Case 1:11-md RJS Document 7586 Filed 07/09/18 Page 2 of 22. In re: Tribune Co. Fraudulent Conveyance Litig., Case No.

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1 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 2 of 22 July 9, 2018 VIA ECF AND (ullivannydchamber@nyd.ucourt.gov) Honorable Richard J. Sullivan United State Ditrict Court Southern Ditrict of New York Thurgood Marhall United State Courthoue 40 Foley Square, Room 2104 New York, NY RE: Joint Letter In re: Tribune Co. Fraudulent Conveyance Litig., Cae No. 11-md-2296 (RJS) Dear Judge Sullivan: In repone to your June 18, 2018 Order [ECF No. 7552] (the Order ), Plaintiff Marc Kirchner ( Plaintiff or the Trutee ), in hi capacity a the Litigation Trutee of the Litigation Trut (the Trut ) of Tribune Company (together with it affiliated entitie, Tribune or Company ), the Note Holder Plaintiff, the Retiree (together with the Note Holder Plaintiff, the Individual Creditor Action Plaintiff, 1 ) and the defendant 2 in thi MDL proceeding ubmit thi joint letter to (i) indicate how they wih to proceed with repect to a potential global reolution of the above-captioned litigation, and (ii) update the Court regarding the current tate of dicovery. 3 1 See Mater Cae Order #3 [ECF No. 1395] at 2. 2 Defendant ubmitting thi letter are: Dudley S. Taft, Enrique Hernandez, Jr., Bety D. Holden, Robert S. Morrion, William A. Oborn, J. Chritopher Reye, and Mile D. White (together, the Independent Director ); The Exhibit A Shareholder Defendant Executive Committee, and the Individual Creditor Action Defendant Executive Committee (together, the Shareholder Executive Committee ); Samuel Zell, Equity Group Invetment, LLC, EGI-TRB, LLC, and Sam Invetment Trut (together, Zell and Affiliated Entitie ); The Robert R. McCormick Foundation and The Cantigny Foundation (together the Foundation ); Chandler Trut No. 1 and Chandler Trut No. 2 (together, the Chandler Trut ); Duff & Phelp, LLC, GreatBanc Trut Company, Valuation Reearch Corporation, Citigroup Global Market Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan Stanley & Co. LLC ( Morgan Stanley ) (collectively, the Advior Defendant ); and Harry Amden, Chandler Bigelow, Stephen Carver; Thoma Finke, Denni FitzSimon, Robert Gremillion, Donald Greneko, Mark Hianik, David Hiller, Dan Kazan, Crane Kenney, Timothy Knight, Tim Landon, Richard Malone, Irving Quimby, John Reardon, Scott Smith, John Vitanovec, Kathleen Waltz, David William, and John Worthington (the Non- Moving Defendant, and together with the Trutee, Advior Defendant, Foundation, Independent Director, Shareholder Executive Committee, Chandler Trut, and Zell and Affiliated Entitie, the Partie ). 3 Although the Order did not lit all of the plaintiff, defendant and defendant group, by agreement they were invited to participate in the Partie dicuion and to contribute to thi joint letter. Counel for the Defendant Executive Committee in the Individual Creditor Action alo participated by agreement, a did counel for the Note Holder Plaintiff and Retiree. The Partie agree that a global reolution of claim againt the Shareholder Defendant and other defendant that received LBO proceed will require the participation of the Individual Creditor Action Plaintiff. 1

2 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 3 of 22 On June 27, counel for the Partie conducted a call to dicu the tatu of dicovery and exchange initial view on the content of thi joint letter. The Partie thereafter exchanged draft of their repective ection of thi letter. I. PARTIES POSITIONS ON POTENTIAL GLOBAL RESOLUTION A. The Trutee Poition on Potential Settlement The Trut repreent the interet of creditor holding billion of dollar of allowed claim againt Tribune that were not atified in the bankruptcy. It i now ten year ince Tribune defaulted on thee debt, and more than five year ince the company exited bankruptcy, and clearly time to accelerate the pace of thee proceeding. A of today, Plaintiff conider repone to be ubtantially complete for the vat majority of merit requet and ubpoena iued, and expect the remaining production (principally from the Non-Moving Defendant) to be complete within the next one to three month. 4 The Trutee doe not preently contemplate needing to erve further document requet or ubpoena unle anwer or ummary judgment motion are filed or depoition tetimony i given that raie new or different fact iue. 5 On the defene ide, other than one requet erved on the Trutee, the Non-Moving Defendant have not erved any document requet and the Trutee i unaware of any document dicovery the Moving Defendant intend to eek. Thu, document dicovery in thee cae i now very far along. The production made in the pat year have given the Trutee acce to ten of thouand of never-before-produced document, many of which were previouly withheld from production a privileged, uch a communication with the Tribune Special Committee (ee Order on Motion to Compel, dated February 25, 2018 [ECF No. 7245]), or from cutodian and time period not ubject to production during the bankruptcy. 6 A prime example i the radically lower financial forecat rendered by Tribune and many of the defendant jut week and month after the LBO wa completed. In the view of the Trutee, the Pot-Bankruptcy Dicovery trongly upport the allegation made in the operative complaint, and, a further detailed below, will be intrumental in the next phae of the litigation and in driving future ettlement negotiation. The Trutee ha carefully conidered the Court uggetion repecting ettlement dicuion, a well a the view of defendant. The Trutee believe a taggered approach i 4 The Trutee ha not yet received privilege log (firt time or updated) from many of the partie it erved with document requet and ubpoena, and reerve all right repecting document withheld by any party or thirdparty on privilege or immunity ground. Additionally, no partie or third-partie have been depoed about their document retention procee or the manner in which document were collected in repone to the Trutee requet; the Trutee reerve all right in that regard a well. 5 The one exception i document dicovery from hareholder who eek to raie individualized defene, to the extent the Trutee i permitted to amend to aert a contructive fraudulent conveyance claim and/or uccefully appeal the dimial of hi intentional fraudulent conveyance claim. 6 The Trutee alo received the turnover of privileged document from reorganized Tribune itelf during Thee document, together with production received and to be received puruant to the Preliminary Dicovery Plan, collectively, are referred to herein a the Pot-Bankruptcy Dicovery. 2

