In re PACIFIC GAS ELECTRIC COMPANY, Chapter 11, Debtor.

No. 01-30923DMUnited States Bankruptcy Court, N.D. California
March 6, 2003

SUPPLEMENTAL DISCOVERY AND TRIAL SCHEDULING ORDER
DENNIS MONTALI, United States Bankruptcy Judge

Based on the matters discussed on the record at this Court’s February 27, 2003 status conference concerning the modifications to the PGE Plan[1] set forth in the February 24, 2003 Amended PGE Plan of Reorganization (the “February 24 PGE Plan modifications”) and the arguments of counsel presented at a further status conference on March 5, 2003, the court hereby amends and supplements its (a) Order Re: Discovery Protocol and Scheduling entered on August 23, 2002, as amended by Order Supplementing the August 23, 2002 Order Re: Discovery Protocol and Scheduling entered on October 3, 2002 (collectively, the “Prior Discovery Orders”); and (b) Confirmation Trial Scheduling Order entered on October 1, 2002, as amended by the Order Supplementing Trial Scheduling Order entered on October 29, 2002 and the Second Order Supplementing Trial Scheduling Order entered on December 4, 2002 (collectively, the “Prior Trial Scheduling Orders”). Should there be any conflict between this order (the “Supplemental Discovery and Trial Scheduling Order”) and the Prior Discovery Orders or the Prior Trial Scheduling Orders, the terms of this order shall prevail.

The court has taken into account the contentions of the PGE Plan Proponents that the February 24 PGE Plan Modifications should not constitute an invitation to Objecting Parties to reinvent the wheel and take discovery they could have taken months ago. On the other hand, the court is equally mindful of the significant shift in emphasis on plan feasibility, now considered from the point of view of PGE Corporation, as well as the several additional conditions arising out of the February 19, and March 5, 2003 letters referred to in paragraph A.1 below. The court does not intend to deny reasonable discovery requests of the Objecting Parties; it will not subject the PGE Plan Proponents to overreaching and burdensome discovery requests. The burden will be on the PGE Plan Proponents to demonstrate why the new developments described do not justify any particular discovery requests; the burden will be on the Objecting Parties to demonstrate why they should be permitted to explore areas that might have been considered previously.

A. WRITTEN DISCOVERY

1. On or before March 5, 2003, all Objecting Parties shall serve written discovery requests, which may include Requests for Production of Documents, Requests for Admission and Interrogatories,[2] pertaining to any issue arising directly or indirectly from the PGE Plan modifications and/or the letter from Standard Poor’s, dated February 19, 2003; provided, however, discovery requests pertaining to any issue arising directly or indirectly from Lehman Brothers, Inc.’s March 5, 2003 Commitment Letter shall be served no later than 2:00 P.M., March 7, 2003.[3] In order to expedite the discovery process, these requests may be exchanged informally between the parties, via electronic mail, facsimile or otherwise.

2. No later than 4:30 P.M., March 11, 2003, the PGE Plan Proponents shall serve any objections to requests made pursuant to paragraph 1. On March 12, 2003, the parties shall meet and confer and attempt to resolve any disputes on an informal basis. During that “meet and confer” the parties are to attempt to agree on a date for responses to written interrogatories and requests for admissions.

3. The court will conduct a discovery status conference at 1:30 P.M. on March 13, 2003, and intends to resolve any disputes still pending after the March 12 “meet and confer,” including fixing deadlines, if necessary, for responses to written interrogatories and requests for admissions. The PGE Plan Proponents should provide the court and all parties with a summary of unresolved discovery issues by 9:00 a.m. on March 13. The court does not want responses from Objecting Parties; such responses may be presented orally at the discovery status conference.

4. The PGE Plan Proponents shall undertake reasonable, good faith efforts to produce no later than March 12, 2003, all non-privileged documents, including communications with Lehman Brothers, that relate or refer to (i) their communications with Standard Poor’s or other rating agencies with respect to the PGE Plan; or (ii) that relate to the formulation of the February 24 PGE Plan Modifications.

5. The PGE Plan Proponents shall undertake reasonable, good faith efforts to provide by March 14, 2003 a privilege log with respect to responsive documents referenced in paragraph 4.

6. On or before March 19, 2003, the PGE Plan Proponents shall undertake reasonable, good faith efforts to produce all non-privileged documents not included in paragraph 4 in response to document requests served by the Objecting Parties.

7. The PGE Plan Proponents shall undertake reasonable, good faith efforts to provide by March 21, 2003, a privilege log with respect to responsive documents referenced in 6.

8. The Joint Plan Proponents shall undertake reasonable, good faith efforts to produce any additional nonprivileged documents, including communications with UBS Warburg, Arimax and/or FTI, that relate or refer to their communications with Standard Poor’s or other rating agencies with respect to the Joint Plan at the earliest possible date.

9. The Joint Plan Proponents shall undertake reasonable, good faith efforts to provide at the earliest date a privilege log with respect to all documents withheld on grounds of privilege and relating or referring to their communications with Standard Poor’s or other ratin agencies with respect to the Joint Plan.

B. SUPPLEMENTAL EXHIBITS AND DESIGNATION OF FACTUAL WITNESSES DISCLOSURES

1. On or before March 14, 2003, the PGE Plan Proponents shall update their factual witness designations and descriptions to include any witnesses who will be testifying concerning the Recent Developments.

