Alta Partners, LLC v. Suncar Technology Group, Inc.

Filing 54

ORDER granting 53 Letter Motion for Discovery. Application granted. The parties' request for a pre-motion discovery conference, Dkt. No. 53, is granted. The Court will hold a teleconference to discuss the parties' positions on November 26, 2024 at 4:00 p.m. The parties are directed to the Courts Individual Rules of Practice in Civil Cases, which are available on the Courts website. Rule 2 of the Court's Individual Rules contains the dial-in number for the conference and other relevant instructions. The parties are specifically directed to comply with Rule 2(C) of the Court's Individual Rules. The Clerk of Court is directed to terminate the motion pending at Dkt. No. 53. SO ORDERED. (Signed by Judge Gregory H. Woods on 11/22/2024) (sgz)

November 21, 2024
VIA E-FILING
The Honorable Gregory H. Woods
United States District Judge
Southern District of New York
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, New York 10007
Re:

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 11/22/24

MEMORANDUM ENDORSED

Joint Letter Re Discovery in Alta Partners, LLC v. SunCar Technology Group,
Inc. Case No. 23-cv-7974 (GHW)

Dear Judge Woods:
Pursuant to Rule 2(E)(ii) of Your Honor’s Individual Rules of Practice, plaintiff Alta
Partners, LLC (“Alta”) and defendant SunCar Technology Group, Inc. (“SunCar”) submit this
joint letter to request a pre-motion conference concerning discovery. SunCar respectfully requests
a stay of discovery pending the Court’s ruling on SunCar’s Rule 12(b)(6) motion; or, alternatively,
for an extension to March 2025 complete fact discovery. Alta opposes this request and anticipates
moving to compel SunCar to provide discovery.
SunCar’s Position
Legal standards: whether to stay discovery pending a motion to dismiss depends on “(1)
whether a defendant has made a strong showing that the plaintiff’s claim is unmeritorious, (2) the
breadth of discovery and the burden of responding to it, and (3) the risk of unfair prejudice to the
party opposing the stay.” Am. Fed. of Musicians and Employers’ Pension Fund v. Atlantic
Recording Corp., No. 15- cv-6267-GHW, 2016 WL 2641122, at *1 (S.D.N.Y. Jan. 8, 2016).
State of discovery: SunCar substantially completed productions of non-privileged
documents and served a privilege log by June 5, 2024. Five months later in November 2024, and
one month before the present fact discovery cutoff, Plaintiff Alta noticed in-person depositions of
SunCar’s China-based CEO (11/21), CFO (11/25), COO (12/3), General Counsel (12/4), and a
director who had been CEO of the SPAC that acquired SunCar (12/9).
Although SunCar explained that only its CEO and the director/former SPAC CEO have
relevant knowledge, and furthermore, that two weeks’ notice makes it impossible to arrange
depositions prior to the current discovery cutoff, Alta has insisted on deposing SunCar’s entire
China-based C-suite and Canada-based board member within the next month. After a telephonic
meet and confer attended by lead counsels lasting approximately 30 minutes on November 13,
2024, as well as exchanges of letters and e-mails between October 30-November 18, 2024, Alta
ultimately declined to extend discovery beyond year-end to accommodate these senior executives’
schedules, or to await an outcome on the pending motion to dismiss. Exs. A (Alta letter), B
(SunCar Response), and C (e-mails, including explaining SunCar’s CEO’s schedule and offering
for him to fly to the U.S. during the Lunar New Year holidays for deposition).

