American court hearing recordings and interviews - 23andMe - Audio of April 29 2025 Bankruptcy Court Hearing, case 2025-40976 before the US Bankruptcy Court for the Eastern District of Missouri, #bankruptcy, #privacy, #data, #genetics #sale #truecrime #23andMe

Episode Date: May 4, 2025

This is the official audio recording of the bankruptcy court hearing held in the 23andMe chapter 11 bankruptcy proceedings on April 29. 2025. The hearing audio is available on PACER and on the free case docket, as are other filings docketed in the 23andMe bankruptcy proceedings. https://restructuring.ra.kroll.com/23andMe/Home-DocketInfo

Let's begin with our 130 calendar. 23 and me, Holding Co. Transism in the courtroom, please. Good afternoon, Your Honor. Tom Risky and Nathan Wallace, Carmen McDonnell, as co-counsel for the debtors. Good afternoon, Your Honor. Christopher Hopkins and Paul Weiss, Rifton, Morton, and Garrison,

as co-counsel to the debtors, and I'm joined today by my colleague, Ms. Jessica Troy. Welcome, Debo. Good afternoon, Your Honor. Zach Hemingway, from Stinson-LLP for the committee. Mr. Cummingway. Your Honor, Carol Richett and Joseph Schlatzauer. on behalf of the U.S.R.S.

You see you both. Good afternoon, Your Honor. Layla Milligan, here with my colleague Romo Dissai, with the Texas Attorney General's Office, appearing on behalf of the state of Texas. Very good. Welcome to you. Good afternoon, Your Honor, Dahlila Jordan with the Minnesota Attorney General's Office,

representing the state of Minnesota. Very good. Welcome. Good afternoon, Your Honor, Josh Watts. On behalf of J&B, I'm also joined by Robert Hirsch. Good to see both. Good afternoon, Your Honor. Abigail Ryan with the National Association of Attorneys General, on behalf of the Attorneys General from the State of Arizona,

Connecticut, Washington, D.C., Florida, Illinois, Louisiana, Maine, Michigan, New Hampshire, New Mexico, New York, North Carolina, Ohio, South Carolina, Utah, Vermont, Virginia, Washington State, West Virginia, and Wisconsin. In alphabetical order. Yes, sir. Good to see you in person, Ms. Ryan. Nice to be here. As an aspect from the Missouri Attorney General's office representing the state of Missouri,

and I am here with my colleague, Zach Ullum, who's also representing the AP's office. Very good, good to see both. Good afternoon, Your Honor. Joshua Jones to the United States of America. Mr. Jones. Good afternoon, Your Honor. Larry Parris and the firm Lewis Rice on behalf of the Special Committee of Board of Directors. New Mr. Paris.

Anyone else in the courtroom? All right, appearances on the WebEx. Thank you, Your Honor. Tamara Jones on behalf of Landlord, J.R.O.P. LLC and also on this line is Michael Council and lead counsel Michael Greger. Welcome, Ms. Jones. Nice. Good afternoon, Your Honor.

Tobias Keller of Telegramianianity Kim appearing on behalf of the data breach claim or class. All right, welcome back to Keller. Good afternoon, Your Honor. Seth Shapiro for the United States Department of Justice on behalf of the National Security Division. Very good. Welcome, Mr. Shapiro. Mr. Shapiro. Good morning.

afternoon, your honor. Daniel Nadal, California, California. I'm taking notes quickly as you all are entering your appearances. Welcome, Mr. Nal. Mr. Nalzhenl. Justin Leonard on behalf of the state of Oregon. Oregon. Welcome, Mr. Leonard.

Thank you. Marvin Clements on behalf of the state of Tennessee. Oh, there you are, Clements, okay. Clements, Tennessee. Very good. Welcome to you. Heather Cracker and the state of Indiana. Oh, there you are, Ms. Crackett, okay.

Welcome back. Any other parents? Good afternoon. I'm behind the council of Pennsylvania. Ms. Michael's Pennsylvania? Yes, Your Honor. Okay, very good. Thank you.

Paige Snothers for the state of Alaska. Ms. Mothers. Good, how are you doing? Good afternoon, Your Honor. Kevin Barnes, Class A shareholder. I'm doing now. Barnes. Thank you, Mr.

Good afternoon, Your Honor. I'm sorry. Sometimes having a conversation. Could you please mute if you're not currently addressing the court? Okay, Ms. McLaughlin? Good afternoon, Your Honor. Megan McLaughlin, Kelly Dry and Warren, counsel to the committee. Good.

Any other appearances on the WebEx? Okay. Mr. Risky, Mr. Hopkins. Where would you like to start? Thank you, Your Honor. It's on RISkey for the record. of the debtors. Your Honor, if it pleases the court, as is kind of typical in this case, a lot of it's been going on behind the scenes since the last time we're here.

I'd ask Mr. Hopkins to give the court a brief update at the court. That would be great. That would be great. Thank you. Thank you, Your Honor. And for the record, Christopher Hopkins and Paul Weiss, Rift and Wharton, Garrison, as co-counsel to the debtors. So we have a relatively short agenda today, Your Honor. I don't have many material updates for you, you know, on the business or the sale process yet. given that we were just here last week. The debtors are hard at work,

progressing negotiations with the stocking horse bidders that are participating in the process. As I previewed, you know, our plan is to try to get that notice on file as soon as we select the stocking horse, and if necessary, that could potentially be up for hearing on May 6th. Otherwise, you know, we are continuing to progress our discussions with key stakeholders. We hope that once we get through today's hearing and the relief we're requesting today, we've kind of established the foundation at that point to run the sale process through conclusion and start to really dig in on the plan negotiations and try to parallel track that process as much as we can

to limit the case timeline, case costs, and maximize distributions to our stakeholders. With that, Your Honor, absent any questions, I think we can turn to today's agenda, which there's really three main motions. There's the bar date, the dueling, CDR versus CPO motions, and then our OCP motion. I think the rejection matter is going to be adjourned. So if it's all right with Your Honor, I would like to take things slightly. out of order because as your honor may have seen we filed a notice late last night and then in a proposed final stipulation shortly before the hearing as we previewed last time we were hard at work with the committee the US trustee and the various states attorney

generals to try to broker you know a consensual resolution of those competing motions given the party's general alignment on what you know the right thing for these cases are and I'm pleased to report you know through a lot of hard work and we really appreciate, you know, the collaborative efforts from the committee, the US trustee, all the states AGs and working with us, we're here today on a consensual basis asking the court to enter in agreed form of stipulation that would authorize, you know, the appointment of a CPO on a consensual basis. I believe the proposed final version was filed at docket number 341, early.

earlier today. I think the only change from the version we filed last night was adding the signature blocks from the parties who have actually consented to the entry of that stipulation. If it's all right with your honor, I'd like to kind of just start here and kind of walk you through it, answer the court's questions, let anybody else who'd like to be heard on the topic before we get into the bar date motion. Sure. I think it makes sense. I reviewed the 340, the version without the signatures, if you're telling me this only change in 341 as a signatures, that's great. I may not have a lot of questions for you, but obviously there are a lot of people who are participating in this hearing and may not have had a chance to go through it. So I think a summary would be very helpful.

Sure. So I'll try to keep it high level. I mean, to help contextualize the settlement, you know, we had filed our motion to appoint the customer data representative in lieu of a CPO, you know, not because, you know, we didn't think it was the right thing for these cases to have an independent expert looking at these issues given all of the scrutiny and focus and concerns and the importance of the sale process at the end of the day.

