Preview
1 THE FIERBERG NATIONAL LAW GROUP, PLLC
DOUGLAS E. FIERBERG (admitted pro hac vice)
2 dfierberg@tfnlgroup.com
JONATHON N. FAZZOLA (admitted pro hac vice)
3 jfazzola@tfnlgroup.com
161 East Front Street, Suite 200
4 Traverse City, MI 49684
Telephone: (231) 933-0180
5 Fax: (231) 252-8100
6 SAWYER & LABAR LLP
IVO LABAR, State Bar No. 203492
7 labar@sawyerlabar.com
1700 Montgomery Street, Suite 108
8 San Francisco, CA 94111
Telephone: (415) 262-3820
9
Attorneys for Plaintiffs
10 DAPHNE BELETSIS
YVONNE RAINEY
11
12
SUPERIOR COURT OF CALIFORNIA
13
COUNTY OF SANTA CRUZ
14
15
DAPHNE BELETSIS, individually, and as Case No. 19CV03287
16 Administrator of the ESTATE OF (Assigned to Hon. Paul Marigonda,
ALEXANDER BELETSIS, and Dept. 10)
17 YVONNE RAINEY, surviving parent of
PLAINTIFFS’ FURTHER OPPOSITION
18 ALEXANDER BELETSIS, deceased TO DEFENDANT THETA CHI
FRATERNITY, INC.’S MOTION TO
19 Plaintiffs, SEVER PLAINTIFFS’ EQUITABLE
vs. CLAIMS OF ALTER EGO AND
20 SUCCESSOR LIABILITY
THETA CHI FRATERNITY, INC., et al.,
21 Hearing Date: October 21, 2022
Time: 8:30 a.m.
22 Defendants. Dept.: 10
23 Complaint Filed: October 31, 2019
FAC Filed: February 5, 2020
24 Trial Date: March 13, 2023
25
26
27
28
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
PL
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 NEW LEGAL AUTHORITY AND EVIDENCE FURTHER DEMONSTRATE
THAT SEVERING THE TRIAL THIS CASE WOULD
2 CONSTITUTE PREJUDICIAL ERROR
3
Plaintiffs file this Further Opposition to Theta Chi’s Motion to Sever Plaintiffs’ Equitable
4
Claims of Alter Ego and Successor Liability (the “Motion to Sever”) to bring to the Court’s
5
attention: (1) a recent, highly relevant ruling by another California Superior Court denying a
6
fraternity’s motion to sever in case that is virtually identical to the case at bar; and (2) highly
7
relevant deposition testimony that Plaintiffs’ counsel obtained after the parties initially briefed
8
Theta Chi’s Motion to Sever. The ruling in that other matter and the recently obtained deposition
9
testimony underscore that severing the trial would be prejudicial, unduly burden witnesses, and be
10
a waste of judicial resources.
11
In John Alexander Michel vs. The Fraternity of Phi Gamma Delta Inc., No. RG20063042
12
(Superior Court of California, County of Alameda, Honorable Jeffrey Brand) (“Michel”), Phi
13
Gamma Delta filed a motion to sever the trial of the plaintiff’s legal and equitable claims in a case,
14
15 like this one, arising out of hazing, the misuse of alcohol, and the catastrophic injury of a student.
16 (See 12/13/21 Motion to Sever in Michel v. Phi Gamma Delta, Inc. (“Michel Motion to Sever”),
17 attached as Exhibit 3 to Declaration of Douglas E. Fierberg (“Fierberg Decl.”). In Michel, like
18 here, the fraternity engaged in pledge rituals that involved the illegal provision and consumption
19
of alcohol, which resulted in a pledge falling off the roof of the fraternity house and incurring
20
significant, permanent injuries. (Ex. 2 to Fierberg Decl., Order Overruling Demurrer and Motion
21
to Strike by Phi Gamma Delta, Inc. in Michel v. Phi Gamma Delta, Inc., et al., at 1.) Counsel of
22
23 record for Phi Gamma Delta in Michel, Michael Osborne, is also counsel of record for Theta Chi
24 in this case. (Ex. 3 to Fierberg Decl., Michel Motion to Sever.) Although the fraternity in Michel
25 sought to sever the trial on virtually the same factual and legal arguments proffered by Theta Chi
26 to this Court, counsel for Theta Chi did not bring the Michel Court’s ruling to the attention of this
27
28
1
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 Court, even though the ruling was entered before Theta Chi filed its Motion to Sever. 1 (Ex. 1 to
2 Fierberg Decl., 02/24/22 Ruling on Motion to Sever in Michel v. Phi Gamma Delta, Inc. (“Michel
3
Motion to Sever Ruling”).)