The Pending Motion Re Count I: SunCar has moved to dismiss Count I, which revolves
around whether SunCar’s Form F-4 registered the exercise-issuance of Warrant Shares underlying
SunCar’s public warrants. The 12(c) motion having been fully briefed, SunCar will not argue the
merits anew here. SunCar notes, however, that “merits” sufficient to warrant a stay does not require
that the Court declare SunCar the victor now, only that it has “raised viable grounds” for dismissal.
HAHA Glob., Inc. v. Barclays, 2020 WL 832341, at *1 (S.D.N.Y. Feb. 20, 2020) (“a peek at the
complaint reveals that Defendant’s position … may have merit.”); see also Trustees of New York
City Dist. Council of Carpenters Pension Fund v. Showtime on Piers LLC, 2019 WL 6912282, at
*1 (S.D.N.Y. Dec. 19, 2019) (where Defendants “have presented substantial arguments for
dismissal of many, if not all, of the claims asserted in this lawsuit, a stay of discovery is
appropriate.”) Should the Court find that SunCar has raised viable grounds for dismissal, the Court
should stay discovery pending a ruling for several reasons:
Dismissal of Count I Will Moot Much of the Remaining Discovery: all discovery going
to whether SunCar’s F-4 registered the Warrant Shares (Count I) would become irrelevant if Count
I is dismissed. The only discovery that would remain would concern what “efforts” SunCar took
to register the Warrant Shares.
Here, however, much, if not most, of Alta’s discovery requests and deposition topics focus
on whether registration of warrant exercise occurred on the Form F-4 (Count I). See, e.g., Ex. D
(Rog Nos. 1-5, 7-8 (concerning public warrant exercisability), 9 (private warrant exercisability),
10 (demanding affirmative defenses, potentially implicating advice of counsel); Ex. E (RFP Nos.
2 (requests to exercise public warrants), RFP No. 3 (exercisability of public warrants), 4 (warrant
agreement exercise provisions, implicating registration), 7-9, 14 (drafting history and fees for F4), 16 (currentness of the prospectus), 23 (exercise of private warrants); 26 (affirmative defenses,
potentially implicating advice of counsel); Ex. F (deposition notice listing numerous topics going
solely to Count I, and many more to narrowing if it is dismissed, including, e.g., Topics 3(e)-(f)
(Alta’s exercise attempts and SunCar’s SEC filings, including F-4), Topic 5 (public warrant
exercise and conditions); Topic 6 (private warrant exercise and conditions), Topic 7 (“the
registration of the Warrant Shares for any and all purposes and in connection with any and all
transactions”), Topic 8 (“All drafts … [of] the Form F-4” “SunCar’s understanding of the … F-4”
“registration of the Warrant Shares on the Form F-4 for any and all purposes”, “representations,
disclosures, and statements made in the Form F-4”, “Calculation of Filing Fee table … to the Form
F-4”)).
All of these matters would be moot if Count I is dismissed. “A stay may [] have the
advantage of simplifying and shortening discovery in the event that some of Plaintiffs’ claims are
dismissed and others survive, by limiting the scope of the parties' inquiry to claims that have been
established as potentially viable.” Spinelli v. Nat'l Football League, 2015 WL 7302266, at *2
(S.D.N.Y. Nov. 17, 2015); Chesney v. Valley Stream Union Free Sch. Dist. No. 24, 236 F.R.D.
113, 116 (E.D.N.Y. 2006) (“[b]y waiting until a decision is reached on the pending motion, the
areas of discovery may well be substantially reduced, if not eliminated[.]”) Indeed, should Count
I be dismissed, the only matters that would be subject to discovery are what “efforts” SunCar made
to register: a straightforward fact inquiry. Whereas if it is not dismissed, discovery may be more
complex—which complexities can be better managed with the benefit of the Court’s opinion, as
set forth below.

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Even assuming Count I survives, the Court’s ruling will dictate the direction and scope
of discovery, with important litigation consequences for the parties: SunCar’s position is that
Count I, whether an exercise-issuance was registered, should be determined as a matter of law
from the face of the F-4. Thus, documents underlying the drafting of the registration statement
should be irrelevant. However, if the Court disagrees, the Court’s opinion will be the only source
of guidance concerning what is or is not relevant.
That guidance will be particularly important here because, unsurprisingly, effectively all
materials concerning the Form F-4 consist of communications by counsel or privileged work
product. Thus, to the extent the Court does not dismiss Count I, privileged materials are likely to
be implicated—which may engender an affirmative waiver by SunCar, so it can rely on privileged
information to defend, or, if it does not waive, then waiver and scope of waiver-related discovery
disputes. On these issues, the parties are presently in the blind but can form informed positions
with the benefit of the Court’s opinion on what does and does not matter.
Unnecessary Burden And Waste: if Count I survives, deposition questioning as to topics
related to Counts I and II should happen at the same time. Whereas if depositions occurred prior
to a ruling, and Count I is dismissed, time spent on it would have been wasted. In short, “[i]f
defendant[’s] dismissal motion[] prove[s] meritorious, the burden of litigating the discovery issues
will have been for nothing and defendants will have suffered the burden of unnecessary legal fees.”
Picture Pats., LLC v. Terra Holdings LLC, 2008 WL 5099947, at *3 (S.D.N.Y. Dec. 3, 2008); see
also Rivera v. Heyman, 1997 WL 86394, at *1 (S.D.N.Y. Feb. 27, 1997) (“Given that disposition
of the dismissal motion[s] may significantly narrow… the issues remaining in the case, proceeding
with discovery while the motion is pending would waste the parties’ resources and would
constitute an undue burden on defendants.”)
Impracticality and scheduling: SunCar does not believe Alta acted in bad faith in noting
depositions so late in the discovery period, since many intervening events, including for example
extensive settlement discussions, negotiations over the first planned 12(c) motion and Alta’s
dismissal of its Securities Act claims, and the briefing of the 12(c) motion, all engendered
substantial delays that is not the fault of either party. However, Alta’s present insistence on
deposing the entire China-based C-Suite of a billion-dollar listed company in just 3 weeks, with
thanksgiving in the middle, is simply not practical or considerate of their schedules. See Palladino
v. JPMorgan Chase & Co., 345 F.R.D. 270, 274 (E.D.N.Y. 2024), aff'd, 2024 WL 1672282
(E.D.N.Y. Apr. 18, 2024) (stay warranted where “the requested discovery would be significant,
especially the depositions of Defendants' senior executives.”).
No prejudice to Alta: SunCar is a billion-dollar company, liquid, and litigating in good
faith. Should Alta prevail, it can try to seek prejudgment interest for the time elapsed. But it cannot
seek attorneys’ fees, so any expenditures it incurs on potentially moot issues would be wasted, just
as Defendant’s expenditures would be. Waiting on the Court’s ruling would only make things more
efficient, and proceeding now can only create confusion and prejudice SunCar.
For the foregoing reasons, the Court should stay discovery pending its ruling on the Rule
12(c) motion and reset the schedule upon such ruling, or, in the alternative, grant an extension of
three months until March 17, 2025 to complete fact discovery.

