my understanding required Ill go further It is general officer Okay For reserves For the reserves yes Page 61 10 11 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 It is required for DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1658-61 John Swensson MA M.S my head And what -- what is the basis of your that its required for general officers The Army regulations and Ive bean told General Hillhouse Which Amy regulations dont know the number of the top of Now are you aware that Mr Hanneken submitted request for constructive credit to the Arm in 2016 believe saw some documentation have to go back and look Did you review the letter of recommendation -- letters of recommendation attached to that request for constructive credit may have dont know Lot of documents Do you recall reviewing letter of recommendation from David Baldwin Yes General Baldwin as in General Do you know General -- -- State of California Sorry do you know General Baldwin Ive met him Is he well respected figure within the military Page 62 Absolutely To your mind is there qualitative difference betwean letter of recommendation from General Baldwin and letter of recommendation from William Perry Absolutely Okay And you would you would rank William Perrys higher MR GIACCHETTI Objection to the extent that it calls for speculation and calls for conclusion and opinion thats beyond the scope BY MR LANPHERE You can answer Yes yes it would be higher Okay Mow much higher Is there do you have some metric you can give us to evaluate the difference between letter of recommendation from General Baldwin and letter of recommendation from William Perry Yes MR GIACCHETTI Its vague as to your reference metric of how much higher THE WITNESS could do it General Baldwins letter is vary impressive very appropriate He is highly respected adjutant general of the State of Califovnia has well respected military officer but letter from Secretary Perry would be dynomite MR LANPHERE Okay dont have any more questions at this time MR GIACCHETTI Okay So would suggest that we take break and than we can conclude questions MR LANPHERE Are you going to ask MR GIACCHETTI Yeah might MR LANPMERE Okay Well if you need to take break lets take break MR GIACCMETTI Okay THE VIDEOGRAPHER Were going off the record at 1055 a.m Whereupon recess was taken THE VIDEOGRAPHER Were back on the record at 1103 a.m Please continue EXAMINATION BY MR GIACCHETTI GIACCHETTI Colonel Swensson understand clarification that you would like regarding -- regarding the information that you relied upon in forming your opinions in this case is that correct have read lot of documentation The depositions of Colonel Hanneken Secretary Perry Ms Gordon other docunents Ive had two meeting well one phone meeting with Colonel Hanneken and one face-to-face meeting with Colonel Hanneken which asked him lot of questions and reviewed by and large the documentation and personal discussions with him MR LANPHERE Are you finished with your clarification THE WITNESS Yes MR LANPHERE Im guing to ask you few questions about what you just said if could FURTHER EXAMINATION BY MR LANPHERE BY MR LANPHERE You mentioned you looked at other documents in addition to deposition transcripts To your knowledge were those all documents produced by the parties in the case Page 65 opinion that by 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR have that you to make Page 64 Yes Okay 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes Page 63 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 1762-65 John Swensson M.A M.S 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes Yes Okay You mentioned you had fa -- phone meeting and face-to-face meeting with Michael Manneken Yes thats correct You asked him lot- of questions believe you said Yes What questions did you ask him asked him questions relative to the case what his meeting was how it want And basically just wanted to get -- wanted to hear from him some of the things that had been reading also asked him about Colonel Falter needed some clarification on that And just the case -- the questions that asked him were case-related What clarification did you need with respect to Colonel Falter from Mr Manneken Colonel Falter had recommended him originally into the meeting with Secretary Perry thought that probably he would have sent Colonel Falter note after his meeting but apparently that was not the case But -- just -- because know Falter that was the reason Page 66 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 request Yes -- for constructive credit and he would make phone call to senior general officer for him Yes Okay So did Mr Mannakan tell you what enthusiastically support his request for constructive credit meant beyond phona call Me would -- MR OIACCMETTI Objection -- objection to the extant that Colonel Hannakens deposition transcript spaake for itself MR LJNPHERE Im not asking about his deposition transcript THE WITNESS The support was in the form of latter and phone call two things BY MR LANPHERE Okay So Mr Manneken told you that Mr Perry said he would send lettar and he would make phone call Yes thats correct Okay All right And then what did Mr Manneken say with respect to Ms Oordon when he talked to you about the case Page 68 for my questions Did you ask Mr Manneken what transpired during his meeting with Mr -- With Secretary Perry Oh yes And-- was getting his clarification that -- and ic was jusc exactly as ha had testified And so whats your recollection of what 10 Mr Mannekan told you about what transpired during 11 that meeting 12 13 That Colonel -- that Secretary Parry would enthusiastically support his request for 14 constructive credit and that ha would make phone 15 call to senior general officer for him 16 Bid ha tell you that -- Im sorry go 17 ahead 18 And then asked him also about his 19 relationship with Ms Gordon because was trying 20 to understand why the letter did not happen 21 Okay So first talking about -- you 22 said that Secretary Perry and Mr -- sorry let me 23 withdraw that and start over 24 You said that Mr Manneken told you that 25 Secretary Parry would enthusiastically support his Page 67 Well he said that he had always been vary professional and very respectful and think the documentation bears that out There came tins when he was told that it took long time to get the answers that he was not going to get letter and that she was not forthcoming about why that was And then there was some suggestion by some other person as recall that -- that -- MR GIACCMETTI And Colonel -- 10 Colonel Swensson please dont speculate 11 MR LANPMERE Counsel hes testifying 12 to his recollection Mes your designated expert 13 Mas an accomplished profas- -- 14 MR GIACCMETTI This is wall beyond -- 15 MR LANPMERE Mes en accomplished 16 professional Im talk -- asking about his 17 conversations with Mr Mannaken 18 MR GIACCMETTI Sure This is the 19 first time hes been deposed and -- 20 BY MR LANPMERE 21 Sir do you understand youre not 22 supposed to speculate right you understand that 23 Thats question 24 Yes 25 You understand that DepoServices.com MILLER COMPANY REPORTERS Page 69 800.487.6278 18 66 69 John Swensson M.A M.S Yes So were not speoulsting here So could you go on before you were cut off by the lewyar representing you here todey end explain -- or finish your answer as to what Mr Msnneken told you shout Ms Gordon Yeah Colonel Hanneken said there was another woman who apparently worked with Deborah Gordon who said that it would be unfair for him to get latter because he was rasarva officer And this is -- is not -- in my opinion its not zero-sum game Its an illogical conclusion Now dont have any further details Are you aware whether there are other reaerva officers attending graduate school at Stanford University Im not Do you believe that Michael Hannakan was the only reserve officer at Stanford University at this time in graduate school MR GIACCHETTI Calls for speculation THE WITNESS have no idea DY MR LANPHERE Okay MR LANPHERE dont think have any Page 70 further guastions So thank you for your time sir THS WITNESS Thank you MR GIACCHETTI Does this conclude the deposition of -- MR LANPHERE It does MR GIACCMETTI -- Colonel Swenason THE WITNESS Thank you THE VIDEOGRAPHER This concludes volume of the deposition of Colonel John Swenaaon on August 16 2018 This is the end of Media Number and were off the record at 1110 a.m Whereupon the deposition concludad at 1110 a.m DECLARATION UNDER PENALTY OF PERJURY the undersigned declare under penalty of perjury that have read the entire foregoing transcript of my deposition or the same has been read to me and the same is true and correct save and except for changes corrections additions or deletions indicated by ma on the DEPOSITION ERRATA SHEET hereof with tha undarstanding that offer these changes as if still under oath Signed on the day of 2018 at Page 72 Kathleen Wilkins CSR 10068 RPR RMR CRR CCRR CLR certify that the foregoing proceedings were taken by ma at the time and place herein sat forth at which time the witness was duly sworn and that the transcript is true record of the testimony so given Witness review correction and signature was Cx by code regueated waivad not raguasted not handled by the deposition officer due to party stipulation The dismantling unsealing or unbinding of the original transcript will render the reporters certificate null and void further certify that am not financially interested in the action and am not relative or employee of any attorney of the parties nor of any of the parties Dated this 24th of August 2018 KATHLEEN WILKINS CSR 10068 RPR-RNR-CRR-CCRR-CLR 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 curvy State WITNESS SIGNATURE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 71 DepoServices.com MILLER COMPANY REPORTERS 800.487.6278 19 70 73 Page 73 MJIALER LQMPANY KEPO RTERS August 23 2018 John Swensson M.A M.S do James Giacchetti Esq McManis Faulkner 50 West San Fernando Street San Jose CA 95113 Re Michael Hanneken Leland Stanford Junior University Deposition Of John Swensson M.A M.S Taken On 08/16/2018 .Miller File No 26264 Please be advised that the transcript in the above-referenced matter is available for reading and signature Unless instructed otherwise the witness should complete the following steps within 35 days of the date of this letter Please contact our office to schedule the review of your printed original deposition in person or to schedule the review of an electronic certified transcript online If you would like to review your attorneys certified copy of the transcript either printed or electronic we have enclosed an errata sheet for that purpose Enclosed you will find the original deposition transcript Read the certified transcript and Note any corrections necessary on the errata pages only Do not write on the transcript itself Write No Changes on the top of the errata pages if you do not wish to make any changes Obtain notarization if instructed by counsel Sign the bottom of the errata pages Return the original transcript to the custodial party if this was requested or you were instructed to do so Return the original errata pages and witness signature page to the custodial party Send copy of the errata pages and witness signature page to Miller Company Reporters 880 Apollo Street Suite 352 El Segundo CA 9024S If electronic documents are permissible in the applicable venue for this matter you may instead submit scanned copy of the errata pages and witness signature page via e-mail to info@millerreporters.com If you should have any questions relating to this matter please do not hesitate to contact our office Sincerely Kathleen Wilkins Deposition Officer Enc cc James Giacchetti Esq Andrew Lanphere Esq DEPOSTON ERRATA SHEET CASE Michael Hanneken Leland Stanford Junior University WITNESS John Swensson M.A M.S MILLER FILE NO 26264 DATE TAKEN 08/16/2018 Page No Line No Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change declare under penalty of perjury that have read the foregoing transcript of my deposition testimony taken in the matter and on the date above and that with the following exceptions the same is true record of the testimony given by me under oath or affirmation Witness Signature ______________________________Date John Swensson M.A M.S Page No Line No Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change Page No Line No.