BARTLETT HACKETT FEINBERG P.C.

155 Federal Street, 9th Floor Boston, Massachusetts 02110 Tel: (617) 422-0200 Fax: (617) 896-6275 Hale Yazicioglu, Esq. e-mail: hy@bostonbusinesslaw.com Frank F. McGinn, Esq. e-mail: ffm@bostonbusinesslaw.com

Hearing:

October 19, 2011 at 10:00 a.m.

Attorneys for Iron Mountain Information Management, Inc.

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------x In re Chapter 7 THELEN, LLP, Case No. 09-15631 (ALG) Debtor. -------------------------------------------------------x LIMITED OBJECTION OF IRON MOUNTAIN INFORMATION MANAGEMENT, INC. TO TRUSTEES MOTION, PURSUANT TO BANKRUPTCY RULE 9019, FOR AN ORDER (A) APPROVING SETTLEMENT AGREEMENTS WITH CERTAIN FORMER PARTNERS OF THE DEBTOR; (B) FINDING THAT SUCH SETTLEMENTS ARE IN GOOD FAITH; AND (C) BARRING CERTAIN CLAIMS AGAINST SETTLING PARTNERS TO THE HONORABLE ALLAN L. GROPPER, UNITED STATES BANKRUPTCY JUDGE: Iron Mountain Information Management, Inc. (Iron Mountain), by and through its undersigned counsel, respectfully submits this limited objection (the Limited Objection) to the Trustees Motion, Pursuant to Bankruptcy Rule 9019, for an Order (A) Approving Settlement Agreements with Certain Former Partners of the Debtor; (B) Finding that such Settlements are in Good Faith; and (C) Barring Certain Claims Against the Settling Partners [Docket # 335, 336]. This Limited Objection is filed in order to preserve Iron Mountains possible claims against former attorneys of the Debtor, Thelen, LLP, for storage and secure destruction of client

files deposited at Iron Mountain. In support of this Limited Objection, Iron Mountain hereby respectfully represents the following: 1. On September 18, 2009, the debtor, Thelen, LLP (the Debtor or Thelen), filed

a voluntary petition for relief under Chapter 7 of title 11 of the United States Code (as amended, the Bankruptcy Code) in the United States Bankruptcy Court for the Southern District of New York. 2. Thereafter, the Trustee, Yann Geron (the Trustee), was appointed by the

Bankruptcy Court as Chapter 7 Trustee of the Debtors estate and still serves in that capacity. 3. On September 28, 2011, the Trustee filed Trustees Motion, Pursuant to

Bankruptcy Rule 9019, for an Order (A) Approving Settlement Agreements with Certain Former Partners of the Debtor; (B) Finding that such Settlements are in Good Faith; and (C) Barring Certain Claims Against the Settling Partners [Docket # 335, 336] (the Motion), together with a proposed order (the Proposed Order). 4. In the Motion, the Trustee states that the Proposed Order and the Settlement

Agreements1 will provide for certain releases and will further bar[] certain third parties from commencing or continuing actions against the Settling Partners to the extent such actions relate to the Claims released against the Settling Partners by the Estate Parties. See Motion at 10. 5. In further support of the Motion, the Trustee also filed the Declaration of Trustee

in Further Support of His Motion, Pursuant to Bankruptcy Rule 9019, for an Order Approving Stipulations Resolving Trustees Claims Asserted Against Certain Former Partners of the Debtor [Docket # 342] (the Trustees Declaration). In the Trustees Declaration, the Trustee states that the release language contained in the proposed settlement agreements was carefully tailored to release only direct claims held by the Trustee, the Debtor or its estate . . . . against the Settling
1

The capitalized words used herein, unless otherwise defined, shall have the same meaning as in the Motion.

