Securities And Exchange Commission v. Wu et al

Filing 105

ORDER by Magistrate Judge Elizabeth D. Laporte denying 94 Motion for Reconsideration re 94 MOTION for Reconsideration of July 7, 2015 Order Regarding Protective Order and Deposition of Defendant Thomas S. Wu filed by Thomas S. Wu (rmm2S, COURT STAFF) (Filed on 9/14/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,

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ORDER DENYING DEFENDANT
THOMAS WU'S MOTION FOR
RECONSIDERATION

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v.

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THOMAS S. WU,

Re: Dkt. No. 94

Defendant.

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United States District Court
Northern District of California

Case No. 11-cv-04988-JSW (EDL)

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Defendant Thomas Wu has filed a Motion for Reconsideration of that portion of the

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Court’s July 7, 2015 Order requiring him to travel to San Francisco for his deposition. For the

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reasons set forth below, the Motion is DENIED.

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I.

BACKGROUND

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On June 18, 2015, this matter was referred to this Court for discovery purposes, including

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a dispute regarding the timing and location of Defendant Thomas Wu’s deposition (Dkt. No. 84).

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In an order filed on July 6, 2015, this Court ordered that the deposition of Mr. Wu would proceed

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as noticed on July 20, 2105 and that the deposition would be held in San Francisco, California.

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Dkt. 86. In a subsequent Order filed July 7, 2015, this Court observed that “Mr. Wu objects to

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being deposed at the beginning of the discovery period based on an asserted fear that he is at risk

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of being criminally charged in the UCB matter. It does not appear that this risk is high, as the

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three other defendants in the civil action who worked with Mr. Wu at UCB were criminally

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prosecuted for this bank failure, whereas Mr. Wu has never been charged.” Dkt. 87 at 3.

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Defendant subsequently moved for leave to file a Motion for Reconsideration of this

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Order, based on information that Defendant asserts is newly discovered that Mr. Wu is at risk for

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arrest should he enter the United States. Dkt. 92. This Motion was granted and Defendant then

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filed a Motion for Reconsideration of that portion of the Court’s order that he be deposed in San

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Francisco. Dkt. 92, 94.

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II.

DISCUSSION

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A.

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“A district court has the discretion to reconsider its prior orders. Sch. Dist. No. 1J,

Legal Standard

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Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir.1993). Reconsideration is

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appropriate if the district court: ‘(1) is presented with newly discovered evidence, (2) committed

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clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in

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controlling law.’ Id.; see also Civ. L.R. 7–9(b). Aside from these factors, a district court also has

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inherent authority to reconsider an interlocutory decision to prevent clear error or prevent manifest
injustice. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817, 108 S.Ct. 2166, 100

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United States District Court
Northern District of California

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L.Ed.2d 811 (1988). Generally, motions for reconsideration are disfavored, and are not the place

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for parties to make new arguments not raised in their original briefs. Northwest Acceptance Corp.

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v. Lynnwood Equip., Inc., 841 F.2d 918, 925–26 (9th Cir.1988). Nor is reconsideration to be used

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to ask the Court to rethink what it has already thought. See United States v. Rezzonico, 32

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F.Supp.2d 1112, 1116 (D.Ariz.1998) (citing Above the Belt, Inc. v. Mel Bohannan Roofing, Inc.,

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99 F.R.D. 99, 101 (E.D.Va.1983)).” Gray v. Golden Gate Nat. Recreational Area, 866 F. Supp. 2d

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1129, 1132 (N.D. Cal. 2011).

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B.

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Plaintiff first argues that the Motion for Reconsideration is untimely. In support of this

Timeliness

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contention he cites a number of cases that stand for the general proposition that a deponent cannot

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refuse to attend a deposition without first obtaining a protective order or a stay of an order that he

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appear at a deposition. Opp’n at 8-9. Plaintiff is correct in his statement of this general

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proposition. See Huene v. United States Dep’t of Treasury, 2013 WL 417747, at * 3 (E.D.Cal.

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Jan. 31, 2013) (“generally, unless a party or witness files a motion for a protective order and seeks

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and obtains a stay prior to the deposition, a party or witness has no basis to refuse to attend a

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properly noticed deposition”). However, Plaintiff’s argument does not directly address the issue

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of whether the Motion for Reconsideration was timely filed, as here.

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C.

Reasonable Diligence in the Discovery of New Evidence

The parties differ on the question of whether Defendant’s counsel exercised the required
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reasonable diligence in discovering that Defendant Wu is at risk for being criminally indicted.
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Defendant points to Plaintiff’s statement in the parties’ June 17, 2015 letter brief that “the fact that
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Wu has not been indicted supports declination of a protective order. While it is true that courts
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occasionally stay discovery when a defendant is being prosecuted criminally, ‘the case for staying
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civil proceedings is a far weaker one when no indictment has been returned. . . .’” Bauer Decl.,
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Exh. A at p. 5. Defendant’s counsel states that he relied on this statement and did not seek further
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information from the Department of Justice regarding the status of criminal proceedings against
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Mr. Wu.
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According to Defendant, after the Court’s July 7 Order was filed, “defendant requested a
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United States District Court
Northern District of California

