Case Document 722 Filed in TXSB on 04/02/18 Page 1 of 10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

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1 Case Document 722 Filed in TXSB on 04/02/18 Page 1 of 10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ) In re: ) Chapter 11 ) COBALT INTERNATIONAL ENERGY, INC., et al., 1 ) Case No (MI) ) Debtors. ) (Jointly Administered) ) DEBTORS EMERGENCY MOTION TO EXCLUDE EDWARD JASON DENNIS IMPROPER LAY OPINION TESTIMONY AND RECITATION OF FACTS ON WHICH HE HAS NO PERSONAL KNOWLEDGE THIS MOTION SEEKS ENTRY OF AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. EMERGENCY RELIEF HAS BEEN REQUESTED. IF THE COURT CONSIDERS THE MOTION ON AN EMERGENCY BASIS, THEN YOU WILL HAVE LESS THAN 21 DAYS TO ANSWER. IF YOU OBJECT TO THE REQUESTED RELIEF OR IF YOU BELIEVE THAT THE EMERGENCY CONSIDERATION IS NOT WARRANTED, YOU SHOULD FILE AN IMMEDIATE RESPONSE. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. Pursuant to Federal Rule of Bankruptcy Procedure 9017 and Federal Rules of Evidence 602, 701 and 704, the Debtors, by and through their undersigned attorneys, move that this Court enter an order precluding Edward Jason Dennis from testifying at the confirmation hearing in these 1 The Debtors in these chapter 11 proceedings, along with the last four digits of each Debtor s federal tax identification number, are: Cobalt International Energy, Inc. (1169); Cobalt International Energy GP, LLC (7374); Cobalt International Energy, L.P. (2411); Cobalt GOM LLC (7188); Cobalt GOM # 1 LLC (7262); and Cobalt GOM # 2 LLC (7316). The Debtors service address is: 920 Memorial City Way, Suite 100, Houston, Texas

2 Case Document 722 Filed in TXSB on 04/02/18 Page 2 of 10 chapter 11 cases regarding: (1) his opinions as to the merits and value of the claims alleged in three derivative lawsuits for which the Official Committee of Unsecured Creditors (the Committee ) has requested standing (the Derivative Actions ); 2 and (2) purported facts underlying the Derivative Actions as to which Mr. Dennis has no personal knowledge. In support of this Motion, the Debtors respectfully state as follows. INTRODUCTION The Committee cannot properly call Mr. Dennis as a purported fact witness to testify as to the status of and regarding the derivative actions that the Committee seeks to pursue. (Ex. A, 3/20/18 B. Levine to S. Pepper.) In deposition, Mr. Dennis testified that the overarching point of his anticipated hearing testimony is to provide his evaluation of [the derivative] claims, including his opinion on the merits and value of those claims. (See Ex. B, Dennis Dep. Tr. at 14:6-23.) To give this opinion testimony, Mr. Dennis intends to address: (1) facts about which he admits he has no personal knowledge and about which he knew nothing at all before preparing for his testimony over the past several weeks; and (2) his application of purported legal principles to those facts as he understands them, which is specialized knowledge plainly outside the purview of a lay witness. 3 Mr. Dennis is a lawyer. His firm, Lynn Pinker Cox & Hurst, LLP, represents the plaintiff in Gaines v. Bryant et al., a shareholder derivative lawsuit pending against Cobalt International Energy, Inc. ( Cobalt ) in Harris County. But Mr. Dennis is not counsel of record and does not 2 The three derivative cases are Gaines v. Bryant, et al., No (Dist. Ct. Harris County, Tex.) ( Gaines ); McDonaugh v. Bryant, et al., No (Dist. Ct. Harris County, Tex.) ( McDonaugh ); and Hafkey v. Bryant, et al., No (Dist. Ct. Harris County, Tex.) ( Hafkey ). 3 To the extent that the Committee seeks to admit evidence regarding the procedural posture of the Derivative Lawsuits, or any prior rulings or motion practice, it may present the relevant docket sheet or pleadings. Debtors counsel previously offered to stipulate to the admissibility of the docket sheet. (Ex. C, 3/21/18 S. Pepper to B. Levine.) But Mr. Dennis is in no better position than this Court and in no position at all as a lay witness to interpret those pleadings. 2

3 Case Document 722 Filed in TXSB on 04/02/18 Page 3 of 10 work on the Gaines litigation. (Ex. B at 36:4-7.) He only started familiarizing himself with the specifics of the Gaines lawsuit in 2018, after the automatic stay was in effect, in preparation for his confirmation-hearing testimony. (Id. at 78:4-13; 221:24-222:6.) Before January of this year, the sum total of Mr. Dennis knowledge of the case consisted of his reading the complaint, and maybe ten informal conversations with an associate in his firm who worked on the matter and whose office was adjacent to his. (Id. at 37:4-18; 43:13-17; 64:24-65:11; 69:18-23; 72:24-73:4.) Mr. Dennis purported knowledge of the case today is based on hours spent reviewing documents and discussing the Gaines litigation with other plaintiffs counsel in the weeks leading up to this hearing. 4 (Id. at 59:4-9; 63:12-23; 82:5-11; 104:13-21; 107:4-17.) And neither he nor his firm had any involvement in the two other derivative lawsuits (McDonough and Hafkey) on which he intends to present lay opinions. (See id. at 19:10-20, 20:11-24; 107:4-12.) Simply put, Mr. Dennis has no personal, firsthand knowledge to offer about the Derivative Actions. But even if Mr. Dennis had worked on the Gaines litigation from its inception, a lawyer s view on the merits of and potential recoveries in litigation is not proper fact witness testimony. Claiming that he is not attempting to offer an expert opinion does not make it so. (Id. at 18:6-14; 220:20-222:6.) In reality, what the Committee seeks to do, under the guise of lay witness testimony, is to present lawyer argument based on Mr. Dennis interpretation of the law and of facts about which he admits he has no personal knowledge. Mr. Dennis admits that it is fair to characterize his intended testimony as based on his expertise as a lawyer. 5 As Mr. Dennis 4 Mr. Dennis admits that he is testifying in the hopes of being appointed to lead the litigation if the Court allows the Committee to pursue it. (Ex. B at 17:14-18.) Undoubtedly, the only testimony Mr. Dennis would give will promote the claims of his firm s present and (hopefully) future client. Indeed, as an ethical matter, Mr. Dennis cannot say anything that would compromise his client s claims. Thus, the only public statements that Mr. Dennis could offer concerning his client s pending litigation would necessarily be positive, without any meaningful disclosure of the case s many known weaknesses. 5 Ex. B at 82:5-11 ( Q. Okay. From your perspective, there s three inputs to the assessment that you make of the prospects for the Gaines and other derivative lawsuits: One, the documents you ve reviewed, two, your discussions with others, and three is your expertise as a lawyer, correct? A. Yeah, I think that s fair. (emphasis added)); see also 3