4
The Michel Court considered the significant overlap in the evidence and arguments
5
involving liability and equitable issues of alter ego and denied the fraternity’s arguments, holding,
6
inter alia, that “it does not appear that severing the issues will further the convenience of the
7
8 witnesses, the parties, or the court. A separate proceeding solely on the equitable issues will likely
9 result in at least some repetition of evidence from the legal trial and potentially re-calling
10 witnesses.” (Ex. 1, Michel Motion to Sever Ruling at 2.)
11
The same reasoning applies to the facts in this case, many of which were developed and/or
12
further established during the long-scheduled and repeatedly delayed depositions of Theta Chi
13
personnel taken after Theta Chi’s Motion to Sever was initially briefed. Those deponents include
14
15 Theta Chi’s CEO, Michael Mayer, Theta Chi’s COO, Ray Vanlanot, Theta Chi’s Senior Director
16 of Collegiate Services, Tara Dunn, and one of the members of the Alumni Probation Committee
17 (“APC”) appointed by Theta Chi to oversee the Chapter before the death of Alex Beletsis, Tyson
18
Lai.
19
As Plaintiffs detailed in their original Brief in Opposition to Theta Chi’s Motion to Sever,
20
evidence regarding the control Theta Chi exercised over the Chapter and its operations is highly
21
relevant to, inter alia, both Theta’s Chi vicarious liability for the Chapter’s negligence and Theta
22
23 Chi’s alter ego and successor liability. (Pltfs’ Opp. to Motion to Sever at 4.) That is because,
24 among other reasons, under California law: (1) an agency relationship requires the principle to
25 “have sufficient right to control the relevant aspects of the purported agent’s day-to-day
26
27
1
28 Plaintiffs’ counsel only became aware of the ruling after Theta Chi filed its Motion to Sever.
(Fierberg Decl. ¶ 13.)
2
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 operations,” (Barenborg v. Sigma Alpha Epsilon Fraternity (2019) 33 Cal.App.5th 70, 85), and (2)
2 under Cal. Corp. Code § 18630, “a member or person in control of a nonprofit association may be
3
subject to liability for a debt, obligation, or liability of the association under common law
4
principles governing alter ego liability of shareholders of a corporation, taking into account the
5
differences between a nonprofit association and a corporation.”
6
The control Theta Chi exercised over the Chapter is also highly relevant to Plaintiffs’
7
8 direct negligence claims against Theta Chi. In California, a “defendant who enters upon an
9 affirmative course of conduct affecting the interests of another is regarded as assuming a duty to
10 act, and will be liable for negligent acts or omissions, because one who undertakes to do an act
11
must do it with care.” O’Malley v. Hospitality Staffing Solutions (2018) 20 Cal.App.5th 21, 28
12
(quoting Bloomberg v. Exchange (1984) 162 Cal.App.3d 571, 575).) Witnesses, including recently
13
deposed witnesses, have confirmed that Theta Chi leveraged its control over the Chapter to lead
14
15 UCSC to believe that it would be reforming the Chapter to make it safer, and UCSC relied on the
16 representations, which turned out to be false, to the ultimate detriment of Alex Beletsis. UCSC’s
17 Assistant Dean of Students, Cliff Golz, confirmed, for example, that it was his expectation that
18
Theta Chi was going to follow through on the promises it made to UCSC in Spring of 2016 to help
19
turn around the Chapter. (Ex. 8 to Fierberg Decl., Golz Dep. Tr. 62:4-17.) Recent Theta Chi
20
witnesses admitted that apart from one day of interviews, discussed below, Theta Chi did nothing
21
in 2016, or in the months or years that followed, to reform the Chapter. (Ex. 7 to Fierberg Decl.,
22
23 Dunn Dep. Tr. 28:20-23; Ex. 6 to Fierberg Decl., Vanlanot Dep. Tr. 64:4-13; Ex. 4 to Fierberg
24 Decl., Lai Dep. Tr. 37:15-40:7.) As a result, the Chapter’s dangerous practices continued until it
25 was finally closed after Alex’s tragic death.
26
Many of the recently deposed Theta Chi personnel provided testimony – and authenticated
27
documents – that bear directly on the extensive control Theta Chi exercised over all relevant
28
3
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 aspects of the Chapter. That testimony – in addition to other testimony and evidence in this case –
2 will be highly relevant to both Plaintiffs’ legal and equitable claims against Theta Chi. For
3
example, in his deposition – which Plaintiffs finally had the opportunity to take on August 26,
4
2022 after it was rescheduled it nine (9) times – Mr. Lai testified that Theta Chi exercised
5
complete control over the Chapter and its members:
6
Q. Now, I want to ask what you understood were the powers of the
7
national fraternity over the local chapter. Did you understand that the national
8 fraternity could exercise its power to remove any member of the chapter?
