Preview
1 Kimberly Pallen (SBN 288605)
kimberly.pallen@withersworldwide.com
2 Christopher N. LaVigne (NYBN 4811121) ELECTRONICALLY
(admitted Pro Hac Vice)
3 christopher.lavigne@withersworldwide.com FILED
Superior Court of California,
Withers Bergman LLP County of San Francisco
4 505 Sansome Street, 2nd Floor
San Francisco, California 94111 03/12/2021
Clerk of the Court
5 Telephone: 415.872.3200 BY: JUDITH NUNEZ
Facsimile: 415.549 2480 Deputy Clerk
6
Attorneys for Defendants Payward, Inc., a
7 California Corporation d/b/a Kraken; and Kaiser
NG, an individual
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 COUNTY OF SAN FRANCISCO
11
12 NATHAN PETER RUNYON, an individual, Case No. CGC-19-581099
13 Plaintiff, OPPOSITION TO EX PARTE APPLICA-
TION TO CONTINE TRIAL OR FOR
14 v. ORDER SHORTENING TIME FOR
PLAINTIFF NATHAN PETER RUNYON’S
15 PAYWARD, INC., a California Corporation NOTICE OF MOTION TO CONTINUE
d/b/a KRAKEN; and Kaiser NG, an TRIAL
16 individual; and DOES 1 through 10,
inclusive, Filed Concurrently with Declaration of Kimberly
17 Pallen In Support of Opposition to Ex Parte
Defendants. Application
18
Date: March 12, 2021
19 Time: 11:00 a.m.
Dept.: 206
20
The Hon. Samuel K. Feng, Dept. 206
21
Action Filed: November 26, 2019
22 Trial Date: July 12, 2021
23
24 Defendants Payward, Inc., d/b/a Kraken (“Payward”) and Kaiser Ng (together with Payward,
25 “Defendants”) oppose Plaintiff Nathan Peter Runyon’s (“Runyon” or “Plaintiff”) Ex Parte
26 Application to Continue Trial or For An Order Shortening Time for Plaintiff Nathan Peter Runyon’s
27 Notice of Motion To Continue Trial (“Ex Parte Application”).
28 There is no good cause to continue the trial date, and Defendants vehemently oppose
W ITHERS
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 Runyon’s attempt to continue the trial in this action – for a third time – due to his and his counsel’s
2 lack of diligence and improper tactics. Payward issued document requests to Runyon one year ago
3 in which Payward sought copies of all of Payward’s documents that Runyon had in his possession.
4 Runyon agreed to produce these documents. However, on March 3, 2020, the day before Runyon’s
5 deposition, Runyon’s counsel informed Payward that she and Runyon are in possession of two flash
6 drives onto which Runyon downloaded Payward’s internal documents prior to his termination.
7 Runyon and Ms. Cochran have been in possession of these documents since at least August 2019,
8 or over a year. Ms. Cochran admits that these documents are responsive to Payward’s document
9 requests, but refuses to turn them over. Runyon now seeks to continue the trial date based on a
10 problem that he created because it will impact Payward’s deadline to submit a motion for summary
11 judgment (which is March 25, 2021).
12 This Ex Parte Application presents a complicated fact pattern and is one that should not be
13 decided on an ex parte basis. Therefore, Defendants respectfully request that the Court order
14 briefing on this issue; Defendants do not oppose the request to have the motion heard on shortened
15 time and request that the Court order Defendants’ opposition due on March 19, 2021. However, to
16 the extent that Runyon seeks to continue the trial through this Ex Parte Application, Defendants
17 respectfully request that the Court deny the motion. The Court should not reward Runyon’s
18 behavior of withholding relevant and potentially exculpatory documents by giving him more time
19 to prepare for trial.
20 For the reasons set forth below, Defendants respectfully request the Court:
21 (i) Order that Defendants’ opposition to the Motion to Continue the Trial be filed by March
22 19, 2021, or in the alternative,
23 (ii) Deny the Ex Parte Application and the request to continue the trial date.
