Francis v. Mona, Jr. et al, No. 2:2018cv02284 - Document 53 (D. Nev. 2021)
Court Description: ORDER granting 52 Stipulation regarding Stay. Case will be stayed until 10/8/2021. Signed by Judge Gloria M. Navarro on 8/23/2021. (Copies have been distributed pursuant to the NEF - DRS)
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Francis v. Mona, Jr. et al Doc. 53 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 1 of 9 1 2 3 4 5 6 Jeffery A. Garofalo (NV Bar No. 7345) E-mail: jeff.garofalo@procopio.com S. Todd Neal (CA Bar No. 174827 – Pro Hac Vice) E-mail: todd.neal@procopio.com Eric A. Plourde (CA Bar No. 320451 - Pro Hac Vice) E-mail: eric.plourde@procopio.com PROCOPIO, CORY, HARGREAVES & SAVITCH LLP 10000 W. Charleston Boulevard, Suite 140 Las Vegas, NV 89135 Telephone: 702.216.2684 7 8 UNITED STATES DISTRICT COURT 9 DISTRICT OF NEVADA 10 11 DAVID FRANCIS, derivatively on behalf of CV SCIENCES, Inc. formerly known as, CANNAVEST CORP., 12 v. 14 MICHAEL MONA JR., MICHAEL MONA III, JOSEPH D. DOWLING, BART P. MACKAY, LARRY RASKIN, JAMES MCNULTY, GARY SLIGAR, STEPHEN M. SCHMITZ and EDWARD A. WILSON, 16 Judge: 17 and 19 CV SCIENCES, INC., formerly known as, CANNAVEST CORP., 21 Hon. Gloria M. Navarro Complaint Filed: Trial Date: November 30, 2018 Not Set Defendants, 18 20 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION Plaintiff, 13 15 Case No. 2:18-cv-02284-GMN-NJK Nominal Defendant. 22 23 WHEREAS Plaintiff David Francis (“Plaintiff”) brought the above-captioned action (the 24 “Action”) derivatively and on behalf of CV Sciences, Inc. formerly known as CannaVEST Corp. 25 (“CV Sciences” or the “Company”), alleging violations breaches of fiduciary duty against certain of 26 the Company’s current and former officers and directors (collectively with CV Sciences, 27 28 1 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION 120416-00000016/5353096.2 CASE NO. 2:18-CV-02284-GMN-NJK Dockets.Justia.com Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 2 of 9 1 “Defendants”) (Plaintiff and Defendants are collectively referred to herein as the “Parties”); 2 WHEREAS, a related putative class action case entitled In re CV Sciences, Inc., Securities 3 Litigation, Case No. 2:18-cv-01602-JAD-PAL is pending in the United States District Court, District 4 of Nevada (the “Nevada Securities Action”); 5 WHEREAS, a related putative class action case entitled In re CannaVEST Corp. Securities 6 Litigation, Case No. 14-cv-02900 was previously pending in the United States District Court, 7 Southern District of New York (the “New York Securities Action”). The Nevada Securities Action 8 and the New York Securities Action shall be collectively referred to herein as the “Federal Securities 9 Actions;” 10 WHEREAS, on February 19, 2019, the Parties filed a Stipulation Concerning a Stay of the 11 Action, which proposed to conditionally stay the Action until the close of fact discovery in the 12 Nevada Securities Action or the New York Securities Action. ECF No. 16. 13 14 15 16 WHEREAS, the parties in the New York Securities Action filed a stipulation of voluntary dismissal, which was so ordered on July 2, 2019; WHEREAS, the fact discovery period in the Nevada Securities Action was extended to May 24, 2021, after which the Parties previously agreed to a stay of this Action until August 11, 2021; 17 WHEREAS, the fact discovery period in the Nevada Securities Action was recently extended 18 and will conclude 90 days after the court in the Federal Securities Action rules on a pending motion 19 to compel in that proceeding; 20 21 WHEREAS, the date of the close of fact discovery in the Federal Securities Action remains ambiguous, and the Parties do not wish at this time to extend the stay in this Action indefinitely; 22 WHEREAS, the Parties agree that the most efficient and effective approach at this time is to 23 stipulate to an additional extension of the stay for a period of approximately 6-7 additional weeks 24 rather than extend the stay to the close of fact discovery in the Federal Securities Action; 25 26 WHEREAS, the Parties have met and conferred concerning the most efficient manner in which to proceed with this Action brought on behalf of CV Sciences; 27 WHEREAS, the Parties anticipate the possibility of holdings