4 Case Document 722 Filed in TXSB on 04/02/18 Page 4 of 10 puts it: [It] would be just as easy for me to give a presentation to Judge Isgur about the merits of the claim... because as an officer of the court, I don t normally need to be sworn in in order to give testimony of that nature. (Id. at 13:10-18.) Whatever Mr. Dennis might mean about lawyers, as advocates, giving testimony to the court, it is inappropriate for a lay witness to do. See Fed. R. Evid. 701 (lay opinion may not be drawn from specialized knowledge ). id. at 72:24-73:4 ( Q. So your assessment prior to 2018 was based possibly on a pleading, based on a discussion with Mr. Hardy and based on your expertise as a lawyer? A. Yes that s fair. ). 4

5 Case Document 722 Filed in TXSB on 04/02/18 Page 5 of 10 ARGUMENT Mr. Dennis admitted in his deposition that the opinions he intends to offer are based on: (1) his expertise as a lawyer; (2) legal research he performed in preparation for his testimony (but that he refuses to reveal on work product grounds); (3) selected documents, including pleadings, newspaper articles, and other publicly available documents, that he reviewed in 2018 in preparation for his testimony; and (4) conversations he had in the lead-up to this hearing with other plaintiffs lawyers. (Ex. B at 82:5-11; 72:24-73:4; see also id. at 84:2-9 (refusing to divulge legal research on work product grounds).) Plainly, testimony applying Mr. Dennis experience as a lawyer and his legal research (the third and fourth of the above-listed bases for his opinions) constitutes specialized knowledge that cannot be the basis of lay person testimony. Further, Mr. Dennis recitation of facts he claims to have seen in documents or learned from other plaintiffs lawyers (the third and fourth bases for his opinions) is impermissible hearsay, not testimony based on personal knowledge. Mr. Dennis thus should be precluded from testifying on any of these bases. A. Mr. Dennis Opinions on the Legal Merits of or Potential for Recovery from the Derivative Actions Are Not Proper Lay Testimony. Federal Rule of Evidence 701 is specifically designed to prevent a party from proffering an expert in lay witness clothing as the Committee attempts to do here. See Fed. R. Evid. 701 Advisory Committee s Note to 2000 Amendment ( Rule 701 has been amended to eliminate the risk that the reliability requirements set forth in Rule 702 will be evaded through the simple expedient of proffering an expert in lay witness clothing. ). Lay witnesses like Mr. Dennis claims to be may not opine on subjects that are beyond the reach of a layperson s knowledge and experience. See Guile v. United States, 422 F.3d 221, 225 (5th Cir. 2005). The testimony the Committee intends to offer through Mr. Dennis falls far outside this scope. Mr. Dennis intends 5

6 Case Document 722 Filed in TXSB on 04/02/18 Page 6 of 10 to offer his evaluation of the claims in all three Derivative Actions, including those in which even his firm has no involvement. (Ex. B at 16:23-17:18; 220:20-222:6.) His evaluation would include: Court Rulings: Mr. Dennis interpretations of court rulings and the substantive inferences he would draw from them, including arguments he believes the court accepted or rejected and evidence he believes the court considered. (Ex. B at 113:14-114:3; 115:17-117:8; 119:11-121:16; 122:7-126:9; 123:25-126:9.) Merits Assessments: Mr. Dennis arguments regarding the prospects for all three Derivative Actions based on his expertise in law and his characterization of purported facts he learned from hearsay sources. (Id. at 81:22-82:4; 177:13-178:18; 185:14-186:5; 190:25-191:17; 207:17-22.) Purported Value of Claims: Mr. Dennis views regarding purported damages theories (whether or not they appear in the Derivative Actions complaints) and his theories on the potential for recovery. (Id. at 141:2-8; 183:22-184:13.) Procedural Assertions: Mr. Dennis incredible assertion that the Gaines case, which has been pending since 2016, in which motions to dismiss (special exceptions) remain pending, and in which no discovery has begun, will somehow be ready for trial by the end of this year. (Id. at 28:24-29:18; 142:17-143:22; 147:8-11; 155:20-25.) Other Legal Theories Not in the Derivative Complaints: Mr. Dennis invented theories, such as potential claims for aiding and abetting liability (for which no claim has been asserted and as to which no request for standing has been made) and supposed damages from changes in equity (which he eventually conceded are not available on a fiduciary-breach claim). (Id. at 212:4-213:16; 226:16-227:21; 230:20-231:11.) Mr. Dennis views on these topics do not qualify as lay opinions in any sense. Federal Rule of Evidence 701 bars lay opinions if they (1) are not rationally based on the witness s perception, or (2) are based on specialized knowledge. See Fed. R. Evid. 701(a), (c). Here, Mr. Dennis knowledge of the facts is not based on his perception at all. To the contrary, his knowledge is admittedly second-hand, based on documents reviewed and conversations with other lawyers. (Ex. B at 68:4-9.) For this reason alone, his testimony fails under Rule 701. But Mr. Dennis testimony is precluded for the independent reason that he concedes it is based on specialized knowledge (i.e., his expertise as a lawyer ), disqualifying it as lay testimony on its face. (Ex. B 72:24-73:4.) Indeed, Mr. Dennis admits that in preparation for his 6