3 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 4 of 22 warranted, with targeted mediation with many of the Shareholder Defendant proceeding in the near term (i.e., tarting ometime in the next few month), and a eparate mediation with the remaining defendant 6 month from now, after certain depoition can be taken. Thi taggered approach aume a narrower cope of mediation than the Shareholder Defendant are propoing below; mediation of all Shareholder claim and defene would require the completion of thee depoition. While defendant univerally oppoe conducting depoition prior to any mediation, their aertion that mediation could be ucceful abent further dicovery i belied by their failure to requet mediation or come to the ettlement table at any time during the lat four year. 7 The Trutee i rightly concerned that the defendant upport of mediation in lieu of dicovery i a delay tactic. Any mediation hould be before a private mediator elected by the Partie, not the Court, experienced in complex commercial and bankruptcy claim. Any mediation hould be governed by term and condition agreed to by the Partie. A court order directing mediation at thi juncture i both unneceary and premature. The Trutee ha teadfatly purued ettlement with the Shareholder Defendant, and require no court order to continue to do o. A to the Shareholder Defendant: Plaintiff ha endeavored to ettle the Count One fraudulent tranfer claim almot continuouly ince hi ubtitution in 2012, having joined with the Individual Creditor Plaintiff in making a erie of five ettlement offer that were communicated to and open to virtually all of the Shareholder Defendant named in the Trut Action and/or the Individual Creditor Action. 8 To date, thoe offer have reulted in over 600 defendant ettling and being dimied with prejudice from the action. 9 The remaining Shareholder Defendant apparently are diintereted in ettling abent mediation or until further legal development occur in thi proceeding and/or in the Second Circuit, where the panel recently recalled the mandate in anticipation of further panel review. Order, In re: Tribune Co. Fraudulent Conveyance Litig., No (L) (2d Cir. May 15, 2018) [ECF No ]. Following highly preliminary dicuion with the Shareholder Executive Committee the Trutee i conceptually willing to engage in mediation of certain alleged individualized defene to the Trutee fraudulent tranfer claim (including any potential amended claim) provided, inter alia, a ufficient number of Shareholder Defendant (meaured by aggregate tranfer amount, number, and/or percentage) claiming each uch defene are intereted in puruing ettlement. 10 Thi mediation would not cover alleged defene applicable 7 The ole exception are Advior Defendant Citigroup Global Market Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Morgan Stanley, which entered into private, bilateral negotiation with the Trutee in 2016, reulting in a partial ettlement of claim againt Morgan Stanley. 8 See Mater Cae Order #3 [ECF No. 1395] at 2. 9 All ettlement have included both the previouly pled intentional fraudulent conveyance claim and the contructive fraudulent conveyance claim the Trutee eek to add by way of amendment. In addition, virtually all ettlement have involved the Individual Creditor Action Plaintiff, who have agreed to releae any and all contructive fraud claim aerted againt the ettling defendant. 10 By limiting the defene to be mediated, the Trutee i not in any way uggeting that any ettlement reached with the Shareholder Defendant would not encompa all claim related to their Shareholder Payment. 3

4 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 5 of 22 to all Shareholder Defendant unle cheduled following depoition, and would not include any of the Trutee other claim. The Trutee ha confirmed that the Noteholder Plaintiff and Retiree (who alo ued many of the ame Shareholder Defendant) would participate in uch a mediation, if and when appropriate parameter are agreed to. Subject to achieving ufficient participation, the Trutee believe that targeted mediation with the Shareholder Defendant could go forward in the hort term, without the need for further dicovery before commencing the mediation, in contrat to the Trutee view with repect to the remaining defendant (decribed below). If the Shareholder Executive Committee init on mediating all iue of general applicability to the fraudulent conveyance claim, the Trutee i willing to do o following the completion of the twelve depoition detailed herein. 11 However, whenever uch mediation hould occur, and irrepective of it cope, it mut not prejudice or delay the Trutee right to conduct depoition later thi year, a dicued below, or the Trutee ability to proceed with hi motion to amend a oon a development at the Second Circuit occur, a contemplated by the Order. The Trutee and Individual Creditor Action Plaintiff will continue dicuion with the Shareholder Executive Committee regarding, inter alia, the identification of appropriate topic for mediation, appropriate procedure, expected participant, and mediator candidate. Indeed, a of now thee partie have materially different view a to the appropriate cope of a mediation and multiple further dicuion are neceary. Accordingly, at thi juncture any order from the Court repecting mediation would be premature, and the Court hould decline the Shareholder Executive Committee invitation (et forth later in thi letter) to intervene in the partie negotiation. The Trutee only learned of the Shareholder Defendant deire to engage in mediation on June 27, and ha had but one additional meet and confer call ince then. While the Trutee intend to negotiate in good faith the myriad logitic of mediation timing, cot-haring, mediator election, and the threhold for mediating individualized defene, the Trutee ha not yet heard any mechanim for bringing all or even ubtantially all hareholder to the table, including the many that failed to appear. The Trutee ubmit that the bet coure of action i to continue negotiation with the Shareholder Executive Committee and report back to the Court if and when the parameter of a mediation either are or are not agreed to. The Trutee i confident the Partie can negotiate an acceptable mediation proce and will mutually agree to an acceptable mediator. A to all other Defendant: In 2014, Plaintiff participated in mediation with counel for certain of the Non-Moving Defendant, Independent Director, tag-along defendant, and Samuel Zell, and had ettlement dicuion with certain of the Advior Defendant. Inurance carrier covering certain of the defendant alo participated. Thoe mediation and dicuion ended without any ettlement, and there have been no formal or informal negotiation with any of thee partie in the 11 The Shareholder Executive Committee have raied at leat one pecific global defene in thi letter. While the Trutee doe not believe thi i the right forum to debate the merit of any particular claim or defene, uffice to ay the Trutee and Individual Creditor Action Plaintiff are well aware of the Executive Committee argument in thi regard and have factored them into prior global ettlement offer made to the Shareholder Defendant. 4