9 A. Yes.
10 Q. Did you understand too that the national could exercise its power to
impose any changes on the chapter that it believed necessary.
11
A. Yes.
12
13 Q. And that the national had the power to remove any officer if it
believed that the officer needed to be removed?
14
A. Yes.
15
Q. The national had the power over the chapter to change the means by
16 which it recruited members if it wanted to?
17 A. My understanding.
18 Q. And the same to change even who the chapter might recruit as
19 members; right?
20 A. Correct.
21 Q. So essentially, the national fraternity exercised pretty much
complete control over the policies and people and activities over the local chapter;
22 right?
23 A. That’s how I understand it.
24 Q. And how you understood it when you were in the fraternity right –
25
A. Correct.
26
Q. – as an undergraduate?
27
A. Correct.
28
Q. And how you understood it as a member of the Alumni Probation
4
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 Committee; correct?
2 A. Correct.
3 Q. The – national conveyed upon you, as an Alumni Probation
Committee member, the authority to recommend any form of change that you
4
believed was necessary in this chapter from A to Z; right?
5
A. Correct.
6
Q. And then, the chapter didn’t have power as some sort of separate
7 entity to stop that change on its own if the national wanted; right?
8 A. Correct.
9 Q. And that would be true even with respect to the way the chapter
10 raised money or managed its money; right? The national could impose new rules
on them?
11
A. I suppose.
12
Q. As far as you understand, the structure – the relationship between
13 national and local, the national had that power to change anything including the
way the funds were managed, the way funds were raised, the way funds were held,
14 the types of activities the chapter engaged in, how it recruited, those sorts of things
15 were within the power of the national to control?
16 A. Correct.
17 (Ex. 4 to Fierberg Decl., Lai Dep. Tr. 69:2–71:9.) 2
18 Mr. Lai was an alumni member of the Chapter and Theta Chi and who served on the APC
19 appointed by Theta Chi to oversee the Chapter following the emergency hospitalization in 2016 of
20
a student for alcohol poisoning who was found by a neighbor in bushes after he attended a
21
recruiting event sponsored by the Chapter. (Ex. 9 to Fierberg Decl., 05/05/16 Suspension Letter
22
from UCSC at 1-2.) After UCSC announced that it was suspending the Chapter following the
23
24
2
25 Theta Chi’s CEO, Michael Mayer, also could not deny that Theta Chi exercised extensive control
over the Chapter. Plaintiffs originally noticed Mr. Mayer’s deposition for March 1, 2022, but it
26 was rescheduled three (3) times by counsel for Theta Chi. (Fierberg Decl. ¶ 20.) When Plaintiffs
finally had the opportunity to depose Mr. Mayer on August 30, 2022, he reluctantly confirmed that
27 Theta Chi the extensive control Theta Chi exercised over its chapters, including the Chapter in this
case. (Ex. 5 to Fierberg Decl., Mayer Dep. Tr. 55:5-59:8.)
28
5
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 incident, on May 12, 2016, Mr. Vanlanot, Theta Chi’s COO, wrote to UCSC to propose a
2 “remediation plan” for the Chapter. (Ex. 10, Fierberg Declaration, 05/12/16 Letter from R.
3
Vanlanot to UCSC at 1.) Mr. Vanlanot informed UCSC that Theta Chi would, among other things
4
appoint a “trained” APC to conduct a “Membership Review” consisting of “one-on-one interviews
5
with each of the members of the Chapter to determine each member’s ability to maintain active
6
membership in Theta Chi,” and “promptly” provide the results of the review to UCSC. (Id.) Mr.
7
8 Vanlanot advised that he would personally, and in-person, coordinate and oversee “the on-site
9 process.” (Id.) Mr. Vanlanot also told UCSC that the APC would have “the powers to modify
10 Chapter membership statutes, remove/replace Chapter officers, amend local by-laws, and regulate
11
Chapter functionality. (Id.) No members or officers of the Chapter were copied on Mr. Vanlanot’s
12
letter to UCSC, underscoring the absolute control Theta Chi exercised over the Chapter. (Id. at 3.)
13
Mr. Lai confirmed in his deposition that although Theta Chi never trained the APC and Mr.
14
15 Vanlanot was not there in-person to coordinate and oversee the membership review, the APC did
16 interview some Chapter members for “several hours” on June 3, 2016. (Ex. 4 to Fierberg Decl.,
17 Lai Dep. Tr. 23:13-24:19, 41:24-47:13.) As reflected in Mr. Lai’s handwritten notes, during those
18
interviews, at least four Chapter members disclosed that they had been hazed, and another member
19
told Mr. Lai that the Chapter’s reputation was that it “has a drug problem.” (Ex. 11 to Fierberg
20
Decl., Lai Handwritten Notes; Ex. 4 to Fierberg Decl., Lai Dep. Tr. 26:1-18.)
