U.S. Securities and Exchange Commission v. Crowd Machine, Inc. et al, No. 4:2022cv00076 - Document 31 (N.D. Cal. 2022)
Court Description: ORDER GRANTING 30 STIPULATION Re Docket No. 25 . Reset Deadlines/Hearing: Close of Fact Discovery due by 12/16/2022; Opening Reports due by 2/1/2023; Rebuttal Reports due by 4/26/2023; Close of Expert Discovery due by 5/24/2023; Motion s due by 6/1/2023; Responses due by 7/19/2023; Replies due by 8/2/2023; and Motion Hearing set for 8/24/2023 02:00 PM in Oakland, Courtroom 2, 4th Floor before Judge Haywood S. Gilliam Jr. Signed by Judge Haywood S. Gilliam, Jr. on 9/6/2022. (ndr, COURT STAFF) (Filed on 9/6/2022)
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U.S. Securities and Exchange Commission v. Crowd Machine, Inc. et al 1 2 3 4 5 Doc. 31 ADAM B. GOTTLIEB (New York Bar No. 4399135) gottlieba@sec.gov CHRISTOPHER J. CARNEY (District of Columbia Bar No. 472294) carneyc@sec.gov U.S. SECURITIES AND EXCHANGE COMMISSION 100 F Street, NE Washington, DC 20549 Telephone: (202) 551-8299 (Gottlieb) 6 Attorneys for Plaintiff SECURITIES AND EXCHANGE COMMISSION 7 Appearances of Counsel Continued on Next Page 8 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION 9 10 11 U.S. SECURITIES AND EXCHANGE COMMISSION, 12 Hon. Haywood S. Gilliam, Jr, Plaintiff, 13 v. 14 15 Case No.: 4:22-cv-00076-HSG CROWD MACHINE, INC., METAVINE, INC, and CRAIG DEREL SPROULE, 16 STIPULATION AND JOINT STATEMENT TO REQUEST MODIFICATION OF SCHEDULING ORDER AND EXTENSION OF DEADLINES; ORDER Defendants, 17 18 19 and METAVINE PTY. LTD., 20 Relief Defendant, 21 22 23 24 25 26 27 28 Case No. 4:22-CV-00076-HSG 227842 Stip. & Joint Stmt; Order Dockets.Justia.com 1 2 3 4 5 6 7 8 William A. Delgado (SBN 222666) wdelgado@dtolaw.com Justin T. Goodwin (SBN 278721) jgoodwin@dtolaw.com Alison D. Kehner (Admitted pro hac vice) akehner@dtolaw.com DTO LAW 601 South Figueroa Street, Suite 2130 Los Angeles, CA 90017 Telephone: (213) 335-6999 Facsimile: (213) 335-7802 Attorneys for Defendants CROWD MACHINE, INC., METAVINE, INC., and METAVINE PTY. LTD. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Case No. 4:22-CV-00076-HSG 227842 Stip. & Joint Stmt; Order 1 1. Plaintiff U.S. SECURITIES AND EXCHANGE COMMISSION (“SEC”) 2 and Defendants Crowd Machine, Inc., Metavine, Inc., and Relief Defendant 3 Metavine Pty, LTD (collectively “Crowd Machine entities”), hereby jointly submit 4 the following Stipulation and Joint Statement pursuant to Local Civil Rules 6-1, 6- 5 2, and 7-12, Federal Rule of Civil Procedure 16(b)(4), and paragraph 15 of this 6 Court’s Standing Order seeking modification of the Court’s Scheduling Order (ECF 7 No. 25) to extend the deadlines therein, subject to the Court’s approval, by 8 approximately 90 days. This is the parties’ first joint request for modification of the 9 Scheduling Order. 10 2. On March 23, 2022, the Court issued a Scheduling Order, setting this 11 matter for a final hearing on the amount of disgorgement and penalties owed on 12 May 11, 2023. The Order also set forth interim deadlines for the completion of fact 13 discovery, the exchange of expert reports and discovery, and a briefing schedule for 14 the parties on the SEC’s motion for disgorgement and penalties. Specifically, the 15 Order set the fact-discovery deadline for September 16, 2022. As set forth in the 16 Joint Statement of Good Cause, the parties agree there is good cause to extend the 17 fact-discovery deadline by 90 days. 18 Joint Statement of Good Cause 19 3. Since the Case Management Conference on March 22, 2022, the 20 parties have been working diligently and cooperatively on exchanging fact discovery 21 and conferring on scheduling matters and logistics, as follows: 22 On April 8, 2022, both parties timely served their initial disclosures. 