Averza v. Super Micro Computer, Inc. et al

Filing 109

ORDER Resolving 106 , 108 Discovery Disputes and Terminating as Moot 105 , 107 Motions to Seal. Dkts. 105-3, 105-4, 105-5 and 107-3 shall remain under seal. Signed by Judge Susan van Keulen on January 27, 2025. (svklc2, COURT STAFF) (Filed on 1/27/2025)

Download PDF
1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 JOSEPH AVERZA, et al., Plaintiffs, 8 ORDER RESOLVING DISCOVERY DISPUTES v. 9 United States District Court Northern District of California Case No. 24-cv-06147-EJD (SVK) 10 SUPER MICRO COMPUTER, INC., et al., 11 Defendants. Re: Dkt. Nos. 105-08 12 Crain Walnut Shelling, LP (“CWS”) and Universal-Investment-Gesellschaft mbH 13 (“Universal”) are vying for the top spot of lead plaintiff in this putative, securities class action, 14 which arises out of alleged misrepresentations disseminated by Super Micro Computer, Inc. 15 (“Super Micro”), and two of its executives. The presiding judge, the Honorable Edward J. Davila, 16 declared CWS the presumptive lead plaintiff but found that Universal had “raised serious 17 questions” about CWS’s “fitness for that role.” See Dkt. 99 at 2. Judge Davila accordingly 18 ordered the Parties to conduct discovery into three narrow topics: 19 ? Topic 1: CWS’s “ownership structure and decision-making processes.” See id. at 6-7. 20 Judge Davila opened discovery into this topic to address his concerns “about who holds 21 final decision-making authority” within CWS and how CWS “would oversee this litigation 22 if appointed as lead plaintiff.” See id. at 7. 23 ? Topic 2: CWS’s “financial condition.” See id. at 8-9. Judge Davila opened discovery 24 into this topic to address his concern about CWS’s “ability to continue as a going 25 concern.” See id. at 8. 26 ? Topic 3: “[T]he circumstances of [CWS’s] purchase of Super Micro stock.” Id. at 9. 27 Judge Davila opened discovery into this topic to address his concerns about why CWS, “an 28 entity actively operating in the walnut market[, would] serve as [an] investment vehicle” United States District Court Northern District of California 1 and “whether [CWS] relied on Super Micro’s alleged misrepresentations to purchase Super 2 Micro stock” or if “some other reason might have driven [CWS’s] decision to rapidly 3 acquire stock.” See id. 4 Universal subsequently propounded several requests for production (“RFPs”) and 5 interrogatories on CWS and noticed a deposition of Charles Crain, Jr., the ultimate owner of CWS. 6 The Parties now present the Court with two discovery disputes: (1) resolving CWS’s objections to 7 some of Universal’s RFPs and interrogatories; and (2) evaluating CWS’s proposed limitations on 8 the deposition of Mr. Crain. See Dkts. 106, 108. The Court has determined that these disputes are 9 suitable for resolution without oral argument. See Civil Local Rule 7-1(b). Having reviewed the 10 Parties’ submissions, the relevant law and the record in this action, the Court resolves the disputes 11 as set forth below. 12 I. RFPS AND INTERROGATORIES 13 Attached to this Order is a chart containing the Court’s rulings on CWS’s objections on a 14 request-by-request basis. CWS must provide supplemental productions and responses consistent 15 with the Court’s rulings by January 31, 2025. The applicable time period is the proposed class 16 period: August 10, 2021, through August 26, 2024 (inclusive). See Dkt. 1 ¶ 1. 17 II. DEPOSITION OF MR. CRAIN 18 Universal noticed a deposition of Mr. Crain pursuant to Federal Rule of Civil Procedure 19 30(b)(1). CWS requests that the Court modify the proposed deposition in four ways: (1) convert 20 the deposition into a deposition of CWS in which Mr. Crain appears as its representative pursuant 21 to Rule 30(b)(6); (2) limit the scope of the deposition to Topics 1-3; (3) limit the length of the 22 deposition to two hours; and (4) require Universal to depose Mr. Crain in Los Molinos, California. 23 Rule 30(b)(1) or Rule 30(b)(6)? Because CWS is an organization, CWS insists that 24 Universal may depose it only through the procedures set forth in Rule 30(b)(6). Implicit in CWS’s 25 argument is the suggestion that CWS is the only party whom Universal may depose in conducting 26 discovery. Judge Davila did not include any such limitation in his order. Further, Mr. Crain has 27 represented that he has “sole ownership and decision-making authority for CWS,” which confirms 28 that he possesses relevant information. See Dkt. 85-1 ¶ 4. Accordingly, Universal may depose 2 United States District Court Northern District of California 1 Mr. Crain in his personal capacity as a non-party pursuant to Rule 30(b)(1). 2 In permitting Universal to depose Mr. Crain as a non-party, the Court assumes that 3 Universal intends to depose Mr. Crain as a non-party and not merely as a representative of CWS— 4 in its notice of deposition, Universal identified Mr. Crain as the deponent and not CWS. If 5 Universal intends to depose Mr. Crain as a representative of CWS under Rule 30(b)(1), it may do 6 so but must re-notice the deposition to clarify that Mr. Crain will appear as a representative of 7 CWS. See 7 Moore’s Federal Practice – Civil § 30.25 (2024) (“A party may still name a particular 8 person to testify on behalf of the organization by noticing the deposition under Rule 30(b)(1)— 9 provided that the deponent is an officer, director, or managing agent—and by indicating that the 10 person named will be expected to testify on behalf of the organization.” (emphasis added) 11 (citations omitted)); accord Elasticsearch, Inc. v. Floragunn GmbH, No.19-cv-05553-YGR, 2021 12 WL 1753796, at *1 (N.D. Cal. May 4, 2021). CWS prefers that Universal conduct a Rule 30(b)(6) deposition because CWS wishes to 13 14 restrict the scope of Universal’s questioning as required in a Rule 30(b)(6) deposition. As 15 discussed below, the scope is necessarily limited even if CWS conducts the deposition under Rule 16 30(b)(1). 