settlement discussions and 28 intend to use the additional time to explore such possibility further, including the furnishing of certain 2 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 3 of 9 1 information which the Parties have agreed to exchange by the end of the stay requested herein; and 2 WHEREAS, the Parties agree that the interests of efficient and effective case management 3 would best be served by (1) staying the Action until October 8, 2021, and (2) sharing all discovery 4 generated in the Nevada Securities Action with Plaintiff in the Action, absent any documents marked 5 confidential by the parties in the Federal Securities Actions; 6 NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by Plaintiff and 7 Defendants, through their undersigned counsel of record and subject to the approval of the Court, as 8 follows: 9 1. All proceedings in this Action and any related derivative actions in this Court shall 10 be stayed until October 8, 2021, the date that the stay will be over, but any of the Parties to this 11 Stipulation can request that the Court lift the voluntary stay upon good cause shown by giving the 12 other party a ten (10) day notice that they believe that good cause exists to lift the voluntary stay of 13 the Action and thereafter bringing the matter to the Court’s attention and requesting that the stay of 14 the Action be lifted. 15 2. Within thirty (30) days after October 8, the date the stay will be over, the Parties in 16 this Action will meet and confer in good faith to determine a schedule for the Action going forward, 17 and will submit a proposed scheduling stipulation for this Court’s review and approval, which shall 18 include a deadline for Defendants to respond to Plaintiff’s operative complaint. 19 3. Defendants shall make available to Plaintiff, subject to the entry of an appropriate 20 protective order and the other provisions of this Stipulation: (i) copies of all documents and written 21 responses to discovery requests that were or are produced to the plaintiffs in each of the Federal 22 Securities Actions in the form and manner in which such documents were or are produced to the 23 plaintiffs in the Federal Securities Actions; (ii) all written agreements regarding the scope of 24 discovery that was produced or to be produced by defendants in each of the Federal Securities 25 Actions; and (iii) all deposition transcripts that were or are generated in each of the Federal Securities 26 Actions. This Stipulation is intended to facilitate coordination and to avoid, to the extent practicable, 27 duplicative discovery. Defendants will provide the materials set forth herein to Plaintiff within ten 28 (10) business days of providing them to the respective plaintiffs in the Federal Securities Actions in 3 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 4 of 9 1 the case of (i) and (ii), and within ten (10) business days of receiving the final transcript in the case 2 of (iii). 3 4. Plaintiff agrees that, prior to a finding at the pleading stage that Plaintiff has 4 adequately alleged demand futility, documents and information obtained pursuant to paragraph 3 of 5 this Stipulation shall not be used to supplement Plaintiff’s allegations of demand futility absent an 6 order of the Court permitting such use. Plaintiff agrees not to use the existence of paragraph 3 of this 7 Stipulation, the substance of any documents or discovery produced pursuant to paragraph 3 of this 8 Stipulation, and/or any documents or information obtained or developed as a result of any documents 9 or discovery produced pursuant to paragraph 3 of this Stipulation as support for any argument that 10 11 Plaintiff is otherwise entitled to use the documents to supplement allegations of demand futility. 5. Notwithstanding the stipulated stay, Plaintiff shall be permitted to file an amended 12 complaint during the pendency of the stay, subject to the provisions in paragraph 4 above. Defendants 13 shall be under no obligation to respond to any complaint while the stay is in effect. 14 6. If Defendants engage in mediation in the Nevada Securities Action, Defendants agree 15 to provide Plaintiff with reasonable advance notice of the mediation and shall invite Plaintiff to 16 participate in the mediation subject to the consent of the plaintiffs in the Nevada Securities Action. 