21
Despite obtaining that information on the heels of an emergency medical transport of a
22
23 student, the complete power and authority Theta Chi exercised over the Chapter, and its promises
24 to UCSC, Theta Chi did absolutely nothing after the on-site interviews to reform the Chapter and
25 make it safe for current and future members and pledges. Theta Chi also did not advise or warn
26
UCSC about the APC’s findings. Mr. Lai testified:
27
Q. Okay. In that next paragraph, it says "We UCSC/Theta Chi
28 alumni support Theta Chi National's recommendation that the creation of
an Alumni Probation Committee will be more effective at overhauling the
6
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 chapter and improving university relations than a suspension." Do you see
that?
2
A. I do.
3
Q. I mean, it would be fair to say that your Alumni Probation
4 Committee didn't do anything to overhaul this chapter; right?
5 A. Correct.
6
Q. And it says in here, "To be clear, there will be accountability,
7 consequences, and changes," from your Alumni Probation Committee
review of this chapter. As you recall, there was no accountability,
8 consequences or changes recommended; right?
9 A. Correct.
10 Q. And in the last paragraph, it says – I mean, the last sentence
11 in that paragraph -- "Perhaps most impactful, we will act as leaders and
mentors to guide these young men." Do you see that?
12
A. I do.
13
Q. Following that one-day meeting where you interviewed
14 these kids, the Alumni Probation Committee -- or as far as you know, no
alumni then undertook to act as leaders and mentors to guide these young
15 men?
16
A. Not that I recall.
17
Q. Okay. In the next paragraph it says "Committee members
18 will also attend chapter meetings and events to ensure that the sanctions
handed down by the university (both prior and current) are successfully
19 completed in a timely manner." Do you see that?
20 A. I do.
21 Q. And that never happened; right?
22
A. Not that I am aware of.
23
(Ex. 4 to Fierberg Decl., Lai Dep. Tr. 49:2-50:17.)
24
This sampling of the material evidence that will directly bear both on Plaintiffs’ liability
25
and alter ego and successor liability claims against Theta Chi demonstrates how the central
26
27 liability and equitable matters at issue cannot be teased apart. At trial, Plaintiffs expect to call at
28 least five (5) Theta Chi and UCSC witnesses, in addition to a number of former Chapter
7
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
1 members, 3 to provide testimony that will bear both on Plaintiffs’ legal and equitable claims
2 against Theta Chi. That will include testimony regarding the extensive control Theta Chi exercised
3
over the Chapter and its operations, which is relevant to, inter alia, Theta Chi’s direct undertaking
4
and liability, its vicarious liability for the Chapter’s negligence, the rebuttal to Theta Chi’s
5
principal defenses to liability, and Theta Chi’s alter ego and successor liability.
6
Given the significant overlap in the evidence bearing on all of those claims, severance
7
would therefore lead to an unnecessary, burdensome, and expensive re-recitation of testimony and
8
other evidence, unduly delay the proceedings, and unduly burden third-party witnesses, like Mr.
9
10 Lai, who have to be called to twice only to repeat and reiterate his testimony from the trial on
11 negligence and damages. It would also unduly prejudice the Plaintiffs by requiring them to expend
12 unnecessary time and resources recalling witnesses and presenting evidence already offered in the
13 trial on negligence and damages. Accordingly, Plaintiffs respectfully request the Court enter an
14 order denying Theta Chi’s motion to sever Plaintiffs’ equitable claims of alter ego and successor
15 liability.
DATED: October 10, 2022 SAWYER & LABAR LLP
16
17 By:
Ivo Labar
18
19 THE FIERBERG NATIONAL LAW GROUP, PLLC
20
Douglas E. Fierberg (admitted pro hac vice)
21 Attorneys for Plaintiffs
22 DAPHNE BELETSIS and
YVONNE RAINEY
23
24
3
For example, members of the Chapter’s Spring 2018 Executive Committee will testify that the
25 Chapter continued to be “unsafe” through the spring of 2018, will identify the dangerous rituals
that took place on the evening of Alex’s tragic fall, and – as Plaintiffs detailed in their Opposition
26
to Theta Chi’s Motion to Sever – will admit they cannot even pretend to know the basics of how
27 their Chapter was formed, its legal form or status, how it managed its money, who opened and
controlled an account through which it paid its dues to Theta Chi, established financial policies or
28 controls, obtained or maintained insurance, or otherwise operated beyond simply following “the
Ritual” and other membership recruitment materials paid for and provided by Theta Chi.