Now, we did that because our view, and it's only the debtor's view, I'm not speaking for any of the other settling parties, is that, you know, our privacy policies do not prohibit the transfer of our customers' data, and so statutory predicate for a CPO was not satisfied. Obviously, you know, the U.S. trustee and the state's AGs, they have a different view, And the stipulation is really kind of an elegant way to punt that issue to when we, at least we as the debtors believe, it's the right time to litigate those issues if we have to, which is in connection with the sale hearing. When we know who the bidder is, we're all looking at the terms of an APA that has a list of acquired assets, how they're going to be transferred, all of the relevant provisions around that architecture.

And so under the proposed stipulation, the U.S. trustee is going to be empowered to appoint a CPO. So we're asking the court to do that with the consent of the parties and in the court's discretion as opposed to based on any findings with respect to what the policies do. You've finally broken loose from work. Three friends, one tea time, and then the text. Honey, there's water in the basement. Not exactly how you pictured your Saturday. That's when you call us, Cincinnati Insurance. We always answer the call because real protection means showing up.

even when things are in the rough. Cincinnati Insurance. Let us make your bad day better. Find an agent at CINFIN.com. Do not submit or permit rather. That CPO will be authorized if they so choose to hire their own professional to assist them with the work. That would need to be done on motion in front of your honor.

Parties would have the opportunity to object. There is a dedicated line item. in the dip budget. It's $300,000 to pay for the CPO and should they choose to hire any professionals the related costs. It was important to the states and the U.S. trustee that that not be a hard cap forever. And so we think that's a reasonable allocation, but the CPO's right to come back to your honor and argue that they should have more money to fulfill this process or preserved, as are other

party's rights to object. In terms of the scope, and this was another reason why I think you saw us file the CDR motion and why you saw some of the, you know, the U.S. trustee in certain of the states file a motion seeking both a CPO or, you know, in addition or in the alternative and examiner, is because there's a lot of focus in this case not just purely on the privacy policies and the customer privacy issues. there's also a lot of scrutiny around cybersecurity here. And so, you know, the scope is intended to allow the CPO to come in,

look at the privacy policies, you know, make a determination about what policies are in effect with our customers. You know, does the proposed sale comply with applicable law? How does the cybersecurity profile of the debtors compare to the buyer? What are the impacts on that as a result of the sale? And, you know, kind of all of that work is intended to culminate in a report that would be filed seven days before the sale hearing so that the court has the benefit of the report, as do parties in interest. And, you know, we can use that to, you know, hopefully help resolve issues in connection with the sale hearing. And give people comfort that someone who's independent and disinterested has analyzed these issues and given the court in the public its view.

The CPO's right to, and this was again an important point for the states, the CPO's right to come in and ask Your Honor for more time is preserved. That would need to be done on motion. I don't want to prejudge it, Your Honor, but I think that would be something that would be very hard for the debtors to agree to. But in the spirit of getting the stipulation done, you know, we were okay leaving it up to Your Honor to ultimately make the should that be necessary.

So unless Your Honor has any other questions on the terms of the stipulation, I think that's the description. I do think this is an important step for the cases. I think the U.S. trustee has been hard at work, thinking about who the right person for this role would be. We have all collectively discussed some ideas, but it's ultimately up to their office. And hopefully if Your Honor is willing to enter this stipulation today,

we can get this person up and running and help advance the ball, because ultimately we think, you know, we as the debtors want the sale to happen on the timeline that was established at the first day hearing, we know it's on us to cooperate with this individual, make sure they get the information they need so that the report can be timely filed. And we're prepared to do that. So we think this is a positive development. We're very happy we were able to get the consensual resolution.

Not only, you know, consensus is always better in bankruptcy, but also to save the estates the case costs of having, you know, a long protracted a dispute hearing today. Sure. So, unless your Honor has any questions for me, I would cede the podium to anyone else on the line or in the courtroom who would like to be heard. Sure. I didn't have any particular questions for you, Mr. Hopkins.

I appreciate the overview that's very helpful. And before I hear from Ms. Ryan, let me ask the U.S. trustee about how long you think the timeline is to have somebody up and running? Your Honor, we're mindful of the timeline. in this case. Joe Schlaughtsauer for the U.S. trustee for the record. We're mindful of the timelines in this case. We don't intend to hold them up and we are working

on that process at this moment. Very good. Appreciate it. Okay. Anyone in the courtroom wish... Oh, I'm sorry. I'm sorry. Just to clarify, I don't have an exact date when that person will be appointed but I assume it's going to be... It's a priority, it sounds like? Yeah. That's good. Okay. It absolutely is.

Okay. Appreciate it. Thank you. Anyone in the courtroom wish to be heard on the stipulation and then we'll go to the WebEx after that. Ms. Ryan. For the record, Abigail Ryan for the National Association of Attorney's General State Clients. I'll narrow it down to that. First, thanks to the debtors and the UCC Council for all the work that

they've put in with the states. And it has been work. Coming to this agreement between the UCC debtors and all the states, that was no easy feat, but we did it. However, there's one part of my motion that it does not settle but we're going to just put it in abeyance.

And it's the request for a security examiner. The states want to leave that option on the table. We are going to work with Greenberg-Troeg to see if we can get the documents that we've been seeking and the information to make us comfortable. But it hasn't happened in two years. And so if we can't get to that agreement, then I would like to re-raise the security examiner issue. Okay. So the stipulations without prejudice to the states, right?

to seek an examiner by separate motion. Is that correct? Christopher Hopkins with Paul Weiss for the debtors, Your Honor. That's correct. I mean, we don't think that the stipulation would have foreclosed that right anyway, so anyone can, you know, theoretically make a motion for Your Honor to hear on whether an examiner should be appointed later. Okay.

All right. Thank you. Good afternoon, Your Honor. Layla Milligan, on behalf of the state of Texas. Yes. We filed one of the motions to appoint a consumer privacy ombudsman. And I just join my colleagues in expressing gratitude to the court for hearing this today and to the parties for their work to reach agreement.

We are satisfied with the agreement reached and look forward to cooperating with that person once they're appointed in getting this information to assist the court. Great. Thank you. Thank you. Anyone else in the courtroom? Good afternoon, Your Honor. Dalila Jordan with the state of Minnesota, representing the people in Minnesota. I just want to stay on the record that our state has joined.

with the stipulation, and we are pleased to have reached the agreement for the U.S. trustee to appoint a DPR. All right. Thank you. All right. And one on the WebEx wish to be heard. Okay. Well, let me add to the chorus of thank you for cooperation, my own. This is a matter that we could have litigated, and if we needed to litigate it, we would have litigated it.