5 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 6 of 22 intervening four year. The abence of ettlement or ettlement dicuion i not urpriing given the abence of any development directly affecting thee claim. The Trutee i willing to reume mediation with all of thee defendant at the appropriate time, but believe it will be no more ucceful than the lat mediation and reult in a large and unneceary drain on the Trutee reource until (1) the Court ha rendered ruling on the pending motion to dimi, which have been fully briefed for ome time, and (2) the Partie are permitted to proceed with ome of the key, initial depoition. In Plaintiff view, a ruling on the pending motion to dimi will provide incentive to ettle that do not preently exit. Additionally, Plaintiff believe that allowing the Trutee to conduct an initial twelve depoition prior to any mediation or formal ettlement conference with the Director and Officer, tag-along, Advior, and Zell Defendant will provide thee Partie and the Trutee with an important factual bai for ettlement dicuion. Plaintiff ha communicated a preliminary lit of thee deponent 12 to the Partie, and believe that the depoition of thee individual, who were key director, officer, and advior of Tribune at the time of the relevant event, will erve to explore the new dicovery obtained by the Trutee, including the privileged document and pot-lbo material, and allow both Plaintiff and defendant to tet certain of their core allegation and theorie. Following the completion of thee initial depoition (and potentially ruling from the Court a well), the Trutee intend to mediate the remaining claim againt the Director and Officer, tag-along, Advior, and Zell Defendant. With repect to all claim, the Trutee believe a profeional mediator elected by the Partie, with experience in complex commercial dipute, and who ha the time available to addre the very complex claim and defene in thi litigation, would be preferable to a pecial mater or magitrate, a poition that all defendant ave Zell and hi affiliated entitie appear to hare. The Trutee diagree that there i any role to play for a Magitrate Judge or Special Mater in equencing motion or dicovery, tak the Partie have regularly dealt with in meet and confer and thi Court ha handled to date and hould continue to handle. To recap, the Trutee (joined by the Individual Creditor Action Plaintiff) propoe (i) a mediation with the hareholder firt, to begin a oon a term are negotiated conenually, followed by (ii) a eparate mediation with the Director and Officer, tag-along, Advior, and Zell Defendant, to be held following the completion of the currently contemplated document dicovery and the twelve depoition of key witnee. All mediation would be governed by term negotiated by the Partie, rather than et by the Court. The timeline for thi would be a follow: July-September, 2018: Completion of outtanding production, negotiation of Trutee-Shareholder Defendant mediation term, and if ucceful, beginning of Trutee-Shareholder mediation with a profeional mediator. 12 Thee expected initial deponent are: Chandler Bigelow, Denni FitzSimon, Heidi Ficher, Rachel Sauter, William Oborn, David Hiller, Crane Kenney, Harry Amden, Gina Mazzaferri, Todd Kaplan, Roeanne Kurmaniak, and Thoma Whayne. 5

6 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 7 of 22 July-November, 2018: All Partie to receive and review Pot-Bankruptcy Dicovery, a each ee fit. November, 2018-January, 2019: Depoition of no more than 12 witnee identified by Trutee. Trutee to negotiate with Director and Officer Defendant, Advior Defendant term of mediation and elect mediator January 2019: Trutee, Director and Officer Defendant, and Advior Defendant begin mediation with a profeional mediator. Further dicovery tayed pending outcome of mediation. B. Retiree Poition on Potential Settlement There are approximately 164 individual retiree of Tribune (the Retiree ) who are plaintiff in the four State Law Contructive Fraudulent Conveyance Litigation (the Retiree SLCFC Action ) which are the ubject of the Second Circuit recent order recalling the mandate in In re: Tribune Co. Fraudulent Conveyance Litig., No (L) (2d Cir. May 15, 2018) [ECF No ]. The principal amount of the claim aerted by the Retiree in the Retiree SLCFC Action i approximately $63 million. Of the 164 Retiree, approximately 84 are beneficiarie of the Trut and hold claim in the principal amount of approximately $36 million (the LT Retiree ). Among the overlapping retiree i William A. Niee. Mr. Niee i the lead plaintiff in each of the Retiree SLCFC Action and i a member of the Adviory Board of the Trut. Teitelbaum Law Group, LLC repreent Mr. Niee in hi capacity a a member of the Adviory Board to the Trut and the Retiree in the Retiree SLCFC Action. Thi ection i ubmitted on behalf of the Retiree in their capacity a plaintiff in the Retiree SLCFC Action. There ha been and continue to be cooperation among the Retiree, the Note Holder Plaintiff who are party to their own State Law Contructive Fraudulent Conveyance Litigation and the Trut in connection with effort to reolve the myriad of complex iue before thi Court and the Second Circuit. The Retiree have upported the ettlement brokered by the Trut and have agreed to dimi claim aerted by them in the Retiree SLCFC Action againt ettling defendant. The Retiree believe that their continued participation in thi proce i neceary if there i any propect of a global ettlement a uggeted by thi Court. Thu, the Retiree appreciate thi Court recognition of the fact that it may be time for partie to eriouly embrace a comprehenive ettlement of thi complex multi-ditrict litigation. The Retiree hare the concern of the Trut regarding the complexity of uch a proce and the need to incentivize partie to participate in a meaningful way. The Retiree have lived with thee cae and the lo of their peronal retirement aving ince the Tribune bankruptcy filing in A a reult of the bankruptcy cae the Retiree recovered approximately 33% of the $95 million of their hard earned money entruted to Tribune a part of a deferred compenation retirement program. The Retiree have had to come to grip with the fact that the LBO devatated their golden year and that the Retiree SLCFC Action and the Trut Action are their lat chance to recover their live while they are till living. The Retiree, conitent with the Trut poition, upport mediation and requet that thi 6