24 I. FACTS
25
A. Runyon’s Complaint Contains Whistleblower Allegations Pertaining to a
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Former Payward Employee Named Connie Wong
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Payward operates a cryptocurrency exchange and maintains its primary place of business
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W ITHERS
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 in San Francisco, California. (See FAC ¶¶ 1-2.) Payward employed Plaintiff as a financial analyst
2 from approximately March 26, 2018 until August 1, 2019. (See id. ¶¶ 17, 39-40.) Plaintiff’s
3
claims fall into three categories: he alleges he was discriminated against based on veteran status
4
and disability, fired due to the fact that he blew the whistle on allegedly improper stock option
5
practices, and was not paid under a lease agreement he was forced to sign with Mr. Ng.
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At issue here are Plaintiff’s whistleblower claims. In essence and in particular, Plaintiff
7
8 claims that Payward’s Chief Financial Officer (“CFO”), Kaiser Ng, intentionally and fraudulently
9 changed the vesting schedule of one former Payward employee, Connie Wong, without Board
10 approval. (See id. ¶¶ 32, 33.) Plaintiff provided more detail about these claims at his deposition.
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He claimed that Mr. Ng changed Ms. Wong’s vesting schedule from four years to six years,
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meaning that upon Ms. Wong’s termination, she was not able to exercise as many stock options as
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she allegedly should have been entitled to exercise based on her purported four-year vesting
14
15 schedule. See Declaration of Christopher LaVigne (“LaVigne Decl.”) dated March __, 2021, Ex.
16 __ (Deposition Transcript of N. Runyon (“Runyon Tr.”) dated March 4, 2021) at 157:1-22;
17 184:13-185:24. To defend itself against Plaintiff’s whistleblower allegations, Payward sought
18 and is entitled to know what information Plaintiff possesses that substantiate his claims that
19
Defendants altered employees’ equity vesting schedules.
20
B. Payward Issued Document Requests to Runyon Regarding the Whistleblower
21
Allegations
22
On February 24, 2020, Payward issued its first set of Requests for Production of Documents to
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Plaintiff. See LaVigne Decl., Ex. __. Included in that first set of requests were the following
24
25 requests:
26
• Request for Production No. 29: ALL DOCUMENTS and property belonging to, issued by,
27 or owned by PAYWARD, or any DOCUMENTS and property issued or provided to YOU
28 during your employment with PAYWARD, in YOUR possession after August 1, 2019.
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 • Request for Production No. 45: ALL DOCUMENTS RELATING TO any whistleblowing
activities that YOU engaged in during YOUR employment with PAYWARD as alleged in
2
YOUR COMPLAINT.
3
Plaintiff responded to Payward’s first set of Requests for Production of Documents on March 3,
4
2020 as follows:
5
6
• Response to Request for Production No. 29: Runyon stated that he “will comply in full
7 with this Request and all documents or things in Plaintiff’s possession, custody and/or
control responsive to this Request will be included in the production.”
8
• Response to Request for Production No. 45: Runyon stated that he “made a diligent search
9 and reasonable inquiry in an effort to comply with this Demand in whole, but because
responsive documents are not in his possession he believes that any and all documents that
10 may be responsive to this Demand are in the possession, custody or control of Defendant,
Payward, Inc.”
11
See LaVigne Decl., Exs. __ and __.
12
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C. The Day Before Runyon’s Deposition, Ms. Cochran Revealed the Existence of
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Two Flash Drives Containing Documents Responsive to Runyon’s
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Whistleblower Claims, Which Runyon Stole From Payward in 2019
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On January 29, 2021, Payward issued a Notice of Deposition to Plaintiff. The notice
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required that he sit for his deposition on March 4, 2021. See LaVigne Decl., Ex. __. One day
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before his deposition, on March 3, 2021, Plaintiff’s counsel sent Payward’s counsel an extraordinary
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20 letter. See LaVigne Decl., Ex. __. In it, Plaintiff’s counsel advised that Plaintiff – a mere one day
21 before his deposition – “intended to produce amended responses to discovery, including
22 CONFIDENTIAL documents” to Payward. These documents live on “two USB flash drives” that
23 were “created” by Plaintiff and onto which Plaintiff downloaded Payward documents “during his
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employment.” Id. (emphasis added). Even though Plaintiff has been sitting on these documents –
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which Plaintiff’s counsel concedes are responsive to Payward’s document requests – for over a year,
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Plaintiff’s counsel claimed that she now “cannot produce [them due to] advice of outside Counsel.”
