Southern California Institute of Law v. TCS Education System et al

Filing 47

JOINT REPORT Rule 26(f) Discovery Plan ; estimated length of trial 8 days, filed by Plaintiff Southern California Institute of Law.. (Shohet, George)

1
2
3
4
5

George A. Shohet SBN 112697
LAW OFFICES OF GEORGE A. SHOHET,
A PROFESSIONAL CORPORATION
245 Main Street, Suite 310
Venice, CA 90291-5216
Tel.: [phone]
Fax: [phone]

6
7
8
9
10
11
12
13

Gretchen M. Nelson SBN 112566
KREINDLER & KREINDLER LLP
707 Wilshire Blvd, Suite 4100
Los Angeles, CA 90017
Tel.: [phone]
Fax: [phone]
Attorneys for Plaintiff
Southern California Institute of Law

14

UNITED STATES DISTRICT COURT

15

CENTRAL DISTRICT OF CALIFORNIA

16
17
18
19
20
21
22
23
24
25
26
27

SOUTHERN CALIFORNIA
INSTITUTE OF LAW, a California
corporation,
Plaintiff,

CASE NO.: CV10-8026 JAK (AJWx)
[Assigned to Hon. John A. Kronstadt]
JOINT RULE 16(b) REPORT

vs.
Action Filed: Oct. 25, 2010
TCS EDUCATION SYSTEM, an
Illinois corporation; DAVID J.
FIGULI, an individual; and GLOBAL
EQUITIES, LLC d/b/a HIGHER
EDUCATION GROUP, a Colorado
limited liability company,

Date: June 30, 2011
Time: 8:30 a.m.
Courtroom: 750

Defendants.

28
_____________________________________________________________________________________________
JOINT RULE 16(b) REPORT

Pursuant to Fed. R. Civ. P. 26 (“Rule 26”), Local Rule 26-1 and the Court’s

1
2

Order Setting Rule 16(b) Scheduling Conference, filed June 7, 2011, counsel for

3

plaintiff Southern California Institute of Law (“plaintiff” or “SC Law”) and

4

counsel for defendants TCS Education System ("TCS"), David J. Figuli ("Figuli")

5

and Global Equities, LLC ("Global") held a teleconference on June 16, 2011.

6

Participating in the call were Gretchen M. Nelson and George A. Shohet, counsel

7

for the plaintiff, Nicholas W. Sarris, counsel for TCS, and Maurice Fitzgerald and

8

Aaron A. Hayes, counsel for Figuli and Global. Thereafter, plaintiff's counsel

9
10

prepared a draft of this report and circulated it to defense counsel for comments.
The parties respectfully submit this Joint Rule 16(b) Report ("Joint Report") in

11

connection with the upcoming scheduling conference:
12

A.

STATEMENT OF THE CASE

13

This case arises out of a contemplated transaction between plaintiff SC Law
14

and defendant TCS. SC Law is a small State-Bar accredited, evening law school
15

with a twenty-five year history of serving working class adults in the tri-county
16

area of San Luis Obispo, Santa Barbara and Ventura Counties. TCS is a non-profit
17

corporation that acquires and affiliates with specialized schools and colleges
18

providing the schools with financial support and other resources. Defendant Figuli
19

is a Colorado-based attorney who has an extensive background in strategic
20

acquisitions in the education sector and, through defendant Global, he identifies
21

suitable acquisition candidates and assists in structuring transactions for TCS.
22

Figuli was one of the representatives for TCS in connection with the contemplated
23

SC Law transaction.
24

In mid-September 2009, a TCS representative approached SC Law regarding
25

a potential acquisition by TCS. To foster negotiations, SC Law allegedly provided
26

TCS with access to SC Law's Dean, faculty and certain confidential files. TCS and
27

SC Law executed a “Confidentiality and Non-Disclosure Agreement” (the
28
________________________________________________________________________________________________________

1
JOINT RULE 16(b) REPORT

1

“NDA”). The NDA was allegedly drafted by Figuli. Figuli denies that he drafted

2

the NDA.