7 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 8 of 22 Court ue it good office to encourage all partie to promptly explore a global ettlement. C. Shareholder Executive Committee and Large Shareholder Poition The Shareholder Executive Committee Support Mediation of Shareholder Claim The Shareholder Executive Committee upport a formal mediation proce to attempt to conenually reolve any claim againt hareholder defendant that might be reintated or added. While all previouly pled claim againt hareholder are currently dimied, 13 both the intentional and contructive fraudulent tranfer claim remain ubject to future appellate proceeding, and the plaintiff continue to eek to amend the FitzSimon complaint to add new federal contructive fraudulent tranfer claim againt the hareholder defendant. A a reult of the dimial of all claim againt the hareholder defendant baed on globally applicable defene, there ha been no proce to date to addre other defene applicable to all or individual or ub-group of hareholder defendant beyond the Conduit Protocol, 14 which wa upended upon dimial of the FitzSimon complaint againt the hareholder defendant. For example, while the recent deciion in Merit Management Group, LP v. FTI Conulting, Inc. may forecloe one theory that would protect all hareholder defendant, other global defene remain, including thoe that, in the circumtance of Tribune, entitle every tendering hareholder to the afe harbor, and another baed on older but equally valid Supreme Court precedent, a the defendant have outlined in their recent ubmiion in the Second Circuit. Additional afe harbor argument are available to particular defendant who may qualify a financial intitution or financial participant on ground ditinct from the global defene. 15 Other individual or ub-group defene include tatute of limitation, principle of overeign immunity, ervice and juridictional iue, interplay with the variou tate law governing tetamentary etate and corporate diolution, interplay with the Invetment Company Act of 1940, ERISA or other federal law, a well a other categorie, many of which are et forth in Schedule A of our letter to the Court in connection with Mater Cae Order No. 4, dated February 13, [ECF No ]. The plaintiff purport to be willing to mediate individualized defene, but oppoe mediation of global defene applicable to all hareholder defendant. Plaintiff refual to mediate global defene together with individualized defene would doom mediation to failure before it even tarted. To have any propect of ucce, mediation of hareholder claim mut include all potentially applicable defene, both global and individual. Indeed, the concept of mediating ome defene, but not other that a defendant ha make no ene, jut a it would 13 The only exception i certain tate-law claim in FitzSimon againt the Foundation and the Chandler Trut, which are ubject to pending motion to dimi. The foregoing hareholder defendant are referred to a the Large Shareholder in thi Court Mater Cae Order No. 3. The Large Shareholder upport the poition et forth herein by the Shareholder Executive Committee, of which the Large Shareholder are member. 14 See Conduit Protocol entered April 24, 2014 [ECF No. 5695]. 15 See, e.g., Citigroup Entitie Letter to the Court ubmitted Mar. 13, 2018 [ECF No. 7291]. 7

8 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 9 of 22 make no ene to mediate ome, but not all, claim againt that defendant. No defendant i going to entertain a ettlement that doe not take account of all defene it ha, jut a no plaintiff i going to entertain a ettlement that doe not take account of all of it claim againt that defendant. The plaintiff ugget that a mediation including global defene would be fruitle becaue hareholder with any interet in ettlement accounting for thoe defene have already ettled. That uggetion i mileading. A mediation proce would foter dialogue and, with the aitance of a killed mediator, tet each ide view of the claim and defene at iue. By contrat, the plaintiff in thi multi-ditrict litigation have thu far iued only take-it-or-leave-it ettlement offer uually limited to defendant with maller amount of expoure. For hareholder defendant that received more than $10 million in LBO proceed, only two offer were made in 2012 and 2018, each open for approximately ix week and non-negotiable. 16 Even thee limited offer did not account for individual or ub-group defene, and, with repect to global defene, plaintiff have largely not engaged with the hareholder defendant with the larget expoure. Indeed, plaintiff mot recent unilateral offer, made after the deciion in Merit Management, wa propoed before defendant had explained and did not purport to addre the defendant remaining global defene under Bankruptcy Code Section 546(e) baed on the fact that Tribune till qualifie a a financial participant, and that Tribune and the tranferee in the LBO were cutomer of a trut company and therefore qualify a financial intitution. While plaintiff note that 600 named hareholder defendant have accepted the plaintiff global ettlement offer, that repreent barely 10% by number of the more than 5,000 originally named hareholder defendant, and conit principally (if not excluively) of hareholder that received relatively mall amount in ettlement of their hare redemption. Defendant who received the overwhelming majority (by both amount and number) of the LBO hareholder tranfer have not agreed to accept plaintiff unilaterally determined ettlement amount. The Shareholder Executive Committee repectfully ubmit that a mediation proce that addree both global and individual or ub-group defene would be much more productive than the take-it-or-leave-it offer that plaintiff have made to date. The Shareholder Executive Committee believe that a mediation proce that addree both the global and individual and ub-group defene of hareholder would advance the reolution of remaining or potential claim againt many, if not all, hareholder defendant. Accordingly, the Shareholder Executive Committee repectfully requet that the Court order that (i) the plaintiff and hareholder defendant participate in a mediation of both global and individual defene, (ii) the plaintiff and Shareholder Executive Committee meet and confer regarding the election of a mediator and, in the abence of conenu, ubmit letter briefing to the Court regarding the partie repective poition on the election of a mediator, 17 and 16 During the period when other offer limited to maller hareholder were open, the plaintiff rejected at leat ome requet from hareholder defendant to ettle on the propoed term becaue thoe defendant expoure exceeded the plaintiff etablihed threhold, and in ome cae, by jut mall amount. 17 The member of the Shareholder Executive Committee repectfully requet that the Court provide the partie additional time to meet and confer regarding the election of a mediator. Given the number of partie involved, the nature of the claim, and the complexity of the cae, the election of a mediator will be of critical importance to the ultimate ucce of the mediation. The partie hould be afforded the opportunity to meet and 8