7 Case Document 722 Filed in TXSB on 04/02/18 Page 7 of 10 testimony, he conducted legal research. (Id. at 84:2-6.) And, tellingly, he invokes work product protection to avoid disclosing to Debtors counsel the substance of that research (i.e., the bases for his opinions, which Debtors counsel is entitled to discover and subject to cross-examination). (See, e.g., id. at 74:22-75:16; 84:7-9.) The Committee cannot credibly argue that Mr. Dennis s testimony falls within Rule 701 s scope. It would be fundamentally unfair to Debtors to allow Mr. Dennis to testify as anything other than a lay witness. Mr. Dennis insists that he has not been retained as an expert and is not offering expert testimony. (Ex. B at 18:5-14; 220:20-222:6.) Equally important, the Committee did not disclose him as an expert, as required by FRCP 26 or BLR (c) a deadline set by agreement with the Committee that passed over a week ago. 6 (See Ex. D, 3/22/18 S. Pepper Letter to A. Kornfeld.) The only question here is whether Mr. Dennis may properly offer lay testimony, and the answer is no. B. Mr. Dennis Admits He Lacks the Firsthand Knowledge Required to Testify. Mr. Dennis may not offer his planned testimony here, as he has no personal knowledge of the matter. Fed. R. Evid. 602; Gardea v. DialAmerica Mktg., Inc., 2013 WL , at *4 (W.D. Tex. Apr. 30, 2013) (excluding testimony where basis given for alleged personal knowledge was hearsay) (citing United States v. Cantu, 167 F.3d 198, 204 (5th Cir. 1999)); Bonn Operating Co. v. Devon Energy Prod. Co., LP, 2009 WL , at *5 (N.D. Tex. Sept. 24, 2009) (excluding testimony from witness whose knowledge of underlying facts was based on 6 The Debtors do not concede that Mr. Dennis proposed testimony would not be proper expert testimony. Much of it likely would not be. See, e.g., Askanase v. Fatjo, 130 F.3d 657, 673 (5th Cir. 1997) (expert cannot testify whether directors had fulfilled their fiduciary duties to the company, its creditors and shareholders ); United States v. Burton, 737 F.2d 439, 444 (5th Cir. 1984) (upholding exclusion of expert testimony purporting to interpret the law); Good Shepherd Manor Found n, Inc. v. City of Momence, 323 F.3d 557, 564 (7th Cir. 2003) (affirming exclusion of expert testimony applying legal principles to facts of case). 7

8 Case Document 722 Filed in TXSB on 04/02/18 Page 8 of 10 review of document), aff d sub nom. Bonn Operating Co. v. Devon Energy Prod. Co., L.P., 613 F.3d 532 (5th Cir. 2010). Mr. Dennis admits that he has no firsthand knowledge of the facts underlying the Gaines litigation or any of the other Derivative Actions. (Ex. B at 68:4-9.) He further admits he has no personal knowledge about what went on in Angola. (Id.) In fact, he had no involvement at all in making any submission to the Court or in prosecuting the Gaines litigation. (Id. at 65:9-11; 68:22-24; 69:18-23.) And his firm is not counsel in the other two Derivative Actions about which he seeks to testify. His testimony, based on documents prepared by others and conversations with other plaintiffs lawyers, is information collected by others behind the curtain and then communicated by the declarant. See Trujillo v. Apple Computer, Inc., 578 F. Supp. 2d 979, 988 (N.D. Ill. 2008) (affidavit submitted by an attorney regarding facts communicated to the attorney by others constituted shocking disregard of the requirements of the rules of evidence ). On this basis as well, Mr. Dennis testimony should be excluded. C. Emergency Consideration In light of the facts and circumstances of these chapter 11 cases and the timing of the hearing for the Confirmation of the Debtors Proposed Joint Chapter 11 Plan (the Confirmation Hearing ), the Debtors respectfully request emergency consideration of this Motion for the Confirmation Hearing scheduled for April 3, 2018, at 8:30 a.m., prevailing Central Time. CONCLUSION For the reasons set forth herein, the Debtors respectfully request that this Court enter an Order precluding Mr. Dennis from testifying at the Confirmation Hearing about: (1) his lay opinions as to the purported merits and value of the claims brought in the Derivative Actions; and (2) purported facts underlying the Derivative Actions, as to which Mr. Dennis has no personal knowledge. 8

9 Case Document 722 Filed in TXSB on 04/02/18 Page 9 of 10 Houston, Texas Dated: April 2, 2018 /s/ Zack A. Clement Zack A. Clement (Texas Bar No ) ZACK A. CLEMENT PLLC 3753 Drummond Street Houston, Texas Telephone: (832) and- James H.M. Sprayregen, P.C. (pro hac vice) Marc Kieselstein, P.C. (pro hac vice) Chad J. Husnick, P.C. (pro hac vice) Brad Weiland (pro hac vice) Gabor Balassa, P.C. (pro hac vice) Stacy Pepper (pro hac vice) Jamie Aycock (Texas Bar No ) KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 300 North LaSalle Street Chicago, Illinois Telephone: (312) Facsimile: (312) Counsel to the Debtors and Debtors in Possession 9

10 Case Document 722 Filed in TXSB on 04/02/18 Page 10 of 10 CERTIFICATE OF SERVICE I certify that on April 2, 2018, I caused a copy of the foregoing document to be served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas. /s/ Zack A. Clement Zack A. Clement