8
PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO
SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY
Preview
1 THE FIERBERG NATIONAL LAW GROUP, PLLC DOUGLAS E. FIERBERG (admitted pro hac vice) 2 dfierberg@tfnlgroup.com JONATHON N. FAZZOLA (admitted pro hac vice) 3 jfazzola@tfnlgroup.com 161 East Front Street, Suite 200 4 Traverse City, MI 49684 Telephone: (231) 933-0180 5 Fax: (231) 252-8100 6 SAWYER & LABAR LLP IVO LABAR, State Bar No. 203492 7 labar@sawyerlabar.com 1700 Montgomery Street, Suite 108 8 San Francisco, CA 94111 Telephone: (415) 262-3820 9 Attorneys for Plaintiffs 10 DAPHNE BELETSIS YVONNE RAINEY 11 12 SUPERIOR COURT OF CALIFORNIA 13 COUNTY OF SANTA CRUZ 14 15 DAPHNE BELETSIS, individually, and as Case No. 19CV03287 16 Administrator of the ESTATE OF (Assigned to Hon. Paul Marigonda, ALEXANDER BELETSIS, and Dept. 10) 17 YVONNE RAINEY, surviving parent of PLAINTIFFS’ FURTHER OPPOSITION 18 ALEXANDER BELETSIS, deceased TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO 19 Plaintiffs, SEVER PLAINTIFFS’ EQUITABLE vs. CLAIMS OF ALTER EGO AND 20 SUCCESSOR LIABILITY THETA CHI FRATERNITY, INC., et al., 21 Hearing Date: October 21, 2022 Time: 8:30 a.m. 22 Defendants. Dept.: 10 23 Complaint Filed: October 31, 2019 FAC Filed: February 5, 2020 24 Trial Date: March 13, 2023 25 26 27 28 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO PL SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 NEW LEGAL AUTHORITY AND EVIDENCE FURTHER DEMONSTRATE THAT SEVERING THE TRIAL THIS CASE WOULD 2 CONSTITUTE PREJUDICIAL ERROR 3 Plaintiffs file this Further Opposition to Theta Chi’s Motion to Sever Plaintiffs’ Equitable 4 Claims of Alter Ego and Successor Liability (the “Motion to Sever”) to bring to the Court’s 5 attention: (1) a recent, highly relevant ruling by another California Superior Court denying a 6 fraternity’s motion to sever in case that is virtually identical to the case at bar; and (2) highly 7 relevant deposition testimony that Plaintiffs’ counsel obtained after the parties initially briefed 8 Theta Chi’s Motion to Sever. The ruling in that other matter and the recently obtained deposition 9 testimony underscore that severing the trial would be prejudicial, unduly burden witnesses, and be 10 a waste of judicial resources. 11 In John Alexander Michel vs. The Fraternity of Phi Gamma Delta Inc., No. RG20063042 12 (Superior Court of California, County of Alameda, Honorable Jeffrey Brand) (“Michel”), Phi 13 Gamma Delta filed a motion to sever the trial of the plaintiff’s legal and equitable claims in a case, 14 15 like this one, arising out of hazing, the misuse of alcohol, and the catastrophic injury of a student. 16 (See 12/13/21 Motion to Sever in Michel v. Phi Gamma Delta, Inc. (“Michel Motion to Sever”), 17 attached as Exhibit 3 to Declaration of Douglas E. Fierberg (“Fierberg Decl.”). In Michel, like 18 here, the fraternity engaged in pledge rituals that involved the illegal provision and consumption 19 of alcohol, which resulted in a pledge falling off the roof of the fraternity house and incurring 20 significant, permanent injuries. (Ex. 2 to Fierberg Decl., Order Overruling Demurrer and Motion 21 to Strike by Phi Gamma Delta, Inc. in Michel v. Phi Gamma Delta, Inc., et al., at 1.) Counsel of 22 23 record for Phi Gamma Delta in Michel, Michael Osborne, is also counsel of record for Theta Chi 24 in this case. (Ex. 3 to Fierberg Decl., Michel Motion to Sever.) Although the fraternity in Michel 25 sought to sever the trial on virtually the same factual and legal arguments proffered by Theta Chi 26 to this Court, counsel for Theta Chi did not bring the Michel Court’s ruling to the attention of this 27 28 1 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 Court, even though the ruling was entered before Theta Chi filed its Motion to Sever. 1 (Ex. 1 to 2 Fierberg Decl., 02/24/22 Ruling on Motion to Sever in Michel v. Phi Gamma Delta, Inc. (“Michel 3 Motion to Sever Ruling”).) 4 The Michel Court considered the significant overlap in the evidence and arguments 5 involving liability and equitable issues of alter ego and denied the fraternity’s arguments, holding, 6 inter alia, that “it does not appear that severing the issues will further the convenience of the 7 8 witnesses, the parties, or the court. A separate proceeding solely on the equitable issues will likely 9 result in at least some repetition of evidence from the legal trial and potentially re-calling 10 witnesses.” (Ex. 1, Michel Motion to Sever Ruling at 2.) 