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28 See id.
W ITHERS
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 Payward responded to this letter with an email on the same date. In it, Payward noted that
2 Plaintiff “provides no legitimate grounds, and no legal authority whatsoever, for withholding
3
admittedly responsive documents.” See LaVigne Decl., Ex. __. Payward also requested that the
4
documents be produced immediately, but no later than close of business on March 4, 2021. Ibid.
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The document were not produced. See LaVigne Decl., ¶ __.
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At the March 4, 2021 deposition, Payward questioned Plaintiff about the flash drives and
7
8 the documents contained thereon. Plaintiff confirmed at his deposition that the documents were
9 downloaded onto the flash drive “[p]rior to me being terminated.” See LaVigne Decl., Ex. __
10 (Runyon Tr.) at 219:12-15. He also testified that that one of the reasons he downloaded the
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documents was so that he would have it available to himself later in order to be a whistleblower
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and/or insulate himself from potential wrongdoing. See id. at 219:16-220:24 (“Q. Why did you
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download those document, company documents, onto your flash drive? A. For a variety of
14
15 reasons. Q. What were those reasons? A. . . . [A]s well as to cover my a** because it seemed like
16 [Payward’s CFO] was possibly going to throw me under the bus for some of this stuff about
17 changing people’s vesting schedules . . . So I wanted to ensure that, among other things, that I
18 wouldn’t be penalized for actions that he was doing which I believed were unethical, illegal, and
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personally immoral. Q. What documents would protect you from that? A. Various things [Kaiser
20
Ng] was, he was doing. . . Q. Do you remember how many documents roughly were downloaded
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in total. A. No, I don’t remember.”).
22
23 Also at Plaintiff’s deposition, Payward’s counsel asked Plaintiff’s counsel: “Has all of the
24 documentation on those flash drives been produced to us in this litigation?” Ms. Cochran replied,
25 “No.” See LaVigne Decl., Ex. __ (Runyon Tr.) at 198:25-199:3. Payward’s counsel then asked:
26
I’m going to reiterate the question that I asked in the email last night in response to
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you, are there documents on those flash drives that are responsive to this litigation
28 that have not yet been produced? Id. at 199:5-9.
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 Plaintiff’s counsel responded:
2 There are documents on the flash drive that have not been produced in this
3 litigation. Whether or not we determined they were relevant before and now we
believe that they are is work product. Id. at 199:10-13.
4
5
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D. Runyon Filed an Ex Parte Application with this Court on March 10, 2021 In
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Which He Concedes That the Documents On the Flash Drives Are Relevant
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and Responsive
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II. LEGAL STANDARD
11
“To ensure the prompt disposition of civil cases, the dates assigned for a trial are firm. All
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parties and their counsel must regard the date set for trial as certain.” See CRC Rule 3.1332(a)
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Good cause to continue a trial date exists in the following circumstances:
14
15 (1) The unavailability of an essential lay or expert witness because of death, illness, or other
16 excusable circumstances;
17
(2) The unavailability of a party because of death, illness, or other excusable circumstances;
18
19 (3) The unavailability of trial counsel because of death, illness, or other excusable
20 circumstances;
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(4) The substitution of trial counsel, but only where there is an affirmative showing that the
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23 substitution is required in the interests of justice;
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(5) The addition of a new party if:
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26 (A) The new party has not had a reasonable opportunity to conduct discovery and
27 prepare for trial; or
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W ITHERS
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 (B) The other parties have not had a reasonable opportunity to conduct discovery and
2 prepare for trial in regard to the new party's involvement in the case;
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(6) A party's excused inability to obtain essential testimony, documents, or other material
4
5 evidence despite diligent efforts; or
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(7) A significant, unanticipated change in the status of the case as a result of which the case
7
is not ready for trial.