11 Case Document Filed in TXSB on 04/02/18 Page 1 of 2 EXHIBIT A

12 Case Document Filed in TXSB on 04/02/18 Page 2 of 2 From: Beth Levine [mailto:blevine@pszjlaw.com] Sent: Tuesday, March 20, :14 PM To: Pepper, Stacy <stacy.pepper@kirkland.com>; Balassa, Gabor <gbalassa@kirkland.com>; Aycock, Jamie Alan <jamie.aycock@kirkland.com> Cc: Alan Kornfeld <akornfeld@pszjlaw.com> Subject: RE: In re Cobalt International Energy, Inc., Debtors Dear Stacy: Thank you for your . First, with respect to Jason Dennis, the Committee intends to call him to testify as to the status of and regarding the derivative actions the defendants in which are being released pursuant to the Plan. We believe the Sidley and Kirkland reports are likely to be relevant to this testimony. The Committee intends to take Mr. Utt s deposition as well as the ones previously noticed. Can you please advise when he and the other noticed witnesses will be available for deposition. We are not yet in a position to disclose whether the Committee will be calling expert witnesses. Perhaps it makes sense to block out dates and times to hold for expert witnesses so that we can start to firm up the deposition schedule. Can you please advise as the status of the Debtors document production. When can we expect the next tranche of documents to be produced? Regards, Beth Beth Levine Pachulski Stang Ziehl & Jones LLP Direct Dial: Tel: Fax: blevine@pszjlaw.com vcard Bio LinkedIn Los Angeles San Francisco Wilmington, DE New York

13 Case Document Filed in TXSB on 04/02/18 Page 1 of 66 EXHIBIT B

14 Case Document Filed in TXSB on 04/02/18 Page 2 of 66 Page UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS 3 HOUSTON DIVISION 4 In re ) Chapter 11 ) 5 ) Case No. COBALT INTERNATIONAL ) (MI) 6 ) ) Jointly 7 ENERGY, INC., et al. ) Administered ORAL DEPOSITION OF EDWARD JASON DENNIS 11 Houston, Texas 12 Wednesday, March 28, Reported by: 24 MICHAEL E. MILLER, FAPR, RDR, CRR, Notary Public 25 JOB NO

15 Case Document Filed in TXSB on 04/02/18 Page 3 of 66 Page 13 2 Q. Okay. And what, if anything, was 3 said about the evidentiary issues that might 4 require live witness testimony? 5 A. I think the decision was it would be 6 up to Judge Isgur, and that to be safe, that they 7 would designate one of us as a factual witness to 8 talk about the derivative lawsuits and the merits 9 of them. 10 Q. What was the alternative that was 11 discussed? 12 A. Well, I mean, it would be just as 13 easy for me to give a presentation to Judge Isgur 14 about the merits of the claim and have opposing 15 counsel say why they don't think there are merits 16 to the claim, because as an officer of the court, 17 I don't normally need to be sworn in in order to 18 give testimony of that nature. 19 Q. On the second call was it decided who 20 would be testifying? 21 A. No. That was decided on maybe 22 Saturday. 23 Q. Saturday, do you know a date? Of the 24 same week? 25 A. Saturday following the -- is it the

16 Case Document Filed in TXSB on 04/02/18 Page 4 of 66 Page th, so the 17th. 3 Q. The Saturday of the same week where 4 you had the two phone calls? 5 A. Yes. 6 Q. Okay. What is your understanding of 7 the substance of the testimony that you're going 8 to provide the Court? 9 A. Well, that we were pursuing these 10 derivative claims, that they're very valuable 11 claims, and that we would be willing to pursue 12 them on behalf of the committee or whoever 13 retains those claims. 14 Q. Anything else? 15 A. That's the overarching point is that 16 our evaluation of these claims is they are very 17 good claims, they're valuable claims, and I'm 18 sure we'll get into all the detail of that; that 19 it wouldn't make any sense to give those claims 20 away for nothing when they're so valuable, and 21 that if there's worry about the cost, our firm 22 is -- our firms are willing to take them on a 23 contingency basis. 24 Q. Which firms are willing to take the 25 Gaines claims on a contingency basis?

17 Case Document Filed in TXSB on 04/02/18 Page 5 of 66 Page 16 2 Ms. Grant's firm are all currently proceeding on 3 a contingency basis with the Gaines lawsuit, and 4 would be willing to proceed with -- what we'll 5 call the derivative claims on behalf of the 6 committee subject to whatever compensation they 7 wanted to negotiate with us. In particular, if 8 they want to do it as a contingency, we're into 9 that. 10 Q. Okay. So your firm is willing to 11 consider serving as contingency fee counsel in 12 the three derivative lawsuits; is that correct? 13 A. Yes. 14 Q. Okay. Has your firm negotiated any 15 terms with the creditors committee pursuant to 16 which you might represent the interests of 17 creditors in pursuing those claims? 18 A. No. 19 Q. Has your firm extended any kind of 20 binding offer to represent creditors pursuant to 21 a contingency fee basis? 22 A. No. We haven't been asked to. 23 Q. Going -- we'll come back to that. 24 In terms of the substance of the 25 testimony that you anticipate offering the Court,

18 Case Document Filed in TXSB on 04/02/18 Page 6 of 66 Page 17 2 do you intend to provide Judge Isgur with your 3 opinions about the merits of the lawsuit? 4 A. I'm not -- as I understand it, I'm 5 not designated as an expert witness. I'm here to 6 provide Judge Isgur the reasons that we took the 7 Gaines lawsuit and would love to take the 8 derivative cases on behalf of the committee 9 because they are, in our view, such good claims. 10 I'm drawing a distinction because I 11 haven't been designated as an expert as far as I 12 know. I mean, I could be an expert, but I 13 haven't been asked to do that and I'm not doing 14 that. My understanding is I'm going to talk 15 about why we took the Gaines claims and why we 16 think they're valuable and why we'd love to take 17 the derivative claims for the committee because 18 we believe in them strongly. 19 Q. So one of the things you want to tell 20 the Court is why you think the claims are valid? 21 A. Why we decided to take the claims and 22 why we continue to think they're excellent 23 valuable claims. 24 Q. You intend to provide the Court with 25 your assessment of the merits and potential value