11 The same reasoning applies to the facts in this case, many of which were developed and/or 12 further established during the long-scheduled and repeatedly delayed depositions of Theta Chi 13 personnel taken after Theta Chi’s Motion to Sever was initially briefed. Those deponents include 14 15 Theta Chi’s CEO, Michael Mayer, Theta Chi’s COO, Ray Vanlanot, Theta Chi’s Senior Director 16 of Collegiate Services, Tara Dunn, and one of the members of the Alumni Probation Committee 17 (“APC”) appointed by Theta Chi to oversee the Chapter before the death of Alex Beletsis, Tyson 18 Lai. 19 As Plaintiffs detailed in their original Brief in Opposition to Theta Chi’s Motion to Sever, 20 evidence regarding the control Theta Chi exercised over the Chapter and its operations is highly 21 relevant to, inter alia, both Theta’s Chi vicarious liability for the Chapter’s negligence and Theta 22 23 Chi’s alter ego and successor liability. (Pltfs’ Opp. to Motion to Sever at 4.) That is because, 24 among other reasons, under California law: (1) an agency relationship requires the principle to 25 “have sufficient right to control the relevant aspects of the purported agent’s day-to-day 26 27 1 28 Plaintiffs’ counsel only became aware of the ruling after Theta Chi filed its Motion to Sever. (Fierberg Decl. ¶ 13.) 2 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 operations,” (Barenborg v. Sigma Alpha Epsilon Fraternity (2019) 33 Cal.App.5th 70, 85), and (2) 2 under Cal. Corp. Code § 18630, “a member or person in control of a nonprofit association may be 3 subject to liability for a debt, obligation, or liability of the association under common law 4 principles governing alter ego liability of shareholders of a corporation, taking into account the 5 differences between a nonprofit association and a corporation.” 6 The control Theta Chi exercised over the Chapter is also highly relevant to Plaintiffs’ 7 8 direct negligence claims against Theta Chi. In California, a “defendant who enters upon an 9 affirmative course of conduct affecting the interests of another is regarded as assuming a duty to 10 act, and will be liable for negligent acts or omissions, because one who undertakes to do an act 11 must do it with care.” O’Malley v. Hospitality Staffing Solutions (2018) 20 Cal.App.5th 21, 28 12 (quoting Bloomberg v. Exchange (1984) 162 Cal.App.3d 571, 575).) Witnesses, including recently 13 deposed witnesses, have confirmed that Theta Chi leveraged its control over the Chapter to lead 14 15 UCSC to believe that it would be reforming the Chapter to make it safer, and UCSC relied on the 16 representations, which turned out to be false, to the ultimate detriment of Alex Beletsis. UCSC’s 17 Assistant Dean of Students, Cliff Golz, confirmed, for example, that it was his expectation that 18 Theta Chi was going to follow through on the promises it made to UCSC in Spring of 2016 to help 19 turn around the Chapter. (Ex. 8 to Fierberg Decl., Golz Dep. Tr. 62:4-17.) Recent Theta Chi 20 witnesses admitted that apart from one day of interviews, discussed below, Theta Chi did nothing 21 in 2016, or in the months or years that followed, to reform the Chapter. (Ex. 7 to Fierberg Decl., 22 23 Dunn Dep. Tr. 28:20-23; Ex. 6 to Fierberg Decl., Vanlanot Dep. Tr. 64:4-13; Ex. 4 to Fierberg 24 Decl., Lai Dep. Tr. 37:15-40:7.) As a result, the Chapter’s dangerous practices continued until it 25 was finally closed after Alex’s tragic death. 26 Many of the recently deposed Theta Chi personnel provided testimony – and authenticated 27 documents – that bear directly on the extensive control Theta Chi exercised over all relevant 28 3 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 aspects of the Chapter. That testimony – in addition to other testimony and evidence in this case – 2 will be highly relevant to both Plaintiffs’ legal and equitable claims against Theta Chi. For 3 example, in his deposition – which Plaintiffs finally had the opportunity to take on August 26, 4 2022 after it was rescheduled it nine (9) times – Mr. Lai testified that Theta Chi exercised 5 complete control over the Chapter and its members: 6 Q. Now, I want to ask what you understood were the powers of the 7 national fraternity over the local chapter. Did you understand that the national 8 fraternity could exercise its power to remove any member of the chapter? 9 A. Yes. 10 Q. Did you understand too that the national could exercise its power to impose any changes on the chapter that it believed necessary. 11 A. Yes. 12 13 Q. And that the national had the power to remove any officer if it believed that the officer needed to be removed? 14 A. Yes. 15 Q. The national had the power over the chapter to change the means by 16 which it recruited members if it wanted to? 17 A. My understanding. 