U.S. Commodity Futures Trading Commission v. Banc de Binary, Ltd.

Filing 101

ORDER Denying 76 Motion to Stay Discovery. Granting 79 Motion for Leave to File Excess Pages. Granting 81 Motion to Extend Time to Disclose Experts. Granting 86 Motion to Seal. Granting 94 Motion to Extend Time to Reply. Signed by Magistrate Judge Cam Ferenbach on 1/15/2015. (Copies have been distributed pursuant to the NEF - SLR)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 *** 4 5 U.S. COMMODITY FUTURES TRADING COMMISSION, 6 Plaintiffs, 7 8 Case No. 2:13–cv–992–MMD–VCF vs. BANC DE BINARY, LTD., et al., ORDER Defendants. 9 10 This matter involves the U.S. Commodity Futures Trading Commission’s civil-enforcement action 11 against Banc de Binary, Ltd., et al. Five motions are before the court: (1) BDB Services Ltd.’s Motion to 12 13 14 Stay Discovery (#76); (2) the Commission’s Motion for Leave to File Excess Page (#79); (3) the Commission’s Motion to Extend Time to Disclose Experts (#81); (4) the Commission’s Motion to 15 Seal (#86); and the Commission’s Motion to Extend Time to Reply (#94). For the reasons stated below, 16 BDB Services’ Motion to Stay is denied and the Commission’s motions are granted. 17 I. Defendants’ Motion to Stay Discovery 18 First, Defendants, BDB Services Ltd., BO Systems Ltd., Banc de Binary Ltd., E.T. Binary Options, 19 Ltd., Oren Shabat Laurent, move to stay discovery pending the resolution of their motion for partial 20 21 summary judgment. When evaluating a motion to stay discovery while a dispositive motion is pending, the court initially considers the policy of the Federal Rules of Civil Procedure: the guiding premise of the 22 Rules is that the Rules “should be construed and administered “to secure the just, speedy, and inexpensive 23 determination of every action.” Consistent with this policy, the Rules do not provide for automatic or 24 blanket stays of discovery when a potentially dispositive motion is pending. See Blankenship v. Hearst 25 1 1 2 Corp., 519 F.2d 418, 429 (9th Cir. 1975) (“Under the liberal discovery principles of the Federal Rules defendants were required to carry a heavy burden of showing why discovery was denied.”). 3 In the District of Nevada, courts consider, inter alia, the following two-factor test: (1) “the pending 4 motion must be potentially dispositive of the entire case or at least dispositive of the issue on which 5 discovery is sought,” and (2) “the court must determine whether the pending potentially dispositive motion 6 can be decided without additional discovery.” Tradebay, LLC v. eBay, Inc., 278 F.R.D. 597, 602 (D. Nev. 7 2011). “In applying this two-factor test, the court deciding the motion to stay must take a ‘preliminary 8 peek’ at the merits of the pending dispositive motion to assess whether a stay is warranted. If the party 9 moving to stay satisfies both prongs, a protective order may issue; otherwise, discovery should proceed.” 10 Id. The party seeking a stay carries a “heavy burden” of demonstrating why discovery should be denied. 11 Blankenship, 519 F.2d at 429. 12 Defendants failed to satisfy their burden because the Honorable Miranda M. Du, U.S. District 13 14 15 Judge, has already determined that discovery is required to adjudicate the issues underlying Defendants’ pending Motion for Summary Judgment. On July 15, 2013, Defendants moved to dismiss counts one and 16 four the Commission’s complaint, arguing that “the instruments that [Defendants] offered and sold were 17 not ‘options’ as defined in the [Commodity Exchange Act] and were not otherwise subject to regulation 18 by the [Commission] during the period in question.” (Def.’s Mot. to Dismiss (#18) at 5:1–3). 19 Judge Du denied Defendants’ motion to dismiss, stating that the argument raised “cannot be 20 resolved at this pleading stage” because it requires the court to look beyond the complaint. That is, 21 22 Defendants conceded that their financial products are “options,” which are financial instruments that are normally subject to the Commission’s jurisdiction; but Defendants contended that their “products are 23 different than” normal options. (See Order #44 at 6:1–12). 