9 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 10 of 22 (iii) following the election of a mediator, the mediator, in conultation with the plaintiff and Shareholder Executive Committee, etablih mediation procedure to be ubmitted to the Court for entry of an order approving uch procedure for mediation of the claim againt the hareholder, including global and individual and ub-group defene. Further, while the goal of the mediation would of coure be to conenually reolve claim againt the hareholder, the mediation proce could prove helpful even if that goal were not achieved. For example, it could alo be utilized to develop a voluntary proce by which individual or ub-group defene could be efficiently adjudicated, including procee imilar to the Conduit Protocol, potentially conducted through the ue of a magitrate or pecial mater. D. Non-Moving Defendant Poition Non-Moving Defendant tate (and echo the other Partie entiment herein) that if a global reolution through mediation i the objective, then pre-mediation ruling on the pending motion to dimi would make that outcome more likely. For the reaon dicued infra Section II.C., Non-Moving Defendant alo agree with all defendant that the Court hould reject the Trutee uggetion to hold depoition before an initial mediation. Intead, any party left in the cae after thi Court rule on the motion to dimi, and after mediation, can proceed to depoition at that time. Thi will reult in depoition that are more focued, efficient and fair to everyone left in the cae. If the Trutee uggetion that depoition will aid mediation hold true, thoe partie can hold a econd mediation to wrap thing up. With repect to timing, Non-Moving Defendant tand ready to participate in the development of a mediation plan, and ultimately mediate, whenever aked to do o. Finally, to clarify a potential miundertanding, we note that the prior ettlement offer the Trutee decribe do not apply to Non-Moving Defendant becaue thoe offer were extended only to defendant named olely in Count 1. In addition, current and former Tribune employee who are Shareholder Defendant named only in Count 1, and who alo are defendant in Adverary Proceeding tranferred to thi Court eeking to recoup compenation paid to them by Tribune pre-bankruptcy, have never been offered complete relief by the Trutee. Thi i becaue the Trutee offer have not included a releae of correponding Adverary Proceeding againt any employee Shareholder Defendant. E. Sam Zell and Affiliated Entitie Poition Mr. Zell and affiliated defendant, Equity Group Invetment, LLC, EGI-TRB, LLC and Sam Invetment Trut ( Affiliated Entitie ), were invetor (or affiliate of invetor) who lot money in the Tribune tranaction. Conitent with the finding of the Examiner, the Tribune Bankruptcy Court required a pecial dicloure to creditor in conjunction with the Tribune bankruptcy Plan of Reorganization notifying creditor that any claim againt Mr. Zell were unlikely to ucceed. confer to attempt to reach a conenu, or at leat narrow the field of potential mediator, before the Court order the appointment of any particular mediator. 9

10 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 11 of 22 Mr. Zell and Affiliated Entitie have long believed that a reolution of thi dipute i in the bet interet of all concerned. To that end, they would engage in any mediation proce at any time and believe there would be merit in commencing that proce without further delay. Mr. Zell and Affiliated Entitie ubmit the following additional comment a to why they believe a) the Court hould appoint a pecial mater or magitrate a oppoed to a private mediator, b) at leat initially the mediation hould be a global mediation involving all intereted partie; and c) motion to dimi hould be decided before depoition dicovery i permitted. Appointment of a pecial mater or magitrate i preferable to appointment of a private mediator: Mr. Zell and Affiliated Entitie agree with the Court appointing either a pecial mater or a magitrate who, in addition to mediating the dipute, would have authority (in the event a global reolution i not achieved at firt) to make recommendation to the Court about how bet to equence motion practice, dicovery and/or further litigation o a to promote a global reolution. Conitent with thi Court reference in it June 19, 2018 Order to the poible appointment of a magitrate or pecial mater, Mr. Zell and Affiliated Entitie believe appointment of a pecial mater or mediator would be preferable to appointment of a private mediator becaue the former could formulate recommendation for how bet to narrow and reolve remaining iue and could report to the Court on the progre of the mediation proce. Additionally, given the multiplicity of partie and diverity of interet, it may be challenging for all intereted partie to agree on a particular private mediator; yet, there would be obviou value in having the ame individual mediate all dipute related to thi cae. At leat initially, the mediation hould be a global mediation involving all intereted partie: Becaue there hould be value to all involved in achieving a global reolution, a mediation hould involve all intereted partie (at leat initially), including dimied partie like the Shareholder Defendant. Incluion of all intereted partie will enure the mediator i fully informed and in a poition to make recommendation to the Court with repect to additional tep (including, for example, targeted dicovery or prioritization of certain motion practice) that might promote global reolution. Educating multiple different mediator about thi dipute would be inefficient and likely further delay reolution. Reolution of motion to dimi may facilitate ettlement. Mr. Zell and Affiliated Entitie defer to the Court on when to decide motion to dimi relative to mediation, but ubmit that ruling on pending motion to dimi may facilitate ettlement. They are concerned that the Litigation Trutee may be unwilling to engage in meaningful ettlement dicuion without further determination by the Court regarding the merit of the Trutee claim. Becaue the Litigation Trutee will undoubtedly appeal any dimial, any dimied partie (including Mr. Zell and Affiliated Entitie) would continue to participate in a mediation ubequent to their dimial, a there will continue to be value in achieving a complete and final reolution of thi dipute. In um, Mr. Zell and Affiliated Entitie are upportive of a) a global mediation or any other mediation proce directed by the Court; b) the appointment of a magitrate or pecial mater with authority both to mediate all claim and alo to recommend additional procee for narrowing or reolving thi litigation globally, if mediation i not completely ucceful at firt; c) the Court reolving motion to dimi when it determine that doing o would be mot likely to facilitate global reolution, but in all event prior to authorizing any depoition dicovery. 10