But I think everyone's probably better served with the resolution than everyone can live with, even if no one's 100% happy with it. And I think it will allow the sale process, the proposed sale process to move forward expeditiously and allow parties to focus on, as Mr. Hopkins said, what is the actual deal that's proposed as opposed to theorizing about what it might look like and what sorts of problems that might cause. And I think that will wind up being productive overall. So I will approve the proposed stipulation. I was satisfied with document 340 and the 341 has nothing more but signatures. on it that will work fine. I will grant all of the motions to expedite the various CPO motions that we're on today, but otherwise we'll treat the stipulation as resolving the debtor's

motion and the various motions of the U.S. Trustee of the States and the other parties with the reservation of rights to seek an examiner in the future. Anything further we need on that, Mr. Hopkins? I don't believe so, Your Honor. I think we're all set. Okay, very good. Thank you. If it's all right with your honor just in the interest of knocking things out before we get to the bar date, could we skip ahead to agenda item three, the OCP motion? OCP, yes, certainly. So that was filed at docket number 178. We did file a revised form of order addressing some comments from the committee,

but I believe that motion is going forward on an uncontested basis today. And so unless Your Honor has any questions, we'd respectfully request that, Your Honor, enter the proposed form of order. Sure, I had one or two questions mostly circling around KPMG. I don't usually see auditors as ordinary course professionals. I'm not saying they can or can't be,

but is there anything unusual about KPMG's role here compared to the other professionals or compared to a typical auditor in a typical Chapter 11 case that would cut either way on that issue? I don't believe so, Your Honor. Can I conclude this? Certainly. Because I believe that KPMG may be providing

PACT advisory services to the company and not their main auditor. I'm sorry, Your Honor. KPMG is the auditor. The other. I think it's where we are because of when we filed, we're so close to being in a position to file the 10K that the fees they would incur

post-filing were within the realm of where we set the OCP cap. Relatively modest. And I believe they're within the Tier 1 professionals, which does come with, as part of the committee's comments to the order, incremental reporting on their fees to the U.S. to the committee. Okay. All right. And then the updated proposed order paragraph 10 provides for notice to the committee before payments to Tier 1, ordinary course professionals.

but it also refers to information about attorneys who are working on the matter. Does that apply to KPMG? Does it apply to auditors' accounting professionals and not just attorneys, those reports that you're going to provide? That's fine, Your Honor. Okay, all right. That's good. Oh, those are the only questions I had.

Anyone wish to be heard on the ordinary course professionals' motion in the courtroom or on the WebEx? Very well. I'll grant the motion, and I believe we have the proposed order already. Thank you very much, Your Honor. I will cede the podium to my colleague, Ms. Troy, to handle the bar date board. Good afternoon, Your Honor. Good evening. Good evening.

Good evening. On behalf of the debtors. Your Honor, I'll be presenting the debtor's bar date motion followed at doctor number 24. The debtors also filed their honor to best reply in support of the bar date motion at docket number 339, as well as a declaration from Ms. Jessica Berman from Cole, the debtor's claims a noticing agent, in support of the bar date motion at packet number 338. Your Honor, as a housekeeping matter, and if it's okay with you, I would like to submit Ms. Furman's declaration into evidence now. Socket to any party's rights to cross-examine Ms. Berman throughout the remainder of the hearing. I believe Ms. Berman is attending the hearing currently via remotely for virtually.

Looks like she is. All right. Any objection to the receipt of Ms. Berman's declaration number 338 into evidence? Your Honor, Tobias Keller. Yes. I'm sorry, Your Honor, Tobias Calder for the date of police class. We understood this was not going to be an evidentiary hearing. We would like to reserve the right to cross-examine her at a later date if we are going to have an evidentiary hearing. Certainly. You have the right to cross-examine her if she testifies at a subsequent hearing for purposes of today.

Is there any objection to the receipt of her declaration? You can cross-examine her today if you want. There is not today, Your Honor. Any other objections? Great, Your Honor. And just to clarify for the record, that Ms. Berman's declaration does not relate in any way to one of the objections that are contained in the date of breach objection relating to the authorization to file a class proof of claim. So in case that's helpful, I just wanted to make that clear. Right.

Okay. That's very good. Okay. All right. I'll receive the declaration number 338 in evidence. Thank you. I'm happy to report that we are here on a fully consensual basis as it relates to the state's objection. that was filed at docket number 286.

And over the last few weeks, we've engaged with various stakeholders, including the committee, the clerk of the court, the US trustee, various state AG's representatives of the data breach claimants to improve upon what we had originally proposed as a bar date order as part of the bar date motion. And I thought it might be helpful to go through some of the modifications that we've made

based on the discussions that we've had with those stakeholders. Sure. The discussions have led to the filing of a revised proposed order that now implements the following changes. Now we will be serving via email direct notice to all of the company's 18 million former and current customers. And we will supplement the email notice with traditional mail notice for any undeliverable

emails to the extent that the debtors are in possession of the mailing addresses. And we will expand upon our publication notice to not just publish the bar dates on the Wall Street Journal, but also to post the hyperlink to the Quill submit approved of claim page on the debtor's website, as well as on the profile pages of all the debtor's social media accounts, which links will be on those platforms and on the debtor's website for the pendency of the bar date period. And lastly, to extend the bar date to be 75 days from the date of entry of the bar date order. And your honor, with these changes, we believe we have resolved all of the state's objections, subject to the state's reservation of rights to extend or seek an extension of the bar date,

but only in the event that there's some catastrophic event where claimants are actually unable to file a complaint on the Cole website. So if the Cole website gets hacked or if it is not operable for some reason, then the debtors would agree and the states have their rights to seek by motion an extension of the bar date at that time. Okay, I didn't pick up on that last bit in the proposed order. How does that work if the Kroll website is merely overwhelmed and unable to handle the traffic? Is that the sort of catastrophe you're describing? No, I don't think, I mean, from the debtor's perspective, I don't think, you know, if the Kohl website were overwhelmed with volume, so long as the claimants are actually able to go on the site and submit a proof of claim,

I think that would not fall in the category of like the catastrophic events that I'm talking about. I think if there were any events that would actually prevent a claimant from going on the site to submit a proof of claim, those are the situations that I think this language would encompass. Okay. And then the general excusable neglect standard in the rules would apply to any particular creditor who says I was unable to file and here's why, and I would apply the normal standard to that situation. Yes, conferred. Okay.

All right. Should we hear from the states next? We've got a lot of different directions we could go with this. I'm happy to, yeah, turn it over to just, you know, on this issue since we're on the topic. Okay, sure. Why don't we take up this topic and then we'll continue to forge our way ahead. Again, for the record, Abigail Ryan, for the NIG client states. There is one state that joins our objection that I have not.

heard from regarding the 75-day deadline. I don't have any reason to think that they wouldn't approve it, but I need to confirm their approval first. And I'm actively working on that while sitting in your courtroom, Your Honor. And when we're talking about catastrophic things that could happen, I actually was thinking about, well, what if the website got bombarded by 18 million people's claims and goes down? And so, but were you considering that as well? If the website goes down and the claimant cannot actually access the site to file a proof of claim, I think that the debtors would be amenable to, you know, further discussions

at that time as to be, you know, what can be, you know, what types of remedy, remedies to, you know, consider for that situation. Yeah. Just wanted to make that clear because this is a big case and I hope it all goes smoothly. People do tend to act at the last minute. So I'm sure the website will be busy on the last few days. I have no reason to believe that it will not work fine. But I hope for the best and prepare for the worst.

Sure. Okay. And then both of you mentioned 75 days. I think the last version of the order I had was referred to 65 days. Correct. So this is a number that works for both the debtors and the states in terms of timing when the bar date will be? It's a true settlement because I would have preferred 120 days and you guys would have preferred something shorter. So we're both a little unhappy and we got it settled.

Okay. This is very fresh. We just met before the hearing, so that's why it's not reflected in the order. Settlements are good. Numbers that divide by seven are even better. Let me just say, well, we can work with 75, I think, depending on what other parties have to say. If it ends up on a weekend or a holiday, there'll be lots of motions. That's all I have, Your Honor.