____ Change to Reason for change declare under penalty of perjury that have read the foregoing transcript of my deposition testimony taken in the matter and on the date above and that with the above exceptions the same is true record of the testimony given by me under oath or affirmation Witness Signature _____________________________Date John Swensson M.A M.S EXHIBIT ¥ EXHIBIT F JAMES McMANIS 40958 TYLER ATKINSON 257997 JAMES GIACCHETTI 307117 McMANIS FAULKNER Professional Corporation 50 West Sari Fernando Street 10th Floor San Jose California 95113 Telephone 408 279-8700 Facsimile 408 279-3244 Email jgiacchettimcmanis1aw.com Attorneys for Plaintiff MICHAEL HANNEKEN SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 FOR THE COUNTY OF SANTA CLARA 11 MICHAEL HANNEKEN Case No 16-CV-300285 12 Plaintiff FIRST AMENDED COMPLAINT FOR 13 vs BREACH OF CONTRACT 14 LELAND STANFORD JUNIOR PROMISSORY ESTOPPEL UNIVERSITY WILLIAM PERRY DOES 15 1-50 NEGLIGENT MISREPRESENTATION 16 Defendants DEMAND FOR JURY TRIAL 17 18 19 INTRODUCTION 20 Lieutenant Colonel Michael Hanneken Colonel Hanneken or plaintiff is 21 veteran of the War in Afghanistan lifelong member of the United States Army Reserves 22 husband and father He holds Bachelors and Masters degrees from Monmouth College and 23 Washington University in St Louis Additionally Colonel Hanneken has completed the 24 Advanced Management Development Program in Real Estate at Harvard University 25 Colonel Hanneken is an entrepreneur After many years of success working for 26 Bay Area professional services firms in 2003 Colonel Hanneken founded Real Estate Strategies 27 and Solutions RESS RESS advises exedutives of prominent public and private sector capital 28 projects RESS is highly successful advisory firm that implements and supports commercial FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No 6-CV-3 00285 and large infrastructure projects For example RESS is key advisor on the $70 billion-dollar high speed rail project in California Colonel Hanneken is the owner and manager of the firm Despite his business success Colonel Hannekn decided to return to graduate school in his mid-forties to begin doctoral program at Stanford University Leland Stanford Junior University or Stanford University or Stanford with the particular goals of enhancing his military and professional career His decision was based on statements by Stanford personnel assuring him that Stanford could support his military career priorities For Stanford he was desirable doctoral student applicant trained architect and field grade officer in the U.S Army Reserves with recent combat-zone experience 10 including assisting with USAID and the State Department on economic development projects in 11 southern Afghanistan and the proprietor of highly successful advisory firm operating in 12 California Colonel Hanneken is assigned to the Special Operations Command which among 13 other missions plans and oversees complex projects in war-torn countries His credentials and 14 experience present uncommon multidisciplinary research capabilities that could contribute to the 15 influence of Stanford on U.S security and international policy more broadly Stanford desires 16 and accepts students possessing these and similarqualities 17 As result of numerous conversations with Stanford personnel Colonel 18 Hanneken enrolled in Stanford doctoral program under the reasonable belief that Stanford and 19 in particular former Secretary of Defense William Perry Secretary Perry would provide 20 valuable career support by submitting among other considerations letter of recommendation 21 supporting Colonel Hannekens request to the U.S Military for Professional Military Education 22 Constructive Credit constructive credit During personal meeting which occurred in the 23 second month of classes during Colonel Hannekens first year at Stanford Secretary Perry 24 promised to provide Colonel Hanneken letter of recommendation supporting his application for 25 constructive credit in exchange for taking specific courses and performing security-based 26 doctoral research not otherwise required of Colonel Hanneken 27 I/I 28 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No l6-CV-300285 Colonel Hanneken remained enrolled at Stanford and took specific courses and engaged in security-based doctoral research in reliance on Secretary Perrys promise sacrificing prime economic growth years of business prospects Had Secretary Perry not made specific representations and promises to Colonel Hanneken Colonel Hanneken would not have continued at Stanford and he would not have taken specific courses or engaged in specific research in reliance thereon Colonel Hanneken reasonably believed Secretary Perry would keep his word and follow through on his comn-iitrnents and fUrther reasonably believed that Secretary Perry spoke for Stanford As an elite political and governmental leader and Stanford faculty member with significant decision-making authority and experience Secretary Perrys word 10 carries significant weight 11 Colonel Hanneken sought Secretary Perrys letter of recommendation supporting 12 his application with the military on several occasions Colonel Hanneken waited patiently he 13 reasonably believed that as an elite professor Secretary Perry was occupied with personal and 14 academic matters E-mails went unanswered phone calls unreturned with no explanation by 15 either Stanford or Secretary Perry Eventually it became known that despite Colonel 16 Hannekens considerable sacrifices and fUll completion of his promises Secretary Perry would 17 not honor his commitments Chief among the broken promises Secretary Perry did not tender 18 the letter of support for Colonel Hanncktn Colonel Hannekens reliance on Secretary Perrys 19 promise increased his time at Stanford by years Colonel Hanneken reasonably took Secretary 20 Perry and Stanford at their word 1-le passed up substantial opportunities as result 21 PARTIES 22 Plaintiff Michael Hanneken is Ph.D student at Stanford University as well as 23 resident of the County of Contra Costa California 24 Defendant Leland StanfordJunior University is and at all relevant times was 25 California business entity formed on February 14 1901 and operates as private co-educational 26 university under the laws of the State of California located in the Stanford neighborhood of the 27 County of Santa Clara California 28 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEOLLOENT MISREPRESENTATION Case No 16-CV-3 00285 supporting his request for letter The co-director of CISAC Dr Amy Zegart made it clear that there may be creative ways to support and engage Colonel Hanneken for the purposes of obtaining constructive credit because Secretary Perry director at CISAC is the sole person to consider whether to support request for constructive credit CISAC personnel arranged meeting between Colonel Hanneken and Secretary Perry to discuss constructive credit Dr Zegart put Colonel Hanneken in contact with CISAC employee Debra Gordon Ms Gordon who facilitated the meeting between Colonel Hanneken and Secretary Perry 18 As result of Colonel I-iannekens favorable discussions with Stanford personnel during which he expressed the central role obtaining support from Secretary Perry played in his 10 decision to attend Stanford on November 21 2013 Colonel Hanneken met privately with 11 Secretary Perry Before his meeting Secretary Perry had been apprised of Colonel Hanneken 12 professional and military background facts surrounding Colonel Hannekens decision to attend 13 Stanford and that material reason for his attending Stanford was to obtain Secretary Perfys 14 support Also before meeting in person with Secretary Perry Colonel Hanneken submitted to 15 Secretary Perry multiple page research proposal summary of research interests to pursue at 16 CISAC and explained his military career plans in writing Also before the meeting both 17 Stanford and Secretary Perry were aware of the substantial financial sacrifices Colonel Hanneken 18 would be making by continuing his enrollment at Stanford and by pursing an extended period of 19 study and research 20 19 During their private meeting Colonel Hanneken and Secretary Perry entered into 21 an agreement Colonel Hanneken offered to take security-based courses and perform security- 22 based doctoral research involving CISAC and incorporating interdisciplinary fields of 23 engineering and project finance in exchange for Secretary Perrys promise to sign and send 24 letter of recommendation to the U.S Military supporting Colonel Hannekens request for 25 constructive credit Secretary Perrys letter would recommend that Colonel Hanneken be 26 granted constructive credit for the courses he completed at Stanford University because of their 27 relevance and similarity to classes taught at the U.S War College and further because of 28 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No 6-CV-3 00285 Colonel Hannekens program similarities with active-duty officers attending CISACs Military Fellowship at Stanford Colonel Hanneken was not obligated to take security-based courses or perform security-based research to successfUlly complete his academic program at Stanford If Colonel Hanneken failed to take courses and perform research as promised Secretary Perry would not have been obligated to provide letter of recommendation supporting Colonel Hannekens request for constructive credit _7 20 Upon hearing Colonel Hanneken proposed research topic and military aspirations Secretary Perry agreed to Colonel 1-lanneken proposal Secretary Perry enthusiastically agreed to provide Colonel Hanneken letter of recommendation in support of 10 his request for constructive credit and personally call the general officer with the authority to II approve the request on Colonel Hannekens behalf to ensure his request would be properly 12 considered in accordance with existing army regulations Colonel Hannekens proposal 13 benefited Secretary Perry and Stanford in many ways Secretary Perry was willing to agree to 14 provide the letter because Colonel Hannekens courses and research were similarto those taken 15 by the Stanford War College Fellows Secretary Perry oversees and who receive by default War 16 College credit Additionally as professor of engineering and director at CISAC Secretary 17 Perry was eager to support student who possessed interdisciplinary research skills highly usefUl 18 to CISAC The applicability of Colonel Hanneken research to timely military operations 19 differentiated Colonel Ha.nneken from many other students Such original research is highly 20 valued and contributes to CISAC research Furthermore Colonel Hannekens work with current 21 operations at Special Operations Command and the publication of Colonel Hannekens research 22 advance CISACs interests in being associated with research on U.S security policy This 23 agreement was made immediately known to Secretary Perrys assistant and colleague Ms 24 Gordon Secretary Perrys agreement confirmed what Colonel Hanneken had been told by 25 Stanford personnel before he enrolled at Stanford 26 21 Relying on his agreement with Secretary Perry Colonel Hanneken took specific 27 courses engaged in specific research and developed dissertation topic integrating fields of 28 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No 6-CV-3 00285 courtesy and professionalism if Secretary Perry intended not to honor the agreement he or Ms Gordon would have notified Colonel 1-lanneken of that decision 26 By the start of classes in the Fall Term of the 2014-20 15 academic year Ms Gordon stopped returning Colonel Hannekens calls and failed to respond to requests to meet Colonel Hanneken spoke with Secretary Perry about the draft memorandum previously submitted to Ms Gordon Secretary Perry told Colonel Hanneken to speak with Ms Gordon about the matter In accordance with Secretary Perrys instruction on December 2014 Colonel Hanneken met with Ms Gordon and her assistant During the meeting Colonel Hanneken asked Ms Gordon to arrange for Secretary Perry to provide the letter of support as 10 agreed Ms Gordon stated that it cannot be done notifying Colonel Hanneken for the first 11 time that Secretary Perry would not provide the letter as promised 12 27 Only after Colonel Hanneken had completed nearly year and half of studies 13 did Ms Gordon inform him the agreement would not be honored During that time Colonel 14 Hanneken had taken over 20 credit hours of classes solely for security studies/research Colonel 15 Hanneken chose to remain enrolled at Stanford University to obtain doctorate even after 16 learning that Secretary Perry would not honor his agreement as means of mitigating the harm 17 caused after dedicating years to obtain an advanced degree while neglecting millions of dollars 18 of business opportunities at RESS Colonel Hanneken decided not to apply to other War College 19 schools after investing year and half in the professors and colleagues at Stanford and not 20 wanting to uproot his family again 21 28 As result of the additional coursework taken and research performed in reliance 22 on his agreement with Secretary Perry Colonel Hanneken academic career at Stanford was 23 extended by three years In July of 2016 Colonel Hanneken asked Secretary Perry to provide 24 letter supporting his application without response Thereafter he began the process of 25 submitting request for constructive credit without the support of Secretary Perry 26 I/I 27 28 11 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No 6-CV-300285 FIRST CAUSE OF ACTION of Contract Against All Defendants 29 Plaintiff hereby incorporates by reference the allegations of paragraphs through 28 above 30 On or about November 21 2013 plaintiff and defendants entered into an oral agreement 31 Plaintiff has performed all conditions covenants and promises required on his part to be performed in accordance with the terms and conditions of the contract 32 On or about February 18 2014 plaintiff requested that defendants perform their 10 obligations under the contract 11 33 On or about December 2014 plaintiff discovered that defendants refused to 12 honor the agreement and breached the contract 13 34 As proximate result of defendants breach of contract Colonel Hanneken was 14 harmed and damaged in an amount according to proof at trial 15 SECOND CAUSE OF ACTION 16 Estoppel Against All Defendants 17 35 Plaintiff hereby incorporates by reference the allegations of paragraphs through 18 28 above 19 36 Further or in the alternative on or aboutNovember 21 2013 Secretary Perry 20 confirmed the above described promises and representations that Stanford University personnel 21 made to Colonel Hanneken before enrolling in security-based courses at Stanford 22 37 On or about November 21 2013 Secretary Perry promised to provide Colonel 23 Hanneken support including letter of recommendation supporting Colonel Hannekens 24 application for constructive credit 25 38 In so doing Secretary Perry knew or should have known that Colonel Hanneken 26 would be reasonably induced to rely on Secretary Perrys promises and representations 27 39 Defendants have not performed any part of their promises or representations 28 12 FIRST AMENDED COMPLAINT FOR BREACH OF CONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No 16-CV-3 00285 40 As proximate result of defendants failure to perform plaintiff was harmed and damaged in an amount according to proof at trial 41 Injustice may be avoided only by enforcing defendants promises and representations TIIIRIJ CAUSE OF ACTION Misrepresentation Against All Defendants 42 Plaintiff hereby