11 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 12 of 22 F. Independent Director Poition The Independent Director are willing to participate in a mediation with the goal of achieving a global reolution of thi litigation. However, they agree with the Trutee and other defendant that any mediation in thi cae would benefit from additional ruling by the Court on the pending ubtantive motion. G. Financial Advior Defendant Poition While the Financial Advior Defendant are prepared to participate in mediation with a mediator to be agreed upon by the partie, auming other partie are imilarly inclined, we believe that mediation would make more ene, and be more productive, after a deciion on the pending motion to dimi i rendered. Regardle, the Financial Advior Defendant believe the Court hould deny the Trutee requet to authorize depoition dicovery. Currently, thi Court order authorizing limited document dicovery treat the Financial Advior Defendant a non-partie to the litigation. See Preliminary Dicovery Plan at 3 5, Kirchner v. Fitzimon, 1:11-md RJS, ECF Doc. No (April 5, 2017, S.D.N.Y.). Unle and until the pending motion to dimi are denied, the Financial Advior Defendant tatu remain the ame. The Trutee offer no new reaon or urgency to change that tatu while the motion to dimi are till pending, relying again olely on the paage of time. Moreover, moving forward with the depoition at the end of thi year, a propoed by the Trutee, would impoe on nonpartie the ubtantial burden of reviewing, in preparation for the depoition, the million of page of document that have been produced by the many defendant in thi cae. Further, the depoition themelve would likely be very burdenome a numerou partie who might otherwie be dimied from the cae would want to quetion each deponent, thu expoing non-party deponent to the poibility of multiple round of depoition or depoition that may exceed the even-hour time limit under the Federal Rule of Civil Procedure 30(d)(1). In contrat, deferring depoition until after the motion to dimi are decided would be far more efficient and economical. To the extent one or more of the Financial Advior Defendant are dimied, their preparation for a non-party depoition may be ignificantly reduced a compared to preparing for a depoition while their tatu in the cae i in limbo. In addition, if multiple partie are dimied, it would likely narrow the number of partie participating in the depoition, thereby avoiding iue urrounding multiple or protracted depoition. 11

12 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 13 of 22 II. DISCOVERY UPDATE A. Joint Statement by the Trutee and Non-Moving Defendant Dicovery in thee cae wa tayed from 2012 through On February 23, 2017, thi Court iued an order [ECF No. 6944], which requeted that the partie propoe a cae management plan that, among other thing, ditinguihe between Non-Moving Defendant and Moving Defendant and treat the Moving Defendant a third partie. To that end, Non-Moving Defendant and the Trutee agreed to the April 5, 2017 Preliminary Dicovery Plan [ECF No. 6952], which provide for document dicovery firt and depoition later. Upon entry of the Preliminary Dicovery Plan, the Trutee and Non-Moving Defendant proceeded to conolidate and exchange Tribune Bankruptcy Data, and were, for the firt time, permitted to take merit dicovery. To that end: The Trutee and Non-Moving Defendant iued document requet to each other. The Trutee iued 28 third-party ubpoena to variou Moving Defendant and nonpartie. 19 Thee ubpoena covered a number of Tribune former counel and advior. o o o To implify third-party dicovery, the Non-Moving Defendant did not erve eparate ubpoena on entitie ubpoenaed by the Trutee. In return, the Trutee agreed to hare with Non-Moving Defendant all non-privileged document produced during the ubpoena proce, and to involve Non-Moving Defendant in all meet-and-confer dicuion with ubpoena repondent. The Trutee believe that certain of Tribune privilege were tranferred to him during Tribune bankruptcy, and ha withheld document baed on that privilege. Mot ubpoena reulted in meet-and-confer dicuion among the Trutee, the repondent, and Non-Moving Defendant. In mot cae, lengthy meet-andconfer procee following ervice of repone and objection were neceary before production commenced. Moving Defendant did not participate in thi proce other than by reponding to ubpoena erved upon them, and, in ome cae, objecting to the production of 18 The Court permitted limited dicovery for purpoe of correcting defendant name and addree for ervice, and identifying individual who were initial or ubequent tranferee of LBO proceed, where the tranfer amount were unknown, or one or more tranferee were diolved or deceaed. See Mater Cae Order 4 [ECF No. 2865], at IX. 19 Specifically, the Trutee erved ubpoena upon the Chandler Trut; the Cantigny Foundation; the McCormick Foundation; Sam Zell; Sam Invetment Trut; EGI; EGI TRB; Reorganized Tribune/tronc; Sidley Autin LLP; Morri Nichol, Arht & Tunnell LLP; Wachtell, Lipton, Roen & Katz; Skadden, Arp, Slate, Meagher & Flom LLP; Bety Holden; Dudley Taft; Enrique Hernandez, Jr.; J. Chritopher Reye; Robert S. Morrion; William A. Oborn; Mile White; Pricewaterhoue Cooper; Boton Conulting Group; Citibank; Duff & Phelp; GreatBanc; Merrill Lynch; Morgan Stanley; VRC; and Ernt & Young. 12