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Alta’s Position
SunCar’s Request for a Stay Should be Denied. “A motion to dismiss does not
automatically stay discovery.” K.A. v. City of New York, No. 16-cv-04936, 2022 WL 3996710, at
*2 (S.D.N.Y. Sept. 1, 2022) (quotation marks omitted). Moreover, this is not a typical motion to
dismiss filed at the outset of litigation.
On the contrary, this case has been pending since September 2023, SunCar only filed its
motion in September 2024, and the parties are already far along in discovery. The parties have
already exchanged discovery requests, discovery responses, and documents. Indeed, besides a
handful of remaining issues concerning SunCar’s discovery responses and document production
(discussed below), the only remaining hurdle for the parties to complete fact discovery in advance
of the December 19 deadline are the depositions of fact witnesses. See Richards v. Kallish, No.
22-cv-9095, 2024 WL 1833920, at *3 (S.D.N.Y. Apr. 26, 2024) (holding that the near-completion
of fact discovery weighed against a stay). Accordingly, this is not a case where a short stay at the
outset of the case might spare the parties from substantial burdens without prejudicing the plaintiff.
E.g., Negrete v. Citibank, N.A., No. 15-cv-7250, 2015 WL 8207466, at *2 (S.D.N.Y. Dec. 7, 2015)
(granting stay where ‘[a]ny prejudice stemming from delay is likely to be minimal … since this
case is in its infancy”).
To that end and in anticipation of the current fact discovery deadline, Alta timely noticed
depositions of five fact witnesses and one Rule 30(b)(6) deposition on November 4. In response,
SunCar claimed that some of these witnesses—including witnesses listed on their Initial
Disclosures—did not have relevant knowledge. Alta disagrees and, in any event, is entitled to test
this assertion through a deposition. SunCar also claimed that key witnesses simply cannot attend
a deposition until sometime in 2025. Alta was prepared to work with SunCar on deposition
scheduling, but cannot accept that SunCar’s executives are simply unavailable for months on end.
Indeed, SunCar just this week noticed five depositions of Alta’s witnesses between December 9
and 13. These witnesses have busy schedules and other commitments, but Alta is prepared to
proceed with these depositions in-person in New York on the dates noticed.
Moreover, this is not a case where the defendant has a pending motion that might terminate
the action, which means that each of the witnesses will still have to appear for a deposition. See
Richards v. Kallish, No. 22-cv-9095, 2024 WL 1833920, at *2 (S.D.N.Y. Apr. 26, 2024) (finding
the fact that defendants only brought a partial motion dismiss weighed against a stay); CT Espresso
LLC v. Lavazza Premium Coffees Corp., No. 22-cv-377, 2022 WL 1639485, at *2 (S.D.N.Y. May
24, 2022) (same). Alta maintains that SunCar’s motion to dismiss lacks merit for the reasons set
forth in its opposition and notices of supplemental authority. While SunCar hopes that the Court’s
decision might “narrow” the remaining issues, Alta will still be entitled to inquire at depositions
into the Form F-4 and the timing of the registration of the warrant shares regardless of the outcome
on Count I. Similarly, the Court should not reward SunCar’s gamesmanship in suggesting that it
is waiting on the Court’s decision to decide whether to affirmatively waive the attorney-client
privilege. The time has come (and passed) for SunCar to make that decision.
Alta Does Not Oppose a Brief Extension of the Discovery Schedule, but SunCar’s
Request for a Three-Month Extension is Unwarranted. Alternatively, SunCar seeks an extension
of the fact discovery deadline until March 17, 2025. Alta does not oppose a reasonable extension
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of the deadline until December 31, 2024—and a corresponding extension of the expert discovery
deadlines—in light of the delays caused by SunCar’s last-minute request for a stay submitted just
days before depositions were noticed to proceed. But Alta opposes a further extension that
effectively permits SunCar to defer depositions until there is a decision on its motion to dismiss.
Indeed, if the motion is still pending in February 2025, Alta anticipates that SunCar will come
back to the Court seeking yet another extension. Besides waiting out a decision on its motion, the
only other ground offered for a three-month extension is the purported unavailability of SunCar’s
witnesses. These witnesses, however, should be made available within the deadline for fact
discovery that SunCar previously agreed to.
SunCar Should be Compelled to Provide Additional Discovery. Alta’s counsel (including
undersigned counsel) met and conferred with SunCar’s lead counsel on November 13 regarding
several discovery issues, which were also raised in Alta’s October 30 letter to SunCar.1 Two issues
remain unresolved.
First, Alta’s RFP No. 10 requested documents relating to the timing of SunCar’s filing of
its Form F-1. SunCar claims that it used “best efforts” to register the shares underlying Alta’s
public warrants via a Form F-1, But SunCar has not produced any documents concerning the
preparation of the Form F-1 and what efforts it undertook to have the Form F-1 filed and declared
effective after the closing of the business combination. Alta seeks an order compelling SunCar to
produce such documents.
Second, Alta’s RFP No. 16 sought documents concerning the currentness of the prospectus
to SunCar’s Form F-4. SunCar claims that there were material changes that rendered the Form F4 prospectus stale by the time of Alta’s attempted exercise. But again, it has not produced any
documents concerning those alleged changes. In particular, SunCar has argued that the Form F4’s prospectus lacked audited financial statements for financial year ended December 31, 2022.
Yet public documents reveal it terminated its auditor, and retained a new auditor during the
relevant time period. The timing and circumstances of the dismissal are relevant to SunCar’s
compliance with its obligation to use its best efforts to file a registration statement “as soon as
practicable.” Accordingly, Alta seeks an order compelling SunCar to produce documents
concerning the currentness of the Form F-4 prospectus, including documents and communications
concerning the termination its auditor.