3

Upon entering into the NDA, and pursuant to TCS’s due diligence requests,

4

SC Law allegedly provided to TCS and Figuli numerous documents that it alleges

5

are confidential or contain trade secret information, such as SC Law’s tax returns,

6

balance sheet, personnel files, strategic and marketing documents and accreditation

7

materials. In addition, SC Law's Dean participated in meetings during September

8

and November of 2009, during which TCS’s possible purchase of SC Law was

9

discussed. Allegedly, SC Law competed against nearby Santa Barbara and

10

Ventura Colleges of Law ("COL"), a much larger State Bar accredited evening law

11

school, for students and faculty. SC Law's ability to compete against COL is

12

allegedly due to, among other factors, SC Law's low tuition rates and strong

13

faculty.

14

After the second meeting between TCS’s and SC Law’s representatives,

15

TCS ceased communicating with SC Law. When, in January 2010, SC Law's

16

Dean contacted Figuli, Figuli, on behalf of TCS, responded via e-mail that “an

17

arrangement that would be acceptable to [TCS] would be very disappointing to

18

your board. As a result . . . we think it would be best for TCS to take a pass on the

19

[purchase] at this time.” In September 2010, it was announced that instead of

20

affiliating with SC Law, TCS obtained approval from the California State Bar

21

Committee of Bar Examiners to affiliate with COL. SC Law contends that

22

defendants misappropriated its confidential information and strategic plans in

23

violation of the NDA in order to affiliate with COL.

24

SC Law filed this case on October 25, 2010. On April 5, 2011, the Court

25

granted, in part, and denied, in part, TCS's motion to dismiss. On May 23, 2011,

26

SC Law filed a First Amended Complaint alleging claims for: (1) breach of

27

contract against TCS; (2) negligent misrepresentation against TCS; (3)

28

misappropriation of trade secrets against all defendants; (4) tortious interference
________________________________________________________________________________________________________

2
JOINT RULE 16(b) REPORT

1

with contract against Figuli and Global; and (5) violation of California’s Unfair

2

Competition Law against all defendants. Although SC Law seeks monetary

3

damages, the primary relief requested is a permanent injunction enjoining the

4

defendants from taking any further steps to pursue or implement an affiliation

5

between TCS and COL. Defendants deny these claims and dispute plaintiff's

6

allegations of wrongdoing and injury.

7

B.

The Court has subject matter jurisdiction over plaintiff's claims under 28

8
9

SUBJECT MATTER JURISDICTION

U.S.C. § 1332(a) because the parties are diverse and plaintiff alleges that the

10

amount in controversy exceeds $75,000, exclusive of interest and costs.

11

C.

BRIEF DESCRIPTION OF KEY LEGAL ISSUES
The parties believe that the key legal issues in the case relate to (i) the

12
13

interpretation and application of the NDA to defendants' conduct; (ii) whether or

14

not the information the defendants obtained from SC Law constitutes trade secrets

15

as defined by California Civil Code § 3426.1(d) and, if so, whether a

16

misappropriation occurred; (iii) whether or not TCS owed the plaintiff a duty to

17

disclose its intention to pursue a potential affiliation with COL; (iv) whether or not

18

Figuli and Global knowingly caused TCS to breach the NDA and interfere with

19
20

plaintiff's contractual rights; (v) whether the wrongdoing alleged by the plaintiff
constitutes a violation of California Business & Professions Code §§17200, et seq.;

21

and (vi) if plaintiff proves some or all of its claims, what is the appropriate remedy.
22
23
24

D.

PARTIES AND NON-PARTY WITNESSES
The following are potential witnesses known to the parties at this time:

25

Stanislaus Pulle; Desmond O'Neill; Carroll Gambrell; Dennis Rasmussen; Sara

26

Fenton; Eric Pommer; David J. Figuli; Michael Horowitz; Jeff Keith; George

27

Haynes; Heather Georgakis; and Barbara Doyle.

28

SC Law has no subsidiaries, parents or affiliated entities. TCS is currently
________________________________________________________________________________________________________

3
JOINT RULE 16(b) REPORT

1

unaware of any subsidiaries, parents or affiliates with a financial interest in the

2

outcome of this case. Global does not have any subsidiaries, parents or affiliated

3

entities.

4

E.

5

REALISTIC RANGE OF PROVABLE DAMAGES
Plaintiff seeks, inter alia, injunctive relief, actual damages, statutory

6

damages, attorney's fees, costs, and pre- and post-judgment interest. Plaintiff

7

believes that its damages may be based on lost profits due to decreased enrollment

8

and higher marketing and advertising costs and the destruction or diminished value

9
10

of its business. Plaintiff estimates damages ranging from hundreds of thousands of
dollars to over $3 million.