incorporates by reference the allegations of paragraphs through 28 above 43 Further or in the alternative on or about November 21 2013 Secretary Perry 10 confirmed the representations of Stanford University personnel and made additional 11 representations to Colonel Hanneken 12 44 On or about November 21 2013 Secretary Perry stated that he would provide 13 Colonel Hanneken support including letter of recommendation supporting Colonel 14 Hannekens request for constructive credit Secretary Perry also did not inform Colonel 15 Hanneken of any supposed impediments to providing this support which would have been 16 material omission 17 45 The representations of defendants were in fact false 18 46 When defendants made these representations they had no reasonable ground for 19 believing them to be true 20 47 Defendants made these representations with the intention of inducing plaintiff to 21 act in reliance on these representations in the manner alleged or with the expectation that 22 plaintiff would so act 23 48 Plaintiff reasonably relied on these representations and was harmed 24 49 Plaintiffs reliance on defendants representations was substantial factor in 25 causing his harm 26 50 As proximate result of defendants representations Colonel Hanneken was 27 harmed and damaged in an amount according to proof at trial 13 FIRST AMENDED COMPLAINT FOR BREACH OF bONTRACT PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION Case No l6-CV-300285 EXHIBITI T G ENDoRSED ZOIJAPR2Ô 1122 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA 10 11 12 MICHAEL HANNEICEN Case No 16-CV-300285 13 Plaintiff ORDER RE DEMURRER TO FAC 14 vs 15 LELAND STANFORD JUNIOR UNIVERSITY 16 etal 17 Defendants 18 19 The demurrer to the first amended complaint filed by defendants Leland Stanford Junior 20 University and William Perry came on for hearing before the Honorable Maureen Folan on 21 April 20 2017 at 900 a.m in Department The matter having been submitted the Court 22 orders as follows 23 This is breach of contract and fraud action initiated by plaintiff Michael Hanneken 24 Plaintiff against defendants Leland Stanford Junior University Stanford and William 25 Perry Secretary Perry collectively Defendants 26 According to the allegations of the operative first amended complaint FAC Plaintiff 27 is military veteran and lifelong member of the United States Army Reserves FAC In 28 addition to being veteran Plaintiff is also an entrepreneur who created succesaQul ORDER RE DEMURRER professionletWce fitin Id.at Despite his success as businessman Plaintiff decided to return to graduate school with the goal of enhancing his military career 11d at Pláiriti enrolled at Stanford in order to achieve those goals after having numerous conversations with Stanford personnel including Secretary Perry FAC Plaintiff enrolled under the belief Stanford would help his military career Ibid Prior to enrolling Plaintiff asked staff and faculty at Stanford whether he would be able to receive constructive credit as student at Stanford Ibid Constructive credit allows service member to apply educational credit towards courses offered at the United States Army War College Id at 15 Staff and faculty responded that they believed he would be able to obtain constructive credit and Secretary 10 Perry was solely in charge of recommending student receive it Id at 17 Two months after 11 classes began Plaintiff obtained meeting with Secretary Perry Id at During the 12 meeting Secretary Perry promised to provide Plaintiff with letter of recommendation 13 supporting his request for constructive credit in exchange for Plaintiff enrolling in specific 14 courses and performing security-based doctoral research not otherwise required Ibid Plaintiff 15 subsequently enrolled in those courses and engaged in security-based doctoral research in 16 reliance on Secretary Perrys promise Id at After several requests for the lettçr of 17 recommendation Plaintiff was told Secretary Perry would not provide one Id at The 18 FAC does not allege whether Plaintiff received constructive credit 19 The FAC asserts causes of action for breach of oral contract promissory estoppel and 20 negligent misrepresentation 21 Currently before the Court is Defendants demurrer to each cause of action on the ground 22 of failure to state facts sufficient to constitute cause of action 23 Request for Judicial Notice 24 In support of the demurrer Defendants request judicial notice of the following documents 25 filed in this action the FAC the original complaint and defendants demurrer to the 26 original complaint These court documents are proper subjects for judicial notice pursuant to 27 Evidence Code section 452 subdivision which allows courts to take judicial notice of court 28 records Additionally the documents are relevant to issues under review in the demurrer ORDER RE DEMURRER Silverado Modjeska Recreation and Park Dist county of Orange 2011 197 Cal.App.4th 282 307 precondition to judicial notice is that the matter to be noticed be relevant to material issue before the court Accordingly the request for judicial notice is GRANTED IL Meet and Confer Defendants attorney filed declaration in support df the demurrer stating he met and conferred with Plaintiffs counsel prior to filing the demurrer Lamphere Decl In opposition Plaintiffs attorney filed declaration in which he states Defendants attorney did not offer compromise to demurrer summarized an abbreviated version of the table of contents during their discussion mentioned additional arguments and provided few case 10 citations Giacchetti DecL Plaintiffs attorney further attests counsel for Defendants 11 misrepresented the depth of the issues discussed during their telephone call Id at While 12 Plaintiff does not affirmatively state the meet and confer was inadequate he suggests this by his 13 conrnents 14 Pursuant to Code of Civil Procedure section 430.41 subdivision prior to filing 15 demurrer the moving party shall meet and confer with the party who filed the pleading to 16 determine whether an agreement can be reached that would resolve the objections raised by the 17 demurrer During the meet and confer process the demurring party shall identify all of the 18 specific causes of action that it believes are subject to demurrer and identify with legal support 19 the basis of the deficiencies Code Civ Proc 430.41 subd a1 The party who filed the 20 pleading shall in turn provide legal support for his or her position that it is legally sufficient 21 Ibid 22 Here counsel for both parties discussed the merit of the arguments raised in the demurrer 23 on the telephone on February 10 2017 Lamphere Decl After this discussion the parties 24 exchanged e-mails addressing their conversation and summarizing their conversation Plaintiffs 25 counsel states they discussed all three causes of action Giacchetti Decl Exhibit Counsel 26 for Defendants replied to the e-mail and emphasized that the demurrer to the FAC would be 27 28 ORDER RE DEMURRER substantially similar to the demurrer filed to the original complaint Id at Exhibit Plaintiffs attorney was in possession of the demurrer to the original complaint and able to consult it in order to view specific legal authority Ibid Based on the above facts Defendants adequately met and conferred with Plaintiff prior to filing this demurrer Defendants identified each cause of action at issue in the demurrer and legal support addressing their arguments To the extent Plaintiff asserts Defendants inadequately met and conferred because they did not offer to compromise there is no legal authority requiring party to offer to compromise The fact that two parties could not come to an agreement does not render the meet and confer process inadequate Therefore Defendants sufficiently met and conferred with Plaintiff 10 Ill Merits of the Demurrer 11 12 First Cause of Action Breach of Oral Contract 13 Defendants argue Plaintiff fails to plead an enforceable contract the element of 14 causation and the authority for Secretary Perry to contract on Stanfords behalf Defendants 15 additionally argue the statute of frauds bars the claim 16 Enforceability of the Contract 17 Defendants assert the terms of the contract are so vague the contract is void Specifically 18 Defendants contend Plaintiff does not specify the contents of the recommendation letter and the 19 contract is therefore too vague to enforce In addition Defendants argue the promise Plaintiff 20 made to take security-based research classes and perform security-based doctoral research is 21 ambiguous 22 Where contract is so uncertain and indefinite that the intention of the parties in 23 material particulars cannot be ascertained the contract is void and unenforceable Ladas 24 California State Auto Assn 1993 19 Cal.App.4th 761 770 citations omitted For example 25 the promise to consider changing policies to achieve pay parity is indefinite because the promise 26 to consider is amorphous Ibid 27 28 The demurrer was not heard by the Court because Plaintiff filed the FAC prior to the hearing rendering the demurrer moot ORDER RE DEMURRER Here the terms of the contract are sufficiently definite As persuasively argued by Plaintiff the allegations clearly reflect the promises each party allegedly made Plaintiff adequately pleads Secretary Perry promised to write letter of recommendation to strengthen his application for constructive credit and in return Plaintiff promised to enroll in certain courses Further Plaintiff alleges key factual details supporting the existence of the alleged promises For example Plaintiff alleges that prior to the meeting with Secretary Perry he provided letter detailing what courses he would take and the focus of the research FAC 11 18-21 The Court fmds the allegations of the existence of the contract to be sufficiently definite Accordingly the demurrer on the basis the contract is not enforceable is not sustainable 10 Causation 11 Defendants identify the alleged damages as the receipt of constructive credit and argue 12 this injury could not have been caused by the failure to provide letter of recommendation 13 because Plaintiff does not allege his request for constructive credit has been denied In 14 opposition Plaintiff states Defendants improperly limit the scope of alleged damages 15 To state claim for breach of contract the plaintiff must plead his or her damages were 16 proximately caused by the defendants actions US Ecology Inc State 2005 129 17 Cal.App.4th 887 909 While Plaintiff acknowledges the non-receipt of constructive credit is an 18 alleged injury he also points to other alleged injuries that were caused by reliance on 19 Defendants promises Plaintiff pleads that due to his extra time at Stanford he sacrificed 20 substantial economic opportunities with his successful business company and spent three years 21 longer than necessary at Stanford FAC 1J 6-7 27 28 Plaintiff further alleges he only 22 enrolled in these courses and invested his time into the doctoral research because of Defendants 23 promise to provide him with recommendation Thus Defendants identification of Plaintiffs 24 alleged damages only focuses on the receipt of constructive credit and ignores the other alleged 25 damages As result Defendants argument does not fully address Plaintiffs alleged injury 26 Therefore the demurrer is not sustainable on the basis Plaintiff fails to plead the element of 27 causation 28 ORDER RE DEMURRER Authority to Enter into Contract Defendants contend Plaintiff fails to allege Secretary Perry had authority to contract on Stanfords behalf because he does not allege any acts by Stanford suggesting Secretary Perry had ostensible authority to enter it into contracts It appears Defendants intend to argue that as result of the lack of ostensible authority Stanford did not consent to the contract Consent is an essential element to the existence of contract Civ Cod 1550 An agent may be authorized to carry-out any ordifiary business transaction on behalf of the principal including entering into contracts Whittaker Otto 1961 188 Cal.App.2d 619 623 see also Civ Cod 2304-2309 There are two types of such authority actual and ostensible 10 Tomerlin Canadian Indern Co 1964 61 Cal.2d 638 643. Neither party advances any 11 argument that Secretary Perry had actual authority to bind Stanford to contract the only form 12 of authority at issue is ostensible authority 13 authority arises as result of conduct of the principal which cause the third 14 party reasonably to believe that the agent possesses the authority to act oh the principals behalf 15 Tomerlin Canadian Indem Co supra 61 Cal.2d at 643 Ostensible agency cannot be 16 established by the representations or conduct of the purported agent the statements or acts of the 17 principal must be such as to cause the belief the agency exists J.L Childrens Institute Inc 18 2009 177 Cal.App.4th 388 404 An agents authority may be implied from the circumstances 19 ofa particular case Kelleyv R.F Jones Co 1969 272 Cal.App.2d 113 120 The principals 20 consent to the agency need not be express Tonierlin Canadian Indenz Co supra 61 Cal.2d 21 atp.644 22 Here Plaintiff alleges Secretary Perry is the director of the War College at Stanford 23 University director of the Preventative Defense Project for Center for International Security and 24 Cooperation CISAC and professor emeritus FAC 16 Plaintiff additionally pleads 25 Secretary Perry oversees Military Fellows at Stanford who receive military credit for academic 26 studies the same transaction at issue here with respect to the constructive credits Plaintiff 27 sought Ibid Secretary Perry is allegedly the sole person at Stanford to decide whether to 28 support request for constructive credit Id at 18 Further other Stanford personnel ORDER RE DEMURRER represented Secretary Perry would consider Plaintiffs request for constructive credit should he choose to attend Stanford Ic at 11 15 22 The Court finds these allegations sufficiently reflect that Stanford held Secretary Perry out as someone who