8
9 III. ARGUMENT
10 A. Defendants Require One Week to Oppose Plaintiff’s Motion
11
Setting aside the fact that the statute upon which Runyon relies pertains to environmental
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actions, the Ex Parte Application contains a number of misstatements and inaccuracies. One of the
13
most important pieces of information left out by Runyon is that all of the documents contained on
14
15 the flash drive belong to Defendants and can properly be turned over to Defendants based on the
16 Stipulated Protective Order in this case. These are Payward documents that Runyon stole and
17 retained after he was terminated and, as a result, there is no reason that Runyon cannot disclose the
18 identity and existence of these documents to Defendants, their original custodian. The other material
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omission from Runyon’s motion is that Runyon and his counsel have admitted under oath that the
20
flash drives at issue have been in Runyon’s counsel’s possession since 2019. Runyon decided to
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wait more than a year and a half, and more than a year after Defendants issued document requests
22
23 encompassing the documents on the flash drives, to reveal the existence of the flash drives on the
24 evening before Runyon’s deposition. The relief requested by Runyon – that his counsel be able to
25 forensically examine the flash drives and “make sure [they] are compliant with ESI collection and
26
management” – could have and should have been conducted by Runyon’s counsel long before now.
27
And it certainly could have and should have been conducted in the last eight days since Runyon
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W ITHERS
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 revealed these documents.
2 Indeed, Runyon’s motion demonstrates that he and his counsel have deliberately and
3 willfully evaded their discovery obligations. The motion cites no case law or any other authority
4 supporting the necessity of having a court-ordered “special master” to review the drives prior to
5 production of the documents and seeks to continue the trial date because the issue that Runyon has
6 created out of thin air at the last minute will impact Payward’s deadline to submit a motion for
7 summary judgment. In other words, Runyon’s motion was filed purposely to prevent Payward from
8 submitting a summary judgment motion pursuant to the current deadlines in this case.
9 Defendants need to sufficiently brief these issues, among others, and will need more than 24
10 hours to do so. As a result, Defendants request that the Court order their opposition be filed on or
11 before March 16, 2021.
12 B. Good Cause Does Not Exist to Continue the Trial
13 This is the third continance
14 Trial was supposed to commence on January 25, 2021.
15
16 C. Payward Will Be Prejudiced By a Continuation of the Trial Date
17 dfdsafd
18 D. Sanctions Should be Imposed on Runyon and His Counsel
19
20 Only limited forms of relief are available on an ex parte basis. The appointment of a
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special master is not one of those forms of relief. In Runyon’s proposed order, filed with his Ex
22
Parte Application, he requests an order shortening time and an advancement of his hearing date.
23
He also requests an order “in the alternative [that] Plaintiff’s Ex Parte request to appoint a special
24
master is granted.” This request is improper.
25
26 Situations upon which ex parte relief is available are as follows: (1) to shorten or extend
27 time to plead or for service of notice, (2) to appoint a guardian ad litem, (3) to amend a pleading
28 by substituting the name of a fictitiously-named party, (4) to amend a pleading by adding or
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER
1 deleting parties, or correcting a mistake in a party's name or in any other respect, (5) to authorize
2 service by publication or substitute service on a corporation; (6) to exceed page limits for
3
memoranda of law, (7) to authorize discovery by plaintiff during the “hold” on discovery at the
4
outset of the case, or (8) to control deposition scheduling. See Ex Parte Applications, Cal. Prac.
5
Guide Civ. Pro. Before Trial Ch. 9(I)-F. None of the aforementioned situations pertain to the
6
appointment of a special master, or to the appointment of a discovery referee more generally. This
7
8 Court, therefore, does not have authority to grant the Ex Parte Application without briefing by
9 Defendants.
10 IV. CONCLUSION
11 Based on the foregoing, Defendants respectfully request that the Court (i) deny Runyon’s
12 request that the Court grant Runyon’s motion and appoint a special master without briefing by
13 Defendants, and (ii) order that Defendants’ opposition is due on March 16, 2021.
14
15 DATED: March 12, 2021 WITHERS BERGMAN LLP
16
17
By:
18 Kimberly Pallen
Christopher N. LaVigne
19
Attorneys for Defendants Payward, Inc., a
20 California Corporation d/b/a Kraken; and Kaiser
Ng, an individual
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OPPOSITION TO EX PARTE APPLICATION FOR ORDER SHORTENING TIME TO APPOINT A SPECIAL MASTER