19 Case Document Filed in TXSB on 04/02/18 Page 7 of 66 Page 18 2 of the claims, correct? 3 A. Can you repeat that question? I'm 4 sorry. 5 Q. Sure. 6 You intend to provide the Court with 7 your assessment of the merits and potential value 8 of the claims, correct? 9 A. If that's how you want to 10 characterize why we took the case and why we 11 would continue taking the case. I just don't 12 want to give the false impression that I am 13 offering expert opinions because that's not what 14 I'm asked to do, not designated. 15 I'm here to talk about -- we were 16 the -- we were counsel for the Gaines lawsuit so 17 we obviously believe in those claims and are we're willing to take those claims, and the 19 claims for the committee would be even better. 20 So I guess I'm here to talk about our 21 willingness to take those claims and why we are 22 willing to take those claims. 23 Q. Okay. And as part of explaining why 24 you're willing to take the claims, do you expect 25 to explain to the Court your assessment of the

20 Case Document Filed in TXSB on 04/02/18 Page 8 of 66 Page 19 2 merits and of the potential value of those 3 claims? 4 A. I'm happy to answer any questions 5 about why we think those claims are valuable. 6 Q. You've used the term "we" a few times 7 in the context of why "we" would be willing to 8 take the claims, why "we" think the claims are 9 valuable. 10 Mr. Dennis, whose assessment of the 11 claims do you anticipate providing to the Court? 12 A. Well, I don't know -- I use "we" in 13 the sense that there are three law firms who are 14 co-counsel for the Gaines lawsuit, and so -- and 15 my firm, Lynn Pinker Cox Hurst, it's not the 16 Dennis law firm, so -- and I wouldn't be 17 undertaking -- I didn't in the past and wouldn't 18 be undertaking an engagement for the committee 19 for these derivative claims on behalf of myself. 20 So that's what I mean when I say "we." 21 Q. Okay. If you address with the Court 22 the potential merits and potential recovery of 23 the lawsuit, whose perspective do you intend to 24 provide, yours, your firm's or the group of 25 counsel currently representing the Gaines

21 Case Document Filed in TXSB on 04/02/18 Page 9 of 66 Page 20 2 plaintiffs? 3 A. I guess my answer to that would be I 4 don't draw a distinction. I think that there's 5 no difference in my personal perspective from 6 Mr. Hardy's perspective, from the firm's 7 perspective, from Ms. Grant's perspective, from 8 Mr. Abraham's perspective. We all jointly 9 believe in the merits and the potential damages 10 and likelihood of success. 11 Q. How do you know what others at your 12 firm believe about the merits and about the 13 potential for recovery in the suit? 14 A. Well, when you say "others," not 15 everyone in my firm would be privy to the details 16 of the case. I would say it would be primarily 17 myself and Mr. Hardy who have looked at the case 18 in any detail. 19 Q. Okay. And how did you come to learn 20 what Mr. Hardy's perspective on the case was? 21 A. Mr. Hardy's office is like five feet 22 away from mine, so we have spoken at length on 23 these issues, before we knew about the bankruptcy 24 and after. 25 Q. So is it through conversations with

22 Case Document Filed in TXSB on 04/02/18 Page 10 of 66 Page 28 2 hearing. Those are the only expenses that come 3 to mind. 4 Q. Okay. You'd expect there's going to 5 be very substantially more costs and expenses in 6 prosecuting the litigation on a going-forward 7 basis if the Court allows that? 8 A. More than what we've expended, but I 9 wouldn't classify them as substantial versus a 10 recovery in excess of a billion dollars as the 11 potential. 12 Q. Do you have any estimate of how long 13 the derivative litigation might go on if the 14 Court allows it to go forward? 15 A. And to what stage would you be 16 referring? 17 Q. To resolution. 18 A. And do you mean a resolution -- well, 19 my answer would depend on what you're describing 20 as a resolution. I can give you the typical time 21 period for Harris County, the typical time period 22 for an appeal if there was a final judgment, and 23 then I guess there's potential for review. 24 Q. Sure. What is your estimation, 25 taking account of the facts and circumstances

23 Case Document Filed in TXSB on 04/02/18 Page 11 of 66 Page 29 2 that you think apply in the derivative suit, to 3 how long it would take the case to reach summary 4 judgment, a summary judgment decision, if the 5 Court allows it to go forward? 6 A. Well, you know, unlike the Federal 7 Rules, in state court you could file a summary 8 judgment at any time, but given the procedural 9 posture of the Gaines in particular, and other 10 lawsuits will probably be consolidated in Harris 11 County, you would have full discovery first 12 before there would be any summary judgment. 13 The case has already been pending 14 since 2016, so let's say if the hearing is next 15 week and the committee's allowed to proceed with 16 the claims, I don't know why you couldn't get a 17 trial date before the end of the year, if not 18 before the end of the year, just into next year. 19 Q. How much discovery have the 20 plaintiffs' counsel taken in the Gaines lawsuit? 21 A. There's been no discovery except 22 informal discovery, I guess, on either side's 23 part because there was a stay, I think by Rule agreement -- if you're familiar with, it's sort 25 of a counsel agreement in Texas. There was a

24 Case Document Filed in TXSB on 04/02/18 Page 12 of 66 Page 36 2 A. You said mid December Q. Thank you. 4 Up through mid December 2017, did 5 your firm function in a local counsel capacity 6 for Ms. Grant's firm? 7 A. I'd say in part, that's true. 8 Q. Which firm had the lead in the Gaines 9 lawsuit? 10 A. Well, I guess that depends on the 11 stage, but Ms. Grant certainly brought us into 12 the case, and I believe brought Mr. Abraham into 13 the case, and she certainly has a high level of 14 expertise in derivative and securities lawsuits, 15 especially at the procedural level. 16 Q. So at least as far as the case had 17 gotten, Ms. Grant was the lead lawyer? 18 A. She was the lead in filing it. With 19 the special exceptions, I believe that both her 20 and Mr. Hardy argued the special exceptions, so I 21 don't know. 22 Q. What was your -- the nature and 23 extent of your involvement in the Gaines lawsuits 24 before mid December 2017? 25 A. I'd had conversations with Mr. Hardy

25 Case Document Filed in TXSB on 04/02/18 Page 13 of 66 Page 37 2 about it. I had not made an appearance in that 3 litigation. 4 Q. Had you done any substantive work on 5 the Gaines lawsuit before mid December 2017? 6 A. Well, if by "substantive" you mean 7 substantive discussions with Mr. Hardy, yes. If 8 you mean make an appearance or write a document, 9 no. 10 Q. Okay. How many substantive 11 discussions did you have with Mr. Hardy about the 12 Gaines lawsuit before 2018? 13 A. I don't know. Maybe ten? 14 Q. Over what time period did you have 15 the maybe ten discussions with Mr. Hardy about 16 the Gaines lawsuit prior to 2018? 17 A. From prior to filing through the 18 suggestion of bankruptcy. 19 Q. Why didn't you -- strike that. 20 Were you a -- I know you were. I'll 21 rephrase. 22 You were a partner at the firm back 23 at the time the Gaines lawsuit was filed, 24 correct? 25 A. Yes.