23 On June 24, 2022, Defendants propounded their First Set of 24 Interrogatories and Request for Production of Documents on the SEC. 25 The SEC timely responded to Defendants’ document requests on July 26 25, 2022, and produced the vast majority of the SEC’s investigative file, 27 which consisted of 38,115 documents (128,943 pages). After a one-week 28 Case No. 4:22-CV-00076-HSG 227842 1 Stip. & Joint Stmt; Order] 1 extension due to counsel’s illness, the SEC provided its interrogatory 2 responses on August 1, 2022. 3 On July 8, 2022, the SEC advised that it intended to issue targeted 4 discovery requests concerning specific expenditures relating to 5 Defendant’s initial coin offering (ICO) that was the subject of its 6 investigation. It further advised that it would seek to depose defendant 7 Craig Sproule in his capacity as an officer of the entity Defendants, 8 and, if necessary, also depose a 30(b)(6) company designee. 9 On August 5, 2022, the SEC served its First Set of Interrogatories and 10 Request for Production of Documents to Defendants. By rule, 11 Defendants’ responses are due on September 6, 2022 – 10 days before 12 the fact discovery deadline set for September 16. 13 14 On August 25, the SEC requested dates on which it could depose Mr. Sproule and a 30(b)(6) designee for Defendants. 15 4. At the same time, the parties have engaged in efforts to limit the scope 16 of the issues before the Court, while continuing to discuss the possibility of a 17 negotiated resolution. 18 5. Despite the parties’ diligence and good faith in conducting fact 19 discovery, the parties agree the fact discovery necessary to prepare this matter for 20 motion practice cannot be completed by September 16, 2022, which in turn will 21 impact the remaining deadlines in the case. 22 23 6. The reason additional time is needed is due to several factors, all of which support good cause for extending the deadlines: 24 Defendants’ responses to the SEC’s interrogatories and document requests 25 are due on September 6, 2022, ten days before the current discovery cut- 26 off date. The SEC then will need to review the document production prior 27 to deposing any witnesses. Because Defendants require additional time to 28 produce the requested documents for the reasons set forth below, if the 2 Case No. 4:22-CV-00076-HSG 227842 Stip. & Joint Stmt; Order 1 SEC were to move forward with the depositions before the current fact 2 discovery cut-off date, it would have to do so without the benefit of the 3 documents it has requested. Also, given the logistical difficulties with 4 deposing Mr. Sproule and a company designee (both located in Australia), 5 there is insufficient time to schedule and conduct those depositions under 6 the current schedule. 7 The location of Defendants have presented unavoidable logistical issues. 8 Defendants’ responses to the SEC’s discovery requests have required 9 several meetings between defense counsel and parties in Australia who 10 possess the relevant information and potentially responsive documents. 11 Counsel has met virtually on several occasions with Defendants, but the 12 time difference has presented a limited window in which to meet. 13 (Australia is 14 hours ahead of Eastern Daylight Time and 17 hours 14 ahead of Pacific Daylight Time.) 15 Defendants have also advised the SEC that their accounting software is 16 limited in capacity and that they lack employees and IT services due to 17 Defendants’ financial circumstances. The need for a three-month 18 extension of the fact discovery period, which would similarly delay all 19 subsequent deadlines, is largely driven by the parties’ desire to afford 20 Defendants adequate time to access, download, review, and produce 21 accounting documents, which Defendants contend is a lengthy process. 22 The production of these documents may narrow the areas of dispute 23 regarding the appropriate amount of disgorgement to be awarded the 24 SEC. The parties intend to continue to work together on solutions to 25 potentially reduce the burden and time necessary to gather these records. 