17 In the event that such consent is not obtained, Defendants will mediate with Plaintiff separately at or 18 about the same time. 19 7. If Defendants engage in any settlement conferences or mediations in any shareholder 20 derivative actions initiated on behalf of CV Sciences based on any of the same or similar set of facts 21 as those alleged in this Action, including, but not limited to, Ruth v. Mona, Jr., et al., Case No. 2:15- 22 cv-00481-RFB-VCB, pending in the United States District Court, District of Nevada as well as 23 Depoti v. Dowling, et al., Case No. A-18-782513-C, pending in the District Court, Clark County 24 Nevada, Radcliffe v. Dowling, et al., Case No. A-19-794377-B, pending in the District Court, Clark 25 County Nevada, Tarangelo v. Dowling, et al., Case No. A-19-789153-B, pending in the District 26 Court, Clark County Nevada, Menna v. Dowling, et al., Case No. 202100019613 pending in 27 California Superior Court, San Diego Division, Berry v. Dowling, et al., Case No. 3:20-cv-01072- 28 AJB-DEB, pending in the United States District Court for the Southern District of California 4 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 5 of 9 1 (“Related Derivative Actions”), Defendants agree to provide Plaintiff with reasonable advance notice 2 of such settlement conferences or mediations and shall invite Plaintiff to participate in such 3 settlement conferences or mediations. 8. 4 If Defendants provide or provided documents to the plaintiffs in either or both of the 5 Federal Securities Actions in connection with a mediation or settlement discussions, Defendants 6 agree to promptly provide the same documents to Plaintiff in this Action on the same terms they are 7 provided to the plaintiffs in the Federal Securities Actions, subject to the provisions of paragraph 4 8 above. 9 9. Counsel for Defendants will promptly notify Plaintiff’s counsel if any Defendants are 10 served or were served with any other Related Derivative Actions, and Plaintiff’s counsel shall notify 11 Defendants’ counsel in the event Plaintiff’s counsel becomes aware of any other Related Derivative 12 Actions. 13 10. In the event that any Related Derivative Action is not stayed while this case is stayed 14 or in the event that any of the parties to any Related Derivative Action execute an agreement 15 pertaining to the settlement of that Related Derivative Action without the Parties to this Action also 16 executing an agreement pertaining to the settlement of this Action, then Plaintiff may lift the stay 17 upon providing fifteen (15) days’ notice via email to Defendants’ counsel. 18 11. In the event that any documents are or were produced to any other CV Sciences 19 shareholder who has filed a shareholder derivative action on behalf of CV Sciences, or demanded 20 the inspection of books and records of CV Sciences, based on any of the same or similar set of facts 21 as those alleged in this Action, Defendants agree to promptly produce those documents to Plaintiff. 22 12. The provision of discovery materials pursuant to this Stipulation will not constitute a 23 waiver of, or in any way limit, Defendants’ right to file a motion to dismiss, or other appropriate 24 challenge, arguing that Plaintiff fails to adequately plead demand futility or make a pre-suit demand, 25 or Defendants’ right to argue that Plaintiff is not entitled to conduct formal discovery prior to 26 establishing that he has have adequately alleged standing. 27 28 13. By entering into this Stipulation, the Parties do not waive any rights not specifically addressed herein, including the right to pursue and/or oppose formal discovery and/or file any motion 5 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 6 of 9 1 any party deems appropriate once this case is no longer temporarily stayed. 2 IT IS SO STIPULATED. 