1

SunCar indicated that it would address certain other issues with its discovery responses—
including its refusal to produce communications with other warrant holders. Alta reserves the right
to raise these issues with the Court as soon as practicable should SunCar fail to cure these
deficiencies.
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Respectfully submitted,
PLAINTIFF ALTA PARTNERS, LLC

DEFENDANT SUNCAR TECHNOLOGY
GROUP, INC.

By:_/s/ Matthew Letten______________
Jeffrey Mueller
Matthew Letten
Day Pitney LLP
225 Asylum Street
Hartford, CT 06103
Tel.: [phone]
[e-mail]
[e-mail]

By:__/s/ Angus Ni _____________
Angus Ni
Lawrence Yichu Yuan
Morrow Ni LLP
41 Madison Ave, 31st Floor
New York, New York 10010
Tel.: [phone]
[e-mail]
[e-mail]

Gregory Bruno
Day Pitney LLP
605 Third Avenue, 31st Floor
New York, New York 10158
Tel.: [phone]
[e-mail]
cc:

All counsel of record via ECF

Application granted. The parties’ request for a pre-motion discovery conference, Dkt. No. 53, is granted. The Court
will hold a teleconference to discuss the parties’ positions on November 26, 2024 at 4:00 p.m. The parties are
directed to the Court’s Individual Rules of Practice in Civil Cases, which are available on the Court’s website. Rule 2
of the Court’s Individual Rules contains the dial-in number for the conference and other relevant instructions. The
parties are specifically directed to comply with Rule 2(C) of the Court’s Individual Rules. The Clerk of Court is
directed to terminate the motion pending at Dkt. No. 53.
SO ORDERED.
Dated: November 22, 2024
New York, New York

_____________________________________

GREGORY H. WOODS
United States District Judge

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