17 Scope. Judge Davila was clear: The Parties may conduct discovery into Topics 1-3. He 18 did not permit discovery into any other subjects. Accordingly, Universal may not ask Mr. Crain 19 any questions outside the scope of Topics 1-3. That scope is neither as broad as Universal insists 20 nor as narrow as Mr. Crain believes. The Parties should refer to the Court’s rulings in the attached 21 chart to better understand what is and is not within the scope of Topics 1-3. The Court also 22 provides the following guidance: 23 ? Topic 1 is broad enough to encompass all entities within the ownership chain of CWS. 24 ? Topic 2 does not encompass the financial condition of any entity other than CWS itself, 25 absent a non-speculative demonstration that the financial condition of another entity 26 impacts CWS’s ability to continue as a going concern. Universal did not provide any such 27 non-speculative demonstration in its submissions. 28 ? Topic 3 is broad enough to encompass all entities and accounts over which Mr. Crain 3 maintains a controlling interest. 1 ? United States District Court Northern District of California 2 Just because an entity is affiliated with CWS or Mr. Crain does not automatically mean 3 that the entity is relevant to Topics 1-3. Universal must do more to connect an entity to a 4 topic than merely note its relationship to CWS or Mr. Crain. 5 Duration. “Unless otherwise stipulated or ordered by the court, a deposition is limited to 6 one day of 7 hours.” Fed. R. Civ. P. 30(d)(1). Thus, seven hours is the default length. See In re 7 Republic of Ecuador, No. 10-mc-80225-CRB, 2011 WL 736868, at *5 (N.D. Cal. Feb. 22, 2011). 8 CWS offers no reason to shorten this length beyond conclusorily asserting that “[h]aving Mr. 9 Crain sit for seven hours of deposition testimony is unreasonable.” See Dkt. 108 at 5. The Court, 10 therefore, will not shorten the deposition length. 11 Location. CWS requests that Universal depose Mr. Crain in Los Molinos, California, to 12 accommodate his convenience. See id. But CWS is the presumptive lead plaintiff and requests 13 that the Court appoint it as the lead plaintiff. That is key because a plaintiff is presumptively 14 subject to a deposition in the judicial district in which a case is commenced. See Sunsauce Foods 15 Indus. Corp. v. Son Fish Sauce USA Corp., No. 22-cv-08973-PCP, 2024 WL 778395, at *2 (N.D. 16 Cal. Feb. 26, 2024). Los Molinos does not qualify because it is located in Tehama County, 17 California, which is within the Eastern District. See 28 U.S.C. § 84(b). 18 Of course, as noted above, Universal may depose Mr. Crain as a non-party and not merely 19 as a representative of CWS. Even so, based on Mr. Crain’s representations, he retains sole control 20 over the company, and Universal undoubtedly seeks to depose him to probe his exercise of that 21 authority. Accordingly, in light of the circumstances in which the instant discovery disputes arise 22 (a battle over appointment of CWS as lead plaintiff), regardless of whether Universal deposes Mr. 23 Crain as a representative of CWS or in his individual capacity, equity requires that Mr. Crain 24 appear for a deposition in the Northern District of California at a location noticed by Universal. 25 /// 26 /// 27 /// 28 /// 4 1 2 3 4 5 6 7 8 9 10 III. MOTIONS TO SEAL In connection with submitting the discovery disputes, CWS requested that the Court seal portions of the submissions. See Dkts. 105, 107. The Court’s reasoning in this Order (including the attached chart) does not depend on the information sought to be sealed, and the Court does not expressly discuss any of that information. Accordingly, the Court TERMINATES AS MOOT the motions to seal; Dkts. 105-3, 105-4, 105-5 and 107-3 shall remain under seal. See, e.g., Bloom Energy Corp. v. Badger, No. 21-cv-02154-PJH, 2021 WL 4079208, at *13 (N.D. Cal. Sept. 8, 2021). The Court has also preserved the redactions included by CWS in the attached chart. SO ORDERED. Dated: January 27, 2025 United States District Court Northern District of California 11 12 SUSAN VAN KEULEN United States Magistrate Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 Chart of Court’s Rulings Disputed Requests for Production RFP No. Disputed Request Crain Walnut’s Response 5 Documents sufficient to show the legal structure, ownership, organizational structure, business and operations, identity of any current or former partners, and decision-making processes of: CWS objects to this Request on the following grounds: (a) Crain Walnut Shelling, Inc.; (b) Nuez Progresivo, Inc.; (c) Grupo Progresivo, Inc.; (d) Eco-Shell LP; (e) Crain Orchards, Inc.; (f) C.R. Crain & Sons, Inc. d/b/a Crain of California; (g) Crain Ranch d/b/a Crain Marketing, Inc.; (h) Crain Farming, LP; (i) Crain International #2; (j) any other entity controlled by Charles R. Crain, Jr.; and 1. The Request seeks information or documents that are irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. 