11

F.

WHETHER THERE IS INSURANCE COVERAGE

12

TCS has insurance coverage through a general liability policy.

13
14

G.

MOTIONS ADDING PARTIES, AMENDING THE PLEADINGS OR

15

TO TRANSFER VENUE

16

Defendants intend to file a motion to dismiss challenging certain of the

17

claims in plaintiff's First Amended Complaint. If granted in whole or in part,

18

plaintiff may be required to amend its complaint. The parties do not anticipate

19

adding any new parties, claims or seeking leave to transfer venue.

20

H.

MANUAL FOR COMPLEX LITIGATION
The parties do not believe that utilizing the procedures set forth in the

21
22

Manual would be helpful in this case.

23

I.

24

STATE OF DISCOVERY
Due to the extensive settlement discussions that occurred during the first

25

three months of this case, the parties agreed to defer formal discovery. In the last

26

two months, TCS retained new counsel and defendants Figuli and Global were

27

served. Figuli and Global retained their counsel during the past week. The parties

28

anticipate that they will initiate formal discovery promptly. The parties have
________________________________________________________________________________________________________

4
JOINT RULE 16(b) REPORT

1

discussed the Rule 26 Initial Disclosures. To facilitate those disclosures, plaintiff

2

provided a form of protective order to the defendants for their consideration.

3

J.

4

DISCOVERY PLAN
The parties anticipate that document discovery (document requests and third

5

party subpoenas) will begin within the next 30 to 60 days. Certain written

6

discovery (interrogatories and requests for admissions) may follow thereafter.

7

Within the next 120 to 150 days, the parties anticipate that depositions will

8

commence. The witnesses in Section D., above are likely deponents. The parties

9
10

do not believe that there is a need to change the Rule 26(a) disclosures or phase or
limit discovery in any manner. Subjects to be covered include, among others: the

11

parties' discussions related to TCS's potential acquisition of SC Law; the
12
13
14

preparation of the NDA; defendants contacts with COL related to the TCS-COL
affiliation; defendants or COL's contacts with the State Bar and other accrediting

15

bodies related to the affiliation; the use, if any, of SC Law's confidential

16

information by defendants or COL; and the financial impact, if any, of the TCS-

17

COL affiliation on SC Law.

18

K.

PROPOSED DISCOVERY CUT-OFF
The parties propose a non-expert discovery cutoff of March 6, 2012,

19
20

including resolution of all discovery motions.

21

L.

EXPERT DISCOVERY
The parties propose the date of March 13, 2012 for initial expert disclosure;

22
23

April 10, 2012 for rebuttal expert disclosure; and an expert discovery cut-off of

24

May 1, 2012.

25

M.

DISPOSITIVE MOTIONS

26

As stated above, defendants anticipate filing a motion to dismiss on or about

27

June 30, 2011. The parties cannot anticipate which issues may be resolved through

28

a motion for summary judgment or a motion in limine at this stage of the
________________________________________________________________________________________________________

5
JOINT RULE 16(b) REPORT

1

proceedings.

2

N.

SETTLEMENT
At the outset of this case, plaintiff and TCS extensively discussed the

3
4

potential settlement of this case. Drafts of a memorandum of terms were

5

exchanged, including a process by which SC Law would be valued and acquired

6

by TCS. A few issues prevented the parties from successfully completing their

7

discussions, including the future involvement by certain SC Law personnel in law

8

school education in the tri-county region. In April 2011, TCS retained new

9
10

counsel. After filing the First Amended Complaint, plaintiff made a settlement
proposal to TCS which TCS is now considering. The parties are open to

11

considering any of the settlement procedures authorized by Local Rule 16-15.4.
12
13

O.

TRIAL ESTIMATE
The parties estimate an eight (8) day trial. A jury trial is presently selected,

14
15

but the parties are willing to further discuss having the case tried by the Court.

16

Plaintiff anticipates calling approximately nine (9) witnesses. TCS anticipates

17

calling ten (10) witnesses. Figuli and Global contemplate calling Jeff Keith,

18

George Haynes, and Heather Georgakis.

19

P.

TRIAL COUNSEL

20

Plaintiff's trial counsel will be Gretchen M. Nelson and George A. Shohet.