Okay, thank you, Ms. Ryan. Layla Milligan for the state of Texas. I do agree that the 75 days is a compromise. It's with the understanding that parole, with the assistance of the debtors, will have a period of time to serve all of these people. It will take several days, if not a couple of weeks, to serve everyone. So the 75 days allows that additional time for individuals

or any creditor to file a proof of claim. that's not shortened due to the length of service proceedings or processes. Additionally, when we were doing the math on when the 65, essentially, days would run, it literally ended on the 4th of July. So this moves it back past the 4th of July, but not to an amount that is what we believe of owner us to the debtors and parties. And so we do appreciate the debtor's willingness to work with us on that. And our concern, of course, is the ability of consumer creditors to access the website.

If there's any sort of, I won't belabor with anecdotes, but in other cases we have seen imitation emails or packs of websites, things like that. We want to be sure that those are addressed, and the debtors have offered to do that. I want to make one point. We did not object to the declaration in support of this motion being entered. We have reached an agreement with counsel for debtors to meet with a cruel representative to have some questions that we were intending to ask that representative today at the hearing, but we feel like we can meet informally to have our questions answered,

and the debtors are very generously offered to arrange that. So we do appreciate their willingness to talk with us through these processes and the changes. that have been made to the proposed order. Right. Thank you. Thank you. Thank you. I'll suspect the Missouri AGs. I think largely in agreement, so without reiterating what has already been said,

but as was indicated by Jessica, this was a very new compromise that took place right before this hearing. And so I don't think that we have sort of fully contemplated every possible sort of catastrophic or unforeseen event that might occur that would require us to come back before you or to reach out to debtors' counsel and say, hey, we need to allow, you know, the consumers more time to potentially file their notice of claims. So I'm not disagreeing, just clarifying a little bit that, you know, I don't know what that might look like because we're not there. But to the extent that things hopefully go smoothly,

then we won't need to discuss that. But I don't want to foreclose the possibility of, you know, bringing an issue to the court that we may not have contemplated here today. Sure, understood. And, of course, please reach out to debtors council first. Absolutely. I'm happy to resolve whatever I can resolve, but you all are doing a great job of resolving things so far on today's calendar as well as in the case more generally. And I'm confident that that can keep up.

Yes, certainly would be our first call. So I just wanted to clarify that slightly. But yes, definitely in agreement and appreciate the compromise. So thank you, Your Honor. Thank you. All right. Anyone else wish to be heard on the state's issues before we move on to others? Yeah, Mr. Wilson, I see you have your hand raised.

Mr. Wilson. Good afternoon, Your Honor. Megan McLaughlin. I don't know. Oh, there, there. No apologies, Your Honor. That was inadvertent. And apologies for not being present in the courtroom today.

We had an issue with the equipment flying out of New York this morning, so we appreciate the video accommodation. Sure. Sure, no problem at all. All right, Ms. McLaughlin. Sorry about that, Your Honor. I'll let Ms. Troy continue on with her presentation, and then we'll be happy to speak after, once she finishes.

Okay, very good. Thank you. So I think with that, the outstanding objections that have not been resolved before Your Honor today is the issue of noticing the traditional mail versus email. And on that issue, you know, I would like to just say for the record that the standard for noticing that we're bound by is that, you know, the notice should be reasonably calculated under all the circumstances to apprise interested parties of the bar dates. And here we believe a noticing procedures, you know, a noticing procedure that contemplates service via traditional mail is not reasonably calculated and it is not reasonable under the circumstances for a number of reasons.

First, I set forth in Ms. Berman's declaration, serving the general and the cyber bar date package on all 18 million plus former and current customers of the debtors would cost in excess of $70 million, twice the amount of the aggregate commitments under the bidness. To put it bluntly, Your Honor, a request for the debtors to serve via traditional mail, the bar date packages, will be a request to convert these cases to a chapter 7. Second, there's no clear benefit of serving notice via traditional mail in lieu of email. Among other things, the mailing addresses that are in the debtor's possession were collected from customers in the course of the company's almost 20-year history. So to that end, many of the mailing addresses that are in the possession of the debtors might be allocated. Third, the company has an incomplete list of mailing addresses for their customers because, for one,

the debtors do not have mailing addresses for DNA testing kit that were sold through third-party vendors, such as Amazon or Walmart, and also if a DNA testing kit was sold as a gift, so if I purchased a DNA testing kit and it's mailed to my address, I later gift it to my mother and she registers the kit online, there's a mismatch between the mailing address as well as the account that's actually created. from the kit. So for all these reasons and also in addition to the fact that for any emails that are undelivered we will do our best and use commercially reasonable efforts to try to serve those customers with traditional mail notice with a postcard to the extent that we have

their address and also given all the publication notice that the current bar date order contemplates and lastly given all the you know the free press that we've been getting given the highly publicized nature of these cases, we believe that service via email is appropriate under their circumstances and that, you know, service by traditional mail is not only a waste of the estate's resources, but has no clear benefit in lieu of an email servicing program. The other issue... I'm sorry, let me ask you a question on that. I understand your position on the 18 million customers.

What about the ordinary creditors, for lack of a better word? I see paragraph 11 and paragraph 24 refer to email fax or first-class mail. Are you serving those folks, you know, folks in the schedules, executory contracts, employees who made claims? Are you serving them by mail if you have a mailing address? Yes, we will be serving those creditors by mail. Okay. The email service really pertains more specifically to the customer base.

Okay, that's helpful. I'm sorry, go on to your other issue. Yep. And I believe the next issue that is outstanding as it relates to the objection that was filed by the data breach claimants is the ability to file a class proof of claim. As agreed with class counsel for the data breach claimants, we have agreed that this issue, specifically the issue of class certification under Rule 7023, as well as the issue of whether a class group of claim should be authorized and omitted, should be deferred to another day when the issue could be more properly briefed before the issue. the court and in the lead up in the lead up to this hearing we have had discussions with also the pixel claimants so these are its council that represents pixel claimants which is another class action that's pending in the Northern District

of California and we have agreed with the pixel claimants that we will defer the issue of rule 7023 as well as the ability to file a class with the claim to be based on a mutually agreeable briefing schedule and that schedule would be you agreed upon between the class council the debtors and the committee and if we cannot agree on a schedule then we would have the issue before you at next week's hearing to establish the briefing schedule and that a hearing on the issue of class certification or the authorization to file a class worth of claim should be scheduled shortly you know after the bar date hearing and i believe with those changes that are you know we have we are in agreement with the pixel claimants as to the

class group of claim issue. We've tried to reach out to counsel for the data breach claimants but have not heard that yet. So that is the status of our debate as it relates to the class with claim. So just one clarification you said the hearing on class on class with a claim would be shortly after the bar date hearing or shortly after the bar date. The bar date. Okay. Okay. That's helpful. Okay. All right. There were a number of changes to the provisions involving lawyers who have many clients. Yes. Are those consensual with the lawyers concerned? Is that where those came from?

No, that relates to the council that represents arbitration claimants. So as you'll recall, there have been more than 35,000 arbitration claims that have been asserted against the company as a petition date. And, you know, most of those 35,000 claims are represented by, you know, a handful of law firms. And those law firms, so for an example, if Labaton represents, you know, 8,000 claimants, you know, we worked out a construct where it would be both beneficial for the estate from an administrative perspective where they could provide us with the claimant by claimant information on an Excel spreadsheet but not have to populate and submit 8,000 individual proofs of claim.