Partners, or third party claims which are derivative of those claims. See Trustees Declaration at 13. 6. Iron Mountain, which holds both pre-petition and post-petition claims against the

Debtor for services provided pursuant to certain agreements with the Debtor, submits this Limited Objection on the basis that the language contained in the Proposed Order, the proposed releases and the Settlement Agreements is too broad and indeed may prevent Iron Mountain from seeking payment on its claims against the former Thelen attorneys for the storage and secure destruction services it provided with respect to the Debtors client files deposited at Iron Mountain. 7. On or about June 5, 2010, Iron Mountain filed the Iron Mountain Information

Management, Inc.s (A) Request for Immediate Payment of Administrative Expense; and (b) Motion for Order Requiring Trustee to Remove Records from Storage or Pay for Secure Disposition of Records [Docket # 118] (Motion for Payment of Administrative Expense) concerning its payment for post-petition services provided to the Debtor. The Trustee opposed the Motion for Payment of Administrative Expense [Docket # 132] (Trustees Opposition) on the grounds that, inter alia, the Trustee did not induce Iron Mountains performance and further that Iron Mountains services and security protects the former clients and attorneys of the Debtor and not the Trustee and the estate of the Debtor. See Trustees Opposition. The Court reserved decision on the Motion for Payment of Administrative Expense. See Order, Docket # 133. 8. Iron Mountain submits this Limited Objection to reserve its rights and to ensure

that its claims for storage and secure destruction services provided to the Debtor and/or its former attorneys in the pre-petition and post-petition period will not be barred by any release entered into by and between the Trustee and former attorneys of the Debtor and the Proposed

Order submitted for approval and signature by this Court. 9. Iron Mountain has reached out to the Trustee and counsel for the Settling Partners

to discuss its concerns about the proposed releases and the Proposed Order. Iron Mountain submits this Limited Objection in abundance of caution and to reserve its rights to seek payment on its claims in light of the broad language contained in the proposed releases and the Proposed Order that may potentially bar Iron Mountains claims against the Debtor and its former attorneys for the storage and destruction services it has been providing in the pre-petition and post-petition period. RELEVANT FACTUAL BACKGROUND 10. Commencing in 1994, Iron Mountain and the Debtor (and/or its predecessors and

affiliates) entered into various agreements (the Agreements) for storage of the Debtors Records.2 11. On or about November 20, 2009, the Trustee filed an application for entry of an

order establishing procedures and disposition of client files pursuant to Bankruptcy Code 105, 541 and 554 (the Procedures Motion), which was opposed by Iron Mountain. A hearing was held on December 15, 2009. 12. On December 23, 2009, this Court entered the Disposition Procedures Order

[Docket # 60]. The Disposition Procedures Order provides, among other things, that upon expiration of a 90 day Retrieval/Transfer Period the Debtors client files may be promptly destroyed or disposed of at the Trustees discretion, and as the Trustee determines reasonably

For other and further relevant facts and documents concerning the relationship between Iron Mountain and the Debtor, including all relevant documents, agreements and exhibits, Iron Mountain respectfully refers the Court to the Motion for Payment of Administrative Expense [Docket # 118]. In the interests of conserving judicial resources and expenses, Iron Mountain has not reproduced all of the relevant documents with the submission of this Limited Objection and respectfully refers the Court to the Motion for Payment of Administrative Expense filed by Iron Mountain and all of the exhibits annexed thereto. See Docket # 118.

necessary at the lowest reasonable cost and within the Trustee business judgment without further order of the Court . . . . See Docket # 60 at g. 13. On December 23, 2009, this Court also entered an Amended Stipulation and

Order Between Chapter 7 Trustee and Citibank, N.A., Regarding Limited Use of Cash Collateral by Trustee and Granting Adequate Protection (the Amended Cash Collateral Order) [Docket # 58]. 14. Pursuant to paragraph 3, n. 2 of the Amended Cash Collateral Order, a carve-out

from Citis Cash Collateral was established for any reasonable costs of administering the Debtors estate . . . . [i]ncluding any administrative-priority claims that may be allowed by the Court for records storage. See Docket # 58 at 3, n. 2. 15. The Trustee sent the Debtors former clients and attorneys notice on January 7,