18 Q. And the same to change even who the chapter might recruit as 19 members; right? 20 A. Correct. 21 Q. So essentially, the national fraternity exercised pretty much complete control over the policies and people and activities over the local chapter; 22 right? 23 A. That’s how I understand it. 24 Q. And how you understood it when you were in the fraternity right – 25 A. Correct. 26 Q. – as an undergraduate? 27 A. Correct. 28 Q. And how you understood it as a member of the Alumni Probation 4 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 Committee; correct? 2 A. Correct. 3 Q. The – national conveyed upon you, as an Alumni Probation Committee member, the authority to recommend any form of change that you 4 believed was necessary in this chapter from A to Z; right? 5 A. Correct. 6 Q. And then, the chapter didn’t have power as some sort of separate 7 entity to stop that change on its own if the national wanted; right? 8 A. Correct. 9 Q. And that would be true even with respect to the way the chapter 10 raised money or managed its money; right? The national could impose new rules on them? 11 A. I suppose. 12 Q. As far as you understand, the structure – the relationship between 13 national and local, the national had that power to change anything including the way the funds were managed, the way funds were raised, the way funds were held, 14 the types of activities the chapter engaged in, how it recruited, those sorts of things 15 were within the power of the national to control? 16 A. Correct. 17 (Ex. 4 to Fierberg Decl., Lai Dep. Tr. 69:2–71:9.) 2 18 Mr. Lai was an alumni member of the Chapter and Theta Chi and who served on the APC 19 appointed by Theta Chi to oversee the Chapter following the emergency hospitalization in 2016 of 20 a student for alcohol poisoning who was found by a neighbor in bushes after he attended a 21 recruiting event sponsored by the Chapter. (Ex. 9 to Fierberg Decl., 05/05/16 Suspension Letter 22 from UCSC at 1-2.) After UCSC announced that it was suspending the Chapter following the 23 24 2 25 Theta Chi’s CEO, Michael Mayer, also could not deny that Theta Chi exercised extensive control over the Chapter. Plaintiffs originally noticed Mr. Mayer’s deposition for March 1, 2022, but it 26 was rescheduled three (3) times by counsel for Theta Chi. (Fierberg Decl. ¶ 20.) When Plaintiffs finally had the opportunity to depose Mr. Mayer on August 30, 2022, he reluctantly confirmed that 27 Theta Chi the extensive control Theta Chi exercised over its chapters, including the Chapter in this case. (Ex. 5 to Fierberg Decl., Mayer Dep. Tr. 55:5-59:8.) 28 5 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 incident, on May 12, 2016, Mr. Vanlanot, Theta Chi’s COO, wrote to UCSC to propose a 2 “remediation plan” for the Chapter. (Ex. 10, Fierberg Declaration, 05/12/16 Letter from R. 3 Vanlanot to UCSC at 1.) Mr. Vanlanot informed UCSC that Theta Chi would, among other things 4 appoint a “trained” APC to conduct a “Membership Review” consisting of “one-on-one interviews 5 with each of the members of the Chapter to determine each member’s ability to maintain active 6 membership in Theta Chi,” and “promptly” provide the results of the review to UCSC. (Id.) Mr. 7 8 Vanlanot advised that he would personally, and in-person, coordinate and oversee “the on-site 9 process.” (Id.) Mr. Vanlanot also told UCSC that the APC would have “the powers to modify 10 Chapter membership statutes, remove/replace Chapter officers, amend local by-laws, and regulate 11 Chapter functionality. (Id.) No members or officers of the Chapter were copied on Mr. Vanlanot’s 12 letter to UCSC, underscoring the absolute control Theta Chi exercised over the Chapter. (Id. at 3.) 13 Mr. Lai confirmed in his deposition that although Theta Chi never trained the APC and Mr. 14 15 Vanlanot was not there in-person to coordinate and oversee the membership review, the APC did 16 interview some Chapter members for “several hours” on June 3, 2016. (Ex. 4 to Fierberg Decl., 17 Lai Dep. Tr. 23:13-24:19, 41:24-47:13.) As reflected in Mr. Lai’s handwritten notes, during those 18 interviews, at least four Chapter members disclosed that they had been hazed, and another member 19 told Mr. Lai that the Chapter’s reputation was that it “has a drug problem.” (Ex. 11 to Fierberg 20 Decl., Lai Handwritten Notes; Ex. 4 to Fierberg Decl., Lai Dep. Tr. 26:1-18.) 