2. The Request seeks information or documents that are irrelevant, not proportionate, and unduly burdensome to the extent it seeks corporate information or documents from periods other than when the transactions in Super Micro securities occurred. 3. The Request seeks information or documents that are irrelevant, not proportionate, and unduly burdensome to the extent it seeks corporate information or documents concerning the formation of corporate entities other than CWS and its constituting partners (Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc). 4. The phrases “controlled by” and “has the decision-making authority” are vague, overbroad, and ambiguous, Universal’s Compromise/Position Universal does not believe a limitation to this Request for Production is appropriate and requests Crain Walnut fully comply with this Request for Production. Crain Walnut has produced some documents showing the legal structure of Crain Walnut Shelling, LP, Nuez Progresivo, Inc, and Grupo Progresivo, Inc, but this is not the same as providing such documents for all of the related parties listed in the Request for Production. Universal’s position in the Joint Statement supports the relevance of this request. Such discovery is necessary to fully understand Mr. Crain’s Super Micro investments In addition, from the discovery produced thus far, is appears that there are additional related entities that Universal would expect to fall into (j) or (k) of this request, including Shell Processing Facility LP, Crain of California, Inc., Eco-Shell, Inc., Crain International #4, Butte 1 Crain Walnut’s Compromise/Position Notwithstanding CWS’s objections, CWS has produced the formation documents for CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc. While Universal has not raised any deficiencies in this production as to CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. Court’s Decision The requested documents are relevant to Topic 1. However, the RFP is overbroad to the extent it seeks documents concerning: (1) entities outside the ownership chain of CWS; and (2) any entities’ “business and operations.” The Court ORDERS CWS to produce documents responsive to the following revised RFP: “Documents sufficient to show the legal structure, ownership, organizational structure, identity of any current or former partners during the relevant period, and decision-making processes of: (1) CWS; and (2) any entity with a direct or indirect ownership interest in CWS.” RFP No. Disputed Request (k) any other entity for which Charles R. Crain, Jr. has the decision-making authority. Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position and also potentially call for legal Vista Farms, LLC, Crain Ranch conclusions. In responding to this and Sons, NuVista LP, and Request, CWS construes these two Walnut Processing Facility, LP. phrases as referring to any entity in which Charles R. Crain, Jr., directly or indirectly, owns more than 50 percent of voting stock (for corporations) or more than 50 percent of the beneficial interests (for partnerships). Nevertheless, to the extent the Request seeks any information or documents concerning the structure, ownership, operations, or processes of any entity that Charles R. Crain, Jr. controls or has decisionmaking authority (other than potentially CWS and its constituting partners), the Request seeks information and documents that are irrelevant, not proportionate, duplicative, and unduly burdensome. Crain Walnut’s Compromise/Position Court’s Decision Notwithstanding CWS’s objections, CWS has produced the formation documents for CWS, Crain Walnut Shelling, See Court’s Decision re RFP No. 5. The Court ORDERS CWS to produce responsive documents for those entities within the In reliance upon its objections, CWS will not produce documents responsive to this Request other than those nonprivileged documents produced in response to Request Nos. 3 and 4. 6 All documents concerning the formation of the entities listed in Request 5(a)-(k), including partnership agreements, certificates of incorporation, and bylaws. CWS objects to this Request on the following grounds: 1. The Request seeks information or documents that are irrelevant and Universal does not believe a limitation to this Request for Production is appropriate and requests Crain Walnut fully comply with this Request for 2 RFP No. Disputed Request Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position beyond the permissible scope of Production. Crain Walnut has limited discovery set forth in the produced some documents Order. See also Gen. Obj. Nos. 1-3. showing the legal structure of Crain Walnut Shelling, LP, Nuez 2. The Request seeks information or Progresivo, Inc, and Grupo documents that are irrelevant, not Progresivo, Inc, but this is not proportionate, and unduly the same as providing such burdensome to the extent it seeks documents for all of the related corporate information or documents parties listed in the Request for from periods other than when the Production. transactions in Super Micro securities occurred. Universal’s position in the Joint Statement supports the relevance 3. The Request seeks information or of this request. Such discovery is documents that are irrelevant, not necessary to