Hiscox Syndicates Limited v. Paper Bird, Inc. et al, No. 4:2023cv04033 - Document 72 (N.D. Cal. 2023)
Court Description: ORDER GRANTING 67 STIPULATION. Hiscox Syndicates Limited (a Private Limited Company, formed in England) Terminated. Signed by Judge Haywood S. Gilliam, Jr. on 12/21/2023. (ndr, COURT STAFF) (Filed on 12/21/2023)
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Hiscox Syndicates Limited v. Paper Bird, Inc. et al 1 2 3 4 5 6 7 8 9 10 11 Doc. 72 KATHERINE CONNOLLY (SBN 313640) katie.connolly@nortonrosefulbright.com NORTON ROSE FULBRIGHT US LLP 555 California Street, Suite 3300 San Francisco, CA 94140 Tel. (628) 231-6800 DANIEL MCNEEL LANE, JR. (Pro Hac Vice) neel.lane@nortonrosefulbright.com NORTON ROSE FULBRIGHT US LLP 111 W. Houston Street, Suite 1800 San Antonio, TX 78205 Tel. (210) 224-5575 JEANNIE NGUYEN (Pro Hac Vice) jeannie.nguyen@nortonrosefulbright.com NORTON ROSE FULBRIGHT US LLP 1301 McKinney, Suite 5100 Houston, Texas 77010-3095 Tel. (713) 651-5151 Attorneys for Plaintiff HISCOX SYNDICATES LIMITED 12 UNITED STATES DISTRICT COURT 13 NORTHERN DISTRICT OF CALIFORNIA 14 HISCOX SYNDICATES LIMITED, 15 a Private Limited Company formed in England, 16 Plaintiff, 17 vs. 18 SAMUEL BANKMAN-FRIED, NISHAD SINGH, RAMNIK ARORA, CLAIRE WATANABE, HOWARD ANDREW FISHER, AMY WU, ZIXIAO (GARY) WANG, RYAN SALAME, CAN SUN, CONSTANCE ZHE WANG, LUK WAI (JEN) CHAN, NATALIE TIEN, ZANE TACKETT, ZHONGYUAN (DAVID) MA, DANIEL FRIEDBERG, ROBIN MATZKE, PATRICK GRUHN, ROSS RHEINGANS-YOO, NICHOLAS BECKSTEAD, and JONATHAN CHEESMAN, 19 20 21 22 23 24 25 Case No. 4:23-cv-04033-HSG STIPULATION RESOLVING INTERPLEADER ACTION Complaint Filed: First Am. Compl. 08/09/2023 08/10/2023 Defendants. 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER PAGE 1 STIPULATION RESOLVING INTERPLEADER ACTION Dockets.Justia.com 1 Pursuant to Rule 7-1 of the Civil Local Rules of the Unites States District Court, Northern 2 District of California, Plaintiff Hiscox Syndicates Limited (“Plaintiff” or “Hiscox”) and 3 Defendants Samuel Bankman-Fried, Nishad Singh, Ramnik Arora, Claire Watanabe, Amy Wu, 4 Zixiao (Gary) Wang, Ryan Salame, Can Sun, Constance Zhe Wang, Luk Wai (Jen) Chan, Natalie 5 Tien, Zane Tackett, Daniel Friedberg, Robin Matzke, Patrick Gruhn, Ross Rheingans-Yoo, 6 Nicholas Beckstead, and Jonathan Cheesman (collectively the “Defendants”, together the 7 “Parties”) 1 hereby stipulate and request that the $5,000,000.00 limits of the Hiscox insurance 8 policy that is the subject of this interpleader action (the “Hiscox Policy”) deposited into the 9 Registry of the Court (“Interpleader Funds”) shall be disbursed pursuant to the distribution plan 10 set forth below, and Plaintiff’s requests for interpleader relief in connection with the Excess 11 Insurance Policy No. B0146ERINT2201008 issued to Paper Bird Inc. (the “Hiscox Policy”) be 12 granted. 13 WHEREAS Plaintiff filed this interpleader action on August 9, 2023 (ECF No. 1); 14 WHEREAS Plaintiff filed an amended complaint (ECF No. 7) on August 10, 2023, against 15 Defendants, who were the known individual insureds with a potential interest in the proceeds of 16 the Hiscox Policy as of the time of filing; 17 WHEREAS the Hiscox Policy is the third-layer excess liability policy in Paper Bird Inc.’s 18 $20 million tower of directors and officers liability insurance, and provides a $5 million limit of 19 liability in excess of $15 million in aggregate limits of underlying insurance comprising of a 20 primary policy issued by Certain Underwriters at Lloyd’s, London, a first-layer excess policy 21 issued by QBE Insurance Corporation (“QBE”), and a second-layer excess policy issued by 22 Continental Casualty Company (“CNA”), each with limits of $5 million; 23 WHEREAS QBE exhausted its policy limits in partial payment of defense costs incurred 24 through April 2023 and CNA subsequently initiated