2010 of the file transfer procedures established under the Disposition Procedures Order. The 90 day claim period established under the Disposition Procedures Order expired on April 7, 2010. On April 8, 2010, the Trustee demanded that Iron Mountain continue storing the Records until further notice from the Trustee. 16. On June 5, 2010, Iron Mountain filed the Motion for Payment of Administrative

Expense, seeking, inter alia, payment from the Trustee of an administrative expense claim from the Debtors estate for storage costs and disposition costs relating to the secure retrieval and destruction of the Debtors records stored with Iron Mountain pursuant to its Agreements. See Docket # 118. In the Motion for Payment of Administrative Expense, Iron Mountain also moved for an order requiring the Trustee to (1) remove the records from Iron Mountain facilities at his cost and expense; or (2) pay Iron Mountain for the retrieval and secure destruction of the records. See id.

17.

The Trustee filed the Trustees Opposition in response to the Motion for Payment

of Administrative Expense. See Docket # 132. Among the reasons cited by the Trustee for why the Motion for Payment of Administrative Expense should be denied, the Trustee stated, there are no direct state laws which require the Trustee . . . to ensure destruction of the records. See Trustees Opposition at 39. Further, the Trustee stated that at the point when the Debtor stopped operating as a law firm, the ethical duty to preserve client files rested solely with the former Thelen attorneys. The Trustee does not have the same obligation to comply with the ABA Model Rules as do the former Thelen attorneys. Any ethical duty owed to former Thelen clients to maintain and preserve their file is a duty directly owed by the Thelen attorneys themselves, and remains with them. See id. at 41. 18. This Court entered an Order in Respect of Iron Mountain Information

Management, Inc.s (A) Request for Immediate Payment of Administrative Expense; and (B) Motion for Order Requiring Trustee to Remove Records from Storage or Pay for Secure Disposition of Records [Docket # 133]. In this Order, Iron Mountain was authorized to securely destroy records not designated by the Trustee as Retained Records (as defined in the Order) by secured shredding and required the Trustee to take possession of the Retained Records and pay accrued storage and delivery charges on the Retained Records. See Docket # 133 at 2-3. In the Order, the Court further marked the Motion for Payment of Administrative Expense and the Trustees Opposition off the calendar sine die, effectively reserving decision on the issues raised concerning whose obligation (the Trustee or the former attorneys of the Debtor) it is to satisfy Iron Mountains claims for storage and destruction services. See id. at 4. 19. In the Motion, the Trustee now seeks approval of the Settlement Agreements

together with a release and the Proposed Order barring 6

[A]ll creditors and parties in interest in this Chapter 7 case from commencing or continuing any and all, past, present or future claims or causes of action and from asserting any and all allegations of liability or damages, against the Settling Partners based on, relating to, or arising from the Released Claims or such [third partys] claims against the Debtor. See Motion at 24. 20. The Trustee posits that the releases and the Proposed Order will release only

direct claims held by the Trustee, the Debtor or its estate . . . against the Settling Parties, or third party claims which are derivative of those claims. There is nothing specific of implied in the settlement agreements which would release direct claims of third parties against the Settling Parties. See Trustees Declaration at 13. IRON MOUNTAINS LIMITED OBJECTION TO THE MOTION 21. Iron Mountain objects to the Motion, the Proposed Order and the proposed

Settlement Agreements, which purports to provide releases and to bar[] certain third parties from commencing or continuing actions against the Settling Partners to the extent such actions relate to the Claims released against the Settling Partners by the Estate Partners. Motion at 10. 22. As of October 11, 2011, Iron Mountains claim is in the total amount of

$1,377,187.22 as follows: (a) Pre-Petition Claim: (b) Post-Petition Claim: 23. $ 166,225.86 $ 1,210,961.36

