Federal Trade Commission v. Noland, et al

Filing 405

ORDER: IT IS ORDERED that the Individual Defendants' Rule 56(d) motion (Doc. 402 ) is denied [see attached Order for details]. Signed by Judge Dominic W Lanza on 9/8/21. (MAW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Federal Trade Commission,
Plaintiff,

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ORDER

v.

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No. CV-20-00047-PHX-DWL

James D. Noland, Jr., et al.,

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Defendants.

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In March 2021, following the close of fact discovery, Plaintiff Federal Trade

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Commission (“FTC”) filed a motion for summary judgment as to liability. (Doc. 285.)

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The Individual Defendants filed their response in May 2021 (Docs. 335, 348) and the

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motion became fully briefed in June 2021 (Doc. 370), although the FTC later filed

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corrected versions of its briefs (Doc. 381). In mid-August 2021, the Court informed the

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parties that it was is in the process of reviewing the liability-related summary judgment

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briefing and intended to rule soon. (Doc. 395 at 4.) Separately, in June 2021, the FTC

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filed a motion for summary judgment as to remedies. (Doc. 365.) In mid-August 2021,

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that motion became fully briefed. (Docs. 392, 398.)

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Notwithstanding all of this, on September 6, 2021, the Individual Defendants filed

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a motion under Rule 56(d) of the Federal Rules of Civil Procedure “for leave to supplement

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the record on the pending motions for summary judgment.” (Doc. 402.) In a nutshell, the

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motion argues that, due to the purportedly “unlawful” orders issued during earlier stages

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of this case, which had the effect of freezing certain assets, “the Individual Defendants

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have been hamstrung in their ability to afford counsel and for counsel to fully investigate

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the facts of this matter and defend their interests.” (Id. at 2-3.) More specifically, the

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Individual Defendants contend that, due to the asset freezes, they were “unable to take key

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depositions, such as those of the FTC’s investigator Adam Rottner, its expert Stacey

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Bosley, its data analyst Amanda Wilson, the receiver, and Evan Mendelson i[n] his

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capacity as a declarant making factual statements in support of the FTC’s claims for relief”

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and were “unable to obtain evidence about and from alleged complainants, upon whose

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alleged statements the FTC’s case is built.” (Id. at 3-4.) Additionally, the motion accuses

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the FTC, both in its own capacity and “through the receiver,” of engaging in the “deliberate

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destruction of critical evidence in the form of SBH’s customer support ticketing system.”

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(Id. at 4-6.) The motion concludes by asking the Court to “refrain from ruling on the

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pending summary judgment motions” so the Individual Defendants can pursue unspecified

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“discovery regarding the matters raised by this motion.” (Id. at 6.) Notably, the motion is

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not accompanied by a declaration from counsel specifying the additional discovery that the

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Individual Defendants wish to pursue or explaining the relevance of that unspecified

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discovery to the issues raised in the FTC’s pending (and fully briefed) summary judgment

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motions.

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Although the FTC has not yet responded to the Individual Defendants’ motion, the

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Court finds it unnecessary to receive further briefing. The motion is denied for several

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independent reasons.

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First, the motion is untimely. “A motion under Rule 56(d) should be made before

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the close of discovery.” Miyares v. City of New York, 2013 WL 3940816, *2 n.3 (S.D.N.Y.

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2013). Here, fact discovery closed in December 2020. (Doc. 211). The Individual

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Defendants make no effort to explain why they failed to raise their Rule 56(d) request until

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nine months after the close of discovery—and, indeed, do not acknowledge that they have

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already filed responses to both of the FTC’s summary judgment motions, which have been

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fully briefed for some time. Cf. Gonzalez v. Garibay, 2012 WL 12875366, *4 (S.D. Cal.

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2012) (“Since Garibay’s motion was not filed until two-and-a-half months after discovery

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ended, . . . . the Court DENIES Gonzalez’s untimely and unsupported request for relief

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under Rule 56(d).”).

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Second, the motion is procedurally deficient. Rule 56(d) provides that “[i]f a

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nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present

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facts essential to justify its opposition, the court may: (1) defer considering the motion or

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deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue

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any other appropriate order.” Id. (emphasis added). Put another way, a “party seeking to

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delay summary judgment for further discovery . . . . must show that: (1) it has set forth in

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affidavit form the specific facts it hopes to elicit from further discovery; (2) the facts sought

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exist; and (3) the sought-after facts are essential to oppose summary judgment.” Stevens

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v. Corelogic, Inc., 899 F.3d 666, 678 (9th Cir. 2018) (cleaned up) (emphasis added)

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(emphasis omitted). Here, the Individual Defendants have failed to submit the required

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affidavit or declaration from counsel.1 This, alone, precludes relief. Brae Transp., Inc. v.

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Coopers & Lybrand, 790 F.2d 1439, 1443 (9th Cir. 1986) (“[Rule 56(d)] requires affidavits

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setting forth the particular facts expected from the movant’s discovery. Failure to comply

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with the requirements . . . is a proper ground for denying discovery and proceeding to

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summary judgment.”).

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Third, even if the Court were to overlook this procedural deficiency and treat the

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motion as the Individual Defendants’ declaration, relief would still be unwarranted. The

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motion is an exercise in vagueness—it makes no effort to identify the additional facts the

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Individual Defendants believe they would uncover if permitted to take the additional “key

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depositions” and makes no effort to explain why those unspecified missing facts are

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relevant to (let alone essential for opposing) the FTC’s pending summary judgment

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arguments. Such a showing is a prerequisite to relief under Rule 56(d). See, e.g., Ohno v.

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Although the Individual Defendants have provided declarations from three fact
witnesses (Docs. 402-1, 402-2, 402-3), those declarations merely provide background
details concerning SBH’s customer support ticketing system—they make no effort to
identify the additional discovery-related steps the Individual Defendants wish to pursue or
explain why the facts generated during those discovery-related steps would be essential in
opposing the FTC’s summary judgment arguments.

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Yasuma, 723 F.3d 984, 1013 n.29 (9th Cir. 2013) (“[I]t is not enough to rely on vague

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assertions that discovery will produce needed, but unspecified, facts.”) (internal quotation

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marks omitted); Margolis v. Ryan, 140 F.3d 850, 853 (9th Cir. 1998) (“In making a [Rule

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56(d)] motion, a party opposing summary judgment must make clear what information is

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sought and how it would preclude summary judgment.”) (internal quotation marks

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omitted); 2 Gensler, Federal Rules of Civil Procedure, Rules and Commentary, Rule 56, at

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173 (2021) (“A general or conclusory assertion that additional discovery is needed will not

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suffice.”).

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Accordingly, IT IS ORDERED that the Individual Defendants’ Rule 56(d) motion
(Doc. 402) is denied.
Dated this 8th day of September, 2021.

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