3 4 LEVERTY & ASSOCIATES LAW CHTD. PROCOPIO, CORY, HARGREAVES & SAVITCH, LLP /s/ Patrick R. Leverty, Esq. Patrick R. Leverty (Nev. Bar 8840) Reno Gould House 832 Willow Street Reno, NV 89502 Telephone: 775.322.6636 Facsimile: 775.322.3953 pat@levertylaw.com /s/ Jeffery A. Garofalo, Esq. JEFFERY A. GAROFALO (NV Bar No. 7345) S. TODD NEAL (Pro Hac Vice) ERIC A. PLOURDE (Pro Hac Vice) 10000 W. Charleston Boulevard, Suite 140 Las Vegas, NV 89135 Telephone: 702.216.2684 Facsimile: 619.788.5500 Las Vegas, NV 89169 5 6 7 8 9 10 11 12 13 and 14 15 16 17 18 THE BROWN LAW FIRM, P.C. Timothy Brown (Pro Hac Vice) 767 Third Avenue, Suite 2501 New York, NY 10017 Telephone: 516.922.5427 Facsimile: 516.344.6204 tbrown@thebrownlawfirm.net Attorneys for Defendants, CV SCIENCES, INC., MICHAEL MONA JR., MICHAEL MONA III, JOSEPH D. DOWLING, JAMES MCNULTY, GARY SLIGAR, STEPHEN M. SCHMITZ, EDWARD A WILSON, BART P MACKAY, and LARRY RASKIN 19 20 Counsel for Plaintiff 21 22 23 24 25 26 27 28 6 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION 120416-00000016/5353096.2 CASE NO. 2:18-CV-02284-GMN-NJK Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 7 of 9 1 PURSUANT TO THE PARTIES’ STIPULATION, IT IS HEREBY ORDERED THAT: 1. 2 All proceedings in this Action and any related derivative actions in this Court shall 3 be stayed until October 8, 2021, the date that the stay will be over, but any of the Parties to this 4 Stipulation can request that the Court lift the voluntary stay upon good cause shown by giving the 5 other party a ten (10) day notice that they believe that good cause exists to lift the voluntary stay of 6 the Action and thereafter bringing the matter to the Court’s attention and requesting that the stay of 7 the Action be lifted. 2. 8 Within thirty (30) days after October 8, 2021, the date that the stay will be over, the 9 Parties in this Action will meet and confer in good faith to determine a schedule for the Action going 10 forward, and will submit a proposed scheduling stipulation for this Court’s review and approval, 11 which shall include a deadline for Defendants to respond to Plaintiff’s operative complaint. 3. 12 Defendants shall make available to Plaintiff, subject to the entry of an appropriate 13 protective order and the other provisions of this Stipulation: (i) copies of all documents and written 14 responses to discovery requests that were or are produced to the plaintiffs in each of the Federal 15 Securities Actions in the form and manner in which such documents were or are produced to the 16 plaintiffs in the Federal Securities Actions; (ii) all written agreements regarding the scope of 17 discovery that was produced or to be produced by defendants in each of the Federal Securities 18 Actions; and (iii) all deposition transcripts that was or is generated in each of the Federal Securities 19 Actions. This Stipulation is intended to facilitate coordination and to avoid, to the extent practicable, 20 duplicative discovery. Defendants will provide the materials set forth herein to Plaintiff within ten 21 (10) business days of providing them to the respective plaintiffs in the Federal Securities Actions in 22 the case of (i) and (ii), and within ten (10) business days of receiving the final transcript in the case 23 of (iii). 24 4. Plaintiff agrees that, prior to a finding at the pleading stage that Plaintiff has 25 adequately alleged demand futility, documents and information obtained pursuant to paragraph 3 of 26 this Stipulation shall not be used to supplement Plaintiff’s allegations of demand futility absent an 27 order of the Court permitting such use. Plaintiff agrees not to use the existence of paragraph 3 of this 28 Stipulation, the substance of any documents or discovery produced pursuant to paragraph 3 of this 7 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 8 of 9 1 Stipulation, and/or any documents or information obtained or developed as a result of any documents 2 or discovery produced pursuant to paragraph 3 of this Stipulation as support for any argument that 3 Plaintiff is otherwise entitled to use the documents to supplement allegations of demand futility. 4 5. Notwithstanding the stipulated stay, Plaintiff shall be permitted to file an amended 5 complaint during the pendency of the stay, subject to the provisions in paragraph 4 above. Defendants 6 shall be under no obligation to respond to any complaint while the stay is in effect. 7 6. If Defendants engage in mediation in the Nevada Securities Action, Defendants agree 8 to provide Plaintiff with reasonable advance notice of the mediation and shall invite Plaintiff to 9 participate in the mediation subject to the consent of the plaintiffs in the Nevada Securities Action. 