21

TCS's trial counsel will be Nicholas W. Sarris and Jeffrey S. Whittington. Figuli

22

and Global's trial counsel will be Maurice Fitzgerald.

23

Q.

24

INDEPENDENT EXPERT OR MASTER
The parties do not believe that there is any need for a Master or independent

25

expert.

26

R.

27
28

TIMETABLE
Exhibit A to this Joint Report is the parties' proposed Schedule of Pretrial

and Trial Dates.
________________________________________________________________________________________________________

6
JOINT RULE 16(b) REPORT

1

S.

There are no other management issues the parties need to address.

2
3

T.

4
5
6
7

OTHER ISSUES

PATENT CASES
This is not a patent case.

U.

MAGISTRATE
The parties do not wish to have a Magistrate Judge preside over all of the

proceedings in this action.
Respectfully submitted,

8
9

THE LAW OFFICES OF GEORGE A. SHOHET

10

KREINDLER & KREINDLER LLP

11
12
13

DATED: June 23, 2011

14

By:
George A. Shohet
Attorneys for Plaintiff Southern California
Institute of Law

15
16

Nicholas W. Sarris, Esq.
KAUFMAN BORGEEST AND RYAN LLP
23975 Park Sorrento, Suite 370
Calabasas, CA 91302
Tel: [phone]
Fax: [phone]
Email: [e-mail]

17
18
19
20
21
22
23
24
25

DATED: June 23, 2011

By:________/s/_____________________
Nicholas W. Sarris
Attorneys for Defendant TCS Education
System

26
27
28
________________________________________________________________________________________________________

7
JOINT RULE 16(b) REPORT

Maurice Fitzgerald, Esq.
STRAZULO FITZGERALD LLP
3991 MacArthur Blvd. Suite 400
Newport Beach, CA 92660
Tel.: [phone]
Fax: [phone]
E-mail: [e-mail]

1
2
3
4
5
6
7
8
9

DATED: June 23, 2011

By:________/s/______________________
Maurice Fitzgerald
Attorneys for Defendants David J. Figuli
and Global Equities, LLC

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
________________________________________________________________________________________________________

8
JOINT RULE 16(b) REPORT

EXHIBIT A

1
2
3

SCHEDULE OF PRETRIAL AND TRIAL DATES
LA CV10-08026 JAK (AJWx)

Case No.:

Southern California Institute of Law v. TCS Education System, et al.

Case Name:

4
5

Matter

Plaintiff(s)
Request

6

[ X ] Jury Trial [

7

Duration Estimate:

8

Status Conference re Exhbits: (Friday at 3:00 p.m.)

9

Friday before the trial date

] Court Trial: (Tuesday at 9:00 a.m.)

6/26/2012

Defendant(s)
Request

Court Order

6/26/2012

8 Days
6/22/2012

6/11/2012

10

Final Pretrial Conference: (Monday at 1:30 p.m.)

11

Status Conference re Settlement: (Monday at 1:30 p.m.)

13

Matter

4/2/2012

4/2/2012

30 days before the cut-off date

14

6/11/2012

2 weeks before the trial

12

6/22/2012

Weeks
Before
Trial

15
16

Last Date to Amend Pleadings/Add Parties

40

Plaintiff(s)
Request

9/13/2011

Defendant(s)
Request

9/13/2011

18

Non-Expert Discovery Cut-Off

16

3/6/2012

3/6/2012

Expert Disclosure (initial)

15

3/13/2012

3/13/2012

Expert Disclosure (rebuttal)

11

4/10/2012

Last Date to Conduct Settlement Conference

10

4/17/2012

Expert Discovery Cut-Off

17

8

5/1/2012

5/1/2012

Last Date to Hear Motions

8

5/1/2012

5/1/2012

19
20
21
22

4/10/2012
4/17/2012

23
24
25
26
27

Settlement Procedure Selection (ADR-01):
1. Magistrate Judge
2. Attorney Settlement Officer Panel
3. Outside ADR/Non-Judicial

1, 2, or 3

28
Exhibit A

1, 2, or 3

Court Order

1

CERTIFICATE OF SERVICE

2

The undersigned hereby certifies that all counsel of record who have

3

consented to electronic service are being served with a copy of the foregoing

4

document via Central District of California CM/ECF system on June 23, 2011.

5
6
7

By:
George A. Shohet

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
________________________________________________________________________________________________________

9
JOINT RULE 16(b) REPORT