So that's, I think, where the consolidated claim aspect of the Bardi order came from. We pivoted from a contract where we originally contacted bulk claims, where an arbitration law firm that represents multiple claimants would have to still populate, you know, individual proofs of claims, PDF files, but they could upload all those files and send it to the debtors as part of a zip file. We thought it would be more administratively, you know, beneficial for both parties to instead, you know, leverage an Excel file where they could provide us with a claimant by claimant information which debtors need, but I'm a pivoting to a format where it's

an Excel file instead. Okay, all right, that's helpful. All right, so I think you've laid out the lay of the land with respect to the data breach plaintiffs. Any other issues before I turn to Mr. Keller or anyone else who wishes to speak on that? No other issues. Just, you know, I just want to express my gratitude for all the stakeholders who have worked with us over the last two weeks to really, you know, help us with a framework for coming up with the modified proposed order, which I believe it's entered by your honor would really help us to advance these cases to the next stage of plan negotiations. Okay.

All right, Ms. McLaughlin, you have your hand raised. Let me actually hear from you before Mr. Keller. Sure. Thank you, Your Honor. Megan McLaughlin, Kelly Dry and Warren, counsel to the committee, and thank you again for accommodating our virtual appearance today. I'll be brief. I don't want to repeat what Ms. Troy just said.

As I mentioned to last week, the committee represents trade creditors and litigation creditors, and we're sensitive to the need for appropriate notice, but we're also concerned with the administration. trade of Byrne in this case, and we believe that the bar date, as articulated by Ms. Troy, which is more than 70 days from today, is appropriate and gives creditors ample time to prepare and file their proof of claim. Any later date would cause unnecessarily, unnecessary delay and further increase the cost

of this process. And speaking of cost, as you've heard today, the cost of mailing the bar date package to all customers would exceed $70 million. Performing this mailing would be cost prohibitive, and not only cost prohibitive, but unnecessary. Email is the debtor's primary method of communicating with our customers, and it just makes the most sense here. We've made a number of other changes.

That makes choice walk through you. The debtors have approved the claim filing process with the new consolidated proof of claim, and the debtors are now providing improved notice to creditors. We realize that there may be individual claimants with discrete issues, and we're confident that the debtors will handle those on an individual basis. With all the changes that have been discussed today, we believe that the revised Arbate and the revised order are reasonable, and we support entry.

All right, thank you. Mr. Keller? Good afternoon, Your Honor. I look like I'm standing on my own here. We just got to reply last night with everybody else, and there are a number of things to reply to as well as Ms. Troy's presentation. Generally speaking, I want to talk about the request on notice generally. I also want to talk about the form of notice

and then touch briefly on the class proof of claim. To start with the notice generally, rule 2002 does speak to service by mail, and I think Judge Goldblatt in what we said in our opposition wrote really comprehensive ruling about what could be done there. And in this situation, we think that the mail is required with the obvious exception of allowing the filing of a class proof of claim. The debtor and Ms. Choi are urging notice by publication. That doesn't work here. Let me explain that.

We start with the proposition that the debtors told their customers. both that their data was secure, and even if it were breached, it would be impossible to connect the individuals with their data. That was, of course, flat out wrong. Not only was the data breach, but our class's most private information was or is now for sale on the dark web. So, as of today, we could provide Your Honor in camera with some of what is being sold representing our clients.

And as the debtors can see, they know exactly who suffered those damages of results. those damages and results of this breach. But this is not a circumstance like the rest of the customers in which a generalized notice to unknown claimants would solve the fundamental due process rights of the victims.

And in fact, the debtor seems to concede that they have mailing addresses for most of the kits, just not the ones sold through Amazon or Walmart. There's another response in the reply that Ms. Toy didn't touch on, which is they've effectively co-opted the class by trying to adapt the process that Judge Chin

put in place during the class action when he certified the class. But here's the problem. Judge Chin had a class controlled by Rule 23, which ensures the fairness to the claimants, and it includes class coverage in an opt-out regime. What the debtors are proposing is a worst kind of gotcha for our class. There's going to be limited disclosure of information, and I'll get to that on the form of this claim.

Heavy reliance on public disclosure and published notices, and if they don't file their claims timely, our 6.3 million class members will have all of their rights eliminated, and that is made very clear in the bar-date notices. Now, class counsel is extremely skeptical that these notices will, in fact, provide actual notice to the 6.3 million class members that the debtors know about. Fortunately, we can track that by asking that if Cole does do the solicitation, and we're obviously not conceiving that they should,

but if they were due to the solicitation, they should not be tracking the bounce facts where they get an affirmative notice that the claimant didn't get notice. They should be tracking weed receipts to see who actually opened the emails with 6.3 million emails. Then we'll have some inkling of how many of the 6.3 million emails were actually received and opened. And at a later date of the debentary basis will be able to address the issue that most concerned Judge Goldblatt, which is whether the top debtors can actually establish actual. notice.

Publication doesn't solve the D-cross problem when you have known and identified claimants. Because we got their argument last night, we don't have authority, but if the judge, if the court would like authority, we're prepared to file a post-hearing brief on why when you have damaged a specific individual, notice by publication does not do the job. Rule 2002 doesn't work. Rule 7023 does. And again, we're not prepared to do an evidentiary hearing today. That was by agreement with the debtors.

But I'll discuss it as they have in a moment. Let me turn to the form of the notice. 40% of the customers are in our class, something on that order, 6 million of the 15 million of the customers. As our opposition argues, if we tweet everybody the same, it's going to be extremely confusing. There's a generalized reference to a data breach, but here we know specifically that for 6.3,000,

million customers, our clients, the class, actually have their data not just breached, but downloaded and made available on the dark web. So they're in a fundamentally different place than the people that the state AGs are protected for the customers, and we don't object to taking care of the customers. But when you know this specific damage, what their notice says is, gee, we told you in an email several months ago that your data may have been compromised. If you want to file a claim, go ahead, but if you don't, you'll have no claims. Here, our view is that there is evidence that their information is on the dark web, and we'll provide that in camera.

They should be advised that their data has been breached, that it has been provided publicly or been offered for sale, that they're a member of a class and that class counsel has been established to represent them. But the matter was settled, but that the bankruptcy has intervened, and then the statement that is being, proposed by the debtor is, yes, there's a class action, but you have no rights because of the debtor, and so if you don't file a claim, you're out of luck. But we're fighting that point, and that should be underscored as well. They are class members. There was broad notice about all this.