could provide letter of recommendation for Plaintiff to receive constructive credit particularly as he is allegedly the only individual at Stanford who may grant such requests Accordingly the demurrer is not sustainable on the basis Plaintiff failed to plead Secretary Perry had authority to enter into contract Statute of Frauds Defendants assert the breach of cothract cause of action is barred by the statute of frauds 10 because the promise to perform certain coursework took Plaintiff years to fulfill Therefore according to Defendants allegations establish that the coursework Plaintiff alleges was 12 part of his side bargain could not have been performed within one year Mem Ps As 13 lis 23-26 14 The statute of frauds is codified in Civil Code section 1624 which in relevant part 15 provides that an oral contract is unenforceable if by its terms it will not be performed within one 16 year or during the lifetime of the promisor To fall within the words of this provision the 17 agreement must be one of which it can truly be said at the very moment it is made 18 agreement is not to be performed within one year White Lighting Co Wolfson 1968 68 19 Cal.2d 336 343 fri citations omitted general demurrer maybe interposed when the 20 complaint shows on its face that the agreement sued on is within the statute of frauds and does 21 not comply with its requirements Parker Solomon 1959171 Cal.App.2d 125 136 22 Here the contract does not clearly fall within the statute of frauds because the alleged 23 terms of the contract do not expressly preclude performance within one year Defendants entire 24 argument is predicated on the fact Plaintiff alleges it took three years to complete certain 25 coursework However that fact alone does not preclude the possibility of completing the 26 courseworlc in less than one year There are no facts alleged in the FAC suggesting it was 27 impossible for Plaintiff to complete the agreed-upon coursework within one year and it is 28 ORDER RE DEMURRER otherwise conceivable that the coursework could have been completed within one year Therefore the demurrer is not sustainable on the basis it is barred by the statute of frauds Conclusion In sum Defendants fail to advance any successful argument that could serve as basis for sustaining the demurrer to the breach of contract claim Accordingly the demurrer to the first cause of action on the ground of failure to state sufficient facts to constitute cause of actior is OVERRULED Second Cause of Action Promissory Estoppel Defendants assert Plaintiff fails to plead claim for promissory estoppel because he does 10 not adequately allege clear and unambiguous promise the element of reliance and the element 11 of injury Defendants additionally contend the claim is barred by the statute of frauds 12 Promise 13 14 Defendants advance the same argument here that the promise is ambiguous as it does 15 with respect to the breach of contract claim Once again Defendants contend the promise to 16 write recommendation letter is vague because Plaintiff does not plead the exact contents of the 17 letter 18 One element of claim for promissory estoppel is promise clear and unambiguous in 19 its terms La/cs Coast Fed Say LoanAssn 197660 Cal.App.3d 885 890 promise 20 has been held not to be clear and ambiguous when the promise was not intended to be final and 21 there will undoubtedly be further negotiations Ibid Such is not the case here For the reasons 22 stated above the Court finds this promise to be sufficiently definite The fact that Plaintiff does 23 not plead the exact contents of the letter is not determinative as the promise contains key 24 provisions as to what must be written in the left er i.e support for receiving constructive credit 25 The alleged facts do not suggest any additional negotiation was required or that the parties did 26 not decide term of the promise Accordingly the demurrer is not sustainable on the basis the 27 promise is not clear and ambiguous 28 ORDER RE DEMURRER Reliance Defendants insist Plaintiff fails to adequately plead the element of reliance because reliance was not reasonably foreseeable Defendants additionally argue Plaintiff fails to plead the element of reliance because he alleges the existence of consideration in connection with breach of contract claim i.e promise that was bargained for Therefore it appears Defendants intend to argue Plaintiff may not plead inconsistent claims Reliance is an element of claim for promissory estoppel and such reliance must be reasonably foreseeable La/cs Coast Fed Say Loan Assn supra 60 Cal.App.3d at 890 In other words plaintiff must allege promise which the promisor should reasona4bly expect 10 to induce action or forebearance of definite and substantial character on the part of the 11 promise Diede Const Inc Monterey Mechanical Co 2004 125 Cal.App.4th 380 385 12 Defendants assert Plaintiff does not plead he reasonably relied on Secretary Perrys 13 promise because he does not plead any facts supporting the conclusion that such reliance was 14 reasonably foreseeable In support Defendants point to lack of any allegations suggesting Plaintiff told anyone at Stanford he was relying on Secretary Perrys promise 16 This contention lacks merit review of the pleading reveals Plaintiff adequately pleads 17 the element of reasonably foreseeable reliance Prior to enrolling at Stanford Plaintiff asked 18 multiple employees about the possibility of receiving constructive credit FAC 15 36 As 19 part of these discussions Plaintiff alleges he specifically inquired about whether he would be 20 able to receive letter of recommendation from Secretary Perry and described the central role 21 Secretary Perry and obtaining constructive credit played in his choice to attend Stanford Id at 22 31 16 18 Plaintiff additionally alleges after enrolling at Stanford he continued to inquire with 23 other members of the faculty if he would be able to receive constructive credit and receive 24 letter of reconunendation Id at 17 The staff replied that they believed so becaue Secretary 25 Perry is the sole person to consider whether to support request for constructive credit Jbid 26 The co-director of CISAC even allegedly advised Plaintiff on how to obtain Secretary Perrys 27 support Id at 17 After these conversations meeting was arranged between Plaintiff and 28 Secretary Perry so that he could inquire about receiving constructive credit Ibid After ORDER RE DEMURRER Plaintiffs discussions with Secretaty Perry and other faculty Plaintiff relied on the promise to provide letter of recommendation by enrolling in certain courses and performing doctoral research that he would not have otherwise undertaken Id at 1123-24 27 Based on the above it is reasonably foreseeable that Plaintiff would rely on the numerous representations from staff thembers and other faculty that Secretary Peny would provide him with letter of recommendation Turning to whether Plaintiff may plead both claim for breach of contract and promissoryestoppel claim for promissoryestoppel is distinct from claim sounding in contractbecause the element of detrimental reliance is regarded as substitute for consideration 10 Douglas Barnhart Inc CMC Fabricators Inc 2012 211 Cal.App.4th 230 242 Thus 11 where the promisees reliance was bargained for the law of consideration applies and it is only 12 where the reliance was unbargained for that there is room for application of the doctrine of 13 promissory estoppel Id at pp 24344 citations omitted 14 Therefore Defendants general statement of law that promise in claim for promissory 15 estoppel maynot be bargained for is correct However that is not the end of the inquiry 16 Plaintiff argues that at the pleading stage he may plead alternative counts and thus is not 17 precluded from asserting promissory estoppel claim in addition to claim for breach of 18 contract This argument is well-taken modem practice allows that party to plead in the 19 alternative and make inconsistent allegations Mendoza Continental Sales Co 2006 140 20 Cal.App.4th 1395 1402 see also Crowley Katleman 1994 Cal.4th 666 691 21 pleading alternative factual or legal theories is appropriate when the pleading is in doubt as to 22 which theory most accurately reflects the events and can be established by the evidence 23 Courts have specifically allowed plaintiff to plead both promissory estoppel and breach of 24 contract based on the same facts even though the causes of action have conflicting elements 25 Fleet Bank ofAinerica NA 2014 229 Cal.App.4th 1403 1413 Therefore Plaintiff could 26 allege facts that could support cause of action for promissory estoppel.. in the event that 27 cannot establish cause of action for breach of contract Ibid 28 10 ORDER RE DEMURRER In light of the above the fact that Plaintiff also alleges breach of contract is not basis for sustaining the demurrer Injury Defendants argue Plaintiff fails to adequately plead the element of injury because the military has not yet determined whether he will obtain constructive credit The part asserting the estoppel must plead he or she was injured by reliance on the promise US Ecology Inc State supra 129 Cal.App.4th at 901 As discussed more thoroughly above Plaintiffs alleged injury is that he spent three years taking unnecessary coursework and sacrificed growing his successful company while he was enrolled at Stanford 10 FAC 25 27 28 Plaintiff specifically alleges that without Secretary Perrys promise he would not have taken these security-based classes and would have left Stanford Therefore 12 Plaintiff adequately pleads the element of injury 13 Statute of Frauds 14 Defendants advance the same argument here with respect to the statute of frauds as they 15 did relative to the first cause of action Defendants assert the claim for promissory estoppel is 16 barred by the statute of frauds because Plaintiff alleges it took him three years to complete the necessary coursework For the reasons previously stated the claim is not barred by the statute of 18 frauds because the allegations do not clearly reflect that the necessary coursework could not have 19 been completed in less than year Therefore the cause of action for promissory estoppel does 20 not appear to be barred by the statute of frauds 21 Conclusion 22 23 Based on the foregoing Defendants fail to present any persuasive argument as to why the 24 demurrer to the second cause of action should be sustained Accordingly the demurrer to the 25 second cause of action on the ground of failure to state sufficient facts to constitute cause of action is OVERRULED 27 28 11 ORDER RE DEMURRER Third Cause of Action Negligent Misrepresentation Defendants argue Plaintiff fails to plead misrepresentation of prior or existing fact the element of injury and Secretary Perrys authority to speak for Stanford Misrepresentation Defendants assert Plaintiff fails to plead the element of misrepresentation because the alleged promise was representation regarding future events or actions One eletnent of claim for negligent misrepresentation is the misrepresentation of past or existing material fact Apollo Capital Fwzd LLCv Roth Capital Partners LLC 2007 158 Cal.App.4th 226 243 false promise to perform in the future cannot support claim for 10 negligent misrepresentation Tarmann State Farm Mut Ins Co 1991 Cal.App.4th 153 11 158-159 12 Defendants position that the promise concerns future events or actions is well-taken 13 Plaintiffs claim is predicated on Defendants promise to provide letter of recommendation to 14 help him obtain constructive credit for courses taken at Stanford Plaintiffs arguments in 15 opposition are unavailing Plaintiff simply asserts he pleads Defendants made representations of 16 fact because Stanford said it would support his military career and never expressed 17 concern that Secretary Perry would not consider supporting his request Opp 13 us 8-10 18 emphasis added These statements do not qualify as representations of fact Rather the 19 statement that Stanford would support Plaintiffs military career is more akin to statement that 20 someone would pay for repairs in the future which is not representation of present fact 21 Tarmann State Farm Mut Ins Co supra Cal.App.4th at 158 emphasis in original 22 While Plaintiff provides litany of law illustrating exceptions to the requirement of 23 representation of material fact he does not advance any arguments showing how any such 24 examples relate to the present circumstances 25 Accordingly Plaintiff fails to plead the element of misrepresentation and the demurrer is 26 thus sustainable 27 28 12 ORDER RE DEMURRER Injury Defendants once again argue Plaintiff fails to allege he was injured as result of their actions An element of claim for negligent misrepresentation is that the plaintiff suffered resulting damages i.e injury Hot Rods LLC Northrop Grumman Systems Corporation 2015 242 Cal.App.4th 1166 1185 As discussed with respect to the first and second causes of action Plaintiff adequately alleges he was injured due to Defendants representations that if he took extra security-based coursework he would receive letter of recommendation for constructive credit As result of this representation Plaintiff allegedly invested more time in 10 school to the detriment of his independent business Accordingly the demurrer is not sustainablc 11 on the basis he fails to plead the element of injury 12 Authority 13 Defendants assert Plaintiff fails to plead Secretary Perry had authority to make promises 14 on Stanfords behalf Defendants advance the same exact argument with respectto the third 15 cause of action as to the first cause of action 16 The Court is unaware of any legal authority supporting Defendants contention that Plaintiff must allege facts establishing Secretary Perrys ostensible authority to make promises on Stanfords behalf to support negligent misrepresentation claim Defendants only cite to cases concerning the heightened particularity requirement in fraud claims which requires plaintiff to plead facts showing