fully understand proportionate, and unduly Mr. Crain’s Super Micro burdensome to the extent it seeks investments information or documents concerning the formation of corporate entities In addition, from the discovery other than CWS and its constituting produced thus far, is appears that partners (Crain Walnut Shelling, Inc., there are additional related Nuez Progresivo, Inc., and Grupo entities that Universal would Progresivo, Inc). expect to fall into (j) or (k) of this request, including Shell 4. The implicitly incorporated phrases Processing Facility LP, Crain of “controlled by” and “has the California, Inc., Eco-Shell, Inc., decision-making authority” are Crain International #4, Butte vague, overbroad, and ambiguous, Vista Farms, LLC, Crain Ranch and also potentially call for legal and Sons, NuVista LP, and conclusions. In responding to this Walnut Processing Facility, LP. Request, CWS construes these two phrases as referring to any entity in which Charles R. Crain, Jr., directly or indirectly, owns more than 50 3 Crain Walnut’s Compromise/Position Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc. While Universal has not raised any deficiencies in this production as to CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. Court’s Decision scope of the Court’s revised RFP No. 5. RFP No. Disputed Request Crain Walnut’s Response Chart of Court’s Rulings Universal’s Compromise/Position Crain Walnut’s Compromise/Position Court’s Decision Universal does not believe a limitation to this Request for Production is appropriate and request Crain Walnut fully comply with this Request for Production. Notwithstanding CWS’s objections, CWS has produced the formation documents for CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc. CWS’s objection is SUSTAINED. At best, the requested documents are of speculative relevance to Topic 3. Mr. Crain admitted that he traded in Super Micro securities through the Revocable Trust While Universal has not raised any deficiencies in this production as to CWS, Crain percent of voting stock (for corporations) or more than 50 percent of the beneficial interests (for partnerships). Nevertheless, to the extent the Request seeks any information or documents concerning the structure, ownership, operations, or processes of any entity that Charles R. Crain, Jr. controls or has decisionmaking authority (other than potentially CWS and its constituting partners), the Request seeks information and documents that are irrelevant, not proportionate, duplicative, and unduly burdensome. In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request other than those non-privileged documents produced in response to Request Nos. 3 and 4. 7 Documents sufficient to show the CWS objects to this Request on the legal structure, ownership, and following grounds: decision-making process of the revocable trust discussed in ECF No. 1. The Request seeks information or 85-1 at ¶ 5. documents that are irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. 4 RFP No. Disputed Request Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position 2. The Request seeks information or during the Class Period. documents that are irrelevant, not Universal’s position in the Joint proportionate, and unduly Statement supports the relevance burdensome to the extent it seeks of this request. information or documents concerning entities other than CWS and its constituting partners (Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc). In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request. 8 All documents concerning the formation of the revocable trust discussed in ECF No. 85-1 at ¶ 5. CWS objects to this Request on the following grounds: 1. The Request seeks information or documents that are irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. 2. The Request seeks information or documents that are irrelevant, not proportionate, and unduly burdensome to the extent it seeks information or documents concerning entities other than CWS and its constituting partners (Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc). Crain Walnut’s Compromise/Position Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. Universal does not believe a limitation to this Request for Production is appropriate and request Crain Walnut fully comply with this Request for Production. Notwithstanding CWS’s objections, CWS has produced the formation documents for CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc. Mr. Crain admitted that he traded in Super Micro securities through the Revocable Trust during the Class Period. Universal’s position in the Joint Statement supports the relevance of this request. While Universal has not raised any deficiencies in this production as to CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce 5 Court’s Decision See Court’s Decision re RFP No. 7. RFP No. Disputed Request 9 All Documents concerning (i) the acquisition, transfer, sale, or retention of any Super Micro securities, options, or derivatives, (ii) any positions taken as a hedge against any such Super Micro positions, and (iii) margin trading in Super Micro securities, options or derivatives by: (a) Crain Walnut Shelling, Inc.; (b) the “individual account in [Charles R. Crain, Jr.’s] name” discussed in ECF No. 85-1 at ¶ 5; (c) the revocable trust discussed in ECF No. 85-1 at ¶ 5; Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request. CWS objects to this Request on the following grounds: 1. The Request seeks information or documents that are irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. 