26 Case Document Filed in TXSB on 04/02/18 Page 14 of 66 Page 43 2 mine. When we were in the office, it would be a 3 rare day that we wouldn't talk about some case or 4 just a social conversation or grab a cup of 5 coffee together. 6 So, you know, there's just no way I'd 7 be able to break out when those conversations 8 were or how long they were. I know we had 9 discussion. I probably wouldn't remember the 10 detail of them, to save some time, other than, 11 you know, the status of the lawsuit and maybe if 12 anything had come up or been learned. 13 Q. So as best you can recall, most of 14 these conversations before 2018 with Mr. Hardy, 15 informal conversations with him? 16 A. Yes, I would say informal. Not 17 formal scheduled meetings. 18 Q. Okay. With respect to Ms. Grant, is 19 it fair to say that you don't recall whether you 20 had any conversations with her about the Gaines 21 litigation prior to 2018? 22 A. If I did, it would have been very 23 late Q. Okay. But you don't remember one way 25 or another whether you spoke to her prior to 2018

27 Case Document Filed in TXSB on 04/02/18 Page 15 of 66 Page 55 2 Q. What's your understanding of the 3 purpose for recording time on contingency fee 4 matters like the Gaines lawsuit? 5 A. Well, if we assign a number and we -- 6 you know, there's the expectation of recovering 7 attorneys' fees -- in general, we will enter our 8 time for contingency matters just like we would 9 an hourly matter in, you know, tenths of an hour 10 with a description. 11 Q. At least for internal assessment 12 purposes, correct? 13 A. No. Just to clarify, not for 14 internal assessment purposes, but so that if we 15 were going to seek recovery of attorneys' fees 16 that there would be records. 17 Q. Okay. So you don't record time in 18 order to assess whether the firm has effectively 19 made money given the time that was invested in a 20 contingency fee matter relative to the outcome of 21 that fee -- of that lawsuit? 22 A. You know what, you would be able to 23 determine that, yes. So let me correct that: 24 You would be able to do it. My original response 25 was, you know, is there sort of an ongoing

28 Case Document Filed in TXSB on 04/02/18 Page 16 of 66 Page 63 2 pleadings not just related to the Gaines lawsuit, 3 but also the bankruptcy proceeding and the 4 securities proceeding. 5 Q. Okay. 6 A. I don't think at that time I looked 7 at the other derivative complaints. I may have 8 looked at them earlier, but I do not recall that. 9 Q. So of the 30 to 50 hours that you 10 spent familiarizing yourself with the Gaines 11 lawsuit, how much of that time -- strike that. 12 How much of the 30 to 50 hours that 13 you spent familiarizing yourself with the Gaines 14 litigation was spent after your March 12th 15 conversation with committee counsel? 16 A. Maybe half. When I -- after -- so I 17 didn't spend but a little bit of time that week 18 of March 12th because it was spring break, but 19 when I found out the following week that I would 20 be the person put forward and that there was 21 going to be a deposition set, I spent the bulk of 22 the time, including yesterday, preparing for this 23 deposition. 24 Q. Okay. Most of the time that you've 25 spent familiarizing yourself with the derivative

29 Case Document Filed in TXSB on 04/02/18 Page 17 of 66 Page 64 2 lawsuits occurred within the last seven days, 3 correct? 4 A. I said half. I'd say most of the 5 time, it's fair to say, has been since January. 6 Q. Okay. 7 A. All the time -- I mean, I was 8 aware -- and we said the Gaines lawsuit. I was 9 aware of the Gaines lawsuit. I'd seen the 10 pleading. I was generally aware of allegations. 11 I'd had discussions with Mr. Hardy about that 12 suit. 13 I was not as familiar with the 14 detailed allegations in the securities lawsuit 15 which revolve around the same nexus of facts. 16 Q. Of the 30 to 50 hours that you said 17 you spent familiarizing yourself with the Gaines 18 lawsuit, how much of that time was for work you 19 did in the last seven days? 20 A. Again, just estimating, probably hours. But I know I'm giving you a range, so 22 that makes it difficult. I don't have a precise 23 number to put on it. 24 Q. You had no involvement investigating 25 facts related to the Gaines complaint prior to

30 Case Document Filed in TXSB on 04/02/18 Page 18 of 66 Page 65 2 that complaint being filed, correct? 3 A. No, I'm aware of the investigation, 4 but I had no personal involvement at that time. 5 Q. You had no involvement in drafting 6 the complaint, correct? 7 A. No. You asked if it was correct. 8 Q. Let me try again. 9 You had no involvement drafting the 10 Gaines petition or complaint, correct? 11 A. That is correct. 12 Q. Did you have any discussions with 13 Mr. Lynn about the Gaines litigation prior to 14 December of 2017? 15 A. I don't believe so. 16 Q. Did -- strike that. 17 What was the nature and extent, if 18 any, of Mr. Hardy's involvement in preparing the 19 Gaines complaint? 20 A. I believe he was heavily involved in 21 its preparation. Now, I believe that Ms. Grant 22 drafted it initially, but he was, you know, 23 certainly involved prior to its filing, and with 24 respect to revising it, that kind of thing. 25 Q. Okay. Ms. Grant did the initial