an individuals authority to speak on behalf of corporation West JPMorgan Chase Bank NA 0l3 214 Cal.App.4th 780 793 The purpose of the 22 heightened pleading standard is to give the defendant notice of definite charges which can be 23 intelligently met and to permit the court to determine whether on the facts pleaded there is any 24 foundation prima facie at least for the charge of fraud Apollo Capital Fund LLC Roth Capital Partners LLC 2007 158 Cal.App.4th 226 240 citations and quotations omitted 26 Defendants essentially argue authority must be pleaded in order to establish liability for 27 negligent misrepresentation claim similarto the requirement to plead an agents authority to 28 enter into contract on principals behalf The argument is misguided as the requirement to 13 ORDER RE DEMURRER plead authority in fraud cases exists to give notice to defendants whereas here Defendants address the issue of authority in the context of legally binding Stanford to Secretary Perrys statements Therefore Defendants fail to substantiate their position that no cause of action has been stated due to the absence of allegations of authority Even assuming Defendants argument is correct for the reasons stated above Plaintiff sufficiently alleges Secretary Perrys authority to enter into contracts on behalf of Stanford Plaintiff alleges ample facts suggesting Stanford held Secretary Perry out as one who could provide letter of recommendation Notably Secretary Perry is allegedly the only individual who approves requests for constructive credit FAC 17 Secretary Perrys ostensible 10 authority is additionally strengthened by his title as Director of CISAC and director of the War 11 College Fellows program at Stanford which allows students at the War College to audit classes 12 at Stanford for constructive credit Id at 16 Therefore Plaintiff pleads facts suggesting 13 Secretary Perry had ostensible authority to act on Stanfords behalf with respect to writing 14 recommendations for constructive credit 15 Conclusion 16 For the reasons stated above Defendants petsuasively argue Plaintiff fails to plead the 17 element of misrepresentation Accordingly the demurrer to the third cause of action on the 18 ground of failure to state facts sufficient to constitute cause of action is SUSTAINED with 10 19 days leave to amend 20 21 22 26 Date 14 Superior Court ORDER RE DEMUflER EXHIBITEXHIBIT H 1 Michael Hanneken 15 Northwood Court Orinda California 94563 February 13 2016 Office of the President and Provost Dr Stephanie Kalfayan Building 10 Stanford CA 94305-2061 Transmitted via fax 650-725-1347 kalfayan@stanford.edu Re Non-academic grievance appeal Dear Dr Kalfayan In accordance with University policy am writing to submit the attached non-academic grievance appeal am dissatisfied with the abrupt disposition and the apparent lack of investigation by the Director of Diversity of my non-academic grievance As you may recall Dr Rasch made request of your office the Vice Provost for Academic Affairs in December 2015 to informally discuss this matter with Dr William Perry My understanding is that your office declined to assist at that time Since then continued to work diligently to informally resolve the matter on my own However absent support from the University my request for the opportunity to remedy perceived concerns regarding an agreement with Dr Perry were ignored or denied now ask the Provost Office for assistance again While the matter adversely affects me in several ways the non-academic grievance process when performed in accordance with Stanford policy offers the most favorable environment to resolve this grievance Kindly see the attached non-academic grievance appeal for your review and consideration Should you have any questions about the appeal or its underlying grievance may be reached by Cel 415 413-7540 or by email hanneken@stanford.edu Respectfully submitted HANNEKENOO21 Non-academic Grievance Appeal Page Director of Diversitys Grievance Decision This document is an appeal to formal grievance filed with Director of Diversity and Student Life Rosa Gonzalez Attached hereto as Attachment Formal Grievance This appeal does not result solely from dissatisfaction with Ms Gonzalezs decision rather it arises out of her failure to reasonably analyze the facts supporting my grievance as applied to the stated policies Ms Gonzalez did not investigate analyze or respond to any of the substantive portions of my grievance Additionally Ms Gonzalez based her decision on conversations not included in my grievance that occurred prior to my filing Ms Gonzalezs decision was unreasonable demonstrates failure to base her exercise of discretion on substantive matter presented and ultimately resulted in an abuse of discretion Ms Gonzalezs Single Paragraph Decision Ms Gonzalez summarily dismissed my grievance Her decision was based on the following Th central issue is the alleged agreement between Secretary Perry and you as stated in your grievanceIn brief Dr Perry promised to support War College constructive credit As have discussed with you on number of occasions the Student Non- Academic Grievance Procedure is not appropriate when the issues involve faculty member and student As the University administrator charged with administering the Student Non-Academic Grievance Procedure am referring this matter to the Student Grievance Procedure See Section .e.ii of the Student Non-Academic Grievance ProcedureThe Director in his or her sole discretion can decide whether to refer grievance brought under this procedure to another grievance procedure February 2016 Email from Rosa Gonzalez to Michael Hanneken Grievance Decision attached hereto as Attachment Improper Facthal Basis Giving Rise to Ms Gonzalezs Decision Ms Gonzalezs decision is based on extraneous facts not those giving rise to the grievance Ms Gonzalez focused on past conversations not mentioned in my grievance and contextualizing facts not providing basis for the grievance in rendering her decision both actions were unreasonable She states that th central issue is the alleged agreement between Secretary Perry and you as stated in your grievance In brief Dr Perry promised to support War College constructive credit Grievance Decision My grievance in Section titled breach of Stanford policies giving rise to this grievance provides that Taken as whole Stanford University has breached its standards of conduct by not providing meeting to discuss the agreement The non-substantive responses provided by Stanford employees show failure to respect my belief that an Errors in the original HANNEKENOO21 Non-academic Grievance Appeal Page agreement is not being performed or to understand the importance performance of the agreement has for my academic research and career Additionally believe the standard requiring fair conduct has been violated as Stanford employees have allowed other Stanford employees to evade substantive discussion of the agreement by misuse of bureaucratic process Formal Grievance Section subd emphasis added For purposes of the grievance discussion of the agreement between myself and Dr Perry only served to explain underlying conduct the grievance is based on the failure of Stanford to provide the procedural remedies it guarantees towards informal resolution of issues This fact contextualizes the issue giving rise to the grievance the failure to provide forum for informal resolution As thoroughly explained in Section of the grievance the conduct of the Stanford employees not specifically Dr Perry gave rise to the breach of the Stanford Code of Conduct There state that Stanford has not provided an opportunity to discuss concerns regarding the promise made by Dr Perry Formal Grievance Section My grievance did not address the agreement between myself and Dr Perry The grievance solely addressecIhe failure of Stanfor employees in the performance of their duties to respond to my attempts at informal resolution Section of the grievance titled informal efforts at resolution states that made exhaustive efforts to informally implement the Stanford administration to resolve the issue of whether Ms Gordon will honor the agreement of her supervisor Dr Perry in professional respectftil and non-adversarial manner Formal Grievance Section As expressed in my grievance the efforts made in this matter involved obtaining forum to resolve my dispute not the dispute itself For purposes of the grievance discussion of Dr Perry was purely contextual reasonable analysis of my grievance reveals that the agreement between myself and Dr Perry did not form the basis of my complaint but was mentioned only for purposes of orienting the reader Ms Gonzalez failed to appreciate the thrust of my grievance Stanford failed to implement its policies by not providing forum to substantively address and potentially remedy perceived concerns regarding an agreement with Dr Perry during informal resolution Finally conversations had with Ms Gonzalez are used as factual basis for the decision although those conversations were not mentioned in or relevant to the grievance This is discussed in Section III of the appeal In short reasonable person would exercise discretion by providing an analysis of the pertinent facts and issues as presented in the formal grievance and not on issues or facts that do not appear in the grievance and are collateral to the purpose of the grievance Ms Gonzalezs use of conversations not relevant to my grievance as basis for her decision was unreasonable Further Misconduct by University Personnel have been the subject of retribution by university personnel As mentioned in my grievance Stanford employees have smeared my name by spreading false rumors HANNEKENOO212 Non-academic Grievance Appeal Page about my conduct in relation to attempts to informally resolve this grievance As provided in the Code of Conduct No retaliation Stanford University prohibits retaliation or reprisals against individuals based on their pursuit in good faith of grievance under this procedure or their participation in good faith in the grievance process Code of Conduct subd It is my belief that one or more Stanford personnel have retaliated against my efforts to obtain resolution in this matter by spreading false acquisitions For example recently received phone call from an Asst Dean at GLO directing me to cease communication with research center on campus the deans reasons were based on two patently false acquisitions made by those have filed this grievance against The misuse of the GLO distracts its staff from the important role they play on campus and effectively stopped my ability to seek informal resolution Such behavior is violation of the Stanford Code of Conduct and shows retaliatory motives resulting from my attempts to resolve my issue It should also be noted that throughout this entire process have been without the benefit of an advisor Although the Universitys Code of Conduct is supposed to apply to University faculty and staffand not just studentswhen spoke with an advisor from the Office of Community Standards he wrote back that my toncerns regarding the alleged conduct of Stanford staff cannot be adjudicated through our process Put simply have had to seek resolution of claim against Stanford employees in an environment where acquisitions made by senior University staff are unquestioned II The Facts Giving Rise to the Grievance Involved Failure of Stanford Staff to Provide Forum for Informal Resolution of Matter Not the Matter Itself The Facts Giving Rise to the Claim Involved Stanford Staff Not Professor brought my grievance as result of violation of the Stanford Code of Conduct as applied to Stanford employees Section 3B of my grievance discusses the University Code Section that was violated and the facts giving rise to this violation As stated in the grievance All faculty staff students University Officers and affiliates are responsible for sustaining the highest ethical standards.2 The University values integrity honesty and fairness Code of Conduct 1.1.1 subd Those subject to the Code of Conduct are required to report suspected violations of applicable standards policies laws or regulations to the appropriate cognizant office Code of Conduct 1.1.1 subd Stanfords conduct is governed by rules of fairness honesty and respect for the rights of others will govern our conduct Code of Conduct 1.1.2 https //adminguide.stanford.edu/chapter-1 /subchapter- 1/policy-i-i-i HANNEKENOO21 Non-academic Grievance Appeal Page Stanford has not provided an opportunity to discuss concerns regarding the promise made by Dr Perry.. Stanfords failure to provide the opportunity to engage in substantive discussion regarding the agreement with Dr Perry is violation of essential Standards governing the conduct of Stanford employees Formal Grievance Section subd emphasis added My grievance clearly explains that the facts giving rise to the dispute involve Stanford employee misconduct in not providing forum to informally resolve my dispute not the dispute itself and such misconduct is violation of the Stanford Code of Conduct Ms Gonzales failed to address the substantive issues giving rise to the grievance and instead depended on background facts as the basis for her decision The Grievance Focuses on Policies Breached by Stanford Stall Not Professor In Section of my grievance titled efforts taken at informal resolution explain the numerous attempts have made to obtain forum state that made exhaustive efforts to informally implement the Stanford administration to resolve the issue of whether Ms Gordon will honor the agreement of her supervisor Dr Perry in professional respectful and non-adversarial manner sought informal resolution through assistance from leaders of FSI and CISAC Office of Diversity Community of Standards GLO Ombuds and others attempted to reach Dr Perry through mailed letter and to gain clarity on what the perceived barriers are to my request contacted among others Deborah Gordon Karl Eikenberry Michael McFaul David Rasch Elizabeth