13 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 14 of 22 document by themelve or other baed on a claim of attorney-client or common interet privilege. o Over half of the recipient of ubpoena produced document. From thoe production, the Trutee ha re-produced to Non-Moving Defendant over 9,000 document, and intend to produce any and all document previouly withheld on the bai of Tribune privilege in the next few week. Trutee and Non-Moving Defendant have continually met and conferred about Trutee document requet to Non-Moving Defendant. The progre to date include: o o Executing a Fed. R. Evid. 502(d) tipulation on May 22, 2018, which govern the timing and proce for the Non-Moving Defendant document production. Agreeing to a proce and earch term by which Certain Non-Moving Defendant 20 will produce document. Certain Non-Moving Defendant anticipate commencing production within a month and finihing in approximately three month. B. The Trutee Propoed Next Step on Dicovery Puruant to the Preliminary Dicovery Plan, the Trutee and the Non-Moving Defendant each have a databae of all document that were produced during the coure of the bankruptcy. The Trutee i prepared to ditribute thee document, along with the Pot-Bankruptcy Dicovery (in both cae electronically) to all Partie, including the Moving Defendant and the Shareholder Executive Committee. The Trutee expect that thi can be accomplihed within two week. Production till being completed can imply be made to all Partie imultaneouly, and are expected to be complete within the next three month. Tribune Privilege Waiver A noted in the Court order on the Trutee Motion to Compel, the Trutee wa aigned control over any privilege belonging to the Debtor and which relate in full or in part to Tribune Company 2007 leveraged buy-out tranaction (collectively, the Tribune Privilege ). See Agreement Repecting Tranfer of Document, Information, and Privilege from Debtor and Reorganized Debtor, dated Dec. 31, 2012 (the Tranfer Agreement ) I(A). The Tranfer Agreement alo vet in the Trutee ole authority and ole dicretion to waive any uch privilege or immunity. Id. In order to allow the unfettered ue of all of the Pot- Bankruptcy Dicovery for ettlement purpoe, in depoition, and at trial, the Trutee ha determined to waive the Tribune Privilege. For the avoidance of doubt, thi waiver i limited to the Tribune Privilege covered by the Tranfer Agreement. The Trutee doe not waive, and exprely preerve, any and all other privilege, protection, and immunitie otherwie afforded to information in the poeion, cutody, or control of the Trutee, including but not limited to 20 Harry Amden; Stephen Carver; Denni FitzSimon; Robert Gremillion; Donald Greneko; David Hiller; Tim Landon; Richard Malone; John Reardon; Scott Smith; John Vitanovec; Kathleen Waltz; and David William. 13

14 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 15 of 22 the Trutee communication with the Trutee counel and advior, their work product, and all common-interet communication. Depoition Not urpriingly, even at thi late date the defendant continue to be united in eeking further delay of the Trutee ability to move ahead with thi litigation. Yet, aide from three of the Advior Defendant, not a ingle one of the Moving Defendant or Non-Moving Defendant ha approached the trutee with any interet in ettling in the pat four year. Proceeding with depoition notwithtanding the pendency of motion to dimi i conitent with the Federal Rule and the Preliminary Dicovery Plan. See In re Currency Converion Fee Antitrut Litig., 2002 U.S. Dit. LEXIS 974, *4-5 (S.D.N.Y. Jan. 22, 2002) ( impoition of a tay i not appropriate imply on the bai that a motion to dimi ha been filed, a the Federal Rule make no uch proviion ); Preliminary Dicovery Plan at 11. It i certainly warranted here, where depoition of the Non-Moving Defendant (and ome moving defendant) are inevitable regardle of the outcome of the pending motion. See, e.g., Hollin v. United State Tenni A n., 469 F. Supp. 2d 67, 79 (E.D.N.Y. 2006) (compelling depoition where dicovery would proceed regardle of the outcome of motion to dimi); Salgado v. City of New York, 2001 U.S. Dit. LEXIS 799, *2 (S.D.N.Y. Jan. 31, 2001) (denying defendant requet for a tay of dicovery; even if the defendant motion were granted, thi action would not terminate and the ame dicovery would be neceary. ). Moreover, given the pace at which the Individual Creditor Action appeal ha progreed, deferring depoition until after the reolution of the Trutee pending requet to amend to add a contructive fraud claim and/or appeal the dimial of the Trutee actual fraud claim (a the Shareholder Executive Committee ugget), would likely defer depoition for everal additional year, at great prejudice to the Trutee. See Republic of Colombia v. Diageo N. Am. Inc., 619 F. Supp. 2d 7, 13 (E.D.N.Y. 2007) (tay of dicovery pending interlocutory appeal denied where dicovery already tayed for three year at requet of defendant). The Trutee i entitled to depoe thee key witnee while they retain ome emblance of memory of the event in quetion, and before any additional witnee pa away. The Trutee vigorouly dipute the Shareholder Executive Committee uggetion that proceeding with thee depoition, which the Trutee believe are not neceary for mediation with the Shareholder Defendant, would prejudice them in any way. Liaion Counel for the Shareholder Defendant have ably defended the interet of the Shareholder Defendant without any adminitrative difficulty, and there i no reaon why counel could not continue to do o by attending thee twelve depoition. Indeed thee depoition do not entail any fact pertinent to any alleged individualized hareholder defene. The cot of Liaion Counel participating would be minute when compared to the billion of dollar of tranfer retained by their client and other Shareholder Defendant. Moreover, thi i not a cae where dimied defendant are at odd with thoe who remain in the cae many of the Non-Moving Defendant are themelve Shareholder Defendant, having received in the aggregate million of dollar in LBO-related proceed. For example, former director and CEO Denni FitzSimon, one of the Non-Moving Defendant, received over $21 million in LBO proceed. At any rate, ome or all of thee depoition would likely take place after a mediation with the Shareholder Defendant, at which point many of them may no longer be partie to thee proceeding. 14