mediation to attempt a global resolution of 25 CNA’s and Hiscox’s layers; 26 27 28 1 The Parties to this stipulation do not include Defendant Howard Andrew Fisher, who has been dismissed from this action, and Defendant Zhongyuan (David) Ma, whose current whereabouts and contact information are unknown. DOCUMENT PREPARED ON RECYCLED PAPER PAGE 2 STIPULATION RESOLVING INTERPLEADER ACTION 1 WHEREAS the amount of defense costs submitted for payment by Defendants and 2 determined to be covered at the time of mediation exceeded the combined limits of CNA’s and 3 Hiscox’s layers; 4 WHEREAS Hiscox maintains that it did not and does not take a position as to an 5 appropriate allocation among insureds because Hiscox has stated that it disclaims any interest in 6 the proceeds; 7 WHEREAS, following two formal mediation sessions and substantial efforts by the 8 mediator and mediation participants over the course of several weeks, a tentative global resolution 9 was reached (see Declaration of David M. Murphy) and an agreement regarding the proposed 10 resolution of this interpleader action was fully executed on November 22, 2023 (the “Settlement 11 Agreement”); 12 WHEREAS, as noted in the mediator’s declaration, the mediation process was extremely 13 complex and hard fought, and in the mediator’s professional opinion that the proposed distribution 14 plan is “the best obtainable consensual resolution among the Participating Claimants, taking into 15 consideration all of the costs, uncertainties, risks, and delay of further litigation” (see Declaration 16 of David M. Murphy); 17 18 19 20 WHEREAS on November 22, 2023, Hiscox filed a Stipulation and Proposed Order for Stay and Deposit of Interpleader Funds (ECF No. 59); WHEREAS on November 28, 2023, the Court entered an Order Directing Clerk to Accept Deposit of Interpleader Funds (ECF No. 61); 21 WHEREAS the Interpleader Funds have been deposited into the Registry of the Court; 22 WHEREAS on November 30, 2023, Hiscox filed an Administrative Motion for Order 23 Resolving Interpleader Action (ECF No. 62) (the “Administrative Motion”), seeking entry of a 24 Proposed Approval Order to resolve this action pursuant to the Parties’ agreement; 25 WHEREAS on December 5, 2023, the Court issued an Order stating that “[t]he Court does 26 not take issue with the mediation outcome or the substance of the proposed order, but is of the 27 view that clarity would be best served by presenting the agreement differently” (ECF No. 64); 28 WHEREAS the December 5, 2023, Order terminated the Administrative Motion and DOCUMENT PREPARED ON RECYCLED PAPER PAGE 3 STIPULATION RESOLVING INTERPLEADER ACTION 1 directed Hiscox to file (1) “a stipulation agreeing to the proposed resolution of the interpleader 2 action as to the settling parties identified in the Proposed Approval Order” and (2) “an 3 administrative motion seeking resolution of the interpleader action as to Defendant David Ma, who 4 appears to be the only Defendant from whom a stipulation cannot reasonably be obtained”; 5 WHEREAS Hiscox will separately file an administrative motion concerning David Ma; 6 WHEREAS pursuant to the December 5, 2023, Order, the Parties enter into this stipulation, 7 which (1) sets forth the agreed-upon distribution of the Interpleader Funds under the Settlement 8 Agreement, and (2) reserves a specific dollar amount of the Interpleader Funds and sets forth a 9 procedure for disbursement to those persons potentially insured under the Hiscox Policy who were 10 unable to participate in the mediation process; WHEREAS Local Rule 7-1 provides that parties may present a request to the Court for an 11 12 order by stipulation pursuant to Local Rule 7-12; WHEREAS the Parties agree that entering this stipulation does not constitute a general 13 14 appearance by Defendants in this litigation; and 15 WHEREAS if this stipulation is not “So Ordered” by the Court, the stipulation shall be 16 null, void, and of no force and effect, the Parties shall be placed in the same position as if this 17 stipulation had not been entered, and nothing in this stipulation shall constitute an admission by 18 any Party or prejudice any Party’s position in litigation; WHEREFORE the Parties stipulate that this Court enter the relief requested below. 