21 Despite obtaining that information on the heels of an emergency medical transport of a 22 23 student, the complete power and authority Theta Chi exercised over the Chapter, and its promises 24 to UCSC, Theta Chi did absolutely nothing after the on-site interviews to reform the Chapter and 25 make it safe for current and future members and pledges. Theta Chi also did not advise or warn 26 UCSC about the APC’s findings. Mr. Lai testified: 27 Q. Okay. In that next paragraph, it says "We UCSC/Theta Chi 28 alumni support Theta Chi National's recommendation that the creation of an Alumni Probation Committee will be more effective at overhauling the 6 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 chapter and improving university relations than a suspension." Do you see that? 2 A. I do. 3 Q. I mean, it would be fair to say that your Alumni Probation 4 Committee didn't do anything to overhaul this chapter; right? 5 A. Correct. 6 Q. And it says in here, "To be clear, there will be accountability, 7 consequences, and changes," from your Alumni Probation Committee review of this chapter. As you recall, there was no accountability, 8 consequences or changes recommended; right? 9 A. Correct. 10 Q. And in the last paragraph, it says – I mean, the last sentence 11 in that paragraph -- "Perhaps most impactful, we will act as leaders and mentors to guide these young men." Do you see that? 12 A. I do. 13 Q. Following that one-day meeting where you interviewed 14 these kids, the Alumni Probation Committee -- or as far as you know, no alumni then undertook to act as leaders and mentors to guide these young 15 men? 16 A. Not that I recall. 17 Q. Okay. In the next paragraph it says "Committee members 18 will also attend chapter meetings and events to ensure that the sanctions handed down by the university (both prior and current) are successfully 19 completed in a timely manner." Do you see that? 20 A. I do. 21 Q. And that never happened; right? 22 A. Not that I am aware of. 23 (Ex. 4 to Fierberg Decl., Lai Dep. Tr. 49:2-50:17.) 24 This sampling of the material evidence that will directly bear both on Plaintiffs’ liability 25 and alter ego and successor liability claims against Theta Chi demonstrates how the central 26 27 liability and equitable matters at issue cannot be teased apart. At trial, Plaintiffs expect to call at 28 least five (5) Theta Chi and UCSC witnesses, in addition to a number of former Chapter 7 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY 1 members, 3 to provide testimony that will bear both on Plaintiffs’ legal and equitable claims 2 against Theta Chi. That will include testimony regarding the extensive control Theta Chi exercised 3 over the Chapter and its operations, which is relevant to, inter alia, Theta Chi’s direct undertaking 4 and liability, its vicarious liability for the Chapter’s negligence, the rebuttal to Theta Chi’s 5 principal defenses to liability, and Theta Chi’s alter ego and successor liability. 6 Given the significant overlap in the evidence bearing on all of those claims, severance 7 would therefore lead to an unnecessary, burdensome, and expensive re-recitation of testimony and 8 other evidence, unduly delay the proceedings, and unduly burden third-party witnesses, like Mr. 9 10 Lai, who have to be called to twice only to repeat and reiterate his testimony from the trial on 11 negligence and damages. It would also unduly prejudice the Plaintiffs by requiring them to expend 12 unnecessary time and resources recalling witnesses and presenting evidence already offered in the 13 trial on negligence and damages. Accordingly, Plaintiffs respectfully request the Court enter an 14 order denying Theta Chi’s motion to sever Plaintiffs’ equitable claims of alter ego and successor 15 liability. DATED: October 10, 2022 SAWYER & LABAR LLP 16 17 By: Ivo Labar 18 19 THE FIERBERG NATIONAL LAW GROUP, PLLC 20 Douglas E. Fierberg (admitted pro hac vice) 21 Attorneys for Plaintiffs 22 DAPHNE BELETSIS and YVONNE RAINEY 23 24 3 For example, members of the Chapter’s Spring 2018 Executive Committee will testify that the 25 Chapter continued to be “unsafe” through the spring of 2018, will identify the dangerous rituals that took place on the evening of Alex’s tragic fall, and – as Plaintiffs detailed in their Opposition 26 to Theta Chi’s Motion to Sever – will admit they cannot even pretend to know the basics of how 27 their Chapter was formed, its legal form or status, how it managed its money, who opened and controlled an account through which it paid its dues to Theta Chi, established financial policies or 28 controls, obtained or maintained insurance, or otherwise operated beyond simply following “the Ritual” and other membership recruitment materials paid for and provided by Theta Chi. 8 PLAINTIFFS’ FURTHER OPPOSITION TO DEFENDANT THETA CHI FRATERNITY, INC.’S MOTION TO SEVER PLAINTIFFS’ EQUITABLE CLAIMS OF ALTER EGO AND SUCCESSOR LIABILITY