Iron Mountain objects to the Motion on the basis that if the Court approves and

signs the Proposed Order approving the Motion and the Settlement Agreements containing the releases, then Iron Mountain will be left without recourse and indeed without an ability to seek payment on its pre-petition and post-petition claims if the Trustee is successful in arguing that former Thelen attorneys, rather than the estate, are responsible for the storage and secure 7

destruction of the Debtors client files. 24. While the Trustee in the Trustees Declaration states that direct claims of third

parties against the Settling Partners would not be released in the Settlement Agreements, (see Trustees Declaration at 13), Iron Mountain submits that the overbroad language proposed by the Trustee does not protect Iron Mountain and in fact may prevent Iron Mountain from being paid for the storage and destruction services that it has provided with respect to the Debtors client files. Nothing in the Motion, the Proposed Order, or in the Trustees Declaration prevents a Settling Partner from later arguing that Iron Mountains claims are derivative of direct claims held by the Trustee, the Debtor or its estate and therefore would be barred. 25. No determination has yet been made on the issues raised in the Motion for

Payment of Administrative Expense, including whether or not the Trustee on behalf of the estate or the former attorneys of the Debtor are ultimately responsible for the storage and destruction services provided by Iron Mountain. 26. No determination has yet been made that Iron Mountains claims are direct claims

against the Settling Partners or other former attorneys of the Debtor, or, that Iron Mountains claims are not derivative of the estates or Trustees claims against the Settling Partners. 27. If the Settlement Agreements are approved by this Court and the Proposed Order

is approved and signed without modification to account for Iron Mountains claims and concerns, Iron Mountain may be prevented from recovering payment from the parties this Court may ultimately determine are responsible for storage and secure destruction of the Debtors client files.

28.

The proposed Settlement Agreements should, therefore, not be approved by this

Court unless and until Iron Mountains claims are carved out and not subject to the releases or the bar on third party claims contained in the Proposed Order. CONCLUSION 29. For the foregoing reasons, Iron Mountain objects to the Motion and the proposed

Settlement Agreements with respect to the proposed language contained in the releases and the Proposed Order, which seeks to bar Case Parties from commencing or continuing any and all past, present or future claims or causes of action and from asserting any and all allegations of liability or damages, against the Settling Partners based on, relating to, or arising from Released Claims or such Case Partys claims against the Debtor. Motion at 24. Iron Mountain requests that the proposed releases and the Proposed Order be modified. Iron Mountain requests that none of the releases and settlements embodied in the Settlement Agreements or the Proposed Order approving the Settlement Agreements shall affect or bar Iron Mountain Information Management, Inc.s claims against the Settling Partners or other former Thelen attorneys for storage and secure destruction of the Debtors client files deposited at Iron Mountain. 30. The submission of this Limited Objection is without prejudice to any other rights

of Iron Mountain. 31. Iron Mountain reserves its rights to amend this Limited Objection and make

further objections as necessary and proper.

WHEREFORE, Iron Mountain Information Management, Inc., respectfully requests that the Trustee and the Settling Partners modify the proposed language in the releases and the Proposed Order to reflect that none of the releases and settlements embodied in the Settlement Agreements or the Proposed Order approving the Settlement Agreements shall affect or bar Iron Mountain Information Management, Inc.s claims against the Settling Partners or other former Thelen attorneys for storage and secure destruction of the Debtors client files deposited at Iron Mountain, together with such other and further relief that may be just and proper. Dated: New York, New York October 13, 2011 BARTLETT HACKETT FEINBERG P.C. Attorneys for Iron Mountain Information Management, Inc.

By:

/s/ Hale Yazicioglu HALE YAZICIOGLU FRANK F. McGINN 155 Federal Street, 9th Floor Boston, Massachusetts 02110 Tel: (617) 422-0200 Fax: (617) 896-6275

To:

Yann Geron, Esq. Fox Rothschild LLP Attorneys for Yann Geron, Chapter 7 Trustee 100 Park Avenue Suite 1500 New York, New York 10017

Tracy L. Klestadt, Esq. Sean Southard, Esq. Klestadt & Winters, LLP Attorneys for the Settling Partners 570 Seventh Avenue 17th Floor New York, New York 10018 10

Susan D. Golden, Esq. Office of the United States Trustee 33 Whitehall Street 21st Floor New York, New York 10004

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