31 Case Document Filed in TXSB on 04/02/18 Page 19 of 66 Page 68 2 firsthand perceptions that were put into the 3 complaint. 4 Q. The fact is you have no firsthand 5 knowledge about any of the allegations in the 6 complaint, correct? 7 A. Well, I think that would be the case 8 for any lawyer. No one's got firsthand knowledge 9 of the allegations of what went on in Angola. 10 Q. Or in Cobalt's boardroom, correct? 11 A. Yes. I mean, I think all of the 12 allegations in the complaint either come from 13 documents, public documents, documents received 14 from Cobalt, in particular, correspondence, 15 witnesses who are verified in the securities 16 complaint as testifying. 17 And there's some other documents 18 referenced in the securities complaint that may 19 or may not be public. I don't know for certain 20 about every single document. I mean, all of 21 those things are secondhand information. 22 Q. You had no involvement in preparing 23 the briefing on the special exceptions, correct? 24 A. I did not. 25 Q. You've had no involvement in

32 Case Document Filed in TXSB on 04/02/18 Page 20 of 66 Page 69 2 preparing any of the pleadings or letters that 3 had been submitted to the Court in the Gaines 4 lawsuit, correct? 5 A. I don't know about the letters 6 submitted. I did not make an appearance of 7 record. If I had -- well, I don't know. I guess 8 I could have helped without putting my name on 9 the signature block, but I don't recall having 10 worked on anything that was filed in the Gaines 11 lawsuit before the bankruptcy standing. 12 Q. Prior to mid December 2017, to the 13 best of your recollection, you had no involvement 14 in preparing any of the submissions that were 15 made to the Court in the Gaines lawsuit, correct? 16 A. Can you repeat that back? I'm sorry. 17 I just missed part of it. 18 Q. Before the bankruptcy filing, to the 19 best of your recollection, you were not involved 20 in preparing any of the submissions that 21 plaintiffs made to the Court in the Gaines 22 lawsuit, correct? 23 A. That is correct. 24 Q. You didn't attend or participate in 25 any oral arguments before the Court, correct?

33 Case Document Filed in TXSB on 04/02/18 Page 21 of 66 Page 72 2 have a lot of involvement in 2017? No, I did 3 not. 4 Q. Did you review -- strike that. 5 Did you make any assessment of the 6 underlying facts and substantive merits of the 7 lawsuit prior to 2018? 8 A. I don't know that in my mind I 9 declared something an assessment. I mean, based 10 on what I knew I certainly assessed them as good 11 claims, especially when the special exceptions 12 were denied and I understood that the securities 13 claims had proceeded past motion to dismiss stage 14 and class had been certified. So I had assessed 15 them as very good based on what I knew. 16 Q. And what you knew was based on prior to 2018 was based on conversations with 18 Mr. Hardy and your -- possibly your review of the 19 petition, correct? 20 A. Yeah, as well as my general knowledge 21 of derivative cases and security cases and the 22 procedural postures and the venue and the damage 23 model, those kind of things. 24 Q. So your assessment prior to 2018 was 25 based possibly on a pleading, based on a

34 Case Document Filed in TXSB on 04/02/18 Page 22 of 66 Page 73 2 discussion with Mr. Hardy and based on your 3 expertise as a lawyer? 4 A. Yes, that's fair. 5 Q. When did you first review documents 6 other than the petition relating to the 7 derivative lawsuits? 8 A. Sometime after January of I 9 could tell you what I've looked at. I don't know 10 that I could tell you exactly at what time, 11 whether I looked at it last week or the first 12 week of January, but somewhere in that time 13 period. 14 Q. What documents did you review, to the 15 best of your recollection, in that early January 16 time period? 17 A. Like I said, I'm not sure I can break 18 it out by time period, but I can just tell you in 19 general that I have reviewed the substantive 20 pleadings in the Gaines litigation. I have 21 reviewed the dockets for the other two derivative 22 cases, the petitions and/or demand letters for 23 those two litigations, and I tried to review 24 anything -- any substantive pleadings. The 25 special exception sort of parroted what was in

35 Case Document Filed in TXSB on 04/02/18 Page 23 of 66 Page 74 2 the Gaines' lawsuit so I don't review those in 3 detail for the other two derivative cases. 4 I reviewed the docket for the 5 securities case, which was voluminous. I 6 reviewed for sure the second amended complaint, 7 the memorandum and opinion by Judge Atlas, the 8 order from Judge Baker on the special exceptions, 9 other press releases and attachments to some of 10 those pleadings and general research regarding 11 Cobalt and what's out there in the media. 12 And I think just prior to this 13 deposition, I did review some studies related to 14 special litigation committees and derivative 15 litigation. 16 Q. Did you review anything else in relating to the Gaines or other derivative 18 lawsuits? 19 A. Some work product things, so things 20 that were relied upon in the filing of the 21 original complaint. 22 Q. What work product did you review 23 relating to the Gaines litigation or the other 24 derivative lawsuits in 2018? 25 THE WITNESS: Just a second. I need

36 Case Document Filed in TXSB on 04/02/18 Page 24 of 66 Page 75 2 to confer with my counsel. 3 (Conference out of the hearing of the 4 reporter between Mr. Hardy and The Witness.) 5 A. Yeah, I reviewed one document that 6 was work product from prior to the filing of the 7 original complaint. 8 BY MR. BALASSA: 9 Q. What was that document? 10 MR. HARDY: Mr. Dennis, I'm going to 11 instruct you not to answer that question on the 12 basis of work product and potentially 13 attorney-client privilege. 14 MR. BALASSA: Are you going to follow 15 your counsel's instruction? 16 THE WITNESS: Yes, I am. 17 BY MR. BALASSA: 18 Q. One of the categories of documents 19 that you've reviewed since you were contacted strike that. 21 One of the categories of documents 22 that you've reviewed since you spoke to counsel 23 for the committee were SEC filings, correct? 24 A. Yes, I did review some SEC filings. 25 I'm not sure I reviewed every SEC filing, but I