2. On or before March 17, 2003, the PGE Plan Proponents shall update their exhibit list to include any exhibit pertaining to the Recent Developments not previously designated.

3. On or before April 11, 2003, all Objecting Parties shall update their factual witness designations and descriptions to include any witnesses who will be testifying pertaining to the Recent Developments and update their exhibit lists to include any exhibits pertaining to the Recent Developments not previously designated.

C. SUPPLEMENTAL EXPERT TESTIMONY

1. In order to facilitate the progress of these confirmation hearings, from this date forward the Court exempts the Parties from the requirement of serving expert reports pursuant to Fed.R.Civ.P. 26(a)(2), as made applicable to these proceedings by F.R.Bankr.P. 7026 and 9014, provided that any expert’s supplemental direct written testimony and exhibits thereto filed and served after this date contain all of the information required by Fed.R.Civ.P. 26(a)(2).

2. On or before March 10, 2003, the PGE Plan Proponents shall file and serve on all other parties any written direct testimony of William T. Russell offered in support of the PGE Plan that has been created, revised, or supplemented as a result of the February 24 PGE Plan Modifications, along with a statement indicating the date, time and location such expert will be available for deposition.

3. On or before March 14, 2003, the PGE Plan Proponents shall file and serve on all other parties any written direct testimony of David P. Boergers offered in support of the PGE Plan that has been revised, or supplemented as a result of the February 24 PGE Plan Modifications, along with a statement indicating the date, time and location such expert will be available for deposition.

4. The PGE Plan Proponents shall serve any documents reviewed or relied on by such experts in revising their testimony on the same day as they file and serve the expert testimony. The PGE Plan Proponents shall make any such expert witness available for deposition regarding the testimony filed pursuant to this paragraph at a time and location to be agreed by the parties.

5. On or before March 21, 2003, the PGE Plan Proponents shall file and serve on all other parties any written direct testimony from any other expert (including, but not limited to Messrs. Donald Santa, Paul Murphy and Stephen Fetter) that has been created, revised, or supplemented as a result of the February 24 PGE Plan Modifications, along with a statement indicating the date, time and location such experts will be available for deposition. The PGE Plan Proponents shall serve any documents reviewed or relied on by such experts in revising their testimony on the same day as they file and serve the expert testimony. The PGE Plan Proponents shall make any such expert witness available for deposition regarding the testimony filed pursuant to this paragraph at a time and location to be agreed by the parties.

6. On or before April 14, 2003, any Objecting Party shall file and serve on all Parties supplemental direct written testimony from their expert(s) pertaining to the Recent Developments, along with a statement indicating the date, time and location such expert(s) will be available for deposition. The Parties offering the supplemental direct written testimony shall serve any documents reviewed or relied on by such experts on the same day as they file and serve the supplemental direct written testimony. The Parties offering the supplemental direct written testimony shall make any expert witnesses available for deposition at dates and locations to be agreed by the parties.

D. DEPOSITION DISCOVERY

It is contemplated that depositions of factual and expert witnesses pertaining to the Recent Developments shall commence on or about March 17, 2003. The Parties will work together and use their best, good faith efforts, to schedule these depositions as expeditiously and efficiently as possible. The Parties agree that depositions may commence earlier than March 17, 2003 if the proponent offering the witness prior to March 17, 2003 certifies that (i) all documents concerning the witness have already been produced; and/or (ii) the proponent is willing to bring the deponent back for an additional day of deposition after all documents have been produced.

E. FURTHER STATUS CONFERENCE

The Court shall hold a further status conference on March 27, 2003 at 1:30 p.m. to assess the progress of document and deposition discovery on these issues, with the expectation that the Parties will be in a position to re-commence trial on the PGE Plan by April 8, 2003.

F. EVIDENCE PERTAINING TO THE JOINT PLAN

1. On or before March 28, 2003, the PGE Plan Proponents shall file and serve on all other Parties the written direct testimony of any rebuttal expert witnesses they intend to offer in opposition to the expert testimony of Thomas Lumsden, dated December 6, 2002. The PGE Plan Proponents shall make any such expert witnesses available for deposition on or before April 4, 2003.

2. Beginning on April 8, 2003, the Court will hear the expert testimony of Mr. Thomas Lumsden in connection with the trial on the Joint Plan, followed immediately by any rebuttal witnesses called by PGE in connection with Mr. Lumsden’s testimony.

G. MODIFICATIONS OF DISCOVERY PROCEDURES

Any party seeking relief from or modification to any provision of this Order shall try first to obtain agreement, which agreement if reached shall be binding without further order of the court, from the Parties who would be affected by such relief or modification. If an agreement cannot be reached in good faith on an informal basis, the Party seeking such relief or modification may bring the matter to the court’s attention by writing a letter to the court, with a copy to counsel for each Party, and should advise the court’s calendar clerk when the party would like the matter heard. The court is presently reserving March 20, 2003, at 1:30 P.M. and March 24, 2003, at 2:30 P.M. for resolution of any such disputes.

[1] Capitalized terms not defined in this order bear the meaning set forth in the Order Re: Discovery Protocol and Scheduling entered on August 23, 2002.
[2] The court is overruling the PGE Plan Proponents’ request to exclude written interrogatories and requests for admissions.
[3] The Plan Modifications, the Standard Poor’s Letter and the Lehman Brothers, Inc.’s Commitment Letter are referred to herein as “the Recent Developments.”