26 The SEC’s August 1 document production contains 25,112 unique 27 documents, including documents the SEC obtained during its 28 investigation from third parties, in addition to documents Defendants 3 Case No. 4:22-CV-00076-HSG 227842 Stip. & Joint Stmt; Order 1 produced to the SEC. Because Defendants’ current counsel was not 2 engaged until well after the SEC’s investigation was complete, defense 3 counsel did not previously have the opportunity to review the documents 4 their clients produced during the investigation. 5 7. In light of the foregoing, the parties agree completion of fact discovery 6 is not practicable by September 16 and believe good cause exists to extend the fact 7 discovery deadline by 90 days. They further agree that, because the remaining 8 deadlines are keyed to the close of fact discovery, all subsequent deadlines set forth 9 in the Court’s Scheduling Order should adjourned by an equal amount of time. 10 11 8. The parties agree this Joint Statement is made in good faith and in the interests of judicial economy and is not for the purposes of delay. 12 Based on the foregoing, IT IS STIPULATED AND AGREED, by and between the 13 parties, and their undersigned counsel, that good cause exists for the deadlines set 14 forth in the Scheduling Order to be MODIFIED. The parties have conferred and 15 jointly propose the following modifications to the current deadlines set forth in the 16 Court’s Scheduling Order: 17 Event 18 Parties to exchange Fed. R. Civ. P. 26(a)(1)(A) initial disclosures Close of Fact Discovery re SEC’s request for monetary relief Deadline for SEC to serve initial expert report or updated disclosure under FRCP 26(a)(1)(A)(iii) Deadline for Defendants and Relief Defendant to complete expert discovery re SEC’s initial expert report (if any) and serve any expert report re SEC’s claim for monetary Relief 19 20 21 22 23 24 25 Current Date ECF No. 5 Apr. 8, 2022 Proposed New Date n/a Sep. 16, 2022 Dec. 16, 2022 Oct. 14, 2022 Feb. 1, 20231 Dec. 1, 2022 Mar. 15, 2023 26 27 28 1 This proposed schedule extends the period between the close of fact discovery and the deadline for the SEC to serve its expert report by two weeks to account for the interim holidays. Otherwise, the time between events remains the same. Case No. 4:22-CV-00076-HSG 227842 4 Stip. & Joint Stmt [with Proposed Order] 1 2 3 4 5 Deadline for SEC to complete expert discovery re: Defendant and Relief Defendant’s expert report (if any) and serve any rebuttal expert report Jan. 12, 2023 Apr. 26, 2023 Deadline for Defendants and Relief Defendant to complete expert discovery re SEC’s rebuttal expert report Feb. 10, 2023 May 24, 2023 Deadline for SEC to file motion for monetary relief Mar. 10, 2023 June 21, 2023 Deadline for Defendants and Relief Defendant to file response to SEC’s motion for monetary relief Apr. 7, 2023 July 19, 2023 Deadline for SEC to file reply in support of motion for monetary relief Apr. 21, 2023 Aug. 2, 2023 Hearing on SEC’s motion for monetary relief May 11, 2023, at 2:00 p.m. Aug. 24, 2023, at 2:00 p.m. 6 7 8 9 10 11 12 13 14 15 Dated: September 2, 2022 By. __/s/ Adam B. Gottlieb___________________ ADAM B. GOTTLIEB CHRISTOPHER J. CARNEY Attorneys for Plaintiff U.S. SECURITIES AND EXCHANGE COMMISSION 16 17 18 19 Dated: September 2, 2022 20 By: /s/ Justin T. Goodwin WILLIAM DELGADO JUSTIN T. GOODWIN ALISON KEHNER Attorneys for Defendant CROWD MACHINE, INC., METAVINE, INC., and METAVINE PTY., LTD. 21 22 23 24 25 26 27 PURSUANT TO STIPULATION, IT IS SO ORDERED. DATED: 9/6/2022 28 Case No. 4:22-CV-00076-HSG 227842 ___________________________________ HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE 5 Stip. & Joint Stmt; Order
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