37 Case Document Filed in TXSB on 04/02/18 Page 25 of 66 Page 78 2 A. Perhaps, but that's all that comes to 3 mind at the moment. 4 Q. As you sit here today, the best you 5 can recall as far as the materials that you've 6 reviewed concerning the Gaines and other 7 derivative lawsuits are SEC filings, pleadings 8 from the derivative lawsuits, pleadings from the 9 securities lawsuit, news articles, an NGO report, 10 a work product document, some materials on 11 special litigation committees, and some investor 12 presentations; is that correct? 13 A. That's all that comes to mind, yes. 14 Q. Other than the work product, are all 15 of those materials publicly available documents? 16 A. Yes, with the ones I've already 17 excepted in that some of those pleadings were 18 redacted or some of those pleadings may have been 19 unavailable to the public. 20 Q. Did you -- strike that. 21 The unredacted versions of redacted 22 pleadings that you reviewed A. I did not -- so I don't have the 24 unredacted version of the McDonaugh pleading. I 25 have only reviewed the redacted version, but the

38 Case Document Filed in TXSB on 04/02/18 Page 26 of 66 Page 81 2 reports that are being relied on to claim that 3 the derivative claims lack merit. 4 Q. Okay. 5 A. As I understand it, that offer was 6 refused. 7 Q. With respect to the special committee 8 investigation report and with respect to the 9 disinterested director report, that's what you're 10 talking about? 11 A. I don't know them as that 12 description. I know them as we asked for the 13 Sidley & Austin report, which I think is the 14 special investigation committee, and the 15 Kirkland report, which is something you-all did 16 in connection with the bankruptcy. 17 Q. So you have not reviewed any internal 18 Cobalt documents relating to any of the 19 substantive allegations made in the Gaines 20 complaint, correct? 21 A. No, but we look forward to doing it. 22 Q. So then putting the documents to the 23 side, your assessment of the prospects of the 24 Gaines litigation presumably relies in part on 25 discussions with others; is that fair?

39 Case Document Filed in TXSB on 04/02/18 Page 27 of 66 Page 82 2 A. My assessment does rely in part on 3 the discussions that we've talked about, as well 4 as the documents, as well as experience. 5 Q. Okay. From your perspective, there's 6 three inputs to the assessment that you make of 7 the prospects for the Gaines and other derivative 8 lawsuits: One, the documents you've reviewed; 9 two, your discussions with others; and three is 10 your expertise as a lawyer, correct? 11 A. Yeah, I think that's fair. 12 Q. Who did you talk to -- strike that. 13 Who are the folks with whom you spoke 14 and who are influencing your assessment of the 15 Gaines and other derivative lawsuits? 16 A. I don't know that I know how to 17 answer that. I think we've described the 18 conversations that we've had and the documents 19 reviewed, apart from the work product document 20 that I referenced. So I'm not quite sure how to 21 answer your question. 22 Q. Okay. Is there anyone other than 23 your colleagues at Lynn Pinker and your 24 co-counsel who you've spoken to about the Gaines 25 litigation and other derivative lawsuits and

40 Case Document Filed in TXSB on 04/02/18 Page 28 of 66 Page 84 2 Q. With respect to your reliance on your 3 experience as a lawyer, did you review any legal 4 research in making your assessment of the 5 derivative lawsuits? 6 A. Yes. 7 Q. What legal research did you review? 8 A. I'm not going to reveal that on the 9 grounds of work product. 10 Q. How much time did you spend 11 conducting legal research in connection with 12 assessing the prospects for the Gaines 13 litigation? 14 A. It would be somewhere within the 15 figure that I gave you before, but bear in mind, 16 we have had in the past and continue to have 17 other directors and officers cases, so I'm aware 18 of other research that I may not have done 19 specifically for the Gaines lawsuit. 20 Q. How much time, how many hours, 21 approximately, did you spend conducting or 22 reviewing existing research in connection with 23 making your assessments about the prospects for 24 the derivative lawsuits? 25 A. I would say several hours, but I

41 Case Document Filed in TXSB on 04/02/18 Page 29 of 66 Page range. It would be a number of cases. I was 3 thinking -- I was trying to narrow it down to 4 verdicts and judgments I think is what you said. 5 Q. I did, so let me ask again. 6 The largest verdict or judgment that 7 you've gotten for a client in any kind of case 8 over your career where you had appeared as 9 plaintiffs' counsel was in the 3 to $5 million 10 range, correct? 11 A. Yes, that's right, for verdicts and 12 judgments. 13 Q. You mentioned in passing that you had 14 reviewed documents in connection with preparing 15 for this deposition. What's the universe of 16 activities that you undertook in order to prepare 17 for this deposition? 18 A. Reviewed documents, as we discussed, 19 conversations with our co-counsel. We met with 20 the Pachulski firm briefly yesterday, and I had 21 conversations with Mr. Hardy. 22 Q. How long did you talk to counsel from 23 the Pachulski firm in preparation for this 24 deposition? 25 A. I'd say we met to discuss the case

42 Case Document Filed in TXSB on 04/02/18 Page 30 of 66 Page experience with the case. I'd say at this point, 3 I have the deepest knowledge about the case. 4 Q. Based on your review of materials 5 over the last month, you've acquired the deepest 6 knowledge of anyone at your firm about the Gaines 7 litigation? 8 A. Yes. And again, you keep saying 9 "Gaines litigation," but when I answer in 10 response to that, I mean the derivative 11 litigation as a whole, which would include 12 Gaines, McDonaugh and Hafkey. 13 Q. Okay. I'd appreciate you pointing 14 that out as we go, because there may be questions 15 that relate to Gaines specifically, okay? 16 A. I just viewed it generally as 17 derivative litigation. 18 Q. What, if anything, did counsel for 19 the creditors committee show you, what documents, 20 if any, did they show you in preparation for this 21 deposition? 22 A. Not a single document, but we did 23 request them. 24 Q. You mentioned a couple of times now 25 your prior experience serving as special counsel