2. The Request seeks information or documents that are irrelevant, not proportionate, and unduly burdensome to the extent it seeks information or documents concerning transactions, positions, or margin trading that were not within the Class Period. Universal does not believe a limitation to this Request for Production is appropriate and request Crain Walnut fully comply with this Request for Production. Such trading is directly relevant to the questions that the Court raised, particularly the suspect timing of Crain Walnut’s trades in Super Micro stock and the Court’s questions about reliance. ECF No. 99 at 9. . Crain Walnut’s Compromise/Position similar information for all of its investment funds on relevancy grounds. Court’s Decision Notwithstanding CWS’s objections, CWS has produced documentation sufficient to show CWS’s transactions in Super Micro securities throughout the Class Period and through the end of December 2024. The requested documents are relevant to Topic 3. Further, Mr. Crain has represented that he has “sole ownership and decisionmaking authority for CWS,” which sweeps entities outside the ownership chain of CWS within the scope of relevance to Topic 3. See Dkt. 85-1 ¶ 4. While Universal has not raised any deficiencies in this production related to CWS’s transactions, to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. 3. The Request seeks information or documents that are irrelevant, not (d) Eco-Shell LP; proportionate, and unduly burdensome to the extent it seeks (e) Any other entity or account information or documents concerning controlled by Charles R. Crain, transactions, positions, and margin Jr. that purchased, sold, acquired, trading in Super Micro securities by or transferred Super Micro entities other than CWS. securities, options, derivatives, or took any positions as a hedge 4. The phrases “controlled by” and “has against any Super Micro the decision-making authority” are positions held by itself or other 6 The Court ORDERS CWS to respond to this RFP with respect to: (1) CWS; and (2) any other entity or account identified in the RFP in which Mr. Crain maintains a controlling interest. RFP No. Disputed Request entities controlled by Charles R. Crain, Jr.; and (f) Any other entity for which Charles R. Crain, Jr. has the decision-making authority that purchased, sold, acquired, or transferred Super Micro securities, options, derivatives, or took any positions as a hedge against any Super Micro positions. Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position vague, overbroad, and ambiguous, and also potentially call for legal conclusions. In responding to this Request, CWS construes these two phrases as referring to any entity in which Charles R. Crain, Jr., directly or indirectly, owns more than 50 percent of voting stock (for corporations) or more than 50 percent of the beneficial interests (for partnerships). To the extent the Request seeks any information or documents concerning transactions of Super Micro securities by any entity that Charles R. Crain, Jr. controls or has decision-making authority (other than potentially CWS), the Request seeks information and documents that are irrelevant, not proportionate, duplicative, and unduly burdensome. Crain Walnut’s Compromise/Position Court’s Decision Notwithstanding CWS’s objections, CWS has produced documentation sufficient to show CWS’s transactions in Super Micro securities throughout the Class Period and through the end of December 2024. See Court’s Decision re RFP No. 9. This RFP is overbroad to the extent it seeks “all Documents related to” and “all communications . . . concerning” the decision to In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request. 10 As to each entity identified in Request 9(a)-(f), all Documents related to the decision to engage in such transactions through said entity, including all communications with any investment advisor or tax advisor concerning the decision to invest through said entity. CWS objects to this Request on the following grounds: 1. The Request seeks information or documents that are irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. Universal does not believe a limitation to this Request for Production is appropriate and request Crain Walnut fully comply with this Request for Production. 7 RFP No. Disputed Request Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position Such trading is directly relevant 2. The Request seeks information or to the questions that the Court documents that are irrelevant, not raised, particularly the suspect proportionate, and unduly timing of Crain Walnut’s trades burdensome to the extent it seeks in Super Micro stock and the information or documents concerning Court’s questions about reliance. decisions to engage in transactions ECF No. 99 at 9. that were not within the Class Period. 3. The Request seeks information or documents that are irrelevant, not proportionate, and unduly burdensome to the extent it seeks information or documents concerning decisions to engage in transactions by entities other than CWS. Crain Walnut’s Compromise/Position While Universal has not raised any deficiencies in this production related to CWS’s transactions, to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. 