19 20 21 I. Disbursements to the Pro Rata Claimants 1. The sum of $4,375,000.00 of the Interpleader Funds deposited into the Registry of 22 the Court shall be disbursed for reimbursement of defense costs incurred by each the following 23 individual claimants (“Pro Rata Claimants”) in the respective amounts set forth in the payment 24 schedule, filed under seal as Exhibit A to this Stipulation Resolving Interpleader Action (the 25 “Payment Schedule”): 26 a. Samuel Bankman-Fried 27 b. Nishad Singh 28 c. Zixiao (Gary) Wang DOCUMENT PREPARED ON RECYCLED PAPER PAGE 4 STIPULATION RESOLVING INTERPLEADER ACTION 1 d. Amy Wu 2 e. Ramnik Arora 3 f. Claire Watanabe 4 g. Ryan Salame 5 h. Can Sun 6 i. Constance Zhe Wang 7 j. Luk Wai (Jen) Chan 8 k. Natalie Tien 9 l. Zane Tackett 10 m. Tristan Yver* 11 n. Armani Ferrante* 12 o. Claire Zhang* 13 p. Jonathan Cheesman 14 q. Patrick Gruhn and Robin Matzke 15 r. Nicholas Beckstead 16 II. Disbursement to Daniel Friedberg 2. 17 The sum of $225,000.00 of the Interpleader Funds deposited into the Registry of 18 the Court shall be disbursed to Daniel Friedberg. 19 III. The WBR Set Aside 3. 20 The amount of $200,000.00 (the “WBR Set Aside”) shall be reserved for 21 reimbursement of defense costs incurred by Defendants Claire Watanabe, Nicholas Beckstead, and 22 Ross Rheingans-Yoo (“WBR Claimants”), each of whom may seek up to one-third, or $66,666.67 23 of the WBR Set Aside. 4. 24 The WBR Claimants shall make requests for distribution of the WBR Set Aside by 25 letter to the Court filed on the docket and attaching summary invoices for the Court’s review. 26 Upon consideration of any request by any of the WBR Claimants, together with any additional 27 * 28 Tristan Yver, Armani Ferrante, and Claire Zhang were not named as defendants in the First Amended Complaint for Interpleader. DOCUMENT PREPARED ON RECYCLED PAPER PAGE 5 STIPULATION RESOLVING INTERPLEADER ACTION 1 information requested by the Court (including in camera submission of complete invoices) to 2 establish that the claimant is entitled to the requested payment from the Interpleader Funds, the 3 Court shall order that such amounts be paid from the Registry of the Court. 5. 4 Remaining amounts of the WBR Set Aside that have not been disbursed to the 5 WBR Claimants as of one year after the date of entry of this stipulation shall be distributed from 6 the Registry of the Court to all of the Pro Rata Claimants on a pro rata basis in accordance with 7 the percentages set forth in the Payment Schedule. 8 IV. The Future Claimant Set Aside 6. 9 The amount of $200,000.00 (the “Future Claimant Set Aside”) shall be reserved for 10 reimbursement of defense costs incurred by the WBR Claimants, each of whom may seek up to 11 one-sixth, or $33,333.33 of the Future Claimant Set Aside, and any other claimants who did not 12 participate in mediation (“Future Claimants”). Amounts of the Future Claimant Set Aside that are 13 not paid to the WBR Claimants shall be available to the Future Claimants. 7. 14 The WBR Claimants and Future Claimants shall make requests for distribution of 15 the Future Claimant Set Aside by letter to the Court filed on the docket and attaching summary 16 invoices for the Court’s review. Upon consideration of any request by any of the WBR Claimants 17 or Future Claimants, together with any additional information requested by the Court (including 18 in camera submission of complete invoices) to establish that the claimant is entitled to the 19 requested payment from the Interpleader Funds, the Court shall order that such amounts be paid 20 from the Registry of the Court. 