guarantee of safe passage to and from San Francisco” and “the SEC explain[ed] that it actually
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does not know whether or not the defendant has been indicted because the criminal investigation is
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separate from the SEC case.” See Bauer Decl., Ex. B. Defendant then got in touch with the
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Assistant U.S. Attorney who is investigating United Commercial Bank: “I telephoned AUSA
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Adam Reeves on July 13, 2015 after exchanging emails with the SEC. In that conversation, AUSA
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Reeves told me that Mr. Wu was still the subject of an ongoing grand jury investigation and that
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the government was looking at him very closely. He would not confirm or deny that Mr. Wu was
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already under indictment or subject to an arrest warrant. He also said that if Mr. Wu was charged
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and arrested when in San Francisco for his deposition, it might be relevant at his detention hearing
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if he had come to the U.S. voluntarily for the deposition. He did not make any promises or
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representations suggesting that the government would agree that Mr. Wu could return to his home
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in Hong Kong, however.” Bauer Decl. ¶ 6.
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Defendant’s counsel also points out that it was not unreasonable for him to rely on
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Plaintiff’s representation regarding Mr. Wu’s status in the criminal investigation because it
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appeared to him that the SEC and DOJ seemed to be working together on this matter and,
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therefore, he believed both were aware of Mr. Wu’s status in the criminal investigation and
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whether he was already under indictment. Reply at 4.
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Plaintiff’s position is that it has, all along, told Defendant that it does not know of any

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indictment against Mr. Wu, or any grand jury investigation and that it has consistently

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recommended that Defendant Wu speak directly to the U.S. Attorney regarding this possibility.

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Opp’n Brief at 9-15. Plaintiff cites a number of cases for the general proposition that grand jury

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deliberations are confidential and it therefore would not have known whether Mr. Wu was the

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subject of such an investigation. Opp’n at 12. In his declaration, Plaintiff’s lawyer includes a

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copy of a letter to defense counsel dated May 22, 2105, in which he states that he cannot confirm

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or deny whether Defendant is the subject of a criminal investigation. In that letter, he suggests

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that Defendant Wu’s lawyer contact the AUSA handling the criminal investigation. Habermeyer

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Decl., Exh. B.

United States District Court
Northern District of California

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Plaintiff relies on a number of cases in which courts found that the party moving for

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reconsideration did not show, as required, that the evidence it discovered “could not be discovered

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earlier through due diligence.” Flintkote Co. v. Gen. Accident Assurance Co. of Canada, 692

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F.Supp.2d 1194, 1197 (N.D. Cal. 2010). Defendant, however, asserts that these cases are

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inapposite because they involve situations in which the parties seeking reconsideration were

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themselves in possession of or had access to the purportedly newly discovered evidence. Flintkote

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involved a file that was already in the defendant’s office, Alvarez v. Cate 2014 U.S. Dist. LEXIS

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124565 involved information contained in the moving party’s own files, and in Savetsky v. Pre-

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Paid Legal Services, Inc., 2015 WL 1519066 at * 4 (N.D. Cal. Apr. 3, 2015) the defendant did not

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attempt to demonstrate reasonable diligence. Finally, in Fairbaugh v. Life Ins. Co. of N. Am., 872

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F.Supp.2d 174 (D.Conn.2012), the party moving for reconsideration was already aware of the

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information (the amount of a social security disability award) on which it based its motion.

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Defendant, in turn, cites a case, Matthew Enterprise, Inc. v. Chrysler Group LLC, 2015

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WL 3746736 at *1 (N.D.Cal. May 21, 2015), in which a motion for reconsideration was granted

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when the moving party showed that representations on which the court had relied in granting a

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motion to dismiss were not true. This case is not on point. Nothing in the record indicates that

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Plaintiff made any representation to the court that it understood to be untrue. Certainly, Plaintiff

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seems to have been careful at least at one point in communicating with Defendant about not
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making an outright representation that Defendant was not at risk for prosecution, and also did

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suggest that Defendant contact the AUSA to find out whether this was the case. On the other

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hand, Plaintiff suggested to the Court that there was no indictment pending and thus little risk of

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criminal prosecution. Although whether Defendant was sufficiently diligent is a close question,

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the Court will not deny the Motion for Reconsideration on this basis.

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D.

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Defendant’s principle argument is that newly discovered information regarding his risk for

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arrest upon entering the country is grounds for a reexamination of this Court’s previous ruling that

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his deposition shall take place in San Francisco. See Bauer Decl. ¶ 6. The issue, then, is what

Location of Deposition

relevance, if any, the risk of arrest upon entry has to the Court’s decision regarding the location of

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United States District Court
Northern District of California

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a deposition. The Court is persuaded by the reasoning in Mill-Run Tours, Inc. v. Khasshoggi, 124

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F.R.D. 547 (S.D.NY 1989), that “[i]to would be inappropriate for this Court to act as a prosecutor

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and order [defendant] to be deposed here as a means of apprehending him,” and “[b]y the same

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token, it would be anomalous if the indictment were to give [defendant] an advantage in this civil

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litigation by being considered as a factor making it ‘inconvenient’ for him to appear here for

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deposition. Accordingly, [defendant]’s criminal difficulties have not been taken into account in

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connection with the instant motions.” Id. at 551 (citing Farquhar v. Shelden, 116 F.R.D. 70, 73

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(E.D. Mich. 1987)). The court in S.E.C. v. Banc de Binary, 2014 W.L. 1030862 at *9 (D. Nevada

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2014) also followed this approach. Accordingly, this Court has no basis to revisit its previous

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Order that Mr. Wu’s deposition take place in San Francisco.

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III.

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CONCLUSION
Defendant’s Motion for Reconsideration is DENIED.

IT IS SO ORDERED.

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Dated: September 14, 2015
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________________________
ELIZABETH D. LAPORTE
United States Magistrate Judge

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