We should be committed to file a class with proof of claim because that would take care of the notice issue as well. Getting to the class proof of claim, we understood and agreed that this wouldn't be an evidentiary hearing. But we do have a settlement class with a binding agreement on us and on the debtors, but for the intervening bankruptcy. And it's the debtors who do not know if they can comply with the settlement

firms, or they'd be moving to assume the agreement. Limiting our class to $30 million under the settlement agreement is something that presumably they'd be excited about if they knew they had a surfeit of cash. In opposing the filing of a class proof of claim, they're actually taking

positions in direct opposition to the positions they took before Judge Jim. We'll put that evidence before your honor in a live evidentiary hearing, but from our point of view, it is sort of the height of cynicism to now say that there isn't grounds to have a class proof of claim. We will file a formal motion with evidence for recognition of the class proof of claim. We can't control when it's resolved, so there had been some discussion of a drop dead, and if it hasn't been allowed by that time, then somehow, uh, there's the right to a class would be waived. We want to make sure that, well, we can control

when we file our claim, that the question of when it gets resolved is out of our hands, and there shouldn't be a drop debt there. That's within your honor's prerogative. And frankly, we think we should go ahead and just set that briefing schedule now or very quickly if we want to do that by agreement with the debtors. To step back, we don't think that this notice procedure, notice by publication, works when you've actually damaged people and you have actual addresses that you can send it to them. That's curable by allowing the class proof of claim, but we're not addressing that today. If a notice goes out, we think that notice has to be very specific to our class because they

have suffered actual damages that are continuing to suffer and sending out a sort of generalized notice that your data may have been breached without any evidence of what has happened, how they assert damages, those sorts of things is really not a competent notice under these circumstances. We do have fundamental problems with the treatment of our class under this motion and would ask the court, to the extent that is inclined to set a bar date, help us set either a notice regime that goes through the class proof of claim process, or if not through that, at a minimum, let us revisit the proof of claim so that the folks who are getting notice that actually had their data breached and offered for sale are getting an appropriate notice that at least allows them to know what has gone on. And then finally, let's track how many of them receive actual notice because that's going to be a huge constitutional issue if the debtor really wants to proceed on the basis of publication. With that, Your Honor, I'm happy to answer questions. Thank you, Mr. Keller.

I didn't follow one of your comments, which is that the debtors have co-opted the class. What are you getting at there? So in their reply brief, the debtors say, What's the big deal? We've gone back and looked at Judge Chinsorgers about what would be appropriate to notify the class and tell them about their opt-out right. So why is the class making a big deal of it? We're doing the same thing. But, of course, it's not the same thing.

There's a huge difference between a class that you're presumptively a part of, which you benefit from, to notice your opt-out rights versus being in a bankruptcy where if you don't file a claim in 65 or 75 days, you have no right to make a claim any further. This is going to functionally disenfranchise the vast majority of the 6.2 million claimants if they're not permitted to file a class proof of claim. And the notice issue doesn't address that because an opt-out class is fundamentally different than what this is, which is an opt-in class. So under your contemplation, if I were to allow a class proof of claim, it would be an opt-out class? The class that has been certified for settlement purposes is definitionally an opt-out class. But if I allow you to file a class proof of claim, is that an opt-out class or is that a limited fund class? I may be over my fees a little bit here.

There is an agreement as to the amount in the settlement. Now, obviously, that's an executory contract, and so we have to perform, they have to perform, but it's set to fixed amount. And what they're sharing within the fixed amount is is determined by who opt-out. So I know we're not litigating the class proof claim today, but if I, a week or two or three from now, allow a class proof of claim, at some point the members of the class would have an opportunity to opt out of the class, correct? And then they would have to have a separate bar date to file their own independent proofs of claim, right? Correct.

And I do believe that were we to have a class proof of claim approved, that it would be appropriate to let those class claimants know that if they wish to preserve their opt-out rights, They need to file a claim in the bankruptcy case. I think you're asking the right questions and maybe having the same questions I am, which is, you know, a class action might be appropriate outside a bankruptcy case as a means to, you know, resolve many, many claims through one, you know, process. But we're in bankruptcy, and there's a question as to the appropriateness of a class action within a bankruptcy context. Given the toolkit that's made available to the debtors to aggregate claims and resolve all cases,

in a centralized forum in a holistic way. I do want to just respond. Just a second. Without prejudging that issue, that's not exactly the point I was making with Mr. Keller, but I'll decide whether to allow a class-proof claim when that's concretely before me. But I'm not sure it simplifies noticing,

which is our issue today. In other words, if we have notice go out to, let's just refer to the $6 million. and 7 million customers whose data was breached. If we have notice go out to them and we have a class group of claim filed and then either there's an objection to the class group of claim or there's an opt-out opportunity which may or may not be protected with plan voting, there's more noticing to be done to allow, I think, each class member information about their right to opt out.

And then if they do opt out, then they have filed a group of claim. by some later date because the date we're talking about now 75 days from now it's not going to work by the time all that plays out. So without prejudging the issue whether there should be a class proof of claim or what is the better fit with bankruptcy It does seem to me whatever however that plays out the class proof of claim doesn't simplify the noticing big picture But go on where were you headed next I would agree with that and I think you know that's why one of the factors that are considered when a court determines whether a possible of claim should be filed is whether you know that there will be any material adverse effects on the administration and here given the additional noticing that would be required when

there's a separate procedure under the bankruptcy law to act you know consolidate the claims and have a resolution process I'm not sure that you know there will be a benefit to the estate if we allow for the cost of a claim or allowed for the cost of litigation I do want to you know just respond to you the color point about you know the service by traditional now you know in discussions with our client and as they review the information that they have access to I believe that the client believes our debtors believe that they have you know reliable mailing addresses for 40% of their customers so the concept that you know mailing

addresses mailing serving notice by mail is superior in any way is unfounded and based on the information that's available to it would not be the best means of notifying people of the bar dates. Separately, I just want to clarify for the record that the settlement that we have with the data breach claimants was approved on a conditional and preliminary basis. And class counsel for the data breach claimant standing here today does not seek to file a class proof of claim in accordance with the terms of that settlement agreement. Said differently, they want the benefit of the settlement agreement, which is the ability to file one class proof of claim, while not honoring the terms of the settlement agreement, while not honoring the terms of the settlement agreement, while not honoring their part of the bargain, such as a stipulation as to the allowed amount of those claims,

which is $30 million per Mr. Keller's point. If class counsel are amenable to filing a class with a claim based on the settlement terms, and they are willing to stipulate to the amount of those claims, I'm sure that debtors and Mr. Keller could work out language that will resolve both of our issues. But they can't have it both ways. They can't try to alter the terms of the settlement agreement

and reserve their rights to seek a higher number, while also try to get the benefit of the settlement agreement by claiming that they're entitled to file a pass-pressed of claim. If we're still negotiating the amount of the settlement, effectively there is no settlement, and there is no settlement class to file the pass-prop of claim on behalf of. Again, I think issues around Rule 7023 and whether the pass-prop of claim should be authorized,

as I mentioned earlier, I think it needs to be properly briefed before the court, but we filed for bankruptcy on March 23rd. This is not a new issue for, I'm sure, you know, Mr. Keller, who's experienced bankruptcy attorney. He's had over a month to tee this up so that he could get authority to file a class with a claim. But he can't, you know, come here today with an objection that our noticing procedures are somehow deficient

because they don't compare or they're not identical to the opt-out structure in the class action settlement. Because that's a completely different structure than, you know, the framework we have here, which is that people have to file, you know, actively take steps to file a proof of claim against the debtors. So I don't know that the procedures or the, you know, terms of the settlement agreement and the class action settlement that was approved on a condition on preliminary basis has any relevance at all and does not actually point to any deficiencies in our noticing procedures. Okay. Okay, further word from the committee.

All right. Mr. Keller, back to you. Mr. McLaughlin. Oh, I'm sorry. Go ahead, Ms. McLaughlin. No, Your Honor. I was just going to say no further comments from us. Okay, thank you.

Thank you. Now we're back to you, Mr. Keller. Thank you, Your Honor. Just a couple of points in response. We're not urging that 7 million mailings go out. The debtors figured this out with the arbitration claimants. They allow the counsel to file one claim on that. all the arbitration claimants, albeit in an aggregated form.