24 25 2 1 2 Now, Defendants move for partial summary judgment on the same ground: “this court should grant judgment in defendants’ favor on count one of the amended complaint because the instruments that BDB 3 offered and sold were not “options” as defined in the [Commodity Exchange Act] and were not otherwise 4 subject to regulation by the [Commission] during the period in question.” (Def.’s Mot. Summ. J. (#74) 5 at 9:3–6). As indicated by Judge Du’s order, this issue raises a question of fact, not a question of law. 6 Accordingly, on December 25, 2014, the Commission filed a Rule 56(d) Motion in opposition to 7 Defendants’ Motion for Summary Judgment. 8 9 The parties do not agree that the discovery conducted to date is sufficient to resolve Defendants’ Motion for Partial Summary Judgment. The Commission asserts that it lacks the facts necessary to oppose 10 Defendants’ motion; but, as Defendants correctly assert, the Commission “never explains how the 11 discovery it claims to have requested but not received will have any bearing on the issue forming the basis 12 for Defendants’ motion for partial summary judgment.” (Def.’s Reply #89 at 3:10–15). Nonetheless, the 13 14 15 16 court denies Defendants’ motion to stay because it is Defendants’ burden to demonstrate that additional discovery is unnecessary. Tradebay, 278 F.R.D. at 602. Defendants failed to carry their “heavy burden” here. See Blankenship, 519 F.2d at 429. 17 Additionally, denial of the motion effectuates the Federal Rule’s general policies. A motion to stay 18 discovery pending a motion to dismiss is unlike a motion to stay discovery pending a motion for summary 19 judgment. The former merely delays the beginning of discovery; the latter disrupts discovery that is in 20 progress and risks protecting discoverable information from disclosure. When deciding a motion to 21 22 dismiss, the court is generally prohibited from considering “matters outside the pleadings.” FED. R. CIV. P. 12(d). As a result, a discovery stay pending a motion to dismiss may result in “the just, speedy, and 23 inexpensive determination of [an] action” because discovery is costly and unnecessary to adjudicate a 24 merited motion to dismiss. 25 3 Summary judgment is different. When opposing a motion for summary judgment, a party may 1 2 assert that “it cannot present facts essential to justify its opposition.” See FED. R. CIV. P. 56(d). As a result, 3 a discovery stay pending a motion for summary judgment is less likely to result in “the just, speedy, and 4 inexpensive determination of every action” because discovery is normally required to adjudicate summary 5 judgment. Even if a court took a “preliminary peek” at a party’s pending motion for summary judgment 6 and became “convinced” that the moving party would prevail, see Tradebay, 278 F.R.D. at 602, a 7 discovery stay risks preempting the nonmoving party’s right to seek additional discovery under Rule 56(d) 8 and risks preventing the discovery of facts that may have alerted the court’s judgment. This would not 9 effectuate “the just, speedy, and inexpensive determination of every action.” FED. R. CIV. P. 1. 10 II. The Commission’s Motions 11 The court now turns to the Commission’s motions (Docs. ##79, #81, #86, #94). They are 12 unopposed. Local Rule 7-2(d) governs unopposed motions. It states that “[t]he failure of an opposing party 13 14 15 to file point and authorities in response to any motion shall constitute a consent to the granting of the motion.” Therefore, the Commission’s motions are granted. Additionally, the court finds good cause to 16 (1) permit the Commission to file excess pages in connection with its motion to compel, (2) extend the 17 time to disclose experts from December 5, 2014, to December 12, 2014, (3) seal the Commission’s 18 opposition to Defendants’ motion for a protective order, and (4) the Commission to file an untimely reply 19 to its motion to compel, as requested in the motions. 20 21 22 ACCORDINGLY, and for good cause shown, IT IS ORDERED that BDB Services Ltd.’s Motion to Stay Discovery (#76) is DENIED. IT IS FURTHER ORDERED that the Commission’s Motion for Leave to File Excess Page (#79) 23 is GRANTED. 24 25 4 1 2 IT IS FURTHER ORDERED that the Commission’s Motion to Extend Time to Disclose Experts (#81) is GRANTED. 3 IT IS FURTHER ORDERED that the Commission’s Motion to Seal (#86) is GRANTED. 4 IT IS FURTHER ORDERED that the Commission’s Motion to Extend Time to Reply (#94) is 5 GRANTED. 6 IT IS SO ORDERED. 7 DATED this 15th day of January, 2015. 8 9 _________________________ CAM FERENBACH UNITED STATES MAGISTRATE JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 5

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