15 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 16 of 22 The objection of the Zell Defendant and Independent Director to the cot of preparing for or attending depoition alo ring hollow, a their defene cot are being borne by Tribune inurer. See V.S. v. Muhammad, No. 07-CV-1281(DLI)(JO), 2009 WL , at *2 (E.D.N.Y. Apr. 3, 2009) (no irreparable harm to individual defendant jutifying tay pending appeal where appellant indemnified by employer). The Trutee alo diagree that the Financial Advior and other Moving Defendant will be required to review million of document in preparation for thee depoition. The Trutee ha, at great expene, ubpoenaed and proceed hundred of thouand of document worth of new and improved metadata, permitting mot Bankruptcy Dicovery and virtually all Pot-Bankruptcy Dicovery to be orted o a to focu on the document relating to the deponent. The Preliminary Dicovery Order o-ordered by the Court contemplate that depoition will begin following the completion of the document dicovery decribed therein. 21 See Preliminary Dicovery Plan 11 ( Trutee and the Non-Moving Defendant preently contemplate waiting until the document production contemplated by thi Preliminary Dicovery Plan i ubtantially complete to conduct mot depoition. ). Now that thi time ha come, the Trutee hould be permitted at the very leat to depoe a limited late of important witnee. Plaintiff anticipate that thee depoition could be conducted beginning in November, giving all Partie at leat four to five month to review the vat majority of Pot-Bankruptcy Dicovery, and at leat two month to review any new material produced by the Non-Moving Defendant. During thi time, Plaintiff intend to continue negotiating with the Shareholder Executive Committee, and if agreement i reached on mediation term, commence mediation with the Shareholder Defendant. C. Non-Moving Defendant Poition on Next Step Non-Moving Defendant diagree with the Trutee uggetion to commence depoition practice in November. To provide ome background, the Trutee and Non-Moving Defendant negotiated a tipulation over the coure of everal month that anticipated the following proce: (1) document production by the Non-Moving Defendant; then (2) 60 day later, a deciion by the Trutee on whether to waive privilege; followed by (3) either a production by the Trutee or a motion to compel by Non-Moving Defendant. The Trutee deciion to waive privilege now, before Non-Moving Defendant have produced, mean Non-Moving Defendant mut finih reviewing and producing their own document while imultaneouly analyzing 26,298 previouly withheld document that the Trutee claim are material to the cae. For that reaon and other explained below, Non-Moving Defendant propoe the following tep: 21 The Non-Moving Defendant aert that depoition hould not proceed thi year becaue the Moving Defendant have not yet conducted written dicovery. The Trutee note that neither the Non-Moving Defendant nor the Moving Defendant have identified any topic or partie not covered to date by prior dicovery. Neverthele, the Trutee ha no objection to the Moving Defendant taking written dicovery, and believe they houlddoopromptly. 15

16 Cae 1:11-md RJS Document 7586 Filed 07/09/18 Page 17 of 22 Step 1: All defendant mut review all previouly withheld document, ome of which the Trutee ha poeed ince A. Due to the Trutee deciion to waive privilege, all defendant need time to analyze at leat 26,298 document the Trutee claim are material to the cae. 7,603 document from Tribune bankruptcy. A central iue throughout the dicovery proce ha been the volume and importance of document withheld by the Trutee a privileged. During Tribune bankruptcy, Sidley Autin LLP ( Sidley ) produced a privilege log on behalf of the debtor that pan over 1,100 page and lit well over 11,000 document. The Trutee repreent that he received 8,422 uch document in September The Trutee produced 819 of thee document it believe are non-privileged a few week ago. 18,695 document from third-party ubpoena. The Trutee received production from Sidley own record, a well a variou advior, including Wachtell Lipton Roen & Katz; Skadden, Arp, Slate, Meagher & Flom; Morri, Nichol, Arht & Tunnell; the Special Committee; Boton Conulting Group; Ernt & Young; PricewaterhoueCooper; and Reorganized Tribune. The Trutee repreent that thee production include 18,695 document that the Trutee i now withholding a privileged. B. The Trutee repreent that the production he received from ubpoena repondent over the lat year have given [him] acce to ten of thouand of never-before-produced document, many of which were previouly withheld from production a privileged, uch a communication with the Tribune Special Committee that will be intrumental in the next phae of the litigation and in driving future ettlement negotiation. C. The Trutee ha alo repreented that he ha unreolved dipute with Tribune over document that are lited on Tribune bankruptcy privilege log, but have not yet been produced to the Trutee. D. To ummarize, the Trutee had ubtantial time to review thouand of privileged document, but now propoe that all defendant do the ame work in jut a few month while imultaneouly participating in document dicovery and preparing for depoition by November. The Trutee poition i unreaonable, not only a a matter of timing, but alo becaue: Thoe ten of thouand of putatively privileged document may contain ignificant information that require careful conideration. The Trutee requeted a proce for Non-Moving Defendant review of document that would protect the Trutee privilege. The partie carefully negotiated a tipulated proce and reached final agreement in May Under the tipulated proce, the Trutee deciion to waive privilege i due three month after all Non-Moving Defendant are finihed producing in 16