That's effectively what we're asking to do here. The problem is the debtors have our clients. We don't even, we know who our named plaintiffs are, but the debtors have all the identifying information. So the only way that we can represent all of those people is by filing a class proof of claim. Okay. I'm talking to talk you there, Mr. Keller. I think you just said you're not advocating for six million mailings to go out.

I thought last time you spoke you were advocating for 18 million mailings to go out. You know, I believe that if you have the addresses and you have an actual identified damage that you've done to someone, the rules require that there is a mailing to that person. Again, Judge Goldblatt did the analysis of how Rule 2002 worked. We had not separately briefed the publication issue, but absent the right to file a class proof of claim, which would then cover all of those people. I don't believe the rules permit for anything other than service by mail. And we think that's a massively inferior solution to allowing us to file a class group of claim.

But that's the position that the debtors are in. We didn't create that. The federal rules create that. Okay, so let me ask you, the debtors are cited rule 2002L. How is it not, well, let me take the double negative out of this. How is it practicable for the debtors to give mail notice to all of their customers? or even if we say only to the $6 million or $7 million directly impacted by the data breach. How is that practical?

So there are two different questions. Is it affordable? I don't think it is. The second one is publication by notice work. And I believe that there are cases, but again, we have to brief this. And we could get a brief to your honor. It would say that when you actually affirmatively damage somebody that you know about, relying on publication by notice rather than reaching out to them as permitted by the rules,

doesn't work. But you don't get to do the chapter. But aren't the debtors? A third way here. I agree, Rule 2002L, you could read it and say publication and we're done. The debtors are not proposing to do that. The debtors are proposing to publish in a traditional old line gray or black and white newspaper, but also by social media, but also by emailing everybody that they have.

and if the email bounces back, postcards, sending postcards as a follow-up. That's very different from a strict reliance on 2002L. Why doesn't that work, however? For the reasons that Judge Goldblatt went through, because unless you can establish that the persons who received that email notice actually received notice as opposed to you received an email or sent an email that didn't bounce back,

which is very different than actual notice, you have not given them the constitutional due process that they're entitled to before they are deprived of their property rights in this debtor. Anything further? The only other point that I would make is, Mr. Troy made the point that we're now presumably willing to live with the $30 million settlement, and that fundamentally represents what happened. The debtor's position without getting into the settlements, but the fact that the debtor had very, very limited resources was an extremely, extremely material part of the reason that the class agreed to settle and Judge Chen agreed to let us settle out at a $30 million level than at a higher level, i.e. the debtor's financial condition was taken into consideration when the settlement was reached. The debtor is not proposing to assume this contract. The debtor is saying if you unilaterally agree that your claim will be limited to $30 million and then we can dilute you without outsized claims that are coming from the arbitration, claimants with FIXO claimants, then we'll stipulate, that's not our deal.

If they want to assume the contract, we can live with the terms of the contract. If they're not assuming it, we're not going to take a double hit by virtue of already taking an adjusted claim because of solvency and then be asked to take a discount on the $30 million. So it's apples and oranges. We're prepared to go through the process that we go to getting this settlement approved if we're going to be paid $30 million. or were prepared to file a class proof of claim and suffer through the bankruptcy process. But it's not a question of agreeing to cap our unsecured claim and not be willing to live with the consequences.

That was never the deal, and it's not the deal here. Okay, thank you. Thank you. Ms. McLaugh, and your camera's back on, wasn't sure if you wanted to weigh in at this point. Nope, okay. All right. Ms. Choi. I don't know that I have anything further, Your Honor.

I think the debtors sort of maintain that as of right now, a class with claim is not warranted. And I think that issue needs to be properly brief and presented to the court. And I think we'll have our differences about the implications of the settlement and how that should inform our noticing procedures. We think that our noticing procedures more than satisfy the due process requirements.

And for that reason, I would request that the bar date would be Okay. I already asked you one question about the order. Let me just check my notes here. All right. I misread the state of play in reviewing the reply and the proposed order and thought that you were resolved with the date of breach claimants and still litigating with states. It's just the opposite. So I'm going to take a short recess after we handle our other matter. Go put my notes together and come back and give you a ruling on this one. So we still have the motion to reject? The first task conference. I believe counsel for the landlords is hearing remotely today. Ms. Jones, I think you're on mute. All right. Yes, I am here. Michael Brigger is also on the line for CAR O.P. Tech LLC,

and he will be speaking for the landlord. I stay here. Very good. McGregor, if you're on the phone, I think Star 6 is good. Oh, Your Honor. There we go. Mike and Gregor Val and Atkins. There you are.

Okay. Okay. All right. Somebody want to make an announcement? No, I'm not happy to. I was waiting for Your Honor. Sorry, Your Honor. Yeah, that's okay.

I could be very brief. As Your Honor knows, we filed this as part of the original rejection. Business justification is similar to the others. Therapeutics business was closed down. It's part of their business judgment. They don't need this location. I can't say there are some factual issues. There was an issue of surrender and the removal of certain materials in the facility.

The debtors tried to do that pre-position. There was some hiccup that came up for that. I think was maybe payment related from stop checks on the petition date. But the debtors have gone in there to remove the stuff. But as part of the process with California, there has to be an inspection by the fire department and some other regulatory agencies. It's my understanding that has happened. However, there were some miscellaneous things left there.

So we've sent those people back in to finally remove stuff. So I'm cautiously optimistic we can give this. one resolve. However, our request today is if we could just pick this one week for another status to try and get it resolved after that's been done, I don't think there's a lot of separation between the parties as to how this needs to be resolved. And then also between now and then, I think based on their objection and their declaration, to the extent we have to do a hearing on this, I think we'll be able to stipulate the facts here. So that's where this one stands for. Okay, Mr. Greger, that makes sense to you?

Because you're on. Okay. And I'll adjust this to both of you. As I read the objection, at least a part of the objection, is that the rejection is not effective until I enter an order. Next week will be a new month. Is anyone contending that there will be rent due or may if we continue this by a week? That is an issue I've been talking Mr. Greger about, and that's why we're to hopefully alleviate that issue. We're trying to get that done tomorrow.

So there's still things to be done on the premises? Correct. Okay, that's a separate issue from the peer lapse of a week. We're trying to get that fixed, and then we think we can rein in the other issue. I see. Okay. All right. As long as everybody's focused on that issue, that will satisfy me.

Okay. Well, we'll continue this then to 1.30 on May 6th, and we'll see if there's stipulation or evidence or resolution. Perfect. Thank you, Your Honor. Okay. Before I go put together, certainly, before I go put together a ruling on the bar date motion, any other matters from the debtor? Okay.

Oh, yeah, come up to the mic, sorry, Ms. Ryan. For the record, Abigail Ryan, with the National Association of Attorneys General. Our last state has approved. Very good. So we have now settled that part of our motion. Thank you. Very good. Thank you.

Thank you, Your Honor. Your Honor, Christopher Hopkins of Paul Weiss, co-counsel to the debtors. I think that's it, Your Honor. So if you want to take your recess and come back and give us a ruling, from the debtor's perspective, nothing else. Okay. Anything from the committee or anybody else? Very good.