Gardner and Laurette Beeson Formal Grievance Section This section of the grievance demonstrates that my efforts to informally resolve the matter giving rise to my grievance obtaining forum had failed Ms Gonzalez overlooked these facts Furthermore in Section of the grievance titled desired resolution of the matter explain that by ignoring numerous requests to obtain substantive response to my inquiries Stanford University has failed to adequately implement its stated policies regarding non-academic disputes frustration for me is thatto dateI have not been provided substantive answer for why cannot speak with Dr Perry Formal Grievance Section emphasis added Again show that the basis for my grievance and the desired resolution of my matter involves the provision of forum Ms Gonzalez failed to consider these issues in her decision III The Provost May Overturn This Decision on Numerous Grounds There are numerous grounds on which the Provost may overturn Ms Gonzalezs decision student dissatisfied with the disposition of formal grievance may appeal to the HANNEKENOO214 Non-academic Grievance Appeal Page Provost Student Non-Academic Grievance Procedure Grievance Procedure subd When reviewing grievance decision on appeal the Provost usually considers the following Were the proper facts and criteria brought to bear on the decision Were improper or extraneous facts or criteria brought to bear that substantially affected the decision to the detriment of the grievant Were there any procedural irregularities that substantially affected the outcome of the matter to the detriment of the grievant Given the proper facts criteria and procedures was the decision one which person in the position of the decision maker might reasonably have made3 Grievance Procedure subd The proper facts and criteria were not brought to bear on the decision Ms Gonzalez failed to rationally apply the facts giving rise to the grievance to the stated policies violated by Stanford employees in so doing she made erroneous and unreasonable assumptions First she assumed that the grievance was brought as result of disagreement between student and professor Second she assumed without explanation that this grievance was academic in nature Because Ms Gonzalez failed to analyze the proper facts and criteria in reaching her decision to deny the grievance her decision must be overturned Ms Gonzalez did not consider the factual basis of my grievance the failure of Stanford staff to provide forum for informal resolution Formal Grievance Section 3B Furthermore she failed to apply supporting facts to the pertinent Code of Conduct Standards as applied to Stanford employees Formal Grievance Section 3B Finally Ms Gonzalez failed to analyze whether these facts involved non-academic matter As provided in my grievance matter is non-academic as it does not stem from an improper decision on an academic matter such as grade dispute but involves an individual decision and individual actions that affect the grievant personally in his or her capacity as student Student Non-Academic Grievance Procedure Grievance Procedure Art subd Stanfords failure to provide forum in which my substantive concerns can be addressed has given rise to this grievance as my informal attempts to obtain such relief have proven inadequate Formal Grievance Section 3A emphasis added Ms Gonzales failed to consider the facts giving rise to my grievance or apply pertinent Stanford Codes of Conduct Instead she summarily determined that my grievance was brought to address my claim against Stanford professor As result she reached decision not based on the proper facts or criteria Improper or extraneous facts or criteria were brought to bear that substantially affected the decision to my detriment https//web.stanford.edu/dept/registrar/bulletin 1112/4771 .htm HANNEKENOO21 Non-academic Grievance Appeal Page Ms Gonzalez considered improper facts in reaching her decision She based her decision on previous discussions having nothing to do with the substance of my grievance Ms Gonzalez states central issue is the alleged agreement between Secretary Perry and you as stated in your grievanceJn brief Dr Perry promised to support War College constructive credit As have discussed with you on number of occasions the Student Non-Academic Grievance Procedure is not appropriate when the issues involve faculty member and student Grievance Decision emphasis added Ms Gonzalez considered extraneous conversations involving my underlying dispute to support her decision This was improper because Ms Gonzalez failed to address the substantive facts giving rise to my complaint Instead of focusing on the failure of Stanford employees to conduct themselves in accordance with Stanford Policies Ms Gonzalez referenced background facts and conversations that do not appear in my grievance or form basis for the complaint As result of her improper consideration of extraneous facts Ms Gonzalez reached an incorrect decision There were procedural irregularities that substantially affected the outcome of the matter to my detriment Ms Gonzalez failed to initiate an investigation into the failure of Stanford employees to provide me forum to resolve my conflict informally The essence of my grievance Stanford Code of Procedure provides4 Investigation the Compliance Officer will promptly initiate an investigation and may refer the matter or any part of it to grievance officer or other designee who will look into and/or address the matter as the Compliance Officer directs In undertaking the investigation the Compliance Officer or grievance officer may interview consult with and/or request written response to the issues raised in the grievance from any individual the grievance officer believes to have relevant information including faculty staff and students Non-Academic Regulations subd Ms Gonzalez did not complete an investigation in relation to my claims against Stanford employees for violation of the Stanford Code of Conduct She failed to request response to the issues raised in the grievance from any individuals believed to have information the reviewer considers relevant including faculty staff and students Grievance Policy Instead she summarilydismissed the formal non-academic grievance This is evidenced in her failure to conduct investigations regarding my claims and her sole reliance on the discretion provided her office to avert academic grievances Such decision fails to address in any substantive fashion my explanation of how this grievance is non-academic Such conduct is improper as discussed in the Stanford Code of Procedure hap //exploredegrees.stanford.edu/nonacademicregulations/text-studnonagrieproc HANNEKENOO21 Non-academic Grievance Appeal Page Findings and Notification upon completion of the investigation the grievance officer will prepare and transmit to the student and to the party against whom the grievance is directed final report containing summary of the investigation written findings and proposed disposition Non-Academic Regulations subd Ms Gonzalez did not provide summary of her findings Instead she dismissed the substantive portions of my grievance She chose to do so without reference to the section of my grievance that explains how the issue is non-academic in nature Failure to exercise discretion is an abuse of discretion Taken as whole Ms Gonzalez failed to follow Stanford Policy regarding the Grievance Procedure She declined to investigate the different claims made regarding the Stanford Code of Conduct violations Furthermore she did not provide report containing summary of her investigation or description of her findings To quote Ms Gonzalez she referred this matter to the Student Grievance Procedure See Section .e.ii of the Student Non-Academic Grievance ProcedureThe Director in his or her sole discretion can decide whether to refer grievance brought under this procedure to another grievance procedure Grievance Decision Ms Gonzalezs failure to perform an investigation into the substance of my grievance and prepare summary of her findings are procedural irregularities that affected the outcome of my matter Ms Gonzalez did not evaluate the merits of my grievance She did not investigate whether my grievance was academic or non-academic Further she did not investigate my claims against University employees for failure to implement the Code of Conduct As result of Ms Gonzalezs failure to follow procedure the substance of my complaint has not been evaluated or commented on Given the proper facts criteria and procedures the decision is not one which person in the position of the decision maker might reasonably have made Ms Gonzalez states that the policy giving her grounds to refer this grievance to the academic procedure is captured in Section 1.e.ii of the Student Non-Academic Grievance Procedure provides The Director in his or her sole discretion can decide whether to refer grievance brought under this procedure to another grievance procedure Grievance Decision Ms Gonzalez fails to explain the basis for exercising her discretion Besides the previous conversations between myself and Ms Gonzalez which are not discussed in my grievance and the background factual information which serves to provide context for my grievance Ms Gonzalez failed to provide any analysis or explanation for why she decided to refer my grievance to the academic procedure Noticeably absent from her decision is discussion of the substantive portions of my grievance including my explanation for why this grievance is non-academic in nature HANNEKENOO21 Non-academic Grievance Appeal Page CONCLUSION Ms Gonzalez did not perform her duty as Director of Diversity iii reasonable manner Her decision was not based on investigation analysis review and rational explanation Instead she jotted an email deflecting grievance to another branch of the Stanford administration For discretion to be reasonably exercised it must be based on appropriate facts and criteria by failing to analyze and investigate facts substituting this with discussion of facts not mentioned in the grievance or relevant thereto Stanford policies explaining that my grievance is non- academic and the policies violated by Stanford personnel or provide reasoned analysis synthesizing the two Ms Gonzalezs exercise of discretion was unreasonable and abusive Ms Gonzalezs decision must be reversed because of her failure to apply proper facts and criteria to my grievance and her failure to employ standard procedures involving investigation and reporting findings Such actions substantially affected the decision to my detriment As student at Stanford University am entitled to substantive review or my grievance Ms Gonzalezs decision is unreasonable and the type that person in the position of Director would not have made HANNIZKbNOUZ1 EXHIBITEXHIBIT I SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA MICHAEL HANNEKEN Plaintiff vs Case No 16CV300285 LELAND STANFORD JUNIOR UNIVERSITY WILLIAM PERRY DOES 1-50 Defendants DEPOSITION OF JOHN ETCHEMENDY THURSDAY MARCH 22 2018 1005 A.M SAN JOSE CALIFORNIA Reported by Michelle Knowles CSR 8979 CRR CCRR Job 25615 JOHN ETCHEMENDY March 22 2018 Uh-huh And that was the decision that he then appealed Uh-huh Okay Now the academic grievance process would have required him to file formal grievance with the dean of his school in this case believe dean of engineering and the dean of engineering would have then made decision and so forth And if he was unhappy 10 with that decision it would have -- he could appeal 11 and it would be appealed to me 12 So all these different grievance processes and 13 appeal processes most of them ultimately can come to me 14 if the person appeals Okay 15 Okay 16 So in this case he was actually appealing 17 the decision that this case should go through 18 different process 19 Okay 20 When received it -- so didnt want to 21 have him have to go through the academic grievance 22 process and so in order--for his benefit took it 23 on as if were doing the academic grievance 24 And what was the underlying issue 25 Well the underlying issue was -- ultimately Page 80 Bill Perry and he thought that maybe -- suppose he thought that he could convince him to change his mind But that meeting did not happen and so he was unhappy about that and he said that am being prevented from coming to an informal resolution So thaVs nonacademic issue But really if you think about it that would make every academic grievance nonacademic grievance because every academic grievance before it gets to the 10 formal process you know presumably theres some 11 chance to have an informal resolution and if that 12 fails its only if that fails that it goes through 13 the formal process The fact that it fails doesnt make 14 it nonacademic grievance See 15 So that was the problem and Mr Hannekens 16 reasoning and why it was not really an nonacademic 17 grievance was because it went back to the original 18 academic issue 19 Was Mr Hanneken provided an opportunity to 20 obtain informal resolution 21 MR LANPHERE Object to the form Lacks 22 foundation 23 THE WITNESS mean certainly --yes and 24 dont know exactly what you mean 25 Was he given opportunity He certainly Page 79 was disagreement between whether he had been -- whether William Perry had promised to support his request to get an exception from -- from the Army for particular purpose And -- and that was -- so that was ultimately the basis Now when he filed the grievance he said Well no Its -- really the grievance is grievance about the fact that have not been given the chance to come to an informal resolution because 10 havent been given the chance to meet with 11 William Perry And so thats not academic and so 12 thats why he thought the appropriate process was the 13 nonacademic grievance process 14 Now Ican explain why thats wrong if youd 15 like 16 Please 17 So if you think about-- sowe have basic 18 issue that student is unhappy about and that was an 19 academic issue the question of whether or not he would 20 be supported in -- to receive kind of credit from the 21 Army War College for courses he took here And any -- 22 so thats an academic issue 23 He then thought that well now if try -- 24 if come to an informal resolution then we can end 25 things or he decided that he wanted to talk to Page 81 interacted with Deborah Gordon and thats presumably an attempt to come to an informal resolution BY MR GIACCHETTI Okay Do you know if he ever communicated with William Perry MR LANPHERE Ever THE WITNESS Ever Yeah BY MR GIACCHETTI After this dispute arose in his effort -- well here Let me just say do you -- Well know he wrote -- mean he wrote letter and so forth yeah Okay Okay And dont know the timing so dont know at what point that was done Yeah And do you know if William Perry ever responded MR LANPHERE Just do you know THE WITNESS dont know dont know BY MR GIACCHETTI Okay Was that an issue that the factfinders in this matter looked into Yes believe -- mean the whole interaction there was an issue that they looked into but dont recall whether he responded to -- first of Page 78 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First Legal Deposition-CalendarfirstIegal.com L.A 855.348.4997 78 to 81 JOHN ETCHEMENDY March 22 2018 Fage 52 all as said dont know if that letter was written in the process -- in this process of looking for an informal resolution dont know whether he responded to it so cant answer that question Okay just dont know Uh-huh And so when Mr Hanneken appealed the grievance decision what eventually came before you What came before me was the original 10 grievance the appeal of the grievance the decision by 11 the grievance officer and so that was communication 12 to Michael Hanneken and then the --and then his 13 appeal Okay Arid then at that point in time you appointed factfinders is that correct Uh-huh Yes And you asked them to investigate the matter Yes Okay And when you communicated with your factfinders you had oral meetings and you also had e-mail communications MR LANPHERE Objection Lacks foundation Misstates his prior testimony You can answer THE WITNESS So yes had oral meetings Page 84 factfinder if they interview lots of people over the course of weeks presumably takes notes as they interview dont know whether that happened here BY MR GIAccHETTI Okay And when the factfinders presented their findings to you how did they present them Orally Did they give you an oral presentation Yeah mean in my office yes Okay Okay We met right and they explained the case and what they had found out what people had said and so forth And you didnt take any notes in that -- No --in that--okay No And when you were meeting in your office what questions did you ask the factfinders So obviously -- probably -- mean again MR LANPHERE He doesnt want you to speculate Hes asking what questions did you ask at the meeting Page 83 mean face-to-face meetings and Im sure there were e-mails BY MR GIAccHETTI Okay And how did you come to determine what the -- what the dispute was between Hanneken and Perry How did come to determine From the report of the factfinders Okay From their report to me 10 Andthatwasanoralreport 11 Uh-huh ______________ 12 Do you believe that your factfinders took 13 notes or prepared any kind of reports 14 MR LANPHERE Objection Lack of foundation 15 THE WITNESS dont know 16 MR LANPHERE calls for speculation 17 THE WITNESS Yeah dont know the answer to 18 that 19 BY MR GIAccHETTI 20 Okay Would you expect that they would 21 MR LANPHERE Objection Lacks foundation 22 THE WITNESS You know it depends on the 23 complexity of the case 24 MR cIAccHETTI Uh-huh 25 THE WITNESS Yeah Usually you know Page 85 THE WITNESS Oh okay Well then actually cant recall that can tell you one question that always ask so Im quite sure because always ask Did you find out -- was there anything else that caused you concern in this case BY MR GIACCHETTI And do you remember what the factfinders told you when you asked them that question 10 11 12 no No You dont remember mean no do remember and the answer was 13 Okay All right When you normally process 14 grievance appeal what is -- do you have sort of 15 standard procedure that you go through 16 MR LANPHERE Objection think hes 17 already testified to that 18 But go ahead 19 THE WITNESS Yeah it kind of-- mean it 20 is -- so again there are many different appeal and 21 grievance-- 22 MR GIAccHETTI Yeah 23 THE WITNESS -- processes And have 24 standard process go through if its tenure appeal 25 have different standard process go through if its 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First Legal Deposition-CalendarfirstIegal.com L.A 855.348.4997 82 to 85 JOHN ETCHEMENDY March 22 2018 Page 210 because presumably the search may be overbroad Do you know in this matter who did that in the general counsels office No dont Uh-uh You dont No And would you be surprised if you learned that no e-mails have been produced that were written by you in this matter MR LANPHERE Thats actually false THE WITNESS Would be surprised dont know how many e-mails were written by me on this matter am sure that anything that was written has been collected and -- say Im sure only in the sense of trust BY MR GIAccHETTI Okay Well your-- Mr Lanphere states that e-mails were collected and were produced So.. MR LANPHERE And we stated that MR GIAccHETTI Okay MR LANPHERE And his e-mails were collected were reviewed pursuant to prior requests that asked for every e-mail that references the plaintiff and an4hing that referenced plaintiff has been produced MR GIAccHETTI Okay have those documents BY MR GIACCHETTI Okay And if you were going to estimate about what percentage of the letter is your original work Page 212 MR LANPHERE Objection Vague Ambiguous THE WITNESS How much of the letter is my original work dont dont know how to answer that The original draft was drafted by one person and 10 then edited by second person and then passed on to me 11 and then edited the letter 12 Generally in some cases -- so again Im 13 just talking generally Some cases do quite 14 extensive rewrites of the letter other cases thats 15 not necessary Do remember in this particular case 16 how much editing did dont 17 BY MR GIAccHETTI 18 And who wrote the first draft 19 MR LANPHERE Asked and answered 20 THE WITNESS Lauren Schoenthaler 21 BY MR GIAccHETTI 22 Okay And then -- okay 23 Is there anything that the factfinders 24 investigated or found to be facts that are not included 25 in the letter Page 211 THE WITNESS Which may not be lot MR GIACCHETTI Yeah Okay Now when you prepared your letter-- just want to -- just want to make sure that Im clear on few different issues -- to what extent did you rely on the factfinders MR LANPHERE Objection Asked and answered about 800 times James MR GIACCHETTI Uh-huh MR LANPHERE Thats patently unfair question You can say it-- go ahead and answer it again but dont know how many times thats been asked THE WITNESS So rely on them to find out what the facts of the case are MR GIACCHETTI Yeah THE WITNESS Right They go out they investigate they report back to me and so thats how rely on them Now obviously as weve seen as we went through the letter dont have to rely on them on some things like whats in the grievance whats in the appeal and so forth what are Mr Hannekens claims that are in the grievance and appeal dont know that Page 213 Not that know of Okay They may have but not that know of And did you ever speak with Professor Perry personally about this matter No Uh-uh No ___________ If you wanted to contact Professor Perry how would you do that Probably by e-mail or calling his assistant or Ms Gonzalez Okay And did you -- did you elect not to do that in this matter So as said deal with something like an appeal or grievance week in addition to all the other things described and dont -- dont personally do the investigation Uh-huh rely on factfinders to do that So no didnt try to call him And the factfinders did not speak with him personally MR LANPHERE Objection Lack of foundation THE WITNESS dont know dont know BY MR GIACCHETTI You dont know 210 to 213 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First Legal Deposition-Calendarfirstlegal.com L.A 855.348.4997 EXHIBITEXHIBIT J SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA ---000--- MICHAEL KANNEKEN Plaintiff CASE NO 16CV300285 vs LELAND STANFORD JUNIOR UNIVERSITY WILLIAM PERRY DOES 1-50 Defendants DEPOSITION OF STEPHANIE KALFAYAN SAN JOSE CALIFORNIA THURSDAY AUGUST 2018 Reported By Amanda Ostrowski CSR 13922 Job 29752 STEPHANIE KALFAYAN August02 2018 Page 34 Did you ever discuss with her what she did No did not dont think did Were you ever present in meeting where Ms Schorenthaler discussed what she did -- have no specific memory but it would not be -- it would not be unusual for her to have reported to the provost in my presence what she did But have no memory of that You know like have memory right now of us sitting here have memory of that Okay Did you ever sit in or were you ever part of meeting related to Colonel Hannekens grievance or grievance decision Well just said that dont have memory of that but it wouldnt be unreasonable for that to have happened So think had just answered that question Do you know person named David Rasch think maybe you mean David Rasch who was the university ombuds He retired Okay And you know that person know who he is yeah Okay Did you speak with him about Michael Hanneken So -- as told you have worked at Stanford for nearly 25 years Over the course of that time have spoken to five or more ombudspeople and most Page 35 frequently when have conversation with the ombuds it is not about someone by name have no recollection of speaking with David Rasch about your client Okay Do you recall speaking with David Rasch about dispute between student and FSI the Freeman Spogli Institute do not have specific recollection of that conversation It may have happened Do you have recollection of having 10 conversation with David Rasch about William Perry and 11 student 12 do not have that recollection Perhaps can 13 just go back and say what said before When the 14 ombuds -- because of the ombudss confidential work 15 generally the nature of my interaction with the ombuds 16 was in hypotheticals 17 have staff member who is concerned about 18 What is the policy surrounding this have student 19 who is concerned about why Is there policy that you 20 can point me to that might help 21 So it was the practice of David as well as the 22 other people who preceded him in that role not to 23 provide very much information It would have been highly 24 unusual for them to mention people by name which is -- 25 am not saying that it didnt happen but it was generally Page 36 the way he operated Okay Do you recall David Rasch asking you to intervene on behalf of student in regards to dispute related to FSl have no recollection of that Do you have recollection of David Rasch asking you to intervene on behalf of student in relationship to William Perry Again have -- have no recollection and 10 what -- as just explained think likely 11 conversation between David and myself would have been 12 more Would this be kind of situation where someone 13 can intervene not specific Will you do this In 14 fact cant remember ever having conversation with an 15 ombuds asking me to intervene or to do something 16 Do you have job duties related to grievances or 17 grievance appeals 18 MR LANPHERE Asked and answered 19 THE WITNESS Yeah mean --as already 20 explained have no decision-making responsibility with 21 respect to those things My only -- my only 22 responsibility is in some cases -- in some cases am 23 the person who acknowledges receipt and checks on 24 progress and moves things along 25 BY MR GIACCHETTI Okay And did you check on the progress of Mr Hannekens grievance may have but have no recollection of that now Page 37 Would you describe your relationship with William Perry -- have never had conversation with him that recall have no relationship with him _______ Okay Would you please describe your relationship with Deborah Gordon Again have no relationship with Deborah Gordon know who she is In the 90s worked with her on few things but have no relationship with her Okay And in relationship to Mr Hannekens grievance and grievance appeal is it the case that you never spoke with any individuals about Michael Hanneken MR LANPHERE Asked and answered And misstates her prior testimony You can-- THE WITNESS mean other than John Etchemendy Lauren Schorenthaler and the possibility that Rosa Gonzalez mentioned him by name when she was saying she had grievance there is no one else have spoken to aside from my attorney here ______ BY MR GIACCHETTI 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First Legal Deposition-CalendarfirstIegal.Com L.A 855.348.4997 34 to 37 STEPHANIE KALFAYAN August 02 2018 Page 38 Okay Did you conduct any form of analysis related to Michael Hanneken No already answered that did not Do you know if there are any due diligence standards related to investigation or resolution of grievances and grievance appeals MR LANPHERE Asked and answered Vague and ambiguous You can answer THE WITNESS Yeah mean think did answer this at the -- earlier There -- there -- there is not one way to deal with it So if that is what you mean by due diligence answered it earlier BY MR CIACCHETTI Okay So would you say that there are no due diligence standards MR LANPHERE Vague and ambiguous as to what you mean If you understand it you can answer THE WITNESS Yeah mean so think due diligence is -- pardon me It is lawyer term You know It is not something that people just use So if you want to clarify what you mean by that or ask it in another way might be able to answer it differently But think already answered it about you know 20 Page 39 minutes ago BY MR GIACCHETTI Do you know if there are any standards related to quality of investigation and resolution as they relate to grievance appeals and grievance decisions MR LANPHERE Im sorry object to the form Vague and ambiguous