4. The phrase “related to the decision to engage in such transactions” is vague, overbroad, and ambiguous, and also potential calls for a legal conclusion. In responding to this Request, CWS construes the phrase as seeking any information about Super Micro’s business, as well as any advice on whether to transact in Super Micro securities. 5. The phrase “through said entity” is vague, overbroad, and ambiguous, and also potentially calls for a legal conclusion. To the extent the phrase calls for documents showing why a transaction occurred through the 8 Court’s Decision engage in the transactions in question. The Court ORDERS CWS to respond to this RFP with respect to documents and communications, if any exist, that demonstrate why the at-issue transactions were made. CWS’s production is limited to those entities within the scope of the Court’s limitations on RFP No. 9. RFP No. Disputed Request Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position entity at issue (as opposed to any another), the Request seeks information or documents that are irrelevant (and also not proportionate and unduly burdensome). 6. The Request incorporates the phrases “controlled by” and “has the decision-making authority” which are vague, overbroad, and ambiguous, and also potentially call for legal conclusions. In responding to this Request, CWS construes these two phrases as referring to any entity in which Charles R. Crain, Jr., directly or indirectly, owns more than 50 percent of voting stock (for corporations) or more than 50 percent of the beneficial interests (for partnerships). To the extent the Request seeks any information or documents concerning transactions of Super Micro securities by any entity that Charles R. Crain, Jr. controls or has decision-making authority (other than potentially CWS), the Request seeks information and documents that are irrelevant, not proportionate, duplicative, and unduly burdensome. In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request. 9 Crain Walnut’s Compromise/Position Court’s Decision RFP No. 12 Chart of Court’s Rulings Disputed Request Crain Walnut’s Response Universal’s Compromise/Position Documents sufficient to show the CWS objects to this Request on the Universal does not believe a financial condition, including annual following grounds: limitation to this Request for revenues, income, cash flows, assets, Production is appropriate and debts, and liabilities, of the 1. The Request seeks information or request Crain Walnut fully following during the calendar years documents that are irrelevant and comply with this Request for ended 2022, 2023, and 2024, and all beyond the permissible scope of Production. federal and state tax returns and limited discovery set forth in the audited financials of any kind Order. See also Gen. Obj. Nos. 1-3. Crain Walnut has produced some prepared within the past three years: documents showing the past 2. The Request seeks information or financial condition of Crain (a) Crain Walnut Shelling LP; documents that are irrelevant, not Walnut Shelling, LP, but this is proportionate, and unduly not the same as providing such (b) Crain Walnut Shelling, Inc.; burdensome to the extent it seeks documents for all of these information or documents concerning entities for all request time (c) Nuez Progresivo, Inc.; the financial condition of any periods. person/entity other than CWS. (d) Grupo Progresivo, Inc.; and The relevance of the financial 3. The Request seeks information or position of Crain Walnut’s (e) Charles R. Crain, Jr. documents that are irrelevant, not limited partner, Crain Walnut proportionate, and unduly Shelling, Inc., other companies burdensome to the extent it seeks in its ownership structure like information or documents other than Nuez Progresivo, Inc. and Grupo those concerning the present financial Progresivo, Inc., and its sole condition of CWS. ultimate owner, Mr. Crain, is well established in the Joint Subject to and without waiving the Statement. Further, documents objections above, CWS agrees to showing the financial condition produce the “Financial Statements and of all of these entities for 2024 is Independent Accountant’s Review extremely relevant to Crain Report of Crain Walnut Shelling, LP: Walnut’s ability to continue as a December 31, 2023 and 2022.” going concern. 10 Crain Walnut’s Compromise/Position Notwithstanding CWS’s objections, CWS produced documentation sufficient to show CWS’s financial condition, including CWS’s financial statements and monthly brokerage statements throughout 2024. While Universal has not raised any deficiencies in this production related to CWS’s financial condition, to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. Court’s Decision The financial condition of entities other than CWS is, at best, of speculative relevance to Topic 2. The Court ORDERS CWS to respond to this RFP with respect to CWS. RFP No. Disputed Request 15 All Documents concerning the decision (i) to have Crain Walnut Shelling, LP move for appointment as Lead Plaintiff or (ii) to not have Charles R. Crain, Jr. or any other entity through which Charles R. Crain, Jr. traded Super Micro securities seek appointment as Lead Plaintiff. Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position CWS objects to this Request on the Universal does not believe a following grounds: limitation to this Request for Production is appropriate and 1. The Request seeks information or requests Crain Walnut fully documents that are irrelevant and comply with this Request for beyond the permissible scope of Production. Universal’s position limited discovery set forth in the in the Joint Statement supports Order. See also Gen. Obj. Nos. 1-3. the relevance of this request. 2. The Request seeks documents protected by the attorney work product doctrine or attorney-client privilege. Crain Walnut’s Compromise/Position CWS will not provide information related to RFP No. 15 as it is not permitted discovery under the Court’s Order. Notwithstanding CWS’s objections, there are no responsive documents. Furthermore, the decision to have CWS seek appointment as lead plaintiff was a decision made in consultation with counsel and is protected by attorney-client privilege and/or work-product doctrine. In reliance upon the above-listed objections, CWS will not produce documents responsive to this Request. 11 Court’s Decision CWS’s objection is SUSTAINED. The requested documents are outside the scope of Topics 1-3. Chart of Court’s Rulings Disputed Interrogatories Rog No. Disputed Request 1 For each of the following entities, identify and describe each entity’s legal structure, ownership, organizational structure, decisionmaking process, business and operations, as well as each of their current or former partners and board members and who holds final decision-making authority for each entity: (a) Crain Walnut Shelling, LP; (b) Crain Walnut Shelling, Inc.; (c) Nuez Progresivo, Inc.; (d) Grupo Progresivo, Inc.; (e) Eco-Shell LP; (f) Crain Orchards, Inc.; (g) C.R. Crain & Sons, Inc. d/b/a Crain of California; (h) Crain Ranch d/b/a Crain Marketing, Inc.; (i) Crain Farming, LP; (j) Crain International #2; Crain Walnut’s Response Universal’s Compromise/Position CWS objects to this Interrogatory on the Universal does not believe a following grounds: limitation to this Interrogatory is appropriate and requests Crain 1. The Interrogatory seeks information Walnut fully comply with this that is irrelevant and beyond the Interrogatory. Crain Walnut has permissible scope of limited produced some documents discovery set forth in the Order. See showing the legal structure of also Gen. Obj. Nos. 1-3. Crain Walnut Shelling, LP, Nuez Progresivo, Inc, and Grupo 2. The Interrogatory seeks information Progresivo, Inc, but this is not that is irrelevant, not proportionate, the same as a description of the and unduly burdensome to the extent “legal structure, ownership, it seeks corporate information for organizational structure, periods other than when the decision-making process, transactions in Super Micro Securities business and operations… who occurred. holds final decision-making authority” for all of the related 3. The Interrogatory seeks information parties listed in the that is irrelevant, not proportionate, Interrogatory. and unduly burdensome to the extent it seeks corporate information In addition, from the discovery concerning the structure, ownership, produced thus far, is appears that decision-making processes, and there are additional related operations of corporate entities other entities that Universal would than CWS and its constituting expect to fall into (k), (l), or (n) partners (Crain Walnut Shelling, Inc., of this request, including Shell Nuez Progresivo, Inc., and Grupo Processing Facility LP, Crain of Progresivo, Inc.). California, Inc., Eco-Shell, Inc., Crain International #4, Butte 4. The phrases “controlled by” and “has Vista Farms, LLC, Crain Ranch the decision-making authority” are and Sons, NuVista LP, and vague, overbroad, and ambiguous, Walnut Processing Facility, LP. 12 Crain Walnut’s Compromise/Position Notwithstanding CWS’s objections, CWS has produced the formation documents for CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc. While Universal has not raised any deficiencies in this production as to CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., to the extent it does, CWS will consider Universal’s requests and respond appropriately. CWS further notes that Universal has refused to produce similar information for all of its investment funds on relevancy grounds. Court’s Decision See Court’s Decision re RFP No. 5. The Court ORDERS CWS to respond to the following revised interrogatory: “For each of the following entities, identify and describe each entity’s legal structure, ownership, organizational structure, decision-making process, as well as each of their current or former partners and board members and who holds final decision-making authority during the relevant period: (1) CWS; and (2) any entity with a direct or indirect ownership interest in CWS.” Rog No. Disputed Request (k) any other entity controlled by Charles R. Crain, Jr.; (l) any other entity for which Charles R. Crain, Jr. has the decision-making authority; (m) any other entity for which You have the authority to direct purchases of any securities; and (n) any other entity related to the Crain family business. Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position and also potentially call for legal conclusions. In responding to this Interrogatory, CWS construes these two phrases as referring to any entity in which Charles R. Crain, Jr., directly or indirectly, owns more than 50 percent of voting stock (for corporations) or more than 50 percent of the beneficial interests (for partnerships). To the extent the Interrogatory seeks information concerning the structure, ownership, operations, or processes of any entity that Charles R. Crain, Jr. controls or has decision-making authority (other than potentially CWS and its constituting partners), the Interrogatory seeks information and documents that are irrelevant, not proportionate, duplicative, and unduly burdensome. 5. The answer to the Interrogatory may be determined by examining, auditing, compiling, abstracting, or summarizing CWS’s business records, and the burden of deriving or ascertaining the answer is substantially the same for the parties. Subject to and without waiving the objections above, pursuant to Federal Rule of Civil Procedure 33(d), CWS refers Universal to the formation 13 Crain Walnut’s Compromise/Position Court’s Decision Rog No. Disputed Request 7 Identify the sources of the funds You used to purchase Super Micro Securities, including through any entity or account You used to make such an investment. Chart of Court’s Rulings Crain Walnut’s Response Universal’s Compromise/Position documents for CWS, Crain Walnut Shelling, Inc., Nuez Progresivo, Inc., and Grupo Progresivo, Inc., produced in this case. See CWSLP-000161– CWSLP-000234. CWS objects to this Interrogatory on the following grounds: 1. The Interrogatory seeks information that is irrelevant and beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. Universal does not believe a limitation to this Interrogatory is appropriate and requests Crain Walnut fully comply with this Interrogatory. Crain Walnut has referred Universal to monthly brokerage statements, which do not provide any information regarding the source of the funds, beyond reflecting that Crain Walnut purchased hundreds of millions of dollars in securities on margin. 2. The Interrogatory seeks information that is irrelevant, not proportionate, and unduly burdensome to the extent it seeks information concerning transactions in Super Micro Securities by persons or entities other than In a subsequent letter, counsel to CWS. Crain Walnut represented that [REDACTED]. Ex. A at 4. Subject to and without waiving the That representation by counsel objections above, pursuant to Federal (which Mr. Crain has not Rule of Civil Procedure 33(d), CWS endorsed through an actual refers Universal to the monthly response to Universal’s brokerage statements CWS has Interrogatory) directly produced in this litigation. See CWSLP- contradicts Mr. Crain’s prior 000002–CWSLP-000139, CWSLPrepresentation to the Court that 000235–CWSLP-000294. Crain Walnut invests monies “earned through multiple [REDACTED]. sources of business and 14 Crain Walnut’s Compromise/Position Court’s Decision During the parties’ meet and confer, CWS agreed to, and did confirm, [REDACTED]. CWS believed this fully resolved the dispute. CWS’s objection is SUSTAINED. The requested information is outside the scope of Topics 1-3. Chart of Court’s Rulings Universal’s Compromise/Position investment income.” ECF No. 85-1 ¶ 7. Neither Mr. Crain’s sworn declaration nor the representation from his counsel referenced [REDACTED] as a source of funds used to purchase Super Micro stock. Rog No. Disputed Request Crain Walnut’s Response 14 Identify and describe Your decision to have Crain Walnut Shelling, LP move for Lead Plaintiff in the Super Micro Securities Class Action, including why Charles R. Crain, Jr., or any other entities through which he invested, did not seek appointment as Lead Plaintiff. CWS objects to this Interrogatory on the following grounds: 1. The Interrogatory seeks information beyond the permissible scope of limited discovery set forth in the Order. See also Gen. Obj. Nos. 1-3. 2. The Interrogatory potentially seeks information protected by the attorney work product doctrine or attorneyclient privilege. Given the objections above, CWS provides no answer. Crain Walnut’s Compromise/Position Court’s Decision Universal does not believe a limitation to this Interrogatory is appropriate and requests Crain Walnut fully comply with this Interrogatory. CWS will not provide information related to Interrogatory No. 14 as it is not permitted under the Court’s Order. See Court’s Decision re RFP No. 15. Universal’s position in the Joint Statement supports the relevance of this request. In addition, Crain Walnut’s objections to this interrogatory on the basis of attorney-client privilege is highly concerning. Read plainly, this objection means that Mr. Crain has no independent understanding of why Crain Walnut is the Lead Plaintiff movant, rather than Mr. Crain himself or any of the other Super Micro Trading Vehicles. The clear implication is that Mr. Crain has already delegated important decision making to his Notwithstanding CWS’s objections, there are no responsive documents. 15 Furthermore, the decision to have CWS seek appointment as lead plaintiff was a decision made in consultation with counsel and is protected by attorney-client privilege and/or work-product doctrine. Rog No. Disputed Request Crain Walnut’s Response Chart of Court’s Rulings Universal’s Compromise/Position attorneys, rather than exercising the supervision required of a Lead Plaintiff. 16 Crain Walnut’s Compromise/Position Court’s Decision

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?