10 In the event that such consent is not obtained, Defendants will mediate with Plaintiff separately at or 11 about the same time. 12 7. If Defendants engage in any settlement conferences or mediations in any shareholder 13 derivative actions initiated on behalf of CV Sciences based on any of the same or similar set of facts 14 as those alleged in this Action, including, but not limited to, Ruth v. Mona, Jr., et al., Case No. 2:15- 15 cv-00481-RFB-VCB, pending in the United States District Court, District of Nevada as well as 16 Depoti v. Dowling, et al., Case No. A-18-782513-C, pending in the District Court, Clark County 17 Nevada, Radcliffe v. Dowling, et al., Case No. A-19-794377-B, pending in the District Court, Clark 18 County Nevada, Tarangelo v. Dowling, et al., Case No. A-19-789153-B, pending in the District 19 Court, Clark County Nevada, Menna v. Dowling, et al., Case No. 202100019613 pending in 20 California Superior Court, San Diego Division, Berry v. Dowling, et al., Case No. 3:20-cv-01072- 21 AJB-DEB, pending in the United States District Court for the Southern District of California 22 (“Related Derivative Actions”), Defendants agree to provide Plaintiff with reasonable advance notice 23 of such settlement conferences or mediations and shall invite Plaintiff to participate in such 24 settlement conferences or mediations. 25 8. If Defendants provide or provided documents to the plaintiffs in either or both of the 26 Federal Securities Actions in connection with a mediation or settlement discussions, Defendants 27 agree to promptly provide the same documents to Plaintiff in this Action on the same terms they are 28 provided to the plaintiffs in the Federal Securities Actions, subject to the provisions of paragraph 4 8 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION CASE NO. 2:18-CV-02284-GMN-NJK 120416-00000016/5353096.2 Case 2:18-cv-02284-GMN-NJK Document 53 Filed 08/23/21 Page 9 of 9 1 2 above. 9. Counsel for Defendants will promptly notify Plaintiff’s counsel if any Defendants are 3 served or were served with any other Related Derivative Actions, and Plaintiff’s counsel shall notify 4 Defendants’ counsel in the event Plaintiff’s counsel becomes aware of any other Related Derivative 5 Actions. 6 10. In the event that any Related Derivative Action is not stayed while this case is stayed 7 or in the event that any of the parties to any Related Derivative Action execute an agreement 8 pertaining to the settlement of that Related Derivative Action without the Parties to this Action also 9 executing an agreement pertaining to the settlement of this Action, then Plaintiff may lift the stay 10 11 upon providing fifteen (15) days’ notice via email to Defendants’ counsel. 11. In the event that any documents are or were produced to any other CV Sciences 12 shareholder who has filed a shareholder derivative action on behalf of CV Sciences, or demanded 13 the inspection of books and records of CV Sciences, based on any of the same or similar set of facts 14 as those alleged in this Action, Defendants agree to promptly produce those documents to Plaintiff. 15 12. The provision of discovery materials pursuant to this Stipulation will not constitute a 16 waiver of, or in any way limit, Defendants’ right to file a motion to dismiss, or other appropriate 17 challenge, arguing that Plaintiff fails to adequately plead demand futility or make a pre-suit demand, 18 or Defendants’ right to argue that Plaintiff is not entitled to conduct formal discovery prior to 19 establishing that he has have adequately alleged standing. 20 13. By entering into this Stipulation, the Parties do not waive any rights not specifically 21 addressed herein, including the right to pursue and/or oppose formal discovery and/or file any motion 22 any party deems appropriate once this case is no longer temporarily stayed. 23 24 IT IS SO ORDERED. 23 day of August, 2021. Dated this ____ 25 26 27 28 ___________________________ Gloria M. Navarro, District Judge UNITED STATES DISTRICT COURT 9 STIPULATION AND [PROPOSED] ORDER CONCERNING A STAY OF THE ACTION 120416-00000016/5353096.2 CASE NO. 2:18-CV-02284-GMN-NJK
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