If you know you can answer THE WITNESS Yeah really dont know what you mean by quality Any grievant who is not satisfied with the answer or thinks that the decision and the process was not of good quality So that is really not -- that is not question that can be answered BY MR GIACCHETTI There are no internal standards related to what is produced in response to grievance or grievance appeal MR LANPHERE Objection Vague and ambiguous Asked and answered You can answer THE WITNESS think that-- that is absolutely correct there is no internal standard BY MR GIACCHETTI Do you know approximately how many grievance or grievance appeals are submitted to the provost on Page 40 yearly basis No could only speculate about number Is it over 50 No Is it over 25 Im not sure And those are submitted to the provost is that correct MR LANPHERE That is what you asked right Object to the form Go ahead and answer THE WITNESS was speaking about grievances and grievance appeals that come to the provosts office As you should know the grievance is the grievance processes vary and they are intermediate decision-makers right So am only answering about the provost to the best of my knowledge BY MR GIACCHETTI Are the grievances and grievance appeals that are submitted to the provost typically resolved within the course of an academic year No Okay Could you estimate for me generally how long it takes to resolve -- for the provost to resolve grievance or grievance appeal As stated previously because there are so many different kinds of these situations involving different members of the community they can take Page 41 anywhere from two weeks to more than year Okay And once decision is reached is that decision reviewed by anyone besides the provost MR LANPHERE Objection Vague and ambiguous You can answer THE WITNESS If your question is Does the provost make decision and have somebody else review it -- is that your question BY MR GIACCHETTI My question is whether the provosts work as it relates to grievances and grievance appeals is reviewed by anyone at Stanford MR LANPHERE It is vague and ambiguous But if you understand you can answer THE WITNESS Yeah Im not sure who you mean BY MR GIACCHETTI Well am asking you whether there is anyone at Stanford who reviews the provosts work related to grievances and grievance appeals I--I-- MR LANPHERE Same objection You can answer if you know THE WITNESS Yeah think dont understand your question so if you can ask it different way Im sorry Im really not trying to be difficult 38 to 41 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First Legal Deposition-Calendarfirstlegal.oom L.A 855.348.4997 EXHIBITEXHIBIT K ‘ SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA MICHAEL HJNNEKEN Plaintiff vs Case No 16CV300285 LELAND STANFORD JUNIOR UNIVERSITY WILLIAN PERRY DOES 1-50 Defendants DEPOSITION OF LAUREN SCHOENTHALER WEDNESDAY APRIL 25 2018 854 A.M SAN JOSE CALIFORNIA Reported by Michelle Knowles CSR 8979 CRR CCRR Job 26945 LAUREN SCHOENTHALER April 25 2018 Page 15 When you phrase the question as against -- there was never representation against Mr Hanneken as the word against connotes would say that Mr Hanneken wasnt my client BY MR GIACCHETTI Okay When you gathered facts for John Etchemendy were you doing it in an adversarial proceeding dont think was dont think of grievance as an adversarial proceeding think of grievance as mechanism by which individuals at Stanford can bring forward concerns and can have those concerns reviewed Okay So there was no -- there was no lawsuit pending against Stanford University when you were gathering facts is that correct Thats correct Okay And you werent gathering facts -- Im sorry Let me rephrase the question Mr Etchemendy didnt ask you to gather facts in relationship to an adversarial proceeding is that correct 23 So Ill just put this in -- Ill just say this 24 once You keep using the phrase gathering facts and 25 just want to be careful about that because facts Page 20 BY MR GIACCHETTI Okay And who -- how did you go about gathering information about Mr Hanneken Sure So as -- as Ive shared with you reached out to Deborah Gordon in Secretary Perrys office and spoke with her and gathered documents from her Okay And when did you begin your investigation 10 dont recall the date exactly It would 11 have been relatively soon after Mr Hanneken filed his 12 grievance 13 Okay And --aside from Deborah Gordon did 14 you speak to anybody else 15 So dont recall speaking to anybody else 16 The way that the grievance letter is written indicates 17 that spoke with someone in the -- in the Graduate Life 18 Office but dont have specific recollection of 19 that Did you speak with William Perry was not able to speak with William Perry His wife was quite ill Did you speak with Michael Hanneken did not speak with Michael Hanneken had his statement Page 19 connotes decided issues was gathering information and it was Johns job to make the final determination But with that kind of in the record and know you prefer to use gathering facts just want to state that across the board in my testimony Im referring to my role as -- as -- as gathering information With that very long introduction in mind -- really apologize James -- forgot your question Can you repeat it MR GIACCHETTI Could you read it back please Record read THE WITNESS Mr Etchemendy did not ask me to gather facts in an adversarial proceeding as understand Stanfords grievance purpose BY MR GIACCHETTI Okay And so when Mr Etchemendy asked you to gather information what was what was the task that you were to perform MR LANPHERE Asked and answered You can go ahead THE WITNESS Sure My task was to get the information surrounding the concerns that Mr Hanneken had brought forward I//I Page 21 So the only person that you recall speaking with is Deborah Gordon MR LANPHERE Objection Misstates her prior testimony THE WITNESS The only -- the only specific recollection have is of speaking with Ms Gordon and know spoke with her more than once but frankly cant even recall how many times spoke with her BY MR GIACCHETTI Okay Did you take notes when you spoke with Ms Gordon dont recall whether took notes will say it would have been my regular practice to take notes 15 Okay And have you --do you store your 16 notes 17 do not have practice of storing my notes 18 Okay Did you transcribe your notes 19 So dont have specific recollection of 20 how -- dont have recollection of taking notes My 21 general practice is to rely on notes as -- as write 22 up information And dont have specific 23 recollection but expect would have relied on the 24 notes in helping the provosts office put the letter to 25 Mr Hanneken together 10 11 12 13 14 15 16 17 18 19 20 21 22 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10 11 12 13 14 20 21 22 23 24 25 First Legal Deposition-CalendarfirstIegaI.com L.A 855.348.4997 18 to 21 EXHIBITEXHI L REDACTED EXHIBITEXHIBIT M SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA LELAND STANFORD JUNIOR UNIVERSITY WILLIAM PERRY DOES 1-50 DEPOSITION OF TAKEN ON MICHAEL HANNEKEN May 16 2018 VOLUME Pages through 296 inclusive REPORTED BY Althea Miller CSR No 3353 RPR CCRR File No 18-25533 JER MPANY LEPO RTERS Chase Uflatian Servtes Company MICHAEL HANNEKEN Plaintiff versus CONDENSED TRANSCRIPT No 16-CV-300285 Defendants MillerReporters.com MILLER COMPANY REPORTERS 800.487.6278 Michael Hanneken Volume before we broke that you hope to complete all your requiremeots and receive your Ph.D by the end of the calendar quarter this year is that right Thats hope It could go little longer provided the draft of your dissertation to Professor Levitt Okay And when did you provide him draft of your dissertation few weeks ago Oksy and did you provide it to him for the purpose of him giving you some initial feedback before you provide it to the other two provided it in anticipation of 10 coofereoce 11 With Professor Levitt 12 conference for ao external body 13 Okay Im sorry Now think 14 understand 15 So you are going to be -- or perhaps you 16 already have speakiog at conference -- is that correct -- 18 Correct 19 -- about the research youve been 20 conducting Is that correct 21 Thats the plan 22 Okay And what -- what conference is this 23 EPOC which believe stands for 24 engineering organization projects conference 25 Its okay Page 86 Okay But its hope What are your plans -- what do you plan to do after you receive your Ph.D 10 Work Work full time 11 And is that with your business RESS 12 Correct 13 MR LANPHERE And Althea thats R-E-S-S 14 Its an acronym 15 And why dont you tell us what does RESS 16 stand for 17 It stands for Real Estate Strategies and 18 Solutions 19 Will you continue to serve in the Army 20 Reserves post graduation 21 plan to yes 22 Do you have any specific assignments that 23 have been given to you for that period yet by the 24 Army Reserves 25 Yes Im -- Im currently battalion Page 88 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Its conference Sorry Fair enough And when is that conference In June And so you provided the dissertation to Professor Levitt so he could give you -- you could have discussion with him about the best way to present it at this conference is that right MR GIACCHETTI Objection Misstates prior testimony Argumentative Speculative THE WITNESS provided it for his awareness of the research MR LANPHSRE Okay So we need to change the videotape so why dont we go off the record THE WITNESS Okay THE VIDEOGRAPMER Were going off the record at 1119 A.M This is the end of Media No brief recess was taken THE VIDEOGRAPHER Were back on the record at 1130 A.M This is the beginning of Media No Please continue BY MR LANPHERE So believe you you -- you told me Page 87 commander and will hold this position for another 18 months or so And what battalion 492 CA battalion located in Arizona And is that battalion composed of reserve soldiers and officers Thats correct Okay And do you have to travel to Arizona in order to fulfill your obligations in that regard 10 Arizona Korea other places 11 Okay So youll be called upon during 12 that -- at least that 18-month period when youre 13 the battalion commander to you know provide 14 service as required in connection with that role is right 16 Correct 17 Okay And youre subject to being deployed 18 at any particular time if the -- if the nation 19 requires it is that right 20 Correct 21 Okay Do you have any plane to -- to 22 teach To enter the academy following receipt of 23 your Ph.D 24 My primary plan is to focus on my business 25 full-time but try to keep options open Page 89 MillerReporters.com MILLER COMPANY REPORTERS 800.487.6278 2386-89 Michael Hannekeri Volume But as of currently right now you dont have for example some intent to become professor you know shortly after you receive your Ph.D Is that -- is that right My intent is to work on my business full-time Okay So when was RBSS formed Decambar of 2003 10 Okay And are you tha only owner of that 11 business lam Is it corporation No Is it LLC No Is it just -- dba Thats just the business nama Thats correct Okay So it does -- does it -- to your understanding does it exist as legal entity separate from yourself or -- MR OIACCHETTI Well objection to the extant that it calls for legal conclusion I/I Page 90 BY MR LAIPHBRE Yeah If you understand my question Im just trying to understand if it has some -- well if you understand my question please answer it worked with an attorney and its sole proprietorship Does it file separate tax returns No Correction Theres Schedule which is specific only to the business and thats contained within larger income filing Right The Schedule is attached to your personal income tax filings when you file correct Right MR GIACCHBTTI And would object to the extent that this begins to invade the taxpayer privilege MR LANPMERE It really doesnt Im not asking for any taxpayer individualized information Okay So what type of business is RESS What does it do We perform advisory services to public and private entities concerning their commercial real estate holdings and we also can deliver Page 91 projects on behalf of them by hiring teams of builders and designers Is that working as general contractor or something different would characterize it as different although do have general contractors license So how would you chara- is there characterization you would give to he work you described as delivering projects on behalf of 10 clients In the industry many people would probably 12 call it fee developer 13 Fee developer 14 For-fea developer 15 Im sorry For-fee developer 16 Can you tell me why its called that Is 17 there reason it has that name Generally when people think of 19 developer they think of someone who acquires land 20 builds building and sells that building based 21 upon the marketplace at that time 22 Uh-huh 23 We operate similarly except that we know 24 who were building the building for in advance and 25 then we are paid fee to do it Page 92 So in the for-fee developer role that RESS performs do they actually buy the land Or does the client buy the land The client buys the lend Okay And similarly in the for-fee developer role does RESS pay for the construction or does the client pay for the construction When we are performing on construction-type job typically we will contract with the contractor and pay them directly and the owner pays us Okay But theres an ongoing reimbursement so when you pay contractor within short time you are reimbursed for that amount by the client Is that right We are Its not situation for example where you incur all the costs of construction until the project is complete and then youre paid some amount at the end of the project to reimburse you for the cost of construction MR GIACCHETTI Object to the extent its hypothetical BY MR LANPMERE 25 Do you understand my question Im trying Page 93 12 13 14 15 16 18 19 20 21 22 23 24 25 10 12 13 14 15 16 18 19 20 21 22 23 24 25 10 11 12 13 14 15 16 18 19 20 21 22 23 24 MillerReporters.com MILLER COMPANY REPORTERS 800.487.6278 24 90 93