8. 21 Remaining amounts of the Future Claimant Set Aside that have not been disbursed 22 to the WBR Claimants and Future Claimants as of one year after the date of entry of this stipulation 23 shall be distributed from the Registry of the Court to all of the Pro Rata Claimants on a pro rata 24 basis in accordance with the percentage set forth in the Payment Schedule. 25 V. 26 27 28 Interpleader Relief Under 28 U.S.C. § 1335 and Federal Rule of Civil Procedure 22 9. Plaintiff, a disinterested stakeholder, is discharged from further liability in connection with the limits of the Hiscox Policy. 10. Plaintiff is dismissed with prejudice from this interpleader action. DOCUMENT PREPARED ON RECYCLED PAPER PAGE 6 STIPULATION RESOLVING INTERPLEADER ACTION 1 2 3 11. No further litigation shall be brought against Hiscox in connection with coverage under the Hiscox Policy. 12. All claims related to the Hiscox Policy shall be litigated in this interpleader action. 4 5 Dated: December 20, 2023 NORTON ROSE FULBRIGHT US LLP By: 6 7 /s/ Daniel McNeel Lane, Jr. Daniel McNeel Lane, Jr. Attorney for Plaintiff HISCOX SYNDICATES LIMITED 8 9 10 Dated: December 18, 2023 By: 11 12 Dated: December 19, 2023 15 COHEN & GRESSER LLP By: 16 17 Dated: December 19, 2023 20 COBLENTZ PATCH DUFFY & BASS LLP By: 21 22 /s/ Benjamin C. Pulliam Benjamin C. Pulliam Franklin Cordell Attorneys for Defendant DANIEL FRIEDBERG 23 24 /s/ Benjamin Zhu Douglas J. Pepe Benjamin Zhu Attorneys for Defendant SAMUEL BANKMAN-FRIED 18 19 /s/Shanti Eagle Shanti Eagle Attorney for Defendant RAMNIK ARORA 13 14 FARELLA BRAUN + MARTEL, LLP Dated: December 18, 2023 25 GOETZ FITZPATRICK LLP By: 26 /s/ Scott D. Simon Scott D. Simon Attorney for Defendant ROSS RHEINGANS-YOO 27 28 DOCUMENT PREPARED ON RECYCLED PAPER PAGE 7 STIPULATION RESOLVING INTERPLEADER ACTION 1 Dated: December 18, 2023 By: 2 3 /s/ William T. Um William T. Um Attorney for Defendant NISHAD SINGH 4 5 JASSY VICK CAROLAN LLP Dated: December 18, 2023 6 BAKER & MCKENZIE LLP By: 7 /s/ Ronald L. Ohren Ronald L. Ohren Attorney for Defendant CLAIRE WATANABE 8 9 Dated: December 20, 2023 STEPTOE & JOHNSON LLP 10 By: 11 Attorney for Defendants CAN SUN, CONSTANCE ZHE WANG, LUK WAI (JEN) CHAN, NATALIE TIEN, and ZANE TACKETT 12 13 14 15 /s/ Jennifer Karpinski (Singh) Jennifer Karpinski (Singh) Dated: December 18, 2023 16 THE DALEY LAW FIRM, LLC By: 17 18 /s/ Samantha Neal Darrell M. Daley Samantha Neal Attorney for Defendants PATRICK GRUHN and ROBIN MATZKE 19 20 Dated: December 18, 2023 CLARK SMITH VILLAZOR LLP 21 By: 22 23 /s/ Rodney Villazor Rodney Villazor (CA Bar No. 310212) Attorney for Defendant JONATHAN CHEESMAN 24 25 26 27 28 DOCUMENT PREPARED ON RECYCLED PAPER PAGE 8 STIPULATION RESOLVING INTERPLEADER ACTION 1 Dated: December 18, 2023 KELLER BENVENUTTI KIM LLP By: 2 3 /s/ Dara L. Silveira Dara L. Silveira Jane Kim Attorneys for Defendant NICHOLAS BECKSTEAD 4 5 6 Dated: December 19, 2023 By: 7 8 /s/ Andrew J. Demko Andrew J. Demko Attorney for Defendant RYAN SALAME 9 10 MAYER BROWN LLP Dated: December 20, 2023 11 COHEN ZIFFER FRENCHMAN & MCKENNA LLP By: 12 13 /s/ John R. Hazelwood John R. Hazelwood (CA Bar No. 337988) Attorney for Defendant ZIXIAO (GARY) WANG 14 15 16 Dated: December 19, 2023 17 K&L GATES LLP By: 18 19 20 21 /s/ Jason N. Haycock Jason N. Haycock (CA Bar: 278983) Jonathan Theonugraha (CA Bar: 306812) Steven P. Wright (pro hac vice to be filed) Attorneys for Defendant AMY WU 22 23 24 25 PURSUANT TO STIPULATION, IT IS SO ORDERED ON THE 21st DAY OF DECEMBER 2023. 26 ________________________________________ HON. HAYWOOD S. GILLIAM, JR. 27 28 DOCUMENT PREPARED ON RECYCLED PAPER PAGE 9 STIPULATION RESOLVING INTERPLEADER ACTION
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