All right. Well, let's take about a 15-minute recess. up with together ruling and be back shortly. Thank you very much, Your Honor. Please rise. Your Honor, we are back on the record. Thanks, please be seated, everyone. I'm just showing you're standing at the lectern as though you're about to announce a resolution

that will prevent me from having to rule on this. No, okay, just checking. Only one resolution today. Just checking. All right, all right. Well, as I said, I apologize that I misunderstood which had been resolved and which had not, but here we are. All right.

So the matter before the court is the motion to establish bar dates and notices and related relief. I will grant the motion with the compromises agreed to by the parties and announced previously, some of which I will repeat here, and the following additional modifications. As we discussed earlier, notice to persons other than the customer base will be by first class mail unless the debtors don't have a mailing address, so there's some other reason why that doesn't work. and then other forms of notice may be appropriate. Notice to the customer base as proposed by the debtors, that is initially by email with a postcard follow-up for undeliverable rejected messages is approved.

I find that notice by mail to the customer base, and even to that portion of the customer base, even if it were limited only to that portion of the customer base that is directly affected by the data breach. It's impracticable. everyone acknowledges that it's not affordable. The statistic, Ms. Troy, that you offered that the debtors believe that they have good addresses for 40% of their customers, that's not in the record. But it's consistent with common sense.

It's consistent with how people deal with what are fundamentally online businesses. I recognize that 23 and me has physical operations, but from a consumer perspective, it's basically an online business. when we move, it's not the sort of thing where we go and update our mailing address. We tend to keep our email addresses. Not always. There will be bouncebacks. That will be an issue that will have to be dealt with. But we tend to keep our email addresses for long periods of time.

In short, if I were to require mailed notice to the customer base or even just the portion of the customer base directly affected by the date of reach, I believe it would be an enormous waste of money and it would accomplish. very little. Because mailed notice is impracticable, as I mentioned during the hearing, the language of Rule 2002L might justify notice only by publication, but that would be inappropriate and clearly insufficient in the circumstances we have here. The debtors have a much better means to contact customers, and it's probably the means that most customers would expect if they were going to receive a communication from the debtors, and that's electronic mail. When that's

bolstered with the other general noticing the data that's proposed, in other words, websites, social media, Wall Street Journal, and backed up by postcard notice to those with undeliverable or rejected email addresses. I believe that's reasonably calculated to provide actual notice and therefore sufficient for purposes of due process. I want to talk about the cyber litigation decision for a bit. That's Judge Goldblatt's decision that's been cited. That didn't involve Rule 2002L.

Judge Goldbeck concluded that the email notice in that case was reasonably calculated to reach the individual at issue, and it was at least as good in terms of the likelihood of actually reaching him as a mailed notice would be. And he said that email notice would satisfy due process on page one of his opinion, but there was nothing impracticable about serving that guy in that case by mail, and it doesn't appear that anyone contended that it was. So Rule 2002L never came into the picture of Rule 2002-87 control. I think this is clearly a 2002-L case.

I disagree with Mr. Keller about the level of detail that needs to be provided. For example, I don't think the notice needs to say your data is for sale in the dark web, that sort of thing. The proposed notice, which is the G to the proposed order. Sorry, could you meet yourself, please? The proposed notice Exhibit G appears to balance the level of detail necessary for recipients to understand what's going on with the need for simplicity and brevity, which is necessary. if we want people to read the thing and to act on it. All that being said, and I will be very clear about this.

I may well agree with Mr. Keller about a lot of things as this case goes on, or other class counsel, for that matter. I may agree that a class proof of claim is appropriate for one or more classes or even superior to individual noticing here. That's not before me today. I'll take that up in due course. All I'll say about a class proof of claim today is two things. One, as I mentioned during the hearing,

it's not obvious that it's a less expensive, a more elegant solution to the notice issue. And two, it's not the only permissible alternative to service by mail, as I've indicated, the email backed up by postcard and publication, I believe, is preferable in terms of actually providing notice to the people who ought to receive notice of this. But as I say, there may be a lot of other benefits

to a class proof of claim, and I'll entertain those issues if the appropriate time. So as discussed, the general bar date and the cybersecurity incident claim bar date will be 75 days after entry of the order. A couple other smaller edits to the proposed order. Paragraph 14D at the end has a sentence about processing claims on the court's claims register and then posting them on Kroll's website. I think that concept has come out elsewhere in the order. We're not going to run things through the court's claims register for confidentiality reasons.

just to avoid any confidentiality problems. So if you take that out there and then it replicates in the various notices that draw in that same language. And then a few changes on paragraph 34 of the proposed order. The concept of commercially reasonable efforts to follow up

applies to the postcards for the customer base, which I think is a good standard. I think that should also apply to 34B and C, which is the post office sends something back with affording address, I think commercially reasonable efforts rather than discretion is the appropriate standard there. And paragraph C, which is if somebody says, I'm sending your letter back, contact them yourself, here's his address.

Commercially reasonable efforts ought to apply to the follow-up to be done on that as well. The discretion, I think, works for A&D. On the postcard follow-up for the customer base, let's make that, let's have a, have that go out at least 28 days before the bar dates that provides a little more time for people to figure out what to do. The postcard, as you know, doesn't have nearly enough for someone looking only at the postcard to know what they need to do next and they need more time to do that. And then supplemental mailings and other circumstances, let's have those go out at least 21 days before the applicable bar date. And I think with that will satisfy both the time requirements of the rules and give people a little more opportunity to react. Is there anything further you need on the bar date motion?

Yes, two things. Yes. We did make a few edits to paragraph 31. This concerns the class proof of claim language. Just based on subsequent conversations that we had right before the hearing with council representing the pixel claimants. So if we could provide a red line to that language for your honors consideration shortly after this hearing, we're happy to do so. Sure, that doesn't adversely affect anyone. No, it's a language that has been usually.

agreed and basically says that we'll mutually agree to a briefing schedule that will be you know presented before your honor next week if we cannot mutually agree to us agree to the schedule okay and then secondly I think we were all too excited about reaching a settlement around the 75 days and did not factor the fact factor in that I think 75 days from today if your honor entered the order today gets us to a Sunday so if it's possible for your honor to delay of entry of the order till tomorrow that would be ideal you could probably manage that And that will get us to a Monday that's not a holiday, right?

Yes. Okay. Okay. July 14th. We will make a note not to enter the order until tomorrow, and that's why I said the magic multiples of seven are always helpful, but here we've solved it with more straightforward now. So thank you for that, Mr. George. Thank you, Your Honor. All right.

Anything further to come before the court? Your Honor. Yes. Tobias. Yes. Yes. Yes. Yes.

For the date, Bushman. Thank you for your ruling. One request more for the record, but we did ask that when Cole sends out the email messages, if they check the docs asking for read receipts so that we have that evidence at a later date, I wanted to have that addressed officially one way or the other. Is that technically feasible? I would have to consult our claims of noticing agent, Your Honor. I can't make a representation on that right now.

Yeah, I don't know if they're using a Microsoft Outlook or something like you and I are used to Mr. Peller. What I'll say is that to the extent that they can, with minimal effort, set up a tracking that will allow Mr. Keller or others who may want to look into this down the road to take a look at the data and see whether an email was opened or not, they should do that. If it's not technically feasible, given whatever platform they use, if someone would provide that information to Mr. Keller, at such a time as it comes up, that'll have to be the way it is. But thank you for following up on that, Mr. Keller. I left that one out. Thank you, Your Honor. All right.

Thank you all. Be adjourned. See you next week.